Interim results
15/09/2022 07:00
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RNS Number : 5170Z Gresham House PLC 15 September 2022
15 September 2022
Gresham House plc
("Gresham House," "the Group" or "the Company")
Interim results for the six months ended 30 June 2022
Continued profitable growth in assets under management
Gresham House plc, (AIM: GHE), the specialist alternative asset manager, is
pleased to announce its unaudited interim results for the six months ending 30
June 2022. Assets under management (AUM) rose 11% to £7.3 billion, driving an
increase in adjusted operating profit to £13.2 million and a continued
increase in operating margin to 35%. The Group continues to deliver against
its strategic and financial targets alongside its long-term client-led
approach.
Highlights
As at As at Change
30 Jun 2022 31 Dec 2021 (%)
Assets under management (£bn) 7.3 6.5 +11
Cash and liquid assets(1) (£mn) 69.7 78.3 -11
Six months to 30 Jun 2022 Six months to 30 Jun 2021 Change (%)
Total net core income (£mn) 37.2 23.0 +61
Adjusted operating profit(2) (£mn) 13.2 6.9 +91
Adjusted operating margin (%) 35% 30%
Return on capital employed (ROCE)(3) (%) 15.5% 24.0%
1. Cash and liquid assets includes cash and investments in tangible and
realisable assets
2. Adjusted operating profit is defined as the net trading profit of the Group
after charging interest but before depreciation, amortisation, share-based
payments and remuneration relating to acquisitions, profits and losses on
disposal of tangible fixed assets, net performance fees, net development
gains, exceptional items, and non-core activities
3. ( )Return on capital employed is defined as adjusted operating profit,
plus net performance fees, net realised gains on development activity and fair
value movements in investments, less fair value movement in contingent
consideration, divided by opening net assets, adjusted for shares issued in
the year
Financial highlights
§ Assets under management (AUM) up 11% in H1 to £7.3 billion
o +8% organic growth of £0.5 billion
§ Net core income up 61% to £37.2 million (H1 2021: £23.0 million)
§ Adjusted operating profit up 91% to £13.2 million (H1 2021: £6.9 million)
§ Adjusted operating margin improvement up to 35% (H1 2021: 30%) -
highlighting the operational leverage of the business
§ Return on capital employed (ROCE) of 15.5% on an annualised basis in line
with medium-term targets (H1 2021: 24.0%)
§ Balance sheet cash used to continue to invest in and develop projects to
grow long-term AUM
Strategic highlights
§ International expansion continued through the acquisition of Burlington
Real Estate in Ireland and the purchase, on behalf of an institutional client,
of a £49 million forestry and carbon credit portfolio in New Zealand - an
exciting new expansion for our Forestry division
§ Gresham House Energy Storage Fund plc (GRID) expanded its investment policy
to include international activity, opening up a wider investment universe
§ An increase in the number of institutional clients, building the depth in
the Group's client base
Sustainability highlights
§ Completion of a large-scale project to calculate the carbon footprint of
our operations and managed/advised investments, with a view to setting a
net-zero strategy over the near term with science-based targets
§ Awarded 4 or 5 stars, out of a maximum of 5 stars, for all modules relevant
to Gresham House plc in our 2021 PRI Report
§ Met the expected standard of reporting to remain a signatory to the UK
Stewardship Code
Outlook
§ Adjusted operating profit expected to be at least in line with market
expectations(4) for the full year to 31 December 2022
§ Opportunities to scale for further AUM growth identified across all
divisions, including Real Assets, Public Equity and Private Equity
§ Net cash of £28.1 million and unused £20 million Revolving Credit
Facility available to support further investment to grow the business
§ Expected to commission battery storage projects for GRID generating gains
in H2 for the Group
§ Additional fund closes expected in H2 to make further progress towards the
achievement of GH25 strategy
4. Market expectations defined as adjusted operating profit for the year to 31
December 2022 in the range of £25.5 million to £26.3 million in broker
reports that follow Gresham House plc as at 14 September 2022
Commenting on the results, Tony Dalwood, Chief Executive Officer said:
"We have delivered a strong increase in AUM, with organic growth and robust
net fundraising across all business divisions, despite the challenges of the
macroeconomic environment. Our performance illustrates the strength of
investor appetite for the asset classes in which we specialise and has enabled
us to further enhance the depth and breadth of our client base.
"Whilst we are cognisant of the market environment, we are confident that
momentum for our asset classes will be sustained into H2 as we continue to
raise funds, make further profitable progress against our GH25 strategy and to
deliver value to all our stakeholders."
Gresham House will be hosting a Capital Markets Day in November 2022 - details
will be announced in due course.
This announcement contains inside information for the purposes of the Market
Abuse Regulation (596/2014/EU)("MAR")
For more information contact:
Gresham House plc +44 (0)20 3837 6270
Tony Dalwood, Chief Executive Officer
Kevin Acton, Chief Financial Officer
Houston - PR advisors gh@houston.co.uk (mailto:gh@houston.co.uk)
Kay Larsen +44 (0)20 4529 0549
Joe Burgess
Canaccord Genuity Limited - Nominated Adviser and Joint Broker +44 (0)20 7523 8000
Bobbie Hilliam
Georgina McCooke
Jefferies International Limited - Joint Broker and Financial Adviser +44 (0)20 7029 8000
Paul Nicholls
Max Jones
This announcement contains forward-looking statements that involve substantial
risks and uncertainties, and actual results and developments may differ
materially from those expressed or implied by these statements. These
forward-looking statements are statements regarding Gresham House plc's
intentions, beliefs or current expectations concerning, among other things,
its results of operations, financial condition, prospects, growth, strategies,
and the industry in which it operates. By their nature, forward-looking
statements involve risks and uncertainties because they relate to events and
depend on circumstances that may or may not occur in the future. These
forward-looking statements speak only as of the date of this announcement and
Gresham House plc does not undertake any obligation to publicly release any
revisions to these forward-looking statements to reflect events or
circumstances after the date of this announcement
Chairman's statement
"Resilient growth in a challenging environment"
Gresham House has made pleasing progress in the first half of 2022, delivering
a strong assets under management (AUM) increase of 11% to £7.3 billion. This
was largely driven by robust organic growth across the business divisions,
with each achieving net positive inflows, along with the acquisition of
Burlington Property RE Limited (Burlington Real Estate) which added a further
£0.3 billion. The Group's resilient performance was achieved despite the
challenging macroeconomic environment, demonstrating the growth and
attractiveness of the long-term private asset classes in which Gresham House
specialises.
Gresham House has grown considerably since the 2014 management buy-in and is
now a sizeable business with over 200 employees across offices in England,
Scotland, and Ireland, with AUM in the UK, Europe and Australasia.
It is through the dedication of the team, their desire to grow the business
and achieve returns for clients, shareholders, and stakeholders alike that we
have been able to maintain this strong momentum. Meanwhile, the senior
management team has been instrumental in continuing to drive the Group's
strategy forward. They have been keenly focused on shareholder value creation
and have laid out both financial and strategic objectives in their five-year
plan, GH25, while being closely aligned to these objectives through
substantial ownership of Gresham House shares. Good headway has been made with
these objectives and the team continues to balance the investment in Gresham
House's future growth with short-term profitability targets.
The Group has made good progress against its ambitions for international
expansion, with the acquisition of Burlington Real Estate growing our presence
in Ireland, and the acquisition of forestry and carbon credit assets in New
Zealand on behalf of clients, adding a further £49 million to our AUM.
Gresham House Energy Storage Fund plc (GRID) also expanded its mandate
internationally. These are key areas in which Gresham House has identified
clear growth opportunities and which are well-positioned to capture the drive
for investments that deliver both financial returns and sustainable,
climate-based solutions for investors.
The Group's strong balance sheet has been further enhanced by the disposal of
the Rockwood Realisation plc (formerly Gresham House Strategic plc)
investment, with proceeds of £11.8 million in the period delivering a return
of over 2x capital invested. This demonstrates the Group's cultural desire to
use its balance sheet to align with clients and deliver returns to
shareholders.
Activity in the period
The 11% rise in AUM, stemming from both organic (8%) and acquisitive (3%)
activity, reflects the business' strong performance in the period. The organic
growth of £0.5 billion resulted from net inflows and overall robust
investment performance across the Group underlining the long-term nature of
the Group's AUM, with the average life of Limited Partnership funds being 14
years. The fundraises identified in the 2021 Annual Report are on track across
battery energy storage, forestry, shared ownership housing, equity funds and
VCTs. The acquisitive growth derived from the purchase of Dublin-based
Burlington Real Estate, added £0.3 billion to AUM while further strengthening
our growing presence in Ireland as we continue to operate in the EU.
Results
We continue to make excellent progress towards achieving the financial goals
of GH25, with net core income up 61% in the first half of 2022 to £37.2
million (H1 2021: £23.0 million), reflecting the impact of organic growth and
the first full six-months of revenues from the Mobeus VCTs acquired in
September 2021. Meanwhile, adjusted operating profit was up 91% in the same
period to £13.2 million (H1 2021: £6.9 million).
We also saw improvement in operating margin to 35% in the first half of 2022 -
up from 33% for the year to 31 December 2021 and 30% at the half year in 2021.
This performance was delivered as a result of our ongoing focus on expanding
the business in areas of high-growth potential where we have the technical
expertise to outperform.
Sustainability
The Group continues to make excellent strides with its Corporate
Sustainability Strategy, as outlined in our second annual Sustainable
Investment Report, published in April. Gresham House's sustainability-focused
funds are performing strongly and in line with their targets, demonstrating
that sustainable investments and financial returns do not need to be mutually
exclusive.
We have continued to make progress against the measurement of our
sustainability objectives. For the first time we have worked with consultants
to calculate the carbon footprint of our operations and our investments, with
a view to setting a science-based net-zero strategy later this year to align
our operations and investment activity with the Paris Agreement.
There is a more comprehensive update on the Group's progress against its
sustainability strategy later in this report.
Board
As previously announced, Richard Chadwick stood down as Audit Committee
Chairman and Non-Executive Director at the conclusion of the 2022 Annual
General Meeting (AGM). We are pleased to report that his replacement, Sarah
Ing, has now taken on full responsibility as the Audit Committee Chair. I look
forward to working with Sarah as we continue the Company's growth story. I'm
also pleased that Gareth Davis has stepped into the role of Senior Independent
Director and continues to provide the benefit of his extensive experience to
the Board.
Shareholders
The Group intends to host its second Capital Markets Day in November 2022 to
provide a deeper understanding of Gresham House and our targets. We look
forward to using this opportunity to engage with both existing shareholders
and potential investors.
Outlook
As we look ahead, we are well-positioned to maintain our strong momentum and
grow the business, as we continue to benefit from the evident structural
growth across our asset classes. We remain mindful of the macroeconomic
headwinds and continued market volatility, but feel we are well placed to
navigate these challenges through the resilience of the private asset classes
within which we operate, the strength of the team and the continued focus on
cost management across the Group.
We have an exciting list of clients looking to invest in our funds, which will
help them to deliver against their levelling up and net-zero based ambitions,
and we continue to work towards achieving our strategic goals for 2022.
Anthony Townsend
Chairman
15 September 2022
Chief Executive's report
"Delivering long-term growth from long-term assets"
Overview
In the first half of 2022, we have delivered clear progress against our
strategy and further strengthened our sustainability positioning and
credentials. This performance has been achieved in an increasingly challenging
macroeconomic environment characterised by market volatility, rising
inflation, the cost of living crisis and the threat of recession.
The current economic uncertainty and global geopolitical turmoil have
presented both threats and opportunities but overall Gresham House's
investment products, ranging across ESG-focused real assets and private and
public equity, have continued to deliver returns. At the same time, real
assets such as shared ownership housing and forestry also provide inflation
hedging potential.
We have made continued progress against each of our GH25 strategic targets in
the first half of the year.
AUM increased to £7.3 billion, as the strong performance of our funds
continued to attract an increasing range of investors. 8% or £0.5 billion of
this growth was organic, whilst the remaining 3%, or £0.3 billion, came
through acquisition.
Our margin at the end of June 2022 was 35%, and we are on track to achieve our
target of 40% by 2025. We continue to invest in a diverse range of growth
areas across many asset classes, whilst maintaining a keen focus on operating
margin improvement.
ROCE at the end of the first half was 15.5% (annualised) in line with our
target of more than 20% over the medium term, compared to H1 2021 of 24.0%
(annualised) and 34.1% in FY 2021.
We continue to expand further into international investment opportunities in
Ireland, Australia and New Zealand.
In addition, we have underpinned our commitment to ESG with the development of
our Corporate Sustainability Strategy that ensures best practice across all
our areas of activity and, crucially, this will enable us to measure impact
and set clear targets in the years ahead.
Progress on 2022 priorities - Financial
AUM
AUM rose 11% in H1 2022 to £7.3 billion (2021: £6.5 billion), with strong
net inflows across every division, despite the challenging environment for
equity markets. Overall fund performance was up by £0.1 billion, as strong
performances in the forestry division and renewable energy, particularly
battery storage, offset the market driven decline in equity valuations in the
first half of the year.
A further £0.3 billion in AUM was added with the completion in March 2022 of
the acquisition of Dublin-based Burlington Real Estate, one of Ireland's
premier independent commercial property asset and development management
companies, for an initial consideration of €1.8 million. This move also
marked a further step towards delivery of our international expansion plans as
outlined in GH25.
We expect to see continued momentum in AUM growth across a range of asset
classes as we move into the second half of the year.
In our Forestry strategy, we have established an Irish fund for which we aim
to hold a meaningful close in H2, attracting a key Irish investor base to
underpin growth and access to the Irish forestry market. We anticipate further
international growth through international funds and standalone transactions,
such as the New Zealand forestry and carbon credit assets recently acquired
for £49 million on behalf of an institutional client.
The second half of the year will also bring further closes in our Gresham
House Forest Fund VI LP, which held a first close with commitments of £75
million from institutional clients in H1, and also in our Forest Growth &
Sustainability Fund LP.
Meanwhile, within Real Estate, our UK Housing team held a fund raise of £65
million for the ReSI LP shared ownership housing fund. The team aims to
alleviate the shortage of high-quality, affordable housing in England, working
in partnership with housing associations, local authorities and developers.
Gresham House manages almost 1,000 shared ownership homes and 3,500 rental
homes, and plans to deliver an additional 5,000 shared ownership homes by
2026.
In renewable energy, we are increasing our focus on collocated battery and
renewables projects, as evidenced by the transaction with Canadian Solar
announced in July 2022, through which Gresham House acquired a collocated
ground-mounted solar and battery energy storage project in Durham. We see
collocation, where solar PV and battery energy storage plants are built
together and share the same grid connection infrastructure, as an area
offering strong growth potential and enhanced returns.
Our New Energy team has also established a segregated mandate with a leading
institutional investor.
In our Sustainable Infrastructure strategy, we expect further closes in our
BSIF II fund to enable us to capture the growth opportunity offered by our
extensive and exciting investment pipeline of innovative projects that address
key themes including climate change and decarbonisation.
EBITDA margin
In the first half of 2022, we delivered an adjusted operating profit margin
improvement to 35% from 33% at the end of 2021. We continue to see progression
in our EBITDA margin, in line with our GH25 target of 40% as we invest
strategically in the business to drive future growth, whilst keeping a sharp
focus on productivity and efficiency in every area of our operations.
ROCE
ROCE in the first half of the year was 15.5% (annualised), as we continued to
use our balance sheet to invest in projects that will deliver longer term AUM
growth and superior returns. During H1, we deployed £15 million into battery
energy storage projects under development, alongside further cash investment
in other areas to align with clients and deliver growth in AUM.
It is anticipated that projects sold by the Group to Gresham House Energy
Storage Fund plc (GRID) will be commissioned in H2 2022 and will realise gains
to shareholders during the period. Through these projects, together with
others in construction, the Group continues to support the growth of GRID's
operational portfolio.
Progress on 2022 priorities - Strategic
Sustainability
Throughout the first half of the year, we have maintained our commitment to
sustainability through the progress we have made against our Corporate
Sustainability Strategy. We were delighted to deliver our second Sustainable
Investment Report in April 2022, which provided detailed analysis of how we
are implementing sustainability in a measurable way across the business.
As we move into H2, we are continuing to evolve our Task Force on
Climate-Related Financial Disclosures (TCFD) framework to enhance our
reporting of climate risks and opportunities across our operations and
investments. We continue to work on setting net-zero science-based targets,
which we will evolve with further guidance in 2023.
We were also delighted to be awarded 4 or 5 stars (out of a maximum of 5
stars), in our 2021 PRI Report, for all modules relevant to Gresham House plc.
Performance and market share
A significant number of the funds we manage across real assets as well as
private and public equity have performed strongly, delivering returns in line
or ahead of targets.
We continue to hold a leading market share across a range of real asset
strategies that play a central role in progress towards decarbonisation,
whilst offering long-term sustainable returns.
GRID is the largest UK investor in battery energy storage facilities, which
are widely recognised to be a key to facilitating decarbonisation and
supporting a meaningful shift to renewable energy usage. In H1, an
oversubscribed fundraise by GRID of £150 million was successfully completed.
These funds will enable GRID to build on its leading market share and
significantly increase the size of its portfolio by acquiring an existing
pipeline of 747MW of battery energy storage system projects in the UK and
Ireland.
Gresham House is also the leading commercial forestry asset manager in the UK.
We have been steadily extending our forestry activities internationally into
Australia, New Zealand and Ireland and will continue to do so into H2 and
beyond. At the end of H1, we managed £3.3 billion of forestry assets in the
UK, Europe and Australasia, making us one of the largest global forestry asset
managers by value and the largest in the UK.
Our strong position in the VCT sector, where we are second largest manager in
the UK, was also reinforced in H1 by fundraising closes for the Baronsmead and
Mobeus VCTs of £70 million.
International
A key component of our GH25 strategy and a long-term goal of Gresham House is
the expansion of our international footprint. We have made further progress in
relation to this ambition during H1, with momentum continuing into the rest of
the year.
The completion of the acquisition of leading Irish commercial property asset
and development management company Burlington Real Estate has further enhanced
our presence in Ireland and our foothold into the EU. It is also complementary
with Gresham House, Ireland (formerly Appian Asset Management Limited,
acquired in 2021), unlocking increased opportunities to develop and grow
projects we have identified in Ireland.
We also expanded our footprint into New Zealand, acquiring forestry and carbon
credit assets for £49 million on behalf of an institutional client focused on
carbon sequestration.
Market positioning
We have gained increasing recognition in recent years as a specialist
alternative asset manager that delivers sustainable investment opportunities
and clear returns. The volume of enquiries and scale of appetite amongst large
institutions seeking to invest in our specialist asset classes continues to
rise, driven by our consistent track record of delivery, our strategic
progress and our market leading positions in many of the assets in which we
specialise.
This market positioning is driving the steady flow of mandate wins that are
supporting our AUM growth. At the same time, we are seeing further client
diversification and depth as the funds we launch attract new institutional and
long-term clients.
People
Our team has demonstrated deep commitment to our core values of sustainability
and best practice over the past few years, despite the challenges that
resulted first from COVID-19 and more recently amid the current economic
turmoil. We are proud of the resilient corporate culture we have built across
Gresham House.
We are continuing to invest in talented individuals to help drive forward key
areas of growth. We are pleased to be able to attract dedicated staff who
value the opportunity to be part of our dynamic, ESG-focused culture and
embrace the opportunity to make a tangible impact through investment
strategies across Gresham House's asset classes.
Culture is also critical when it comes to acquisitions and we have worked hard
with businesses that we have acquired to share and develop our culture, an
important factor as the business continues to scale.
In recognition of the changing working practices that were accelerated by the
COVID-19 lockdowns, we have adopted a hybrid model of working to maintain
flexibility for our staff and support them in optimising outcomes.
Outlook
Strong performance and progress towards all our strategic targets have
positioned us well for continued momentum into H2 and beyond. We are
continuing to capture the growth opportunity and have identified potential for
further growth across all our divisions, including Real Assets, Public Equity
and Private Equity.
Gresham House's consistent track record of delivery and the opportunities
presented by our asset classes continue to bring further depth and breadth to
our client base as we expand our international footprint and credentials. I
would like to thank all of our employees for their dedication and hard work as
well as our clients and shareholders for their continued support as we
continue to execute our growth strategy.
Our robust balance sheet equips us to invest in further enhancing our business
and performance. While there are several macroeconomic headwinds facing the
asset management industry during these turbulent times, we are confident that
momentum will continue at Gresham House as we continue to raise funds in H2
and make further progress towards the achievement of our GH25 strategy to
deliver value to all our stakeholders.
Tony Dalwood
Chief Executive
15 September 2022
Sustainability overview
Progress on our Corporate Sustainability Strategy
In our 2021 Sustainable Investment Report, we unveiled our first Corporate
Sustainability Strategy which supports our GH25 strategic objective "to become
a recognised leader in sustainable investment, including Environmental, Social
and Governance (ESG)".
Here we detail our progress against our Strategy's three core pillars.
Gresham House as a sustainable investor
For us, sustainable investment means delivering strong financial returns by
proactively managing a full range of risks and opportunities whilst seeking to
influence positive social, economic or environmental outcomes across the funds
that we manage or advise.
In this context, we are proud of the progress we have made against our
priority topics during the first half of 2022:
Climate change and pollution
§ Undertook a large-scale project to calculate the carbon footprint of
managed/advised investments
§ Started to model near-term science-based targets for each division
Risk and compliance
§ Developed portfolio level ESG data (KPI) banks to inform portfolio
construction processes and engagement activities
§ Developed an impact framework to be used for our Sustainable Infrastructure
division
§ Prepared a Task Force on Climate-Related Financial Disclosures (TCFD) plan
for Gresham House and relevant funds to enhance our 2022 reporting and beyond
Marketplace responsibility
§ Completed an audit of our internal ESG processes, policies and ESG Decision
Tools used by investment teams and ESG content included in Investment
Committee papers
§ Developed a plan to address feedback from an ESG audit process that we
undertook, including the evolution of our proprietary ESG Decision Tools.
Additionally, we plan to invest in a technology platform to hold all our
sustainable investment related tools in one place to provide efficiencies
across our investment teams
Plans for the second half of 2022 include committing to set near-term and
net-zero science-based targets for each division by:
§ Enhancing our understanding and knowledge of natural capital impacts
§ Mapping sustainability risks across our battery supply chains
§ Streamlining the way sustainability is integrated into investment decision
making through the development of a new internal platform for our sustainable
investment tools
Gresham House as a sustainable employer and business, and sustainable
corporate citizen
The other two pillars of our Corporate Sustainability Strategy focus on
ensuring we operate authentically by aligning our actions with our corporate
purpose, while having a positive impact on the communities we are part of.
Our achievements over the first half of 2022 include:
Commitment to sustainability
§ Finalised our first Corporate Sustainability Strategy
§ Published our second Sustainable Investment Report
§ Published our first TCFD report
§ Embedded the new Sustainability Executive Committee into our broader
sustainability governance structure
§ Awarded 4 or 5 stars, out of a maximum of 5 stars, for all modules relevant
to Gresham House plc in our 2021 PRI Report
Climate change and pollution
§ Published our first operational carbon footprint in our 2021 Annual Report
§ Started to model near-term science-based targets for our operational
emissions
§ Enhanced our internal expenses system to gather better quality data on
travel emissions
Community care and engagement
§ Developed and introduced a two-day per year volunteering policy
Moving forward, we are focused on several core priorities including:
§ Enhancing our TCFD for 2022 reporting
§ Committing to set near-term and net-zero science-based targets for our
operations
§ Introducing a travel policy to reduce our travel emissions
§ Enhancing internal sustainability training for all levels
Financial review
"A focus on long-term, sustainable revenues"
The Group has performed strongly in the first half of 2022 against a
challenging macroeconomic environment. This performance was driven by the
quality of the Group's AUM, based on long-term asset classes in sectors
demonstrating structural growth that remain attractive to clients.
The Group's AUM increased to £7.3 billion at the end of the first half, up
11% on the beginning of the year (£6.5 billion) and represented net inflows
from every division.
Net core income grew in the period by 61% to £37.2 million compared to £23.0
million in the first half of 2021 and this has driven the adjusted operating
profits of the Group up by 91% to £13.2 million (H1 2021: £6.9 million).
Alongside the organic growth in the business in the first half of 2022, these
results also include the impact of the Mobeus VCT business and Appian Asset
Management acquisitions which completed in the second half of 2021. If you
exclude the impact of these acquisitions then revenues grew by 26% and
adjusted operating profit grew by 41% compared to H1 2022.
We have made progress against the Group's operating margin targets achieving a
margin of 35% in the first half of 2022, up from the 33% for the year to 31
December 2021 and 30% at the half year in 2021, demonstrating an increase in
the quality of earnings of the Group. This remains an area of focus for the
Group as we continued to invest in the long-term scalable areas of the
business as well as the people and systems to capture the growth opportunity.
The Group also delivered total comprehensive income of £2.2 million (H1 2021:
£5.2 million), with acquisition related costs such as increased amortisation
of management contracts and acquisition related remuneration (earn outs
payable to sellers who joined Gresham House as part of an acquisition)
alongside reductions in the value of quoted investments on the balance sheet
offsetting the improved adjusted operating income performance.
We have continued to use the Group's balance sheet to invest in areas which
will lead to increasing AUM and the generation of long-term management fees.
Assets under management
AUM grew by 11% in the first six months of the year to £7.3 billion (December
2021: £6.5 billion). In line with our strategy, this was achieved through
both organic growth of £495 million (8%) and acquisition growth of £243
million (3%).
£ millions AUM Net fund flows(1) Performance Funds acquired/won AUM Total growth
December 2021
June 2022
Strategic Equity
Public Equity 1,036.9 43.3 (136.3) - 943.9 (9.0)%
Private Equity 887.1 25.1 (87.6) - 824.6 (7.0)%
Subtotal 1,924.0 68.4 (223.9) - 1,768.5 (8.1)%
Real Assets
Forestry 2,953.7 77.8 259.5 - 3,291.0 11.4%
New Energy & Sustainable Infrastructure 1,213.1 197.5 94.6 - 1,505.2 24.1%
Real Estate 447.9 23.3 (1.8) 242.7 712.1 59.0%
Subtotal 4,614.7 298.6 352.3 242.7 5,508.3 19.4%
Total AUM 6,538.7 367.0 128.4 242.7 7,276.8 11.3%
1. Including funds raised, redemptions and distributions.
Net fund inflows totalling £367 million across all divisions highlighted the
demand for the Group's offering against a challenging macroeconomic
environment. We have previously set out the key funds that we were focused on
raising AUM for in 2022 and these have shown good progress in the period.
Within New Energy and Sustainable Infrastructure, GRID raised £150 million in
an over-subscribed equity raise. The division also attracted a new
institutional client investing in an exclusive pipeline of collocated battery
storage and renewable energy projects which the Group has secured using its
balance sheet. Projects delivered so far increased AUM by £38 million in the
first half of 2022, with more of the pipeline still to be developed.
The Forestry division grew AUM by £78 million having raised committed capital
from institutional clients of £75 million for Gresham House Forest Fund VI LP
(of which £61 million was invested by the half year with fee earning AUM
based on drawn capital). The division also invested £49 million in a New
Zealand carbon credit forest on behalf of an institutional client, as the
Group increases its international credentials. These fund inflows were offset
by net sales of £32 million as individual clients took the opportunity to
realise gains on their forest portfolios.
The Housing division secured further commitments of £65 million in Gresham
House Residential Secure Income LP (ReSI LP), our shared ownership housing
fund, with fee earning AUM standing at £98 million by the end of June 2022.
The equity raise by Residential Secure Income plc earlier in the year raised
£15 million.
Net inflows in the Strategic Equity division reflected the confidence of
investors in the strategy against a background where equity managers have
experienced net outflows in the first half of 2022. The public equity business
had net inflows of £43 million and the VCT business generating gross equity
flows of £70 million for the private equity business.
Performance in the first half was primarily driven by market movements as the
Strategic Equity business noted a reduction in AUM of £224 million. This
reflected the 19% reduction to the public equity portfolio and 11% reduction
in value in the private equity portfolio reflecting the impact of valuation
multiple reductions.
Real Assets performance was made up of the increase in forestry valuations for
clients where the portfolio was revalued in the period, noting the forestry
valuations are typically performed on an annual basis by an external valuer,
and the improvement in the NAV of GRID as the underlying portfolio of battery
storage assets increased in value.
We also completed the acquisition of Burlington Real Estate adding £243
million AUM to the Group in March 2022. Burlington has since been rebranded as
Gresham House Real Estate and has been integrated with our business in Dublin.
This adds to our Real Estate offering as well as further builds our
international growth plans.
Adjusted operating profit
The adjusted operating profit for the Group grew in the first half of 2022 by
91% to £13.2 million (H1 2021: £6.9 million). We use the non-GAAP measure of
adjusted operating profit as a key performance indicator for Gresham House as
an alternative asset manager and have separated out net performance fees and
net gains on investments. As set out in the 2021 Annual Report, the adjusted
operating profit is defined as the net trading profit of the Group before
deducting amortisation, depreciation and exceptional items relating to
acquisition and restructuring costs and share-based payments and remuneration
relating to acquisitions.
Six months to 30 June 2022 Six months to 30 June 2021
£'000 £'000
Gross core income 38,526 23,648
Rebates, distribution costs and fundraising costs (1,345) (611)
Net core income 37,181 23,037
Administration overheads (excluding amortisation, depreciation, exceptional (23,751) (16,041)
items and acquisition related share-based payments and remuneration)
Finance costs (278) (102)
Adjusted operating profit 13,152 6,894
Adjusted operating margin 35% 30%
Performance fees (gross) - 1,912
Variable compensation attributable to performance fees - (1,497)
Performance fees net of costs - 415
Realised gains on development projects - 818
Variable compensation attributable to realised gains - (511)
Development project costs (260) (219)
Realised gains on development projects net of costs (260) 88
Non-core operating revenues 1,100 -
Costs relating to non-core operating revenues (1,064) - -
Net non-core operating activity 36 -
Adjusted operating profit including performance fees, net realised gains on 12,928 7,397
development projects and non-core activities
Amortisation and depreciation (6,092) (4,191)
Acquisition related share-based payments charges (217) (253)
Acquisition related remuneration (1,243) -
Exceptional items (495) (102)
Net (losses)/gains on investments and other fair value movements (1,456) 3,305
Tax (1,257) (908)
Operating profit after tax 2,168 5,248
Loss from discontinued operations (3) (5)
Total comprehensive net income 2,165 5,243
Income
Net core income in the period increased by 61% to £37.2 million (H1 2021:
£23.0 million). This increase reflects the organic growth in AUM across the
business of 26% alongside the impact of the Mobeus VCT business and Appian
Asset Management Limited acquisitions in H2 2021 of 35%.
The long-term nature of the Group's Real Asset management contracts highlight
the stable revenue streams for the business with over £2.0 billion of AUM in
Limited Partnership management contracts with a weighted average contract
length of 14 years. The underlying assets within these funds of forests,
infrastructure, renewable energy and housing continue to provide a stable
platform to grow the business.
Administration expenses
Administration expenses, (excluding amortisation, depreciation, share-based
payments relating to acquisitions and exceptional items) have increased in the
period by 48% to £23.8 million (H1 2021: £16.0 million). Cost management and
the focus on margins in a challenging environment with increasing inflation
and cost of living pressures are a critical part of how we manage the
business. We continue to invest in the business to capture the growth
opportunities across all key functions. The Group's full time equivalent
headcount increased to 205 at the end of June (H1 2021: 138 people and
December 2021: 185). The increase from acquisitions since H1 2021 was 16 from
the Mobeus VCT business, 22 from Appian Asset Management and 14 from
Burlington. The impact of these acquisitions increased the cost base by 29% in
H1 2022, with organic costs growing by 20% and the business was able to
increase the revenues generated by more than the increase in costs, improving
its operating margin to 35% in H1.
Performance fees
The Group did not receive performance fees in the period, as a result of
market-based performance in the Strategic Equity division (H1 2021: £1.9
million).
Development projects
We continue to use the Group's balance sheet to develop battery storage and
other New Energy projects to grow the Group's AUM. No battery storage projects
in the pipeline became operational in the period and as such no realised gains
were recognised. There are a number of projects which are expected to become
operational in H2 2022 and we shall update shareholders as this takes place.
Other costs associated with battery storage development projects were £0.3
million in the period (H1 2021: £0.2 million).
Acquisition related share-based payments and remuneration and exceptional
items
Acquisition related share-based payments and remuneration increased to £1.5
million reflecting the Mobeus VCT business acquisition which has an earn out
element payable to the team for delivering in line with the sellers business
plan (H1 2021: £0.3 million). Exceptional items in the first half of the year
of £0.5 million reflect the acquisition of Burlington and other
integration/restructuring costs (H1 2021: £0.1 million). There were no
material acquisition costs in the first half of 2021.
Net losses on investments and other fair value movements
Net losses on investments in the period of £1.5 million (H1 2021: £3.3
million gains) were the result of mark to market valuations on the Group's
listed investments and fair value movements in contingent consideration
payable for acquisitions. The Group realised its investment in Rockwood
Realisation plc (formerly Gresham House Strategic plc or GHS) for £11.8
million, generating a realised gain of £0.3 million in the period, which
represented a total return on investment of 2x invested capital. GHS was
treated as an associate by the Group prior to its realisation.
Other unrealised losses in the period relating to mark to market decreases
were Strategic Equity Capital plc of £0.4 million, ReSI plc of £0.3 million
and Strategic Public Equity (SPE) co-investments of £0.3 million.
Contingent consideration payable to the sellers of acquired businesses is fair
valued at each period end, with the movement reflecting assessments of the
expected final payment as well as the discount over time. The fair value
movement in the period of £0.8 million was primarily driven by the unwind of
the discount (H1 2021: £0.4 million).
Financial position
The Group continued to use its balance sheet to grow in the first half of the
year with investments growing from £38.0 million to £41.6 million. Cash has
reduced as a result of this from £40.3 million to £28.1 million, with the
£20 million Revolving Credit Facility (RCF) remaining undrawn in the period.
The Group used its cash balance and proceeds from sales in the period to
invest in a number of strategic positions to grow the Group's AUM. Investment
in the development of battery storage projects increased to £26.6 million at
the half year alongside a further £2.0 million investment in the ReSI plc
fundraise and further drawdowns to commitments made to limited partnership
funds to align the Group with its clients.
The remaining cash movement reflects the dividend paid in May 2022 of £3.8
million, contingent consideration payments of £6.9 million and operating
activity.
Outlook
The increase in inflation, the cost of living and interest rates continues to
dominate the minds of investors, clients and staff. We continue to focus on
how we can provide solutions to some of these challenges with the asset
classes which we operate in continuing to exhibit structural growth.
We have a strong pipeline of new clients looking to invest in our funds and
will continue to work hard to deliver increased commitments to funds, grow AUM
and deliver returns for clients throughout the remainder of 2022 and into
2023.
Kevin Acton
Chief Financial Officer
15 September 2022
Unaudited condensed group statement of comprehensive income
Six months ended Six months ended Year ended
30 June 2022 (unaudited) 30 June 2021 (unaudited) 31 December 2021
(audited)
Notes £'000 £'000 £'000
Income
Asset management income 38,285 22,960 62,162
Dividend and interest income 241 139 590
Other operating income 1,100 389 1,448
Performance fees and carried interest - 1,912 6,163
Total income 5 39,626 25,400 70,363
Operating costs (34,467) (23,425) (63,331)
Administrative overheads (33,972) (23,323) (60,116)
Exceptional items 7 (495) (102) (3,215)
Net operating profit 5,159 1,975 7,032
Finance costs (278) (102) (311)
Net operating profit after finance costs 4,881 1,873 6,721
Gains and losses on investments
Share of associates' (losses)/profits (203) 2,700 4,955
Profit on disposal of associate 295 413 461
(Losses) and gains on investments held at fair value (945) 1,520 5,842
Movement in fair value of contingent consideration (840) (350) (1,659)
Operating profit before taxation 3,188 6,156 16,320
Taxation (1,257) (908) (4,107)
Operating profit from continuing operations 1,931 5,248 12,213
Loss from discontinued operations (3) (5) (14)
Profit for the period 1,928 5,243 12,199
Foreign exchange gains/(losses) on translation of a foreign subsidiary 237 - (158)
Profit and total comprehensive income 2,165 5,243 12,041
Attributable to:
Equity holders of the parent 2,153 5,220 11,777
Non-controlling interest 12 23 264
2,165 5,243 12,041
Basic profit per ordinary share (pence) 5.7 16.2 34.8
8
Diluted profit per ordinary share (pence) 5.3 15.3 32.7
8
Basic adjusted profit per ordinary share (pence) 28.5 17.8 52.6
8
Diluted adjusted profit per ordinary share (pence) 26.9 16.8 49.4
8
Unaudited condensed group statements of changes in equity
Six months ended 30 June 2022 (unaudited)
Ordinary share capital Share premium Merger reserve Treasury shares Retained reserves Foreign exchange reserve Equity attributable to equity shareholders of the Parent Company Non- controlling interest Total equity
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
Balance at 31 December 2021 9,500 39,328 24,811 (51) 73,032 (158) 146,462 1,075 147,537
Profit and total comprehensive income for the period - - - - 1,916 237 2,153 12 2,165
Contributions by and distributions to owners
Share-based payments - - - 84 (2,194) - (2,110) - (2,110)
Issue of shares 69 - 608 (50) - - 627 - 627
Dividends paid - - - - (3,815) - (3,815) - (3,815)
Total contributions by and distributions to owners 69 - 608 34 (6,009) - (5,298) - (5,298)
Balance at 30 June 2022 9,569 39,328 25,419 (17) 68,939 79 143,317 1,087 144,404
Six months ended 30 June 2021 (unaudited)
Ordinary share capital Share premium Merger reserve Treasury shares Retained reserves Foreign exchange reserve Equity attributable to equity shareholders of the Parent Company Non- controlling interest Total equity
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
Balance at 31 December 2020 8,023 60,061 19,981 - 8,402 - 96,467 811 97,278
Profit and total comprehensive income for the period - - - - 5,220 - 5,220 23 5,243
Contributions by and distributions to owners
Share-based payments - - - - 445 - 445 - 445
Issue of shares 213 - 953 - - - 1,166 - 1,166
Dividends paid - - - - (1,881) - (1,881) - (1,881)
Total contributions by and distributions to owners 213 - 953 - (1,436) - (270) - (270)
Balance at 30 June 2021 8,236 60,061 20,934 - 12,186 - 101,417 834 102,251
Year ended 31 December 2021 (audited)
Ordinary share capital Share premium Merger reserve Treasury shares Retained reserves Foreign exchange reserve Equity attributable to equity shareholders of the Parent Company Non- controlling interest Total equity
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
Balance at 31 December 2020 8,023 60,061 19,981 - 8,402 - 96,467 811 97,278
Profit and total comprehensive income for the year - - - - 11,935 (158) 11,777 264 12,041
Contributions by and distributions to owners
Share-based payments - - - - (5,424) - (5,424) - (5,424)
Issue of shares 1,477 39,267 4,830 (51) - - 45,523 - 45,523
Cancellation of share premium - (60,000) - - 60,000 - - - -
Dividends paid - - - - (1,881) - (1,881) - (1,881)
Total contributions by and distributions to owners 1,477 (20,733) 4,830 (51) 52,695 - 38,218 - 38,218
Balance at 31 December 2021 9,500 39,328 24,811 (51) 73,032 (158) 146,462 1,075 147,537
Unaudited condensed group statement of financial position
Notes 30 June 2022 30 June 2021 31 December 2021
(unaudited) (unaudited) (audited)
Assets £'000 £'000 £'000
Non-current assets
Investments 10 15,859 13,443 13,560
Property, plant and equipment 2,577 1,432 2,927
Investment in associates 293 11,012 11,955
Intangible assets 92,891 63,133 95,012
Long-term receivables 492 - 492
Deferred tax 2,198 895 2,197
114,310 89,915 126,143
Current assets
Trade receivables 11,560 11,067 11,135
Accrued income and prepaid expenses 18,061 16,129 21,705
Other current assets 10 7,604 1,955 3,537
Cash and cash equivalents 28,062 10,144 40,252
Non-current assets held for sale
Assets of a disposal group held for sale 29,831 15,689 17,545
Total current & non-current assets held for sale 95,118 54,984 94,174
Total assets 209,428 144,899 220,317
Current liabilities
Trade and other payables 32,606 21,315 42,721
Liabilities of a disposal group held for sale
Liabilities of a disposal group held for sale 10,866 6,403 7,499
Total liabilities and liabilities of a disposal group held for sale 43,472 27,718 50,220
Total assets less current liabilities 165,956 117,181 170,097
Non-current liabilities
Deferred taxation 9,996 3,784 10,597
Long-term borrowings - 5,822 -
Other creditors 11,556 5,324 11,963
21,552 14,930 22,560
Net assets 144,404 102,251 147,537
Capital and reserves
Ordinary share capital 11 9,569 8,236 9,500
Share premium 39,328 60,061 39,328
Merger reserve 25,419 20,934 24,811
Treasury shares (17) - (51)
Retained reserves 68,939 12,186 73,032
Foreign exchange reserve 79 - (158)
Equity attributable to equity shareholders of the Parent Company 143,317 101,417 146,462
Non-controlling interest 1,087 834 1,075
Total equity 144,404 102,251 147,537
Basic net asset value per ordinary share (pence) 375.1 307.8 387.5
12
Diluted net asset value per ordinary share (pence) 354.3 291.7 366.6
12
Unaudited condensed group statement of cash flows
Notes Six months ended Six months ended Year ended
30 June 2022 30 June 2021 31 December 2021
(unaudited) (unaudited) (audited)
£'000 £'000 £'000
Cash flow from operating activities
Net cash generated from operations 13 8,825 (6,097) 21,130
Corporation tax paid (2,761) (447) (968)
Interest paid on loans (150) (51) (187)
Cash flow from investing activities
Acquisition of Burlington RE Property Management Limited (626) - -
Acquisition of Appian Asset Management Limited - (841) (841)
Acquisition of Mobeus VCT business - - 514
Deferred consideration paid (6,875) (794) (1,409)
Investment in associates - (15) (1,165)
Sale of associates 11,754 855 3,296
Dividends received from associates - 258 383
Purchase of investments (4,069) (6,013) (5,409)
Sale of investments 1,051 1,422 4,287
Investment in DevCo projects (14,829) (3,156) (12,349)
DevCo loans repaid 254 - 551
Proceeds received on sale of DevCo projects 3,740 2,281 3,551
Purchase of fixed assets (208) (87) (327)
Sale of fixed assets 19 - 6
Purchase of intangible assets (547) (371) (724)
(10,336) (6,461) (9,636)
Cash flow from financing activities
Receipt of loans - 5,000 10,000
Repayment of loans - - (10,000)
Share issue proceeds - - 22,000
Share issue costs - - (1,513)
Share-based payments settled (3,818) (1,529) (9,734)
Dividends paid (3,815) (1,881) (1,881)
Capital element of lease payments (135) (276) (845)
(7,768) 1,314 8,027
(Decrease)/increase in cash and cash equivalents (12,190) (11,742) 18,366
Cash and cash equivalents at start of period 40,252 21,886 21,886
Cash and cash equivalents at end of period 28,062 10,144 40,252
Notes to the accounts
1 Reporting entity
Gresham House plc (the Company) is a public limited company limited by shares
incorporated in the United Kingdom under the Companies Act and registered in
England. The unaudited condensed group interim financial statements of the
Company as at and for the six months ended 30 June 2022 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 and basis of preparation
The financial information presented in these interim results has been prepared
in accordance with international accounting standards in conformity with the
requirements of the Companies Act 2006. The principal accounting policies
adopted in the preparation of the financial information in these interim
results are primarily unchanged from those used in the Company's financial
statements for the year ended 31 December 2021 and are consistent with those
that the Company expects to apply in its financial statements for the year
ended 31 December 2022.
The financial information for the year ended 31 December 2021 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 2021 were audited and have been filed with the
Registrar of Companies. The Independent Auditor's Report on the Report and
Accounts for the year ended 31 December 2021 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 2021 and 30 June 2022 are unaudited and have not
been reviewed by the Company's auditors.
3 Estimates and management judgements
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
2021.
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 2021.
5 Income
Six months ended 30 June 2022 Six months ended 30 June 2021 Year ended 31 December 2021
£'000 £'000 £'000
Asset management income
Asset management income 38,285 22,960 62,162
38,285 22,960 62,162
Income from investments
Dividend income - Listed UK 43 106 173
Interest receivable - Banks 5 2 8
- Other 193 31 409
241 139 590
Other operating income
Other income - 1 15
DevCo income * - 388 293
Non-core operating income ** 1,100 - 1,140
1,100 389 1,448
Performance fees
Performance fees - 1,912 6,163
- 1,912 6,163
Total income 39,626 25,400 70,363
* DevCo income represents the net operating income in the period from battery
storage projects prior to the projects being sold to GRID.
** Non-core operating income relates to income earned from ReSi Property
Management Limited for property services and Gresham House O&M Services
Limited for O&M services, which are not considered core asset management
services to the Group.
Notes to the accounts
6 Business combinations
On 15 March 2022 the Group acquired 100% of the issued share capital of
Burlington RE Property Management Limited (Burlington), a company registered
in Ireland. Burlington is one of Ireland's premier independent commercial
property asset and development management companies, and manages or advises
assets of €340 million as at 31 December 2021. The acquisition forms part of
Gresham House's ongoing international expansion plans, as set out in its
five-year strategy (GH25) and is the Group's second acquisition in Ireland,
following the completion of the Appian Asset Management transaction in 2021.
It consolidates the existing relationship between the two businesses to
achieve long-term alignment.
The provisional fair value of the identifiable net assets acquired, and the
consideration paid under IFRS 3 are as follows:
Net book value Adjustments Fair value
£'000 £'000 £'000
Tangible fixed assets 2 - 2
Cash 390 - 390
Trade and other receivables 267 - 267
Trade and other payables (328) - (328)
Intangible fixed assets (including goodwill) - 2,632 2,632
Deferred tax liability - (474) (474)
Total identifiable net assets 331 2,158 2,489
Under the terms of the acquisition agreement, the fair value of the
consideration paid to the vendors of Burlington was:
£'000
Cash 1,028
Shares - 73,177 shares in Gresham House plc valued at 855.0p per share on 15 626
March 2022
Total initial consideration 1,654
Contingent consideration 835
Total consideration 2,489
The consideration shares were admitted to trading on AIM on 21 March 2022.
Contingent consideration
Contingent consideration with an expected fair value of €1.0 million will be
payable to the sellers within 20 business days of publication of the accounts
for the year ending 31 December 2024. This is calculated as 40% of 6.5 times
the average EBITDA in three years ending 31 December 2024.
The fair value of the contingent consideration has been estimated at the date
of acquisition using estimated outcomes, the probability of those outcomes and
discounting this at 8.0%. Up to 50% of the contingent consideration may be
settled in Gresham House plc shares at the Company's discretion. As such this
will be recognised as a liability on the balance sheet and the fair value
assessed each reporting period. The fair value at the time of acquisition was
calculated as £835k.
Revenue and profits of Burlington
Burlington was acquired on 15 March 2022. The Group has recognised the
following revenues and costs in respect of Burlington for the period ended 30
June 2022:
€'000
Revenue 543
Profit before tax 119
The results for the most recent audited reporting period prior to acquisition
were to 31 December 2021. Had Burlington been part of the Group for the entire
reporting period the following sums would have been consolidated:
€'000
Revenue 2,098
Profit before tax 259
Goodwill
Goodwill arises due to the excess of the fair value of the consideration
payable over the fair value of the net assets acquired. It is mainly
attributable to the skills of the team acquired, the synergies expected to be
achieved from the acquisition and the business development potential. Goodwill
arising on the Burlington acquisition is not deductible for tax purposes.
Fair value
The fair value of the management contracts have been estimated using a
discounted cash flow model. The estimated cash flows have been valued at a
discount of 8.0%.
Notes to the accounts
7 Exceptional items
Six months ended 30 June 2022 Six months ended 30 June 2021 Year ended 31 December 2021
£'000 £'000 £'000
Acquisition costs
TradeRisks Limited - - 19
Burlington RE Property Management Limited 174 - -
Appian Asset Management Limited - 8 187
Mobeus VCT business 4 - 1,141
Other 219 54 83
397 62 1,430
Restructuring costs 98 40 633
DevCo acquisition and disposal costs - - 1,152
495 102 3,215
Acquisition and associated restructuring costs are considered exceptional and
not part of the normal course of asset management activity.
8 Earnings per share
(a) Basic and diluted profit per share
Six months ended 30 June 2022 Six months ended 30 June 2021 Year ended 31 December 2021
Total net profit attributable to equity holders of the parent (£'000) 2,153 5,220 11,777
Weighted average number of ordinary shares in issue during the period 38,075,964 32,291,046 34,083,582
Number of shares held by the Gresham House Employee Benefit Trust (69,542) - (204,007)
Weighted average basic shares in issue during the period 38,006,489 32,291,046 33,879,575
Dilutive shares* 2,244,067 1,818,884 2,150,707
Weighted average dilutive shares in issue during the period 40,250,489 34,109,930 36,030,282
Basic profit per share to equity holders of the parent (pence) 5.7 16.2 34.8
Diluted profit per share to equity holders of the parent (pence) 5.3 15.3 32.7
*Dilutive shares were deemed to have been issued at nil consideration as a
result shares which could be issued under the bonus share matching plan,
long-term incentive plans and acquisition related share-based payments.
(b) Adjusted earnings per share
Adjusted earnings per share is based on adjusted operating profit after tax,
which is stated after charging interest but before depreciation, amortisation,
share-based payments and remuneration relating to acquisitions, profits and
losses on disposal of property, plant and equipment, net performance fees, net
non-core activities, net development gains and exceptional items, to provide
the non-GAAP measure of the performance as an asset manager. This includes
dividend and income received from investments in associates.
Adjusted profit for calculating adjusted earnings per share:
Six months ended 30 June 2022 Six months ended 30 June 2021 Year ended 31 December 2021
£'000 £'000 £'000
Net operating profit after finance costs 4,881 1,873 6,721
Add back:
Exceptional operating expenses 495 102 3,215
Depreciation and amortisation 6,100 4,188 9,475
(Profit) / loss on disposal of tangible fixed assets (8) 3 -
Dividend income received from associates - 160 285
Net performance fees - (415) (1,714)
Variable compensation attributable to realised gains on development projects - 511 689
Development project costs 260 219 470
Net non-core activity (36) - (38)
Share-based payments relating to acquisitions 217 253 615
Acquisition related remuneration 1,243 - 452
Adjusted operating profit attributable to equity holders of the parent before 13,152 6,894 20,170
tax
Corporation tax attributable to adjusted operating profit (2,333) (1,157) (2,363)
Adjusted operating profit attributable to equity holders of the parent after 10,819 5,737 17,807
tax
Adjusted profit per share (pence) - basic 28.5 17.8 52.6
Adjusted profit per share (pence) - diluted 26.9 16.8 49.4
Notes to the accounts
9 Dividends
The Company paid £3,815,000 during the period which represents a final
dividend for the year ended 31 December 2021 of 10.0 pence per share. A final
dividend for the year ended 31 December 2020 of 6.0 pence per share totalling
£1,881,000 was paid in May 2021.
10 Investments - securities
Investments have been classified as follows:
30 June 2022 30 June 2021 31 December 2021
£'000 £'000 £'000
Non-current assets 15,859 13,443 13,560
Other debtors due within one year - Investment in development projects 7,604 1,955 3,537
23,463 15,398 17,097
A further analysis of total investments is as follows:
30 June 2022 30 June 2021 31 December 2021
£'000 £'000 £'000
Listed securities - on the London Stock Exchange 7,236 6,521 4,993
Securities dealt in under AIM 953 1,222 1,363
Securities dealt in under Aquis Stock Exchange 4 6 5
Unlisted securities 15,270 7,649 10,736
Closing value 23,463 15,398 17,097
Investments valued at fair value through profit or loss 15,859 13,443 13,560
Loans and receivables carried at amortised cost 7,604 1,955 3,537
23,463 15,398 17,097
11 Share capital
30 June 2022 30 June 2021 31 December 2021
£'000 £'000 £'000
Allotted: Ordinary - 38,273,996 (30 June 2021: 32,945,875; 31 December 2021: 9,569 8,236 9,500
38,000,819) fully paid shares of 25p each
During the six months to 30 June 2022 the Company issued the following new
ordinary shares:
· 73,177 shares on 15 March 2022 at a price of 855.0p per share to
the vendors of Burlington RE Property Management Limited; and
· 200,000 shares on 25 March 2022 at par into the Gresham House
Employee Benefit Trust.
Notes to the accounts
12 Net asset value per share
30 June 2022 30 June 2021 31 December 2021
Equity attributable to holders of the parent (£'000) 143,317 101,417 146,462
Number of ordinary shares in issue at the end of the period 38,273,996 32,945,875 38,000,819
Number of shares held by the Gresham House Employee Benefit Trust (69,542) - (204,007)
Basic number of ordinary shares in issue at the end of the period 38,204,454 32,945,875 37,796,812
Dilutive shares* 2,244,067 1,818,884 2,150,707
Number of ordinary shares in issue during the period post dilutive shares 40,448,521 34,764,759 39,947,519
Basic net asset value (pence) 375.1 307.8 387.5
Diluted net asset value (pence) 354.3 291.7 366.6
* Diluted shares are deemed to have been issued at nil consideration and could
be issued under the bonus share matching plan, long-term incentive plans and
acquisition related share-based payments.
13 Reconciliation of net operating profit to operating cash flows
30 June 2022 30 June 2021 31 December 2021
£'000 £'000 £'000
Net operating profit after exceptional items 4,881 1,873 6,721
Loss from discontinued operations (3) (5) (14)
Interest payable 184 54 214
Depreciation 574 413 959
(Profit)/loss on disposal of tangible fixed assets (8) 3 -
Amortisation 5,526 3,776 8,516
Share-based payments 1,708 1,972 3,788
Acquisition related remuneration 884 - 452
13,746 8,086 20,636
Increase in long-term receivables - - (492)
Decrease/(increase) in current assets 3,566 (11,284) (7,745)
(Decrease)/increase in current liabilities (8,487) (2,899) 8,731
8,825 (6,097) 21,130
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