AFH founder and chief executive Alan Hudson said in its half yearly results published on Monday that the market for advice firms was “buoyant”.
The company had closed six transactions at “traditional multiples” worth £3.2m ($4.2m €3.6m) despite the upward pressure costs for larger businesses, Hudson said. If these acquisition perform well a further £3.5m is payable to the vendors of the acquired firms over the next two years.
“Integration of acquisitions made during the period has been completed successfully and I am pleased to report that businesses acquired in previous periods continue to trade in line with our expectations,” said Hudson.
“During the period we again paid deferred consideration, based on the profitability of the acquired businesses, in excess of 90% of the expectation, including a growth opportunity, set at the time of acquisition across the portfolio.”
AFH’s strategy is focused on larger acquisitions where it comes across competition from private equity and product providers.
Funds under management
Over the six months to April 2018, AFH’s funds under management increased 45% to £3.2bn at the period end.
Financial planning fees increased 37% to £5.6m, a rise of £1.5m, which AFH credited to “increasing client requirements for financial planning driven by new legislation as well as changing lifestyle needs”.
AFH said annualised revenue per adviser in its core business had increased to £220,000, compared to £180,000 in the same period of 2017, while ongoing management fees increased to £13.2 million (2017: £9.8m).
The advice division generated Ebitda of £4.4m (2017: £3.1m), representing a 23.4% profit margin (2017: 22.3%), while the group’s underlying Ebitda margin, which excludes amortisation of intangible assets arising from the acquisitions and the non-cash charge/credit for any share-based payment costs, increased to 19.5%.