UEX.L Regulatory News (UEX)

5 May 2020

THIS ANNOUNCEMENT INCLUDES INSIDE INFORMATION

Urban Exposure Plc

Update on Strategic Review

Related Party Transaction with Urban Exposure Philanthropy Limited

Update on Strategic Review

Further to the announcement on 17 April 2020 and discussions with shareholders, Urban Exposure plc (the "Company") has reviewed its strategic options for its future business.

In light of current business conditions, including the market uncertainty created by COVID-19, the Company has determined that it will not enter into any new lending opportunities for the foreseeable future.

Instead the Company will focus entirely on the management of its existing loan portfolio to maturity in order to maximise the returns from the portfolio for the benefit of its shareholders.

The Company is continuing to investigate numerous possibilities regarding the potential sale of its loan book with a view to determining whether a sale of all or some of the loan book may be more attractive to shareholders than holding those loans to maturity. Shareholders will be updated in due course on the outcome of those discussions.

In the meantime, the Company wishes to reiterate to its existing borrowers and business partners that it remains fully committed to its current loan portfolio and that the Company will continue to deliver the same high service levels as at present.

Related Party Transaction with Urban Exposure Philanthropy Limited

On 1 October 2019, Urban Exposure Lendco Limited ("UE Lendco"), a wholly owned subsidiary of the Company, entered into a loan agreement with Urban Exposure Philanthropy Limited ("UEP") pursuant to which UE Lendco agreed to grant an interest-free unsecured loan of £701,800 to UEP (the "Loan"). The Loan was novated to Urban Exposure Amco Limited ("UE Amco"), also a wholly owned subsidiary of the Company, in January 2020 and increased to £1,235,646. £907,000 is currently outstanding under the Loan and no further advances will be made. The Loan is repayable by UEP to UE Amco on demand under the terms of the loan agreement.

The Loan, made by UE Lendco to UEP, was made in advance of UEP commencing fundraising activities so that UEP could gift the proceeds of the Loan to the Harris Federation in time for the refurbishment of a nursery school in south-east London, and fund ongoing running costs to provide for meals, developmental and education needs for children in a disadvantaged area. Social impact considerations are an important part of the Company's strategy and whilst in 2019 it was determined by the Board that the Company was not in a position to make a substantial gift donation to the project, and accordingly a loan was made instead.

UEP was formed in March 2019 and registered as a charity in September 2019, to support the Company's charitable endeavours. On the basis of charity law advice received at the time of its formation, UEP is not a subsidiary of the Company and instead is owned and controlled by the CEO, Randeesh Sandhu, and his wife Daljit Sandhu who acts as COO. Both Mr Sandhu and Mrs Sandhu are directors of UE Lendco and UE Amco. As it is a charitable company, neither Mr or Mrs Sandhu have any economic interest in UEP.  There is a board of four directors of UEP, two of whom are not directors of the Company or its subsidiaries.

In conjunction with the preparation of the Company's audited financial statements for the year ended 31 December 2019 which is currently on-going, the Loan was brought to the attention of Liberum Capital Limited ("Liberum"), the Company's nominated adviser, for the first time by an independent director.  UEP is a related party of the Company for the purposes of the AIM Rules for Companies and the Loan is a related party transaction for the purposes of Rule 13 of the AIM Rules for Companies.  Liberum was not consulted at the time that the Loan was entered into as required by AIM Rule 13.  Liberum is unable to advise that the Loan is fair and reasonable insofar as the shareholders are concerned.

As UEP is a connected person of Mr and Mrs Sandhu for the purposes of the Companies Act 2006, shareholder approval should also have been obtained prior to the Loan being made because it is a loan to a person connected with directors of the Company or its subsidiaries under section 200 of the Companies Act 2006.  The Company is not currently expecting to take any immediate action to remedy this matter.

The board of directors has decided that an inquiry into the circumstances concerning the making of the Loan should be conducted by an independent third party.

The Loan Agreement provides that the Loan will be repaid out of charitable donations received by UEP.  As UEP is a newly formed charity with limited charitable donations to date, Mr and Mrs Sandhu informally agreed at the outset personally to underwrite the balance of the Loan not funded from charitable donations to UEP and voluntary contributions from other employees of the Company, to ensure that the Loan is repaid in full, and this remains the case.  The Company's board of directors will determine the appropriate timing for seeking full repayment of the Loan in due course and will provide a further update in due course.

Enquiries:

Urban Exposure plc         Tel: +44(0)207 408 0022

William McKee, Chairman

Randeesh Sandhu, Chief Executive Officer

Sam Dobbyn, Chief Financial Officer

Jefferies (Financial adviser and Joint Corporate Broker)  Tel: +44(0)207 029 8000

Rishi Bhuchar

Ed Matthews

James Thomlinson

William Brown

Liberum (NOMAD and Joint Corporate Broker)    Tel: +44(0)203 100 2000

Neil Patel

Gillian Martin

Jonathan Wilkes-Green

Louis Davies

MHP Communications (Financial Public Relations)    Tel: +44(0)203 128 8540/          +44(0)203 128 8731

Charlie Barker

Sophia Samaras

UrbanExposure@mhpc.com