Audited Results for Year Ended 31 December 2016

RNS Number : 6826A

Gresham House PLC

28 March 2017

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

(AIM: GHE)

Audited Results for Year Ended 31 December 2016

Delivering on Strategy, and Another Year of Significant Development with 50% Growth in Assets Under Management

· Assets under management ("AUM") in the year to 31 December 2016 increased 50% to £363 million (2015: £242 million)

· Revenue growth of over 200% in the year to 31 December 2016 to £4.3 million (2015: £1.4 million), and reduced adjusted operating loss in the year to £1.6 million (2015: £3.1 million)

· Organic growth includes Gresham House Forestry LP and Gresham House Strategic Public Equity LP, with potential value from carried interest arrangements

· New strategic shareholders invested to align with the Group and support long-term growth, including the recently announced plan for the new Gresham House British Strategic Investment Fund

· Strong balance sheet with £26.9 million of tangible/realisable assets at year end (2015: £27.7 million) and a further £7.3 million received on the issuance of shares to a new strategic shareholder, Berkshire Pension Fund, in March 2017

Platform

Strategic Equity

· Gresham House Asset Management ("GHAM") appointed investment manager to LMS Capital with AUM of £68 million at 31 December 2016

· Gresham House Strategic Public Equity LP ("SPE LP") launched with committed AUM of £24 million at first close on 15 August 2016

· Gresham House Strategic plc ("GHS") has seen NAV grow 6% over the period from 14 August 2015 to 31 December 2016, including a significant cash weighting

Real Assets

· Gresham House Forestry AUM grown by 20% to £247 million at 31 December 2016 (2015: £205 million)

· Gresham House Forestry Fund LP launched with committed capital of £15 million at first close on 31 October 2016

Process

· Investment in compliance and regulatory functions

· Integration and rebranding of Gresham House Forestry completed in the year and performance in line with achievement of 15% return on invested capital acquisition criteria

· LMS's transition to GHAM as an external manager progressing to plan, implementing cost savings and GHAM value-add

· Investment teams are performing well and delivering growth across the strategies

People

· Continued investment in a strong and dedicated team appointing a new Finance Director, Chief Operating Officer and General Counsel, plus the lead fund manager for Gresham House Forestry and experienced Investment Directors in the Strategic Equity division

· Chief Technology Officer also joined in February 2017

Post reporting period

· Continued development in 2017, with Berkshire Pension Fund becoming a 20% strategic shareholder.

Tony Dalwood, CEO of Gresham House, comments:

"In 2015 we established the foundations of a specialist asset manager and 2016 has seen us build Gresham House into a credible specialist player whilst developing the brand. This has been enhanced by progress in early 2017, which has generated additional momentum that will drive further growth in the coming year. Our priority is to generate sustainable and increasing profits through growth in AUM. The positive recent developments accelerate our path to profitability in the nearer term and hence long-term value creation for shareholders. We continue to work on a number of organic and acquisition initiatives, including the recently announced Gresham House British Strategic Investment Fund with local government pension schemes and other long term investors."

Enquiries:

Gresham House plc

Anthony (Tony) Dalwood

Kevin Acton

+44 20 3837 6270

Liberum Capital Ltd

Neil Elliot

Jill Li

+44 20 3100 2000

Montfort Communications

Gay Collins

Rory King

greshamhouse@montfort.london

+44 7798 626282

+44 203 770 7906

The information contained within this announcement is deemed by the Company to constitute inside information as stipulated under the Market Abuse Regulation ("MAR"). Upon the publication of this announcement via Regulatory Information Service ("RIS"), this inside information is now considered to be in the public domain. If you have any queries on this, then please contact John-Paul Preston, Chief Operating Officer of the Company (responsible for arranging release of this announcement) on +44 (0)203 837 6274.

Chairman's Statement

Activity in the year

Gresham House's development as a specialist asset manager has continued in the year and I am pleased to advise shareholders that the Company continues to deliver well against our stated strategy.

Activity in the year has highlighted the progress made by the management team, with assets under management growing 50% through both organic and acquisition activity. Each of these elements of growth has been approached in a diligent manner to ensure that the investment management contracts acquired and funds launched are in line with the Company's stated strategy to operate in alternative and illiquid assets classes, which aim to generate superior returns for clients and shareholders over the longer term.

Results

The Group has reduced its adjusted operating loss to £1.6 million in the year from a £3.1 million loss last year, demonstrating great progress on the journey towards profitability. We continue to build the Group from a solid balance sheet and have the ability to approach opportunities from a strong position.

This performance is notable against a background of difficult economic and political conditions during 2016, following Britain's vote to leave the European Union in June and the US election results in November. The weakening of sterling and slow growth prospects for markets in general has impacted many companies. We are still operating in uncertain times, however the Board is keen to ensure that the business continues to be managed in a risk focussed manner. We are not materially exposed to foreign currency movements or interest rates and are using the current conditions to ensure that we continue to invest in the value driven areas of the market.

The management team

We have experienced some changes at the Board level in the year and I would like to take this opportunity to thank Michael Phillips on behalf of shareholders and the Board for his efforts in building Gresham House and his important role in the early stages of the Company's development. Mike stepped down from his role as Strategic Development Director at the end of the year to focus on his other business interests.

Shareholders will recall that we announced on 19 April 2016 that Kevin Acton would be joining us as Finance Director. Kevin took up his position on 6 June 2016 and very much hit the ground running; he has been a very valuable addition to the team and it has been a great pleasure working with him since then.

The Gresham House team has grown in the year to match the management's ambitions and provide a sound infrastructure to support the new funds launched and the investment management contracts acquired. The hard work and dedication of the whole team has driven the business to where it is today and I believe that we have the right people in place to continue to deliver against our strategic goals.

Shareholders

I am also pleased to welcome a number of new, long-term strategic shareholders to our share register in the year. Our supportive shareholder base has enabled the Company to use its balance sheet to develop to date and we are excited about the prospect of continuing to grow the business with this solid support behind us.

The announcement on 21 February 2017 and issuance of ordinary shares to the Royal County of Berkshire Pension Fund ("Berkshire"), highlight that Gresham House is building its name as an established specialist asset manager and becoming attractive to a wider audience of investors. We also look forward to working with Berkshire as the cornerstone investor in our new Gresham House British Strategic Investment Fund, in which we are already getting interest from local authority pension funds.

Annual General Meeting

Our Annual General Meeting this year is being held at 11.00am on 18 May 2017 at Travers Smith, 10 Snow Hill, London, EC1A 2AL. Given how much has happened during the year and subsequently the Board would encourage shareholders to attend and hear directly from the management team on the progress to date. I therefore hope to see as many of you as possible there.

Outlook

Overall it has been a very productive year for the Company and we have the ambition to deliver further growth in 2017. We will continue to harness our existing relationships and grow the business in line with our stated strategy and I look forward to updating you with further progress later in the year.

Anthony Townsend

Chairman

27 March 2017

Chief Executive's Statement

It has been a further year of significant development for the Group. Having firmly established Gresham House as a specialist asset manager focused on alternative and illiquid assets we have made progress on our journey to scale the business. This was a key objective we set out at the beginning of last year. We continue to focus on addressing the demand for long-term alternative investment strategies and providing alternatives asset management solutions to institutions, family offices, charities and endowments. We are delivering against our stated strategy of growing the business organically and through acquisitions that enhance the platform. The Gresham House brand is gaining increased recognition from investors and the market as a result.

Building on the solid foundations we have established for a long-term sustainable and successful group, the management team continues to focus on the three pillars of "Platform, Process and People".

The Gresham House Platform

The demand for illiquid assets is increasing and so too are the opportunities for Gresham House. We have formed a scalable platform to offer a range of alternative investment products through our two specialist divisions: Strategic Equity covering public and private equity and Real Assets. This has resulted in significant growth of 50% in Assets Under Management ("AUM") to £363 million in the year to 31 December 2016 (2015: £242 million).

Growing AUM and thereby sustainable management fees including associated performance fees or carried interest is critical to the Group's success. The growth in AUM during the year has increased revenues by over 200% to £4.3 million (2015: £1.4 million). The annualised management fees for the funds being managed at the end of December 2016 is £3.9 million from zero at the beginning of our journey in December 2014.

The Strategic Equity division has continued to develop and the team now manages three funds. Gresham House Asset Management Limited ("GHAM") was awarded the mandate in August 2015 to manage Gresham House Strategic plc ("GHS"), the AIM quoted company investing and actively engaging with management teams of undervalued smaller UK public companies. Subsequent to this, in August 2016 we launched the Gresham House Strategic Public Equity Fund LP ("SPE LP") with £24 million committed capital and co-investment. Following shareholder approval, GHAM was also appointed as investment manager to LMS Capital plc ("LMS") in August 2016, the London Stock Exchange listed private equity company with a Net Asset Value ("NAV") of £68 million at 31 December 2016.

The Real Assets division, currently comprising Gresham House Forestry Limited (formerly Aitchesse Limited), the specialist asset manager of UK commercial forestry, accounted for AUM of £247 million at the end of the year (2015: £205 million). The first close of the Gresham House Forestry Fund LP ("GHF LP") was in October 2016 and the subsequent purchase of a portfolio of six forests in West Scotland added £15 million to AUM in the year. We have also seen promising growth in the value of forests managed by Gresham House, making up the remaining £232 million of AUM.

The importance of technology in the daily lives of individuals is increasingly significant within asset management. Gresham House has identified an opportunity to materially enhance the client service proposition and create value through utilising digital platforms. We are therefore pleased to have recently added a new strategic objective to our development plan based around a new addition to our team, Andy Hampshire, who has joined us as Chief Technology Officer from Lloyds Development Capital. Andy has been tasked with creating value through developing a client platform to provide a high-quality service for investors that facilitates co-investment opportunities.

The Gresham House Process

To continue to build a successful business and meet client expectations, we have robust processes in place that require us to maintain exceptionally high standards in delivering sustainable value creation over the long term. Our view is that the investment discipline needed to manage funds is also required to manage the Group and as significant shareholders ourselves, the management team is focused on value creation for all shareholders over the long-term. The Investment Committee adds to this discipline and provides external challenge and an independent industry expert view to ensure that potential acquisitions or capital allocation considered by the management team exceed Group hurdles.

We have drawn on the Investment Committee's experience in the year and are benefitting from the acquisitions that we have made to date. All of these are meeting or performing ahead of the Group's investment return requirement to deliver long-term return on capital of 15%.

Process is also essential to integrating new businesses into the Gresham House family. The integration and rebrand of Gresham House Forestry was completed in the year, with the forestry team now fully embedded in the Group. The transition for LMS from self-managed to an externally managed company is progressing well and we continue to work closely with the board of LMS and increase our direct interaction and engagement with LMS' portfolio companies. This has included members of the GHAM team joining investee company boards.

The Gresham House People

Gresham House is a people business and behind the platform and process we have built a strong and dedicated team supporting a culture built on long-term shareholder value, alignment and teamwork.

As mentioned in our Interim Results announcement on 28 September 2016, over the year, we made several key hires within the senior management team, a number of whom have previously worked with existing members of the Gresham House team.

Kevin Acton joined as Finance Director and John-Paul Preston as Chief Operating Officer in 2016, both adding to the strength of the senior management team.

The specialist investment teams have also been enhanced with the addition of several significant appointments. Richard Davidson joined as the Chairman of the Investment Committee of the forestry business and Pardip Khroud was appointed as an Investment Director in the Strategic Equity division. Nick Friedlos and Tony Sweet have also joined as Investment Directors, following the appointment of GHAM as investment manager to LMS.

As set out above, Andy Hampshire also joined us as our Chief Technology Officer in February 2017.

I would like to thank Mike Phillips for his contribution to establishing the initial foundations of Gresham House. Mike stepped down from his role as Strategic Development Director at the end of the year.

Outlook

Gresham House is well positioned to offer a range of specialist products to address the increasing demand in the alternative market.

The Company has developed significantly under the new management team in a relatively short two year period and momentum is driving us into the coming year. Long-term shareholder value creation continues to be at the forefront of the Board's strategic focus.

Growth in AUM to generate sustainable profit growth remains a priority and we are pleased with the developments to date, as shown by the 50% AUM growth in 2016, which gives us greater visibility on near-term profitability.

We continue to work on a number of initiatives for both organic and acquisition growth. The recently announced Gresham House British Strategic Investment Fund, with the Royal County of Berkshire Pension Fund ("Berkshire") acting as a cornerstone investor, is a good example of the Group's ambition to innovate and grow. This new platform for the Group aims to provide solutions to pension schemes and endowments who want to access smaller niche alternative investments with longer term investment horizons in a more engaged and cost efficient manner.

The ambition of the Group has also been recognised externally with a number of new strategic long-term investors becoming shareholders, including LMS in the year and recently Berkshire in March 2017. This helps to create a supportive and long term investor base from which to grow the business. We are also pleased that the Gresham House Forestry acquisition is achieving the Group's intended long term hurdles of 15%.

We aim to close both the SPE LP and GHF LP funds in the second half of 2017 alongside managing both GHS and LMS portfolios to achieve their target returns for their respective shareholders.

There is also a renewed focus on realising value from the legacy portfolio, with both the Southern Gateway site and the remaining land at Newton-le-Willows entering marketing processes.

As we have grown the team alongside AUM we have also reviewed our London office needs. In February 2017, the London office moved to flexible office space at Octagon Point near St Paul's in London, with sufficient space to foreseeably accommodate the team for the next 18 month's development.

2017 strategic initiatives aim to achieve operating profitability in the near-term with a focus on achieving attractive operating margins in the medium term. We have a strong balance sheet with longer term asset management contracts, and we are growing additional value through balance sheet carried interests in the asset management products we manage.

We have a busy year ahead of us and I am confident that we have the right team in place to achieve our goals including growing the brand and client satisfaction. These initiatives alongside an aligned and capable management team are supporting the execution of the growth vision, with the near term aim of achieving profitability.

Anthony Dalwood

Chief Executive Officer

27 March 2017

Financial Review

Financial performance for the year ended 31 December 2016

	2016	2015
	£'000	£'000
Income	4,264	1,358
Property outgoings	(290)	(339)
Administration overheads (excluding amortisation and depreciation)	(5,459)	(2,700)
Finance costs	(442)	(144)
Gains/(losses) on investments/property and associates	342	(1,229)
Adjusted operating loss	(1,585)	(3,054)

Amortisation and depreciation	(1,433)	(4)
Movement in fair value of deferred receivable/contingent consideration	(51)	-
Exceptional items	-	(773)
Net operating loss after exceptional items	(3,069)	(3,831)

The Group's operating loss after exceptional items has decreased to £3,069k from £3,831k in the prior year. To measure the Group's performance, we focus on the trading profits, which is defined as the adjusted operating loss. The adjusted operating loss for the year to 31 December 2016 has reduced to £1,585k from £3,054k a year earlier. This non-GAAP measure reflects the Group's improved trading performance before the deduction of amortisation, depreciation, the fair value movement in contingent consideration and deferred receivable and exceptional items in the year. There has been a substantial improvement in income generated, primarily driven by AUM growth throughout the year. The cost base has also increased as the business has scaled and the right infrastructure and team are put in place. It should be noted that the balance sheet improvement in the period, from the gains on investments/property, are primarily driven by the share of profits recognised by the Group from its holding in GHS at £628k.

The net operating loss after exceptional items of £3,069k (2015: £3,831k) includes the deduction of amortisation and depreciation of £1,433k (2015: £4k), the increase in the fair value of the contingent consideration for Gresham House Forestry of £253k (2015: nil), the fair value movement in deferred receivable from Persimmon on the sale of Newton-le-Willows of £202k (2015: nil) and no exception items (2015: £773k).

Income

	2016	2015
	£'000	£'000
Asset management income	3,202	333
Rental income	741	746
Dividend and investment income	249	228
Other income	72	51
Total income	4,264	1,358

Asset management income

In line with the growth in AUM outlined in the Chief Executive's Report there has been a substantial increase in asset management fee income to £3,202k in the year to 31 December 2016 (2015: £333k). This was the result of new funds being launched and investment management contracts acquired as part of Gresham House's development as a specialist asset manager. The annualised asset management fee income for funds managed as at 31 December 2016 is £3.9 million.

The Real Assets division delivered income from the forestry business of £2,120k in the year (2015: £206k related to six weeks' income). This is the first full year of the forestry business being part of the Group and also recognises the launch of GHF LP in October 2016, which generated management fee and transaction fee income of £249k.

Strategic Equity earned fees from all three of the funds managed by the division, totalling £1,082k in the year (2015: £127k). The Group earned management fee income of £542k from its contract with GHS, reflecting NAV growth and a full year of management services (2015: £127k). SPE LP, the sister fund to GHS, had its first close on 15 August 2016 and subsequently the Group earned £61k of management fees in the later part of 2016. The LMS management contract was awarded on 16 August 2016 and delivered management and transition fee income in the year of £479k.

Rental income

The legacy property portfolio includes the Southern Gateway site and the remaining land at Newton-le-Willows, which generated £741k in the year (2015: £747k). Southern Gateway rental income was £724k (2015: £738k), representing improvements in rent from a number of tenants being offset by a vacant period of six months. The vacant area of the site has since been let at a premium to its original rent.

Dividend and investment income

Dividend and investment income of £249k (2015: £228k) mainly represents interest earned on the Attila loan of £238k, which was earned and paid in the period (2015: £95k).

Property outgoings

The cost of managing the legacy property portfolio has reduced to £290k in 2016 (2015: £339k) as we rationalised the use of external consultants on the site and focused on readying the site for sale.

Administrative overheads

Administrative overheads excluding amortisation, depreciation and the fair value movement in contingent consideration payable and deferred receivable have grown to £5,459k in the year (2015: £2,700k). The development and transformation of Gresham House to a specialist asset manager has required investment in people and infrastructure to grow AUM. The increase of £2,759k is primarily driven by the growth of the business and costs relating to people, office and also recognising the first full year of the forestry business.

The Gresham House team has grown from 23 to 26 at the end of 2016 as we put in place the right support and investment team to deliver the ambitious growth plan. The Gresham House Forestry team has remained consistent with a team of eleven people throughout the year and the growth in headcount has therefore been in the Group and Strategic Equity teams, with key hires including the Finance Director, Chief Operating Officer and Investment Directors. People costs have consequently increased by £1,925k from £1,760k to £3,685k at the end of 2016. It should be noted that a cost reduction exercise has been identified including synergies, and is in the process of being implemented.

Office costs have also increased as the business has scaled. Early in 2016 the London office moved to flexible office space at Cheapside in London as an interim step to accommodate the increase in headcount and activity, which contributed to office costs of £307k (2015: £131k).

This is the first full year of owning Gresham House Forestry Limited and the administrative overheads from the business of £441k are now included in the Group income statement (2015: £32k).

Finance costs

In April 2016, the group refinanced the existing Co-operative bank facility of £2.85 million with a new Kleinwort Benson Bank facility of £7.0 million. The finance costs associated with both of these loans over the year was £442k (2015: £144k). Further details of the Kleinwort Benson Bank facility are included in the borrowings section of this Financial Review.

Gains/(losses) on investments

	2016	2015
	£'000	£'000
Share of associates' profits	628	-
Gains/(losses) on investments held at fair value	(147)	(485)
Fair value movement on investment properties	(242)	(586)
Profit/(loss) on disposal of investment properties	103	(158)
Total gains/(losses) on investments	342	(1,229)

The gains/(losses) on investments table above represents the investment that the Group has made in the funds that it manages as well as the legacy investments in property and securities.

The share of associates' profits relates to the 19.2% holding that the Group has in GHS. The last results announcement from GHS was on 25 November 2016 for the six month period to 30 September 2016. Under associate accounting, the Group has therefore recognised its share of the profits in the period of £628k.

The fair value movement on investments reflects the Group's co-investment with SPE LP in IMI Mobile, which reduced in value by £113k in the period to 31 December 2016.

The capital expenditure at Southern Gateway has been offset by slower general market conditions and therefore although the valuation increased by £100k a value decrease of £242k was noted in the year (2015: £586k decrease).

The Group did however receive an overage payment of £103k in the year relating to the sale of the Vincent Lane site in 2013 as a result of housing sales in excess of the sale and purchase agreement.

Amortisation and depreciation

The acquisition of Aitchesse Limited (now Gresham House Forestry Limited) in November 2015 and the LMS investment management contract in August 2016 requires the recognition of goodwill and other intangible assets. In line with the Group's accounting policies, the intangible assets are amortised over their useful lives. This is the first full year over which the intangible assets are being amortised, with £1,364k being recognised as amortisation.

Depreciation of £69k in the year (2015: £4k) has a lesser impact on the Group's income statement and relates primarily to motor vehicles used by the forestry business.

Fair value movement in deferred receivable and contingent consideration

Persimmon purchased the Newton-le-Willows site in September 2015 and agreed a schedule of payments to the Group with annual instalments up until 22 March 2019. The deferred receivable is initially recognised at fair value and the £202k movement in the fair value in the year represents the reduction in time to payment, in line with International Financial Reporting Standards. Further details of the repayment profile are included in note 14 to the financial statements.

The fair value movement in the contingent consideration payable to the sellers of Aitchesse has increased by £253k in the year as there is less impact from the discount applied over time. Further details are in the following section.

Exceptional items

There were no exceptional items in the year compared to £773k in 2015. The 2015 exceptional items related to the re-admission to AIM and the acquisition of Aitchesse.

Financial position

	2016	2015
	£'000	£'000
Assets
Investments*	8,873	7,470
Property	10,000	9,900
Deferred receivable - Persimmon	5,180	5,916
Cash	2,802	4,390
Tangible/realisable assets	26,855	27,676

Intangible assets	6,630	6,588
Other assets	2,037	1,559
Total assets	35,522	35,823

Liabilities
Borrowing	5,896	2,850
Contingent consideration	3,237	2,726
Other creditors	2,256	4,421
	11,389	9,997
Net assets	24,133	25,826

*IFRS requires the consolidation of the Gresham House Forestry Friends and Family Fund LP. This has been adjusted here for the £491k non-controlling interest to show the Group's position on an investment basis.

Tangible/realisable assets

The above highlights the strong balance sheet position that the Group has at the end of 2016. The tangible/realisable assets supporting this total £26.9 million (2015: £27.7 million), comprising investments, property, accrued income receivable from Persimmon on the sale of the Newton-le-Willows site and cash.

Investments

Investments include the value of the Group's holding at the end of the year in GHF LP of £1.2 million, co-investment in SPE LP of £468k and the Group's associate holding in GHS of £6.5 million (2015: £5.9 million). The remaining balance of £675k related to the legacy portfolio at the end of 2016. Good progress has been made in the year with realisations of £918k to 31 December 2016 from an opening value at the beginning of the year of £1,568k.

Property

The value of the property portfolio of Southern Gateway £7.75 million (2015: £7.65 million) and the remaining land at Newton-le-Willows £2.25 million (2015: £2.25 million) have both been valued independently at the end of the year. Both are now in active sales processes and we envisage selling these properties in the coming year.

Deferred receivable - Persimmon

The Persimmon deferred receivable relates to the instalments that are due from Persimmon annually up to 22 March 2019. In the year £0.9 million was paid early by Persimmon as a result of selling houses quicker than expected. The next instalment due on 22 March 2017 has therefore been reduced by this amount, and a further £0.1 million received early in January 2017, to £1.0 million. The deferred receivable have been fair valued as this was designated at fair value through profit or loss at inception.

Intangible assets

Intangible assets of £6.6 million (2015: £6.6 million) relate to the Aitchesse Limited (now Gresham House Forestry Limited) acquisition and the LMS management contract award. The intangible assets recognised at the end of the year for Aitchesse of goodwill, management contracts and customer relationships totalled £5.5 million. The performance of the business has supported the goodwill recognised and the management contract and customer relationships have been amortised in line with their expected useful lives.

The LMS contract has been recognised at a fair value of £1.4 million at acquisition, including acquisition costs, in August 2016 and amortised over three years, reducing to £1.2 million as at 31 December 2016.

Borrowing

In April 2016 the Group refinanced the loan that was in place with the Co-operative Bank (£2.85 million), which was secured on the property portfolio. A new facility with Kleinwort Benson Bank Limited was agreed to lend the Group £7.0 million with security over the Group's property portfolio as well as deferred receivable due from Persimmon. The facility is repayable over three years, matching the deferred receivable settlement by Persimmon. Interest is charged at LIBOR plus 4.5%.

Contingent consideration

The contingent consideration payable to the original owners of Aitchesse requires EBITDA generation by the Aitchesse business of between £1.7 million and £3.5 million in the period from 1 July 2015 to 28 February 2018. The current assessment is that the maximum EBITDA is expected to be achieved, with the Group incurring a full deferred consideration, which after discounting indicates a fair value of £3.0 million (2015: £2.7 million).

The remaining £258k relates to the fair value of the second tranche payment due to LMS for the management contract in August 2018.

Kevin Acton

Finance Director

27 March 2017

Strategic Report

This report has been prepared by the Directors in accordance with the requirements under section 414 of the Companies Act 2006. The purpose of this report is to inform shareholders about how the Group fared during the year ended 31 December 2016.

Short forms and abbreviations are defined above in the Chairman's and Chief Executive's Reports.

Strategic objective

Gresham House is a specialist asset manager focussed on alternative and illiquid asset classes, aiming to generate superior returns for clients and shareholders over the longer term. Shareholder value creation will be driven by long-term growth in earnings as a result of increasing AUM and returns from invested capital.

Gresham House currently manages investments and co-investments through its investment management platform on behalf of institutions, family offices, charities and endowments and private individuals.

Gresham House's strategy is to grow AUM organically and through appropriate acquisitions, using its balance sheet to acquire businesses, attract talent, seed new funds and create new divisions with the aim of creating a sustainable and profitable business together with carried interest and performance fees.

Business model

The Group's business model as a specialist asset manager focuses on alternative investment strategies in illiquid assets over long-term horizons and clear alignment between shareholders and the management team.

Specialist asset management vehicle

Gresham House, with its FCA regulated subsidiary Gresham House Asset Management Limited, provides investors with the opportunity to access a London Stock Exchange listed vehicle and so benefit from the sustainable management fees earned from its specialist asset management business. An experienced team with strong track records in their respective specialist sectors lead the business.

Alignment

Alignment with shareholders is critical to delivering value. The management team and close advisors ensure alignment by directly owning 5% of the business and the wider team is motivated to grow the value of Gresham House plc through long-term incentive schemes. It is also important for Gresham House to be aligned with the investors in the funds that it manages and therefore the Group typically holds a stake in these funds. This approach when combined with the talent at Gresham House and the development of a best-in-class client technology platform will allow Gresham House to deliver value to its shareholders and clients alike.

Developing asset classes

The Strategic Equity and Real Assets divisions currently house a number of funds that have either been launched organically or been acquired through existing businesses and management contracts. The Group will continue to develop the business by growing AUM through the purchase of existing companies, the raising of new funds and from sustainable management fee income from the two current divisions and any subsequent divisions that are yet to be established.

Key performance indicators

The key indicators of performance relevant for the Group are the trading profits of the investment management business, measured through the adjusted operating profit metric and AUM.

In the year to 31 December 2016 the adjusted operating loss had reduced to £1,585k (2015: £3,054k) and included net gains totalling £342k from associates, losses from investments and (2015: £1,229k losses).

AUM grew to £363 million by the end of the year (2015: £242 million), further detail is included in the business review below.

Business review

Assets under Management

The AUM of the Group has grown by over 50% in the year to £363 million at 31 December 2016 (2015: £242 million).

Growth in AUM has been both organic, through the raising of SPE LP (£24 million committed and co-investment) and GHF LP (£15 million), as well as acquisition, with the award of the LMS investment management contract (£68 million).

Real Assets - "Uncorrelated with traditional asset classes"

The Group's Real Assets division was established with the acquisition of Aitchesse Limited (now Gresham House Forestry Limited) in November 2015. The Real Assets division targets asset classes that are uncorrelated with traditional debt and equity classes and forestry is a great example of this. Forestry is a physical asset that generates income, provides inflation protection and is unaffected by the performance of financial markets, since trees continue to grow irrespective of the economic environment

Gresham House Forestry is a specialist asset manager that manages over 30,000 hectares of UK commercial forestry on behalf of endowments, family offices, limited partnerships and high-net-worth investors. The forestry business has completed its first full year of results since the acquisition and is now integrated with the Gresham House business. The figures below demonstrate that it has experienced good growth in the year to 31 December 2016.

The forestry business' 20% growth in AUM in the year to £247million (2015: £205 million) was driven by the increase in value of the existing forests managed by the team, combined with new forest acquisitions and the launch of the Gresham House Forestry Fund LP ("GHF LP") on 31 October 2016.

GHF LP targets net returns of 10% per annum, with expected annual distribution of 2% to 4% from timber sales. GHF LP had its first close with £15 million of commitments and finance raised, which included £1.25 million from Gresham House. GHF LP has subsequently invested in six forests at a price of £12.3 million as at 31 December 2016 and is targeting a final close in the second half of 2017 at a size of £50 million.

Market conditions for Forestry continue to be favorable with GBP remaining weak and timber prices high. The UK timber harvest accounts for only 25% of the 60 million tonnes of timber used each year in the UK. Imports are therefore a key part of the timber industry in the UK. A large portion of these imports come from Scandinavia and a weak GBP against the Swedish Krone makes imported timber more expensive, benefiting the UK forestry market. The UK government has also renewed its commitment to house building and with the timber content of new houses continuing to rise, this is further positive news for UK forestry.

While timber prices are back to their 2014 highs, fuel prices are not. This dynamic has had a positive impact on UK forestry returns since the costs of harvesting and haulage are considerable and are significantly affected by the price of fuel.

Strategic Equity - "Bridging public and private markets"

The Strategic Equity division focuses on inefficient areas of public and private markets to capture value over the long-term. This division covers both public market and private equity investment opportunities.

Gresham House applies its Strategic Equity approach to small public and private companies in the UK that are typically below £100m in size, generate healthy cash flows and produce good return on capital, but have been overlooked by the market, so-called "value stocks".

Given the current economic backdrop and political uncertainty we believe the UK market is expensive relative to historic ranges with the valuation of companies within the FTSE All-Share Index, as a multiple of prospective earnings, trading close to 10 year highs.

It is also clear that much of the uplift in company valuations in the UK over the last 12 months has been down to market re-rating, and then dividend pay-out rather than supported by earnings growth.

Gresham House Asset Management flagged this concern at the beginning of 2016 in its H1 2016 Investment Perspectives publication titled "Alpha generation from investing in value companies" that highlighted that while value stocks generally remain overlooked we are beginning to see a rotation away from growth and momentum stocks that are highly priced and into value. Earlier this year GHAM published its H1 2017 perspectives flagging the attractions of smaller companies that tend to be valued significantly below their larger peers, reiterating that within that opportunity set, those stocks with value characteristics offer significant scope to generate superior returns over the long-term.

Investment in smaller, value stocks requires a considerably higher level of engagement with investee company stakeholders. First, in order to identify market pricing inefficiencies, and catalysts for value creation, and then to support a clear strategic plan to create equity value over the long term (3-5 years) thereby targeting above market returns.

The Strategic Equity division provides access to this investment strategy through three vehicles, Gresham House Strategic plc ("GHS") and Gresham House Strategic Public Equity LP ("SPE LP"), both of which primarily target public markets, and LMS Capital plc ("LMS"), which targets direct private equity in the UK.

Gresham House Strategic plc

GHS was the first investment mandate awarded to GHAM in August 2015 and the Group holds a 19.2% interest in GHS creating alignment between the two.

The existing GHS portfolio managed by GHAM continues to perform well with low volatility in difficult macro-economic and geo-political conditions. NAV growth to 31 December 2016 was 6% since GHAM's appointment on 14 August 2015. A resilient performance relative to the FTSE Small-Cap Index (excluding investment trusts) , which also grew by 7% over the same period. Through buying GHS shares which currently trade at a 25% discount to the NAV per share, investors gain exposure to a portfolio of eight companies that are attractively valued at c.6x EV/EBITDA (stripping out cash from the portfolio) and growing earnings in excess of 30%*

*Using the latest corporate broker forecasts for the underlying portfolio companies and stripping out the cash position in the company. Gresham House EV is based on the market capitalisation and cash position as at 20 March 2017, the latest data available.

Gresham House Strategic Public Equity LP

SPE LP held its first close on 15 August 2016 with commitments and co-investment agreements of £24 million and is targeting a final close in the second half of 2017. SPE LP is a sister fund to GHS and will invest and divest alongside, utilising the same investment committee and investment team. Gresham House has entered into a co-investment agreement with SPE LP and has committed to an amount of £1.5 million.

LMS Capital plc

GHAM was appointed as the investment manager of LMS in August 2016. Over the past seven months there has been significant progress in the transition to external management and the generation of targeted annualised cost savings for LMS. Through this period, members of the investment team have actively engaged with underlying portfolio companies.

LMS is listed on the main market of the London Stock Exchange. It has a private equity portfolio that includes small to medium sized private and public companies in the consumer, energy and business services sectors, with investments held both directly and indirectly through third party investment funds. LMS had been undergoing a realisation programme ahead of GHAM's appointment in August 2016 and the adoption of a new investment policy focused predominantly on private equity investment. As the manager, GHAM will aim to achieve shareholder objectives through a staged approach.

The mandate to manage LMS involves maximising long-term value. This includes appropriate realisations of the existing portfolio and returning a further £11 million to shareholders alongside reinvestment in direct private equity investments in the UK in the longer term and focusing on options to scale LMS thereafter.

Gresham House paid a first tranche consideration of £1 million in Gresham House plc ordinary shares for the management contract in August 2016, with a second tranche amount of up to £1.25 million being payable in two years' time. The second tranche is payable on a sliding scale from zero to £1.25 million when the NAV in two years' time is between £67.5 million and £85 million. The investment management contract is for a minimum term of three years. Management fees of 1.5% per annum are earned on the average annual NAV of LMS of up to £100 million, 1.25% where NAV is greater than £100 million but lower than £150 million and 1.0% where NAV is greater than £150 million. Performance fees of 15% will be payable where new investments have had cumulative compound growth in excess of 8% per annum, with the first measurement being the period to 31 December 2017. No new investments have been made in the period to 31 December 2016.

LMS announced its annual results for the year to 31 December 2016 on 14 March 2017 and the positive foreign currency impact of the US dollar from LMS' US portfolio has been offset by weak trading performance in some of LMS' portfolio companies. As such, the year-end NAV was reduced to £68 million.

GHAM has engaged with portfolio companies and is working with the management teams to identify catalysts for growth, to drive long-term value creation and to reverse the disappointing portfolio performance in 2016. As stated above the company has committed to return up to £11 million to LMS shareholders from realisations of the existing portfolio and is focused on progressing and initiating sale processes for certain holdings. Alongside any return to shareholders we will look to reinvest in direct private equity opportunities at the smaller end of the market, leveraging the expertise and experience of our investment team and new investment committee.

Legacy portfolio

The orderly disposal of the legacy portfolio has been ongoing in the year to 31 December 2016. The majority of the legacy portfolio relates to property, namely the Southern Gateway site and the remaining land at Newton-le-Willows, with a combined gross value of £10 million as at 31 December 2016 (2015: £9.9 million).

Southern Gateway

The Southern Gateway site is approximately 370,000 square feet of mixed commercial and warehouse property in Speke, Liverpool and is now in an active marketing process. During the year a number of initiatives have been implemented to improve the value of the site in preparation for sale. The current gross valuation of £7.75 million (2015: £7.65 million) has been assessed by an independent valuer and factors in the improvement initiatives as well as the general market conditions, which have been felt in the property market since the Brexit vote in the summer. We have entered a process to realise value in the short-term.

Newton-le-Willows

The majority of the Newton-le-Willows site was sold to Persimmon Homes in September 2015 for housing development. We have since been working on preparing the remaining land at Newton-le-Willows for sale and have recently applied for planning permission to build 82 homes. The valuation as at 31 December 2016 for the land is £2.25 million (2015: £2.25 million) as assessed by an independent valuer. The land is now in an active sales process and we are also aiming to realise value in the short-term.

Remaining securities

We have made good progress in disposing of the legacy security portfolio, realising £918k in the year. We continue to seek value as we dispose of these assets and focus on the current business as a specialist asset manager.

Financial Tables

Group Statement of Comprehensive Income

FOR THE YEAR ENDED 31 DECEMBER 2016

		2016	2015
Notes
		£'000	£'000
Income	1
Asset management income		3,202	333
Rental income		741	746
Dividend and interest income		249	228
Other operating income		72	51
Total income		4,264	1,358
Operating costs	3
Property outgoings		(290)	(339)
Administrative overheads		(6,892)	(2,704)
Net operating loss before exceptional items		(2,918)	(1,685)
Finance costs	6	(442)	(144)
Exceptional items	*	-	(773)
Net operating loss after exceptional items		(3,360)	(2,602)
Gains and losses on investments:
Share of associate's profit	16	628	-
Movement in fair value of investment property	11	(139)	(744)
Gains and (losses) on investments held at fair value	10	(147)	(485)
Movement in fair value of contingent consideration		(253)	-
Movement in fair value of deferred receivable		202	-
Operating loss before taxation		(3,069)	(3,831)
Taxation	7	33	-
Total comprehensive income		(3,036)	(3,831)

Attributable to:
Equity holders of the parent		(3,027)	(3,807)
Non-controlling interest		(9)	(24)
		(3,036)	(3,831)
Basic and diluted loss per ordinary share (pence)	8	(30.3)	(40.5)

* Exceptional items in 2015 relate to professional fees incurred in respect of the re-admission to AIM and the acquisition of Aitchesse Limited which took place on 23 November 2015 and on the reorganisation of the Group's legacy subsidiaries.

Statements of Changes in Equity

Group
YEAR ENDED 31 DECEMBER 2016
Notes		Ordinary share capital	Share premium	Share warrant reserve	Retained reserves	Equity attributable to equity share-holders	Non-controlling interest	Total equity
		£'000	£'000	£'000	£'000	£'000	£'000	£'000
Balance at 31 December 2015		2,463	1,688	64	21,611	25,826	-	25,826
Comprehensive income for the year
Loss for the year		-	-	-	(3,027)	(3,027)	(9)	(3,036)
Total comprehensive income for the year		-	-	-	(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	25	-	-	255	-	255	-	255
Share based payments	26	-	-	-	73	73	-	73
Issue of shares	24	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


YEAR ENDED 31 DECEMBER 2015
Notes		Ordinary share capital	Share premium	Share warrant reserve	Retained reserves	Equity attributable to equity share-holders	Non-controlling interest	Total equity
		£'000	£'000	£'000	£'000	£'000	£'000	£'000
Balance at 31 December 2014		2,336	12,508	64	12,934	27,842	-	27,842
Comprehensive income for the year
Loss for the year		-	-	-	(3,807)	(3,807)	(24)	(3,831)
Total comprehensive income for the year		-	-	-	(3,807)	(3,807)	(24)	(3,831)
Contributions by and distributions to owners
Transfer of non-controlling interest deficit		-	-	-	(24)	(24)	24	-
Issue of shares	24	127	1,688	-	-	1,815	-	1,815
Cancellation of share premium	27	-	(12,508)	-	12,508	-	-	-
Total contributions by and distributions to owners		127	(10,820)	-	12,484	1,791	24	1,815
Balance at 31 December 2015		2,463	1,688	64	21,611	25,826	-	25,826

Company
YEAR ENDED 31 DECEMBER 2016
Notes		Ordinary share capital	Share premium	Share warrant reserve	Retained reserves	Total equity
		£'000	£'000	£'000	£'000	£'000
Balance at 31 December 2015		2,463	1,688	64	16,939	21,154
Comprehensive income for the year
Loss for the year		-	-	-	(786)	(786)
Total comprehensive income for the year		-	-	-	(786)	(786)
Contributions by and distributions to owners
Issue of shares	24	83	923	-	-	1,006
Share warrants issued	25	-	-	255	-	255
Total contributions by and distributions to owners		83	923	255	-	1,261
Balance at 31 December 2016		2,546	2,611	319	16,153	21,629
YEAR ENDED 31 DECEMBER 2015
Notes		Ordinary share capital	Share premium	Share warrant reserve	Retained reserves	Total equity
		£'000	£'000	£'000	£'000	£'000
Balance at 31 December 2014		2,336	12,508	64	6,946	21,854
Comprehensive income for the year
Loss for the year		-	-	-	(2,515)	(2,515)
Total comprehensive income for the year		-	-	-	(2,515)	(2,515)
Contributions by and distributions to owners
Issue of shares	24	127	1,688	-	-	1,815
Cancellation of share premium	27	-	(12,508)	-	12,508	-
Total contributions by and distributions to owners		127	(10,820)	-	12,508	1,815
Balance at 31 December 2015		2,463	1,688	64	16,939	21,154

Statements of Financial Position

AS AT 31 DECEMBER 2016

			Group		Company
		Notes	2016	2015	2016	2015
Assets			£'000	£'000	£'000	£'000
Non current assets
	Investments - securities	10	2,834	1,568	1,116	1,568
	Investment property	11	-	9,559	-	-
	Tangible fixed assets	12	179	154	13	-
	Investment in subsidiaries	15	-	-	16,292	2,822
	Investment in associate	16	6,530	5,902	-	5,902
	Intangible assets	13	6,630	6,588	-	-
	Long-term receivables	14	4,095	5,916	-	-
			20,268	29,687	17,421	10,292
Current assets
	Trade receivables	17	1,259	665	-	-
	Accrued income and prepaid expenses		917	1,081	219	383
	Deferred receivable	14	1,139	-	-	-
	Other current assets	18	-	-	9,734	11,568
	Cash and cash equivalents		2,802	4,390	858	372
Non-current assets held for sale
	Property investments	11	9,628	-	-	-
Total current assets and non-current assets held for sale			15,745	6,136	10,811	12,323
Total assets			36,013	35,823	28,232	22,615

Current liabilities
	Trade and other payables	19	2,229	4,390	87	1,435
	Short term borrowings	20	1,015	2,850	1,377	26
			3,244	7,240	1,464	1,461
Total assets less current liabilities			32,769	28,583	26,768	21,154

Non-current liabilities
	Deferred taxation	21	-	-	-	-
	Long term borrowings	22	4,881	-	4,881	-
	Other creditors	23	3,264	2,757	258	-
			8,145	2,757	5,139	-
Net assets			24,624	25,826	21,629	21,154

Capital and reserves
	Ordinary share capital	24	2,546	2,463	2,546	2,463
	Share premium	27	2,611	1,688	2,611	1,688
	Share warrant reserve	27	319	64	319	64
	Retained reserves	27	18,657	21,611	16,153	16,939

Equity attributable to equity shareholders			24,133	25,826	21,629	21,154
Non-controlling interest		27	491	-	-	-
Total equity			24,624	25,826	21,629	21,154

Basic and diluted net asset value per ordinary share (pence)		28	236.9	262.2	212.4	214.7
The loss after tax for the Company for the year ended 31 December 2016 was £786,000. The financial statements were approved and authorised for issue by the Board and were signed on its behalf on 27 March 2017 Kevin Acton Finance Director

Group Statement of Cash Flows

FOR THE YEAR ENDED 31 DECEMBER 2016

	Notes	2016	2016	2015	2015
		£'000	£'000	£'000	£'000
Cash flow from operating activities
Dividend income received		7		48
Interest received		470		317
Rental income received		728		549
Other cash payments		(4,542)		(2,940)
Net cash utilised in operations	29		(3,337)		(2,026)

Corporation tax paid		(204)		-
Interest paid on loans		(226)		(175)
			(430)		(175)

Net cash flow from operating activities			(3,767)		(2,201)

Cash flow from investing activities
Acquisition of Aitchesse Limited		-		(1,074)
Purchase of investments		(1,831)		(5,000)
Sale of investments		918		-
Sale of investment properties		-		2,222
Deferred proceeds received on sale of investment properties		1,041		-
Expenditure on investment properties		(353)		(329)
Purchase of fixed assets		(125)		(24)
Sale of fixed assets		37		15
Purchase of contracts		(148)		-
			(461)		(4,190)
Cash flow from financing activities
Repayment of loans		(4,454)		(428)
Receipt of loans		6,833		-
Share issue proceeds		6		-
LMS warrants issued		255		-
			2,640		(428)

Decrease in cash and cash equivalents			(1,588)		(6,819)

Cash and cash equivalents at start of year			4,390		11,209

Cash and cash equivalents at end of year			2,802		4,390

Company Statement of Cash Flows

FOR THE YEAR ENDED 31 DECEMBER 2016

	Notes	2016	2016	2015	2015
		£'000	£'000	£'000	£'000
Cash flow from operating activities
Investment income received		7		48
Interest received		470		316
Other cash payments		(883)		(1,711)
Net cash flow from operating activities	29		(406)		(1,347)

Interest paid on loans			(194)		-

Net cash flow from operating activities			(600)		(1,347)

Cash flow from investing activities
Purchase of investments		(581)		(5,000)
Sale of investments		918		-
Investment in subsidiary		(1,250)		(2,500)
Advanced to Group undertakings		(4,789)		(8,621)
Repaid by Group undertakings		1,314		6,957
Purchases of fixed assets		(16)		-
			(4,404)		(9,164)
Cash flow from financing activities
Repayment of loans		(1,604)		-
Receipt of loans		6,833		-
Share issue proceeds		6		-
LMS warrants issued		255		-
			5,490		-

Increase / (decrease) in cash and cash equivalents			486		(10,511)

Cash and cash equivalents at start of year			372		10,883

Cash and cash equivalents at end of year			858		372

Principal Accounting Policies

The Group's principal accounting policies are as follows:

(a) Basis of preparation

The financial statements of the Group and the Company have been prepared in accordance with International Financial Reporting Standards ("IFRS") as adopted by the European Union and those parts of the Companies Act 2006 applicable to companies reporting under IFRS.

The Group has considerable financial resources and ongoing investment management contracts. As a consequence, the directors believe that the Group is well placed to manage its business risks successfully. The directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future. Thus, the directors continue to adopt the going concern basis of accounting in preparing the financial statements.

The following standards and interpretations which have not been applied in these financial statements were in issue but not yet effective at year end. The following standards and interpretations which have not been applied in these financial statements were in issue but not yet effective at year end. The Directors do not anticipate that the adoption of these standards and interpretations will have a material impact on the Group's financial statements in the period of initial application, other than presentation or disclosure, and a full assessment will be conducted subsequent to the year end:

(i) IFRS 9 Financial Instruments

(ii) IFRS 10 (amended) Consolidated Financial Statements

(iii) IFRS 11 (amended) Accounting for Acquisitions of Interests in Joint Operations

(iv) IFRS 12 (amended) Disclosures of Interest in Other entities

(v) IFRS 14 Regulatory Deferral Accounts

(vi) IFRS 15 Revenue From Contracts With Customers

(vii) IFRS 16 Leases

(viii) IAS 16 (amended) Property, Plant and Equipment

(ix) IAS 28 (amended) Investments in Associates and Joint Ventures

(x) IAS 38 (amended) Intangibles

(b) Basis of consolidation

Subsidiaries

Where the Company has control over an investee, it is classified as a subsidiary. The Company controls an investee if all three of the following elements are present: power over the investee, exposure to variable returns from the investee, and the ability of the investor to use its power to affect those variable returns. Control is reassessed whenever facts and circumstances indicate that there may be a change in any of these elements of control. The consolidated financial statements incorporate the financial statements of the Company and its subsidiary undertakings made up to the year-end as if they formed a single entity. All intra-group transactions, balances, income and expenses are eliminated on consolidation.

Associates

Where the Group has significant influence, it has the power to participate in (but not control) the financial and operating policy decisions of another entity, it is classified as an associate. Associates are initially recognised in the Group Statement of Financial Position at cost. Subsequently, associates are accounted for using the equity method, where the Group's share of post-acquisition profits and losses and other comprehensive income is recognised in the Group Statement of Comprehensive Income.

Profits and losses arising on transactions between the Group and its associates are recognised only to the extent of unrelated investors' interests in the associate. The investor's share in the associate's profits and losses resulting from these transactions is eliminated against the carrying value of the associate.

Where there is objective evidence that the investment in an associate has been impaired, the carrying amount of the investment will be tested for impairment in the same way as other non-financial assets.

As permitted by section 408 of the Companies Act 2006, the Company has not presented its own Statement of Comprehensive Income. Details of the Company's results for the year are set out in note 27, the loss for the year being £786,000 (2015: £2,515,000).

(d) Segment reporting

IFRS 8 requires operating segments to be identified on the basis of internal reports about components of the Group that are regularly reviewed by the Board in order to allocate resources to the segments and to assess their performance.

The Group's reportable segments, which are those reported to the Board are, "Real Assets", "Strategic Equity", "Legacy Property" and "Central".

(e) Revenue recognition

Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Group and the revenue can be reliably measured. Revenue is measured at the fair value of the consideration received or receivable is stated net of value added tax and is earned within the United Kingdom.

(i) Asset management income

Revenue represents management and advisory fees for the provision of fund management and forestry management services and is recognised in the Statement of Comprehensive Income when the services are performed net of VAT.

(ii) Rental income

Rental income comprises property rental income receivable net of VAT, recognised on a straight line basis over the lease term and excludes service charges recoverable from the tenant.

(iii) Dividend and interest income

Income from listed securities is recognised when the right to receive the dividend has been established. Interest receivable is recognised when it is probable that the economic benefits will flow to the Group and the amount of revenue can be reliably measured. Interest income is accrued on a time basis by reference to the principal outstanding.

(iv) Performance fees

Performance fees will be recognised on the date of entitlement in accordance with the management contract.

(f) Expenses

All expenses and interest payable are accounted for on an accruals basis.

(g) Property, plant and equipment

Each class of property, plant and equipment is carried at cost less, where applicable, any accumulated depreciation.

The carrying amount of property, plant and equipment is reviewed annually by the directors to ensure it is not in excess of the recoverable amount from those assets. The recoverable amount is assessed on the basis of the expected net cash flows which will be received from the assets' employment and subsequent disposal.

The depreciable amount of all fixed assets are depreciated on a straight line basis over their estimated useful lives to the Group commencing from the time the asset is held ready for use, and are depreciated using rates of between 2% and 25%.

(h) Taxation

The tax expense represents the sum of the tax currently payable and deferred tax.

The tax currently payable is based on taxable profit for the year. Taxable profit differs from profit before tax as reported in the Statement of Comprehensive Income because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The Group's liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the Statement of Financial Position date.

Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit, and is accounted for using the statement of financial position liability method. Deferred tax liabilities are recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised. Deferred tax is also provided for on revaluation surpluses on investment properties.

The carrying amount of deferred tax assets is reviewed at each Statement of Financial Position date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the assets to be recovered.

Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset realised. Deferred tax is charged or credited in the Statement of Comprehensive Income, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity.

(i) Operating leases and hire purchase contracts

Amounts payable under operating leases are charged directly to the Statement of Comprehensive Income on a straight line basis over the period of the lease. The aggregate costs of operating lease incentives provided by the Group are recognised as a reduction in rental income on a straight line basis over the lease term.

(j) Investments

Financial assets designated as at fair value through profit and loss ("FVTPL") at inception are those that are managed and whose performance is evaluated on a fair value basis, in accordance with the documented investment strategy of the Company. Information about these financial assets is provided internally on a fair value basis to the Group's key management. All equity investments that were previously classified as held at fair value through profit or loss have been reassessed as at the date the Company became a trading company. The equity investments which do not meet the definitions of an associate or subsidiary remain held at fair value through profit and loss.

(i) Properties

Property investments are included in the Statement of Financial Position at fair value and are not depreciated.

Sale and purchase of property assets is generally recognised on unconditional exchange except where completion is expected to occur significantly after exchange. For conditional exchanges, sales are recognised when the conditions have been satisfied. Profits and losses are calculated by reference to the carrying value at the end of the previous financial year, adjusted for subsequent capital expenditure and less directly related costs of sale.

(ii) Assets held for sale

Non-current assets held for sale are measured at the lower of carrying amount and fair value less costs to sell (except where the exemptions of paragraph 5 of IFRS 5 apply) and are classified as such if their carrying amount will be recovered through a sale transaction rather than through continuing use. Investment property that is held for sale is measured at fair value in accordance with paragraph 5 of IFRS 5.

This is the case when the asset is available for immediate sale in its present condition subject only to terms that are usual and customary for sales of such assets and the sale is considered to be highly probable. A sale is considered to be highly probable if the appropriate level of management is committed to a plan to sell the asset and a further active programme to locate a buyer and complete the plan has been initiated. Further, the asset has to be marketed for sale at a price that is reasonable in relation to its current fair value. In addition, the sale is expected to qualify for recognition as a completed sale within one year from the date that it is classified as held for sale.

(iii) Securities

Purchases and sales of listed investments are recognised on the trade date, the date on which the Group commit to purchase or sell the investment. All investments are designated upon initial recognition as held at fair value, and are measured at subsequent reporting dates at fair value, which is either the market bid price or the last traded price, depending on the convention of the exchange on which the investment is quoted. Fair values for unquoted investments, or for investments for which there is only an inactive market, are established by taking into account the International Private Equity and Venture Capital Valuation Guidelines as follows:

(i) Investments which have been made in the last 12 months are valued at cost in the absence of overriding factors;

(ii) Investments in companies at an early stage of development are also valued at cost in the absence of overriding factors;

(iii) Where investments have gone beyond the stage in their development in (ii) above, the shares may be valued by having regard to a suitable price-earnings ratio to that company's historical post-tax earnings or the net asset value of the investment; and

(iv) Where a value is indicated by a material arm's length market transaction by a third party in the shares of a company, that value may be used.

(iv) Loans and receivables

Unquoted loan stock is classified as loans and receivables in accordance with IAS 39 and carried at amortised cost using the Effective Interest Rate method. Movements in both the amortised cost relating to the interest income and in respect of capital provisions are reflected in the Statement of Comprehensive Income. Loan stock accrued interest is recognised in the Statement of Financial Position as part of the carrying value of the loans and receivables at the end of each reporting period.

(k) Exceptional items

The Group presents as exceptional items on the face of the Consolidated Statement of Comprehensive Income those material items of income and expense which, because of the nature and expected infrequency of the events giving rise to them, merit separate presentation to allow shareholders to understand better the elements of financial performance in the year so as to facilitate comparison with prior years and to assess better trends in financial performance.

(l) Intangible assets

(i) Goodwill

Goodwill, representing the excess of the cost of acquisition over the fair value of the Group's share of the identifiable assets, liabilities acquired, is capitalised in the Statement of Financial Position. Following initial recognition, goodwill is stated at cost less any accumulated impairment losses.

Goodwill will be reviewed for impairment annually or more frequently if events or changes in circumstances indicate that the carrying value may be impaired.

(ii) Management contracts and client relationships

Intangible assets, such as management contracts and client relationships acquired as part of a business combination or separately, are capitalised where it is probable that future economic benefits attributable to the assets will flow to the Group and the fair value of the assets can be measured reliably.

They are recorded initially at fair value and then amortised, if appropriate, over their useful lives. The fair value at the date of acquisition is calculated using discounted cash flow methodology and represents the valuation of the net residual income stream arising from the management contracts or distribution agreements in place at the date of acquisition. The management contracts and client relationships are included in the Statement of Financial Position as intangible assets. Intangible assets with a finite life have no residual value and are amortised on a straight-line basis over their expected useful lives as follows:

· Client relationships arising on acquisition - 5 years

· Management contracts arising on acquisition - 1 to 3 years depending on the specific management contract details

Amortisation methods, useful lives and residual values will be reviewed at each reporting date and adjusted if appropriate.

At each period end date, reviews are carried out of the carrying amounts of intangible assets to determine whether there is any indication that the assets have suffered an impairment loss. If any such indication exists, the recoverable amount, which is the higher of value in use and fair value less costs to sell, of the asset is estimated in order to determine the extent, if any, of the impairment loss.

If the recoverable amount of an asset or cash-generating unit ("CGU") is estimated to be less than its net carrying amount, the net carrying amount of the asset or CGU is reduced to its recoverable amount. Impairment losses are recognised immediately in the Statement of Comprehensive Income. The Group assesses at the end of each reporting period whether there is any indication that an impairment loss recognised in prior periods may no longer exist or may have decreased. If any such indication exists, the Group estimates the recoverable amount of that asset. In assessing whether there is any indication that an impairment loss recognised in prior periods for an asset may no longer exist or may have decreased, the Group considers, as a minimum, the following indications:

(a) Whether the asset's market value has increased significantly during the period;

(b) Whether any significant changes with a favourable effect on the entity have taken place during the period, or will take place in the near future, in the technological, market, economic or legal environment in which the entity operates or in the market to which the asset is dedicated; and

(c) Whether market interest rates or other market rates of return on investments have decreased during the period, and those decreases are likely to affect the discount rate used in calculating the asset's value in use and increase the asset's recoverable amount materially.

(m) Financial instruments

Financial assets and financial liabilities are recognised on the Consolidated Statement of Financial Position when the Group becomes a party to the contractual provisions of the instrument.

Financial assets and liabilities are offset and the net amount reported in the Consolidated Statement of Financial Position when there is a legally enforceable right to settle on a net basis, or realise the asset and liability simultaneously and where the Group intends to net settle.

(i) Trade and other receivables

Receivables are short term in nature. Trade and other receivables are recognised and carried at the lower of their invoiced value and recoverable amount. Provision is made when there is objective evidence that the Group will not be able to recover balances in full.

(ii) Cash and cash equivalents

Cash comprises cash on hand and demand deposits. Cash equivalents are short term, highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.

(iii) Non-current receivables

Deferred receivables are recognised at the discounted value of those receipts.

(iv) Dividends payable

All dividends are recognised in the period in which they are approved by shareholders.

(v) Bank borrowings

All bank loans are initially recognised at cost, being the fair value of the consideration received, less issue costs where applicable. After initial recognition, all interest-bearing loans and borrowings are subsequently measured at amortised cost. Amortised cost is calculated by taking into account any discount or premium on settlement. Interest costs on loans are charged to the Statement of Comprehensive Income as incurred.

(vi) Trade and other payables

Trade payables are not interest-bearing and are stated at their nominal value. Other payables are not interest-bearing and are stated at their nominal value as any discounting of expected cash flows is considered to be immaterial.

(vii) Borrowing costs

Unless capitalised under IAS 23, Borrowing Costs, all borrowing costs are recognised in the Consolidated Statement of Comprehensive Income in the period in which they are incurred. Finance charges, including premiums paid on settlement or redemption and direct issue costs and discounts related to borrowings, are accounted for on an accruals basis and charged to the Consolidated Statement of Comprehensive Income using the effective interest method.

(viii)Contingent consideration

Contingent consideration arises when settlement of all or any part of the cost of a business combination or other acquisition, for example management contract, is deferred. It is stated at fair value at the date of acquisition, which is determined by discounting the amount due to present value at that date.

Estimates are required in respect of the amount of contingent consideration payable on acquisitions, which is determined according to formulae agreed at the time of the business combination, and normally related to the future earnings of the acquired business. The directors review the amount of contingent consideration likely to become payable at each period end date, the major assumption being the level of future profits of the acquired business. Contingent consideration payable is discounted to its fair value in accordance with applicable International Financial Reporting Standards.

(n) Pensions

Payments to personal pension schemes for employees are charged against profits in the year in which they are incurred.

(o) Share based payments

The Group issued equity-settled share-based payments to certain directors and employees. Equity-settled share based payments are measured at fair value (excluding the effect of non-market based vesting conditions) at the date of grant. The fair value determined at the grant date of the equity-settled share based payments is expensed on a straight-line basis over the vesting period, based on the Group's estimate of the shares that will eventually vest and adjusted for the effect of non-market based vesting conditions.

Fair value is measured using a Black-Scholes option pricing model. The expected life used in the model has been adjusted, based on management's best estimate, for the effect of non-transferability, exercise restrictions and behavioural considerations.

A liability equal to the portion of the goods or services received is recognised at the current fair value determined at each period end date for cash-settled share based payments.

(p) Non-controlling interests

Non-controlling interests in the net assets of consolidated subsidiaries are identified separately from the Group's equity therein. Non-controlling interests consist of the amount of those interests at the date of the original business combination and for acquisitions post 3 October 2010 following adoption of IAS 27, Consolidated and Separate Financial Statements (Revised 2008), the non-controlling interests' share of changes in equity since the date of the combination.

Prior to the adoption of IAS 27 (Revised 2008) losses attributable to non-controlling interests in excess of the non-controlling interests' share in equity were allocated against the interests of the Group except to the extent that the non-controlling interests have a binding obligation and is able to make an additional investment to cover such losses. When the subsidiary subsequently reports profits, the non-controlling interests do not participate until the Group has recovered all of the losses of the non-controlling interests it previously reported.

(q) Critical accounting estimates and judgments

The preparation of financial statements in conformity with generally accepted accounting principles requires the use of estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Although these estimates are based on management's best knowledge of the amount, event or actions, actual results may ultimately differ from those estimates. The estimates and assumptions that have significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are those used to determine:

(i) Consolidation of third party funds managed by the Group;

(ii) Value of investment properties;

(iii) Value of investments at fair value through profit and loss; and

(iv) Impairment in the value of loans.

Consolidation of third party funds managed by the Group

When assessing whether the Group controls funds that are managed on behalf of third parties, the Group is required to assess whether it has power over these funds; exposure, or rights, to variable returns from its involvement with the fund; and has the ability to use its power over the funds to affect the amount of the Group's returns. This can also be considered when the Group is acting in its capacity as agent or principal. An agent is acting on behalf of third party investors, whereas a principal is acting for its own benefit.

IFRS 10 provides guidance for considering the assessment of whether fund managers are acting as agent or principal, and therefore whether the Group should consolidate the funds that it manages or not. The key considerations when assessing this are decision making authority of the fund manager, rights held by third parties, remuneration and exposure to returns. The following provides further detail on the directors' assessment of control over the funds that are managed by Gresham House Asset Management Limited ("GHAM"), the FCA regulated entity within the Group.

Gresham House Strategic Public Equity LP ("SPE LP") is managed by GHAM, a subsidiary of Gresham House plc. GHAM in its role as investment advisor is exposed to variable returns through its management fee, however the Company is not directly invested in SPE LP. The limited partners of SPE LP have the ability to remove the manager without cause, one year after the final close of SPE LP on obtaining limited partner special consent. The directors' assessment indicates that GHAM is acting as agent for SPE LP and therefore should not consolidate SPE LP.

Gresham House Forestry Fund LP ("GHF LP") is managed by GHAM. GHAM is exposed to variable returns through its management fee and acquisition fees, as well as the Company's limited partnership interest in Gresham House Forestry Friends and Family LP ("GHFF"), a vehicle which in turn is a limited partner in GHF LP.

The limited partners of GHF LP have the ability to remove the manager without cause, one year after the final close of GHF LP on obtaining limited partner special consent. There are a number of limited partners that would be required to co-ordinate to remove the manager. The directors' assessment of this right indicates that the manager is acting as agent for GHF LP and therefore should not consolidate GHF LP.

The directors' assessment of GHFF however indicates that it is in a controlling position and therefore should consolidate this in the Group financial statements.

Gresham House Strategic plc ("GHS") is managed by GHAM and the Company also holds 19.2% of the ordinary share capital as at 31 December 2016. The directors consider that the Company exercises significant influence over GHS, but not control, through its holding and the investment management agreement in place with GHAM. GHS has therefore been classified as an associate.

Value of investment properties

The value of investment properties is based on independent third party valuations. These valuations are based on the 'investment method' of valuation. This approach involves applying market-derived capitalisation yields to current and market-derived future income streams with appropriate adjustments for income voids arising from vacancies or rent free periods. These capitalisation yields and future income streams are derived from comparable property and leasing:

(i) transactions are considered to be the key inputs in the valuation. Other factors that are taken into account in the valuations include the tenure of the property, tenancy details and ground and structural conditions; and

(ii) The fair value of consideration paid has been derived by applying appropriate discount rates to the consideration paid at the time of acquisition. In respect of the contingent consideration, fair value adjustments have been made to the estimated consideration payable and has been adjusted to fair value of the date of acquisition applying appropriate discount factors.

Value of investments at fair value through profit and loss

The investments which are held at fair value through profit and loss in unquoted companies require judgement to be exercised, with reference to the valuation policy and International Private Equity Valuation guideline.

Impairment in the value of loans

Impairment reviews of the loans held by the Group require a careful assessment of the performance and financial position of the company involved from the best information that is available. This assessment requires the exercise of judgement to conclude whether an impairment is appropriate to the loans held by the Group.

Notes on the Consolidated Financial Statements

Basis of preparation

The financial statements set out in the announcement do not constitute the Company's statutory accounts for the year ended 31 December 2016 or the year ended 31 December 2015. The financial information for the year ended 31 December 2016 and the year ended 31 December 2015 are extracted from the statutory accounts of Gresham House plc.

The auditor, BDO LLP has reported on the accounts for both periods; their report was unqualified.

The financial statements have been prepared on a going concern basis.

The full statutory accounts will be available on the Company's website at www.greshamhouse.com and will be posted to shareholders shortly.

The accounting policies used by the Group in these condensed financial statements are consistent with those applied in its financial statements for the year to 31 December 2015. Other standards and interpretations have been issued which will be effective for future reporting periods but have not been adopted in these financial statements.

Notes to Accounts

1 INCOME

	2016	2015
	£'000	£'000
Asset management income
Fund management income	1,082	127
Forestry management income	2,120	206
	3,202	333
Income from investments
Rental income	741	746
Dividend income - Listed UK	7	48
Interest receivable: Banks	4	40
Other	238	140
	990	974
Other operating income
Reversal of provision against loans	5	-
Management fees receivable	67	51
	72	51
Total income	4,264	1,358
Total income comprises
Asset management income	3,202	333
Rental income	741	746
Dividends	7	48
Interest	242	180
Other operating income	72	51
	4,264	1,358

2 SEGMENTAL REPORTING

For the year ended 31 December 2015, the Group invested in securities and maintained its investment in commercial properties, and during the course of the year, the strategy that the new management team had set out started to take shape.

From August 2015 onwards, the Group's asset management company, Gresham House Asset Management Limited began to generate fund advisory fees and then, upon FCA regulation, fund management fees from its management of Gresham House Strategic plc. In November 2015, the Group acquired the forestry management business of Aitchesse Limited (now Gresham House Forestry Limited) and generated fees from the management of forestry.

During 2016 the Group continued to grow its Strategic Equity division through the appointment of Gresham House Asset Management Limited as investment manager to LMS Capital plc, and the launch of Gresham House Strategic Public Equity LP. The Real Assets division also launched the Gresham House Forestry Fund LP in the year.

Accordingly, management reporting is split under the headings "Real Assets", "Strategic Equity", "Legacy Property" and "Central".

All activity and revenue is derived from operations within the United Kingdom.

2 SEGMENTAL REPORTING - continued

31 December 2016

	Real Assets	Strategic Equity	Legacy Property	Central	Consolidated
Revenue	£'000	£'000	£'000	£'000	£'000
Asset management income	2,120	1,082	-	-	3,202
Income from investments	1	1	741	247	990
Other operating income	-	-	27	45	72
Total revenue	2,121	1,083	768	292	4,264

Share of associate's profit	-	628	-	-	628
Gains and losses on investments at fair value	(31)	(113)	-	(3)	(147)
Movement in fair value of property investments	-	-	(139)	-	(139)
Total income and gains	2,090	1,598	629	289	4,606
Segment expenses	(1,422)	(1,647)	(451)	(2,229)	(5,749)
Finance costs	-	-	-	(442)	(442)
Adjusted operating profit/(loss)	668	(49)	178	(2,382)	(1,585)
Depreciation and amortisation					(1,441)
Profit on disposal of tangible fixed assets					8
Movement in fair value of contingent consideration					(253)
Movement in fair value of deferred receivable					202
Loss before taxation					(3,069)

31 December 2015

	Real Assets	Strategic Equity	Legacy Property	Central	Consolidated
Revenue	£'000	£'000	£'000	£'000	£'000
Asset management income	206	127	-	-	333
Income from investments	1	1	747	225	974
Other operating income	-	-	27	24	51
Total revenue	207	128	774	249	1,358

Gains and losses on investments at fair value	-	-	-	(485)	(485)
Movement in fair value of property investments	-	-	(744)	-	(744)
Total income and gains	207	128	30	(236)	129
Segment expenses	(138)	(531)	(459)	(1,911)	(3,039)
Finance costs	-	-	-	(144)	(144)
Adjusted operating profit/(loss)	69	(403)	(429)	(2,291)	(3,054)
Exceptional operating expenses					(773)
Depreciation and amortisation					(10)
Profit on disposal of tangible fixed assets					6
Loss before taxation					(3,831)

2 SEGMENTAL REPORTING - continued

Other information

31 December 2016

	Real Assets	Strategic Equity	Legacy Property	Central	Consolidated
	£'000	£'000	£'000	£'000	£'000
Segment assets	2,853	8,914	15,775	8,471	36,013
Segment liabilities	(296)	(144)	(526)	(10,423)	(11,389)
	2,557	8,770	15,249	(1,952)	24,624
Capital expenditure	1,865	581	311	16	2,773
Depreciation and amortisation	1,250	157	5	3	1,415
Non-cash expenses other than depreciation	-	-	-	73	73

31 December 2015

	Real Assets	Strategic Equity	Legacy Property	Central	Consolidated
	£'000	£'000	£'000	£'000	£'000
Segment assets	1,154	8,379	17,157	9,199	35,889
Segment liabilities	(606)	(7)	(4,733)	(4,717)	(10,063)
	548	8,372	12,424	4,482	25,826
Capital expenditure	53	6,361	359	-	6,773
Depreciation	1	-	3	-	4

3 OPERATING COSTS


Operating costs comprise the following:	2016	2015
	£'000	£'000
a) Property outgoings:
Wages and salaries	49	50
Social security costs	6	6
Other operating costs (net of service charges recoverable from tenants of £803,000 (2015: £724,000))	235	283
	290	339
b) Administrative overheads:
Directors' emoluments (excluding benefits in kind and share based payments)	968	880
Auditor's remuneration *	106	200
Amortisation	1,364	-
Depreciation	77	10
Profit on disposal of assets	(8)	(6)
Wages and salaries	2,234	647
Social security costs	428	177
Operating lease rentals - land and buildings	3	24
Share based payments	73	-
Other operating costs	1,647	772
	6,892	2,704
Staff costs (including directors' emoluments) were:
Wages, salaries and fees	3,100	1,577
Social security costs	434	183
Pension costs	151	-
	3,685	1,760

3 OPERATING COSTS - continued

* A more detailed analysis of auditor's remuneration is as follows:	2016	2015
	£'000	£'000
Audit fees	106	99
Auditor's other fees -other services	12	101
	118	200

The directors consider the auditor was best placed to provide these other services. The Audit Committee reviews the nature and extent of non-audit services to ensure that independence is maintained.

£12,000 of costs for other services above are pertaining to non-audit services relating to the appointment of Gresham House Asset Management Limited as investment manager to LMS Capital plc, which have been capitalised in the financial statements.

The average number of persons employed by the Group, including the executive directors, was 26 (2015: 12). The Company has no employees.

The Group has no commitments under operating leases for the current and prior year.

4 DIRECTORS' EMOLUMENTS

The emoluments of the directors are disclosed in the Remuneration Report.

The directors are considered to be the Group's only key management personnel. Employers' National Insurance Contributions in respect of the directors for the year were £137,000 (2015: £89,000).

5 Business combinations during the period

There were no new business combinations that took place during the year ended 31 December 2016.

On 20 November 2015, shareholders approved the acquisition of Aitchesse Limited (Aitchesse) in a general meeting. The Group acquired 100% of the issued share capital of Aitchesse, a Scottish company whose principal activity is the management of forestry. Further details on this transaction can be found in the 2015 Annual Report.

6 FINANCE COSTS

	2016	2015
	£'000	£'000
Interest payable on loans and overdrafts	293	137
Finance fees	149	7
	442	144

7 TAXATION

	2016	2015
	£'000	£'000
(a) Analysis of charge in period:
UK Corporation tax at 20% (2015: 20.25%)	-	-
Overprovision in prior year	(33)	-
Total tax credit	(33)	-

(b) Factors affecting tax credit for period:
Loss on ordinary activities before tax multiplied by standard rate of corporation tax in the UK of 20% (2015: 20.25%)	(614)	(776)
Tax effect of:
Investment losses not taxable	29	98
Dividend income not taxable	(1)	(10)
Amortisation not taxable	238
Expenses disallowed	69	153
Other gains and losses not taxable	(138)	-
Movement in losses carried forward	384	535
Actual tax credit	(33)	-

The Group has unutilised tax losses of approximately £11.2 million (2015: £6.0 million) available against future corporation tax liabilities. The potential deferred taxation asset of £2.2 million (2015: £1.2 million) in respect of these losses has not been recognised in these financial statements as it is not considered sufficiently probable that the Group will generate sufficient taxable profits from the same trade to recover these amounts in full.

8 EARNINGS PER SHARE

(a) Basic and diluted loss per share

	2016	2015
Total net loss attributable to equity holders of the parent (£'000)	(3,027)		(3,807)

Weighted average number of ordinary shares in issue during the period	9,976,412		9,404,614

Basic and diluted loss per share attributable to equity holders of the parent (pence)	(30.3)		(40.5)

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

The shareholder, supporter warrants 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 ordinary shares during the year (see note 25).

(b) Adjusted earnings per share

Adjusted earnings per share is based on adjusted loss after tax, where adjusted loss is stated after charging interest but before depreciation, amortisation, exceptional items and items relating to previous years. The fair value movement in the contingent consideration payable and deferred receivable has also been adjusted for as similar to amortisation, these do not relate to the trading profits of the business.

Adjusted loss for calculating adjusted earnings per share:

	2016	2015
	£'000	£'000
Operating loss before taxation for the year	(3,069)	(3,831)
Add back:
Exceptional operating expenses	-	773
Depreciation and amortisation	1,441	10
Profit on disposal of tangible fixed assets	(8)	(6)
Movement in fair value of deferred consideration	253	-
Movement in fair value of deferred receivable	(202)	-
Adjusted loss before and after tax	(1,585)	(3,054)
Non-controlling interest	9	24
Adjusted loss after tax attributable to equity holders of the parent	(1,576)	(3,030)
Adjusted loss per share (pence)	(15.8)	(32.2)

9 DIVIDENDS

No dividends have been paid or proposed in the year (2015: nil).

10 INVESTMENTS - SECURITIES

An analysis of total investments is as follows:

	Group		Company
	2016	2015	2016	2015
	£'000	£'000	£'000	£'000
Listed securities - on the London Stock Exchange	-	105	-	105
Securities dealt in under AIM	468	-	468	-
Securities dealt in under NEX Exchange	31	51	31	51
Unlisted securities	2,335	1,412	617	1,412
Closing value at 31 December	2,834	1,568	1,116	1,568

Investments valued at fair value through profit and loss	2,217	157	499	157
Loans and receivables valued at amortised cost	617	1,411	617	1,411
	2,834	1,568	1,116	1,568

	Group		Company
	2016	2015	2016	2015
	£'000	£'000	£'000	£'000
Opening cost	6,094	6,300	6,094	6,542
Opening net unrealised losses	(4,526)	(3,345)	(4,526)	(3,587)
Opening value	1,568	2,955	1,568	2,955
Movements in the year:
Purchases at cost	2,331	6,361	581	6,361
Sales - proceeds	(918)	(7,263)	(918)	(7,263)
Sales - realised gains & (losses) on sales	(2,942)	(26)	(2,942)	(268)
Net unrealised gains & (losses)	2,795	(459)	2,827	(217)
Closing value	2,834	1,568	1,116	1,568

Closing cost	4,565	6,094	2,815	6,094
Closing net unrealised losses	(1,731)	(4,526)	(1,699)	(4,526)
Closing value	2,834	1,568	1,116	1,568

Gains and losses on investments held at fair value	Group			Company
	2016	2015		2016		2015
	£'000	£'000		£'000		£'000
Net realised gains & (losses) on disposal	(2,942)	(26)		(2,942)		(268)
Net unrealised gains & (losses)	2,795	(459)		2,827		(217)
Net losses on investments	(147)	(485)		(115)		(485)
An analysis of investments is as follows:	Group		Company
	2016	2015	2016		2015
	£'000	£'000	£'000		£'000
Equity investments	2,217	52	499		52
Fixed income securities	-	105	-		105
Unquoted loan stock	617	1,411	617		1,411
	2,834	1,568	1,116		1,568

Further information on the measurement of fair value can be found in note 31.

11 INVESTMENT PROPERTY

Investment properties have been classified as follows:	Group
	2016	2015
	£'000	£'000
Non-current assets	-	9,559
Non-current assets held for sale	9,628	-
	9,628	9,559

The orderly disposal of the legacy investment property portfolio has been ongoing in the year to 31 December 2016 and an active sales process is underway. These assets are now expected to be realised in the short term and as such have been classified as non-current assets held for sale.

A further analysis of total investment properties is as follows:

	Group
	2016	2015
Net book value and valuation	£'000	£'000
At 1 January	9,559	16,675
Additions during the year - expenditure on existing properties	311	359
Disposals during the year - proceeds	(103)	(6,731)
Profit / (loss) on disposal of investment properties	103	(158)
Movement in fair value during the year	(242)	(586)
At 31 December	9,628	9,559

Investment properties are shown at fair value based on current use and any surplus or deficit arising on valuation of property is reflected in the Statement of Comprehensive Income.

All investment properties were valued by Jones Lang LaSalle Limited, Chartered Surveyors, as at 31 December 2016 at a combined total of £10 million. These external valuations were carried out on the basis of Market Value in accordance with the latest edition of the Valuation Standards published by the Royal Institution of Chartered Surveyors.

The gross property valuation has been adjusted for the fixed rental uplift as follows:

	2016	2015
	£'000	£'000
Gross valuation	10,000	9,900
Rent free receivable	(372)	(341)
	9,628	9,559

Operating leases

The future minimum lease payments receivable under non-cancellable operating leases are as follows:

	2016	2015
	£'000	£'000
Not later than one year	723	657
Between 2 and 5 years	1,271	1,441
Over 5 years	914	682
	2,908	2,780

Rental income recognised in the Statement of Comprehensive Income amounted to £741,000 (2015: £746,000).

The commercial leases vary according to the condition of the units let. The commercial units are leased on terms where the tenant has the responsibility for repairs and running costs for each individual unit (other than roof repairs in certain circumstances) with a service charge payable to cover estate services provided by the landlord.

The cost of the above properties as at 31 December 2016 is as follows:

							Group
							£'000
Brought forward							9,576
Additions during the year							311
							9,887

11 INVESTMENT PROPERTY - continued

Capital commitments

Capital expenditure contracted for but not provided for in the financial statements for the Group was £118,000 (2015: £16,000) and for the Company was nil (2015: nil).

Movement in fair value of investment properties	Group
	2016	2015
	£'000	£'000
Realised gains/(losses) on disposal of investment property	103	(158)
Decrease in fair value	(242)	(586)
Movement in fair value of investment property	(139)	(744)

Further information on the measurement of fair value can be found in note 31.

12 TANGIBLE FIXED ASSETS


Group	2016				2015
	Office equipment	Motor vehicles	Leasehold property	Total		Motor vehicles	Leasehold property	Total
	£'000	£'000	£'000	£'000		£'000	£'000	£'000
cost
As at 1 January	-	154	10	164		-	-	-
Additions	16	115	-	131		98	-	98
Additions on acquisition of subsidiary	-	-	-	-		92	10	102
Disposals during the year	-	(32)	-	(32)		(36)	-	(36)
As at 31 December	16	237	10	263		154	10	164

Depreciation
As at 1 January	-	10	-	10		-	-	-
Charge for the year	3	73	1	77		10	-	10
Disposals during the year	-	(3)	-	(3)		-	-	-
As at 31 December	3	80	1	84		10	-	10

Net book value as at 31 December	13	157	9	179		144	10	154


Company
	2016	2015
	Office equipment	Office equipment
	£'000	£'000
Cost
As at 1 January	-	-
Additions	16	-
As at 31 December	16	-

Depreciation
As at 1 January	-	-
Charge for the year	3	-
As at 31 December	3	-

Net book value as at 31 December	13	-

13 INTANGIBLE ASSETS

Group

	2016				2015
	Goodwill	Customer relationships	Contracts	Total	Goodwill	Customer relationships	Contracts	Total
	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000
Cost
As at 1 January 2016	2,942	3,072	574	6,588	-	-	-	-
Additions	-	-	1,406	1,406	2,942	3,072	574	6,588
As at 31 December 2016	2,942	3,072	1,980	7,994	2,942	3,072	574	6,588

Amortisation
As at 1 January 2016	-	-	-	-	-	-	-	-
Charge for the year	-	615	749	1,364	-	-	-	-
As at 31 December 2016	-	615	749	1,364	-	-	-	-

Net book value as at 31 December	2,942	2,457	1,231	6,630	2,942	3,072	574	6,588

On 16 August 2016, Gresham House Asset Management ("GHAM") was appointed the investment manager of LMS Capital plc ("LMS"). The Company issued a first tranche of 332,484 new ordinary shares to LMS with a value of £1 million on 16 August 2016 and will issue a second tranche of new ordinary shares on the second anniversary of the appointment up to a value of £1.25 million subject to certain performance conditions. The fair value of the contract at 16 August 2016 was estimated at £1,258,000, with a further £148,000 of associated acquisition costs and has been recorded as an addition to contracts in the period and will be amortised over the contract's useful life of three years.

Contingent consideration

The second tranche issue of new ordinary shares will depend on the following:

· LMS extending the term of the portfolio management agreement for two years following the second anniversary of appointment on 16 August 2016;

· There being no material changes to the terms of the portfolio management agreement; and

· LMS undertaking not to return capital to shareholders during the two year period following the second anniversary of appointment.

The value of the second tranche will be calculated by the Net Asset Value ("NAV") of the portfolio on the second anniversary of appointment:

· If the NAV is below £67.5 million, no shares will be issued;

· If the NAV is between £70.0 million and £80.0 million, the value of the second tranche shares will be between £500,000 and £1 million calculated on a straight line basis;

· If the NAV is between £80.0 million and £85.0 million, the value of the second tranche shares will be between £1 million and £1.25 million calculated on a straight line basis; and

· If the NAV is above £85.0 million the maximum value of shares issued will be capped at £1.25 million.

Fair value

The fair value of the contract has been estimated using an equal weighting of three scenarios. The estimated cash flows in each case has been valued at a discount of 15%. This resulted in fair value of £1,258,000, with a contingent consideration of £258,000, which has been included in non-current liabilities as deferred consideration, note 23.

The Company also issued 909,908 LMS Warrants to LMS on 14 October 2016, details are included in note 25.

GHAM will receive an annual management fee of:

· 1.5% of the average NAV of LMS for an NAV of up to £100 million;

· 1.25% of the average NAV of LMS for an NAV of between £100 million and £150 million;

· 1.0% of the average NAV of LMS for an NAV of greater than £150 million

GHAM will also receive a performance fee of 15% on the gain in NAV of new investments made since being appointed the investment manager of LMS, subject to a hurdle rate of 8%.

14 NON CURRENT ASSETS - LONG TERM RECEIVABLES

On 22 September 2015, the sale of 25.8 acres of the site at Newton-le-Willows to Persimmon Homes Limited ("Persimmon") was completed. An initial payment of £944,610 was received with a further payment of £937,252 received during the year and the balance of the consideration, at fair value, will be receivable in three tranches as follows:

							£'000
On 22 March 2017 - included within current assets							1,139
On 22 March 2018							2,020
On 22 March 2019							2,021
							5,180

The total cash value of the deferred receipts is £5,368,000, though this has been designated at fair value through the Statement of Comprehensive Income

The discount rate applied was 2.49% (2015: 2.77%) being the average rate of borrowing on Persimmon's debt facilities.

Long term receivables consist of the following:	Group
	2016	2015
	£'000	£'000
Deferred receivables	4,041	5,916
Other debtors	54	-
	4,095	5,916

15 INVESTMENTS IN SUBSIDIARIES

	Company
	2016	2015
Subsidiary undertakings	£'000	£'000
At 1 January	2,822	322
Additions	16,544	2,500
Disposals	(3,074)	-
At 31 December	16,292	2,822

During the year the Group put in place a reorganisation of its subsidiaries.

Under the reorganisation, Gresham House Holdings Limited ("GHHL") became an intermediate holding company between Gresham House plc and the subsidiaries of the Group.

As a part of the reorganisation, intercompany balances within the Group were rationalised and balances of £15,294,000 were capitalised.

The subsidiary undertakings of Gresham House plc are as follows:

	Held by Company	Held by other Group companies		Country of incorporation and registered office
	%		%
Chartermet Limited	-		75	5 New Street Square, London EC4A 3TW, England
Deacon Commercial Development and Finance Limited	-		100	5 New Street Square, London EC4A 3TW, England
Deacon Knowsley Limited	-		75	5 New Street Square, London EC4A 3TW, England
Gresham House Asset Management Limited	-		100	5 New Street Square, London EC4A 3TW, England
Gresham House Capital Partners Limited	-		100	5 New Street Square, London EC4A 3TW, England
Gresham House EIS Limited	-		100	5 New Street Square, London EC4A 3TW, England
Gresham House Finance Limited	-		100	5 New Street Square, London EC4A 3TW, England
Gresham House Forestry Limited	-		100	Riverview House, Friarton Road, Perth, PH2 8DF, Scotland
Gresham House Forestry Friends and Family LP	71.4		-	Riverview House, Friarton Road, Perth, PH2 8DF, Scotland
Gresham House (General Partner) Limited	-		100	Riverview House, Friarton Road, Perth, PH2 8DF, Scotland
Gresham House GP LLP	-		100	Riverview House, Friarton Road, Perth, PH2 8DF, Scotland
Gresham House Holdings Limited	100		-	5 New Street Square, London EC4A 3TW, England
Gresham House Investment Management Limited	-		100	5 New Street Square, London EC4A 3TW, England
Gresham House Investment Management (Guernsey) Limited	-		100	Dorey Court, Admiral Park, St Peter Port, GY1 2HT, Guernsey
Gresham House Investors Limited	-		100	5 New Street Square, London EC4A 3TW, England
Gresham House Private Capital Solutions Limited	-		100	5 New Street Square, London EC4A 3TW, England
Gresham House Private Equity Limited	-		100	5 New Street Square, London EC4A 3TW, England
Gresham House Private Wealth Limited	-		100	5 New Street Square, London EC4A 3TW, England
Gresham House Real Assets Limited	-		100	5 New Street Square, London EC4A 3TW, England
Gresham House Services Limited	-		100	5 New Street Square, London EC4A 3TW, England
Gresham House Smaller Companies Limited	-		100	5 New Street Square, London EC4A 3TW, England
Gresham House SPE Limited	-		100	5 New Street Square, London EC4A 3TW, England
Gresham House Special Situations Limited	-		100	5 New Street Square, London EC4A 3TW, England
Gresham House Value Limited	-		100	5 New Street Square, London EC4A 3TW, England
Gresham House VCT Limited	-		100	5 New Street Square, London EC4A 3TW, England
Knowsley Industrial Property Limited	-		100	5 New Street Square, London EC4A 3TW, England
New Capital Developments Limited	-		75	5 New Street Square, London EC4A 3TW, England
New Capital Holdings Limited	-		75	5 New Street Square, London EC4A 3TW, England
Newton Estate Limited	-		100	5 New Street Square, London EC4A 3TW, England
Security Change Limited	-		100	5 New Street Square, London EC4A 3TW, England
Watlington Investments Limited	-		100	5 New Street Square, London EC4A 3TW, England
Wolden Estates Limited	-		100	5 New Street Square, London EC4A 3TW, England

16 INVESTMENT IN Associate

The Board believe that Gresham House plc exercises significant influence over Gresham House Strategic plc ("GHS"), but not control, through its 19.2% equity investment as well as the investment management agreement between GHAM and GHS.

	Group
	2016	2015
	£'000	£'000
Investment in associate	5,902	5,902
Share of associate's profit	628	-
	6,530	5,902

The latest published financial information of GHS was the unaudited interim results for the six months to 30 September 2016. The assets and liabilities at that date are shown below:


	2016	2015
	£'000	£'000
Non current assets	25,233	19,348
Current assets	14,886	17,208
Current liabilities	(224)	(156)
Net assets	39,895	36,400

The GHS group unaudited statement of comprehensive income noted realised and unrealised gains from continuing operations on investments at fair value through profit and loss of £3,733,000 and revenues of £171,000 for the six months ended 30 September 2016.

The registered office of GHS is 77 Kingsway, London, WC2B 5SR.

17 TRADE RECEIVABLES

	Group		Company
	2016	2015	2016	2015
	£'000	£'000	£'000	£'000
Amounts receivable within one year:
Trade receivables	1,259	665	-	-
Less allowance for credit losses	-	-	-	-
	1,259	665	-	-

Allowances for credit losses on trade receivables:
Allowances as at 1 January	-	4	-	-
Changes during the year released to Statement of Comprehensive Income:
- allowances reversed	-	(4)	-	-
Allowances as at 31 December	-	-	-	-

Trade receivables are assessed for impairment when older than 90 days. As at 31 December 2016, trade receivables of £20,000 (2015: £73,000) were past due but not impaired. The ageing analysis of these trade receivables is as follows:

	Group		Company
	2016	2015	2016	2015
	£'000	£'000	£'000	£'000
1-3 months	-	69	-	-
3-6 months	20	1	-	-
More than 6 months	-	3	-	-
	20	73	-	-

As at 31 December 2016 trade receivables of £nil (2015: £nil) were impaired and provided for.

The main credit risk represents the possibility of tenants defaulting in their rental commitments. This risk is mitigated by regular monitoring of the financial covenant strength of the tenant base, together with regular meetings with the tenants.

18 OTHER CURRENT ASSETS

	Group		Company
	2016	2015	2016	2015
	£'000	£'000	£'000	£'000
Amounts owed by Group undertakings	-	-	9,734	11,568
	-	-	9,734	11,568

19 TRADE AND OTHER PAYABLES

	Group		Company
	2016	2015	2016	2015
	£'000	£'000	£'000	£'000
Trade creditors	225	265	-	-
Other creditors	332	1,913	14	53
Short term loan notes	-	667	-	667
Accruals	1,672	1,545	73	715
	2,229	4,390	87	1,435

20 SHORT TERM BORROWINGS

	Group		Company
	2016	2015	2016	2015
	£'000	£'000	£'000	£'000

Bank loans - within current liabilities (note 22)	1,015	2,850	1,015	-
Amounts owed to Group undertakings	-	-	362	26
	1,015	2,850	1,377	26

21 DEFERRED TAXATION

Under International Accounting Standards ("IAS") 12 (Income Taxes) provision is made for the deferred tax liability associated with the revaluation of property investments.

The deferred tax provision on the revaluation of property investments calculated under IAS 12 is £nil at 31 December 2016 (2015: £nil) due to the availability of losses and indexation allowances.

22 LONG TERM BORROWINGS

	Group		Company
	2016	2015	2016	2015
	£'000	£'000	£'000	£'000
Bank loans	4,881	-	4,881	-
	4,881	-	4,881	-

On 12 April 2016, the Company signed a £7.0 million banking facility agreement with Kleinwort Benson Bank Limited ("the facility"). The facility is secured against the Group's property assets and the deferred receivable from the sale of the Newton-le-Willows site to Persimmon in September 2015.

The facility is repayable in three tranches to match the deferred receivable due from Persimmon over a three year period:

· £1,154,000 on 22 March 2017 (£937,000 repaid on 5 October 2016)

· £2,092,000 on 22 March 2018

· £2,817,000 on 22 March 2019

The interest payable on the facility is LIBOR plus 4.5%.

23 NON-CURRENT LIABILITIES - OTHER CREDITORS

	Group		Company
	2016	2015	2016	2015
	£'000	£'000	£'000	£'000
Contingent consideration	3,237	2,726	258	-
Other creditors	27	31	-	-
	3,264	2,757	258	-

Contingent consideration

Contingent consideration will be payable if Gresham House Forestry ("GHF") achieves certain EBITDA targets. The amount of additional consideration payable shall increase on a sliding scale depending on the EBITDA achieved in the period to 22 February 2018. The contingent consideration shall be payable if GHF achieves EBITDA between a range of £1,733,333 and £3,466,666 with the full £3,697,237 of additional consideration being payable if EBITDA of £3,466,666 or more is achieved and no additional consideration being payable if EBITDA of less than £1,733,333 is achieved.

In the event of the target being achieved, the Company is obliged to issue a further 736,074 shares to the vendors. The fair value of the contingent consideration has been based on the mid-market share price on 23 November 2015, the date of the acquisition of GHF, at 357.5p per share. The directors, having carefully reviewed the future business prospects of GHF, believe that the maximum contingent consideration will be achieved.

The additional consideration shall be satisfied by:

• the payment of up to £1,500,055 in cash to the sellers; and

• the issue of up to 736,074 new ordinary shares to the vendors.

Fair value

The fair value of the contingent consideration is estimated using an income approach based on a discount assuming a maximum pay-out of the contingent consideration as anticipated by the Board, supported by forecasts of the trading of GHF in the period to 22 February 2018.

Contingent cash payable has been valued at a discount of 13.5%.

The entire amount of the contingent consideration is recognised as a financial liability and is measured at fair value through comprehensive income at each reporting date.

The minimum contingent consideration is £nil.

The contingent consideration for the second tranche payment of the LMS contract has a fair value of £258k. Further details of the LMS contract are included in note 13.

24 SHARE CAPITAL

	2016	2015
Share Capital	£'000	£'000

Allotted: Ordinary - 10,185,487 (2015: 9,851,041) fully paid shares of 25p each	2,546	2,463

On 16 August 2016 the Company issued 332,484 new ordinary shares at a price of 300.77p per share as part of the consideration for the appointment of Gresham House Asset Management Limited as the investment manager to LMS Capital plc. Additionally, 1,962 shareholder warrants were exercised during the year at a price of 323.27p

25 SHARE WARRANTS

	2016				2015
Group	Shareholder warrants	Supporter warrants	LMS warrants	Total warrants	Shareholder warrants	Supporter warrants	Total warrants
Balance at 1 January	1,073,775	850,000	-	1,923,775	1,073,904	850,000	1,923,904
Warrants granted during the year	-	-	909,908	909,908	-	-	-
Warrants exercised during the year	(1,962)	-	-	(1,962)	(129)	-	(129)
As at 31 December	1,071,813	850,000	909,908	2,831,721	1,073,775	850,000	1,923,775

25 SHARE WARRANTS - continued

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 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 £255,000. 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.

There were no warrants issued in the 2015. During the year, 1,962 shareholder warrants were converted into ordinary shares resulting in the issue of 1,962 new ordinary shares (2015: 129).

26 SHARE BASED PAYMENTS

Long term incentive plan

Following approval from shareholders at the General Meeting of the company on 20 November 2015, the directors implemented a long term incentive plan ("plan") to incentivise the management team as well as align their interests with those of shareholders on 28 July 2016 through enhancing shareholder value.

For the purposes of the plan, "shareholder value" is the difference between the market capitalisation of the Company at the point in time that any assessment is made and the sum of:

(i) the market capitalisation of the Company a) at 1 December 2014 for first awards made to management who joined the Company before 30 September 2015 ("old joiners") and b) at the date of award in all other cases ("new joiners"); and

(ii) the aggregate value (at the subscription price) of all ordinary shares issued thereafter and up to the point in time that any assessment is made, in each case adjusted for dividends and capital returns to Shareholders and/or issue of new shares.

The beneficiaries of the plan, will in aggregate be entitled to an amount of up to 13.8% of shareholder value created, subject to performance criteria set out below. Individual participation in the shareholder value created will be determined by the Remuneration Committee.

There will be certain hurdles the Company's share price has to achieve before an award vests.

In the event that the Company achieves an average mid-market closing price equal to compound growth at 7% per annum for a period of 10 consecutive dealing days in the period after 1 December 2016 for first awards to management who joined the Company before 30 September 2015 and from the second anniversary of the date of award in all other cases, 50% of the award will vest.

In the event that the share price of the Company outperforms the FTSE All Share Index in the period after 1 December 2016, and from the second anniversary of the date of the award in all other cases, 50% of the award shall vest.

Each award will require a minimum term of employment of three years and awards will be made to current management and new joiners at the Company's discretion.

IFRS 2: Share Based Payments sets out the criteria for an equity settled share based payment, which has market performance conditions. The plan meets these criteria and should therefore be recognised at award as fair value and amortised over the vesting period of two years. A total award of 1,000 A shares in Gresham House Holdings Limited was made on 28 July 2016and all of these were outstanding as at 31 December 2016 and are not exercisable until the end of the vesting period. The weighted average time to vesting is 14 months. There is no exercise price payable by the beneficiaries on exercise.

Fair value

The fair value of the award has been determined using an expected returns model, which is based on a number of scenarios and probabilities of the Company's performance for the period when the awards may be exercised. The assumptions in the model have estimated the shareholder value created and applied discounts for liquidity and likelihood of exercise by participants. The weighted average valuation of the Company has been used to calculate the expected shareholder value created and consequently the value of the plan. The fair value of the plan at award was £155,000 (£155 per share), which will be amortised over the two year vesting period.

27 RESERVES

	2016			2015
	Share premium account	Share warrant reserve	Retained reserves	Share premium account	Share warrant reserve	Retained reserves
Group	£'000	£'000	£'000	£'000	£'000	£'000
Balance at 1 January	1,688	64	21,611	12,508	64	12,934
Loss and total comprehensive income	-	-	(3,027)	-	-	(3,807)
Transfer of non-controlling interest deficit	-	-		-	-	(24)
Issue of shares	923	-	-	1,688	-	-
Issue of warrants	-	255	-	-	-	-
Cancellation of share premium	-	-	-	(12,508)	-	12,508
Share based payments	-	-	73	-	-	-
As at 31 December	2,611	319	18,657	1,688	64	21,611

	2016			2015
	Share premium account	Share warrant reserve	Retained reserves	Share premium account	Share warrant reserve	Retained reserves
Company	£'000	£'000	£'000	£'000	£'000	£'000
Balance at 1 January	1,688	64	16,939	12,508	64	6,946
Loss and total comprehensive income	-	-	(786)	-	-	(2,515)
Issue of shares	923	-	-	1,688	-	-
Issue of warrants	-	255	-	-	-	-
Cancellation of share premium	-	-	-	(12,508)	-	12,508
Share based payments	-	-	-	-	-	-
As at 31 December	2,611	319	16,153	1,688	64	16,939

	2016	2015
Non-controlling interest:	£'000		£'000
Balance as at 1 January	-		-
Interest in trading result for the year	56		51
Interest in investments- securities	500		-
Interest in movement in investment property for the year	(65)		(75)
Transfer deficit balance			24
	491		-

On 4 February 2015, the High Court approved the cancellation of the Company's share premium account (the "Cancellation"). As a consequence of the Cancellation, £12,508,000 standing to the credit of the Company's share premium account was cancelled. This will facilitate any share buyback or payment of dividends that the Board of the Company may in the future approve by creating a reserve of an equivalent amount that, subject to certain creditor protection undertakings, will form part of a distributable reserve. The Cancellation had no effect on the overall net asset position of the Company.

28 NET ASSET VALUE PER SHARE

Basic and diluted

	2016	2015
Equity attributable to holders of the parent (£'000)	24,133	25,826
Number of ordinary shares in issue at the end of the period	10,185,487	9,851,041
Basic and diluted net asset value per share (pence)	236.9	262.2

No shares were deemed to have been issued at nil consideration as a result of shareholder and supporter 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 ordinary shares during the year.

	£'000
The movement during the year of the assets attributable to ordinary shares were as follows:
Total net assets attributable at 1 January 2016	25,826
Total recognised losses for the year	(3,027)
Share warrants issued	255
Share based payments	73
Issue of shares	1,006
Total net assets attributable at 31 December 2016	24,133

29 RECONCILIATION OF OPERATING PROFIT TO OPERATING CASH FLOWS

	Group		Company
	2016	2015	2016	2015
	£'000	£'000	£'000	£'000
Net loss after exceptional items	(3,360)	(2,602)	(2,086)	(2,181)
Interest payable	293	137	260	-
Depreciation	77	10	3	-
Profit on disposal of tangible fixed assets	(8)	(6)	-	-
Amortisation	1,364	-	-	-
Share based payments	72	-	-	-
Intercompany loans waived	-	-	2,000	-
	(1,562)	(2,461)	177	(2,181)
Increase in long term receivables	(54)	-	-	-
(Increase) / decrease in current assets	(430)	(343)	164	136
(Decrease) / increase in current liabilities	(1,291)	778	(747)	698
	(3,337)	(2,026)	(406)	(1,347)

30 FINANCIAL INSTRUMENTS

The Group consists of the Company and subsidiary undertakings whose principal activities are asset management, forestry management and property investment

The Group's financial instruments, which are held in accordance with the Group's objectives and policies, comprise:

(i) securities consisting of listed and unlisted equity shares;

(ii) a secondary portfolio of listed and unlisted fixed income securities;

(iii) cash, liquid resources and short term debtors and creditors that arise directly from its operational activities; and

(iv) short term and long-term borrowings.

As at 31 December 2016 the following categories of financial instruments were held by:-

Group	2016			2015
	Loans and receivables	Assets at fair value through comprehensive income		Loans and receivables	Assets at fair value through comprehensive income
Financial assets per Statement of Financial Position	£'000		£'000	£'000		£'000
Investments - securities	617		2,217	1,411		157
Trade and other receivables - current and non-current	1,259		5,180	665		5,916
Accrued income	387		-	454		-
Cash and cash equivalents	2,802		-	4,390		-
	5,065		7,397	6,920		6,073

	2016		2015
Other financial liabilities		Liabilities at fair value through comprehensive income	Other financial liabilities	Liabilities at fair value through comprehensive income
Financial liabilities per Statement of Financial Position	£'000	£'000	£'000	£'000
Trade and other payables - short term *	2,229	-	4,390	-
Bank loans - short & long term	5,896	-	2,850	-
Other creditors - long term	27	3,237	31	2,726
	8,152	3,237	7,271	2,726

* £245,000 (2015: £1,765,000) of corporation tax, PAYE and VAT payable is included within trade and other payables.

30 FINANCIAL INSTRUMENTS - continued

Company	2016			2015
	Loans and receivables	Assets at fair value through comprehensive income		Loans and receivables	Assets at fair value through comprehensive income
Financial assets per Statement of Financial Position	£'000		£'000	£'000		£'000
Investments - securities	617		499	1,411		157
Accrued income	219		-	383		-
Amounts owed by Group undertakings	9,734		-	11,568		-
Cash and cash equivalents	858		-	372		-
	11,428		499	13,734		157

	2016		2015
Other financial liabilities		Liabilities at fair value through comprehensive income	Other financial liabilities	Liabilities at fair value through comprehensive income
Financial liabilities per Statement of Financial Position	£'000	£'000	£'000	£'000
Trade and other payables - short term	87	-	1,435	-
Other loans - short & long term	6,258	-	26	-
Other creditors - long term	-	258	-	-
	6,345	258	1,461	-

The carrying value of loans and receivables and other financial liabilities are not materially different to their fair values. The Group's activities expose it to various types of risk that are associated with the financial instruments and markets in which it invests. The main risks to which the Group is exposed are market price risk, credit risk, interest rate risk and liquidity risk. The nature and extent of the financial instruments outstanding at the Statement of Financial Position date and the risk management policies employed by the Group are summarised below.

Market price risk

Market price risk is the risk that changes in market prices will adversely affect the Group's income due to a decline in the underlying value of assets under management, resulting in lower fees.

The objective of market price risk management is to manage and control market price exposure, while optimising the return on risk. The Group manages strategic equity funds. Forestry assets management fees are not linked directly to market prices.

Market price risk arises from uncertainty about the future prices of financial instruments held within the Group's portfolio. It represents the potential loss that the Group might suffer through holding market positions in the face of market movements. The investments in equity and fixed interest stocks of unquoted companies are not traded and as such the prices are more uncertain than those of more widely traded securities.

Unquoted investments are valued as per accounting policy (j) in these financial statements. Regular reviews of the financial results, combined with close contact with the management of these investments, provides sufficient information to support these valuations.

30 FINANCIAL INSTRUMENTS - continued

Credit risk

Credit risk is the risk that the counterparty will fail to discharge an obligation or commitment that it has entered into with the Group.

The Group's maximum exposure to credit risk is:

	2016	2015
	£'000	£'000

Loan stock investments	617	1,411
Trade and other receivables - long term	5,180	5,916
Trade and other receivables - short term	1,259	665
Accrued income	387	454
Cash and cash equivalents	2,802	4,390
	10,245	12,836

The Group has an exposure to credit risk in respect of both loan stock investments and other loans, most of which have no security attached to them, or where they do, such security will rank after any bank debt. The Company's exposure to credit risk is restricted to investments, cash and cash equivalents, other loans, amounts owed by Group undertakings and accrued income totalling £11,428,000 (2015: £13,734,000).

Cash and cash equivalents consist of cash in hand and balances with banks. To reduce the risk of counterparty default the Group deposits its surplus funds in approved high quality banks.

The following table shows the maturity of the loan stock investments and other loans referred to above:

	2016	2015
(a) Loan stock investments	£'000	£'000
Repayable within:- 1 year	151	-
1-2 years	466	945
2-3 years	-	-
3-4 years	-	466
4-5 years	-	-
	617	1,411

As at 31 December 2016 loan stock investments totalling £340,000 (2015: £423,000) were impaired and provided for.

As at 31 December 2016 other loans totalling £155,000 (2015: £196,000) were impaired and provided for.

There is potentially a risk whereby a counter party fails to deliver securities which the Company has paid for, or pay for securities which the Company has delivered. This risk is considered to be small as where the transaction is in respect of quoted investments the Company uses brokers with a high credit quality and where the transaction is in respect of unquoted investments, these are conducted through solicitors to ensure that payment matches delivery.

Interest rate risk

The Group's fixed and floating interest rate securities, its equity, preference equity investments and loans and net revenue may be affected by interest rate movements. Investments in small businesses are relatively high risk investments which are sensitive to interest rate fluctuations.

The Group's assets include fixed and floating rate interest instruments as detailed below. The Group is exposed to interest rate movements on its floating rate liabilities.

30 FINANCIAL INSTRUMENTS - continued

The interest rate exposure profile of the Group's financial assets and liabilities as at 31 December 2016 and 2015 were:

Group	Non interest bearing assets/ liabilities		Fixed rate assets		Floating rate assets		Fixed rate liabilities	Floating rate liabilities		Net total
As at 31 December 2016	£'000		£'000		£'000		£'000		£'000	£'000
Investments - securities	2,217		617		-		-		-	2,834
Cash	-		-		2,802		-		-	2,802
Trade and other receivables	1,259		-		-		-		-	1,259
Accrued income	387		-		-		-		-	387
Creditors
- falling due within 1 year	(2,229)		-		-		-		(1,015)	(3,244)
- falling due after 1 year	(3,237)		-		-		(27)		(4,881)	(8,145)
	(1,603)		617		2,802		(27)		(5,896)	(4,107)
		Non interest bearing assets/ liabilities		Fixed rate assets	Floating rate assets	Fixed rate liabilities		Floating rate liabilities			Net total
As at 31 December 2015		£'000		£'000	£'000	£'000			£'000		£'000
Investments - securities		52		1,516	-	-			-		1,568
Cash		-		-	4,390	-			-		4,390
Trade and other receivables		665		-	-	-			-		665
Accrued income		454		-	-	-			-		454
Creditors
- falling due within 1 year		(3,723)		-	-	(667)			(2,850)		(7,240)
- falling due after 1 year		(2,726)		-	-	(31)			-		(2,757)
		(5,278)		1,516	4,390	(698)			(2,850)		(2,920)

Non interest bearing assets comprise the portfolio of ordinary shares, dealing securities and non interest bearing loans.

Fixed rate assets comprise preference shares, fixed rate loans, unsecured loans and loans repayable on demand, with a weighted average interest rate of 10.0% (2015: 9.9%).

Floating rate assets and floating rate liability loans are subject to interest rates which are based on LIBOR and bank base rates.

Fixed rate liabilities include hire purchase contracts and short term loan notes.

The Group is not materially exposed to currency risk as its assets and liabilities are substantially denominated in sterling.

The interest rate exposure profile of the Company's financial assets and liabilities as at 31 December 2016 and 2015 were:

Company	Non interest bearing assets/ liabilities	Fixed rate assets	Floating rate assets	Fixed rate liabilities	Floating rate liabilities		Net total
As at 31 December 2016	£'000	£'000	£'000	£'000		£'000	£'000
Investments - securities	499	617	-	-		-	1,116
Cash	-	-	858	-		-	858
Accrued income	219	-	-	-		-	219
Owed by Group undertakings	9,734	-	-	-		-	9,734
Creditors
- falling due within 1 year	(87)	-	-	-		(1,105)	(1,192)
- falling due after 1 year	(258)	-	-	-		(4,881)	(5,139)
	10,107	617	858	-		(5,986)	5,596

30 FINANCIAL INSTRUMENTS - continued

	Non interest bearing assets/ liabilities	Fixed rate assets	Floating rate assets	Fixed rate liabilities	Floating rate liabilities		Net total
As at 31 December 2015	£'000	£'000	£'000	£'000		£'000	£'000
Investments - securities	52	1,516	-	-		-	1,568
Cash	-	-	372	-		-	372
Accrued income	383	-	-	-		-	383
Owed by Group undertakings	11,568	-	-	-		-	11,568
Creditors
- falling due within 1 year	(768)	-	-	(667)		-	(1,435)
- falling due after 1 year	-	-	-	-		-	-
	11,235	1,516	372	(667)		-	12,456

Although the Company holds investments that pay interest, the Board does not consider it appropriate to assess the impact of interest rate changes upon the value of the investment portfolio as interest rate changes are only one factor affecting market price and the impact is likely to be immaterial. However, as the Group has bank borrowings, the section below shows the sensitivity of interest payable to change in interest rates:

	2016	2015
	Profit and net assets	Profit and net assets
If interest rates were 0.5% lower with all other variables constant - increase (£'000)	29	14
Increase in earnings and net asset value per ordinary share (pence)	0.30	0.14
If interest rates were 0.5% higher with all other variables constant - decrease (£'000)	(29)	(14)
Decrease in earnings and net asset value per ordinary share (pence)	(0.30)	(0.14)

Liquidity risk

The investments in equity investments in NEX Exchange traded companies may be difficult to realise at their carrying value, particularly if the investment represents a significant holding in the investee company. Similarly, investments in equity and fixed interest stocks of unquoted companies that the Company holds are only traded infrequently. They are not readily realisable and may not be realised at their carrying value where there are no willing purchasers.

The Group aims to hold sufficient cash to be able to provide loan interest and quarterly capital repayment cover of at least 6 months.

The table below analyses the Group's financial liabilities into relevant maturity groupings based on the remaining period at the Statement of Financial Position date to the expected maturity date. The amounts disclosed in the table are the contractual undiscounted cash flows.

As at 31 December 2016	Less than 1 year	Between 1 and 2 years	Between 2 and 5 years
	£'000	£'000	£'000
Bank borrowings	1,413	2,264	2,863
Trade payables	225	-	-
Accruals	1,672	-	-
Contingent consideration	-	3,955	-
Other creditors	359	-	-
	3,669	6,219	2,863

As at 31 December 2015	Less than 1 year	Between 1 and 2 years	Between 2 and 5 years
	£'000	£'000	£'000
Bank borrowings	2,890	-	-
Trade payables	265	-	-
Accruals	1,545	-	-
Contingent consideration	-	-	3,697
Short term loan notes	667	-	-
Other creditors	1,944	-	-
	7,311	-	3,697

30 FINANCIAL INSTRUMENTS - continued

Capital risk management

The Group manages its capital to ensure that entities within the Group and the Company will be able to continue to trade in an orderly fashion whilst maintaining sustainable returns to shareholders.

The capital structure of the Group and Company consist of short and long term borrowings as disclosed in notes 20 and 22, cash and cash equivalents and equity attributable to equity shareholders of the Company comprising issued share capital, share premium, share warrant reserve and retained reserves as disclosed in notes 23 to 26. The Board reviews the capital structure of the Group and the Company on a regular basis. The financial measures that are subject to review include cash flow projections and the ability to meet capital expenditure and other contracted commitments, projected gearing levels and interest covenants although no absolute targets are set for these.

	Group		Company
	2016 £'000	2015 £'000	2016 £'000	2015 £'000
Debt	(5,896)	(2,850)	(5,896)	-
Cash and cash equivalents	2,802	4,390	858	372
Net (debt) / cash	(3,094)	1,540	(5,038)	372
Net (debt) / cash as a % of net assets	(12.6%)	6.0%	(23.3%)	1.8%

31 FAIR VALUE MEASUREMENTS

Valuation inputs

IFRS 13 - Fair Value Measurement - requires an entity to classify its financial assets and liabilities held at fair value according to a hierarchy that reflects the significance of observable market inputs. The classification of these assets and liabilities is based on the lowest level input that is significant to the fair value measurement in its entirety. The three levels of the fair value hierarchy are defined below.

Quoted market prices - Level 1

Financial instruments, the valuation of which are determined by reference to unadjusted quoted prices for identical assets or liabilities in active markets where the quoted price is readily available, and the price represents actual and regularly occurring market transactions on an arm's length basis. An active market is one in which transactions occur with sufficient volume and frequency to provide pricing information on an ongoing basis.

Valuation technique using observable inputs - Level 2

Financial instruments that have been valued using inputs other than quoted prices as described for level 1 but which are observable for the asset or liability, either directly or indirectly.

Valuation technique using significant unobservable inputs - Level 3

Financial instruments, the valuation of which incorporate significant inputs for the asset or liability that are not based on observable market data (unobservable inputs). Unobservable inputs are those not readily available in an active market due to market illiquidity or complexity of the product. These inputs are generally determined based on observable inputs of a similar nature, historical observations on the level of the input or analytical techniques.

For investment properties the significant unobservable inputs used in the valuation at 31 December 2016 are the estimated rental value (ERV) of the properties and the market capitalisation rate (yield). The ERV has been determined by reference to rents currently achieved on existing leases and the rents being asked by landlords advertising properties of a similar specification in that geographical region. The market capitalisation rate has been determined by reference to actual market transactions for properties in that region, with adjustment made to reflect the particular characteristics of that property. A decrease in the ERV or an increase in the market capitalisation rate will decrease the fair value of the investment property. Conversely an increase in the ERV or decrease in the market capitalisation rate will increase the fair value.

For investments in securities, which includes early-stage private equity investments, the significant unobservable inputs used include cash flow forecasts and discount rates. An increase in the discount rate applied will decrease the fair value of the investment whereas a decrease in the rate will increase the fair value. No reasonable foreseeable changes to significant unobservable inputs will result in a material impact to profit and loss or equity.

The valuation techniques used by the Company for level 3 financial assets can be found in accounting policy (j) (iii) and (iv).

Further details of the securities portfolio can be found in note 10 and of the property portfolio in note 11 of these financial statements.

31 FAIR VALUE MEASUREMENTS - continued

An analysis of the Group's and Company's assets measured at fair value by hierarchy is set out below.

Group	31 December 2016	Level 1	Level 3
	£'000	£'000	£'000
Financial assets at fair value through profit and loss:
Property investments	9,628	-	9,628
Investments - securities
- Equities	2,217	499	1,718
Trade and other receivables - long term	5,180	-	5,180
	17,025	499	16,526

	31 December 2015	Level 1	Level 3
	£'000	£'000	£'000
Financial assets at fair value through profit and loss:
Property investments	9,559	-	9,559
Investments - securities
- Equities	52	51	1
- Fixed income	105	105	-
Trade and other receivables - long term	5,916	-	5,916
	15,632	156	15,476

Company	31 December 2016	Level 1	Level 3
	£'000	£'000	£'000
Financial assets at fair value through profit and loss:
Investments - securities
- Equities	499	499	-
	499	499	-

	31 December 2015	Level 1	Level 3
	£'000	£'000	£'000
Financial assets at fair value through profit and loss:
Investments - securities
- Equities	52	51	1
- Fixed income	105	105	-
	157	156	1

Set out below is a reconciliation of financial assets measured at fair value based on level 3.

Group 31 December 2016	Property investments	Investments - securities	Trade and other receivables - long term	Total
	£'000	£'000	£'000	£'000
Opening balance	9,559	1	5,916	15,476
Total gains and (losses):
In Statement of Comprehensive Income	(139)	-	201	62
Additions	311	1,718	-	2,029
Disposals	(103)	(1)	(937)	(1,041)
Closing balance	9,628	1,718	5,180	16,526

Total gains and (losses) for the period included in comprehensive income for assets held at the end of the reporting period	(242)	-	201	(41)

31 FAIR VALUE MEASUREMENTS - continued

31 December 2015	Property investments	Investments - securities	Trade and other receivables - long term	Total
	£'000	£'000	£'000	£'000
Opening balance	16,675	441	-	17,116
Total gains and (losses):
In Statement of Comprehensive Income	(744)	(440)	-	(1,184)
Additions	359	-	5,916	6,275
Disposals	(6,731)	-		(6,731)
Closing balance	9,559	1	5,916	15,476

Total gains and (losses) for the period included in comprehensive income for assets held at the end of the reporting period	(586)	(440)	-	(1,026)

Company 31 December 2016	Investments - securities	Trading securities	Total
	£'000	£'000	£'000
Opening balance	1	-	1
Disposals	(1)	-	(1)
Closing balance	-	-	-

Total gains or losses for the period included in comprehensive income for assets held at the end of the reporting period	-	-	-

31 December 2015	Investments - securities	Trading securities	Total
	£'000	£'000	£'000
Opening balance	441	-	441
Total gains or losses:
In statement of comprehensive income	(440)	-	(440)
Closing balance	1	-	1

Total gains or losses for the period included in statement of comprehensive income for assets held at the end of the reporting period	(440)	-	(440)

The only financial liabilities held at fair value relates to the deferred consideration on the acquisition of Gresham House Forestry Limited (formally Aitchesse Limited) and the appointment of Gresham House Asset Management Limited as investment manager to LMS Capital plc amounting to £3,237,000. This is measured using level 3 valuation techniques. The only such financial liabilities held at fair value within the Company relates to the LMS contingent consideration totalling £258,000.

Price risk sensitivity

Based on values as at 31 December 2016 a 10% movement in the fair values of the Group's equity and direct property investments would be equivalent to a movement of £1,185,000 in both profit and net assets.

32 RELATED PARTY TRANSACTIONS

Group

During the year management fees totalling £542,453 (2015: £126,596) were invoiced to Gresham House Strategic plc ("GHS"), a company in which the Group has a 19.2% interest. At the year-end £57,803 (2015: £151,916) was due from GHS.

During the year management fees totalling £479,996 (2015: £nil) were invoiced to LMS Capital plc ("LMS"), a company with a significant shareholding in the Company as disclosed in the directors' report. At the year-end £253,725 (2015: £nil) was due from LMS.

Company

During the year the Company advanced loans totalling £3,098,028 to (2015: received £550,736 from) Security Change Limited. At the year-end £3,071,913 was due from (2015: £26,115 owed to) Security Change Limited. No interest was charged during the year (2015: £nil).

During the year the Company received £8,278,600 (2015: £nil) from Gresham House Finance Limited (formally Watlington Investments Limited). At the year-end £221,400 (2015: £8,500,000) was owed by Gresham House Finance Limited, against which a provision of £nil (2015: £1,629,000) has been made. No interest was charged during the year (2015: £nil).

During the year the Company received £361,460 (2015: £nil) from Gresham House Forestry Limited. At the year-end £361,460 (2015: £nil) was owed to Gresham House Forestry Limited. No interest was charged during the year (2015: £nil).

During the year Gresham House plc advanced loans totalling £2,005,085 (2015: £4,321,977) to Gresham House Holdings Limited. At the year-end £6,327,062 (2015: £4,321,977) was owed by Gresham House Holdings Limited. No interest was charged during the year (2015: £nil).

During the year the Company charged management fees totalling £nil (2015: £397,020) to Gresham House Asset Management Limited. At the year end £113,733 (2015: £375,406) was owed by Gresham House Asset Management Limited.

33 POST BALANCE SHEET EVENTS

At the extraordinary general meeting of the Company on 10^th March 2017, it was resolved to issue 2,251,372 new ordinary shares at a price of 325 pence per share to the Royal County of Berkshire Pension Fund ("Berkshire"). This represents the alignment of Berkshire with the Company following the announcement on 21 February 2017 that Berkshire intends to become a cornerstone investor in the British Strategic Investment Fund ("BSIF"). BSIF will be managed by GHAM and is aimed at providing solutions to longer term investors, addressing demand for alternatives and illiquid assets in a cost-effective manner which will also facilitate structured co-investment.

This information is provided by RNS

The company news service from the London Stock Exchange

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