Final Results

RNS Number : 5739V

Gresham House PLC

19 April 2016

 

19 April 2016

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

(AIM: GHE)

AUDITED RESULTS FOR YEAR ENDED 31 DECEMBER 2015

TRANSFORMATION TO A SPECIALIST ASSET MANAGER IN THE FIRST YEAR UNDER THE NEW MANAGEMENT TEAM AND ASSETS UNDER MANAGEMENT ("AUM") GROWTH TO £0.24 BILLION

Transformation to specialist asset manager under new management

·      Scalable growth platform established for differentiated and illiquid asset management strategies

·      FCA authorisation for newly formed subsidiary Gresham House Asset Management (GHAM)

·      Advisory group formed and continued investment in talent. Rupert Robinson as managing director of GHAM and Graham Bird head of Strategic Public Equity team

Established third party assets under management ("AUM") of £0.24 billion within first year

·      Initial Strategic Public Equity ("SPE") investment mandate awarded for Gresham House Strategic plc ("GHS"), formerly SPARK Ventures plc ("SPARK")

·      Acquisition of leading forestry asset manager Aitchesse Ltd for £7.0 million

 Financial highlights

·      Results in line with management expectations for the year:

-       Investment in the business resulted in operating loss of £1.68 million (2014: £0.41 million)

-       Cash at the end of the year £4.4 million (2014: £11.2 million)

·      Strong balance sheet comprising cash, marketable securities, receivables and saleable property assets

Post year-end

·      Currently launching new forestry fund and increasing institutional access to asset class

·      New £7 million banking facility with Kleinwort Benson Bank Ltd

·      Richard Davidson appointed chairman of the Investment Committee and lead fund manager at Gresham House Forestry

·      Kevin Acton to join the Board as Finance Director from June 2016

·      Organic growth and acquisition opportunities continue to be appraised

Tony Dalwood, CEO of Gresham House, comments:

"Gresham House's transformation to a specialist asset manager has progressed well and we are now in a strong position to take advantage of the structural growth in alternative asset management.  We have a strong balance sheet and scalable platform to support AUM growth and the momentum is starting to generate a consistent flow of deal opportunities and ideas across all our Group businesses.

This has been the first full year under the new management team and having successfully completed stage one, we have now entered into stage two of our journey. The Board and the executive team are focused on growing profitability, management fees and performance fees whilst increasing assets under management, both organically and through acquisition."

For further enquiries, please contact:

Gresham House plc Tony Dalwood, Chief Executive Officer		[phone]
Liberum                                         Neil Elliot/Jill Li		[phone]
Montfort Communications, PR Adviser Rory King		[e-mail]         [phone]

Website: www.greshamhouse.com

Disclaimers

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

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

 

Financial calendar

Report & Accounts posted to shareholders and available on Company website		22 April 2016
Annual General Meeting		11.00 am on 15 June 2016 10 Snow Hill London EC1A 2AL

Registered office

5 New Street Square London EC4A 3TW

***

CHAIRMAN'S STATEMENT

2015 was a year of great change for Gresham House.

Phase one of the ambitious development plan put in place by the new management team in December 2014 is complete. At 31 December 2015, from a standing start, Gresham House is a fully established specialist asset management business with approaching £0.24 billion of third party assets under management.

The new Board outlined the objectives for 2015 in the last annual report and accounts and I am pleased to be able to tell shareholders that the management team has made great progress in achieving these both organically and through acquisition. The management team has also made substantial progress in the successful disposal and stewardship of Gresham House's legacy property assets. This continues to ensure the Group has a strong asset-backed balance sheet to support opportunistic deployment of capital.

2016 started with concerns over weakening global economic growth causing stock market volatility. Fortunately, we have limited exposure to emerging markets, foreign currency fluctuations or depressed commodity prices. The looming uncertainty caused by Brexit may influence the financial markets in the very short term, however we are building the group for the long term and we are confident that the long-term value creation opportunity will not be affected. Nonetheless, we will undoubtedly feel the effect of the broader economic influences of these global events.  The Board aims to ensure that the business is run in a way that builds long-term value regardless of the wider backdrop.

I would like to take this opportunity to thank all the management and staff for their commitment and contribution to the transformation of Gresham House. As you read on, you will see that 2015 has been an exciting time and as the Group grows, it behoves me to welcome new members. In particular, it has been a pleasure to bring under the Gresham House umbrella Aitchesse Limited, our specialist forestry management business based in Perth, Scotland. As the cornerstone of the Gresham House Real Asset division, I am sure that Aitchesse will make an invaluable contribution to the development of the Group going forward.

Duncan Abbot, our finance director and company secretary stepped down from the Board of the Company and resigned as company secretary with effect from 31 December 2015. Duncan has however continued to oversee the Company's finance and compliance function, including the preparation of the 2015 accounts. I would like to take this opportunity, on behalf of everyone at Gresham House, to pay special thanks to Duncan for his hard work over the last year.  As Gresham House moves into the next phase of its development, I am pleased to welcome Kevin Acton who will join the group, subject to the usual regulatory approvals, as our new finance director with effect from 6 June 2016. Kevin joins us from Oaktree Capital Management (UK) LLP.

Our next interim statement will be a significant one for the Company. For the first time, we will be able to report on our business where, for the whole of the reporting period, we will have results from both established divisions within our specialist asset management business: Gresham House Strategic Equity and Gresham House Real Assets.

With solid foundations developed in 2015 and with good momentum, particularly from the second half of the year, the Group is well positioned for another year of organic and acquisitive growth.

Anthony Townsend

Chairman

18 April 2016

CHIEF EXECUTIVE'S REPORT 

The first full year under the new management team has been a transformational period.

The business has been converted from an investment trust with legacy property and direct equity assets and a complex web of subsidiaries into a specialist asset manager addressing the increasing demand for long-term alternative investment strategies and illiquid asset classes.  

The new team has established an asset management platform that will now be scaled and from a standing start has grown third party assets under management ("AUM") to £0.24 billion, organically and through acquisition.

The results for the year ended 31 December 2015 are in line with management expectations and I am pleased to report significant progress on the journey we embarked upon in December 2014.  

We set out to put in place three key pillars necessary to successfully and sustainably develop Gresham House into a specialist asset manager: a scalable investment platform, a disciplined investment philosophy, and highly capable team of individuals. It has been a productive year for the team and we have made substantial strides towards our plan to create a specialist asset manager focused on alternative and differentiated investment products:

·      We established Gresham House Asset Management Limited ("GHAM") and in November gained authorisation from the Financial Conduct Authority ("FCA") to conduct designated investment business in the UK

·      Under GHAM we have established two divisions: The first, Strategic Equity, includes Strategic Public Equity (SPE), and was established in July with the award of the investment mandate for AIM-traded investment company SPARK Ventures plc (since rebranded in October 2015 Gresham House Strategic plc (AIM: GHS) ("GHS"). Secondly, our acquisition of Aitchesse Limited, one of the UK's leading managers of commercial forestry, marked the launch of the Gresham House Real Assets division

·      We have appointed new brokers, moved offices and recruited new and experienced members to our team

The results to 31 December 2015 are detailed fully in the Strategic Report and reflect the investment we have made in the platform and people throughout this transformational year.  AUM growth was achieved during the second half of the year. Therefore, the material revenues relating to the development of AUM to £0.24 billion reflect five months' fee contribution from GHAM in respect of the management of GHS and only six weeks' contribution from Aitchesse. In line with expectations, the Group operating loss widened from £406,000 in 2014 to £1,685,0000 for the year as the management team invested in the platform. 

Since our initial working capital fund raise of £10.6 million (net of expenses) in December 2014, the new management team has continued to invest in growing Gresham House. 

We are also making significant headway in turning legacy property assets into cash to reinvest into the business. Our asset backed balance sheet and merchant banking-style approach to aligning interests with shareholders has been a driving force throughout this transitional year. A new £7 million bank facility, as detailed below, will ensure we have available capital to develop further the Strategic Equity and Real Assets businesses.

Strategic Equity

The award of our first investment advisory mandate by SPARK (now GHS) was an important milestone for Gresham House because it marked the launch of our first division, Gresham House Strategic Equity. It was a significant management contract to be awarded to GHAM, with a management fee income of 1.5% per year of the net asset value of the GHS portfolio plus performance fee potential.

In line with our approach to alignment of interests, Gresham House invested in GHS in two ways: we invested £5 million in new ordinary shares and we exchanged our 10.6% holding in SpaceandPeople plc for new ordinary shares in GHS. As a result of the asset swap, Gresham House invested a total of £6.4 million in GHS shares and now holds 19.2% of the issued share capital of that company. We had considerable support from our major shareholders during this process, which saw a restructuring of the investment company that is now our quoted vehicle that enables investors to access the SPE investment strategy. 

Based on the net asset value released on 18 April 2016, since GHAM took on the management contract and the investment policy changed, the discount to net asset value at which GHS traded has more than halved to 22.5% from a previous average of 54%. We are working actively to further close the discount and investment performance is an important component of that; we are pleased that, whilst it is still only short term, the NAV performance has marginally outperformed its benchmark at these early stages.

The fund managers made an active decision to hold a significant weighting in cash in the second half of 2015 within GHS. This cash is increasingly being deployed where opportunities have arisen as a result of reduced valuations or where a company's access to capital maybe constrained; these investments include BeHeard Group plc and Quarto Group plc. Taking into account the current discount to NAV, GHS is currently priced below 5x forecast EBITDA (as a weighted average, Dec 2016) with in excess of 10% forecast  EBITDA growth (calculations exclude cash and Be Heard, for which there are no current forecasts).   This compares to 9x for the FTSE Allshare with average forecast growth of 6%.  We are particularly excited by the potential returns that may be generated by looking at the 'value' areas of the quoted companies universe, which are relatively lowly valued as markets and investors choose to focus on 'quality' and 'growth' at any price. We believe 2016 could be the year when we see value investment strategies and stocks return to favour and begin to generate the long-term returns that historical data has shown to outperform other investment strategies.  We continue to see good opportunities for value investments which fit our criteria for illiquid asset management and, due to their limited access to growth capital, are being overlooked by the wider market.

We have progressed plans to launch a new Limited Partnership that will enable us to broaden the investor base in the SPE strategy and grow AUM. In addition, we have established a partnership with a respected third party distributor to address the wholesale/retail client channel. 

Real Assets

Our acquisition of Aitchesse, one of the UK's leading commercial forestry managers, in November 2015 marked the launch of the Gresham House Real Assets division. The £7.0 million maximum consideration was funded from a combination of cash, loan notes and Gresham House shares. The transaction has been divided into an initial consideration stage plus an earn-out through to 2018.

Since 2007 Aitchesse's experienced and capable team has increased AUM by around 400 % and the strategy has outperformed the equity markets over the last 10 years by over 16% per annum. The team now manages around 30,000 hectares of forestry valued at over £200 million for a small client base of endowments, institutions, and high net worth families. 

We are excited by the prospective returns and the opportunity to widen Aitchesse's client base whilst increasing the AUM. We are working closely with the Aitchesse team to launch new forestry investment products and, in February 2016, we announced our intention to launch the Gresham House Forestry Fund LP, which will target unleveraged net returns of 10%. We have started to market the fund to potential investors.

The cornerstone investment for the fund will be a portfolio of forests in the West of Scotland. We have entered into conditional contracts to acquire the assets on behalf of the fund for a total consideration of £12.1 million.

We continue to review opportunities presented to us for similar acquisitions.

In due course, Aitchesse will be rebranded Gresham House Forestry and will form a core component of our Real Assets business. 

People

One of our three pillars for growth is developing a team of capable investment and business managers. In the course of the year, we have recruited a number of people who will build on our business offering. As a result, we have moved to flexible office space at 107 Cheapside, London EC2V 6DN.

Graham Bird, with whom I worked at SVG Advisers, has joined Gresham House to lead our SPE team. Graham is also fund manager alongside me on the GHS investment mandate.

Rupert Robinson, former chief executive of Schroders Private Bank, has joined us as managing director of our newly formed subsidiary, Gresham House Asset Management Limited. 

Since the year-end, we are very pleased to have Richard Davidson join the Aitchesse team (Gresham House Forestry) as chair of the investment committee and lead fund manager. Richard is an experienced forestry investor and was previously a fund manager at Lansdowne Partners and Chief European Equity Strategist at Morgan Stanley.  

I would like to thank Duncan Abbot, who was integral to the initial development of the new Gresham House strategy and I wish him all the best for the future.  Going forward we welcome Kevin Acton who joins us from Oaktree Capital Management in June 2016 as Finance Director. 

I indicated that we would establish an Advisory Group to support the development of Gresham House through business insight, network expansion, deal flow and investment appraisal. As such, I welcome Gareth Davis, Alan Mackay and Sir Roy Gardner, all of whom have superb attributes to support the team on the continuing journey toward further shareholder value growth.

We have a dynamic team now in place and are fortunate to be supported by a strong long-term shareholder base. 

Legacy assets

With respect to our legacy assets, we have continued to maximise value through a realisation process and reinvestment in the specialist asset management business. The share exchange between SpaceandPeople and GHS was part of a wider process that other GHS investors were able to participate in and is an example of the way in which Gresham House is seeking to be innovative in product development.

On 22 September 2015, we completed the sale of 25.8 acres of land at Newton-le-Willows to FTSE 100 housebuilder Persimmon Homes Ltd (Persimmon). The transaction will realise a total consideration of £7.25 million net. A deposit and initial payment of £944,610 has been received and the balance will be receivable in three tranches in March 2017, 2018 and 2019. In addition, Gresham House is entitled to an overage payment in the event that Persimmon achieves a selling price in excess of an agreed amount per square foot. Gresham House still retains a five acre site with retail planning permission bordering the residential site so there is scope for additional property value realisation.

At our Southern Gateway site in Speke, we have made considerable progress in lettings. The newer tenants offer the potential of stronger and more valuable relationships. The current book value of £7.65 million is an uplift since the new management team took over the Group, and whilst Brexit appears to have increased the risk aversion of property investors, Gresham House will seek to maximise and realise shareholder value from this asset in 2016.

We have provided £440,000 against our investment in Memorial Holdings Limited as at 31 December 2015. We were aware at the time of the December 2014 transaction that the equity of that company was under pressure due to its debt burden and after the year-end, we sold our shares for a nominal amount to the main financier of the company thereby crystallising the provision created at 31 December 2015. We also hold an investment in the mezzanine debt of Memorial through our stake in Kemnal Investments Limited. Kemnal has agreed with Memorial to extend the mezzanine term for a further two years. We believe that the current trading forecasts and strategy of Memorial supports the repayment of our share of the mezzanine debt of £466,000, together with accrued interest to date of £153,000.

Banking facility

To fund the planned growth of Gresham House, and after the year-end, we recently concluded a new banking facility with Kleinwort Benson Bank Limited to borrow £7 million. The borrowing is secured against our property assets and the deferred proceeds of the sale of the Newton-le-Willows site. The facility will be repayable in three tranches to match the deferred proceeds due from Persimmon . Part of the funding has been used to repay the existing Co-op facility of £2.85 million and pay down the £0.67m short-term loan notes issued in connection with the acquisition of Aitchesse Limited. The balance of the proceeds will be available for general working capital and further investment opportunities.

Outlook

The growth in alternative asset management continues as institutions, ultra high net worths and family offices seek superior investment returns in this low return world, and we believe we are well positioned to capitalise on this trend.

The macroeconomic environment continues to be challenging and 2015 saw near zero UK equity and bond returns. Global growth appears to be slowing with recent downward revisions and earnings growth expectations having been reduced in the developed world with forecast growth now around 35% lower than expected at the start of the year. As we are close to the end of the current economic cycle, alongside the peaking of corporate profit margins and relatively high valuations in the equity markets, it should therefore not be a surprise that financial market volatility has been evident. This is likely to continue whilst these ingredients plus an overvalued bond market remain. The pressures on dividends over the next couple of years will be significant and long-term returns from the equity markets are likely to be below the 7-8% plus per annum that investors aspire to. Seeking out areas and asset classes where superior returns can potentially be generated will become a more valuable business model.

As such, I look towards the next development stage of Gresham House with optimism and enthusiasm.  To say that the business has been transformed may seem a decisive statement, but Gresham House is very different today compared to when I took on the role as CEO. Our Company now has a scalable platform for growth. The progress made in transitioning to a specialist asset manager with a strong balance sheet and a developing brand is being recognised. This momentum is starting to generate a regular flow of ideas across all our Group businesses and we are currently appraising organic growth and acquisition opportunities.

We have an ambitious business plan, and feel that we are now at stage two of our journey. With £0.24 billion of AUM, the Board and the executive team is focused on growing profitability, management and performance fees whilst increasing assets under management, both organically and by acquisition.

Anthony Dalwood 

Chief Executive Officer 

18 April 2016

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 Company fared during the year ended 31 December 2015.

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

Strategic objective

The Directors intend to develop the Company as a quoted platform principally for the investment in, and the investment management of, differentiated, specialist or illiquid assets in order to generate superior risk adjusted returns for shareholders over the longer term. Returns are expected to be principally through capital growth. In addition, the Directors intend to develop an asset management business, either organically or through one or more acquisitions.

Recent Developments

On 8 October 2014, the Company announced the final terms of a new strategic direction including the appointment of new directors.

Since 1 December 2014, the Directors have been pursuing a strategy to:

• develop the Company as a quoted platform principally for investment in, and the investment management of, differentiated, specialist or illiquid assets in order to generate superior risk adjusted returns for shareholders of the Company over the longer term;

• develop an asset management business organically or through one or more acquisitions; and

• manage and develop an appropriate strategy for each of the Company's legacy assets (including its property assets) so as to maximise the value of the assets over the medium term in order to recycle the capital into areas the Directors believe will generate superior returns.

In continuance of the strategy described above, the Company has begun to focus on investment management of relatively differentiated, specialist or illiquid assets, through the asset management mandate with GHS and the acquisition of Aitchesse and we will continue to seek out new investment fund opportunities.

In line with the Directors' strategy to develop the Company as a quoted platform for investment in, and the investment management of, differentiated, specialist or illiquid assets, the Company established its Strategic Public Equity ("SPE") investment team. The team is led by Graham Bird and Tony Dalwood, and has a mandate to target superior long-term investment returns through applying private equity techniques to investing in public markets.

On 21 July 2015, GHAM (a subsidiary of Gresham House) entered into its first asset management mandate with SPARK Ventures plc ("SPARK") to be led by the SPE investment team and, at the same time, Gresham House agreed to invest £5 million in Spark and exchanged its entire 10.6% shareholding in SpaceandPeople plc for new shares in SPARK. The appointment and associated fundraising by Spark was approved by its shareholders on 6 August 2015. On 28 October 2015, SPARK'S name was changed to Gresham House Strategic plc.

GHAM applied to be authorised by the Financial Conduct Authority so that GHAM can act as the investment management vehicle for the Group's operations. GHAM received authorisation from the FCA on 6 November 2015.

On 4 November 2015, the Company announced that, in line with its strategy to develop an asset management business, we had agreed to acquire the entire issued share capital of Aitchesse, an asset management business based in Scotland that focuses on managing forestry and timber assets.

The acquisition of Aitchesse, effective from 23 November 2015, resulted in Gresham House becoming an operating company instead of an investing company. The Company ceased to be subject to the AIM Rules that relate to investing companies and therefore is no longer required to have an investing policy. Instead, the Directors intend to pursue a strategy to develop an asset management business focusing on the management of relatively differentiated, specialist or illiquid assets.

Since 1 December 2014, the Directors have developed a strategy for each of the Group's material legacy assets.

On 22 September 2015, the sale of 25.8 acres of the site at Newton-le-Willows to Persimmon was completed in accordance with the sale and purchase contract that was exchanged in April 2014, for a total consideration of £7.25 million (excluding overage payments). The Directors are now considering the sale of the remaining five acres of the site; and the property at Speke (as described in further detail below) is now virtually fully let and the Directors have very recently started working with Jones Lang LaSalle to sell this legacy asset.

Our strategy has been to focus on Strategic Equity, Real Asset management and the continued realisation of the Group's legacy assets.

Strategic Equity

The strategic equity investment strategy includes applying a private equity approach to making influential "block" stake investments in smaller quoted companies. Central to this strategy is constructive engagement with management and shareholders of investee companies in support of a clear equity value creation plan, which combined with the adoption of private equity techniques, including an investment committee and advisory group, aims for a significant de-risking of an investment.

The Directors believe the private equity approach described above can lead to superior investment returns as it targets inefficiencies in certain segments of the public markets. There are over 1,200 companies in the FTSE Small Cap index and on AIM: the Directors believe that these companies typically have limited research coverage and may often have limited access to growth capital often leading to valuation opportunities being overlooked by the wider market.

In line with its plans for this core element of the business, on 21 July 2015 GHAM was awarded its first investment advisory mandate to manage GHS using the strategic equity investment strategy. As at 31 December 2015, GHS had assets under management of approximately £36. 5 million (£36. 4 million at 8th April 2016 (being the latest available weekly net asset value update released by GHS prior to the publication of this document).

As at 31 December 2015, GHS held six investments, which together represent 58.1% of its AUM. The largest investment is its holding in AIM-quoted IMImobile plc, which was valued at approximately £15.6 million as at 31 December 2015 (£15. 6 million at 8th April 2016).

GHS will focus mainly on cash generative companies where there is scope through management engagement to identify opportunities to implement either strategic, management or operational changes to create shareholder value in the business and to generate improved equity returns.

Under the GHS Investment Management Agreement, GHAM was appointed as investment adviser to GHS, for which GHAM receives a fee of 0.125% per month of the net asset value of the GHS portfolio. In addition, GHAM is entitled to a performance fee of 15% of the increase in net asset value per share of GHS over a 7% hurdle. Upon receipt of FCA authorisation, GHAM became Investment Manager of GHS.

As part of the transaction, the Company made an investment of £5 million in GHS and exchanged its entire 10.6% shareholding in SpaceandPeople plc for new shares in GHS. From 21 July 2015 to 23 November 2015, as an investing company, the holding in GHS was classified as an investment and held at fair value through profit and loss. During that period, the Group incurred a fair value loss of £459,000.

The Group holds 19.2% of the issued share capital of GHS. Due to the close relationship, between the Group and the company, it has been decided that Gresham House plc will account for its 19.2% stake in GHS as an associate. This is because of the significant influence it is perceived we have over the affairs of GHS through GHAM's investment management mandate even though our shareholding is below 20% and we do not have an appointed director on the Board of that company. There has been no reporting of results for GHS from the date of its recognition as an associate at 31 December 2015.  As such, no profit or loss has been recognised on the associate for that period.  GHS has a year-end of 31 March 2016 and therefore the results of GHS will be incorporated into the Group up to the latest published annual information.

The Company intends to grow its Strategic Equity division and will continue to seek out new mandates to achieve this goal. GHAM intends launching a limited partnership for those investors who prefer to invest alongside GHS in a limited partnership vehicle. The Directors believe there to be a demand for this from ultra high net worth individuals, family offices and smaller institutional investors.

Real Asset management

The Directors believe that there is an increasing demand for long-term superior returns from illiquid and alternative asset management strategies. Institutions, family offices and ultra-high net worth individuals are increasing allocation to alternative strategies and private equity. Real assets can offer attractive benefits to investors, including superior investment returns, which are typically uncorrelated to equities, funds and UK commercial property. The increase in asset allocation towards this area has been significant over the last 20 years and is ongoing, reflected by the fact that pension funds, who had a zero percentage allocation on average to "alternatives" (ex-property) in 1995, are now allocating approximately 9% of their assets under management to this asset class.

The Company intends to build on its specialist asset management group, which will incorporate various illiquid or differentiated asset strategies. Our first step was the acquisition of Aitchesse (described more fully in note 4 to the accounts) a specialist asset manager of forests and timber. It has a strong financial record and the Directors believe the business to be a successful model on which it can build. The specialist knowledge of the management team at Aitchesse and the experience of the Company should be a successful combination: Aitchesse will be able to provide the expert forest management skills required to manage the commercial forest element of the assets. The Company's experience will assist in the growth and institutionalisation of Aitchesse's business and the Group will use its network of contacts to introduce potential investors in forestry assets to Aitchesse.

The Company will also seek to grow this business unit organically and, should further opportunities arise, through the acquisition of differentiated specialist asset managers. Specialisms may include infrastructure, renewables, forestry and real estate, amongst others. The common theme tying the specialisms together is that they involve the acquisition of tangible assets and should create long-term, intrinsic value growth. The team is focused on creating shareholder value through assets under management and resultant earnings growth, including carried interest and performance fees from third party assets under management.

Legacy assets

The Board has been pursuing an orderly realisation of the Group's assets and property to redeploy the sale proceeds in pursuit of its plans for the Strategic Equity division and Real Asset division (as described above):

On 29 April 2014, contracts were exchanged with Persimmon for the sale of 25.8 acres gross of the site at Newton-le-Willows, with the sale completing on 22 September 2015. The Board is holding  the remaining five acres of the site for future review when Persimmon's building programme on the adjacent site is well progressed.

On 7 August 2015, the Company exchanged its entire 10.6% shareholding in SpaceandPeople plc (a public company whose shares are traded on AIM) for new shares in GHS.

The property at Speke (as described in further detail below) is now virtually fully let. The Company is currently considering the sale of the property and has instructed Jones Lang La Salle to advise.

The Company will continue to appraise its assets and any opportunities for sale or realisation in furtherance of its development (as was the case with the exchange of its SpaceandPeople holding).

The proceeds from the sale of legacy assets will be utilised by the Group to implement its strategy of building a specialist asset management business, through additional acquisitions of asset management businesses, through the seeding of new funds which the Company may wish to promote, direct co-investments alongside clients or the recruitment of talented individuals with asset management experience.

Investing policy

Until 23 November 2015, Gresham House was an investing company and had the investing policy set out below.

Gresham House plc will seek to use the expertise and experience of its new Board of directors and members of the Investment Committee to invest according to a robust private equity-style "value" investment philosophy. The Company's investing policy is to invest in assets that will typically have a number of the following characteristics:

-     an illiquidity discount;

-     a minimum target rate of return of 15%;

-     cash generative (or expected to generate cash within a reasonable investment horizon);

-     relatively differentiated, specialist or illiquid;

-     attractive management track records;

-     potential for superior risk adjusted returns;

-     potential for liquidity or exit within an identified time frame;

-     potential for the Company to have a competitive advantage; and/or

-     potential for the Company to add incremental value to an investment.

Investments may be either passive or active and the Company may make investments directly or indirectly (including through any asset management business, special purpose vehicle or underlying fund) and for cash or share consideration. In particular, the Company may:

-     invest in and take controlling or non-controlling stakes in publically and/or privately held companies (primarily in equity and related instruments) and also in convertible or non-convertible debt instruments;

-     set up and potentially co-invest in funds including cornerstone investments in specialist funds on preferred terms which may include lower management fees; and

-     enter into derivative contracts (including but not limited to currency hedging, or other portfolio risk management techniques).

A majority of the direct investments made by the Company will be in securities of small and medium sized companies. Initial potential target areas may include small public (less than £250 million market capitalisation) and private companies.

The Company will not invest more than 35% of the Group's gross assets, at the time when the investment is made, in securities issued by any single company other than in a single collective investment undertaking or fund structure. Where such an investment is made in a single collective investment undertaking, due regard will be paid to the concentration of risk that such an investment may entail. The investment will only be made after the Investment Committee is convinced that the risk/return relationship is acceptable.

The Board of directors will consider investment in a number of business areas, particularly those sectors in which the Board of directors collectively believes that it and/or members of the Investment Committee has the necessary expertise and experience to be able to manage the opportunity.

Investments may be made in any country globally.

The Company has no borrowing limits.

A typical direct investment (other than in connection with the development of an asset management business or an investment in a fund) will be expected to have a holding period of between three to five years, but may be shorter or longer, as appropriate, to develop realisable intrinsic value in order to maximise shareholder value.

The Directors' initial intention is to re-invest profits into the Company rather than paying dividends and shareholder returns are likely to be through capital appreciation. However, the directors may pay dividends in accordance with any alternative dividend policy that they may adopt from time to time in order to maximise shareholder value over the longer term.

Any material change in the Investing policy will require prior shareholder approval in accordance with the AIM Rules for Companies.

Whilst the Company operated as an investing company, it was the intention of the Directors to develop an asset management business, either organically or through one or more acquisitions. The development of such an asset management business, through the acquisition of Aitchesse on 23 November 2015 led to the Company ceasing to be an investing company (as defined in the AIM Rules for Companies) and instead becoming a trading company (i.e. a company which operates an asset management business with some direct and indirect investments). The key consequences of such a development are as follows:

-     NAV per share ceased to be an appropriate performance indicator with focus becoming profitability and AUM growth;

-     the Company may now acquire businesses where the acquisition involves recognising purchased goodwill and other intangible assets, which may have to be amortised. Such amortisation would have a negative impact on the Company's balance sheet, despite such acquisitions being made in anticipation of contributing in time to the Company's earnings;

-     the Company's Standard Industrial Classification may change. This would, in turn, alter the way in the Company is classified for various statistical and analytical purposes and may limit the ability of some investors to hold the Company's shares where the investors' investment mandates are specific as to the type of share they are able to hold; and

-     the investing policy previously adopted ceases to be applicable.

The Group continues to hold investments in commercial properties and will invest further but only where this enhances or protects the value of existing investments. As any of these assets are realised the proceeds of realisation will be redeployed in accordance with the development of an asset management business.

Performance during the year

The Group operating result for the year ended 31 December 2015 was a net operating loss of £1,685,000 against a loss of £406,000 in 2014.  The comparison between both years is as follows:

			2015		2014
			£'000		£'000
Rental income			746		858
Fund management fee income			127		-
Forestry management fee income			206		-
Dividend and investment income			228		248
Other income			51		66
Property outgoings			(339)		(516)
Administration overheads			(2,704)		(1,062)
Net operating loss			(1,685)		(406)

The significant variances between the two years are as follows:-

We have the initial revenues from our asset management businesses, although the contribution from GHAM is for only five months and the Aitchesse contribution reflect six weeks ownership.

Rental income increased at Southern Gateway during 2015 but the comparative includes rental income from premises subsequently vacated at Newton-le-Willows and overall rental income accordingly has decreased.

The significant reduction in property outgoings of £177,000 over the year ended 31 December 2015 was due to increased occupancy enabling the service charges to be recovered from tenants and not being an unrecoverable expense, and no directors' remuneration chargeable in 2015 (2014: £121,000).

Our administrative overheads were significantly increased as we invested in people and the platform without the benefits yet of the revenues from this expenditure flowing through.

Property portfolio

The property portfolio consists of the property in Speke, Liverpool, known as Southern Gateway and a residual 5 acres at Newton-le-Willows. The bulk of the site at Newton-le-Willows was sold to Persimmon on 22 September 2015 for a total of £7.25 million net. As part of the negotiations with the local authority, Persimmon was obliged to change its plan to secure planning permission for the site. This resulted in a reduction in the number of plots available for development, which in turn resulted in an adjustment in the previously announced selling price of £150,000. A deposit and initial payment of £944,610 has been received and the balance will be receivable in three tranches over the next three years. The asset was being carried in the balance sheet at 31 December 2014 at a discounted value of £6.82 million. Following the sale, the remaining consideration is carried in the balance sheet as a non-current asset at a discounted value of £5.92 million. In addition, Gresham House will be entitled to an overage payment in the event that Persimmon achieves a selling price in excess of an agreed amount per square foot. This has not been recognised in the year-end balance sheet as the outcome depends on the selling price of houses on the site in 2018 and beyond and is uncertain.

Gresham House retains a five acre site with retail planning permission contiguous to the site sold and will explore options for this site now the sale of the main residential site has been completed. We have suffered a reduction in the valuation of this site that arises from the change in sentiment towards food retailing.

At Speke, we continue with our strategy to maximise income over the short term with a view to selling the property. The value of the site has increased during the year from £7.25m to £7.65 m at 31 December 2015 as a result of increased lettings.

Securities portfolio

At 31 December 2015, the value of the investment portfolio decreased by £1.39 m primarily as a result of the disposal of the investment in SpaceandPeople (£0.89 m) and the additional provision made against Memorial Holdings Limited (£0.44 m) both of which are discussed below.

In August 2015, we exchanged our shareholding in SpaceandPeople for shares in GHS. This resulted in us realising a gain of £433,000 as a result of the exchange.

On 23 November 2015, as a consequence of the change in our status from an investing company to a trading company we have accounted for GHS as an associate. The subsequent share price decrease of GHS has required us, on a mark to market basis, to make a fair value adjustment against the carrying value of the holding in GHS as the share price has fallen below the price at which the exchange was done in August 2015. This has required us to provide a fair value adjustment of £459,000.

We have taken a further provision of £440,000 against our holding in Memorial Holdings Limited, the cemetery business in Kent. After the year-end, we sold our ordinary shares in MHL to the majority shareholder at 1p per share, crystallising the loss recognised in the provision. This followed an appraisal by the directors of MHL of the prospects for the business. The Company has an ancillary investment in Kemnal Investments Limited, which holds mezzanine debt in MHL. As a result of the review of the business activities of MHL, the facility has been extended for an additional two years. We believe we will be able to recover both the principal of £466,000 and the interest that has accrued to date of £153,000 on the loan.

We are pleased to report that Attila (BR) Limited, a company in which we hold a loan stock investment completed the sale of its property site in Edinburgh to CALA Management Limited. The consideration from the purchaser will enable Attila to redeem its loan notes and pay Gresham House the rolled-up interest on the loan stock that we have accrued. We are anticipating receipts in June and December of 2016 from Attila, having received initial payments in June and July 2015 totalling £277,000.

Borrowings and cash at bank

Loans at 31 December 2015 amounted to £2,850,000 against £3,278,000 at 31 December 2014. The loan is from the Co-operative Bank and is secured against the property portfolio. This represented a loan to value of 30% against the overall property investments.

Cash in hand at 31 December 2015 was £4.4 m (£11.2 m at 31 December 2014). This reduction in cash reflects a number of items of expenditure during the year. £5m was invested in shares of GHS, the sum of £1,841,000 was paid as the initial cash consideration for Aitchesse and £710,000 was paid in professional fees in connection with the acquisition of Aitchesse. Following the completion of the sale of the Newton-le-Willows site, we agreed with the Co-op Bank that the facility be reset at £2.85 million after £428,000 of the initial proceeds from the sale were applied in reducing the amount outstanding. This replaced a previous agreement with the Co-op Bank wherein the existing facility with the bank of £3.28 million as at 31 December 2014 was to be extended by £372,000 to fund capital expenditure at Southern Gateway, Speke.

After the year end, we entered into a new facility with Kleinwort Benson Bank Limited. Under this new arrangement, entered into on 12 April 2016, we have borrowed a total of £7m. The borrowing is secured against our property assets and the deferred proceeds of the sale of Newton-le-Willows site to Persimmon announced in September 2015.

The facility will be repayable in three tranches to match the deferred proceeds due from Persimmon, in March 2017, March 2018 and March 2019.

Part of the funding has been used to repay the existing Co-op facility of £2.85m and pay down the £0.67m short-term loan notes issued in connection with the acquisition of Aitchesse. The balance of the proceeds is available for general working capital and investment purposes.

Key Performance Indicators

Prior to the new team and corporate strategy being initiated in December 2014, the Board have historically considered the main performance indicator to be net asset value per share ("NAV").

As flagged in last year's Strategic Report, the KPIs that are relevant to the Company as it develops in to an asset management operating company are as follows; earnings per share and assets under management. As at 31 December 2015 the loss per share was 40.5p (83.3p, 2014). Third party assets under management at 31 December 2015 were £235m (£nil, 2014), being £36m of equity assets we manage for GHS and £200m of forestry assets.

The number of hectares of forestry under management represents 30,000 hectares as at 31 December 2015 (2014: nil). As the business develops, further KPIs will become relevant.

Capital reduction

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 has no effect on the overall net asset position of the Company.

The Cancellation proposals were contained in the Company's shareholder circular and AIM Admission Document, each dated 8 October 2014, and approved by shareholders at the Company's General Meeting on 31 October 2014.

Principal risks, risk management and regulatory environment

There are a number of risks and uncertainties that face the Group. The Board have established a structured approach to identify, assess and manage these risks.

The following list highlights the principal risks.

Risks relating to the strategy of the Group

Failure to attract investment funds

The Directors' strategy envisages the development of an asset management business. Such businesses are operationally geared and success depends on attracting adequate investment funds to manage. If the asset management business fails to attract sufficient assets to generate fees, this could have a material adverse effect on the Company's business, financial condition and prospects.

Ability to recruit and retain skilled personnel

The Company's success depends on qualified and experienced employees to enable it to raise assets for its asset management activity and successfully manage its investments. Should the Company be unable to attract new employees this could have a material adverse effect on the Company's ability to grow its business.

Dependence on key executives

The Company's development and prospects are dependent upon the service and performance of the Directors and senior management. The loss of the services of any of the Directors or senior management could cause disruption, which could have a material adverse effect on the deliverability of the strategy, the development of the asset management business and the financial prospects of the Company.

Exposure to macroeconomic, geographic, sector-related and geo-political risks

The Company's investment activities will expose the Shareholders to risks arising from macroeconomic, geographic, sector-related and geo-political risks.

Nature of investee companies

A majority of the investments made by the funds, which GHAM manages, will be in the securities of small and medium sized companies. Such securities may involve a higher degree of risk than would be the case for the securities of larger companies. If the investments do not perform well, GHAM, as the fund manager, would receive a lower management fee, and would be at risk of losing investors as a result of poor performance.

Liquidity of portfolio

The funds managed by GHAM may invest in securities that are not readily tradable, which may make it difficult for the funds to sell its investments.

Delay/failure to make significant acquisition

The Directors' strategy anticipates that the Company will develop by continuing to grow an asset management business through acquisition. If the Company is unable to negotiate successfully a meaningful acquisition or is unable to grow its asset management business organically, that could have a material impact upon the Company's ability to execute the Directors' strategy.

The Company is likely to face competition from a variety of other potential purchasers in identifying and acquiring suitable assets. Market conditions may have a negative impact on the Company's ability to identify and execute investments in suitable assets that generate acceptable returns.

Potential requirement for further investment

Any potential expansion activity and/or business development may require additional capital. There can be no guarantee that the necessary funds will be available on a timely basis on favourable terms or at all or that, such funds (if raised) would be sufficient. If additional funds are raised by issuing equity securities, dilution to the existing Shareholders may result. If the Company is not able to obtain additional capital on acceptable terms or at all, it may be forced to curtail or abandon such planned expansion, activity and/or business development.

FCA Authorisations

GHAM is currently authorised by the FCA. GHAM is expected to meet certain FCA standards. This will result in an extra cost to the Group. Furthermore, should GHAM be in breach of its duties, the FCA has a wide range of enforcement powers, which include withdrawing a company's authorisation, suspending firms which undertake regulated activities, and fining firms or individuals who breach the rules. Use of these enforcement powers could bring about reputational and financial damage to the Group.

Risks relating to the Group's existing assets

The Group's current investment portfolio consists of land and commercial property (the property portfolio) and investments in equity and debt securities in predominantly smaller companies (the securities portfolio).

Property portfolio - general economic and property market risks

The value of the Group's property portfolio is dependent on general economic conditions as well as on the specific conditions of the commercial property market.

Property portfolio - tenant associated risks

Any non-renewal of existing leases or early termination by the existing tenants in the Group's property portfolio could result in a significant decrease in the Group's net rental income as the Group may not be able to secure a replacement tenant on favourable terms, or at all, for the vacated space.

If the Group's net rental income declines, it would have less cash available to service and repay its debts and the value of its properties could decline as well. In addition, significant expenditures associated with each property, such as taxes, service charges and maintenance costs, are normally not reduced in proportion to any decline in rental revenue from that property.

The Group is exposed to the credit risk of its tenants and the creditworthiness of its tenants can decline over the short term. This may result in less rental income for the Group, delayed payments and/or costs or delay in taking enforcement or repossession action. The Group may again not be able to secure a replacement tenant on favourable terms or at all for space vacated by such a defaulting tenant.

Property portfolio - sale risks

The sale proceeds from Persimmon are payable in three further instalments. This exposes the Group to a credit risk with respect to the future financial standing of Persimmon and also means that the Group does not have all the proceeds of sale available for working capital or investment capital purposes or for distribution for some time after the sale.

Property portfolio - valuation risks

The valuation of the Group's property portfolio is inherently subjective. As a result, the valuations of the Group's property portfolio are subject to a degree of uncertainty and are made based on assumptions (including hope value in relation to successful negotiation of, and entry into, new leases) which may not prove to be accurate, particularly in periods of volatility or low transaction flow in the property market.

Property portfolio - liability risks

The Group may be subject to warranty claims due to defects in quality or title relating to the leasing and sale of its properties.

Property portfolio - illiquidity risks

Properties of the type remaining in the Group's portfolio can be illiquid assets for reasons such as properties being tailored to tenants' specific requirements and reduced demand for property on the market. This may affect the Group's ability to, dispose of or liquidate part of its portfolio on a timely basis or at a satisfactory price,  in response to changes in general economic conditions, property market conditions or other conditions.

Securities portfolio - risks relating to investments in smaller companies and private assets

The Group invests in smaller company securities. Individual smaller companies can be expected, inter alia, in comparison to larger companies, to have less mature businesses, less depth of management and a higher risk profile. As a result, they may find it difficult to secure financing and/or overcome periods of economic slowdown. This may have a material adverse effect on the performance of that smaller company and may make it difficult or impossible for such company to repay its debts or lead it to reduce its dividends, which could reduce the Company's cash resources.

Furthermore, the value of securities in smaller companies can be more volatile than those of larger companies, particularly at times of economic downturn.

The Group may thus not be able to dispose of any of its investments in its securities portfolio for an acceptable price and/or at a specific time.

Securities portfolio - risks relating to market and economic conditions

The Group's investments are subject to normal market fluctuations and the risks inherent in the purchase, holding or selling of securities and there can be no assurance that appreciation in the value of those investments will occur.

It should be noted that the Group currently has a 19.2% stake in Gresham House Strategic plc ("GHS"). The shares of GHS are traded on AIM. The value of these shares may be volatile and may go down as well as up. As the Group holds a significant proportion of GHS's shares, the value of the ordinary shares may be affected by the value of the shares of GHS.

The anticipated proceeds from the repayment of the Attila loan notes and accrued interest exposes the Company to a risk on the purchaser of the Attila property asset, CALA Management Limited. Failure by the purchaser to pay the deferred consideration to Attila would affect its ability to repay the loan notes, accrued interest, and have a detrimental impact on the Company's working capital.

Risks relating to Aitchesse Limited

In November 2015, the Group acquired Aitchesse Limited. There are specific risk relating to that business which are summarised below.

Concentration of clients

Aitchesse has a small and concentrated client base, with four clients accounting for 96% of management fee income. In particular, one client comprises 55% of Aitchesse's income from management fees. The loss of such a client before the business can increase or diversify its investor base is a risk and the loss could have a significant adverse effect on Aitchesse's revenue. The current management team is aware that it faces a concentration risk and its management has been working to diversify their client base.

Sector focus - reliance on forestry

The success of Aitchesse relies on the continued attractiveness to investors of the UK forestry and timber industry. Changes in the sector, rendering timber less attractive as an investment, could bring about a material adverse change to the business of Aitchesse.

Regulation and tax

Regulation surrounding the forestry industry may be subject to change. Currently, timber is allowed significant tax breaks (it is not subject to income tax, capital gains tax or corporation tax and is also exempt from inheritance tax).

If these tax breaks were repealed, timber could cease to be an attractive investment to high-net-worth individuals and ultra-high-net-worth individuals and families. This would have a significant effect on the business of Aitchesse.

Bespoke arrangements

One fund managed by Aitchesse does not have a management agreement in place. This means this fund is not required to give notice to cancel its relationship with Aitchesse, nor are its fee arrangements formalised. Aitchesse is currently working with this client to put arrangements that are more formal in place and it is now expected that the arrangements will be documented during 2016.

Reliance on suppliers

There are a limited number of suppliers in the forestry industry. Although the Directors are satisfied that Aitchesse has good relationships with its suppliers, there is a risk that, should these relationships deteriorate, Aitchesse would struggle to find a replacement supplier. Should this occur, Aitchesse may find it difficult to achieve its cost effective land management, which would affect the management fees it would receive.

The Board seeks to mitigate these and other perceived risks by setting appropriate policies and by undertaking a risk assessment at least annually.

For and on behalf of the Board

Anthony Dalwood 

Chief Executive Officer

18 April 2016

FINANCIAL TABLES

GROUP STATEMENT OF COMPREHENSIVE INCOME

FOR THE YEAR ENDED 31 DECEMBER 2015

				2015			2014
Notes
				£'000			£'000
Income:	1
Asset Management income				333			-
Rental income				746			858
Dividend and interest income				228			248
Other operating income				51			66
Total Income				1,358			1,172
Operating costs:	2
Property outgoings				(339)			(516)
Administrative overheads				(2,704)			(1,062)
Net operating loss				(1,685)			(406)
Finance costs	5			(144)			(209)
Exceptional items	*			(773)			(678)
Net operating loss after exceptional items				(2,602)			(1,293)
Gains & losses on investments:
Fair value movement of investment property	11			(586)			(523)
Fair value movement of investments	10			(459)			(2,188)
Loss on disposal of investment properties	11			(158)			-
Loss on disposal of investments	10			(26)			3
Group operating loss before taxation				(3,831)			(4,001)
Taxation	7			-			-
Loss and total comprehensive income				(3,831)			(4,001)
Attributable to:
Equity holders of the parent				(3,807)			(4,753)
Non-controlling interest				(24)			752
				(3,831)			(4,001)
Basic and diluted loss per ordinary share (pence)	8			(40.5)			(83.3)

*    Exceptional items relate to professional fees incurred in respect of the re-admission to AIM and acquisition of Aitchesse Limited, which took place on 23 November 2015 and on the reorganisation of the Group's legacy subsidiaries.  (2014: Exceptional items relate to professional fees incurred in respect of the Proposals which took effect from 1 December 2014).

STATEMENTS OF CHANGES IN EQUITY

Group
YEAR ENDED 31 DECEMBER 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
Loss for the period being total  comprehensive income for the year		-	-	-	(3,807)	(3,807)	(24)	(3,831)
Transfer of non-controlling interest deficit		-	-	-	(24)	(24)	24	-
Issue of shares	22	127	1,688	-	-	1,815	-	1,815
Cancellation of Share Premium		-	(12,508)	-	12,508	-	-	-
Balance at 31 December 2015		2,463	1,688	64	21,611	25,826	-	25,826

YEAR ENDED 31 DECEMBER 2014
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 2013		1,342	2,302	-	16,680	20,324	-	20,324
Loss for the period being total  comprehensive income for the year		-	-	-	(4,753)	(4,753)	752	(4,001)
Transfer of non-controlling interest deficit		-	-	-	752	752	(752)	-
Issue of shares	22	994	10,206	-	-	11,200	-	11,200
Share based payments		-	-	-	255	255	-	255
Share warrants issued		-	-	64	-	64	-	64
Balance at 31 December 2014		2,336	12,508	64	12,934	27,842	-	27,842

STATEMENTS OF CHANGES IN EQUITY - continued

Company
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
Loss for the period being total  comprehensive income for the year			-	-	-	(2,515)	(2,515)
Issue of shares	22		127	1,688	-	-	1,815
Cancellation of Share Premium			-	(12,508)	-	12,508	-
Balance at 31 December 2015			2,463	1,688	64	16,939	21,154
YEAR ENDED 31 DECEMBER 2014
Notes			Ordinary share capital	Share premium	Share warrant reserve	Retained reserves	Total equity
			£'000	£'000	£'000	£'000	£'000
Balance at 31 December 2013			1,342	2,302	-	10,377	14,021
Loss for the period being total  comprehensive income for the year			-	-	-	(3,686)	(3,686)
Issue of shares	22		994	10,206	-	-	11,200
Share based payments			-	-	-	255	255
Share warrants issued			-	-	64	-	64
Balance at 31 December 2014			2,336	12,508	64	6,946	21,854

STATEMENTS OF FINANCIAL POSITION

AS AT 31 DECEMBER 2015

			Group				Company
		Notes	2015		2014		2015		2014
Assets			£'000		£'000		£'000		£'000
Non-current assets
	Investments - securities	10	1,568		2,955		1,568		2,955
	Property investments	11	9,559		9,865		-		-
	Tangible fixed assets	12	154		-		-		-
	Other investments	15	-		-		2,822		322
	Investment in associate	6	5,902		-		5,902		-
	Intangible assets	13	6,588		-		-
	Long-term receivables	14	5,916		-		-		-
			29,687		12,820		10,292		3,277
Current assets
	Trade and other receivables	16	665		84		-		-
	Accrued income and prepaid expenses		1,081		913		383		519
	Other current assets	17	-		-		11,568		7,245
	Cash and cash equivalents		4,390		11,209		372		10,883
Non-current assets held for sale
	Property investments	11	-		6,810		-		-
Total current assets and non-current assets held for sale			6,136		19,016		12,323		18,647
Total assets			35,823		31,836		22,615		21,924
Current liabilities
	Trade and other payables	18	4,390		716		1,435		70
	Short term borrowings	19	2,850		3,278		26		-
			7,240		3,994		1,461		70
Total assets less current liabilities			28,583		27,842		21,154		21,854
Non-current liabilities
	Deferred taxation	20	-		-		-		-
	Other creditors	21	2,757		-		-		-
			2,757		-		-		-
Net assets			25,826		27,842		21,154		21,854
Capital and reserves
	Ordinary share capital	22	2,463		2,336		2,463		2,336
	Share premium		1,688		12,508		1,688		12,508
	Share warrant reserve		64		64		64		64
	Retained reserves		21,611		12,934		16,939		6,946
Equity attributable to equity shareholders			25,826		27,842		21,154		21,854
Non-controlling interest			-		-		-		-
Total equity			25,826		27,842		21,154		21,854
Basic and diluted net asset value per ordinary share (pence)		23	262.2		298.0		214.7		233.9
The financial statements were approved and authorised for issue by the Board and were signed on its behalf on 18 April 2016 A L Dalwood

GROUP STATEMENT OF CASH FLOWS

FOR THE YEAR ENDED 31 DECEMBER 2015

		2015		2015		2014		2014
		£'000		£'000		£'000		£'000
Cash flow from operating activities
Dividend income received		48				92
Interest received		317				7
Rental income received		549				762
Other cash payments		(2,940)				(1,929)
Net cash utilised in operations				(2,026)				(1,068)
Interest paid on property loans		(175)				(146)
				(175)				(146)
Net cash flow from operating activities				(2,201)				(1,214)
Cash flow from investing activities
Acquisition of Aitchesse Limited		(1,074)				-
Purchase of investments		(5,000)				(10)
Sale of investments		-				29
Sale of investment properties		2,222				148
Expenditure on investment properties		(329)				(515)
Purchase of fixed assets		(24)				-
Sale of fixed assets		15				-
Purchase of developments in hand		-				(67)
Sale of development in hand		-				417
				(4,190)				2
Cash flow from financing activities
Repayment of loans		(428)				(468)
Share issue proceeds		-				11,400
Share issue costs		-				(200)
Supporter warrants issued		-				64
				(428)				10,796
(Decrease)/increase in cash and cash equivalents				(6,819)				9,584
Cash and cash equivalents at start of year				11,209				1,625
Cash and cash equivalents at end of year				4,390				11,209

COMPANY STATEMENT OF CASH FLOWS

FOR THE YEAR ENDED 31 DECEMBER 2015

		2015		2015		2014		2014
		£'000		£'000		£'000		£'000
Cash flow from operating activities
Investment income received		48				92
Interest received		316				7
Other cash payments		(1,711)				(807)
Net cash flow from operating activities				(1,347)				(708)
Cash flow from investing activities
Purchase of investments		(5,000)				(10)
Sale of investments		-				29
Investment in subsidiaries		(2,500)				-
Advanced to Group undertakings		(8,621)				(1,857)
Repaid by Group undertakings		6,957				1,184
Purchase of development in hand		-				(67)
Sale of development in hand		-				417
				(9,164)				(304)
Cash flow from financing activities
Share issue proceeds		-				11,400
Share issue costs		-				(200)
Supporter warrants issued		-				64
				-				11,264
(Decrease)/increase in cash and cash equivalents				(10,511)				10,252
Cash and cash equivalents at start of year				10,883				631
Cash and cash equivalents at end of year				372				10,883

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 2015 or the year ended 31 December 2014. The financial information for the year ended 31 December 2015 and the year ended 31 December 2014 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 financial statements of the Group and the Company have been prepared in accordance with International Financial Reporting Standards ("IFRS") as adopted by the European Union and those parts of the Companies Act 2006 applicable to companies reporting under IFRS. 

The accounting policies used by the Group in these condensed financial statements are consistent with those applied in its financial statements for the year to 31 December 2014. Other standards and interpretations have been issued which will be effective for future reporting periods but have not been adopted in these financial statements. 

 

1.     INCOME

	2015		2014
	£'000		£'000
Asset management income
Fund management income	127		-
Forestry management income	206		-
	333		-
Income from investments
Rental income	746		858
Dividend income - Listed UK	48		92
Interest receivable: Bank	40		7
Other	140		149
	974		1,106
Other operating income
Dealing profits and losses	-		1
Management fees receivable	51		65
	51		66
Total income	1,358		1,172
Total income comprises:
Asset management income	333		-
Rental income	746		858
Dividends	48		92
Interest	180		156
Other operating income	51		66
	1,358		1

2.      OPERATING COSTS

Operating costs comprise the following:	2015			2014
	£'000			£'000
a) Property outgoings:
Directors' emoluments (excluding benefits in kind)	-			121
Wages and salaries	50			57
Social security costs	6			7
Other operating costs (net of service charges recoverable from tenants of £724,000 (2014: £486,000))	283			331
	339			516
b) Administrative overheads:
Directors' emoluments (excluding benefits in kind)	880			352
Auditor's remuneration *	200			131
Depreciation	10			-
Profit on disposal of assets	(6)			-
Wages and salaries	647			44
Redundancy costs	-			19
Social security costs	177			22
Operating lease rentals - land and buildings	24			24
Share based payments	-			255
Other operating costs	772			215
	2,704			1,062
Staff costs (including directors' emoluments) were:
Wages, salaries and fees	1,577			555
Redundancy costs	-			33
Social security costs	183			29
Pension costs	-			5
	1,760			622

* A more detailed analysis of auditor's remuneration is as follows:	2015		2014
	£'000		£'000
Audit fees	99		62
Auditor's other fees -other services relating to taxation	-		6
Auditor's other fees -other services	101		63
	200		131

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.

£98, 000 of costs for other services above are pertaining to the acquisition of Aitchesse, which have been recorded as an exceptional item in the financial statements.

The average number of persons employed by the Group, including the executive directors, was 12 (2014: 5). 

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

3.      DIRECTORS' EMOLUMENTS

The emoluments of the Directors are disclosed in the Remuneration Report in the statutory accounts of Gresham House plc 

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 £89,000 (2014: £16,000).

4.      Business combinations during the period 

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.

The principal reason for this acquisition is to pursue the Group's objective of becoming a specialist asset manager of illiquid investments. The Group also expects to develop new funds utilising the expertise and contacts of Aitchesse. As a result of the acquisition, the Company moved from being an investing company to an operating company.

Details of the fair value of identifiable assets liabilities acquired, purchase consideration and goodwill are as follows:

		Net Book Value		Adjustments		Fair value
		£'000		£'000		£'000
Property, plant and equipment		102		-		102
Client  contracts and relationships		-		3,646		3,646
Trade and other receivables		116		-		116
Other current assets		289		-		289
Cash		767		-		767
Trade and other payables		(814)		-		(814)
Goodwill		-		2,942		2,942
Total identifiable net assets		460		6,588		7,048

Under the terms of the acquisition agreement, the initial consideration paid to the vendors of Aitchesse was: 

	£'000
Cash paid	1,841
507,522 Shares in Gresham House plc valued at 357.5p per share	1,814
Short Term Loan Notes	667
Total Initial consideration	4,322
Contingent consideration (at fair value)	2,726
Total consideration	7,048

The consideration shares were admitted to trading on AIM on 23 November 2015. 

Contingent Consideration 

Contingent consideration will be payable if Aitchesse 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 Aitchesse 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 Aitchesse, at 357.5p per share.  The Directors, having carefully reviewed the future business prospects of Aitchesse, believe that the maximum contingent consideration will be achieved and accordingly no adjustment is made to reflect the likelihood of the target not being 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 payout of the contingent consideration as anticipated by the Board, supported by forecasts of the trading of Aitchesse 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 deferred liability and is measured at fair value through comprehensive income at each reporting date.

The minimum contingent consideration is £nil. 

Revenue and profits of Aitchesse 

Actual revenue and profits

Aitchesse was acquired on 23 November 2015.  The Group has recognised the following amounts in respect of Aitchesse for the six week period ended 31 December 2015:

		£'000
Revenue		206
Profit before tax		69

Gross hypothetical revenue and profits 

Prior to acquisition by the Company, Aitchesse had a 30 June year-end. The results for the most recent audited reporting period prior to acquisition were to 30 June 2015. Had the Aitchesse been part of the Group for the entire reporting period the following sums would have been consolidated:

		£'000
Revenue		1,912
Profit before tax		560

Acquisition costs of £710,000 arose as a result of the transaction. These have been recognised as part of the exceptional items in the Statement of Comprehensive Income.

Goodwill 

Goodwill arises due to the excess of the fair value of the consideration payable over the fair value of the net assets acquired. It is mainly attributable to the skills of the team acquired, the synergies expected to be achieved from the   acquisition and the business development potential. Goodwill arising on the Aitchesse acquisition is not deductible for tax purposes. 

5.      FINANCE COSTS

	2015		2014
	£'000		£'000
Interest payable on loans and overdrafts	137		146
Finance fees	7		63
	144		209

6.      Accounting for Associates 

The Group acquired a stake of 706,806 shares in Gresham House Strategic plc ("GHS") on 21 July 2015 by exchanging the Company's entire interest in SpaceandPeople plc and an investment of £5m in cash.  The total initial investment was £6,361,000.

From 21 July 2015 to 23 November 2015, as an investing company, the holding in GHS was classified as an investment and held at fair value through profit and loss. During that period, the Company incurred a fair value loss of £459,000.  On 23 November 2015, following the acquisition of Aitchesse, the Board reviewed the accounting for all its equity investments as an operating company and has accounted for GHS as an associate after that date.

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

There has been no reporting of results for GHS from the date of its recognition as an associate on 23 November 2013 and 31 December 2015.  As such, no profit or loss has been recognised on the associate for that period.  GHS has a year end of 31 March 2016 and therefore the results of GHS will be incorporated into the Group up to the latest published financial information.

The latest published financial information of GHS was for the unaudited interim results for the six months to 30 September 2015. The assets and liabilities at that date are shown below:

Non Current Assets             £19.3 million

Current Assets                     £17.2 million

Current Liabilities              £0.2 million

Net Assets                             £36.4 million

7.      TAXATION

			2015		2014
			£'000		£'000
(a) Analysis of charge in period:
UK Corporation tax at 20.25% (2014: 21.5%)			-		-
Total tax charge			-		-
(b) Factors affecting tax charge for period:
Loss on ordinary activities before tax multiplied by standard rate of corporation tax in the UK of 20.25% (2014: 21.5%)			(776)		(860)
Tax effect of:
Investment losses not taxable			98		470
Dividend income not taxable			(10)		(20)
Expenses disallowed			153		1
Movement in losses carried forward			535		409
Actual tax charge			-		-

The Group has unutilised tax losses of approximately £6.0 million (2014: £12.8 million) available against future corporation tax liabilities. The potential deferred taxation asset of £1.2 million (2014: £2.8 million) in respect of these losses has not been recognised in these financial statements as it is not considered sufficiently probable that the Group will generate sufficient taxable profits from the same trade to recover these amounts in full.

8.      LOSS PER SHARE

(a) Basic and diluted loss per share

The basic and diluted loss per share figure is based on the net loss for the year attributable to the equity shareholders of £3,807,000 (2014: £4,753,000) and on 9,404,614 (2014: 5,707,350) ordinary shares, being the weighted average number of ordinary shares in issue during the period. No shares were deemed to have been issued at nil consideration as a result of the shareholder and supporter warrants granted.

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

(b) Adjusted loss 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.

Adjusted loss for calculating adjusted earnings per share:

	2015	2014
	£000	£000
Loss before taxation for the year	(3,831)	(4,001)
Add back:
Exceptional operating expenses	773	678
Depreciation and amortisation	4	-
Adjusted loss before tax	(3,054)	(3,323)
Taxation:	-	-
Adjusted loss after tax for the calculation of adjusted loss per share	(3,054)	(3,323)

Adjusted loss per share was as follows using the number of shares calculated above:

	2015	2014
	pence	pence
Adjusted loss per share	(32.4)	(58.2)

9.      DIVIDENDS

No dividends have been paid or proposed in the year (2014: £nil).

10.    INVESTMENTS - SECURITIES

An analysis of total investments is as follows:

			Group						Company
			2015		2014				2015		2014
			£'000		£'000				£'000		£'000
Listed securities - on the London Stock Exchange			105		106				105		106
Securities dealt in under AIM			-		928				-		928
Securities dealt in under ISDX			51		69				51		69
Unlisted securities			1,412		1,852				1,412		1,852
Closing value at 31 December			1,568		2,955				1,568		2,955
Investments valued at fair value through profit or loss			157		1,544				157		1,544
Loans and receivables valued at amortised cost			1,411		1,411				1,411		1,411
			1,568		2,955				1,568		2,955

			Group				Company
			2015		2014		2015		2014
			£'000		£'000		£'000		£'000
Opening cost			6,300		6,316		6,542		6,558
Opening net unrealised losses			(3,345)		(1,157)		(3,587)		(1,399)
Opening value			2,955		5,159		2,955		5,159
Movements in the year:
Purchases at cost			6,361		10		6,361		10
Sales - proceeds			(7,263)		(29)		(7,263)		(29)
Sales - realised gains & (losses) on sales			(26)		3		(268)		3
Net unrealised losses			(459)		(2,188)		(217)		(2,188)
Closing value			1,568		2,955		1,568		2,955
Closing cost			6,094		6,300		6,094		6,542
Closing net unrealised losses			(4,526)		(3,345)		(4,526)		(3,587)
Closing value			1,568		2,955		1,568		2,955

The cost of the investments held by the Company is different to that of the Group as a result of unrealised gains on intra-group transfers being eliminated on consolidation.

Gains and losses on investments held at fair value	Group						Company
	2015		2014				2015			2014
	£'000		£'000				£'000			£'000
Net realised gains & (losses) on disposal	(26)		3				(268)			3
Net unrealised losses	(459)		(2,188)				(217)			(2,188)
Net losses on investments	(485)		(2,185)				(485)			(2,185)
An analysis of investments is as follows:	Group					Company
	2015		2014			2015			2014
	£'000		£'000			£'000			£'000
Equity investments	52		1,438			52			1,438
Fixed income securities	105		106			105			106
Unquoted loan stock	1,411		1,411			1,411			1,411
	1,568		2,955			1,568			2,955

11.    PROPERTY INVESTMENTS

Property investments have been classified as follows:	Group
	2015		2014
	£'000		£'000
Non current assets	9,559		9,865
Non-current assets held for sale	-		6,810
	9,559		16,675

A further analysis of total property investments is as follows:

	Group
	2015		2014
Net book value and valuation	£'000		£'000
At 1 January	16,675		16,700
Additions during the year - expenditure on existing properties	359		498
Disposals during the year	(6,731)		-
Loss on disposal of investment properties	(158)		-
Movement in fair value during the year	(586)		(523)
At 31 December	9,559		16,675

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

All property investments were valued by Jones Lang LaSalle Limited, Chartered Surveyors, as at 31 December 2015 at a combined total of £9,900,000. These external valuations were carried out on the basis of Market Value in accordance with the latest edition of the Valuation Standards published by the Royal Institution of Chartered Surveyors. 

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

	2015		2014
	£'000		£'000
Gross valuation	9,900		16,675
Fixed rental uplift	(341)		-
	9,559		16,675

Operating leases

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

	2015		2014
	£'000		£'000
Not later than one year	657		561
Between 2 and 5 years	1,441		1,349
Over 5 years	682		872
	2,780		2,782

Rental income recognised in the Statement of Comprehensive Income amounted to £746,000 (2014: £858,000).

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 2015 is as follows:

							Group
							£'000
Brought forward							17,813
Additions during the year							359
Disposals during the year							(8,596)
							9,576

Capital commitments

Capital expenditure contracted for but not provided for in the financial statements for the Group was £16,000 (2014: £248,000) and for the Company was £nil (2014: £nil).

Movement in fair value of property investments					Group
					2015		2014
					£'000		£'000
Realised losses on disposal of property					(158)		-
Decrease in fair value					(586)		(523)
Movement in fair value of property investments					(744)		(523)

12.    TANGIBLE FIXED ASSETS

			Group
			Motor Vehicles		Leasehold Property		Total
			£'000		£'000		£'000
Deemed cost
As at 1 January 2015			-		-		-
Additions			98		-		98
Additions on acquisition of subsidiary			92		10		102
Disposals during the year			(36)		-		(36)
As at 31 December 2015			154		10		164
Depreciation
As at 1 January 2015			-		-		-
Charge for the year			10		-		10
Disposals during the year			-		-		-
As at 31 December 2015			10		-		10
Net book value as at 31 December 2015			144		10		154
Net book value as at 31 December 2014			-		-		-

13.    INTANGIBLE ASSETS

	Group
	Goodwill		Customer relationships		Contracts		Total
	£'000		£'000		£'000		£'000
Deemed cost
As at 1 January 2015	-		-		-		-
Additions	2,942		3,072		574		6,588
As at 31 December 2015	2,942		3,072		574		6,588
Amortisation
As at 1 January 2015	-		-		-		-
Charge for the year	-		-		-		-
As at 31 December 2015	-		-		-		-
Net book value as at 31 December 2015	2,942		3,072		574		6,588
Net book value as at 31 December 2014	-		-		-		-

All intangible assets relate to the acquisition of Aitchesse Limited on 23 November 2015.  No amortisation has been provided for the period from 21 November 2015 to 31 December 2015 on the grounds that any charge will be immaterial.

14.    NON CURRENT ASSETS - LONG TERM RECEIVABLES

On 22 September 2015, the sale of 25.8 acres gross of the site at Newton-le-Willows to Persimmon was completed. An initial payment of £944,610 was received and the balance of the consideration, at fair value, will be receivable in three tranches as follows:

							£'000
On 22 March 2017							2,012
On 22 March 2018							1,955
On 22 March 2019							1,949
							5,916

The total cash value of the deferred receipts is £6,305,000.

The discount rate applied was 2.77% being the average rate of borrowing on Persimmon's debt facilities.

15.    OTHER INVESTMENTS

					Company
					2015		2014
Subsidiary undertakings					£'000		£'000
At 1 January					322		322
Additions					2,500		-
At 31 December					2,822		322

16.    TRADE AND OTHER RECEIVABLES

	Group				Company
	2015		2014		2015		2014
	£'000		£'000		£'000		£'000
Amounts receivable within one year:
Trade receivables	665		88		-		-
Less allowance for credit losses	-		(4)		-		-
	665		84		-		-
Allowances for credit losses on trade receivables:
Allowances as at 1 January	4		-		-		-
Changes during the year charged/(released) to Statement of Comprehensive Income:
- allowances reversed	(4)		-		-		-
- additional allowances	-		4		-		-
Allowances as at 31 December	-		4		-		-

Trade and other receivables are assessed for impairment when older than 90 days. As at 31 December 2015, trade receivables of £73,000 (2014: £15,000) were past due but not impaired. The ageing analysis of these trade receivables is as follows:

	Group				Company
	2015		2014		2015		2014
	£'000		£'000		£'000		£'000
1-3 months	69		9		-		-
3-6 months	1		6		-		-
More than 6 months	3		-		-		-

As at 31 December 2015 trade receivables of £nil (2014: £4,000) were impaired and provided for.  The ageing of these receivables is as follows:

	Group				Company
	2015		2014		2015		2014
	£'000		£'000		£'000		£'000
1-3 months	-		-		-		-
3-6 months	-		-		-		-
6-12 months	-		1		-		-
More than 12 months	-		3		-		-

The main credit risk represents the possibility of tenants defaulting in their rental commitments. This risk is mitigated by regular meetings with the tenants.

17.    OTHER CURRENT ASSETS

		Group				Company
		2015		2014		2015		2014
		£'000		£'000		£'000		£'000
Amounts owed by Group undertakings		-		-		11,568		7,245
		-		-		11,568		7,245

18.    CURRENT LIABILITIES - TRADE AND OTHER PAYABLES

	Group				Company
	2015		2014		2015		2014
	£'000		£'000		£'000		£'000
Trade creditors	265		120		-		-
Other creditors	1,913		119		53		70
Short term loan notes	667		-		667		-
Accruals	1,545		477		715		-
	4,390		716		1,435		70

19.    CURRENT LIABILITIES - SHORT TERM BORROWINGS

	Group				Company
	2015		2014		2015		2014
	£'000		£'000		£'000		£'000
Bank overdrafts and short-term loans (secured)
- property loans - within current liabilities	2,850		3,278		-		-
- other	-		-		26		-
	2,850		3,278		26		-

Property loans at 31 December 2015 amounted to £2,850,000 (2014: £3,278,000). The loan is from the Co-operative Bank and is secured against the property portfolio. This represents a loan to value of 30% against the overall property investments. Since the year-end the loan has been refinanced, further details can be found in note 25.

The loan carries an interest rate of 3.5% over 3 month LIBOR and is secured by way of a legal mortgage over the investment property of the Group, the deferred Persimmon proceeds and a floating charge over the assets of New Capital Developments Limited. In addition there is a cross guarantee in place with fellow subsidiary undertakings and an interest guarantee by the Company.

20.    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 2015 (2014: £nil) due to the availability of losses and indexation allowances. The potential deferred taxation asset of £1.2 million (2014: £2.8 million) has not been recognised in these financial statements.

21.    NON-CURRENT LIABILITIES - OTHER CREDITORS

	Group				Company
	2015		2014		2015		2014
	£'000		£'000		£'000		£'000
Deferred consideration (note 4)	2,726		-		-		-
Other creditors	31		-		-		-
	2,757		-		-		-

22.    SHARE CAPITAL

	2015		2014
Share Capital	£'000		£'000
Allotted: Ordinary - 9,851,041  (2014: 9,343,390) fully paid shares of 25p each	2,463		2,336

On 20 November 2015, the Company issued 507,522 new ordinary shares at a price of 357.5p per share as part of the acquisition consideration for Aitchesse Limited.  Additionally, 129 shareholder warrants were exercised during the year at a price of 323.27p

23.    NET ASSET VALUE PER SHARE

Basic and diluted

Basic and diluted net asset value per ordinary share is based on equity attributable to equity shareholders at the year-end and on 9,851,041 (2014: 9,343,390) ordinary shares being the number of ordinary shares in issue at the year-end.  No shares were deemed to have been issued at nil consideration as a result of shareholder and supporter warrants granted.

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

	£'000
The movement during the year of the assets attributable to ordinary shares were as follows:
Total net assets attributable at 1 January 2015	27,842
Total recognised losses for the year	(3,831)
Issue of shares	1,815
Total net assets attributable at 31 December 2015	25,826

24.    SEGMENTAL REPORTING

For the year ended 31 December 2014 the Group's policy was to invest in both securities and commercial properties. 

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 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 and generated fees from the management of forestry.

Accordingly, management reporting for the year ended 31 December 2015 is split on this basis under the headings "investment", "property", "asset management" and "forestry".  Inter-segment income consists of management fees and interest on inter-company loans.  Unallocated corporate expenses relate to those costs, which cannot be readily identified to either segment.

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

31 December 2015

	Investment		Property Investment		Asset Management		Forestry		Elimination		Consolidated
Revenue	£'000		£'000		£'000		£'000		£'000		£'000
External income	215		773		126		206		-		1,320
Inter - segment income	517		-		-		-		(517)		-
Total revenue	732		773		126		206		(517)		1,320
Gains and losses on investments at fair value	(485)		-		-		-		-		(485)
Movement on property  investments at fair value	-		(744)		-		-		-		(744)
Total income and gains	247		29		126		206		(517)		91
Segment expenses	-		(339)		(134)		(138)		-		(611)
Inter - segment expense	-		(120)		(397)		-		517		-
Finance costs	-		(144)		-		-		-		(144)
Segment (loss)/profit	247		(574)		(405)		68		-		(664)
Unallocated corporate expenses											(3,205)
Operating loss											(3,869)
Interest income											38
Loss before taxation											(3,831)

31 December 2014

	Investment		Property Investment		Elimination		Consolidated
Revenue	£'000		£'000		£'000		£'000
External income	301		864		-		1,165
Inter - segment income	128		-		(128)		-
Total revenue	429		864		(128)		1,165
Gains and losses on investments at fair value	(2,185)		-		-		(2,185)
Movement on property  investments at fair value	-		(523)		-		(523)
Total income and gains	(1,756)		341		(128)		(1,543)
Segment expenses	-		(516)		-		(516)
Inter - segment expense	-		(128)		128		-
Finance costs	-		(209)		-		(209)
Segment (loss)/profit	(1,756)		(512)		-		(2,268)
Unallocated corporate expenses							(1,740)
Operating loss							(4,008)
Interest income							7
Loss before taxation							(4,001)

Other information

31 December 2015

	Investment		Property Investment		Asset Management		Forestry		Unallocated		Consolidated
	£'000		£'000		£'000		£'000		£'000		£'000
Segment assets	15,101		17,157		2,477		1,154		-		35,889
Segment liabilities	(4,717)		(4,733)		(7)		(606)		-		(10,063)
	10,384		12,424		2,470		548		-		25,826
Capital expenditure	6,361		359		-		53		-		6,773
Depreciation	-		3		-		1		-		4
Non-cash expenses other than depreciation	-		-		-		-		-		-

31 December 2014

	Investment		Property Investment		Unallocated		Consolidated
	£'000		£'000		£'000		£'000
Segment assets	14,622		17,214		-		31,836
Segment liabilities	(287)		(3,707)		-		(3,994)
	14,335		13,507		-		27,842
Capital expenditure	10		498		-		508
Depreciation	-		-		-		-
Non-cash expenses other than depreciation	-		-		255		-

All non-current assets are located within the United Kingdom.

25.    POST BALANCE SHEET EVENTS

The following key events happened after the year-end:

Group reorganisation

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. The effects of the transactions underlying the reorganisation will be reported in the 2016 statutory accounts of the subsidiaries concerned.

GHHL will be the vehicle through which the Group's long-term incentive plan is organised.

Debt facility

On 12 April 2016, the Group signed a new £7 million banking facility with Kleinwort Benson Bank Limited.  The borrowing is secured against the Group's property assets and the deferred proceeds of the sale of the Newton-le-Willows site to Persimmon Homes Limited ("Persimmon") announced last September.

The facility will be repayable in three tranches to match the deferred proceeds due from Persimmon, over the next three years:

Part of the funding was used to repay the Co-operative Bank facility of £2.85 million and pay down the £0.67 million short-term loan notes issued in connection with the acquisition of Aitchesse. The balance of the proceeds, consistent with supporting the growth strategy, will be available for general working capital and investment purposes.

End

 

END

 

 

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