11 March 2021, 07:00

Source - LSE Regulatory

RNS Number : 8766R

Gresham House PLC

11 March 2021

Gresham House plc

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

Annual Results for the year ended 31 December 2020

Strong Organic Growth in AUM of 35%

The Board of Gresham House plc, (AIM: GHE), the specialist alternative asset manager, is pleased to announce another year of strong growth, both organically and through acquisition, with Assets Under Management (AUM) increasing by 42% to £4.0 billion, and significant increases to revenue and adjusted operating profit. The Group has momentum in fundraising and plans for further AUM growth across its divisions in 2021. The Board is also pleased to announce a 33% increase in the dividend to 6.0p (2019: 4.5p).

FINANCIAL HIGHLIGHTS

	As at/for the year to 31 Dec 2020	As at/for the year to 31 Dec 2019	Change (%)

Assets under management (£m)	3,970	2,797	+42
Cash and liquid assets (£m)	45.1	41.3	+9
Net core income (£m)	40.8	31.7	+29
Adjusted operating profit (£m)	12.1	10.3	+17
Net performance fees and gains on investments (£m)	1.0	1.5	-33
Comprehensive net income (£m)	0.8	-0.8	n/a
Dividend (p)	6.0	4.5	+33

·	Strong AUM growth of 42% to £4.0 billion (2019: £2.8 billion), with organic growth of £1.0 billion (35%)
·	Robust net core income growth of 29% to £40.8 million (2019: £31.7 million) and growth in adjusted operating profit of 17% to £12.1 million (2019: £10.3 million)
·	Final dividend proposed to increase by 33% to 6.0 pence (2019: 4.5 pence)
·	Good progress in first year of five-year strategic plan GH25 to create shareholder value as part of identified strategic and financial Group objectives
·	International presence progressed by proposed acquisition of Appian Asset Management Limited, the EU-based regulated asset manager, subject to regulatory approval in 2021
·	Enhanced client base, with six of the ten largest UK Local Government Pension Schemes investing in funds managed by Gresham House
·	Continued investment in the team to scale AUM in identified areas of strong growth potential

SUSTAINABILITY HIGHLIGHTS

·	The Group's inaugural Sustainable Investment Report will be published week beginning 15^th March 2021
·	Sustainable Investing Committee embedded in the business has supported the Group's recognition in this area with top Principles for Responsible Investment scores and Green Economy Mark from the London Stock Exchange
·	Forestry division growth includes planting 9.0 million trees in 2020. Carbon dioxide sequestration across the forestry portfolio totalled approximately 35 million tonnes as at the end of December 2020. It is estimated that 1.5 million tonnes of CO_² was absorbed in 2020.

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

"The growth within each of the asset classes at Gresham House reflects the quality of our investment teams and client demand for these specialist areas. We start the second year of the GH25 plan with positive momentum despite the ongoing macroeconomic and social challenges, and we continue to invest alongside our growth ambitions in order to deliver client targets and generate shareholder value from AUM growth".

Gresham House is hosting its annual results webinar at 10:00 AM today via this link

-ends-

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

Gresham House plc

Tony Dalwood, Chief Executive

Kevin Acton, Chief Financial Officer

+44 (0)20 3837 6271

Houston

Alexander Clelland

Anushka Mathew

gh@houston.co.uk

+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 plc is a London Stock Exchange quoted specialist alternative asset management group (GHE.LN) that provides funds, direct investments and tailored investment solutions including co-investment. It focuses on five areas of long-term alternative investment within its two divisions of Strategic Equity and Real Assets.

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

The Group aims to generate superior returns across a range of alternative investment strategies over long-term investment horizons. As a signatory to the UN-supported Principles for Responsible Investment, Gresham House is committed to operating responsibly and sustainably and believes its strategy of taking the long view in delivering sustainable investment solutions will continue to be a growing factor in the strength of its market positioning.

www.greshamhouse.com

Chairman's Statement

2020 has unquestionably been one of the most challenging years we have seen, with the COVID-19 pandemic affecting global populations and economies on an unprecedented scale. However, despite the difficulties and uncertainty we faced, I am pleased to report yet another busy and productive year for Gresham House, in which we have made strong progress against GH25, our five-year growth plan, and demonstrated the resilience of our business. This is directly attributable to the quality and drive of the people within this business.

COVID-19

We entered the pandemic in a good position, with a strong balance sheet supported by the resilient nature of our assets and have continued to grow and outperform the market. Our operations have remained largely unaffected and stable throughout, thanks to the early and decisive action taken by management to protect the business and the impressive response of our talented team, as they adapted swiftly to new ways of working. We continue to prioritise their safety, health, and wellbeing, encouraging a culture of 'overcommunication' with colleagues and clients, and close team collaboration.

I am pleased that the Company, Management Committee and Directors donated £100,000 in aggregate to the Trussell Trust, a charity that works to end the need for food banks in the UK, and NHS Charities Together, as we aimed to support communities in need. In addition, we set up a Give As You Earn Scheme for all employees and the Company will match donations made.

Activity in the period

I am delighted to see the remarkable 42% growth in AUM over the past year, bringing us to £4.0 billion of AUM, demonstrating the attractive nature of our strategies.

Around £1.0 billion of this growth has been organic, which has been achieved through very strong fundraising success in a tough market across our strategies in housing, forestry, sustainable infrastructure and new energy - all vital to the UK Government's plans for a green economic recovery in the UK post the pandemic. In Strategic Equity, we have also held up well against a difficult broader economic backdrop and grown our assets further, alongside winning the £150 million mandate for Strategic Equity Capital plc (SEC). Fundraising highlights across the year include the British Strategic Investment Fund (BSIF) hitting its £300 million target, the Gresham House Energy Storage Fund (GRID) raising £150 million, exceeding its target, the Baronsmead VCTs raising £57 million as well as the successful fund raise for Gresham House Forest Fund I LP.

We have also made good progress with acquisition-based growth, with the integration of TradeRisks, the fund management and debt advisory services group, boosting our Housing division and the recently announced acquisition of Appian Asset Management, which is subject to Central Bank of Ireland approval, ensuring a strengthened presence in Ireland to target growth in the post-Brexit world. TradeRisks has again shown the capability of this management team to add value through integration and execute on potential synergies.

Our performance has also been recognised by the industry and the market, as we appeared on twelve shortlists and won five awards including 'Boutique of the Year' in the Investment Week Specialist Fund Awards 2020 and, for a third year running, 'Best Alternative Investment Manager' in the WealthBriefing European Awards. I am particularly proud that we have continued to invest in the business, having recruited 21 new joiners in a tough, uncertain market.

Sustainability

It has been pleasing to see the progress we have made with embedding sustainability in every aspect of our business, as we achieved industry leading scores for our first submission to the Principles for Responsible Investment and were also awarded the Green Economy Mark by the London Stock Exchange. We have expanded the range of sustainability focused investment strategies with new opportunities including carbon credit and affordable housing investment platforms. Rebecca Craddock-Taylor, our Sustainable Investment Director who joined us in July 2020 is leading this process as we get ready to publish our inaugural Sustainable Investment Report. The culture within the Group is strong and positive with evidence of this coming through our employee survey.

Results

The growth that we have seen this year is noteworthy given the tough external backdrop. Net core income has increased by 29% to reach £40.8 million (2019: £31.7 million), while adjusted operating profit was £12.1 million, growing by 17% (2019: £10.3 million). Net comprehensive income is up to a profit of £0.8 million (2019: £0.8 million loss). Our robust balance sheet and the strong cash and net liquid asset positions have also provided us with the flexibility to continue the pursuit of our growth ambitions.

Dividend

We intend to increase the dividend for this year to 6.0 pence, an increase of 33% (2019: 4.5 pence), with the Board cognisant of striking a balance between continuing to invest in the business for growth and providing a progressive dividend policy. The dividend increase for the year reflects the positive long-term outlook we anticipate for the company.

Shareholders

We continue to welcome new shareholders to the register as we broaden our supportive shareholder base and it is pleasing to see the quality of that base, a reflection of the capital markets supporting our growth and management teams. As our market capitalisation has grown beyond the £250 million threshold, we have come a long way since the £12 million capitalisation at the time of the Management Buy-In a little over five years ago. Importantly, the senior management team has shown that it can generate organic growth alongside adding value by acquisitions.

Board

Richard Chadwick, our Senior Independent Director and Chairman of the Audit Committee, has served on the Board since June 2008. His knowledge of the Company's history prior to the advent of the current management team has been very useful and his continuity on the Audit Committee has been valuable during a period of considerable change. However, after nearly 13 years on the Board it is time to plan for his succession. I have therefore agreed with him that he should serve one more year, which will give us time to recruit a new Chairman of the Audit Committee and facilitate an orderly handover of his responsibilities; he will then retire at the conclusion of next year's AGM. In accordance with our Articles and the provisions of the QCA Corporate Governance Code, Richard will therefore stand for re-election at this year's AGM.

Outlook

As we commence 2021 still in lockdown, we continue to prioritise our employees' safety and wellbeing. We will continue to invest in the business, as we scale our platform, ensuring that we are resourced to match our ambitions. We are confident the year ahead will take us further on our journey to achieve our GH25 objectives.

Although COVID-19 continues to disrupt our daily lives, we approach the year ahead with optimism, and are excited about our growth trajectory, as our product offering and sustainable investment focus continue to provide attractive returns over the long-term whilst delivering shareholder value.

Gresham House operates in areas with strong opportunities for growth from increased allocation to alternative assets, underpinned by significant demand for sustainable investment, placing us in a position of long-term strength. We have witnessed the resilience of our business in 2020 and are confident that we will continue to grow in the coming year.

Anthony Townsend

Chairman

10 March 2021

Chief Executive's Report

Introduction

In March 2020, we set out GH25, our ambitious strategic plan to generate shareholder value over the next five years, at that stage unaware of the full extent of the pandemic that would follow, resulting in a tumultuous period economically, socially and politically. I am pleased to say that the quality of our business has been highlighted in so many ways including the adaptability of our people to address these challenges. The subsequent actions and change in routine to achieve our clients' objectives have been something to be proud of, and importantly, momentum in profit growth alongside strategic development has continued.

Over this period, we have grown our AUM by 42% to £4.0 billion, in line with our ambitious plans. Of this growth, £1.0 billion (35%) was organic, through strong fundraising performances across both the Real Assets and Strategic Equity divisions, increasing the depth of the Group's institutional client base. We have also grown through selective acquisitions, including Appian Asset Management, subject to approval from the Central Bank of Ireland, and TradeRisks, a fund management business and specialist provider of debt structuring and advisory services to the housing and social infrastructure sectors. With the acquisition of Appian, we have accelerated our international expansion plans with the addition of a regulated EU-based platform post-Brexit. TradeRisks considerably enhances our Housing platform with the addition of a highly experienced team to help us build scale in this important area. We believe these are further examples of our approach to create shareholder value through complementary additions to the Gresham House platform, where target returns, business development plans and synergies are clear.

Throughout what has been both a difficult and highly disruptive period, to the market and to the business environment, we have remained cognisant that our companies, and our industry, are defined by the people who work within them. Our key assets are our people, and the effect that the COVID-19 situation continues to have on individuals and families financially, psychologically and socially, has been at the forefront of our minds. We have maintained a focus on team safety, through remote working and staggered working times in the office, and closely monitored the physical and mental health of the Gresham House family. I am proud of our team's dedication and response plus our ability to continue business as usual during such a difficult time. We continue to remain vigilant to the threat posed by the pandemic whilst focused on our client and shareholder objectives.

We have seen structural growth in the asset classes in which Gresham House invests, in terms of continued growth in institutional investor allocation to alternatives and growth in demand for ESG investment opportunities. A survey of institutional investors by CoreData found that 40% will increase their allocations to alternative investment strategies over the next three to five years. Equally, Mercer's 2020 survey of the European pension industry shows 88% of institutional investors now plan to integrate ESG into their investment policy.

As a consequence, we see a strong outlook for organic growth within the business, underpinned by structural growth in the demand for new energy, forestry, sustainable infrastructure, housing, early-stage technology companies and those targeting entrepreneurial growth. As we look to the year ahead, we do so with cautious optimism and the knowledge that we are well-positioned to benefit from structural growth in demand for our investments from clients across the spectrum of institutional, Family Office, High Net Worth and retail.

GH25

We believe the GH25 framework objectives will generate substantial shareholder value, resulting in Gresham House becoming an "asset to covet" for all stakeholders, shareholders, employees and clients. GH25 aims to double shareholder value over the five years to 2025. With sustainability at the heart of our strategy to generate long-term shareholder value, we aim to grow AUM to over £6.0 billion, increase operating margins to 40% and maintain target Returns on Invested Capital (ROIC) of 15% or above.

At the end of the first year of our strategic plan, we have increased AUM by £1.2 billion both organically and via acquisition, making solid progress towards our goal. This has included capturing synergies from the TradeRisks acquisition, which significantly enhances our ability to scale our housing platform, and we anticipate further synergies with the proposed acquisition of Appian Asset Management in Ireland.

We continue to invest substantially in the business, across all our platforms in areas where we see long-term sustainable opportunities to grow and subsequently benefit from the operational gearing.

We are also on track to maintain ROIC of 15% through the use of our balance sheet in the medium term. This has also been demonstrated in the performance of historic acquisitions. In 2020, this was further evidenced by balance sheet investments in battery storage projects through the wholly-owned subsidiary Gresham House Devco Limited, and its subsequent sales to Gresham House Energy Storage Fund plc (GRID).

We have continued to see superior returns from funds managed, with resilient performance in the LF Gresham House UK Micro Cap and LF Gresham House UK Multi Cap Income funds over 2020. In addition, forestry as an asset class continues to show very strong performance, with our forestry funds generating an average return of 15% in the last 12 months. We pride ourselves on our ability to manage funds which provide investors with diversification benefits during periods of market volatility.

Gresham House is a specialist in several niche investment areas and our market share in these continues to grow. We now have the largest battery storage investment trust in the UK in GRID, and we are the largest commercial forestry asset manager in the UK. These asset classes evidence how we can provide sustainable solutions to clients whilst growing the client base through capable investment, asset management and distribution talent.

Importantly, we are increasing our international footprint with the proposed acquisition of Appian Asset Management in Ireland and working on capturing a substantial carbon credit-based forestry opportunity in New Zealand. The acquisition of Appian expands our capabilities to develop existing strategies in Ireland, and further across Europe, with a particular focus on sustainable infrastructure, social housing, specialist equities and forestry.

We continue to enhance the Gresham House brand, with industry recognition and our broader profile in the media, including national broadcast media, and across social media, delivering our messages to the market directly and succinctly through showcasing our growing capabilities.

Sustainability

In 2020, we were pleased that our commitment to embedding ESG and sustainable investing across the Group was recognised by the London Stock Exchange, which awarded us the coveted Green Economy Mark in July. The Green Economy Mark is only awarded to listed companies that derive more than 50% of annual revenues from environmental solutions. We also received our first scores from the UN-supported Principles for Responsible Investment, with an A+ rating for Strategy & Governance, the highest possible score. Our investment strategies scored an A+ in Infrastructure, A in Public Equity and an A in Private Equity.

We have continued to invest in our leadership in this critical area with the hire of Rebecca Craddock-Taylor as Sustainable Investment Director, who has been working to develop and embed existing sustainable investment policies across both the Real Assets and Strategic Equity divisions. In 2020, we codified our approach to sustainable investment with the establishment of a Sustainable Investing Committee under Rebecca's leadership. This committee comprises senior representatives across the company and ensures delivery against the sustainable investment policies that are embedded across each stage of the investment lifecycle. It also sets the culture for sustainability at Gresham House from the top.

We lead by example and sustainability now forms part of every employee's objectives so that it permeates every aspect of the business. In 2020, we hosted our first webinar on our approach to sustainable investment, providing examples of the application to real assets including forestry, new energy and sustainable infrastructure. We will also launch our first Sustainable Investment Report shortly and host further webinars in this area, which lies at the heart of what we do.

Assets under management

Our GH25 ambition to double shareholder value is driven by our ability to grow AUM. The table below provides more detail on our progress in the year, growing AUM by 42% to £4.0 billion:

	AUM as at 31 Dec 2019 £m		Net Fund Flows ¹ £m	Performance £m	Funds won/ acquired £m	AUM as at 31 Dec 2020 £m	AUM Movement £m	AUM Movement %
Strategic Equity
Strategic Public Equity	283		35	42	148	508	225	80%
Private Equity ²	425		37	5	(55)	412	(13)	(3)%
Subtotal	708		72	47	93	920	212	30%

Real assets
Forestry	1,333		85	393	-	1,811	478	36%
New Energy and Sustainable Infrastructure		663	267	2	-	932	269	41%
Housing	93		35	(5)	184	307	214	230%
Subtotal	2,089		387	390	184	3,050	961	46%

Total AUM	2,797		459	437	277	3,970	1,173	42%

¹ Includes funds raised, redemptions and distributions.

²The LMS contract was terminated in May 2020.

Organic growth in AUM of 35% in the year was c.£1.0 billion, driven by net fundraising across the Group, fund performance and winning a new fund mandate.

Net fund inflows in the year reflected the resilient demand for the sustainable investment funds that we manage occurring across each division in the business. Notable fundraises include GRID raising £150 million, Gresham House Forest Fund I LP raising £108 million, BSIF securing additional commitments of £100 million as well as the Strategic Equity funds generating net inflows from the open-ended funds and Baronsmead VCTs. We were also able to diversify and deepen our client base and we now manage funds for six of the ten largest UK Local Government Pension Schemes in the UK.

Performance in the year generated £437 million in AUM, with the demand for Forestry increasing and valuations improving as a result.

We also added a further £277 million which includes winning the Strategic Equity Capital plc (SEC) mandate (£147 million) and ReSI plc (£184 million) through the acquisition of TradeRisks. Our busy year has been reflected in the growth in our AUM.

Real Assets

As expected, Real Assets remained robust during the pandemic, offering resilience and a safe haven in a time of heightened volatility in global equity markets.

Forestry continued to provide an excellent safe harbour for capital throughout the crisis. We have seen growth in the underlying value of all the forests that we manage and there has been significant interest from investors in the sector. As a consequence, we closed the Gresham House Forest Fund I LP fundraising at £108 million, securing a new institutional investor, driven by the potential for attractive long-term returns, our expertise in the sector and the robust underlying characteristics of the asset class. We are also looking further afield at carbon credits and forestry to support our international growth.

In New Energy, GRID raised over £150 million in the year, with its last equity raise being oversubscribed significantly, and we were able to supply 100MW of utility scale battery storage projects from our development pipeline. The proceeds of the fundraising will be used to finance a c.485MW pipeline of energy storage projects. We are pleased to be meeting a fundamental need within the UK energy network. Additional renewable generation capacity brings the need for more energy storage to achieve a cost-effective energy transition, and our new pipeline will help meet this need. As part of our commitment to New Energy, we are also investing in unsubsidised renewable energy assets and plan to launch a renewable energy fund for institutional clients in this important area.

We were delighted to reach a final close of £300 million for our British Strategic Investment Fund (BSIF) in 2020, the upper limit of our fundraising target, and received further backing from UK Local Government Pension Schemes who are committed to funding UK infrastructure. BSIF is focused on sustainable infrastructure areas and has already deployed capital into the renewable energy, battery storage, waste disposal, fibre broadband, vertical farming and key worker accommodation sectors and we look forward to launching a second fund in the coming year.

Following the acquisition of TradeRisks in March, we have further built out our Housing team with Residential Secure Income plc (ReSI) adding £184 million in AUM to the division. The team has also worked together on the launch of Gresham House Residential Secure Income LP (GH ReSI LP), which will target institutional investors and local government pension schemes looking to access the under-addressed UK shared ownership residential property market and aim to deliver a quantifiable social impact. The aim is to have a first close in the first half of 2021.

Strategic Equity

The pandemic has taken its toll on global equity markets in 2020, with high levels of volatility and market uncertainty, marked by a significant fall in valuations in March, followed by an unprecedented stimulus package from governments globally.

As a consequence, the economy has been supported to a significant degree, including a £330 billion UK Government financial package, restoring valuations, and combating negative sentiment. Throughout this crisis, we have supported our portfolio companies, particularly in the hard-hit sectors such as leisure and retail.

We have seen steady growth through net fund inflows into our open-ended vehicles, despite continued outflows for UK equities across the industry, and raised £57 million over the course of the year for the Baronsmead VCTs, reflecting strong ongoing demand for a dynamic, entrepreneurial approach to investing in the UK's early-stage growth businesses, a key area for post-Brexit UK.

Gresham House was also appointed investment manager for SEC. Our appointment was made on the basis of the depth of expertise within the Gresham House platform, with talent such as Ken Wotton and Brendan Gulston, and a team with a superior 20-year track record of investing in small caps and creating shareholder value through constructive corporate engagement using a private equity approach to publicly quoted companies. This has also been demonstrated by the very strong five-year performance of Gresham House Strategic plc, managed by the strategic public equity team including Richard Staveley, and Laurence Hulse.

People and culture

The Gresham House culture is fundamental to who we are as a business. We have cultivated a culture of dynamism based on empowering individual flair and entrepreneurial thinking. This enables us to design and implement innovative investment solutions capable of building a sustainable future for all our stakeholders.

Over the course of 2020 we have invested in our people to achieve our AUM growth ambitions, making hires across the business, attracting key fund managers such as Peter Bachmann for Sustainable Infrastructure, and hiring across distribution.

Employee engagement remains strong and our employee survey showed 94% of employees would recommend Gresham House as a good place to work to their network and friends. We are also making good progress with diversity at management level, with women holding 32% of our senior managerial roles. I would like to express my personal thanks to this great team for their dedication to our purpose and ambitions.

We are committed to diversity and inclusion, whilst making a positive change, and this is evident in actions not simply words. As part of this commitment, we are participating in the #100BLACKINTERNS initiative, which aims to offer Black students across the UK an opportunity to begin a career in investment management. The internships are paid and will last a minimum of six weeks over the summer of 2021.

We have also added to the Gresham House team in partnership with Leadership Through Sport & Business (LTSB), a social mobility charity that prepares and supports young people from disadvantaged backgrounds into meaningful roles in accounting and technology with major firms. They make sure those at risk of under-employment find careers equal to their ambition and ability.

At the year end, we employed 122 people, demonstrating the continued growth in the business since we started in 2014, with just a few individuals. Our goals are well aligned with that of our clients, with senior management owning a material 8% of the shares. We see increasing management and employee share ownership, through both our bonus share matching, with c.50% take up by employees, and share save schemes.

Our talented team continues to gain recognition from across the industry and we were named Alternative Investment Manager of the Year at the UK Pensions Awards, as well as European Alternative Investment Manager of the Year by Funds Europe, among other accolades. These awards are well deserved and a testament to the commitment, excellence and dedication that underpins our culture.

Outlook

As the pandemic continues, there is no doubt that the market will continue to be challenging and we expect volatility in equity and bond markets alongside turbulence in the real economy as many stimulus packages cease and governments look to fund the enormous debts accumulated.

At present, market valuations in certain areas also show bubble-like characteristics. However, there are areas of the market and sectors where good value exists and others that feature structural growth dynamics including sustainability that make them attractive to alternative asset managers. The balance and long-term resilience of our business model and mix mitigates volatility in earnings due to extraneous factors, such as COVID-19.

We are now into the second year of our five-year plan, having gone through the 'J curve' of growth. This is an exciting journey and one that contains even more potential than seemed possible in 2015.

Over the course of 2021, we look forward to completing our acquisition of Appian Asset Management and its integration into our operations as we build the platform and further capitalise on our plans for international expansion.

We are also excited by the pipeline of fundraising we have planned for 2021 across all areas of our business.

In Housing, we look forward to launching GH ReSI LP and in Sustainable Infrastructure we have the ongoing deployment of BSIF, with a follow-on fund to come during the year. We will also be launching new funds in Forestry, including an international theme, and in New Energy with renewables and battery storage. Across equities, the strong investment performance should attract more investors to the specialist approaches within the Strategic Public Equity, VCT and Equity Funds areas.

Our focus is to deliver on stakeholder objectives in order to make Gresham House an asset to covet for clients, employees and shareholders. The opportunity with our existing asset classes is growing, and clients are seeking new investment solutions to achieve both their financial and sustainability ambitions. We have shown that we can grow the business organically and through acquisition, and the Gresham House brand is growing in a positive way.

I am fortunate to be working with a team of ambitious people who understand client and shareholder objectives. The aim is to keep raising the bar year on year, and this capable team keep rising to the challenge supported by structural growth in our markets from clients for specialist and differentiated products and solutions.

Tony Dalwood

Chief Executive

10 March 2021

Financial Review

In what can only be described as difficult conditions for all, the Group has maintained its growth trajectory and has delivered in the first year of its five-year strategy, GH25. The Group has grown AUM by 42% in the year to 31 December 2020, with a closing AUM of £4.0 billion, up £1.2 billion in the year (2019: £2.8 billion). The AUM growth includes the acquisition of TradeRisks Limited (TradeRisks) in March 2020, which added £184 million to AUM. This growth has helped to increase net core income in the year by 29% to £40.8 million (2019: £31.7 million) and deliver an adjusted operating profit of £12.1 million, up 17% in the year (2019: £10.3 million).

The Group has continued to use its balance sheet to develop projects and support the growth of the business, with the sale of two battery storage projects delivering an additional £1.0 million in net gains in the year (2019: £1.3 million).

Total comprehensive net income after the deduction of amortisation and other acquisition related costs has delivered a profit of £0.8 million (2019: £0.8 million loss). We are also pleased to announce our intention to increase the final dividend by 33% to 6.0 pence for the year ended 31 December 2020, building on the Group's 2019 final dividend of 4.5 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 realised gains on the sale of investments. The performance fees and realised gains on the sale of investments 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, as they are effectively an earn out paid to the sellers of businesses acquired rather than an operating expense.

Adjusted operating profit

	2020	2019
	£'000	£'000
Income	41,936	31,784
Dividend income from associates	202	1,323
Gross core income	42,138	33,107
Rebates, distribution costs and fundraising costs	(1,364)	(1,383)
Net core income	40,774	31,724
Administration overheads (excluding amortisation, depreciation, exceptional items and acquisition related share-based payment charges)	(28,690)	(21,047)
Finance costs	(25)	(390)
Adjusted operating profit	12,059	10,287
Adjusted operating margin	29.6%	32.4%
Performance fees (gross)	-	1,944
Variable compensation attributable to performance fees	-	(1,744)
Performance fees net of costs	-	200

Realised gains on investment	3,482	2,369
Variable compensation attributable to realised gains	(2,474)	(1,037)
Realised gains net of costs	1,008	1,332
Performance fees and realised gains net of costs	1,008	1,532

Adjusted operating profit, performance fees and realised gains net of costs	13,067	11,819

Amortisation and depreciation	(8,931)	(8,527)
Exceptional items	(1,775)	(1,063)
Acquisition related share-based payment charges	(593)	(593)
Net gains/(losses) on investments*	134	(2,463)
Tax	(1,084)	(23)
Operating profit/(loss) after tax	818	(850)
(Loss)/profit from discontinued operations	(12)	55
Total comprehensive net income	806	(795)

*Excluding dividend income from associates of £0.2 million (2019: £1.3 million) and realised gains on investments of £nil (2019: £2.4 million).

The adjusted operating profit metric has increased to £12.1 million (2019: £10.3 million) and the adjusted operating margin based on net core income reduced to 29.6% (2019: 32.4%) following the investment in the business to achieve our growth ambitions.

Income

	2020	2019
	£'000	£'000
Asset management income	40,304	31,427
Dividend and investment income	554	278
Other income	1,078	79
Total income	41,936	31,784
Divided income from associates	202	1,323
Gross core income	42,138	33,107
Rebates, distribution costs and fundraising costs	(1,364)	(1,383)
Net core income	40,774	31,724

Net core income

Total net core income has increased by 29% in the year to £40.8 million (2019: £31.7 million), driven by the strong 35% organic growth in AUM in the year to £4.0 billion (2019: £2.8 billion). This increase includes the revenues generated by the acquisition of TradeRisks, the specialist housing fund manager in March 2020. We have presented 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 the 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, the majority of which are closed ended and provide a stable view on future revenue streams. This is demonstrated through the weighted average life of limited partner management contracts accounting for £1.3 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 £269 million at the end of the year (2019: £224 million), which was an increase in the year, despite the impact of the pandemic.

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 2020 to £554,000 (2019: £278,000), primarily due to dividends from Gresham House Energy Storage Fund plc (GRID) of £314,000 (2019: £149,000).

Other income of £1,078,000 (2019: £79,000) principally reflects the net operating income earned from the two battery storage projects while under the Group's ownership, prior to being sold to GRID.

Dividend income from associates relates to dividends recognised for Gresham House Strategic plc (GHS) of £202,000 in the year (2019: £1,323,000). In the prior year, Noriker Power Limited paid a dividend in specie of GRID shares and cash of £1.2 million to Gresham House plc and GHS declared dividends of £172,000 in the year. 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 £28.7 million in the year (2019: £21.0 million). The increase in cost base includes the costs of the TradeRisks business of £2.4 million, which has been integrated with our Housing division.

The Group has taken the conscious decision to invest in the team in order to grow the business effectively. In the earlier stages of this investment there is an impact on operating margins and the speed at which we achieve our target 40% adjusted operating margins in the medium-term. The benefit of this investment will be recognised when the revenues generated come through increased AUM.

Investment in key team members across the Group in 2020 led to the Group's full-time equivalent headcount standing at 122 at the end of the year up from 94 at the end of 2019. This included 21 new hires as we focused on the key roles needed to grow the business. People costs have consequently increased in the year to £23.3 million from £15.6 million in 2019, alongside variable compensation relating to performance fees and realised gains of £2.5 million (2019: £2.8 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 £0.8 million (2019: £0.7 million), reflecting the additional office costs from the acquisition of TradeRisks offsetting the cost savings as a result of reduced office activity due to the pandemic.

We operate with offices in London, Oxford, Dumfries and Perth and continue to operate a flexible approach to the London office where it is important that we commit to an appropriate size and time frame to accommodate acquisition activity as part of our strategic growth.

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 put in place a £5.0 million revolving credit facility with Santander in December 2020. The facility was not drawn in the year and with no other borrowing in the year the finance costs were £25,000. The £390,000 finance cost in 2019 reflects the interest and arrangement fees paid for the term loan and revolving credit facility of £357,000 and IFRS 16 Lease interest of £33,000.

Amortisation and depreciation

Amortisation of management contracts, client contacts, the website and IT platform development accounted for £8.0 million (2019: £7.7 million) as these intangible assets continue to be amortised over their useful lives. The acquisition of TradeRisks in March 2020 required the assessment of the fair value of the ReSI plc management contract and customer relationships within the businesses, which are being amortised over their useful lives.

Depreciation of £871,000 in the year (2019: £816,000) 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 2020 were £1.8 million compared to £1.1 million in 2019. These include the acquisition costs associated with TradeRisks as well as Appian Asset Management (Appian), which exchanged in December 2020 and is subject to approval from the Central Bank of Ireland, alongside restructuring costs.

Gains/(losses) on investments

	2020	2019
	£'000	£'000
Share of associates' profits	158	246
Gains/(losses) in investments held at fair value	4,599	3,048
Fair value movement in deferred receivable	224	-
Movement in fair value of contingent consideration	(1,163)	(2,065)
Total gains/(losses) on investments	3,818	1,229
Less realised gains on development projects	(3,482)	(2,369)
Less dividend income from associates	(202)	(1,323)
Net gains/(losses) on investments	134	(2,463)

The Group has made gains on its investments and fair value movements in acquisition related contingent consideration totalling £3.8 million in 2020 (2019: £1.2 million).

The share of associates' profits relates to the 23% holding that the Group has in GHS and the Group's 27% holding in Noriker Power Limited (Noriker). The last results announcement from GHS was on 10 November 2020 for the six-month period to 30 September 2020. Under associate accounting, the Group has therefore recognised its share of the loss in the period of £133,000 (2019: £77,000 profit), which included dividends received in the year of £202,000 (2019: £172,000).

The Group's investment in Noriker was acquired for alignment as Noriker develops battery storage projects which are part of the pipeline of projects to be acquired by GRID when operational. The Group's share of Noriker profits in 2020 was £326,000 (2019: £187,000). Noriker did not pay a dividend in 2020 (2019: £1.1 million).

The associates have different year ends to that of the Group, however no material adjustments are required to the reported numbers.

The gain of £4.6 million from investments held at fair value in the year (2019: £3.0 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 realised gain made on the sale of the Thurcroft and Wickham Market battery storage projects to GRID, making a gross realised profit of £3.5 million (2019: £2.4 million gross gain on sale of Red Scar battery project). Both of these sales of battery development projects 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 project was £1.0 million for the Group.

The other notable unrealised value increase in the year was the £0.8 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.

Fair value movement in contingent consideration

Both the TradeRisks and Livingbridge VC acquisitions have a contingent payment element which is driven by AUM growth or revenue performance over a three-year period since acquisition. The contingent consideration payment has been fair valued at each reporting period end with the movement in the fair value recognised in the income statement.

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 Livingbridge VC business revenue performance to December 2020 and estimates for 2021 have been used to estimate the fair value of the contingent consideration. 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 FIM contingent consideration of £4.8million was paid in full in August 2020.

Tax

The Group continues to utilise the losses available against the current trading activity, however this year is now in a tax paying position. The tax charge noted reflects taxable profits within the Group partially offset by the deferred tax liability recognised on the acquisition of the FIM and TradeRisks businesses and the impact of the movement in the fair value of the management contracts.

Financial position

	2020	2019
	£'000	£'000
Assets
Investments*	23,259	21,902
Cash	21,886	19,432
Tangible/realisable assets	45,145	41,334

Intangible assets	59,970	58,545
Other assets	18,057	13,560
Total assets	123,172	113,439

Liabilities
Borrowing	-	-
Contingent consideration	6,933	10,510
Other creditors	19,772	12,692
Total Liabilities	26,705	23,202
Net assets	96,467	90,237

*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 £7,363,000 (2019: (£12,188,000) and "Liabilities of a disposal group classified as held for sale" of £2,072,000 (2019: £9,718,000) and replaced with the investment exposure in "investments in securities" £5,842,000 (2019: £3,678,000) and "investment in associates" of £20,000 (2019: £54,000).

Gresham House Forestry Friends and Family Fund LP - reduced the value by the non-controlling interest amount of £811,000 (2019: £527,000) 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 2020. The tangible/realisable assets supporting this total £45.1 million (2019: £41.3 million), comprise 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	2020	2019
	£'000	£'000
Investment in associates
Gresham House Strategic plc (GHS)	8,456	8,791
Noriker Power Limited	666	341
DevCo Projects	20	54
	9,142	9,186
Investment in securities
DevCo Projects	5,842	3,678
Gresham House Energy Storage Fund plc (GRID)	2,859	5,402
Gresham House Forestry Fund LP	2,068	1,489
Gresham House Strategic Public Equity LP	1,162	844
Residential Secure Income plc (ReSI plc)	864	-
LF Gresham House Smaller Companies Fund	703	633
Gresham House British Strategic Investment Fund (BSIF)	269	-
Strategic Equity Capital plc (SEC)	173	-
Other investments	177	670
	14,117	12,716
Total investments (excluding non-controlling interests)	23,259	21,902

Investments in associates

The Group maintained its holding in GHS in the year at 23%. The last publicly available results for the six months to 30 September 2019 has led to a decrease in the recognised value as an associate of £133,000 (2019: £70,000 increase), which after adjusting for the dividend payment of £202,000 (2019: £172,000) in the year results in a value of £8,456,000 (2019: £8,791,000).

The Group treats Noriker as an associate and the Group's share of Noriker's profits for the year to 31 December 2020 was £326,000 (2019: £187,000).

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 £5.9 million (2019: £3.7 million) at the end of 2020 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 2021 and 2022. During the year, the Group sold two projects, Thurcroft and Wickham Market, which delivered a net gain of £1.0 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 2020, the Group reduced its direct investment in GRID by £2.5 million to £2.9 million 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 £2.0 million (2019: £1.5 million), excluding non-controlling interests.

Gresham House Strategic Public Equity LP continued to invest during 2020 and generated realised and unrealised gains of £197,000 (2019: £177,000).

Following the acquisition of TradeRisks, the Group owns £864,000 in ReSI plc, the listed housing REIT, providing further alignment with our clients.

The other investments demonstrate the Group's ability to co-invest alongside the funds that it manages and provides alignment with clients, for example committing £1.0 million at the final close to BSIF.

Cash and Borrowing

The cash balance of the Group was £21.9 million at the end of the year (2019: £19.4 million) and reflected operating cash profits generated in the year as well as a number of other items.

The issuance of shares in the Company following investor-lead demand in March 2020 generated £7.7 million after costs. The Group also sold two DevCo projects, Thurcroft and Wickham Market, in October and December respectively, generating £5.7 million gross proceeds.

The acquisition of TradeRisks in March 2020 was settled in £8.0 million net cash and the issuance of £3.5 million of Company shares.

The completion of the FIM earn out period resulted in a cash payment of £4.8 million in final settlement of the acquisition of the FIM business in August 2020 and the payment of the first instalment of contingent consideration of £5.0 million was made to the sellers of Livingbridge VC LLP in December 2020.

Cash generated by operating activity and the above was used to support growth initiatives across the business in areas such as investing a further £1.3 million in DevCo Projects and committing £1.0 million to BSIF.

As highlighted, the DevCo Projects have borrowed to fund the acquisition of utility scale batteries, and this exposure is netted off against the DevCo Projects. On consolidation, the IFRS statement of financial position includes this borrowing amount of £2.1 million under liabilities of a disposal group classified as held for sale, although this borrowing has no recourse to the Group (2019: £9.7 million).

Finally, to provide flexibility as the Group enters 2021 with a range of opportunities to grow the business the Group has put in place a new Revolving Credit Facility (RCF) with Santander. The RCF has a £5.0 million limit, with a £5.0 million accordion allowing the Group to extend the size of the RCF to £10.0 million, with a three-year term.

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 2020, the net book value of management contracts and other intangible assets was £30.3 million (2019: £34.5 million), reflecting the amortisation of the management contracts over their useful lives, and the addition of the ReSI plc management contract following the acquisition of TradeRisks. 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 £29.7 million (2019: £24.1 million). Further details are included in the notes to the financial statements.

Contingent consideration

Contingent consideration reduced from £10.5 million to £6.9 million in the year, reflecting the final settlement of the FIM earn out of £4.8 million in August 2020, the settlement of the first deferred payment to the sellers of Livingbridge VC LLP of £5.0 million in December 2020. This was offset by the addition of the £3.3 million fair value of the contingent consideration payable to the sellers of TradeRisks, amounts payable on DevCo Projects of £2.1 million plus the unwind of the discount from the year end to the date of settlement.

Going Concern

The Directors carry out a rigorous assessment of all the factors affecting the business in deciding to adopt a going concern basis for the preparation of the accounts. The Directors have reviewed and examined the financial and other processes embedded in the business, in particular the annual budget process. On the basis of such review and the significant liquid assets underpinning the balance sheet relative to the Group's predictable operating cost profile, the Directors consider that the adoption of a going concern basis, covering a period of at least 12 months from the date of this report, is appropriate.

Kevin Acton

Chief Financial Officer

10 March 2021

GROUP STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 DECEMBER

		2020	2019
	Notes	£'000	£'000
Income
Asset management income		40,304	31,427
Dividend and interest income		554	278
Other operating income		1,078	79
Performance fees and carried interest		-	1,944
Total income	1	41,936	33,728
Operating costs
Administrative overheads	3	(42,052)	(34,331)
Net operating loss before exceptional items		(116)	(603)
Finance costs	7	(25)	(390)
Exceptional items	6	(1,775)	(1,063)
Net operating loss after exceptional items		(1,916)	(2,056)
Gains and losses on investments and fair value movements
Share of associates' profits/(losses)	17	158	246
Gains and losses on investments held at fair value	12	4,599	3,048
Movement in fair value of contingent consideration		(1,163)	(2,065)
Movement in value of deferred receivable		224	-
Operating profit/(loss) before taxation		1,902	(827)
Taxation	9	(1,084)	(23)
Operating profit/(loss) from continuing operations		818	(850)
(Loss)/profit from discontinued operations		(12)	55
Profit/(loss) and total comprehensive income		806	(795)

Attributable to:
Equity holders of the parent		577	(850)
Non-controlling interest		229	55
		806	(795)
Basic profit/(loss) per ordinary share (pence)	10	1.9	(3.2)
Diluted profit/(loss) per ordinary share (pence)	10	1.8	(3.2)
Basic adjusted profit per ordinary share (pence)	10	34.5	35.3
Diluted adjusted profit per ordinary share (pence)	10	32.9	31.2

STATEMENTS OF CHANGES IN EQUITY YEAR ENDED 31 DECEMBER

Group 2020	Notes	Ordinary share capital	Share premium	Retained reserves	Equity attributable to equity shareholders	Non- controlling interest	Total equity
		£'000	£'000	£'000	£'000	£'000	£'000
Balance at 31 December 2019		6,956	69,242	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	28	2	38	(4,863)	(4,823)	-	(4,823)
Issue of shares	26	1,065	10,762	-	11,827	-	11,827
Dividends paid	11	-	-	(1,351)	(1,351)	-	(1,351)
Total contributions by and distributions to owners		1,067	10,800	(6,214)	5,653	-	5,653
Balance at 31 December 2020		8,023	80,042	8,402	96,467	811	97,278

Group 2019	Notes	Ordinary share capital	Share premium	Share warrant reserve	Retained reserves	Equity attributable to equity shareholders	Non- controlling interest	Total equity
		£'000	£'000	£'000	£'000	£'000	£'000	£'000
Balance at 31 December 2018		6,218	57,901	58	15,036	79,213	527	79,740
Adjustments for changes in accounting policy		-	-	-	6	6	-	6
Balance at 31 December 2018 after adjustment		6,218	57,901	58	15,042	79,219	527	79,746
Loss and total comprehensive income for the year		-	-	-	(850)	(850)	55	(795)
Contributions by and distributions to owners
Share-based payments	28	8	189	-	642	839	-	839
Issue of shares	26	730	11,152	(58)	-	11,824	-	11,824
Dividends paid	11	-	-	-	(795)	(795)	-	(795)
Total contributions by and distributions to owners		738	11,341	(58)	(153)	11,868	-	11,868
Balance at 31 December 2019		6,956	69,242	-	14,039	90,237	582	90,819

YEAR ENDED 31 DECEMBER

Company 2020	Notes	Ordinary share capital	Share premium	Retained reserves	Total equity
		£'000	£'000	£'000	£'000
Balance at 31 December 2019		6,956	69,242	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	26	1,067	10,800	-	11,867
Dividends paid	11	-	-	(1,351)	(1,351)
Total contributions by and distributions to owners		1,067	10,800	(1,351)	10,516
Balance at 31 December 2020		8,023	80,042	9,257	97,322

Company 2019	Notes	Ordinary share capital	Share premium	Share warrant reserve	Retained reserves	Total equity
		£'000	£'000	£'000	£'000	£'000
Balance at 31 December 2018		6,218	57,901	58	13,394	77,571
Adjustments for changes in accounting policy		-	-	-	6	6
Balance at 31 December 2018 after adjustment		6,218	57,901	58	13,400	77,577
Loss and total comprehensive income for the year		-	-	-	(226)	(226)
Contributions by and distributions to owners
Issue of shares	26	738	11,341	(58)	-	12,021
Dividends paid	11	-	-	-	(795)	(795)
Total contributions by and distributions to owners		738	11,341	(58)	(795)	11,226
Balance at 31 December 2019		6,956	69,242	-	12,379	88,577

STATEMENTS OF FINANCIAL POSITION AS AT 31 DECEMBER

		Group		Company
	Notes	2020	2019	2020	2019
Assets		£'000	£'000	£'000	£'000
Non-current assets
Investments	12	9,086	9,621	5,342	7,550
Tangible fixed assets	13	1,090	813	564	610
Investment in subsidiaries	16	-	-	79,872	79,872
Investment in associates	17	9,142	9,186	65	65
Intangible assets	14	59,970	58,545	749	386
		79,288	78,165	86,592	88,483
Current assets
Trade receivables	18	3,184	5,334	-	-
Accrued income and prepaid expenses	19	13,783	7,200	760	159
Other current assets	20	551	1,420	6,885	3,988
Deferred tax	23	1,051	613	153	276
Cash and cash equivalents		21,886	19,432	7,826	1,940
Non-current assets held for sale
Assets of a disposal group held for sale	15	7,363	12,188	-	-
Total current assets and non-current assets held for sale		47,818	46,187	15,624	6,363
Total assets		127,106	124,352	102,216	94,846

Current liabilities
Trade and other payables	21	18,780	15,210	243	283
Short-term borrowings	22	-	-	4,651	5,986
Liabilities of a disposal group classified as held for sale
Liabilities of a disposal group classified as held for sale	15	2,072	9,718	-	-
		20,852	24,928	4,894	6,269
Total assets less current liabilities		106,254	99,424	97,322	88,577

Non-current liabilities
Deferred taxation	23	3,227	2,632	-	-
Long term borrowings	24	-	-	-	-
Other creditors	25	5,749	5,973	-	-
		8,976	8,605	-	-
Net assets		97,278	90,819	97,322	88,577

Capital and reserves
Ordinary share capital	26	8,023	6,956	8,023	6,956
Share premium	29	80,042	69,242	80,042	69,242
Retained reserves	29	8,402	14,039	9,257	12,379
Equity attributable to equity shareholders		96,467	90,237	97,322	88,577
Non-controlling interest	29	811	582	-	-
Total equity		97,278	90,819	97,322	88,577

Basic net asset value per ordinary share (pence)	30	300.6	324.3	303.6	318.3
Diluted net asset value per ordinary share (pence)	30	287.4	288.2	290.3	282.9

The loss after tax for the Company for the year ended 31 December 2020 was £1,771,000. The financial statements were approved and authorised for issue by the Board and were signed on its behalf on 10 March 2021. Kevin Acton Chief Financial Officer

GROUP STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 31 DECEMBER

		2020	2019
	Notes	£'000	£'000
Cash flow from operating activities
Net cash generated from operations	31	17,592	9,646
Corporation tax paid		(1,856)	(178)
Interest paid on loans		(25)	(265)
Net cash flow from operating activities		15,711	9,203

Cash flow from investing activities
Acquisition of TradeRisks Limited		(8,045)	-
Deferred consideration paid		(9,842)	-
Investment in associates		-	(65)
Dividends received from associates		186	118
Purchase of investments		(1,007)	(2,149)
Sale of investments		3,032	319
Deferred proceeds received on sale of investment properties		-	1,033
Investment in DevCo Projects		(1,271)	(1,510)
DevCo loans repaid		1,096	-
Proceeds received on sale of DevCo projects		4,581	-
Purchase of fixed assets		(152)	(269)
Sale of fixed assets		-	40
Purchase of intangible assets		(584)	(302)
		(12,006)	(2,785)
Cash flow from financing activities
Repayment of loans		-	(10,000)
Receipt of loans (net of fees paid)		-	-
Share issue proceeds		8,010	6,495
Share issue costs		(347)	(8)
Share warrants exercised		182	4,859
Share-based payments settled		(7,125)	(833)
Dividends paid		(1,351)	(795)
Capital element of lease payments		(620)	(662)
		(1,251)	(944)

Increase in cash and cash equivalents		2,454	5,474

Cash and cash equivalents at start of year		19,432	13,958

Cash and cash equivalents at end of year		21,886	19,432

COMPANY STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 31 DECEMBER

		2020	2019
	Notes	£'000	£'000
Cash flow from operating activities
Net cash generated from operations	31	(1,180)	118
Interest paid on loans		(8)	(255)
Net cash flow from operating activities		(1,188)	(137)

Cash flow from investing activities
Purchase of investments		(930)	(2,149)
Sale of investments		3,032	319
DevCo loans repaid		1,096	-
Investment in associates		-	(65)
Purchase of fixed assets		(152)	(267)
Sale of fixed assets		-	15
Purchase of intangible assets		(593)	(302)
		2,453	(2,449)
Cash flow from financing activities
Repayment of loans		-	(10,000)
Net advances to Group undertakings		(1,387)	(1,588)
Share issue proceeds		8,010	6,495
Share issue costs		(347)	(8)
Share warrants exercised		182	4,859
Dividends paid		(1,351)	(795)
Capital element of lease payments		(486)	(585)
		4,621	(1,622)

Increase/(decrease) in cash and cash equivalents		5,886	(4,208)

Cash and cash equivalents at start of year		1,940	6,148

Cash and cash equivalents at end of year		7,826	1,940

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 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 and certain classes of property plant and equipment 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 2020 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. Whilst Brexit and COVID-19 has impacted the environment in which the Group operates it has not had a material impact on the Group's resources. 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.

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.

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 29, the loss for the year being £1,771,000 (2019: £226,000).

(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 Housing, 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. 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. The potential volatility of performance fee revenue means that it 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.

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.

(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.

(f) Expenses

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

(g) Tangible fixed assets

Each class of tangible fixed assets is carried at cost less, where applicable, any accumulated depreciation.

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

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

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.

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 of the acquired business. The Directors review the amount of contingent consideration likely to become payable at each period end date, the major assumption being the level of future profits of the acquired business. Contingent consideration payable is discounted to its fair value in accordance with applicable International Financial Reporting Standards.

(n) Pensions

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

(o) Share-based payments

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

Fair value is measured using either a Black-Scholes or 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.

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

(q) 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) and Noriker Power Limited (Noriker)

(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) Valuation of Management Contract and Customer Relationships as part of the TradeRisks acquisition

(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.

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 period the service relates to is assessed and for past service provision the catch-up management fee is recognised when the new Limited Partner joins the fund.

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 and the outcome is known. No performance fee was recognised from GHS 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 2020 by the VCTs managed by the Group.

(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 60-70% of the equity in 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) is accounted for as an associate as Devco Limited holds only 24% of the equity and is 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 tangible fixed assets.

d) Assets held for sale (IFRS 5) and loss of control - the sale of the DevCo Projects (Wickham and Thurcroft) 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 on Comprehensive Income. At year end, a sale of an additional DevCo Project has been agreed with GRID and is documented, including price and conditions to complete the sale. It is expected that the sale process will complete within a three to 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 2020.

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

GHS is managed by GHAM and the Company also holds 23% of the ordinary share capital as at 31 December 2020. The Directors consider that the Company exercises significant influence over GHS, but not control, through its holding and the investment management agreement in place with GHAM. GHS therefore continues to be classified as an associate.

Noriker is 27% owned by the Group and is not an entity managed by GHAM. There are no specific additional rights that the Group have as investors in Noriker, however with a 27% holding, the Board considers this a position of significant influence and has concluded that Noriker should be treated as an associate.

These are included in the table in the consolidation assessment below for completeness.

(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
GHS	Yes	Substantive	Market norm	23%	Agent	Associate
Noriker	No	n/a	n/a	27%	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	0.7%	Agent	No consolidation
Residential Secured Income plc	Yes	Substantive	Market norm	0.5%	Agent	No consolidation
BSIF	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
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.

Gresham House Energy Storage Fund plc (GRID) is managed by GHAM and the Company has a direct and indirect investment in GRID totalling 0.7%. 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 6% 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.

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 2020 the Group held 0.5% 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 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.

Gresham House British Strategic Investment Fund (BSIF) Strategy, which comprises the 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.

The remaining funds of the Baronsmead 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 the recently won mandate for 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. 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 2020.

(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 2020 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 and TradeRisks businesses has been estimated with reference to the contractual requirements as at 31 December 2020.

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 fair value has been based on a weighted probability of outcomes over the three-year period and discounted by 15%.

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.

· £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.

(vii) Valuation of Management Contract and Customer Relationships as part of the TradeRisks acquisition

The acquisition of TradeRisks Limited (TradeRisks) in March 2020 is classified as a business combination under IFRS 3: Business Combinations. The management contract of ReSI plc, the listed housing fund, is therefore required to be fair valued. 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.

TradeRisks also had a number of customer relationships that have been fair valued using the annual retainers in place. A discounted cash flow model has also been used to value these customer relationships factoring in attrition rates, contributory asset charges and a consistent discount rate with the management contract valuation.

(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.

NOTES TO THE ACCOUNTS

1 INCOME

	2020	2019
	£'000	£'000
Asset management income
Asset management income	40,304	31,427
	40,304	31,427
Dividend and interest income
Dividend income - Listed UK	316	166
Interest receivable: Banks	69	52
Other	169	60
	554	278
Other operating income
Other income	51	79
DevCo income*	1,027	-
	1,078	79

Performance fees
Performance fees	-	1,944
	-	1,944

Total income	41,936	33,728
Total income comprises
Asset management income	40,304	31,427
Dividends	316	166
Interest	238	112
Other operating income	1,078	79
Performance fees	-	1,944
	41,936	33,728

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

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 and Sustainable Infrastructure and Housing 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.

2 SEGMENTAL REPORTING - continued

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 performance fees	-	-	-	-
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 tangible fixed assets				(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 before taxation from continuing operations				1,902
*Share of associate's profit/(loss) of £44,000 excludes dividend income received in the year of £202,000.

For the year ended 31 December 2019	Real Assets	Strategic Equity	Central	Consolidated
Gross core income	£'000	£'000	£'000	£'000
Asset management income	18,483	12,944	-	31,427
Interest income	41	24	47	112
Dividend income	140	25	-	166
Other operating income	47	14	18	79
Dividend income from associates*	1,151	172	-	1,323
Rebates, distribution costs and fundraising costs	(421)	(962)	-	(1,383)
Net core income	19,441	12,218	65	31,724
Segment expenses	(7,698)	(5,010)	(8,339)	(21,047)
Finance costs	-	-	(390)	(390)
Adjusted operating profit/(loss)	11,743	7,208	(8,664)	10,287
Net performance fees	-	200	-	200
Net realised gains on investments	1,332	-	-	1,332
Adjusted operating profit including performance fees and realised gains on investments	13,075	7,408	(8,664)	11,819
Exceptional items				(1,063)
Depreciation and amortisation				(8,484)
Loss on disposal of tangible fixed assets				(43)
Share of associate's profit/(loss)*				(1,077)
Share-based payments relating to acquisitions				(593)
Profits on investments at fair value				679
Movement in fair value of contingent consideration				(2,065)
Loss before taxation from continuing operations				(827)
* Share of associate's profit/(loss) of £1,077,000 excludes dividend income received in the year of £1,323,000.

2 SEGMENTAL REPORTING - continued

During the year the Group had one customer accounting for more than 10% of the Group's revenue, totalling £4,631,000 (2019: one customer, totalling £4,610,000).

Other information:

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

31 December 2019	Real Assets	Strategic Equity	Central	Consolidated
	£'000	£'000	£'000	£'000
Segment assets	46,334	64,241	13,777	124,352
Segment liabilities	(12,371)	(7,025)	(14,137)	(33,533)
	33,963	57,216	(360)	90,819
Capital expenditure	-	-	610	610
Depreciation and amortisation	2,742	4,865	920	8,527
Non-cash expenses other than depreciation	312	-	1,844	2,156
Goodwill included within segment assets	11,896	12,167	-	24,063

3 OPERATING COSTS

Administrative overheads comprise the following:

	2020	2019
	£'000	£'000
Directors' emoluments (excluding benefits in kind and share-based payments)	1,898	1,809
Auditor's remuneration *	246	176
Amortisation	8,033	7,668
Depreciation	871	816
Loss on disposal of assets	27	43
Wages and salaries	17,402	12,310
Social security costs	3,575	1,986
Share-based payments	2,266	1,844
Other operating costs	7,734	7,478
	42,052	34,130
Staff costs (including Directors' emoluments) were:
Wages, salaries and fees	19,237	14,072
Social security costs	3,575	1,986
Pension costs	716	539
	23,528	16,597

3 OPERATING COSTS - continued

* A more detailed analysis of auditor's remuneration is as follows:	2020	2019
	£,000	£,000
Audit fees - Company and consolidated financial statements	40	40
Audit fees - audit of the Company's subsidiaries	206	136
	246	176

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

The average number of persons employed by the Group, including the Executive Directors, was 113 (2019: 87). The Company has no employees.

4 DIRECTORS' EMOLUMENTS

The emoluments of the Directors are disclosed in the Remuneration Report in the 2020 Annual Report.

The Directors are considered to be the Group's only key management personnel. Employers' National Insurance Contributions in respect of the Directors for the year were £270,000 (2019: £198,000).

5 Business combinations

a) 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 are as follows:

	Net book value	Adjustments	Fair value
	£'000	£'000	£'000
Investments	463	-	463
Tangible fixed assets	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.

5 BUSINESS COMBINATIONS - continued

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.

· £2.0 million payable within 6 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 payable within the next 12 months.

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 has 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 has delayed a number of debt advisory transactions which are now expected to complete 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 have 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.

b) Appian Asset Management Limited

On 17 December 2020 the Group announced the acquisition of Appian Asset Management Limited (Appian) for an initial consideration of €4.55 million, with €3.6 million payable on completion (€2.7 million in cash from existing resources of the Group and €0.9 million in new shares issued by the Company) and including €0.95 million for cash within the business (the Acquisition). Further variable deferred consideration is payable subject to targeted earnings performance up to 31 December 2023, bringing potential total consideration to €10.0 million. The transaction is subject to approval from the Central Bank of Ireland and is expected to complete in the first half of 2021.

Based in the Republic of Ireland, Appian is an active asset manager with c.€330 million in AUM as at 30 September 2020 with €0.4 million normalised EBITDA for the year to 30 November 2020. The firm manages a range of funds which invest globally across traditional and alternative asset classes including equities, property, infrastructure, and forestry.

Appian's funds will complement those offered by Gresham House, with a planned social housing fund in Ireland complementary to Gresham House's Residential Secure Income LP fund to be launched in 2021, targeting the shared ownership housing market and aiming to unlock a supply of more affordable houses.

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

6 EXCEPTIONAL ITEMS

	2020	2019
	£'000	£'000
Acquisition costs
TradeRisks Limited	868	-
Appian Asset Management Limited	328	-
FIM Services Limited	-	2
Livingbridge VC	-	10
Joint Venture costs	219	251
Other	30	-
	1,445	263
Restructuring costs	330	646
Exceptional legal fees	-	154
	1,775	1,063

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

	2020	2019
	£'000	£'000
Interest payable on bank loans	-	188
Finance fees	-	169
Interest payable on leases	25	33
	25	390

See Note 24 for details of borrowings.

8 IFRS 16 LEASES

IFRS 16 Leases replaced IAS 17 Leases and was effective for annual periods beginning on or after 1 January 2019. The Group has therefore adopted the standard from 1 January 2019.

The only material impact on the Group relates to leases for use of office space at various locations. These were earlier classified as operating leases under IAS 17, with lease rentals charged to operating expenses on a straight-line basis over the lease term. As required by IFRS 16, 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 are 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%.

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.

	2020	2019
	£'000	£'000
ROU asset cost	2,221	1,344
ROU asset accumulated depreciation	(1,623)	(896)
Retained reserves *	(6)	(6)
Depreciation expense	666	665

* 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.

8 IFRS 16 LEASES - continued

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

	Group		Company
	2020	2019	2020	2019
	£'000	£'000	£'000	£'000
Balance as at 1 January	445	-	243	-
IFRS 16 restatement	346	1,065	-	838
Additions	470	42	446	-
Cash payments	(645)	(695)	(486)	(618)
Interest expense	25	33	8	23
As at 31 December	641	445	211	243

Please see Note 32 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 2020 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;

(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 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.

9 TAXATION

	2020	2019
	£'000	£'000
(a) Analysis of credit in period:
UK Corporation tax at 19% (2019: 19%)	1,778	680
(Over)/underprovision in prior year	(237)	268
Deferred tax	(457)	(925)
Total tax charge	1,084	23

(b) Factors affecting tax credit for period:
Profit/(loss) on ordinary activities before tax multiplied by standard rate of corporation tax in the UK of 19% (2019: 19%)	361	(157)
Tax effect of:
Dividend income not taxable	(73)	-
Amortisation not taxable	617	945
Other gains and losses not taxable	(913)	226
Utilisation of previously unrecognised tax losses	(11)	(1,259)
Prior year adjustment	(237)	268
Deferred tax not recognised	(689)	-
Fixed asset timing differences	2,029	-
Actual tax charge	1,084	23

The Group has unutilised tax losses of approximately £10.2 million (2019: £10.3 million) available against future corporation tax liabilities. A potential deferred taxation asset of £1.6 million (2019: £1.5 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 £0.2 million (2019: £0.3 million) in the current year. No material uncertain tax positions exist as at 31 December 2020. This assessment relies on estimates and assumptions and may involve a series of complex judgments about future events. To the extent that the final tax outcome of these matters is different than 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/(loss) per share

	2020	2019
Total net profit/(loss) attributable to equity holders of the parent (£'000)	577	(850)
Weighted average number of shares in issue during the period	30,479,015	26,479,021
Basic profit/(loss) per share attributable to equity holders of the parent (pence)	1.9	(3.2)
Diluted profit/(loss) per share attributable to equity holders of the parent (pence)	1.8	(3.2)

1,475,509 (2019: 3,491,093) 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 which, as required under IAS 33, Earnings per Share, were not recognised in the previous year as they would reduce the loss per share (see Note 27).

(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 relating to acquisitions, profits and losses on disposal of tangible fixed assets, net performance fees, 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:

	2020	2019
	£'000	£'000
Net operating loss after exceptional items	(1,916)	(2,056)
Add back:
Exceptional operating expenses	1,775	1,063
Depreciation and amortisation	8,904	8,484
Loss on disposal of tangible fixed assets	27	43
Dividend income received from associates	202	1,323
Net performance fees	-	(200)
Variable compensation attributable to realised gains on investments	2,474	1,037
Share-based payments relating to acquisitions	593	593
Adjusted profit attributable to equity holders of the parent before tax	12,059	10,287
Corporation tax attributable to adjusted operating profit	(1,541)	(948)
Adjusted profit attributable to equity holders of the parent after tax	10,518	9,339
Adjusted profit per share (pence) - basic*	34.5	35.3
Adjusted profit per share (pence) - diluted*	32.9	31.2

*The 2019 adjusted profit per share (basic and diluted) have been restated to include the deduction of corporation tax.

11 DIVIDENDS

In May 2020 the Company paid £1,351,000 which represents a final dividend for the year ended 31 December 2019 of 4.5 pence per share. A final dividend for the year ended 31 December 2018 of 3.0 pence per share totalling £795,000 was paid in May 2019.

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.

	2020	2019
	£'000	£'000
Proposed final dividend for the year ended 31 December 2020 of 6.0 pence (2019: 4.5 pence) per share	1,926	1,252

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
	2020	2019	2020	2019
	£'000	£'000	£'000	£'000
Non-current assets	9,086	9,621	5,342	7,550
Other debtors due within one year - Investment in development projects (see Note 20)	551	1,208	551	1,208
	9,637	10,829	5,893	8,758

A further analysis of total investments is as follows:	Group		Company
	2020	2019	2020	2019
	£'000	£'000	£'000	£'000
Listed securities - on the London Stock Exchange	3,991	5,624	3,202	5,624
Securities dealt in under AIM	950	531	950	531
Securities dealt in under Aquis Exchange	7	10	7	10
Unlisted securities	4,689	4,664	1,734	2,593
Closing value at 31 December	9,637	10,829	5,893	8,758
Investments valued at fair value through profit and loss	8,874	8,914	5,130	6,843
Loans and receivables carried at amortised cost	763	1,915	763	1,915
	9,637	10,829	5,893	8,758

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

	Group		Company
	2020	2019	2020	2019
	£'000	£'000	£'000	£'000
Opening cost	8,724	7,346	6,975	5,597
Opening net unrealised losses	190	(835)	(132)	(950)
Opening value	8,914	6,511	6,843	4,647
Movements in the year:
Purchases at cost	1,309	1,940	885	1,940
Additions through business combinations	463	-	-	-
Sales - proceeds	(2,883)	(257)	(2,883)	(257)
Sales - realised gains and (losses) on sales	226	(305)	226	(305)
Net unrealised gains and (losses)	845	1,025	59	818
Closing value	8,874	8,914	5,130	6,843
Closing cost	7,839	8,724	5,203	6,975
Closing net unrealised gains/(losses)	1,035	190	(73)	(132)
Closing value	8,874	8,914	5,130	6,843

The movement in loans and receivables carried at amortised cost is:	Group		Company
	2020	2019	2020	2019
	£'000	£'000	£'000	£'000
Opening value	1,915	1,613	1,915	1,613
Movements in the year:
Purchases at cost	47	1,332	47	1,332
Sales - proceeds	(1,245)	(62)	(1,245)	(62)
Sales - realised gains and (losses) on sales	46	6	46	6
Net unrealised gains and (losses)	-	(47)	-	(47)
Transferred on acquisition of subsidiary undertaking	-	(927)	-	(927)
Closing value	763	1,915	763	1,915

Gains and losses on investments held at fair value	Group		Company
	2020	2019	2020	2019
	£'000	£'000	£'000	£'000
Net realised gains and (losses) on disposal	272	(299)	272	(299)
Net unrealised gains and (losses)	845	978	59	771
Profit on disposal of subsidiary undertaking	3,482	2,369	-	-
Net gains/(losses) on investments	4,599	3,048	331	472

13 TANGIBLE FIXED ASSETS

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

Group 2019	Office equipment	Motor vehicles	Leasehold property	Right of use assets	Total
	£'000	£'000	£'000	£'000	£'000
Cost
As at 1 January	191	297	4	-	492
IFRS 16 restatement	-	-	-	1,302	1,302
Additions	101	166	-	42	309
Disposals during the year	(32)	(174)	-	-	(206)
As at 31 December	260	289	4	1,344	1,897

Depreciation
As at 1 January	56	101	3	-	160
IFRS 16 restatement	-	-	-	231	231
Charge for the year	67	83	1	665	816
Disposals during the year	(27)	(96)	-	-	(123)
As at 31 December	96	88	4	896	1,084
Net book value as at 31 December	164	201	-	448	813

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

13 TANGIBLE FIXED ASSETS - continued

Company 2019	Office equipment	Motor vehicles	Right of use assets	Total
	£'000	£'000	£'000	£'000
Cost
As at 1 January	178	-	-	178
IFRS 16 restatement	-	-	991	991
Additions	107	284	-	391
Disposals during the year	(32)	(49)	-	(81)
As at 31 December	253	235	991	1,479

Depreciation
As at 1 January	52	-	-	52
IFRS 16 restatement	-	-	157	157
Charge for the year	64	42	589	695
Disposals during the year	(27)	(8)	-	(35)
As at 31 December	89	34	746	869
Net book value as at 31 December	164	201	245	610

14 INTANGIBLE ASSETS

Group 2020	Goodwill	Customer Relationships	Contracts	IT platform development	Total
	£'000	£'000	£'000	£'000	£'000
Cost
As at 1 January	24,063	3,072	43,764	588	71,487
Additions through business combinations	5,655	263	2,886	97	8,901
Other additions	-	-	-	593	593
Disposals	-	-	-	(36)	(36)
As at 31 December	29,718	3,335	46,650	1,242	80,945

Amortisation
As at 1 January	-	2,457	10,283	202	12,942
Charge for the year	-	659	7,128	246	8,033
As at 31 December	-	3,116	17,411	448	20,975
Net book value as at 31 December	29,718	219	29,239	794	59,970
Remaining amortisation period	n/a	4 years	1-23 years	1-4 years

Group 2019	Goodwill	Customer Relationships	Contracts	IT platform development	Total
	£'000	£'000	£'000	£'000	£'000
Cost
As at 1 January	24,063	3,072	43,764	286	71,185
Additions	-	-	-	302	302
As at 31 December	24,063	3,072	43,764	588	71,487

Amortisation
As at 1 January	-	1,843	3,342	89	5,274
Charge for the year	-	614	6,941	113	7,668
As at 31 December	-	2,457	10,283	202	12,942
Net book value as at 31 December	24,063	615	33,481	386	58,545
Remaining amortisation period	n/a	1 year	1-24 years	1-4 years

14 INTANGIBLE ASSETS - continued

Company	2020	2019
	IT platform development	IT platform development
	£'000	£'000
Cost
As at 1 January	588	286
Additions	593	302
As at 31 December	1,181	588

Amortisation
As at 1 January	202	89
Charge for the year	230	113
As at 31 December	432	202
Net book value as at 31 December	749	386
Remaining amortisation period	1-4 years	1-4 years

The assumptions used to fair value the contracts, including discount rates, growth rates and cash flow models are described in more detail in the critical accounting estimates and judgements section of the accounting policies.

Goodwill has been assessed for each business acquired for impairment as at 31 December 2020. This assessment includes an analysis of the expected cash flows from the specific businesses based on expected fundraising and other growth factors as well as the associated cost of delivering the planned revenues. A discount has been applied to the cash flows to determine an estimate of the fair value of the business, which is used to assess whether goodwill should be impaired.

No reasonably possible change in any of the variables used in the goodwill impairment tests would give rise to an impairment.

15 DISPOSAL GROUP HELD FOR SALE

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 60-70% of the equity in and the Group has also lent funds for the development of the projects.

The sale of the DevCo Projects has been agreed with GRID and is documented, including price and conditions to complete the sale. It is expected that the sale process will complete within a six to 12-month time frame, as such it has been deemed appropriate to treat the DevCo Projects as assets held for sale under IFRS 5. Specifically, they are classified as a "disposal group" held for sale, whose value will be primarily recovered by sale.

The assets and liabilities of those SPVs which have been consolidated by the Group are:

	2020	2019
	£'000	£'000
Assets of a disposal group held for sale	7,363	12,188
Liabilities of a disposal group classified as held for sale	(2,072)	(9,718)
	5,291	2,470

The Group's interest in other DevCo Projects can be summarised as follows:

	2020	2019
	£'000	£'000
Loans and receivables brought forward	1,208	1,290
Additions - net of abort costs	-	2,511
Disposals	(657)	-
Transferred on acquisition of subsidiary undertaking *	-	(2,593)
Loans and receivables carried forward (Note 12)	551	1,208

* During the previous year the Group acquired a controlling interest in HC ESS6 Limited and HC ESS7 Limited. Amounts previously recognised as loans and receivables were therefore eliminated on consolidation of these entities.

15 DISPOSAL GROUP HELD FOR SALE - continued

The Group's total exposure to DevCo Projects is:

	2020	2019
	£'000	£'000
Net assets and liabilities of a disposal group held for sale	5,291	2,470
Loans and receivables	551	1,208
	5,842	3,678

During the year the Group acquired a controlling interest in GridReserve Limited, Lister Battery Limited and Monets Garden Battery Limited.

During the year the Group disposed of HC ESS6 Limited (Wickham Market) and HC ESS7 Limited (Thurcroft), with total net proceeds of £3,740,000 due, realising a net gain on disposal of £3,482,000.

16 INVESTMENT IN SUBSIDIARIES

	Company
	2020	2019
Subsidiary undertakings	£'000	£'000
As at 1 January	79,872	79,872
Additions	-	-
As at 31 December	79,872	79,872

The subsidiary undertakings of Gresham House plc are as follows:

Held by Company		Held by other Group companies	Country of incorporation and registered office
	%	%
Aitchesse Limited	-	100	5 New Street Square, London EC4A 3TW, England
Chartermet Limited	-	95	5 New Street Square, London EC4A 3TW, England
Deacon Commercial Development and Finance Limited	-	100	5 New Street Square, London EC4A 3TW, England
Deacon Knowsley Limited	-	95	5 New Street Square, London EC4A 3TW, England
FIM Services Limited	-	100	5 New Street Square, London EC4A 3TW, England
FIM Windfarms General Partner 2 Limited	-	100	5 New Street Square, London EC4A 3TW, England
FIM Windfarms (SC) General Partner Limited	-	100	15 Atholl Crescent, Edinburgh, EH3 8HA, Scotland
GH ReSiHoldings Limited	-	100	5 New Street Square, London EC4A 3TW, England
Gresham House Asset Management Limited	-	100	5 New Street Square, London EC4A 3TW, England
Gresham House Carry Warehousing Limited	-	100	5 New Street Square, London EC4A 3TW, England
Gresham House Capital Partners Limited	-	100	5 New Street Square, London EC4A 3TW, England
Gresham House Company Secretarial 1 Limited	-	100	5 New Street Square, London EC4A 3TW, England
Gresham House Company Secretarial 2 Limited	-	100	5 New Street Square, London EC4A 3TW, England
Gresham House Devco Limited	-	100	5 New Street Square, London EC4A 3TW, England
Gresham House EIS Limited	-	100	5 New Street Square, London EC4A 3TW, England
Gresham House Energy Storage Limited	-	100	5 New Street Square, London EC4A 3TW, England
Gresham House Finance Limited	-	100	5 New Street Square, London EC4A 3TW, England
Gresham House Forestry Limited	-	100	Riverview House, Friarton Road, Perth, PH2 8DF, Scotland
Gresham House Forestry Friends and Family LP	71.4	-	Riverview House, Friarton Road, Perth, PH2 8DF, Scotland
Gresham House Forest Funds General Partner Limited	-	100	5 New Street Square, London EC4A 3TW, England
Gresham House (General Partner) Limited	-	100	Riverview House, Friarton Road, Perth, PH2 8DF, Scotland
Gresham House GP LLP	-	100	Riverview House, Friarton Road, Perth, PH2 8DF, Scotland
Gresham House Holdings Limited	100	-	5 New Street Square, London EC4A 3TW, England
Gresham House Housing Limited	-	100	5 New Street Square, London EC4A 3TW, England
Gresham House Initial Partner Limited	-	100	5 New Street Square, London EC4A 3TW, England

16 INVESTMENT IN SUBSIDIARIES - continued

Held by Company		Held by other Group companies	Country of incorporation and registered office
	%	%
Gresham House Infrastructure Limited	-	100	5 New Street Square, London EC4A 3TW, England
Gresham House Investment Management Limited	-	100	5 New Street Square, London EC4A 3TW, England
Gresham House Investment Management (Guernsey) Limited	-	100	Dorey Court, Admiral Park, St Peter Port, GY1 2HT, Guernsey
Gresham House Investors Limited	-	100	5 New Street Square, London EC4A 3TW, England
Gresham House New Energy Limited	-	100	5 New Street Square, London EC4A 3TW, England
Gresham House (Nominees) Limited	-	100	5 New Street Square, London EC4A 3TW, England
Gresham House Private Capital Solutions Limited	-	100	5 New Street Square, London EC4A 3TW, England
Gresham House Private Equity Limited	-	100	5 New Street Square, London EC4A 3TW, England
Gresham House Private Wealth Limited	-	100	5 New Street Square, London EC4A 3TW, England
Gresham House Real Assets Limited	-	100	5 New Street Square, London EC4A 3TW, England
Gresham House Renewable Infrastructure Limited	-	100	5 New Street Square, London EC4A 3TW, England
Gresham House Services Limited	-	100	5 New Street Square, London EC4A 3TW, England
Gresham House Smaller Companies Limited	-	100	5 New Street Square, London EC4A 3TW, England
Gresham House Solar Distribution Designated Member 1 Limited	-	100	5 New Street Square, London EC4A 3TW, England
Gresham House Solar Distribution Designated Member 2 Limited	-	100	5 New Street Square, London EC4A 3TW, England
Gresham House SPE Limited	-	100	5 New Street Square, London EC4A 3TW, England
Gresham House Special Situations Limited	-	100	5 New Street Square, London EC4A 3TW, England
Gresham House Timberland General Partner Limited	-	100	5 New Street Square, London EC4A 3TW, England
Gresham House Windfarms General Partner 3 Limited	-	100	5 New Street Square, London EC4A 3TW, England
Gresham House Value Limited	-	100	5 New Street Square, London EC4A 3TW, England
Gresham House VCT Limited	-	100	5 New Street Square, London EC4A 3TW, England
GridReserve Limited	-	70	5 New Street Square, London EC4A 3TW, England
Knowsley Industrial Property Limited	-	100	5 New Street Square, London EC4A 3TW, England
Lister Battery Limited	-	100	5 New Street Square, London EC4A 3TW, England
Monets Garden Battery Limited	-	100	5 New Street Square, London EC4A 3TW, England
New Capital Developments Limited	-	95	5 New Street Square, London EC4A 3TW, England
New Capital Holdings Limited	-	95	5 New Street Square, London EC4A 3TW, England
Newton Estate Limited	-	100	5 New Street Square, London EC4A 3TW, England
ReSi Capital Management GP Limited	-	100	5 New Street Square, London EC4A 3TW, England
ReSi Capital Management Limited	-	100	5 New Street Square, London EC4A 3TW, England
ReSi Homes Limited	-	100	5 New Street Square, London EC4A 3TW, England
Security Change Limited	-	100	5 New Street Square, London EC4A 3TW, England
TradeRisks Inc	-	100	9 East Loockerman Street, Dover, DE 19901, United States
TradeRisks Limited	-	100	5 New Street Square, London EC4A 3TW, England
TradeRisks (Luxembourg) S.a.r.l.	-	100	25a, Boulevard Royal, L-2449 Luxembourg
Wolden Estates Limited	-	100	5 New Street Square, London EC4A 3TW, England

17 INVESTMENT IN ASSOCIATES

	2020	2019
	£'000	£'000
Opening Investment in associates	9,186	10,198
Additions	-	65
Share of associates' profit	158	246
Dividends received from associates	(202)	(1,323)
Closing investment in associates	9,142	9,186

The above balance consists of the Group's holdings in Gresham House Strategic plc (GHS), Noriker Power Limited (Noriker) and Biggerbrook Limited (Biggerbrook).

The Board believe that Gresham House plc exercises significant influence over GHS, but not control, through its 23.4% equity investment as well as the investment management agreement between GHAM and GHS.

The latest published financial information of GHS was the unaudited interim results for the six months to 30 September 2020. The assets and liabilities at that date are shown below:

	2020	2019
	£'000	£'000
Non-current assets	38,461	39,128
Current assets	3,924	5,520
Current liabilities	(173)	(155)
Net assets	42,212	44,493

The GHS consolidated unaudited statement of comprehensive income noted realised and unrealised gains from continuing operations on investments at fair value through profit and loss of £5,350,000 and revenues of £1,205,000 for the six months ended 30 September 2020.

The registered office of GHS is 6^th Floor, 60 Gracechurch Street, London, EC3V 0HR.

The Board believe that Gresham House plc exercises significant influence over Noriker, but not control, through its 26.6% equity investment.

The registered office of Noriker is Railway House, Bruton Way, Gloucester, GL1 1DG.

The Board believe that Gresham House plc exercises significant influence over Biggerbrook, but not control, through its 21.9% equity investment.

The registered office of Biggerbrook is 5 New Street Square, London, EC4A 3TW.

18 TRADE RECEIVABLES

	Group		Company
	2020	2019	2020	2019
	£'000	£'000	£'000	£'000
Amounts receivable within one year:
Trade receivables	3,184	5,334	-	-
Less allowance for credit losses	-	-	-	-
	3,184	5,334	-	-

As at 31 December 2020, trade receivables of £87,000 (2019: £82,000) were past due but not impaired. The ageing analysis of these trade receivables is as follows:

	Group		Company
	2020	2019	2020	2019
	£'000	£'000	£'000	£'000
1-3 months	53	53	-	-
3-6 months	26	10	-	-
More than 6 months	8	19	-	-
	87	82	-	-

As at 31 December 2020 there were no provisions against trade receivables (2019: £nil).

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. The Group has therefore not recognised a loss allowance because historical experience has indicated that the risk profile of trade receivables is deemed low.

Group balances are not deemed to be impaired and when assessing expected credit losses full recoverability of these balances is expected.

19 ACCRUED INCOME AND PREPAID EXPENSES

	Group		Company
	2020	2019	2020	2019
	£'000	£'000	£'000	£'000
Accrued income	9,124	3,860	-	-
Other debtors	3,457	2,582	642	-
Prepaid expenses	1,202	758	118	159
	13,783	7,200	760	159

20 OTHER CURRENT ASSETS

	Group		Company
	2020	2019	2020	2019
	£'000	£'000	£'000	£'000
Amounts owed by Group undertakings	-	-	6,334	2,780
Loan Receivables - Investment in development projects (see Note 12)	551	1,208	551	1,208
Corporation tax recoverable	-	212	-	-
	551	1,420	6,885	3,988

21 TRADE AND OTHER PAYABLES

	Group		Company
	2020	2019	2020	2019
	£'000	£'000	£'000	£'000
Trade creditors	705	469	-	-
IFRS 16 lease creditor	440	321	211	243
Other creditors	1,561	1,228	14	23
Accruals	14,416	7,730	18	17
Corporation tax payable	273	801	-	-
Contingent consideration (Note 25)	1,385	4,661	-	-
	18,780	15,210	243	283

22 SHORT-TERM BORROWINGS

	Group		Company
	2020	2019	2020	2019
	£'000	£'000	£'000	£'000
Bank loans - within current liabilities (Note 24)	-	-	-	-
Amounts owed to Group undertakings	-	-	4,651	5,986
	-	-	4,651	5,986

23 DEFERRED TAXATION

Under International Accounting Standards (IAS) 12 (Income Taxes) provision is made for the deferred tax liability associated with the recognition of the management contracts and customer relationships as part of the 100% acquisition of FIM and TradeRisks. This has been recognised at 17% for FIM and 19% for TradeRisks of the fair value of the intangible assets at acquisition and reassessed each year end, with the movement being recognised in the income statement. As at 31 December 2020 the deferred tax liability was £3,227,000 (2019: £2,632,000).

The Group has recognised a deferred tax asset of £1,051,000 (2019: £613,000) in relation to 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. The Company has recognised £153,000 (2019: £276,000) in respect of these differences.

The movement on the deferred tax account is as shown below:

	Group		Company
	2020	2019	2020	2019
	£'000	£'000	£'000	£'000
Balance as at 1 January	(2,019)	(2,944)	276	-
Deferred tax recognised in profit and loss	457	925	(123)	276
	(1,562)	(2,019)	153	276
Arising on business combinations	(614)	-	-	-
Balance as at 31 December	(2,176)	(2,019)	153	276

	Group		Company
	2020	2019	2020	2019
	£'000	£'000	£'000	£'000
Deferred tax asset	1,051	613	153	276
Deferred tax liability	(3,227)	(2,632)	-	-
	(2,176)	(2,019)	153	276

24 LONG-TERM BORROWINGS

	Group		Company
	2020	2019	2020	2019
	£'000	£'000	£'000	£'000
Bank loans	-	-	-	-
	-	-	-	-

On 21 December 2020, the Company signed a £5.0 million banking facility agreement with Banco Santander SA (the facility). The facility is secured with fixed and floating charges over certain of Company's assets, with cross guarantees provided by Gresham House Asset Management Limited and Gresham House Holdings Limited. The fixed charges relate to certain Group bank accounts with a carrying value of £17.8 million as at the year end.

The facility consists of a £5.0 million two-year revolving credit facility with an option to request an extension of one year. There is a further £5.0 million accordion to increase the size of the facility. No amounts were drawn under this facility at the year end.

The Group has complied with the financial covenants attached to the facility.

The interest payable on the facility is LIBOR plus 3.05%. The Group expects the facility to transition from LIBOR to alternative interest rate benchmarks by the end of 2021.

25 NON-CURRENT LIABILITIES - OTHER CREDITORS

	Group		Company
	2020	2019	2020	2019
	£'000	£'000	£'000	£'000
Contingent consideration	5,548	5,849	-	-
IFRS 16 lease creditor	201	124	-	-
	5,749	5,973	-	-

Contingent consideration

FIM

The contingent consideration payable to the sellers of FIM is based on the combined Forestry division generating revenue of between £13.0 million and £14.0 million over the two years from acquisition on 22 May 2018. No contingent consideration is payable below £13.0 million, a sliding scale from £13.0 million to £14.0 million to receive from zero to £4.0 million.

A further contingent consideration is payable should the combined divisions deliver revenues of greater than £18.0 million over the same two-year period, above which 33% will be payable to the sellers. Actual revenues generated during this period were £20.6 million which resulted in an additional payment of £0.8 million.

Contingent consideration totalling £4.8 million was paid to the sellers of FIM during the year.

Livingbridge VC

The Livingbridge VC contingent consideration has been determined in two parts.

The first being that the VCT Boards do not give notice to GHAM within two years of the acquisition. Should this be the case, then a payment of £5.0 million will be made to the sellers of Livingbridge VC. Contingent consideration totalling £5.0 million was paid in respect of this during the year.

The second part of the contingent consideration being the hurdle to deliver revenues from the Livingbridge VC business of between £30.9 million and £37.2 million in the three years to 31 December 2021. The maximum amount payable on achieving the £37.2 million hurdle is £2.5 million and the minimum payable is zero if the £30.9 million hurdle is not achieved. The fair value has been based on a weighted probability of outcomes over the three-year period and discounted by 15% as per above.

The fair value of the remaining contingent consideration payable to the Livingbridge VC sellers as at 31 December 2020 was £1.6 million.

TradeRisks

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

a) 0.5% of funds raised payable in three years, with maximum amount capped at £3.0 million.

b) Any realised synergies payable in three years, capped at £1.0 million.

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

Payments totalling £0.6 million relating to part c) were paid during the year.

The fair value of the remaining contingent consideration payable to the TradeRisks sellers as at 31 December 2020 was £3.2 million.

Monets Garden

The Group acquired a controlling interest in Monets Garden Battery Limited, a battery storage development project, during the year. Under the terms of the SPA deferred consideration of £0.3 million was paid in February 2021 and a further amount of £0.75 million is payable by 31 January 2022.

Lister Battery

The Group acquired a controlling interest in Lister Battery Limited, a battery storage development project, during the year. Under the terms of the SPA deferred consideration of £0.3 million was paid in February 2021 and a further amount of £0.75 million is payable by 31 January 2022.

26 SHARE CAPITAL

	2020	2019
	£'000	£'000

Allotted: Ordinary - 32,091,707 (2019: 27,824,222) fully paid shares of 25 pence	8,023	6,956

During the year the Company issued the following new ordinary shares:

· 56,302 shares on 14 January 2020 at a price of 323.27 pence per share as a result of the exercise of the remaining shareholder warrants;

· 2,924 shares on 14 January 2020 at a price of 324.8 pence per share to employees under the Company's Save as you earn scheme;

· 555,555 shares on 11 March 2020 at a price of 625.0 pence per share to the vendors of TradeRisks Limited;

· 4,770 shares on 11 March 2020 at a price of 632.5 pence per share to management and employees under the Company's bonus share matching plan;

· 1,568,628 shares on 20 March 2020 at a price of 510.0 pence per share by way of a placing;

· 750,000 shares on 6 July 2020 at par into the Gresham House Employee Benefit Trust; and

· 1,329,306 shares on 31 July 2020 at par into the Gresham House Employee Benefit Trust.

27 SHARE WARRANTS

Group	2020		2019
	Shareholder warrants	Total warrants	Shareholder warrants	Supporter warrants	Total warrants
Balance as at 1 January	56,363	56,363	874,485	769,000	1,643,485
Warrants exercised during the year	(56,302)	(56,302)	(734,182)	(769,000)	(1,503,182)
Warrants lapsed during the year	(61)	(61)	(83,940)	-	(83,940)
As at 31 December	-	-	56,363	-	56,363

Shareholder warrants

On 1 December 2014, the Company issued 1,073,904 shareholder warrants to existing shareholders as at the close of business on 28 November 2014 on a 1:5 basis, such warrants having been admitted to trading on AIM. Shareholder warrants were freely transferable, and exercisable at any time between 1 January 2015 and 31 December 2019 at an exercise price of 323.27 pence per ordinary share and were subject to the terms of the shareholder warrant instrument dated 7 October 2014. Shareholder warrants not exercised by 31 December 2019 lapsed.

Supporter warrants

On 1 December 2014, the Company issued 850,000 supporter warrants to the new Directors and certain members of the Investment Committee and Advisory Group, who acquired them at a price of 7.5 pence per warrant. Supporter warrants have the same entitlements as the shareholder warrants save that (i) they were not freely transferable (such supporter warrants only being transferable to certain family members, trusts or companies connected with the relevant warrant holder) and accordingly not quoted on AIM; (ii) were not exercisable until 1 December 2015; and (iii) were subject to the terms of the supporter warrant instrument dated 7 October 2014. All Supporter warrants were exercised in 2019.

During the year, 56,302 shareholder warrants were converted into ordinary shares resulting in the issue of 56,302 new ordinary shares (2019: 734,182 shareholder warrants and 769,000 supporter warrants). Notice was given by shareholder warrant holders by 31 December 2019 for 56,363 shareholder warrants, of which 56,302 have been exercised, with the remaining 61 shareholder warrants lapsing.

28 SHARE-BASED PAYMENTS

2016 Long term incentive plan

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

For the purposes of the 2016 LTIP, "shareholder value" is the difference between the market capitalisation of the Company at the point in time that any assessment is made and the sum of:

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

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

The beneficiaries of the 2016 LTIP, will in aggregate be entitled to an amount of up to 20.0% of shareholder value created over the exercise period, subject to performance criteria set out below. Individual participation in the shareholder value created will be determined by the Remuneration Committee.

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

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

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

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

IFRS 2: Share-Based Payments sets out the criteria for an equity-settled share-based payment, which has market performance conditions. The 2016 LTIP meets these criteria and should therefore be recognised at award at fair value and amortised over the vesting period of two years. There is no amount payable by the beneficiaries on exercise. The table below details the type and number of shares in Gresham House Holdings Limited issued and exercised in the year:

2020	A Shares old joiners	A Shares new joiners	B Shares	C Shares	D Shares	Total LTIP
Balance as at 1 January	870	46	208	104	180	1,408
Exercised during the year	(870)	(46)	(104)	(104)	-	(1,124)
As at 31 December	-	-	104	-	180	284
Exercisable at year end	-	-	104	-	-	104
Months to vesting	-	-	-	-	12

2019	A Shares old joiners	A Shares new joiners	B Shares	C Shares	D Shares	Total LTIP
Balance as at 1 January	908	92	208	104	-	1,312
Issued in the year	-	-	-	-	180	180
Exercised during the year	(38)	(46)	-	-	-	(84)
As at 31 December	870	46	208	104	180	1,408
Exercisable at year end	870	46	208	104	-	1,228
Months to vesting	-	-	-	-	24

28 SHARE-BASED PAYMENTS - continued

916 A Shares were exercised during the year. 570 of these were settled in equity and at the Company's discretion 346 were settled in cash. For the cash settled awards the difference between the fair value recognised over the vesting period and the fair value at the date of exercise was recognised in retained reserves.

104 B Shares were exercised during the year and were settled in equity.

104 C Shares were exercised during the year and at the Company's discretion were settled in cash. The difference between the fair value recognised over the vesting period and the fair value at the date of exercise was recognised in retained reserves.

Fair value

The fair value of the award at the date of the award has been determined using an expected returns model, which is based on a number of scenarios and probabilities of the Company's performance for the period when the awards may be exercised. The assumptions in the model have estimated the shareholder value created and applied discounts for liquidity and likelihood of exercise by participants. The weighted average valuation of the Company has been used to calculate the expected shareholder value created and consequently the value of the plan.

2018 Long term incentive plan

The Remuneration Committee considered and implemented a long term incentive arrangement in 2018 (2018 LTIP). The 2016 LTIP became exercisable during 2018 and as such the Remuneration Committee introduced the 2018 LTIP to align the management team and wider members of the business for the next three years with shareholders.

The 2018 LTIP is a deferred share award, which vests in three years from the date of award subject to management remaining employed by the Company as at the vesting date. There is no staggered vesting period, vesting is at the end date in three years' time.

During the year ended 31 December 2019, 7,113 awards were exercised and settled by ordinary shares held by the Gresham House Employee Benefit Trust. During the year ended 31 December 2019, 59,353 ordinary shares were issued under the 2018 LTIP with a fair value at exercise of £0.4 million. The weighted average share price at the date of exercise was 740 pence (2019: 622.5 pence)

2019 Long term incentive plan

The Remuneration Committee considered and implemented a long term incentive arrangement in 2019 (2019 LTIP).

Under the 2019 LTIP, 274,728 deferred shares were awarded to the management team and 121,063 deferred shares were awarded to the wider members of the business, with a fair value at award of £1.5 million and £0.7 million respectively. The awards to the management team vest in three years from the date of award subject to management remaining employed by the Company as at the vesting date and achievement of performance conditions. There is no staggered vesting period, vesting is at the end date in three years' time. The awards to the wider members of the business also vest in three years from the date of award but there are no performance conditions.

The performance conditions relating to the management team's awards are that in the event that the Company achieves an average mid-market closing price equal to compound growth at 7% per annum over the three-year period from award, or the growth in Adjusted Earnings Per Share has compound growth of 7% per annum or more, 50% of the award will vest.

In the event that the share price of the Company outperforms the FTSE All Share Index from the third anniversary of the date of the award in all other cases, 50% of the award will vest.

The fair value of the 2019 LTIP was measured as the share price at the date of award. The impact of the volatility in the share price has been deemed to be immaterial.

	2018 LTIP	2019 LTIP - management team	2019 LTIP other staff	Total
Balance as at 31 December 2018	488,174	-	-	488,174
Issued in the year	-	274,728	121,064	395,792
Exercised in the year	(59,353)	-	-	(59,353)
Balance as at 31 December 2019	428,821	274,728	121,064	824,613
Exercised in the year	(7,331)	-	(4,504)	(11,835)
Balance as at 31 December 2020	421,490	274,728	116,560	812,778
Exercisable at year end	-	-	-	-

28 SHARE-BASED PAYMENTS - continued

2020 Long term incentive plan

The Directors implemented the 2020 long term incentive plan (2020 LTIP) in December 2020 to incentivise the management team as well as align their interests with those of shareholders through enhancing shareholder value. This scheme replaced the 2016 LTIP which had vested and was exercised by the majority of the management team during 2020.

The 2020 LTIP pool principles state that the value of the awards will be driven by the total return to shareholders over (i) 1 January 2020 to 31 December 2023 (the first measurement period) and (ii) 1 January 2020 to 31 December 2024 (the second measurement period).

In the event that total return to shareholders over the first measurement period is 7% p.a. (Performance Hurdle) or more, a maximum related plan pool of value equal to 7.5% of such total return may arise. In the event that total return to shareholders is more than the Performance Hurdle over the second measurement period, a maximum of 15% of such total return to shareholders may arise (less any pool value distributed under the awards in respect of the first measurement period).

Return to shareholders for such purposes shall be measured from a base value of £165,706,250, being the 90-day average market capitalisation of the Company to 1 January 2020, to the respective 90-day market capitalisation averaging periods at each of the measurement periods and shall include the value of dividends (assumed reinvested) and other capital (if any) returned. Appropriate adjustments to the required minimum 7% p.a. level of growth in return shall be made in respect of any capital raised during the measurement periods.

IFRS 2: Share-Based Payments sets out the criteria for an equity-settled share-based payment, which has market performance conditions. The 2020 LTIP meets these criteria and should therefore be recognised at award at fair value and amortised over the vesting period of four years from the date of award. The fair value of the 2020 LTIP at award was £5.7 million.

There is no amount payable by the beneficiaries on exercise and the number of shares in respect of which the awards may vest when aggregated with those issuable or issued in respect of awards granted under the 2020 LTIP and any other Company employees' share scheme, shall not exceed 20% of prevailing issued share capital in accordance with the AIM Admission circular dated 4 November 2015. Scaling back of awards shall apply to such extent as required to ensure this limit is not breached.

Renewable Energy team long term incentive plan

The Renewable Energy management team, which joined as part of the acquisition of the asset management business of Hazel Capital LLP, has a long term incentive plan in place, which granted the team a total of 1,000 A Shares in Gresham House New Energy Limited on 31 October 2017. The plan is an earn out plan following the acquisition of Hazel Capital LLP and is considered an acquisition related share-based payment. The vesting date of the A Shares is 31 December 2020, at which point the holders are entitled to receive either Gresham House plc shares, or cash at the Company's discretion in exchange for their A Shares. Under the guidance in IFRS 2:41, it has been considered that the A Share settlement should be treated as an equity-settled instrument.

The value of the A Shares at vesting is based on a calculation, which is based on the average profits generated by the New Energy division between 31 October 2017 and 31 December 2020, which was £10.2 million at 31 December 2020.

The fair value of the award has been determined using an expected returns model, which is based on a number of scenarios and probabilities of the New Energy division's performance for the period from 31 October 2017 to 31 December 2020. The assumptions in the model have estimated the average profits over the period and applied discounts for liquidity and control and consequently the value of the A Shares. The fair value of the A Shares at award was £276,000 (£276 per share), which will be amortised over the three-year and two-month vesting period.

Livingbridge VC long term incentive plan

The Livingbridge VC long term incentive plan is an equity settled incentive scheme and considered an acquisition related share-based payment. The recipients of the scheme will receive up to £2.5 million in aggregate in Gresham House plc shares based on the three-year period to 31 December 2021. There is a hurdle to deliver revenues from the Livingbridge VC business of between £30.9 million and £37.2 million in the three years to 31 December 2021. The maximum amount payable on achieving the £37.2 million hurdle is £2.5 million and the minimum payable is zero if the £30.9 million hurdle is not achieved.

Bonus share matching plan

The Company introduced in 2016 a share matching plan linked to the discretionary annual bonus scheme to encourage management and employees to invest in the long-term growth of the Company.

Subject to Remuneration Committee approval, management and employees entitled to a bonus may be permitted (but not required) to defer and reinvest up to 50% of their annual bonus into ordinary shares which will be released to them after three years together with any additional matching shares subject to performance criteria set out below. In 2020 the Remuneration Committee approved the reinvestment of up to 50% of annual bonuses into ordinary shares by management and employees (2019: 50%).

In the event that the Company achieves a mid-market closing price equal to 7% per annum compound growth from the date of deferral, the participants will receive 50% of the matching shares benefit. In the event that the Company's share price outperforms the FTSE All Share Index from the date of deferral, the participants will receive 50% of the matching shares.

Shares will be awarded in the ratio one share for each share invested. In the event that this performance condition is not met, the participants will receive only the ordinary shares acquired with the deferred bonus.

The bonus shares to be awarded after the three-year period and subject to performance conditions have been fair valued using a Monte Carlo simulation. The key variables include the risk-free rate of 0.32% and volatility of the Company share price of 16%. The fair value of the matching shares relating to the 2019 bonuses is £209,000 (£1.46 per share) and will be amortised over the three-year vesting period.

Save as you earn (SAYE) scheme

In 2018 the Remuneration Committee approved a SAYE scheme for the benefit of all employees of the Group whereby employees can save up to £500 per month over a three-year period. At the end of the three-year period the employees have an option to purchase Company shares at the agreed exercise price or receive their savings in cash. The exercise price for the 2020 scheme is 399 pence (2019: 373 pence). The following table outlines the maximum number of shares under the SAYE scheme:

	Shares under option	Fair value of option (pence)	Exercise price (pence)
2018 SAYE scheme	68,707	74	325
2019 SAYE scheme	106,266	85	373
2020 SAYE scheme	74,567	104	399
	249,540

29 RESERVES

	2020			2019
	Share premium account	Share warrant reserve	Retained reserves	Share premium account	Share warrant reserve	Retained reserves
Group	£'000	£'000	£'000	£'000	£'000	£'000
Balance as at 1 January	69,242	-	14,039	57,901	58	15,036
Adjustments for changes in accounting policy	-	-	-	-	-	6
Profit/(loss) and total comprehensive income	-	-	577	-	-	(850)
Issue of shares	10,762	-	-	11,152	(58)	-
Share-based payments	38	-	(4,863)	189	-	642
Dividends paid	-	-	(1,351)	-	-	(795)
As at 31 December	80,042	-	8,402	69,242	-	14,039

	2020			2019
	Share premium account	Share warrant reserve	Retained reserves	Share premium account	Share warrant reserve	Retained reserves
Company	£'000	£'000	£'000	£'000	£'000	£'000
Balance as at 1 January	69,242	-	12,379	57,901	58	13,394
Adjustments for changes in accounting policy	-	-	-	-	-	6
Loss and total comprehensive income	-	-	(1,771)	-	-	(226)
Issue of shares	10,800	-	-	11,341	(58)	-
Dividends paid	-	-	(1,351)	-	-	-
As at 31 December	80,042	-	9,257	69,242	-	12,379

	2020	2019
Non-controlling interest:	£'000		£'000
Balance as at 1 January	582		527
Interest in trading result for the year	(2)		(4)
Interest in investments - securities	231		59
	811		582

The following describes the nature and purpose of each reserve within equity:

Reserve Description and purpose

Share premium account Amount subscribed for share capital in excess of nominal value.

Share warrant reserve Share warrants for which consideration has been received but which are not exercised yet.

Retained earnings All other net gains and losses and transactions with owners (e.g. dividends) not recognised elsewhere.

30 NET ASSET VALUE PER SHARE

Basic	2020	2019
Equity attributable to holders of the parent (£'000)	96,467	90,237
Number of ordinary shares in issue at the end of the period	32,091,707	27,824,222
Basic net asset value per share (pence)	300.6	324.3

Diluted	2020	2019
Equity attributable to holders of the parent (£'000)	96,467	90,237
Number of ordinary shares in issue at the end of the period	33,567,216	31,315,093
Basic net asset value per share (pence)	287.4	288.2

Diluted net asset value per share is based on the number of shares in issue at the year end together with 1,475,509 shares 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.

									£'000
The movement during the year of the assets attributable to ordinary shares were as follows:
Total net assets attributable at 1 January 2020									90,237
Total recognised gains for the year									577
Share-based payments									(4,823)
Issue of shares									11,827
Dividends paid									(1,351)
Total net assets attributable at 31 December 2020									96,467

31 NOTES TO THE STATEMENTS OF CASH FLOWS

a) Reconciliation of operating profit to operating cash flows

	Group		Company
	2020	2019	2020	2019
	£'000	£'000	£'000	£'000
Net operating loss after exceptional items	(1,916)	(2,056)	(1,981)	(974)
Loss/(profit) from discontinued operations	(12)	55	-	-
Interest payable	25	221	8	211
Depreciation	871	816	652	695
Loss/(profit) on disposal of tangible fixed assets	27	43	-	36
Amortisation	8,033	7,668	230	113
Share-based payments	2,262	1,844	-	-
	9,290	8,591	(1,091)	81
Decrease in long-term receivables	-	78	-	78
Decrease/(increase) in current assets	1,777	(4,638)	(81)	(133)
Increase/(decrease) in current liabilities	6,525	5,615	(8)	92
	17,592	9,646	(1,180)	118

b) Non-cash investing and financing activities

	Group		Company
	2020	2019	2020	2019
	£'000	£'000	£'000	£'000
Acquisition of right-of-use assets (Notes 8 & 13)	877	42	454	-
Partial settlement of business combinations through the issue of shares (Notes 5 & 26)	3,472	-	-	-
	4,349	42	454	-

31 NOTES TO THE STATEMENTS OF CASH FLOWS - continued

c) Net debt reconciliation

	Group		Company
	2020	2019	2020	2019
	£'000	£'000	£'000	£'000
Cash and cash equivalents	21,886	19,432	7,826	1,940
Borrowings	-	-	(4,651)	(5,986)
Amounts owed by Group undertakings	-	-	6,334	2,780
Lease liabilities (Note 8)	(641)	(445)	(211)	(243)
Net cash/(debt)	21,245	18,987	9,298	(1,509)

Group	Leases	Cash	Total
	£'000	£'000	£'000
Net cash/(debt) at 1 January 2019	-	13,958	13,958
Cash flows	662	5,474	6,136
IFRS 16 restatement	(1,065)	-	(1,065)
New leases	(42)	-	(42)
Net cash/(debt) at 31 December 2019	(445)	19,432	18,987
Cash flows	620	2,454	3,074
New leases obtained through business combinations	(346)	-	(346)
New leases	(470)	-	(470)
Net cash/(debt) at 31 December 2020	(641)	21,886	21,245

Company	Net borrowings	Leases	Cash	Total
	£'000	£'000	£'000	£'000
Net cash/(debt) at 1 January 2019	(5,144)	-	6,148	1,004
Cash flows	3,923	595	(4,208)	310
Non-cash intercompany movements	(2,335)	-	-	(2,335)
Other movements	350	-	-	350
IFRS 16 restatement	-	(838)	-	(838)
Net cash/(debt) at 31 December 2019	(3,206)	(243)	1,940	(1,509)
Cash flows	7,704	478	5,886	14,068
Non-cash intercompany movements	(6,317)	-	-	(6,317)
Other movements	3,502	-	-	3,502
New leases	-	(446)	-	(446)
Net cash/(debt) at 31 December 2020	1,683	(211)	7,826	9,298

32 FINANCIAL INSTRUMENTS

The Group consists of the Company and subsidiary undertakings whose principal activities are asset management.

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

(i) securities consisting of listed and unlisted equity shares

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

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

(iv) short-term and long-term borrowings

32 FINANCIAL INSTRUMENTS - continued

As at 31 December 2020 the following categories of financial instruments were held by:

Group	2020		2019
	Loans and receivables at amortised cost	Assets at fair value through profit or loss	Loans and receivables at amortised cost	Assets at fair value through profit or loss
Financial assets per Statement of Financial Position	£'000	£'000	£'000	£'000
Investments	763	8,874	1,915	8,914
Trade and other receivables - current and non-current	3,184	1,718	5,334	-
Accrued income and other debtors	10,863	-	6,442	-
Cash and cash equivalents	21,886	-	19,432	-
	36,696	10,592	33,123	8,914

	2020		2019
	Other financial liabilities	Liabilities at fair value through profit or loss	Other financial liabilities	Liabilities at fair value through profit or loss
Financial liabilities per Statement of Financial Position	£'000	£'000	£'000	£'000
Trade and other payables - short-term	15,892	1,385	9,461	4,661
Bank loans - short and long-term	-	-	-	-
Other creditors - long-term	201	5,548	124	5,849
	16,093	6,933	9,765	10,510

Company	2020		2019
	Loans and receivables at amortised cost	Assets at fair value through profit or loss	Loans and receivables at amortised cost	Assets at fair value through profit or loss
Financial assets per Statement of Financial Position	£'000	£'000	£'000	£'000
Investments	763	5,130	1,915	6,843
Accrued income and other debtors	643	-	37	-
Amounts owed by Group undertakings	6,334	-	2,780	-
Cash and cash equivalents	7,826	-	1,940	-
	15,566	5,130	6,672	6,843

	2020		2019
	Other financial liabilities	Liabilities at fair value through profit or loss	Other financial liabilities	Liabilities at fair value through profit or loss
Financial liabilities per Statement of Financial Position	£'000	£'000	£'000	£'000
Trade and other payables - short-term	32	-	40	-
Trade and other payables - long-term	211	-	243	-
Other loans - short and long-term	4,651	-	5,986	-
Bank loans - short and long-term	-	-	-	-
	4,894	-	6,269	-

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

32 FINANCIAL INSTRUMENTS - continued

Market price risk

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

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

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

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

Foreign currency risk

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

Credit risk

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

The Group's maximum exposure to credit risk is:

	2020	2019
	£'000	£'000
Loan stock investments	763	1,915
Deferred receivable - short and long-term	1,718	-
Trade and other receivables - short-term	3,184	5,334
Accrued income and other debtors	10,863	6,442
Cash and cash equivalents	21,886	19,432
	38,414	33,123

The Group has an exposure to credit risk in respect of both loan stock investments and other loans, most of which have no security attached to them, or where they do, such security will rank after any bank debt. The Company's exposure to credit risk is restricted to investments, cash and cash equivalents, other loans, amounts owed by Group undertakings and accrued income totalling £15,566,000 (2019: £6,672,000).

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

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

	2020	2019
Loan stock investments	£'000	£'000
Repayable within: - 1 year	763	1,648
1-2 years	-	267
2-3 years	-	-
3-4 years	-	-
4-5 years	-	-
	763	1,915

As at 31 December 2020 loan stock investments totalling £858,000 (2019: £858,000) were impaired and provided for.

As at 31 December 2020 other loans totalling £54,000 (2019: £54,000) were impaired and provided for.

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

32 FINANCIAL INSTRUMENTS - continued

Interest rate risk

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

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

The interest rate exposure profile of the Group's financial assets and liabilities as at 31 December 2020 and 2019 were:

Group	Non-interest-bearing assets/ liabilities	Fixed rate assets	Floating rate assets	Fixed rate liabilities	Floating rate liabilities	Net total
As at 31 December 2020	£'000	£'000	£'000	£'000	£'000	£'000
Investments	8,874	763	-	-	-	9,637
Cash	-	-	21,886	-	-	21,886
Trade and other receivables	4,902	-	-	-	-	4,902
Accrued income and other debtors	10,863	-	-	-	-	10,863
Creditors
- falling due within 1 year	(15,452)	-	-	(440)	-	(15,892)
- falling due after 1 year	-	-	-	(201)	-	(201)
	9,187	763	21,886	(641)	-	31,195

	Non-interest-bearing assets/ liabilities	Fixed rate assets	Floating rate assets	Fixed rate liabilities	Floating rate liabilities	Net total
As at 31 December 2019	£'000	£'000	£'000	£'000	£'000	£'000
Investments	8,914	1,915	-	-	-	10,829
Cash	-	-	19,432	-	-	19,432
Trade and other receivables	5,334	-	-	-	-	5,334
Accrued income and other debtors	6,442	-	-	-	-	6,442
Creditors
- falling due within 1 year	(9,320)	-	-	(321)	-	(9,641)
- falling due after 1 year	-	-	-	(124)	-	(124)
	11,370	1,915	19,432	(445)	-	32,272

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

Fixed rate assets comprise fixed rate loans, unsecured loans and loans repayable on demand, with a weighted average interest rate of 13.2% (2019: 12.3%).

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

Fixed rate liabilities include lease creditors.

32 FINANCIAL INSTRUMENTS - continued

The interest rate exposure profile of the Company's financial assets and liabilities as at 31 December 2020 and 2019 were:

Company	Non-interest-bearing assets/ liabilities	Fixed rate assets	Floating rate assets	Fixed rate liabilities	Floating rate liabilities	Net total
As at 31 December 2020	£'000	£'000	£'000	£'000	£'000	£'000
Investments - securities	5,130	763	-	-	-	5,893
Cash	-	-	7,826	-	-	7,826
Accrued income and other debtors	643	-	-	-	-	643
Amounts owed by Group undertakings	6,334	-	-	-	-	6,334
Creditors
- falling due within 1 year	(32)	-	-	(211)	-	(243)
- falling due after 1 year	-	-	-	-	(4,651)	(4,651)
	12,075	763	7,826	(211)	(4,651)	15,802

	Non-interest-bearing assets/ liabilities	Fixed rate assets	Floating rate assets	Fixed rate liabilities	Floating rate liabilities	Net total
As at 31 December 2019	£'000	£'000	£'000	£'000	£'000	£'000
Investments - securities	6,843	1,915	-	-	-	8,758
Cash	-	-	1,940	-	-	1,940
Accrued income and other debtors	37	-	-	-	-	37
Amounts owed by Group undertakings	2,780	-	-	-	-	2,780
Creditors
- falling due within 1 year	(40)	-	-	(243)	-	(283)
- falling due after 1 year	-	-	-	-	(5,986)	(5,986)
	9,620	1,915	1,940	(243)	(5,986)	7,246

Although the Company holds investments that pay interest, the Board does not consider it appropriate to assess the impact of interest rate changes upon the value of the investment portfolio as interest rate changes are only one factor affecting market price and the impact is likely to be immaterial. The Group had no bank borrowings at the year end so the sensitivity of interest payable to changes in interest rates was not relevant in 2020.

Liquidity risk

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

The Group has in place a revolving credit facility which it has available to manage liquidity risk as required.

32 FINANCIAL INSTRUMENTS - continued

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

As at 31 December 2020	Less than 1 year	Between 1 and 2 years	Between 2 and 5 years
	£'000	£'000	£'000
Leases	443	205	14
Trade payables	705	-	-
Accruals	14,416	-	-
Contingent consideration	1,385	6,247	-
Other creditors	1,561	-	-
	18,510	6,452	14

As at 31 December 2019	Less than 1 year	Between 1 and 2 years	Between 2 and 5 years
	£'000	£'000	£'000
Leases	323	69	72
Trade payables	469	-	-
Accruals	7,730	-	-
Contingent consideration	5,000	5,000	2,032
Other creditors	2,029	-	-
	15,551	5,069	2,104

Capital risk management

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

The capital structure of the Group and Company consist of short and long-term borrowings as disclosed in Notes 22 and 24, cash and cash equivalents and equity attributable to equity shareholders of the Company comprising issued share capital, share premium, share warrant reserve and retained reserves as disclosed in Notes 26, 27 and 29. The Board reviews the capital structure of the Group and the Company on a regular basis to ensure it complies with all regulatory capital requirements. The financial measures that are subject to review include cash flow projections and the ability to meet capital expenditure and other contracted commitments, projected gearing levels and interest covenants, although no absolute targets are set for these.

The Group aims to hold sufficient cash to fulfil its requirements with respect to regulatory capital. During the year the Group and its subsidiary entities complied with all regulatory capital requirements.

	Group		Company
	2020	2019	2020	2019
	£'000	£'000	£'000	£'000
Debt	(641)	(445)	(4,862)	(6,229)
Amounts owed by Group undertakings	-	-	6,334	2,780
Cash and cash equivalents	21,886	19,432	7,826	1,940
Net assets	97,278	90,819	97,322	88,577
Net cash/(debt)	21,245	18,987	9,298	(1,509)
Net cash/(debt) as a % of net assets	21.8%	20.9%	9.6%	(1.7%)

33 FAIR VALUE MEASUREMENTS

Valuation inputs

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

Quoted market prices - Level 1

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

Valuation technique using observable inputs - Level 2

Financial instruments that have been valued using inputs other than quoted prices as described for Level 1 but which are observable for the asset or liability, either directly or indirectly. The Group had no level 2 investments in both the current and prior year.

Valuation technique using significant unobservable inputs - Level 3

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

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

Where investments are in a fund, the net asset value of the fund is used to determine the fair value of the investment. The net asset value is typically prepared by the manager of that specific fund and provided to Group as an investor. The Group review the valuation and use this as the Level 3 assessment of fair value.

The valuation techniques used by the Company for Level 3 financial assets can be found in accounting policy (j) (ii).

Investments in the unlisted securities relates to investments in three separate funds where the valuation methodology is considered a Level 3 assessment.

One of the funds invest in a large number of forestry assets. The forestry assets are held at fair value in the underlying fund. An independent valuation of the forests within the underlying fund is performed annually by forestry valuation experts by reference to comparable market transactions for each underlying forestry asset that considers factors including location, maturity of the forest and size. There is no reasonable change in the inputs in each of the underlying assets would give rise to a material adjustment to the fair value of the investment.

However, as a consequence of COVID-19 the external valuer has reported the valuation of the Group's investment in Gresham House Forestry Friends and Family Fund LP (£2.9 million valuation, of which £811,000 is attributable to non-controlling interest) is subject to 'material valuation uncertainty' as set out in VPS 3 and VPGA 10 of the RICS Valuation - Global Standards. Consequently, in respect of these valuations less certainty - and a higher degree of caution - should be attached to their valuation than would normally be the case. For the avoidance of doubt the 'material valuation uncertainty' declaration, does not mean that the valuation cannot be relied upon. Rather, this explanatory note has been included to ensure transparency and to provide further insight as to the market context under which the valuation opinion was prepared.

The remaining two investments in funds are measured using the fair value of the net asset value provided by the manager of those funds.

Further details of the securities portfolio can be found in Note 12 of these financial statements.

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

Group	31 December 2020	Level 1	Level 3
	£'000	£'000	£'000
Financial assets at fair value through profit and loss
Investments
- Equities	8,874	4,949	3,925
	8,874	4,949	3,925

	31 December 2019	Level 1	Level 3
	£'000	£'000	£'000
Financial assets at fair value through profit and loss
Investments
- Equities	8,914	6,165	2,749
	8,914	6,165	2,749

33 FAIR VALUE MEASUREMENTS - continued

Company	31 December 2020	Level 1	Level 3
	£'000	£'000	£'000
Financial assets at fair value through profit and loss
Investments
- Equities	5,130	4,160	970
	5,130	4,160	970

	31 December 2019	Level 1	Level 3
	£'000	£'000	£'000
Financial assets at fair value through profit and loss
Investments
- Equities	6,843	6,165	678
	6,843	6,165	678

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

Group 31 December 2020	Investments - securities	Trade and other receivables	Total
	£'000	£'000	£'000
Opening balance	2,749	-	2,749
Total gains and (losses):
In Statement of Comprehensive Income	875	-	875
Additions	344	-	344
Disposals	(43)	-	(43)
Closing balance	3,925	-	3,925
Total gains and (losses) for the year included in comprehensive income for assets held at the end of the reporting period	878	-	878

31 December 2019	Investments - securities	Trade and other receivables	Total
	£'000	£'000	£'000
Opening balance	1,924	1,033	2,957
Total gains and (losses):
In Statement of Comprehensive Income	339	-	339
Additions	500	-	500
Disposals	(14)	(1,033)	(1,047)
Closing balance	2,749	-	2,749
Total gains and (losses) for the year included in comprehensive income for assets held at the end of the reporting period	340	-	340

33 FAIR VALUE MEASUREMENTS - continued

Company 31 December 2020	Investments	Total
	£'000	£'000
Opening balance	678	678
Total gains and (losses):
In Statement of Comprehensive Income	66	66
Additions	269	269
Disposals	(43)	(43)
Closing balance	970	970
Total gains and (losses) for the year included in comprehensive income for assets held at the end of the reporting period	69	69

31 December 2019	Investments	Total
	£'000	£'000
Opening balance	60	60
Total gains and (losses):
In Statement of Comprehensive Income	132	132
Additions	500	500
Disposals	(14)	(14)
Closing balance	678	678
Total gains and (losses) for the year included in comprehensive income for assets held at the end of the reporting period	132	132

The only financial liabilities held at fair value relates to the deferred consideration on the acquisition of TradeRisks Limited, the Devco projects and the acquisition of the fund and investment management businesses of Livingbridge VC LLP amounting to £6,933,000. This is measured using Level 3 valuation techniques. There were no such financial liabilities held at fair value within the Company.

Price risk sensitivity

Based on values as at 31 December 2020 a 10% movement in the fair values of 100% of the Group's equity investments would be equivalent to a movement of £887,000 in both profit and net assets.

34 RELATED PARTY TRANSACTIONS

Group

During the year management fees totalling £672,077 (2019: £693,687) and performance fees of £nil (2019: £1,944,518) were invoiced to Gresham House Strategic plc (GHS), a company in which the Group has a 23.4% interest. At the year end £107,867 (2019: £75,783) was due from GHS.

During the year the Group was invoiced £nil (2019: £85,413) for office and other costs by Corylus Capital LLP (Corylus), an entity in which Ben Guest, head of the New Energy strategy, has a material interest. At the year end £nil (2019: £nil) was due to Corylus. At 31 December 2020 the loan provided by Corylus to HC ESS6 Limited (ESS6) totalled £nil (2019: £3,261,656) Interest totalling £445,014 (2019: £205,079) was charged by Corylus to ESS6.

Company

During the year the Company repaid loans totalling £33,259 from (2019: received £2,121,736 from) Security Change Limited. At the year end £4,651,055 (2019: £4,684,314) was due to Security Change Limited. No interest was charged during the year (2019: £nil).

During the year the Company received £nil (2019: £nil) from Gresham House Finance Limited. At the year end £221,400 (2019: £221,400) was owed by Gresham House Finance Limited. No interest was charged during the year (2019: £nil).

During the year the Company received £25,877 from (2019: advanced £30,079 to) Gresham House (Nominees) Limited. At the year end £4,202 (2019: £30,079) was due from Gresham House (Nominees) Limited. No interest was charged during the year (2019: £nil).

During the year the Company advanced £5,766,306 to (2019: repaid £1,500,561 to) Gresham House Holdings Limited. At the year end £4,464,777 was due from (2019: £1,301,529 due to) Gresham House Holdings Limited. No interest was charged during the year (2019: £nil).

During the year the Company advanced £659,344 (2019: £nil) to GridReserve Limited. Interest totalling £81,808 (2019: £nil) was charged during the year. At the year end £741,152 (2019: £nil) was owed by GridReserve Limited.

During the year the Company advanced £489,865 (2019: £nil) to Lister Battery Limited. Interest totalling £34,077 (2019: £nil) was charged during the year. At the year end £523,942 (2019: £nil) was owed by Lister Battery Limited.

During the year the Company advanced £493,725 (2019: £nil) to Monets Garden Battery Limited. Interest totalling £34,293 (2019: £nil) was charged during the year. At the year end £528,018 (2019: £nil) was owed by Monets Garden Limited.

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END

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

(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

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Market Overview

UK 350 Risers and Fallers

Annual Results for the year ended 31 December 2020

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

(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

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