Urban Exposure plc (UEX)
Urban Exposure plc: Interim Results for the six months ended 30 June 2019
10-Sep-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.
10 September 2019
Urban Exposure plc
Interim Results for the six months ended 30 June 2019
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 interim results for the six
months ended 30 June 2019 ("the Period").
Business Highlights
· GBP97.5m of new committed loans as at 9 September 2019 (GBP54.3m of new
committed loans as at H1 2019) (H1 2018: GBP0.3m).
· Continued focus on high loan credit quality with WA LTGDV of 66% (FY
2018: 67%).
· Progressed loan pipeline of GBP1,013.1m of which GBP666.3m is in legal due
diligence.
· Current committed loan book has pre-sales, backed by buyer deposits,
which reduces the WA LTGDV to an effective rate of 45%. Zero credit losses
to date.
· Several asset management strategies well advanced including c. GBP500m of
funding in legal due diligence as at 9 September 2019.
· The following performance measures as at H1 2019 were as follows:
New committed loans:
GBP54.3m (H1 2018: GBP0.3m, FY 2018: GBP524.5m)
Projected aggregate income (the Group share, on loan book over life of
loans):
GBP1.0m (H1 2018: GBP0.0m, FY 2018: GBP26.9m)
Weighted Average LTGDV:
66% (H1 2018: n/a, FY 2018: 67%)
WA IRR (unlevered):
11% (H1 2018: n/a, FY 2018: 10%)
WA Money Multiple (annualised and unlevered):
1.14x (H1 2018: n/a, FY 2018: 1.15x)
Financial Highlights
· The Group achieved a small profit before exceptional items for the
Period and the total loss for the Period was GBP0.2m, including exceptional
costs of GBP0.3m and share-based expenses of GBP0.1m:
· revenue of GBP5.3m
· operating costs of GBP(5.3)m, representing 0.82% of total loans and
assets under management
· Interim dividend of 1.67 pence per share approved payable to all
shareholders on the Register of Members on 27 September 2019 will be paid
on 18 October 2019.
Basic loss per share: (0.16)p
Basic profit per share adjusted for exceptional costs: 0.003p
Net tangible asset value1: 135.2m
Net tangible asset value per share: 85p
Cash and cash equivalents per share: 29p
Loans receivable per share: 53p
Calculated as Net Asset Value of GBP147.7m less Intangible Assets of GBP12.5m
Randeesh Sandhu, Chief Executive Officer, commented:
"In line with our strategy, we continue to focus on the 'ramp up' of our AUM
and loan book and have invested significantly in our team to support this
phase.
While current market sentiment remains subdued, the underlying demand for
development finance has continued unabated and we have a strong progressed
loan pipeline of over GBP1 billion. As the business enters into the
traditionally busier second half of its calendar year, we therefore remain
confident of meeting market expectations."
Enquiries:
Urban Exposure Plc Tel: +44 (0) 845 643 2173
Randeesh Sandhu, CEO
Sam Dobbyn, CFO
Tel: +44 (0) 20 3100 2000
Liberum Capital Limited (Nominated
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)
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 (Aim: UEX) is a specialist real estate financier and
asset manager. The Group services highly experienced borrowers building real
estate assets across the UK, whilst managing funds on behalf of
institutional investors looking for exposure to this sector. For additional
information, please visit Urban Exposure PLC's website at
www.urbanexposureplc.com and on twitter @UrbanExposureuk, LinkedIn:
www.linkedin.com/company/urban-exposure/ and Facebook:
www.facebook.com/UrbanExposureUK/ [1]
Chief Executive's Review
Since the Group listed on AIM I have focussed on ensuring that the business
has the right platform in place to achieve its potential and deliver good
returns for our shareholders. The most important aspect of delivering long
term shareholder value is to ensure that we have the best quality loan book
and funding structures, which together provide the Group with the best risk
adjusted returns in the market. I am pleased with the performance of both
these aspects to date as well as the opportunities for growth going forward.
Key performance
indicators
GBPm 30 June 30 June 31
2019 2018 Decembe
r 2018
New committed 54.3 0.3 524.5
loans
Projected aggregate 1.0 0.0 26.9
income (PAI)
Minimum income 0.6 n/a 15.0
(MI)
Weighted average loan to gross 66% n/a 67%
development value (WALTGDV)
Operational costs as a percentage of 0.82% n/a 0.81%
total committed loan book
Basic loss per (0.16)p (1.33)p (1.18)p
share (EPS)
Adjusted earnings/(loss) per share 0.003p (0.75)p (0.58)p
adjusted for exceptional costs
Financial Review
Overall revenue of GBP5.3m is predominantly derived from fair value gains on
loans deployed on balance sheet. Our goal is to use our balance sheet as
efficiently as possible while also providing us with capacity to execute
loans quickly, before these are subsequently transferred into our asset
management business. To date asset management income has been modest but as
we grow our AUM, and more loans are deployed, this higher quality stream of
earnings should generate a greater proportion of our revenue.
Total operating costs, excluding exceptional items, of GBP5.3m in H1 2019 (H1
2018: GBP1.0m) reflect the increased investment in the business that we
detailed in our 2018 preliminary announcement. There will be an increase in
run rate costs in the second half of the year as we make the necessary
investment needed to capitalise on the opportunities presented to us. We
remain comfortable with our full year cost guidance of GBP12.5m.
The Group achieved a small profit before exceptional items at H1 2019 (H1
2018: loss of GBP1.0m). Exceptional items of GBP(0.3)m were in relation to the
costs of a proposed retail bond that was due to be issued at the start of
August. The retail bond was one part of our asset management strategy to
raise discretionary capital. Due to adverse market conditions at the time of
the issue we decided not to go ahead with the bond. Although we have
incurred costs associated with this, we now have FCA approval and a
published prospectus that would allow us to re-enter the market very quickly
when conditions are more favourable.
New Committed Loans and Pipeline
The nature of our business, the size of the loans we manage, and our
unrelenting focus on credit quality inevitably means that there will be some
variability in the amount of new committed loans we complete during the
year. The real estate development finance industry is also seasonal with a
greater weighting to deals being completed in the last quarter of the year
(in the last two months of 2018, we executed GBP291.1m of loans).
As a result of these factors the Group completed GBP54.3m of new committed
loans at H1 2019 (H1 2018: GBP0.3m) and further loans of GBP43.2m as at 9
September 2019. This GBP54.3m of new committed loans will translate into GBP4.4m
of projected aggregate income (of which the share for the Group is GBP1.0m)
which will eventually be recognised in earnings over the life of the loans.
In total, funding of GBP564.9 million has been committed (GBP648.0 million
including legacy loans) over 17 loans since our IPO in May 2018, as at the
end of H1 2019.
The Group set a target of GBP700-GBP900m of loans this year and despite the slow
start I expect the business to be within this range by the end of the year.
The business has a very strong pipeline of GBP1,013.1m of loans, of which
GBP666.3m are currently in the advanced stages of legal due diligence where
heads of terms have been signed and the Group has exclusivity (the remaining
pipeline balance represents deals where heads of terms have been issued) .
The process of legal due diligence is important as at this point the
borrower is committing legal expenses to ensure the loan is eligible for
completion. Historically we have converted a high proportion of these loans.
Loan Credit Quality
The credit quality of the loans we underwrite is fundamental to our business
model and our reputation as a leading real estate development finance
provider. We employ robust credit guidelines, rigorous deal appraisal and
stringent policies and procedures to mitigate market risk in our lending and
operations. Our overall approach to risk management ensures that we are well
diversified across projects and geographical locations so that we mitigate
concentration risk.
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