AFH Financial Group Plc

June 24, 2014 07:02 ET

Proposed Admission to AIM

                                          AFH Financial Group PLC
                                          ("AFH" or the "Group")
            Proposed Admission to AIM and withdrawal of securities from the ISDX Growth Market
  Proposed Placing and Subscription to raise approximately GBP1.46 million (before expenses) to fund the
                                   Group's continued growth strategy and
                           GBP1.46 million share sale by an existing shareholder


The Board of AFH today announces that it will make an application for the admission of its issued and to be
issued  share  capital  to  trading on AIM which is expected to be effective on  or  around  30  June  2014
("Admission"). An updated pre-admission announcement in connection with the proposed admission of it shares
to  trading on AIM (the "Update Schedule One Announcement") is expected to be released  today by the London
Stock  Exchange  and  an admission document will be published by the Group shortly. Copies  of  the  Update
Schedule    One    Announcement   will   be   available   to   download   from    the    Group's    website
( in due course. The ticker symbol will remain as AFHP.

The  Group  has also given notice to the ISDX Growth Market that the Group intends to withdraw  its  shares
from  trading  on  that market at the close of business on the business day preceding Admission,  which  is
expected to be on or around 27 June 2014.

As  part  of Admission, the Group has conditionally raised GBP1.46 million (before expenses) by  way  of  a
placing and subscription of new ordinary shares of 10 pence each (the "Placing and Subscription") with  new
investors  and existing shareholders at a price of 140 pence per share (the "Placing Price"). In  addition,
GBP1.46  million  has been conditionally raised on behalf of Alan Hudson by the sale of 1,044,101  ordinary
shares  of 10 pence each in AFH (the "Sale Shares") at the Placing Price. Pursuant to the Subscription  and
conditional on Admission, John Wheatley (Non-Executive Chairman) has agreed to purchase 32,857 Sale  Shares
at  the Placing Price, Toby Denne (Chief Investment Officer) has agreed to purchase 178,571 Sale Shares  at
the  Placing Price and Paul Wright (Chief Financial Officer) has agreed to purchase 35,000 Sale  Shares  at
the Placing Price.

The  Group is seeking to move from the ISDX Growth Market to AIM in order to take advantage of AIM's higher
profile, broader investor base, greater liquidity and access to institutional investors for the Placing and
any future potential fundraisings.

Following Admission, the Group intends to retain its focus on organic growth and acquisitions, through  the
continued acquisition or recruitment of new Financial Advisers (an IFA who works exclusively for AFH  on  a
self-employed basis), and the use of its AIM quotation to accelerate its acquisition strategy.

Reasons for Admission and use of proceeds

The Directors believe that the Group has reached a stage in its development where it will benefit from
AFH's shares being admitted to trading on AIM and that this will:

    *       enhance the perceived credentials of the Group with existing and potential clients;

    *       allow the Group to access equity capital cost effectively in order to provide the Group with
            financial flexibility to pursue growth opportunities as and when they arise;
    *       be used as a platform to acquire complementary businesses within the IFA and related
            financial services sector in line with the Group's stated strategy; and
    *       support the development of the Group's brand.

The  net  proceeds  of the Placing and the Subscription receivable by AFH will total GBP1.06  million.  The
Directors  intend  to  use  these  funds,  along with the Group's existing  cash  resources,  for  business
expansion,  in  particular,  to fund the Group's continued growth strategy and provide  funds  for  further
acquisitions, continuing investment in the Group's business infrastructure and additional working capital.

Current trading and prospects

Trading  in  the  first  five months of the current financial year has been in  line  with  the  Directors'
expectations,  with the full contribution of acquisitions made in 2013 reflected in increased  revenue  for
the  period.  Recurring  revenue in the period remained at the 50% level reported  in  the  2013  financial
statements and gross margins remained above 50%.

During  the  period  since  the  Group's  year-end, the Group has continued  to  strengthen  its  operating
management  team, in addition to the Board appointments announced in February 2014. The cost of  continuing
to  build an infrastructure to support the current and anticipated growth of the Group has been achieved to
date  without  impacting  operating  margins and further investment  is  expected  throughout  the  current
financial year.

In  April  2014,  the Group announced a successful equity subscription, raising GBP1.6 million  of  further
funding  to  be  used to provide additional working capital for the Group and to finance  potential  future
acquisitions.  Following  the subscription the Group had cash reserves of GBP4.8 million  with  no  secured

Whilst the Group did not make any significant acquisitions during the period under review, the pipeline  of
prospective  acquisitions  remains  strong and further acquisitions  are  anticipated  during  the  current
financial  year. On 19 May 2014, AFH announced the acquisition of the assets of Omega Consulting  (Norwich)
Limited,  the Group's second acquisition in 2014. The Group is in preliminary discussions with a number  of
potential acquisition prospects and is undertaking due diligence on three small IFA businesses.

The Placing and the Subscription

The Placing and the Subscription comprise the issue of the 346,252 New Ordinary Shares by AFH, the issue of
the  697,850  Subscription Shares by AFH and the sale of the 1,044,101 Sale Shares by Alan Hudson,  raising
approximately  GBP1.06 million (net of expenses) for the Group and GBP1.46 million for Alan  Hudson  (Chief
Executive of the Group).

The  Placing  has  not  been  underwritten by Allenby Capital Limited (the Group's  nominated  adviser  and
broker). The Placing and the Subscription are conditional upon, inter alia, Admission becoming effective by
not later than 8.00 a.m. on 30 June 2014 (or such later date as Allenby Capital Limited may agree not being
later than 14 July 2014).

Pursuant  to the Subscription Agreements the Subscribers have agreed, conditional on Admission, to purchase
the Subscription Shares and 941,067 Sale Shares at the Placing Price.

Application will be made for the admission of the Enlarged Share Capital to trading on AIM. It is  expected
that  Admission will become effective and dealings in the Enlarged Share Capital will commence on  30  June

Share options

Conditional on Admission the Board has granted the following options to the Directors, exercisable  at  the
Placing Price, under the AFH EMI Share Option Plan and as unapproved share options:

Director                       EMI Options                  Unapproved Options (#)
Alan Hudson                    -                            150,000
(Chief Executive Officer)                                   

John Wheatley                  -                            25,000
(Non-Executive Chairman)                                    

Toby Denne                     92,857                       -
(Chief Investment Officer)                                  

Paul Wright                    71,428                       53,572
(Chief Financial Officer)                                   

Susan Lewis                    -                            25,000
(Non-Executive Director)

Further announcements will be made in due course.

The Directors of AFH Financial Group PLC are responsible for the content of this announcement.

For further information please contact:

AFH Financial Group PLC                           +44 (0)1527 577 775
Alan Hudson, Chief Executive
Paul Wright, Chief Financial Officer

Peterhouse Corporate Finance Limited              +44 (0)20 7469 0930
(ISDX Corporate Adviser)
Mark Anwyl
Duncan Vasey

Allenby Capital Limited                           +44 (0)20 3328 5656
(Nominated Adviser and Broker)
Nick Naylor
Chris Crawford
Nick Athanas

Yellow Jersey PR Limited                          +44 (0) 7768 534 641
(Financial PR)
Philip Ranger
Kelsey Traynor

Contact Information

  • AFH Financial Group Plc