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Urban Exposure plc (UEX)
Financial results for the period from 10 April 2018 (incorporation) to 31
December 2018
03-Apr-2019 / 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.
3rd April 2019
Urban Exposure Plc
Solid start to a new growth phase
Financial results for the period from 10 April 2018 (incorporation) to 31
December 2018
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 audited Group financial
results for the period from 10 April 2018 (the date of incorporation) to 31
December 2018 ("the Period"), following its admission to AIM on 9 May 2018
("IPO" or "Admission").
The Group's financial year ends on 31 December each year. These results are
being published in accordance with AIM Rule 19.
Business Highlights
· Funding of GBP525 million was committed across 16 loans during the Period.
· The Group closed its first managed account, a partnership agreement with
Kohlberg Kravis Roberts ("KKR") with exclusivity, and with a value of GBP165
million (of which the Group has committed to invest up to GBP15 million).
· The Group closed its first discretionary senior secure debt facility
with UBS into the KKR partnership with a value of up to GBP165 million,
increasing the lending capacity of the partnership to GBP330 million.
· Overall third-party Assets Under Management ("AUM") raised for the first
eight months of operation totalled GBP371 million (excluding IPO proceeds).
Financial Highlights
· Income for the Period was GBP3.9 million
· Operating loss for the Period before exceptional items was GBP1.1 million
and the total loss for the Period was GBP1.7 million, including exceptional
costs of GBP0.9 million and share-based expenses of GBP0.5 million
· Operating costs before exceptional items were GBP5.0 million, representing
0.81% of total committed loans
· Dividend per share: 2.5p
· proposed final dividend of 1.67 pence per share (interim dividend of
0.83 pence per share)
· Basic loss per share: (1.18)p
· Adjusted loss per share*: (0.58)p
· Net asset value: GBP151m
· Net asset value per share: 95p
Operational Highlights
· New committed loans:GBP525m
· Deployed by the Group:GBP93m
· Projected aggregate income (on loan book over life of loans):GBP69m
· Projected aggregate income (the Group's share, on loan book over life of
loans):GBP 27m
· Guaranteed minimum income (on loan book over life of loans):GBP43m
· Guaranteed minimum income (the Group's share, on loan book over life of
loans):GBP15m
· Weighted average LTGDV:67%
Weighted average IRR (unlevered):10%*: Adjusted loss per share is the basic
loss per share adjusted to exclude exceptional items of GBP0.9m (being GBP0.6m
costs related to the IPO and GBP0.3m exceptional professional costs)
Randeesh Sandhu, Chief Executive Officer, commented:
"In what has been a transformational year for the Group, we have made good
progress towards achieving the long-term business plan set out at IPO. We
have successfully provided facilities totalling GBP525m in less than eight
months on competitive, flexible finance terms to some of the most highly
regarded SME developers operating in the UK today. We have generated higher
than expected projected aggregate income despite being uncompromising in
maintaining the high level of credit quality on our loan book.
"We have expanded and developed our asset management activities to increase
the funds available for deployment, raising GBP371m of new capital in the
Period, making great strides in building on our existing relationships. We
also have a substantial live pipeline of GBP670m potential new loan
transactions.
"If ambitious government targets to build 300k new homes every year are to
be realised, we estimate there is a lending opportunity of GBP394 billion over
the next decade across the UK. Of this, the 'funding gap' equates to GBP237
billion of development finance opportunities. The very significant scale of
this shortfall gives us confidence that, using our unique set of resources
and expertise, we will be able to build our market share achieving revenue
growth, profitability and long-term shareholder value."
A copy of the Report will shortly be available on the Company's website at
www.urbanexposureplc.com [1] and hard copies will be sent to shareholders in
due course.
Enquiries:
Urban Exposure Plc Tel: +44 (0) 845 643 2173
Randeesh Sandhu, CEO
Liberum Capital Limited (Nominated Tel: +44 (0) 20 3100 2000
Adviser & Joint Corporate Broker)
Neil Patel
Gillian Martin
Jonathan Wilkes-Green
Louis Davies
Jefferies International Limited (Joint Tel: +44 (0) 20 7029 8000
Corporate Broker)
Ed Matthews
William Brown
MHP Communications (Financial Public Tel: +44 (0) 20 3128 8100
Relations)
Barnaby Fry
Charlie Barker
Patrick Hanrahan
Sophia Samaras
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 Randeesh Sandhu, Chief Executive
Officer of Urban Exposure Plc.
Notes to Editors
Urban Exposure plc is a specialist residential development finance and asset
manager that has been formed to provide finance for UK real estate
development. The Group focuses on generating interest and fees from
originating loans on its balance sheet, before moving the loans into asset
management structures, from which origination and management fee income is
generated from institutional investors. The Group therefore services two
types of customer: borrowers and capital providers. For additional
information, please visit Urban Exposure's website: www.urbanexposureplc.com
and on twitter @UrbanExposureuk, LinkedIn:
www.linkedin.com/company/urban-exposure/ and Facebook:
www.facebook.com/UrbanExposureUK/
CEO'S REVIEW
2018 was a transformational year for the Group, during which we joined the
AIM market. We have made a solid start to this new phase for the Group and
laid firm foundations for the coming years.
Trading and Dividend
The reported loss of GBP1.7m covers a period of less than eight months.
Overall, we have made solid progress, with a total of GBP525m in committed
loans and GBP371m in new capital available through our partnership
arrangements. Gross projected aggregate income on the loan book as a whole
is GBP69m (with just under GBP43m as the guaranteed minimum amount). Our share
of the projected aggregate income is GBP27 million, which will eventually
translate to earnings in the financial statements over the life of the
loans. Our share of the minimum income is GBP15 million. The weighted average
LTGDV on the loan book is 67% and the weighted average IRR is 10%
(unlevered), demonstrating excellent credit quality whilst delivering a
strong IRR.
While the raising of capital must occur alongside the commitment of new
loans, the two are still distinct business activities and the business will
one day manage capital in excess of its committed loan book. The Group
'warehouses' loans until capital raised via asset management strategies
matches loan commitments. We call this period, estimated to be two to three
years following the IPO, the 'ramp-up' period. Over time, as the assets
under management grow, the Group will have the ability to grow its loan book
without having to warehouse each loan temporarily. I will refer to this
stage as the "steady state". The premium earnings multiple that asset
managers' share prices trade at typically, as opposed to balance sheet
lenders who often trade at a multiple of book value, shows that the market
recognises and values this as higher quality earnings.
Initially, given the time it can take to deploy capital into committed
loans, we will value the business using a combination of both NAV and
earnings. After the 'ramp-up' period, this valuation approach should
gradually transition away from NAV towards earnings as the key measure.
Key achievements
For the Group, the eight months to 31 December have been full of significant
milestones. Whilst the business today makes a loss, looking at this in
isolation fails to paint a true picture of the business's achievements in
2018, some of which were exceptional.
Shortly after the IPO, in July 2018, the Company entered into a partnership
with KKR, with an initial size of GBP165m. A partnership with such an industry
behemoth involved KKR undertaking a considerable degree of diligence on the
Company, the competition and the sector. This is a clear demonstration of
our profile and calibre, the size of the market opportunity and the extent
of investor appetite in the sector.
In December 2018, the partnership closed a first-of-its-kind, blind-pool
discretionary loan-on-loan funding line with UBS, which provided the Group
with a GBP165m facility on a portfolio basis. Additionally, the Group also
secured an additional loan-on-loan funding line from Aviva Investors for a
single loan within the partnership structure. The combined firepower of the
KKR and UBS venture therefore currently provides circa GBP363m of development
lending available to the Group. The Group also syndicated loans to other
financial institutions during the Period. The total lending capacity raised
in 2018 was GBP371m.
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