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GHE Gresham House Plc

1,100.00
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Share Name Share Symbol Market Type Share ISIN Share Description
Gresham House Plc LSE:GHE London Ordinary Share GB0003887287 ORD 25P
  Price Change % Change Share Price Bid Price Offer Price High Price Low Price Open Price Shares Traded Last Trade
  0.00 0.00% 1,100.00 0.00 00:00:00
Industry Sector Turnover Profit EPS - Basic PE Ratio Market Cap
0 0 N/A 0

Gresham House PLC Half-year Report (6946Q)

14/09/2017 7:00am

UK Regulatory


Gresham House (LSE:GHE)
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TIDMGHE

RNS Number : 6946Q

Gresham House PLC

14 September 2017

14 September 2017

Gresham House plc ("Gresham House" or "the Company")

(AIM: GHE)

INTERIM RESULTS FOR SIX MONTHSING 30 JUNE 2017

50% INCREASE IN ASSETS UNDER MANAGEMENT RESULTS IN ACCELERATION OF PROFITABILTY EXPECTATIONS

-- Continued momentum in organic growth of the business with AUM up c. 50% since the beginning of the year to GBP532m

   --     Asset management revenue increased by 100% to GBP2.4m (H1 2016: GBP1.2m) 
   --     Adjusted operating loss * reduced to GBP0.8m (H1 2016: GBP1.2m) 

-- On track to surpass management's trading profitability expectations since this management team came together in 2014. Asset management trading profitability expected on a run-rate basis by the end of 2017

-- Launch of British Strategic Investment Fund on the Long-Term Investment Solutions platform (the 4(th) Gresham House platform) with a 12-year life and achieving first close of fund at GBP150m

-- Investment in client portal, co-investment platform, talented asset management and support individuals

   --     Successful integration of LMS and the forestry division achieving acquisition return hurdles 

Significant progress since 30 June 2017:

   --     Sale of inherited legacy property asset, Southern Gateway, for gross proceeds of GBP7.25m 

-- Proposed acquisition of Hazel Capital LLP, the renewables and infrastructure group, which manages or advises over GBP100m of assets, including VCTs with net assets of GBP50m, plus additional EIS and energy storage systems asset management vehicles, is in final stages of due diligence

-- Strong balance sheet - Borrowing facility of GBP4.4m repaid. Tangible and realisable assets of GBP27.4m after the sale of Southern Gateway and the repayment of the borrowing facility (H1 2017: GBP27.4m, including borrowing facility)

Tony Dalwood, CEO of Gresham House, comments:

"Gresham House has developed its alternative asset management proposition with further organic growth in the first half of 2017. The Group has achieved a number of milestones including passing through GBP0.5 billion AUM, and the launch of the British Strategic Investment Fund, and importantly I am pleased to report that we are on track to achieve profitability on a run-rate basis in the second half of this year.

We continue to assess various acquisitions alongside the organic strategy that is working well."

* Adjusted operating loss/profit has been restated per note 8

For further enquiries, please contact:

 
 Gresham House plc 
  Tony Dalwood, Chief         +44 (0) 203 837 
  Executive Officer            6270 
 Liberum 
  Neil Elliot/Jill            +44 (0) 20 3100 
  Li                           2000 
 Montfort Communications,     greshamhouse@montfort.london 
  PR Adviser                   +44 (0) 203 770 
  Gay Collins / Rory           7906 
  King 
 

Website: www.greshamhouse.com

This announcement contains inside information for the purposes of Article 7 of Regulation (EU) No 596/2014

Disclaimers

This announcement does not constitute an invitation to underwrite, subscribe for, or otherwise acquire or dispose of any Gresham House plc shares or other securities. This announcement contains certain forward-looking statements with respect to the financial condition, results, operations and businesses of Gresham House plc. These statements and forecasts involve risk and uncertainty because they relate to events and depend on circumstances that will occur in the future. There are a number of factors that could cause actual results or developments to differ materially from those expressed or implied by these forward-looking statements and forecasts.

Past performance is no guide to future performance and persons needing advice should consult an independent financial adviser.

CHAIRMAN'S STATEMENT

Activity in the period

It has been another strong six months for Gresham House. Assets Under Management ("AUM") have passed the GBP500 million mark, accelerating the Group's path to profitability, which we anticipate in 2018. The investment team is delivering high-quality asset management expertise for our clients and we are focused on growing value for shareholders.

The launch of the Long-Term Investment Solutions platform as the Group's fourth division has contributed to organic AUM growth of c.50% in the period. The first fund on the platform, the Gresham House British Strategic Investment Fund ("BSIF"), held a first close of GBP150 million in June 2017, demonstrating the appetite from local government pension schemes ("LGPS") and other institutional investors to access long-term opportunities in UK housing and infrastructure related assets. BSIF will focus on areas where an identified gap exists in capital provision (sub GBP50 million transactions) and will work in partnership with LGPS and local authorities. This provides further evidence of our management team identifying alternative asset management products to satisfy clear areas of demand.

Results

The results for the first half of 2017 show an improvement in the Group's adjusted operating loss* to GBP0.8 million, compared to the first half of 2016, which was a loss of GBP1.2 million. We are now benefitting from the management fees earned from the specialist asset management business as well as the investment in people and processes, two key pillars we identified at the start of the transformation process.

Shareholders

We are pleased that the strong relationships between shareholders and the Company continue to develop and welcome the positive strategic opportunities this potentially generates. I was also pleased to meet more shareholders at the AGM in May and we look forward to increasing engagement with them as we continue to grow the business and deliver the strategic plan we set out at the start of our journey.

Outlook

Gresham House is now well positioned to benefit from the on going shift to investment in alternative assets, particularly amongst LGPS, other institutional investors, charities, endowments and family offices. We have built robust investment processes around a strong team and a solid platform to continue our growth. I am excited about the pipeline of opportunities that we are currently reviewing to deliver value to clients and shareholders.

Anthony Townsend

14 September 2017

Chairman

* Adjusted operating loss/profit has been restated per note 8

CHIEF EXECUTIVE'S REPORT

We started 2017 with the aim of scaling Gresham House as a specialist asset manager, focused on alternatives and illiquid assets. I'm pleased to say that we have continued to grow the business in the first half of 2017 and our current AUM is now GBP532 million, an increase of c. 50% since the beginning of the year. We are today significantly exceeding management's expectations from when we first came together in December 2014 with a vision of building a specialist asset manager. A notable milestone for the period was the launch of the Long-Term Investment Solutions platform, and the subsequent first close of the BSIF at GBP150 million.

Our second objective was to have made good progress on our asset management operating profitability and I am pleased that we expect to be run-rate profitable within the second half of 2017. Our adjusted operating loss* for the six months to 30 June 2017 reduced to GBP0.8 million from a GBP1.2 million loss in the same period last year, primarily driven by asset management revenues doubling to GBP2.4 million (H1 2016: GBP1.2 million).

Investment in new talent and infrastructure is already benefitting the Group. From the start, we aimed to put technology at the core of the client proposition and over the past six months significant progress has been made in establishing our digital platform and client portal. Over the period, we were joined by Andy Hampshire as Chief Technology Officer and Michael Hart as Head of Distribution.

As I set out later, we are pleased that we have achieved strong performance through our existing funds across our investment products in real assets, strategic public equity and private equity.

The Group's acquisitions executed to date have passed our return hurdles, plus balance sheet investments are generating strong returns, even at this early stage of deployment.

Events since 30 June 2017

While the reporting period ended on 30 June 2017, several developments have occurred that give a fuller picture of our activity throughout the period.

We recently announced the sale of our legacy property asset, Southern Gateway, Speke for a gross price of GBP7.25 million. This was the most material legacy property asset inherited by the management team and only leaves the site at Newton-le-Willows which is held on our balance sheet at a book value of GBP2.25 million, as the remaining significant inherited legacy property asset still held by the Group. Since the management team took over in December 2014, we have realised GBP16 million from the legacy portfolio, which exceeds the market value of the Group at that time.

The proceeds from the Southern Gateway sale have been used to repay the Kleinwort Hambros (formerly Kleinwort Benson) loan facility of GBP4.4 million, and deleverage the balance sheet. The remaining cash is being used to develop the asset management business.

We continue to work on a number of organic and acquisition initiatives, and on 19 May 2017 announced that we were in discussions to acquire Hazel Capital LLP ("Hazel Capital"), the renewables and infrastructure group. The proposed acquisition is in the final stages of due diligence. Hazel Capital manages two VCTs with combined net assets of over GBP50 million. In additional, various EIS and energy storage systems asset management vehicles are expected to be part of the transaction. Completion is expected in Q4 2017 and is expected to include cash and shares consideration, within our existing permissions, and with shares to be issued at a premium to the current share price.

Since the new management team became involved in Gresham House we have invested across our key three pillars of Platform, Process and People. Our standard capital allocation process has been successfully in place since then, and has overseen acquisitions and capital investment in people.

As we continue to build a scalable, quality business we manage our progress by focusing on these areas of growth.

The Gresham House Platform

AUM now stands at GBP532 million (2016: GBP363 million), an increase of c. 50% having been achieved through organic growth since the beginning of the year. The table below shows the growth in AUM since the management team started the transformation of the Group to a specialist asset manager in December 2014.

 
                                                  30-Jun-17 
                          31-Dec-15   31-Dec-16    (H1) 
                          GBPm        GBPm        GBPm 
 Strategic Equity         37          116         124 
 Real Assets              205         247         258 
 Long Term Investment 
  Solutions               -           -           150 
 TOTAL AUM                242         363         532 
 

The launch of the Long-Term Investment Solutions platform, and the first close of BSIF on 16 June 2017 at GBP150 million, was a milestone for the Group. In a relatively short period of time this demonstrated the team's ability to provide an investment solution in the UK housing and infrastructure related sectors and connect with institutional investors, including pension schemes, endowments and family offices.

Organic growth across the existing platforms was also evident with the forestry business increasing AUM by 5% to GBP258 million (2016: GBP247 million) through the increasing value and acquisitions of the underlying forests in the period. The Gresham House Forestry Fund LP continues to fund raise and is working towards a final close at the end of 2017.

The AUM of our Strategic Equity division grew by 6% in the period. Gresham House Strategic plc ("GHS") grew its Net Asset Value ("NAV") by 11% to GBP42 million in the period and has continued to outperform the FTSE-Small Cap excluding Investment Trusts Index by 1.9% since Gresham House Asset Management's ("GHAM") appointment in August 2015. The Gresham House Strategic Public Equity LP fund maintained its committed and co-investment capital at GBP24 million as at 30 June 2017.

LMS Capital plc ("LMS"), our private equity investment trust, grew NAV by 5% in the period to GBP72 million on the back of a strong realisation programme. The proceeds received have allowed LMS to fulfil its commitment to shareholders by returning a further GBP11 million by way of tender offer, which completed in August 2017. In the 12 months since GHAM was appointed investment manager, LMS has now returned the full GBP17 million promised to shareholders, partially changed its shareholder base and is now in a position to begin investing again.

The proposed Hazel Capital acquisition is a good example of adding strategic expertise in a specialist asset management area and is highly complementary to the Group's existing Real Assets division and the objectives of BSIF, which has already demonstrated the substantial appetite for infrastructure related assets. On completion in the latter part of the year, Hazel Capital is expected to become a further part of the Gresham House platform and add to the Group's AUM, alongside providing future asset management expertise.

The development of our specialist asset management platform has also been recognised with the Group being nominated as a finalist in the Investment Week Specialist Investment Awards 2017, Specialist Management Group of the Year.

The Gresham House Process

Gresham House's ability to integrate businesses and add value through synergies is evident in the two existing acquisitions of Gresham House Forestry Limited and the LMS management contract. We have always stated that our acquisition strategy needs to deliver the long-term return hurdle of 15% per annum to add value to the Group. Both the Gresham House Forestry Limited acquisition and the LMS management contract continue to deliver ahead of these returns, demonstrating our ability to add value and ensure synergies as part of our acquisition plan.

We have been able to integrate both of these businesses within the Gresham House family, which has helped deliver the long-term returns to shareholders. In the case of LMS this has been achieved more quickly than originally planned and, having completed the first two phases of our integration, the team can now focus on developing the LMS business.

As previously mentioned, we continue to invest in our digital platform and our Chief Technology Officer, Andy Hampshire, has made good progress to date. Working closely with trusted advisors and industry experts he is developing a best in class client portal, which will provide high quality reporting to investors as well as facilitate co-investment opportunities in a clear and simple manner. We are aiming for this to go live in the last quarter of 2017.

The client portal is only one part of our overall digital platform. Engagement with clients, as well as potential investors, is key to developing the Gresham House brand and raising awareness of the products we offer. We have increased our digital engagement through the use of marketing campaigns and the efficient use of our systems.

Gresham House People

Gresham House is a people business and to operate successfully and grow we need high quality professionals who are experts in their fields. John-Paul Preston and Andy Hampshire are both examples of talented members of the team, who recently won The M&A Advisor's Emerging Leaders Awards - EMEA in their respective fields and are to be congratulated.

One of the critical elements to growing the business is distribution and I'm pleased that Michael Hart joined Gresham House as the Head of Distribution in June 2017. Michael joined us from Amundi and has a wealth of experience across a wide range of institutional investors. He is already proving to be a great asset to the team as we continue to fund raise for BSIF.

We are also building the investment management team for BSIF, with Joe Thomas joining as an Investment Manager from Lloyds Banking Group. We continue to build the BSIF Investment team.

Outlook

It has been another busy period for the Company, with the close of BSIF at GBP150 million and the addition of the Royal County of Berkshire Pension Fund to the share register as well as managing the existing business to achieve strong returns for clients. We have taken further steps to scale the business and accelerate the path to profitability, with profits on a run-rate basis expected by the end of 2017.

We are assessing a number of organic and acquisition growth opportunities to grow the Group and add further value for shareholders.

The alternative asset market benefits from diversification, yield and acting as a partial inflation hedge. Our focus remains on areas that represent good value, where operational performance can be improved and cash flows exist to provide investment opportunities for clients. The demand for alternative asset management continues to grow, with some of the largest institutional asset managers recently executing acquisitions in this area.

We believe we are well placed to capitalise on this demand and with our platform offering, we are able to service clients' needs in this area and ultimately deliver value to shareholders. We continue to work hard on building the business and driving profit growth into 2018.

Anthony Dalwood

14 September 2017

Chief Executive

* Adjusted operating loss/profit has been restated per note 8

FINANCIAL REVIEW

We continue to focus on profitability and are pleased to say that we have made further progress as a specialist asset manager with increasing AUM and the recently announced sale of the legacy property asset, Southern Gateway.

With Gresham House becoming an established specialist asset manager and moving away from its legacy property asset portfolio, we have reclassified the Group's legacy property business unit as a discontinued operation within these results. As such, we have also revisited the definition of adjusted operating profit/loss, the non-GAAP measure, to clearly disclose the trading performance of the Group as an asset manager.

The adjusted operating profit/loss definition has been simplified to use the Group's net trading loss and deduct amortisation and depreciation of intangible and tangible assets. This now represents the management fee income earned from the asset management business, less the administrative overheads associated with delivering the asset management services.

Adjusted operating profit/loss

The adjusted operating loss has reduced to GBP0.8 million (H1 2016: GBP1.2 million), with management fee income doubling to GBP2.4 million (H1 2016: GBP1.2 million) in the period due to new funds raised and the continued performance of the existing portfolio. The BSIF fund held its first close on 16 June 2017, so we expect this fund to impact management fee income more meaningfully in the second half of 2017.

Administrative expenses (excluding amortisation and depreciation) have increased to GBP3.1 million in the period (H1 2016: GBP2.3 million), which represents the investment primarily in the team, but also the infrastructure of the business as we grow to successfully manage the increasing AUM of the business.

Gains/losses on investments

Net gains on investments in the period totalled GBP236k (H1 2016: GBP89k gain) and are driven by the Group's investment in the funds that it manages. The co-investment in the Gresham House Strategic Public Equity LP Fund delivered unrealised gains of GBP177k (H1 2016: GBPnil). This was mainly driven by the holding in IMI Mobile, which increased its share price by 37% in the period.

The Group's 20% holding in GHS means that we account for this investment as an associate and the Group's share of reported losses in the period are GBP72k (H1 2016: GBP18k profits).

The other movement of note in gains/losses on investments was the fair value movement in the deferred consideration receivable from Persimmon Homes Limited for the purchase of the Newton-le-Willows site in 2015.

Discontinued operations

Discontinued operations represent the impact of the legacy property portfolio on the Group. With the sale of the Southern Gateway site completing after the period end, the fair value reflected in the balance sheet as at 30 June 2017 represents the commercial value of the sale, a gross value of GBP7.25 million (2016: GBP7.75 million). Alongside rental income and other expenses the legacy property portfolio has created a loss of GBP1.0 million in the period (H1 2016: GBP69k profit). This is primarily the result of difficult property market conditions for a bespoke property with a limited number of potential purchasers. The loss includes fees and guarantees relating to the sale process of GBP617k.

The sale of Southern Gateway means that management can now fully focus on continuing to build the specialist asset management business with the resulting cash from a position of increased strength.

Total comprehensive income

The above activity has resulted in a total comprehensive loss of GBP2.1 million for the period (H1 2016: GBP1.7 million loss), with the performance of the legacy property portfolio having the biggest impact. The continuing asset management business is expected to be profitable on a run-rate basis by the end of 2017 as the Group realises the inherited legacy property portfolio and grows the specialist asset management business.

Financial position

The increase in net asset value in the period was primarily due to the issue of new shares to the Royal County of Berkshire Pension Fund for GBP7.3 million for a 20% holding in the Company. As a result, the Group's cash position increased to GBP8.1 million at the end of the period (2016: GBP2.8 million).

On 26 April 2017, Persimmon Homes Limited repaid GBP1.5 million of the deferred consideration for the Newton-le-Willows site, which was originally sold in September 2015. In line with the loan agreement with Kleinwort Hambros, these proceeds were used to partially repay the loan facility, which was GBP4.4 million as at the end of the period (2016: GBP5.9 million).

The working capital loan to Hazel Capital is included within investments and at the period end GBP1.5 million of the GBP4.5 million facility had been drawn. Interest and arrangement fees totalled GBP34k in the period.

We will continue to use our strong balance sheet to scale the specialist asset management business.

Kevin Acton

14 September 2017

Finance Director

Unaudited Condensed Group Statement of Comprehensive Income

 
                                         Six months               Six months 
                                              ended                    ended         Year ended 
                                            30 June                  30 June        31 December 
                                   2017 (unaudited)        2016 (unaudited)*    2016 (audited)* 
                          Notes            GBP' 000                 GBP' 000           GBP' 000 
 Income: 
 Asset management 
  income                                      2,409                    1,179              3,202 
 Dividend and interest 
  income                                         24                       52                249 
 Other operating 
  income                                         68                       19                 45 
                                 ------------------      -------------------  ----------------- 
 Total income                 5               2,501                    1,250              3,496 
 Operating costs: 
 Administrative 
  overheads                                 (3,638)                  (2,911)            (6,892) 
                                 ------------------      -------------------  ----------------- 
 Net operating 
  loss                                      (1,137)                  (1,661)            (3,396) 
 Finance costs                6               (220)                    (155)              (442) 
 Net trading loss                           (1,357)                  (1,816)            (3,838) 
 Gains and losses 
  on investments: 
 Share of associate's 
  (losses) / profits                           (72)                       18                628 
 Gains and (losses) 
  on investments 
  held at fair value                            172                     (15)              (147) 
 Movement in fair 
  value of contingent 
  consideration                                  16                        -              (253) 
 Movement in fair 
  value of deferred 
  receivable                                    120                       86                202 
 Operating loss 
  before taxation                           (1,121)                  (1,727)            (3,408) 
 Taxation                                         -                        -                 33 
                                 ------------------      -------------------  ----------------- 
 Operating loss 
  from continuing 
  operations                                (1,121)                  (1,727)            (3,375) 
 (Loss)/profit 
  from discontinued 
  operations                  7             (1,021)                       69                339 
 Total comprehensive 
  income                                    (2,142)                  (1,658)            (3,036) 
                                 ==================      ===================  ================= 
 
 Attributable to: 
 Equity holders 
  of the parent                             (1,892)                  (1,664)            (3,027) 
 Non-controlling 
  interest                                    (250)                        6                (9) 
                                 ------------------      -------------------  ----------------- 
                                            (2,142)                  (1,658)            (3,036) 
                                 ==================      ===================  ================= 
 
 Basic and diluted 
  loss per ordinary 
  share (pence)               8              (15.7)                   (16.9)               (30.3) 
 
 

* Comparatives for the period ended 30 June 2016 and the year ended 31 December 2016 have been restated to reflect the classification of the Group's legacy property activities as discontinued operations (see note 7)

Unaudited Condensed Group Statements of Changes in Equity

 
 Six months ended 30 June 2017 (unaudited) 
                                                                                 Equity 
                                 Ordinary               Share              attributable          Non- 
                                    share     Share   warrant   Retained      to equity   controlling     Total 
                                  capital   premium   reserve   reserves   shareholders      interest    equity 
                                  GBP'000   GBP'000   GBP'000    GBP'000        GBP'000       GBP'000   GBP'000 
 Balance at 31 December 
  2016                              2,546     2,611       319     18,657         24,133           491    24,624 
 Comprehensive income 
  for the period 
 Loss for the period                    -         -         -    (1,892)        (1,892)         (250)   (2,142) 
                                ---------  --------  --------  ---------  -------------  ------------  -------- 
 Total comprehensive 
  income for the 
  period                                -         -         -    (1,892)        (1,892)         (250)   (2,142) 
 Contributions by 
  and distributions 
  to owners 
 Transfer of non-controlling 
 interest loss                          -         -         -      (245)          (245)           245         - 
 Share based payments                   -         -         -         51             51             -        51 
 Issue of shares                      588     7,038         -          -          7,626             -     7,626 
                                ---------  --------  --------  ---------  -------------  ------------  -------- 
 Total contributions 
  by and distributions 
  to owners                           588     7,038         -      (194)          7,432           245     7,677 
                                ---------  --------  --------  ---------  -------------  ------------  -------- 
 Balance at 30 June 
  2017                              3,134     9,649       319     16,571         29,673           486    30,159 
                                =========  ========  ========  =========  =============  ============  ======== 
 
 
   Six months ended 30 June 2016 (unaudited) 
                                                                                 Equity 
                                 Ordinary               Share              attributable          Non- 
                                    share     Share   warrant   Retained      to equity   controlling     Total 
                                  capital   premium   reserve   reserves   shareholders      interest    equity 
                                  GBP'000   GBP'000   GBP'000    GBP'000        GBP'000       GBP'000   GBP'000 
 Balance at 31 December 
  2015                              2,463     1,688        64     21,611         25,826             -    25,826 
 Comprehensive income 
  for the period 
 Loss for the period                    -         -         -    (1,664)        (1,664)             6   (1,658) 
                                ---------  --------  --------  ---------  -------------  ------------  -------- 
 Total comprehensive 
  income for the 
  period                                -         -         -    (1,664)        (1,664)             6   (1,658) 
 Contributions by 
  and distributions 
  to owners 
 Transfer of non-controlling 
 interest gain                          -         -         -          6              6           (6)         - 
 Issue of shares                        -         6         -          -              6             -         6 
                                ---------  --------  --------  ---------  -------------  ------------  -------- 
 Total contributions 
  by and distributions 
  to owners                             -         6         -          6             12           (6)         6 
                                ---------  --------  --------  ---------  -------------  ------------  -------- 
 Balance at 30 June 
  2016                              2,463     1,694        64     19,953         24,174             -    24,174 
                                =========  ========  ========  =========  =============  ============  ======== 
 
 
   Year ended 31 December 2016 (audited) 
                                                                                 Equity 
                                 Ordinary               Share              attributable          Non- 
                                    share     Share   warrant   Retained      to equity   controlling     Total 
                                  capital   premium   reserve   reserves   shareholders      interest    equity 
                                  GBP'000   GBP'000   GBP'000    GBP'000        GBP'000       GBP'000   GBP'000 
 Balance at 31 December 
  2015                              2,463     1,688        64     21,611         25,826             -    25,826 
 Comprehensive income 
  for the period 
 Loss for the period                    -         -         -    (3,027)        (3,027)           (9)   (3,036) 
                                ---------  --------  --------  ---------  -------------  ------------  -------- 
 Total comprehensive 
  income for the 
  period                                -         -         -    (3,027)        (3,027)           (9)   (3,036) 
 Contributions by 
  and distributions 
  to owners 
 Non-controlling 
  interest in Gresham 
  House Friends & 
  Family Fund LP                        -         -         -          -              -           500       500 
 Share warrants 
  issued                                -         -       255          -            255             -       255 
 Share based payments                   -         -         -         73             73             -        73 
 Issue of shares                       83       923         -          -          1,006             -     1,006 
                                ---------  --------  --------  ---------  -------------  ------------  -------- 
 Total contributions 
  by and distributions 
  to owners                            83       923       255         73          1,334           500     1,834 
                                ---------  --------  --------  ---------  -------------  ------------  -------- 
 Balance at 31 December 
  2016                              2,546     2,611       319     18,657         24,133           491    24,624 
                                =========  ========  ========  =========  =============  ============  ======== 
 

Unaudited Condensed Group Statement of Financial Position

 
                                   Notes         30 June             30 June 
                                                                                       31 December 
                                                    2017                2016                  2016 
                                             (unaudited)         (unaudited)             (audited) 
 Assets                                          GBP'000             GBP'000               GBP'000 
 Non-current assets 
  Investments - 
   securities                         10           4,580                 895                 2,834 
       Investment property                             -               9,509                     - 
  Tangible fixed 
   assets                                            215                 213                   179 
  Investment in 
   associate                                       6,457               5,920                 6,530 
  Intangible assets                                6,127               5,994                 6,630 
  Long-term receivables                            1,661               3,947                 4,095 
 Total non-current 
  assets                                          19,040              26,478                20,268 
                                          --------------       -------------  -------------------- 
 
 Current assets 
  Trade receivables                                  957                 667                 1,259 
  Accrued income 
   and prepaid expenses                              937               1,127                   917 
  Deferred receivable                              2,059               2,054                 1,139 
  Cash and cash 
   equivalents                                     8,100               4,797                 2,802 
 Non-current assets 
  held for sale 
  Investment property                              8,516                   -                 9,628 
                                          --------------       -------------  -------------------- 
 Total current assets 
  and non-current 
  assets held for 
  sale                                            20,569               8,645                15,745 
                                          --------------       -------------  -------------------- 
 Total assets                                     39,609              35,123                36,013 
                                          --------------       -------------  -------------------- 
 
 Current liabilities 
  Trade and other 
   payables                                        1,866               1,473                 2,229 
       Contingent consideration                    2,962                   -                     - 
  Short term borrowings                            2,025                   -                 1,015 
                                          --------------       -------------  -------------------- 
                                                   6,853               1,473                 3,244 
                                          --------------       -------------  -------------------- 
 Total assets less 
  current liabilities                             32,756              33,650                32,769 
 Non-current liabilities 
 Long term borrowings                              2,324               6,715                 4,881 
 Other creditors                                     273               2,761                 3,264 
                                          --------------       -------------  -------------------- 
                                                   2,597               9,476                 8,145 
 Net assets                                       30,159              24,174                24,624 
                                          ==============       =============  ==================== 
 
 Capital and reserves 
 Ordinary share capital               11           3,134               2,463                 2,546 
 Share premium                                     9,649               1,694                 2,611 
 Share warrant reserve                               319                  64                   319 
 Retained reserves                                16,571              19,953                18,657 
                                          --------------       -------------  -------------------- 
 Equity attributable 
  to equity shareholders                          29,673              24,174                24,133 
 Non-controlling 
  interest                                           486                   -                   491 
 Total equity                                     30,159              24,174                24,624 
                                          ==============       =============  ==================== 
 
 Basic and diluted 
  net asset value 
  per ordinary share                  13          236.7p              245.4p                236.9p 
                                          ==============       =============  ==================== 
 

Unaudited Condensed Group Statement of Cash Flows

 
                                            Six months 
                                                                Six months        Year ended 
                                                 ended               ended       31 December 
                                               30 June             30 June 
                                                  2017                2016              2016 
                                  Notes    (unaudited)         (unaudited)         (audited) 
                                               GBP'000             GBP'000           GBP'000 
 Cashflow from operating 
  activities 
 Dividend income received                            -                   3                 7 
 Interest received                                   1                   2               470 
 Rental income received                            350                 303               728 
 Other cash payments                             (835)             (3,324)           (4,542) 
                                         -------------       -------------  ---------------- 
 Net cash utilised 
  from operations                  14            (484)             (3,016)           (3,337) 
 Interest paid on loans                          (145)                (59)             (226) 
 Corporation tax received 
  / (paid)                                          33               (204)             (204) 
                                         -------------       -------------  ---------------- 
 Net cash flows in 
  operating activities                           (596)             (3,279)           (3,767) 
                                         =============       =============  ================ 
 
 Cash flows from investing 
  activities 
 Purchase of investments                       (1,574)                   -           (1,831) 
 Sale of investments                                 -                 658               918 
 Deferred proceeds 
  received on sale of 
  investment properties                          1,634                   -             1,041 
 Expenditure on investment 
  properties                                     (123)               (104)             (353) 
 Purchase of fixed 
  assets                                          (99)               (110)             (125) 
 Sale of fixed assets                               16                  38                37 
 Purchase of intangible 
  assets                                          (39)                   -             (148) 
                                                 (185)                 482             (461) 
                                         =============       =============  ================ 
 Cash flows from financing 
  activities 
 Repayment of loans                            (1,547)             (3,517)           (4,454) 
 Receipt of loans                                    -               6,715             6,833 
 LMS warrants issues                                 -                   -               255 
 Share issue proceeds                            7,626                   6                 6 
                                         -------------       -------------  ---------------- 
                                                 6,079               3,204             2,640 
                                         =============       =============  ================ 
 
 Increase / (decrease) 
  in cash and cash equivalents                   5,298                 407           (1,588) 
 
 Cash and cash equivalents 
  at start of period                             2,802               4,390             4,390 
 
 Cash and cash equivalents 
  at end of period                               8,100               4,797             2,802 
                                         =============       =============  ================ 
 

Notes to the Accounts

1 REPORTING ENTITY

Gresham House plc ("the Company") is a company incorporated in England. The unaudited condensed group interim financial statements of the Company as at and for the six months ended 30 June 2017 comprise the Company and its subsidiary undertakings (together referred to as the "Group"). All intra-group transactions, balances, income and expenses are eliminated on consolidation.

2 STATEMENT OF COMPLIANCE

The financial information presented in these interim results has been prepared in accordance with the recognition and measurement requirements of International Financial Reporting Standards issued by the International Accounting Standards Board, as adopted by the European Union. The principal accounting policies adopted in the preparation of the financial information in these Interim Results are unchanged from those used in the Company's financial statements for the year ended 31 December 2016 and are consistent with those that the Company expects to apply in its financial statements for the year ended 31 December 2017.

The financial information for the year ended 31 December 2016 presented in this Interim Report does not constitute the Company's statutory accounts for that period but has been derived from them. The Report and Accounts for the year ended 31 December 2016 were audited and have been filed with the Registrar of Companies. The Independent Auditors' Report on the Report and Accounts for the year ended 31 December 2016 was unqualified and did not draw attention to any matters by way of emphasis and did not contain statements under s498(2) or (3) of the Companies Act 2006. The financial information for the periods ended 30 June 2016 and 30 June 2017 are unaudited and have not been reviewed by the Company's auditors.

3 ESTIMATES

The preparation of the unaudited condensed group interim financial statements requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expense. Actual results may differ from these estimates.

In preparing these unaudited condensed group interim financial statements, the significant judgements made by management in applying the Group's accounting policies and the key sources of estimation were the same as those that applied to the group financial statements as at and for the year ended 31 December 2016.

4 FINANCIAL RISK MANAGEMENT

The Group's financial risk management objectives and policy are consistent with those disclosed in the group financial statements as at and for the year ended 31 December 2016.

5 INCOME

 
                                         Six 
                                      months   Six months           Year 
                                       ended        ended          ended 
                                     30 June      30 June    31 December 
                                        2017         2016           2016 
                                     GBP'000      GBP'000        GBP'000 
 Asset management income 
 Fund management income                1,097          251          1,082 
 Forestry management income            1,312          928          2,120 
                                   ---------  -----------  ------------- 
                                       2,409        1,179          3,202 
                                   ---------  -----------  ------------- 
 Income from investments 
 Dividend income - Listed UK               -            3              7 
 Interest receivable - Bank & 
  brokers                                  1            3              4 
                         - Other          23           46            238 
                                   ---------  -----------  ------------- 
                                          24           52            249 
                                   ---------  -----------  ------------- 
 Other operating income 
 Reversal of provision against 
  loans                                    5            1              5 
 Other fees receivable                    63           18             40 
                                          68           19             45 
 
 Total income                          2,501        1,250          3,496 
                                   =========  ===========  ============= 
 
 

6 FINANCE COSTS

 
                                  Six months   Six months 
                                       ended        ended     Year ended 
                                     30 June      30 June    31 December 
                                        2017         2016           2016 
                                     GBP'000      GBP'000        GBP'000 
 
 Interest payable on loans and 
  overdrafts                             125          125            293 
 Finance fees                             95           30            149 
                                         220          155            442 
                                 ===========  ===========  ============= 
 

7 DISCONTINUED OPERATIONS

Discontinued operations represent the legacy property portfolio of the Group, with the sale of the Southern Gateway site completing after the period end, and the remaining land at Newton-le-Willows being actively marketed for sale.

The disposal group fulfilled the requirements of IFRS 5 to be classified as "discontinued operations" in the consolidated statement of comprehensive income, the results of which are set out below:

 
                                              Six 
                                           months   Six months 
                                            ended        ended     Year ended 
                                          30 June      30 June    31 December 
                                             2017         2016           2016 
 
 Rental income                                376          370            741 
 Other operating income                         -            -             27 
 Property outgoings                         (162)        (147)          (290) 
 Movement in fair value of investment 
  property                                (1,235)        (154)          (139) 
 
 Net (loss)/profit from discontinued 
  operations                              (1,021)           69            339 
                                        =========  ===========  ============= 
 

8 LOSS PER SHARE

Basic and diluted loss per share

 
                                               Six 
                                            months   Six months           Year 
                                             ended        ended          ended 
                                           30 June      30 June    31 December 
                                              2017         2016           2016 
 
 Total net loss attributable 
  to equity holders of the parent 
  (GBP'000)                                (1,892)      (1,664)        (3,027) 
 
 Weighted average number of ordinary 
  shares in issue during the period     12,073,106    9,852,060      9,976,412 
 
 Basic and diluted loss per share 
  to equity holders of the parent 
  (pence)                                   (15.7)       (16.9)         (30.3) 
                                       ===========  ===========  ============= 
 

No shares were deemed to have been issued at nil consideration as a result of the shareholder, supporter and LMS warrants granted.

The shareholder, supporter and LMS warrants are not dilutive as the exercise price of the warrants is 323.27p, which is higher than the average market price of the ordinary shares during the period.

Adjusted earnings per share

Adjusted earnings per share is based on adjusted operating loss, which is stated after charging interest but before depreciation, amortisation and profit on disposal of tangible fixed assets. This has been restated compared to prior periods to reflect the classification of the legacy property portfolio as discontinued operations and simplify the non-GAAP measure of the performance as an asset manager.

Adjusted loss for calculating adjusted earnings per share:

 
                                                      Six 
                                    Six months     months 
                                         ended      ended     Year ended 
                                       30 June    30 June    31 December 
                                          2017       2016           2016 
                                       GBP'000    GBP'000        GBP'000 
 
 Net trading loss                      (1,357)    (1,816)        (3,838) 
 Add back: 
 Depreciation and amortisation             584        631          1,441 
 Profit on disposal of tangible 
  fixed assets                            (12)        (8)            (8) 
 Adjusted operating loss                 (785)    (1,193)        (2,405) 
 
 Adjusted loss per share (pence)         (6.5)     (12.1)         (24.1) 
                                   ===========  =========  ============= 
 

9 DIVIDENDS

No final or interim dividends were proposed or paid for the periods ending 30 June 2017, 31 December 2016 and 30 June 2016.

10 INVESTMENTS - SECURITIES

An analysis of total investments is as follows:

 
                                  30 June   30 June   31 December 
                                     2017      2016          2016 
                                  GBP'000   GBP'000       GBP'000 
 Listed securities - on the             -       102 
  London Stock Exchange                                         - 
 Securities dealt in under AIM        672         -           468 
 Securities dealt in under NEX 
  Exchange                             42        25            31 
 Unlisted securities                3,866       768         2,335 
 Carrying value                     4,580       895         2,834 
                                 ========  ========  ============ 
 
 Investments valued at fair 
  value through profit or loss      2,417       127         2,217 
 Loans and receivables valued 
  at amortised cost                 2,163       768           617 
                                    4,580       895         2,834 
                                 ========  ========  ============ 
 

11 SHARE CAPITAL

 
                                           30 
                                         June   30 June   31 December 
                                         2017      2016          2016 
                                      GBP'000   GBP'000       GBP'000 
 Allotted: Ordinary - 12,536,957 
  (30 June 2016: 9,852,461; 31 
  December 2016: 10,185,487) fully 
  paid shares of 25p each               3,134     2,463         2,546 
                                     ========  ========  ============ 
 

12 SHARE WARRANTS

 
                              Shareholder   Supporter 
                                 warrants    warrants   LMS warrants     Total warrants 
 
 Balance at 1 January 
  2016                          1,073,775     850,000              -          1,923,775 
 Warrants exercised during 
  the period                      (1,420)           -              -            (1,420) 
                             ------------  ----------  -------------  ----------------- 
 Balance at 30 June 2016        1,072,355     850,000              -          1,922,355 
 Warrants granted during 
  the period                            -           -        909,908            909,908 
 Warrants exercised during 
  the period                        (542)           -              -              (542) 
                             ------------  ----------  -------------  ----------------- 
 Balance at 31 December 
  2016                          1,071,813     850,000        909,908          2,831,721 
 Warrants exercised during 
  the period                          (1)           -              -                (1) 
 Balance at 30 June 2017        1,071,812     850,000        909,908          2,831,720 
                             ============  ==========  =============  ================= 
 

Shareholder warrants

On 1 December 2014 the Company issued 1,073,904 shareholder warrants to existing shareholders as at the close of business on 28 November 2014 on a 1:5 basis, such warrants having been admitted to trading on AIM. Shareholder warrants are freely transferable, are exercisable at any time between 1 January 2015 and 31 December 2019 at an exercise price of 323.27p per ordinary share and are subject to the terms of the shareholder warrant instrument dated 7 October 2014.

Supporter warrants

On 1 December 2014 the Company issued 850,000 supporter warrants to the new directors and certain members of the Investment Committee and Advisory Group at a price of 7.5p per warrant. Supporter warrants have the same entitlements as the shareholder warrants save that (i) they are not freely transferable (such supporter warrants only being transferable to certain family members, trusts or companies connected with the relevant warrant holder) and accordingly not quoted on AIM; (ii) are not exercisable until 1 December 2015; and (iii) are subject to the terms of the supporter warrant instrument dated 7 October 2014.

LMS warrants

On 14 October 2016 the Company issued 909,908 LMS warrants to LMS Capital plc ("LMS"). The LMS warrants entitle LMS to exercise one LMS warrant for one ordinary share in the Company from 14 October 2016 to 30 June 2018 at an exercise price of 323.27 pence per ordinary share. LMS paid a warrant purchase price of 28 pence per LMS warrant, totalling GBP255,000. The LMS warrants are not transferrable, unless consent of the Board of the Company has been provided and were issued in accordance with the LMS Warrant Instrument dated 14 October 2016.

During the period 1 shareholder warrant was converted into ordinary shares resulting in the issue of 1 new ordinary share (30 June 2016: 1,420; 31 December 2016: 1,962).

13 NET ASSET VALUE PER SHARE

Basic and diluted

 
                                       30 June     30 June   31 December 
                                          2017        2016          2016 
 
 Equity attributable to holders 
  of the parent (GBP'000)               29,673      24,174        24,133 
 
 Number of ordinary shares in 
  issue at the end of the period    12,536,957   9,852,461    10,185,487 
 
 Basic and diluted net asset 
  value (pence)                          236.7       245.4         236.9 
                                   ===========  ==========  ============ 
 

No shares were deemed to have been issued at nil consideration as a result of the shareholder, supporter and LMS warrants granted.

The shareholder, supporter and LMS warrants are not considered dilutive as the exercise price of the warrants is 323.27p which is higher than the average market price of the ordinary shares during the period.

14 RECONCILIATION OF NET TRADING LOSS TO OPERATING CASH FLOWS

 
                                              30        30 
                                            June      June   31 December 
                                            2017      2016          2016 
                                         GBP'000   GBP'000       GBP'000 
 Net trading loss                        (1,357)   (1,816)       (3,838) 
 (Loss)/profit from discontinued 
  operations                             (1,021)        69           339 
 Movement in fair value of investment 
  property                                 1,235       154           139 
 Interest payable                            125       125           293 
 Depreciation                                 42        37            77 
 Profit on disposal of tangible 
  fixed assets                              (12)       (8)           (8) 
 Amortisation                                542       594         1,364 
 Share based payments                         51         -            72 
                                           (395)     (845)       (1,562) 
 Increase in long term receivables             -         -          (54) 
 Decrease / (increase) in current 
  assets                                     282     (133)         (430) 
 Decrease in current liabilities           (371)   (2,038)       (1,291) 
 Net cash utilised from operations         (484)   (3,016)       (3,337) 
                                        ========  ========  ============ 
 

15 POST BALANCE SHEET EVENTS

Since the period end the Group has disposed of the legacy property Southern Gateway in Speke, Liverpool. The gross price received was GBP7.25 million and is in line with the valuation of the property as at 30 June 2017. The proceeds from the sale were used to repay the Kleinwort Hambros (formerly Kleinwort Benson) loan facility, which had an outstanding balance of GBP4.4 million as at 30 June 2017.

This information is provided by RNS

The company news service from the London Stock Exchange

END

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