TIDMAFHP
RNS Number : 7949M
AFH Financial Group Plc
25 January 2016
AFH Financial Group PLC
("AFH" or the "Group")
AUDITED FINAL RESULTS
Strong results ahead of expectations, dividend increased by
50%
The Directors of AFH (the "Directors"), a leading financial
planning led investment management firm, today announces the
Group's consolidated audited results for the period ending 31
October 2015 reflecting the continued growth of the Group and
resulting in a 50% increased dividend.
Highlights:
-- Progressive dividend policy sees 50% increase of full year
dividend to 2.25p per share
-- EBITDA up 115% due to controlled and profitable growth
-- Revenue up 40% to GBP21.0m, exceeding market expectations
-- EPS up 80% to 5.95 pence per share
-- Successful completion of 11 acquisitions with a strong
pipeline for the period ahead
-- Well positioned to meet increasing demand and regulatory
change
Commenting, John Wheatley, Chairman of AFH, and Alan Hudson,
Chief Executive of AFH, said:
"Given the progress made in 2015 and the early months of the
2016 financial year, the Directors view the coming period as
providing excellent prospects and look forward to extending AFH's
brand, reach and reputation."
Enquiries:
AFH Financial Group PLC 01527 577 775
Alan Hudson, Chief Executive Officer
Paul Wright, Chief Financial Officer
www.afhfinancialgroup.com
Allenby Capital Limited 020 3328 5656
Nick Naylor/Nick Athanas (Nominated Adviser and Broker)
Chris Crawford (Corporate Broking)
Yellow Jersey PR Limited 07768 537 739
Dominic Barretto
Aidan Stanley
Chairman's Report
Business Review
I am pleased to report a successful 2015, following a strong
performance during the second half of the year to 31 October 2015.
The Company has enjoyed significant increases in both revenue and
profitability and continues to provide high quality services to a
growing portfolio of clients nationwide.
Our success continues to be built on our belief that a financial
planning led approach to the management of our clients' wealth,
based on the highly personal face to face relationship between them
and our advisers, is key to ensuring that client's interests remain
at the centre of our operations. This strategy allows us to
identify and plan for our clients' long-term requirements and
ambitions before any investment decisions are made. We work with
them to structure a portfolio appropriate for their attitude and
tolerance to risk. This is then invested, regularly monitored and
managed in line with their agreed goals and requirements. Our
clients receive a proactive and transparent service all year round,
where relationships are built on mutual respect.
At a time when people are living longer and being encouraged by
the Government to take greater responsibility for their financial
wellbeing, and with current legislation allowing for additional
flexibility and choice, the Company believes that long-term demand
for personal independent financial advice will continue to grow.
With over 150 qualified advisers, AFH is well positioned to meet
this increasing need and to benefit from these demographic and
regulatory changes.
During the year under review, the Company enjoyed strong revenue
growth. This was driven by a significant rise in recurring fee
income, which increased our average annualised gross revenue per
adviser to GBP143,000. Total revenue for the full year grew by 40%
to GBP21.0m with H2 revenue, boosted by acquisitions made during
the year. This exceeded expectations set out in the interim report
of May 2015, where I indicated that new business revenues had been
restrained during H1. This was in part due to our clients deferring
pension advice and investment. I am pleased to report that,
following the UK General Election in May, the level of new business
has increased significantly.
During the year, AFH increased its national footprint by
completing 11 acquisitions at an average capped consideration of
slightly above GBP1m. Five of these acquisitions were asset
purchases, where the client databases and ongoing revenue streams
were acquired. The remaining six were acquired by purchasing 100%
of the equity shares with a significant proportion of the
consideration payable on a deferred basis. Our acquisitions during
the period were financed from our continuing positive trading cash
flow and from the equity and unsecured loan stock raised by the
Company during 2014 and in January and May 2015.
In line with our strategy of controlled and profitable growth,
the Company continued to invest in strengthening its management
team, with a number of senior appointments. In October 2015 it was
announced that Alexis James and Austin Broad, our Heads of Risk and
Advice respectively, had joined the main Board. We also invested
heavily in our physical and technological infrastructure to support
the additional growth planned for 2016 and future years. In
September 2015, we increased our office space at AFH House in
Bromsgrove by 50%, and during the second half upgraded both our
internal IT capacity and our ability to respond to the increasing
technology risks currently affecting all businesses.
Financial Results
The Company reported strong growth in 2015, with revenues
increasing by 40% to GBP21.0m (2014: GBP15.0m) and EBITDA (net cash
generation from trading excluding non cash share based payments)
increasing by 115% from GBP1.3m to GBP2.8m. Excluding the
GBP240,000 non-recurring cost of operating IFS UK Limited, which
was acquired on 30 April 2015, as a separate business during its
integration and which was anticipated and reported at the time of
the acquisition, EBITDA rose to GBP3.05m. Post tax earnings
attributable to shareholders showed a similarly healthy increase
from GBP0.6m to GBP1.2m.
Earnings per share increased to 5.95p (2014: 3.31p) as the
benefits of AFH's centralised administration for supporting our
growing business were recognised.
During 2015, recurring revenue increased to GBP13.6m (2014:
GBP8.25m) to represent 65% of total income for the year. The
Directors believe this figure confirms the strength of the
Company's financial model. Almost 90% of the Company's total
ongoing cost base, as at 31 October 2015, was covered by our
recurring fees alone, when our 52% average gross margin figure is
applied.
Approximately 75% of recurring revenue was generated internally
during the year, representing organic growth in excess of 20% on
2014 levels. This reflects our advisers' ability to self-generate
business, the benefits of our centralised marketing and our
regional and national affinity groups to attract new clients.
The gross margin increased slightly during the year from 51% to
52% and remains comfortably above our benchmark 50% level.
The Company's cost base, excluding depreciation, amortisation
and non-cash share-based payments, increased by GBP1.9m to GBP8.2m
(2014: GBP6.3m). This comprised of increased staff investment,
which represents over 65% of our total expenditure and the
infrastructure supporting continued business growth.
At 31 October 2015, the Group held cash and cash equivalents of
GBP3.8m (2014: GBP5.7m). During the year the Company raised GBP1.1m
from equity and GBP2.1m from the issue of a four year unsecured
loan note paying a coupon of 7.5%. The major cash outflows were
GBP4.23m in initial and deferred payments for acquisitions
purchased in the period 2013 to 2015. The Board believes that all
future deferred payments for acquisitions completed during the year
will be financed from existing cash resources and revenue generated
by those acquisitions during the earn-out periods.
Post year end Share Placing and Subscription
In December 2015, the Company raised GBP6.37m (gross) from
institutional and private investors. This was to provide additional
capital for acquisitions anticipated to be completed in 2016, and
to provide working capital for the enlarged business. I am pleased
to welcome a number of new institutional investors as a result of
the placing and wish to thank existing shareholders for their
continued support.
Dividend
The Directors intend to continue the progressive dividend policy
set out in my previous reports, whilst recognising the requirement
to maintain sufficient cash within the business to fund the
Company's growth strategy. Having considered this in the light of
the strong performance during the year under review, the Directors
propose a dividend of 2.25p per share, an increase of 50% over the
2015 dividend (1.5p per share). Subject to shareholders' approval
at AFH's forthcoming Annual General Meeting, the dividend will be
paid on 4th April 2016 to shareholders on the register of members
at the close of business on 18th March 2016.
Employees and Advisers
The profitable growth of AFH is due to the hard work and
professional approach of our staff and advisers. I would like to
formally thank all the team for the contribution they have made to
a highly successful year in which we have continued to grow our
business profitably. It is our aim to become the employer of choice
for staff and to maintain the alignment of interests between our
staff and advisers with those of our shareholders. It is in
response to the support we receive from our staff that we continue
to develop and promote our people from within the Company at every
opportunity, so that many key positions are occupied by home grown
talent. It is the enthusiasm, dedication and creativity of our
staff and advisers that has allowed the Group to continue to
deliver according to its strategy each year.
Outlook
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The Directors believe that there is a growing requirement for a
professional, financial planning led approach to wealth management
delivered by trusted personal advisers. Furthermore they recognise
that there is a continuing consolidation of the IFA market at many
levels within the sector.
The Company has again proven its ability to increase revenue
whilst maintaining consistency in gross margins. This year has seen
the early realisation of the benefits of scale and the
infrastructure investment made in previous periods. The Company
continues to be cash generative, and maintains a strong balance
sheet given the current size of its business. The Board believes
that it has developed the necessary infrastructure to support its
growth plans for 2016 and beyond. The Company will actively
continue to seek appropriately priced opportunities during 2016 to
generate additional revenue and drive increased profitability.
Given the progress made in 2015 and the early months of the 2016
financial year, the Directors view the coming period as providing
excellent prospects and look forward to extending AFH's brand,
reach and reputation.
John Wheatley
Chairman
Chief Executive's report
2015 represented a year of further growth for AFH, seen in both
new business levels and recurring revenues from our Funds Under
Management ("FUM"), which have performed well. The Company
continues to take advantage of the acquisition opportunities
arising from the consolidation of the IFA sector, alongside our
core organic advisory and investment management business. During
the year we completed a further 11 acquisitions to extend our
national coverage whilst investing heavily in support functions run
from our Bromsgrove offices.
Our business is focused on the UK mass affluent market,
providing advice to clients in an environment where the State is
increasingly passing the responsibility for financial management to
individuals. This permits greater choice, but also reduces the
involvement and responsibility of the Government. Through our
advisers, the Company seeks to build strong long-term relationships
with our clients. Our aim is to guide them to achieve their
financial goals, and we believe that through face to face advice,
supported by a centralised technical and investment team, we are
able to provide clients with the most effective outcomes.
The Board believes the strategy of face-to-face financial
planning led investment management also delivers benefits to our
shareholders. The long-term interaction and trust that such an
approach engenders leads to a permanence and continuity of the
client relationship with AFH. During 2015, our client retention
rate remained above our internal target of 95% and new business
inflows reached record levels.
During the year, FUM with ongoing fee agreements in place
increased to approximately GBP1.8bn (2014: GBP0.9bn). Whilst almost
GBP700m was added as a result of acquisitions during the period,
over GBP200m represented inflows from existing and new clients of
the core business. Approximately 90% of new business has been
placed on our discretionary service, which at the year-end managed
over GBP700m.
Adviser numbers increased to 158 as at 31 October 2015 (2014:
136), including both advisers joining from acquisitions and those
recruited individually (net of retiring IFAs). As outlined in my
last report, the internal market facilitated by the Company
continues to offer an opportunity for retiring advisers to realise
the growth in the value of their client base, whilst enabling
younger advisers within the Group to acquire client portfolios in a
transparent and controlled environment. It is expected this will
continue to develop further.
In December 2014, the Company announced the issue of a 7.5%
unsecured loan note, raising GBP2.14m. By introducing a limited
amount of gearing to the Company's balance sheet and using the
funds to part-finance the initial payments of our 2015
acquisitions, the Director's have been able to accelerate our
acquisition strategy. This has been done with minimal dilution to
existing shareholders whilst maintaining a conservative approach to
debt financing, which at the year-end remained below 25% of net
assets.
Following significant acquisition activity in the first half of
the year, including our two largest transactions to date, the board
announced in June 2015 that it would focus on integrating the new
businesses and developing our management and infrastructure during
the second half in preparation for growth in 2016. Since the
year-end we have entered into discussions with a number of
potential acquisitions. We have identified a strong pipeline of
opportunities on which we will begin due diligence during the first
six months of 2016.
In December 2015 the Company announced the successful Placing
and Subscription for new shares, raising GBP6.37m (gross) to enable
the Company to fund the purchase of further IFA businesses and to
provide additional working capital for the enlarged Group. This
fundraising has brought the Company to the attention of a number of
important institutional investors, several of whom I am delighted
to welcome as new shareholders. The size and structure of the fund
raise, which follows a record financial year and the six month
period of integration and preparation for growth in 2016, continues
our strategy of maintaining a conservative approach to gearing
whilst seeking to enhance Earnings per Share for shareholders in
each financial year.
Current year trading
The current year has started in line with trading levels from
the second half of 2015. Recurring revenues continue in line with
the Directors' expectations, and the Group's acquisition pipeline
remains strong. The recently enhanced Group cash reserves, which
have risen to over GBP8m, will allow the board to take further
advantage of the active M&A market in the IFA sector and
deliver on its strategic aims in 2016 and future periods.
Alan Hudson
Chief Executive Officer
AFH FINANCIAL GROUP PLC
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 OCTOBER 2015
2015 2014
Note GBP'000 GBP'000
Revenue 20,977 15,037
Cost of sales (10,009) (7,326)
Gross profit 10,968 7,711
Administrative expenses (9,213) (6,811)
Operating profit 1,755 900
Finance income 26 25
Finance costs (187) (64)
Profit before tax 1,594 861
Income tax expense (421) (260)
Profit for the year attributable to owners of the parent 1,173 601
Other comprehensive income - -
Total comprehensive income for the year attributable to owners of the parent 1,173 601
Earnings per share (in pence)
Basic 5.95 3.31
Diluted 5.49 3.10
AFH FINANCIAL GROUP PLC
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 31 OCTOBER 2015
2015 2014
Note GBP'000 GBP'000
Assets
Non-current assets
Intangible assets 4 20,902 9,707
Property, plant and equipment 960 279
Investments 1 1
21,863 9,987
Current assets
Trade and other receivables 6 4,406 2,474
Cash and cash equivalents 3,766 5,653
8,172 8,127
Total assets 30,035 18,114
Liabilities
Current liabilities
Trade and other payables 8,289 4,780
Current tax liabilities 339 136
Financial liabilities - Borrowings 63 -
8,691 4,916
Net current (liabilities) / assets (519) 3,211
Non-current liabilities
Trade and other payables 8 5,238 1,866
Financial liabilities - Borrowings 7 3,432 752
Deferred tax liability 45 42
8,715 2,660
Total liabilities 17,406 7,576
Net assets 12,629 10,538
Shareholders' equity
Share capital 2,012 1,932
Share premium account 8,112 7,097
Merger reserve (540) (540)
Share-based payment reserve 384 269
Retained earnings 2,661 1,780
Total Shareholders' equity 12,629 10,538
Approved by the Board of Directors 22 January 2016
AFH FINANCIAL GROUP PLC
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
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AS AT 31 OCTOBER 2015
Share-based
Share capital Share premium Merger reserve payment reserve Retained earnings Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Balance at 1
November 2013 1,712 4,477 (540) 230 1,407 7,286
Profit for the
year 39 601 640
Other
comprehensive
income - - -
Total
comprehensive
income 39 601 640
Issue of share
capital 220 2,620 2,840
Dividend (228) (228)
Balance at 31
October 2014 1,932 7,097 (540) 269 1,780 10,538
Profit for the
year 115 1,173 1,288
Other
comprehensive
income - - -
Total
comprehensive
income 115 1,173 1,288
Issue of share
capital 80 1,015 1,095
Dividend (292) (292)
Balance at 31
October 2015 2,012 8,112 (540) 384 2,661 12,629
AFH FINANCIAL GROUP PLC
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 OCTOBER 2015
2015 2014
Note GBP'000 GBP'000
Cash flows from/(used in) operating activities
Cash generated from operations 9 (1,035) 1,895
Tax paid (219) (314)
Net cash inflow/(outflow) from operating activities (1,254) 1,581
Cash flows from investing activities
Purchase of property, plant and equipment (789) (112)
Purchase of other intangible assets, net of cash (3,865) (2,674)
Proceeds from disposals of other intangible assets 34 -
Rental Income received 8 10
Interest received 18 15
Net cash outflow from investing activities (4,594) (2,761)
Cash flows from financing activities
Proceeds from issue of shares 1,072 3,082
Share issue costs (24) (242)
Proceeds from borrowings 3,342 -
Repayment of borrowings - (50)
Interest paid (137) (63)
Dividends (292) (228)
Net cash inflow from financing activities 3,961 2,499
Net increase/(decrease) in cash and cash equivalents (1,887) 1,319
Cash and cash equivalents at the beginning of the year 5,653 4,334
Cash and cash equivalents at the end of the year 3,766 5,653
AFH FINANCIAL GROUP PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 OCTOBER 2015
The following selected notes have been extracted from the
Company's audited report and accounts.
1. General Information
AFH Financial Group is a company incorporated in England and
Wales under the Companies Act 2006 and is registered at AFH House,
Buntsford Drive, Stoke House, Bromsgrove, Worcestershire, B60
4JE.
The Group is principally engaged in the provision of independent
financial advice to the retail market.
This financial information has been prepared for the year ended
31 October 2015.
2. Revenue and 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 of
Independent Financial Advisory services 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.
No customer is defined as a major customer by revenue,
contributing more than 10% of the Group revenues (2014 -
GBPnil).
3. Employees
Employee costs (including salaried directors) for the Group were
as follows:
2015 2014
GBP'000 GBP'000
Wages and salaries 5,280 3,833
Social security costs 509 358
Share based payments 116 39
5,905 4,230
The average number of employees (including directors) during the
year were as follows:
2015 2014
Number Number
Directors 6 5
Office 178 136
Total 184 141
4 Intangible Assets
Acquired
client
Goodwill portfolios Total
GBP'000 GBP'000 GBP'000
Cost
At 1 November 2013 2,465 5,428 7,893
Additions - 2,674 2,674
Disposals - - -
Revaluations - - -
At 31 October 2014 2,465 8,102 10,567
Additions - 11,959 11,959
Disposals - - -
Revaluations - - -
At 31 October 2015 2,465 20,061 22,526
Amortisation
At 1 November 2013 375 142 517
Charge for the year - 343 343
At 31 October 2014 375 485 860
Charge for the year - 764 764
At 31 October 2015 375 1,249 1,624
Net book value
At 31 October 2015 2,090 18,812 20,902
At 31 October 2014 2,090 7,617 9,707
Goodwill believed to have an indefinite useful life is carried
at cost. The determination of whether goodwill is impaired requires
an assessment of the fair value less cost to sell. The recoverable
amount of goodwill on a fair value less costs to sell calculation
is based on the discounted cash flows expected from the intangible
assets of each acquisition, assuming no future growth in revenue
generated cash flows, discounted at an implied factor of 10%. On
this basis the directors believe the value of goodwill is not
impaired at 31 October 2015.
5 Business combinations
(i) 2015 Acquisitions
a. Share purchase
Acquisition of Roxborough Consultancy Ltd.
Roxborough Consultancy Ltd was acquired by AFH Group Limited on
30 January 2015 and undertakes the provision of independent
financial advice to the retail market.
The acquisition has been accounted for using the acquisition
method. The provisional fair value of the identifiable assets and
liabilities of Roxborough Consultancy Ltd as at the date of
acquisition was:
Provisional
fair value
to be Previous
recognised Fair value carrying
on acquisition adjustments value
GBP'000 GBP'000 GBP'000
----------------------------- ---------------- ------------- ----------
Client portfolio 916 916 -
Cash at bank 63 - 63
Assets 979 916 63
----------------------------- ---------------- ------------- ----------
Trade and other payables (9) - (9)
Liabilities (9) - (9)
----------------------------- ---------------- ------------- ----------
Total identifiable net
assets at fair value 970
Total acquisition cost 970
----------------------------- ----------------
Analysed as follows:
Initial cash consideration 481
Deferred contingent
consideration 435
Net assets adjustment
to initial consideration 54
Total acquisition cost 970
----------------------------- ----------------
Cash outflow on acquisition GBP'000
----------------------------- ----------------
Cash paid 535
Cash acquired (63)
Acquisition costs 5
Net cash outflow 477
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----------------------------- ----------------
The contingent consideration is payable in two payments on 30
March 2016 and 30 March 2017 and subject to an earn-out based on
future turnover. The maximum amount payable is GBP916k
The post-acquisition revenue for the period ended 31 October
2015 was nil and the post-acquisition profit for the period ended
31 October 2015 was GBPnil as all client portfolios were novated to
AFH Independent Financial Services Limited. If the acquisition had
taken place on 1 November 2014, management estimate that the
revenue would have been GBPnil and there would have been a profit
of GBPnil.
5 Business combinations (continued)
Acquisition of K.L. Plester Financial Services Holdings Ltd.
K.L. Plester Financial Holdings Ltd was acquired by AFH Group
Limited on 9 February 2015 and undertakes the provision of
independent financial advice to the retail market.
The acquisition has been accounted for using the acquisition
method. The provisional fair value of the identifiable assets and
liabilities of K.L. Plester Financial Services Holdings Ltd as at
the date of acquisition was:
Provisional
fair value
to be Previous
recognised Fair value carrying
on acquisition adjustments value
GBP'000 GBP'000 GBP'000
----------------------------------- ---------------- ------------- ----------
Client portfolio 1,717 1,717 -
Cash at bank 115 - 115
Assets 1,832 1,717 115
----------------------------------- ---------------- ------------- ----------
Trade and other payables - - -
Liabilities - - -
----------------------------------- ---------------- ------------- ----------
Total identifiable net
assets at fair value 1,832
Total acquisition cost 1,832
----------------------------------- ----------------
Analysed as follows:
Initial cash consideration 745
Deferred contingent consideration 972
Net assets adjustment
to initial consideration 115
Total acquisition cost 1,832
----------------------------------- ----------------
Cash outflow on acquisition GBP'000
----------------------------------- ----------------
Cash paid 861
Cash acquired (115)
Net cash outflow 746
----------------------------------- ----------------
The contingent consideration is payable in two payments on 9
April 2016 and 9 April 2017 and subject to an earn-out based on
future turnover. The maximum amount payable is GBP1,717k
The post-acquisition revenue for the period ended 31 October
2015 was nil and the post-acquisition profit for the period ended
31 October 2015 was GBPnil as all client portfolios were novated to
AFH Independent Financial Services Limited. If the acquisition had
taken place on 1 November 2014, management estimate that the
revenue would have been GBPnil and there would have been a profit
of GBPnil.
5 Business combinations (continued)
Acquisition of Clarendon Financial Solutions Ltd.
Clarendon Financial Solutions Ltd was acquired by AFH Group
Limited on 1 April 2015 and undertakes the provision of independent
financial advice to the retail market.
The acquisition has been accounted for using the acquisition
method. The provisional fair value of the identifiable assets and
liabilities of Clarendon Financial Solutions Ltd as at the date of
acquisition was:
Provisional
fair value
to be Previous
recognised Fair value carrying
on acquisition adjustments value
GBP'000 GBP'000 GBP'000
----------------------------------- ---------------- ------------- ----------
Client portfolio 461 461 -
Tangible assets - -
Cash at bank 50 - 50
Assets 511 461 50
----------------------------------- ---------------- ------------- ----------
Trade and other payables (28) - (28)
Liabilities (28) - (28)
----------------------------------- ---------------- ------------- ----------
Total identifiable net
assets at fair value 483
Total acquisition cost 483
----------------------------------- ----------------
Analysed as follows:
Initial cash consideration 231
Deferred contingent consideration 230
Net assets adjustment
to initial consideration 22
Total acquisition cost 483
----------------------------------- ----------------
Cash outflow on acquisition GBP'000
----------------------------------- ----------------
Cash paid 258
Cash acquired (50)
Net cash outflow 208
----------------------------------- ----------------
The contingent consideration is payable in two payments on 17
May 2016 and 17 May 2017 and subject to an earn-out based on future
turnover. The maximum amount payable is GBP461k
The post-acquisition revenue for the period ended 31 October
2015 was GBPnil and the post-acquisition profit for the period
ended 31 October 2015 was GBPnil as all client portfolios were
novated to AFH Independent Financial Services Limited. If the
acquisition had taken place on 1 November 2014, management estimate
that the revenue would have been GBPnil and there would have been a
profit of GBPnil.
5 Business combinations (continued)
Acquisition of IFS (UK) Ltd
IFS (UK) Ltd was acquired by AFH Group Limited on 30 April 2015
and undertakes the provision of independent financial advice to the
retail market.
The acquisition has been accounted for using the acquisition
method. The provisional fair value of the identifiable assets and
liabilities of IFS (UK) Ltd as at the date of acquisition was:
Provisional
fair value
to be Previous
recognised Fair value carrying
on acquisition adjustments value
GBP'000 GBP'000 GBP'000
----------------------------------- ---------------- ------------- ----------
Client portfolio 2,750 2,750 -
Trade and other receivables 511 - 511
Cash at bank 71 - 71
Assets 3,332 2,750 582
----------------------------------- ---------------- ------------- ----------
Trade and other payables 147 - 147
Provisions and other
payables 259 - 259
Liabilities 406 - 406
----------------------------------- ---------------- ------------- ----------
Total identifiable net
assets at fair value 2,926
Total acquisition cost 2,926
----------------------------------- ----------------
Analysed as follows:
Initial cash consideration 450
Deferred contingent consideration 2,300
Net assets adjustment
to initial consideration 176
Total acquisition cost 2,926
----------------------------------- ----------------
Cash outflow on acquisition GBP'000
----------------------------------- ----------------
Cash paid 450
Cash acquired (71)
Net cash outflow 379
----------------------------------- ----------------
The contingent consideration is payable in three payments on 16
November 2015, 31 December 2016 and 31 December 2017 and subject to
an earn-out based on future turnover. The maximum amount payable is
GBP4,100k
The post-acquisition revenue for the period ended 31 October
2015 was GBP1.7m and the post-acquisition profit for the period
ended 31 October 2015 was GBP180k. If the acquisition had taken
place on 1 November 2014, management estimate that the revenue
would have been GBP3.4m and there would have been a profit of
GBP250k.
5 Business combinations (continued)
Davisons Financial Management Limited
Davisons Financial Management Limited was acquired by AFH Group
Limited on 31 July 2015 and undertakes the provision of independent
financial advice to the retail market.
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