Monday 20 January 2020 12:47 pm

AFH financial reports strong earnings growth

AFH Financial has reported strong growth in revenue and funds under management (FUM) following after the financial adviser consolidator completed a string of acquisitions.

Revenue at the AIM-listed firm jumped to £74.3m for the year ending 31 October, fuelling an 82 per cent jump in profit after tax, which hit £10.8m. 

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AFH Financial’s FUM stood at £6.2bn by the end of the period, compared to £4.4bn a year earlier, with a 10 per cent increase in organic gross inflows.

The firm completed eight acquisitions during the year, taking the number of acquisitions made since its 2014 float beyond 50.

“Although we have been acquiring within the sector, we’ve been doing very well… from an organic growth perspective, and I think that is in contrast with the investment-led models of the traditional wealth managers,” chief executive Alan Hudson told City A.M.

AFH announced in September it would be easing off on further acquisitions and de-risk its business model through a “period of consolidation”. 

In November, it announced it had reached a £12m facility agreement with HSBC for further acquisitions, and AFH confirmed today that none of the amount had yet been allocated.

Hudson said AFH had had a “pause” on new acquisitions, but suggested further deals could be on the horizon.

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“Undoubtedly we will return to buy businesses within the sector again, and in that regard we have put in place a £12m HSBC facility to do exactly that.”

“Although we haven’t been making acquisitions, I don’t think that will continue to be the case,” he said.

AFH increased its dividend 33 per cent to 8p per share following the strong showing, with earnings per share up 59 per cent to 25.4p.

The adviser consolidator said trading for the year remained strong and in line with board expectations, and that it was making “steady progress” against its aspirational targets, which include hitting £10bn FUM in the next three to five years.

Hudson said investor sentiment had been “so much better” following the result of the General Election in December. 

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“I think investment professionals and retail clients now feel we’ve got a bit of a BoJo bounce on this side of the pond, and on the other side we’ve got Mr Trump, who in the runup to the election would want to see a stock market that’s performing well… So I think most people are expecting now that 2020 is going to be a good year for all concerned”

AFH shares were 2.60 per cent up in lunchtime trading.