Gresham House Strategic plc LON:GHS has given DirectorsTalk its final audited results for the year ended 31 March 2017.
GHS invests primarily in UK and European smaller public companies, applying private equity techniques and due diligence alongside a value investment philosophy to construct a focused portfolio where 10-15 companies represent circa 80% of the value.
The Investment Manager aims for a considerably higher level of engagement with investee company stakeholders, including; management, shareholders, customers, suppliers and competitors, to identify market pricing inefficiencies and support a clear equity value creation plan, targeting above market returns over the longer term.
Highlights:
— Strong investment performance with net asset value (“NAV”) increasing 7.6% during the year to 31 March 2017, 19.9%(1) during the 12 months to 31 May 2017 and 20.2%(2) since the appointment of Gresham House Asset Management (“GHAM”). Investment performance has outperformed the FTSE Small-Cap Index since GHAM’s appointment with relative low volatility
— GHS share price increased 8.2% during the year to 31 March 2017 and 16.2% in the 12 months to 31 May 2017
-- The portfolio of investments is tracking in line with GHAM's investment thesis
— IMImobile (“IMI”) has performed strongly with the share price rising 16.7% during the year to 174.5p as of 31 March 2017, and a further 23.8% to 216p as of 31 May 2017 a result of a strong trading update, good organic growth, cash generation and a successful acquisition
— Strategic co-investment agreement with Gresham House Strategic Public Equity Fund LP, leading to GBP4.6 million cash realised on the sale of 23.0% of original holding in IMI
— Realised profits on investments of GBP1.7 million since GHAM’s appointment as Investment Manager.
— In line with the policy to return half of realised profits to shareholders, the Board has recommended a maiden dividend of 15p per share and conducted a share buyback in April 2017, equating to circa GBP0.8m in returns to shareholders
— Significant investment in existing portfolio companies and new strategic investment opportunities (including post year-end investments) such as:
– Supporting further acquisitions for Be Heard Group plc
– Increasing holding in Northbridge Industrial Services plc
– Increasing holding in Miton Group plc
– First pre-IPO investment in MJ Hudson
– New investment in Warpaint London plc
– Increasing holding in SpaceandPeople plc
– New initial investment in Escape Hunt plc
– Initial investments in new opportunities as we progress engagement and due diligence
— Whilst we believe the market is expensive relative to historic ranges and that the outlook for equity markets remains uncertain, we are finding attractive investment opportunities focusing on smaller companies that tend to lack access to growth capital. We focus on ‘value’ stocks which have a margin of safety and where we can identify catalysts for value creation, and the ability to generate long term superior returns.
(1) Performance from 27 May 2016, reported month end NAV through to 31 May 2017 reported month end NAV
(2) Performance from 14 August 2015 through to 31 May 2017
Financial Highlights:
-- NAV at 31 March 2017 of GBP39.5 million, increased to GBP43.4 million as of 31 May 2017
— Realised and unrealised gains on investments of GBP3.9 million in the year to 31 March 2017 (2016: GBP3.8 million)
-- Profit before tax of GBP2.8m (2016: GBP0.3m) -- Earnings per share of 76.07p (2016: 8.30p)
The Board proposes a dividend for the year of 15p per share (2016: nil). If approved by shareholders at the AGM, this will be payable on 21 July 2017 to all shareholders on the register at the close of business on 23 June 2017. The corresponding ex-dividend date is 22 June 2017.
