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.

RECOMMENDED CASH ACQUISITION

of

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 Arrangement
under Part 26 of the Companies Act 2006

1          Introduction

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") are pleased to announce that they have reached agreement on the terms and conditions of a recommended all cash acquisition of the entire issued, and to be issued, ordinary share capital of AFH. It is intended that the Acquisition will be implemented by means of a Court-sanctioned scheme of arrangement under Part 26 of the Companies Act.

2          The Acquisition

Under the terms of the Acquisition, which will be subject to the Conditions and further terms set out in Schedule 1 to this Announcement and the full terms and conditions to be set out in the Scheme Document, each Scheme Shareholder will be entitled to receive:

for each Scheme Share:          463 pence in cash

In its preliminary results for the year ended 31 October 2020 announced on 18 January 2021, AFH announced that AFH Shareholders on the register of members at the close of business on 29 January 2021 will receive a first interim dividend of 3 pence per AFH Share on 16 February 2021 (the "Interim Dividend"). AFH Shareholders on the register of members as at the close of business on 29 January 2021 will be entitled to receive and retain the Interim Dividend without any reduction of the consideration payable under the Acquisition.

The Acquisition Price of 463 pence per Scheme Share (excluding the Interim Dividend) represents a premium of approximately:

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

·    16.5 per cent. to the Closing Price of 397.5 pence per AFH Share on the Latest Practicable Date;

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

·    35.9 per cent. to the volume-weighted average price of 340.7 pence per AFH Share for the six-month period ended on the Latest Practicable Date.

The Acquisition values AFH's entire issued ordinary, and to be issued, ordinary share capital at approximately £224.5 million.

Bidco reserves the right to reduce the consideration payable in respect of each AFH Share under the terms of the Acquisition to the extent that the Interim Dividend exceeds 3 pence per AFH Share (as set out in the AFH results announcement for the 12 months ended 31 October 2020 published on 18 January 2021). If, after the date of this document, any dividend and/or other return of capital is announced, declared, made or paid or becomes payable in respect of the AFH Shares (other than the Interim Dividend), Bidco reserves the right to reduce the Acquisition Price payable pursuant to the Acquisition by the amount of such dividend and/or distribution and/or return of capital so announced, declared, made, paid or payable.

3          Background to and reasons for the Acquisition

Flexpoint has previously identified the UK wealth management sector as a potentially attractive area for investment and believes AFH to be one of the UK's leading wealth management platforms having reviewed a number of investment opportunities.

Flexpoint believes that the management team of AFH has built an attractive financial planning-led business with a strong, scaled platform delivering attractive propositions for clients. Flexpoint aims to support AFH's management in building on this solid foundation to enhance the growth in the business both organically and by acquisition, by providing capital backing, investment, strategic support and its global expertise, as needed.

Flexpoint also believes that, in order to maximise its future potential, AFH would be better suited to a private company environment where initiatives to improve the performance of the business can be implemented effectively with appropriate support, capital and assistance from Flexpoint, free from the requirement to meet the public equity market's shorter-term reporting requirements and expectations and the costs, constraints and distractions associated with being a publicly quoted company.

4          Recommendation

As the AFH Executive Directors will have a personal interest in the Rollover Arrangements (and consequently the Acquisition more generally), the board of AFH has constituted a committee composed of the Independent Directors for the purposes of evaluating and recommending the Acquisition to AFH Shareholders. None of the AFH Executive Directors have participated in the appraisal of the Acquisition by the Independent Directors or the decision of the Independent Directors to recommend the Acquisition to AFH Shareholders.

The Independent Directors, who have been so advised by KBW as to the financial terms of the Acquisition, consider the terms of the Acquisition 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, 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 Latest Practicable Date. Further details of these undertakings, including the circumstances in which they cease to be binding, are set out in Schedule 3.

In view of their personal interest in the Rollover Arrangements (as described at paragraph 9 below), the AFH Executive Directors will not be permitted to vote, or procure the vote, on the Scheme at the Court Meeting or the Rollover Resolution at the General Meeting in respect of their beneficial holdings of 6,005,700 AFH Shares, in aggregate, representing approximately 14.0 per cent. of the issued ordinary share capital of AFH on the Latest Practicable Date. However, they are entitled to vote their AFH Shares, or procure that their AFH Shares are voted, on the special resolution to amend the Articles (and any further Resolutions on which they are not conflicted) to be proposed at the General Meeting.

5          Background to and reasons for the recommendation

The AFH Group's strategy

The AFH Group is a leading UK financial planning-led wealth management firm based in the Midlands. Founded in 1990 by Alan Hudson (Chief Executive Officer). The AFH Group provides wealth management and financial advisory services to over 20,000 clients in the UK. These services are delivered by over 450 professional advisers and 400 support staff.

Since its IPO in 2014, the AFH Group's strategy has focused on increasing shareholder value through a combination of organic growth through greater productivity of advisers and by value accretive acquisitions financed on an earn-out model (having made over 50 acquisitions since IPO). In September 2019, following feedback from shareholders, the AFH Group announced a focus on organic growth. This reflected the fact that access to funding on a regular basis to support M&A-led growth can be challenging for publicly quoted companies.

Accordingly, the AFH Group's revised strategy set out a focus on completing the integration of previous acquisitions, driving adviser productivity and generating cash to pay down deferred earn-outs and finance additional acquisitions without recourse to the equity market. The AFH Group's strategy would also be complemented by digital marketing to support the generation of new clients, technology to improve operational efficiencies, digital interaction with existing clients to enhance user experience and selective value-enhancing acquisitions.

The Independent Directors remain confident that the ongoing, successful execution of the AFH Group's strategy would provide long-term growth and create significant value for AFH Shareholders.

Market environment

The Independent Directors expect the requirement for professional financial planning to accelerate in the future and for the consolidation within the sector to continue, driven by commercial factors and regulatory requirements.

Nonetheless, the Independent Directors note that the recent market backdrop has resulted in a challenging trading environment, with macro-economic uncertainties due to a combination of COVID-19 and the UK's exit from the European Union, which came into effect on 31 December 2020. Despite this market backdrop, the AFH Group has continued to trade profitably whilst focusing on cash management and the strengthening of the balance sheet by paying down both deferred earn-outs and loan notes as they matured.

Future funding

It is the view of the Independent Directors that the public markets no longer afford AFH the financial flexibility to enable it to pursue its strategy and unlock the full potential of the AFH Group. As a public company AFH has, at times, struggled to raise equity capital for growth in a timely manner and on reasonable terms, and has also been hampered from accessing cost-effective funding from debt capital markets, which many of its privately-backed competitors have enjoyed.

The Independent Directors believe that the UK's IFA market remains attractive, providing opportunities for both organic growth and opportunities for value enhancing consolidation, however, AFH lacks the financial resources to pursue these opportunities in a meaningful way today. The Independent Directors believe that the delivery of the AFH Group's growth strategy would be both slower and more uncertain without considerable further capital funding, which is not currently available without material changes to the capital structure and dividend policy of the group. Potential organic growth initiatives, which require capital funding, could include accelerating the recruitment of advisers, investing in additional sales and marketing resource, increasing investment in technology and continuing to develop the AFH Group's investment proposition.

The Independent Directors recognise that, in order for the AFH Group to continue making acquisitions, it will require additional funding on a regular basis. The availability of further funding on a timely basis, on reasonable financial terms, to support M&A-led growth can be challenging in the public market given the current market environment; however, as a private company and with the support of Bidco it is expected that AFH will have better and more flexible access to debt and equity capital to accelerate its strategy.

Bidco offer

The Independent Directors remain confident that the ongoing, successful execution of the AFH Group's strategy would provide long-term growth and create significant value for AFH Shareholders. However, the Independent Directors believe the Acquisition reflects an attractive valuation for AFH. An Acquisition Price per Scheme Share of 463 pence represents a premium of 34.2 per cent. to the volume-weighted average price of 345.0 pence per AFH Share for the three-month period ended on the Latest Practicable Date. It also represents a total return to investors since its IPO of 239.5 per cent. (as at the Latest Practicable Date) including dividend reinvestment. At this level, the Independent Directors believe that the Acquisition will provide the 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.

Bidco has received support from major AFH Shareholders, together with the support of all Independent Directors, who hold, or are interested in, AFH Shares, with aggregate irrevocable undertakings with respect to 8,176,977 AFH Shares representing approximately 19.0 per cent. of the issued share capital (as at the Latest Practicable Date) 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 Practicable Date.

In addition, the Independent Directors are pleased with Bidco's stated intentions concerning AFH's management and employees, locations of business and strategic plans (further details of which are set out in paragraph 12 below). In particular, the Independent Directors are pleased that Bidco (i) does not intend to initiate any material headcount reductions; (ii) does not intend to initiate any material restructurings; and (iii) does not have any current plans to change the locations where people presently work for AFH and intends to maintain AFH's existing corporate headquarters in Bromsgrove. In addition, the Independent Directors are pleased that Bidco intends to develop the business through organic initiatives and by acquisitions. The Independent Directors also welcome Bidco's confirmation that, following completion of the Acquisition, the existing contractual and statutory employment rights of all AFH's management and employees will be fully safeguarded in accordance with applicable law.

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 intend to recommend the Acquisition to AFH Shareholders.

None of the AFH Executive Directors have participated in the appraisal of the Acquisition by the Independent Directors or the decision of the Independent Directors to recommend the Acquisition to AFH Shareholders as a result of the conflicts of interest arising from their participation in the Rollover Arrangements, which are described more fully in paragraph 9 below.

The same conflicts of interest preclude the AFH Executive Directors from voting on the resolution to approve the Scheme at the Court Meeting and the resolution to approve their Rollover Arrangements at the General Meeting, although they will be entitled to vote on the special resolution to approve the adoption of the Amended AFH Articles (and any further resolutions on which they are not conflicted) to be proposed at the General Meeting.

6          Irrevocable Undertakings

Bidco has, in total, received irrevocable undertakings from AFH Shareholders in respect of a total of 14,182,677 AFH Shares representing, in aggregate, approximately 33.0 per cent. of the issued ordinary share capital of AFH (representing approximately 22.1 per cent. of the AFH Shares eligible to vote at the Court Meeting) on the Latest Practicable Date. These irrevocable undertakings are described in further detail below.

Bidco has received irrevocable undertakings from the Independent Directors who hold AFH Shares 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 respect of a total of 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 Latest Practicable Date. These irrevocable undertakings remain binding in the event of a competing offer.

Alan Hudson, AFH's largest shareholder, has irrevocably undertaken in favour of Bidco 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) 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), representing approximately 12.6 per cent. of AFH's issued, and to be issued, ordinary share capital as at the Latest Practicable Date. Alan Hudson has also irrevocably undertaken in respect of 5,955,700 AFH Shares (being his entire beneficial holding of AFH Shares and representing approximately 13.9 per cent. of AFH's issued ordinary share capital as at the Latest Practicable Date) to vote, or procure the vote, in favour of the special resolution proposed at the General Meeting to approve the adoption of the Amended AFH Articles. Alan Hudson is not entitled to vote in respect of the Scheme at the Court meeting or at the General Meeting in respect of the Rollover Resolution. This irrevocable undertaking remains binding in the event of a competing offer.

Paul Wright, Austin Broad and Alex Larvin have irrevocably undertaken in favour of Bidco 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) in respect of 487,840 AFH Shares owned by them (or in respect of which they are interested pursuant to options held over AFH Shares)  (being all of the AFH Shares (on a fully diluted basis) owned by them or in respect of which they are interested), representing, in aggregate, approximately 1.0 per cent. of AFH's issued, and to be issued, ordinary share capital as at the Latest Practicable Date. Paul Wright and Austin Broad have also irrevocably undertaken in respect of an aggregate of 50,000 AFH Shares (being their entire beneficial holdings of AFH Shares and representing approximately 0.1 per cent. of AFH's issued ordinary share capital as at the Latest Practicable Date) to vote, or procure the vote, in favour of the special resolution proposed at the General Meeting to amend the Articles. Paul Wright and Austin Broad are not entitled to vote in respect of the Scheme at the Court Meeting or at the General Meeting in respect of the Rollover Resolution. 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. These irrevocable undertakings remain binding in the event of a competing offer.

Bidco has also received 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) from each of BMO Asset Management Limited, Paul Connor and Philip Mobberley in respect of a total of 7,865,723  AFH Shares representing, in aggregate, approximately 18.3 per cent. of the issued ordinary share capital of AFH and approximately 21.3 per cent. of the AFH Shares eligible to vote at the Court Meeting, in each case, on the Latest Practicable Date.

Further details of the irrevocable undertakings described above, including the circumstances in which they may lapse, are set out in Schedule 3 to this Announcement.

7          Information relating to Flexpoint and Bidco

Flexpoint is a US-based investment firm which has raised over $4.3 billion in capital and made over 30 investments since 2005. Flexpoint specialises in investments in the financial services and healthcare sectors and has expertise in both minority and control structures across private and public companies. Flexpoint employs over 50 people across two offices in Chicago and New York in the United States.

Bidco is a newly incorporated company registered in the Cayman Islands, which was formed for the purposes of the Acquisition. Bidco is indirectly controlled by Flexpoint Fund IV-A, L.P. and will, prior to the Effective Date be indirectly controlled jointly by Flexpoint Fund IV-A, L.P., Flexpoint Fund IV-B, L.P., Flexpoint Overage Fund IV-A, L.P. and Flexpoint Overage Fund IV-B, L.P. (the "Flexpoint Funds"), each of which is managed by Flexpoint Ultimate Management IV, LLC. These funds, together with their affiliates, do business as Flexpoint.

8          Information relating to AFH AND CURRENT TRADING

AFH (AIM: AFHP) is a leading UK financial planning-led wealth management firm based in the Midlands with offices across the UK. Founded in 1990 by Alan Hudson (Chief Executive Officer), the AFH Group provides wealth management and financial advisory services to over 20,000 clients in the UK. These services are delivered by over 450 professional advisers and 400 support staff.

Since its IPO in 2014, the AFH Group's strategy has focused on increasing shareholder value through a combination of organic growth through greater productivity of advisers and by value accretive acquisitions financed on an earn-out model (having made over 50 acquisitions since IPO). In September 2019, following feedback from shareholders, the AFH Group announced a focus on organic growth.

On 18 January 2021, AFH announced its results for the twelve months ended 31 October 2020, a copy of which can be found at www.afhwm.co.uk/investor-relations/announcements/.

9          MANAGEMENT Arrangements

The following summarises the proposed Management Arrangements in relation to the AFH Executive Directors:

Cash Sale SPA

Bidco and Alan Hudson have entered into an agreement, dated the same date as this Announcement, to sell for cash at a price equal to the Acquisition Price 4,294,065 AFH Shares beneficially owned by him (representing approximately 9.99 per cent. of AFH's issued ordinary share capital as at the Latest Practicable Date) to Bidco. Completion of the acquisition is not subject to any conditions but will occur: (i) immediately following the issue of the Scheme Court Order; or (ii) the Long Stop Date, whichever is the earlier. If the Scheme Court Order has not been issued on or before the Long Stop Date, Bidco will have the right, but is not obliged, to rescind the agreement.

Share Exchange Agreement

A Share Exchange Agreement provides for the exchange by the AFH Executive Directors of 1,680,931 AFH Shares beneficially owned by them (or in respect of which they are interested pursuant to options held over AFH Shares) (on a fully diluted basis) and 984 Growth Shares, which have an aggregate value of £9,651,462 at the Acquisition Price, for loan notes to be issued by Bidco (the "Bidco Rollover Notes"). The Share Exchange Agreement also provides for the rollover of certain Growth Shares held by the AFH Executive Directors, whereby such Growth Shares will first be exchanged, following the Scheme becoming Effective, for loan notes to be issued by AFH, and then such AFH loan notes will be exchanged by the AFH Executive Directors for Bidco Rollover Notes.

Put and Call Option Deed

A Put and Call Option Deed provides for the transfer by the AFH Executive Directors, by means of a series of put and call options, of the Bidco Rollover Notes issued to them pursuant to the Share Exchange Agreement in consideration for loan notes issued by Midco and, subsequently, shares issued by Topco.

Investment Agreement

An Investment Agreement sets out the terms on which the AFH Executive Directors will hold their investment in shares in Topco, an indirect parent of Bidco.

The Independent Shareholders will be asked at the General Meeting to approve the Rollover Arrangements described in this paragraph 9 by voting on the Rollover Resolution. Voting on the Rollover Resolution will be by way of a poll.

The Independent Directors intend unanimously to recommend that the Independent Shareholders vote, or procure the vote, in favour of the Rollover Resolution to approve the Rollover Arrangements described in this paragraph 9.

As a result of their respective interests in the Rollover Arrangements, the AFH Executive Directors are not considered to be independent for the purposes of the Code. Neither they, nor any of their respective connected persons nor any person holding AFH Shares on behalf of any AFH Executive Directors and/or any of their respective connected persons, will be entitled to vote on the resolution to approve the Scheme at the Court Meeting or the Rollover Resolution at the General Meeting. Each of the AFH Executive Directors has irrevocably undertaken to vote, or procure the vote, in favour of the other Resolution(s) in respect of their entire holding of AFH Shares.

For the purposes of Rule 16 of the Code, KBW has confirmed that, in its opinion, the terms of the Rollover Arrangements are fair and reasonable so far as the Independent Shareholders are concerned. In providing its opinion, KBW has taken into account the commercial assessments of the Independent Directors. The Acquisition is conditional, amongst other things, upon the passing of the Rollover Resolution by the requisite majority of the Independent Shareholders.

Other than the Management Arrangements, currently there are no arrangements or understandings between Flexpoint or Bidco and/or any person acting in concert with Flexpoint and/or Bidco and the management or directors of AFH having any connection with or dependence upon the Acquisition.

Further details of the terms of the Management Arrangements will be set out in the Scheme Document.

10        Financing

The cash consideration payable by Bidco in respect of the Acquisition 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.

11        Further terms

Bidco reserves the right to reduce the consideration payable in respect of each AFH Share under the terms of the Acquisition to the extent that the Interim Dividend exceeds 3 pence per AFH Share. If, after the date of this document, any dividend and/or other distribution and/or other return of capital is announced, declared, made or paid or becomes payable in respect of the AFH Shares (other than the Interim Dividend), Bidco reserves the right to reduce the Acquisition Price payable pursuant to the Acquisition by an amount up to the amount of such dividend and/or distribution and/or return of capital so announced, declared, made, paid or payable.

12        DIRECTORS, Management, employees, research and development and locations

Prior to the date of this Announcement, consistent with market practice, Bidco was granted access to AFH's senior management team for the purpose of undertaking confirmatory due diligence, which has allowed Bidco to evaluate the strategic and operational plans of the AFH Group. From the diligence undertaken, Bidco is supportive of the organic and M&A-led growth strategy of the AFH Group and believes it can support the management team and AFH Group in accelerating the delivery of its stated strategy.

It is anticipated that more detailed long-term strategic and operational planning will take place in the six months following the Effective Date (the "post-Effective Date review") and that this will include plans to support the management team and the AFH Group in accelerating the delivery of its stated strategy including through further investment in AFH's underlying technology and systems, and the re-engagement with potential target firms previously in the Company's M&A pipeline.

Post-completion, Alan Hudson and Paul Wright will join the board of directors of Bidco and remain in their roles as Chief Executive Officer and Chief Financial Officer of AFH, respectively.

Bidco's strategic plans for AFH

The Bidco Directors believe that the UK wealth management market is currently undergoing an important transition, as regulatory and demographic trends are driving increasing demand for high quality financial advice that can be met by financial planning-led firms with a long-term view and the ability to invest in critical infrastructure and technology. In addition, the market is highly fragmented, which provides an opportunity to service customers better and to create value through consolidation.

Based on its due diligence, the Bidco Directors believe AFH's management, competitive position and track record make AFH well-positioned to capitalise on the market opportunity. Bidco looks forward to working with AFH's management team to continue building a leading financial planning-led wealth management firm of scale, with the ability to offer its clients access to the highest quality investment solutions at an attractive cost.

In addition to AFH's overall performance, Bidco has been particularly impressed by the AFH management team's ability to create value, both organically and inorganically, across both its two divisions, wealth management and protection broking. Bidco intends to support the existing management team of AFH to maximise the value of each division. Bidco intends to undertake a further detailed review and this next stage of planning may result in the development of separate, focused strategies for each division. This will be further explored as part of the post-Effective Date review, which will include for each division an in-depth review of competitive market standing, and the identification of opportunities for additional investment with the objective of driving growth and reviewing broader strategic options.

The current Bidco Directors believe that there is the potential to accelerate some areas of the AFH management team's current organic growth strategy, which can be more easily achieved when operating with a focus on the longer-term, with a unified and aligned investor base. Potential initiatives could include accelerating the recruitment of advisers, investing in additional sales and marketing resource, increasing investment in technology and continuing to develop the firm's investment proposition. 

AFH has a long track record of acquiring and integrating advisory businesses, although the cadence of its acquisitions slowed during 2019 and 2020 due to the complexity of continuously raising capital in a public setting. Bidco intends to work with AFH's management team to restart, and potentially accelerate, its prior acquisition activity by deploying its resources (both capital and expertise) to support AFH.

Employees and management

Bidco attaches great importance to the skills, experience and continued commitment of AFH's management and employees and believes that they will benefit from greater opportunities as a result of the Acquisition. The Bidco Directors intend to support the development of the business through organic initiatives and by acquisitions and, as such, does not expect any material change to the operations of the business as a result of the Acquisition. Bidco will continue to support AFH's management in the continuous review of the AFH Group's operations to ensure efficiency in the ordinary course of business, including any operational adjustments necessary as it transitions from being a public company to a private company.

Bidco has not entered into, and has not had any discussions with respect to proposals to enter into, any form of incentivisation or any other arrangements with members of AFH's management (other than in respect of the Rollover Arrangements, which are described at paragraph 9 above and will be described further in the Scheme Document). It is the intention to put in place appropriate arrangements for management and staff of AFH following completion of the Acquisition.

Each of John Wheatley (Non-Executive Chairman), Sue Lewis (Non-Executive Director) and Mark Chambers (Non-Executive Director) has confirmed that they intend to resign, following a contractual notice period, from the board of AFH conditional upon, and with effect from, the Scheme becoming Effective.

Save as described above, Bidco does not intend to make any material reduction to the headcount, or any material change to the conditions of employment or to the balance of skills and functions, of the AFH Group's employees or management.

Existing rights and pension schemes

AFH and certain of its subsidiaries make contributions to various defined contribution pension schemes on behalf of a number of qualifying employees and Bidco intends that these arrangements would remain in place.

No member of the AFH Group participates in a defined benefit pension scheme.

Following completion of the Acquisition, the existing employment rights, including pension rights, of the management and employees of the AFH Group will be fully safeguarded.

Locations and headquarters

Bidco has no current plans to change the locations where people presently work for AFH. Bidco also intends to maintain AFH's existing corporate headquarters in Bromsgrove and will follow current strategy with respect to the AFH Group's other locations and regional offices.

There are no plans to redeploy the fixed assets of AFH. AFH does not currently have a research and development function and Bidco has no plans in this regard.

Trading Facilities

AFH is currently admitted to trading on AIM and, as set out in paragraph 16 below, prior to the Scheme becoming Effective, a request will be made to the London Stock Exchange to cancel trading in AFH Shares on AIM, following which it is intended that AFH would be re-registered as a private limited company.

No statements in this paragraph 12 are "post-offer undertakings" for the purposes of Rule 19.5 of the Takeover Code.

13        AFH SHARE PLANS AND AFH CULS

AFH Share Plan Participants will be contacted regarding the effect of the Acquisition on their rights under the AFH Share Plans and appropriate proposals will be made to such AFH Share Plan Participants in due course. Details of these proposals will be set out in separate letters to be sent to the AFH Share Plan Participants.

All outstanding "in the money" options and/or awards under the AFH Share Plans will be treated in accordance with the rules of the applicable AFH Share Plans.

The holders of the Growth Shares will be contacted regarding the effect of the Acquisition on their Growth Shares and an appropriate proposal will be made to such holders in due course.

In addition, the holders of the AFH CULS will be contacted regarding the effect of the Acquisition on their loan notes under the AFH CULS and an appropriate proposal will be made to such holders in due course.

Further details on the terms of such proposals will be contained in the Scheme Document.

14        Offer-related Arrangements

Confidentiality Agreement

On 1 December 2020, Flexpoint and AFH entered into the Confidentiality Agreement in relation to the Acquisition, pursuant to which, amongst other things, Flexpoint has undertaken to: (i) subject to certain exceptions, keep information relating to AFH and the Acquisition confidential and not to disclose it to third parties; and (ii) use such confidential information only in connection with the Acquisition. These confidentiality obligations will remain in force until 1 December 2022, provided that if the Acquisition becomes Effective then the obligations contained in the Confidentiality Agreement will lapse to the extent the Confidential Information relates solely to AFH or a member of the AFH Group.

Co-operation Agreement

On 25 January 2021, Bidco and AFH entered into a Co-operation Agreement, pursuant to which the parties have, amongst other things, each agreed to: (i) co-operate in relation to obtaining any consents, clearances, permissions, waivers and/or approvals as may be necessary, and the making of all filings as may be necessary, in order to satisfy the Condition set out in paragraph 2 of Part A of Schedule 1 in connection with the Acquisition; and (ii) cooperate in preparing and implementing appropriate proposals in relation to the AFH Share Plans. In addition, Bidco has given certain undertakings in the event that the Scheme should switch to an Offer. The Co-operation Agreement will terminate in certain circumstances, including if the Acquisition is withdrawn or lapses, if prior to the Long Stop Date any Condition becomes incapable of satisfaction, if the Independent Directors withdraw their recommendation of the Acquisition or if the Scheme does not become Effective in accordance with its terms by the Long Stop Date or otherwise as agreed between Bidco and AFH.

Cash Sale SPA

On 25 January 2021, Bidco and Alan Hudson entered into an agreement to sell for cash at a price equal to the Acquisition Price 4,294,065 AFH Shares beneficially owned by him (representing approximately 9.99 per cent. of AFH's issued ordinary share capital as at the Latest Practicable Date) to Bidco. Completion of the acquisition is not subject to any conditions but will occur: (i) immediately following the issue of the Scheme Court Order; or (ii) the Long Stop Date, whichever is the earlier. If the Scheme Court Order has not been issued on or before the Long Stop Date, Bidco will have the right, but is not obliged, to rescind the agreement.

Investment Agreement

An Investment Agreement sets out the terms on which the AFH Executive Directors will hold their investment in shares in Topco, an indirect parent of Bidco.

15        Structure of the Acquisition

It is intended that the Acquisition will be implemented by way of a Court-sanctioned scheme of arrangement between AFH and the Scheme Shareholders under Part 26 of the Companies Act. The purpose of the Scheme is to provide for Bidco to become the owner of the entire issued, and to be issued, share capital of AFH. Under the Scheme, the Acquisition will be achieved by the transfer of the Scheme Shares by the Scheme Shareholders to Bidco in consideration for which the Scheme Shareholders will receive cash on the basis described in paragraph 2 above. The procedure involves, among other things, an application by AFH to the Court to sanction the Scheme.

The Acquisition is subject to the Conditions and certain further terms referred to in Schedule 1 to this Announcement and to the full terms and conditions to be set out in the Scheme Document and will only become Effective if, among other things, the following events occur on or before the Long Stop Date:

·    the FCA having notified Bidco and/or AFH of its approval of the change of control of any UK authorised persons within the AFH Group as a result of the Acquisition (or the requisite assessment period for such approval to be provided having elapsed without the FCA having objected to the Acquisition);

·    a resolution to approve the Scheme is passed by a majority in number of the Voting Scheme Shareholders present and voting (and entitled to vote), either in person or by proxy, representing 75 per cent. or more in value of each class of the Scheme Shares held by those Voting Scheme Shareholders at the Court Meeting (or at any adjournment thereof) on or before the 22^nd day after the expected date of the Court Meeting to be set out in the Scheme Document in due course (or such later date as may be agreed between AFH and Bidco and the Court may allow);

·    the resolution(s) necessary to implement the Scheme is/are passed at the General Meeting to be held on or before the 22^nd day after the expected date of the General Meeting to be set out in the Scheme Document in due course, expected to be immediately after the Court Meeting (or such later date as may be agreed between AFH and Bidco and the Court may allow), which will require the approval of AFH Shareholders representing at least 75 per cent. of the votes cast at the General Meeting, either in person or by proxy;

·    the Rollover Resolution is passed on a poll at the General Meeting to be held on or before the 22^nd day after the expected date of the General Meeting to be set out in the Scheme Document in due course (or such later date as may be agreed between Bidco and AFH and the Court may allow), which will require the approval of Independent Shareholders representing more than 50 per cent. of the votes cast by Independent Shareholders on the Rollover Resolution. The requirement for the Rollover Resolution to be passed is not capable of being waived by Bidco;

·    following the Meetings, the Scheme is sanctioned by the Court (without modification, or with modification on terms agreed by Bidco and AFH) on or before the 22^nd day after the expected date of the Scheme Court Hearing to be set out in the Scheme Document in due course (or such later date as may be agreed between Bidco and AFH and the Court may allow); and

·    following such sanction, a copy of the Scheme Court Order is delivered to the Registrar of Companies, whereupon the Scheme will become Effective.

Upon the Scheme becoming Effective: (i) it will be binding on all Scheme Shareholders, irrespective of whether or not they attended or voted at the Court Meeting or the General Meeting (and if they attended and voted, whether or not they voted in favour); and (ii) share certificates in respect of AFH Shares will cease to be valid and entitlements to AFH Shares held within the CREST system will be cancelled.

Any AFH Shares issued before the Scheme Record Time will be subject to the terms of the Scheme. The special resolution to be proposed at the General Meeting will, amongst other matters, provide that the Articles be amended to incorporate provisions requiring any AFH Shares issued after the Scheme Record Time (other than to Bidco and/or its nominees) to be automatically transferred to Bidco on the same terms as the Acquisition (other than terms as to timings and formalities). The provisions of the Articles (as amended) will avoid any person (other than Bidco and/or its nominees) holding shares in the capital of AFH after the Effective Date. If the Scheme does not become Effective on or before the Long Stop Date, it will lapse and the Acquisition will not proceed (unless the Panel otherwise consents).

The Scheme Document will include full details of the Scheme, together with notices of the Meetings. The Scheme Document will also contain the expected timetable for the Acquisition and will specify the necessary actions to be taken by AFH Shareholders. It is expected that the Scheme Document, together with the Forms of Proxy, will be published as soon as practicable and in any event, within 28 days of this Announcement (unless the Panel agrees otherwise).

16        CANCELLATION OF admission to trading on AIm

At least 20 business days prior to the Scheme becoming Effective, AFH intends to make an application to the London Stock Exchange for the cancellation of the admission to trading of the AFH Shares on AIM, requesting that such cancellation takes effect on, or shortly after, the Effective Date. The Scheme Document will set out details of the expected last day of dealings in AFH Shares on AIM and the latest time for registration of transfers prior to the Effective Date.

On the Effective Date, AFH will become a wholly-owned subsidiary of Bidco. As soon as possible after the Effective Date, it is intended that AFH will be re-registered as a private limited company under the relevant provisions of the Companies Act.

17        Disclosure of interests in AFH relevant securities

Except for the irrevocable undertakings referred to at paragraph 6 above, as at the close of business on the Latest Practicable Date, neither Bidco, nor any Bidco Directors or any member of the Bidco Group, nor, as far as Bidco is aware, any person acting in concert (within the meaning of the Code) with Bidco:

·    had any interest in, or right to subscribe for, any relevant securities of AFH; nor

·    had any short position in relevant securities of AFH, including any short position under a derivative, any agreement to sell, any delivery obligation or right to require another person to purchase or take delivery of relevant securities of AFH; nor

·    had borrowed or lent any relevant securities of AFH or entered into any financial collateral arrangements relating to relevant securities of AFH; nor

·    was party to any dealing arrangement of the kind referred to in Note 11 on the definition of acting in concert in the Code in relation to relevant securities of AFH.

In the interests of secrecy prior to this Announcement, Bidco has not made any enquiries in respect of the matters referred to in this paragraph of certain parties who may be deemed by the Panel to be acting in concert with Bidco for the purposes of the Scheme. Enquiries of such parties will be made as soon as practicable following the date of this Announcement and any disclosure in respect of such parties will be included in the Scheme Document.

'Interests in securities' for these purposes arise, in summary, when a person has long economic exposure, whether absolute or conditional, to changes in the price of securities (and a person who only has a short position in securities is not treated as interested in those securities). In particular, a person will be treated as having an 'interest' by virtue of the ownership, voting rights or control of securities, or by virtue of any agreement to purchase, option in respect of, or derivative referenced to, securities.

18        Dividends

Bidco reserves the right to reduce the consideration payable in respect of each AFH Share under the terms of the Acquisition to the extent that the Interim Dividend exceeds 3 pence per AFH Share. If, after the date of this document, any dividend and/or other distribution and/or other return of capital is announced, declared, made or paid or becomes payable in respect of the AFH Shares (other than the Interim Dividend), Bidco reserves the right to reduce the Acquisition Price payable pursuant to the Acquisition by an amount up to the amount of such dividend and/or distribution and/or return of capital so announced, declared, made, paid or payable.

19        Overseas shareholders

The availability of the Acquisition or the distribution of this Announcement to AFH Shareholders who are not resident in the United Kingdom may be affected by the laws of their relevant jurisdiction. Such persons should inform themselves of, and observe, any applicable legal or regulatory requirements of their jurisdiction. AFH Shareholders who are in any doubt regarding such matters should consult an appropriate independent professional adviser in the relevant jurisdiction without delay.

This Announcement does not constitute an offer for sale of any securities or an offer or an invitation to purchase any securities. AFH Shareholders are advised to read carefully the Scheme Document and related Forms of Proxy once these have been published.

20        Documents published on a website

Copies of the following documents will, by no later than 12 noon (London time) on the business day following this Announcement, be published on AFH's website at www.afhwm.co.uk/investor-relations until the Effective Date:

·    this Announcement;

·    the irrevocable undertakings referred to in paragraph 6;

·    the Confidentiality Agreement referred to in paragraph 14;

·    the Cooperation Agreement referred to in paragraph 14;

·    the Cash Sale SPA referred to in paragraph 14;

·    the Investment Agreement referred to in paragraph 14; and

·    documents relating to the financing of the Scheme referred to in paragraph 10 above.

The contents of AFH's website are not incorporated into and do not form part of this Announcement.

21        General

Bidco reserves the right to elect (with the consent of the Panel) to implement the acquisition of the AFH Shares by way of a Takeover Offer as an alternative to the Scheme. In such event, the Offer will be implemented on substantially the same terms, so far as applicable, as those which would apply to the Scheme and, among other things, the change in structure by which the Acquisition is to be implemented and compliance with all applicable laws, including US securities laws.

The Acquisition will be made on the terms and subject to the Conditions and further terms set out in Schedule 1 to this Announcement and to the full terms and conditions to be set out in the Scheme Document. The sources of information and bases of calculations contained in this Announcement are set out in Schedule 2 to this Announcement. A summary of the irrevocable undertakings is contained in Schedule 3 to this Announcement. Certain terms used in this Announcement are defined in Schedule 4 to this Announcement.

Raymond James (as financial adviser to Bidco) and KBW (as financial adviser to AFH) have each given and not withdrawn their consent to the publication of this Announcement with the inclusion herein of the references to their names in the form and context in which they appear.

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 will contain 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 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 will be 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.

In accordance with Rule 2.9 of the Code, AFH confirms that as at the date of this Announcement, it has in issue and admitted to trading on AIM 42,983,638 ordinary shares of £0.10 each (and holds no shares in treasury). The International Securities Identification Number (ISIN) of the ordinary shares is GB00B4W5WQ08.

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.