Kingswood H. Regulatory News (KWG)

1 October 2018

The information communicated in this announcement contains inside information for the purposes of Article 7 of the Market Abuse Regulation (EU) No. 596/2014.

KINGSWOOD HOLDINGS LIMITED

("Kingswood" or the "Group")

KW Wealth acquires Marchant McKechnie

Kingswood Holdings Limited (AIM: KWG), the integrated wealth management group, which trades under the name KW Wealth, has acquired (the "Acquisition"), subject to FCA approval, Marchant McKechnie Independent Financial Advisers Ltd ("Marchant McKechnie").

The total maximum consideration payable for the Acquisition is £4.0 million. This consideration comprises an initial cash payment of £1.6 million with a deferred sum of up to £2.4 million. This is payable in cash or, at the seller's request and Kingswood's agreement, Kingswood shares, subject to certain revenue metrics being achieved over the next two years. For the year to 31 December 2017, Marchant McKechnie generated EBITDA of £855k, meaning the Acquisition has been completed at a valuation of 4.7x 2017 EBITDA. For the same period Marchant McKechnie generated profit after tax of £499k. The Acquisition is expected to be immediately earnings enhancing to the Group.

Based in Beverley, East Yorkshire, Marchant McKechnie offers a wide range of services to its clients, including personal and company pensions, investments, and tax planning. Marchant McKechnie serves around 700 clients and has about £200 million of assets under advice ("AUA").

Following the Acquisition, the Group will have over £2.0 billion of AUA, 20 financial advisors and more than 4,000 active clients. Marchant McKechnie will continue to operate from its existing office in Beverley and will become KW Wealth's seventh regional office in the UK, after London, Manchester, Cheltenham, Maidstone, Brighton and Worcester.

The Acquisition is part of KW Wealth's strategy to become a leader in the UK wealth management market and represents the Group's first acquisition since the rebrand from European Wealth in September 2018.

A further announcement will be made upon completion of the Acquisition following receipt of the requisite FCA approval.

Marianne Ismail, CEO of KW Wealth said: "Marchant McKechnie is a strong addition to the Group as we look to build a new national brand in the UK wealth market. Marchant McKechnie shares our commitment to delivering high levels of customer service to clients over the long-term.

"The UK wealth market is excessively fragmented, and we believe that there is a substantial market opportunity to build a national brand for quality, independent wealth planning advice and investment management.

"The rebranding of European Wealth to KW Wealth and the acquisition of Marchant McKechnie are first steps. Our objective is to grow both organically and dynamically by acquisition in the UK and US, and we are actively looking at opportunities in both countries. The Group has a strong and scalable operating platform with the capacity to support incremental revenue and earnings growth from future acquisitions, delivering improved profitability for the Group as a whole."

Neil McKechnie, Founder, Marchant McKechnie, commented: "I am delighted that in KW Wealth we have found an owner who shares our philosophy of working in a way that is always centred on what is right for the client. KW Wealth has a strong platform that will enable a number of synergies to be realised through the combination of our businesses and we look forward to playing our part in helping KW Wealth achieve their ambition of becoming one of the leading wealth management providers in the UK market."

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