Delivering on acquisitions and organic growth
Atlas Financial Holdings Inc's (O:AFH) FY15 EPS was up 80% on FY14, driven by a 40% increase in turnover. Management highlights that organic revenue growth was c 20%. The group continues its conservatively executed acquisition strategy and we expect the £6.2m of recent net equity placement proceeds to be deployed in deals relatively quickly. Management confidence is highlighted by the 50% increase in dividend.
FY15 results: Beating expectations on organic growth
The key surprise in FY15 was the rapid organic revenue growth (20% on FY14) despite relatively anaemic organic growth in H115. Management highlights that after the tax year, investors then delayed investment decisions until after the general election. Historic initiatives, which focused on recurring rather than initial income, are now delivering revenue. We also understand that the largest 20 advisers (by funds) outperformed the firm as a whole, helping to pull up average revenue growth. Management comments that 75% of recurring revenue was generated internally (including advisers acquired in previous years but not the current year). Funds under management (FUM) doubled to £1.8bn, with £0.7bn acquired and £0.2bn inflows from existing and new clients. Client retention was around 97%. There was some operational leverage, with administration costs as a percentage of revenue dropping to 40% from 42%. The dividend was raised by 50% to 2.25p and was still covered 2.6x by normalised earnings. Balance sheet group cash reserves were c £8m on the reporting date.
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