Advice-led wealth manager AFH Financial (AFHP:AIM) reported strong full-year growth in revenues of 47% to £74.3m and earnings per share up 45% to 32.8p for the period ended 31 October 2019.
The shares added 3.7% to 399p and are up 42% over the last three-months.
Chief executive Alan Hudson said, ‘trading remains strong and in line with the board's expectations and the current levels of activity underpins the directors' confidence for the continued progress of the group in the current year and thereafter in line with its aspirational targets.’
DELIVERING AGAINST TARGETS
AFH Financial’s medium term goals are to achieve £10bn of funds under management, (FUM) revenues of £140m and earnings before interest, tax, depreciation and amortisation (EBITDA) margins of 25%.
House broker Shore Capital believes that the firm will meet its targets within five-years.
AFH Financial made great strides towards achieving the targets with FUM up 40% to £6.2bn and EBITDA up 65% to £17.2m, giving margins of 20.6%. Growth was driven by eight acquisitions while the firm also notched-up 8% organic growth, against a market which remained stagnant.
SUSTAINABLE ADVANTAGES
Recurring management fees increased 45% to £45m representing 60% of group revenues while initial fees grew 34% to £15.1m.
Protection broking, the part of the business which provides professional indemnity, grew 56% to £14.2m.
Investment in technology is aimed at streamlining the client experience and provides an attractive proposition for advisors working at smaller firms who face increasing regulatory burdens.
In addition the company absorbs platform fees, giving it a sustainable competitive advantage.
AFH Financial reckons that it is the cost leader in the market with an ‘all-in’ fee of around 1.6%, significantly lower than competitors, a differentiation for the business.
Increasing demand for professional planning is expected to provide a healthy tailwind for the company as it continues to consolidate the sector and drive cost efficiencies.
