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
IR SFWESDFWSEDU
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September 14, 2017 02:00 ET (06:00 GMT)
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