Audited Results for year ended 31 December 2013

17 April 2014

EW Group Limited

("EW Group" or "the Company")

Audited results for the year ended 31 December 2013

EW Group (AIM: EWG) today announces its audited results for the year ended 31 Dceember 2014.

Highlights

· Net assets more than doubled to £8.0 million (2012:£3.3 million)

· European Wealth doubled revenues to approximately £5.8 million in 2013 (2012: £2.5 million) with an adjusted EBITDA of £0.2 million (2012: £0.2 million loss)

· Funds under managment and influence at European Wealth of approximately £0.7 billion

· Post period, proposed Acquisition of European Wealth Management Group Ltd for consideration of £7.1 million.

Paul Everitt of EW Group, said:

"2013 was a period of strong growth for European Wealth, our largest investment which has grown its funds under managent and influence to approximately £0.7 billlion.

"The Board believes that the potential for acquisitive and organic growth within European Wealth will benefit from direct acess to capital markets and hence have agreed tems for the consolidation of European Wealth into EW Group, which has been announced today. This is the culmination of the Company's investment strategy since 2012 when it first recognised the potential of European Wealth. Since that initial investment, the value of European Wealth has increased over six fold, and we look forward to the continued increase in value for our shareholders."

ENDS

EW Group Limited

Paul Everitt: +44 (0)14 8173 2888

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' REPORT

EW Group is an AIM-quoted Guernsey registered investment company. Incorporated in 2004 and admitted to trading on AIM in 2005, the Company's investment policy permits investments to be made in, amongst other things, private and publicly quoted companies across a wide range of sectors with no limit on the percentage ownership that EW Group can hold in any investee company.

The Company is pleased to report that it has more than doubled the value of its net asset base during the course of the 2013 financial year from approximately £3.3 million at the start of the year to approximately £8.0 million at 31 December 2013. Profit on ordinary activities for the year also increased to approximately £1.56 million (2012: £1.17 million) which, like 2012, was mainly due to the unrealised gain on investments of approximately £1.71 million on the Company's holding in European Wealth Management Group plc ("European Wealth") (2012: £1.39 million gain).

In addition, the Company is pleased to announce that it has agreed the conditional acquisition of all of the issued shares in European Wealth not already owned by EW Group (the "Acquisition"), valuing the whole of European Wealth at £13.45 million. The consideration is in the form of both Ordinary Shares in EW Group and new convertible loan stock to be issued by EW Group and admitted to trading on AIM. Following readmission to trading on AIM, the Company will no longer be an investment company but the holding company of a trading group. Further details on this proposal are set out in the admission document to be sent to the Company's shareholders today. A copy is also available on the Company's website www.ewgrouplimited.com.

Investments

European Wealth

European Wealth, the Company's largest investment by far, is a fast growing private wealth management business which was founded and commenced trading in 2010. Its core services are financial planning, corporate pension advisory and investment management in both equity and fixed interest instruments. Its client base currently ranges from individuals with up to £10 million of assets to invest to institutions managing up to £100 million.

European Wealth's management's conscious decision to develop financial planning and investment management platforms concurrently provides its clients with the widest possible range of expertise at the same time as removing reliance upon lumpy clients or significant stock market swings for its shareholders in the current year.

European Wealth doubled revenues to approximately £5.8 million in 2013 from approximately £2.5 million in 2012 with an adjusted EBITDA of £0.2 million (2012: £0.2 million loss). European Wealth's average employee numbers in 2013 increased to 35 from 31 in 2012, operating out of its offices in London, Brighton, Cheltenham, East Malling, Wokingham and Worcester.

The directors believe that there are significant opportunities available to European Wealth to continue to grow as the consolidation in the wider wealth management market continues and ever increasing regulatory changes force the smaller wealth management firms to seek complementary business with which to merge.

Acquisition

In April 2012, EW Group made its initial investment in European Wealth, acquiring 33.3% of that company's share capital at an approximate value of £0.92 million; and valuing the whole at £2.17 million. At the time, European Wealth had funds under management and influence of £150 million.

In March 2013, the Company acquired further shares in European Wealth through a direct acquisition of shares from other European Wealth shareholders for consideration comprising the issue to them of Ordinary Shares in the Company and the conversion of loans of £822,000 owed by European Wealth to the Company into new shares in European Wealth, resulting in an increase in the shareholding in European Wealth to 48.8%. Based on the directors' assessment at the time, this valued the Company's investment in European Wealth at approximately £3.9 million.

As at 31 December 2013, European Wealth had grown its funds under management and influence to approximately £660m and the directors assessment of the value of the Company's investment in European Wealth had increased to £5.63 mllion, valuing the whole group at £11.5 million.

As at today, European Wealth's funds under management and influence have grown to approximately £0.7 billion. The Acquisition values European Wealth at approximately £13.45 million with the total consideration being approximately £7.1 million to be satisfied by the issue of Ordinary Shares in EW Group and the issue of new convertiable loan stock in EW Group, which will also be admitted to trading on AIM.

The Acquisition is conditional upon, inter alia, the approval of the Company's shareholders and an extraordinary general meeting has been convened for 6 May 2014. Notice of the extraordinary general meeting will be issued with the admission document sent to shareholders today. Following completion of the Acquisition, the Company will cease to be an investing company and will be the holding company of the European Wealth group.

Quoted Company Portfolio - EW Investments Limited

During the year under review, the Company created a new wholly owned subsidiary, EW Investments Limited to hold its portfolio of quoted investments as distinct from its investment in unquoted European Wealth. As at the beginning of the year, the Company held investments in 3 quoted companies valued at approximately £0.03 million. This quoted portfolio has not been expanded due to the Company's investment activity being heavily focused on supporting the growth of European Wealth. As at the balance sheet date, EW Investments held one investment valued at £0.01 million.

Disposal

In May 2013, the Company disposed of its investment in unquoted CMS Corporate Consultants Limited ("CMS") to that company's management for a consideration of £0.04m, being its carrying value at 31 December 2012.

Mezzanine loans

At the beginning of the year, the Company had outstanding loans due for repayment of £1.58 million, £1.56 million of which were due from European Wealth and £0.82 million of which were converted into new equity in European Wealth in March 2013. During 2013, the Company made further loans to European Wealth totalling £2.3 million, £0.3 million of which were subsequently repaid, bringing the balance to approximately £2.75 million at the year end. These loans attract interest at 10% per annum, are unsecured with £0.74 million of them being convertible, at the Company's option, into new shares in European Wealth.

Summary of activities

In January 2013, shareholders approved a change in the Company's name from Kingswalk Investments Limited to EW Group Limited. This change was to better reflect the Company's investments in financial and wealth services, and particularly its interest in European Wealth.

During the 2013 financial year, the Company successfully raised more than £2.08 million in new equity and debt funds and invested £1.9 million in debt and £822,000 in equity (through the settlement of outstanding debt) in supporting the growth of European Wealth.

The £625,000 of convertible debt issued by the Company that was outstanding at the beginning of the year, together with a further £375,000 issued in February 2013, was converted into new ordinary shares of 0.1 pence each in the Company ("Ordinary Shares") during the first half of 2013, strengthening the Company's balance sheet. Following the entry by the Company into two new loans of £300,000 and £200,000 in August 2013 and December 2013, respectively (the proceeds of which were lent on to European Wealth), the Company's debt position as at the balance sheet date was £0.5 million.

At the end of the year, the Company had equity investments in 2 companies valued at approximatley £5.64 million, 99.8% of which related to the Company's holding in European Wealth, and a loan book, comprised almost exclusively of interest bearing loans made to European Wealth, of approximately £2.76 million.

During the year under review, in line with the Board's strategy to focus its short term investment activities on supporting European Wealth's consolidation plans, £1.9 million was lent to European Wealth financed in part through the issue at 1 pence of approximately 121,115,000 million Ordinary Shares in two separate fundraisings in April and October, which raised a total of approximately £1.21 million of new money, and in part through the proceeds of loans to the Company from third party investors totalling £500,000. These loans are unsecured and bear interest at a rate of 10 per cent. per annum.

The Board was strengthened during the year with the appointment of Mr John Morton in March 2013. Mr Morton brings to the Company a wealth of experience in the financial services sector. He is the Executive Chairman and founder shareholder of European Wealth, and a significant shareholder in the Company.

Financial review

The Company achieved a gain on investments in the year of £1.71 million (2012: £1.43 million) which was almost entirely due to the £2.50 million unrealised gain on the directors' revaluation of the European Wealth investment. As at 31 December 2012, the directors' per share valuation of European Wealth was £13.26. As at 31 December 2013, the director's per share value had increased by almost two-thirds to £19.05. These gains, together with interest and fees receivable on mezzanine loans of £0.19 million (2012: £0.09 million) offset administration costs of £0.34 million (2012: £0.35 million).

The Company's profit for the year was £1.56 million (2012: £1.17 million) resulting in earnings per share of 0.48 pence (2012: 0.54 pence).

The value of the Company's net assets at the year end improved by more than 240% to £8 million (2012: £3.32 million) and the net asset value per share increased by 15% to 1.26 pence from 1.1 pence in 2012.

The carrying value of the Company's equity portfolio was £5.64 million at the year end (2012: £2.38 million), of which £5.63 million was the European Wealth investment.

The Company's other assets were primarily made up of loans made to European Wealth totalling approximately £2.75 million at the year end, all of which are due for repayment during 2014. The loans are unsecured and carry interest at 10 per cent. per annum. payable bi-annually.

In August 2013 and December 2013, third party investors granted loans of £300,000 and £200,000 respectivietly to the Company. The loans carry interest at 10 per cent. per annum, are unsecured and repayable in December 2015. The entire proceeds of the loans were lent to European Wealth. The full amounts of the loans remain outstanding at the date of this report.

Share issues and capital reorginisation

At the beginning of the year under review, the Company had 299,705,008 Ordinary Shares in issue.

In March 2013, the Company issued 56,847,461 new Ordinary Shares to shareholders of European Wealth in consideration for the purchase of an additional stake in European Wealth, taking the Company's shareholding in European Wealth from approximately 33% to approximately 48%.

In April 2013, the Company issued 62,675,000 new Ordinary Shares at a subscription price of 1 pence per share raising £625,000 and a further 3,250,000 new Ordinary Shares in satisfaction of professional fees incurred in connection with the subscription.

In June 2013, the Company issued 142,857,143 new Ordinary Shares on the conversion of a total of £1,000,000 convertible loan notes at 0.7 pence per share.

In October 2013, the Company issued a total of 68,377,688 new Ordinary Shares, of which 58,440,000 were issued at a subscription price of 1 pence per share raising £584,400, 7,398,644 were issued in consideration for the purchase of £73,986.44 of European Wealth debt, and 2,539,044 were issued in satisfaction of interest owing on the convertible loan notes converted in June 2013.

Accordingly, as at 31 December 2013, the Company had a total of 633,712,300 Ordinary Shares in issue.

Post year end and in connection with the Acquisition, shareholders will be asked to approve a share capital reorganisation of the Company such that every 60 Ordinary Shares shall be redenominated as 1 new ordinary share of 5 pence ("New 5p Ordinary Share") and 1 new deferred share of 1 pence ("New Deferred Share"). The New Deferred Shares are effectively worthless and the Company expects to repurchase and cancel them in due course. Full details are set out in the admission document issued om connection with the aquistion.

Investment policy

The Company's investment policy is set out below and remains unchanged from that approved by its shareholders at the 2013 AGM. Shareholders should note that on completion of the Acquisition, the Company will cease to be an investing company and it will instead be the holding company of the European Wealth trading group and this investment policy will no longer apply. Should shareholders not approve the Acquisition at the extraordinary general meeting to be held on 6 May 2014, then the Company's investment policy will remain as set out below.

The investment policy allows the Company to invest in a broad range of listed and unlisted businesses. The Company's investment policy allows the Board to evaluate potential investments from a wide variety of industry sectors and the Company will seek investments in sectors where there is potential for growth. This is likely to include sectors such as financial services, support services, resources and property, amongst others, where the directors believe significant value resides. The Company will primarily focus on European businesses but will also consider investments in other geographical areas if appropriate.

The Company does not seek to limit the size of the investment or the size of the entities in which it invests and does not limit the percentage ownership that it may hold in any one company at any time. Accordingly, the Company's investment policy permits the Company to make investments of up to, and including, 100% of businesses.

The Company will not seek to have a fixed number of investments or seek to diversify the investments over particular sectors or particular indexes, however it is envisaged that the total number of investments at any given time will not exceed 50 investments. The Company will instead generally focus on diversifying the relative risks of investments. The Company does not intend at this stage to gear its investments but may consider doing so in the future if suitable funding arises.

The Company will generally be a passive investor in the entities in which it invests but if the Board or the Company's consultants are able to add value to the investee entity then the Company may take a more active stance. The Company's investment decisions will be based upon research prepared and presented by individual directors of the Board and by research consultants and advisers.

All revenue and capital items in the above statement derive from continuing operations.

No operations were acquired or discontinued during the year.

The Company had no recognised gains or losses other than those shown in the income statement.

BALANCE SHEET

As at 31 December 2013

CASH FLOW STATEMENT

For the year ended 31 December 2013

RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS

For the year ended 31 December 2013

1 INVESTMENTS AT FAIR VALUE THROUGH PROFIT AND LOSS

As as 1 January 2013, the Company held a 33.3% investment in the issued share capital of European Wealth with a carrying value of £2,310,724 (£13.26/share). In March 2014, the Company increased its holding in European Wealth through the acquisition of a further 120,939 shares in European Wealth, taking its stake to approximately 48.8% of European Wealth. As at 31 December 2013, European Wealth had net liabilities of £0.08 million (2012 £1.28 million) and for the year ended 31 December 2013 recorded turnover of £5.8 million (2012: £2.5 million) and a net loss of £0.9 million (2012: £0.3 million). As at 31 December 2013, the directors' assessment of the carrying value of its 48.8% investment in European Wealth was approximately £5.63 million, representing a per share carrying value of £19.05 (2012: £13.26).

2 EARNINGS PER SHARE

The calculation of basic and diluted earnings per share is based on the net profit on ordinary activities for the year and on 490,928,051 shares (2012: 218,419,396 ) being the weighted average number of shares in issue during the year.

When calculating the diluted earnings per share for the year, the 800,000 share options over Ordinary Shares in issue are considered to be anti-dilutive as the options are at a significant premium to the current share price.

3 LOANS RECEIVABLE

Of the loans receivable within one year, £2,745,394 relates to loans made to European Wealth, the investee company in which EW Group held a 48.8% shareholding at the year end. Of this, £736,000 were unsecured convertible loans attracting interest at 10% per annum and repayable in full in October 2014 ("EWMG Convertible Loan"). The balance of the loans due within one year made to European Wealth of £2,009,394 were unsecured loans attracting interest at 10% per annum and repayable in full at various dates during the remainder of 2014.

4 NET ASSET VALUE PER SHARE

The calculation of net asset value per share is based on the net assets of £8,007,972 (2012: £3,319,816) and on the ordinary shares in issue of 633,712,300 (2012: 299,705,008) at the balance sheet date.

5 OTHER CREDITORS AND ACCRUALS

The £625,000 outstanding at 31 December 2012 represented part of the Company's own convertible loan note created in October 2012 which carried interest at 10 per cent. per annum payable bi-annually and was capable of conversion into Ordinary Shares at fixed intervals during its two year life ("EW Group Loan Note"). A further £375,000 of the EW Group Loan Notes was issued in February 2013 taking its total to £1.0 million. In April and May 2013, all of the holders of the £1.0 million EW Group Loan Note elected to convert their loan notes into Ordinary Shares at 0.7 pence, resulting in the Company issuing an aggregate 142,857,143 Ordinary Shares in early June 2013. In August and December 2013, a further £300,000 and £200,000, respectively of two-year non-convertible unsecured loans were taken out, both attracting interest at 10% p.a. Both loans remain outstanding as at the date of these financial statements.

7 NOTES ON THE CASH FLOW STATEMENT

8 SHARE CAPITAL

In March 2013, the Company issued 56,847,461 new Ordinary Shares of 0.1p each ("Ordinary Shares") valued at 0.01375p each in consideration for the acquisition of 58,948 shares in European Wealth.

In April 2013, the Company completed a subscription to raise £626,750 through the issue of 62,675,000 Ordinary Shares 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.

In June 2013, 142,857,143 Ordinary Shares were issued in connection with the conversion of £1.0 million of unsecured convertible loan notes issued by the Company variously between October 2012 and February 2013 ("Loan Notes").

In October 2013, the Company completed a subscription to raise £584,400 through the issue of 58,440,000 Ordinary Shares at a subscription price of 1p per Ordinary Share. On the same day, the Company issued 7,398,644 Ordinary Shares to acquire £73,986.44 of short term debt from European Wealth and also issued a further 2,539,044 Ordinary Shares in satisfaction of interest due on the Loan Notes. As at the date of this report, the Company has an aggregate of 633,712,300 Ordinary Shares in issue.

9 POST BALANCE SHEET EVENTS

The Company today agreed the conditional acquisition of all of the issued shares in European Wealth not already owned by EW Group (the "Acquistion"), valuing the whole of European Wealth at £13.45 million. The consideration is in the form of both Ordinary Shares in EW Group and new convertible loan stock to be issued by EW Group and admitted to trading on AIM. Following readmission to trading on AIM, the Company will no longer be an investment company but the holding company of a trading group. Further details on this proposal are set out in the admission document to be sent to the Company's shareholders today. A copy is also available on the Company's website www.ewgrouplimited.com.