Half Yearly Report

NBNK INVESTMENTS PLC

HALF YEARLY REPORT FOR THE SIX MONTHS TO 30 JUNE 2012 (unaudited)

The report including the unaudited results for the period is as follows:

Company summary

The Company was established to create a new UK retail and SME bank through the acquisition of high quality banking assets facilitated by a substantial fundraising.

Chairman and Chief Executive's review 

After the publication of our 2011 annual report and accounts, the Company made a renewed offer to Lloyds Banking Group ('LBG') for the acquisition of the Verde asset package. As announced on 27 June 2012, the Company was unable to find a way forward on the transaction that would have been both in the best interests of NBNK's shareholders and acceptable to LBG. Trading in the Company's shares was restored the following day (its shares having been suspended from trading since 6 September 2011). The directors, having concluded at that time that there were no other UK banking assets available for sale that would meet the Company's objectives, commenced steps to wind-up the Company on a solvent basis.

The small number of staff that had been retained in the first half of the year to progress the renewed LBG offer were immediately released in accordance with their contract terms. The directors agreed to remain in post but without remuneration, and having waived their entitlement to full payment in lieu of notice. Steps were taken to terminate the few remaining contracts for services and the Company has continued to operate on the lowest possible cost basis. The Company expects as previously estimated and announced to be able to return cash reserves representing nearly 40% of that initial capital.

In the weeks following the June announcement concerning cessation of talks with LBG, the directors received a number of enquiries from third parties wishing to explore the continuation of NBNK and its listing, ready to act if any potential acquisition opportunities arose in the medium term. Since then no formal proposals have been received. If, however, any formal proposals are received prior to a winding-up being implemented, the directors intend to consider them carefully and determine whether the implementation of such proposals would better serve the interests of shareholders than a winding up. In that regard, a number of shareholders have indicated that they would want the Board to consider continuing the Company in these circumstances.

Lord Levene of Portsoken KBE Gary Hoffman

Chairman Chief Executive Officer

NBNK INVESTMENTS PLC

HALF YEARLY REPORT FOR THE SIX MONTHS TO 30 JUNE 2011 (unaudited)

Performance

The Company's ordinary shares were suspended from trading on 6 September 2011 (when the price was 90.5 pence per share) following speculation about acquisition discussions. The suspension was lifted on 28 June and at 30 June 2012, the Company's shares were trading at 39.5 pence per share. The Company reports a loss for the period of £2,913,000.

Dividend

The directors do not recommend an interim dividend on the ordinary shares for the six months to 30 June 2012.

Principal risks and uncertainties

The principal risk for the Company, that its acquisition strategy might fail, has crystallised. The board's response to this is described in the Chairman and Chief Executive's review.

The principal financial key performance indicator continues to be the rate at which the Company is spending the proceeds generated when it was listed on AIM. Given the current status of the Company, cost control is and will continue to be crucial and the directors are of the view that the Company is being maintained at the lowest possible cost to shareholders.

The directors are of the view that there are no meaningful non-financial KPIs since there is no current prospect for an acquisition.

Events after the balance sheet date

Since the period end, the directors have estimated that the costs of solvent winding up will be circa £1.8 million.

The Company announced the resignations of non-executive directors Lord McFall and Sir David Walker, on 17 July and 13 August respectively, as they each took up new positions that required them to divest other financial services directorships. The board wishes to put on record its thanks for the considerable contribution that both of them made to NBNK during their terms as directors.

Related party transactions

In the opinion of the Board, the related parties are the directors. There were no related party transactions during the period, other than directors' remuneration and share based payments as outlined in note 4 to the accounts.

On behalf of the Board

Gary Hoffman

28 September 2012

Notes

The financial information presented herein does not amount to full statutory accounts within the meaning of Section 435 of the Companies Act 2006 and they have neither been audited nor reviewed pursuant to guidance issued by the Auditing Practices Board. The annual report and financial statements for 2011 have been filed with the Registrar of Companies. The independent auditors' report on the annual report and financial statements for 2011 was unqualified, did not include a reference to any matters to which the auditor drew attention by way of emphasis without qualifying the report, and did not contain a statement under 498(2) or (3) of the Companies Act 2006.

Income statement

for the six months ended 30 June 2012 (unaudited)

Statement of comprehensive income

for the six months ended 30 June 2012 (unaudited)

Statement of financial position

as at 30 June 2012 (unaudited)

Statement of changes in equity

for the six months ended 30 June 2012 (unaudited)

Statement of cash flows

for the six months ended 30 June 2012 (unaudited)

Notes to the half yearly report

for the six month period ended 30 June 2012 (unaudited)

1 - Summary of significant accounting policies

General Information

NBNK Investments plc is a public company incorporated in the United Kingdom. The Company's operations and its principal activities are to establish a new UK retail and SME banking and savings operation. The financial statements are presented in pounds sterling thousands because that is the currency of the primary economic environment in which the Company operates.

Basis of preparation

The financial statements of NBNK Investments plc have been prepared in accordance with International Financial Reporting Standards (IFRS), as adopted by the European Union.

The financial statements have been prepared under the historical cost convention as amended for use of fair value for derivative financial instruments and share based payments. Historical cost is based upon the fair value of consideration given in exchange for assets.

Application of IFRS

NBNK Investments plc was incorporated in 2010 with the intention of building (primarily through acquisition) a new and substantial UK bank. The Company has not made an acquisition to date and unless and until the Company commences operation as a UK bank it is not appropriate to set out the accounting policies which will be applicable to that business.

New IFRSs, interpretations and amendments not yet effective

Given the current status of the Company, it cannot be stated with any degree of certainty which new standards, interpretations or amendments but not yet effective may ultimately have a material impact on the Company's future financial statements.

Accounting policies

The accounting policies applied by the Company in these half-yearly results are the same as those applied by the Company in its audited financial statements for the period ended 31 December 2011.

2 - Loss per share from operations

Loss per share from operations for the period is based upon the attributable loss of £2,913,000 (£23,041,000 for the period ended 31 December 2011) and 50,050,000 shares (50,050,000 shares for the period ended 31 December 2011), being the weighted average number of shares in issue during the period. The diluted weighted average number of shares in issue assuming exercise of options at less than fair value was 67,271,546 (67,271,546 for the period ended 31 December 2011). No diluted loss per share is provided as it would reduce the basic loss per share.

3 - Events after the balance sheet date

The Company announced the resignations of non-executive directors Lord McFall and Sir David Walker, on 17 July and 13 August respectively, as they each took up new positions that required them to divest other financial services directorships.

Since the period end, the directors have estimated that the costs of solvent winding up will be circa £1.8 million.

4 - Related party transactions

In the opinion of the Board, the related parties are the directors. There were no related party transactions during the period, other than directors' remuneration and share based payments as outlined in the accounts. 

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