AFH, the Financial Planning-led wealth management firm, expects its revenue for the full year to top £50m for the first time, up 49% year on year.

The acquisitive group based in the West Midlands says it expects another year of strong growth driven by acquisitions and higher average levels of revenue generated by existing advisers.

It made the forecasts today in a bullish trading update to the London Stock Exchange.

Funds under management reached £4.5bn in October 2018 compared to £2.8bn at the same time last year.

AFH made 16 acquisitions of IFA firms during the past year for a total cost of £34m and believes it is “well positioned” to take advantage of further IFA market consolidation.

There is a “strong pipeline” of potential acquisitions currently under negotiation, says the firm, which expects to made further takeover and acquisition deals.

The group had  cash balances at 31 October 2018 of £22m, following successful institutional placings of £17.5m in December 2017 and £15m in October 2018.  

Total revenues for the full year are expected to reach £50m (2017: £33.6m), a 49% increase year on year, of which £4m was generated by acquisitions during the year. Of the expected total revenue of £50m for the year, £20m was generated organically as new business.  

During the year the company paid over £3.58m in deferred earn out consideration in respect of acquisitions from prior years, at an average level above 90% of the price negotiated for those acquisitions. AFH says this reflects the strong performance of the acquired businesses within AFH and proven track record of successful acquisitions.

Earlier this month the company announced the acquisition of Premier Wealth Management Harrogate Limited for a maximum of £4.5m.  

Chartered Financial Planner Alan Hudson, chief executive of AFH, said: “I am encouraged by the exceptional progress we have made in 2018 towards the realisation of the revenue, profitability and funds under management targets that we set ourselves. The ability to grow revenues by 49% whilst continuing to expand our EBITDA margin reflects the success of the company's strategy.  

“I believe that shared values are critical in creating successful acquisitions that bind both advisers and clients to the AFH group and am pleased at the high level of advisers who remain with AFH many years after their earn out has been completed. AFH has continued to attract new funds throughout the year and I am pleased to report double digit organic growth in our funds under management, which now exceed £4.5bn.”

“The support of new and existing institutional shareholders throughout the year has provided the company with the funds to continue to acquire a number of earnings accretive IFA businesses, whilst expanding our national footprint at a time when the requirement for Financial Planning and personal asset management continues to grow. Our fundraising in October, against the backdrop of difficult equity markets, has enabled us to continue to evaluate several attractive future acquisition opportunities.”

He thanked shareholders, advisers and staff, “without whom we would not be reporting this level of profitable expansion."