TIDMAFHP
RNS Number : 7189M
AFH Financial Group Plc
21 July 2014
AFH Financial Group PLC
("AFH" or the "Group")
INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 APRIL 2014
Strong revenue performance and profit growth
The Directors of AFH (AIM:AFHP), a leading Independent Financial
Advisory ("IFA") and discretionary wealth management firm, are
pleased to announce the Group's consolidated interim results for
the 6 months ended 30 April 2014, the Group's maiden set of
financial results following its admission to trading on AIM on 30
June 2014.
Highlights:
-- Revenues up 50% to GBP 7.3m (2013: GBP 4.8m)
-- EBITDA increased 97% to GBP 0.81m (2013: GBP 0.41m)
-- Profit before tax up 55% to GBP 0.54m (2013: GBP 0.35m)
-- Gross margin maintained at 51%
-- Earnings per share up 30% to 2.47 pence (2013: 1.90p)
-- Recurring revenue represented 54% of Group revenue (2013: 50%)
-- Strong balance sheet with net assets of GBP 9.4m, an increase of 136%
-- Cash reserves at 30 April 2014 of GBP 4.9m (2013: GBP 1.2m)
-- Four acquisitions made during the period for a maximum consideration of GBP 1.3m
-- Fundraising of GBP 1.6m completed in April 2014
-- Group IPO on AIM in June 2014 raising a further GBP 1.46m of funds (before expenses)
Commenting Alan Hudson, Chief Executive Officer of AFH Financial
Group PLC, said:
"As the first interim results statement that the Group is
announcing on AIM, I am delighted to report strong revenue
performance and profit growth during a period when our efforts were
predominantly focused on our successful move to AIM from ISDX.
Our outlook for this year is to continue with our steady growth
through organic development and appropriate acquisitions to deliver
further profitability. We are delighted to now be on AIM and look
forward to updating shareholders with our progress."
For further information please contact:
AFH Financial Group PLC +44 (0)1527 577 775
Alan Hudson, Chief Executive Officer
Paul Wright, Chief Financial Officer
Allenby Capital Limited +44 (0)20 3328 5656
(Nominated Adviser and Broker)
Nick Naylor
Chris Crawford
Nick Athanas
Yellow Jersey PR Limited +44 (0)7799 003 220
(Financial PR)
Dominic Barretto
Kelsey Traynor
Chairman's statement
I am pleased to provide shareholders with an update on the
Group's performance for the six months to 30 April 2014, a period
that has seen continued financial and corporate progress. In
addition, following the period end, trading in the Group's shares
was transferred from ISDX to AIM where the Group successfully
raised an additional GBP1.46 million to help fund the Group's
continued growth plans.
Results
Revenue for the period was GBP 7.3m, an increase of 50% compared
to the previous year of GBP 4.8m. Gross margins remained strong at
51% (2013: 50%) whilst recurring revenue represented 54% (2013:
50%) of total revenue.
During the period, the Group continued to invest in its head
office to support the current and future projected growth. As a
result, administrative expenditure increased by 47% to GBP 3.1m.
This included an increase of GBP 183,000 (330%) in amortization and
depreciation costs of non current assets acquired in this and
previous periods. Further investment is anticipated as the Group
continues its growth strategy. The Group reported an increase of
55% in profit before tax to GBP 0.54m, whilst earnings per share
increased by 30% to 2.47p per share (2013: 1.90p).
The Group reported increased EBITDA of GBP 0.81m, representing
an increase of 97% over the prior year comparative figure of GBP
0.41m. This is a measure used by the Directors to assess the cash
generation from the ongoing operations. The EBITDA margin of 11.1%
on revenue (2013: 8.5%), reflects the scalability of the business
given the level of investment in the central overhead noted
above.
Cash position
The Group remains free of bank or secured debt and maintains
healthy cash balances. At the period-end, cash and cash equivalents
totaled GBP 4.9m, boosted by the equity and bond fundraising
announced in April 2014.
IPO on AIM
As previously reported, on 30 June 2014 the Group successfully
listed its Ordinary Shares on AIM and at the same time raised GBP
1.46m gross in additional equity at a price of 140p to provide
additional working capital to fund future acquisitions in the IFA
and related financial services sector. The listing of the Group's
ordinary shares on ISDX was cancelled on 27 June 2014.
The listing was completed during a period of uncertainty due to
the number of IPOs being introduced to the market and the negative
media commentary on a number of these companies. Against this
background the Directors believe that the successful listing and
fundraising reflects the success of the business to date and
provides greater access to the capital markets to facilitate
further organic and acquisitive growth, which will in turn generate
additional shareholder value.
Whilst the IPO process encompassed much of the six month period
under review, and demanded significant management time, the
positive results for the period confirm the continued profitable
growth of the underlying business and reflect the benefits of the
strengthened board and senior management team highlighted in my
previous report in March.
Acquisitions
During the period the Group completed the acquisitions of the
client portfolios of three small IFA businesses and the entire
share capital of a fourth at a combined cost, subject to two year
earn out periods, of GBP 1.3m. These were all purchased in line
with our standard model based on a multiple of recurring income.
One adviser joined AFH as a result of these acquisitions and client
portfolios have been allocated amongst the existing AFH
advisers.
Outlook
The Group remains profitable and cash generative with a strong
balance sheet for its current size. Our strategy remains to grow in
our traditional areas of strength through both organic and
acquisitive growth to drive increased profitability. The Directors'
continue to actively seek appropriately priced acquisition
opportunities with a comparable culture to AFH to generate
incremental opportunities for the Group.
Our long-term aim is to grow our client base through increased
adviser numbers and greater productivity afforded by the AFH
structure and centralised support functions. The progress made
during the first half of the current financial year allows the
Directors to view the prospects for the full year and beyond with
confidence.
John Wheatley
Chairman
Consolidated Statement of Comprehensive Income
Unaudited Unaudited Audited
Six months Six months Twelve months
ending 30 ending 30 ending 31
April April October
2014 2013 2013
Note GBP'000 GBP'000 GBP'000
Revenue 7,293 4,793 10,797
Cost of sales (3,587) (2,377) (5,165)
-------------- -------------- --------------
Gross profit 3,706 2,416 5,632
Administrative expenses (3,137) (2,061) (4,561)
-------------- -------------- --------------
Operating profit 569 355 1,071
Finance income 1
Finance costs (32) (6) (23)
-------------- -------------- --------------
Profit before tax 537 349 1,049
Income tax expense (110) (68) (245)
-------------- -------------- --------------
Profit for the year attributable
to owners of the parent 427 281 804
Other comprehensive income - - -
-------------- -------------- --------------
Total comprehensive income
for the year attributable
to owners of the parent 427 281 804
Earnings per share (in
pence)
Basic 2.470 1.899 5.332
Diluted 2.290 1.829 5.191
Consolidated Statement of Financial Position
Unaudited Unaudited Audited
30 April 30 April 31 October
2014 2013 2013
Note GBP'000 GBP'000 GBP'000
Assets
Non-current assets
Intangible assets 8,804 4,230 7,377
Property, plant and equipment 282 170 251
-------------- -------------- --------------
9,086 4,400 7,628
Current assets
Trade and other receivables 2,635 2,326 2,625
Current tax assets - - -
Cash and cash equivalents 4,879 1,150 4,334
-------------- -------------- --------------
7,514 3,476 6,959
-------------- -------------- --------------
Total assets 16,600 7,876 14,587
Liabilities
Current liabilities
Trade and other payables 3,166 2,870 3,933
Current tax liabilities 190 68 312
Financial liabilities - Borrowings 50 225 50
-------------- -------------- --------------
3,406 3,163 4,295
Net current assets 4,108 298 2,663
-------------- -------------- --------------
Non-current liabilities
Trade and other payables 3,073 327 2,220
Financial liabilities - Borrowings 752 - 752
Deferred tax liability - - 34
-------------- -------------- --------------
3,825 327 3,006
Total liabilities 7,231 3,490 7,301
-------------- -------------- --------------
Net assets 9,369 4,386 7,285
Shareholders' equity
Share capital 1,827 1,478 1,711
Share premium account 5,970 2,153 4,477
Share-based payment reserve 277 229 229
Retained earnings 1,295 526 868
-------------- -------------- --------------
Total Shareholders' equity 9,369 4,386 7,285
Share Share premium Share-based Retained Total
capital payment earnings
reserve
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Audited balance
at 31 October 2012 1,478 2,153 229 245 4,105
------------ ------------ ------------ ------------ ------------
Profit for the
period - - - 281 281
Other comprehensive
income - - - - -
------------ ------------ ------------ ------------ ------------
Total comprehensive
income - - - 281 281
------------ ------------ ------------ ------------ ------------
Unaudited balance
at 30 April 2013 1,478 2,153 229 526 4,386
------------ ------------ ------------ ------------ ------------
Profit for the
period - - - 490 490
Other comprehensive
income - - - - -
------------ ------------ ------------ ------------ ------------
Total comprehensive
income - - - 490 490
------------ ------------ ------------ ------------ ------------
1,478 2,153 229 1,016 4,876
Issue of share
capital 233 2,324 - - 2,557
Dividend - - - (148) (148)
------------ ------------ ------------ ------------ ------------
Audited balance
at 31 October 2013 1,711 4,477 229 868 7,285
------------ ------------ ------------ ------------ ------------
Profit for the
period - - - 427 427
Other comprehensive
income - - 49 49
------------ ------------ ------------ ------------ ------------
Total comprehensive
income - - 49 427 476
------------ ------------ ------------ ------------ ------------
Issue of share
capital 116 1,493 1,608
Dividend -
------------ ------------ ------------ ------------ ------------
Unaudited balance
at 30 April 2013 1,827 5,970 278 1,295 9,369
------------ ------------ ------------ ------------ ------------
Consolidated Statement of Cash Flows
Unaudited Unaudited Audited
Six months Six months Twelve months
ending 30 ending 30 ending 31
April April October
2014 2013 2013
Note GBP'000 GBP'000 GBP'000
Cash flows from operating activities
Cash generated from operations 930 368 997
Tax paid (266) - (187)
-------------- -------------- --------------
Net cash inflow from operating
activities 664 368 810
-------------- -------------- --------------
Cash flows from investing activities
Purchase of property, plant
and equipment (71) (45) (161)
Purchase of other intangible
assets, net of cash (1,625) (680) (4,059)
Proceeds from disposals of
other intangible assets - 590 1,080
Interest received - - 1
-------------- -------------- --------------
Net cash (outflow) from investing
activities (1,696) (135) (3,139)
-------------- -------------- --------------
Cash flows from financing activities
Proceeds from issue of shares 1,621 - 2,588
Share issue costs (12) - (31)
Issue of unsecured bond - - 752
Proceeds from borrowings - - 3,558
Repayment of borrowings - - (957)
Interest paid (32) (6) (23)
Dividends - - (148)
-------------- -------------- --------------
Net cash inflow/(outflow) from
financing activities 1,577 (6) 5,739
-------------- -------------- --------------
Net increase in cash and cash
equivalents 545 227 3,411
Cash and cash equivalents at
the beginning of the period 4,334 923 923
-------------- -------------- --------------
Cash and cash equivalents at
the end of the period 4,879 1,150 4,334
1 General Information
AFH Financial Group Plc is a company incorporated in England and
Wales. The Group is principally engaged in the provision of
independent financial advice to the retail market
2 Basis of preparation and accounting policies
2.1 Basis of preparation
The interim condensed consolidated financial statements have
been prepared in accordance with IAS 34 Interim Financial
Reporting. The interim condensed consolidated financial statements
do not include all the information and disclosures required in the
annual financial statements and should be read in conjunction with
the Group's financial statements for the year ended 31 October
2013, which were prepared in accordance with International
Financial Reporting Standards adopted by the International
Accounting Standards Board ("IASB") and interpretations issued by
the International Financial Reporting Interpretations Committee
("IFRIC") of the IASB (together "IFRS") as adopted by the European
Union, and in accordance with the requirements of the Companies Act
applicable to companies reporting under IFRS.
The information relating to the six months ended 30 April 2014
and the six months ended 30 April 2013 is unaudited and does not
constitute statutory financial statements within the meaning of
section 434 of the Companies Act 2006. The Group's statutory
financial statements for the year ended 31 October 2013 have been
reported on by its auditor and delivered to the Registrar of
Companies. The report of the auditor was unqualified and did not
draw attention to any matters by way of emphasis, or contain a
statement under section 498(2) or (3) of the Companies Act
2006.
The information relating to the six months ended 30 April 2013
has been restated to be consistent with the accounting policies
followed in the preparation of the Group's annual financial
statements for the year ended 31 October 2013 which were prepared
in accordance with International Financial Reporting Standards. The
effect of this restatement has been to decrease administrative
expenses by GBP70,000 and increase retained earnings by a similar
amount. The impact of merger accounting in 2013 has also reduced
intangible assets and share premium account by GBP8.3m as detailed
in the Group's financial statements for the year ended 31 October
2013
2.2 Significant accounting policies
The accounting policies adopted in the preparation of the
interim condensed consolidated financial statements are consistent
with those followed in the preparation of the Group's annual
financial statements for the year ended 31 October 2013.
2.3 Basis of consolidation
The interim condensed consolidated financial statements
consolidate the financial statements of the Company and its
subsidiary undertakings as at 30 April each year.
Subsidiaries are fully consolidated from the date of
acquisition, being the date on which the Group obtains control, and
continue to be consolidated until the date that such control
ceases. The financial statements of subsidiaries are prepared for
the same reporting period as the parent company, using consistent
accounting policies.
2.4 Key sources of judgements and estimation uncertainty
The preparation of the condensed consolidated financial
statements requires management to make estimates and assumptions
that affect the reported amount of revenues, expenses, assets and
liabilities and the disclosure of contingent liabilities. If in the
future such estimates and assumptions, which are based on
management's best judgement at the date of preparation of the
financial statements, deviate from actual circumstances, the
original estimates and assumptions will be modified as appropriate
in the period in which the circumstances change. The areas where a
higher degree of judgement or complexity arises, or where
assumptions and estimates are significant to the consolidated
financial statements, are discussed below.
Impairment of client portfolios
The Group reviews whether acquired client portfolios are
impaired at least on an annual basis. This comprises an estimation
of the fair value less cost to sell and the value in use of the
acquired client portfolios. In assessing value in use, the
estimated future cash flows expected to arise from the individual
client portfolios are discounted to their present value using the
Group's weighted average cost of capital adjusted for tax, which
reflects management's estimate of the time value of money and the
risks specific to the asset.
The key assumption used in arriving at a fair value less cost of
sale are those around valuations based on earnings multiples and
values based on assets under management. These have been determined
by looking at valuations of similar businesses and the
consideration paid in comparable transactions.
The carrying amount of client portfolios at 30 April 2014 was
GBP 6.7m (2013: GBP 2.1m). No impairments have been made during the
period (2013: GBPnil).
Impairment of goodwill
The Group determines whether goodwill is impaired at least on an
annual basis. This requires an estimation of the value in use of
the cash-generating units to which the goodwill has been allocated.
In assessing value in use, the estimated future cash flows expected
to arise from the cash-generating unit are discounted to their
present value using the Group's weighted average cost of capital
adjusted for tax.
The carrying amount of goodwill at 30 April 2014 was GBP 2.1m
(2013: GBP 2.1m). No impairments have been made during the period
(2013: GBP nil).
3 Segmental Analysis
The Board of Directors is considered to be the chief operating
decision maker of the Group.
The Board has determined that there is one operating segment
based on reports reviewed by the Board that are used to make
strategic decisions.
The total revenue of the group for the year has been derived
from its principal activity wholly undertaken in the United
Kingdom.
4 Reconciliation of Operating profit to Net Cash inflow from
Operating Activities
Unaudited Unaudited Audited
Six months Six months Twelve months
ending 30 ending 30 ending 31
April April October
2014 2013 2013
GBP'000 GBP'000 GBP'000
Profit before tax for the period 537 349 1,049
Adjustments for
Interest and dividend income - - (1)
Interest expense 32 6 22
Depreciation, amortisation and
impairment 238 55 145
Gain on disposal of intangible
assets - (6) (6)
Equity settled share based expense 48 - -
(Decrease) in current financial
liabilities - (175)
Movements in working capital
(Increase) in trade and other
receivables (10) (336) (485)
(Decrease) / Increase in trade
and other payables 85 300 448
-------------- -------------- --------------
Cash generated from operations 930 368 997
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR KVLBFZDFFBBD
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