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Gresham House PLC (GHE)

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Tuesday 15 March, 2022

Gresham House PLC

Annual Results for the year ended 31 December 2021

RNS Number : 7633E
Gresham House PLC
15 March 2022
 

15 March 2022

 

Gresham House plc

("Gresham House," "the Group" or "the Company")

 

Annual Results for the year ended 31 December 2021

 

65% AUM increase to £6.5bn with strong organic growth

 

The Board of Gresham House plc, (AIM: GHE), the specialist alternative asset manager, is pleased to announce a year of significant growth, both organically and through acquisitions. Assets under management (AUM) rose 65% to £6.5 billion. Growth in AUM has led to material growth in revenue, operating margin and profit. The Group made strong progress against its GH25 strategic objectives and increased its AUM target in November 2021 to £8.0 billion. The Board is pleased to confirm that following the achievement of adjusted diluted EPS of 49.4p, up 50%, it is recommending a 67% increase in the dividend to 10.0 pence (2020: 6.0 pence).

 

Financial highlights

 

 

As at/for the year to 31 Dec 2021

As at/for the year to 31 Dec 2020

Change

(%)

 

 

 

 

Assets under management (£bn)

6.5

4.0

+65%

Cash and liquid assets (£mn)

78.3

45.1

+73%

Net core income (£mn)

61.6

40.8

+51%

Adjusted operating profit (£mn)

20.2

12.1

+67%

Performance fees and development gains net of costs (£mn)

3.5

1.0

+250%

Comprehensive net income (£mn)

12.0

0.8

+1394%

Adjusted diluted Earnings Per Share (p)

49.4p

32.9p

+50%

Dividend (p)

10.0

6.0

+67%

 

 

· Substantial AUM growth of 65% to £6.5 billion (2020: £4.0 billion), with organic growth of £1.9 billion (c.50%)

Driven by strong fundraising, targeted acquisitions, and investment performance

· Strong net core income growth of 51% to £61.6 million (2020: £40.8 million)

· Growth in adjusted operating profit of 67% to £20.2 million (2020: £12.1 million) and 50% increase to adjusted diluted EPS to 49.4 pence (2020: 32.9 pence)

· Return on Capital Employed increased to 34.1% (2020: 16.0%)

· Final dividend proposed to increase by 67% to 10.0 pence (2020: 6.0 pence)

· Strong balance sheet with £40.3 million cash; £20.0 million undrawn RCF; plus £38.0 million investments

 

Strategic highlights

· Outstanding fundraising performance, with net inflows of £1.2 billion (2020: £0.4 billion) across all of the Group's strategies, including:

£206 million of net inflows in Strategic Equity open-ended and VCT funds

£100 million of additional fundraising for Gresham House Energy Storage Fund plc (GRID)

£202 million raised for new forestry fund Gresham House Forest Growth & Sustainability LP

£150 million BSIF II LP, the Group's second sustainable infrastructure fund

£430 million from AXA IM Alts Australian forestry mandate

· Continued growth and diversification of client base across broadening range of institutional and wholesale investors

Driven by product development and targeting of growing channels

· Targeted acquisitions have enhanced AUM by £625 million and enhanced the Group's potential:

International footprint established following completion of Appian Asset Management Limited acquisition, an EU-based AIFM in June 2021

Private Equity platform substantially augmented by acquisition of VCT business of Mobeus Equity Partners LLP in October 2021

· Further established market leadership in sustainability across battery storage, solar, wind, forestry, housing, and sustainable infrastructure

· Continued investment in talent to facilitate future growth in AUM

· Leading position in UK forestry in 2021 supports winning of international mandates in Australia and Ireland

· Well positioned for further growth across all asset classes in 2022 and beyond

 

GH25 upgrades

· GH25 five-year strategy target for AUM increased from £6.0 billion to £8.0+ billion

· EBITDA margin of 32.7% (2020: 29.6%), on track to achieve 40.0% target

· GH25 ROCE target raised from 15% to '20% over the medium term'

· Dividend policy established to target three times adjusted operating profits coverage by the end of GH25

 

Commenting on the results, Tony Dalwood, Chief Executive of Gresham House, said:

 

"Throughout 2021 we made exceptional progress on the delivery of our GH25 five-year strategy and are reporting outstanding growth in AUM, profitability and revenue. We are focused on private assets which exhibit long-term superior investment returns alongside sustainability characteristics.

 

"We have demonstrated our ability to grow organically and to add value through acquisitions, providing an exciting future for our Group. Gresham House Ireland and the Mobeus VCT businesses enhance the strategic ambitions and potential for the Group.

 

"Momentum across the business continues to be buoyed by the structural shift driving fund inflows into alternative asset classes as we continue to diversify our client base. Our ESG-focused strategy and strong investment performance mean we are well placed to capture the rising demand for investments that deliver both financial returns and sustainable, climate-based solutions.

 

"In light of our excellent 2021 performance, we are well on track to achieve our GH25 objectives and have therefore upgraded our targets in accordance with our ambition and strategic goals. Despite the current macroeconomic environment and geo-political events, we are confident of further growth throughout 2022 as we continue to deliver value to all our stakeholders."

 

Gresham House is hosting its Annual Results webinar at 09:00am today.
Link:
https://greshamhouse.zoom.us/webinar/register/WN_ReTB3jbdTVC_JbWkP2sEaQ

This announcement contains inside information for the purposes of Article 7 of Regulation (EU) No 596/2014

For more information contact: 

Gresham House plc

Tony Dalwood, Chief Executive

Kevin Acton, Chief Financial Officer

 

+44 (0)20 3837 6271

 

Houston

Alexander Clelland

Kay Larsen

Joe Burgess

 

[email protected]

+44 (0)20 4529 0549

Canaccord Genuity Limited - Nominated Adviser and Joint Broker

Bobbie Hilliam

Georgina McCooke

 

+44 (0)20 7523 8000

Jefferies International Limited - Financial Adviser and Joint Broker

Paul Nicholls

Max Jones

+44 (0)20 7029 8000

 

About Gresham House

Gresham House is a specialist alternative asset management group, focused on sustainable investments across a range of investment strategies, including forestry, housing, sustainable infrastructure, renewable energy and battery storage, public and private equity.

 

Our origins stretch back to 1857, while our focus is on the future and the long term. Quoted on the London Stock Exchange (GHE:LN) we actively manage £6.5 billion of assets on behalf of institutions, family offices, charities and endowments, private individuals and their advisers. We act responsibly within a culture of empowerment that encourages individual flair and entrepreneurial thinking.

As a signatory to the UN-supported Principles for Responsible Investment (PRI), our vision is to always make a positive social or environmental impact, while delivering on our commitments to shareholders, employees and investors. www.greshamhouse.com  

 

 

Chairman's statement

 

Introduction

I am pleased to report on a year of exceptionally strong, profitable growth for Gresham House, with substantial increases in assets under management (AUM) and margins complementing both organic and acquisitive progress. The business has adapted and delivered against its targets and made excellent strides against its GH25 ambitions while remaining resilient in the face of the ongoing pandemic and continued uncertainty in the markets. In light of this, we are increasing our GH25 Return on Capital Employed (ROCE) target from 15% to 20% average over the medium term as well as improving our dividend policy to target three times operating profit coverage by the end of GH25.

This resilience and continued growth momentum is a huge testament to our employees' dedication and the excellent performance of the management team, which has contributed to excellent shareholder value creation year after year. The dedication of the senior management team and the capability and integrity with which they lead the business permeates throughout the Group. An internal focus on both financial and strategic metrics has cultivated an ambitious and successful culture and, supported by excellent colleagues, the executive team has sought to establish the Gresham House brand as a symbol of superior investment performance, teamwork and ambition in pursuit of shareholder value creation. Meanwhile, share ownership throughout the organisation has promoted employee belief and alignment with the brand we are building.

 

Activity in the period

I am delighted to report that we have significantly accelerated our outstanding growth rate in AUM, increasing it 65% over the year. Organic growth included growing demand within the Forestry division resulting in new business AUM growth of over £600 million. As part of this Gresham House saw further international expansion with the completion of an Australian forestry mandate, announced on 9 December 2021, while significant fundraises were achieved across the Group within our British Sustainable Infrastructure Fund II LP, Gresham House Energy Storage Fund plc (GRID), Gresham House Forest Growth & Sustainability LP, and Gresham House Residential Secure Income LP (ReSI LP), as well as in our VCTs and equity funds.

Alongside strong organic growth, we also grew the business further through strategic acquisitions, namely Appian Asset Management Limited in June, as well as the VCT business of Mobeus Equity Partners LLP in October, adding a further £303 million and £369 million respectively in the year.

Given the significant progress made against our five-year strategy, GH25, we revised our AUM target upwards by 33% to £8 billion AUM in November, whilst maintaining the targets of 40% EBITDA margin and 15% ROCE by 2025. As a result of recent strong performance, we continue to track towards or exceed these financial targets with an EBITDA margin of 32.7% (2020: 29.6%) and ROCE1 of 34.1% for 2021 (2020: 16.0%).

The Board was pleased to note that the 2021 Employee Engagement Survey demonstrated high levels of satisfaction and commitment amongst staff, with a 96% advocacy rate, against an external benchmark of 73%. The survey also showed a staff alignment score of 80%, against an external benchmark of 66%.

1. Return on capital employed defined as adjusted operating profit, plus net performance fees, net realised gains on development activity and fair value movements in investments less fair value movements on contingent consideration, divided by opening net assets, adjusted for shares issued in the year.

 

Sustainability

We continue with our aim to be a market leader in sustainability, with assets across battery storage, solar, wind and forestry, as well as housing and sustainable infrastructure. Core to this are the sustainability goals we set out as part of our GH25 strategy, first announced in March 2020, aiming to further develop the business as a leading specialist alternative asset manager with sustainability at its heart.

This year we established our Sustainability Committee, chaired by Gareth Davis, as a subcommittee of the Board to provide oversight and accountability for our sustainability-related practices across the business. The Committee met for the first time in August 2021 where a range of sustainability factors were discussed, including how we will advance our management of climate change-related risks and opportunities.

Going forward, we expect there will be an ever-increasing focus on impact and sustainable investments. It is now an important factor for all asset managers and a differentiator for Gresham House in the market.

 

Financials

I am very proud of the excellent results achieved by the Group this year. Alongside the substantial 65% growth in AUM, we saw net core income increase by 51% to reach £61.6 million (2020: £40.8 million), while adjusted operating profit was £20.2 million, growing by 67% (2020: £12.1 million). Net comprehensive income was up substantially to £12.0 million (2020: £0.8 million) and we also achieved ROCE of 34.1% (2020: 16.0%). Our balance sheet remains strong with £40.3 million of cash, £38.0 million of investments and £20.0 million of undrawn Revolving Credit Facility (RCF), leaving us very well positioned to support our ambitions and continue our exciting growth trajectory in 2022.

 

Dividend

We intend to increase the dividend for this year to 10.0 pence, an increase of 67% (2020: 6.0 pence). As outlined earlier, and as part of our GH25 strategy, we have reviewed our dividend policy to increase it to target adjusted operating profit coverage of three times by 2025. Shareholders should therefore look towards increasing dividends in the future.

 

Shareholders

Having raised £42.0 million via a placing alongside our acquisition of the VCT business of Mobeus Equity Partners LLP, we welcomed several new, long-term supportive shareholders to the register. We were delighted with the level of backing and we hope to continue engaging with both our current and new shareholders in the capital markets going forward. The company has evolved substantially from the sub-£15 million market capitalisation at the time the new management team commenced its plans in December 2014. We have benefited from a broadening of our shareholder base and look forward to attracting further new, long-term shareholders to continue the growth of the business.

 

Board

We were delighted to welcome Sarah Ing as the Audit Committee Chair Designate this year, who will take on full responsibility for the role following the retirement of our current Chair, Richard Chadwick, at the conclusion of the 2022 AGM. Sarah is a chartered accountant, with listed company experience as a Non-Executive Director on XPS Pensions Group plc and CMC Markets plc boards and is already adding value to the Board.

Richard leaves us after many years of exceptional service to Gresham House having seen the business go from a property-based investment company to the alternative asset manager we are today, and his knowledge of the corporate history has proved very valuable. We are extremely grateful for his contribution to this growth throughout his tenure and wish him well in his retirement.

Richard also holds the position of Senior Independent Director on the Board. I am pleased to be able to advise that this role will pass to Gareth Davis after the 2022 AGM.

 

Annual General Meeting

After two years of COVID-19 restrictions, requiring a virtual meeting, we can now at last revert to holding our Annual General Meetings in person again. The intention is therefore to look forward to welcoming shareholders to our 2022 AGM at Eversheds Sutherland (International) LLP, 100 Wood Street, London, on Thursday 12 May 2022.

 

Outlook

We have continued to establish ourselves as a significant player in alternative assets and sustainable investing, areas which have shown continued resilience during 2021, and we approach the year ahead with confidence. We have made excellent progress against our GH25 objectives and we have revised these upwards as we grow further. I believe that our product offering, and sustainable investment focus will continue to provide attractive investment characteristics to existing and potential clients seeking returns within a sustainability framework.

With the opportunities ahead we are confident that we will continue our strong growth momentum, in line with our ambitions, to create shareholder value and sustainable returns to clients and investors, and add further depth and breadth to our platform. My thanks go to all those within the Company for their hard work and dedication as well as the support from our clients and shareholders.

 

 

Anthony Townsend

Chairman

14 March 2022

 

 

Chief Executive's report

Strategic overview

Throughout 2021 we made excellent progress in the delivery of our GH25 five-year strategic plan launched in 2020. As we entered 2021 the UK, and indeed much of the world, was still operating under lockdown conditions. Nevertheless, the entire Gresham House team continued to demonstrate commitment, resilience and resourcefulness in the face of the economic and social challenges that the pandemic has created. We adapted in various ways as a company and continued to drive strong organic growth with progress evident across each of our asset classes. Importantly, investment performance for clients was also something to be proud of.

Gresham House delivered 65% growth in AUM by the year end, rising to £6.5 billion (2020: £4.0 billion). Organic growth represented c.50%, alongside two strategic acquisitions which increased AUM by a further c.15%.

The acquisition of Appian Asset Management, first announced at the end of 2020, completed in June 2021 to establish Gresham House Ireland (GHI). Based in Dublin, GHI is an active asset manager and the acquisition brought c.€350 million of AUM into Gresham House providing a platform for investment outside the UK, with an increasing emphasis on assets with a sustainability focus.

In October, we substantially built out our private equity capability with the acquisition of the VCT business of Mobeus Equity Partners LLP. The four Mobeus VCTs brought a combined AUM of £369 million and a high-quality, experienced team with complementary skills. Following this acquisition, Gresham House has become one of the leading players in the VCT market with combined AUM of £887 million across the Baronsmead and Mobeus brands.

As a result of both organic growth and these key acquisitions, I am delighted to report that our profitability rose 67%, whilst our margin increased to 33%, marking strong progress towards our GH25 target of 40% margin.

Momentum across the business continues to be buoyed by a structural shift in asset allocation by investors, including appetite for our sustainability-focused asset classes which continues to increase. Alternative assets proved robust during a volatile 2020, and in 2021 showed their ability to perform.

The World Economic Forum's Global Risk Report 2021 highlighted that over the next ten years environmental risks are the five most critical long-term threats to the world, with the three most severe risks identified as climate action failure, extreme weather, and biodiversity loss. Many of our funds are seeking to address these crucial areas.

Global sustainable fund assets doubled in just a six-month period to reach $3.9 trillion in September 2021, according to financial services information provider Morningstar. Globally, alternative assets under management are set to continue to grow strongly from $13.32 trillion at the end of 2021 to $23.21 trillion by 2026.

Throughout 2021, demand and allocations to Gresham House managed funds with a sustainable investment focus saw significant growth, and this trend is expected to continue into 2022 and beyond.

Throughout the year our market share in these assets continued to expand. We also grew our client base and welcomed new investors across the spectrum of institutional, family office, high net worth, wholesale and retail investors into our specialist and differentiated products and solutions.

The developments outlined above are driving continued shareholder value creation. Crucially, we have also delivered clear strategic progress driven by our ambitious, sustainability-focused culture and underpinned by rigorous internal processes. We ended the year with market-leading positions in several of our asset classes, notably VCT, forestry, housing and battery storage. We also developed our international profile, through an Australian forestry mandate that completed in December.

 

GH25

Our GH25 strategy was launched in March 2020 to articulate a five-year ambition with sustainability at the heart of our strategy. Within it we targeted long-term shareholder value by more than doubling AUM to over £6.0 billion, increasing operating margins to 40% and generating a target ROCE of 15% or above.

As a result of a very strong year of growth, we announced in November that we would raise our AUM target by 33% to greater than £8.0 billion.

Following continued expansion of the Group, we are proud to announce that we now intend to establish a dividend policy with a medium-term target of three times adjusted operating profits cover by 2025, to underline the increasing quality and profitability of the business alongside a recognition of the importance of income for some shareholders. Separately, we are also aiming to achieve an increased ROCE target to 20% over the medium term, recognising the importance shareholders place on capital returns.

 

Strategic objectives

As we move into 2022, Gresham House is firmly establishing itself as a leader in sustainable investment and best practice corporate governance.

We launched our inaugural Sustainable Investment Report in March 2021 and delivered a stewardship report, which received Financial Reporting Council approval. We also embedded our commitment to sustainability at the highest level of the business with the creation of our Board level Sustainability Committee. Within the business we also strive to achieve appropriate Diversity, Equity and Inclusion (DEI) objectives.

Gresham House has a leadership position across our specialist alternative investment activities. In battery storage, the Gresham House Energy Storage Fund plc (GRID) secured £280 million in debt and new funding in 2021 making it the largest fund of its kind in the UK. We are also the largest asset manager of forestry in the UK and continue to develop our international franchise with assets in Australia and Ireland. In Strategic Equity, the acquisition of the Mobeus VCTs business has expanded our VCT platform significantly to position us as a leading player in the sector.

The scale and scope of our business, and the central platform infrastructure we provide to support our investment strategies, have enabled us to deliver superior returns on funds managed, and industry leading growth in a number of our asset classes.

As part of the GH25 strategy we are committed to developing the business internationally and have made notable progress in establishing an overseas foothold during 2021 with the completion of the Appian acquisition to establish Gresham House Ireland and the Australian forestry mandate that was secured in December.

The Gresham House brand has continued to grow and to establish itself in the alternative investment sector during 2021. This has been clearly illustrated by the many awards won across the Group during the year, including winning best Alternatives Investment Management at both the Pensions Age Awards and Sustainable & ESG Investment Awards 2021.

 

Financial objectives

 

· AUM growth - 65% £2.5bn growth in 2021 - organic and acquisitive

· Operating margins - improved to 33% from 30% - investment in the business - creating a higher quality business, comparable to more mature peers

· Maintain ROCE of 15% on balance sheet in the medium term - hit 34% in 2021

 

Strategic objectives

 

· Recognised leader in sustainable investment and governance - multiple award wins, launched Sustainable Investment Report, Stewardship Report approved by the FRC, Sustainability Committee established at Gresham House plc Board level, DEI committee and actions being taken

  Superior returns for funds managed

Top Quartile - LF Gresham House UK Multi Cap Income Fund ranked second out of 84 funds in the UK Equity Income sector over three years to 31 December 2021 and remains number one in the sector since launch in June 2017.

Long-term performance - Forestry as an asset class continues to show very strong performance, with our mature retail forestry funds reporting an average return in excess of 13.6% since inception.

Outperforming target returns - GRID achieved a total return of 14.2% since IPO in 2018. BSIF Infrastructure achieved an IRR of 16.2% to 31 December 2021. ReSI plc total return of 27.0% in 2021.

· Leaders in our specialist areas

Largest battery storage investment trust in the UK and Europe, GRID.

Largest commercial forestry asset manager in the UK and now operating in Australia.

Second largest VCT player in the UK: Baronsmead and Mobeus VCTs.

· Develop the business internationally - Appian acquisition and Australian forestry.

· Enhance Gresham House brand - now an established asset manager that has become the go-to on our specialist asset classes (e.g. vertical farming alongside battery storage).
 

Employees and clients

People and culture

The Gresham House team has grown steadily in recent years and now totals 185 employees in the core asset management business. This expansion has been driven by our focus on investing in talent, bringing leading expertise into the business across all asset classes and activities.

With share ownership across the business, the ambitions of the business and its staff are closely aligned with those of our clients. Employees own c.10% of shares. We value our employees as our greatest asset and were delighted that our latest staff survey at the end of 2021 showed strong levels of advocacy for the business with 96% of staff happy to recommend Gresham House as a good place to work.

A dynamic, entrepreneurial and meritocratic culture is critical to our ongoing success and the significant new hires into the business, including key investment and distribution professionals, have further enhanced this.

Equally, we are committed to increasing Diversity, Equity and Inclusion (DEI) across the business and we have taken steps to achieve this through our participation in the #100BlackInterns programme, and the establishment of the Group's DEI Committee, which has launched a number of key initiatives.

We will continue to invest in our people, developing career aspirations as we consider this to be fundamental to achieving our growth ambitions for the business.

Clients

During 2021 we further expanded and diversified our client base at both an institutional and wholesale level, and welcomed James Lindsay as Head of Institutional Business, working alongside Heather Fleming and Catriona Buckley. We were pleased that new corporate pension schemes, such as Centrica invested in ReSI LP and that new institutional clients invested in the Gresham House Forest Growth & Sustainability LP. These are important steps as institutional clients begin to understand the returns and sustainability dynamics of investing in forestry. This highlights our ability to be able to increase the coverage of our fund offerings across wider distribution channels, carefully packaging our products into relevant fund structures for a wider range of clients.

We have also developed a number of relationships in the Strategic Equity division to provide access to a wider client base through platforms and wealth manager connections.


Sustainability

We are committed to embedding sustainability throughout the business to underpin the ESG focus of our investment approach.

In 2021 we established the Sustainability Committee as a sub-committee of the Board, chaired by Gareth Davis, to provide leadership for the implementation of this commitment with objectives for every employee across Gresham House.

We are also proud to be publishing our second annual Sustainable Investment Report.

We are focused on investments that both yield tangible and reliable returns for investors in our funds, whilst delivering positive social and environmental gains in areas that include battery storage, forestry and affordable housing.

We have set out a new Corporate Sustainability Strategy, with our ambitions built on three key pillars: Gresham House as a sustainable business and employer; a sustainable corporate citizen; and a sustainable investor.

Sustainable business and employer

Our growth will be influenced by our ability to successfully integrate sustainability authentically into our day-to-day business activities and our investment decisions. A key progressive step for this is our commitment to the Task Force on Climate-related Financial Disclosure (TCFD) reporting to assess our carbon footprint and continuously assess the measures we are taking to reduce it.

Sustainable corporate citizenship

We are fostering a commitment to corporate citizenship across the business through community and charitable initiatives including our support of the British Heart Foundation and Centrepoint. We are also committed to giving all employees two days volunteering leave per year to support employee engagement across the business but also to ensure our colleagues are contributing to wider society through charitable initiatives.

Sustainable investor

Solving some of the world's greatest challenges - climate change, biodiversity loss and social inequality - can be achieved through the creation of new innovative solutions and technology with private market capital investing in real assets. Private markets are widely considered to offer growth opportunities in sustainable investment alongside attractive financial returns. With sustainability as a core element of our investment activities, we are committed to achieving attractive financial returns for our clients whilst delivering sustainability-focused investment solutions and strategies.

We ensure best practice throughout our investment activities through constant assessment and evaluation.

 

AUM

 

AUM as at 31 December 2020

Net fund flows1

Performance

Net funds won/ acquired

AUM as at 31 December 2021

 

AUM movement

AUM movement

 

£mn

£mn

£mn

£mn

£mn

 

£ mn

%

Strategic Equity

 

 

 

 

 

 

 

 

Strategic Public Equity

508

179

162

188

1,037

 

529

104%

Private Equity

412

27

60

388

887

 

475

115%

Subtotal

920

206

222

576

1,924

 

1,004

109%

 

 

 

 

 

 

 

 

 

Real Assets

 

 

 

 

 

 

 

 

Forestry

1,811

611

531

-  

2,953

 

1,142

63%

New Energy & Sustainable Infrastructure

932

258

23

-  

1,213

 

281

30%

Real Estate

307

91

1

49

448

 

141

46%

Subtotal

3,050

960

555

49

4,614

 

1,564

51%

 

 

 

 

 

 

 

 

 

Total AUM

3,970

1,166

777

625

6,538

 

2,568

65%

1 Includes funds raised, redemptions and distributions.

AUM growth in the year totalled 65%, closing the year out at £6.5 billion (2020: £4.0 billion). This was driven by organic growth of £1.9 billion (c.50% growth) and acquisitions which added a further £0.6 billion.

Net inflows in the year of £1.2 billion (2020: £0.4 billion) represented a great year for fundraising across all of the Group's strategies, ranging from net inflows in the Strategic Equity open-ended funds to consistent fundraising for GRID (£100 million), new forestry funds such as the Gresham House Forest Growth & Sustainability LP (£202 million) and BSIF II LP, our second sustainable infrastructure fund (£150 million).

The underlying funds have continued to perform well with performance driving AUM up by £0.8 billion (2020: £0.4 billion). This was notable in the Forestry strategy, where the independent valuations of the forests managed by the Group continued to rise in value, generating a further £0.5 billion in AUM.

We also added £0.6 billion in AUM through the acquisition of Appian Asset Management Limited (Appian), now Gresham House Ireland, which added £303 million across the Strategic Equity and Real Estate strategies, and £369 million through the acquisition of the Mobeus VCT business in October 2021.

 

Strategic Equity

In 2021, we significantly increased the scale and scope of the Gresham House VCT business through the acquisition of the Mobeus VCT business, alongside the Baronsmead VCTs, which raised £71 million in new funds. In combination with Baronsmead, the Gresham House VCT platform had AUM of £887 million at the end of December, the second largest manager in the UK. We welcome Trevor Hope, and Clive Austin, joining the Strategic Equity Executive Committee with Tania Hayes, Bevan Duncan and Ken Wotton.

We also delivered a very strong performance in 2021 from our open-ended funds, which nearly doubled in size, with growth driven by our substantially enhanced distribution capabilities.

Performance across all funds was strong. Strategic Equity Capital plc (SEC) delivered 26.6% growth in the year. There was 24.6% growth in the Gresham House UK Micro Cap Fund, and 26.5% growth in the Gresham House UK Smaller Companies Fund. The performance of Gresham House Strategic under our management over the six years delivered a total return of 141%, a substantial outperformance versus the 74% of its benchmark. As a result, our fund managers are widely recognised across the industry for their investment capabilities and our LF Gresham House UK Multi Cap Income Fund won the UK Equity Income category at the Investment Week Fund Manager of the Year Awards 2021.


Real Assets

Forestry

Through 2021, Forestry remained a compelling asset class for patient capital and we were pleased to see increasing appetite from UK institutional investors for our forestry funds. During the year, we launched the Gresham House Forest Growth & Sustainability LP. The fund raised £202 million over the year and will invest in forestry that addresses demand for timber and for carbon credits.

We also expanded our international footprint, establishing a foothold in Australia with the acquisition of Green Triangle Forest Products on behalf of AXA IM Alts. Building on this momentum, we intend to launch a dedicated International Forestry Fund in 2022.


New Energy - Battery Storage

Gresham House invests in battery storage via Gresham House Energy Storage Fund plc (GRID), the UK's largest fund investing in utility-scale battery energy storage systems.

During 2021, GRID raised £280 million, incorporating £100 million in an oversubscribed equity raise in July and a £180 million, five-year, debt facility secured in September 2021. GRID is seeing favourable developments in the battery storage market driven by Ofgem and National Grid and is very well funded to address these opportunities. During the year, the Group was able to develop and sell 50MW of operational utility-scale battery storage projects to GRID from the in-house battery storage project development pipeline.

GRID has also signed agreements for the acquisition of a further 425MW of shovel-ready capacity across seven projects during the period, which have, or shall, complete subject to certain conditions being met.  These projects progress our ambitions towards its target of c.1.3GW of operational capacity by H1 2023.


New Energy - Solar and Wind

In New Energy, Gresham House are investing in a range of assets including wind farms and solar parks. Gresham House manages 150MW of wind farms in the UK through Limited Partnership (LP) and unlisted structures and in 2021 acquired the 24MW Inverclyde Wind Farm in Scotland, which has a 15-year Power Purchase Agreement with Tesco.

In Solar, Gresham House is managing 92MW of solar parks - both roof and ground mounted solar assets - across 17 ground mounted sites and four companies owning many roof mounted assets. We also partnered with Anesco on a 200MW ground mounted solar portfolio pipeline.


Sustainable Infrastructure

We were pleased to raise £150 million for our second sustainable infrastructure fund, BSIF II LP, and deployment has been strong under Peter Bachmann and team.

Our investments directly address key sustainability challenges and provide innovative solutions that seek to enable a new, more sustainable, way of living. Areas within which we source investable solutions include: decarbonisation; digital inclusion; health and education;regeneration; resource efficiency; and waste solutions. In addition to funds already deployed, the team has an identified pipeline of £1.6 billion.

 

As part of our digital inclusion investment strategy, we have invested in three full fibre network providers: Borderlink, which targets the hard-to-reach parts of the Scottish and English Borders; Wildanet, which is focused on the rural areas of Cornwall and Devon; and Telcom, which focuses on apartment blocks and office buildings across the 'Northern Powerhouse' cities and towns.

We have also made notable headway in our resource efficiency investments, in particular in vertical farming with Fischer Farms, which is in the process of developing the world's largest vertical farm in Norfolk. This opens the potential to fund multiple replicas across the UK to meet high supermarket demand for leafy greens with strong sustainability credentials.


Real Estate

Our Real Estate funds (formerly known as Housing) saw strong fund inflows in 2021, with investors attracted to their stable and secure inflation-linked returns, alongside the clear social benefits of affordable housing. We closed a new shared ownership housing fund, ReSI LP led by Ben Fry, with commitments of £120.0 million at the end of 2021, and we have a strong investment pipeline in place for these funds.

 

Our listed vehicle, Residential Secure Income plc ( ReSI plc), which invests in independent retirement living and shared ownership, introduced charters in 2021 for the acquired shared ownership portfolios we own and manage, to ensure we embed best practice across our activities, and we also established a resident welfare team that supports digitally excluded residents.

The UK's shortage of affordable housing is well documented and caused by demographic trends and historic undersupply of new homes and Gresham House's listed and unlisted housing investment vehicles - Gresham House BSI Housing LP, ReSI plc and ReSI LP - address a range of affordable housing problems.

Moving into the current year, ReSI plc completed a £15.0 million equity raise on 3 February 2022, which together with existing capital resources and an ultra-long-term debt facility, will allow the fund to fully finance £39.0 million of accretive shared ownership transactions currently underway.

The Appian Burlington Property Fund, now managed by Gresham House Ireland, won the MSCI European Property Investment Award for the second year running and under the leadership of Patrick Lawless, our business in Ireland is well positioned. We are pleased to see the launch of the Credit Union Income Fund post year end. This fund invests in loans to Approved Housing Bodies (AHBs) to generate a secure and steady income from social housing.


Outlook

We are entering the third year of our GH25 five-year plan with an enhanced investment platform supported by strong performances across all asset classes which has driven the increase in our ROCE target over the medium term to 20% as well as the announcement of our dividend policy to reach three times coverage by 2025. The five-year plan exists to provide a clear framework for shareholder value creation. We are pleased to be successfully executing on that ambition and have plans to capture the increasing growth opportunities.

We approach 2022 with the world facing different challenges than those seen in 2021 as we hopefully move through the COVID-19 pandemic. However, we have to operate in a world coping with the Russian invasion of Ukraine alongside increasing inflationary pressures. The Group does not manage or own any Russian assets and have minimal exposure to assets that are exposed to Russian sanctions and we believe that we do not have any Russian shareholders.   These issues will see risk premia rise and have consequent impacts on valuations. It is important to remember that our asset classes and philosophy are long term. With that investment horizon in mind, the growth in demand for our product areas should continue its positive momentum.

We have a dynamic programme of fundraising mapped out for 2022 across all areas of the business, which will be well supported by our strong and diversified distribution channels, spanning institutional, wholesale, retail and high net worth investors and family offices.

We are committed to delivering a sustainable investment framework that will generate returns for both our investors and the wider environment, economy and society and anticipate further growth in investor appetite across new energy, sustainable infrastructure, forestry, real estate, and both public and private equity.

With improved margins and higher quality AUM, as we move into 2022, we are well positioned to benefit from investors' increasing demands for investment opportunities that address the most pressing issues of our time. The increased globalisation of investment allows our strategic positions in these specialist asset classes to scale substantially from this point. The Board is confident that the Group is on track for further growth in the coming year and beyond and will continue to deliver value for all our stakeholders.

 

 

Tony Dalwood

Chief Executive

14 March 2022

 

 

 

Financial review

 

The Group has continued its momentum in 2021, building on the foundations laid in 2020 and delivering exceptional growth in AUM and profits. We continued to face challenges from the COVID-19 pandemic in 2021; however, we demonstrated the quality of the business and the team, operating in an agile manner to deliver returns for shareholders and clients.

 

The Group has grown AUM by 65% in the year to 31 December 2021, with a closing AUM of £6.5 billion, up £2.5 billion in the year (2020: £4.0 billion). The AUM growth was driven by strong organic growth of c.50% (£1.9 billion), alongside the acquisitions of the Mobeus VCT business and Appian Asset Management Limited (Appian), the EU-based AIFM, adding a further £0.6 billion in the year. This growth has helped to increase net core income in the year by 51% to £61.6 million (2020: £40.8 million) and deliver an adjusted operating profit of £20.2 million, up 67% in the year (2020: £12.1 million).

 

The performance of funds managed by the Group has also delivered net performance fees of £1.7 million (2020: £nil) highlighting the team's strong performance for clients in the year.

 

The Group has continued to use its balance sheet to develop projects and support the growth of the business, with the sale of battery storage projects and other development activity delivering an additional £1.8 million in net gains in the year (2020: £1.0 million).

 

Total comprehensive net income after the deduction of tax, amortisation and other acquisition-related costs has delivered a profit of £12.0 million (2020: £0.8 million). As a result of the improvement in the Group's profitability and growth in the business, we have reviewed the dividend policy and are looking to target dividend cover of three times by the end of the GH25 strategic plan in 2025. We are therefore pleased to announce our intention to increase the final dividend by 67% to 10.0 pence for the year ended 31 December 2021, building on the Group's 2020 final dividend of 6.0 pence.

 

We present the performance of the Group using the non-GAAP adjusted operating profit metric. The aim of the adjusted operating profit metric is to show the true performance of the core asset management business through the management fee income and revenues earned, less the administrative overheads associated with delivering asset management services. The adjusted operating profit metric below highlights the performance of the core asset management business separately from performance fees and gains on the sale of development projects. The performance fees and gains on the sale of development projects are presented alongside the variable compensation costs payable as a result of their generation, to show the net impact on the Group.

 

The adjusted operating profit metric thereby excludes depreciation and amortisation, exceptional items from acquisition costs and restructuring and acquisition-related share-based payments and remuneration, as they are effectively an earn out paid to the sellers of businesses acquired rather than an operating expense.

 

Adjusted operating profit

 

2021

2020

 

£'000

£'000

Income

63,060

41,936

Dividend income from associates

285

202

Gross core income

63,345

42,138

Rebates, distribution costs and fundraising costs

(1,736)

(1,364)

Net core income

61,609

40,774

Administration overheads (excluding amortisation, depreciation, exceptional items and acquisition-related share-based payment charges)

 

(41,128)

 

(28,690)

Finance costs

(311)

(25)

Adjusted operating profit

20,170

12,059

Adjusted operating margin

32.7%

29.6%

 

Performance fees (gross)

 

6,163

 

-

Variable compensation attributable to performance fees

(4,449)

-

Performance fees net of costs

1,714

-

 

 

 

Gains on development projects

2,932

3,482

Variable compensation attributable to gains on development projects

(689)

(2,474)

Development project costs

(470)

-

Net development gains

1,773

1,008

Performance fees and development gains net of costs

3,487

1,008

 

 

 

Adjusted operating profit, performance fees and development project gains net of costs

23,657

13,067

 

 

 

Non-core operating revenues

1,140

-

Costs relating to non-core operating revenues

(1,102)

-

Net non-core activity

38

-

 

 

 

 

 

 

Amortisation and depreciation

(9,475)

(8,931)

Exceptional items

(3,215)

(1,775)

Acquisition related share-based payment and remuneration charges

(1,067)

(593)

Net gains/(losses) on investments and fair value movements*

6,224

134

Tax

(4,107)

(1,084)

Operating profit after tax

12,055

818

Loss from discontinued operations

(14)

(12)

Total comprehensive net income

12,041

806

 

 

 

*Excluding dividend income from associates of £0.3 million (2020: £0.2 million) and gains on development projects of £2.9 million (2020: £3.5 million).

 

The adjusted operating profit metric has increased to £20.2 million (2020: £12.1 million) and the adjusted operating margin based on net core income increased to 32.7% (2020: 29.6%) showing the operating model of the business coming through in margin improvement as we target a 40% operating margin as part of the GH25 strategy.

 

Income

 

2021

2020

 

£'000

£'000

Asset management income

62,162

40,304

Dividend and investment income

590

554

Other income

308

1,078

Total income

63,060

41,936

Dividend income from associates

285

202

Gross core income

63,345

42,138

Rebates, distribution costs and fundraising costs

(1,736)

(1,364)

Net core income

61,609

40,774

 

Net core income

Total net core income has increased by 51% in the year to £61.6 million (2020: £40.8 million), driven by the strong c.50% organic growth in AUM in the year to £6.5 billion (2020: £4.0 billion). This increase includes the revenues generated by the acquisition of the Mobeus VCT business from October 2021 and Appian, the EU-based AIFM, from June 2021. We present net core income to reflect the rebates, distribution costs and fundraising fees paid to deliver core income by the Group.

 

The Group provides high-quality services in actively managed alternative asset classes. Delivery of returns for investors is key and requires our team of asset management specialists to drive investment performance. As such, we operate in higher fee margin specialist areas of asset management.

 

The Group benefits from a diverse range of long-term management contracts, with c.90% of AUM being in closed-ended funds and structures which provide a stable view on future revenue streams. This is demonstrated through the weighted average life of limited partner management contracts accounting for £2.0 billion in AUM being over 14 years in asset classes such as forestry. The spread of products managed by the Group's Real Assets and Strategic Equity divisions also ensures that the Group is not exposed to any one particular market, providing good diversification. The open-ended funds in the Strategic Equity division had an AUM of £800 million at the end of the year (2020: £269 million), reflecting the addition of the funds managed by Appian of £284 million alongside strong inflows and performance from the open-ended equity funds, which added a further £247 million.

 

Dividend, interest and other income

We continue to use our balance sheet to invest alongside clients and develop or support products managed by the Group and dividends, interest and other income reflect this. Overall dividend and investment income increased in 2021 to £590,000 (2020: £554,000), primarily due to interest earned on a development project of £279,000, offsetting reduced dividends from Gresham House Energy Storage Fund plc (GRID) as the Group traded out of its holding to recycle capital elsewhere in the business.

 

Other income of £308,000 (2020: £1,078,000) principally reflects the net operating income earned from a battery storage project while under the Group's ownership, prior to being sold to GRID. Two projects were sold in the prior year, which were revenue generating for a period of time before their sale process completed with GRID.

 

Dividend income from associates relates to dividends recognised for Gresham House Strategic plc (GHS, now known as Rockwood Realisation plc) of £125,000 in the year (2020: £202,000) and Noriker Power Limited of £160,000 (2020: £nil). These are recognised in the share of associates profit line in the income statement and separated out as part of the adjusted operating profit metric disclosure.

 

Administrative overheads

Administrative overheads, excluding amortisation, depreciation and exceptional items, were up 43% in the year to £41.1 million (2020: £28.7 million). The increase in cost base includes three months of the Mobeus VCT business' cost totalling £0.6 million and six months of costs for Appian totalling £1.5 million.

 

The Group continues to focus its efforts on maximising profit growth and increasing shareholder value and as such invested further in the core functions of the business in 2021. Whilst doing this we focused on the operating margin target of 40% and were pleased to note the improvement in operating margin from 29.6% to 32.7% at the end of 2021. We are starting to see the operating leverage come through the business as we grow AUM at a faster rate than the cost base required to service the increased level of AUM and as such remain on track to achieve 40% operating margins over the medium term.

 

The investment in key team members across the Group in 2021 led to the Group's full-time equivalent headcount standing at 185 at the end of the year, up from 122 at the end of 2020. This included 16 people joining with the Mobeus VCT business,22 with the Appian business and 64 new hires as we focused on the key roles needed to grow the business. People costs have consequently increased in the year to £34.8 million from £23.3 million in 2020, alongside variable compensation relating to performance fees and development gains of £5.1 million (2020: £2.5 million).

 

The Group has also benefited from improved performance across the divisions, which drives the bonus pools based on a share of the profits with the teams and thereby increases costs.

 

Total office costs across the Group were £1.6 million (2020: £0.8 million), reflecting the London office move to 80 Cheapside as well as the additional office costs from the acquisition of Appian.

 

We operate with offices in London, Dublin, Oxford, Dumfries and Perth and continue to operate a hybrid working approach, which provides flexibility to our growth plans and the team alike.

 

When we acquire businesses, we focus on the synergies that can be delivered as a result of combining complementary businesses. It is not only acquisitions where we target cost savings. We continue to review all areas of the Group's cost base diligently to ensure that we are operating efficiently and in a lean manner. We do, however, ensure that appropriate investment takes place in areas that will support the growth of the business.

 

Finance costs

The Group increased the size of its revolving credit facility (RCF) with Santander in December 2021 to £20.0 million (2020: £5.0 million facility size). RCF interest and finance fees over the year were £244,000 (2020: £nil) with the remaining £67,000 relating to IFRS 16 lease interest (2020: £25,000).

 

Amortisation and depreciation

Amortisation of management contracts, customer relationships, the website and IT platform development accounted for £8.5 million (2020: £8.0 million) as these intangible assets continue to be amortised over their useful lives. The increase in the year reflects the acquisition of the Mobeus VCT business in October 2021 and Appian in June 2021. This required the assessment of the fair value of the management contracts and brand acquired within the businesses, which are being amortised over their useful lives and are the main drivers for the increase in the year.

 

Depreciation of £959,000 in the year (2020: £871,000) relates primarily to office leases, motor vehicles used by the Forestry business and IT equipment.

 

Exceptional items

We classify exceptional items as those fees and costs which relate to acquisitions and restructuring of the business post acquisition as well as one-off costs. Exceptional items in 2021 were £3.2 million compared to £1.8 million in 2020. These include the acquisition costs associated with the Mobeus VCT business, as well as Appian, which completed in June 2021, alongside restructuring costs. This also includes £1.2 million of DevCo-related acquisition and disposal costs that are required to be expenses in the year under IFRS, rather than capitalised as development activity.

 

 

Gains/(losses) on investments

 

2021

2020

 

£'000

£'000

Share of associates' profits

4,955

158

Profit on disposal of associate

461

-

Gains/(losses) in investments held at fair value

5, 842

4,599

Fair value movement in deferred receivable

-

224

Movement in fair value of contingent consideration

(1,659)

(1,163)

Foreign exchange movements on translation of foreign subsidiary

(158)

-

Total gains on investments

9,441

3,818

Less realised gains on development projects

(2,932)

(3,482)

Less dividend income from associates

(285)

(202)

Net gains/(losses) on investments

6,224

134

 

The Group has made gains on its investments and fair value movements in acquisition-related contingent consideration totalling £9.4 million in 2021 (2020: £3.8 million).

 

The share of associates' profits relates to the 23% holding that the Group has in GHS. The last results announcement from GHS was on 7 December 2021 for the six-month period to 30 September 2021. Under associate accounting, the Group has therefore recognised its share of the profits over GHS's last 12 months' reported profits of £5.8 million (2020: £133,000 profit), which included dividends received in the year of £125,000 (2020: £202,000).

 

The Group sold its investment in Noriker Power Limited in December 2021 and as such has recognised a profit on disposal of £0.5 million. The gain of £5.8 million from investments held at fair value in the year (2020: £4.6 million) includes realised and unrealised gains and losses on the co-investments that have been made in the funds managed or advised by Gresham House. The key driver of this was the gains recognised on the sale of the Byers Brae and Enderby battery storage projects to GRID, making a gross profit on sale of £2.9 million (2020: £3.5 million gross gain on sale of Thurcroft and Wickham Market battery projects). Both these battery storage development projects sales made a return on investment in excess of the Group's medium-term target of 15%. The net gain after the deduction of variable compensation relating to the projects and costs associated with development activity was £1.8 million for the Group (2020: £1.0 million).

 

The other notable unrealised value increase in the year was the £0.9 million increase in the value of the Gresham House Forestry Friends and Family Fund LP, based on the independent valuation at the end of the year alongside unrealised valuation increases totalling a further £2.0 million in funds and co-investments managed by the Group.

 

Fair value movement in contingent consideration

The Livingbridge VC business, TradeRisks, Mobeus VCT business and Appian acquisitions have contingent payment elements which is driven by AUM growth, maintaining management contracts or revenue performance over a three-year period since acquisition. The contingent consideration payments have been fair valued at each reporting period end with the movement in the fair value recognised in the income statement.

 

The Livingbridge VC business revenue performance to December 2021 has been used to estimate the fair value of the contingent consideration, which reached its maximum pay-out of £2.5 million as a result of delivering revenues in excess of the business plan at the time of acquisition. The increase in the fair value on the balance sheet reflects this and the unwind of the discount between the period end and settlement in 2022.

 

The TradeRisks deferred consideration is driven by AUM growth assumptions and cost synergies. At the year end these assumptions have been reviewed and the primary driver for the increase in the deferred consideration is the unwinding of the discount applied between the year end and settlement in 2023.

 

The Appian and Mobeus VCT business contingent considerations have been fair valued as part of the acquisition process, with limited fair value movement noted since acquisition in June and October 2021 respectively.

 

Tax

The Group continues to utilise the losses available against the current trading activity. The tax charge noted reflects taxable profits within the Group partially offset by the unwinding of the deferred tax liability recognised on the acquisition of the FIM, Livingbridge, TradeRisks, Mobeus VCT and Appian businesses and the impact of the movement in the fair value of the management contracts.

 

Financial position

 

 

2021

2020

 

 

£'000

£'000

Assets

 

 

 

Investments*

38,023

23,259

Cash

 

40,252

21,886

Tangible/realisable assets

 

78,275

45,145

 

 

 

 

Intangible assets

95,012

59,970

Other assets

36,259

18,057

Total assets

 209,546

123,172

 

 

 

 

Liabilities

 

 

 

Borrowing

-

-

Contingent consideration

22,659

6,933

Other creditors

40,425

19,772

Total Liabilities

 

63,084

26,705

Net assets

146,462

96,467

 

 

*The above presentation of the Group's balance sheet highlights the Group's direct exposure to those vehicles and entities that it has invested in. We have therefore adjusted the IFRS Statement of Financial Position for the following items which are required to be consolidated under IFRS 10 to present the Group on an investment basis:

 

DevCo Projects - removed the "Assets of a disposal group held for sale" of £17,545,000 (2020: £7,363,000) and "Liabilities of a disposal group classified as held for sale" of £7,499,000 (2020: £2,072,000) and replaced with the investment exposure in "investments in securities" £13,921,000 (2020: £5,842,000).

 

Gresham House Forestry Friends and Family Fund LP - reduced the value by the non-controlling interest amount of £1,075,000 (2020: £811,000) to show the Group's underlying exposure to this fund.

 

Tangible/realisable assets

The above highlights the strong balance sheet position that the Group improved on during 2021. The tangible/realisable assets supporting this total £78.3 million (2020: £45.1 million), comprising investments and cash.

 

Investments

The Group invests in or alongside the funds that it manages to align itself with clients. The below table provides a summary of the investment portfolio at the end of the year:

 

 

Investment portfolio

2021

2020

 

£'000

£'000

Investment in associates

 

 

Rockwood Realisation plc (formerly Gresham House Strategic plc or GHS)

11,459

8,456

Environment Bank Limited

496

-

Noriker Power Limited

-

666

DevCo Projects

-

20

 

11,955

9,142

Investment in securities

 

 

DevCo Projects

13,583

5,842

Strategic Equity Capital plc (SEC)

3,349

173

Gresham House Forestry Fund LP

2,739

2,068

Residential Secure Income plc (ReSI plc)

1,438

864

Gresham House Strategic Public Equity LP

1,363

1,162

Gresham House Forestry Growth and Sustainability Fund LP

1,000

-

LF Gresham House Smaller Companies Fund

882

703

Gresham House British Strategic Investment Fund (BSIF)

864

269

Residential Secured Income LP

639

-

Other investments

 211

 177

Gresham House Energy Storage Fund plc (GRID)

-

2,859

 

26,068

14,117

Total investments (excluding non-controlling interests)

38,023

23,259

 

Investments in associates

GHS changed its name to Rockwood Realisation plc (Rockwood) and changed its investment strategy in line with results from the extraordinary general meeting held in December 2021. Rockwood has since been in the process of realising its portfolio and returning capital to shareholders, with £2.4 million being returned to the Company in 2021.

 

The Group maintained its holding in Rockwood in the year at 23%. The last publicly available results for the six months to 30 September 2020 have led to an increase in the recognised value as an associate of £5.8 million (2020: £133,000 decrease), which after adjusting for the dividend payment of £125,000 (2020: £202,000) in the year results in a value of £11,458,000 (2020: £8,456,000).

 

The Group supported the early investment into Environment Bank Limited, an entity focused on creating habitat land banks to support rewilding in the UK. It is envisaged that the Group's holding will be sold to BSIF II LP when Environment Bank Limited is operational and generating cash flows. This is an example of the Group using its balance sheet to support the growth of assets to be sold into funds managed by the Group, ultimately growing the AUM of the Group.

 

In December 2021, the Group sold its interest in Noriker realising a gain of £729,000.

 

Investments in securities

IFRS 10: Consolidation, requires the consolidation of the Group's investments in battery storage Development Company projects (DevCo Projects) as the Group has a controlling position in these projects. The DevCo Projects have borrowed to pay the deposits for the utility-scale batteries and this borrowing is secured at the DevCo Project level on the batteries and there is no recourse to the Group. The disclosure above therefore shows the Group's net exposure to the DevCo Projects, i.e. the equity and loan investment in the vehicles, and nets out the borrowing and utility-scale battery assets as shown in the IFRS Statement of Financial Position assets and liabilities of a disposal group held for sale.

 

The Group increased its investment in the DevCo Projects in the year, which totalled £13.6 million (2020: £5.8 million) at the end of 2021 and are in the exclusive pipeline for GRID to purchase when they are operational. GRID will go through a detailed independent valuation process when the projects are operational as part of the acquisition process and these projects currently remain on track to be operational in 2022 and 2023. During the year, the Group sold seven projects, Byers Brae and six Statera projects, which delivered a net gain of £1.8 million to the Group.

 

The Group invested £5.0 million in GRID at the IPO to ensure that it reached £100.0 million in size and GRID has since successfully raised further capital to grow the vehicle. At the end of 2021, the Group realised its direct investment in GRID as it looks to deploy capital for new initiatives around the Group.

 

Gresham House Forestry Fund LP performed well in the year, with increases in the value of the underlying forests driving an increase in the Group's investment to £2.7 million (2020: £2.1 million), excluding non-controlling interests.

 

Gresham House Strategic Public Equity LP continued to invest during 2021 and generated realised and unrealised gains of £430,000 (2020: £197,000).

 

The other investments demonstrate the Group's ability to co-invest alongside the funds that it manages and provides alignment with clients, for example investing £1.0 million into the Gresham House Forest Growth & Sustainability LP as well as committing up to £1.0 million to ReSI LP, the shared ownership housing fund. These are investments where, as general partner, Gresham House uses its balance sheet to align itself with its clients.

 

Cash and borrowing

The cash balance of the Group was £40.3 million at the end of the year (2020: £21.9 million) and reflected operating cash profits generated in the year as well as a number of significant cash movements such as equity fundraising and capital returned on the sale of investments.

 

The Company issued new equity with a value of £42.0 million (gross) for cash in September 2021 (£40.5 million net of fees). This equity raise was to fund the acquisition of the Mobeus VCT business as well as provide capital to support the Group's ambitious development activities.

 

The acquisition of the Mobeus VCT business in October 2021 incurred an initial consideration of £20.0 million in cash, with deferred and contingent consideration to follow in the coming years. The acquisition of Appian in June 2021 required a net payment of £3.1 million (€3.6 million).

 

The deferred consideration element of the Hazel Capital acquisition completed in the year with a cash payment of £5.3 million under the Hazel LTIP.

 

Investment and development activity in the year totalled £18.9 million which included commitments to new funds launched by the Group of £1.6 million (such as ReSI LP, and Gresham House Forest Growth & Sustainability LP), capital investments to win new mandates of £3.0 million (SEC) and development projects such as battery storage and other renewable energy projects of £12.3 million.

 

The Group also benefited from the sale of a number of battery storage projects delivering £3.6 million and the sale of its stake in Noriker of £0.8 million

 

Finally, to provide flexibility as the Group enters 2022 with a range of opportunities to grow the business, we have increased the size of the RCF with Santander to £20.0 million, with a three-year term. The Group is therefore well positioned with cash and available facilities to take advantage of opportunities as they arise in 2022.

 

Intangible assets

Intangible assets are primarily made up of the management contracts acquired as part of acquisitions and the goodwill associated with these acquisitions. As at 31 December 2021, the net book value of management contracts and other intangible assets was £46.2 million (2020: £30.3 million), reflecting the amortisation of the management contracts over their useful lives, and the addition of the management contracts, customer relationships and Mobeus brand following the acquisitions of the Mobeus VCT business and Appian. No contracts were impaired at the year end.

 

Goodwill resulting from acquisitions is reviewed each year end and there was no indication that impairment to goodwill should be considered to the book value of £48.8 million (2020: £29.7 million). Further details are included in the notes to the financial statements.

 

Contingent consideration

Contingent consideration increased from £6.9 million to £22.7 million in the year, reflecting the acquisition of the Mobeus VCT business and Appian alongside the impact of the time value of money as future contingent consideration amounts become more certain.

 

Outlook

The balance sheet is well positioned to capture the growth opportunity in front of us with cash of £40.3 million and investments of £38.0 million providing a solid platform. We have laid further foundations in 2021 and look forward to growing the business further in 2022.

 

 

 

Kevin Acton

Chief Financial Officer

14 March 2022

 

 

 

Group statement of comprehensive income

For the year ended 31 DECEMBER

 

 

 

2021

 

2020

 

Notes

 

£'000

 

£'000

Income

 

 

 

 

 

Asset management income

 

 

62,162

 

40,304

Dividend and interest income

 

 

590

 

554

Other operating income

 

 

1,448

 

1,078

Performance fees and carried interest

 

 

6,163

 

-

Total income

1

 

70,363

 

41,936

Operating costs

 

 

(63,331)

 

(43,827)

Administrative overheads

3

 

(60,116)

 

(42,052)

Exceptional items

6

 

(3,215)

 

(1,775)

Net operating profit /(loss)

 

 

7,032

 

(1,891)

Finance costs

7

 

(311)

 

(25)

Net operating profit /(loss) after finance costs

 

 

6,721

 

(1,916)

Gains and losses on investments and fair value movements

 

 

 

 

 

Share of associates' profits

18

 

4,955

 

158

Profit on disposal of associate

 

 

461

 

-

Gains and losses on investments held at fair value

12

 

5,842

 

4,599

Movement in fair value of contingent consideration

 

 

(1,659)

 

(1,163)

Movement in value of deferred receivable

 

 

-

 

224

Operating profit before taxation

 

 

16,320

 

1,902

Taxation

9

 

(4,107)

 

(1,084)

Operating profit from continuing operations

 

 

12,213

 

818

Loss from discontinued operations

 

 

(14)

 

(12)

Profit for the year

 

 

12,199

 

806

Other comprehensive income

 

 

 

 

 

Foreign exchange losses on translation of a foreign subsidiary

 

 

(158)

 

-

Profit and total comprehensive income

 

 

12,041

 

806

 

 

 

 

 

 

Attributable to:

 

 

 

 

 

Equity holders of the parent

 

 

11,777

 

577

Non-controlling interest

 

 

264

 

229

 

 

 

12,041

 

806

Basic profit per ordinary share (pence)

10

 

34.8

 

1.9

Diluted profit per ordinary share (pence)

10

 

32.7

 

1.8

Basic adjusted profit per ordinary share (pence)

10

 

52.6

 

34.5

Diluted adjusted profit per ordinary share (pence)

10

 

49.4

 

32.9

 

 

 

Statements of changes in equity

Year ended 31 DECEMBER

 

 

Group 2021

Notes

Ordinary share capital

Share premium

Merger reserve

Treasury shares

Retained reserves

Foreign exchange reserve

Equity attributable to equity shareholders of the Parent Company

Non- controlling interest

Total equity

 

 

£'000

£'000

£'000

£'000

£'000

£'000

£'000

£'000

£'000

Balance at 31 December 2020

 

8,023

60,061

19,981

-

8,402

-

96,467

811

97,278

Profit and total comprehensive income for the year

 

-

-

-

-

11,935

(158)

11,777

264

12,041

Contributions by and distributions to owners

 

 

 

 

 

 

 

 

 

 

Share-based payments

29

-

-

-

-

(5,424)

-

(5,424)

-

(5,424)

Issue of shares

27

1,477

39,267

4,830

(51)

-

-

45,523

-

45,523

Cancellation of share premium

 

-

(60,000)

-

-

60,000

-

-

-

-

Dividends paid

11

-

-

-

-

(1,881)

-

(1,881)

-

(1,881)

Total contributions by and distributions to owners

 

1,477

(20,733)

4,830

(51)

52,695

-

38,218

-

38,218

Balance at 31 December 2021

 

9,500

39,328

24,811

(51)

73,032

(158)

146,462

1,075

147,537

 

 

 

Group 2020

Notes

Ordinary share capital

Share premium (restated)

Merger reserve (restated)

Retained reserves

Equity attributable to equity shareholders of the Parent Company

Non- controlling interest

Total equity

 

 

£'000

£'000

£'000

£'000

£'000

£'000

£'000

Balance at 31 December 2019

 

6,956

52,594

16,648

14,039

90,237

582

90,819

Profit and total comprehensive income for the year

 

-

-

-

577

577

229

806

Contributions by and distributions to owners

 

 

 

 

 

 

 

 

Share-based payments

29

2

38

-

(4,863)

(4,823)

-

(4,823)

Issue of shares

27

1,065

7,429

3,333

-

11,827

-

11,827

Dividends paid

11

-

-

-

(1,351)

(1,351)

-

(1,351)

Total contributions by and distributions to owners

 

1,067

7,467

3,333

(6,214)

5,653

-

5,653

Balance at 31 December 2020

 

8,023

60,061

19,981

8,402

96,467

811

97,278

 

 

 

Company 2021

Notes

Ordinary share capital

Share premium

Merger reserve

Retained reserves

Total equity

 

 

£'000

£'000

£'000

£'000

£'000

Balance at 31 December 2020

 

8,023

60,061

19,981

9,257

97,322

Loss and total comprehensive income for the year

 

-

-

-

(1,695)

(1,695)

Contributions by and distributions to owners

 

 

 

 

 

 

Share-based payments

 

-

-

-

(4,977)

(4,977)

Issue of shares

27

1,477

39,267

4,830

-

45,574

Cancellation of share premium

 

-

(60,000)

-

60,000

-

Dividends paid

11

-

-

-

(1,881)

(1,881)

Total contributions by and distributions to owners

 

1,477

(20,733)

4,830

53,142

38,716

Balance at 31 December 2021

 

9,500

39,328

24,811

60,704

134,343

 

 

 

Company 2020

Notes

Ordinary share capital

Share premium (restated)

Merger reserve (restated)

Retained reserves

Total equity

 

 

£'000

£'000

£'000

£'000

£'000

Balance at 31 December 2019

 

6,956

52,594

16,648

12,379

88,577

Loss and total comprehensive income for the year

 

-

-

-

(1,771)

(1,771)

Contributions by and distributions to owners

 

 

 

 

 

 

Issue of shares

27

1,067

7,467

3,333

-

11,867

Dividends paid

11

-

-

-

(1,351)

(1,351)

Total contributions by and distributions to owners

 

1,067

7,467

3,333

(1,351)

10,516

Balance at 31 December 2020

 

8,023

60,061

19,981

9,257

97,322

 

 

 

 

 

 

 

Statements of financial position

As at 31 DECEMBER

 

 

 

Group

 

Company

 

Notes

 

2021

 

2020

 

2021

 

2020

Assets

 

 

£'000

 

£'000

 

£'000

 

£'000

Non-current assets

 

 

 

 

 

 

 

 

 

Investments

12

 

13,560

 

9,086

 

8,308

 

5,342

Property, plant and equipment

13

 

2,927

 

1,090

 

1,912

 

564

Investment in subsidiaries

17

 

-

 

-

 

80,148

 

79,872

Investment in associates

18

 

11,955

 

9,142

 

-

 

65

Intangible assets

14

 

95,012

 

59,970

 

1,100

 

749

Long-term receivables

15

 

492

 

-

 

492

 

-

Deferred tax

24

 

2,197

 

1,051

 

92

 

153

 

 

 

126,143

 

80,339

 

92,052

 

86,745

Current assets

 

 

 

 

 

 

 

 

 

Trade receivables

19

 

11,135

 

3,184

 

-

 

-

Accrued income and prepaid expenses

20

 

21,705

 

13,783

 

1,157

 

760

Other current assets

21

 

3,537

 

551

 

20,047

 

6,885

Cash and cash equivalents

 

 

40,252

 

21,886

 

23,800

 

7,826

Non-current assets held for sale

 

 

 

 

 

 

 

 

 

Assets of a disposal group held for sale

16

 

17,545

 

7,363

 

-

 

-

Total current assets and non-current assets held for sale

 

 

94,174

 

46,767

 

45,004

 

15,471

Total assets

 

 

220,317

 

127,106

 

137,056

 

102,216

 

 

 

 

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

 

 

 

Trade and other payables

22

 

42,721

 

18,780

 

519

 

243

Short-term borrowings

23

 

-

 

-

 

1,136

 

4,651

Liabilities of a disposal group classified as held for sale

 

 

 

 

 

 

 

 

 

Liabilities of a disposal group classified as held for sale

16

 

7,499

 

2,072

 

-

 

-

Total current liabilities and liabilities of a disposal group classified as held for sale

 

 

50,220

 

20,852

 

1,655

 

4,894

 

Total assets less current liabilities

 

 

170,097

 

106,254

 

135,401

 

97,322

 

 

 

 

 

 

 

 

 

 

Non-current liabilities

 

 

 

 

 

 

 

 

 

Deferred taxation

24

 

10,597

 

3,227

 

-

 

-

Long-term borrowings

25

 

-

 

-

 

-

 

-

Other creditors

26

 

11,963

 

5,749

 

1,058

 

-

 

 

 

22,560

 

8,976

 

1,058

 

-

Net assets

 

 

147,537

 

97,278

 

134,343

 

97,322

 

 

 

 

 

 

 

 

 

 

Capital and reserves

 

 

 

 

 

 

 

 

 

Ordinary share capital

27

 

9,500

 

8,023

 

9,500

 

8,023

Share premium

30

 

39,328

 

60,061

 

39,328

 

60,061

Merger reserve

30

 

24,811

 

19,981

 

24,811

 

19,981

Treasury shares

30

 

(51)

 

-

 

-

 

-

Retained reserves

30

 

73,032

 

8,402

 

60,704

 

9,257

Foreign exchange reserve

30

 

(158)

 

-

 

-

 

-

Equity attributable to equity shareholders of the Parent Company

 

 

146,462

 

96,467

 

134,343

 

97,322

Non-controlling interest

30

 

1,075

 

811

 

-

 

-

Total equity

 

 

147,537

 

97,278

 

134,343

 

97,322

 

 

 

 

 

 

 

 

 

 

Basic net asset value per ordinary share (pence)

31

 

387.5

 

300.6

 

353.5

 

303.6

Diluted net asset value per ordinary share (pence)

31

 

366.6

 

287.4

 

334.6

 

290.3

 

 

 

 

 

 

 

 

 

 

The loss after tax for the Company for the year ended 31 December 2021 was £1,695,000. The financial statements were approved and authorised for issue by the Board and were signed on its behalf on 14 March 2022.

 

 

Kevin Acton

Chief Financial Officer

 

 

Group statement of cashflows

For the year ended 31 DECEMBER

 

 

 

2021

 

2020

 

Notes

 

£'000

 

£'000

Cash flow from operating activities

 

 

 

 

 

Net cash generated from operations

32

 

21,130

 

17,592

Corporation tax paid

 

 

(968)

 

(1,856)

Interest paid on loans

 

 

(187)

 

(25)

Net cash flow from operating activities

 

 

19,975

 

15,711

 

 

 

 

 

 

Cash flow from investing activities

 

 

 

 

 

Acquisition of Appian Asset Management Limited

 

 

(841)

 

-

Acquisition of Mobeus VCT business

 

 

514

 

-

Acquisition of TradeRisks Limited

 

 

-

 

(8,045)

Deferred consideration paid

 

 

(1,409)

 

(9,842)

Investment in associates

 

 

(1,165)

 

-

Sale of associates

 

 

3,296

 

-

Dividends received from associates

 

 

383

 

186

Purchase of investments

 

 

(5,409)

 

(1,007)

Sale of investments

 

 

4,287

 

3,032

Investment in DevCo Projects

 

 

(12,349)

 

(1,271)

DevCo loans repaid

 

 

551

 

1,096

Proceeds received on sale of DevCo Projects

 

 

3,551

 

4,581

Purchase of fixed assets

 

 

(327)

 

(152)

Sale of fixed assets

 

 

6

 

-

Purchase of intangible assets

 

 

(724)

 

(584)

Total cash flow from investing activities

 

 

(9,636)

 

(12,006)

Cash flow from financing activities

 

 

 

 

 

Receipt of loans

 

 

10,000

 

-

Repayment of loans

 

 

(10,000)

 

-

Share issue proceeds

 

 

22,000

 

8,010

Share issue costs

 

 

(1,513)

 

(347)

Share warrants exercised

 

 

-

 

182

Share-based payments settled

 

 

(9,734)

 

(7,125)

Dividends paid

 

 

(1,881)

 

(1,351)

Capital element of lease payments

 

 

(845)

 

(620)

Total cash flow from financing activities

 

 

8,027

 

(1,251)

 

 

 

 

 

 

Increase in cash and cash equivalents

 

 

18,366

 

2,454

 

 

 

 

 

 

Cash and cash equivalents at start of year

 

 

21,886

 

19,432

 

 

 

 

 

 

Cash and cash equivalents at end of year

 

 

40,252

 

21,886

 

 

 

 

Company statement of cashflows

For the year ended 31 DECEMBER

 

 

 

2021

 

2020

 

Notes

 

£'000

 

£'000

Cash flow from operating activities

 

 

 

 

 

Net cash generated from operations

32

 

(1,911)

 

(1,180)

Interest paid on loans

 

 

(142)

 

(8)

Net cash flow from operating activities

 

 

(2,053)

 

(1,188)

 

 

 

 

 

 

Cash flow from investing activities

 

 

 

 

 

Purchase of investments

 

 

(5,203)

 

(930)

Sale of investments

 

 

3,284

 

3,032

DevCo loans repaid

 

 

551

 

1,096

Investment in DevCo Projects

 

 

(3,537)

 

-

Sale of associates

 

 

65

 

-

Purchase of fixed assets

 

 

(371)

 

(152)

Sale of fixed assets

 

 

6

 

-

Purchase of intangible assets

 

 

(725)

 

(593)

Total cash flow from investing activities

 

 

(5,930)

 

2,453

Cash flow from financing activities

 

 

 

 

 

Receipt of loans

 

 

10,000

 

-

Repayment of loans

 

 

(10,000)

 

-

Net repayments from (advances to) Group undertakings

 

 

11,208

 

(1,387)

Share issue proceeds

 

 

22,000

 

8,010

Share issue costs

 

 

(1,513)

 

(347)

Share warrants exercised

 

 

-

 

182

Share-based payments settled

 

 

(5,253)

 

-

Dividends paid

 

 

(1,881)

 

(1,351)

Capital element of lease payments

 

 

(604)

 

(486)

Total cash flow from financing activities

 

 

23,957

 

4,621

 

 

 

 

 

 

Increase in cash and cash equivalents

 

 

15,974

 

5,886

 

 

 

 

 

 

Cash and cash equivalents at start of year

 

 

7,826

 

1,940

 

 

 

 

 

 

Cash and cash equivalents at end of year

 

 

23,800

 

7,826

 

 

Principal accounting policies

The Group's principal accounting policies are as follows:

 

(a) Basis of preparation and going concern

Gresham House plc is a public limited company limited by shares incorporated in the United Kingdom under the Companies Act and registered in England with company number 871.  The address of the registered office is 5 New Street Square, London, EC4A 3TW.

 

The financial statements of the Group and the Company have been prepared in accordance with United Kingdom adopted International Accounting Standards in conformity with the requirements of the Companies Act 2006.  The financial statements are presented in Sterling, which is also the Group's functional currency.  The financial statements have been prepared on a historical cost basis, except for the following:

§ certain financial assets and liabilities are measured at fair value; and

§ assets held for sale are measured at fair value less costs to sell.

 

There were no new accounting standards, which were effective for periods beginning 1 January 2021 adopted during the year that would have had a material impact on the Group's results.

 

The Group has sufficient financial resources and ongoing investment management contracts. As a consequence, the Directors believe that the Group is well placed to manage its business risks successfully. The Directors have a reasonable expectation, after performing downside scenario stress tests, that the Group has adequate resources to continue in operational existence for the foreseeable future. Downside scenario stress tests included a material reduction in revenues from reducing net asset values of the funds managed by the Group as well as reviews of variable costs and discretionary investment. Whilst Brexit and COVID-19 have impacted the environment in which the Group operates they have not had a material impact on the Group's resources. The downside scenarios also reviewed the revolving credit facility covenants, which were not breached as the revolving credit facility was undrawn at the year end. Thus, the Directors continue to adopt the going concern basis of accounting in preparing the financial statements.

 

  (b)  Basis of consolidation

Subsidiaries

Where the Company has control over an investee, it is classified as a subsidiary. The Company controls an investee if all three of the following elements are present: power over the investee; exposure to variable returns from the investee; and the ability of the investor to use its power to affect those variable returns. Control is reassessed whenever facts and circumstances indicate that there may be a change in any of these elements of control. The consolidated financial statements incorporate the financial statements of the Company and its subsidiary undertakings made up to the year end as if they formed a single entity. All intra-group transactions, balances, income and expenses are eliminated on consolidation. The acquisition method of accounting is used to account for business combinations by the Group.  Refer to Note (r) iv) for further details on whether the Group controls funds that it also manages.  At the Company level investments in subsidiaries are carried at cost less impairment.

 

Associates

Where the Group has significant influence, it has the power over (but not control of) the financial and operating policy decisions of another entity, it is classified as an associate. This is typically where the Group holds over 20% of the voting shares in the entity.  Associates are initially recognised in the Group Statement of Financial Position at cost. Subsequently, associates are accounted for using the equity method, where the Group's share of post-acquisition profits and losses and other comprehensive income is recognised in the Group Statement of Comprehensive Income.  Dividends received or receivable from associates are recognised as a reduction in the carrying amount of the investment.

 

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

 

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

 

(c)  Presentation of Statement of Comprehensive Income

As permitted by Section 408 of the Companies Act 2006, the Company has not presented its own Statement of Comprehensive Income. Details of the Company's results for the year are set out in Note 30, the loss for the year being £1,695,000 (2020: £1,771,000).

 

(d) Segment reporting

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

 

The Group's reportable segments, which are those reported to the Board are Real Assets, Strategic Equity and Central.  The Real Assets division includes Forestry, New Energy and Sustainable Infrastructure and Real Estate, and the Strategic Equity division includes Public and Private Equity.

 

(e)   Revenue recognition

The fixed consideration element of asset management contracts is measured at the fair value of the consideration received or receivable, is stated net of value added tax and is earned within the United Kingdom. The fixed consideration element of asset management contracts is recognised evenly over the contracted period, as the contracts require the Group to perform an indeterminate number of individual asset management services over the duration of the contract. Typically, the asset management fees are based on a fixed percentage of the net asset values of the funds managed or committed capital. Asset management income also includes catch-up management fees on final close of limited partnership funds, directors and advisory fees and fundraising fees.

 

Catch-up management fees or equalisation fees are calculated as the management fee payable from the date of commitment to the fund as if an investor had joined the fund at inception of the fund and are typically calculated on the investor's commitments to the limited partnership at the appropriate management fee or priority profit share.

 

Performance fees are recognised as revenue only to the extent that it is highly probable that a significant reversal in the amount of cumulative revenue recognised will not occur. Performance fees are payable when a certain hurdle rate has been achieved on a specific date, typically an NAV amount on the year end reporting date of the specific fund. The potential for the NAV to decrease from a reporting period end to the measurement date means that the performance fee is generally only recognised when the measures on which it is based have finally been determined. Cash payments in relation to fixed and variable revenues earned are generally received shortly after the relevant quarter end.

 

Fundraising fees are earned by the Group for providing fund raising services, typically to the VCTs. This includes promoting the fund raise, legal documentation and other administrative tasks of executing the fund raise. Fundraising fees are typically paid on a percentage of the funds raised, i.e. equity invested into the fund.

 

The costs associated with fund raising, distribution and rebates to investors as part of a fund raising are recognised as they are incurred or over the service period provided and are presented as part of the net core income disclosure. These costs are incurred with the Group acting as principal.

 

Other revenue recognition

(i)  Dividend and interest income

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

 

(ii)  Other income

Other income earned by the Group is recognised to the extent that it is probable that the economic benefits will flow to the Group and that revenue can be reliably measured in line with any contractual arrangements in place. This includes non-core operating income which relates to income earned from property services, which are not considered core asset management services to the Group.

 

(f)  Expenses

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

 

(g) Property, plant and equipment

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

 

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

 

The depreciable amount of all property, plant and equipment is depreciated on a straight-line basis over their estimated useful lives to the Group commencing from the time the asset is held ready for use, and are depreciated at the following rates:

  Office equipment   25%

  Motor vehicles  25%

  Leasehold property  10%

  Right of use assets  over the lease term

 

(h) Taxation

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

 

The tax currently payable is based on taxable profit for the year. Taxable profit differs from profit before tax as reported in the Statement of Comprehensive Income because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are not taxable or deductible. The Group's liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the Statement of Financial Position date.

 

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

 

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

 

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

 

(i)  Leases

A lease is defined as a contract that conveys the right to control the use of an identified asset for a period of time in exchange for consideration. At the commencement date of a lease a right of use asset and a lease liability are recognised in the financial statements.

 

The lease liability is initially measured at the present value of expected future lease payments discounted at the interest rate implicit in the lease or, if that rate cannot be determined, the lessee's incremental borrowing rate. Subsequently the lease liability decreases by the lease payments made, offset by interest on the liability, and may be remeasured to reflect any reassessment of expected payments or to reflect any lease modifications.

 

The right of use asset is initially measured at the amount of the initial lease liability plus: any lease payments made on or before the commencement date less incentives received; any incremental costs of obtaining the lease; and, if any, the costs of decommissioning the asset and any restoration work to return the asset to the condition required under the terms of the lease.

 

Subsequently the right of use asset is valued using the cost model. The asset is amortised on a straight-line basis over the expected term of the lease, adjusted for any remeasurement of the lease liability, and is shown net of the accumulated depreciation and any impairment provisions.

 

Leases for low value assets and short-term leases are expensed to operating profit on a straight-line basis over the term of the lease.

 

(j)  Investments

In line with IFRS 9: Financial Instruments, financial assets designated as at fair value through profit and loss (FVTPL) at inception are those that are managed and whose performance is evaluated on a fair value basis. Information about these financial assets is provided internally on a fair value basis to the Group's key management. The equity investments which do not meet the definitions of an associate or subsidiary remain held at fair value through profit and loss.

 

(i)   Assets held for sale

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

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

 

An impairment loss is recognised for any initial or subsequent write-down of the asset (or disposal group) to fair value less costs to sell.  A gain is recognised for any subsequent increases in fair value less costs to sell of an asset (or disposal group), but not in excess of any cumulative impairment loss previously recognised.  A gain or loss not previously recognised by the date of the sale of the non-current asset (or disposal group) is recognised at the date of derecognition.

 

Non-current assets (including those that are part of a disposal group) are not depreciated or amortised while they are classified as held for sale. Interest and other expenses attributable to the liabilities of a disposal group classified as held for sale continue to be recognised.

 

(ii)   Securities

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

 

(iii)  Loans and receivables

Unquoted loan stock, loan receivables in development projects and the deferred receivable are all classified at amortised cost under IFRS 9 reflecting their held to collect business model. Unquoted loan stock is classified as loans and receivables in accordance with IFRS 9 if it meets the business model and cash characteristics tests. The business model and cash characteristics tests require the objective of owning the financial asset to collect the contractual cash flows of interest and principal over the life of the asset, rather than selling prior to contractual maturity. The financial assets are held at amortised cost, less any loss allowance, which is measured using the expected credit loss impairment model. This assesses the movements in both the amortised cost relating to the interest income and in respect of loss allowances and these are reflected in the Statement of Comprehensive Income. 

 

(k)  Exceptional items

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

 

(l)  Intangible assets

(i)   Goodwill

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

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

(ii) Management contracts and client relationships

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

 

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

§ Client relationships arising on acquisition - five years

§ Management contracts arising on acquisition - one to 25 years depending on the specific management contract details

 

(iii) Website and IT platform development

Costs associated with the development of the Group's website and IT platform are capitalised in the Statement of Financial Position and are amortised over the estimated useful life of four years.

 

(iv) Brands

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

 

They are recorded initially at fair value and then amortised over their useful lives. The fair value at the date of acquisition is calculated using discounted cash flow methodology and represents the valuation of the net residual income stream arising from the brands at the date of acquisition. The brands are included in the Statement of Financial Position as intangible assets. Intangible assets with a finite life have no residual value and are amortised on a straight-line basis over their expected useful lives of five years.

 

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

 

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

 

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

 

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

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

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

 

(m) Financial instruments

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

 

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

 

(i)   Trade and other receivables

Receivables are short term in nature. Trade and other receivables are recognised and carried at the lower of their invoiced value and recoverable amount. Expected credit losses are recognised in respect of each trade receivable and remeasured at each report date based on the expected credit losses at that time.  The expected credit losses are estimated using a provision matrix by reference to past default experience and an analysis of the debtor's current financial position, adjusted for factors that are specific to the debtor, general economic conditions of the industry and an assessment of both the current as well as the forecast direction of conditions at the reporting date.

 

(ii)  Cash and cash equivalents

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

 

(iii) Non-current receivables

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

 

(iv) Dividends payable

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

 

(v)  Bank borrowings

Bank borrowings are initially recognised at fair value, net of transaction costs incurred.  Bank borrowings are subsequently measured at amortised cost.  Any difference between the proceeds (net of transaction costs) and the redemption amount is recognised in profit or loss over the period of the borrowings using the effective interest rate method.  Fees paid on the establishment of loan facilities are recognised as transaction costs of the loan to the extent that it is probable that some or all of the facility will be drawn down.  In this case, the fee is deferred until the draw-down occurs.  To the extent there is no evidence that it is probable that some or all of the facility will be drawn down, the fee is capitalised as a prepayment for liquidity services and amortised over the period of the facility to which it relates.

 

(vi) Trade and other payables

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

 

(vii) Borrowing costs

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

 

(viii) Contingent consideration

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

 

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

 

(n) Pensions

The Group operates defined contribution pension schemes where payments to such schemes for employees are charged against profits in the year in which they are incurred.

 

(o)   Share-based payments

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

 

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

 

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

 

(p)   Non-controlling interests

Non-controlling interests in the net assets of consolidated subsidiaries are identified separately from the Group's equity therein in accordance with IFRS 10. Non-controlling interests consist of the amount of those interests at the date of the original business combination and for acquisitions post 3 October 2010 following adoption of IAS 27 Consolidated and Separate Financial Statements (Revised 2008), the non-controlling interests' share of changes in equity since the date of the combination.

 

(q) Business combinations

  The Group recognises business combinations when it considers that it has obtained control over a business, which could be an entity or separate business within an entity (for example acquiring management contracts and hiring the team to service those contracts). The fair value of the assets acquired, and the liabilities assumed from the business combination are assessed at acquisition. The fair value of the consideration paid to the sellers of the business is assessed, with particular reference to the classification of payments to employees that could be considered remuneration rather than consideration for a business.

 

(r)  Critical accounting estimates and judgements

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

 

(i)  revenue recognition, performance fees, management fees and fund-raising fees

(ii)  treatment of battery storage development companies

(iii)  accounting for investment in associates - Gresham House Strategic plc (GHS - now known as Rockwood Realisation plc)

(iv)  consolidation assessment of funds managed and controlled by the Group

(v)  impairment review for Goodwill and Management Contracts from previous acquisitions

(vi)  valuation of contingent consideration

(vii)  Mobeus VCT business acquisition - valuation of management contracts and brand 

(viii)  Appian Asset management Limited business acquisition - valuation of management contracts 

 

(i)  Revenue recognition, performance, management and fundraising fees

The revenue recognition of the Group is driven by asset management fees, which are recognised in line with the investment management or advisory agreements in place with the appropriate funds. These are typically based on the committed capital of Limited Partnership funds, or Net Asset Values (NAV) for listed vehicles managed or advised by the Group. The NAV is typically the last audited or publicly available NAV announced by the Board of these companies and is therefore independently approved. As a result there is limited uncertainty in the amount of revenue to be recognised.

 

Limited partnerships and other fund management fees are typically based on committed capital, or an independent valuation where appropriate. Where there is an interim close on a Limited Partnership, the equalisation process for new Limited Partners involves catch-up management fees or priority profit shares back to inception of the fund. In this instance the judgement relates to the assessment of service period, which represents past service provision for management fees as if the new Limited Partner joined at inception.

 

Performance fees are recognised only when the Group is entitled to receive the performance fee per the management contract. This is on achievement of the hurdle rate as set out in the management or advisory agreements and the outcome is known as it is based on the audited NAV of the fund. Performance fees were recognised and paid by GHS plc and Baronsmead VCT plc in the year.

 

Fundraising fees are recognised as a percentage of funds raised, with fundraising being the key performance obligation. The fundraising relates to new share offers in 2021 by the VCTs managed by the Group. Judgement is applied at the end of the period, should the issuance date for new investors fall after the period end. The commitments received by the receiving agent are used to estimate the amount of funds raised and consequently the amount of fundraising fee to be recognised at the period end. This is confirmed post period through the share allotment process run by the registrar of the VCTs.

 

(ii)   Treatment of battery storage development companies

The Group has invested in the development of battery storage projects (DevCo Projects), which are part of the exclusive pipeline to be sold to Gresham House Energy Storage Fund plc (GRID) when operational. The DevCo Projects are held in separate SPVs, which the Group entity Devco Limited owns between 60-100% of the equity in, and the Group has also lent funds for the development of the projects.

 

There are five key considerations in the accounting treatment of the development companies:

a)  Control (IFRS 10) - Devco Limited holds the majority of the equity in the DevCo Projects and has also loaned capital to fund the development of the DevCo Projects. Devco Limited is considered in control of the DevCo Projects and therefore has consolidated them in the Group financial statements.

b)  Associates (IAS 28) - one of the DevCo Projects (Biggerbrook) was accounted for as an associate in the prior year as Devco Limited held only 24% of the equity and was not in a controlling position.

c)  Classification of the assets in each DevCo Project - the SPVs are developing battery storage facilities which are classified as non-current assets under development until these assets become operational. The Group has therefore classified these as non-current assets, akin to property, plant and equipment .

d)  Assets held for sale (IFRS 5) and loss of control - the sale of the DevCo Projects (Byers Brae and Enderby) during the period has been treated as a loss of control transaction under IFRS 10 resulting in a gain on sale being presented net in the Statement of Comprehensive Income. It is expected that the sale process will complete within a six-month time frame; as such, it has been deemed appropriate to treat this DevCo Project as a disposal group held for sale under IFRS 5.

e)  Borrowing costs (IAS 23) - the DevCo Projects have interest payments relating to the amounts lent by GRID to fund the acquisition of the battery assets at the project company level. The DevCo Projects have capitalised finance costs per IAS 23 Borrowing Costs as the characteristics of the development of the projects (such as not generating revenues until operational, loans being procured for the sole purpose of developing the projects and the projects taking a long time to get ready for intended sale) permit this. The capitalisation rate used was the weighted average of the borrowing costs applicable to all relevant borrowings outstanding during 2021.

 

(iii) Accounting for investment in associates - Gresham House Strategic plc (GHS ), Environment Bank Limited (EBL ) and Noriker Power Limited (Noriker)

The Board remains satisfied that the Group did not exercise control over GHS, based on the Group's stake and the fact that the management contract with GHS was terminated by the Board of GHS on 11 October 2021, thereby reducing any influence GHAM has over GHS. 

 

Nonetheless, the Board has concluded that the Group does exercise significant influence over GHS due to its 23% equity stake. As a result of this, it remains appropriate to account for the Group's stake in GHS as an associate of the Group. The stake in GHS was acquired in August 2015, however, the requirement to account for GHS as an associate arose with effect from 23 November 2015, the date the Company ceased being an investing company and became an operating company which resulted in a reassessment of the accounting for all such equity investments. The Board concluded that the Company continues to have significant influence over GHS. 

 

Noriker

On 8 June 2018, the Group acquired a 28% investment in Noriker, the battery storage developer, which was fully sold in December 2021. The Group has treated this as the disposal of an associate in the year. 

 

EBL

On 7 May 2021, the Group acquired a 50% investment in Environment Bank Limited (EBL), the habitat bank development company. The Group has also entered into an option agreement with Gresham House BSI Infrastructure LP and Gresham House British Sustainable Infrastructure Fund II LP (BSIF funds) for the BSIF funds to acquire 25% from the Group. The Group does not have the ability to control the board of EBL through majority voting rights or the ability to appoint or remove the majority of the board of directors. The Director's assessment is that the Group can exercise significant influence over EBL and has treated it as an associate.

 

(iv)  Consolidation assessment of funds managed and controlled by the Group

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

 

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

 

Fund

Manager/

adviser

Removal rights of investors

Remuneration basis

Gresham House holding

Agent/

principal

Accounting treatment

Rockwood Realisation (formerly GHS)

No

Substantive

n/a

23%

Agent

Associate

EBL

No

n/a

n/a

50%

Agent

Associate

GHF FF LP

Yes

No

Market norm

71%

Principal

Consolidate

GHFF LP

Yes

Substantive

Market norm

0%

Agent

No consolidation

GRID

Yes

Substantive

Market norm

-

Agent

No consolidation

Residential Secured Income plc

Yes

Substantive

Market norm

<1%

Agent

No consolidation

BSIF

Yes

Substantive

Market norm

<1%

Agent

No consolidation

BSIF II LP

Yes

Substantive

Market norm

<1%

Agent

No consolidation

SPE LP

Yes

Substantive

Market norm

0%

Agent

No consolidation

Baronsmead VCTs

Yes

Substantive

Market norm

0%

Agent

No consolidation

Mobeus VCTs

Yes

Substantive

Market norm

0%

Agent

No consolidation

Strategic Equity Capital plc

Yes

Substantive

Market norm

<1%

Agent

No consolidation

Micro Cap Fund

Yes

Substantive

Market norm

0%

Agent

No consolidation

Multi Cap Income Fund

Yes

Substantive

Market norm

0%

Agent

No consolidation

Gresham House Renewable Energy VCTs

Yes

Substantive

Market norm

0%

Agent

No consolidation

Forestry LP Funds

Yes

Substantive

Market norm

0%

Agent

No consolidation

New Energy LP Funds

Yes

Substantive

Market norm

0%

Agent

No consolidation

 

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

 

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

 

The Directors' assessment of GHF FF LP, however, indicates that it is in a controlling position with a 71% holding and therefore should consolidate this in the Group financial statements.

 

The acquisition of TradeRisks Limited (TradeRisks) in March 2020 included the acquisition of shares in Residential Secured Income plc (ReSI plc), which is now managed by the Group. At the end of 2021 the Group held less than 1%% in ReSI plc. The Directors' assessment indicates that GHAM is acting as agent for ReSI plc and therefore should not consolidate ReSI plc.

 

Gresham House Energy Storage Fund plc (GRID) is managed by GHAM and the Company sold its direct investment in GRID in 2021. The assessment of whether GHAM is acting as agent or principal requires assessing the other entities and individuals that are connected to Gresham House and their investment in GRID. BSIF has a 5% investment in GRID, however the assessment of whether BSIF is controlled by GHAM concluded that GHAM does not control BSIF and therefore should not be included in the proportion of GRID that is under the control of GHAM.

 

Gresham House British Strategic Investment Fund (BSIF Strategy), which comprises two sub-funds, Gresham House BSI Infrastructure LP and Gresham House BSI Housing LP, is managed by GHAM. The manager is exposed to variable returns through its management fee and has committed £0.5 million to each sub-fund, making up less than 1.0% of committed capital. While exposed to the variable returns as an investor, this is not considered a material exposure. The limited partners of the BSIF Strategy also have the ability to remove the manager without cause, one year after the final close of the BSIF sub-funds with a special resolution. The Directors' assessment of this right and the fact that the Company is not invested in the BSIF Strategy indicates that the manager is acting as agent for the BSIF Strategy and therefore should not consolidate the BSIF Strategy.

 

BSIF II LP has the same assessment as BSIF LP, with the manager acting as agent and therefore should not consolidate BSIF II LP.

 

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

 

The remaining funds of the Baronsmead VCTs, Mobeus VCTs, Gresham House Renewable Energy VCTs, the LF Gresham House UK Micro Cap Fund (Micro Cap Fund), the LF Gresham House UK Multi Cap Income Fund (Multi Cap Income Fund) and Strategic Equity Capital plc (SEC) are managed by GHAM, however are not invested in by the Group (or have less than 1% holding). The Board has therefore concluded that the Group is acting as agent and therefore should not consolidate these funds.

 

(v) Impairment review for Goodwill and Management Contracts from previous acquisitions

Per IAS 36 Impairment of Assets, the potential impairment of Goodwill and Management Contracts generated by prior acquisitions is reviewed. The WACC rates used for discounting were derived using a CAPM model, accounting for the different risk profile of acquired contracts. No terminal value was assigned for the review.

 

(a) Goodwill impairment testing

The potential value of the acquired cash generating units based on discounted cash flow of potential future performance of the acquired contracts was assessed. The cash generating units are defined as the collection of management contracts generating revenues which have a clearly allocated cost base and relate to the businesses that have been acquired by the Group. The cash generating units are the businesses formerly known as Aitchesse, Hazel Capital, FIM, Livingbridge VCT business, Mobeus VCT business, TradeRisks and Appian Asset Management. It has been assumed that the cash generating unit will continue to grow in line with reasonable assumptions based on historic assumptions and the business model. The revenues and costs were modelled using a discounted cash flow model, with the estimated value compared to the goodwill on the Statement of Financial Position and other intangible assets and acquired assets. Where the value estimated less other intangible and tangible assets is greater than the goodwill amount on the Statement of Financial Position, no impairment is recognised. There were no indications of impairment against all goodwill balances of the Group as at 31 December 2021 (2020: No impairment).

 

(b) Management Contracts impairment review

The management contacts were revalued using a discounted cash flow method to assess the remaining value of the contract to the end of its expected life. This is assumed with no growth from fund raising and costs assumed appropriate in a no growth business. The valuation was compared to the carrying value of the management contracts as at 31 December 2021 and there were no indications of impairment.

 

(vi) Valuation of contingent consideration

The fair value of contingent consideration payable to the sellers of Livingbridge VC, TradeRisks, Mobeus VCT and Appian businesses has been estimated with reference to the contractual requirements as at 31 December 2021.  

 

The remaining Livingbridge VC contingent consideration is driven by the hurdle to deliver revenues of between £30.9 million and £37.2 million in the three years to 31 December 2021. The revenues delivered over the period are in excess of the £37.2 million and therefore the maximum payout of £2.5 million will be made in March 2022.

The TradeRisks contingent consideration can total a maximum of £6.0 million, payable in cash to the sellers based on the following:

§ 0.5% of funds raised payable in three years, with maximum amount capped at £3.0 million;

§ Any realised synergies payable in three years, capped at £1.0 million; and

§ £2.0 million payable within six months post-completion for any inventory true-up.

 

The fair value of the contingent consideration has been estimated using estimated outcomes, the probability of those outcomes and discounting this at 7.5%. This is cash settled and will therefore be recognised as a liability on the balance sheet and the fair value assessed each reporting period.

 

The Mobeus VCT business contingent consideration is based on the Mobeus VCTs maintaining the VCT investment advisory agreements with Gresham House over the three years post acquisition (maximum £8.9 million payable as deferred consideration) and achieving certain AUM growth targets over the three-year period (maximum £0.8 million). The contingent consideration for maintaining the VCT contracts has been considered a reasonable likelihood and this amount has therefore been discounted for the time value of money. The contingent consideration for achieving the AUM targets has been probability weighted and discounted using the appropriate WACC. 

   

The Appian deferred consideration is driven by applying a multiple of 1.4x to the probability weighted earnings to be delivered in the year to 30 June 2023 and 30 June 2024. This outcome could range from zero deferred consideration up to the estimated €6.4 million.

 

(vii)  Mobeus VCT business acquisition - valuation of management contracts and brand 

The acquisition of the Mobeus VCT business in October 2021 is classified as a business combination under IFRS 3, Business Combinations. The acquisition involved the novation of the investment advisory agreements for the four Mobeus VCTs and a brand licence agreement and the transfer in of the team into the Group.

 

The investment advisory agreements for the four VCTs are therefore required to be fair valued at acquisition. This has been valued using a discounted cash flow model, with assumptions regarding length of contracts of 7.7 years, appropriate costs and appropriate discount rate applied. Contributory asset charges have also been applied to determine the fair value of the management contract. Deferred tax liabilities have also been recognised to reflect the temporary timing differences as the management contracts are amortised over their useful lives.

 

The brand licence agreement allows the Group t o use the Mobeus brand name on the VCTs for up to four years from acquisition. This has been fair valued using the royalty relief method and will be amortised over the four-year period. 

 

(viii)  Appian Asset Management Limited business acquisition - valuation of management contracts 

The acquisition of Appian Asset Management Limited in June 2021 is classified as a business combination under IFRS 3, Business Combinations. The acquisition involved the purchase of 100% of the share capital of Appian Asset Management Limited, which includes the management contracts of a number of funds.

 

The management agreements are therefore required to be fair valued at acquisition. This has been valued using a discounted cash flow model, with assumptions regarding length of contract, appropriate costs and appropriate discount rate applied. Contributory asset charges have also been applied to determine the fair value of the management contract. Deferred tax liabilities have also been recognised to reflect the temporary timing differences as the management contracts are amortised over their useful lives.

 

(s) Foreign currency

  Assets and liabilities in foreign currencies are translated into Sterling at the rates of exchange ruling at the Statement of Financial Position date.  Transactions in foreign currencies are translated into Sterling at the rate of exchange ruling at the date of transaction. Exchange differences are taken into account in arriving at the operating result. 

 

Exchange gains and losses arising on the retranslation of monetary financial assets are treated as a separate component of the change in fair value and recognised in profit or loss. Exchange gains and losses on non-monetary OCI financial assets form part of the overall gain or loss in OCI recognised in respect of that financial instrument.

 

On consolidation, the results of overseas operations are translated into Sterling at rates approximating to those ruling when the transactions took place. All assets and liabilities of overseas operations, including goodwill arising on the acquisition of those operations, are translated at the rate ruling at the reporting date. Exchange differences arising on translating the opening net assets at opening rate and the results of overseas operations at actual rate are recognised in other comprehensive income and accumulated in the foreign exchange reserve.

 

(t) Treasury shares

Consideration paid/received for the purchase/sale of treasury shares is recognised directly in equity. The cost of treasury shares held is presented as a separate reserve (the "treasury share reserve"). Any excess of the consideration received on the sale of treasury shares over the weighted average cost of the shares sold is credited to retained earnings.

 

(u) Gresham House Employee Benefit Trust (GH EBT)

As the Company is deemed to have control of the GH EBT, it is treated as a subsidiary and consolidated for the purposes of the Consolidated Financial Statements. The GH EBT's assets (other than investments in the Company's shares), liabilities, income and expenses are included on a line-by-line basis in the Consolidated Financial Statements. The GH EBT's investment in the Company's shares is deducted from equity in the consolidated statement of financial position as if they were treasury shares.

 

 

Notes to the accounts

 

1  Income

 

 

 

 

 

 

 

 

2021

 

2020

 

 

 

 

 

 

 

£'000

 

£'000

Asset management income

 

 

 

 

 

 

 

 

 

Asset management income

 

 

 

 

 

 

62,162

 

40,304

 

 

 

 

 

 

 

62,162

 

40,304

Dividend and interest income

 

 

 

 

 

 

 

 

 

Dividend income - listed UK

 

 

 

 

 

 

173

 

316

Interest receivable: banks

 

 

 

 

 

 

8

 

69

  Other

 

 

 

 

 

 

409

 

169

 

 

 

 

 

 

 

590

 

554

Other operating income

 

 

 

 

 

 

 

 

 

Other income

 

 

 

 

 

 

15

 

51

DevCo income**

 

 

 

 

 

 

293

 

1,027

Non-core operating income*

 

 

 

 

 

 

1,140

 

-

 

 

 

 

 

 

 

1,448

 

1,078

Performance fees

 

 

 

 

 

 

 

 

 

Performance fees

 

 

 

 

 

 

6,163

 

-

 

 

 

 

 

 

 

6,163

 

-

 

 

 

 

 

 

 

 

 

 

Total income

 

 

 

 

 

 

70,363

 

41,936

 

Total income comprises:

 

 

 

 

 

 

 

 

 

Asset management income

 

 

 

 

 

 

62,162

 

40,304

Dividends

 

 

 

 

 

 

173

 

316

Interest

 

 

 

 

 

 

417

 

238

Other operating income

 

 

 

 

 

 

308

 

1,078

Non-core operating income*

 

 

 

 

 

 

1,140

 

-

Performance fees

 

 

 

 

 

 

6,163

 

-

 

 

 

 

 

 

 

70,363

 

41,936

 

* Non-core operating income relates to income earned from Residential Property Management Limited for property services, which are not considered core asset management services to the Group.

 

** DevCo income represents the net operating income in the year from battery storage projects prior to projects being sold to GRID.

 

Gross core revenue as disclosed in the adjusted operating profit metric:

 

 

 

 

 

 

 

2021

 

2020

 

 

 

 

 

 

 

£'000

 

£'000

Asset management income - core operations

 

 

 

 

 

 

62,162

 

40,304

Dividend and interest income

 

 

 

 

 

 

590

 

554

Other operating income

 

 

 

 

 

 

308

 

1,078

Dividend income from associates

 

 

 

 

 

 

285

 

202

Gross core revenue

 

 

 

 

 

 

63,345

 

42,138

 

 

2   Segmental reporting

 

The Board and management team of the Company have organised and reported the performance of the business by Real Assets, Strategic Equity and Central segments. These have evolved as the business has grown to become a specialist asset manager.

 

Real Assets includes the Forestry, New Energy & Sustainable Infrastructure and Real Estate divisions.

 

Strategic Equity includes the Public Equity and Private Equity divisions.

 

Central includes the general income created and costs incurred by the central functions of the business that are not directly linked to Real Assets or Strategic Equity.

 

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

 

For the year ended 31 December 2021

 

 

Real Assets

 

Strategic Equity

 

Central

 

Consolidated

Gross core income

 

 

£'000

 

£'000

 

£'000

 

£'000

Asset management income

 

 

38,947

 

23,215

 

-

 

62,162

Interest income

 

 

406

 

7

 

4

 

417

Dividend income

 

 

146

 

27

 

-

 

173

Other operating income

 

 

293

 

-

 

15

 

308

Dividend income from associates*

 

 

160

 

125

 

-

 

285

Rebates, distribution costs and fundraising costs

 

 

(142)

 

(1,594)

 

-

 

(1,736)

Net core income

 

 

39,810

 

21,780

 

19

 

61,609

Segment expenses

 

 

(17,562)

 

(5,644)

 

(17,922)

 

(41,128)

Finance costs

 

 

-

 

-

 

(311)

 

(311)

Adjusted operating profit/(loss)

 

 

22,248

 

16,136

 

(18,214)

 

20,170

Net performance fees

 

 

-

 

1,714

 

-

 

1,714

Net DevCo gains

 

 

1,773

 

-

 

-

 

1,773

Net non-core activities

 

 

38

 

-

 

-

 

38

Adjusted operating profit including performance fees and realised gains on investments

 

 

24,059

 

17,850

 

(18,214)

 

23,695

Exceptional items

 

 

 

 

 

 

 

 

(3,215)

Depreciation and amortisation

 

 

 

 

 

 

 

 

(9,475)

Loss on disposal of property, plant and equipment

 

 

 

 

 

 

 

 

-

Share of associate's profit/(loss)*

 

 

 

 

 

 

 

 

4,670

Profit on disposal of associate

 

 

 

 

 

 

 

 

461

Share-based payments relating to acquisitions

 

 

 

 

 

 

 

 

(615)

Acquisition related remuneration

 

 

 

 

 

 

 

 

(452)

Profits on investments at fair value

 

 

 

 

 

 

 

 

2,910

Movement in fair value of contingent consideration

 

 

 

 

 

 

 

 

(1,659)

Profit from continuing operations

 

 

 

 

 

 

 

 

16,320

*Share of associate's profit of £4,670,000 excludes dividend income received in the year of £285,000

 

For the year ended 31 December 2020

 

 

Real Assets

 

Strategic Equity

 

Central

 

Consolidated

Gross core income

 

 

£'000

 

£'000

 

£'000

 

£'000

Asset management income

 

 

26,198

 

14,106

 

-

 

40,304

Interest income

 

 

157

 

19

 

62

 

238

Dividend income

 

 

314

 

2

 

-

 

316

Other operating income

 

 

1,077

 

-

 

1

 

1,078

Dividend income from associates*

 

 

-

 

202

 

-

 

202

Rebates, distribution costs and fundraising costs

 

 

(190)

 

(1,174)

 

-

 

(1,364)

Net core income

 

 

27,556

 

13,155

 

63

 

40,774

Segment expenses

 

 

(12,924)

 

(6,433)

 

(9,333)

 

(28,690)

Finance costs

 

 

-

 

-

 

(25)

 

(25)

Adjusted operating profit/(loss)

 

 

14,632

 

6,722

 

(9,295)

 

12,059

Net realised gains on investments

 

 

1,008

 

-

 

-

 

1,008

Adjusted operating profit including performance fees and realised gains on investments

 

 

15,640

 

6,722

 

(9,295)

 

13,067

Exceptional items

 

 

 

 

 

 

 

 

(1,775)

Depreciation and amortisation

 

 

 

 

 

 

 

 

(8,904)

Loss on disposal of property, plant and equipment

 

 

 

 

 

 

 

 

(27)

Share of associate's profit/(loss)*

 

 

 

 

 

 

 

 

(44)

Share-based payments relating to acquisitions

 

 

 

 

 

 

 

 

(593)

Profits on investments at fair value

 

 

 

 

 

 

 

 

1,117

Movement in fair value of contingent consideration

 

 

 

 

 

 

 

 

(1,163)

Movement in fair value of deferred receivable

 

 

 

 

 

 

 

 

224

Profit from continuing operations

 

 

 

 

 

 

 

 

1,902

 

*Share of associate's profit/(loss) of £44,000 excludes dividend income received in the year of £202,000.

 

During the year the Group had no customers accounting for more than 10% of the Group's revenue (2020: one customer, totalling £4,631,000).

 

Other information:

 

 

31 December 2021

Real Assets

 

Strategic Equity

 

Central

 

Consolidated

 

£'000

 

£'000

 

£'000

 

£'000

Segment assets

75,856

 

78,460

 

66,001

 

220,317

Segment liabilities

(20,909)

 

(22,613)

 

(29,258)

 

(72,780)

 

54,947

 

55,847

 

36,743

 

147,537

Capital expenditure

1

 

54

 

2,985

 

3,040

Depreciation and amortisation

2,828

 

5,549

 

1,098

 

9,475

Non-cash expenses other than depreciation

-

 

-

 

3,788

 

3,788

Goodwill included within segment assets

17,552

 

31,244

 

-

 

48,794

 

 

 

31 December 2020

Real Assets

 

Strategic Equity

 

Central

 

Consolidated

 

£'000

 

£'000

 

£'000

 

£'000

Segment assets

50,372

 

36,082

 

40,652

 

127,106

Segment liabilities

(8,185)

 

(1,585)

 

(20,058)

 

(29,828)

 

42,187

 

34,497

 

20,594

 

97,278

Capital expenditure

-

 

-

 

1,215

 

1,215

Depreciation and amortisation

3,231

 

4,572

 

1,128

 

8,931

Non-cash expenses other than depreciation

-

 

-

 

2,268

 

2,268

Goodwill included within segment assets

17,551

 

12,167

 

-

 

29,718

 

 

3   Operating costs

 

Administrative overheads comprise the following:

 

 

 

2021

 

2020

 

 

 

Core activities

 

Non-core activities

 

Total

 

Total

 

 

 

£'000

 

£'000

 

£'000

 

£'000

Directors' emoluments (excluding benefits in kind and share-based payments)

 

 

2,982

 

-

 

2,982

 

1,898

Auditor's remuneration*

 

 

360

 

-

 

360

 

246

Amortisation

 

 

8,516

 

-

 

8,516

 

8,033

Depreciation

 

 

950

 

9

 

959

 

871

Loss on disposal of assets

 

 

-

 

-

 

-

 

27

Wages and salaries

 

 

26,713

 

644

 

27,357

 

17,402

Social security costs

 

 

4,757

 

60

 

4,817

 

3,575

Share-based payments

 

 

3,788

 

-

 

3,788

 

2,266

Other operating costs

 

 

10,939

 

398

 

11,337

 

7,734

 

 

 

59,005

 

1,111

 

60,116

 

42,052

Staff costs (including Directors' emoluments) were:

 

 

 

 

 

 

 

 

 

Wages, salaries and fees

 

 

29,631

 

644

 

30,275

 

19,237

Social security costs

 

 

4,757

 

60

 

4,817

 

3,575

Pension costs

 

 

1,008

 

30

 

1,038

 

716

 

 

 

35,396

 

734

 

36,130

 

23,528

 

 

* A more detailed analysis of auditor's remuneration is as follows:

 

2021

 

2020

 

 

 

 

 

 

 

£'000

 

£'000

Audit fees - Company and consolidated financial statements

 

40

 

40

Audit fees - audit of the Company's subsidiaries

 

 

 

 

 

 

298

 

186

Non audit services - CASS reporting to the FCA

 

 

 

 

 

 

22

 

20

 

 

 

 

 

 

 

360

 

246

 

The Audit Committee reviews the nature and extent of non-audit services to ensure that independence is maintained. 

 

The average number of persons employed by the Group, including the Executive Directors, was 173 (2020: 113), including 22 employees relating to non-core activities (2020: nil). The Company has no employees.

 

 

4   Directors' emoluments

 

The audited emoluments of the Directors are disclosed in the Remuneration Report in the 2021 Annual Report and Audited Financial Statements.

 

The Directors are considered to be the Group's only key management personnel. Employer's National Insurance contributions in respect of the Directors for the year were £505,000 (2020: £270,000).

 

 

5  Business combinations

 

a) Appian Asset Management Limited

On 29 June 2021 the Group acquired 100% of the issued share capital of Appian Asset Management Limited (Appian), a company registered in Ireland. Appian is an active asset manager with around €350 million in Assets Under Management (AUM) as at 31 December 2020. The acquisition enhances the Group's capabilities to develop existing strategies in Ireland and Europe, particularly those with a sustainability focus including Forestry, Sustainable Infrastructure, and Real Estate.  Appian was subsequently renamed Gresham House Asset Management Ireland Limited.

 

The fair value of the identifiable net assets acquired, and the consideration paid under IFRS 3 is as follows:

 

 

Net book value

 

Adjustments

Fair value

 

£'000

 

£'000

 

£'000

Property, plant and equipment

54

 

441

 

495

Cash

2,305

 

-

 

2,305

Trade and other receivables

604

 

-

 

604

Trade and other payables

(1,464)

 

(690)

 

(2,154)

Management contracts

-

 

2,231

 

2,231

Goodwill

-

 

4,044

 

4,044

Deferred tax liability

-

 

(511)

 

(511)

Total identifiable net assets

1,499

 

5,515

 

7,014

 

The adjustments relate to the recognition of management contracts and associated deferred tax, goodwill and the IFRS 16 lease asset and liability.

 

Under the terms of the acquisition agreement, the fair value of the consideration paid to the vendors of Appian was:

 

 

£'000

Cash

 

3,146

Shares - 104,168 shares in Gresham House plc valued at 940.0p per share on 29 June 2021

 

979

Total initial consideration

 

4,125

Contingent consideration

 

2,889

Total consideration

 

7,014

 

The consideration shares were admitted to trading on AIM on 5 July 2021.

 

Contingent consideration

Contingent consideration with an expected fair value of €4.6 million will be payable in cash to the sellers based on the following:

§ 1.4 times year two earnings, payable in two years. The expected fair value at acquisition was £1.1 million;

§ 1.4 times year three earnings, payable in three years. The expected fair value at acquisition was £1.4 million; and

§ up to €0.75 million payable in three years based on certain AUM and earnings targets.  The expected fair value at acquisition was £0.4 million.

 

The fair value of the contingent consideration has been estimated at the date of acquisition using estimated outcomes, the probability of those outcomes and discounting this at 13.0%. Up to 50% of the contingent consideration may be settled in Gresham House plc shares at the Company's discretion.  As such this will be recognised as a liability on the balance sheet and the fair value assessed each reporting period. The fair value at the time of acquisition was calculated as £2.9 million.  The potential undiscounted amount of all future payments that the Group could be required to make under the contingent consideration arrangement is between €nil million and €6.4 million.

 

Revenue and profits of Appian

 The actual revenues and profits that have been generated since the acquisition of Appian on 29 June 2021 to 31 December 2021 were:

 

€'000

Revenues

1,988

Profit before tax

190

 

Prior to acquisition by the Group, Appian had a 31 December year end. The results for the most recent audited reporting period prior to acquisition were to 31 December 2020. Had Appian been part of the Group for the entire reporting period the following sums would have been consolidated:

 

€'000

Revenue

3,403

Profit before tax

284

 

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 Appian acquisition is not deductible for tax purposes. 

 

Fair value

The fair value of the management contracts and customer relationships have been estimated using a discounted cash flow model. The estimated cash flows have been valued at a discount of 13.0%.

 

Acquisition costs in relation to business combinations have been classified as exceptional items (see Note 6).

 

b) Mobeus VCT business

On 1 October 2021 the Company acquired the VCT business of Mobeus Equity Partners LLP (Mobeus), a UK-based investment firm managing assets across two distinct client groups, one of which is the VCT business acquired by the Company. The acquisition of Mobeus included the novation and acquisition of investment advisory contracts for Mobeus Income & Growth VCT plc, Mobeus Income & Growth 2 VCT plc, Mobeus Income & Growth 4 VCT plc and The Income & Growth VCT plc (together, the "Mobeus VCTs"), with a combined AUM of £369 million as at March 2021, and the hiring of the Mobeus VCT team. The acquisition of Mobeus was to build out the Group's existing VCT business.

 

The fair value of the identifiable net assets acquired, and the consideration paid under IFRS 3 is as follows:

 

 

 

 

Fair value

 

 

 

 

 

£'000

Management contracts

 

 

 

 

21,115

Brand

 

 

 

 

456

Goodwill

 

 

 

 

15,118

Liabilities assumed

 

 

 

 

(514)

Deferred tax

 

 

 

 

(5,031)

Total identifiable net assets

 

 

 

 

31,144

 

Under the terms of the acquisition agreement, the fair value of the consideration paid to the vendors of Mobeus was:

 

 

£'000

Vendor placing shares - 2,197,802 shares in Gresham House plc valued at 907.0p per share on 1 October 2021

 

19,934

Consideration shares - 439,560 shares in Gresham House plc valued at 907.0p per share on 1 October 2021

 

3,986

Excess cash and net working capital

 

(514)

Total initial consideration

 

23,406

Contingent consideration

 

7,738

Total consideration

 

31,144

 

 

The vendor placing and consideration shares were admitted to trading on AIM on 1 October 2021.

 

Contingent consideration

Contingent consideration with an expected fair value of £7.7 million will be payable in cash to the sellers over a three-year period conditional on contract retention and fundraising and AUM targets. 

 

The fair value of the contingent consideration has been estimated at the date of acquisition using estimated outcomes, the probability of those outcomes and discounting this at 12.0%. As such this will be recognised as a liability on the balance sheet and the fair value assessed each reporting period.

 

The potential undiscounted amount of all future payments that the Group could be required to make under the contingent consideration arrangement is between £nil million and £12.1 million.

 

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.

 

None of the goodwill is expected to be deductible for income tax purposes.

 

Actual revenue and profits of Mobeus

The actual revenues and profits that have been generated since the acquisition of Mobeus on 1 October 2021 to 31 December 2021 were:

 

£'000

Revenues

2,588

Profit before tax

1,917

 

The disclosure of hypothetical revenues and profits of Mobeus for the year ended 31 December 2021 is not considered relevant due to the nature of the transaction. The entire Mobeus business was not acquired and there will be revenues and expenses not relevant to the business acquired.

 

Fair value

The fair value of the management contracts has been estimated using a discounted cash flow model. The estimated cash flows have been valued at a discount of 12.0%. This resulted in fair value of management contracts totalling £21,115,000  being recognised at acquisition.  The fair value of the brand has been estimated using a relief from royalty approach which resulted in a value of £456,000 being recognised at acquisition.

 

Acquisition costs in relation to business combinations have been classified as exceptional items (see Note 6).

 

c) TradeRisks Limited

On 5 March 2020 the Group acquired 100% of the issued share capital of TradeRisks Limited (TradeRisks), a company registered in England. TradeRisks is a fund management business and specialist provider of debt structuring and advisory services to the housing and social infrastructure sectors. TradeRisks' wholly owned and separately FCA regulated subsidiary, ReSI Capital Management Limited (RCML), is the manager of Residential Secure Income plc (ReSI plc) (LSE: RESI), a closed-ended investment company which seeks to deliver secured income returns to its shareholders by investing in portfolios of shared ownership, retirement and local authority housing. The management contracts for ReSI plc were acquired as part of the acquisition of TradeRisks.

 

The fair value of the identifiable net assets acquired, and the consideration paid under IFRS 3 is as follows:

 

 

 

 

 

 

Net book value

 

Adjustments

 

Fair value

 

 

 

 

 

£'000

 

£'000

 

£'000

Investments

 

 

 

 

463

 

-

 

463

Property, plant and equipment

 

 

 

 

180

 

346

 

526

Intangible fixed assets

 

 

 

 

97

 

-

 

97

Cash

 

 

 

 

1,639

 

-

 

1,639

Trade and other receivables

 

 

 

 

5,999

 

-

 

5,999

Trade and other payables

 

 

 

 

(410)

 

(346)

 

(756)

Management contracts

 

 

 

 

-

 

2,886

 

2,886

Customer relationships

 

 

 

 

-

 

263

 

263

Deferred tax liability

 

 

 

 

(16)

 

(598)

 

(614)

Total identifiable net assets

 

 

 

 

7,952

 

2,551

 

10,503

 

Under the terms of the acquisition agreement, the fair value of the consideration paid to the vendors of TradeRisks was:

 

 

 

 

 

 

 

 

 

 

£'000

Cash

 

 

 

 

 

 

 

 

9,684

Shares - 555,555 shares in Gresham House plc valued at 625p per share on 4 March 2020

 

 

 

3,472

 

Total initial consideration

 

 

 

 

 

 

 

 

13,156

Contingent consideration

 

 

 

 

 

 

 

 

3,002

Total consideration

 

 

 

 

 

 

 

 

16,158

 

The consideration shares were admitted to trading on AIM on 11 March 2020.

 

Contingent consideration

Contingent consideration totalling a maximum of £6.0 million will be payable in cash to the sellers based on the following:

§ 0.5% of funds raised payable in three years, with maximum amount capped at £3.0 million. The expected fair value at acquisition was £1.6 million;

§ any realised synergies payable in three years, capped at £1.0 million. The expected fair value at acquisition was £0.6 million; and

§ £2.0 million payable within six months post-completion for any inventory true-up. The expected fair value at acquisition was £0.8 million.  £0.6 million was settled in 2020, with £0.8 million settled during the current year.

 

The fair value of the contingent consideration has been estimated at the date of acquisition using estimated outcomes, the probability of those outcomes and discounting this at 7.5%. This is cash settled and will therefore be recognised as a liability on the balance sheet and the fair value assessed each reporting period. The fair value at the time of acquisition was calculated as £3.0 million.

 

Revenue and profits of TradeRisks

TradeRisks was acquired on 5 March 2020. The Group recognised the following amounts in respect of TradeRisks for the 43-week period ended 31 December 2020:

 

 

 

 

 

 

 

 

 

£'000

Revenue

 

 

 

 

 

 

 

 

2,535

Profit before tax

 

 

 

148

 

 

The £148,000 profit for the period of ownership reflects the impact of COVID-19 on the debt arrangement business, which delayed a number of debt advisory transactions which have since completed in 2021.

 

Prior to acquisition by the Group, TradeRisks had a 31 July year end. The results for the most recent audited reporting period prior to acquisition were to 31 July 2019:

 

 

 

 

 

 

 

 

 

£'000

Revenue

 

 

 

 

 

 

 

 

5,897

Profit before tax

 

 

 

2,187

 

 

Goodwill

Goodwill arises due to the excess of the fair value of the consideration payable over the fair value of the net assets acquired and was calculated as £5.7 million at acquisition. 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 TradeRisks acquisition is not deductible for tax purposes. 

 

Fair value

The fair value of the management contracts and customer relationships has been estimated using a discounted cash flow model. The estimated cash flows have been valued at a discount of 7.5%. This resulted in the fair value of management contracts being recognised at £2,886,000 and the customer relationships at £263,000.  The net book value of the management contracts and customer relationships has been reviewed for impairment and no impairment has been recognised as at 31 December 2021.

 

 

 

6   Exceptional items

 

 

 

 

 

 

 

 

2021

 

2020

 

 

 

 

 

 

 

£'000

 

£'000

Acquisition costs

 

 

 

 

 

 

 

 

 

TradeRisks Limited

 

 

 

 

 

 

19

 

868

Appian Asset Management Limited

 

 

 

 

 

 

187

 

328

Mobeus

 

 

 

 

 

 

1,141

 

-

Joint Venture costs

 

 

 

 

 

 

4

 

219

Other

 

 

 

 

 

 

79

 

30

 

 

 

 

 

 

 

1,430

 

1,445

Restructuring costs

 

 

 

 

 

 

633

 

330

DevCo acquisition and disposal costs

 

 

 

 

 

 

1,152

 

-

 

 

 

 

 

 

 

3,215

 

1,775

 

Acquisition, associated restructuring costs and exceptional legal fees are considered exceptional and not part of the normal operating activity of the Group.

 

 

7   Finance costs

 

 

 

 

 

 

 

 

2021

 

2020

 

 

 

 

 

 

 

£'000

 

£'000

Interest payable on bank loans

 

 

 

 

 

 

148

 

-

Finance fees

 

 

 

 

 

 

96

 

-

Interest payable on leases

 

 

 

 

 

 

67

 

25

 

 

 

 

 

 

 

311

 

25

 

See Note 25 for details of borrowings.

 

 

8   IFRS 16 Leases

 

IFRS 16 Leases relates to leases for use of office space at various locations. As a lessee, the Group has recognised a lease liability representing the present value of the obligation to make lease payments, and a related right-of-use (ROU) asset in line with the process explained under the statement of compliance.

 

The rate implicit in the leases is not evident and so the entities' incremental borrowing rates have been used. The incremental rate referred to by IFRS 16 indicates the rate of interest that a lessee would have to pay to borrow over a similar term, and with a similar security, the funds necessary to obtain an asset of a similar value to the ROU asset in a similar economic environment. The weighted average incremental borrowing rate used on the date of initial application of the leases is 3.25%, which refers to interest charge on the Group's revolving credit facility.

 

The Group is exposed to potential future increases in variable lease payments based on an index or rate, which are not included in the lease liability until they take effect. When adjustments to lease payments based on an index or rate take effect, the lease liability is reassessed and adjusted against the ROU asset.

 

Lease payments are allocated between principal and finance cost. The finance cost is charged to profit and loss over the life of the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period.

 

 

 

 

 

 

 

2021

 

2020

 

 

 

 

 

 

 

£'000

 

£'000

ROU asset cost

 

 

 

 

 

 

3,526

 

2,221

ROU asset accumulated depreciation

 

 

 

 

 

 

(1,220)

 

(1,623)

Retained reserves *

 

 

 

 

 

 

(6)

 

(6)

Depreciation expense

 

 

 

 

 

 

713

 

666

 

* Representing the net impact of recognising the leases under IFRS 16 as at 1 January 2019 as the Group chose to not restate prior periods as a matter of practical expedience afforded by the standard. The impact on retained reserves was immaterial.
 

An analysis of the lease liability relating to ROU assets is as follows:

 

 

 

Group

 

Company

 

 

 

2021

 

2020

 

2021

 

2020

 

 

 

£'000

 

£'000

 

£'000

 

£'000

Balance as at 1 January

 

 

641

 

445

 

211

 

243

IFRS 16 restatement

 

 

689

 

346

 

-

 

-

Additions

 

 

1,970

 

470

 

1,734

 

446

Cash payments

 

 

(912)

 

(645)

 

(625)

 

(486)

Foreign exchange movements

 

 

(14)

 

-

 

-

 

-

Interest expense

 

 

67

 

25

 

21

 

8

As at 31 December

 

2,441

 

641

 

1,341

 

211

 

Please see Note 33 Financial Instruments for the maturity profile of leases.

 

The Group has elected not to apply IFRS 16 to:

(a)  Low value leases for various IT equipment leased across the business. The maximum third-party new item price of any excluded equipment is less than £3,000. The total amount of lease payments for the year ended 31 December 2021 relating to these leases was £21,000.

 

It is also noted that:

(a)  the impact of lease liability and ROU asset on deferred taxes is expected to be immaterial;

(b)  there were no material residual value guarantees or contractual dilapidation commitments that impacted the initial recognition value for ROU assets and lease liability;

(c)  there were no purchase options for leased assets that was made available to or requested by the Group; and

(d)  lease values do not include any termination penalties as the business intends to use the properties to the end of lease terms.

 

Lease terms are negotiated on an individual basis across all seven leases and contain a wide range of different terms and conditions.  The lease agreements do not impose any covenants other than the security interests in the leased assets that are held by the lessor.  Leased assets may not be used as security for borrowing purposes.  No rent concessions were applied and all lease payments are considered fixed per the lease agreement.

 

 

9   Taxation

 

 

 

 

 

 

 

2021

 

2020

 

 

 

 

 

 

 

£'000

 

£'000

(a) Analysis of credit in period:

 

 

 

 

 

 

 

 

 

UK Corporation tax at 19% (2020: 19%)

 

 

 

 

 

 

2,883

 

1,778

Over provision in prior year

 

 

 

 

 

 

(520)

 

(237)

Deferred tax

 

 

 

 

 

 

1,744

 

(457)

Total tax charge

 

 

 

 

 

 

4,107

 

1,084

 

 

 

 

 

 

 

 

 

 

(b) Factors affecting tax charge for period:

 

 

 

 

 

 

 

 

 

Profit/(loss) on ordinary activities before tax multiplied by standard rate of corporation tax in the UK of 19% (2020: 19%)

 

3,101

 

361

Tax effect of:

 

 

 

 

 

 

 

 

 

Dividend income not taxable

 

 

 

 

 

 

-

 

(73)

Amortisation not taxable

 

 

 

 

 

 

261

 

617

Disallowable expenses/non-taxable income

 

 

 

 

 

 

(2,468)

 

(913)

Recognition of previously unrecognised deferred tax liabilities

 

 

 

 

 

 

2,071

 

-

Utilisation of previously unrecognised tax losses

 

 

 

 

 

 

(449)

 

(11)

Over provision in prior year

 

 

 

 

 

 

(520)

 

(237)

Deferred tax not recognised

 

 

 

 

 

 

-

 

(689)

Effect of tax rate change on opening balances

 

 

 

 

 

 

2,328

 

2,029

Remeasurement of deferred tax

 

 

 

 

 

 

(217)

 

-

Actual tax charge

 

 

 

 

 

 

4,107

 

1,084

 

The Group has unutilised tax losses of approximately £10.2 million (2020: £10.2 million) available against future corporation tax liabilities. A potential deferred taxation asset of £2.6 million (2020: £1.6 million) in respect of some 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.  The Company recognised a deferred tax asset of £0.1 million (2020: £0.2 million) in the current year.  No material uncertain tax positions exist as at 31 December 2021. This assessment relies on estimates and assumptions and may involve a series of complex judgements about future events. To the extent that the final tax outcome of these matters is different from the amounts recorded, such differences will impact income tax expense in the period in which such determination is made.
 

10   Earnings per share

 

(a)  Basic and diluted profit per share

 

 

 

 

 

 

 

 

2021

 

2020

Total net profit attributable to equity holders of the parent (£'000)

 

11,777

 

577

Weighted average number of shares in issue during the period

 

34,083,582

 

30,479,015

Number of shares held by the Gresham House Employee Benefit Trust

 

(204,007)

 

-

 

 

33,879,575

 

30,479,015

Basic profit per share attributable to equity holders of the parent (pence)

 

34.8

 

1.9

Diluted profit per share attributable to equity holders of the parent (pence)

 

32.7

 

1.8

 

2,229,892 (2020: 1,475,509) shares were deemed to have been issued at nil consideration as a result of shares which could be issued under the bonus share matching plan, long-term incentive plans and acquisition related share-based payments.

 

(b)  Adjusted earnings per share

Adjusted earnings per share is based on adjusted operating profit after tax, which is stated after charging interest but before depreciation, amortisation, share-based payments and remuneration relating to acquisitions, profits and losses on disposal of property, plant and equipment, net performance fees, net non-core activities, net development gains and exceptional items, to provide the non-GAAP measure of the performance as an asset manager. This includes dividend and income received from investments in associates. 

 

Adjusted profit for calculating adjusted earnings per share:

 

 

 

 

 

 

 

 

2021

 

2020

 

 

 

 

 

 

 

£'000

 

£'000

Net operating profit/(loss) after finance costs

 

 

 

 

 

 

6,721

 

(1,916)

Add back:

 

 

 

 

 

 

 

 

 

Exceptional operatingexpenses

 

 

 

 

 

 

3,215

 

1,775

Depreciation and amortisation

 

 

 

 

 

 

9,475

 

8,904

Loss on disposal of property, plant and equipment

 

 

 

 

 

 

-

 

27

Dividend income received from associates

 

 

 

 

 

 

285

 

202

Net performance fees

 

 

 

 

 

 

(1,714)

 

-

Variable compensation attributable to gains on development projects

 

 

 

689

 

2,474

Development project costs

 

 

 

470

 

-

Net non-core activity

 

 

 

 

 

 

(38)

 

-

Share-based payments relating to acquisitions

 

 

 

 

 

 

615

 

593

Acquisition related remuneration

 

 

 

 

 

 

452

 

-

Adjustedprofitattributable to equity holders of the parent before tax

 

 

 

20,170

 

12,059

Corporation tax attributable to adjusted operating profit

 

 

 

(2,363)

 

(1,541)

Adjustedprofitattributable to equity holders of the parent after tax

 

 

 

17,807

 

10,518

Adjusted profit per share (pence) - basic

 

 

 

 

 

 

52.6

 

34.5

Adjusted profit per share (pence) - diluted

 

 

 

 

 

 

49.4

 

32.9

 

11   Dividends

 

In May 2021 the Company paid £1,881,000 which represents a final dividend for the year ended 31 December 2020 of 6.0 pence per share. A final dividend for the year ended 31 December 2019 of 4.5 pence per share totalling £1,351,000 was paid in May 2020.

 

Set out below is the total dividend payable in respect of the financial year, which is the basis on which the requirements of Section 1158 Corporation Tax Act 2010 are considered.

 

 

 

 

 

 

 

 

2021

 

2020

 

 

 

 

 

 

 

£'000

 

£'000

Proposed final dividend for the year ended 31 December 2021 of 10.0 pence (2020: 6.0 pence) per share

 

3,800

 

1,926

 

The proposed final dividend is subject to approval by shareholders at the Annual General Meeting and has not been included as a liability in these financial statements.
 

12   Investments

 

Investments have been classified as follows:

 

 

Group

 

Company

 

 

 

2021

 

2020

 

2021

 

2020

 

 

 

£'000

 

£'000

 

£'000

 

£'000

Non-current assets

 

 

13,560

 

9,086

 

8,308

 

5,342

Other debtors due within one year - Investment in development projects (see Note 21)

 

 

3,537

 

551

 

3,537

 

551

 

 

 

17,097

 

9,637

 

11,845

 

5,893

 

A further analysis of total investments is as follows:

 

 

Group

 

Company

 

 

 

2021

 

2020

 

2021

 

2020

 

 

 

£'000

 

£'000

 

£'000

 

£'000

Listed securities - on the London Stock Exchange

 

 

4,993

 

3,991

 

3,555

 

3,202

Securities dealt in under AIM

 

 

1,363

 

950

 

1,363

 

950

Securities dealt in under Aquis Exchange

 

 

5

 

7

 

5

 

7

Unlisted securities

 

 

10,736

 

4,689

 

6,922

 

1,734

Closing value at 31 December

 

 

17,097

 

9,637

 

11,845

 

5,893

Investments valued at fair value through profit and loss

 

 

13,560

 

8,874

 

8,308

 

5,130

Loans and receivables carried at amortised cost

 

 

3,537

 

763

 

3,537

 

763

 

 

 

17,097

 

9,637

 

11,845

 

5,893

 

The movement in investments valued at fair value through profit and loss is:

Group

 

Company

 

 

 

2021

 

2020

 

2021

 

2020

 

 

 

£'000

 

£'000

 

£'000

 

£'000

Opening cost

 

 

7,839

 

8,724

 

5,203

 

6,975

Opening net unrealised losses

 

 

1,035

 

190

 

(73)

 

(132)

Opening value

 

 

8,874

 

8,914

 

5,130

 

6,843

Movements in the year:

 

 

 

 

 

 

 

 

 

Purchases at cost

 

 

5,851

 

1,309

 

5,203

 

885

Additions through business combinations

 

 

-

 

463

 

-

 

-

Sales - proceeds

 

 

(4,047)

 

(2,883)

 

(3,045)

 

(2,883)

Sales - realised gains and (losses) on sales

 

 

1,081

 

226

 

361

 

226

Net unrealised gains and (losses)

 

 

1,801

 

845

 

659

 

59

Closing value

 

 

13,560

 

8,874

 

8,308

 

5,130

Closing cost

 

 

10,724

 

7,839

 

7,722

 

5,203

Closing net unrealised gains/(losses)

 

 

2,836

 

1,035

 

586

 

(73)

Closing value

 

 

13,560

 

8,874

 

8,308

 

5,130

 

The movement in loans and receivables carried at amortised cost is:

 

Group

 

Company

 

 

 

2021

 

2020

 

2021

 

2020

 

 

 

£'000

 

£'000

 

£'000

 

£'000

Opening value

 

 

763

 

1,915

 

763

 

1,915

Movements in the year:

 

 

 

 

 

 

 

 

 

Purchases at cost

 

 

6,296

 

47

 

6,296

 

47

Sales - proceeds

 

 

(3,550)

 

(1,245)

 

(3,550)

 

(1,245)

Sales - realised gains and (losses) on sales

 

 

28

 

46

 

28

 

46

Net unrealised gains and (losses)

 

 

-

 

-

 

-

 

-

Transferred on acquisition of subsidiary undertaking

 

 

-

 

-

 

-

 

-

Closing value

 

 

3,537

 

763

 

3,537

 

763

 

Gains and losses on investments held at fair value:

 

 

Group

 

Company

 

 

 

2021

 

2020

 

2021

 

2020

 

 

 

£'000

 

£'000

 

£'000

 

£'000

Net realised gains on disposal

 

 

1,109

 

272

 

389

 

272

Net unrealised gains and (losses)

 

 

1,801

 

845

 

659

 

59

Profit on disposal of subsidiary undertaking

 

 

2,932

 

3,482

 

-

 

-

Net gains on investments

 

 

5,842

 

4,599

 

1,048

 

331

 

13   Property, plant and equipment

 

Group 2021

Office equipment

 

Motor vehicles

 

Leasehold property

 

Right of  use assets

 

Total

 

£'000

 

£'000

 

£'000

 

£'000

 

£'000

Cost

 

 

 

 

 

 

 

 

 

As at 1 January

409

 

346

 

130

 

2,221

 

3,106

Additions

289

 

38

 

-

 

1,988

 

2,315

Additions through business combinations

54

 

-

 

-

 

806

 

860

Disposals during the year

(99)

 

(26)

 

-

 

(1,472)

 

(1,597)

Foreign exchange movements

-

 

-

 

-

 

(17)

 

(17)

As at 31 December

653

 

358

 

130

 

3,526

 

4,667

 

 

 

 

 

 

 

 

 

 

Depreciation

 

 

 

 

 

 

 

 

 

As at 1 January

195

 

169

 

29

 

1,623

 

2,016

IFRS 16 restatement through business combinations

-

 

-

 

-

 

365

 

365

Charge for the year

138

 

80

 

28

 

713

 

959

Disposals during the year

(96)

 

(23)

 

-

 

(1,472)

 

(1,591)

Foreign exchange movements

-

 

-

 

-

 

(9)

 

(9)

As at 31 December

237

 

226

 

57

 

1,220

 

1,740

Net book value as at 31 December

416

 

132

 

73

 

2,306

 

2,927

 

 

Group 2020

Office equipment

 

Motor vehicles

 

Leasehold property

 

Right of  use assets

 

Total

 

£'000

 

£'000

 

£'000

 

£'000

 

£'000

Cost

 

 

 

 

 

 

 

 

 

As at 1 January

260

 

289

 

4

 

1,344

 

1,897

Additions

95

 

57

 

-

 

470

 

622

Additions through business combinations

54

 

-

 

126

 

407

 

587

As at 31 December

409

 

346

 

130

 

2,221

 

3,106

 

 

 

 

 

 

 

 

 

 

Depreciation

 

 

 

 

 

 

 

 

 

As at 1 January

96

 

88

 

4

 

896

 

1,084

IFRS 16 restatement through business combinations

-

 

-

 

-

 

61

 

61

Charge for the year

99

 

81

 

25

 

666

 

871

As at 31 December

195

 

169

 

29

 

1,623

 

2,016

Net book value as at 31 December

214

 

177

 

101

 

598

 

1,090

 

 

Company 2021

Office equipment

 

Motor vehicles

 

Right of  use assets

 

Total

 

£'000

 

£'000

 

£'000

 

£'000

Cost

 

 

 

 

 

 

 

As at 1 January

348

 

292

 

1,445

 

2,085

Additions

211

 

38

 

1,752

 

2,001

Disposals during the year

(92)

 

(26)

 

(1,472)

 

(1,590)

As at 31 December

467

 

304

 

1,725

 

2,496

 

 

 

 

 

 

 

 

Depreciation

 

 

 

 

 

 

 

As at 1 January

170

 

115

 

1,236

 

1,521

Charge for the year

98

 

80

 

469

 

647

Disposals during the year

(89)

 

(23)

 

(1,472)

 

(1,584)

As at 31 December

179

 

172

 

233

 

584

Net book value as at 31 December

288

 

132

 

1,492

 

1,912

 

 

Company 2020

Office equipment

 

Motor vehicles

 

Right of  use assets

 

Total

 

£'000

 

£'000

 

£'000

 

£'000

Cost

 

 

 

 

 

 

 

As at 1 January

253

 

235

 

991

 

1,479

Additions

95

 

57

 

454

 

606

As at 31 December

348

 

292

 

1,445

 

2,085

 

 

 

 

 

 

 

 

Depreciation

 

 

 

 

 

 

 

As at 1 January

89

 

34

 

746

 

869

Charge for the year

81

 

81

 

490

 

652

As at 31 December

170

 

115

 

1,236

 

1,521

Net book value as at 31 December

178

 

177

 

209

 

564

 

 

14   Intangible assets

 

Group 2021

Goodwill

 

Customer relationships

 

Contracts

 

Brands

 

IT platform development

 

Total

 

£'000

 

£'000

 

£'000

 

£'000

 

£'000

 

£'000

Cost

 

 

 

 

 

 

 

 

 

 

 

As at 1 January

29,718

 

3,335

 

46,650

 

-

 

1,242

 

80,945

Additions through business combinations

19,162

 

-

 

23,346

 

456

 

-

 

42,964

Other additions

-

 

-

 

-

 

-

 

725

 

725

Disposals during the year

-

 

-

 

(1,406)

 

-

 

(9)

 

(1,415)

Foreign exchange movements

(86)

 

-

 

(47)

 

-

 

-

 

(133)

As at 31 December

48,794

 

3,335