AFHP.L Regulatory News (AFHP)

22 February 2021

AFH FINANCIAL GROUP PLC

("AFH" or "Group" or the "Company")

Statement re Press Comment

AFH, the leading financial planning-led wealth management firm, notes recent commentary in the UK Press regarding the recommended cash offer for the Company by Cortina Bidco Limited ("Bidco") (the "Acquisition"). The Independent Directors would like to reiterate that they consider the terms of Acquisition to be fair and reasonable, believe the Acquisition is a good deal for all shareholders, and therefore shareholders vote in favour of the Scheme.

The Company refers to the Scheme Document posted to AFH Shareholders on 9 February 2021 and strongly recommends that all shareholders read the document in full as it outlines the background to and reasons for the Acquisition. It also contains the recommendation of the Independent Directors of AFH and the URGENT ACTION to be taken in order to vote on the Acquisition. The Scheme Document along with all other documents relevant to the Acquisition can be found at: https://afhwm.co.uk/investor-relations/offer/documents/

The Independent Directors believe that the Acquisition reflects an attractive valuation which will provide AFH Shareholders with the opportunity to obtain liquidity for their investment and to crystallise the value of their holdings now against an uncertain market backdrop.

In considering the financial terms of the Acquisition, which (excluding the Interim Dividend) value the entire issued, and to be issued, ordinary share capital of AFH at approximately £224.5 million, the Independent Directors note the following:

· the Acquisition represents

o a price-to-earnings multiple of 21.0x for the AFH Group for the year ended 31 October 2020;

o 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;

· during 2020, AFH's share price fluctuated between 203 pence (on 23 March 2020) and 427 pence (on 13 February 2020), often experiencing swings on relatively low share trading volumes. It therefore references the premium on offer to both the three-month volume weighted average and the six-month volume weighted average, being offer premia of 34.2 per cent. and 35.9 per cent., respectively; and

· an Acquisition Price per Scheme Share of 463 pence represents a total return to investors since AFH's IPO of 239.5 per cent. (as at the Pre-Announcement Date) including dividend reinvestment.

Having taken into account all relevant factors, the Independent Directors believe that the terms of the Acquisition are compelling, acknowledge the quality and strong prospects of AFH's business and deliver attractive value to AFH Shareholders in cash allowing them to crystallise the value of their holdings.

AS SUCH, THE INDEPENDENT DIRECTORS UNANIMOUSLY RECOMMEND THE ACQUISITION TO AFH SHAREHOLDERS.

Voting at the Court Meeting and the General Meeting

The Scheme will require approval at a meeting of the Voting Scheme Shareholders convened pursuant to an order of the Court (the "Court Meeting") to be held at AFH House, Buntsford Drive, Stoke Heath, Bromsgrove, Worcestershire B60 4JE at 11.00 a.m. (London time) on 1 March 2021. Implementation of the Scheme will also require approval of AFH Shareholders at the General Meeting to be held at the same place at 11.15 a.m. (London time) on 1 March 2021 (or as soon as reasonably practicable thereafter as the Court Meeting shall have been concluded or adjourned).

Given the current UK Government guidance and the general uncertainty on what additional and/or alternative measures may be put in place restricting social gatherings in view of the COVID-19 pandemic, AFH Shareholders (or their proxies) will not be permitted to attend the Meetings physically save for those AFH Shareholders permitted by the Chair of the relevant Meeting to establish a quorum.

SHAREHOLDERS WISHING TO VOTE ON THE ACQUISITION ARE STRONGLY URGED TO DO SO THROUGH COMPLETION OF THE FORM OF PROXY THAT HAS BEEN SENT TO THEM AND WHICH IS ALSO AVAILABLE AT https://afhwm.co.uk/investor-relations/offer/documents/.

It is very important that, for the Court Meeting in particular, as many votes as possible are cast so that the Court may be satisfied that there is a fair and reasonable representation of the opinion of Voting Scheme Shareholders. Therefore, shareholders must complete, sign and return their Forms of Proxy, or deliver their voting instructions by one of the other methods mentioned in the Scheme Document, as soon as possible.

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