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Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
---|---|---|---|---|---|
Urban Exposure Plc | LSE:UEX | London | Ordinary Share | GB00BFNSQ303 | ORD GBP0.01 |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 68.50 | 0.00 | 01:00:00 |
Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
---|---|---|---|---|---|
0 | 0 | N/A | 0 |
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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