November 2018
City of London Group City of London Group plc is the AIM-listed parent company of a group focused on serving two key segments, the UK SME market and home reversion. While grounded with traditional values through the strength and depth of expertise in its expanding team, it is now primed for growth. • A £38m market cap organisation • Majority shareholders: - DV4 (a BVI-registered fund advised by Delancey) - The Bard family (substantial London-based property investors) • Two-pronged strategy (finance and services for the SME sector and home reversion) 2
City of London Group § Provides home reversion plans based on § CAML is a business to business provider of either traditional or innovative models, debt and asset finance to SMEs providing people with renewed financial § Established 9 years ago freedom whilst remaining in their homes § Works through broker channels § Residential property investments of c£72m § Has a loan book of approximately £17m § At 31 March 2018, the business had 613 § Focus on equipment finance plans, secured on 552 properties § Has not been active in the market since 2009 § P&FS offers property and bridging loans for Formed to provide financial services to the UK acquisitions, refinancing, refurbishments and SME sector. Subject to the granting of a banking developments to its customers licence it will target an underserved but growing § Established in May 2018 business customer population seeking greater § Loan terms are always structured to fit individual human contact, better speed of response and business plans, personal to the customer execution, flexibility of structuring and continuity § Has already sanctioned £6.5m deals in 5 months of management. 3
The Opportunity “A new UK-based SME bank focused on service excellence, speed of execution, flexible structuring and durable customer relationships.”
COLG Board Colin Wagman, Non-Executive Andy Crossley, Independent Non- Chairman Executive Director Andy spent twenty-four years, principally From 1998 until March 2018 he was at Invesco Perpetual, as a UK small cap Deputy Chairman and Chief Financial fund manager. He is currently the MD of Officer of Delancey which is the principal Stockdale Securities, a leading UK small adviser to the Delancey property funds cap broker. Andy sits on the LSE AIM which held several billion pounds of Advisory Group and brings a wealth of property investments and developments in corporate governance and capital markets the UK. expertise to the Group. Lorraine Young, Independent Non- Michael Goldstein, CEO Executive Director 35+ years experience. A Senior Audit Lorraine runs a board advisory practice partner in BDO LLP where he was and is also a non-executive director of responsible for the management of the PHSC plc, an AIM listed national audit business. CEO of COLG company. Lorraine is a Past President since 2017. and Fellow of ICSA, the Governance Institute. Paul Milner, Executive Director Paul qualified as a solicitor in 1986 but has spent most of his career in the property, construction and private finance industries. Since July 2013 he has been Chief Executive of a privately owned group of property companies. 5
Recognise Executive - a team with deep experience Richard Lumley, Chief Risk Officer Jason Oakley, CEO 20+ years’ experience. 33 years’ experience. Experience : Head of Credit at Northern Trust, Experience: MD of Commercial Banking Senior risk consultant in market risk at Deutsche and Deputy Chief Risk Officer at & Mortgages at Metro Bank growing the SMBC Nikko. balance sheet from £60M to circa £2.5bn in under 3 years. Head of SME of both brands at NatWest & RBS, supporting 1M SMEs with a £1.1bn income stream. Built Mark Bampton, Chief Credit Officer Mantra Capital from scratch to 31 years’ experience intermediated drawdowns of circa £0.5bn. Experience: Former National Head of Commercial Property Finance at Nationwide BS. Retail banking with NatWest & SME Bryce Glover, Deputy CEO business deposit taking operation at Nationwide 36 years’ experience. BS. Former MD Commercial Banking Alliance & Leicester / Santander managing 200k business accounts and a lending portfolio Martin Parsons, MD, CAML which grew from £4bn to £11bn over 5 years. 25 years’ experience Commercial Director at Nationwide BS from Experience: Lloyds, Bank of Scotland, 2009 responsible for a £22bn lending portfolio Barclays, CIT, and CitiCapital. and the launch of Business Savings. NED and Chair of Group Risk Committee at Newcastle Building Society. Monica Valesquez, CTO Adrian Golumbina, CFO Experience: Technology Consultant at 15 years’ experience. PwC. Banking Authorisation, IT service and Experience: Previously Finance Director risk management. Has recently advised 6 of three large divisions of Network Rail banking licence applicants. Qualifications (2,300 employees and £0.8bn total include both Electronic Engineering and spend), Group FD of Euroway Group and Management. FD of Hanco ATM Systems Ltd. 6
Market Dynamics 5.7 million SMEs in the Strong political and UK and growing: SME new lending market regulator support for Seeking a more human face, better approx. £5.5bn per more new entrants speeds of response and execution, quarter (CMA5 currently hold 90% flexibility of structuring and continuity of relationship of market share) management 7
New entrants have demonstrated profitable growth Cost/Income Name Results Lending Deposits Profit Net CET1 Ratio Comments Margin Ratio Acquired by 12/17 £8,600M £7,100M £160M 3.5% 51% 12.2% FirstRand Q4 2017 Unaudited (+15%) (+6%) (+20%) 12/17 £4,840M £4,370M £106M 5.4% 54% 12.9% Marlin Consortium bid accepted July (+16%) (+10%) (+14%) 2017 at £850M £9,600M 2017 - over £1bn net 12/17 £11,700M £20.8M 1.93% 91% 15.3% lending to SMEs (+63% * ) (+47%) (Loss £11.7M) £24.4M 13.8% Bank became 12/17 £690M £798M (+14%) 4.43% 32% profitable by July (+35%) (+15%) 2013 after 13 months. New management 12/17 £632M £596M (+14%) £9.9M 5.06% 58% 21% team acquired in (+225% ) (+36%) 2014 with backing of Alchemy. In profit within 2 years Full authorisation 12/17 £851M £491M £10.6M 6.9% 57% Not September 2015. (+300%) (+200%) (Loss £2.4M) Available 2017 lent over £1bn to SMEs 8
Why will Recognise be successful? There is no single ingredient that guarantees success. It is a combination of attributes which places Recognise in a strong position to deliver success in the short term and sustain this over the long term. Management experience _ Retail Relevant and lending business products savings Passionate about relationships, continuity Speed of response, of management and pace of execution, access to decision flexible structures makers Breadth of delivery channels and Customer focus, commitment to existing professional/customer innovate and exceed expectations networks Experience drawn from Versatile Robust risk Strategy COLG existing Cloud- culture and founded businesses and based framework on long term shareholder IT platform viability commitment 9
Why will Recognise be successful? 100+ years’ experience Management experience _ Retail Relevant and lending business products savings Passionate about relationships, continuity Speed of response, Private bank for SMEs of management and pace of execution, access to decision flexible structures makers Breadth of delivery channels and Black book Customer focus, commitment to existing professional/customer innovate and exceed expectations networks Experience drawn from Robust risk Strategy Versatile COLG existing Best-in class technology culture and founded Cloud-based businesses and framework on long term IT platform shareholder viability commitment 10
Building with confidence…and professional support PR and Marketing Advisors and HR Support Auditors IFRS 9 Nomad SMR Specialists Market Research *Currently in negotiations with leading providers for IT Banking & Deposit management platforms. 11
Recognise’s product range at launch Invoice Discounting / Leasing / International / Payroll Third External partners, with commission-sharing arrangements Party but non-recourse to Recognise. Option to provide some products in-house as business evolves Loans for Commercial Property / Working Capital / Professional Buy-to-Let / Refurbishment / Lending Asset Finance / Bridging Retail Finance / General Purposes Easy Access / Notice / Fixed Term • Lending range up to £2.5m SME Notice / Fixed Term • Terms 3 months to 5 years Deposits Min Deposit £1,000, Max £85,000 (FSCS limit) Terms up to 5 years Recognise will predominantly focus on secured lending against tangible assets and with recourse to the borrower (by personal guarantee in the case of limited company borrowers) 12
The Market
Routes to Market Growing contribution of internally Brokers Direct driven business development Effect of margin contribution time 14
Timescales
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