Urban Exposure plc (UEX)
Urban Exposure plc: Interim Results
22-Sep-2020 / 07:00 GMT/BST
Dissemination of a Regulatory Announcement that contains inside information
according to REGULATION (EU) No 596/2014 (MAR), transmitted by EQS Group.
The issuer is solely responsible for the content of this announcement.
22 September 2020
Interim Results for the six months ended 30 June 2020
Urban Exposure Plc ("the Company") and its subsidiaries (together "the Group"
or "Urban Exposure" or "we") a specialist residential development financier
and asset manager, today announces its unaudited Group financial results for
the six months ended 30 June 2020.
Business Highlights
· Since 5 May 2020, the Group has been focused solely on completing an
orderly wind-down of its assets and operations to maximise the return of
shareholder capital.
· On 19 June 2020, the Group estimated that a range of shareholder returns
of between 70p - 83p per ordinary share was possible with 80% of proceeds
expected to be returned within 7 to 15 months.
· As at the date of these results the Group expects shareholder returns to
be within the range of 72p - 78p per ordinary share with 90% of proceeds
expected to be returned within 12 months. This range has been revised
following a thorough review of all existing loan obligations and a number of
refinancing deals undertaken or in progress to deliver value for
shareholders.
· Following implementation of the Group's stated wind-down strategy, the
Group has a cash balance of GBP51m at the publication date of this report of
which it expects to return approximately GBP26m within the next 2 months via a
tender offer. The total size of the distribution may increase should further
loan redemptions occur prior to the announcement of the tender offer.
· Any funding obligation that the Group has, under the terms of existing
loans, has been provided for in the Company's cash projections.
Financial Highlights
· The Group loss before tax for the period was GBP24.1m (June 2019: loss of
GBP0.3m).
· The Group loss before tax for the period excluding exceptional items was
GBP6.3m (June 2019: profit before tax of GBP0.0m).
· During the period, the Group had:
· Negative revenue of GBP2.0m recognised due to a reduction in fair values
as a result of the uncertainty created by Covid-19 (June 2019: Revenue of
GBP5.3m).
· Operating costs of GBP4.3m (June 2019: GBP5.3m) exclusive of exceptional
costs. Exceptional costs were GBP17.8m reflecting the write down of goodwill
and brand value due to the change in Group strategy and costs associated
with potential transactions.
· The Board has proposed a distribution of approximately GBP26m to take place
via a tender offer.
· Basic loss per share: 15.14p (June 2019: GBP0.16p).
· Basic loss per share adjusted for exceptional costs of 3.90p (profit per
share adjusted for exceptional costs of 0.003p).
· Net tangible asset value[1] GBP121.7m (June 2019: GBP135.2m, December 2019:
GBP133.1m).
· Net tangible asset value per share: 77p
· Cash and cash equivalents per share: 12p
· Loans receivable per share: 62p
[1] Calculated as Net Asset Value exclusive of Intangible assets
Enquiries:
Urban Exposure plc Tel: +44(0)207 408 0022
Graham Warner, Chairman
Sam Dobbyn, Chief Executive Officer
Liberum (NOMAD and Corporate Broker) Tel: +44(0)203 100 2000
Neil Patel
Gillian Martin
Louis Davies
Nikhil Varghese
UrbanExposure@liberum.com
MHP Communications (Financial Public Relations) Tel: +44(0)203 128 8540
Charlie Barker
Catherine Chapman
Isabella Grace
UrbanExposure@mhpc.com
This announcement is released by Urban Exposure Plc and contains information
that qualified or may have qualified as inside information for the purposes of
Article 7 of the Market Abuse Regulation (EU) 596/2014 ("MAR"). For the
purposes of MAR and Article 2 of Commission Implementing Regulation (EU)
2016/1055, this announcement is made by Sam Dobbyn, Chief Executive Officer of
Urban Exposure Plc.
Chairman's statement
This is my first report to shareholders following my appointment at the
Company's Annual General Meeting in July and William McKee's retirement from
the Board. I would like to wish William well for the future.
SIGNIFICANT EVENTS
The period under review has been one of significant challenge and change for
the Group, played out against the backdrop of the economic and social impacts
inflicted by the Covid-19 virus.
Earlier in the year, the Group announced the proposed disposal of Urban
Exposure Lendco Limited, the owner of the Group's loan portfolio and its
interest in the Group's partnership with KKR & Co, to Honeycomb Holdings
Limited ('HHL').
As previously communicated to shareholders, the Group received a purported
notice of termination from HHL of the Share Purchase Agreement ('SPA') between
the parties. The Group considers there is no valid basis for the termination
of the SPA by HHL. In consequence, the Group is in the process of claiming
damages from HHL for breach of contract.
The Board and management intend to pursue this claim vigorously, as well as
seek relief from other entities connected to Pollen Street Capital Limited.
In May the Board undertook a strategic review of the Group and its prospects
and concluded that shareholders' interests would be best served by an orderly
wind-down of the Group's activities and return of capital to shareholders.
Subsequent to that decision, the Group engaged with a number of other entities
interested in acquiring its loan portfolio. However, the range of indicative
prices offered was considered to be significantly below the loan portfolio's
intrinsic value and so the approaches were not pursued further.
MANAGEMENT CHANGES
As a result of the change in strategy, Randeesh Sandhu (Chief Executive
Officer) and Daljit Sandhu (Chief Operating Officer) resigned from their
positions with the Group and Company with immediate effect on 18 June 2020.
Rabinder Takhar (Chief Risk Officer) resigned his directorship and positions
with the Group and Company with effect from 30 June 2020 by reason of
redundancy.
Sam Dobbyn, previously Chief Financial Officer, was appointed as Chief
Executive Officer following these departures and now leads a reduced and
restructured senior management team.
RESULT
The result for the period is a pre-tax loss of GBP24.1m, primarily because of a
limited number of write downs to the fair value of some of the loans in the
portfolio, due to the market uncertainty created by Covid-19, as well as
goodwill and brand write offs of GBP12.4m due to the Group's change in strategy.
Additionally, the Group incurred exceptional costs as a result of the HHL
transaction, and its failure to complete, and redundancy and termination
payments to executive directors and staff following the decision to wind down
the Group's operations.
Further detail on the result is contained in the Chief Executive's report.
GOVERNANCE
Shareholders will be aware that the Board commissioned an independent inquiry
by a leading law firm to investigate the corporate governance failings
surrounding the loan made to Urban Exposure Philanthropy Limited ('UEP'), a
company controlled by Mr and Mrs Sandhu, the findings of which are presently
awaited.
With the recent changes to the Board and structure of the Company, there has
been a significant focus on improving corporate governance. The Board is
highly cognisant of the previous corporate governance failings surrounding the
loan made to UEP and I would like to provide comfort to investors that the
newly constituted Board is fully committed to ensuring that such issues cannot
and do not arise again.
Shareholders will not suffer losses as a result of this transaction as Mr and
Mrs Sandhu have procured that UEP will repay the loan (balance at the date of
this report GBP907,000) no later than 31 December 2020 and the Group holds 2.8
million ordinary shares in Urban Exposure plc as security.
RETURNS TO SHAREHOLDERS
At the time of announcement of the Group's results for 2019 it was estimated
that returns to shareholders from the wind down process would be in the region
of 70p to 83p per share on a fully diluted basis.
The Board has reviewed these estimates and has refined them to a narrower
range of 72p to 78p with 90% of the proceeds being returned within 12 months
from now, although I would emphasise that there can be no certainty around the
amount or timing of the returns.
This reflects the on-going work and significant effort which has gone into
maintaining and maximising value for shareholders through careful management
of the Group's loan portfolio.
In line with the Board's commitment to return cash to shareholders as soon as
possible, I am pleased to announce the Group's intention to implement a tender
offer with a distribution of approximately GBP26m expected within the next 2
months. The total size of this distribution may increase should further loan
redemptions occur prior to the announcement of the tender offer.
Subject to the pace of loan recoveries and repayments, the Board will consider
a further Tender Offer being implemented early in 2021. In addition, the
Company has authority to re-purchase up to 14.99 per cent of its issued share
capital and the Board will consider the use of share buy-backs to provide
additional returns to shareholders.
EMPLOYEES
This has been a difficult period for the Group's employees. There has been the
uncertainty engendered both by the proposed HHL transaction and subsequent
loan sale approaches; the decision to wind down the Group's operations and the
significant change in working practices as a result of Covid-19.
To those staff members who left the Group by reason of redundancy as a result
of the change in strategy I would like to thank them for their past efforts
and wish them well in the future.
To employees that remain, I would like to thank them on behalf of shareholders
for their professionalism and commitment to the process of winding down the
Group's activities.
Graham Warner
Chairman
Chief Executive's Review
Since the announcement of the revised business strategy and my appointment
shortly after, the Group has focused solely on completing an orderly wind-down
of its assets and operations to maximise the return of shareholder capital.
This is a significant change in strategy for the business, and my team and I
are determined to realise value for shareholders.
A number of loans have already been repaid, and we have exited some of our
larger loans that would have delayed the return of shareholder capital. The
ongoing cost base of the Group has also been significantly reduced in the
period to reflect the revised strategy. Together this will allow us to begin
the redistribution of capital to shareholders.
Loan Book and Credit Quality
The Group has focused their efforts on realising the value of the loan
portfolio through loan sales and refinances, restructuring commitments, or via
the servicing of loans to maturity. Due to the active management of the
portfolio the Group has reduced its forecast capital drawdown obligations to
approximately GBP10.2m
Despite the uncertainty caused by Covid-19, we continue to have a diverse
portfolio of high-quality loans and co-investments. The remaining portfolio of
loans has a weighted average loan to gross development value (WA LTGDV) of
64%. However, this metric does not fully reflect the underlying level of
security against the Group's loans, due to the stringent pre-sale requirements
the Group negotiated as part of any development loan agreement.
UK Housing Market
As a lender we are principally focused on the UK residential market. The start
of 2020 saw an increase in confidence in the residential sector with
transactions and prices increasing for much of the UK as political uncertainty
dissipated.
The impact of Covid-19 on the UK housing market was sudden. Social distancing
prevented viewings and completions, effectively freezing the market, with the
number of properties sold across the UK falling c.55% by April 2020. The
impact on prices during this period is less clear due to the low number of
sales, although Land Registry data indicated a decline of 1.7% in May - the
steepest decline since 2009.
As social distancing eased viewings and completions could continue, and there
was clear evidence of pent-up demand with both enquiries and sales reaching
2019 levels by early June 2020. The reduction in Stamp Duty announced by the
Government will have supported this bounce-back and is likely to continue to
do so until the expected current expiry of this relief in March 2021.
A recovery in demand, good mortgage availability and a limited supply of new
housing, has meant that prices have also recovered. Nationwide House Price
Index data suggesting that all losses recorded in May and June had been
reversed, and by August had reached an all-time high.
Understandably the outlook for the UK housing market is somewhat uncertain.
The full economic impact of Covid-19 is not yet clear, and a second rise in
cases coupled with another lockdown remain key risks in the short term. That
said, recent data has proved encouraging, evidencing both the level of
underlying demand and ability of the market to recover quickly. Longer term,
the potential downside risk to the economy and its impact on affordability
must be weighed against a fundamental undersupply of housing and potential for
interest rates remaining lower for longer.
Financial Review
Income
GBP'm 30 June 2020 30 June 2019
Income (2.0) 5.3
Operating costs (4.3) (5.2)
Operating (loss) / profit (6.3) 0.1
before exceptional items
Exceptional items (17.8) (0.3)
Finance costs 0.0 (0.1)
Loss before taxation (24.1) (0.3)
Taxation 0.1 0.1
Loss after taxation (24.0) (0.2)
Basic EPS (15.14p) (0.16p)
Diluted EPS (15.14p) (0.16p)
Dividend per share 0.00p 1.67p
Capital
GBP'm 30 June 2020 30 June 2019
Cash and cash equivalents 18.7 46.4
Tangible net assets 121.7 135.2
Tangible NAV per share - pence 77p 85p
Number of shares in issue 165,000 165,000
(millions)
Number of shares in issue 158,494 158,494
(excluding treasury shares)
(millions)
Revenue
Negative income of (GBP2.0m) represents GBP6.0m fair value income on loans
receivable adjusted down by GBP9.0m for fair value reductions on a limited
number of loans due to either the market uncertainty created by the impact of
Covid-19 or to the early terminations of some loans. The remaining income of
GBP1.0m is split between income earned from asset management of GBP0.7m and income
from legacy contract assets of GBP0.1m, with fair value income from investments
amounting to GBP0.2m.
The comparative analysis for June 2019 is made up of GBP5.0m fair value income
on loans receivable, income from asset management of GBP0.2m and income from
legacy contract assets of GBP0.1m with fair value income from investments
amounting to (GBP0.1m) and other income of GBP0.1m.
Operating expenses
With the change in strategy to wind-down the loan book operating costs will
significantly reduce, however initially costs were incurred including
redundancy costs and early exit fees for on-going contractual agreements. As
at June 2020, total operating costs excluding exceptional items were GBP4.3m
(June 2019: GBP5.3m), which includes staff costs of GBP2.7m (June 2019: GBP3.5m).
Total operating costs including exceptional items were GBP22.1m (June 2019:
GBP5.5m).
Exceptional items
The exceptional items of GBP17.8m (2019: GBP0.3m) are as detailed below.
During the period, the group incurred exceptional legal and professional costs
of GBP3.5m related to the proposed disposal of Urban Exposure Lendco Limited to
HHL and, following breach of that SPA, a subsequent project to potentially
sell the Group asset management company which did not proceed.
Following the failure of HHL to complete the proposed transaction, the Group
changed its strategy to an orderly wind down of the Group's loan portfolio.
This led to redundancies at a cost of GBP1.3m to 30 June 2020. The Group expects
to incur further redundancy costs in the second half of the year as resources
reflect the remaining activities.
Due to the change in strategy, the Group has impaired the carrying value of
its intangible assets, comprising goodwill and brands, to GBPnil, resulting in
an exceptional cost for the period of GBP10.9m and GBP1.5m respectively.
As a result of the redundancies and the orderly wind-down, the Group has
reviewed its office requirements and estimates a right-of-use lease impairment
of GBP0.6m.
In the comparative period ended 30 June 2019, costs of GBP0.3m relating to a
cancelled proposed bond issue were expensed.
Earnings per share
The basic loss per share for the period is 15.14p (June 2019: basic loss per
share 0.16p).
The adjusted basic loss per share (after exceptional items) for the period is
3.90p (June 2019: adjusted basic profit per share GBP0.003p).
The basic loss per share (after exceptional items) is based on a weighted
average number of shares of 158,494,130 (2019: 158,494,130).
Distributions
Given the progress made to date following the change in strategy, as at the
date of this report the Group has an approximate cash position of GBP51m and the
Board has determined that approximately GBP26m will be returned to shareholders
by way of a tender offer. The total size of this distribution may increase
should further loan redemptions occur prior to the announcement of the tender
offer. It is expected that the tender offer will be implemented within the
next two months with full details to be published in the near future.
Abridged Balance sheet
GBP'm 30 June 2020 30 June 2019
Non-current asset 8.4 21.2
Fair value of loans 98.1 83.6
Contract assets 0.3 3.0
Cash and cash equivalents 18.7 46.4
Other assets and liabilities (3.8) (6.5)
Net assets 121.7 147.7
Abridged Cash flow
GBP'm 30 June 2020 30 June 2019
Operating cash flows before movement (10.7) 0.2
in working capital
Change in working capital 6.7 3.6
Net cash (outflow)/inflow from (4.0) 3.8
operating activities
Capital Expenditure 0.0 (0.1)
Net cash outflow from investing 0.0 (0.1)
activities
Lease liabilities (0.1) (0.1)
Dividends paid 0.0 (4.0)
Net cash outflow from financing (0.1) (4.1)
activities
Net decrease in cash and cash (4.1) (0.4)
equivalents
Investments
During the period, our investment in the partnership with Kohlberg Kravis
Roberts increased by GBP0.4m to GBP7.1m. There was also a fair value gain on the
investment of GBP0.2m. Overall this investment represents Urban Exposure's 9.1%
share of GBP75.8m total invested by the partners to fund loan drawdowns.
Loans receivable
The fair value of loans as at June 2020 was GBP98.1m after reflecting a
reduction of GBP9.0m in fair values.
Cash flow
Operating cash outflows before movement in working capital of GBP10.7m reflects
the loss for the period after adjustment for non-cash items, with the
principal item being the reduction in goodwill and brand and impairment of
right-of use lease assets. The change in working capital reflects the
reduction in the loan receivable balance offset by the investment in the KKR
partnership.
Sam Dobbyn
Chief Executive Officer
INDEPENT REVIEW REPORT TO URBAN EXPOSURE PLC
Introduction
We have been engaged by the Company to review the condensed set of financial
statements in the half-yearly financial report for the six months ended 30
June 2020 which comprises the consolidated statement of financial position,
the consolidated statement of comprehensive income, the consolidated statement
of changes in equity, the consolidated cash flow statement and notes.
We have read the other information contained in the half-yearly financial
report and considered whether it contains any apparent misstatements or
material inconsistencies with the information in the condensed set of
financial statements.
Directors' responsibilities
The interim report, including the financial information contained therein, is
the responsibility of and has been approved by the directors. The directors
are responsible for preparing the interim report in accordance with the rules
of the London Stock Exchange for companies trading securities on AIM which
require that the half-yearly report be presented and prepared in a form
consistent with that which will be adopted in the Company's annual accounts
having regard to the accounting standards applicable to such annual accounts.
Our responsibility
Our responsibility is to express to the Company a conclusion on the condensed
set of financial statements in the half-yearly financial report based on our
review.
Scope of review
We conducted our review in accordance with International Standard on Review
Engagements (UK and Ireland) 2410, "Review of Interim Financial Information
Performed by the Independent Auditor of the Entity", issued by the Financial
Reporting Council for use in the United Kingdom. A review of interim financial
information consists of making enquiries, primarily of persons responsible for
financial and accounting matters, and applying analytical and other review
procedures. A review is substantially less in scope than an audit conducted in
accordance with International Standards on Auditing (UK) and consequently does
not enable us to obtain assurance that we would become aware of all
significant matters that might be identified in an audit. Accordingly, we do
not express an audit opinion.
Emphasis of matter: wind down of activities
We draw your attention to the disclosures in note 1 to the financial
statements, which explains that the directors have taken the decision to
realise the Group's loan book through an orderly wind down of activities and
to subsequently return capital to shareholders. Our conclusion is not modified
in respect of this matter.
Conclusion
Based on our review, nothing has come to our attention that causes us to
believe that the condensed set of financial statements in the half-yearly
financial report for the six months ended 30 June 2020 is not prepared, in all
material respects, in accordance with the rules of the London Stock Exchange
for companies trading securities on AIM.
Use of our Report
Our report has been prepared in accordance with the terms of our engagement to
assist the Company in meeting the requirements of the rules of the London
Stock Exchange for companies trading securities on AIM and for no other
purpose. No person is entitled to rely on this report unless such a person is
a person entitled to rely upon this report by virtue of and for the purpose of
our terms of engagement or has been expressly authorised to do so by our prior
written consent. Save as above, we do not accept responsibility for this
report to any other person or for any other purpose and we hereby expressly
disclaim any and all such liability.
BDO LLP
Chartered Accountants
London, UK
21 September 2020
BDO LLP is a limited liability partnership registered in England and Wales
(with registered number OC305127).
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THE SIX MONTHSED 30
JUNE 2020
Six months ended Six months ended
30 June 2020 30 June 2019
Unaudited Unaudited
Note GBP000 GBP000
Income 3 (2,023) 5,305
Administrative (4,260) (5,248)
Expenses - before
exceptional items
Administrative 6 (17,808) (312)
Expenses - Exceptional
items
Administrative 5 (22,068) (5,560)
Expenses - Total
Operating Loss 4 (24,091) (255)
Finance costs (8) (51)
Loss before taxation (24,099) (306)
for period
Taxation 107 58
Loss after taxation (23,992) (248)
for the period and
total Comprehensive
Income
LOSS PER SHARE
Basic EPS (loss) 7 (15.14p) (0.16p)
Diluted EPS (loss) 7 (15.14p) (0.16p)
CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE 2020
As at 30 June As at 30 June As at 31
2020 2019 December
2019
Unaudited Unaudited Audited
GBP000 GBP000 GBP000
Non-current Note
assets
Intangible 9 - 12,582 12,488
assets
Tangible assets 10 1,233 4,166 3,702
Investments 11 7,136 4,416 6,570
Total 8,369 21,164 22,760
non-current
assets
Current Assets
Loans receivable 12 98,058 83,617 103,630
Trade and other 1,862 3,996 1,745
receivables
Cash and cash 13 18,659 46,365 22,787
equivalents
Total current 118,579 133,978 128,162
assets
Total assets 126,948 155,142 150,922
Current
liabilities
Trade and other 3,711 3,657 1,829
payables
Lease 479 216 295
liabilities
Total current 4,190 3,873 2,124
liabilities
Total Assets 122,758 151,269 148,798
less Current
liabilities
Non-current
liabilities
Lease 1,062 3,502 3,068
liabilities
Deferred tax - 25 107
Total 1,062 3,527 3,175
non-current
liabilities
Net assets 121,696 147,742 145,623
Equity and
reserves
Share capital 14 1,700 1,700 1,700
Retained 119,996 146,042 143,923
earnings
Total equity and 121,696 147,742 145,623
reserves
These Financial Statements were approved and authorised for issue by the Board
of Directors on
21 September 2020 and were signed on its behalf by:
Sam Dobbyn
Chief Executive Officer
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE SIX MONTHSED 30 JUNE
2020
Six months ended Note Share Retained Total
30 June 2020 capital earnings equity
Unaudited Unaudited Unaudited
GBP000 GBP000 GBP000
Balance brought 1,700 143,923 145,623
forward 1 January
2020
Loss for the - (23,992) (23,992)
period
Share-based - 65 65
payments
Dividends paid 8 - - -
Balance as at 30 1,700 119,996 121,696
June 2020
Six months ended Note Share Retained Total
30 June 2019 capital earnings equity
Unaudited Unaudited Unaudited
GBP000 GBP000 GBP000
Balance brought 1,700 148,821 150,521
forward 1 January
2019
Loss for the - (248) (248)
period
Share-based - 116 116
payments
Dividends paid 8 - (2,647) (2,647)
Balance as at 30 1,700 146,042 147,742
June 2019
Year ended 31 Note Share Retained Total
December 2019 capital earnings equity
Audited Audited Audited
GBP000 GBP000 GBP000
Balance brought 1,700 148,821 150,521
forward 1 January
2019
Profit for the - 144 144
year
Share-based - 252 252
payments
Dividends paid 8 - (5,294) (5,294)
Balance as at 31 1,700 143,923 145,623
December 2019
CONSOLIDATED CASH FLOW STATEMENT FOR THE SIX MONTHSED 30 JUNE 2020
Six months Six months Year ended
ended 30 ended 30 31
June 2020 June 2019 December
2019
Unaudited Unaudited Audited
Note GBP000 GBP000 GBP000
Cash flows from
operating
activities
(Loss) / profit (23,992) (248) 144
for the period
after taxation
Adjustments for
non-cash items:
Amortisation of 4 94 93 186
intangible
assets
Impairment of 6 12,394 - -
intangible
assets
Depreciation of 4 185 220 442
tangible assets
Impairment of 6 600 - -
tangible assets
Fair value - - 2,095
reduction in
contract assets
Share-based 65 116 252
payments
Finance costs 8 51 94
Deferred tax (107) (58) 23
credit for
period
(10,753) 174 3,236
Changes in
working capital
Increase / 1,882 440 (1,386)
(decrease) in
payables
Increase in 11 (566) (2,467) (4,621)
trade
investments
Decrease / 5,455 5,623 (14,234)
(increase) in
receivables
Net cash (outflow) / inflow (3,982) 3,770 (17,005)
from operating activities
Cash flows from
investing
activities
Payments for 10 (7) (110) (97)
purchase of
tangible assets
Net cash (7) (110) (97)
outflow from
investing
activities
Cash flows from
financing
activities
Principal paid (131) (78) (202)
on lease
liabilities
Interest paid (8) (60) (105)
on lease
liabilities
Dividends paid 8 - (3,963) (6,610)
Net cash inflow (139) (4,101) (6,917)
from financing
activities
Net increase in (4,128) (441) (24,019)
cash and cash
equivalents
Cash and cash 22,787 46,806 46,806
equivalents
brought forward
Cash and cash 13 18,659 46,365 22,787
equivalents as
at 30 June 2020
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE SIX MONTHSED 30
JUNE 2020
1) GENERAL INFORMATION AND BASIS OF PREPARATION
General information
The registered office of the Company is 6 Duke Street St. James's, London SW1Y
6BN. The Group's principal activity is the underwriting and management of
loans to UK residential developers.
Period of account
The Consolidated Financial Statements of the Group are in respect of the six
months ended 30 June 2020. The comparatives are for the six months ended 30
June 2019 and for the year ended 31 December 2019.
Basis of preparation
The interim condensed consolidated financial statements have been prepared in
accordance with IAS 34 Interim Financial Reporting. 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 2019, which were prepared in accordance with International Financial
Reporting Standards adopted by the International Accounting Standards Board
("IASB") and interpretations issued by the International Financial Reporting
Committee ("IFRIC") of the IASB (together "IFRS") as adopted by the European
Union.
The information relating to the six months ended 30 June 2020 and the
comparative information for the six months ended 30 June 2019 is unaudited and
does not constitute statutory financial statements within the meaning of
section 434 of the Companies Act 2006. The Group's statutory financial
statements to 31 December 2019 are audited and have been delivered to the
Register of Companies. The report of the auditor was unqualified but contained
two matters to which the auditors drew attention by way of emphasis of matter.
The two paragraphs related to post balance sheet events and a related party
loan and can be found on page 42 of the Annual Report for the year ended 31
December 2019.
Significant accounting policies
The accounting policies adopted in the preparation of the interim condensed
consolidated financial statements are consistent with those followed in the
preparation of the Group's financial statements for the year ended 31 December
2019.
As previously announced, as a result of the impact of Covid-19 and the
non-completion of the proposed transaction with HHL, the Group carried out a
strategic review of its options in April 2020. Having completed the review,
the Directors took the decision to realise the value of the loan book through
an orderly wind down of activities and to subsequently return capital to
shareholders. This process is ongoing. As the Directors remain confident that
the Group will have sufficient funds to continue to meet its liabilities as
they fall due for at least twelve months from the date of approval of the
half-year financial report, they have prepared the report on a going concern
basis.
2) FINANCIAL INSTRUMENTS - FAIR VALUES AND RISK MANAGEMENT
The Group is exposed through its operations to the following financial risks:
· Credit risk
· Liquidity risk
· Market risk.
In common with other businesses, the Group is exposed to risks that arise from
its use of financial instruments. This note describes the Group's objectives,
policies, and processes for managing those risks and the methods used to
measure them. Further quantitative information in respect of these risks is
presented throughout these Financial Statements.
The Group's overall risk management programme focuses on the unpredictability
of financial markets and seeks to minimise the effect on the Group's financial
performance. Risk management is carried out by the Board of Directors. It
identifies, evaluates and mitigates financial risks. The Board provides
written policies for credit risk and liquidity risk.
i) Principal financial instruments
The principal financial instruments used by the Group, from which financial
instrument risk arises, are as follows:
· Loan receivables
· Investments
· Contract assets
· Trade and other receivables
· Cash and cash equivalents
· Trade and other payables
2.FINANCIAL INSTRUMENTS - FAIR VALUES AND RISK MANAGEMENT (continued)
ii) Financial instruments by category
As at 30 June 2020
Fair value through Amortised cost Total
GBP000 profit or loss
Unaudited Unaudited Unaudited
Financial assets
Investments 7,136 7,136
Loan receivables 98,058 98,058
Contract assets 306 306
Trade and other 1,479 1,479
receivables
Cash and cash 18,659 18,659
equivalents
Total financial 105,500 20,138 125,638
assets
Financial
liabilities
Trade and other (3,711) (3,711)
payables
Total financial - (3,711) (3,711)
liabilities
As at 30 June 2019
Fair value through Amortised cost Total
GBP000 profit or loss
Unaudited Unaudited Unaudited
Financial assets
Investments 4,416 4,416
Loan receivables 83,617 83,617
Contract assets 3,037 3,037
Trade and other 693 693
receivables
Cash and cash 46,365 46,365
equivalents
Total financial 91,070 47,058 138,128
assets
Financial
liabilities
Trade and other (3,657) (3,657)
payables
Total financial - (3,657) (3,657)
liabilities
As at 31 December 2019
Fair value through Amortised cost Total
GBP'000 profit or loss
Audited Audited Audited
Financial assets
Investments 6,570 6,570
Loan receivables 103,630 103,630
Contract assets 306 306
Trade and other 1,292 1,292
receivables
Cash and cash 22,787 22,787
equivalents
Total financial 110,506 24,079 134,585
assets
Financial
liabilities
Trade and other 1,829 1,829
payables
Total financial - 1,829 1,829
liabilities
2. FINANCIAL INSTRUMENTS - FAIR VALUES AND RISK MANAGEMENT (continued)
iii) Financial instruments not measured at fair value
Financial instruments not measured at fair value include cash and cash
equivalents, trade and other receivables, and trade and other payables. The
carrying value of other receivables has been amortised to estimated net
recoverable value where there are circumstances indicating that the full value
will not be recovered. Trade receivables are measured at amortised cost and
are impaired for expected credit losses. Due to the short-term nature of cash
and cash equivalents and trade and other payables, the Directors consider that
their carrying value approximates to their fair value.
iv) Financial instruments measured at fair value
The fair value hierarchy of financial instruments measured at fair value is
provided below:
As at 30 June As at 30 June As at 31
2020 2019 December 2019
Fair value Fair value Fair value
Level 3 Level 3 Level 3
GBP000
Financial assets
Investments 7,136 4,416 6,570
Loan receivables 98,058 83,617 103,630
Contract assets 306 3,037 306
Total financial 105,500 91,070 110,506
assets
2) FINANCIAL INSTRUMENTS - FAIR VALUES AND RISK MANAGEMENT (continued)
(v) Financial instruments measured at fair value
The valuation techniques and significant unobservable inputs used in
determining the fair value measurement at Level 2 and Level 3 financial
instruments, as well as the inter-relationship between key unobservable inputs
and fair value are set out in the table below.
Financial Valuation Significant Inter-relationship As at 30 As
instrumen techniques unobservabl between key June 2020 at
t used e inputs unobservable 30
inputs and fair June
value 2019
Unaudited Unau
(Level 3 dite
only) d
(Level 3 only) As at
31
Decembe
r 2019
Audited
GBP000 GBP000 GBP000
Loan Initial Profile and The earlier the 103,630
receivabl transaction timing of timing of the
es costs plus loan drawdowns and the
pro rata drawdowns. higher the value
share of Assumption of the drawdowns, 98,058 83,6
fees plus that loans the higher the 17
accrued can be fair value of the
interest syndicated loan receivables.
adjusted to third
for changes parties at
in credit the fair
risks or value.
market
movements.
Equity Initial Profile and The earlier the 6,570
investmen transaction timing of timing of the
ts costs loan drawdowns and the
subsequentl drawdowns higher the value
y valued at which of the drawdowns 7,136 4,41
fair value determine the higher the 6
based on profile and fair value of the
projected timing of investment.
future investment
earnings and return
discounted on
at an investment.
appropriate
discount
rate.
Contract Discounting Expected The higher the
assets the future cash cash flows the
estimated receipts greater the
future cash and risk valuation. A
flows at a adjusted higher discount 306 3,03 306
rate discount rate results in a 7
reflecting rate. lower valuation.
the risk
associated
with the
cash flows.
Total financial 105,500 91,0 110,506
assets 70
2. FINANCIAL INSTRUMENTS - FAIR VALUES AND RISK MANAGEMENT (continued)
(v) Financial instruments measured at fair value
The following table shows the sensitivity of fair values Grouped in Level 3 to
changes in interest rates, for a selection of the largest financial assets. It
is assumed that interest rates are changed by 1% whilst all other variables
were held constant.
Movement to 30 June 2020
Sensitivity of Value in + 1% change in - 1% change in
fair values Financial interest rate interest rate
Statements
GBP000 GBP000 GBP000
Investments 7,136 7,244 7,028
Loan 98,058 98,387 97,729
receivables
Contract 306 335 277
assets
Balance as at 105,500 105,966 105,034
30 June 2020
Movement to 30 June 2019
Sensitivity of Value in + 1% change in - 1% change in
fair values Financial interest rate interest rate
Statements
GBP000 GBP000 GBP000
Investments 4,416 4,474 4,368
Loan 83,617 83,817 83,416
receivables
Contract 3,037 3,118 2,957
assets
Balance as at 91,070 91,409 90,741
30 June 2019
Movement to 31 December 2019
Sensitivity of Value in + 1% change in - 1% change in
fair values Financial interest rate interest rate
Statements
GBP000 GBP000 GBP000
Investments 6,570 6,847 6,299
Loan 103,630 104,181 103,084
receivables
Contract 306 312 299
assets
Balance as at 110,506 111,340 109,682
31 December
2019
2) FINANCIAL INSTRUMENTS - FAIR VALUES AND RISK MANAGEMENT (continued)
vi) Financial instruments measured at fair value
The reconciliation of the opening and closing fair value balance of Level 3
financial instruments is
provided below:
Movement six months to 30 June 2020
Loan receivables Investments Contract assets
Reconciliation Unaudited Unaudited Unaudited
of fair value
balances -
Level 3
GBP000 GBP000 GBP000
Balance as at 103,630 6,570 306
1 January 2020
New loans / 18,562 410 -
investments
advanced
during period
Loan (7,519) - (113)
repayments /
contract asset
receipts
Loan sold to (13,600) - -
asset
management
structures
Fair value (3,015) 156 113
through profit
or loss
Balance as at 98,058 7,136 306
30 June 2020
Movement six months to 30 June 2019
Loan receivables Investments Contract assets
Reconciliation Unaudited Unaudited Unaudited
of fair value
balances -
Level 3
GBP000 GBP000 GBP000
Balance as at 89,544 1,949 3,154
1 January 2019
New loans / 7,358 2,519 -
investments
advanced
during period
Loan (18,272) - (232)
repayments /
contract asset
receipts
Fair value 4,987 (52) 115
through income
statement
Balance as at 83,617 4,416 3,037
30 June 2019
Movement year to 31 December 2019
Loan receivables Investments Contract assets
Reconciliation Audited Audited Audited
of fair value
balances -
Level 3
GBP000 GBP000 GBP000
Balance as at 89,544 1,949 3,154
1 January 2019
New loans / 59,033 4,777 -
investments
advanced
during year
Loan (47,020) - (887)
repayments /
contract asset
receipts
Loan sold to (8,227) - -
asset
management
structures
Contract - - (2,095)
assets
impairment
Fair value 10,300 (156) 134
through income
statement
Balance as at 103,630 6,570 306
31 December
2019
3) INCOME
The Group income for the period was derived as follows:
Fair value (decrease) /
income from loan receivables
Income from contract assets
Fair value increase /
(decrease) on investments
Management Fees
Other income
Total Income
4) LOSS FOR THE PERIOD
The Group operating loss for the period is stated after charging:
Amortisation of intangible
assets
Depreciation of right-of-use
leasehold
Depreciation of fixtures &
fittings
Exceptional items (note 6)
Exceptional items include GBP12,394,000 (2019: GBPnil) related to impairment of
intangible assets (see note 9) and GBP600,000 (2019: GBPnil) related to impairment
of tangible assets (see note 10).
5) OPERATING COSTS
The Group's operating costs are stated after charging:
Six months ended 30 June 2020
Before Exceptional items Total
Exceptional
items
Unaudited Unaudited Unaudited
GBP000 GBP000 GBP000
Staff costs 2,715 1,293 4,008
Share based 65 - 65
payments
Rent, rates and 128 - 128
office costs
Marketing 60 - 60
Audit & 89 - 89
Accountancy
Legal & 470 3,521 3,991
Professional
Fees
Depreciation 185 - 185
Amortisation 94 - 94
Impairment of - 600 600
tangible assets
Impairment of - 12,394 12,394
intangibles
Other overheads 454 - 454
4,260 17,808 22,068
Six months ended 30 June 2019
Before Exceptional items Total
Exceptional
items
Unaudited Unaudited Unaudited
GBP000 GBP000 GBP000
Staff costs 3,514 - 3,514
Share based 116 - 116
payments
Rent, rates and 163 - 163
office costs
Marketing 249 - 249
Audit & 72 - 72
Accountancy
Legal & 293 312 605
Professional
Fees
Depreciation 220 - 220
Amortisation 93 - 93
Other overheads 528 - 528
5,248 312 5,560
6) EXCEPTIONAL ITEMS
The following costs were identified as exceptional items during the period:
Six months ended Six months ended
30 June 2020 30 June 2019
Unaudited Unaudited
GBP000 GBP000
Settlement costs related to 1,293 -
redundancies
Legal and professional costs 3,521 -
related to aborted disposal
Impairment of Intangibles - 10,922 -
Goodwill
Impairment of Intangibles - 1,472 -
Brand
Impairment of tangible 600 -
assets
Bond issue costs - 312
Exceptional items before 17,808 312
taxation
Taxation impact of - (59)
exceptional items
Exceptional items after 17,808 253
taxation
During the period, there were significant costs incurred in proposed disposal
of Urban Exposure Lendco Limited to HHL. Although this was approved by the
shareholders, the Company received a purported notice of termination of the
SPA from HHL prior to completion. Exceptional legal and professional costs of
GBP3,521,000 were incurred for this project and a further project to sell the
asset manager as a result of the breach of the SPA.
As a result of Covid-19 and following the failure of HHL to complete the
proposed transaction, the Group changed its strategy to an orderly wind down
of the Group loan portfolio. This led to redundancies at a cost of GBP1,293,000
to June 2020.
Following the change in strategy, the Group has reviewed the goodwill and the
brand and have impaired the value of both to GBPnil resulting in an exceptional
charge for the period of GBP10,922,000 and GBP1,472,000 respectively.
Furthermore, the Group has reviewed its requirements for the right-of-use
leasehold premises and for office space with significantly reduced number of
employees following the redundancies, and has made an impairment of the
right-of-use short leasehold asset of GBP600,000.
For the comparative period to June 2019, costs of GBP312,000 relating to a
cancelled proposed bond issue were expensed as a one-off non-recurring cost.
7) EARNINGS PER SHARE (EPS)
Basic earnings/loss per share (EPS) has been calculated based on the loss for
the period as shown in the Consolidated Statement of Comprehensive Income
divided by the weighted average number of Ordinary Shares in issue.
Diluted EPS has been calculated based on the loss for the period as shown in
the Consolidated Statement of Comprehensive Income divided by the weighted
average number of Ordinary Shares. Although 3,150,000 (June 2019 - 3,150,000)
share options were in issue, as these would have an anti-dilutive effect they
have not been included in the calculation of 'Weighted average number of
shares for diluted earnings per share'. When a profit is generated, the share
options will have a dilutive impact.
Six months ended Six months ended
30 June 2020 30 June 2019
Unaudited Unaudited
GBP000 GBP000
(Loss) for the period (23,992) (248)
(Loss)/ profit for the (6,184) 5
period excluding adjusting
items
Number of shares Number of shares
Weighted average number of 158,494,130 158,494,130
shares for basic EPS
Dilutive effect of share - -
options
Weighted average number of 158,494,130 158,494,130
shares for diluted EPS
Six months ended Six months ended
30 June 2020 30 June 2019
Unaudited Unaudited
Pence Pence
Basic (loss) per share (15.14p) (0.16p)
Diluted (loss) per share (15.14p) (0.16p)
Adjusted basic (loss) / (3.90p) 0.003p
profit per share
Adjusted diluted (loss) / (3.90p) 0.003p
profit per share
8) DIVIDS
Six months ended 30 Six months ended 30
June 2020 June 2019
GBP000 GBP000
Final dividend for the - 2,647
year ended 31 December
2019 / Period ended 31
December 2018
The Board did not propose the payment of a final dividend for the year ended
31 December 2019.
For the period ended 31 December 2018, a final dividend of 1.67p per share
(GBP2,647,000) was proposed as payable to all shareholders on the Register of
Members on 12 April 2019, approved at the Annual General Meeting of 2 May 2019
and paid 7 May 2019.
9) INTANGIBLE ASSETS
Six months ended 30 June 2020
Goodwill Brand Total
Unaudited Unaudited Unaudited
GBP000 GBP000 GBP000
Cost
As at 1 January 10,922 1,874 12,796
2020
Acquired during - - -
the period
Cost as at 30 June 10,922 1,874 12,796
2020
Amortisation
As at 1 January - 308 308
2020
Amortisation for - 94 94
the period
Impairment in the 10,922 1,472 12,394
period
Amortisation as at 10,922 1,874 12,796
30 June 2020
Net Book value as - - -
at 30 June 2020
Six -months ended 30 June 2019
Goodwill Brand Total
Unaudited Unaudited Unaudited
GBP000 GBP000 GBP000
Cost
As at 1 January 10,922 1,874 12,796
2019
Acquired during - - -
the period
Cost as at 30 June 10,922 1,874 12,796
2019
Amortisation
As at 1 January - 122 122
2019
Amortisation for - 92 92
the period
Amortisation as at - 214 214
30 June 2019
Net Book value as 10,922 1,660 12,582
at 30 June 2019
Year ended 31 December 2019
Goodwill Brand Total
GBP000 GBP000 GBP000
Cost
As at 1 January 10,922 1,874 12,796
2019
Acquired during - - -
the year
Cost as at 31 10,922 1,874 12,796
December 2019
Amortisation
As at 1 January - 122 122
2019
Amortisation for - 186 186
the year
Amortisation as at - 308 308
31 December 2019
Net Book value as 10,922 1,566 12,488
at 31 December
2019
As a result of Covid-19 and, following the failure of HHL to complete the
proposed transaction and the resultant change in strategy, the Group reviewed
the goodwill and the brand asset and have revalued both to GBPnil resulting in
an impairment charge of GBP10,922,000 and GBP1,472,000 respectively, for the
period ended 30 June 2020.
10) TANGIBLE ASSETS
Six -months ended 30 June 2020
Rig Furniture, Computer TOTAL
ht fixtures & Equipment
of fittings
use
sho
rt
Lea
seh
old
Una Unaudited Unaudited Unaudited
udi
ted
GBP00 GBP000 GBP000 GBP000
0
Cost
As at 1 3,6 492 42 4,144
January 2020 10
Acquired - - 7 7
during the
period
Remeasure of (1, - - (1,691)
leasehold 691
assets )
Cost as at 30 1,9 492 49 2,460
June 2020 19
Depreciation
As at 1 386 49 7 442
January 2020
Charge for the 156 24 5 185
period
Impairment in 600 - - 600
the period
Depreciation 1,1 73 12 1,227
as at 30 June 42
2020
Net Book value 777 419 37 1,233
as at 30 June
2020
Six -months ended 30 June 2019
Rig Furniture, Computer TOTAL
ht fixtures & Equipment
of fittings
use
sho
rt
Lea
seh
old
Una Unaudited Unaudited Unaudited
udi
ted
GBP00 GBP000 GBP000 GBP000
0
Cost
As at 1 3,8 418 19 4,276
January 2019 39
Acquired 22 74 14 110
during the
period
Remeasure of - - -
leasehold
assets
Cost as at 30 3,8 492 33 4,386
June 2019 61
Depreciation
As at 1 - - - -
January 2019
Charge for the 193 24 3 220
period
Depreciation 193 24 3 220
as at 30 June
2019
Net Book value 3,6 468 30 4,166
as at 30 June 68
2019
10) TANGIBLE ASSETS (continued)
Year ended 31 December 2019
Ri Furniture, Computer TOTAL
gh fixtures & Equipment
t fittings
of
us
e
sh
or
t
Le
as
eh
ol
d
Un Unaudited Unaudited Unaudited
au
di
te
d
GBP0 GBP000 GBP000 GBP000
00
Cost
As at 1 3, 418 19 4,276
January 2019 83
9
Acquired 22 74 23 119
during the
year
Remeasure of (2 - - (251)
leasehold 51
assets )
Cost as at 31 3, 492 42 4,144
December 2019 61
0
Depreciation
As at 1 - - - -
January 2019
Charge for the 38 49 7 442
year 6
Depreciation 38 49 7 442
as at 31 6
December 2019
Net Book value 3, 443 35 3,702
as at 31 22
December 2019 4
In the period ended 30 June 2020 and following the change in strategy to wind
down the loan book, the Group revalued the right-of-use short leasehold asset
as it will be exercising the break clause at the end of five years rather than
the original ten year period.
As the Group's requirement for the leasehold premises is unlikely to be
required for the full length of the remaining leasehold period, the Group has
also impaired the asset by a further GBP600,000 within the period.
11) INVESTMENTS
Six months ended 30 June 2020
Unaudited
Valuation GBP000
As at 1 January 2020 6,570
Investment in the period 410
Fair value adjustment during the 156
period
Valuation as at 30 June 2020 7,136
Six -months ended 30 June 2019
Unaudited
Valuation GBP000
As at t 1 January 2019 1,949
Investment in the period 2,519
Fair value adjustment during the (52)
period
Valuation as at 30 June 2019 4,416
Year ended 31 December 2019
Audited
Valuation GBP000
As at 1 January 2019 1,949
Investment in the year 4,777
Fair value adjustment during the (156)
year
Valuation as at 31 December 2019 6,570
The Group entered into a partnership agreement with Kohlberg Kravis Roberts
(KKR) in which the Group has a 9.1% interest. The purpose of the agreement is
to make loans to real estate developers in the United Kingdom for the
development of residential and mix use properties. Under this agreement, KKR
will invest up to GBP150m and Urban Exposure Plc will invest up to GBP15m in
assets under management, with each party contributing as directed under the
partnership agreement, as and when required. The Group has invested GBP7.1m to
date (June 2019 GBP4.5m, December 2019 GBP6.7m).
Due to the change in strategy, the partnership is committed to funding
existing loan arrangements but there will be no further new development loans
to be funded by this arrangement. The maximum commitment of both parties to
the loans is thereby limited to GBP71.3m (KKR) and GBP7.1m (Urban Exposure plc).
The investments are classified as a trade investment and accordingly, they are
financial assets measured at FVTPL. See note 2 for further disclosures.
12) LOAN RECEIVABLES
As at 30 June As at 30 June As at 31
2020 2019 December 2019
Unaudited Unaudited Audited
GBP000 GBP000 GBP000
Loan receivables 98,058 83,617 103,630
See note 2 for further disclosures relating to financial assets.
13) CASH AND CASH EQUIVALENTS
Cash and cash
equivalents -
unrestricted
All the cash and cash equivalents are held in Sterling.
The Directors consider that the carrying amount of cash and cash equivalents
approximates to their fair values.
14) SHARE CAPITAL
Share capital for the period has been issued as follows:
Value per Ordinary Deferred Total
share Shares Shares
Unaudited Unaudited Unaudited Unaudited Unaudited
Number GBP GBP000 GBP000 GBP000
Balance 169,950,000 0.01 1,650 50 1,700
as at 1
January
2019
Movement - - - -
to 30
June 2019
Balance 169,950,000 0.01 1,650 50 1,700
as at 30
June 2019
Movement - - - -
to 31
December
2019
Balance 169,950,000 0.01 1,650 50 1,700
as at 31
December
2019
Movement - - - -
to 30
June 2020
Balance 169,950,000 0.01 1,650 50 1,700
as at 30
June 2020
The movement in the number of shares issued during the period is shown as
below:
Ordinary Deferred Treasury Total
Shares Shares Shares
Unaudited Unaudited Unaudited Unaudited
Number Number Number Number
Balance as 158,494,130 4,950,000 6,505,870 169,950,000
at 1
January
2019
Movement to - - - -
30 June
2019
Balance as 158,494,130 4,950,000 6,505,870 169,950,000
at 30 June
2019
Movement to - - - -
31 December
2019
Balance as 158,494,130 4,950,000 6,505,870 169,950,000
at 31
December
2019
Movement to - - - -
30 June
2020
Balance as 158,494,130 4,950,000 6,505,870 169,950,000
at 30 June
2020
There was no movement in the number of shares issued in the six-month period
ended 30 June 2020.
15) RELATED PARTY TRANSACTIONS
During the period, the Group companies entered the following transactions with
related parties which are not members of the Group as detailed below:
Six months As at 30 June 2020
ended 30
June 2020
Operating Amounts due from Amounts due to
costs related parties related parties
recharges
Unaudited Unaudited Unaudited
GBP000 GBP000 GBP000
UE Finco - - -
Limited
Urban 19 - 14
Exposure
Limited
Urban - - -
Exposure
Investmen
t
Managemen
t LLP
Urban - 907 -
Exposure
Philanthr
opy
Limited
19 907 14
Six months As at 30 June 2019
ended 30
June 2019
Operating Amounts due from Amounts due to
costs related parties related parties
recharges
Unaudited Unaudited Unaudited
GBP000 GBP000 GBP000
UE Finco 32 - 32
Limited
Urban 14 - 14
Exposure
Limited
Urban 63 - 63
Exposure
Investmen
t
Managemen
t LLP
Urban - 5 -
Exposure
Philanthr
opy
Limited
109 5 109
Year ended As at 31 December 2019
31 December
2020
Operating Amounts due from Amounts due to
costs related parties related parties
recharges
Audited Audited Audited
GBP000 GBP000 GBP000
UE Finco 27 - 8
Limited
Urban 343 - 37
Exposure
Limited
Urban - - -
Exposure
Investmen
t
Managemen
t LLP
Urban - 707 -
Exposure
Philanthr
opy
Limited
370 707 45
Operating costs were paid on behalf of Urban Exposure Group and re-charged at
cost by the above related companies.
No dividends were paid to related parties in the period. For the half year to
30 June 2019, dividends of GBP73,000 and GBP147,000 were paid to the Directors and
key managers of Urban Exposure Plc in respect of the interim dividend and
final dividend for the period ended 31 December 2018 in January 2019 and May
2019 respectively. For the year ended 31 December 2019, dividends of GBP302,000
were paid to the Directors and key managers of Urban Exposure Plc in respect
of the final dividend for the period ended 31 December 2018 and the interim
dividend for the year ended 31 December 2019.
15. RELATED PARTY TRANSACTIONS (continued)
On 16 January 2020, a further GBP200,000 was advanced to Urban Exposure
Philanthropy Limited ("UEP"), a related party, leaving a balance of GBP907,000
as at 30 June 2020 (June 2019: GBP5,000, December 2019: GBP707,000). The UEP Loan
was advanced by the Group on the basis that it would be repaid from UEP's fund
raising activities and from contributions from the Group's staff. Mr. and Mrs.
Sandhu have agreed with the Company that they will procure that the UEP Loan
is repaid in full to the Company before 31 December 2020 (the "UEP Loan
Repayment Agreement"). This commitment has been secured by Mr. and Mrs. Sandhu
by the deposit into an escrow arrangement of 2.8 million ordinary shares of
the Company beneficially owned by Mr. and Mrs. Sandhu with the Company being
able to require the sale of the shares from escrow and the proceeds (up to the
amount then owing under the UEP Loan) being used to repay the Company. Mr. and
Mrs. Sandhu may make payment, or part payment, of the UEP Loan in advance of
31 December 2020, in which case a corresponding portion of the shares in
escrow will be released to Mr and Mrs Sandhu. Entry into the UEP Loan
Repayment Agreement was a related party transaction for the purposes of Rule
13 of the AIM Rules for Companies.
Further, because UEP is a connected person of each of Mr. and Mrs. Sandhu for
the purposes of the Companies Act 2006, the arrangements were required to be
approved by PLC's shareholders as a loan to a connected party of a director
pursuant to section 200 of the Companies Act 2006. This shareholder approval
was not obtained. Accordingly, under section 213(2) of the Companies Act 2006,
the loan is voidable by Amco unless either (a) restitution of the loan is no
longer possible or (b) Amco is indemnified for any loss or damage resulting
from the loan. In addition, under sections 213(3) and (4) of the Companies
Act, each of (a) UEP, (b) Mr. and Mrs. Sandhu and (c) any other director of
Lendco and Amco who authorised the Loan are jointly and severally liable to
indemnify Amco for any loss or damage resulting from the Loan, unless, in the
case of (c) that director can show at the time the relevant transaction was
entered into, he did not know the relevant circumstances constituting the
contravention of the Companies Act 2006.
16. FINANCIAL COMMITMENTS
As at 30 June 2020, the Group had GBP165.5m (June 2019 GBP220.8m, December 2019
GBP421.0m) of undrawn committed loan capital payable over the next four years.
Since June 2020, these commitments have reduced by a further GBP133.5m in
respect of loans sold or redeemed early.
The Group entered into a partnership agreement with KKR with a commitment of
up to GBP15.0 million and has made payments of GBP7.1m (June 2019 GBP4.5m, December
2019 GBP6.7m) under this agreement with an outstanding financial commitment
relating to the agreement of GBP7.9m (June 2019 GBP10.5m, December 2019 GBP8.3m).
Due to the change in strategy, there will be no further new development loans
to be funded by this arrangement. The maximum commitment of both parties is
thereby limited to GBP71.3m (KKR) and GBP7.1m (Urban Exposure plc).
17) POST BALANCE SHEET EVENTS
The Group had no significant post balance sheet events requiring adjustment or
disclosure.
Urban Exposure Plc
6 Duke Street St James's
London
SW1Y 6BN
www.urbanexosureplc.com
ISIN: GB00BFNSQ303
Category Code: IR
TIDM: UEX
LEI Code: 213800Q7WLHGIHUFBT43
Sequence No.: 84589
EQS News ID: 1134675
End of Announcement EQS News Service
(END) Dow Jones Newswires
September 22, 2020 02:00 ET (06:00 GMT)
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