Gresham House plc Interim Results 2022

Gresham House plc

(“Gresham House,” “the Group” or “the Company”)

Interim results for the six months ended 30 June 2022

Continued profitable growth in assets under management

Gresham House plc, (AIM: GHE), the specialist alternative asset manager, is pleased to announce its unaudited interim results for the six months ending 30 June 2022. Assets under management (AUM) rose 11% to £7.3 billion, driving an increase in adjusted operating profit to £13.2 million and a continued increase in operating margin to 35%. The Group continues to deliver against its strategic and financial targets alongside its long-term client-led approach.

Highlights

1. Cash and liquid assets includes cash and investments in tangible and realisable assets
2. Adjusted operating profit is defined as the net trading profit of the Group after charging interest but before depreciation, amortisation, share-based payments and remuneration relating to acquisitions, profits and losses on disposal of tangible fixed assets, net performance fees, net development gains, exceptional items, and non-core activities
3. Return on capital employed is defined as adjusted operating profit, plus net performance fees, net realised gains on development activity and fair value movements in investments, less fair value movement in contingent consideration, divided by opening net assets, adjusted for shares issued in the year

Financial highlights

• Assets under management (AUM) up 11% in H1 to £7.3 billion

o  +8% organic growth of £0.5 billion

• Net core income up 61% to £37.2 million (H1 2021: £23.0 million)
• Adjusted operating profit up 91% to £13.2 million (H1 2021: £6.9 million)
• Adjusted operating margin improvement up to 35% (H1 2021: 30%) – highlighting the operational leverage of the business
• Return on capital employed (ROCE) of 15.5% on an annualised basis in line with medium-term targets (H1 2021: 24.0%)
• Balance sheet cash used to continue to invest in and develop projects to grow long-term AUM

Strategic highlights

• International expansion continued through the acquisition of Burlington Real Estate in Ireland and the purchase, on behalf of an institutional client, of a £49 million forestry and carbon credit portfolio in New Zealand – an exciting new expansion for our Forestry division
• Gresham House Energy Storage Fund plc (GRID) expanded its investment policy to include international activity, opening up a wider investment universe
• An increase in the number of institutional clients, building the depth in the Group's client base

Sustainability highlights

• Completion of a large-scale project to calculate the carbon footprint of our operations and managed/advised investments, with a view to setting a net-zero strategy over the near term with science-based targets
• Awarded 4 or 5 stars, out of a maximum of 5 stars, for all modules relevant to Gresham House plc in our 2021 PRI Report
• Met the expected standard of reporting to remain a signatory to the UK Stewardship Code

Outlook

• Adjusted operating profit expected to be at least in line with market expectations⁴for the full year to 31 December 2022
• Opportunities to scale for further AUM growth identified across all divisions, including Real Assets, Public Equity and Private Equity
• Net cash of £28.1 million and unused £20 million Revolving Credit Facility available to support further investment to grow the business
• Expected to commission battery storage projects for GRID generating gains in H2 for the Group
• Additional fund closes expected in H2 to make further progress towards the achievement of GH25 strategy

4. Market expectations defined as adjusted operating profit for the year to 31 December 2022 in the range of £25.5 million to £26.3 million in broker reports that follow Gresham House plc as at 14 September 2022

Commenting on the results, Tony Dalwood, Chief Executive Officer said:

“We have delivered a strong increase in AUM, with organic growth and robust net fundraising across all business divisions, despite the  challenges of the macroeconomic environment. Our performance illustrates the strength of investor appetite for the asset classes in which we specialise and has enabled us to further enhance the depth and breadth of our client base.

“Whilst we are cognisant of the market environment, we are confident that momentum for our asset classes will be sustained into H2 as we continue to raise funds, make further profitable progress against our GH25 strategy and to deliver value to all our stakeholders.”