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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| European W. | LSE:EWG | London | Ordinary Share | GG00BKY4K072 | ORD 5P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 17.50 | 16.50 | 18.50 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
From Apr 2019 to Apr 2024
TIDMEWG
RNS Number : 9502Q
European Wealth Group Limited
18 September 2017
18 September 2017
European Wealth Group Limited ("European Wealth", or "the Group") Unaudited interim results for six month period to 30 June 2017
The Directors of European Wealth (AIM: EWG, EWGL), the growing wealth management group, are pleased to announce its unaudited interim results for the six month period to 30 June 2017.
Operational Highlights
-- Continued strong growth in funds under management and administration (FUMA) which reached GBP1.7bn (GBP1.5bn at 31 December 2016, GBP1.4bn at 30 June 2016)
-- Organic growth main driver of increased funds -- First acquisition in Asia, increasing global reach of Group
Financial Highlights
-- Group revenue for period up 19.0% to GBP5.2m (H1 2016: GBP4.4m). -- Core adjusted profit[1] GBP0.1m (H1 2016: GBP0.02m) -- Investment management generated revenue of GBP3.1m (H1 2016: GBP2.7m)
-- Repayment of convertible loan stock, via a short term bridging loan, until GBP9.3m capital raise in July 2017
Kenneth ("Buzz") West, Chairman of European Wealth, commented:
"The first six months of 2017 were a period for consolidation and stabilisation for the Group, with the Board's attention focussed on the refinancing of the Group which was announced on the 26 June 2017. This resulted in the injection of GBP9.3m of fresh capital and two new and very supportive shareholders, Kingswood and Astoria, joining the shareholder register at a time when corporate activity in the sector is rapidly accelerating.
With a much stronger balance sheet and new supportive shareholders, the Group will be in a position to continue to expand, with a particular focus initially on the institutional capability within the investment management business, European Investment Management (EIM), where we have already built a formidable reputation over the last four years. It is the Board's intention to expand its offering through the introduction of an equity service to the institutional marketplace together with exploring the possibility of launching additional institutional style funds using our UCITs structure in Dublin. We have completed the first step of this approach with the relaunch of the existing equity fund as a Global Managed Strategy Fund.
In recent months we have continued to develop the business by focusing more on organic growth than acquired growth. We have also recruited revenue generating staff which is a trend we would expect to continue during the second half of 2017."
For further details, please contact:
European Wealth Group Limited +44 (0)20 7293 0733
Kenneth ("Buzz") West (Chairman) http://www.europeanwealth.com
finnCap Ltd (Nomad and Broker) +44 (0)20 7220 0500
Adrian Hargrave / Scott Mathieson
FWD Consulting (Financial PR) +44 (0)207623 2368
Gug Kyriacou/Elliot Lane
Chairman's Statement
Overview
The first six months of 2017 were a period for consolidation and stabilisation for the Group, with the Board's focus of attention being on the refinancing of the Group which was announced on the 23 June 2017. This resulted in the injection of GBP9.3m of fresh capital and two new and very supportive shareholders, Kingswood and Astoria, joining the shareholder register at a time when corporate activity in the sector is rapidly accelerating.
With a much stronger balance sheet and new shareholders the Group will be in a position to continue to expand, with a particular focus initially on the institutional capability within the investment management business, European Investment Management (EIM), where we have already built a formidable reputation over the last four years in the management of institutional fixed interest mandates. It is the Board's intention to expand its offering through the introduction of an equity service to the institutional marketplace together with exploring the possibility of launching additional institutional style funds using our UCITS structure in Dublin. The first step down this road has been now been completed with the relaunch of the existing equity fund as a Global Managed Strategy Fund.
In recent months we have continued to develop the business by focusing more on organic growth than acquired growth. However, as we explained in the Annual Report, we have also recruited revenue generating staff which is a trend we would expect to continue during the second half of 2017.
Group funds under management and advice reached GBP1.74bn as at 30 June 2017, an increase of 18% since we last reported at 31 December 2016 (FUMA: GBP1.46bn) and 24% since 30 June 2016 (FUMA: GBP1.39bn).
Financial Review
For the six months to the 30 June 2017, the Group reported total revenues of GBP5.2m, representing an 18.0% increase on the GBP4.4m recorded for the six months to 30 June 2016.
The loss before tax was GBP0.8m for the reporting period compared to a loss of GBP0.5m for the equivalent period in 2016. This increased loss is entirely the result of higher financing costs, which increased from GBP283,000 to GBP462,000, together with one-off extraordinary losses of GBP309,000. Following the refinancing in July and the subsequent repayment of debt, interest charges will fall substantially in the second half of the current year.
Core adjusted profit for the six months to the 30 June 2017 was GBP138,000, an increase from the GBP22,000 recorded for the six months to 30 June 2016. Core adjusted profit excludes finance costs, amortisation, costs in relation to acquisitions and refinancing. Given the Group's high proportion of fixed costs on account of our in-house administration function, we would expect margins to improve significantly as we build our FUMA and resulting revenue.
Review of Divisions
European Wealth Group has established two key divisions which allow the Group to offer a wide range of services in the wealth management industry both within the UK and overseas.
Investment Management
The funds under management in EIM reached GBP1.17bn, an increase of 30% on the GBP889m at 30 June 2016 and 25% on the GBP933m at 31 December 2016. Of this, GBP639m (55%) was managed by the Fixed Interest team, who achieved a 35% growth in their FUM since the year end. It is especially pleasing that the large majority of the growth (74%, GBP207m) was organic.
In October 2016, the Board announced the acquisition of a book of business from Towry, now known as Tilney, which was primarily comprised of clients in South Africa who had funds they wished to invest outside of the country. Since the end of June 2017, further significant progress has been made in transferring assets over to our management and we expect total funds to transfer of GBP80m. Together with our existing business in Switzerland and a recently acquired business in the Far East, this will result in our overseas funds under management approaching GBP200m by the end of the current financial year. The Board sees significant opportunities outside of the UK to grow funds under management at an accelerated pace. By having our own in-house, modern IT platform, we are able to facilitate expansion overseas whilst continuing to use our core systems within the UK, thus continuing to benefit from the inevitable economies of scale which will be achieved as the business continues to grow.
Revenue generated by the investment management division reached GBP3.10m for the six months ended 30 June 2017 (30 June 2016: GBP2.67m), an increase of 16%. Of this revenue, GBP1.55m, or 50% (30 June 2016: GBP1.39m, 56%), relates to investment management fees or other types of recurring income. The non-recurring income will continue to be predominantly brokerage fees generated by European Wealth Trading Limited (EWT), which is the in-house broking business and a member of the London Stock Exchange. Whilst the Board is committed to increasing the amount of recurring revenue as a proportion of the total, this will always be impacted in the short term by the more volatile revenue generated by EWT.
Over the remainder of the calendar year, a review will be undertaken of the fee arrangements for clients of EIM, as it has become apparent that a large proportion of our clients prefer the clarity of an 'all in' investment management fee rather than paying the traditional fee rate, which combines a mixture of management fees and dealing commission. Our intention is to provide a more structured fee proposal for the future. This is not expected to have any impact on the revenue generated by the investment management business but should result in an increase in proportion of recurring income as we progress through 2018.
Financial Planning
European Financial Planning Limited (EFP) has continued to have a challenging time. Revenue for the six months to 30 June 2017 was GBP1.69m, in line with the GBP1.70m generated in six months to 30 June 2016.
A significant amount of work has been done to restructure and streamline the administration function within EFP. As we come to the end of this project, we expect to see the productivity of advisers increase over the coming 12 months as more of their time can be spent providing added value advice to the clients and less dealing with the inevitable administrative burden that goes with an industry that is still heavily paper-based.
The Board is pleased to note that the amount of recurring revenue within EFP has remained at a high level, reaching GBP1.30m or 77%. The stability of the recurring revenue has been a reflection of the Board's decision to consolidate the various businesses that have been acquired over the last three years and focus on increasing the service levels to ensure that the clients joining European Wealth Group have confidence in our service offering. We believe financial planning is an important part of both wealth preservation and creation.
Future Outlook
The next stage in the development of the Group is to turn our focus to building the business, which we intend to do by attracting additional revenue-generating advisers as well as investing both time and money into building a strong sales and marketing function for the Group. The first steps were taken during the period under review but our focus over the third and fourth quarter of 2017 will be to accelerate growth including by acquisition.
Conclusion
The last six months have been a period of consolidation within the operating businesses but a very significant period in the development of the Group. The repayment of the convertible loan notes in June this year together with the arrival of new shareholders onto the register will mark the start of a period of considerable development in the capital structure of the Group.
The wealth management industry both in the UK and overseas continues to go through a period of rapid change. The Board believes that with modern, in-house systems, a strong Management team and a diverse offering to the marketplace, European Wealth are in a very strong position to take advantage of opportunities as they arise.
The second half of the financial year will present challenges ranging from the likely speed of interest rate increases in America, continued currency volatility and the ongoing uncertainty around Brexit. Currently, the consumer in the UK appears to be reducing discretionary expenditure and this, together with a slow-down in business investment, may well result in a modest recession in the UK over the third and fourth quarters of the current year. In global economic terms, this is more than likely to be outweighed by the continuing growth in emerging markets which are expected to continue to show above trend growth.
Any period of uncertainty will provide opportunity and the Board will not hesitate in taking advantage of any opportunity that presents itself that will have the effect of expanding the Group whilst ensuring it has a positive impact on profitability.
European Wealth Group Limited
Unaudited Consolidated Statement of Comprehensive Income
For the six month period to 30 June 2017
Hot Features
Premium
Six months Six months Year ended
to 30 to
Jun 2017
(unaudited) 30 Jun 31 Dec
2016 2016
GBP'000 (unaudited) (audited)
Note GBP'000 GBP'000
--------------------------- ---- ------------ ------------ ----------
Revenue 5,203 4,371 9,412
Cost of sales (673) (417) (1,165)
------------ ----------
Gross Profit 4,530 3,954 8,247
Administrative expenses (4,392) (3,931) (8,150)
Amortisation (283) (263) (484)
Other gains / (losses) (224) - 194
------------ ------------ ----------
Operating loss (369) (240) (193)
Finance costs (462) (283) (568)
Loss before tax (831) (523) (761)
------------ ------------ ----------
Tax - - 4
Loss for the year (831) (523) (757)
============ ============ ==========
Other comprehensive
income
Items that may be reclassified
subsequently to profit & loss:
Exchange difference
on translation of foreign
operations (12) - (30)
------------ ------------ ----------
Total comprehensive
loss for the year (843) (523) (787)
============ ============ ==========
Loss per share
Basic 5 (0.03)p (0.02)p (0.03)p
Diluted 5 (0.03)p (0.02)p (0.03)p
The entire Group's revenue and operating loss was derived from continuing operations.
The operating loss and total comprehensive loss for the year are attributable to the equity holders.
European Wealth Group Limited
Unaudited Consolidated Statement of Financial Position
As at 30 June 2017
30 Jun 30 Jun 31 Dec
2017 2016 2016
(unaudited) (unaudited) (audited)
Note GBP'000 GBP'000 GBP'000
---------------------------- ---- ------------ ------------ ----------
Non-current assets
Fixtures and equipment 8 151 169 159
Intangible assets
and goodwill 9 25,975 24,772 25,944
Investments 13 13 13
Deferred tax asset 428 428 428
------------ ------------ ----------
26,567 25,382 26,544
Current assets
Trade and other receivables 1,510 849 926
Cash and cash equivalents 224 188 375
------------ ------------ ----------
1,734 1,037 1,301
------------ ------------ ----------
Total assets 28,301 26,419 27,845
------------ ------------ ----------
Current liabilities
Trade and other payables 3,833 3,850 4,119
Short term borrowings 6,948 765 5,263
------------ ------------ ----------
10,781 4,615 9,382
Non-current liabilities
Convertible loan note 3,963 -
Other non-current
term liabilities 115 1,087 618
------------ ------------ ----------
115 5,050 618
------------ ------------ ----------
Net assets 17,405 16,754 17,845
============ ============ ==========
Equity
Share capital 1,334 1,171 1,270
Share premium account 14,188 12,654 13,596
Capital reserve 350 351 603
Retained earnings 1,533 2,578 2,376
------------ ------------ ----------
Total equity 17,405 16,754 17,845
============ ============ ==========
The unaudited financial statements of European Wealth Group Limited (registered number 42316) were approved by the Board of Directors and authorised for issue on 18 September 2017, signed on its behalf by:
Buzz West
Chairman
European Wealth Group Limited
Unaudited Consolidated Statement of Changes in Equity
As at 30 June 2017
Share Share Other Retained
Capital Premium Reserves Earnings Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Balance at 1 January
2016 1,171 12,654 351 3,102 17,278
--------- --------- ---------- ---------- --------
Loss for the year - - - (524) (524)
Balance at 30 June
2016 1,171 12,654 351 2,578 16,754
--------- --------- ---------- ---------- --------
Loss for the year - - - (232) (232)
Issue of share capital 53 488 250 - 791
Share based settlement
of deferred consideration 46 454 - - 500
Share based payments - - 2 - 2
Retranslation of
overseas operations - - - 30 30
Balance at 31 December
2016 1,270 13,596 603 2,376 17,845
--------- --------- ---------- ---------- --------
Loss for the year - - - (831) (831)
Issue of share capital 64 592 - - 656
Reversal of convertible
loan note - - (203) - (203)
Capitalisation of
costs (50) (50)
Retranslation of
overseas operations - - - (12) (12)
Balance at 30 June
2017 1,334 14,188 350 1,533 17,405
--------- --------- ---------- ---------- --------
European Wealth Group Limited
Unaudited Consolidated Statement of Cashflows
For the six month period to 30 June 2017
Six months Six months Year ended
to 30 to
Jun 2017
(unaudited) 30 Jun 31 Dec
2016 2016
GBP'000 (unaudited) (audited)
GBP'000 GBP'000
------------------------------ ------------ ------------ ----------
Net cash used in operating
activities (271) 31 93
------------ ------------ ----------
Investing activities
Fixtures and equipment
purchased (15) (18) (18)
Acquisition of investments (15) - -
Deferred consideration (700) (58) (216)
Loans advanced - - (200)
Cash acquired on acquisitions 8 - 40
------------ ------------ ----------
Net cash used in investing
activities (722) (76) (394)
Financing activities
Net proceeds on issue
of shares - - 541
Interest paid (525) (200) (344)
Loans repaid (4,772) (96) (256)
New loans received 6,150 350 539
------------ ------------ ----------
Net cash from financing
activities 853 54 480
Net increase /(decrease)
in cash and cash equivalents (140) 9 179
------------ ------------ ----------
Cash and cash equivalents
at beginning of year 375 179 179
Effects of movement in
exchange rates on cash
held by foreign operations (11) - 17
Cash and cash equivalents
at end of year 224 188 375
------------ ------------ ----------
European Wealth Group Limited
Notes to the Financial Statements
For the 6 months to 30 June 2017
1. General information
European Wealth Group Limited is a company incorporated in Guernsey under The Companies (Guernsey) Law, 2008. The shares of the Group are traded on AIM. The nature of the Group's operations and its principal activities are set out in the Annual Report, which is available at www.europeanwealth.com. Certain subsidiaries in the Group are subject to the FCA's regulatory capital requirements and therefore required to monitor their compliance with credit, market and operational risk requirements, in addition to performing their own assessment of capital requirements as part of the Individual Capital Adequacy Assessment Process (ICAAP).
2. Accounting Policies a) Basis of preparation
The Group's condensed consolidated interim financial statements are prepared and presented in accordance with IAS 34 'Interim Financial Reporting' as adopted by the European Union. The accounting policies adopted by the Group in the preparation of its 2017 interim report are those which the Group currently expects to adopt in its annual financial statements for the period ending 31 December 2017 and are consistent with those disclosed in the annual financial statements for the year ended 31 December 2016
The information relating to the six months ended 30 June 2017 and the six months ended 30 June 2016 are unaudited and do not constitute statutory financial statements within the meaning of section 434 of the Companies Act 2006. The interim condensed consolidated financial statements do not include all the information and disclosures required in the annual financial statements and should be read in conjunction with the Group's financial statements for the year ended 31 December 2016.
b) Going concern
The Directors are satisfied that the Group has sufficient resources to continue in operation for a period of not less than 12 months. Accordingly, the Group continues to prepare the condensed consolidated interim financial statements on a going concern basis.
3. Critical accounting judgements and key sources of estimation uncertainty
In the application of the Group's accounting policies, the Directors are required to make judgements, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the year in which the estimate is revised if the revision affects only that year or in the year of the revision and future years if the revision affects both current and future years.
4. Business and geographical segments
For management purposes, the Group has organised its activities into two operating divisions; Investment Management and Financial Planning. The Group's other activity of providing execution only broking services are included within Investment Management. All head office costs have been included in a separate column, Group, alongside the information presented for internal reporting to the Board of Directors. Therefore the Group's reportable segments under IFRS 8 are Investment Management and Financial Planning.
Information regarding the Group's operating segments is reported below.
Six months to Investment Financial
30-Jun-17 Management Planning Group Total
(unaudited) GBP'000 GBP'000 GBP'000 GBP'000
------------------ ----------- --------- -------- --------
Revenue 3,489 1,714 - 5,203
----------- --------- -------- --------
Operating profit
/ (loss) 728 251 (841) 138
Other gains /
(losses) - - - (224)
Amortisation - (13) - (283)
Finance costs (4) (3) - (462)
Profit for Period 724 235 26,419 (831)
----------- --------- -------- --------
Six months to Investment Financial
30-Jun-16 Management Planning Group Total
(unaudited) GBP'000 GBP'000 GBP'000 GBP'000
------------------ ----------- --------- -------- --------
Revenue 2,669 1,702 4,371
----------- --------- -------- --------
Operating profit
/ (loss) 361 252 (591) 22
Other gains / - - - -
(losses)
Amortisation - (1) (261) (262)
Finance costs (15) (19) (249) (283)
Profit for Period 346 232 (1,101) (523)
----------- --------- -------- --------
Six months to Investment Financial
31-Dec-16 Management Planning Group Total
(unaudited) GBP'000 GBP'000 GBP'000 GBP'000
------------------ ----------- --------- -------- --------
Revenue 6,084 3,328 9,412
----------- --------- -------- --------
Operating profit
/ (loss) 1,474 625 (1,945) 184
Other gains /
(losses) - - 195 195
Amortisation (2) (29) (507) (538)
Finance costs (13) (37) (518) (568)
Profit for Period 1,455 559 (2,775) (757)
----------- --------- -------- --------
5. Earnings per share
Six months Six months Year
to 30 to ended
Jun 2017
(unaudited) 30 Jun 31 Dec
2016 2016
GBP'000 (unaudited) (audited)
GBP'000 GBP'000
--------------------------- ------------ ------------ ----------
Core adjusted profit 138 23 152
Finance costs (462) (283) (568)
Amortisation (283) (263) (538)
Other gains / (losses) (224) - 193
Tax - - 4
------------ ------------ ----------
Earnings attributable
to ordinary shareholders (831) (523) (757)
Number of shares 000's 000's 000's
--------------------------- ------------ ------------ ----------
Weighted number of shares
in issue during period 26,404,837 23,446,845 23,963,676
Effect of dilutive share
options 670,482 670,482 670,482
Convertible loan notes
in issue - 4,166,250 4,166,250
------------ ------------ ----------
Diluted weighted number
of shares in issue during
period 27,075,319 28,283,577 28,800,408
------------ ------------ ----------
Based on reported earnings
Basic loss per share (0.03)p (0.02)p (0.03)p
Diluted loss per share (0.03)p (0.02)p (0.03)p
Based on core adjusted
profit
Basic earnings share 0.01p 0.00p 0.01p
Diluted earnings per share 0.01p 0.00p 0.01p
6. Reconciliation of core adjusted profit to loss before tax
Six months Six months Year ended
to 30 to
Jun 2017
(unaudited) 30 Jun 31 Dec
2016 2016
GBP'000 (unaudited) (audited)
GBP'000 GBP'000
------------------------ ------------ ------------ ----------
Core adjusted profit 138 23 152
Amortisation (283) (283) (568)
Finance costs (462) (263) (538)
Refinancing costs (126) - -
Project and acquisition
costs (168) - -
Other gains / (losses) 70 - 193
------------ ------------ ----------
Loss before tax (831) (523) (761)
------------ ------------ ----------
7. Business combinations
During the period under review, the Group completed one acquisition, Montpelier (BVI) Ltd, a financial advisory firm based out of Thailand.
8. Intangible assets and goodwill
Group Goodwill Intangibles Total
GBP'000 GBP'000 GBP GBP'000
------------------------- -------- ----------- -------
Cost
As at 1 January 2016 16,122 9,186 25,308
Additions - 268 1,695
As at 30 June 2016 16,122 9,454 25,576
Additions 335 1,092 1,427
As at 31 December 2016 16,457 10,546 27,003
Additions - 314 314
-------- ----------- -------
As at 30 June 2017 16,457 10,860 27,317
-------- ----------- -------
Accumulated amortisation
As at 1 January 2016 - 564 564
Charge for year - 240 240
-------- ----------- -------
As at 30 June 2016 - 804 804
Additions - 255 255
As at 31 December 2016 - 1,059 1,059
Charge for year - 283 283
--------
As at 31 December 2016 - 1,342 1,342
-------- ----------- -------
Group Goodwill Intangibles Total
GBP'000 GBP'000 GBP GBP'000
----------------------- -------- ----------- -------
Net book value
As at 1 January 2016 16,457 8,622 25,079
As at 30 June 2016 16,457 8,650 25,107
As at 31 December 2016 16,457 9,487 25,944
-------- ----------- -------
As at 30 June 2017 16,457 9,516 25,975
======== =========== =======
9. Share capital
Share
capital
GBP'000
Authorised, allotted, issued and fully
paid:
As at 1 January and 30 June 2016:
23.4 million ordinary shares of GBP0.05
each 1,171
---------
Issue of shares 99
As at 31 December 2016
25.4 million ordinary shares of GBP0.05
each 1,270
---------
Issue of shares 64
As at 30 June 2017
---------
26.7 million ordinary shares of GBP0.05
each 1,334
=========
10. Reconciliation of operating profit to net cash inflow from operating activities
Six months Six months Year ended
to 30 Jun to
2017
(unaudited) 30 Jun 31 Dec
2016 2016
GBP'000 (unaudited) (audited)
GBP'000 GBP'000
------------------------------ ------------ ------------ ----------
Operating profit (831) (523) (757)
Finance costs 462 283 567
Forex 4 31 32
Tax charge - 4 (4)
Depreciation and amortisation 306 276 538
Share based payment - 6 2
Movements in deferred
consideration 15 268 (536)
Decrease/(Increase) in
receivables (2,031) (52) (128)
(Decrease)/Increase in
payables 1,889 (262) 597
Other gains and Losses (85) - (218)
Net cash inflow from
operating activities (271) 31 93
------------ ------------ ----------
11. Ultimate Controlling Party
The directors do not consider there to be an ultimate controlling party for the Company.
12. Post Balance Sheet Events
On 22 July 2017, the Company raised GBP9.3m through a share placing. Refer to the Chairman's Statement and for further details
[1] Core adjusted profit excludes finance costs, amortisation, costs in relation to acquisitions, refinancing and aborted capital raises
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR GGUCGBUPMGQA
(END) Dow Jones Newswires
September 18, 2017 02:00 ET (06:00 GMT)
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