TIDMNBNK
RNS Number : 5808E
NBNK Investments PLC
01 June 2012
NBNK Investments plc
('NBNK' or 'the Company')
Update on bidding activities and audited results for the year
ending 31 December 2011
NBNK Investments plc (AIM: NBNK) announces its audited results
for the year ending 31 December 2011 and provides the following
update on its bidding activities.
Following Lloyds Banking Group's ('LBG') announcement that
exclusive negotiations for the sale of the Verde asset package have
ceased, NBNK has been in discussions with LBG following its renewed
offer for the Verde asset package. These discussions and meetings
have progressed positively.
Additionally, at the behest of LBG, the Company presented its
plans for Verde to the FSA and has answered a number of questions
relating to its renewed offer. The FSA has confirmed to NBNK that
the process of engagement is satisfactory from its point of view at
this stage.
NBNK remains of the belief that its offer for Verde can deliver
the best operational and financial outcome for LBG and its
shareholders. Since its inception NBNK's investors have remained
supportive of and committed to its objectives, underlining the
Company's ability to finance the acquisition of Verde.
The Company believes that Verde represents a unique opportunity
to create a new nationwide entrant into high street banking which
is focussed on customers and able to compete with the incumbent
providers. NBNK can create what everyone wants: a safe, secure and
successful UK-focused consumer and small business bank and it can
be achieved years ahead of the Independent Commission on Banking's
2019 target.
NBNK's Chief Executive, Gary Hoffman, said: "Having continued to
engage constructively with Lloyds, I believe we have provided
sufficient information to enable negotiations to progress for the
sale of Verde to NBNK."
The following is an extract from the Company's report and
accounts which will be posted to shareholders on 1 June 2012 and is
available on the Company's website at
www.nbnkinvestmentsplc.co.uk.
Chairman and Chief Executive officer's statement
NBNK was set up to respond to the need for a new competitor in
the retail banking market. We were encouraged by a number of
institutional investors who were prepared to support the proposal
and were able to assemble a highly experienced Board of Directors
and an excellent management team.
During 2011 we pursued a number of opportunities to create a
safe, secure, ring-fenced UK focused retail bank. We made several
bids that, if accepted, would have been in the interests of our
shareholders and the Company's broader stakeholder group. By the
end of the year none of our bids had been accepted - either because
we could not reach agreement on price or because of extended vendor
timetables.
Following Lloyds Banking Group's (LBG) announcement early in
2011 that it wished to accelerate the Verde sales process, we made
a number of proposals within the timetable and process required. By
the end of the year, however, another party had been afforded
'preferred bidder' status. We believe that LBG had overlooked the
relative attractiveness of our offer and are pleased, at date of
writing, that we have been asked to represent our credentials.
Due to constraints placed on our ability to participate in the
sale of Northern Rock, imposed by Northern Rock plc, we entered the
sale late in the process and we decided to make our bid dependent
upon a successful outcome in the Verde sale. The Government's
timetable and a higher offer from another party resulted in
Northern Rock being sold to that other party.
We undertook detailed analysis of other UK based opportunities,
notably National Australia Bank's Clydesdale and Yorkshire Banks.
That work and the discussions that followed did not result in a
transaction which we would have been able to recommend to our
shareholders.
We want to say a few words about how we went about our work in
2011. NBNK is a unique venture. Together with the Board, we were
clear from the outset that the right balance needed to be struck
between preparing professional, comprehensive bids which
established NBNK as a credible high street challenger bank, while
managing shareholders' funds effectively.
We recruited a small core team of highly qualified specialists,
who were asked to make a serious commitment to NBNK in
circumstances where success and long term security was by no means
guaranteed and it is to the credit of all our permanent staff,
contractors and external advisers alike who have contributed, and
in some cases still continue to contribute, so enthusiastically to
the objectives of the Company.
We resourced our bidding activities on a flexible, scalable
basis. We achieved the objective of submitting a number of
extremely high quality bids while conserving shareholders' funds as
far as possible. In this way, we have been able to continue to
pursue the Company's objective in 2012 in an efficient and
cost-conscious manner and to keep the quantum of our loss in 2011
down to GBP23.3m (2010: loss of GBP1.3m) before depreciation,
amortisation, share based payments and movement in derivative
financial instruments.
We have produced bids of the very highest calibre and produced a
proposition which we believe is capable of altering the landscape
of high street retail banking for all generations of customers.
Business review
The Company was incorporated on 2 July 2010 as De Facto 9999
Plc. On 2 August 2010, it changed its name to NBNK Investments plc.
The directors of the Company are:
Lord Levene of Portsoken KBE;
Lord Brennan of Bibury QC;
Lord McFall of Alcluith;
Sir David Walker;
Lord Forsyth of Drumlean;
Gary Hoffman.
The Company was established to try and launch a new UK retail
and SME banking and savings operation.
The directors' strategy has been to focus on the UK market,
initially in the retail banking and SME areas but, over time, with
an intention to expand into retail wealth management. UK domestic
banking and wealth management have historically produced a high
return on equity and a relatively low volatility earnings profile.
Domestic returns for the larger UK banks at group level have
typically been diluted by overseas expansion and involvement in
more volatile business areas such as investment and wholesale
banking. The Company has focused on acquisitions as the means of
commencing and scaling its banking operations in the UK and has
attempted to acquire one or more established, high quality banking
businesses, to be funded by further substantial fundraisings via a
premium listing on the London Stock Exchange. The strategy has been
to build a business that would represent approximately 4-6% of the
UK banking market with a branch network of some 400-600 branches
across the UK, with a focused regional strategy for Scotland,
England and Wales.
The net proceeds of the Company's AIM listing have been used to
build a platform from which the Company could make credible and
serious bids to acquire substantial banking sector assets.
Gary Hoffman acted as Chief Executive Designate until his formal
appointment to the Board on 1 May 2011 when he became Chief
Executive. Working with the management team that he had put
together, the focus during much of the year was on the preparation
of bids to acquire assets.
The main focus through the year was on the detailed work
necessary to present a comprehensive and credible bid for the
Lloyds Banking Group assets known as 'Project Verde'. The Company
was successful in getting through 'Round 1' of the bid process and
then embarked on very significant due diligence and strategic
planning work to hone a competitive 'Round 2' bid. As has been
widely reported, Lloyds Banking Group ultimately chose to give
exclusivity to a bid from another party on the grounds that it was
better placed to deliver execution of the acquisition than NBNK.
The Board would vigorously dispute that conclusion, but the fact
remains that, notwithstanding the extremely thorough and
professional bid that had been submitted, ultimately it was
unsuccessful.
Following the removal of constraints on the Company to
participate in the sale of Northern Rock plc, a bid was made by the
Company in October 2011, dependent upon a successful outcome in the
Verde sale. The Government's timetable and a higher offer from
another party resulted in Northern Rock being sold to that other
party.
The Board has also during the year been mindful of other
prospective acquisitions and the Executive team were engaged on
ensuring that the Company progressed fully any other opportunities
that may have arisen.
Work on the bids involved a great deal of careful planning and
analysis. The Executive team, engaged on contracts that provide for
relatively short notice severance should an acquisition not be
forthcoming, were supplemented by third party advisers on fixed
contract terms and by temporary expert staff, also engaged on fixed
terms that allowed for non punitive severance. Thus, while the
Company quickly scaled up to resource its bids, it was able quickly
to scale down again following the Lloyds Banking Group decision,
with the cost base reduced to a bare minimum of circa. GBP400,000
per month.
Since the Company's strategy is dependent upon acquisitions, the
directors will keep under review the long term prospects for the
Company and, should it become clear that no substantial acquisition
is achievable, they will resolve that the Company should be wound
up and its remaining assets returned to shareholders.
At date of writing, the Company has re-engaged in dialogue with
Lloyds Banking Group and the progress of these discussions will be
a key determinant of the Company's future prospects.
Financial results
Income statement
for the year ending 31 December 2011
Year ending Period ending
31 Dec 2011 31 Dec 2010
GBP000 GBP000
--------------------------------------- -------------- ---------------
Interest income 310 125
Administrative expenses (24,589) (1,514)
--------------------------------------- -------------- ---------------
Operating loss (24,279) (1,389)
Decrease / (increase) in fair value
of derivative financial liabilities 1,238 (424)
--------------------------------------- -------------- ---------------
Loss before taxation (23,041) (1,813)
Taxation - -
--------------------------------------- -------------- ---------------
Loss for the year (23,041) (1,813)
--------------------------------------- -------------- ---------------
Loss per share (pence) - basic (46.04) (4.95)
--------------------------------------- -------------- ---------------
Statement of comprehensive income
for the year ending 31 December 2011
Year ending Period ending
31 Dec 2011 31 Dec 2010
GBP000 GBP000
---------------------------------------- --------------- ---------------
Loss for year and total comprehensive
loss for the year (23,041) (1,813)
---------------------------------------- --------------- ---------------
Statement of financial position
as at 31 December 2011
Year ending Period ending
31 Dec 2011 31 Dec 2010
GBP000 GBP000
-------------------------------------------- -------------- ---------------
Assets
Non current assets
Property, plant and equipment 223 138
Other intangible assets 7 8
Total non current assets 230 146
-------------------------------------------- -------------- ---------------
Current assets
Other accrued income and prepaid expenses 175 70
Cash and cash equivalents 26,412 47,280
-------------------------------------------- -------------- ---------------
Total current assets 26,587 47,350
-------------------------------------------- -------------- ---------------
Total assets 26,817 47,496
-------------------------------------------- -------------- ---------------
Current liabilities
Trade and other payables 2,906 280
Other taxation including social security 147 18
Derivative financial liabilities 82 1,320
Total current liabilities 3,135 1,618
-------------------------------------------- -------------- ---------------
Total net assets 23,682 45,878
-------------------------------------------- -------------- ---------------
Equity
Called up share capital 5,005 5,005
Share premium 42,595 42,595
Capital redemption 45 45
-------------------------------------------- -------------- ---------------
Retained losses (23,963) (1,767)
-------------------------------------------- -------------- ---------------
Total equity 23,682 45,878
-------------------------------------------- -------------- ---------------
Statement of cash flows
for the year ending 31 December 2011
Year ending Period ending
31 Dec 2011 31 Dec 2010
GBP000 GBP000
------------------------------------------- -------------- ---------------
Operating activities
Operating loss before taxation (23,041) (1,813)
Depreciation of property, plant and
equipment 100 10
Amortisation of intangible assets 3 1
Share based payments - options 767 46
Share based payments - founder warrants 78 -
(Decrease) / increase in fair value
of derivative financial instruments (1,238) 424
Increase in receivables (105) (70)
Increase in payables 2,755 298
Cash flow from operating activities (20,681) (1,104)
------------------------------------------- -------------- ---------------
Investing activities
Acquisition of property, plant and
equipment (185) (148)
Expenditure on other intangible assets (2) (9)
Cash flow from investing activities (187) (157)
------------------------------------------- -------------- ---------------
Financing activities
Net proceeds of increase in share
capital and share warrants - 48,541
------------------------------------------- -------------- ---------------
Cash flow from financing activities - 48,541
------------------------------------------- -------------- ---------------
Net (decrease) / increase in cash
and cash equivalents (20,868) 47,280
------------------------------------------- -------------- ---------------
Cash and cash equivalents at 1 January 47,280 -
------------------------------------------- -------------- ---------------
Cash and cash equivalents at 31 December 26,412 47,280
------------------------------------------- -------------- ---------------
Statement of changes in equity
for the year ending 31 December 2011
Share Share Capital Retained Total
capital premium redemption losses
GBP000 GBP000 GBP000 GBP000 GBP000
----------------------------------- ---------- ---------- ------------- ---------- ----------
Total equity as at 1
Jan 2011 5,005 42,595 45 (1,767) 45,878
Net loss and total comprehensive
loss for the year - - - (23,041) (23,041)
Share based payments - - - 845 845
----------------------------------- ---------- ---------- ------------- ---------- ----------
Total equity as at 31
Dec 2011 5,005 42,595 45 (23,963) 23,682
----------------------------------- ---------- ---------- ------------- ---------- ----------
Annual General Meeting
The Annual General Meeting of the Company will be held on 27
June 2012 at 9.30 am at Fifth Floor, One Angel Court, London, EC2R
7HJ.
Status of the information contained in this announcement
The financial information set out above does not constitute the
Company's statutory accounts for 2011. Statutory accounts for the
period ending 31 December 2011 have been reported on by the
Independent Auditors. The Independent Auditors' Report on the
Annual Report and Financial Statements for 2011 was unqualified,
did not draw attention to any matters by way of emphasis, and did
not contain a statement under 498(2) or 498(3) of the Companies Act
2006.
The statutory accounts for the period ending 31 December 2011
will be circulated to shareholders on 1 June 2011 and will be
published on the Company's website. They will be delivered to the
Registrar in due course.
The financial information in this announcement has been prepared
using the recognition and measurement principles of International
Accounting Standards, International Financial Reporting Standards
and Interpretations adopted for use in the European Union
(collectively Adopted IFRSs). The accounting policies adopted in
this announcement have been consistently applied and are consistent
with the policies used in the preparation of the statutory accounts
for the period ending 31 December 2011.
- Ends -
For further information contact:
Cenkos Securities plc (Nominated adviser and broker)
Ian Soanes
Ivonne Cantu +44 20 7397 8900
Pelham Bell Pottinger
James Henderson
Olly Scott +44 20 7861 3232
About NBNK Investments
NBNK has been established to take advantage of the opportunity
which exists in the UK banking and savings market to build
(primarily through acquisition) a new and substantial UK bank
focused on the retail and corporate SME markets. The Company has
been founded by Lord Levene and a group of senior business figures,
supported by a number of institutional shareholders. NBNK will
focus on the UK market only, initially just in the retail banking
and small and medium enterprise (SME) areas but, over time, it
intends to expand into wealth management.
As a quoted entity, the Company will aim to offer investors
exposure to UK retail banking through a legacy-free, focused
investment in UK banking and savings. The Company does not intend
to be active in areas such as wholesale, international or
investment banking.
The identity and percentage holdings of significant shareholders
are:
Invesco Asset Management 29.5%
Aviva Investors 11.5%
Baillie Gifford 9.6%
Och-Ziff Capital Management 9.2%
Moore Europe Capital Management 7.9%
Blackrock Investment Managers 7.2%
F&C Asset Management 6.8%
UBS 5.9%
www.nbnkinvestmentsplc.co.uk
This information is provided by RNS
The company news service from the London Stock Exchange
END
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