The results, for the 12 months ended 31 October, showed a fifth successive year of strong growth and increased profitability, as funds rose from £4.4bn in 2018 to £6bn now.
Other highlights included:
· Revenues for the year expected to exceed £74m, (2018: £50.6m), of which over £29m was generated through new business
· Continued expansion of EBITDA margin, reflecting operational gearing
· Underlying EBITDA expected to exceed £17m, (2018: £10.4m)
· Fifth successive year of increased Earnings per Share attributable to shareholders, which supported a 50% increase in the dividends paid during the year
A company statement said that the board “remains confident of the company's prospects and achieving its stated aspirations of revenues of £140m, underlying EBITDA margin of 25% and £10bn funds under management.”
The report also highlighted operational and strategic achievements and goals including:
· Eight acquisitions completed during the year, total capped consideration of £30m
· Integration of current and prior year acquisitions continued in line with the AFH model
· Board to focus on organic growth and cash generation going forward, as reported in September 2019
· Protection revenue model adjusted from 1 November 2019 to ensure greater cash generation and reduced working capital needs
· Cash balances as at 31 October 2019 of £11.9m
A statement read: “During the last 12 months, the company has enjoyed strong organic growth, with a significant increase in its recurring fee income, and has completed the acquisition of eight businesses, extending both the company's size and geographical footprint.
“Total revenues for the full year are expected to exceed £74m (2018: £50.6m), of which approximately £6.5m was generated from acquisitions completed during the year.
“The company continued to generate operational efficiencies which, together with the growth of the business, is expected to enable AFH to report both increased EBITDA per share together with a further increase in the EBITDA margin.
“This margin increase is the fifth consecutive year of margin enhancement and represents a significant move towards our aspirational target of a 25% EBITDA margin.”
AFH says significant growth “continues to be driven by organic new business generation”.
Of the expected total revenue of £74m for the year over £40m was represented by recurring business while over £29m was new business written by our advisers.
More than £450m of gross funds were received from new and existing clients, representing year-on-year growth above 10%.
Net outflows, including pension drawdown, continued to be below 2% of total funds under management, the firm said.
Alan Hudson, chief executive of AFH, said: “The performance of AFH over the course of the year demonstrates the success of the Group's strategy and business model.
“We maintained our strong levels of growth, both organically and through acquisitions, and continue to deliver on our ambitious targets.
“We have seen five consecutive years of growth and profitability since joining AIM as well as solid increases in FUM with low withdrawal rates and will continue to drive for further operational efficiency and increased margins going forward.
“The recent refinement of our model to place a greater focus on cash generation in these uncertain political and economic times will put AFH in a strong position as we enter the new year, focusing on organic growth and paying down our deferred earn-outs.
“This will free up significant cash flow in the medium term and enable us to continue to deliver on our goals without requiring further funding from the equity markets.
“We have consistently delivered strong levels of organic growth outside of our buy and build strategy over the last few years and are confident in our ability to deliver further value to shareholders following this change of focus.
“Demand for advisory services in the UK continues to grow - the population is living and working for longer and there exists a significant savings and advice gap.
“The directors believe that AFH is well placed to benefit from this trend.
“Our client focussed approach and our growing AFH community creates a commercial advantage for our clients when compared to both small IFAs and traditional wealth managers.
“Investment made to digitise parts of the business, as well as diversification into our complementary protection broking business over the past few years, have helped the group to achieve its goals in a less than benign macro-economic environment, leaving us in good stead to continue on our growth trajectory.
“Given the strong performance over the year it has been frustrating that the valuation multiple of the group has fallen significantly below that of the sector average in spite of our continued growth and increased shareholder return.
“We continue to focus on delivering shareholder value through the profitable growth of the business.
“We look to the future with confidence to continue building AFH into the leading financial planning led wealth manager in the UK.”