Kingswood H. Regulatory News (KWG)

30 September 2013

EW Group Limited

("EW Group" or the "Company")

Unaudited interim results for the six months ended 30 June 2013

EW Group Limited (AIM: EWG) today announces its unaudited results for the six months ended 30 June 2013.

Highlights

· Net assets increased by 70% to £5.6 million at period end (£3.3 million at 31 December 2012);

· £1.4 million of new equity raised;

· Balance sheet strengthened following the conversion of £1.0 million of loans during period; and

· Board strengthened with appointment of new director.

Portfolio update

· Increase in investment in European Wealth Management Group plc ("European Wealth") from 33.3% to 48.8%;

· Stake in European Wealth now valued at approximately £3.9m;

· European Wealth's turnover up 160% compared to H1 2012 and reports maiden interim operating profit; and

· Establishment of EW Investments Limited to hold quoted investment portfolio.

Paul Everitt of EW Group Limited, said:

"The first half of 2013 has seen a continued focus by the Company in maximising value from its core investment in European Wealth, which the directors believe has the potential to drive significant shareholder value over the medium term.

'The directors would like to thank the Company's shareholders for their continued support over the recent months and anticipate being able to deliver additional positive news in due course."

ENDS

EW Group Limited

Paul Everitt: +44 (0)14 8173 2888

John Morton: +44 (0)7540 726 291

www.ewgrouplimited.com

Daniel Stewart & Company Plc - Nominated Adviser and Broker

Antony Legge, Director, Corporate Finance: +44 (0)20 7776 6550

GTH Communications

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

The report is available to view and download from the Company's website at www.ewgrouplimited.com

DIRECTORS' REVIEW

Overview

We are pleased to present the Company's unaudited interim results for the six months to 30 June 2013 to shareholders.

EW Group is a Guernsey registered strategic investment company with a focus on investing in financial services businesses. The Board's aim is to bring together high quality, complementary financial services businesses in order to build an integrated financial services group.

Summary of investments

European Wealth Management Group plc ("European Wealth")

European Wealth is a fast growing private wealth management business founded in 2010 with headquarters in London and regional offices throughout southern and central England. Through its operating subsidiaries, European Wealth now provides investment management and financial planning services to almost 5,000 clients. EW Group initially acquired a 33.3% shareholding in European Wealth in April 2012 and increased its holding to 48.8% in March 2013. As at 30 June 2013, EW Group's shareholding in European Wealth was valued at approximately £3.9 million.

During the first six months of 2013, European Wealth's turnover increased by 164% to more than £3.0 million, compared to £1.15 million for the first half of 2012, producing an operating profit of £0.24 million compared to a loss of £0.1 million for the same period in 2012. Contracted assets under management ("AUM") have grown by 5% over the first six months and now stand at £0.63 billion. This significant increase in revenue in the period has been the result of both organic growth and a strong performance of the businesses acquired in late 2012, which have integrated well.

Turnover for the second half is expected to mirror that of the first half but, with a further £0.2 billion of AUM expected to be added over the coming months and projections by the management of European Wealth of close to £0.9 billion AUM by 31 December 2013, turnover is expected to grow strongly again next year. With operating costs being carefully controlled, the management of European Wealth expect to benefit from significant operational gearing leading to operating profits more than doubling for the full year.

European Wealth continues to build a broad based wealth management business with non-correlated income streams and, so far this year, has made a number of significant hires. On the fixed income side, its fixed-interest team has been further strengthened by the arrival of another highly experienced investment manager and an analyst. Meanwhile a senior business development manager has been recruited to expand the number of professional intermediaries that introduce business to European Wealth.

As part of European Wealth's strategy to continue growing the portfolio of relevant services for its client, the Company is pleased to report that one of European Wealth's subsidiaries, European Investment Management ("EIM") became a full member of the London Stock Exchange in the first half of this year. This is part of an expansion strategy to create a centralised dealing desk and introduce a new execution-only service to its clients. EIM now has 18 registered individuals of which 13 are client facing and turnover for EIM during the period was £1.5 million. As at 30 June 2013, EIM had funds under management of £378 million, with a further £235 million in the pipeline.

Operating from five offices, European Wealth's financial planning arm, European Financial Planning ("EFP") has also expanded through the recruitment of three additional advisers, taking the total registered individuals to 22, of which 15 are client facing. EFP had funds under advice of £246 million at 30 June 2013 and recorded turnover for the six month period of £1.6 million.

As a result of the European Wealth's continued growth, it has invested heavily in its infrastructure including the recruitment of a specialist compliance professional for each regulated business which has reduced European Wealth's dependency on external consultants. 

EW Group is fully committed to supporting the ongoing development of European Wealth which was reflected by our continued investment into the business through the advance of a further £0.94 million of loans to European Wealth during the period and an additional £0.3 million of loans in August 2013, such that, at today's date, outstanding loans made to European Wealth stand at £1.97 million. The Company has high expectations that European Wealth will deliver significant additional value to EW Group's shareholders in the coming months and years.

Quoted Company Portfolio - EW Investments Limited

With the Company's recent investment activity having been heavily focused on supporting the growth of European Wealth, the Company's largest investment to date, the Company's quoted company portfolio has not been expanded during the period, albeit it delivered a return of almost 20% on its investments. At the beginning of the year, the Company had investments in 3 quoted companies with an investment value of approximately £0.03 million. During the period, all of these investments were transferred into a newly formed wholly owned subsidiary, EW Investments Limited, in order for the Board to manage more effectively its portfolio of quoted investments as distinct from its investment in unquoted European Wealth. In May 2013, the Company disposed of its investment in unquoted CMS Corporate Consultants Limited ("CMS") to its management.

Financial review

Profit and loss account review

The Company's overall unaudited net loss for the period was £116,245 (H1 2012: £169,382) The Company's income during the period comprised of interest receivable of £76,060 (H1 2012: £25,253), representing interest due primarily on loans made to European Wealth. The Company's quoted company portfolio also returned a small gain of £5,686 during the period (H1: £26,482).

The Company incurred interest charges of £21,472 in the first half, relating to interest on its £1.0 million convertible loan note issued variously from October 2012 to February 2013 ("Loan Note"). Pleasingly, during the period under review, all of the holders of the Loan Notes elected to convert their Loan Notes into new Ordinary Shares, resulting in the issue in June 2013 of 142,857,143 new Ordinary Shares. With an increase in the loans to European Wealth and a decrease in the Company's debt, net interest income is expected to be higher in the second half.

Administration expenditure during the period was down by more than 10% compared to the same period in 2012 at £197,991 (H1 2012: £221,117). Legal and professional fees in the six month period were reduced significantly on those incurred in the corresponding period in 2012 at £87,229 (H1 2012: £151,716), reflecting the lower levels of investment activity. All of which contributed to the Company reporting a reduced loss per share for the period of (0.03) pence (H1 2012: (0.11) pence).

Balance sheet review

The value of the Company's overall net assets at 30 June 2013 increased by more than 200% to £5.64 million compared to the same time last year (30 June 2012: £1.85 million) and increased by a further 70% compared to the audited carrying value as at 31 December 2012 of £3.32 million.

This increase was primarily due to the increase in the Company's holding in European Wealth from 33.3% in December 2012 to almost 49% in March 2013 and also due to the conversion of £1.0 million of Loan Notes, as described above. The further investment in European Wealth was financed in part through the conversion of £822,000 of loans previously made by the Company to European Wealth and the acquisition of existing shares in European Wealth to the value of £781,652 through the issue of 56,847,461 new Ordinary Shares to the vendors. Following this investment, the Company's 48.8% stake in European Wealth was valued at approximately £3.91 million.

The Company's holding in European Wealth was revalued upwards as part of the audit for the year ended 31 December 2012, leading to an unrealised profit on investments of approximately £1.4 million for the year ended 31 December 2012. No such exercise has been carried out in the first half of 2013 but is expected to be undertaken as part of the Company's year-end audit when, given the continued growth in AUM, revenue and profits of European Wealth, a further uplift in the carrying value of the Company's shareholding in European Wealth may be recognised.

The aggregate value of loans made by the Company to investee companies in the period increased from £1.58 million at 31 December 2012 to £1.69 million at the end of June 2013, of which, £1.67 million were made to European Wealth ("European Wealth Loans"). All of the European Wealth Loans are unsecured and carry interest at 10% per annum. £736,000 of the European Wealth Loans is capable of conversion into new shares in European Wealth (subject to regulatory and shareholder approvals) on or before their redemption date in October 2014 with the balance of £935,407 as at 30 June 2013 being short term loans repayable within 12 months ("Short Term Loans").

As announced on 15 August 2013, £310,407 of the Short Term Loans were consolidated and aggregated with a further £300,000 of new lending to European Wealth into a new £610,407 loan, which, like the others, is unsecured and carries interest at 10% per annum. It is repayable in August 2014. Accordingly, as at the date of this report, the total principal amount of outstanding loans to European Wealth has increased to approximately £1.97 million.

The £300,000 of new lending made to European Wealth in August was financed by an unsecured two year loan of £300,000 from a new third party investor which bears interest at 10% payable annually.

As at 30 June 2013, the Company had current assets of £93,540 and short term liabilities of £120,133. There were no longer term debts at the period end, although the Company has since issued a £300,000 two year loan as described above. At 30 June 2013, the Company's net asset value per share stood at 1.0 pence per share, an increase of more than 50% since the same time last year.

Director changes

On 6 March 2013, John Morton joined the board as a non-executive director. John is a founder shareholder of European Wealth and has more than 33 years' experience of managing institutional and private client accounts, and the management and acquisition of wealth management businesses.

Name change

As approved by the Company's shareholders at the extraordinary general meeting held on 8 January 2013, the Company changed its name to EW Group Limited to better reflect the Company's investments in financial and wealth services, and particularly its interest in European Wealth, which is by far the largest investment made by the Company to date. 

Current trading and outlook

2013 has seen the on-going impact on the financial services sector of the Retail Distribution Review. The increase in regulatory costs is driving wholesale change with some larger firms reducing their exposure to small clients and smaller firms struggling to remain profitable. This environment is providing both organic growth and consolidation opportunities for the Company to exploit through its investment in European Wealth, and the directors look to the second half of 2013 and beyond with confidence.

The directors would like to thank the Company's shareholders for their continued support over the recent months and anticipate being able to deliver additional positive news in due course.

Paul Everitt

Director

30 September 2013

NOTES TO THE UNAUDITED FINANCIAL STATEMENTS

30 JUNE 2013

1. ACCOUNTING POLICIES

(a) CONVENTION

These unaudited interim results have been prepared using the same accounting policies, presentation and methods of computation adopted in the last audited financial statements, which were prepared in accordance with applicable United Kingdom Accounting Standards.

2. EARNINGS PER SHARE

The calculation of basic earnings per share is based on the net return on ordinary activities after tax for the period and on the weighted average number of the Company's ordinary shares of 0.1 pence ("Ordinary Shares") in issue during the period. Accordingly, the weighted average number of Ordinary Shares in issue for the six months ended 30 June 2013 was 374,954,068 (2012: 149,133,786).

3. CALLED UP SHARE CAPITAL

On 6 March 2013, the Company increased its holding in European Wealth from 33.3% to approximately 48.8% through two transactions. Under the first transaction, European Wealth issued 61,991 ordinary shares in European Wealth ("Sale Shares") to the Company in satisfaction of loans owing by European Wealth to the Company of £822,000. Under the second transaction, the Company acquired 58,948 shares in European Wealth. Consideration for the Sale Shares was satisfied by the issue to the sellers of 56,847,461 Ordinary Shares. This increased the number of Ordinary Shares in issue to 356,552,469.

On 10 April 2013, the Company completed a subscription to raise, in aggregate, £626,750 through the issue of 62,675,000 Ordinary Shares to new and existing investors at a subscription price of 1p per Ordinary Share ("Subscription"). On the same day, the Company also issued 3,250,000 Ordinary Shares in satisfaction of professional fees incurred in connection with the Subscription. As a result of these two share issues, the number of Ordinary Shares in issue increased to 422,477,469.

On 5 June 2013, 142,857,143 Ordinary Shares were issued in connection with the conversion of £1.0 million of unsecured convertible loan note issued by the Company variously between October 2012 and February 2013. Accordingly, the Company's issued share capital increased to 565,334,612 Ordinary Shares and it remains at this level as at the date of this interim report.

4. NET ASSET VALUE PER SHARE

The calculation of net asset value per share is based on the net assets of £5,644,473 (2012: £1,853,741) and on the ordinary shares in issue of 565,334,612 at the balance sheet date (2012: 299,705,008).