Kingswood H. Regulatory News (KWG)

17 April 2014

EW GROUP LIMITED

("EW Group" or "the Company")

Acquisition of European Wealth Management Group Limited

andAdmission of the Enlarged Issued Share Capital and CLS to trading on AIM

The Company is pleased to announce the conditional acquisition of all of the issued shares in European Wealth Management Group Limited ("EWMG").

Key Highlights

· Based on the Theoretical Post Consolidation Price, the Acquisition values EWMG at approximately £13.45 million with the value of the Total Consideration being approximately £7.1 million.

· The Total Consideration is to be satisfied through the issue of 2,611,084 New Ordinary Shares (amounting to approximately £1.88 million at the Theoretical Post Consolidation Price) and the issue of £5,218,420 nominal of convertible loan stock ("CLS")

· Since the original EWG investment in April 2012, the EWMG Group has grown its aggregated funds under management and influence from approximately £0.15 billion to over £0.71 billion today, this represents an increase of nearly five fold over the period.

· The EWMG Group's client base currently ranges from individuals with up to £7 million of assets to invest to institutions investing up to £68 million.

· EWMG has identified a number of potential acquisition targets and intends to pursue further growth opportunities through strategic acquisitions funded by a mixture of equity and debt, although no specific proposals have extended beyond preliminary discussions.

Commenting on the Acquisition, Paul Everitt, executive director of EW Group, commented:

"EWMG has grown significantly since we first invested in it in April 2012, with funds under management and influence increasing approximately six fold to approximately £0.7 billion. We believe that significant opportunities for growth, both organic and acquisitive, exist within the wealth management industry however the current arrangement, with EWMG being 48.8% owned by EWG and with EWMG Shareholders holding a further 39% of EWG, does not provide an efficient structure through which to raise growth capital. The Directors' opinion is that for EWMG to fully exploit the opportunities for growth, both organically and by acquisition, within the wealth management industry then the ownership of EWG and EWMG need to be consolidated in order to provide clarity to current and future investors. We look forward to the business continuing to deliver value back to our shareholders."

John Morton, Executive Chairman of European Wealth Management Group, said

"This is an important moment in European Wealth's development. Not only will it allow us to continue growing the range services we deliver to our clients - it will allow us to pursue those opportunities that continue to flow from RDR as well as those now being generated as a result of the Chancellor's recently proposed changes to the pension industry."

EW Group Limited

Paul Everitt: +44 (0)14 8173 2888

www.ewgrouplimited.com 

European Wealth Management Group

John Morton (Chairman): +44 (0)207 293 0733

Rod Gentry (CEO): +44 (0)207 293 0734

Daniel Stewart & Company Plc - Nominated Adviser and Broker

Antony Legge, Ciaran Walsh: +44 (0)20 7776 6550

GTH Communications

Toby Hall: +44 (0)20 7822 7493 / +44 (0)7713 341072

The Admission Document report has been posted to shareholders and is available to view and download from the Company's website at www.ewgrouplimited.com 

Introduction

The Company today announces the conditional acquisition of all of the issued shares in EWMG not already owned by EWG. The consideration is in the form of both New Ordinary Shares and CLS and values the whole of EWMG at approximately £13.45 million. The Acquisition is a reverse takeover under the AIM Rules for Companies and, as such, requires the approval of Existing Shareholders and the publication of an admission Document ("Admission Document").

The Acquisition will also result in the EWMG Concert Party being interested in at least 30 per cent. of the Company's voting rights attached to shares in the Company and, as such, the Acquisition is conditional upon, inter alia, the approval by the Independent Shareholders of the Waiver.

The Company is also proposing changes to its Memorandum, the adoption of the New Articles, a reorganisation of its share capital and a change to its name, all of which require the approval of the Existing Shareholders.

Implementation of the proposals set out above will require a material change to the Company's investment objective and policy.

The Company has posted an Admission Document to Existing EWG Shareholders which contains a Notice of EGM convening an Extraordinary General Meeting, to be held at Roseneath, The Grange, St Peter Port, Guernsey, GY1 2QJ on 6 May 2014 at 9.00 a.m., to consider and, if thought fit, approve the Resolutions and also for the application by the Company for the admission to trading on AIM of the Enlarged Issued Share Capital and the CLS.

Background to and reasons for the Acquisition

The Background

The Company was founded in 2004, under the name Equity Pre-IPO Investments Limited, and admitted to AIM in February 2005. The original strategic aim of the Company was to achieve capital growth through the purchase, holding and sale of minority stakes in private companies which were considering an initial public offering. In 2009, the Company undertook a strategic review of its investments which resulted in several board changes, a change of strategy and a change of name to Kingswalk Investments Limited.

In the early part of 2012, the Board concluded that the financial services sector had the potential to deliver strong growth with a number of high quality businesses offering attractive investment opportunities.

The Directors and the Proposed Director believe that the increase in asset management and financial planning regulation coupled with the fact that individuals are today taking more interest and control over their own financial affairs means that building an integrated financial services business that embraces the latest technology could attract significant premiums, if well executed.

In April 2012, the Company (at this time still named Kingswalk Investments Limited) acquired a 33.33 per cent. stake in EWMG, identifying it as an excellent platform to exploit this opportunity. In January 2013, the Company changed its name to EW Group Limited to reflect the Company's interest in financial and wealth services, and in the EWMG Group in particular.

In recognition of the continued success of, and its commitment to, its investment in EWMG, the Company further increased its holding to 48.8 per cent. in March 2013. The Company also provided additional financial support for EWMG through £2.5 million of loans provided over the same period. These loans were used to provide working capital, repay debtors and to provide cash for acquisitions.

The Company's commitment to its strategy has been validated by the strong performance of the EWMG Group. Since the original investment was made in April 2012, the EWMG Group has grown its aggregated funds under management and influence from approximately £0.15 billion to over £0.71 billion today, this represents an increase of nearly five fold over the period, which has delivered a material uplift in the value of the Company's investment in EWMG.

The Opportunities for EWMG within the UK Market

According to the Investment Management Association ("IMA"), UK AUM are at record levels, and the UK remains the second largest asset management centre in the world after the United States of America. They go on to report that, as at 31 December 2012, £5.2 trillion in total assets was managed in the UK and that this generated revenues of £13 billion for IMA members alone. Retail and private clients represented 17 per cent. and 1.6 per cent. respectively, with institutional clients accounting for 81 per cent. of total assets.

However, the much publicised difficulties that faced the industry following the global financial crisis in 2008 have led the Directors and Proposed Director to identify a number of themes which they believe will continue to be central to growing a successful wealth management business in a post RDR environment, most notably:

1. the need for an appropriate integration of investment management and financial planning disciplines to deliver a unified wealth management service where personal service is key;

2. the ability to respond effectively to changes in both regulatory environment and industry developments; and

3. the ability to maintain profitability at times when operating margins come under pressure.

Further, the Directors and Proposed Director believe that the changes announced regarding pensions in the UK Budget, on 19 March 2014, could result in a significant opportunity for financial services companies.

The Directors and the Proposed Director also believe that the increasing regulation and compliance requirements for small and medium-size investment management companies and financial advisory firms has created significant consolidation opportunities. EWMG has a clearly established track record of supplementing its organic growth with profitable acquisitions. The Directors and Proposed Director believe that the Enlarged Group will be in a good position, with improved access to capital markets, to exploit further such consolidation opportunities.

Summary of the principal terms of the Acquisition

Based on the Theoretical Post Consolidation Price, the Acquisition values EWMG at approximately £13.45 million with the value of the Total Consideration being approximately £7.1 million.

Under the terms of the SPA, most EWMG Shareholders will receive a mixture of New Ordinary Shares and CLS. For each EWMG Share held, an EWMG Shareholder who has elected to receive a mixture of New Ordinary Shares and CLS will receive approximately 1.3694 New Ordinary Shares and approximately £1 of CLS. Courvoisier and CNG have each elected to receive the whole of their respective considerations in the form of CLS. Thus the Total Consideration will be satisfied through the issue of 2,611,084 New Ordinary Shares (amounting to approximately £1.88 million at the Theoretical Post Consolidation Price) and the issue of £5,218,420 nominal of CLS.

The Consideration Shares will represent 19.8 per cent. of the Enlarged Issued Share Capital. EWMG Shareholders, in aggregate, are currently interested in 47.5 per cent. of the current issued ordinary share capital of EWG. On Admission, their aggregate percentage holding will increase to 57.9 per cent.

Certain members of the EWMG Concert Party and of the Courvoisier Concert Party have loans to EWMG amounting to £530,431 in aggregate. Conditional upon the Acquisition being approved, these loans will be exchanged for £531,970 of CLS. Thus the total amount of CLS to be issued and admitted to trading will be £5,748,820 nominal.

Information on the CLS

The CLS will be created by a resolution of the Board prior to Completion and the Company executing the CLS Instrument.

The principal amount of the original issue of the CLS will be limited to £10,000,000, and will be issued in multiples of £10. The CLS is unsecured.

£5,218,420 will be issued to the respective EWMG Shareholders and CNG as part of the consideration for the Acquisition, £377,920 and £154,050 will be issued in respect of the Debt Transfer Deeds. The ISIN of the CLS will be GG00BKY4JY43 and the ticker will be EWGL.

Interest shall be payable at a rate of 10 per cent. per annum on any outstanding CLS until their proper Conversion or redemption save where any payment due to a CLS Holder (whether of interest or principal) has not been paid in full and on time in accordance with the terms of the CLS Instrument in which case, from the date of default until the date of payment, and without prejudice to any other rights a CLS Holder may have, the interest payable on the CLS subject to such default shall be at a rate of the Bank of England base rate from time to time plus 10 per cent. per annum and shall accrue before as well as after judgment. This interest will be payable half-yearly in arrears in respect of the preceding Interest Period on the fourteenth day following the Record Date immediately following the end of the relevant Interest Period. 

Any CLS Holder may, in any of the 14 day periods following the Dividend Announcement Dates in each of November 2014, May 2015, November 2015, May 2016, November 2016 and May 2017 and prior always to the Redemption Date, give notice to the Company at its registered office, specifying the nominal value of the CLS to be converted and if held in certificated form accompanied by the certificate of CLS held by the CLS Holder, requiring some or all of his CLS to be converted into New Ordinary Shares at the following price:

Conversion of CLS so converted shall take place on and with effect of the last Thursday of the month in which the notice relating to Conversion is given by the relevant CLS Holder whereupon the New Ordinary Shares into which the relevant CLS have been converted shall be allotted and forthwith issued and share certificates (if appropriate) shall be posted in respect of the same within 28 days of such allotment. New Ordinary Shares allotted upon Conversion shall carry the right to receive dividends declared, paid or made on New Ordinary Shares for which the record date is in the same month in which the Conversion becomes effective and thereafter shall otherwise rank pari passu and form one class with the New Ordinary

Shares in issue on the date of allotment and have the rights and privileges prescribed in the New Articles.

Further details of the CLS are set out in the Admission Document and securities information in relation to the CLS will be on the EW Group Limited website on Admission.

Information on the EWMG Group

History

The EWMG Group is a fast growing private wealth management business which was founded in 2009 and commenced trading in 2010. Its core services are financial planning, corporate pension advisory and investment management in both equity and fixed interest instruments. The EWMG Group was set up to be RDR compliant EFP has opted for Independent Adviser status and EIM has opted for Restricted Financial Adviser status. Its client base currently ranges from individuals with up to £7 million of assets to invest to institutions investing up to £68 million. It has its headquarters in London and regional offices in Brighton, Cheltenham, Worcester, Wokingham and East Malling. The EWMG Group currently has 54 employees as well as using the services of 11 consultants.

The founding shareholders that still support the Company are George Robb, Rod Gentry, John Morton, Geoff Dearing, Susan Roughley and Courvoisier. George Robb was a founder shareholder and former chairman of Aberdeen Asset Management plc and Managing Director of Asset Management Investment Company plc. Rod Gentry was formerly Chief Executive of Ashcourt Holdings Limited, a subsidiary of Syndicate Asset Management plc (now Ashcourt Rowan Plc), with FUM at the time of over £1.5 billion. John Morton is a former Chief Executive of Ashcourt Holdings plc and Syndicate Asset Management plc which grew at the time to having AUM of over £5 billion. Geoff Dearing is a former Chairman of Ashcourt Holdings plc. Susan Roughley was a director of Ashcourt Holdings Limited and Courvoisier is a Swiss private wealth management company headquartered in Geneva.

Since incorporation, the EWMG Group has completed four acquisitions. The first acquisition was of Mathews, Smith (Financial Consultants) Limited, a Maidstone-based (Kent) independent financial adviser, in March 2011, and the second was of the funds under management and the staff of Aventus Capital Management, a Cheltenham-based investment management business previously owned by law firm Rickerbys LLP, in January 2012. The third acquisition was Ernest Noad & Associates Limited, a London based independent financial adviser with an office in Bromley, the business of which has subsequently been merged into the Kent office near East Malling. Then, in October 2012, EFP acquired the 'Bradley Stuart' business, a highly regarded financial planning business with clients including some well-known names in British industry. This deal significantly increased the EWMG Group's presence in the South West of England.

The EWMG Group's Strategy

The EWMG Group's strategy is to deliver a strong wealth management proposition through a personalised service to clients which integrates investment management with financial planning. In addition, the EWMG Group has invested in an IT platform capable of high volume trading and enhanced portfolio modelling to improve its client offering.

Through the two key operating subsidiaries, EIM and EFP, both of which are authorised and regulated by the FCA, the EWMG Group has sought to avoid reliance upon a small number of clients and provides investment management and financial planning services to businesses, charities and trustees, individuals and their families, institutions and professional intermediaries.

EWMG's turnover is split broadly evenly between its financial planning and investment management businesses. A more detailed summary of the two operating subsidiaries is set out below:

EIM

EIM is a member of the London Stock Exchange and is the investment management arm of EWMG providing institutional style investment management for private clients, trusts, pension funds and charities. It also manages money on behalf of third party independent financial advisers. EIM currently has approximately £430 million of AUM split between £218 million of, mainly discretionary, equity investments and £220 million of fixed interest investments.

EIM has five portfolio models approved by its investment management committee ranging from 100 per cent. fixed interest to 100 per cent. equity. Underlying each model are pre-approved investment portfolios from which each investment manager can select, dependent on the investment preferences and risk profiles of the client. The Trustee Managed Portfolio Indices ("TMPI") prepared by the Society of Trust and Estate Practitioners for the end of 2014 analyse the performance of their members in three categories - 'Low', 'Medium', and 'High' risk. The TMPI report that EIM's models have significantly out performed its peer group in each of these categories by 6.21 per cent., 6.45 per cent. and 4.13 per cent. for 2013, and by 15.20 per cent., 9.66 per cent. and 6.72 per cent. respectively for the preceding three years.

EIM classifies revenue into two main categories, management fees and dealing income, although there are sub-categories of services across each of these as set out below:

· Advisory Investment Management.

· Discretionary Investment Management.

· Stockbroking.

· Treasury Management.

In January 2014, EIM became the promoter of a Dublin-based UCITs, an umbrella structure. The fund has been renamed the European Wealth Investment Fund Limited and currently has three sub funds, being a bond fund and two equity funds. The Sterling Bond Fund is managed by EIM's fixed interest team and the two equity funds are currently managed by Hume Capital Management Limited.

EIM operates out of the Brighton, Cheltenham and London offices and currently has 23 staff as well as using the services of 4 consultants. Its revenue in the year to 31 December 2013 was approximately £3.0 million.

EFP

EFP currently acts for 1,381 private clients and 35 corporate pension schemes ranging in size from 10 to 4,500 members, with aggregate funds under advice of approximately £280 million. EFP provides advice to clients covering three core services - financial planning, corporate pension advisory and tax planning.

Corporate pension advisory (obtained through the Bradley Stuart acquisition) is the most significant revenue stream for EFP, generating approximately £1.7 million in 2013. Fees charged are based on the number of members within a scheme. Financial planning and tax planning contribute £0.65 million and £0.50 million to overall EFP revenue respectively.

The financial planning services include:

· Business and shareholder protection.

· Employee benefits.

· Retirement planning.

· Regular savings and cashflow planning. Tax planning services include:

· Lifetime tax planning.

· HMRC approved structures.

· Inheritance tax planning.

· Tax returns.

Corporate pension advisory and tax planning services include:

· Auto-enrolment and group pension plans and director/shareholder pension plans.

· Death in service schemes.

· Key man shareholder protection.

EFP operates predominantly out of the East Malling, Wokingham and Worcester offices with smaller numbers of staff based in other offices. EFP currently has 21 employees as well as using the services of 5 consultants. Its revenue in the year to 31 December 2013 was approximately £2.8 million.

Summary financials

The following summary financial information relating to EWMG has been extracted, without material adjustment, from the historical financial information presented in Part V of the Admission Document.

Year ended Year ended Year ended

31 December 31 December 31 December

2011 2012 2013

£m £m £m

The last six months of 2013 were an important period for the EWMG Group as the expansion of the business continued with the hiring of a number of income-generating staff. Inevitably, the cost of taking these people on together with the continued building of the EWMG Group's infrastructure had an effect on the short term financial performance with EWMG moving from a maiden profit at the half year to a small loss at year end.The total costs of these developments and other non-recurring items totalled £660,000 in 2013. The Directors and Proposed Director believe that the investment will bear fruit during the course of 2014 and provide the EWMG Group with the structure to accommodate further growth as they believe that there will be a continued rationalisation within the industry, a trend of which they believe EWMG is ideally placed to take advantage.

The strategy of the EWMG Group has been to keep all custody and client reporting functions in-house. As a result, the Directors and Proposed Director believe that some 70 per cent. of the Enlarged Group's overhead will be fixed, therefore any additional revenue will have a disproportionate effect on the profitability of the Enlarged Group.

Strategy and future prospects of the Enlarged Group

The Directors and Proposed Director intend to adopt EWMG's strategy of both organic and acquisitive growth which has resulted in the four fold increase in the EWMG Group's AUM over the last 2 years.

EWMG has identified a number of potential acquisition targets and intends to pursue further growth opportunities through strategic acquisitions funded by a mixture of equity and debt, although no specific proposals have extended beyond preliminary discussions.

Together with the search for acquisitions, EWMG has recently formed a business development committee. This committee has been established to develop the European Wealth brand and reputation through effective marketing of its services to clients and the wider industry.

Working capital

The Directors and the Proposed Director are of the opinion, having made due and careful enquiry, that, taking into account the Company's and EWMG's available working capital resources, the Enlarged Group has sufficient working capital available to it for its present requirements, that is for at least 12 months from the date of Admission.

Change to the Company's investment objective and policy

In order for the Company to implement the Acquisition it is necessary under Guernsey law to amend its investment objective and policy.

The current investment policy of the Company is to invest in companies operating in a wide range of sectors, including financial services, property and support services. Assets that the Company can invest in can be both quoted or unquoted and the size of the investment can be both minority stakes and wholly owned subsidiaries.

Resolution 4, as set out in the Notice of EGM, proposes that the Company's investment objective and strategy should be amended to invest solely in EWMG. Post Admission, the Company will become a holding company.

Should Resolution 4 be approved the Company shall apply to the Commission to have its declaration by the Commission as a Registered Closed-ended collective investment scheme cancelled for lack of spread of investment risk. Following Admission, the Enlarged Group will no longer be an investing company under the AIM Rules.

Directors and Senior Management

The Board currently comprises Paul Everitt, Roger Parry, John Morton, Tim Revill, Kish Gopaul and Rod Gentry.

On Admission, Roger Parry will retire from the Board, Buzz West will join the Board as a non-executive director, Paul Everitt will become a non-executive director with Rod Gentry becoming an executive director and John Morton becoming executive Chairman.

On Completion, the Company will become the sole ultimate owner of three FCA authorised entities, therefore meaning that the remaining Directors and Proposed Director will all need to be approved by the FCA. Approval has been secured for Rod Gentry, John Morton and Kish Gopaul and the requisite forms have been submitted for Paul Everitt, Tim Revill and Buzz West. It is hoped that such approval will be forthcoming prior to Admission but, in the event that this is not the case, then the Director or Proposed Director concerned will be required to step down from the Board, temporarily, until the approval is received.

Directors

Paul Michael Everitt (aged 45) (Executive Director)

Mr Everitt is qualified as a chartered accountant and has 20 years' experience in the finance industry, having previously acted as Head of Fund Services for Barclays' offshore operations, with responsibility for their fund administration teams.

He is the co-founder and managing director of Fund Corporation, a Guernsey-based administration firm. He has a wide-ranging practical experience in Guernsey and the UK, in particular with international fund structures.

He is a director of a number of other AIM-traded companies and investment funds including Global Mutual Fund PCC Limited, Zenith International Bond Fund Limited and Hume Global Investors PCC Limited.

Ian Roger ("Roger") Parry (44) (Executive Director)

Mr Parry is a chartered accountant who worked at Phoenix Equity Partners and Barclays Wealth before setting up Fund Corporation with Paul Everitt. Mr Parry is a director of Fund Corporation and specialises in international fund structures.

He is a director of Central Nexus Fund Limited and Strategic Capital Partners PCC Limited.

With effect from Admission, Roger Parry will be stepping down as a result of the de-authorisation of the Company as a regulated company in Guernsey.

Alan John ("John") Morton (54) (Non-Executive Director and Chairman)

Mr Morton is executive chairman and a founder shareholder of EWMG and an executive director of EIM and EFP. He is a member of EWMG's investment management committee and a member of the UK Equity Group.

John was previously the Chief Executive of Syndicate Asset Management plc, having previously been the Chief Executive of Ashcourt Holdings plc.

Prior to that, he was the Investment Director of Brachers.

John has over 32 years' experience of managing institutional and private client portfolios. He also has many years' experience of mergers and acquisitions within the wealth management industry.

On Admission, John will become Executive Chairman of the Enlarged Group.

Timothy ("Tim") John Revill (63) (Non-Executive Director)

Mr Revill qualified as a chartered accountant in 1974 with PKF in London.

In 1978, he established his own practice in the Isle of Man. In 1982, he moved to Gibraltar to open the Gibraltar and Spanish offices of his partnership, which he managed until 1989, when he participated in a management buy-out of the Spanish office and established Fidecs Group S.A.

In 2007, Fidecs Group was reversed into STM Group plc, which was simultaneously listed on AIM. He held the position of Chief Executive Officer of STM Group plc from 27 March 2007 until his retirement on 9 March 2010.

Kishore ("Kish") Kumar Gopaul (61) (Non-Executive Director)

Mr Gopaul has 32 years' experience in international finance and investment. He is the Vice Chairman and Managing Partner of Courvoisier, a 20.4 per cent. shareholder in EWMG, having previously held executive roles at Citibank.

Mr Gopaul is also Vice Chairman of CNG, Vice Chairman of Courvoisier Capital, and Chairman of Merchant Bridge (Switzerland).

Mr Gopaul serves as a non-executive director of EWMG.

Roderick ("Rod") Gentry (55) (Non-Executive Director)

Mr Gentry is a director and the Group Chief Executive of EWMG. He oversees all of EWMG's investment, commercial and operational activities and is the Chair of EWMG's investment management committee and a member of the UK Equity Group.

Previously, he was the Chief Executive of Ashcourt Holdings Limited, and oversaw its development as it reached AUM of £1.5 billion.

Rod has over 20 years' experience in the wealth management industry.

Proposed Director

Kenneth ("Buzz") Reginald Dawson West (59) (Non-Executive Director)

Mr West is a British-Cypriot national who served as an officer in the Welsh Guards from 1972 to 1977. Mr West worked for Reuters plc, first as general manager East Mediterranean (based in Beirut), then sales director EMEA and finally CEO for the Middle East and Africa (based in Bahrain) until 1995. He was Chairman of MXM Security Ltd from 1995 to 1997 and a director of Ceravision Limited from 1995 to 2002. Mr West also served as Chairman of Ashcourt Rowan plc until 2012.

Mr West serves as senior non-executive director for Hume Securities plc, senior independent non-executive director at Norcon plc and Chairman of the UK Loss adjusting company, GAB Robins UK Limited.

Senior Management

Along with John Morton, Rod Gentry and Kish Gopaul the other directors of EWMG are:

Geoffrey ("Geoff") Dearing (65)

Geoff is a director of EWMG, EIM and EFP. He has a wealth of experience in law and investment management. He was previously Chairman of Ashcourt Holdings Limited, and was senior partner of Brachers, a large law firm in the South East of England. Geoff lectures extensively on anti-money laundering, risk management, regulation and compliance.

George Robb (71)

George is the senior non-executive director of EWMG. He has over 40 years' experience in the asset management sector, having been a founding shareholder and later chairman of Aberdeen Asset Management PLC and managing director of Asset Management Investment Company PLC. He has extensive experience on the boards of public and private companies. He is also non-executive chairman of The ECU Group and of Broadband Cloud Solutions Limited and a director of several other companies.

Susan Roughley (50)

Susan Roughley is the director of Human Resources of EWMG, EIM and EFP and is based in the East Malling office. Prior to joining EWMG, she was a director of Ashcourt Holdings Limited, having previously been the Human Resources Manager. Before this she worked for Lloyds of London with responsibility for their front office HR function covering 1,100 employees.

Simon Ray (46)

Simon is a director and the Chief Operating Officer of EIM and is based in Cheltenham. He is responsible for the day to day operational side of the investment business and is also an authorised investment manager. He was previously the head of Aventus Capital Management, and has over 20 years' experience in investment management.

Employees

On Admission, the Enlarged Group will have 54 full time employees and use the services of 11 consultants.

Corporate governance

Due to the size and nature of the Company, it does not currently comply with the full provisions of the UK Corporate Governance Code. However, the Directors and the Proposed Director recognise the importance of sound corporate governance and intend to follow, as far as practicable, the QCA Guidelines. The only major deviation from the QCA Guidelines is the appointment of John Morton as Executive Chairman. With the Board's main focus likely to be securing new acquisitions both in the UK and overseas, the Directors and Proposed Director believe that the division between chief executive and chairman will work better at the subsidiary level in the short term. The Directors and Proposed Director recognises that as the Company grows, there will be a point in the future when such a structure will be sub optimal, at which point the roles of chief executive and chairman will be separated.

The Directors and Proposed Director will be responsible for formulating, reviewing and approving the Enlarged Group's strategy, budgets and corporate activities. Following Admission, the Directors and the Proposed Director intend to hold Board meetings at least four times a year and at other times as and when required. The Company has established an audit committee, a remuneration committee and a nomination committee with effect from Admission.

Details of the committees are set out below.

Audit Committee

The audit committee will be chaired by Tim Revill and will also be comprised of Kish Gopaul. The audit committee is responsible for providing formal and transparent arrangements for considering how to apply suitable financial reporting and internal control principles having regard to good corporate governance and for monitoring external audit functions including the cost-effectiveness, independence and objectivity of the Company's auditors.

Remuneration Committee

The remuneration committee will be chaired by Buzz West and will also be comprised of Paul Everitt. The remuneration committee is responsible for establishing a formal and transparent procedure for developing policy on executive remuneration and to set the remuneration packages of individual Directors. This includes agreeing with the Board the framework for remuneration of the Executive Chairman, all other executive Directors, the Company Secretary and such other members of the executive management of the Company as it is designated to consider. It is also responsible for determining the total individual remuneration packages of each Director including, where appropriate, bonuses, incentive payments and share options. No Director will play a part in any decision about his own remuneration.

Nomination Committee

The nomination committee will be chaired by Kish Gopaul and will also be comprised of Buzz West. The nomination committee is responsible for considering Board appointments, reviewing Board structure, size and composition and identifying the need for Board appointments by reference to the balance of skills, knowledge and experience on the Board and the scale of the Enlarged Group.

Share Dealing Code

The Company has adopted and will operate a share dealing code for Directors and applicable employees in order to ensure compliance with Rule 21 of the AIM Rules for Companies and will take proper steps to ensure compliance by the Directors and those employees.

Dividend and interest policy

New Ordinary Shares

The Board's objective is to grow the Enlarged Group's business and increase shareholder value. Future income generated by the Enlarged Group is likely to be re-invested to implement its growth strategy. In view of this, it is unlikely that the Board will recommend a dividend in the early years following Admission. The Board intends to commence the payment of dividends at a suitable date in the future when it becomes commercially prudent to do so, having regard to the Company's distributable profits and funds required to finance future growth and subject always to the provisions of Guernsey Companies Law.

CLS

Interest shall be payable at a rate of 10% per annum on any outstanding CLS until their proper conversion or redemption. This interest will be payable half-yearly in arrears in respect of the preceeding Interest Period.

Further information on the particulars of the CLS is set out in Part VII of the Admission Document.

Share option scheme

The Directors and Proposed Director believe that it is important that the key personnel of the Enlarged Group are appropriately and properly incentivised.

The Company established a share option scheme in 2007, under which options have been granted over 800,000 shares at an exercise price of 26p per Existing EWG Share.

As at the date of the Admission Document, EWMG had unexercised options over 52,855 shares at exercise prices ranging from £nil to £5.00. On completion of the Acquisition, these options will be exchanged for new options over New Ordinary Shares. The exact number of Options will be determined by the mid-market closing price on the day of Admission, such that the market value of the Options being received is the same as the value of options in EWMG being exchanged ("Acquisition Value"). Based on the value per EWMG share received by the EWMG Shareholder in respect of the Acquisition, the Acquisition Value is £1.146 million. Assuming the mid market closing price on the date of Admission is the same as the Theoretical Post Consolidation Price (in other words there has been no change in the price from the date of the Admission Document) then the Company will need to issue 1,592,410 Options (being £1.146 million as divided by £0.72), representing approximately 12 per cent. of the Enlarged Issued Share Capital on Admission.

An announcement will be released on 8 May 2014 which will state the final Options figure based on the mid market closing price on the date of Admission.

It is the intention of the Directors and Proposed Director to review the existing option scheme post Admission following which eligible persons may be granted further options at the discretion of the Remuneration Committee.

Further details illustrating how the number of Options to be issued will vary with a change in the mid market price on the date of Admission are set out in the Admission Document.

Further details on the existing options and the options to be transferred from EWMG are set out in the Admission Document.

Change of Name

Resolution 9 will be proposed at the Extraordinary General Meeting to change the name of the Company to European Wealth Group Limited. The change of name will take effect after the Guernsey registrar of companies approves the application to change the Company's name.

The ticker for the New Ordinary Shares, EWG, will remain unchanged. The ticker for the CLS will be EWGL.

Changes to Memorandum

By way of background, the Guernsey Companies Law was introduced in Guernsey on 1 July 2008 as a complete revision of Guernsey's companies law. The Memorandum, adopted on incorporation of the Company, was drafted to comply with the requirements of the Companies (Guernsey) Law, 1994 to 1996, as amended. It is proposed that the Company amend its Memorandum to reflect certain changes brought in by the Guernsey Companies Law and to enable the Company to be operationally more flexible.

The Amended Memorandum will reflect, amongst other things, the following changes:

(i) references to the term "Memorandum of Association" will be replaced with the term 'Memorandum of Incorporation';

(ii) references to the Company's authorised share capital will be deleted;

(iii) the Company will be stipulated as being a "non-cellular company"; and

(iv) the objects of the Company will be replaced in their entirety with the statement that the "objects of the Company are unlimited".

In order to effect the proposed amendments to the Memorandum, Existing Shareholders will be asked to approve Resolution 1.

The Company had been previously advised that it was not necessary to formally delete the reference to authorised share capital in its then memorandum of association. New advice has now been received that this should have occurred and hence the share issues since 14 May 2012 have been issued and allotted in excess of this authorised share capital. Resolution 2 is proposed to retrospectively ratify these issues.

New Articles

It is proposed that the Company adopt the New Articles. A copy of the New Articles (together with a comparison showing the changes from the Articles) will also be available on the Company's website: www.ewgrouplimited.com.

The changes to the Articles are required in order to:

1. create the New Ordinary Shares and New Deferred Shares;

2. create the necessary consolidation and conversion mechanism to give effect to the Capital Reorganisation; and

3. create a compulsory redemption mechanism in order that all Existing EWG Shares not subject to the Capital Reorganisation may be compulsorily redeemed at the same time as the Capital Reorganisation.

The New Articles will otherwise be in the same form as the Articles except that they will be called "Articles of Incorporation" rather than "Articles of Association" in order to be compliant with the Guernsey Companies Law. The rights attaching to the New Ordinary Shares will be identical in all respects to those of the Existing EWG Shares except for the change in nominal value.

In order to adopt the New Articles, Existing Shareholders will be asked to approve Resolution 3. Further details of the New Articles are set out in paragraph 5.2.2 of Part VIII.

Capital Reorganisation

The Capital Reorganisation is being proposed primarily because the Company currently has a relatively large number of issued shares and the Directors and Proposed Director believes that the Capital Reorganisation will result in a share price and nominal value more appropriate for a company of EWG's size. This may assist in reducing volatility, thereby enabling a more consistent valuation of the Enlarged Group. Accordingly, the Directors have decided that, subject to the adoption of the New Articles (which will create the new classes of New Ordinary Shares and New Deferred Shares and necessary consolidation, conversion and redemption mechanics), a share reorganisation will be effected by:

1. the consolidation and conversion of each block of 60 Existing EWG Shares into one New Ordinary Share and one New Deferred Share; and

2. where any Existing Shareholder's holding of Existing EWG Shares is not divisible by 60, the compulsory redemption of all of the remaining unconsolidated Existing EWG Shares held by that Existing Shareholder.

Holdings of Existing EWG Shares which are not exactly divisible by 60, will be rounded down to the nearest whole number of New Ordinary Shares and Deferred Shares following the Capital Reorganisation. Fractional entitlements, whether arising from holdings of fewer or more than 60 Existing EWG Shares, will be reclassified as being redeemable at the option of the Company and then redeemed.

The Existing EWG Shares are admitted to CREST. Application will be made for the New Ordinary Shares, including those arising from the Capital Reorganisation and the Consideration Shares, to be admitted to CREST, all of which may then be held and transferred by means of CREST.

New Ordinary Shares arising as a result of the Capital Reorganisation in respect of Existing EWG Shares held in uncertificated form, i.e. in CREST, will be credited to the relevant CREST accounts on 7 May 2014, and definitive share certificates in respect of the New Ordinary Shares arising as a result of the Capital Reorganisation in respect of Existing EWG Shares held in certificated form will be dispatched to relevant shareholders by first class post by 19 May 2014. No temporary documents of title will be issued. Share certificates in respect of Existing EWG Shares will cease to be valid on 7 May 2014 and, pending delivery of share certificates in respect of New Ordinary Shares, transfers will be certified against the register. The record date of the Capital Reorganisation is 6 May 2014.

The rights attaching to the New Ordinary Shares will be identical in all respects to those of the Existing EWG Shares except for the change in nominal value.

The New Deferred Shares will have no voting rights and will not carry any entitlement to attend general meetings of the Company, nor will they be admitted to AIM or any other market. They will carry only the right to participate in the assets available for distribution among members of the Company on a winding-up, up to the nominal amount of such New Deferred Shares. In addition, they will have no right to participate in any dividend or other distribution. The Board will have the right at any time, subject to the Guernsey Companies Law, to redeem all of the New Deferred Shares of any member, upon which the member shall be entitled to payment by the Company of 1p in full settlement of the redemption and cancellation of all such member's New Deferred Shares.

Accordingly, the New Deferred Shares will, for all practical purposes, be valueless and it is the Board's intention, at an appropriate time, to redeem the New Deferred Shares in accordance with the redemption mechanism described above. No certificates will be issued in respect of the New Deferred Shares.

The Notice set out at the end of this document contains Resolutions to give effect to the proposed Capital Reorganisation. The Capital Reorganisation is conditional upon the approval of the Existing Shareholders at the Extraordinary General Meeting as required by the Guernsey Companies Law and the Articles.

Admission, settlement and CREST

The Acquisition constitutes a reverse takeover under the AIM Rules for Companies and is therefore dependent on the approval of the Existing Shareholders being given at the Extraordinary General Meeting. Subject to the passing of the Resolutions, application will be made to the London Stock Exchange for the Enlarged Issued Share Capital and the CLS to be admitted to trading on AIM. Admission of the Enlarged Issued Share Capital and the CLS to trading on AIM is expected to take place on or around 7 May 2014.

The New Ordinary Shares and the CLS will be eligible for CREST settlement. Accordingly, settlement of transactions in New Ordinary Shares and CLS following Admission may take place within the CREST system if the relevant Shareholder (or CLS Holder) so wishes.

CREST is a voluntary system and Shareholders (or CLS Holders) who wish to receive and retain certificates will be able to do so.

It is expected that, subject to the satisfaction of the Conditions, the Consideration Shares and CLS will be registered in the respective names of the EWMG Shareholders and CNG and issued either:

· in certificated form, where the relevant EWMG Shareholder or CNG so elects, with the relevant share certificates and loan stock certificates expected to be despatched by post, at their risk, by 19 May 2014; or

· in CREST, where the relevant EWMG Shareholder or CNG so elects (but only if they are a member (as defined in the CREST Regulations) in relation to CREST), with delivery (to the designated CREST account) of the relevant Consideration Shares and CLS expected to take place on 7 May 2014.

Notwithstanding the election by any EWMG Shareholder or CNG as to the form of delivery of the Consideration Shares and the CLS, no temporary documents of title will be issued. All documents or remittances sent by or to the EWMG Shareholders or CNG or as they may direct will be sent through the post at their risk.

Pending the despatch of definitive share certificates and loan stock certificates (as applicable), instruments of transfer will be certified against the register.

Orderly market arrangements

At Admission, the Directors, Proposed Director, the EWMG Concert Party and the Courvoisier Concert Party will hold or be interested in, directly and indirectly, an aggregate of 7,563,153 New Ordinary Shares, representing approximately 57.4 per cent. of the Enlarged Issued Share Capital and approximately 93.2 per cent of the CLS in issue.

The Directors, Proposed Directors, the EWMG Concert Party and the Courvoisier Concert Party have agreed for the period of one year following Admission they shall only dispose of any interest in New Ordinary Shares or CLS that they may have on Admission (or subsequently acquire) in accordance with orderly market principles with prior written notice to the Company's nominated adviser and broker, such disposal to be made through the Company's broker, except in certain restricted circumstances.

Takeover Code

The Takeover Code is issued and administered by the Panel. The Takeover Code applies to all takeovers and merger transactions, however effected, where the offeree company is, inter alia, a listed or unlisted public company resident in the UK, the Channel Islands or the Isle of Man and to certain categories of private limited companies. The Company is such a company and, therefore, Existing Shareholders are entitled to the protection afforded by the Takeover Code.

Under Rule 9 of the Takeover Code, where any person acquires, whether by a series of transactions over a period of time or otherwise, an interest (as defined in the Takeover Code) in shares which, taken together with shares in which he is already interested or in which persons acting in concert with him are interested, carry 30 per cent. or more of the voting rights of a company which is subject to the Takeover Code, that person is normally required to make a general offer to all the remaining shareholders to acquire their shares.

Similarly, Rule 9 of the Takeover Code also provides that when any person, together with persons acting in concert with him, is interested in shares which, in aggregate, carry more than 30 per cent. of the voting rights of such company, but does not hold shares carrying 50 per cent. or more of such voting rights, a general offer will normally be required if any further interest in shares is acquired by any such person. Note 4 of Rule 9 of the Takeover Code further provides, among other things, that where any person who, together with persons acting in concert with him, holds over 50 per cent. of the voting rights of a company acquires further shares, then an obligation to make a general offer to the other shareholders to acquire the balance of their shares will not normally arise.

An offer under Rule 9 must be in cash (or accompanied by a cash alternative) and must be at the highest price paid by the person required to make the offer, or any person acting in concert with him, for any interest in shares of the company in question during the 12 months prior to the announcement of the offer.

Under the Takeover Code, a concert party arises when persons, pursuant to an agreement or understanding (whether formal or informal), actively co-operate, through the acquisition by any of them of shares, in a company, to obtain or consolidate control of that company. Under the Takeover Code, "control" means an interest, or aggregate interest, in shares carrying 30 per cent. or more of the voting rights of a company, irrespective of whether the interest or interests give de facto control.

The obligation that would otherwise arise to make a general offer under Rule 9 of the Takeover Code can be waived when that obligation arises on account of an issue of new shares and provided that, among other things, this waiver is approved by a vote on a poll of independent shareholders at a general meeting. Accordingly, as set out below, the approval of Independent Shareholders is being sought for the waiver.

The members of the EWMG Concert Party, who are the founding shareholders of EWMG and associated family members, are deemed to be acting in concert for the purposes of the Takeover Code. The EWMG Concert Party comprises Alan John Morton, Rebecca Linda Morton, Lauren Camilla Morton, Alan James Morton, Roderick Gentry, Susan Jane Roughley, Geoffrey Gordon Dearing, George Alan Robb, Jonathan Alexander Robb, Judith Olivia Robb and Moira Ann Robb.

Further details regarding the members of the EWMG Concert Party can be found in paragraph 1 of Part III of the Admission Document.

The EWMG Concert Party currently holds in aggregate 153,926,500 Existing EWG Shares, representing 24.29 per cent. of the issued share capital of EWG as at the date of the Admission Document. Following the Acquisition, the EWMG Concert Party will hold in aggregate 4,632,789 New Ordinary Shares, representing 35.17 per cent. of the issued voting share capital of EWG, which, without a waiver of the obligations under Rule 9 of the Takeover Code, would oblige one or more members of the EWMG Concert Party to make a general offer to Existing Shareholders under Rule 9 of the Takeover Code.

Following the Acquisition and assuming the conversion of all CLS and exercise of all options held by the EWMG Concert Party, the EWMG Concert Party would together hold in aggregate 8,577,821 New Ordinary Shares, representing a maximum (if no other New Ordinary Shares were issued by the Company, whether pursuant to the conversion of any other CLS or otherwise) of 50.11 per cent. of the issued New Ordinary Shares, as enlarged by the conversion of such CLS and exercise of Options, which, without a waiver of the obligations under Rule 9 of the Takeover Code, would oblige the members of the EWMG Concert Party to make a general offer to Existing Shareholders under Rule 9 of the Takeover Code.

The Panel has agreed, however, subject to the approval (on a poll) of the Independent Shareholders at the Extraordinary General Meeting, to waive the obligation for the EWMG Concert Party (or any member of it) to make a general offer that would otherwise be required as a result of:

(a) the issue of New Ordinary Shares in connection with the Acquisition; or

(b) any subsequent conversion by any member of the EWMG Concert Party of any CLS issued to such person pursuant to the Acquisition; or

(c) any exercise by any member of the EWMG Concert Party of any Option held by any member of the EWMG Concert Party.

Following the Acquisition and assuming the conversion of all CLS by members of the EWMG Concert Party at the earliest opportunity (i.e. the first Dividend Announcement Date on 3 November 2014) and exercise of all options held by the EWMG Concert Party, the EWMG Concert Party would hold more than 50 per cent. of the Enlarged Issued Share Capital. In these circumstances, for so long as the members of the EWMG Concert Party continue to be treated as acting in concert, the EWMG Concert Party may increase their aggregate interest in shares in the Company, without incurring any obligation under Rule 9 to make a general offer (provided that no individual member of the EWMG Concert Party will be able to increase his or her percentage interests in shares through or between a Rule 9 threshold without the Panel's consent).

Following Admission, the Courvoisier Concert Party will hold £3,492,500 of CLS which, if converted and assuming no other CLS or options are converted or exercised, could result in the Courvoisier Concert Party holding approximately 42 per cent. of the Enlarged Issued Share Capital. The Courvoisier Concert Party has written to the Company declaring that it will not convert its holding of CLS if such conversion would result in the Courvoisier Concert Party holding at least 30 per cent. of the Company's voting rights. In the event that any member of the Courvoisier Concert Party does convert its holding, and this results in the Courvoisier Concert Party holding at least 30 per cent. of the Company, then they would be required to make a mandatory offer under Rule 9 of the City Code.

Related Party Transaction

The EWMG Shareholders and CNG are a 'related party' as defined by the AIM Rules for Companies and are entering into the SPA in relation to the Acquisition. Further, the Acquisition is a related party transaction for the purposes of AIM Rule 13. The Independent Directors consider, having consulted with Daniel Stewart, that the terms of the Acquisition are fair and reasonable insofar as the Existing Shareholders are concerned.

Extraordinary General Meeting

The Notice of EGM contains information on the EGM, which is to be held at Roseneath, The Grange, St Peter Port, Guernsey, GY1 2QJ on 6 May 2014 at 9.00 a.m., for the purpose of considering and, if thought fit, passing the Resolutions.

Resolution 1 will be to amend the Memorandum in order to take account of certain changes in Guernsey law and also take account of the proposed changes in the other Resolutions.

Resolution 2 will be to confirm and ratify (so far as possible) certain irregularities in previous reorganisations of the Company's share capital.

Resolution 3 will be to change the Articles, including, inter alia, the ability to re-organise the share capital and create the Ordinary Share and Deferred Share classes.

Resolution 4 will be to modify the Company's investment objective and strategy to invest solely in EWMG.

Resolution 5 will be to consolidate each 60 share block of Existing EWG Shares held by the Existing Shareholders into one Ordinary Share and one Deferred Share and redeem at par any Existing EWG Shares held by an Existing Shareholder and not within a block divisible by 60.

Resolution 6 will be to grant the Directors the authority to issue and allot shares, including the Consideration Shares and also to disapply pre-emption rights over such shares.

Resolution 7 will be to approve the Acquisition.

Resolution 8, the Whitewash Resolution, seeks to approve the waiver of the obligation contained in Rule 9 of the Takeover Code with respect to the EWMG Concert Party. Resolution 8 will be conducted by way of a poll and may only be voted on by the Independent Shareholders.

Resolution 9 will be to change the name of the Company to European Wealth Group Limited.

Resolutions 5, 6, 7 and 8 will be ordinary resolutions. Resolution 8 will be conducted by way of a poll and may only be voted on by the Independent Shareholders. Resolution 1, 2, 3, 4 and 9 are special resolutions and require 75 per cent. of the vote to pass.

Irrevocable undertakings

Insofar as they are interested in Existing EWG Shares, the Directors and Proposed Director and persons connected with them have given irrevocable undertakings to the Company to vote in favour of the ordinary Resolutions 5, 6 and 7 and vote in favour of the special Resolutions 1, 2, 3, 4 and 9 to be proposed at the Extraordinary General Meeting (and, where relevant, to procure that such action is taken by the relevant registered holders if that is not them) in respect of their entire beneficial holdings totalling, in aggregate, 283,608,692 Existing EWG Shares, representing approximately 44.8 per cent. of the total number of Existing EWG Shares in issue.

In addition, certain other Existing Shareholders have given irrevocable undertakings to the Company to vote in favour of the ordinary Resolutions 5, 6 and 7 and vote in favour of the special Resolutions 1, 2, 3, 4 and 9 to be proposed at the Extraordinary General Meeting (and, where relevant, to procure that such action is taken by the relevant registered holders if that is not them) in respect of their holdings totalling, in aggregate, 109,561,871 Existing EWG Shares, representing approximately 17.3 per cent. of the total number of Existing EWG Shares in issue.

In total, therefore, the Company has received irrevocable undertakings to vote in favour of the ordinary Resolutions 5, 6 and 7 and vote in favour of the special Resolutions 1, 2, 3, 4 and 9 to be proposed at the Extraordinary General Meeting in respect of holdings totalling, in aggregate 393,170,563 Existing EWG Shares, representing approximately 62.0 per cent. of the total number of Existing EWG Shares in issue.

The EWMG Concert Party and the Courvoisier Concert Party are precluded from voting on the Whitewash Resolution. The Company has received irrevocable undertakings from the Independent Directors and certain other Independent Shareholders to vote in favour of Resolution 8 to be proposed at the Extraordinary General Meeting in respect of holdings totalling, in aggregate 141,142,800 Existing EWG Shares, representing approximately 37.0 per cent. of the total number of Existing EWG Shares in issue, excluding those held by the EWMG Concert Party and the Courvoisier Concert Party.

Expected timetable of principle events

Definitions

Except where the context otherwise requires, the following definitions shall apply throughout this announcement as defined in the Admission Document: