European Wealth announces loss amid fundraising

European Wealth announces loss amid fundraising

Wealth management group European Wealth has announced another loss and a heavily discounted fundraising, despite a 25 per cent increase in assets under management.

The group, which announced a £1m loss before tax for 2015, said that this had fallen to £0.8m in 2016.

The £9.2m fundraising - a subscription and open offer - at 12.8p a share is designed to repay a recently agreed bridging loan as well as other debt.

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The wealth management group, which completed three acquisitions in the period, said that it had had a successful year. However, it said that its share price had been impacted by concerns over debt. The Aim-listed group's share price has fallen from over 45p to 27p in a year.

“European Wealth has had a successful year pursuing its strategy of growth through classic organic growth, selective acquisitions of businesses and the addition of revenue-generating staff resulting in another significant increase in our funds under management,” said chief executive officer John Morton. 

"Having built a structure which will enable us to continue to develop the business, we are now in a stronger position, bolstered by our new shareholders, to support the continued development of the Group to the benefit of our clients, staff and shareholders.”

The company said that the figures had allowed them to post a positive EBITDA of £346,000, against £68,000 the previous year.

The company’s acquisitions, the financial planning client list of Phoenix Invest Limited, the acquisition of CIMCO Partners and the book of businesss from Towry Asset Management, helped to increase assets under management by 25 per cent to £1.5bn.

The group recently secured a bridge financing facility for £5.25m to redeem £4.2m of convertible loan stock and repay a loan to Clysdedale Bank. It has 90 days to repay the loan, and said that the proceeds of the subscription and open offer will be used to do that.

The company said that its share price had been “adversely affected” by uncertainty over how debt finance would be redeemed,  and concerns that interest payments absorb too much cash flow and reduce the Group's ability to invest in the future.

“The Board has explored a number of options and believes that the Fundraising is the best option available to the Group to re-capitalise its balance sheet and build a strong platform from which to pursue its stated strategy more effectively,” the Aim-listed group said.