1. Introductory Presentation
Gresham House Strategic plc (GHS.LN)
Strategic Public Equity Investment Strategy
Targeting superior long-term returns through a private equity approach to public markets
January 2016

2. Important information
This presentation (the “Presentation”) is issued by Gresham House Asset Management Ltd (“GHAM”), Investment Manager for Gresham House Strategic plc (“GHS”) for information purposes only. This Presentation, its contents and any information provided or discussed in connection with it are strictly private and confidential and may not be reproduced, redistributed or passed on, directly or indirectly, to any other person or published, in whole or in part, for any purpose, without the consent of GHAM (provided that you may disclose this Presentation on a confidential basis to your legal, tax or investment advisers (if any) for the purposes of obtaining advice). Acceptance of delivery of any part of the Presentation by you constitutes unconditional acceptance of the terms and conditions of this notice.
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Prospective investors should seek their own independent financial, tax, legal and other advice before making a decision to invest.

3. Bridging the divide between public and private markets
Contents
Gresham house strategic plc (GHS.LN)
overview – the opportunity 1
Gresham house strategic plc
Background and details
Significant potential upside from existing portfolio
IMI mobile – Investment opportunity
New investment opportunities – well developed pipeline 2 3 4 5
Strategic public equity
Spe approach – targeting superior long-term returns
GHS plc - Spe track record
Experienced ghs Investment team
Spe investment process
Execution of GHS plan 6 7 8 9 10
conclusion
Conclusion 11
Supplementary information
12-20
Bridging the divide between public and private markets

4. Gresham House Strategic plc
Since 1857

5. Bridging the divide between public and private markets
Overview
The opportunity - Gresham House Strategic plc (GHS.LN)
Strategic Public Equity mandate – Targeting net 15% IRR over the longer term*
Private equity approach to investing in public markets
Focus on inefficient areas of the market - UK smaller companies**
Significantly higher levels of engagement with investee company stakeholders
Focused portfolio – the majority of the portfolio will be invested in companies
Attractive entry point trading at a 17% discount to NAV1
Investment appraisal has identified potential for significant upside within existing portfolio
Valuation opportunities presenting themselves as market bifurcates
Diligence and engagement with target companies
Proven investment team with a track record of strong long-term returns
Investment team aligned to performance through significant shareholding
* Refer to Investing Policy section (p:10) of the GHS circular sent to shareholders 21st July 2015
** The fund will invest primarily in UK equities but can also invest in smaller European companies
1 Bid price as of 4th January 2016 and applying announced NAV as at 31st December 2015, released on 4th January 2016
Bridging the divide between public and private markets

6. Bridging the divide between public and private markets
Gresham House Strategic plc (GHS)
Background & details
Investing company traded on AIM - £36m NAV trading at a 17%2 discount
Investment Manager is Gresham House Asset Management Ltd (GHAM)
GHAM is a division of specialist asset manager Gresham House plc, founded in 1857
Gresham House plc and team own c.20% of GHS
New Strategic Public Equity Investment Mandate – Bridging the divide between public and private markets
Private equity approach - investment appraisal, due diligence and risk management
Disciplined investment process and use of Investment Committee and Advisory Group
Concentrated portfolio of smaller, typically UK quoted companies
Targeting companies that can benefit from strategic, operational or management initiatives
Investment Team – Strong long-term track records at SVG & PDFM (led by Tony Dalwood and Graham Bird)
Fees – 1.5% management charge with 15% performance fee over a 7% hurdle rate
GHAM to reinvest 50% of performance fee into Gresham House Strategic plc shares
* Manager has the ability to invest up to 30% of the portfolio in unquoted securities
2 Bid price as of 4th January 2016 and applying announced NAV as at 31st December 2015, released on 4th January 2016
Bridging the divide between public and private markets

7. Cash and other net assets
Gresham House Strategic plc – Existing portfolio
Significant potential upside
NAV p3
IMImobile
£15.6m
Earnings growth
Cash generation
Potential for re-rating - currently less than 7x EBITDA
Poorly understood and lowly valued
AUM and earnings growth
Cash generation and cost control
Strong balance sheet
Miton Group
£1.3m
Significant operational gearing
Spaceandpeople
£1.3m
Recovery, margins and growth
Sales growth and recovery of EBIT margin
Highly cash generative
Continued contract wins and renewals
Be Heard Group
£1.2m
Organic and acquisition growth plus valuation
Proven management team
Strong track record of value creation
Digital media consolidation via enhancing acquisitions
Castle Street*
£1.1m
Clean cash shell – growth through M&A
Acquisition opportunities within tech sector
Focus on targets that are profitable, cash generative, have visibility of earnings
GHAM relationship with shareholders and Board
Quarto Group
£0.8m
Buy & build, growth plus cash generation
Niche market exposure
Grow earnings through enhancing acquisitions and operational efficiencies
Highly cash generative; reducing debt
Cash and other net assets
£16.0m
Tax losses
£150m
3 NAV as at 31st December 2015, released on 4th January 2016
* Castle Street Investments plc announced advanced discussions with a potential acquisition target in the IT sector which would constitute a reverse takeover on 24th December 2015
Page 3
Bridging the divide between public and private markets

8. Bridging the divide between public and private markets
IMImobile – GHS 17.8% shareholding
High growth business benefiting from mobile data growth
Attractions
High recurring revenues and embedded solutions
Strong cash generation and balance sheet, high return on capital and successful acquisition track-record
High gross margins and significant operational gearing
Investment thesis
Trades at a significant discount to sector on 6.9x FY16 EV/EBITDA, falling to 5x FY174 vs peer group average of 12.9x4
Significant opportunity to simplify business and market messaging and positioning with investors
Strategic initiatives delivering with strong momentum; clear value creation plan
Catalysts – earnings growth; further improvement in quality of earnings; new markets (USA); potential for a PE or trade buyer
Potential risks / threats
Customer concentration - loss of a major contract could have a material short-term impact
Regulatory environment
Responsiveness (product development and deployment) to technological change and innovation
GHAM is engaged with management and shareholders
GHAM team actively engaged with executive management, Board and key teams (tech, finance)
Tom Teichman (GHS IC member) was an original VC backer of IMImobile with invaluable insight and relationships
Shareholder engagement and aligned interests – Tosca 27.6%, Liontrust 12.9%, management 21.2%
4 Whitman Howard research 3rd December Peer group, as determined by GHAM, Fwd EV/EBITDA median average - Bloomberg data as of 5th Jan 2016
Bridging the divide between public and private markets

9. New investment opportunities
Well developed pipeline of new investment opportunities
[1470 – Stocks on FTSE All-share and AIM All-Share Index]
1461 – Stocks on FTSE All-share and AIM All-Share Index
900 – Stocks with a Market Capitalisation below £250m
490 – Stocks trading > 50% below 3yr price high
79 – EV/ EBITDA < 7x
46 – Gearing > 75%
26 – ROCE > 10%
49 – FCF Yield > 10%
Public
P2P opportunities
Pre-IPO
Preferred quasi equity positions
Private
Private Equity houses typically uncomfortable with public markets
Profitable companies with organic & acquisition growth (not ready for public markets yet)
Watchlist
Convertibles, mezzanine
Preferred instruments
Growth / Acquisition Capital
Recovery Capital
Strategic & Opportunistic Improvement
Source: Bloomberg, 16th December 2015
Private: Pre-IPO / P2P / quasi equity
M&A Catalyst
Asset Realisation
Listed Private Equity
Reject
Portfolio
Bridging the divide between public and private markets

10. Strategic Public Equity
Since 1857

11. Bridging the divide between public and private markets
SPE approach
Targeting superior long-term returns
Value creation opportunities through a focus on inefficient areas of public markets
Valuation anomalies as a result of temporary market inefficiency
Limited advice / access to growth capital can result in small companies being strategically constrained
Poor research coverage of smaller companies – an average of one live broker recommendation per stock5
Philosophy – Value based approach, longer term holding period
Typically focus on cash generative companies, where ROCE and growth can be improved
Applying disciplined Private Equity techniques in public markets:
Influential, minority block stakes typically 5%-25% of equity
Significant engagement with stakeholders including; Management, shareholders, customers, suppliers and competitors
Support a clear equity value creation plan (Management, capital, strategic and operational support)
Targeting superior long-term investment returns - 15% net IRR over the long-term6
Private Equity - style approach including Investment Committee and extensive due diligence
Small company focus (<£250m mkt cap), value philosophy to generate enhanced long-term returns
Up to 30% of the portfolio can be invested in unquoted investments (pre-IPO, private equity - exploit illiquidity discount)
5 GHAM research using data extracted from Bloomberg FTSE AIM and All-share constituents with a market cap <£250m. Median average total number of live and up to date broker recommendations per stock (Buy/Sell/Hold) July 2015.
6 Targeted on an investment by investment basis.
Bridging the divide between public and private markets

12. GHS plc – SPE investment track record
Track record of strong relative returns at SVG and PDFM
Breadth of skills:
Investment
Corporate Advisory
Banking
Private Equity
Over 130 years’ experience of SPE investment & corporate advisory within team and Investment Committee
Team and SPE performance track record
SVG Investment Managers / Schroder Ventures Ltd (London)
Tony Dalwood established the Strategic Public Equity investment strategy at SVG and launched two LPs the Strategic Recovery Fund I and II and the Investment Trust (SEC plc), the latter two with Graham Bird
Graham left SVG in Feb 2009
Tony left SVG in March 2011
Strategic Equity Capital Investment Trust
5yr IRR 23%7, 11% IRR since 20077
Strategic Recovery Fund I (LP)
46% net IRR8 (03 Vintage)
Strategic Recovery Fund II (LP)
6% net IRR8 (06 Vintage).
Remaining equity investments transferred to limited partners in specie9
Journey Group plc +67% since fund realisation
E2V plc +75% since fund realisation
Lavendon Group plc -12% since fund realisation
UK Focus Fund (OEIC)
78% total return 2003–2011, vs 14% for SMXX10
Downing LLP
Tony chaired the Investment Committee from July 2011 – Dec 2014
Downing Active Management (OEIC)11
98% 3yr total return (vs 90% SMXX)
73% total return since inception (vs 55% SMXX)
PDFM (UBS Asset Management)
Tony was a member of the UK Investment Committee
Managed UK equity Funds of £1.5bn.
UK Investment Committee member, top quartile (CAPS data)
Pension Fund of the year 2001 (Pooled Fund) – Team member
Gresham House:
Advisory Group broadens and deepens the appraisal process and deal sourcing
Network bridges public & private markets
Range of skills and experience enhances due diligence process
7 Gresham House Asset Management Ltd calculations excluding dividends, including period subsequent to the departures of Graham Bird and Tony Dalwood. 8 GVQIM website.
9 Bloomberg data (total return since 30 Aug 2013 when SRFII wound up through to 5th Jan 2016) – SEC plc continues to follow an SPE style of investment and demonstrates the success of the strategy over the investment cycle. 10 Bloomberg data – total return. Tony Dalwood left SVGIM in March 2011 therefore data tracked for UK Focus Fund from Aug 2003 (July inception) - 31 Dec Tony Dalwood chaired Downing Active Management Fund Investment Committee from July 2011 – Dec Total return Performance data up to 26th Dec 2014.
Bridging the divide between public and private markets

13. Bridging the divide between public and private markets
Experienced GHS investment team
Fund Management
Tony Dalwood*
Chairman of Investment Committee, Fund Manager
Established SVGIM and launched Strategic Equity Capital plc and the Strategic Recovery Funds. Former CEO of SVG Advisers (Schroder Ventures London), former chair of Downing Active Management Investment Committee and a member of the UK Investment Committee at PDFM. Currently NED of JP Morgan Private Equity Plc and an adviser to LDC through Gresham House.
Tony is also Chairman of the Investment Committee and CEO of Gresham House plc.
Graham Bird*
Fund Manager
Previously Director of strategic investments at SVGIM and a Director within the corporate finance department at JP Morgan Cazenove. Recently held senior positions at Paypoint plc including strategic planning and corporate development director and PayByPhone President & executive Chairman.
Graham Bird is Head of Strategic Investments at Gresham House plc and a director of GHAM.
Jonathan Dighe
Investment team
Over five years of UK small cap equities experience, working as both a research analyst and as a Director on the equity sales desk at Charles Stanley Securities where he was responsible for looking after corporate clients, predominantly UK smaller public companies, a number of secondary placing's and IPOs.
Jonathan is also Commercial Director of Gresham House plc.
Investment Committee
Tom Teichman
30 years’ VC & banking experience. Founded Spark in Former Investment Committee member at Brandt’s, Credit Suisse, Bank of Montreal and Mitsubishi Finance London. Start-up investor/director of lastminute.com, mergermarket.com, Chairman of Kobalt Music, notonthehighstreet.com, ARC, MAID, amongst others. Investor/director in System C Healthcare, Argonaut Games, World Telecom. Delivered various disposals to trade, P-E, and through IPO. B.Sc.Econ(Hons). NXD Market-Tech.
Rupert Robinson
Over 25 years’ experience in Private Wealth and Asset Management. Former CEO and CIO of Schroders Private Bank and was instrumental in driving organic growth in AUM which doubled between 2008 and 2012 from £4.5 to more than £9bn. Prior to Schroder Rupert was Head of UK Wealth Management at Rothschild Asset Management.
Rupert is Managing Director of GHAM.
Bruce Carnegie Brown
IC member, Gresham House plc
Bruce is currently chairman of Aon UK Ltd and of Moneysupermarket.com Group plc. He is a non-executive director of Santander UK plc. He was previously a managing partner of 3i QPE plc, a managing director of JP Morgan and CEO of Marsh Ltd.
Bruce is also a member of the Gresham House plc Investment Committee.
Gresham House plc Advisory Group
Investment Committee member
Gareth Davis
Current Chairman of Wolseley, William Hill and DS Smith. Former CEO of Imperial Tobacco and Senior Executive at Hanson.
Alan Mackay
Former Senior Partner and Head of Healthcare at 3i Group plc, appointed to the board in Currently Managing Partner at GHO Capital and former CEO of Hermes GPE.
Sir Roy Gardner
Adviser to Credit Suisse, current Non-Executive Chairman of Serco, Senior Independent Director of William Hill Plc and Non-Executive Director of Willis Group Holdings Plc. Former Chairman of Compass Group, Manchester United and CEO of Centrica.
Bridging the divide between public and private markets

14. SPE investment process
Watch List
Corporate Advisers
M&A Transactions
Investor Community
Cash Flow Screen
Directors Dealings
Yield Drivers Screen
LBO Screen
Idea Generation
Investment Committee
Investment Committee
Stage 1
Stage 2
Stage 3
Stage 4
Sourcing
Due Diligence
Equity Value Plan
Catalyst & Exit
Investment
One Pager
Preliminary Investment
Report
Final Investment
Report
Execution
and Exit
Involvement of Advisory Group
Company overview
Investment thesis
Credible case for investment?
Does the company meet our criteria?
Catalyst for value
P-E insights
Initial meetings
Management credibility
Stakeholder analysis
Feasibility
Cash flow model
LBO model
Peer group review
DD questions
Investment risks
P-E transactions
Target price and IRR
Counterparty analysis
Due diligence reports
Bespoke research
External research
Management referencing
Commercial, technical/other DD
Risk mitigation/scenarios
Value creation plan & catalysts
Management support
Progress against thesis
Changes to estimates
Investment
Monitor & review against thesis every 6 months
Exit strategy
Materials
Focus
Source: Gresham House Asset Management Limited
Bridging the divide between public and private markets

15. Bridging the divide between public and private markets
Execution of GHS plan
Actively engaged in building the business
Re-brand and name change
Publishing broker research
Board review – addition of accomplished independent non-executive director
Investor roadshow and increased awareness
Execution of PR / IR plan increasing profile
Objective to narrow the discount to NAV and broaden the shareholder base (Discount has narrowed to 17% since GHAM was appointed manager from an average of 54%)12
12 From 12th Dec 2014 when GHS reported interim results through to 6th Aug when GHAM appointed Investment Manager. Average discount calculated with reference to the most recent published NAV on a daily basis over the period
Bridging the divide between public and private markets

16. Bridging the divide between public and private markets
Conclusion
Attractive entry point - GHS plc trades at a 17% discount to NAV13
Gresham House believes there is significant potential upside from existing strategic investments in the portfolio over the medium term (valuations plus catalysts)
Attractive pipeline of investment opportunities – engaged with a number of opportunities
Investment team with a track record of delivering strong long-term absolute returns
Investing with a Strategic Public Equity (SPE) approach can deliver superior long-term returns
Investment team aligned to performance – plans to scale and continue to narrow discount to NAV
13 Bid price as of 4th January 2016 and applying announced NAV as at 31st December 2015, released on 4th January 2016
Bridging the divide between public and private markets

17. Bridging the divide between public and private markets
Supplementary Information - Contents
Supplementary information
Attraction of existing portfolio investments
IMImobile plc
Miton group plc
Spaceandpeople plc
Be heard group plc
Quarto group inc
SPE – UTILISING PRIVATE EQUITY levers for equity value creation
Value investment philosophy generates long-term returns
Superior long-term returns from SPE STYLE Strategy
SPE – Long-term value creation from a focused portfolio
(12-16) 12 13 14 15 16 17 18 19 20
Bridging the divide between public and private markets

18. Bridging the divide between public and private markets
IMImobile – GHS 17.8% shareholding
“Undervalued and poorly understood”
Background
Corporate engagement / value creation levers
IPO in June IMI provides software and services centred around mobile data and consumer engagement. The Company’s solutions help enterprise clients engage and transact with their customers more efficiently through mobile devices.
Market leader in sector driven by macro mega-trends
Strong IP (suite of software applications - scalable cloud based)
Strong cash generation and balance sheet
Recurring / repeatable revenues provide strong visibility
Customer referencing confirms high value add
Pro-active engagement with management with clear strategic plan for next 3 years
Investment in new product
Growth of geographic footprint
Re-positioning towards high value, higher margin services
Continued client diversification and growth outside MNOs
Simplification of story, improved research coverage and demonstration of growth
Potential to enhance board in line with migration of business in Western Europe and North America
Perception to move away from ‘emerging market’ to ‘growth in mobile data’
Concentrated shareholder base and high levels of engagement with management enable company to control its future – Tosca 27%, GHS 18%, Liontrust 14% and management stake 22%
Strong relationship with management through Tom Teichman - GHS Investment Committee
Investment thesis
Low rating relative to peers & sector / P-E arbitrage opportunity
Business evolving to higher margin SaaS and high growth solutions
Increasing exposure to rapid growth and higher business in high western Europe, North America and Africa Enterprise will subsume focus on Indian and MEA ‘ businesses
Improving visibility and quality of revenue
Significant operational gearing - target to grow EBIT margin
Significant M&A opportunity with scope and proven ability to cross-sell
Valuation
Sept Archer acquisition and significant cross-selling opportunity
6.9x14 fwd EV/EBITDA, falling to 5x14 FY17 vs peer group 12.9x15
Forward PE multiple of 15x14 versus peer group >20x15
Trade / PE deal precedents at high relative valuations
PEG ratio < 0.75x, falling to < 0.5x
Attractive valuation characteristics provide significant upside potential if strategy is successful*
IPO
June Placed 5% VC holding with institutions
2014
2015
14 Whitman Howard research 3rd December GHAM determined peer group, median average fwd EV/EBITDA data from Bloomberg 5th Jan 2015.
* GHAM internal view; share prices may go down as well as up
Bridging the divide between public and private markets

19. Bridging the divide between public and private markets
Miton Group plc– GHS 2.9% shareholding
“Significant potential for positive operational gearing as AUM builds”
Background
Corporate engagement / value creation levers
Miton is a leading asset manager with an established multi-asset proposition and a proven track record to launch new single strategy funds. It manages in excess of £2bn across 9 OEICs, 4 unit trusts and 3 investment trusts. The company has built an infrastructure to support significant growth in AUM saw the company experience significant fund outflows on the back of poor investment performance and key man departures. Subsequent fund manager changes have led to strong fund performance leading to a resumption of growth and plans to launch new funds.
Established relationships with management
Clarity of shareholder value creation strategy – focus on ROCE
Leverage of distribution platform for existing and new fund launches
Identify milestones in execution of plans and assist communication
Investment thesis
AUM growth has resumed:
Strong growth in specialist UK equity funds and re-launched multi-asset strategy has led to net inflows
Top-quartile performance within single asset strategies
New fund launches – e.g. European fund
AUM growth expected to drive strong operational gearing; Industry EBIT margins c.30% versus 14% historic and c.9% forecast
Oct pSigma loss of segregated mandate
July pSigma acquisition and placing at 31p
Valuation
8.5x16 EV/EBITDA (falling to 5.6x16) v peer group 9.9x16
1.3% EV/AUM13, v peer group 2.7%13
Visible opportunity for material upside over the medium term*
Dec New management team and equity fund raise at 33p
2010
2015
16 GHAM calculations using GHAM determined peer group and Bloomberg data Dec 2015 * GHAM internal view; share prices may go down as well as up.
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20. Bridging the divide between public and private markets
SpaceandPeople plc– GHS 10.5% shareholding
“Return to normal margins”
Background
Corporate engagement
SpaceandPeople (SAL) markets and manages promotional space for marketing campaigns and retailing in shopping centres and other high footfall locations, such as theme parks and railway stations. SAL is at the forefront of developing the concept of space as an advertising and promotional medium. It offers consumer brands the opportunity to promote their products through direct engagement with consumers through a mix of experiential marketing events and complementary advertising and multimedia campaigns.
Actively engaged with founder, CEO and major shareholder Matthew Bending
Good existing relationships with recent Board appointments
Close relationships with individual large shareholders
Gresham House plc NED also a non-executive director of SAL
Focus on opportunity to deploy further growth capital and invest in European growth opportunities
Investment thesis
Business currently operating well below normal EBIT margin and ROCE
Significant operational gearing and ability to deploy capital at returns above cost of capital
acceleration of investment provides scope for superior growth
Momentum with material recent contract wins; further geographic expansion
Experiential marketing and use of space in high footfall locations becoming an important sub-sector
company influencing marketing spend decisions
Potential benefits to being held privately: deliverable P2P / trade sale
April 2014 Profit warning - contract losses and slow down in all divisions – (internal controls)
Aug SPARK / GHS plc invest in SAL at 66p a 10% discount to the prevailing price
Aug Gresham House actively engage management
Feb / March Gresham House engage new NEDs and founder
Valuation
5x17 EV/EBITDA v peers on 10x17
ROCE low single digits vs historic 20%17
Path to earnings recovery through contract wins & higher ROCE MPKs
2010
2015
17 GHAM calculations using GHAM determined peer group and Bloomberg data – Jan 2015 * GHAM internal view; share prices may go down as well as up
Bridging the divide between public and private markets

21. Be Heard – GHS 7.3% shareholding
“Strong management team delivering acquisition led value creation”
Background
Corporate engagement / value creation levers
Be Heard's strategy is to create a network of digital businesses spanning the marketing services, data and e-commerce sectors through acquiring smaller, niche complementary agencies in the UK, US and Europe. The plan is to create a mid-size digital media network providing more flexibility than holding groups and greater scale than digital specialists can achieve alone..
Its first acquisition was Agenda 21 in November Founded in 2005, Agenda 21 is a market-leading digital media and analytics agency. It’s core business is planning, buying and managing multi-channel marketing campaigns across the digital marketing spectrum. This includes search engine optimisation, pay-per-click, display advertising and other paid media, underpinned by proprietary analytics, serving clients across a variety of industries, including financial services, utilities, and charities.
Pro-active engagement with management with a clear strategic plan for next 5 years:
Base case model: £50m - £100m of acquisitions over 5 years; including Agenda 21
Create value from the acquisitions through synergies and efficiencies, centralised process and top level functions
Scale leadership in UK digital media to international presence/market share
Provide capital in support of a targeted acquisition growth strategy
Investment thesis
Backing a proven management team with a strong track record of value creation in the sector and highly capable integrators of businesses
Support a buy and build growth and value creation strategy
Market growth in digital media is evident with spending on internet advertising forecast to double
Positioned to benefit from rapid growth in mobile data and connected devices
Expectation of strong cash flow generation from operations and earnings growth provides an opportunity to deliver a significant money-multiple return.
29th May 2015: Change of investment focus from natural resources to TMT
18th November 2015 Gresham House invests £0.7m in placing at 3.25p
December 2014 Mithril IPO (cash shell)
18th November 2015 placing raises £5.5m for acquisition of Agenda21 + name change to Be Heard Group plc and admission to AIM – BHRD begins trading on AIM 23rn Nov
Valuation
1st December 2015 GHS purchases a further £0.1m at 2.97p
Agenda21 was acquired at 6x EBITDA, subject to further earn-out payments which if fully realised would increase the multiple to 8x19.
Larger companies in the sector trade on a range of 9-11x EBITDA19
Dec 14
Jan 16
18 Enders Analysis based on GroupM/ZenithOptimedia
19 Gresham House calculations. GHAM determined peer group including much larger peers which in time as BHRD executed on its buy and build strategy should become appropriate comparable companies..
Bridging the divide between public and private markets

22. Quarto Group – GHS 1.8% shareholding
“Buy and build”
Background
Corporate engagement / value creation levers
The Quarto Group (‘Quarto”) is the world’s leading global illustrated book publisher and distribution group and has been listed on the London Stock Exchange since Quarto creates more than 1,500 adult and children's books a year. These books are sold into 35 countries and in 25 languages. Subjects range from Art 'How-To', Graphic Design, and Home Improvement, to Cooking, Gardening, Motoring, and Crafts; Quarto specializes in producing books that can be better explained with photographs or illustrations, covering many different subject matters.
Good relationship with CEO Marcus Leaver proven management team
GH to support the strategy financially and directly through expertise and advice
Deleveraging to continue strong cash generation
Acquisitions to increase exposure to higher value markets
Assist in pull-back from lower margin divisions
Organic bottom line growth through cost reduction and focus on high margin areas
Investment thesis
Backing CEO Marcus Leaver to grow earnings and create value through a combination of organic growth and increasing exposure to higher margin areas, continued strong cash generation (de-leveraging) and value enhancing acquisitions.
The strategy seeks to acquire c. $25m of smaller publishers for low multiples (4x-5x EBITDA) and integrate them with Quarto trading closer to 7.3x20 fwd EV/EBITDA, driving operational synergies and enhancing group earnings
IVY press was acquired in 2015 with EBITDA forecast to double by 2017
February 2015 acquisition of IVY Press for £1.3m
Valuation
C.6x fwd EV/EBITDA FY16, falling to 5.2x FY17 vs peer group 7.521
Trade / PE deal precedents at high relative valuations17
Dec 09
Jan 16
20 Westhouse Securities (now Stockdale) research note 13 Aug 2015, Northland Capital Partners research 15th November 2015
21 .Gresham House calculations using peer group as determined by GHAM
Bridging the divide between public and private markets

23. Bridging the divide between public and private markets
Strategic Public Equity value creation
Utilising Private Equity levers for equity value creation
Private Equity techniques to identify equity value creation levers in public companies
Margin Improvement 6.5%
Operational Improvement 48.3%
Influenced by company management team, shareholders and the GP 80.8%
Free Cash Flow Creation 15.9%
Revenue Growth 25.9%
Leverage 32.5%
Multiple Expansion 19.2%
Can be Influenced by Company , management and advisers 19.2%
Source diagram – Centre for Entrepreneurial and Financial Studies, Technical University of Munich, Capital Dynamics mainly European enterprises backed by Private Equity over 17 yr period Average holding period 3.5yrs. Data published in FTfm October 2009.
Bridging the divide between public and private markets

24. Bridging the divide between public and private markets
Value investment philosophy generates long-term returns
Lower valuation at time of investment leads to higher returns
10yr Cyclically Adjusted PE & Future Average Real Compound Returns for 32 Countries (1980 – 2011)22
Avg CAPE %
1yr
3yr
5yr
7yr
10yr
by Bucket
Occurrence
Real CAGR
<10
10.2%
25.9%
17.0%
17.1%
13.4%
10.9%
10 to 15
20.5%
22.8%
13.8%
12.2%
11.2%
9.6%
15 to 20
25.2%
10.8%
10.6%
8.8%
8.0%
20 to 25
18.3%
4.4%
6.8%
5.6%
6.5%
5.7%
25 to 30
11.0%
-1.3%
0.7%
3.4%
3.4% 
3.3%
30 to 40
7.5%
3.0%
-1.1%
-0.8%
1.7%
2.1%
40 to 50
-3.3%
-3.4%
0.0%
0.2%
-0.2%
>50
2.0%
-4.5%
-12.3%
-6.4%
-1.9%
-3.1%
22 Cambria - CQR ISSUE 5 using global financial data, Morningstar.
Bridging the divide between public and private markets

25. Bridging the divide between public and private markets
Superior long-term returns from SPE style strategy
Year to 31 January
Source: Bloomberg data, Annual Report & Accounts. NAV growth vs FTSE small-cap (ex IT)
The SPE strategy delivered an average NAV CAGR of 7.4% vs 4.0% for the SMXX between Jan 2008 – Jan
Gresham House has no relationship with Strategic Equity Capital plc, NASCIT and Crystal Amber. The purpose of this slide is to demonstrate the long-term aggregate outperformance of the engaged strategic public equity style investment strategy.
23 Gresham House calculations. SPE strategy average NAV CAGR calculated by taking the average NAV growth of NASCIT, Strategic Equity Capital plc and Crystal Amber over the period vs the CAGR in share price of the FTSE small-cap index excluding Investment Trusts (SMXX) .
Bridging the divide between public and private markets

26. Bridging the divide between public and private markets
SPE – Long term value creation from focused portfolio
SEC plc demonstrates the long-term investment cycle for SPE style investing
Strategic Equity Capital plc - Top 10 holdings as of 30/6 each yr - % of invested portfolio
2007
2008
2009
2010
2011
2012
2013
2014
Redstone
14.6
Intec
16.4
SRF II
13.9
16.6
17.2
Tyman (Lupus)
13.1
E2V
12.2
Pinewood
8.4
8.8
RPC
11.5
9.8
11.8
Lupus Capital
12.7
Tyman
12.1
Melrose
6.7
Spirent
7.8
9.1
KCOM
9.4
9.2
10.1
4imprint
10.0
Servelec
10.6
Evolution
5.5
6.9
StatPro Group
8.7
8.5
8.9
Lavendon
8.6
Thorntons
6.1
8.3
7.9
Wilmington
Cardpoint
5.3
6.8
6.6
CVC Group
EMIS
Mecom
5.0
StatPro
5.4
6.3
Allocate
5.9
7.2
Renold
4.5
4.8
ORA Capital
5.2
7.3
5.7
Gooch &
Housego
5.6
Goals
7.1
4.4
Vintage 1
4.2
4.3
Kewill
Gooch & Housego
5.8
Journey Group
3.6
CVS Group
3.9
Top 10 as % of portfolio
64.5
68.6
80.4
76.9
86.8
84.9
81.4
83.9
Private Equity
2010 or earlier investment
Highlighted stocks reflect initial investment decisions made in or prior to 2010
Engage, influence, value creation plan and then the market re-rates on execution /delivery (not a short-term strategy)
Unquoted – significant drivers of performance – SRF II (IRR 36.8%, 2.8x24), Vintage (46.0% IRR 5.7x24)
24 SEC plc Annual Report 30 June 2013, net of fees and since purchase in Aug 2009.
Bridging the divide between public and private markets

27. The flagship listed Gresham House Strategic Public Equity platform
Gresham House Asset Management Ltd
12 Austin Friars
EC2N 2HE