AFH Financial Group Plc Trading Update (5130A)

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RNS Number : 5130A

AFH Financial Group Plc

30 September 2020

30 September 2020

AFH FINANCIAL GROUP PLC

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

TRADING UPDATE

Profitable and cash generative throughout the summer period

The Board of AFH, a leading financial planning led wealth management firm, provides the market today with the following update regarding trading .

In the interim results, released on 1 June 2020, it was reported that through the half-year period gross inflows of funds continued at a similar level to that of the second half of 2019, whilst annualised outflows continued at below 2% of opening funds. It was also reported that, following the introduction of COVID-19 restrictions in March, new business in the Company's wealth management division fell below expectations as uncertainty gripped the markets and AFH's advisers came to terms with new ways of virtual interaction with clients.

AFH staff and advisers have continued to support clients throughout the period and, despite the majority working from home, have ensured that the business has continued efficiently. The investment made by the Group in technology since 2015 has proven invaluable during this period and revised working practices are expected to create greater efficiencies in the future, while enabling AFH to provide greater working flexibility to staff and reduce the environmental impact of the traditional business model.

Cash remains the primary focus of the Board and it is therefore pleasing to report that the Company has continued to be profitable and cash generative throughout the summer period. We have also taken steps to reduce the outstanding deferred consideration and other unsecured debt, repaying GBP752,000 of 8% Loan Notes in early September and over GBP3m in deferred consideration since April. In September, while the Board has maintained its stated salary reduction, the Company was able to return staff back to their full remuneration as confidence in the business model and the resilience of the existing business in this new era has increased.

Since the release of the Company's interim results, the Board has been pleased that ongoing management fees returned to anticipated levels during the summer period and the Group has not experienced significant outflows of clients' funds. However, due to ongoing COVID-19 restrictions and challenges of remotely interacting with prospective clients, the recovery in new business written by the wealth management division and the associated inflow of new funds has been slower than anticipated and, since May, has remained below pre-COVID-19 levels. The Company's Protection business has continued to trade in line with the Board's expectations throughout the period. As a result of these factors, whilst the Board is pleased that revenue and EBITDA for the full year are anticipated to be ahead of 2019, it expects the full year EBITDA to be slightly below its previous expectations.

The Group expects to have reduced outstanding deferred consideration by the financial year end to approximately GBP20 million, further strengthening its balance sheet. As previously reported, AFH remains focussed on generating strong organic growth based on digital and traditional marketing methods augmented by selective acquisitions. Digital campaigns started during the summer have generated a level of meetings with prospective clients above the previous estimates and are expected to generate strong business inflows into the future. Based on this initial success, the Board will intensify its digital marketing activities as the Group approaches the new financial year.

Enquiries:

AFH Financial Group PLC 01527 577 775

Alan Hudson, Chief Executive Officer

Paul Wright, Chief Financial Officer

www.afhfinancialgroup.com

Liberum (Nominated Adviser and Broker) 020 3100 2222

Richard Bootle / Euan Brown / Kane Collings

Shore Capital (Joint Broker) 020 7408 4090

Hugh Morgan / Daniel Bush / Sarah Mather

Yellow Jersey PR Limited (Financial PR) 077 4884 3871

Joe Burgess / Annabel Atkins / Dom Barretto

This announcement is released by AFH Financial Group plc and contains inside information for the purposes of Article 7 of the Market Abuse Regulation (EU) 596/2014 (MAR), and is disclosed in accordance with the Company's obligations under Article 17 of MAR.

For the purposes of MAR and Article 2 of Commission Implementing Regulation (EU) 2016/1055, this announcement is being made on behalf of the Company by Paul Wright, Chief Financial Officer.

Notes to Editors

AFH Financial Group (AIM: AFHP) is a leading UK financial planning-led wealth management firm based in the Midlands. Founded in 1990 by CEO Alan Hudson, the Company 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.

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September 30, 2020 02:00 ET (06:00 GMT)