TIDMCIN
RNS Number : 3454L
City of London Group PLC
10 September 2021
10 September 2021
City of London Group plc
("COLG" or "the Company" or "the Group")
Preliminary announcement of final results
The Company announces its audited final results for the year
ended 31 March 2021.
Highlights
Business developments
-- Successful cash raise exercise in October 2020 raised
GBP27.0m before expenses. The funds were invested in Recognise Bank
to facilitate its development and provide a capital base for its
lending activities.
-- Following the fund raise, Recognise Bank received
authorisation with restriction (AwR) as a bank from the PRA on 10
November 2020 and began trading, offering four lending products.
The business changed its name to Recognise Bank Limited from
Recognise Financial Services Limited.
-- Recognise Bank has now met the technical regulatory
mobilisation conditions set by the PRA, following completion of the
build out and testing of its banking infrastructure. It is expected
it will be granted a full UK banking licence after the laid-down
capital adequacy requirements are met.
-- Capital raise announced on 23 August 2021, to raise a minimum
of GBP11.4m conditional on shareholder approval, which was obtained
on 8 September 2021. Two of the Company's major shareholders are
supporting the next stage of the Group's development by investing a
further GBP11.4m. This will be invested in Recognise Bank to meet
the capital adequacy requirements referred to above . An open offer
will be made to other existing shareholders.
-- Sale of Acorn to Oaks for GBP1.1m was completed on 1 April
2021 while the sale of Milton Homes for GBP9.3m in total was
agreed, subject to regulatory approval, on 3 September 2021. The
net proceeds from the sale of Milton Homes will be invested in
Recognise Bank.
-- Recognise Bank has been working to implement its business
strategy and develop its business so that it will be well placed to
grow its lending activities once it receives a full banking licence
and restrictions on deposit-taking are lifted, which is expected
during the third quarter of 2021. It is also planning to introduce
business savings products towards the end of 2021.
Financial results
-- Loss before tax GBP12.6m after absorbing costs of GBP7.9m
associated with UK banking licence application and GBP2.5m from
discontinued activities (2020: loss before tax GBP9.7m after
absorbing costs of GBP3.4m associated with applying for UK banking
licence).
-- Consolidated NAV per share attributable to shareholders 49p (2020: 60p).
Michael Goldstein, CEO, commented:
"The Group has made considerable progress in implementing its
long-term strategy over the last 18 months. The process of
re-focusing the Group's business on banking activities is largely
complete with Recognise Bank poised to become a deposit taking
bank.
"The support offered by two of the Company's major shareholders
through the recently- announced capital raise is a sign of
continuing confidence from our shareholder base in our strategy,
and the opportunity that exists within the SME banking space.
"Recognise Bank has made great strides in developing its
business since achieving its initial goal of receiving AwR in
November 2020. The capital raise will enable Recognise Bank to exit
mobilisation, having met all the requirements of the PRA. As a
deposit-taking bank, Recognise Bank will be well placed going
forward to deliver its business plan and meet the needs of its
target customers in the UK SME market, and offer a relationship led
banking service which is currently not available to SMEs."
For further information:
City of London Group plc
Michael Goldstein (Chief Executive Officer) +44 (0)200 3988 6501
Ben Peters (Director of Investor Relations) +44 (0)200 3988 6500
Peel Hunt LLP (Nominated Adviser and Joint Broker) +44 (0)20 7418 8900
James Britton
Rishi Shah
For media enquiries, please contact:
Heather Armstrong ( heather.armstrong@tavistock.co.uk ) +44 (0)7929 116860
Tim Pearson
Or e:Mail: colg@tavistock.co.uk
This RNS has been approved on behalf of the board by Michael
Goldstein, CEO on 9 September 2021.
Notes to Editors:
City of London Group plc is quoted on AIM (TIDM: CIN) and is the
parent company of a group which is focused on serving the UK SME
market. While grounded in traditional values, it is primed for
future growth through the strength and depth of expertise in its
expanding team.
ww.cityoflondongroup.com
Chair's statement
It is a pleasure to be able to tell you in my first report as
your Chair about the substantial progress we have made over the
last year in implementing the Group's growth strategy.
The Group has largely completed the process of simplifying and
re-focusing its business activities. With Recognise Bank expected
to achieve its full deposit taking authorisation in the very near
future, the Group is well placed to take advantage of the
opportunities that we see for it as a relationship-led bank focused
on serving the UK SME sector, as the UK economy moves forward from
COVID-19.
Business model and strategy
The Group's business model and strategy has continued to evolve
as Recognise Bank maintained its progress towards being granted a
full UK banking licence. After Recognise Bank achieved its initial
goal of receiving authorisation with restriction, as a bank in
November from the PRA, the Board decided the Group should in future
concentrate on the development of its banking business and divest
itself of its other two businesses, Milton Homes and Acorn to Oaks.
The sale of both businesses has been achieved since the year end
and the proceeds will be redeployed in Recognise Bank.
A second major step in implementing the Group's strategy was
reached in June when the PRA confirmed formally to Recognise Bank
it had met all the technical regulatory conditions for mobilisation
set by the PRA and would achieve a full UK banking licence once the
capital adequacy conditions were met. It is a major achievement for
the team at Recognise Bank to have completed the build out and
testing of the banking infrastructure to the satisfaction of the
Regulator within a seven-month period.
We will meet the capital adequacy conditions set by the
Regulator after the forthcoming capital raise which was announced
on 23 August 2021. The continuing support being offered by two of
the Company's major shareholders who have agreed to subscribe
GBP11.4m is a sign of confidence in the Group's strategy.
Recognise Bank is poised to move forward with delivering its
business plan as soon as it exits mobilisation and restrictions on
taking deposits are lifted which we expect in the very near
future.
We believe the strategy for Recognise Bank remains robust and is
now even more relevant as a result of the impact of COVID-19 on the
UK economy. As the UK's SME businesses seek to recover and grow
following lockdown restrictions, the opportunities for Recognise
Bank, as a new entrant focusing on supporting the SME market, are
as attractive now, as when the strategy was first put in place.
Governance
Following a review of Corporate Governance, the Board increased
the number of its independent non-executive directors in February
by appointing four non-executive directors of Recognise Bank
Limited as non-executive directors of the Company. As well as
bringing the Company into line with the 2018 Corporate Governance
Code requirements on independent non-executive directors, these
appointments improve corporate governance overall by streamlining
the oversight function of the boards of both companies.
The governance structure of the Company will be kept under
review as the expansion of the Group continues.
Board changes
There have been a number of Board changes during the year.
Ruth Parasol and Nyreen Bossano-Llamas were appointed on 9
October 2020 in accordance with the terms of the Relationship
Agreement with Parasol V27 Limited, the Company's largest
shareholder.
Following the Corporate Governance review, four non-executive
directors of Recognise Bank Limited were appointed as non-executive
directors of the Company in February.
Lorna Brown and Lorraine Young resigned as non-executive
directors on 18 August 2020 and 15 January 2021, respectively.
Andy Crossley, who has been a non-executive director since 2015
stepped down from the Board at the General Meeting on 8 September
2021.
I should like to thank Lorna, Lorraine and Andy for the valuable
contributions each has made to the Board.
AGM matters
The Board is seeking authority at the AGM to issue up to
20,959,316 new shares. As in 2020, this is a larger amount than
would normally be sought but will allow COLG to raise the new
equity required to finance business opportunities arising after
Recognise Bank has a full banking licence.
The Board does not recommend payment of a dividend.
Colin Wagman
Colin Wagman retired as Chair of the Board on 10 June. On behalf
of the Board, I should like to thank Colin, who became the Chair in
October 2017, for the valuable contribution he has made since that
time and his leadership in implementing a new Group strategy which
is being successfully delivered.
Outlook
A summary of the Group's activities during the year is given in
the Strategic report.
While the continuing impact of COVID-19 on economic growth
remains uncertain, the Board is confident that Recognise Bank, as a
relationship-led bank supported by modern cloud-based technologies
focusing on providing a high-quality service to customers, is well
placed to meet the present and future needs of its target customers
in the UK SME market.
The Group is successfully delivering the strategy it set out in
2017 and 2018 and the ability for Recognise Bank to take deposits,
which is expected in the third quarter of 2021, is the final
regulatory milestone to allow it to move forward as a bank and
achieve its business plan.
Philip Jenks
Chair
9 September 2021
Strategic report
The Group operated in three business areas during the year ended
31 March 2021. The Company's banking subsidiary, Recognise Bank,
began trading following receipt of AwR in November 2020: all new
lending activity is now transacted through Recognise Bank which
anticipates receiving a full UK banking licence in the third
quarter of 2021. The Company has decided it should focus future
activities on the development of Recognise Bank and divest itself
of its other two businesses. Acorn to Oaks was sold on 1 April 2021
and the sale of Milton Homes was agreed, subject to regulatory
approval, on 3 September 2021.
The business areas were:
-- providing loan and lease finance to the UK SME market through
Recognise Bank, which offered its first loans in December, PFS, a
property bridging finance company, and CAML, which offered
asset-based finance and commercial and professional loans;
-- acting as a financial services intermediary focusing on the
SME and property markets through Acorn to Oaks; and
-- administering a portfolio of home reversion plans through Milton Homes.
A review of each business is included below.
Financial summary
The consolidated results before tax of the businesses in the
Group are shown below:
2021 2020
GBP'000 GBP'000
(restated)
------------------------------------------------------ -------- ---------------
Banking activities, including banking
licence application costs (7,812) (3,351)
Loan, lease and professions financing(a)
Asset based finance, commercial and
professional loans (297) (1,336)
Property bridging finance 109 58
Home reversion plans(a) 3,243 (2,602)
Financial services intermediary 5 (36)
Other (7) (8)
Holding company(b) (7,888) (2,385)
------------------------------------------------------ -------- ---------------
Loss before tax (12,647) (9,660)
------------------------------------------------------ -------- ---------------
Continuing operations (10,119) (6,452)
Discontinued operations(b) (2,528) (3,208)
------------------------------------------------------ -------- ---------------
(12,647) (9,660)
------------------------------------------------------ -------- ---------------
(a) stated after quasi-equity intra group payments of interest.
(b) 2021 includes a charge of GBP6,657,000 for the change in
value of business units on reclassification as disposal groups.
On a consolidated basis the key performance indicators for the
Group are:
2021 2020
GBP'000 GBP'000
(restated)
------------------------------------------------------ -------- -----------
Net costs associated with banking licence application
and movement to a full UK bank banking licence (7,812) (3,351)
Loss before tax for the year (GBP'000) (12,647) (9,660)
Consolidated net assets per share (attributable
to owners of the parent) 49p 60p
------------------------------------------------------ -------- -----------
The results for the year reflect the transition in the Group's
activities as it implements its strategy of focusing on the
development and growth of Recognise Bank.
Recognise Bank began trading in November after receiving
authorisation with restriction as a bank from the PRA. Progress
towards obtaining a full UK banking licence was made as Recognise
Bank worked towards meeting the regulatory mobilisation conditions
set by the Regulator in the latter part of the year. The net costs
of GBP7.8m for the year reflect the costs of completing the
build-out and testing of Recognise Bank's banking infrastructure
and the gradual build-up of its team to support future development
and growth.
Following the decision of the Board to concentrate the Group's
future activities on Recognise Bank and divest itself of its other
businesses, the results include a one-off charge of GBP6.7m for the
change in value of Milton Homes and Acorn to Oaks on reclassifying
them as businesses held for disposal. Since the year end both
businesses have been sold with completion in the case of Milton
Homes being conditional upon regulatory approval.
Milton Homes made a profit of GBP3.2m compared with a loss of
GBP2.6m in 2020 as UK residential property valuations increased
sharply from March 2020. After the re-opening of the property
market in May 2020, there was a continuing demand for properties
for the rest of the year with sales prices generally exceeding
expectations. The number of sales achieved in the year was affected
by an increase in the time taken to complete sales.
Following the decision to cease new lending through CAML and PFS
in March 2020, the existing lending portfolios entered their
run-off phase. Despite the issues arising from the COVID-19
pandemic, the run-off process has to date gone smoothly and the
provisions for bad and doubtful debts made in March 2020 in
response to COVID-19 have proved appropriate. Allowance has been
made for possible increased future defaults as the economy emerges
from lockdown restrictions in the provisions carried forward.
The key contributors to the increase of GBP3.0m in the loss for
the year are:
-- increase of GBP4.4m in the net costs of Recognise Bank;
-- one-off charge of GBP6.7m on the reclassification of Milton
Homes and Acorn to Oaks as disposal groups;
-- increase of GBP5.8m in the revenue earned by Milton Homes;
-- decrease of GBP1.3m in the charge for bad and doubtful debts; and
-- reduction of GBP1.4m in the charge for goodwill impairment.
Current activities
The Group has largely completed the process of re-focusing its
activities, following the sale of both Acorn to Oaks and Milton
Homes, subject to regulatory approval, since the year-end. Net
proceeds from the sales will be reinvested in Recognise Bank to
facilitate further development of its business.
Recognise Bank met the technical requirements for mobilisation
in June 2021 within seven months of receiving AwR. It is continuing
to implement its business plans and develop its product offerings
so that it is well placed to grow its lending activities in line
with growth in deposit taking once it has received a full UK
banking licence and deposit restrictions are removed. Since the
year end, Recognise Bank has increased its office space in
Manchester, which services customers in the North West, and opened
an office in Birmingham to service customers in the Midlands.
The run-off of the lease and loan portfolios of CAML/PFL and PFS
is continuing as planned. Existing customers of these businesses
may apply for loans from Recognise Bank.
As lockdown restrictions are gradually removed, staff are moving
towards working on a hybrid basis, working part of the week in the
office and part of the week from home.
Review of the businesses
Recognise Bank Limited ("Recognise Bank") - Bank focused on UK
SME market
(a) Description of the business and business model
Recognise Bank began the process of applying for a UK banking
licence in early 2018 with the objective of setting up a fully
licensed bank that would focus on the UK SME market and accept
deposits from both business and retail savers. The Group strategy
is to develop a relationship-led bank using versatile cloud-based
technology that will focus on delivering excellent service to SME
businesses, which are key to the future growth of the UK economy,
but have to date been underserved.
Major milestones were achieved during the year. Following the
issue in July 2020 by the PRA of its Total Capital Requirement
(TCR) letter, which set out the PRA's capital and liquidity
requirements, Recognise Bank received authorisation with
restriction (AwR) as a bank on 10 November 2020 and began trading,
offering four loan products from November. Receipt of AwR enabled
the change of name from Recognise Financial Services Limited to
Recognise Bank Limited.
After receiving AwR, Recognise Bank worked to complete the build
out and testing of its banking infrastructure and meet the
regulatory mobilisation conditions set by the PRA in November. The
technical requirements were met in June 2021: a full UK banking
licence will be granted when capital adequacy requirements are met,
after completion of the planned capital raise.
(b) Financial review
A summary of the financial performance of the business is set
out in the table below:
GBP'000 2021 2020
----------------- -------- --------
Revenue 76 -
Loss before tax (7,812) (3,351)
----------------- -------- --------
The loss reflects the costs associated with developing the
banking infrastructure and setting up its appropriate governance
and management structure, including the recruitment of key staff,
as Recognise Bank moved towards becoming a fully licensed bank
during the year. The executive team exercised strict control over
costs and the timing of expenditure.
COLG invested GBP34.6m in Recognise Bank during the year to
facilitate its development and provide an initial capital base to
support its lending activities. This investment included the
transfer of the ownership of PFS from COLG to Recognise Bank in
October 2020 and the assignment from COLG of a loan of GBP4.85m
made to PFS.
Recognise Bank began trading in November, offering four initial
lending products and making loans in its own name. All new lending
in the Group will be made through Recognise Bank and customers of
PFS, CAML and PFL, whose portfolios are now in run-off, can seek
further funding through Recognise Bank.
The confidence of the management team that Recognise Bank will
attract new borrowers is borne out by the fact that between
November 2020 and the Group year-end in March, Recognise Bank
received loan applications in excess of GBP400m.
Recognise Bank is now working to develop and expand its business
in line with its strategy, building a regional presence in the
North West, Yorkshire, Midlands and the South. As a new entrant to
the SME banking market, Recognise Bank does not have the potential
problems associated with a legacy loan book and is able to
concentrate on meeting the needs of customers and building a
quality loan book. While there are concerns about the future impact
of COVID-19 on the SME business sector, Recognise Bank is well
placed to help the growth of businesses with underlying strength
and experienced management as well as to assist entrepreneurs who
see opportunities at this point in the economic cycle.
Property & Funding Solutions Ltd ("PFS") - Property Bridging
Finance
(a) Description of the business and business model
PFS provided property bridging and development finance for
commercial customers from its launch in May 2018 until the Group
placed a hold on all new lending in March 2020 due to the impact of
COVID-19. Additional funding was, however, provided during the year
to existing customers to deliver agreed business plans that would
achieve full repayment of the underlying loan.
As the Group decided in March 2020 that all new lending would be
made through Recognise Bank, the existing PFS loan portfolio is now
in its run-off phase.
Recognise Bank considers property bridging finance to be one of
its core loan products and existing PFS customers can seek future
funding through Recognise Bank.
(b) Financial review
A summary of the financial performance of the business is set
out in the table below:
GBP'000 2021 2020
------------------- ----- -----
Revenue 770 631
Operating profit 442 282
Profit before tax 109 58
------------------- ----- -----
The COVID-19 pandemic and resultant lockdown initially impacted
both the residential and commercial property markets. During the
year PFS focused on managing its existing loan book and maintaining
regular contact with its customers. No payment moratoriums were
required by its customers and no loans required any specific
impairment provision. As a result of the impact on property markets
and a marked slowdown in the debt markets for new lending, PFS
supported its customers with loan extensions to allow them more
time to execute their business plans and achieve full repayment of
their loans. The loan book of GBP5.74m at 31 March 2021 comprised 8
loans.
Credit Asset Management Limited ("CAML") and Professions Funding
Limited ("PFL") - Asset Based Finance, Commercial and Professional
Loans
(a) Description of the business and business model
CAML is a business to business provider of debt finance to UK
SMEs. UntiI the Group paused all new lending in March 2020 in
response to COVID-19, CAML provided asset backed finance and
commercial loans to SMEs and, through PFL, loans to professional
practice firms, sourcing business through a national network of
finance brokers.
As the Group decided in March 2020 that all new lending would be
made through Recognise Bank, the existing loan and lease portfolios
are now in their run-off phase.
Recognise Bank considers asset finance, working capital loans
and professional practice property bridging finance to be core loan
products and existing CAML and PFL customers can seek future
funding through Recognise Bank.
(b) Financial review
A summary of the financial performance of CAML and PFL is set
out in the table below:
GBP'000 2021 2020
----------------------- ----- -------
Revenue 1,130 2,035
Operating loss before
shareholder capital
charges (66) (1,126)
Loss before tax (297) (1,336)
----------------------- ----- -------
CAML made an operating loss before shareholder charges of GBP66k
(2020: loss of GBP1,126k). The results for the year were adversely
affected by one off business restructuring costs following the
decision to wind down the business. The prior year loss included a
provision for bad debts of GBP1,138k that was made in March 2020 as
a result of the COVID-19 pandemic.
In early March 2020, CAML commenced an extensive telephone
customer contact programme. to determine the extent of the impact
of the COVID-19 pandemic on its customers' businesses and their
ability to meet payments due to CAML and PFL. Contact with
individual customers was maintained throughout the year and was
well received. In appropriate circumstances, the business supported
customers through reduced payment, interest only and full capital
and interest moratoriums. Recognising the differing impacts of the
trading restrictions imposed on different business sectors, CAML
extended the initial three-month moratorium for periods that
depended on the extent to which the underlying business of the
customer had been affected by the various lockdown
restrictions.
The information obtained from early direct customer contacts was
used to inform the IFRS 9 provisioning exercise undertaken at 31
March 2020. This and the on-going contact with customers during the
year have similarly informed the IFRS 9 provision exercise as at 31
March 2021. The effects of COVID-19 and repeated lockdown
restrictions have been more prolonged and severe than initially
expected and, as the government's support schemes are withdrawn, it
is anticipated there will be increased stress on businesses as
business owners attempt to rebuild their trading performance. With
this in mind, CAML has reviewed the basis of its IFRS 9
provisioning exercise and, as at 31 March 2021, reclassified all
agreements with hospitality and leisure businesses as Stage 2
agreements to reflect the fact these sectors have been most
affected by lockdown restrictions, and also increased its estimate
of future losses where agreements go into default. This resulted in
an additional provision of GBP62k for future losses on Stage 1 and
Stage 2 agreements which were not currently in default but, from
the IFRS 9 model, might be expected to go into default in the next
12 months.
Despite the adverse impacts of COVID-19, CAML maintained
scheduled repayments on its block funding facilities and completed
full repayment of its loan from COLG during the year. This was
achieved due to focused cash collection efforts which enabled CAML
to maintain good cash balances.
The size of the portfolio (the current net investment in the
loans/leases provided to customers) decreased from GBP14.7m to
GBP6.1m over the year.
A number of employees transferred to Recognise Bank in July 2020
as part of the Group's forward recruitment plans.
Milton Homes Limited ("Milton Homes") - Home Reversion Plans
(a) Description of the business and business model
Milton Homes, an equity release provider, administers a
portfolio of individual UK residential properties through being a
provider of home reversion plans. A home reversion plan entails an
occupier selling all, or part, of the ownership of their home to
Milton Homes in return for a rent-free life tenancy. Milton Homes
purchases the fixed amount of equity in a property at a discount in
exchange for the life tenancy, making it an efficient way to invest
in long term house price appreciation in the UK. The occupiers
continue to live in their home until they die or move to a care
facility. After this Milton Homes sells the vacant property and
distributes the sale proceeds, including any that may be due to the
customer or his estate. Milton Homes is realising its portfolio as
reversions occur.
The result is a leveraged exposure to UK House Price Inflation
("HPI") without maturity concentrations given the spread of
realisations over multiple years.
(b) Financial review
A summary of the financial performance of Milton Homes is set
out in the table below:
GBP'000 2021 2020
----------------------------- ------ --------
Revenue 9,005 3,643
Operating profit/
(loss) before shareholder
capital charges 4,148 (1,679)
Profit/ (loss) before
tax 3,243 (2,602)
----------------------------- ------ --------
Milton Homes' day-to-day business has not changed since October
2017: it has continued to sell its properties as reversions occur,
producing cash flow for re-investment in the Group. The portfolio,
which comprised interests in 437 properties at 31 March 2021 (2020:
473 properties), was externally valued at GBP69.7m at that date
(2020: GBP68.95m). The number of properties that reverted to Milton
Homes during the year was 58 compared with 49 in the previous
year.
The results reflect the recovery in the housing market since
March 2020 with an increase in the house price index of 6.34%
compared with 1.81% in the previous year, as well as the increased
number of reversions. The number of sales achieved was affected by
an increase in the time taken to complete sales which is in part
attributable to the COVID-19 pandemic. At 31 March 2021 Milton
Homes had 30 properties on the market, of which 24 were under
offer. Since the year end, Milton Homes has sold 23 properties and
currently has a further 19 under offer.
During the year, Milton Homes paid cash of GBP1.0m to COLG from
its operational cash flow towards repayment of the Deep Discount
Bonds held by COLG (2020: GBP1.5m).
Following the Board's decision to focus on the future
development of the Group's banking activities, Milton Homes was
reclassified as a discontinued operation. An agreement for the sale
of the company and its subsidiaries, which is subject to the FCA
giving approval for the change of control of Milton Homes, was
signed on 3 September 2021.
Acorn To Oaks Financial Services Limited ("Acorn to Oaks") -
Financial Services Intermediary
(a) Description of the business and business model
Acorn to Oaks is an independent financial services intermediary
authorised by the FCA which focuses on the SME and property
markets, providing whole of market broking advice services for
general insurance, commercial finance broking, regulated mortgages,
protection, pensions and investments.
(b) Financial review
A summary of the financial performance of the business is set
out in the table below:
GBP'000 2021 2020
Revenue 885 746
Operating profit
before prior period
costs 5 19
Prior period costs - (55)
---- ----
Operating profit/
(loss) 5 (36)
Profit/ (loss) before
tax 5 (36)
---------------------- ---- ----
The results of Acorn to Oaks for the year were disappointing as
it was unable to take forward its plans for business expansion due
to the effects of the COVID-19 pandemic. The commercial finance
broking division saw very little activity in the market in the
first half of the year as development activity stalled although by
the year-end the number of pipeline deals increased as the market
gradually recovered. The general insurance division closed its
recently established London base in January 2021 as COVID-19
continued to depress the level of SME business activity.
The level of activity of the general insurance division's core
business and the IFA remained stable over the period, as both
maintained their high client retention rate. General insurance
revenue levels benefitted from the hardening of insurance premium
rates over the year.
Following the Board's decision to focus on the future
development of the Group's banking activities, Acorn to Oaks was
reclassified as a discontinued operation. It was sold on 1 April
2021.
Consolidated income statement
for the year ended 31 March 2021
2021 2020
GBP'000 GBP'000
(restated)
------------------------- -------------------------
Continuing Discontinued Continuing Discontinued
operations operations operations operations
Note (a) (a)
---------------------------------- ---- ----------- ------------ ----------- ------------
Revenue
---------------------------------- ---- ----------- ------------ ----------- ------------
Interest income 1,900 - 2,500 -
Other 76 9,890 166 4,389
---------------------------------- ---- ----------- ------------ ----------- ------------
Cost of sales (13) (330) (18) (295)
---------------------------------- ---- ----------- ------------ ----------- ------------
Gross profit 1,963 9,560 2,648 4,094
Administrative expenses: 5
---------------------------------- ---- ----------- ------------ ----------- ------------
Change in value of business
units on reclassification - (6,657) - -
as disposal groups
Provisions for bad and
doubtful debts (138) - (1,571) -
Other (11,396) (1,579) (6,807) (3,371)
---------------------------------- ---- ----------- ------------ ----------- ------------
Other income 103 11 180 1
---------------------------------- ---- ----------- ------------ ----------- ------------
(Loss)/ profit from operations (9,468) 1,335 (5,550) 724
Finance expense (651) (3,863) (902) (3,932)
---------------------------------- ---- ----------- ------------ ----------- ------------
Loss before tax (10,119) (2,528) (6,452) (3,208)
Tax expense 7 - (232) - (70)
---------------------------------- ---- ----------- ------------ ----------- ------------
Loss after tax (10,119) (2,760) (6,452) (3,278)
Loss after tax from discontinued
operations (2,760) (3,278)
---------------------------------- ---- ----------- ------------ ----------- ------------
Loss for the year (12,879) (9,730)
---------------------------------- ---- ----------- ------------ ----------- ------------
Loss for the year comprises
losses from:
Banking activities, including
banking licence application
costs (b) (7,922) (3,351)
Discontinued operations (2,760) (3,278)
Other activities (2,197) (3,101)
---------------------------------- ---- ----------- ------------ ----------- ------------
(12,879) (9,730)
---------------------------------- ---- ----------- ------------ ----------- ------------
Loss for the year attributable
to:
Owners of the parent (12,879) (9,742)
Non-controlling interests - 12
---------------------------------- ---- ----------- ------------ ----------- ------------
Loss for the year (12,879) (9,730)
---------------------------------- ---- ----------- ------------ ----------- ------------
Basic and diluted earnings
per share attributable
to owners of the parent 2
Continuing operations (16.84)p (16.20)p
Discontinued operations (4.59)p (8.26)p
---------------------------------- ---- ----------- ------------ ----------- ------------
Total (21.43)p (24.46)p
---------------------------------- ---- ----------- ------------ ----------- ------------
(a) Discontinued operations in 2021 comprise the businesses operated through:
-- Acorn to Oaks Financial Services Limited, a financial
services intermediary, which was sold on 1 April 2021; and
-- Milton Homes Limited, which administers a portfolio of home
reversion plans and was reclassified as a disposal group held for
sale in March 2021.
The results for the prior year have been restated.
(b) The loss from banking activities, including banking licence
application costs, has been disclosed separately as the award of a
full UK banking licence is fundamental to implementation of the
Group's medium and long-term strategy.
Consolidated statement of comprehensive income
for the year ended 31 March 2021
2020
2021 GBP'000
GBP'000 (restated)
-------------------------------------------------------- -------- -----------
Loss for the year from continuing operations (10,119) (6,453)
Loss for the year from discontinued operations (2,760) (3,277)
-------------------------------------------------------- -------- -----------
Total loss for the year (12,879) (9,730)
-------------------------------------------------------- -------- -----------
Other comprehensive expense from continuing operations
-------------------------------------------------------- -------- -----------
Item that will not be reclassified to profit
or loss
Change in fair value of debt securities - -
Valuation loss on fair value of legal case investments - (130)
-------------------------------------------------------- -------- -----------
Other comprehensive expense from continuing operations - (130)
-------------------------------------------------------- -------- -----------
Total other comprehensive expense - (130)
-------------------------------------------------------- -------- -----------
Total comprehensive expense from continuing operations (10,119) (6,583)
Total comprehensive expense from discontinued
operations (2,760) (3,277)
-------------------------------------------------------- -------- -----------
Total comprehensive expense (12,879) (9,860)
-------------------------------------------------------- -------- -----------
Total comprehensive expense attributable to:
Owners of the parent (12,879) (9,872)
Non-controlling interests - 12
-------------------------------------------------------- -------- -----------
(12,879) (9,860)
-------------------------------------------------------- -------- -----------
Consolidated statement of changes in equity
Attributable to owners of the
parent company
--------------------------------------------------- ------------ --------
Attributable
to non-
Equity Accumulated Capital Share Share controlling Total
I nstrument losses reserve premium capital Total interests equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
--------------------- ------------ ----------- -------- -------- -------- -------- ------------ --------
At 31 March 2019 1,293 (21,672) - 50,104 4,436 34,161 13 34,174
Loss for the year
- continuing
operations
(as restated) - (6,453) - - - (6,453) - (6,453)
Loss for the year
- discontinued
operations
(as restated) - (3,289) - - - (3,289) 12 (3,277)
Other comprehensive
expense - continuing
operations
Valuation loss on
fair value of legal
case investments - (130) - - - (130) - (130)
Total comprehensive
income - (9,872) - - - (9,872) 12 (9,860)
--------------------- ------------ ----------- -------- -------- -------- -------- ------------ ----------
Contributions by
and distributions
to owners
Share-based payments - 133 - - - 133 - 133
Distributions to
non-controlling
interests - - - - - - (25) (25)
Acquisition of
non-controlling
interest - (63) - - - (63) - (63)
Issue of shares - - - 695 12 707 - 707
--------------------- ------------ ----------- -------- -------- -------- -------- ------------ ----------
Total contributions
by and distributions
to owners - 70 - 695 12 777 (25) 752
--------------------- ------------ ----------- -------- -------- -------- -------- ------------ ----------
At 31 March 2020 1,293 (31,474) - 50,799 4,448 25,066 - 25,066
--------------------- ------------ ----------- -------- -------- -------- -------- ------------ ----------
Attributable to owners of the
parent company
--------------------------------------------------- ------------ --------
Attributable
to non-
Equity Accumulated Capital Share Share controlling Total
Instrument losses reserve premium capital Total interests equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------------ ----------- ----------- -------- -------- -------- -------- ------------ --------
At 31 March 2020 1,293 (31,474) - 50,799 4,448 25,066 - 25,066
Loss for the year
- continuing operations - (10,119) - - - (10,119) - (10,119)
Loss for the year
- discontinued
operations - (2,760) - - - (2,760) - (2,760)
Other comprehensive
income - continuing
operations
Change in fair value
of debt securities - - - - - - - -
------------------------ ----------- ----------- -------- -------- -------- -------- ------------ --------
Total comprehensive
income - (12,879) - - - (12,879) - (12,879)
------------------------ ----------- ----------- -------- -------- -------- -------- ------------ --------
Contributions by
and distributions
to owners
Share-based payments - 182 - - - 182 - 182
Transfer on cancellation
of Deferred shares - - 3,648 - (3,648) - - -
Issue of shares to
Employee Benefit
Trust - (1) - 1 - - - -
Issue of shares on
conversion of 6%
Convertible Unsecured
Loan Notes 2021 - - - 2,022 28 2,050 - 2,050
Acquisition of
non-controlling
interest in Recognise
Bank Limited on
exercise
of put option by
minority shareholders - (4,480) - 4,368 112 - - -
Issue of shares
following
cash raise - - - 25,585 675 26,260 - 26,260
Transfer to current
liabilities (note
11) (1,293) - - - - (1,293) - (1,293)
------------------------ ----------- ----------- -------- -------- -------- -------- ------------ --------
Total contributions
by and distributions
to owners (1,293) (4,299) 3,648 31,976 (2,833) 27,199 - 27,199
------------------------ ----------- ----------- -------- -------- -------- -------- ------------ --------
At 31 March 2021 - (48,652) 3,648 82,775 1,615 39,386 - 39,386
------------------------ ----------- ----------- -------- -------- -------- -------- ------------ --------
Consolidated balance sheet
as at 31 March 2021
2021 2020
Note GBP'000 GBP'000
---------------------------------------- ---- ---------- ---------
Assets
Non-current assets
Investment properties 8 - 38,609
Financial assets - equity release plans 9 - 30,343
Intangible assets 10 1,028 2,526
Property, plant and equipment 150 96
Right-of-use assets 369 650
Loans 7,149 3,593
Finance leases 988 1,600
---------------------------------------- ---- ---------- ---------
Total non-current assets 9,684 77,417
---------------------------------------- ---- ---------- ---------
Current assets
Loans 7,496 11,728
Finance leases 398 1,087
Trade and other receivables 3,071 3,001
Debt securities 6,500 -
Cash and cash equivalents 14,493 7,219
---------------------------------------- ---- ---------- ---------
31,958 23,035
Assets in disposal groups classified
as held for sale 11 66,294 -
---------------------------------------- ---- ---------- ---------
Total current assets 98,252 23,035
---------------------------------------- ---- ---------- ---------
Total assets 107,936 100,452
---------------------------------------- ---- ---------- ---------
Current liabilities
Borrowings (4,022) (7,208)
Trade and other payables (4,424) (3,881)
Lease liabilities (289) (298)
---------------------------------------- ---- ---------- ---------
(8,735) (11,387)
Liabilities directly associated with
assets in disposal groups classified
as held for sale 11 (56,730) -
---------------------------------------- ---- ---------- ---------
Total current liabilities (65,465) (11,387)
---------------------------------------- ---- ---------- ---------
Non-current liabilities
Borrowings (2,976) (62,615)
Other creditors - (149)
Lease liabilities (109) (426)
Deferred tax liability 12 - (809)
---------------------------------------- ---- ---------- ---------
Total non-current liabilities (3,085) (63,999)
---------------------------------------- ---- ---------- ---------
Total liabilities (68,550) (75,386)
---------------------------------------- ---- ---------- ---------
Net assets 39,386 25,066
---------------------------------------- ---- ---------- ---------
Equity
Share capital 13 1,615 4,448
Share premium 82,775 50,799
Capital reserve 13 3,648 -
Equity instrument - 1,293
Accumulated losses (48,652) (31,474)
---------------------------------------- ---- ---------- ---------
Equity attributable to owners of the
parent 39,386 25,066
Non-controlling interests - -
---------------------------------------- ---- ---------- ---------
Total equity 39,386 25,066
---------------------------------------- ---- ---------- ---------
Consolidated statement of cash flows
for the year ended 31 March 2021
2021 2020
GBP'000 GBP'000
------------------------------------------------------ -------- ---------
Cash flows from operating activities
Loss before tax (12,647) (9,660)
Adjustments for:
Depreciation and amortisation 399 53
Share-based payments 182 340
Provision for bad and doubtful debts 138 1,571
Impairment of goodwill 117 1,555
Change in value of business units on reclassification
as disposal groups 6,657 -
Impairment of other investments - 8
Investment properties and equity release plan
financial assets:
Increases in the fair values of these assets (6,712) (1,581)
Realised gains on the disposal of these assets (1,082) (695)
Equity transfer income (1,212) (1,367)
Interest payable 4,514 4,834
Changes in working capital:
Increase in trade and other receivables (692) (609)
Increase in trade and other payables 1,419 586
Leases advanced (7) (1,377)
Leases repaid 1,308 2,308
Loans advanced (7,914) (20,432)
Loans repaid 8,452 18,635
Purchase of Debt securities (6,500) -
Cash used in operations (13,580) (5,831)
------------------------------------------------------ -------- ---------
Corporation tax - (4)
------------------------------------------------------ -------- ---------
Net cash used in operating activities (13,580) (5,835)
------------------------------------------------------ -------- ---------
Cash flow from investing activities
Proceeds from the sale of Investment properties
and equity release plan financial assets 8,271 6,258
Purchase of Investment properties and equity
release plan financial assets - (42)
Purchase of CAML 8% Preference Shares (1,250) -
Investment in intangible assets (536) (545)
Purchase of property, plant and equipment (127) (60)
Net cash generated from investing activities 6,358 5,611
------------------------------------------------------ -------- ---------
Cash flow from financing activities
Proceeds from issue of ordinary shares 26,260 500
Loans drawn down 294 4,395
Repayment of loans (10,488) (12,550)
Distributions to non-controlling interests - (25)
Payment of lease liabilities (357) -
Interest paid (443) (637)
------------------------------------------------------ -------- ---------
Net cash generated from/ (used in) financing
activities 15,266 (8,317)
------------------------------------------------------ -------- ---------
Net increase/ (decrease) in cash and cash equivalents 8,044 (8,541)
Cash and cash equivalents brought forward 7,219 15,760
Cash included as Assets in disposal groups classified
as held for sale (770) -
------------------------------------------------------ -------- ---------
Net cash and cash equivalents 14,493 7,219
------------------------------------------------------ -------- ---------
2021 2020
GBP'000 GBP'000
---------------------------------------------- -------- --------
Operating, investing and financing activities
are categorised as follows:
Net cash used in operating activities
Continuing operations (12,556) (4,593)
Discontinued operations (1,024) (1,242)
---------------------------------------------- -------- --------
(13,580) (5,835)
---------------------------------------------- -------- --------
Net cash generated from investing activities
Continuing operations (1,910) (602)
Discontinued operations 8,268 6,213
---------------------------------------------- -------- --------
6,358 5,611
---------------------------------------------- -------- --------
Net cash generated from/ (used in) financing
activities
Continuing operations 21,442 (4,293)
Discontinued operations (6,176) (4,024)
---------------------------------------------- -------- --------
15,266 (8,317)
---------------------------------------------- -------- --------
Notes
1 Basis of preparation
Preliminary announcement
The financial information contained in this preliminary
announcement does not constitute full accounts as defined in
section 434 of the Companies Act 2006 and has been extracted from
the statutory accounts for the year ended 31 March 2021. The
auditors have issued an unqualified report on these statutory
accounts. The statutory accounts for the year ended 31 March 2020
have been filed with the Registrar of Companies and the statutory
accounts for the year ended 31 March 2021 will be filed with the
Registrar of Companies in due course.
This announcement has been prepared using recognition and
measurement principles of International Financial Accounting
Standards (IFRS) in conformity with the requirements of the
Companies Act 2006. This announcement does not contain sufficient
information to comply with IFRS.
The financial statements of the Group have been prepared on a
going concern basis.
The directors consider the going concern basis to be appropriate
following their assessment of the Group's financial position and
its ability to meet its obligations as and when they fall due. The
Annual Report will include further information on the Group's going
concern assessment and a Group viability statement.
In making their going concern assessment the directors have
considered the following:
-- the base case and stressed Group cash flow forecasts for the period to 30 September 2022;
-- the capital structure and liquidity of the Group;
-- the principal and emerging risks facing the Group and its
systems of risk management and internal control;
-- the uncertainties arising from the COVID-19 pandemic on the
future UK economic outlook and actions the Group could take to
mitigate the impact on the business;
-- the completion of all mobilisation conditions set by the PRA
as a requirement for Recognise Bank to obtain a full banking
licence with no restrictions; and
-- the raising of further capital to support the growth of Recognise Bank.
Following the assessment of the Group's financial position and
its ability to meet its obligations as and when they fall due, the
directors are satisfied that the Group has and will maintain
sufficient financial resources to enable it to continue operating
for the foreseeable future and therefore continue to adopt the
going concern basis in preparing the annual report and
accounts.
The same accounting and presentation policies were used in the
preparation of the statutory accounts for the year ended 31 March
2020 with the exception of the following new standards and
interpretations which were adopted for the first time in the
financial statements for the year ended 31 March 2021:
-- Amendments to References to the Conceptual Framework in IFRS Standards
-- Amendments to IAS 1 Presentation of Financial Statements and
IAS 8 Accounting Policies, Changes in Accounting Estimates and
Errors: Definition of Material
There was no impact on the Group following the adoption of the
above.
2 Earnings per share
Basic and diluted earnings per share is calculated by dividing
the loss attributable to equity holders of the Group by the
weighted average number of ordinary shares in issue during the year
less those held in treasury and in the Employee Benefit Trust.
21,849 ordinary shares of GBP0.02 were held by the Employee Benefit
Trust at 31 March 2021 (2020: 21,349).
2020
2021 (restated)
---------------------------------------------- -------- -----------
Loss attributable to equity holders (GBP'000)
Continuing operations (10,119) (6,452)
Discontinued operations (2,760) (3,290)
---------------------------------------------- -------- -----------
Total (12,879) (9,742)
---------------------------------------------- -------- -----------
Weighted average number of ordinary shares in
issue ('000) 60,090 39,831
---------------------------------------------- -------- -----------
Basic and diluted earnings per share
Continuing operations (16.84)p (16.20)p
Discontinued operations (4.59)p (8.26)p
---------------------------------------------- -------- -----------
(21.43)p (24.46)p
---------------------------------------------- -------- -----------
The basic and diluted earnings per share are the same as, given
the loss for the year, the outstanding share options would reduce
the loss per share.
3 Dividends
The directors do not recommend payment of a final dividend
(2020: nil).
4 Segmental reporting
A reportable segment is identified based on the nature and size
of its business and risk specific to its operations. It is reported
in a manner consistent with the internal reporting provided to the
chief operating decision-maker. The chief operating decision-maker,
which is responsible for allocating resources and assessing
performance of the operating segments, has been identified as the
full Board of the Company.
The Group is managed through its operating businesses which,
during the year, comprised the provision of home reversion plans to
the equity release market, loan, lease and professions financing
and financial services intermediary. Following receipt of AwR in
November 2020, Recognise Bank commenced banking activities and
continued the process of moving towards meeting mobilisation
conditions set by the PRA/ FCA. A description of the activities of
each business is given in the Strategic report. The COLG segment
includes the Group's central functions.
Pre-tax profit and loss
For the year ended 31 March 2021
Quasi-equity
intra group Profit/(loss)
Operating Finance payments before
Revenue profit/(loss) expense (a) tax
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
--------------------- ---------------------- --------- -------------- --------- ------------ -------------
COLG Intra-Group 1,096 1,851 - - 1,851
Change in value of
business
units on
reclassification
as disposal groups - (6,657) - - (6,657)
Other - (3,008) (74) - (3,082)
----------------------- --------- -------------- --------- ------------ -------------
1,096 (7,814) (74) - (7,888)
Banking activities, including
banking licence application
costs 76 (7,894) (28) 110 (7,812)
Loan, lease and professions
financing
Asset based finance, commercial
and professional loans 1,130 240 (471) (66) (297)
Property bridging finance 770 422 (78) (235) 109
Other - (7) - - (7)
Home reversion plans 9,005 8,007 (3,859) (905) 3,243
Financial services intermediary 885 9 (4) - 5
Intra-Group (1,096) (1,096) - 1,096 -
--------------------------------------------- --------- -------------- --------- ------------ -------------
11,866 (8,133) (4,514) - (12,647)
---------------------- --------------------- --------- -------------- --------- ------------ -------------
Continuing operations 1,976 (9,468) (651) - (10,119)
Discontinued operations
(b) 9,890 1,335 (3,863) - (2,528)
----------------------- -------------------- --------- -------------- --------- ------------ -------------
11,866 (8,133) (4,514) - (12,647)
---------------------- --------------------- --------- -------------- --------- ------------ -------------
(a) Quasi-equity intra group payments during the year comprise
interest payable to COLG and Recognise Bank.
(b) Including change in value of business units on reclassification as disposal groups.
Pre-tax profit and loss
For the year ended 31 March 2020
Quasi-equity Profit/(loss)
Operating Finance intra group before
Revenue profit/(loss) expense payments tax
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
----------------------------- -------------- --------- -------------- --------- ------------ -------------
COLG Intra-Group 1,151 1,604 (32) - 1,572
Other - (3,778) (179) - (3,957)
--------------- --------- -------------- --------- ------------ -------------
1,151 (2,174) (211) - (2,385)
Home reversion plans 3,643 2,253 (3,932) (923) (2,602)
Loan, lease and professions
financing
Asset based finance, commercial
and professional loans 2,035 (641) (662) (33) (1,336)
Property bridging finance 631 282 (29) (195) 58
Other - (8) - - (8)
Banking licence application - (3,351) - - (3,351)
Financial services intermediary 746 (36) - - (36)
Intra-Group (1,151) (1,151) - 1,151 -
--------------------------------------------- --------- -------------- --------- ------------ -------------
7,055 (4,826) (4,834) - (9,660)
------------------------------ ------------- --------- -------------- --------- ------------ -------------
Continuing operations 2,666 (5,550) (902) - (6,452)
Discontinued operations 4,389 724 (3,932) - (3,208)
------------------------------- ------------ --------- -------------- --------- ------------ -------------
7,055 (4,826) (4,834) - (9,660)
------------------------------ ------------- --------- -------------- --------- ------------ -------------
Quasi-equity intra group payments during the year comprise
interest payable to COLG.
Consolidated Net Assets
For the year ended 31 March 2021
Total
GBP'000
------------------------------------------------ --------------------------------------- ---------
COLG Bank 44,673
Loan, lease and professions financing 2,010
46,683
Assets classified as held for sale 9,564
Other net assets 421
---------------------------------------- ---------
Net assets per entity balance sheet 56,668
Other net liabilities of subsidiary companies (17,282)
----------------------------------------------------------------------------------------- ---------
Consolidated Net Assets 39,386
----------------------------------------------------------------------------------------- ---------
Consolidated Net Assets
For the year ended 31 March 2020
Total
GBP'000
------------------------------------------------ --------------------------------------- ---------
COLG Home reversion plans 13,449
Bank 5,552
Loan, lease and professions financing 5,575
Financial services intermediary 1,130
---------
25,706
Other net assets 5,577
---------------------------------------- ---------
Net assets per entity balance sheet 31,283
Other net liabilities of subsidiary companies (6,217)
----------------------------------------------------------------------------------------- ---------
Consolidated Net Assets 25,066
----------------------------------------------------------------------------------------- ---------
The Board reviews the assets and liabilities of the Group on a
net basis.
5 Administrative expenses
2021 2020
GBP'000 GBP'000
------------------------------------------------------ -------- --------
Staff
Payroll 8,583 5,443
Other staff costs 274 43
Establishment costs
Property costs 588 648
Other, including IT costs 1,446 959
Auditor's remuneration 345 301
Legal fees 64 192
Consultancy fees 218 659
Other professional fees 1,033 750
Provisions for bad and doubtful debts under IFRS
9 138 1,571
Provision for goodwill impairment 117 1,555
Change in value of business units on reclassification
as disposal groups 6,657 -
Depreciation and amortisation 399 53
Reduction in deferred consideration (92) (425)
------------------------------------------------------ -------- --------
Total administrative expenses 19,770 11,749
------------------------------------------------------ -------- --------
Continuing operations 11,534 8,378
Discontinued operations 8,236 3,371
------------------------------------------------------ -------- --------
19,770 11,749
------------------------------------------------------ -------- --------
6 Related party transactions and directors' remuneration
The directors of the Company, who are related parties of the
Company, received aggregate emoluments for the year of GBP823,554
(2020: GBP557,500) of which GBP794,776 (2020: GBP557,500) was borne
by the Company and GBP28,778 (2020: nil) by a subsidiary. In
addition, aggregate social security costs were GBP101,433 (2020:
GBP66,393) of which GBP98,067 (2020: GBP66,393) was borne by the
Company and GBP3,366 (2020: nil) by a subsidiary. There are no
other persons having the authority and responsibility for planning,
directing and controlling the activities of the Group, directly or
indirectly. Accordingly, the aggregate amounts payable to directors
equate to the aggregate compensation to key management
personnel.
Group related parties
The transactions of Group companies with related parties
included:
Transactions of the Company
The Company has agreements with its three largest shareholders
which regulate arrangements with each, including the following:
-- Parasol V27 Limited: The shareholder is entitled to nominate
two non-executive directors to the board of the Company while it
holds 25% or more of the voting shares of the Company and one
non-executive director to the board of the Company and one
non-executive director to the board of Recognise Bank Limited while
it holds 10% or more of the voting shares. The present nominated
directors of the Company are N Bossano-Llamas and R Parasol who is
also the nominated director at Recognise Bank Limited.
-- Max Barney Investments Limited: The shareholder is entitled
to nominate a director to the board of the Company while it holds
not less than 10% of the voting shares of the Company and any 8%
Redeemable Preference Shares issued by Credit Asset Management
Limited. The present nominated director is P G Milner.
-- DV4 Limited: The shareholder is entitled to nominate an
observer to the board of the Company while it holds not less than
10% of the voting shares of the Company.
The Company recharges the costs of shared premises to its
subsidiaries, Credit Asset Management Limited, Milton Homes
Limited, Property & Funding Solutions Ltd and Recognise Bank
Limited. The amount recharged in the year was GBP518,000 (2020:
GBP315,000).
7 Tax expense
2021 2020
GBP'000 GBP'000
----------------------------------------------------- -------- --------
UK corporation tax
Current year charge - 6
Prior year charge - -
Deferred tax
Relating to origination and reversal of temporary
differences 232 64
----------------------------------------------------- -------- --------
Total tax expense 232 70
----------------------------------------------------- -------- --------
Continuing operations - -
Discontinued operations 232 70
----------------------------------------------------- -------- --------
232 70
----------------------------------------------------- -------- --------
Factors affecting the tax expense for the year
The tax expense for the year differs from the theoretical amount
that would arise using the standard rate of corporation tax in the
UK, which is 19% (2020: 19%). The differences are explained
below.
2021 2020
Tax reconciliation GBP'000 GBP'000
-------------------------------------------------- -------- --------
Loss before tax (12,647) (9,660)
-------------------------------------------------- -------- --------
At standard rate of corporation tax in the UK: (2,403) (1,835)
Effects of
Items not deductible for tax purposes 1,572 447
Profit on revaluation of assets offset by brought
forward losses (751) (216)
Other tax adjustments 208 75
Movement on unrecognised deferred tax asset 1,606 1,599
-------------------------------------------------- -------- --------
232 70
-------------------------------------------------- -------- --------
8 Investment properties
2021 2020
At valuation GBP'000 GBP'000
At 1 April 38,609 41,040
Additions - 12
Disposals (4,406) (3,581)
Revaluations 3,953 1,138
-------------------------------------- -------- -------
38,156 38,609
Reclassify as asset held for sale (38,156) -
-------------------------------------- -------- -------
At end of period - 38,609
-------------------------------------- -------- -------
Investment properties - 33,505
Investment properties held for sale
(a) - 5,104
-------------------------------------- -------- -------
- 38,609
-------------------------------------- -------- -------
Numbers of properties
-------------------------------------- -------- -------
At 1 April 248 271
Disposals (19) (23)
-------------------------------------- -------- -------
At 31 March 229 248
-------------------------------------- -------- -------
(a) On vacant possession having been obtained.
9 Financial assets - equity release plans
2021 2020
At valuation GBP'000 GBP'000
At 1 April 30,343 30,485
Additions - 30
Equity transfer 1,212 1,367
On ending of plans (2,782) (1,982)
Revaluations 2,759 443
------------------------------------------ -------- -------
31,532 30,343
Reclassify as asset held for sale (31,532) -
------------------------------------------ -------- -------
At end of period - 30,343
------------------------------------------ -------- -------
Financial assets - equity release plans - 27,987
Financial assets - equity release plans
held for sale (a) - 2,356
------------------------------------------ -------- -------
- 30,343
------------------------------------------ -------- -------
Numbers of properties
------------------------------------------ -------- -------
At 1 April 225 239
Disposals (17) (14)
------------------------------------------ -------- -------
At 31 March 208 225
------------------------------------------ -------- -------
(a) On vacant possession having been obtained.
10 Intangible assets
Software licence
Goodwill & development Total
Group GBP'000 GBP'000 GBP'000
---------------------------------------- -------- ---------------- -------
Cost
As at 31 March 2019 3,558 - 3,558
Additions in year 57 545 602
---------------------------------------- -------- ---------------- -------
As at 31 March 2020 3,615 545 4,160
Additions in year - 536 536
Reclassified as assets held for sale (3,615) - (3,615)
---------------------------------------- -------- ---------------- -------
As at 31 March 2021 - 1,081 1,081
---------------------------------------- -------- ---------------- -------
Accumulated amortisation and impairment
As at 31 March 2019 78 - 78
Charge in year 1,555 1 1,556
---------------------------------------- -------- ---------------- -------
As at 31 March 2020 1,633 1 1,634
Charge in year 117 52 169
Reclassified as assets held for sale (1,750) - (1,750)
---------------------------------------- -------- ---------------- -------
As at 31 March 2021 - 53 53
---------------------------------------- -------- ---------------- -------
Carrying amount
---------------------------------------- -------- ---------------- -------
As at 31 March 2021 - 1,028 1,028
---------------------------------------- -------- ---------------- -------
As at 31 March 2020 1,982 544 2,526
---------------------------------------- -------- ---------------- -------
11 Assets and liabilities classified as held for sale
2021
GBP'000
-------------------------------------------------------- -------
Assets in disposal groups classified as held for
sale
Acorn to Oaks 1,737
Milton Homes 64,557
-------------------------------------------------------- -------
66,294
-------------------------------------------------------- -------
Liabilities directly associated with assets in disposal
groups classified as held for sale
Acorn to Oaks 623
Milton Homes 56,107
-------------------------------------------------------- -------
56,730
-------------------------------------------------------- -------
Fair value of disposal groups
Acorn to Oaks 1,114
Milton Homes 8,450
-------------------------------------------------------- -------
9,564
-------------------------------------------------------- -------
There were no Assets classified as held for sale at 31 March
2020.
During the year, the Company decided that, in order to meet its
medium-term strategic objectives, the Group should focus its
activities on the development and growth of Recognise Bank and
divest itself of its other businesses, Milton Homes Limited
("Milton Homes"), which administers a portfolio of home reversion
plans, and Acorn to Oaks Financial Services Limited ("Acorn to
Oaks"), which is a financial services intermediary. The capital and
additional management resource capacity that become available
following the disposals will be deployed within Recognise Bank.
The assets of each business and the liabilities directly related
to those assets form a disposal group, which will leave the Group
following completion of a sale. The assets of each business and the
liabilities directly related to the assets of each disposal group,
were reclassified as "assets in disposal groups classified as held
for sale" and "liabilities directly associated with assets in
disposal groups classified as held for sale" respectively and
included within current assets and liabilities at 31 March 2021.
Assets reclassified as "assets in disposal groups classified as
held for sale" include the goodwill arising on consolidation of the
disposal group.
The sale of Acorn to Oaks was completed on 1 April 2021,
immediately after the year-end, to Jason Oakley and his wife,
Claire Oakley, who controlled the majority of the shares in Acorn
to Oaks when it was purchased by the Company in January 2019. The
disposal is deemed to be a related party transaction under Rule 13
of the AIM Rules as Jason Oakley is deemed to be a related party of
the Company as he is a director of Recognise Bank, a wholly-owned
subsidiary.
The sale of Milton Homes was agreed, subject to the receipt from
the FCA of regulatory approval for the change of control, on 3
September 2021.
The fair value of Acorn to Oaks as at 31 March 2021 was assessed
by reference to the net consideration realised on its sale on 1
April 2021.
The fair value of Milton Homes as at 31 March 2021 was assessed
by reference to proposals received from parties who expressed an
interest in purchasing Milton Homes and takes account of estimated
disposal costs.
The charge arising from the change in value of the business
units on their reclassification as disposal groups has been
included in the loss from discontinued operations in the
consolidated income statement:
Before As remeasured Change
classification in value
Carrying amounts of assets in disposal GBP'000 GBP'000 GBP'000
group
----------------------------------------- ---------------- -------------- ----------
Acorn to Oaks
Goodwill 861 747 114
Property, plant & equipment 6 6 -
Trade and other receivables 601 601 -
Cash at bank 383 383 -
----------------------------------------- ---------------- -------------- ----------
1,851 1,737 114
----------------------------------------- ---------------- -------------- ----------
Milton Homes
Goodwill 1,004 - 1,004
Investment properties 38,156 35,123 3,033
Financial assets - equity release plans 31,532 29,026 2,506
Trade and other receivables 21 21 -
Cash at bank 387 387 -
----------------------------------------- ---------------- -------------- ----------
71,100 64,557 6,543
----------------------------------------- ---------------- -------------- ----------
Total change in value 6,657
----------------------------------------- ---------------- -------------- ----------
The carrying amounts of assets and liabilities in the Acorn to
Oaks disposal group at 31 March 2021 and 1 April 2021, the date of
its sale, were:
GBP'000 GBP'000
-------------------------------------------------- -------- --------
Assets in disposal group
Goodwill 747
Property, plant & equipment 6
Trade and other receivables 601
Cash at bank 383
--------
1,737
Liabilities related to assets in disposal group
Trade and other payables (553)
Other creditors (70)
--------
(623)
--------
Carrying amounts of assets and liabilities 1,114
--------
The net consideration for the sale was satisfied
by:
Cancellation of Rollover Loan Notes 2021 (a) 1,293
Cash payment by the Company (140)
Costs of disposal (39)
-------------------------------------------------- -------- --------
1,114
-------------------------------------------------- -------- --------
(a) The Rollover Loan Notes 2021 were issued to the buyers at
the time of the purchase of Acorn to Oaks in January 2019.
The carrying amount of the assets and liabilities in the Milton
Homes disposal group at 31 March 2021 was:
GBP'000
-------------------------------------------------- ---------
Assets in disposal group
Investment properties 35,123
Financial assets - equity release plans 29,026
Trade and other receivables 21
Cash at bank 387
-------------------------------------------------- ---------
64,557
-------------------------------------------------- ---------
Liabilities related to assets in disposal group
Trade and other payables (229)
Other creditors (13)
Borrowings (54,824)
Deferred tax liability (1,041)
-------------------------------------------------- ---------
(56,107)
-------------------------------------------------- ---------
Fair value of disposal group 8,450
-------------------------------------------------- ---------
12 Deferred tax liability
2021 2020
Deferred tax liability GBP'000 GBP'000
------------------------------------------------- -------- --------
At 1 April 809 744
Tax expense 232 65
------------------------------------------------- -------- --------
1,041 809
Reclassify to Liabilities directly associated
with assets in disposal groups classified
as held for sale (1,041) -
------------------------------------------------- -------- --------
At 31 March - 809
------------------------------------------------- -------- --------
The deferred tax liability reclassified
comprised:
Gains arising from the revaluation of investment
properties 1,999 1,549
Losses (958) (740)
------------------------------------------------- -------- --------
1,041 809
------------------------------------------------- -------- --------
13 Called-up share capital
Allotted, called up and fully 2021 2020 2021 2020
paid Number Number GBP'000 GBP'000
------------------------------ ---------- ------------- -------- --------
Ordinary shares of GBP0.02 80,727,119 39,960,551 1,615 800
Deferred shares of GBP0.001 - 3,648,415,419 - 3,648
------------------------------ ---------- ------------- -------- --------
1,615 4,448
------------------------------ ---------- ------------- -------- --------
The Company did not hold any ordinary shares in treasury at 31
March 2021 (2020: nil). 21,849 ordinary shares of GBP0.02 were held
by the Employee Benefit Trust ("EBT") at 31 March 2021 (2020:
21,349). The trustees of the EBT subscribed for 500 ordinary shares
at 114.4p each on 16 April 2020: the Company did not transfer any
shares into or out of the EBT during the period (2020: nil). The
fair value of shares held by the EBT at 31 March 2021 amounted to
GBP17,000 (2020: GBP24,000): these are deducted from equity.
.
At a general meeting on 27 April 2020, shareholders approved the
buy back and cancellation of the Deferred shares of the Company in
accordance with the Articles of Association, whereby all the
Deferred shares could be purchased by the Company for a
consideration of not more than GBP1.00 and subsequently cancelled.
Under the Companies Act a share buy-back by a public company (such
as the Company) can only be financed through distributable reserves
or the proceeds of a fresh issue of shares made for the purpose of
financing a share buy back. As the Company currently has no
distributable reserves, the purchase of the Deferred shares for
GBP1.00 was financed from the issue of 500 new ordinary shares
which were allotted to the trustees of the EBT at a price of 114.4p
each on 16 April 2020. Following the cancellation of the Deferred
shares on 30 April 2020, a transfer of GBP3,648,415 was made from
share capital to a capital reserve.
On 16 April 2020, the Company issued 500 ordinary shares at
114.4p each for cash to the EBT to enable the Company to proceed
with the buy back and cancellation of the Deferred shares. The
premium of GBP562 arising on the issue of the shares was credited
to Share premium.
On 7 August 2020, the Company issued 1,433,465 ordinary shares
at 143p each to the holders of the GBP2,050,000 6% Convertible
Unsecured Loan Notes 2021, following their mandatory conversion
into ordinary shares on the receipt by Recognise Bank of its TCR
letter from the PRA on 21 July 2020. The premium of GBP2,022,000
arising on the issue of the shares was credited to Share
premium.
On 4 September 2020, the Company issued 5,600,000 ordinary
shares at 80p each to the minority shareholders in Recognise Bank
Limited (then Recognise Financial Services Limited) who, following
the receipt by Recognise Bank of its TCR letter, exercised their
put option under the terms of the Recognise Shareholders' Agreement
and sold their interest in the equity to the Company. The premium
of GBP4,368,000 arising on the issue of the shares was credited to
Share premium. Following the acquisition of these shares from the
minority shareholders, the Company increased its shareholding from
72% to 100% and, in accordance with IAS 27, the consideration given
for the shares, being the premium arising on consolidation, has
been included as a movement in equity.
On 9 October 2020, the Company raised GBP26,684,550 through the
issue of 33,355,688 ordinary shares at 80p each for cash. On 27
October 2020, the Company raised a further GBP301,452 through the
issue of 376,815 ordinary shares at 80p each for cash. The funds
raised were used to support the on-going development of Recognise
Bank as it moved towards being granted a full UK banking
licence.
Costs of GBP726,000 (2020: nil) were incurred in relation to the
issue of shares in the year. The costs have been offset against the
Company's Share premium.
Ordinary
Deferred of GBP0.02 Deferred Ordinary
Shares in issue Number Number GBP'000 GBP'000
------------------------------- --------------- ----------- -------- --------
As at 31 March 2019 3,648,415,419 39,407,263 3,648 788
Issued for cash on 12
April 2019 - 400,000 - 8
Issued on
13 November 2019 - 153,288 - 4
------------------------------- --------------- ----------- -------- --------
As at 31 March 2020 3,648,415,419 39,960,551 3,648 800
Issued for cash on 16
April 2020 - 500 - -
Cancelled on 30 April
2020 and transferred
to Capital reserve (3,648,415,419) - (3,648) -
Issued on 7 August 2020
on conversion of 6% Unsecured
Loan Stock 2021 - 1,433,565 - 28
Issued on 4 September
2020 following exercise
of put option by minority
shareholders in Recognise
Bank Limited - 5,600,000 - 112
Issued for cash on 9
October 2020 - 33,355,688 - 667
Issued for cash on 27
October 2020 - 376,815 - 8
------------------------------- --------------- ----------- -------- --------
As at 31 March 2021 - 80,727,119 - 1,615
------------------------------- --------------- ----------- -------- --------
Capital reserve
The capital reserve arose on 30 April 2020 following the buy
back and cancellation of the Deferred shares. On cancellation of
the Deferred shares, the share capital was reduced by GBP3,648,415
and this amount was transferred from share capital to a capital
reserve, which is not distributable to shareholders.
14 Financial instruments - price risk
The Group is subject to price risk on both its investment
properties and financial assets - equity release plans. The
valuation of each of these is a Level 3 valuation in the fair value
hierarchy ie the valuation techniques use inputs that have a
significant effect on the recorded fair value that are not based on
observable market data.
The bases of assessing the fair values of the investment
properties and financial assets - equity release plans are set out
in note 3 of the Annual Report. The sensitivity analysis to changes
in unobservable inputs for both investment properties and financial
assets - equity release plans is:
-- increases in estimated investment terms and rates would
result in a lower fair value; and
-- decreases in estimated investment terms and rates would result in a higher fair value.
Due to the aggregated nature of the investment property and
financial asset portfolio it is not possible to accurately quantify
sensitivity of an individual input.
Both the investment properties and financial assets - equity
release plans are held by Milton Homes which has been reclassified
as a disposal group held for sale as at 31 March 2021 and included
in the accounts at its estimated net realisable value, as was the
Acorn to Oaks disposal group (note 11). The valuation of both these
disposal groups is categorised as a level 3 valuation.
Due to their short maturity profiles, management is of the
opinion that there is no material difference between the fair value
and carrying value of trade and other receivables, cash and cash
equivalents, and trade and other payables.
The directors therefore consider that the carrying value of
financial instruments equates to fair value.
The following tables present the Group's assets that are
measured at fair value:
2021 2020
Level 3 valuation GBP'000 GBP'000
---------------------------------------- ------- -------
Acorn to Oaks disposal group 1,114 -
Milton Homes disposal group 8,450 -
Investment properties - 38,609
Financial assets - equity release plans - 30,343
---------------------------------------- ------- -------
9,564 68,952
---------------------------------------- ------- -------
No Level 1 or Level 2 assets were held at either 31 March 2021
or 31 March 2020.
Assets within the Milton Home and Acorn to Oaks disposal groups
became Level 3 assets on their reclassification as disposal groups.
The investment properties and financial assets - equity release
plans held by Milton Homes were already Level 3 assets. There were
no transfers of assets between categories during the previous year.
An asset is transferred when, due to changes in circumstances, it
falls into another category within the fair value hierarchy.
The movement on level 3 assets is as follows:
2021 2020
GBP'000 GBP'000
---------------------------------------- -------- --------
Balance at 1 April 68,952 71,663
Movements prior to reclassification
Additions - 42
Equity transfer 1,212 1,367
Revaluations 6,712 1,443
Disposals (7,188) (5,563)
---------------------------------------- -------- --------
69,688 68,952
Transfer to Milton Homes disposal group (69,688) -
Additions - disposal groups 9,564 -
---------------------------------------- -------- --------
Balance at 31 March 9,564 68,952
---------------------------------------- -------- --------
15 Risk statement
The principal and emerging risks of the Group are reviewed and
assessed by the Board at least twice each year. A summary of the
key risks is set out below together with their mitigation
strategies.
Credit risk
Credit risk particularly arises in the Group's lending
businesses and is mitigated in a number of different ways. There is
a well-defined process for the approval of new lending, which
includes assessment of the risks that customers will not meet their
obligations and a review of the affordability of any loan. Lending
is overseen by the credit committee which operates under specific
delegated powers. Collateral security is obtained for most loans,
with the majority of new lending being secured on property. As
appropriate, loans are secured over other assets and company and
personal guarantees obtained. Regular reports on the performance of
the lending portfolio are made to the credit committee.
Interest rate risk
The Group is exposed to interest rate risk through Recognise
Bank in two ways. Firstly, an increase in interest rates may result
in lower net interest income as increased interest income is likely
to lag increased borrowing costs. Secondly, on an increase in
market interest rates, there is a value risk in that the value of
fixed rate assets will fall by more than fixed rate liabilities, as
there would typically be more fixed rate assets than fixed rate
liabilities and these would have longer maturities. Third party
borrowings by CAML and PFS are all at fixed rates. Recognise Bank
mitigates interest rate risk through its Asset and Liability
Committee which is responsible for identifying, managing and
controlling all balance sheet risks in accordance with Recognise
Bank's chosen business strategy.
Legal and regulatory risk
Regulatory risk now relates primarily to the activities of
Recognise Bank and is the risk that it fails to meet regulatory
requirements or guidelines that apply to it as a bank.
Following the receipt of authorisation with restriction as a
bank in November 2020, Recognise Bank began the process of further
developing and testing its systems as it moved towards mobilisation
when it would receive a full UK banking licence. There was a risk
that it would not satisfy the requirements of the Regulator. In
June 2021, the Regulator confirmed that Recognise Bank had met the
operational and technical standards required for mobilisation.
The on-going regulatory requirements related to both capital and
liquidity adequacy. These are met by Recognise Bank having both an
ICAAP and ILAAP which are approved by the Recognise Bank board
annually, as well as compliance monitoring reviews. Recognise Bank
monitors regulatory changes by maintaining a regulatory
tracker.
CAML, which lends only to businesses, is regulated for those
businesses that fall within the Consumer Credit Act and has full
permission to operate under the FCA consumer credit regulations.
The risk of non-compliance by CAML is considered low as these
regulated activities constitute only a very small part of its
overall revenue. PFS is not FCA regulated and undertakes only
non-regulated lending.
The risk of other legal and regulatory non-compliance (including
non-compliance with the AIM rules) is mitigated by the expertise
within the Board and the use of external advisers, whose
appointment and terms of reference are, as appropriate, agreed
after consultation with the Board.
The businesses which became discontinued operations during the
year are regulated. Acorn to Oaks is authorised by the FCA to
provide regulated products and services as advisor and broker while
four subsidiaries of Milton Homes are also FCA regulated.
Cash flow
The Board assesses its future capital and liquidity requirements
regularly and, as part of its overall group strategy, has developed
plans to access new funding as required. The businesses have 5-year
strategic plans as well as annual budgets that include budgeted
cash forecasts and funding requirements. There are some mitigations
which can be invoked to reduce working capital requirements
including cost cutting and managing the growth of the
businesses.
Competition
As the Group's strategy is to concentrate on the development and
growth of Recognise Bank, there is a risk that competition from
both new banking entrants and existing dominant banking
institutions will reduce lending margins and potentially the
performance of the business. This risk is mitigated by exceeding
customer expectations by focusing on customer service and
developing products that meet the needs of Recognise Bank's target
SME market.
Economic uncertainty
The COVID-19 pandemic has had a material adverse effect on UK
economic activity to date, and its influence is likely to be felt
for some years. The immediate outlook for the UK economy and in
particular the SME market is uncertain as the government withdraws
economic assistance to business. Continuing pressure on SME
businesses is likely to increase the risk of defaults and may deter
capital investment by the sector, which could adversely affect the
development of the Group's lending businesses. Uncertain growth
prospects for the UK economy may also affect the ability of the
Company to raise the capital necessary to deliver its strategy.
Weak property market
The Group is adversely affected by a weak property market
through its lending businesses. Factors that mitigate the risks
within the lending businesses are the level of loan to value where
loans are secured over property, covenants given by customers and,
where appropriate, recourse to other forms of credit protection.
Recognise Bank and PFS are affected by movements in both commercial
and residential markets. CAML is impacted by the overall
consequences of a weak property market on the economy and the
resultant effects on the business performance of its customers.
Milton Homes is impacted by movements in the residential
property market which delay sales or reduce sale values.
Cyber risk
The Board has considered risks arising from cyber crime and IT
resilience. The Group is applying industry standard frameworks to
its cyber defences and is using penetration testing and third-party
vulnerability reports to assess its cyber posture. Recognise Bank
also reviews the cyber posture of third parties which operate
critical systems on its behalf. The Group has business continuity
plans in place, including a disaster recovery plan.
People/succession
There is a risk that key management leave the business which may
compromise the business. To mitigate this risk, management is
incentivised with equity and bonuses comparable with the
market.
16 Post balance sheet events
Acorn to Oaks Financial Services Limited
On 1 April 2021, the Company sold its wholly-owned subsidiary,
Acorn to Oaks Financial Services Limited, which operates as a
financial services intermediary, for a net consideration of
GBP1,114,000. The disposal was a related party transaction as one
of the purchasers, Jason Oakley, is a director of Recognise Bank
(note 11).
Capital raise and open offer
On 23 August 2021, the Company announced a capital raise of
GBP11.4 million through a share subscription, conditional on
shareholder approval, which was obtained on 8 September 2021, and a
raise of up to GBP6.9 million through an open offer.
Two of the Company's major shareholders, Parasol V27 Limited and
Max Barney Investments Limited (together the "Subscribers"), have
agreed to subscribe for 18,916,667 new ordinary shares at a
subscription price of 60p per new ordinary share in cash for
aggregate gross proceeds to the Company of GBP11,350,000 (the
"Subscription"). In addition, the Subscribers will receive warrants
to subscribe for 9,458,333 shares at an exercise price of 69p per
new ordinary share over the next three years.
In addition, an open offer to qualifying shareholders on the
same pricing terms as the Subscription will be launched shortly.
Shareholders who subscribe for shares in the Open Offer will also
receive warrants on the same terms as the Subscribers.
The proceeds of the capital raise and the sale of Milton Homes
will be used to meet capital requirements and lift deposit
restrictions on Recognise Bank.
Credit Asset Management Limited Preference Share Purchase
Related to the Subscription by Max Barney Investments Limited,
the Company has agreed to purchase by 30 September 2021 GBP1million
of accumulated preference dividend in Credit Asset Management
Limited from HPB Pension Trust. HPB Pension Trust is connected with
Max Barney Investments Limited.
Employee Benefit Trust
The Company issued 5,152,794 shares to the trustee of its
Employee Benefit Trust on 6 September 2021 to satisfy future share
awards under the Company's share incentive schemes. This represents
6.4% of the Company's current shares outstanding before this issue
or 6.0% of the shares outstanding immediately after this issue but
excluding any of the share issuances related to the Subscription,
Open Offer or Warrants.
Milton Homes Limited
On 3 September 2021, the Company conditionally entered into an
agreement to sell the entire issued share capital of Milton Homes
Limited and its subsidiaries to Max Barney Investments Limited for
a total consideration of GBP9.3 million. The sale, which is
classified as a substantial transaction under AIM Rule 12, is
conditional on receiving regulatory approval from the FCA for the
change in control of Milton Homes Limited and of its lender. The
net proceeds from the sale of Milton Homes are intended to
contribute to the regulatory capital of Recognise Bank. The
disposal constitutes a related party transaction under AIM Rule 13
as Max Barney Investments Limited holds in excess of 10% of the
total voting rights of the Company.
Annual General Meeting
The 2021 annual general meeting will be held at 3.30 pm on 12
October 2021 at the office of the Company at The Royal Exchange,
First Floor, 1 Royal Exchange Steps, London EC3V 3DG. The notice of
meeting will be included in the Annual Report which will be posted
to shareholders in mid September 2021.
We are keen to welcome shareholders in person to our 2021 Annual
General Meeting this year, particularly given the constraints we
faced in 2020 due to the COVID-19 pandemic. At present, it is
possible under guidelines to allow shareholders to attend the AGM
and therefore we are proposing to welcome shareholders to attend
the AGM within safety constraints and in accordance with government
guidelines. Shareholders who cannot attend the AGM should email any
questions they have, or would normally raise during the course of
the AGM to the Company Secretary (Ben.Harber@shma.co.uk). Given the
constantly evolving nature of the COVID-19 situation, should
circumstances change before the time of the AGM, we want to ensure
that we are able to adapt arrangements, within safety constraints
and in accordance with government guidelines. Should we have to
change arrangements, we will issue a further communication via a
Regulatory Information Service. As such, we strongly recommend
shareholders monitor such communications, which can also be found
on our website at www.cityoflondongroup.com . Shareholders wishing
to appoint a proxy are encouraged to appoint the Chair as their
proxy with their voting instructions.
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END
FR URORRARUKARR
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