AFHP.L Regulatory News (AFHP)

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, IN OR INTO ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OF SUCH JURISDICTION.

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION.

For immediate release.

2 March 2021

INCREASED RECOMMENDED CASH OFFER

for

AFH FINANCIAL GROUP PLC

by

CORTINA BIDCO LIMITED

(a newly incorporated company indirectly controlled by funds managed by Flexpoint Ford LLC)

intended to be effected by means of a Scheme of Arrangementunder Part 26 of the Companies Act 2006

Increased Acquisition Price

and

Resumption of trading

Introduction

On 25 January 2021, the board of Cortina Bidco Limited (Bidco), a newly incorporated company indirectly controlled by funds managed by Flexpoint Ford, LLC (Flexpoint), and the Independent Directors of AFH Financial Group Plc (AFH) announced that they had reached agreement on the terms of a recommended all cash acquisition of the entire issued, and to be issued, ordinary share capital of AFH (the Acquisition). The Acquisition is to be effected by means of a scheme of arrangement under Part 26 of the Companies Act 2006.

The scheme document in respect of the Acquisition (the Scheme Document) was published and made available to AFH Shareholders on 8 February 2021. Capitalised terms used but not defined in this announcement have the meanings given to them in the Scheme Document.

On 1 March 2021, AFH announced the adjournment of the Court Meeting and the General Meeting and suspension of trading in AFH Shares. AFH will notify AFH Shareholders of the revised times and dates on which the Court Meeting and the General Meeting will be held by announcement through a Regulatory Information Service as soon as reasonably practicable.

Increased Acquisition Price

The board of directors of Bidco and the Independent Directors of AFH are pleased to announce that they have reached agreement on the terms of an increased recommended cash offer by Bidco to acquire the entire issued and to be issued share capital of AFH (the Increased Offer).

Under the terms of the Increased Offer, Scheme Shareholders will be entitled to receive:

for each Scheme Share 480 pence in cash

The Increased Offer of 480 pence per Scheme Share represents:

· a market-leading valuation for the Core Wealth division when considering the Bidco offer on a sum-of-the-parts basis between Core Wealth and Protection Broking; and

· a premium of approximately:

· 45.5 per cent. to the Closing Price of 330.0 pence per AFH Share on 1 December 2020 being the date Flexpoint entered into a confidentially agreement with AFH;

· 20.8 per cent. to the Closing Price of 397.5 pence per AFH Share on the Pre-Announcement Date;

· 39.1 per cent. to the volume-weighted average price of 345.0 pence per AFH Share for the three-month period ended on the Pre-Announcement Date; and

· 40.9 per cent. to the volume-weighted average price of 340.7 pence per AFH Share for the six-month period ended on the Pre-Announcement Date.

The Increased Offer values AFH's entire issued, and to be issued, ordinary share capital at approximately £231.6 million.

In connection with the Increased Offer the AFH Executive Directors and the Independent Directors who hold AFH Shares have entered into deeds of amendment to the irrevocable undertakings in respect of the Acquisition previously entered into by them pursuant to which they have agreed that certain of the options held by them over AFH Shares will lapse and not be exercised in connection with the Acquisition. Consequently, the aggregate proceeds to be received in connection with the Acquisition by the AFH Executive Directors and the Independent Directors who hold AFH Shares will reflect the Acquisition Price set out originally in the Scheme Document, being 463 pence per AFH Share.

The Scheme will be modified to reflect the terms of the Increased Offer. Save as disclosed in this announcement, the Increased Offer is subject to the terms and conditions set out in the Scheme Document and the Scheme will otherwise remain unchanged.

Recommendation

The Independent Directors, who have been so advised by KBW as to the financial terms of the Increased Offer, consider the terms of the Increased Offer to be fair and reasonable. In providing its advice, KBW has taken into account the commercial assessments of the Independent Directors. KBW is providing independent financial advice to the Independent Directors of AFH for the purposes of Rule 3 of the Code.

Accordingly, the Independent Directors confirm that they intend unanimously to recommend that AFH Shareholders vote, or procure the vote, in favour of the Scheme at the Court Meeting and the Resolutions at the General Meeting (in each case, to be reconvened in due course as referred to below), as the Independent Directors who are interested in AFH Shares have irrevocably undertaken to do, or procure to be done, in respect of their own beneficial holdings of AFH Shares which are under their control, amounting, in aggregate, to 311,254 AFH Shares representing approximately 0.7 per cent. of the issued ordinary share capital of AFH and approximately 0.8 per cent. of the AFH Shares eligible to vote at the Court Meeting, in each case, on the last business day prior to the date of this announcement; (the Latest Reference Date).

Irrevocable undertakings

Bidco has, in total, received irrevocable undertakings from AFH Shareholders in respect of a total of 25,882,741 AFH Shares representing, in aggregate, approximately 60.2 per cent. of the issued ordinary share capital of AFH (representing approximately 53.7 per cent. of the AFH Shares eligible to vote at the Court Meeting) on the Latest Reference Date. The irrevocable undertakings received by Bidco prior to the date of the Announcement are as described in the Scheme Document (save with respect to certain amendments to such irremovable undertakings described below) and the irrevocable undertakings received by Bidco since the date of the Scheme Document are described in further detail below.

Bidco has received an irrevocable undertaking from Slater Investments Limited, AFH's second largest shareholder (holding 5,577,529 AFH Shares representing approximately 13.0 per cent. of AFH's issued share capital and approximately 15.1 per cent. of the AFH Shares eligible to vote at the Court Meeting, in each case, on the Latest Reference Date) to vote, or procure the vote, in favour of the Scheme at the Court Meeting and the Resolutions to be proposed at the General Meeting.

Bidco has also received irrevocable undertakings from each of GLG Partners Limited, GWM Asset Management Limited, Lombard Odier Asset Management (Europe) Limited, Otus Capital Management, Sand Grove Capital Management LLP and Tavira Securities Limited (holding a combined total of 6,122,535 AFH Shares representing, in aggregate, approximately 14.2 per cent. of AFH's issued share capital and approximately 16.5 per cent. of the AFH Shares eligible to vote at the Court Meeting, in each case, on the Latest Reference Date) to vote, or procure the vote, in favour of the Scheme at the Court Meeting and the Resolutions to be proposed at the General Meeting.

At the time of the Announcement, Bidco had received irrevocable undertakings from Alan Hudson, each of the other AFH Executive Directors, the Independent Directors who hold AFH Shares, Paul Connor, Philip Mobberley and BMO Asset Management Limited to vote, or procure the vote, in favour of the Scheme at the Court Meeting and the Resolutions (or, in the case of the AFH Executive Directors, to be bound by the Scheme) in respect of a total of 14,182,677 AFH Shares, representing approximately 33.0 per cent. of the issued ordinary share capital of AFH and approximately 22.1 per cent. of the AFH Shares eligible to vote at the Court Meeting, in each case, on the Latest Reference Date. Each such party has executed a deed of amendment (i) confirming that these irrevocable undertakings remain binding in connection with the Increased Offer, and (ii) in the case of the AFH Executive Directors and the Independent Directors who hold AFH Shares, that they agree to surrender or allow certain options held by them over AFH Shares to lapse whereby the overall effect is that each AFH Executive Director and each Independent Director who holds AFH Shares will receive aggregate proceeds in connection with the Acquisition that will reflect the Acquisition Price set out originally in the Scheme Document.

Further details of the irrevocable undertakings described above, including the circumstances in which they may lapse, are set out in Schedule 2 to this announcement.

AFH Shareholder Meetings

On 1 March 2021, the Court Meeting and the General Meeting were adjourned indefinitely. It is intended that the Court Meeting and the General Meeting be reconvened in due course in connection with the Increased Offer and AFH Shareholders will be notified of the revised times and dates on which the reconvened Court Meeting and the General Meeting will be held by announcement through a Regulatory Information Service as soon as reasonably practicable. The resolutions to be proposed at the reconvened Meetings will remain unchanged notwithstanding the Increased Offer and further information about how to attend the reconvened Meetings is set out in the Scheme Document and will be provided to AFH Shareholders in due course.

Any votes cast by AFH Shareholders who, prior to the adjournment of the Court Meeting and the General Meeting, appointed a proxy in respect of some or all of their AFH Shares to exercise the right to vote in respect of some or all of the AFH Shares held by such holder shall remain valid and binding in respect of the reconvened Court Meeting and General Meeting. To the extent any AFH Shareholder wishes to alter their vote in light of the Increased Offer, they should contact the Registrar for further Forms of Proxy (or photocopy the previously provided forms).

Financing the Increased Offer

The cash consideration payable by Bidco in respect of the Acquisition, as increased pursuant to the Increased Offer, will be funded by a combination of equity financing drawn down from the Flexpoint Funds pursuant to an Equity Commitment Letter entered into by the Flexpoint Funds and debt financing drawn down under an interim facilities agreement arranged by Ares Management Limited.

Raymond James is satisfied that sufficient resources are available to Bidco to satisfy in full the cash consideration payable to the Scheme Shareholders under the terms of the Scheme and the Increased Offer.

General

The expected timetable of principal events for the implementation of the Scheme will be notified by announcement through a Regulatory Information Service as soon as reasonably practicable.

The Increased Offer does not change Bidco's intentions as regards the business of AFH (including locations of its operations), the management and employees of AFH and the proposals in respect of the AFH Share Plans, as set out in the Scheme Document and in the letters already sent to the participants in the AFH Share Plans informing them of the effect of the Scheme on their rights under the AFH Share Plans and, where applicable, containing appropriate proposals in respect of such rights.

Appendix I contains the sources and bases of certain information contained in this announcement.

Documents available on website

Copies of the following documents will be made available on AFH's website at www.afhwm.co.uk/investor-relations (subject to any applicable restrictions relating to persons resident in Restricted Jurisdictions) by no later than 12 noon on the business day following the date of this announcement up to and including the Effective Date or the date the Scheme lapses or is withdrawn, whichever is earlier:

· this announcement;

· irrevocable undertakings;

· the equity commitment letter described above; and

· the written consents provided by each of Raymond James Financial International Limited and Stifel Nicolaus Europe Limited to the inclusion of their names in this announcement in the form and context in which they appear.

Resumption of trading

Following the release of this announcement, trading in the AFH Shares on AIM and trading in the AFH CULS on the ISM will resume with effect from 7.30 a.m. on 2 March 2021.

Enquiries

Further information

Raymond James Financial International Limited (Raymond James), which is authorised and regulated in the United Kingdom by the FCA, is acting as financial adviser to Bidco and no-one else in connection with the matters described in this Announcement and will not be responsible to anyone other than Bidco for providing the protections afforded to clients of Raymond James nor for providing advice in connection with the matters referred to herein. Neither Raymond James nor any of its affiliates owes or accepts any duty, liability or responsibility whatsoever (whether direct or indirect, whether in contract, in tort, under statute or otherwise) to any person who is not a client of Raymond James in connection with this Announcement, any statement contained herein, the Acquisition or otherwise.

Stifel Nicolaus Europe Limited, which also trades under the name Keefe, Bruyette & Woods (KBW), and which is authorised and regulated in the United Kingdom by the FCA, is acting as financial adviser to AFH and no-one else in connection with the matters described in this Announcement and will not be responsible to anyone other than AFH for providing the protections afforded to clients of KBW nor for providing advice in connection with the matters referred to herein. Neither KBW nor any of its affiliates owes or accepts any duty, liability or responsibility whatsoever (whether direct or indirect, whether in contract, in tort, under statute or otherwise) to any person who is not a client of KBW in connection with this Announcement, any statement contained herein, the Acquisition or otherwise.

Shore Capital and Corporate Limited and Shore Capital Stockbrokers Limited (Shore Capital) are authorised and regulated in the United Kingdom by the FCA. Shore Capital is acting exclusively for AFH and no one else in connection with the matters referred to in this announcement and will not be responsible to anyone other than AFH for providing the protections afforded to clients of Shore Capital or for providing advice in connection with the matters referred to in this announcement. Neither Shore Capital nor any of its subsidiaries or affiliates owes or accepts any duty, liability or responsibility whatsoever (whether direct or indirect, whether in contract, in tort, under statute or otherwise) to any person who is not a client of Shore Capital in connection with this announcement or any matter referred to herein.

Kirkland & Ellis International LLP is retained as legal adviser to Flexpoint and Bidco.

Eversheds Sutherland (International) LLP is retained as legal adviser to AFH.

The person responsible for arranging for the release of this announcement on behalf of AFH is Paul Wright, Chief Financial Officer.

This announcement is for information purposes only and is not intended to and does not constitute, or form part of, an offer, invitation or the solicitation of an offer to purchase, otherwise acquire, subscribe for, sell or otherwise dispose of any securities, or the solicitation of any vote or approval, in any jurisdiction, pursuant to the Acquisition or otherwise, nor shall there be any sale, issuance or transfer of securities of AFH in any jurisdiction in contravention of applicable law. The Acquisition will be implemented solely by means of the Scheme Document (or, if applicable, the offer document containing any Offer), which contains the full terms and conditions of the Acquisition including details of how to vote in respect of the Scheme (or, if applicable, how to accept the Offer). Any vote in respect of the Scheme or other response in relation to the Acquisition should be made only on the basis of the information contained in the Scheme Document (or, if applicable, the offer document containing any Offer).

Overseas jurisdictions

The availability of the Acquisition to AFH Shareholders who are not resident in, and citizens of, the UK may be affected by the laws of the relevant jurisdictions in which they are located or of which they are citizens. Persons who are not resident in the UK should inform themselves of, and observe, any applicable legal or regulatory requirements of their jurisdictions.

The release, publication or distribution of this announcement in or into jurisdictions other than the UK may be restricted by law and therefore any persons who are subject to the law of any jurisdiction other than the UK should inform themselves of, and observe, any applicable legal or regulatory requirements. In particular, the ability of persons who are not resident in the UK to vote their AFH Shares with respect to the Scheme at the Court Meeting, or to appoint another person as proxy to vote at the Court Meeting on their behalf, may be affected by the laws of the relevant jurisdictions in which they are located. Any failure to comply with the applicable restrictions may constitute a violation of the securities laws of any such jurisdiction. To the fullest extent permitted by applicable law, the companies and persons involved in the Acquisition disclaim any responsibility or liability for the violation of such restrictions by any person. This announcement has been prepared for the purposes of complying with English Law, the AIM Rules, UK MAR, the rules of the London Stock Exchange and the Code and the information disclosed may not be the same as that which would have been disclosed if this announcement had been prepared in accordance with the laws of jurisdictions outside of England.

Copies of this announcement and the formal documentation relating to the Scheme and the Acquisition have not been, will not be, and must not be, mailed or otherwise forwarded, distributed or sent in, into or from any Restricted Jurisdiction or any jurisdiction where to do so would violate the laws of that jurisdiction and persons receiving such documents (including custodians, nominees and trustees) must not mail or otherwise forward, distribute or send them in or into or from any Restricted Jurisdiction. Doing so may render invalid any related purported vote in respect of the Acquisition. If the Acquisition is implemented by way of an Offer (unless otherwise permitted by applicable law or regulation), the Offer may not be made, directly or indirectly, in or into or by use of the mails or any other means or instrumentality (including, without limitation, facsimile, e-mail or other electronic transmission, telex or telephone) of interstate or foreign commerce of, or any facility of a national, state or other securities exchange of any Restricted Jurisdiction and the Offer will not be capable of acceptance by any such use, means, instrumentality or facilities or from within any Restricted Jurisdiction.

Further details in relation to overseas shareholders are contained in the Scheme Document.

Additional information for US Holders

US Holders should note that the Acquisition relates to the securities of an English company and is proposed to be implemented under a scheme of arrangement under English company law. A transaction effected by means of a scheme of arrangement is not subject to the tender offer rules under the US Exchange Act and the proxy solicitation rules under the US Exchange Act will not apply to the Acquisition. The Scheme will be subject to UK disclosure requirements and practices which are different from the disclosure requirements of the US tender offer and proxy solicitation rules. The financial information included in this announcement and the Scheme Document has been, or will have been, prepared in accordance with IFRS and thus may not be comparable to financial information of companies whose financial statements are prepared in accordance with generally accepted accounting principles in the US. However, if Bidco were to exercise its right to implement the Acquisition of the AFH Shares by way of an Offer, such Offer will be made in compliance with applicable US tender offer and securities laws and regulations. Such an Offer would be made by Bidco.

The receipt of cash pursuant to the Acquisition by a US Holder as consideration for the transfer of its Scheme Shares pursuant to the Scheme may be a taxable transaction for US federal income tax purposes and under applicable US state and local, as well as foreign and other, tax laws. Each AFH Shareholder is urged to consult his, her or its independent professional adviser immediately regarding the tax consequences of the Acquisition applicable to him, her or it.

It may be difficult for US Holders to enforce their rights and claims arising out of the US federal securities laws since Bidco and AFH are located in countries other than the US and some or all of their officers and directors may be residents of countries other than the US. US Holders may not be able to sue a non-US company or its officers or directors in a non-US court for violations of US securities laws. Further, it may be difficult to compel a non-US company and its affiliates to subject themselves to a US court's judgment.

In accordance with normal UK practice and pursuant to Rule 14e-5(b) of the US Exchange Act, Bidco or its nominees, or their brokers (acting as agents), may from time to time make certain purchases of, or arrangements to purchase, AFH Shares outside of the US, other than pursuant to the Acquisition, until the date on which the Scheme and/or the Acquisition becomes Effective, lapses or is otherwise withdrawn. These purchases may occur either in the open market at prevailing prices or in private transactions at negotiated prices. Any information about such purchases will be disclosed as required in the UK, will be reported to a Regulatory Information Service and will be available on the London Stock Exchange website at www.londonstockexchange.com.

Forward-looking statements

This announcement, oral statements made regarding the Acquisition, and other information published by Bidco and/or AFH contain statements which are, or may be deemed to be, "forward-looking statements". Forward-looking statements are prospective in nature and are not based on historical facts but rather on current expectations and projections of the management of Bidco and/or AFH about future events and are therefore subject to risks and uncertainties which could cause actual results to differ materially from the future results expressed or implied by the forward-looking statements.

The forward-looking statements contained in this announcement include statements relating to the expected effects of the Acquisition on Bidco and AFH, the expected timing and scope of the Acquisition and other statements other than historical facts. Often, but not always, forward-looking statements can be identified by the use of forward-looking words, phrases and statements such as "plans", "expects" or "does not expect", "is expected", "is subject to", "budget", "scheduled", "estimates", "forecasts", "intends", "anticipates" or "does not anticipate", or "believes", or variations of such words, phrases or statements that certain actions, events or results "may", "could", "should", "would", "might" or "will" be taken, occur or be achieved. Although Bidco and AFH believe that the expectations reflected in such forward-looking statements are reasonable, Bidco and AFH can give no assurance that such expectations will prove to be correct. By their nature, forward-looking statements involve risk and uncertainty because they relate to events and depend on circumstances that will occur in the future. There are a number of factors that could cause actual results and developments to differ materially from those expressed or implied by such forward-looking statements.

These factors include, but are not limited to: the ability to complete the Acquisition; the ability to obtain requisite regulatory and shareholder approvals and the satisfaction of other Conditions on the proposed terms and schedule; the behaviour of other market participants; the anticipated benefits from the proposed transaction not being realised as a result of changes in general economic and market conditions in the countries in which Bidco and AFH operate; weak, volatile or illiquid capital and/or credit markets; changes in tax rates, interest rates and currency value fluctuations; the degree of competition in the geographic and business areas in which Bidco and AFH operate; and changes in laws or in supervisory expectations or requirements. Other unknown or unpredictable factors could cause actual results to differ materially from those in the forward-looking statements. Such forward-looking statements should therefore be construed in the light of such factors. Neither Bidco nor AFH, nor any of their respective associates or directors, officers or advisers, provides any representation, assurance or guarantee that the occurrence of the events expressed or implied in any forward-looking statements in this Announcement will actually occur. You are cautioned not to place any reliance on these forward-looking statements. Other than in accordance with their legal or regulatory obligations, neither Bidco nor AFH is under any obligation, and Bidco and AFH expressly disclaim any intention or obligation, to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

No profit forecasts or profit estimates

No statement in this announcement is intended as a profit forecast or profit estimate for any period and no statement in this announcement should be interpreted to mean that earnings or earnings per share for Bidco or AFH, as appropriate, for the current or future financial years would necessarily match or exceed the historical published earnings or earnings per share for Bidco or AFH, as appropriate.

Dealing disclosure requirements

Under Rule 8.3(a) of the Code, any person who is interested in one per cent. or more of any class of relevant securities of an offeree company or of any securities exchange offeror (being any offeror other than an offeror in respect of which it has been announced that its offer is, or is likely to be, solely in cash) must make an Opening Position Disclosure following the commencement of the offer period and, if later, following the announcement in which any securities exchange offeror is first identified.

An Opening Position Disclosure must contain details of the person's interests and short positions in, and rights to subscribe for, any relevant securities of each of (i) the offeree company and (ii) any securities exchange offeror(s). An Opening Position Disclosure by a person to whom Rule 8.3(a) applies must be made by no later than 3.30 pm (London time) on the 10th business day following the commencement of the offer period and, if appropriate, by no later than 3.30 pm (London time) on the 10th business day following the announcement in which any securities exchange offeror is first identified. Relevant persons who deal in the relevant securities of the offeree company or of a securities exchange offeror prior to the deadline for making an Opening Position Disclosure must instead make a Dealing Disclosure.

Under Rule 8.3(b) of the Code, any person who is, or becomes, interested in one per cent. or more of any class of relevant securities of the offeree company or of any securities exchange offeror must make a Dealing Disclosure if the person deals in any relevant securities of the offeree company or of any securities exchange offeror. A Dealing Disclosure must contain details of the dealing concerned and of the person's interests and short positions in, and rights to subscribe for, any relevant securities of each of (i) the offeree company and (ii) any securities exchange offeror(s), save to the extent that these details have previously been disclosed under Rule 8. A Dealing Disclosure by a person to whom Rule 8.3(b) applies must be made by no later than 3.30 pm (London time) on the business day following the date of the relevant dealing.

If two or more persons act together pursuant to an agreement or understanding, whether formal or informal, to acquire or control an interest in relevant securities of an offeree company or a securities exchange offeror, they will be deemed to be a single person for the purpose of Rule 8.3. Opening Position Disclosures must also be made by the offeree company and by any offeror and Dealing Disclosures must also be made by the offeree company, by any offeror and by any persons acting in concert with any of them (see Rules 8.1, 8.2 and 8.4).

Details of the offeree and offeror companies in respect of whose relevant securities Opening Position Disclosures and Dealing Disclosures must be made can be found in the Disclosure Table on the Panel's website at www.thetakeoverpanel.org.uk, including details of the number of relevant securities in issue, when the offer period commenced and when any offeror was first identified. You should contact the Panel's Market Surveillance Unit on +44 (0)20 7638 0129 if you are in any doubt as to whether you are required to make an Opening Position Disclosure or a Dealing Disclosure.

Publication on website

In accordance with Rule 26.1 of the Code, a copy of this announcement will be made available, subject to certain restrictions relating to persons resident in Restricted Jurisdictions, on AFH's website at https://www.afhwm.co.uk/investor-relations by no later than 12 noon (London time) on the business day following this announcement. For the avoidance of doubt, the contents of this website is not incorporated by reference into, and does not form part of, this announcement.

Requesting hard copy documents

AFH Shareholders may request a hard copy of this announcement by contacting the Company Secretary of AFH during business hours on +44 (0)152 757 7775 or by submitting a request in writing to the Company Secretary of AFH at AFH House, Buntsford Drive, Stoke Heath, Bromsgrove, Worcestershire, B60 4JE. For persons who receive a copy of this announcement in electronic form or via a website notification, a hard copy of this announcement will not be sent unless so requested. You may also request that all future documents, announcements and information to be sent to you in relation to the Acquisition should be in hard copy form.

Electronic communications

Please be aware that addresses, electronic addresses and certain other information provided by AFH Shareholders, persons with information rights and other relevant persons for the receipt of communications from AFH may be provided to Bidco during the offer period as required under Section 4 of Appendix 4 of the Code to comply with Rule 2.11(c).

Rounding

Certain figures included in this announcement have been subjected to rounding adjustments. Accordingly, figures shown for the same category presented in different tables may vary slightly and figures shown as totals in certain tables may not be an arithmetic aggregation of figures that precede them.

Inside Information

This announcement contains inside information. Upon the publication of this announcement via a Regulatory Information Service, this inside information is now considered to be in the public domain.

If you are in any doubt about the contents of this announcement or the action you should take, you are recommended to seek your own independent financial advice immediately from your stockbroker, bank manager, solicitor, accountant or independent financial adviser duly authorised under the Financial Services and Markets Act 2000 (as amended) if you are resident in the United Kingdom or, if not, from another appropriately authorised independent financial adviser.

Schedule 1Bases and Sources

Unless otherwise stated in this Announcement:

1. all references to AFH Shares are to ordinary shares of 10 pence each in the capital of AFH;

2. the value attributed to the fully diluted issued ordinary share capital of AFH is based on:

a) 43,005,051 AFH Shares in issue as at the Latest Reference Date; and

b) 1,910,129 AFH Shares which may be issued on or after the date of this announcement to satisfy the exercise of options and vesting of awards outstanding under the AFH Share Plans as at the Latest Reference Date (assuming an Effective Date of 31 March 2021 and that optionholders have saved the maximum amount possible under the AFH SAYE Option Plan); and

c) 3,597,588 AFH Shares which may be issued on or after the date of this announcement to satisfy the conversion of AFH CULS into AFH Shares (assuming 31 March 2021 as the "change of control" date under the trust deed relating to the AFH CULs);

3. historical AFH Share prices are sourced from the AIM Appendix to the Daily Official List and represent Closing Prices on the relevant dates; and

4. the volume-weighted average prices of AFH Shares and trading volume data have been derived from Capital IQ and, in the case of volume-weighted average prices, have been rounded to the nearest single decimal place.

Schedule 2Details of Irrevocable Undertakings

AFH Executive Director undertakings

Alan Hudson Undertaking

Alan Hudson has given an irrevocable undertaking in respect of 6,105,700 AFH Shares beneficially owned by him (or in respect of which he is interested pursuant to options held over AFH Shares) (being all of the AFH Shares (on a fully diluted basis) beneficially owned by him or in respect of which he is interested), and representing approximately 12.6 per cent of AFH's issued, and to be issued, share capital as at the Latest Reference Date) to be bound by the terms of the Scheme and, in respect of 5,955,700 AFH Shares beneficially owned by him (being all of the AFH Shares beneficially owned by him) and representing approximately 13.9 per cent. of AFH's issued share capital as at the Latest Reference Date), to vote, or procure the vote, in favour of the special resolution to be proposed at the General Meeting to approve the adoption of the amended Articles. Alan Hudson is not entitled to vote at the Court Meeting, and is not entitled to vote at the General Meeting in respect of the Rollover Resolution.

The terms of Alan Hudson's irrevocable undertaking do not permit him to accept a higher competing offer made prior to the Scheme becoming Effective, if any person other than Bidco, or a person acting in concert with Bidco, announces a firm intention to make an offer to acquire the entire issued, and to be issued, ordinary share capital of AFH.

Alan Hudson's irrevocable undertaking will cease to be binding only if: (i) the Panel consents to Bidco not proceeding with the Acquisition; or (ii) the Scheme lapses or is withdrawn in accordance with its terms or the Scheme does not become Effective by the Long Stop Date. As stated above, the irrevocable undertaking will remain binding in the event that a higher competing offer for AFH is made.

In connection with the Increased Offer, Alan Hudson has executed a deed of amendment (i) confirming that his irrevocable undertaking (as summarised above) remains binding, and (ii) that he agrees to surrender or allow certain options held by him over AFH Shares to lapse whereby the overall effect is that he will receive aggregate proceeds in connection with the Acquisition that will reflect the Acquisition Price set out originally in the Scheme Document, being 463 pence per AFH Share.

Other AFH Executive Directors' Undertakings

Paul Wright has given an irrevocable undertaking in respect of 285,000 AFH Shares owned by him (or in respect of which he is interested pursuant to options held over AFH Shares) (being all of the AFH Shares (on a fully diluted basis) owned by him or in respect of which he is interested), and representing approximately 0.6 per cent. of AFH's issued, and to be issued, share capital as at the Latest Reference Date) to be bound by the terms of the Scheme and, in respect of 35,000 AFH Shares owned by him (being all of the AFH Shares owned by him) and representing approximately 0.1 per cent. of AFH's issued share capital as at the Latest Reference Date), to vote, or procure the vote, in favour of the special resolution to be proposed at the General Meeting to approve the adoption of the amended Articles. Paul Wright is not entitled to vote at the Court Meeting, and is not entitled to vote at the General Meeting in respect of the Rollover Resolution.

Austin Broad has given an irrevocable undertaking in respect of 101,420 AFH Shares owned by him (or in respect of which he is interested pursuant to options held over AFH Shares) (being all of the AFH Shares (on a fully diluted basis) owned by him or in respect of which he is interested), and representing approximately 0.2 per cent. of AFH's issued, and to be issued, share capital as at the Latest Reference Date) to be bound by the terms of the Scheme (or, if the Acquisition is to be implemented by way of an Offer, to accept, or procure the acceptance of, the Offer) and, in respect of 15,000 AFH Shares owned by him (being all of the AFH Shares owned by him) and representing approximately 0.03 per cent. of AFH's issued share capital as at the Latest Reference Date), to vote, or procure the vote, in favour of the special resolution to be proposed at the General Meeting to approve the adoption of the amended Articles. Austin Broad is not entitled to vote at the Court Meeting, and is not entitled to vote at the General Meeting in respect of the Rollover Resolution.

Alex Larvin has given an irrevocable undertaking in respect of 101,420 AFH Shares in which she is interested pursuant to options held over such AFH Shares (being all of the AFH Shares in which she is interested and representing approximately 0.2 per cent. of AFH's issued, and to be issued, share capital as at the Latest Reference Date), to be bound by the terms of the Scheme (or, if the Acquisition is to be implemented by way of an Offer, to accept, or procure the acceptance of, the Offer). As Alex Larvin's interests are currently held by way of options over AFH Shares only, which will not have been exercised at the date of the General Meeting, she will not have the right to vote on the special resolution to be proposed at the General Meeting to approve the adoption of the amended Articles, nor at the Court Meeting nor General Meeting in respect of the Rollover Resolution.

The terms of these irrevocable undertakings are otherwise the same as those of the Alan Hudson's irrevocable undertaking referred to above.

In connection with the Increased Offer, each of Paul Wright, Austin Broad and Alex Larvin has executed a deed of amendment (i) confirming that the irrevocable undertaking given by such person remains binding, and (ii) that they agree to surrender or allow certain options held by them over AFH Shares to lapse whereby the overall effect is that they will receive aggregate proceeds in connection with the Acquisition that will reflect the Acquisition Price set out originally in the Scheme Document, being 463 pence per AFH Share.

AFH Independent Director undertakings

The following Independent Directors who are interested in AFH Shares have given irrevocable undertakings to vote, or procure the vote, in favour of the Scheme at the Court Meeting and the Resolutions (or, if the Acquisition is to be implemented by way of an Offer, to accept, or procure the acceptance of, the Offer) in relation to the following AFH Shares:

These irrevocable undertakings do not permit acceptance of a higher competing offer made prior to the Scheme becoming Effective, if any person other than Bidco, or a person acting in concert with Bidco, announces a firm intention to make an offer to acquire the entire issued, and to be issued, ordinary share capital of AFH. These irrevocable undertakings lapse in the same circumstances described in relation to Alan Hudson's irrevocable undertaking above.

In connection with the Increased Offer, each Independent Director who is interested in AFH Shares has executed a deed of amendment (i) confirming that the irrevocable undertaking given by such Independent Director remains binding, and (ii) that they agree to surrender or allow certain options held by them over AFH Shares to lapse whereby the overall effect is that they will receive aggregate proceeds in connection with the Acquisition that will reflect the Acquisition Price set out originally in the Scheme Document, being 463 pence per AFH Share.

Sue Lewis does not currently hold any AFH Shares.

AFH Shareholder undertakings

In addition to the AFH Executive Directors and the AFH Independent Directors, the following AFH Shareholders have given irrevocable undertakings to vote, or procure the vote, in favour of the Scheme at the Court Meeting and the Resolutions (or, if the Acquisition is to be implemented by way of an Offer, to accept, or procure the acceptance of, the Offer) in relation to the following AFH Shares:

The undertakings from the AFH Shareholders named above will cease to be binding only if:

1.1 the Scheme has not become effective by 6.00 p.m. on the Long Stop Date (or such later time or date as agreed between Bidco and AFH, with the approval of the Court and/or the Panel if required);

1.2 in respect of Slater Investments Limited, BMO Asset Management Limited, GLG Partners Limited, Sand Grove Capital Management LLP, Otus Capital Management, GWM Asset Management Limited, Lombard Odier Asset Management (Europe) Limited and Tavira Securities Limited, if the Acquisition is to be implemented by way of an Offer, the Offer lapses or is withdrawn in accordance with its terms and Bidco publicly confirms that it does not intend to proceed with the Offer or to implement the Offer by way of a Takeover Offer or otherwise;

1.3 in respect of Connor and Mobberley, the Panel consents to the Offeror not proceeding with the Acquisition;

1.4 in respect of BMO Asset Management Limited, GLG Partners Limited, Sand Grove Capital Management LLP, Otus Capital Management, GWM Asset Management Limited and Tavira Securities Limited: (i) a competing offer third party announces a firm intention pursuant to Rule 2.7 of the Code to acquire the entire issued and to be issued ordinary share capital of the Company and the consideration payable to each AFH Share under such proposal is 528 pence or greater; and (ii) Bidco does not confirm an increase in the consideration to be paid for the AFH Shares pursuant to the Offer to at least an equivalent amount per share within seven days of such competing offer.

1.5 in respect of Slater Investments Limited only, (i) a competing offer third party announces a firm intention pursuant to Rule 2.7 of the Code to acquire the entire issued and to be issued ordinary share capital of the Company and the consideration payable to each AFH Share under such proposal is 481 pence or greater; and (ii) Bidco does not confirm an increase in the consideration to be paid for the AFH Shares pursuant to the Offer to at least an equivalent amount per share within seven days of such competing offer; or

1.6 in respect of Lombard Odier Asset Management (Europe) Limited only, a competing offer third party announces a firm intention pursuant to Rule 2.7 of the Code to acquire the entire issued and to be issued ordinary share capital of the Company and the consideration payable to each AFH Share under such proposal is 528 pence or greater.