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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
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Industry Sector Turnover (m) Profit (m) EPS - Basic PE Ratio Market Cap (m)
Real Estate 11.1 0.2 0.1 766.7 114

Urban Exposure plc: Interim Results

22/09/2020 7:00am

UK Regulatory (RNS & others)


 
 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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