GRESHAM HOUSE STRATEGIC PLC INVESTOR PRESENTATION | Q4 2018 Gresham House Asset Management
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GRESHAM HOUSE STRATEGIC PLC - THE OPPORTUNITY ▪ Compelling opportunity to buy at a 27.0% discount GHS portfolio metrics vs. indices 2 to NAV 1 FTSE FTSE FTSE GHS GHS Small All AIM ▪ Concentrated portfolio with considerable potential current 4 forecast 4 Cap Share current upside, attractively valued and tracking in line with current current Investment Manager’s thesis EV: sales 0.7x 0.6x 0.9x 1.3x 1.6x EV: EBITDA 5.5x 4.2x 13.8x 8.8x NM ▪ Significant cash holding - ability to take advantage of any opportunities/market distortion Sales growth 10.3% 10.0% 5.0% 2.6% 43.2% EBITDA growth 3.8% 32.7% N/A N/A N/A ▪ Portfolio valued at a discount to market together with a share price discount to NAV creates a ‘double Net debt: EBITDA 0.8x 0.4x 2.1x 0.7x 0.2x discount’ Source: Bloomberg data for FTSE All-Share, Small Cap and AIM market indices, company accounts and house broker forecasts for GHS portfolio holdings as at 31 ▪ Proven team - long-term 20-year track record 2 December 2018. Based on 1,188.1p, uses weighted value of holdings and takes into account the discount to NAV and cash holdings ▪ Right timing - focused on undervalued areas (small- cap, value) in a market that is increasingly favouring stock pickers 3 ▪ 17.25p dividend plus £1m buyback in H1. Commitment to 15% increase in dividend for each of the next three years. 1. Discount to NAV as at 31 December 2018 and using GHS mid-price of 1,188.1p 2. See the “ STRATEGIC PUBLIC EQUITY - TRACK RECORD” slide 3. “Stock pickers are poised to reap gains from falling correlations” Cormac Mullen, Bloomberg, 4 August 2017 4. GHS current and forecast values strip out three investments that are private companies and do not have public forecasts. Metrics take into account the discount to NAV and are calculated at a portfolio level. Forecasts are calendarised to December year-end. Current represents 2018, forecast represents 2019. Market ratios based on rolling 12 months | PAGE 3
PERFORMANCE Relative Performance 145 0% -5% 135 -10% 125 Discount to NAV Price - rebased -15% 115 -20% 105 -25% 95 -30% 85 -35% Aug 15 Nov 15 Feb 16 May 16 Aug 16 Nov 16 Feb 17 May 17 Aug 17 Nov 17 Feb 18 May 18 Aug 18 Nov 18 GHS DISCOUNT GHS NAV per share FTSE Small Cap FTSE All Share GHS share price Source: Bloomberg, as at 31 December 2018 Since inception to Performance 2018 Q4 1 31 Dec 2018 2 GHS NAV total return -5.3% 24.5% FTSE All Share total return -10.2% 15.9% 11.2% FTSE Small Cap total return -12.1% Relative performance 4.9% 8.6% vs FTSE All Share total return vs FTSE Small Cap total return 6.8% 13.3% 1. 28 September 2018 to 31 December 2018 2. Inception 14 August 2015 | PAGE 4
STRATEGIC PUBLIC EQUITY - THE MARKET OPPORTUNITY FTSE All Share median EV/ Smaller companies attractively priced EBITDA multiple (x) 12 10.09 ▪ The valuation differential between large stocks above 10 8.21 £250m and smaller, less liquid stocks is significant 8 ▪ The valuation dislocation has been increasing 6 ▪ Significant opportunity to generate superior long-term 4 returns investing in good quality, intrinsically undervalued smaller companies 2 0 Mkt Cap below £250m Mkt Cap above £250m Value stocks set to outperform Source: Bloomberg data to 31 December 2018 Value vs growth ▪ Recent relative under-performance of value vs growth 2.000 provides potentially the strongest argument for value in 40 years +2 Std Dev 1.800 +1 Std Dev 1.600 ▪ Stocks with value characteristics have been overlooked Trend for much of the last five years 1.400 -1 Std Dev 1.200 -2 Std Dev 1.000 0.800 0.600 1975 1977 1979 1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017 Source: Bloomberg data to 31 December 2018 | PAGE 5
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