(Alliance News) - Gresham House Strategic PLC on Wednesday said it swung to profit in the most recent financial year as it implements an internal strategic review.
The London-based investment company swung to profit of GBP16.6 million in the financial year to March 31, from a GBP6.2 million loss the year before.
The company's net asset value total return for the year to the end of March was 44%, whilst its total shareholder return was 59%. The company's net asset value per share on March 31 was 1,515.4 pence, up from 1,060.4p the same date the year before.
Shares in Gresham House Strategic were up 1.7% at 1,529.95p on Wednesday afternoon, up 9.6% since the financial year-end.
Gresham House Strategic proposed a final dividend of 15.36p per share, bringing the total dividend for the year to 27.46p.
The firm said that the year was a "very active period", with its investment team deploying GBP14.9 million into seven new holdings. This included a number of substantial investments such as GBP2.6 million spent on environmental planning and consultancy business RPS Group PLC; GBP1.7 million on London-based international communications network M&C Saatchi PLC; and, GBP2.6 million on fluid power supplier Flowtech Fluidpower PLC among a series of others.
Among the companies highest revenue investments were cloud communications company IMImobile, which generated GBP5.3 million with an internal rate of return of 25% and the waste and resource management group Augean PLC which generated GBP2.8 million with an internal rate of return of 86%.
The company said it expects "economic activity to be constrained" in 2021 despite predictions of fast economic growth around the world. The company restated it's interest in the cheapest types of equity in a low valued UK equity market with wide dispersions between the valuations of various types of equity.
The company said that: "With careful analysis, a conservative approach to financial leverage and deep insight into a company's value drivers, a material margin of safety can be created to enable investments into stocks with significant medium term returns. Our holdings have survived this current crisis with their market positions stronger, their competitive positions easier and their cost-bases leaner, primed for material profit growth in the future."
"We must remain careful to consider what structural changes are underway such that value traps are avoided and ensure we have a sufficient margin of safety to offset an on-going challenging environment," the company added.
Last month Gresham House Strategic's largest shareholder Gresham House PLC, who holds a 23% stake in the company, requested a general meeting to remove sitting chair David Potter from his post. The date of this years annual general meeting was brought forward to no later than July 26. David Potter resigned on June 11 with Helen Sinclair stepping into the role of interim chair until a successor has been appointed. Potter was chair for six years and "the driving force" behind establishing the firm in 2015.
Following the end of the most recent financial year the company initiated a strategic review led by Senior Independent Director Ken Lever, to determine the best way of boosting value for all shareholders in Gresham House Strategic. The review will be carried out alongside an independent financial adviser.
By Scarlett Butler; scarlettbutler@alliancenews.com
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