Gresham House plc

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

Interim results for the six months ended 30 June 2021

Strong AUM growth driven by international expansion and demand for ESG-focused strategies

Gresham House plc, (AIM: GHE) the specialist alternative asset manager, reports strong growth in assets under management (AUM) in the first half of the year, driven by international expansion and continued demand for its Environment, Social and Governance (ESG) focused investment strategies, underpinned by organic and acquisition-based growth.

HIGHLIGHTS

¹Cash and liquid assets includes cash and investments in tangible and realisable assets

²Adjusted operating profit is defined as the net trading profit of the Group 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

FINANCIAL HIGHLIGHTS

·      AUM up 19% in H1 to £4.7 billion

·      Organic growth of 12% (£453 million)

·      Net core income up 31% to £23.0 million (H1 2020: £17.5 million)

·      Adjusted operating profit up 32% to £6.9 million (H1 2020: £5.2 million)

·      Utilising balance sheet to grow the asset management business with cash and liquid assets at 30 June 2021 of £45.0 million (31 December 2020: £45.1 million)

·      Strong post period AUM growth with fund inflows of over £350 million, and the announced acquisition of the Venture Capital Trust business of Mobeus Equity Partners LLP (Mobeus VCT business) increasing pro forma AUM to £5.4 billion

·      Delivery against GH25 financial and strategic targets ahead of management expectations

STRATEGIC HIGHLIGHTS

·      Achieving international expansion through the completion of the acquisition of Appian Asset Management in Ireland and the expected completion of a further international forestry mandate in Australia, subject to regulatory approval

·      Recognised for leadership in sustainable investment through fund performance and award wins

·      Increased client diversification and AUM through additional organic fundraises post period end of over £350 million

·      Acquisition of the Mobeus VCT business brings additional AUM of £369 million (see today's separate RNS announcement)

SUSTAINABLE INVESTMENT HIGHLIGHTS

·      Gresham House Asset Management Limited has met the FRC's expected standard of reporting in 2021 and been listed as a signatory to the 2020 UK Stewardship Code

·      Sustainability Committee established by the Board which will be chaired by Gareth Davis

·      Commenced a large project this year to better understand our climate impact as a business and as investors, ahead of planned reporting against the TCFD recommendations in 2022

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

"Our first half performance has been very strong, with robust AUM growth driven by organic progress and international expansion. In addition, the acquisition of the Mobeus VCT business, announced today, will create further shareholder value.

"We continue to see strong demand for our ESG-focused investment strategies, underpinned by our compelling investment performance. A number of our sustainability-focused funds have held successful closes since the half-year end and the acquisition of the Mobeus VCT business also brings significant scale to create a leading player in the VCT segment.

"The Group has built an effective platform to grow AUM further by providing outstanding products in attractive asset classes. We are extremely well positioned for further growth in second half of 2021 and beyond."

Ends

Gresham House will be hosting a Capital Markets Day on Thursday 4 November 2021 - details to be announced in due course.

This announcement contains inside information for the purposes of the Market Abuse Regulation (596/2014/EU)("MAR")

About Gresham House

Gresham House is a specialist alternative asset management group, dedicated to sustainable investments across a range of strategies, with expertise across forestry, housing, infrastructure, renewable energy and battery storage, public and private equity.

Our origins stretch back to 1857, while our focus is on the future and the long term. Quoted on the London Stock Exchange (GHE:LN) we actively manage c.£4.7 billion of assets (as at 30 June 2021) on behalf of institutions, family offices, charities and endowments, private individuals and their advisers. We act responsibly within a culture of empowerment that encourages individual flair and entrepreneurial thinking.

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

www.greshamhouse.com

CHAIRMAN'S STATEMENT

It has been very pleasing to see the ongoing momentum of Gresham House in the first half of 2021, with strong progress against the financial and strategic targets of the five-year plan, 'GH25'. Growth in AUM has proceeded apace towards the GH25 target of £6.0 billion. AUM was up 19% to £4.7 billion in the half through organic and acquisition activity, reflecting our commitment to creating shareholder value through growth and performance on various metrics.

Moreover, our plan to establish a platform for international growth is now evident in both Europe and Asia Pacific.

We were pleased to complete the acquisition of Appian Asset Management (Appian), now Gresham House Ireland, on 29 June following regulatory approval from the Central Bank of Ireland, cementing the Group's international expansion plans with the addition of a regulated EU-based platform post-Brexit, alongside our intention to scale our activities in Ireland.

In addition, post period end, we were appointed as asset manager for a 24,800-hectare Australian forestry investment, Green Triangle Forest Products (GTFP), for AXA IM Alts, expanding our presence outside Europe and growing our relationship with AXA IM Alts following our appointment to manage a 4,074-hectare portfolio of forests in Ireland in 2019. This is pending regulatory approval, which we hope to provide an update on by the end of the year.

Our leadership in sustainable investing continues to be underpinned by our broad product range and growth across all areas, from renewable energy and sustainable infrastructure to housing and forestry. We are increasingly recognised across the industry as being at the forefront of sustainable investment, investing in people and areas of opportunity which are evolving rapidly, whilst demonstrating innovation and resilience in performance across our product set.

Climate change is at the top of most investors' agendas and we have worked with a number of clients to meet their increasing climate reporting requirements. In addition, we provide our clients with a range of solutions that take advantage of climate related opportunities and positively influence environmental outcomes.

The Taskforce on Climate-Related Financial Disclosures (TCFD) has become the widely recognised standard for climate reporting, and we commenced a large project this year to better understand our climate impact as a business and as investors. We are planning to report against the TCFD recommendations in 2022 and will be starting work with an external expert to provide our first climate footprint as well as forward looking climate analysis.

Our investment expertise has been recognised in awards, including Alternatives Manager of the Year from Pensions Age, and more widely across our business with our UK Multi Cap Income Fund winning awards from both Investment Week and Citywire. We are proud to be finalists for many awards due to be judged in the second half of 2021 and will be delighted to add to this roster.

Clearly clients are the focus for a long term, sustainable, profitable and growing business like Gresham House, and as such, we are pleased that the investment performance of our funds remains strong and continues to attract new investors.

Activity in the period

The robust rise in AUM growth in the period reflects this strong performance at a fund and strategic level across the business, as well as net inflows and the completion of the Appian acquisition (€396 million at 30 June 2021).

We expect this growth to continue with the fund launches highlighted in the 2020 annual report which are on track. This includes the Gresham House Forest Growth & Sustainability LP securing £25 million by the end of the period and Gresham House Residential Secure Income LP (ReSI LP) achieving commitments of £70 million, with £16 million deployed by the end of the period.

Our commitment to investing in people to support growth remains, with senior hires across the business, including James Lindsay as Head of Institutional Business to complement Heather Fleming and our existing senior expertise in this area.

Results

I am also pleased to report continuing progress towards the financial goals of GH25, with Net Core Income up 31% in the first half of 2021 to £23.0 million (H1 2020: £17.5 million), and the Adjusted Operating Profit up 32% in the same period to £6.9 million (H1 2020: £5.2 million).

We continue to invest in the business, with an operating margin of 30% in the first half of 2021 (H1 2020: 30%), as we focus on growing the business in areas of high-growth potential and where we have sector/technical expertise to outperform versus the market.

Board

As highlighted previously, Richard Chadwick will be standing down as Audit Committee Chairman and Non-Executive Director at the conclusion of the 2022 AGM.

We have completed the recruitment process for Richard's replacement and I am pleased to welcome Richard's successor, Sarah Ing as the Audit Committee Chair Designate, taking on full responsibility on Richard's retirement at the conclusion of the 2022 AGM. Sarah will act as Richard's alternate from 15 September 2021 until Richard's retirement.

Sarah is a chartered accountant, with listed company experience as a Non-Executive Director on XPS Pensions Group plc and CMC Markets plc boards. Richard will handover through the 2021 year-end process to ensure a smooth transition. I look forward to working with Sarah as we continue the Company's growth story.

Outlook

Assets with a focus on ESG factors are on track to exceed $53 trillion by 2025, representing more than a third of the $140.5 trillion in projected total global assets under management, according to Bloomberg.[1]

Gresham House is well positioned to take advantage of this growth as many of our investment solutions contribute positively to environmental and social outcomes, whilst offering investors strong investment returns.

To that end, I am pleased to note that Gresham House Energy Storage Fund plc (GRID), Gresham House Forest Growth & Sustainability LP, and BSIF II LP, and ReSI LP have all held successful closes since 30 June, adding over £350 million to AUM and setting the Group in great stead for the second half of 2021 and beyond.

In addition, the acquisition of the Mobeus VCT business and the associated equity raise will boost our AUM and significantly enhance our profitability, marking substantial progress towards achieving the targets laid out in our GH25 five-year plan. Pro forma AUM increases to £5.4 billion after adding post period AUM raised of over £350 million and £369 million from the Mobeus VCT business acquisition.

As the VCT segment continues to consolidate, this latest acquisition provides substantial scale to compete effectively amid rising demand for early-stage growth capital from a range of emerging disruptive businesses. The benefits to both the Baronsmead and Mobeus VCT shareholders are clear from the increased resources and platform that Gresham House can provide, including ESG leadership.

We approach the second half of 2021 with real optimism having laid down a solid platform to grow AUM we are ahead of management expectations for 2021, and remain on track to deliver GH25 and create further shareholder value.

Anthony Townsend

Chairman

9 September 2021

CHIEF EXECUTIVE'S REPORT

It has been 18 months since we set out our five-year strategy 'GH25' to target long-term shareholder value and I am delighted to say we have been making strong progress against all our strategic and financial objectives despite the challenges presented by the global macro environment as a result of the pandemic.

We are increasingly recognised as leaders in ESG and sustainable investing: the vast majority of our investment products are outperforming their benchmarks; we are building significant market share in specialist products; building on our international presence and increasing client diversification and depth. All of the above are enhancing our brand value and reputation and this has been reflected in various industry awards alongside new investors approaching us to become clients or work on a partnership basis.

Whilst the environment has been challenging, with the UK in lockdown for much of the first half of this year, we have seized the opportunities across the business to improve our position in a number of key areas.

Our culture is strong and contributes significantly to our success. In our employee survey, 94% of respondents would recommend Gresham House as a place to work. The Management Committee view this as significant and important for the long-term growth ambitions of the Group. We want people to enjoy their work and we know this is a key ingredient in delivering for our clients.

We will continue to invest in growth areas, recruiting high-calibre talent, while remaining focused on maintaining and improving operating margins in line with the target in GH25.

Achieving AUM growth of 19%, taking us to £4.7 billion at the half-way point of the year, is testament to the success of our strategy to grow organically supported by acquisition, and we are pleased to have already made such good progress against our target of £6.0 billion by 2025.

We welcome our new colleagues in Ireland, where the Appian acquisition builds on our existing presence managing forestry assets for AXA IM Alts, and we foresee further growth under the new name Gresham House Ireland, both in Ireland and across the EU from this important platform.

We committed significant time to launching new funds and to fundraising in the first half of 2021, which means we approach the rest of the year with confidence.

Progress on 2021 priorities - Financial

Our significant AUM growth to date in 2021 and a series of successful fundraises across our product set reflect the sustained interest in ESG investing and the breadth of our offering.

In Housing, ReSI LP, a closed-ended limited partnership aiming to deliver secure income returns by investing in portfolios of shared ownership and rental homes, had a successful first close with commitments of £70 million and we expect this vehicle to scale over time. We are delighted that ReSI Homes, the registered provider within ReSI LP, has been selected as a strategic partner of the Greater London Authority to deliver affordable housing over the next five years. Nationally ReSI Homes is one of only three institutional investors to have been selected.

We continue to develop utility scale battery storage projects to support the growth of Gresham House Energy Storage Fund plc (GRID) and have £11 million invested in projects at the end of the period and also completed the sale of 30MW to GRID in H1, deploying balance sheet capital to support growth.

AUM growth has continued since 30 June 2021, with new fund inflows of over £350 million. A further £100 million was raised for GRID in early July and the launch of the Gresham House Forest Growth & Sustainability LP, with a first close in August, added a further £102 million to close at £127 million. In addition, in sustainable infrastructure - BSIF II (British Sustainable Infrastructure Fund II), reached a first close in August of £100 million. We also achieved a follow-on close for ReSI LP in August for a further £50 million.

We expect this growth to continue through the second half of the year, with further international expansion in Asia Pacific as we pursue Carbon Credit opportunities in forestry and the anticipated close of our new Australian forestry mandate with AXA IM Alts by the end of 2021.

In Public Equity, we have seen continued inflows into our UK Micro Cap and UK Multi Cap Income funds managed by the award-winning Ken Wotton, Brendan Gulston and team. In line with the specialist nature of Gresham House products, these funds focus on small, mid-cap companies and micro-cap companies using a fundamentals-based approach and a private equity philosophy, designed to deliver attractive returns with a low correlation to their peer group.

Our disciplined process leverages the fundamentals-driven attributes of private equity, and our highly-resourced team has access to specialist expertise via an extensive network derived from their private equity heritage, alongside investment committees with broad experience and successful track records. This is evident in the growth in NAVs at Strategic Equity Capital (SEC) and Gresham House Strategic (GHS), which grew by 24% and 22% respectively in the first half. Importantly, the long-term track records of the teams managing these investment funds are clearly very strong and we are proud of the platform Gresham House provides for these teams to flourish and add value to portfolio investments.

There was also successful fundraising in Private Equity, with a successful close for the last fundraising round by the Baronsmead VCTs, raising a total of £65 million, the highest amount raised by these two VCTs to date (£32 million in 2021).

We remain focused on our other financial targets and have achieved an operating profit margin of 30% in the period, and alongside this an operating profit of £6.9 million. We have continued to invest in the business for the long term, while focused on productivity and efficiency throughout and the timing of AUM delivery in 2021 will provide greater benefit to the second half of 2021 and profitability in future years.

As part of GH25 we target a ROIC of 15%+ and we have continued to use our balance sheet to invest, with the ultimate goal of growing AUM while delivering 15%+ returns.

Progress on 2021 priorities - Strategic

In line with our ambition for Gresham House to be a leader in sustainable investment, including ESG, we conducted a corporate ESG gap analysis to identify where there are opportunities to develop our business practices to reflect our ambition for leadership more closely. From this analysis, we have identified several priorities for the business:

1.   Evolve our management and measurement of climate related risks and opportunities at a corporate and investment level

2.   Further enhance Diversity and Inclusion across the business

3.   Evaluate sustainability factors across material supply chains that our investments are a part of

To support the development of these priorities, we have further invested in our Sustainable Investment Team by increasing the team from one to three individuals. This will significantly bolster our capacity to enhance our sustainable investment processes across all divisions as well as at a corporate level.

In addition, the Board have established a Sustainability Committee to provide oversight and accountability for our sustainability related practices across the business. This Committee will work closely with our Managing Director, Rupert Robinson and Director of Sustainable Investment, Rebecca Craddock-Taylor to progress the various priorities we have set ourselves in relation to becoming a leader in this area. Further details on our progress and plans can be found in the Sustainable Investment overview.

Our plans for international expansion are advancing, and the completion of our acquisition of Appian Asset Management, now Gresham House Ireland, and the Australian forestry mandate, subject to regulatory approval, are enabling us to operate in carefully identified areas of the world where we see a business and cultural fit.

We continue to maintain market share in specialist areas and have seen further growth in our Forestry and New Energy businesses, and we expect to grow in other areas with the close of additional fundraises over the course of the year.

We are working to increase our client diversification and depth and have had success with fund launches attracting new institutional and long-term clients. We have also further invested in our distribution team.

People

The Covid-19 pandemic has been a test of the culture of organisations across the world. I am proud to say that my colleagues across Gresham House responded in exemplary fashion to the challenges it presented and our culture has remained strong throughout these difficult times, including the periods of lockdown we experienced earlier this year.

We have followed government guidelines closely to maintain the safety of our teams, enabling our people to work remotely and managing logistics around office work effectively. Following consultation with the teams, our return to the office more permanently will continue to focus on the wellbeing of our employees and we will be adopting a hybrid working model, recognising the benefits of this way of working for both the Company and our people. We will be moving into a new office in London, which has been designed to accommodate hybrid working alongside improved facilities to support sustainability and the growth of the business.

We continue to invest in talent across the business, including notable senior hires in James Lindsay as Head of Institutional Business, and Fernando Casas Garcia as Head of Operations for New Energy, where increasing scale in areas such as battery storage has driven the need for greater expertise in this area. This is also the case with our Sustainable Investment team - it is an important and growing part of the business and we are committed to working with the highest quality talent.

Delivering top-quality service is our priority and we will continue to invest in teams across the business to ensure this is the case.

Outlook

We have enjoyed an encouraging H1 2021 and the outlook for the rest of the year and beyond indicates a continuation of this positive momentum. Whilst macroeconomic challenges are clear, the structural growth in our areas of investment remains evident with increasing asset allocation to real assets and specialist or strategic equity.

In the first half, we have made good progress in many areas against our GH25 objectives and our business has the opportunity to grow further across the board, with our client base broadening and deepening, and as we venture further into international geographies.

I am also pleased to welcome the Mobeus VCT business to the Gresham House family following the announced acquisition and equity fund raise today. Together this adds scale to our expertise in venture investing, while adding scale and enhancing earnings for shareholders.

With Gresham House's positive reputation growing across the spectrum of investment performance, product innovation, a focus on appropriate governance, social benefits and environmental awareness, we have completed the groundwork for a number of our planned funds. We have held first closes in H1 and have a strong pipeline of new investors lined up for closes in H2 having already closed funds with AUM of over £350 million since the end of June, bringing pro forma AUM to £5.1 billion. After the acquisition of the Mobeus VCT business, pro forma AUM increases to £5.4 billion. We are therefore confident that we will outperform the current market expectations for the end of 2021.

Tony Dalwood

Chief Executive

9 September 2021

SUSTAINABILITY AT GRESHAM HOUSE

Progress on our corporate sustainability plan

Environmental awareness, understanding and action

In the past few months, we have been working to appoint an external expert to help us measure our current carbon emissions across our operations and our investments. The purpose of this exercise will be to understand our baseline, so we can then set targets and actions to reduce the impact we have on the environment as a business and as investors.

Diversity and Inclusion (D&I) awareness, understanding and action

In 2020 we published our first D&I policy setting out our commitments to enhance D&I at Gresham House. This year we have established a D&I Committee with representatives from across the business who are tasked with implementing our D&I strategy to set out the internal behaviours and actions to be rolled out to improve diversity and inclusion across the Company and meet our policy commitments. The D&I strategy will also establish a range of objectives we want to achieve to support our company strategy. The D&I strategy provides a shared direction, commitment and set of goals and work streams for us over the next four years. It outlines the key roles and responsibilities and how we will track progress and measure success and is an integral part of the financial and strategic targets of the GH25 plan.

In addition, we signed up to the #100blackinterns last year and subsequently hired two individuals to work in our Sustainable Infrastructure and Housing strategies and within our Sustainable Investment team throughout the summer of 2021. We are building on this and will be developing a formal internship programme to ensure interns that work with us are able to gain valuable skills that can be translated into their future careers.

People and community

Our people are our greatest asset and we have worked extremely hard throughout the Covid-19 pandemic to ensure staff satisfaction remains high. We will be completing our second employee engagement survey in October, which will provide useful insights for the Gresham House leadership team to understand where improvements have been made relative to the results in 2020, and what areas need to be prioritised in the remainder of 2021 and into 2022.

Communication and transparency

We published our first Sustainable Investment Report earlier this year which includes case studies, measurements of what we have achieved and key Group milestones. The report demonstrated what has been achieved over the last year and the contribution that our business and investments are having on the environment and society.

Accreditations and commitments

We have maintained our London Stock Exchange Green Economy Mark for Gresham House plc as well as for our listed battery storage fund Gresham House Energy Storage Fund plc (GRID). Gresham House Asset Management Limited has also met the expected standard of reporting in 2021 and has been listed as a signatory to the 2020 UK Stewardship Code. Earlier this year we reported for the second time for the PRI and await the 2021 rating outcomes. We have also been shortlisted for Best Sustainable & ESG Fund Management Group of the Year (AUM under £20 billion), as well as Best Sustainable & ESG Alternative Assets Fund for GRID at the 2021 Investment Week Sustainable & ESG Investment Awards.

Policies, processes and systems

The Board has established a Sustainability Committee which will be chaired by Gareth Davis. This Committee will provide oversight and accountability for Gresham House plc's sustainability strategy across our business operations and investment practices. The Committee met for the first time in August 2021 where a range of sustainability factors were discussed, including how we will advance our management of climate change risks and opportunities.

In addition, we also have our Sustainable Investing Committee (SIC), which operates at the divisional level. This forum focuses on sharing best practice between different divisions, whilst also working as a unit to drive sustainability related deliverables applicable to all divisions. The SIC's objective for the remainder of 2021 is to build on existing processes and systems to enhance our monitoring of sustainability factors during the holding period of our investments.

Measurable investment actions

1.   Planted 7 million trees in 2021 (versus 9 million for the calendar year 2020)*

2.   Our existing forestry captured the equivalent CO2 generated by 266,000 people in the UK annually (versus 270,000 in 2020)**

3.   Invested in two businesses that plan to connect 5,000+ homes to the internet in 2021

4.   Solar and wind projects generated enough energy to power over 131,000 homes in the last year (versus 117,000 homes in 2020)

5.   Invested in a further 733 shared ownership homes (166 homes in 2020) with a total shared ownership portfolio of 936 homes (205 homes in 2020)

6.   Improved portfolio company engagement in 2020. We voted 97% for management recommendations, 3% against, and had 0% abstentions. (2019, we voted 94% for management recommendations, 6% against, and had 0% abstentions)

* As at 7 September 2021. Based on 1,100 trees per hectare for broadleaves and, 2,700 trees per hectare for conifers

** Existing forestry is captured in the UK national account, so no direct offsetting claims can be made. Calculated using the Woodland Carbon Code and based on the managed area decreasing from 141,000 hectares to 136,000 hectares

FINANCIAL REVIEW

We set out our priorities for 2021 and it is pleasing to see that during the first half of the year we have made good progress.

The Group's AUM increased to £4.7 billion at the end of the first half, up 19% on the beginning of the year (£4.0 billion) and we have since achieved a number of fund closes, which sets the Group up well to deliver ahead of expectations in the second half of the year.

Gresham House has seen net core income grow in the period by 31% to £23.0 million compared to £17.5 million in the first half of 2020 and this has driven the adjusted operating profits of the Group up by 32% to £6.9 million (H1 2020: £5.2 million). We have continued our focus on the long-term scalable areas of the business and continued to invest in people and systems and as such the Group's operating margin has remained at 30% (H1 2020: 30%).

The Group also delivered total comprehensive income of £5.2 million (H1 2020: total comprehensive loss of £2.2 million), reflecting the strong performance of the Group's balance sheet investments in the period.

We have continued to use the Group's balance sheet to invest in areas which will lead to increasing AUM and the generation of long-term management fees.

Assets under management

AUM grew by 19% in the first six months of the year to £4.7 billion (Dec 2020: £4.0 billion). In line with our strategy this was achieved through both organic growth of £453 million (12%) and acquisition growth of £299 million (7%).

1. Including funds raised, redemptions and distributions

Net fund inflows of £105 million across Strategic Equity, Forestry and Housing highlighted the demand for the Group's offering in these asset classes. We set out the key funds that we were focused on raising in 2021 and these have shown good progress with a first close for Gresham House Residential Secured Income LP (ReSI LP), our shared ownership housing fund with committed capital of £70 million, and deployed capital of £16 million by the end of June 2021.

The performance of the Strategic Equity division in the period was strong with £203 million growth in AUM, reflecting the high performing nature of the funds managed by Ken Wotton and his team.

We also completed the acquisition of Appian Asset Management Limited (Appian), which has since been rebranded as Gresham House Ireland and is an exciting platform to pursue our international growth plans. The acquired AUM of £299 million (€350 million) reflects the AUM at exchange in December 2020 and it is pleasing to see that the AUM has since grown to £340 million (€396 million) across the equities and property funds managed by Gresham House Ireland.

Adjusted operating profit

The adjusted operating profit for the Group grew in the first half of 2021 by 32% to £6.9 million (H1 2020: £5.2 million). We use the non-GAAP measure of adjusted operating profit as a key performance indicator for Gresham House as an alternative asset manager and have separated out net performance fees and net gains on investments. As set out in the 2020 Annual Report, the adjusted operating profit is defined as the net trading profit of the Group before deducting amortisation, depreciation and exceptional items relating to acquisition and restructuring costs and share-based payments relating to acquisitions.

Income

Net core income in the period increased by 31% to £23.0 million (H1 2020: £17.5 million). This increase reflects the organic growth in AUM across the business alongside AUM activity in the second half of 2020 which is now coming through fully in the first half of 2021.

The long-term nature of the Group's Real Asset management contracts highlight the stable revenue streams for the business with over £1.4 billion of AUM in Limited Partnership management contracts with a weighted average contract length of 14 years. The underlying assets within these funds of forests, infrastructure, renewable energy and housing continue to provide a stable platform to grow the business.

Administration expenses

Administration expenses, (excluding amortisation, depreciation, share-based payments relating to acquisitions and exceptional items) have increased in the period by 30% to £16.0 million (H1 2020: £12.3 million). We continue to manage costs diligently while ensuring that we invest in critical areas of the business. This includes a focused investment in our distribution and investment teams as the key drivers of growth, as well as in critical support functions such as compliance and legal. Headcount for the Group increased to 138 at the end of June (H1 2020: 129 people), and a further 23 joined from Appian.

Performance fees

The Group received a performance fee of £1.9 million (H1 2020: £nil) from Gresham House Strategic plc (GHS) in recognition of the performance of GHS exceeding the NAV growth hurdle as set out in the investment management agreement. This is a key tool to incentivise the entire team that work on GHS and as such this is allocated to the team, with the Group retaining £415,000.

Realised gains on investments

The Group sold one of the battery storage development projects, Byers Brae, in the period to Gresham House Energy Storage Fund plc (GRID), realising a gain of £818,000. The development of these sites is also used to incentivise the team and as such a proportion of the gain is paid to the team as a variable incentive. Other costs associated with battery storage development projects were £219,000 in the period.

Exceptional items in the first half of the year of £0.1 million (H1 2020: £1.2 million) reflect the fact that there were lower acquisition related costs or restructuring in the first half of the year. The majority of costs relating to the Appian acquisition were recognised at the point of exchange in December 2020.

Gains and losses on investments

Gains on investments in the period of £3.3 million reflect the recognition of the Group's investments in associates as well as the fair value movements other investments and contingent consideration relating to previous acquisitions. The treatment of GHS as an associate requires the Group to recognise its share of profits or losses in the period last reported by GHS. GHS has announced its annual results for the period to 31 March 2021 and under associate accounting the Group's share of the profits of GHS over this time frame is £2.5 million. Other notable gains were Gresham House Energy Storage Fund plc of £0.1 million, Strategic Equity Capital plc of £0.2 million and Strategic Public Equity (SPE) co-investments of £0.4 million.

Contingent consideration payable to the sellers of acquired businesses is fair valued at each period end, with the movement reflecting assessments of the expected final payment as well as the discount over time. The fair value movement in the period of £0.4 million was primarily driven by the unwind of the discount (H1 2020: £0.7 million).

Financial position

The Group's focus on using its balance sheet to grow was key in the first half of the year as investments grew from £23.3 million to £34.9 million. Cash has reduced as a result of this from £21.9 million to £10.1 million and we have drawn £5.0 million of the Revolving Credit Facility (RCF).

The Group received proceeds of £5.0 million from the sale of battery storage projects and some of the other smaller holdings in the Group. This has been used alongside the RCF funds and operating cash flows to fund a number of activities. These include c.£11.0 million investment into battery storage development projects, commitments to new funds launched by the Group, the investment in SEC plc following winning the mandate in 2020 and an investment in a new sustainable infrastructure asset to develop land banks to establish new biodiversity, Environment Bank Limited.

The remaining cash movement reflects the dividend paid in May 2021 of £1.9 million and the completion of the acquisition of Appian for £0.8 million.

Outlook

Since the period end the Group has increased its AUM in ESG attractive asset classes. In July GRID raised a further £100 million, the Gresham House Forest Growth & Sustainability Fund LP added a further £102 million, BSIF II LP, the Group's second sustainable infrastructure fund held a first close for £100 million and ReSI LP added a further £50 million of commitments. This increases pro forma AUM to £5.1 billion and post the acquisition of the Mobeus VCT business to £5.4 billion, setting the Group up well for the rest of 2021 to achieve it's 2021 priorities and continue to deliver shareholder value.

Kevin Acton

Chief Financial Officer

9 September 2021

UNAUDITED CONDENSED GROUP STATEMENT OF COMPREHENSIVE INCOME

UNAUDITED CONDENSED GROUP STATEMENTS OF CHANGES IN EQUITY

UNAUDITED CONDENSED GROUP STATEMENT OF FINANCIAL POSITION