TIDMGHE
RNS Number : 4653L
Gresham House PLC
28 April 2015
28 April 2015
Gresham House plc ("Gresham House" or "the Company")
(AIM: GHE)
AUDITED RESULTS FOR YEAR ENDED 31 DECEMBER 2014
IN-LINE WITH NEW MANAGEMENT'S EXPECTATIONS, GRESHAM HOUSE IS NOW
WELL POSITIONED FOR GROWTH AS A SPECIALIST ASSET MANAGER
Highlights
-- Results cover a period of transition for Gresham House
following the successful GBP10.6m (net) working capital fund raise
in December 2014 and admission to AIM
-- Experienced new management team installed
-- Trading losses halve to GBP0.6m (GBP1.5m 2013), NAV at 31
December 2014: 298p (2013: 378.5p)
-- Gresham House now has a clear mandate to develop as a
specialist asset manager, focused on shareholder value creation
through growth in profitability and AUM both organically and
through acquisitions
-- Appraisal of acquisition deal flow is in progress
-- Gresham House will execute this new strategy building on 3
pillars:
-- Philosophy - A disciplined Private Equity process based upon
a value investment philosophy
-- People - Team of highly capable investment and business
managers, including an Advisory Group of respected industrialists,
investors and financiers
-- Platform - Product development, distribution and structured
discretionary co-investment
-- Graham Bird joins the Gresham House team as Head of Strategic
Investments in June 2015, having previously occupied the same role
successfully at SVG Investment Managers
Tony Dalwood, CEO of Gresham House, comments:
"Gresham House is a quoted entity with a clear strategy for
growth and alignment of management interests with shareholders. We
have started the journey to evolve the Company, both organically
and through acquisitions, into a specialist asset manager. There is
a clear market opportunity to develop specialist and illiquid asset
management strategies to address demand for long-term and superior
investment returns. Gresham House has put together a highly capable
team to succeed in this area and we look forward to reporting as we
implement the strategy."
For further enquiries, please contact:
Gresham House plc
Tony Dalwood, Chief Executive
Officer 020 3837 6272
Duncan Abbot, Finance
Director 020 3837 6271
Westhouse Securities
Ltd 020 7601 6100
Robert Finlay
Richard Johnson
Montfort Communications,
PR Adviser
Gay Collins 0203 770 7906
Rory King 07917 086 227
Website: www.greshamhouse.com
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.
Financial calendar
Report & Accounts posted to shareholders
and available on Company website 1 May 2015
Annual General Meeting 25 June 2015
Registered office
5 New Street Square London EC4A 3TW
CHAIRMAN'S STATEMENT
It is a great pleasure to address our existing shareholders and
new investors as the new Chairman of this long established
company.
A new and exciting journey for Gresham House lies ahead. We are
seeking to compete and grow in a sophisticated and diverse market,
setting ourselves the goal of establishing a presence as a
specialist asset manager focused on illiquid and differentiated
assets, carving out our own niche within the asset management
industry.
This set of results covers a period of transition for Gresham
House.
The new management team took responsibility at the beginning of
December 2014 and the results reflect the efforts of the outgoing
management team in stewarding the assets of the Company as detailed
negotiations with the new team were taking place. Gresham House was
first listed in 1950 and, after becoming an investment trust on the
full market of the London Stock Exchange in 1966, the Company
joined the Alternative Investment Market of the London Stock
Exchange on 1 December 2014.
This set of accounts refers to the history of the Company in
2014 but we have taken the opportunity in the various reports
herein to point to the future direction of the Company.
As existing shareholders know, it had been the intention of the
directors of the Company to liquidate the Company's assets and
return the proceeds to shareholders. Following approval at a
General Meeting of shareholders on 31 October 2014, it was agreed
that the Company should take a change of direction.
I am delighted to chair the new Board of executive and
non-executive directors, who bring a wealth of experience to the
Company.
We have assembled a team of people with experience and skills in
developing and growing asset management businesses. A cash
injection of GBP10.6m (net) as well as the anticipated proceeds
from the existing assets positions the business well. The journey
will aim to address a growing market opportunity for co-investment
from family offices and other professional clients and we set about
that journey with enthusiasm and confidence.
I would like to put on record the thanks from the new management
team, led by Anthony (Tony) Dalwood, your CEO, for the gracious and
cooperative way in which the handover from the previous management
was conducted. I would also like to thank the former directors led
by Chairman Tony Ebel, Brian Hallett, John Lorimer and Rosemary
Chopin-John. I am pleased that Tony, Brian and John will continue
to work with us as consultants in respect of the legacy assets and
that Richard Chadwick will continue as non-executive director as
the new team establish themselves. In keeping with the experienced
backgrounds of the new executive team, we welcome Peter Moon as
senior independent non-executive, who brings additional investment
and business expertise on to the board.
2014 was a year of change for Gresham House, 2015 will be a year
of even greater change. In this report, you will find a commentary
from Tony Dalwood which deals with our future hopes and
expectations for the business as well as a Strategic Report where
we comment on the main events and drivers that influenced the
outcome for the year ended 31 December 2014.
The team is seeing considerable deal flow and already making
progress. I look forward to reporting future developments to you in
due course.
Anthony Townsend
Chairman
27 April 2015
CHIEF EXECUTIVE'S REPORT
It is a privilege to be writing to you as your new Chief
Executive. Gresham House has a very long history and tradition;
now, with a new and experienced management team at the helm, the
Company will address and profit from a growing market opportunity
within the differentiated or illiquid areas of asset
management.
I am excited to be working with a Chairman of Anthony Townsend's
calibre. Anthony brings to this new role a wealth of experience, an
extensive network and a deep knowledge of our industry.
Your new team took responsibility in December, the final month
of the year to which these accounts apply, and as such the "new
journey" begins from 2015.
The December 2014 fundraising and move to the Alternative
Investment Market of the London Stock Exchange ("AIM") raised
GBP10.6m (net of expenses) from new shareholders including
established institutions, family offices and other investors. This
has provided the working capital that will enable us to grow the
business organically and through targeted acquisitions. The
decision to move to AIM was based on that market being more
appropriate for the size of the Company at this stage and because
it provides a suitable environment in which to implement our new
strategy and investment policy; we can also appeal to a wider
investor base that may not be able to invest in authorised
investment trusts. Our AIM listing gives us the flexibility and the
currency of publicly quoted equity that will be useful for future
growth.
The new management team, Investment Committee and Advisory Group
are now also significant shareholders, aligned with the long term
objective of creating shareholder value.
Gresham House has, since incorporation in 1857, been primarily
focussed on asset value growth. We are now commencing a journey to
evolve the Company into a specialist asset manager, based on a long
term investment philosophy and disciplined process with capable
people at the core. In summary, "traditional values, modern
methods".
The 2008/2009 global financial crisis led to investors and
limited partners reappraising investment strategies and vehicle
structures, with particular attention on "blind pool" and long lock
up vehicles. Investors are increasingly demanding more
transparency, discretion and improved service levels, alongside a
sharper focus on fees and alignment with their asset manager. This
has resulted in a substantial increase in the desire for
co-investment opportunities. The sourcing, appraising, execution
and management of such opportunities is not always something family
offices and institutions are able to do, despite wanting to.
Gresham House will position itself to address this growing market
for investors seeking superior longer term returns through illiquid
or differentiated strategies, whilst also facilitating
co-investment demand where appropriate.
We are establishing the building blocks to develop a sustainable
long term asset management business and to use the balance sheet
with a merchant banking style approach, based on private equity
disciplines, to determine capital allocation. We will target
shareholder value growth through increasing assets under management
and a focus on profitability.
The Company will have three core pillars to support its growth.
Firstly, philosophy: disciplined Private Equity process based upon
a value investment philosophy. Secondly, people: a team of highly
capable investment and business managers, including an Advisory
Group of respected industrialists, investors and financiers.
Thirdly, platform: product development, distribution and structured
discretionary co-investment.
The results for the year ended 31 December 2014 which are in
line with management expectations are discussed in full in the
Strategic Report. The future Gresham House will be focussed on
growing profitability, performance fees and assets under
management. However, the historic results show the Group trading
result for the year ended 31 December 2014 as a loss of GBP615,000
against a loss of GBP1,503,000 in 2013. Net assets as at 31
December 2014 were GBP27.8m (2013: GBP20.3m) whilst net asset value
per share, reflecting in part the increased number of shares in
issue following completion of the placing in December 2014, has
decreased in the year to 31 December 2014 to 298.0p from 378.5p per
share at 31 December 2013 (331.7p as at 30 June 2014).
Since the beginning of December, the new management team has
implemented its own 90 day plan to initiate the new strategy and
has established an office in Austin Friars in the City of
London.
An exercise has been commenced to review the Group structure.
Gresham House had developed a complex group structure consisting of
a number of special purpose vehicles through which it held its
property assets and associated finance. The idea is to simplify the
structure and utilise whatever tax Iosses are available.
The Capital Reduction that was approved by shareholders at the
General Meeting has been approved by the High Court with the
consequence that the Share Premium Account can be utilised as part
of the Company's general revenue reserves and be available for
share buy-backs and dividend distribution in the future.
We have submitted an application to the Financial Conduct
Authority for authorisation of our newly formed subsidiary, Gresham
House Asset Management Limited.
On the people front we have also been active. Gresham House has
a long investment history and a crucial component of the future
long term success will be its capital allocation decisions.
Accordingly, Michael Phillips and I are pleased to have established
an experienced Investment Committee which includes Rupert Robinson,
former CEO and CIO of Schroder Private Bank, Bruce Carnegie Brown,
currently Chairman of Aon (UK) and Moneysupermarket.com plc and
formerly of 3i QPE and Matthew Peacock, Managing Partner of Hanover
Investors.
We are in the process of establishing an Advisory Group to
support the long term development of the business, including
appraisal, deal flow and strategy. We look forward to welcoming a
limited number of very experienced and successful individuals into
the Gresham House "family" and will say more on this in due
course.
I am particularly pleased to announce that my former colleague
Graham Bird will be joining as Head of Strategic Investments in
June. Graham occupied the same role at SVG Investment Managers, and
was an important member of the team, alongside me, that launched
the SVG 'Strategic Public Equity' products which included Strategic
Equity Capital plc. We anticipate developing this area of Gresham
House through an investment vehicle as a significant step towards
long term shareholder value creation. We have commenced work
towards launching this investment platform which will apply
disciplined private equity techniques in the public market, and we
are developing the offering in discussion with potential
investors.
We have also been busy with the existing portfolio of assets, of
which the vast majority is represented by property (Southern
Gateway in Speke and a large plot of land at Newton-le-Willows) and
an investment in SpaceandPeople plc (AIM quoted). We are looking at
ways to optimise the returns we can expect from our assets and have
identified some areas where the new management team can add value
at the margin whilst we appraise how to maximise the value of these
investments.
We are pleased to report that in respect of the sale of the site
at Newton-le-Willows to Persimmon Homes, although it has taken
longer than the previous management anticipated, we are progressing
towards completion. Documentation of the s.106 planning agreements
is now taking place and this should then lead to the local
authority giving detailed planning consent. As is standard
procedure, there will then be a 6 week period during which the
decision is subject to judicial review (we are not aware of any
objections to the planning application) and directly thereafter we
expect Persimmon to complete. Completion will trigger the initial
cash receipt and the subsequent receipts agreed in the contract.
Once the sale of the residential element of the Newton-le-Willows
site has completed, we will look to market the retail element in
earnest.
Since the year-end, the Attila contract has been signed with
Cala Homes in Edinburgh, as a result of which initial cash proceeds
of GBP335k are expected imminently. We will then receive two
further instalments of capital and interest in April 2016 and
October 2016 of GBP651k and GBP605k. In addition, further positive
developments include, at Memorial Holdings the signing of a
significant contract with the London Borough of Tower Hamlets to
provide cemetery places over the coming years and for,
SpaceandPeople plc, an improvement in the share price.
The landlord's improvements that we are committed to at Southern
Gateway have now commenced. The Group has reached an agreement with
the Co-op to extend the Group's existing GBP3.278m loan facility on
unchanged terms. The Co-op has also agreed to advance a further
GBP0.372m that will be applied to finance capital expenditure to
enhance the property. The enlarged facility will run for two years
from drawdown.
The financial markets in the UK and US are touching new highs
and headline valuations do not appear to offer attractive value,
particularly when we may well be towards the peak of the corporate
return on the equity cycle. However, the aggregate headline metrics
do mask significant valuation opportunities. This is the case
currently whereby the unprecedented interest rate policy and search
for yield has meant various areas are less highly valued. When
taken together with the long-term structural growth in demand for
alternative and specialist asset management product and client
service, Gresham House is attractively positioned.
It has been a year of major change for Gresham House and I feel
excited about the future. Gresham House is a quoted entity now
consisting of approximately GBP28m of net assets, including c.
GBP11m of cash plus properties in realisation, with a clear
strategy for growth and alignment of management interests with
shareholders. We have already seen a significant number of
opportunities that could lead to acquisitions that we continue to
explore and the journey is well underway for the new management
team to address the market opportunity both organically and through
selective acquisitions.
Anthony Dalwood
Chief Executive Officer
27 April 2015
STRATEGIC REPORT
This report has been prepared by the directors in accordance
with the requirements of section 414 of the Companies Act 2006. The
purpose of this report is to inform shareholders about how the
Company fared during the year ended 31 December 2014.
On 31 October 2014, shareholders of the Company approved a
change of direction for the Company. In December 2014 Gresham House
ceased being an Authorised Investment Trust, delisted from the
Official List and was admitted to the Alternative Investment Market
of the London Stock Exchange and adopted a new investing
policy.
The majority of the board of directors resigned and a new team
of directors took office with effect from 1 December 2014. Further
details are set out in the Report of the Directors.
The Company raised GBP10.6 million net of expenses, pursuant to
the placing of 3,973,510 new Ordinary Shares at 286.9 pence per
share and the subscription for the 850,000 unquoted supporter
warrants by various members of the incoming management team.
The information covers the year under review and the new
policies the Company has adopted following the October 2014 General
Meeting.
Investment objective
The directors intend to develop the Company as a quoted platform
principally for the investment in, and the investment management
of, relatively differentiated, specialist or illiquid assets in
order to generate superior risk adjusted returns for shareholders
over the longer term. Returns are expected to be principally
through capital growth. In addition the directors intend to develop
an asset management business, either organically or through one or
more acquisitions.
Investing policy
Gresham House plc will seek to use the expertise and experience
of its new board of directors and members of the Investment
Committee to invest according to a robust private equity-style
"value" investment philosophy. The Company's investing policy is to
invest in assets that will typically have a number of the following
characteristics:
- an illiquidity discount;
- a minimum target rate of return of 15 per cent;
- cash generative (or expected to generate cash within a reasonable investment horizon);
- relatively differentiated, specialist or illiquid;
- attractive management track records;
- potential for superior risk adjusted returns;
- potential for liquidity or exit within an identified time frame;
- potential for the Company to have a competitive advantage; and/or
- potential for the Company to add incremental value to an investment.
Investments may be either passive or active and the Company may
make investments directly or indirectly (including through any
asset management business, special purpose vehicle or underlying
fund) and for cash or share consideration. In particular the
Company may:
- invest in and take controlling or non-controlling stakes in
publically and/or privately held companies (primarily in equity and
related instruments) and also in convertible or non-convertible
debt instruments;
- set up and potentially co-invest in funds including
cornerstone investments in specialist funds on preferred terms
which may include lower management fees; and
- enter into derivative contracts (including but not limited to
currency hedging, or other portfolio risk management
techniques).
A majority of the direct investments made by the Company will be
in securities of small and medium sized companies. Initial
potential target areas may include small public (less than GBP250
million market capitalisation) and private companies.
The Company will not invest more than 35 per cent of the Group's
gross assets, at the time when the investment is made, in
securities issued by any single company other than in a single
collective investment undertaking or fund structure. Where such an
investment is made in a single collective investment undertaking,
due regard will be paid to the concentration of risk that such an
investment may entail. The investment will only be made after the
Investment Committee is convinced that the risk/return relationship
is acceptable.
The board of directors will consider investment in a number of
business areas, particularly those sectors in which the board of
directors collectively believes that it and/or members of the
Investment Committee has the necessary expertise and experience to
be able to manage the opportunity.
Investments may be made in any country globally.
The Company has no borrowing limits.
A typical direct investment (other than in connection with the
development of an asset management business or an investment in a
fund) will be expected to have a holding period of between three to
five years, but may be shorter or longer, as appropriate, to
develop realisable intrinsic value in order to maximise shareholder
value.
The directors' initial intention is to re-invest profits into
the Company rather than paying dividends and shareholder returns
are likely to be through capital appreciation. However the
directors may pay dividends in accordance with any alternative
dividend policy that they may adopt from time to time in order to
maximise shareholder value over the longer term.
Any material change in the Investing policy will require prior
shareholder approval in accordance with the AIM Rules for
Companies.
Whilst the Company now operates as an investing company, the
directors intend to develop an asset management business, either
organically or through one or more acquisitions. The development of
such an asset management business may lead to the Company ceasing
to be an investing company (as defined in the AIM Rules for
Companies) and instead become a trading company (i.e. it would
become a company which operates an asset management business with
some direct and indirect investments). The key expected
consequences of such a development would be as follows:
- NAV per share would cease to be an appropriate performance indicator;
- the Company may acquire businesses where the acquisition
involves recognising purchased goodwill and other intangible
assets, which may have to be amortised. Such amortisation would
have a negative impact on the Company's balance sheet, despite such
acquisitions being made in anticipation of contributing in time to
the Company's earnings;
- the Company's Standard Industrial Classification may change.
This would, in turn, alter the way in which it is classified for
various statistical and analytical purposes and may limit the
ability of some investors to hold the Company's shares where the
investors' investment mandates are specific as to the type of share
they are able to hold; and
- the new investing policy would cease to be applicable.
The Group continues to hold investments in commercial properties
and will invest further but only where this enhances or protects
the value of existing investments. As any of these assets are
realised the proceeds of realisation will be redeployed in
accordance with the investing policy and/or the development of an
asset management business.
Performance during the year
Up until 1 December 2014 the previous board continued to focus
on maximising shareholder returns by an orderly realisation of the
Group's assets, including the sale of the majority of the site at
Newton-le-Willows to Persimmon Homes Limited for GBP7.43m
conditional upon satisfactory detailed planning permission being
obtained (which is still ongoing) and the sale of the six acre
development site in Knowsley for GBP416,000 in May 2014. In
addition the value of the property known as Southern Gateway in
Speke, Liverpool was significantly enhanced by the letting of
Wellington House for a ten year period in October 2014.
Since that date the new Board has been seeking suitable
investment opportunities in accordance with its investment
objective.
The Group trading result for the year ended 31 December 2014 was
a loss of GBP615,000 against a loss of GBP1,503,000 in 2013.
The comparison between both years is as follows:
2014 2013
GBP'000 GBP'000
Rental income 858 999
Dividend and investment
income 248 268
Other income 66 76
Property outgoings (516) (1,243)
Administration overheads (1,062) (846)
Finance costs (209) (757)
Net trading loss (615) (1,503)
======== ========
The significant variances between the two years are as
follows:-
The decrease in rental income was as a result of (i) the sale of
Northern Gateway in late 2013 and (ii) reduced income from the site
at Newton-le-Willows as tenants left the site making it available
for development, offset by an increase in rental income of
GBP80,000 at Southern Gateway.
The significant reduction in property outgoings of GBP727,000
over the year ended 31 December 2013 was principally due to (i) a
reduction of costs of GBP423,000 on the development site at
Knowsley, (ii) a reduction of GBP158,000 in legal and professional
fees incurred and (iii) a reduction in other property related costs
amounting to GBP100,000.
Administration costs have remained overall fairly constant with
the previous year with the exception of the inclusion in 2014 of
GBP255,000 in respect of share based payments following the issue
of supporter warrants on 1 December 2014.
There has been a substantial decrease in finance costs as a
result of bank borrowings being significantly reduced during the
year ended 31 December 2013.
Net asset value
The net asset value per share ("NAV") has decreased in the year
to 31 December 2014 to 298.0p from 378.5p per share at 31 December
2013 (331.7p as at 30 June 2014).
This decrease in NAV is due to the net trading loss of
GBP1,293,000, the revaluation deficit on investment property of
GBP523,000 and the loss on investments held at fair value of
GBP2,188,000. The NAV was also diluted by the issue of 3,973,510
new ordinary shares as part of the fund raising which completed in
December 2014.
Property portfolio
The property portfolio consists of the property in Speke,
Liverpool, known as Southern Gateway, and the site at
Newton-le-Willows where, as previously reported, contracts were
exchanged with Persimmon Homes Limited on 29 April 2014 for the
sale of the majority of the site for GBP7.43m plus overage
conditional upon Persimmon obtaining satisfactory detailed planning
permission. In order to take into account the extended payment
terms over a period of 42 months from completion this asset has
been valued in the accounts at a discounted amount of GBP6.8m.
At Speke we continue with our strategy to maximise income over
the short term with a view to selling thereafter. As reported above
the value of the site has increased significantly during the year
from GBP5.35m to GBP7.25m, primarily as a result of increased
lettings.
Year-end valuations are overall virtually the same at GBP16.675m
as at 31 December 2014 against GBP16.7m as at 31 December 2013 and
GBP16.35m as at 30 June 2014 as confirmed on 28 November 2014 at
the time of the placing and admission to AIM. However there has
been significant movement between the two sites with the value of
Southern Gateway increasing by GBP1.9m and the value of
Newton-le-Willows decreasing by a similar sum primarily as a result
of the poor backdrop on food retail over the Christmas period and
into this current year impacting the valuation of the retail
element of the site.
Securities portfolio
At 31 December 2014 the value of the investment portfolio
decreased by GBP2,204,000 as a result of net disposals of GBP19,000
and net realised and unrealised losses of GBP2,185,000 reflecting
the significant fall in the value of our investment in
SpaceandPeople plc from GBP2,805,000 as at 31 December 2013 to
GBP928,000 as at 31 December 2014. Since the year end however the
value of this investment has increased and, as at 24 April 2015,
was valued at GBP1,237,500.The value of the securities portfolio as
at 31 December 2014 amounted to GBP2,955,000 with the principal
constituents continuing to be our investments in SpaceandPeople plc
(see above), Attila (BR) Ltd (valued at GBP945,000 at year end
compared with GBP935,000 as at 31 December 2013), Kemnal
Investments Ltd (valued at GBP466,000 for both 31 December 2014 and
2013) and Memorial Holdings Limited (the value of which has
decreased by GBP169,000 to GBP441,000 as at year end as a result of
trading losses incurred during the year).
Borrowings and cash at bank
Loans at 31 December 2014 amounted to GBP3,278,000 against
GBP3,746,000 at 31 December 2013. The loan is from the Co-operative
Bank and is secured against the property portfolio. This represents
a loan to value of 20% against the overall property investments.
The Co-op loan was informally extended by the bank until 31 March
2015 .The Group has reached an agreement with the Co-op to extend
the group's existing GBP3.278m loan facility on unchanged terms.
The Co-op has also agreed to advance a further GBP0.372m that will
be applied to finance capital expenditure to enhance the property
at Southern Gateway, Speke, Liverpool. The enlarged facility will
run for two years from drawdown.
Cash in hand at 31 December 2014 has increased from GBP1.625m at
31 December 2013 to GBP11.209m at 31 December 2014 following the
placing of new ordinary shares and issue of supporter warrants
during the year.
Key performance indicators
The Board considers the main key performance indicator
applicable to the Group to be net asset value per share ("NAV"). As
at 31 December 2014, the NAV was 298.0p (2013: 378.5p). The main
non-financial KPI is considered to be the amount of vacant space
within the property portfolio. As at 31 December 2014 this had
reduced significantly to 75,980 sq. ft. representing 20.1% of the
total available (2013: 157,657 sq. ft. and 34.9%), the percentage
decrease being principally as a result of additional lettings at
Southern Gateway.
The above KPIs will cease to be relevant in future years as the
Company transitions from an investing company (with a heavy
property bias) to an asset management operating company. In future,
it is likely that the KPIs will be guided by Earnings per Share,
other profitability metrics and Assets under Management. In the
year under review, however, there are no meaningful comparators to
discuss.
Principal risks, risk management and regulatory environment
The Board believes that the principal risks faced by the Group
in the year-ended 31 December 2014 were:
Economic risk
Events such as unfavourable economic conditions, industry
conditions, competition, changes in law, political events and
trends could affect trading conditions and consequently (i) the
Company's investment portfolio, particularly the value of smaller
company investments, and (ii) the value of the property
investments. In addition, negative economic conditions might also
have an adverse effect on the Group's rental revenues (either due
to tenant defaults, unlet properties or decreasing rental values)
and diminish its ability to dispose of properties (either at
acceptable values or at all) and its available cash.
Regulatory
The Company is required to comply with the Companies Act 2006,
the AIM Rules for Companies and International Financial Reporting
Standards. A breach of any of these might lead to a suspension of
the Company's Stock Exchange listing, financial penalties or a
qualified audit report. The property market is significantly
dependent upon changes in relevant areas of law or their
application and interpretation by the competent authorities,
including but not limited to, planning, lease and tax laws and
practices which cannot be reasonably foreseen. A significant part
of the site at Newton-le-Willows owned by the Group has been sold
to Persimmon conditional upon satisfactory planning permission
being granted. If such is not obtained then the transaction will
not proceed.
After the year-end, application has been made to the Financial
Conduct Authority ("FCA") to seek regulatory authorisation for the
Group's new subsidiary, Gresham House Asset Management Limited
("GHAM"). Once regulated, GHAM will have to comply with the rules
and principles of FCA. A breach of any of these regulations might
limit the Company's ability to develop as an asset management
business as well as expose it to fines and other penalties.
Key person risk
The future development of the Company will be highly reliant on
the ability of a small number of people to deliver the new
investment policy.
Financial and operating risk
Inadequate controls may lead to misappropriation of assets,
inappropriate accounting policies could lead to misreporting or
breaches of regulations.
Market price risk
There will always be uncertainty regarding future prices of
investments held within the Company's portfolio, particularly where
the investment is unquoted.
Market liquidity risk
Shareholders may find it difficult to sell their shares in the
Company at a price which is near to the net asset value.
Interest rate risk
The Group's investments and net revenue may be affected by
interest rate movements.
Credit risk
Any realisation of property assets is likely to be affected by
the payment terms currently being adopted by residential developers
which could involve payments being made in staged payments. In
particular, the sale proceeds from Persimmon are payable in four
instalments over a period of 42 months from completion which
exposes the Group to a credit risk with respect to the future
financial standing of Persimmon. In addition the repayment of loan
stock by Attila (BR) Ltd is anticipated to be over a period of 18
months from the date of the sale of its site in Edinburgh to Cala
Management Limited which again exposes the Group to a similar
risk.
Property - tenant associated risk
Any non-renewal of existing leases or early termination by
existing tenants could result in a significant decrease in the
Group's net rental income and the Group may not be able to secure a
replacement tenant on favourable terms, or at all, for the vacant
space. If the Group's net rental declines it would have less cash
available to service and repay its debts and the value of its
properties could decline further. In addition the Group is exposed
to the credit risk of its tenants and the creditworthiness of its
tenants can decline over the short term. This may result in less
rental income, delayed payments and/or costs or delay in taking
enforcement or repossession action.
Property - illiquidity risk.
Properties of the type included in the Group's portfolio can be
illiquid assets for reasons such as properties being tailored to
tenants' specific requirements and reduced demand for property on
the market. This may also affect the Group's ability to vary its
portfolio, dispose of or liquidate part of its portfolio on a
timely basis or at a satisfactory price, or to acquire other
properties, in response to changes in general economic conditions,
property market conditions or other conditions.
Securities - asset and liquidity risk
The Group invests predominately in smaller company securities.
Individual smaller companies can be expected, inter alia, in
comparison to larger companies, to have less mature businesses,
less depth of management and a higher risk profile. As a result
they may find it difficult to secure financing and/or overcome
periods of economic slowdown. As they are less likely to have the
financial resources of larger companies they may also find it more
difficult to retain key skilled individuals. Any of these events
may have a material adverse effect on the performance of that
smaller company and may make it difficult or impossible for such a
company to repay its debts or lead it to reduce dividends which
could reduce the Company's cash resources and ability to pay
dividends. A significant portion of the Groups securities portfolio
consists of unquoted investments for which there might not be any
market price - or even any market.. The Group may therefore not be
able to dispose of such investments for an acceptable price or a
specific time.
In addition a portion of the Group's securities portfolio is
admitted to trading on AIM and the ISDX Growth Market. The
typically smaller market capitalisation of companies admitted on
these markets can make the market in their securities very illiquid
and/or the Group may accumulate investment positions that represent
a significant multiple of the normal trading volumes of an
investment which may make it difficult for the Group to sell its
investments.
The Board seeks to mitigate these and other perceived risks by
setting policies and by undertaking a risk assessment at least
annually. Further details can be found in note 21.
For and on behalf of the Board
Anthony Dalwood
Chief Executive Officer
27 April 2015
FINANCIAL TABLES
GROUP STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2014
2014 2013
Notes Restated
GBP'000 GBP'000
Income: 2
Rental income 858 999
Dividend and interest income 248 268
Other operating income 66 76
--------- ---------
Total Income 1,172 1,343
Operating costs: 3
Property outgoings (516) (1,243)
Administrative overheads (1,062) (846)
Finance costs 4 (209) (757)
--------- ---------
Net trading loss (615) (1,503)
Exceptional items * (678) -
--------- ---------
Net loss after exceptional items (1,293) (1,503)
Gains & losses on investments:
Revaluation deficit on investment property 9 (523) (1,612)
Fair value movement of investments 8 (2,188) (468)
Profit on disposal of investment properties 9 - 173
Profit/(loss) on disposal of investments 8 3 (36)
Group operating loss before taxation (4,001) (3,446)
Taxation 5 - -
---------
Loss and total comprehensive income (4,001) (3,446)
========= =========
Attributable to:
Equity holders of the parent (4,753) (3,497)
Non-controlling interest 752 51
--------- ---------
(4,001) (3,446)
========= =========
Basic and diluted loss per ordinary share (pence) 6 (83.3) (65.1)
========= =========
* Exceptional items relate to professional fees incurred in
respect of the proposals which took effect from 1 December 2014
STATEMENTS OF CHANGES IN EQUITY
Group
YEAR ENDED 31 DECEMBER 2014
Equity
Ordinary Share attributable
share Share warrant Retained to equity Non-controlling Total
Notes capital premium reserve reserves share-holders interest equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Balance as at 31
December
2013 1,342 2,302 - 16,680 20,324 - 20,324
Loss for the period
being
total comprehensive
income
for the year - - - (4,753) (4,753) 752 (4,001)
Transfer of
non-controlling
interest
deficit - - - 752 752 (752) -
Issue of shares 994 10,206 - - 11,200 - 11,200
Share based
payments - - - 255 255 - 255
Share warrants
issued - - 64 - 64 - 64
Balance at 31
December
2014 2,336 12,508 64 12,934 27,842 - 27,842
========= ========= ======== ========= ============== ================ ==========
YEAR ENDED 31 DECEMBER 2013 (Restated)
Equity
Ordinary attributable
share Share Retained to equity Non-controlling Total
Notes capital premium reserves share-holders interest equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Balance as at 31
December
2012 1,342 2,302 20,260 23,904 - 23,904
Loss for the period being total
comprehensive income for the
year - - (3,497) (3,497) 51 (3,446)
Transfer of
non-controlling
interest
deficit - - 51 51 (51) -
Ordinary
dividends
paid 7 - - (134) (134) - (134)
Balance at 31
December
2013 1,342 2,302 16,680 20,324 - 20,324
========= ======== ========= ============== ================ ==========
Company
YEAR ENDED 31 DECEMBER 2014
Ordinary Share
share Share warrant Retained Total
capital premium reserve reserves equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Balance as at 31 December 2013 1,342 2,302 - 10,377 14,021
Loss for the period being total
comprehensive income for the year - - - (3,686) (3,686)
Issue of shares 994 10,206 - - 11,200
Share based payments - - - 255 255
Share warrants issued - - 64 - 64
Balance at 31 December 2014 2,336 12,508 64 6,946 21,854
========= ==================== ========== ========== ========
YEAR ENDED 31 DECEMBER 2013 (Restated)
Ordinary
share Share Retained Total
capital premium reserves equity
GBP'000 GBP'000 GBP'000 GBP'000
Balance as at 31 December 2012 1,342 2,302 12,111 15,755
Loss for the period being total comprehensive
income for the year - - (1,600) (1,600)
Ordinary dividends paid 7 - - (134) (134)
Balance at 31 December 2013 1,342 2,302 10,377 14,021
========= ========= ========== ==========
STATEMENTS OF FINANCIAL POSITION
AS AT 31 DECEMBER 2014
Group Company
Notes 2014 2013 2014 2013
Restated Restated
Assets GBP'000 GBP'000 GBP'000 GBP'000
Non-current assets
Investments - securities 8 2,955 5,159 2,955 5,159
Property investments 9 9,865 9,270 - -
Other investments 10 - - 322 322
12,820 14,429 3,277 5,481
-------- --------- -------- ---------
Current assets
Trade and other receivables 84 358 - -
Accrued income and prepaid expenses 913 639 519 370
Other current assets - 415 7,245 7,754
Cash and cash equivalents 11,209 1,625 10,883 631
Non-current assets held for sale
Property investments 9 6,810 7,430 - -
-------- --------- -------- ---------
Total current assets and non-current
assets held for sale 19,016 10,467 18,647 8,755
-------- --------- -------- ---------
Total assets 31,836 24,896 21,924 14,236
-------- --------- -------- ---------
Current liabilities
Trade and other payables 716 826 70 67
Short term borrowings 3,278 3,746 - 148
3,994 4,572 70 215
Total assets less current liabilities 27,842 20,324 21,854 14,021
Non-current liabilities
Deferred taxation - - - -
Net assets 27,842 20,324 21,854 14,021
======== ========= ======== =========
Capital and reserves
Ordinary share capital 2,336 1,342 2,336 1,342
Share premium 12,508 2,302 12,508 2,302
Share warrant reserve 64 - 64 -
Retained reserves 12,934 16,680 6,946 10,377
Equity attributable to equity
shareholders 27,842 20,324 21,854 14,021
Non-controlling interest - - - -
Total equity 27,842 20,324 21,854 14,021
======== ========= ======== =========
Basic and diluted net asset value
per ordinary share (pence) 11 298.0 378.5 233.9 261.1
======== ========= ======== =========
GROUP STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2014
2014 2014 2013 2013
GBP'000 GBP'000 GBP'000 GBP'000
Cash flow from operating activities
Dividend income received 92 88
Interest received 7 108
Rental income received 762 1,037
Other cash payments (1,929) (2,118)
-------- ---------
Net cash utilised in operations (1,068) (885)
Interest paid on property loans (146) (600)
-------- ---------
(146) (600)
-------- ---------
Net cash flow from operating
activities (1,214) (1,485)
Cash flow from investing activities
Purchase of investments (10) (89)
Sale of investments 29 1,480
Sale of investment properties 148 11,466
Expenditure on investment properties (515) (1,227)
Purchase of developments in
hand (67) (22)
Sale of development in hand 417 -
-------- ---------
2 11,608
Cash flow from financing activities
Repayment of loans (468) (16,937)
Receipt of loans - 225
Equity dividends paid - (134)
Share issue proceeds 11,400 -
Share issue costs (200) -
-------- ---------
Supporter warrants issued 64 -
-------- ---------
10,796 (16,846)
-------- ---------
Increase/(decrease) in cash and cash equivalents 9,584 (6,723)
Cash and cash equivalents at start of year 1,625 8,348
Cash and cash equivalents at end of year 11,209 1,625
======== =========
COMPANY STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2014
2014 2014 2013 2013
GBP'000 GBP'000 GBP'000 GBP'000
Cash flow from operating
activities
Investment income received 92 88
Interest received 7 106
Other cash payments (807) (85)
-------- --------
Net cash flow from operating
activities (708) 109
Cash flow from investing
activities
Purchase of investments (10) (89)
Sale of investments 29 1,480
Advanced to Group undertakings (1,857) (8,500)
Repaid by Group undertakings 1,184 -
Purchase of development
in hand (67) (22)
Sale of development in
hand 417 -
-------- --------
(304) (7,131)
Cash flow from financing
activities
Receipt of loans - 170
Repayment of loans - (494)
Equity dividends paid - (134)
Share issue proceeds 11,400 -
Share issue costs (200) -
-------- ------
Supporter warrants issued 64 -
-------- ------
11,264 (458)
------- --------
Increase/(decrease) in cash and cash
equivalents 10,252 (7,480)
Cash and cash equivalents
at start of year 631 8,111
Cash and cash equivalents
at end of year 10,883 631
======= ========
Notes on the Consolidated Financial Statements
1. BASIS OF PREPARATION
The financial statements set out in the announcement do not
constitute the Company's statutory accounts for the year ended 31
December 2014 or the year ended 31 December 2013. The financial
information for the year ended 31 December 2014 and the year ended
31 December 2013 are extracted from the statutory accounts of
Gresham House plc, with the balance sheet for 2013 having been
restated as referred to below. The auditor, BDO LLP has reported on
the accounts for both periods; their report was unqualified and did
not contain a statement under section 498(2) or 498(3) of the
Companies Act 2006 for the periods ended 31 December 2014 or 2013.
The auditor has raised an Emphasis of Matter in relation to going
concern in 2013 only as follows:
'Emphasis of matter - financial statements prepared other than
on a going concern basis
In forming our opinion on the financial statements, which is not
modified, we have considered the adequacy of the disclosures made
in the Basis of Preparation accounting policy concerning the basis
on which the financial statements were prepared. As the objective
of the directors is to achieve an orderly realisation of the
Group's assets over a relatively short period with a view to
returning capital to shareholders thereafter, the financial
statements have been prepared on a basis other than that of going
concern.'
There is no emphasis of matter in the auditor's report for the
year ended 31 December 2014 and the financial statements have been
prepared on a going concern basis.
The full statutory accounts will be available on the Company's
website at www.greshamhouse.com and will be posted to shareholders
shortly.
The financial statements of the Group and the Company have been
prepared in accordance with International Financial Reporting
Standards ("IFRS") as adopted by the European Union and those parts
of the Companies Act 2006 applicable to companies reporting under
IFRS.
The accounting policies used by the Group in these condensed
financial statements are consistent with those applied in its
financial statements for the year to 31 December 2013, as amended
to reflect the adoption of new standards, amendments and
interpretations which became effective in the year as shown
below.
The following standards and interpretations have been adopted in
2014 as they are mandatory for the year ended 31 December 2014:
(i) IFRS 10 Consolidated Financial Statements
(ii) IFRS 11 Joint Arrangements
(iii) IFRS 12 Disclosure of Interests in Other Entities
(iv) IFRS 13 Fair Value Measurement
(v) IAS27 Separate Financial Statements
(vi) IAS28 Investment in Associates and Joint Ventures
Other standards and interpretations have been issued which will
be effective for future reporting periods but have not been adopted
in these financial statements.
Restatement of prior year figures
As a result of the proposals which came into effect on 1
December 2014 including the delisting of the Company from the
Official List and admission to AIM, the adoption of a new Investing
Policy and the subsequent loss of investment trust status, the
comparative figures for 2013 have been restated as it is no longer
appropriate to reflect the presentational guidance set out in the
Statement of Recommended Practice for Investment Trusts issued by
the Association of Investment Companies. This restatement relates
purely to the presentation of the primary statements and has not
affected the net asset position or results of the Group as
previously reported.
2. INCOME
2014 2013
Income from investments GBP'000 GBP'000
Rental income 858 999
Dividend income - Listed UK 92 88
Interest receivable: Bank and brokers 7 46
Other 149 134
1,106 1,267
-------- --------
Other operating income
Dealing profits and losses 1 1
Management fees receivable 65 75
66 76
-------- --------
Total income 1,172 1,343
======== ========
Total income comprises:
Rental income 858 999
Dividends 92 88
Interest 156 180
Other operating income 66 76
-------- --------
1,172 1,343
======== ========
3. OPERATING COSTS
Operating costs comprise the following: 2014 2013
GBP'000 GBP'000
a) Property outgoings:
Directors' emoluments (excluding benefits in kind) 121 138
Wages and salaries 64 53
Other operating costs (net of service charges recoverable
from tenants
of GBP486,000 (2013: GBP687,000) 331 1,052
516 1,243
-------- --------
b) Administrative overheads:
Directors' emoluments (excluding benefits in kind) 352 399
Auditor's remuneration * 131 75
Wages and salaries 44 85
Redundancy costs 19 3
Social security costs 22 33
Operating lease rentals - land and buildings 24 39
Share based payments 255 -
Other operating costs 220 212
1,062 846
-------- --------
Staff costs (including directors' emoluments) were:
Wages, salaries and fees 555 667
Redundancy costs 33 3
Social security costs 29 33
Pension costs 5 8
---- ----
622 711
==== ====
* A more detailed analysis of auditor's remuneration 2014 2013
is as follows:
GBP'000 GBP'000
Audit fees 23 23
Auditor's other fees - category 1 (the auditing of
accounts of subsidiaries of the Company pursuant to
legislation) 39 41
Auditor's other fees - category 3 (other services relating
to taxation) 6 8
Auditor's other fees - category 10 (other services) 63 3
-------- --------
131 75
======== ========
The directors consider the auditor was best placed to provide
these other services. The Audit Committee reviews the nature and
extent of non-audit services to ensure that independence is
maintained.
The average number of persons employed by the Group, including
the executive directors, was 5 (2013: 6).
The Group has the following commitments under operating 2014 2013
leases:
GBP'000 GBP'000
Within 1 year - 16
1 - 2 years - -
- 16
========== ========
4. FINANCE COSTS
2014 2013
GBP'000 GBP'000
Interest payable on loans and overdrafts 146 504
Finance fees 63 253
209 757
======== ========
5. TAXATION
2014 2013
GBP'000 GBP'000
(a) Analysis of charge in period:
UK Corporation tax at 21.5% (2013: 23.25%) - -
Total tax charge - -
======== ========
(b) Factors affecting tax charge for period:
Loss on ordinary activities before tax multiplied
by standard rate of corporation tax in the UK of
21.5% (2013: 23.25%) (860) (801)
Tax effect of:
Investment losses not taxable 470 117
Dividend income not taxable (20) (21)
Expenses disallowed 1 14
Losses utilised in current year - (266)
Movement in losses carried forward 409 957
Actual tax charge - -
======== ========
The Group has unutilised tax losses of approximately GBP12.2
million (2013: GBP12.2 million) available against future
corporation tax liabilities. The potential deferred taxation asset
of GBP2.8 million (2013: GBP2.8 million) in respect of these losses
has not been recognised in these financial statements as it is not
considered sufficiently probable that the Group will generate
sufficient taxable profits from the same trade to recover these
amounts in full.
6. LOSS PER SHARE
Basic and diluted loss per share
The basic and diluted loss per share figure is based on the net
loss for the year attributable to the equity shareholders of
GBP4,753,000 (2013: GBP3,497,000) and on 5,707,356 (2013:
5,369,880) ordinary shares, being the weighted average number of
ordinary shares in issue during the period. No shares were deemed
to have been issued at nil consideration as a result of the
shareholder and supporter warrants granted.
The shareholder and supporter warrants are not dilutive as the
exercise price of the warrants is 323.27p which is higher than the
average market price of ordinary shares during the year.
7. DIVIDENDS
2014 2013
GBP'000 GBP'000
Amounts recognised as distributions to equity holders
in the period:
Final dividend for the year ended 31 December 2013
of nil (2012: 2.5p) per share - 134
- 134
========== ========
Set out below is the total dividend payable in respect of the financial
year.
Proposed final dividend for the year ended 31 December
2014 of nil (2013: nil) per share - -
========== ========
8. INVESTMENTS - SECURITIES
An analysis of total investments is as follows:
Group Company
2014 2013 2014 2013
GBP'000 GBP'000 GBP'000 GBP'000
Listed securities - on the London
Stock Exchange 106 93 106 93
Securities dealt in under
AIM 928 2,805 928 2,805
Securities dealt in under
ISDX 69 76 69 76
Unlisted securities 1,852 2,185 1,852 2,185
-------- ---------
Carrying value at 31 December 2,955 5,159 2,955 5,159
======== ========= ======== ========
Investments valued at fair value
through profit or loss 1,544 3,743 1,544 3,743
Loans and receivables valued
at amortised cost 1,411 1,416 1,411 1,416
-------- --------- -------- --------
2,955 5,159 2,955 5,159
======== ========= ======== ========
The movement in the investment portfolio can be analysed
as follows:
Group Company
2014 2013 2014 2013
GBP'000 GBP'000 GBP'000 GBP'000
Opening cost 6,316 7,743 6,558 7,985
Opening net unrealised
losses (1,157) (689) (1,399) (931)
-------- --------- -------- --------
Opening value 5,159 7,054 5,159 7,054
Movements in the year:
Purchases at cost 10 89 10 89
Sales - proceeds (29) (1,480) (29) (1,480)
Sales - realised gains
& (losses) on sales 3 (36) 3 (36)
Net unrealised losses (2,188) (468) (2,188) (468)
Closing value 2,955 5,159 2,955 5,159
======== ========= ======== ========
Closing cost 6,300 6,316 6,542 6,558
Closing net unrealised
losses (3,345) (1,157)9 (3,587) (1,399)
-------- --------- -------- --------
Closing value 2,955 5,159 2,955 5,159
======== ========= ======== ========
The cost of the investments held by the Company is different to
that of the Group as a result of unrealised gains on intra-group
transfers being eliminated on consolidation.
Gains and losses on investments held Group Company
at fair value
2014 2013 2014 2013
GBP'000 GBP'000 GBP'000 GBP'000
Realised gains & (losses) on sales 3 (36) 3 (36)
Net unrealised losses (2,188) (468) (2,188) (468)
Net losses on investments (2,185) (504) (2,185) (504)
======== ======== ======== ========
An analysis of investments is as follows: Group Company
2014 2013 2014 2013
GBP'000 GBP'000 GBP'000 GBP'000
Equity investments 1,438 3,639 1,438 3,639
Fixed income securities 106 104 106 104
Unquoted loan stock 1,411 1,416 1,411 1,416
-------- --------
2,955 5,159 2,955 5,159
======== ======== ======== ========
9. PROPERTY INVESTMENTS
Property investments have been classified as follows: Group
2014 2013
GBP'000 GBP'000
Non-current assets 9,865 9,270
Non-current assets held for sale 6,810 7,430
-------- --------
16,675 16,700
======== ========
A further analysis of total property investments is as
follows:
Group
2014 2013
Net book value and valuation GBP'000 GBP'000
At 1 January 16,700 28,896
Additions during the year - expenditure on existing
properties 498 942
Disposals during the year - (11,699)
Movement in fair value during the year (523) (1,439)
At 31 December 16,675 16,700
======== =========
Property investments are shown at fair value based on current
use and any surplus or deficit arising on valuation of property is
reflected in the Statement of Comprehensive Income.
All property investments were valued by Jones Lang LaSalle
Limited, Chartered Surveyors, as at 31 December 2014 at a combined
total of GBP16,675,000. These external valuations were carried out
on the basis of Market Value in accordance with the latest edition
of the Valuation Standards published by the Royal Institution of
Chartered Surveyors.
Operating leases
The future minimum lease payments receivable under
non-cancellable operating leases are as follows:
2014 2013
GBP'000 GBP'000
Not later than one year 561 654
Between 2 and 5 years 1,349 583
Over 5 years 872 34
2,782 1,271
======== ========
Rental income recognised in the Statement of Comprehensive
Income amounted to GBP858,000 (2013: GBP999,000).
The commercial leases vary with their location within the United
Kingdom, however wherever the market allows they are being
standardised where possible across the property portfolio. The
commercial units are leased on terms where the tenant has the
responsibility for repairs and running costs for each individual
unit (other than roof repairs in certain circumstances) with a
service charge payable to cover estate services provided by the
landlord.
The cost of the above properties as at 31 December 2014 is as
follows:
Group
GBP'000
Brought forward 17,3153
Additions during the year 498
Disposals during the year -
17,813
========
Capital commitments
Capital expenditure contracted for but not provided for in the
financial statements for the Group was GBP248,000 (2013:
GBP338,000) and for the Company was GBPnil (2013: GBPnil).
Movement in fair value of property Group
investments
2014 2013
GBP'000 GBP'000
Realised losses on disposal of property - 173
Decrease in fair value (523) (1,612)0
-------- ---------
Movement in fair value of property
investments (523) (1,439)
======== =========
10. OTHER INVESTMENTS
Company
2014 2013
Subsidiary undertakings GBP'000 GBP'000
Shares - at cost 322 322
Less provision - -
322 322
======== ========
The principal subsidiary undertakings of Gresham House plc, all
of which principally trade and are registered in England, are as
follows:
Held by
other
Held by Group
Parent companies
% %
Deacon Commercial Development and Finance Limited
- property investment 75 25
New Capital Developments Limited - property investment - 75
Newton Estate Limited - property investment - 100
Security Change Limited - finance and share dealing 100 -
11. NET ASSET VALUE PER SHARE
Basic and diluted
Basic and diluted net asset value per ordinary share is based on
equity attributable to equity shareholders at the year-end and on
9,343,390 (2013: 5,369,880) ordinary shares being the number of
ordinary shares in issue at the year-end. No shares were deemed to
have been issued at nil consideration as a result of shareholder
and supporter warrants granted.
The shareholder and supporter warrants are not dilutive as the
exercise price of the warrants is 323.27p which is higher than the
average market price of ordinary shares during the year.
GBP'000
The movement during the year of the assets attributable to
ordinary shares were as follows:
Total net assets attributable at 1 January 2014 20,324
Total recognised losses for the year (4,001)
Issue of shares 11,200
Share warrants issued 64
Share based payments 255
Total net assets attributable at 31 December 2014 27,842
========
12. POST BALANCE SHEET EVENT
On 4 February 2015 the High Court approved the cancellation of
the Company's share premium account (the "Cancellation"). As a
consequence of the Cancellation GBP12,508,206.76 standing to the
credit of the Company's share premium account was cancelled. This
will facilitate any share buyback or payment of dividends that the
board of the Company may in the future approve by creating a
reserve of an equivalent amount that, subject to certain creditor
protection undertakings, will form part of a distributable
reserve.
The Cancellation has no effect on the overall net asset position
of the Company.
The Cancellation proposals were contained in the Company's
shareholder circular and AIM Admission Document, each dated 8
October 2014, and approved by shareholders at the Company's General
Meeting on 31 October 2014
13. SEGMENTAL REPORTING
Investment Property Investment Elimination Consolidated
2014 2013 2014 2013 2014 2013 2014 2013
Revenue GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
External income 301 310 864 987 - - 1,165 1,297
Inter - segment
income 128 637 - - (128) (637) - -
-------- -------- ---------- ---------- -------- -------- -------- --------
Total revenue 429 947 864 987 (128) (637) 1,165 1,297
Gains and
losses
on investments
at fair value (2,185) (504) - - - - (2,185) (504)
Movement on
property
investments at
fair value - - (523) (1,439) - - (523) (1,439)
Total income
and gains (1,756) 443 341 (452) (128) (637) (1,543) (646)
Segment
expenses - - (516) (1,243) - - (516) (1,243)
Inter - segment
expense - - (128) (637) 128 637 - -
Finance costs - (106) (209) (651) - - (209) (757)
Segment
(loss)/profit (1,756) 337 (512) (2,983) - - (2,268) (2,646)
======== ======== ========== ========== ======== ========
Unallocated
corporate
expenses (1,740) (846)
-------- --------
Operating loss (4,008) (3,492)
Interest income 7 46
Loss before
taxation (4,001) (3,446)
======== ========
For the year ended 31 December 2014 the Group's policy was to invest
in both securities and commercial properties. The future policy of
the Group can be found in the Strategic Report. Accordingly management
reporting for the year ended 31 December 2014 is split on this basis
under the headings "Investment" and "Property Investment" respectively.
Inter-segment income consists of management fees and interest on
inter-company loans. Unallocated corporate expenses relate to those
costs which cannot be readily identified to either segment.
All activity and revenue is derived from operations within the United
Kingdom. Four customers accounted for GBP313,000, GBP141,000, GBP100,000
and GBP93,000 respectively of the external income for the Property
Investment segment. Property operating expenses relating to property
investments that did not generate any rental income were GBP9,000
(2013: GBP18,000).
Other
Information Investment Property Investment Unallocated Consolidated
2014 2013 2014 2013 2014 2013 2014 2013
GBP'000 GBP'000 GBP\'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Segment assets 14,622 6,658 17,214 18,238 - - 31,836 24,896
Segment
liabilities (287) (194) (3,707) (4,378) - - (3,994) (4,572)
-------- -------- ---------- ---------- -------- -------- -------- --------
14,335 6,464 13,507 13,860 - - 27,842 20,324
--------
Capital
expenditure 10 89 498 942 - - 508 1,031
Depreciation - - - - - - - -
Non-cash
expenses
other than
depreciation - - - - 255 - 255 -
All non-current assets are located within the United Kingdom. Details
of the exchanges on which the non-current assets contained within
the Investment segment are traded can be found in note 8 of these
financial statements.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR IRMLTMBMTBFA
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