Disposal of economic interest

THIS ANNOUNCEMENT AND THE INFORMATION CONTAINED HEREIN IS RESTRICTED AND NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, DIRECTLY OR INDIRECTLY, IN OR INTO THE UNITED STATES OF AMERICA, AUSTRALIA, CANADA, JAPAN OR SOUTH AFRICA OR ANY OTHER JURISDICTION IN WHICH RELEASE, PUBLICATION OR DISTRIBUTION WOULD BE UNLAWFUL. THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION.

18 January 2019

For immediate release

LEI: 213800LWUMOSRMT5G527

CHARTER COURT FINANCIAL SERVICES GROUP PLC

(Company number 06712054)

Disposal of economic interest in Precise Mortgage Funding 2018-1B plc and Precise Mortgage Funding 2018-2B plc (the "Transaction")

Charter Court Financial Services Group plc ("Charter Court" or the "Group") today announces that its subsidiary Charter Mortgages Limited has agreed to sell its residual economic interest in the Precise Mortgage Funding 2018-1B plc ("PMF 2018-1B") and Precise Mortgage Funding 2018-2B plc ("PMF 2018-2B") securitisations to Merrill Lynch International ("MLI") for cash consideration of £6.0 million, payable on completion. The Transaction, which is expected to complete on 23 January 2019, will involve the sale of the RC2 residual certificates (the "Certificates") to the securitisations. MLI managed the sale process and purchased the Certificates for onward sale.

The Transaction will generate a pre-tax gain of £30.3 million, which will be recognised in the 2019 financial year. It will also result in a reduction in the gross assets of the Group of c. £584.0 million1 and a reduction in risk weighted assets currently attributable to the securitised mortgages of c. £197 million. The associated increase in common equity tier 1 capital ratio through the reduction in risk weighted assets and the gain on sale will be reinvested to support new loan originations in Charter Court's specialist lending segments and ongoing business activities. During the period between the issuance of each instrument (24 January 2018 for PMF 2018-1B and 20 March 2018 for PMF 2018-2B) and 31 December 2018, the assets being disposed of contributed c. £6.9 million in profit before tax.

Charter Court is also pleased to report that as at 31 December 2018, the Group's loan book stood at £6.66 billion, with new loan originations in the year amounting to £2.85 billion based on unaudited figures, in line with management's previous guidance of loan book growth in excess of 20% and gross organic originations marginally in excess of £2.7 billion for the year.  

Commenting on the Transaction, Sebastien Maloney, CFO of Charter Court, said:

"We are delighted with the outcome of this transaction which has generated a pre-tax gain of £30.3 million, exceeding the expectations we set at the time of our 2018 interim results. The transaction reconfirms our ability to structure and execute complex transactions to generate shareholder value, notwithstanding difficult market conditions.

We enter 2019 with strong capital ratios, leaving the Group ideally positioned to pursue its growth journey. We look forward to updating you on our financial delivery and broader business performance for the full 2018 year in our results announcement scheduled for release on 19 March 2019."

Background on PMF 2018-1B

PMF 2018-1B was issued on 24 January 2018 and securitised approximately £246 million of prime buy-to-let mortgages originated by Charter Court Financial Services Limited. At the time of issuance, PMF 2018-1B sold all of the rated notes (classes A, B, C, D, E and X notes) in the securitisation to third-party investors and Charter Mortgages Limited, a Charter Court group company, purchased the residual certificates pertaining to the transaction. It subsequently sold a sub-component of the residual certificates (the 'RC1's) in November 2018 to a third -party investor independent of the Group. The Transaction will result in the de-recognition of the securitised mortgages and, as a liability, the rated notes (classes A, B, C D, E and X notes) from the Group balance sheet.

Background on PMF 2018-2B

PMF 2018-2B was issued on 20 March 2018 and securitised approximately £374 million of prime buy-to-let mortgages originated by Charter Court Financial Services Limited. At the time of issuance, PMF 2018-2B sold all of the rated notes (classes A, B, C, D, E and X notes) in the securitisation to third-party investors and Charter Mortgages Limited, a Charter Court group company, purchased the residual certificates pertaining to the transaction. It subsequently sold a sub-component of the residual certificates (the 'RC1's) in July 2018 to a third -party investor independent of the Group. The Transaction will result in the de-recognition of the securitised mortgages and, as a liability, the rated notes (classes A, B, C D, E and X notes) from the Group balance sheet.

The Transaction has been agreed today and will settle on 23 January 2019.

A copy of this announcement will be available on Charter Court's website at: http://www.chartercourtfs.co.uk/

1 Includes £19.4 million of non-mortgage assets in PMF 2018-1B and PMF 2018-2B

Enquiries:

Analysts and investors

Charter Court Financial Services Group plc 019 0262 5929

Sebastien Maloney, Chief Financial Officer

Citigate Dewe Rogerson 020 7638 9571

Sandra Novakov

Michael Russell

Media

Citigate Dewe Rogerson 020 7638 9571

Andrew Hey

Caroline Merrell

Important notices

This announcement contains statements which are, or may be deemed to be, "forward-looking statements" which are prospective in nature. All statements other than statements of historical fact are forward-looking statements. They are based on current expectations and projections about future events, and are therefore subject to risks and uncertainties which could cause actual results to differ materially from the future results expressed or implied by the forward-looking statements. Often, but not always, forward-looking statements can be identified by the use of forward-looking words such as "plans", "expects", "is expected", "is subject to", "budget", "scheduled", "estimates", "forecasts", "intends", "anticipates", "believes", "targets", "aims", "projects" or words or terms of similar substance or the negative thereof, are forward-looking statements, as well as variations of such words and phrases or statements that certain actions, events or results "may", "could", "should", "would", "might" or "will" be taken, occur or be achieved. Such statements are qualified in their entirety by the inherent risks and uncertainties surrounding future expectations. Forward-looking statements include statements relating to (a) future capital expenditures, expenses, revenues, earnings, economic performance, indebtedness, financial condition, dividend policy, losses and future prospects, (b) business and management strategies and the expansion and growth of Charter Court's operations, and (c) the effects of global economic conditions on Charter Court's business.

Such forward-looking statements involve known and unknown risks and uncertainties that could significantly affect expected results and are based on certain key assumptions. Many factors may cause actual results, performance or achievements of Charter Court to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Important factors that could cause actual results, performance or achievements of Charter Court to differ materially from the expectations of Charter Court, include, among other things, general business and economic conditions globally, industry trends, competition, changes in government and other regulation and policy, including in relation to the environment, health and safety and taxation, labour relations and work stoppages, interest rates and currency fluctuations, changes in its business strategy, political and economic uncertainty and other factors as may be identified in relation to the disposal. Such forward-looking statements should therefore be construed in light of such factors. Neither Charter Court nor any of its directors, officers or advisers provides any representation, assurance or guarantee that the occurrence of the events expressed or implied in any forward-looking statements in this announcement will actually occur. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. Other than in accordance with its legal or regulatory obligations (including under the UK Listing Rules and the Disclosure and Transparency Rules), Charter Court is not under any obligation and it expressly disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

Market Abuse Regulation

The information contained within this announcement is considered to be inside information prior to its release as defined in Article 7 of the Market Abuse Regulation No. 596/2014 and is disclosed in accordance with the Company's obligations under Article 17 of those Regulations.