TIDMFSG
RNS Number : 1789I
Foresight Group Holdings Limited
01 December 2022
LEI: 213800NNT42FFIZB1T09
1 December 2022
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FOR IMMEDIATE RELEASE
Half-year results for the six months ended 30 September 2022
Diversified business model continues excellent track record of
delivering profitable growth
Foresight Group Holdings Limited ("Foresight", the "Group"), a
leading infrastructure and private equity investment manager, is
pleased to announce its results for the six months ended 30
September 2022 ("H1 FY23").
FINANCIAL AND OPERATIONAL HIGHLIGHTS
Significant progress against all four of our strategic growth
targets:
-- 41% increase in Assets under Management ("AUM") to GBP12.5
billion(1) (FY22: GBP8.8 billion); 38% increase in Funds under
Management ("FUM") to GBP9.2 billion (FY22: GBP6.7 billion)
-- Growth driven by the significant acquisition of Australia-based
Infrastructure Capital Group, which added c.GBP3.0 billion
to the Group's AUM, in combination with successful fundraising
such as Foresight Sustainable Forestry Company Plc's additional
GBP45 million equity raise
-- Updating 20-25% AUM growth target to a rolling 3-year average
to better reflect the variable nature of acquisition activity
and large institutional fundraises
-- 89% high quality recurring revenues, at upper end of 85-90%
target range
-- Total revenue increased by 28% to GBP50.7 million (H1 FY22:
GBP39.7 million), following FUM uplifts, successful fundraising
and significant acquisition activity
-- 42.4% core EBITDA margin pre-Share Based Payments ("SBP"),
delivered through a combination of strong revenue growth and
cost discipline, well on track to meet 43% medium term target
-- Infrastructure division building investment scale with average
deal size in H1 FY23 twice that of FY22
-- Interim dividend of 4.6p, underpinned by the strong performance
of the business and in line with 60% target payout ratio
30 September 30 September
2022 2021 31 March
Key financial metrics 2022
-------------------------------------- ------------ ------------ ----------
Period-end AUM (GBPm) 12,483 8,133 8,839
Period-end FUM (GBPm) 9,203 6,067 6,675
Total revenue (GBPm) 50,720 39,707 86,071
Recurring revenue (% of Total) 89.4% 89.5% 86.9%
Core EBITDA pre-SBP(2) (GBPm) 21,522 15,202 31,825
Core EBITDA pre-SBP(2) margin (%) 42.4% 38.3% 37.0%
Adjusted basic earnings per share (p) 15.9p 10.7p 22.5p
Dividend per share (p)(3) 4.6p 4.0p 13.8p
-------------------------------------- ------------ ------------ ----------
1. GBP0.1 billion reduction on reported 30 September 2022 AUM.
This reflects the impact of the electricity generator levy that was
announced in the UK Government's Autumn Statement on 17 November
2022.
2. SBP equal to GBP0.4 million in H1 FY23.
3. Adjusted diluted earnings per share was 15.7p, 10.7p and
22.4p as at 30 September 2022, 30 September 2021 and 31 March
2022.
Bernard Fairman, Executive Chairman of Foresight Group Holdings
Limited, commented:
"The six months to the end of September 2022 saw a continuation
of Foresight's excellent performance since IPO, with the Group's
diversified business model delivering exceptional results. AUM
growth of 41% in particular was significantly ahead of target,
achieved through both organic growth and outstanding
acquisitions.
I have been delighted with the progress made in integrating both
Infrastructure Capital and Downing's technology ventures division
and look forward to capitalising on the many quality growth
prospects these acquisitions present.
Against the backdrop of challenging market conditions,
Foresight's differentiated and resilient business model continues
to offer global opportunities to scale our investment platform,
diversify our investment offering and attract new clients
worldwide. We are now a key player in both European and Australian
sustainable infrastructure, as well as in regional private equity,
and our expanding geographic footprint means that we are able to
target the most attractive markets in a timely fashion.
The ongoing successful execution of our sustainable investment
strategy will enable us to continue to deliver on our strategic
growth targets and provides us with considerable confidence for the
second half of the year and beyond."
This announcement contains inside information, as that term is
defined in the UK version of the Market Abuse Regulation
(Regulation (EU) No 596/2014) which is incorporated into English
law by virtue of the European Union (Withdrawal) Act 2018.
Analyst presentation
A pre-recorded presentation will be available to view on the
Company's website (https://www.foresightgroup.eu/shareholders) on 1
December 2022. This presentation will be played at the start of a
webcast from 9.00 a.m. (UK time) on 1 December 2022 and be followed
by live Q&A for analysts hosted by Bernard Fairman (Executive
Chairman) and Gary Fraser (CFO and COO).
Those wishing to join should register via the following
link:
Register here
The next scheduled update for Foresight Group will be a Q3 FY23
Trading Update on 12 January 2023.
For further information please contact:
Foresight Group Investors Citigate Dewe Rogerson
Liz Scorer Caroline Merrell / Toby Moore
+44 (0) 7852 210329 / +44 (0) 7768
+44 (0) 7966 966956 981763
ir@foresightgroup.eu caroline.merrell@citigatedewerogerson.com
/
toby.moore@citigatedewerogerson.com
------------------------- -----------------------------------------
About Foresight Group Holdings Limited
Foresight Group was founded in 1984 and is a leading listed
infrastructure and private equity investment manager. With a
long-established focus on ESG and sustainability-led strategies, it
aims to provide attractive returns to its institutional and private
investors from hard-to-access private markets. Foresight manages
over 350 infrastructure assets with a focus on solar and onshore
wind assets, bioenergy and waste, as well as renewable energy
enabling projects, energy efficiency management solutions, social
and core infrastructure projects and sustainable forestry assets.
Its private equity team manages ten regionally focused investment
funds across the UK and an SME impact fund supporting Irish SMEs.
This team reviews over 2,500 business plans each year and currently
supports more than 250 investments in SMEs. Foresight Capital
Management manages four strategies across six investment vehicles
with an AUM of over GBP1.5 billion.
Foresight operates across seven countries in Europe and
Australia with AUM of GBP12.5 billion. Foresight Group Holdings
Limited listed on the Main Market of the London Stock Exchange in
February 2021. https://www.foresightgroup.eu/shareholders
Disclaimer - Forward-looking statements
This announcement, prepared by Foresight Group Holdings Limited
(the "Company"), may contain forward-looking statements about the
Company and its subsidiaries (the "Group"). Such forward-looking
statements can be identified by the use of forward-looking
terminology, including the terms "believes", "projects",
"estimates", "plans", "anticipates", "targets", "aims",
"continues", "expects", "intends", "hopes", "may", "will", "would",
"could" or "should" or, in each case, their negative or other
various or comparable terminology. Forward-looking statements
involve known and unknown risks, uncertainties, assumptions and
other factors which are beyond the Company's control and are based
on the Company's beliefs and expectations about future events as of
the date the statements are made. If the assumptions on which the
Company bases its forward-looking statements change, actual results
may differ from those expressed in such statements. There are a
number of factors that could cause actual results and developments
to differ materially from those expressed or implied by these
forward-looking statements, including those set out under
"Principal Risks" in the Company's annual report for the financial
year ended 31 March 2022. The annual report can be found on the
Company's website (www.fsg-investors.com). Forward-looking
statements speak only as of the date they are made. Except as
required by applicable law and regulation, the Company undertakes
no obligation to update these forward-looking statements. Nothing
in this announcement should be construed as a profit forecast.
EXECUTIVE CHAIRMAN'S STATEMENT
Introduction
We are proud to be one of Europe's and Australia's most
established real asset investors and it is our position as one of
the market leaders that has provided the foundation for our
excellent post - IPO performance. We have continued this strong
performance over the last six months, with Foresight's diversified
business model achieving exceptional results. Assets Under
Management ("AUM") growth in particular was significantly ahead of
target at 41% in the period, achieved through both measured organic
growth and outstanding acquisitions.
The acquisition of Infrastructure Capital Holdings Pty Ltd
("Infrastructure Capital"), now part of the enlarged Foresight
Australia, was a significant achievement, adding considerably to
the Group's AUM. The integration process has been both efficient
and smooth, ensuring that we are well positioned to start to
capitalise on the many growth opportunities this acquisition will
deliver.
Whilst we cannot ignore the ongoing macroeconomic situation to
which we are all exposed, we have designed resilience into our
robust business model through product, geographic and investor
diversification. This has enabled us to grow and perform strongly
in the period despite volatility across the wider global financial
markets.
This is evidenced by Foresight's compound annual growth of 40%
in Core EBITDA pre-SBP over the last three years, which we feel is
currently undervalued by today's market. As an illustrative
example, at a share price of 350 pence, Foresight shares would
trade at just 13x current consensus earnings per share(1) for
FY23.
Our purpose to invest for a smarter future through our
sustainable investment strategy has ensured we are in the best
position to benefit from the increasing sustainability focus of
corporations and governments around the world. We are confident
that we will continue to generate strong financial returns for our
investors thanks to ongoing innovations that will make a real
difference to the world around us and help countries worldwide
deliver on their decarbonisation commitments.
1. Based on consensus EPS as at 12 October 2022 of 26.8 pence.
Financial highlights
We have continued our track record of strong performance against
our strategic growth targets and again demonstrated the access we
have to high - quality investment opportunities in growing
markets.
In the first half we delivered significant growth in Assets
Under Management ("AUM") of 41% to GBP12.5 billion(1) (FY22: GBP8.8
billion), and in Funds Under Management ("FUM") of 38% to GBP9.2
billion (FY22: GBP6.7 billion). Significant acquisition activity
delivered GBP3.3 billion of the AUM growth in the period.
This was further supported by continued organic inflows and
valuation uplifts. Since IPO in 2021(2) , AUM has increased by 74%,
driven by both organic growth and strategic acquisitions.
Recurring revenue of 89.4% (target range: 85-90%) reflected high
- quality revenue composition and predictability. Core EBITDA pre -
SBP in the period was also over 40% ahead of prior year at GBP21.5
million (H1 FY22: GBP15.2 million), with a Core EBITDA pre - SBP
margin of 42.4%, well on track to achieve our medium - term target.
These results were delivered through a combination of revenue
growth, fund performance and cost discipline in the current high
inflation environment.
1. GBP0.1 billion reduction on reported 30 September 2022 AUM.
This reflects the impact of the electricity generator levy that was
announced in the UK Government's Autumn Statement on 17 November
2022.
2. Based on 31 March 2021 AUM of GBP7.2 billion.
Dividend
In support of our dividend policy, and as a result of the
Group's strong performance, the Board is declaring an interim
dividend of 4.6 pence per share (H1 FY22: 4.0 pence) to reflect
their ongoing confidence in our growth trajectory. The interim
dividend will be paid on 27 January 2023.
Strategic activity
We are focused on our ambition to achieve and maintain market
dominance within our chosen markets, which are growing at a high
rate.
As previously disclosed, in the half we completed two strategic
acquisitions that support our drive to act conscientiously and
invest responsibly. The Infrastructure acquisition of
Infrastructure Capital has enabled us to strengthen our presence in
Australia and enables us to offer an enhanced combined product
portfolio. Private Equity's acquisition of Downing LLP's technology
ventures division meaningfully expands our retail private equity
client offering to provide enhanced growth opportunities.
I have been delighted with the integration of both acquisitions
into the Foresight Group and look forward to the additional growth
opportunities these will bring us.
During the period we have deepened our exposure to core asset
classes while also expanding into adjacent asset classes. Our
investment into HH2E, a green hydrogen developer, is an example of
this expansion and highlights how we are able to work across the
business to capitalise on exciting new opportunities. The structure
of this investment, an infrastructure development project led by a
highly skilled management team, leverages our cross - divisional
capabilities. Going forward, our business model with expertise in
both infrastructure and private equity means that we are uniquely
placed to continue to benefit from opportunities such as these.
Sustainability
We have built our Group on the foundation of sustainability. It
drives our investor strategy which is focused on areas such as
renewable energy, sustainable forestry, agriculture and
aquaculture. We also actively encourage our private equity
portfolio companies to focus on adopting ESG strategies that will
have a positive impact on their performance and local
communities.
When considering the investments we make, we look to the
Principles for Responsible Investment ("PRI") to ensure we make
decisions that align with our sustainability beliefs. It is key
that we also perform well against this measure, and I am pleased
that, following the latest PRI scores released in September, we
scored the highest rating of five stars for Private Equity,
Infrastructure and Group Investment and Stewardship Policy.
People
We recognise the importance of investing in our people to build
the capabilities we need to deliver on our full potential. Whilst
our reputation and track record enable us to attract the best in
our industry, it is the opportunity to make a positive impact on
the world around us that helps us retain our dedicated
employees.
As we grow our international presence, we have continued to
strengthen our culture, embedding our core values in all we do to
help us consistently drive improvements and operational excellence
across the Group. The focus of our people strategy is on adopting a
sustainable global growth mindset, demonstrating strong leadership
and enhancing communication, all whilst encouraging diversity and
accountability at all levels of the organisation. We are confident
that through our dedication to getting these elements right, we
will be able to outperform our competitors and differentiate
ourselves as best in class.
I would like to thank all our employees for their ongoing
enthusiasm, knowledge and ambition that is delivering growth and
success for all our stakeholders.
Governance
At our AGM on 10 August 2022, and referenced in our AGM results
announcement of 11 August 2022, over 20% of Foresight's
Shareholders voted against Resolutions 16 and 17 regarding the Rule
9 Waiver and Infrastructure Capital Management Incentive Plan.
As the support of our Shareholders is central to our ongoing
success and their views important to the shaping of our strategy,
we entered into a period of elevated engagement with those
Shareholders that had voiced their concerns. This engagement has
taken place through 1:1 meetings and direct communication with the
Group's Head of Governance. While the views of certain Shareholders
on these resolutions remain unchanged, all valued the provision of
additional context and the opportunity for discussion. The output
of these discussions have been relayed to the Group Board for their
consideration. .
At this time, the Board continues to consider Resolutions 16 and
17 to be in the best interests of Shareholders as a whole. However,
based on this period of engagement, the Board will endeavour to
improve the disclosures included within the 2023 Annual Report to
better inform our Shareholders and other stakeholders regarding the
rationale for our Resolutions.
Outlook
Against the backdrop of challenging market conditions,
Foresight's differentiated and resilient business model offers the
Group future opportunities to deliver on our strategic growth
targets and achieve further growth, diversification and
expansion.
Foresight is now a key player both in European and Australian
sustainable infrastructure, as well as in regional private equity,
and our broadening geographic footprint means that we are
benefiting from being active in multiple markets, able to target
the most attractive markets at any one time. International
opportunities for expansion outside of the UK will be one of our
strategic priorities next year.
There is a continued strong demand for renewable energy
investment, driven by a high commitment to energy transition
strategies and recognition of the importance of renewable energy to
future energy security.
We have long been ahead of our peers in recognising the
importance of renewable energy, both in its potential to reward
investors, and in its importance for responsible investing. The
long-term structural sustainability trends will continue to present
opportunities for Foresight for years to come, and due to the
scalability of our business model we will always be in a position
to turn these opportunities into financial reward for our investors
in the parts of the world where we are, or will become,
established.
On the private equity front, we are successfully expanding our
regional footprint and are able to utilise our extensive experience
to support our well balanced and growing portfolio of SMEs, now in
excess of 250 companies, through these challenging times.
Our Foresight Capital Management division delivered a resilient
performance in the period relative to peer performance within the
wider markets. The division remains focused on increasing
distribution geographically and expects to deliver strong growth
over the medium term by capitalising on the compelling market
opportunity that exists.
The ongoing successful execution of our sustainable investment
strategy, to help deliver on the opportunities available to us,
provides us with considerable confidence for the second half of the
year and beyond. I expect us to continue to deliver on our IPO
promises which should, in due course, create significant value for
Shareholders.
Bernard Fairman
Executive Chairman
30 November 2022
INFRASTRUCTURE
Infrastructure by geography
UK | 52%
Australia | 33%
Europe | 15%
Infrastructure AUM by client type
Energy transition | 66%
Transport | 17%
Social | 8%
Sustainable land and food | 2%
Digital | 1%
Uninvested | 6%
Overview
Foresight's Infrastructure division is one of Europe's and now
Australia's most established real assets investors, following the
acquisition of Infrastructure Capital on 8 September 2022. The
infrastructure market is characterised by powerful long - term
structural trends, in particular the transition to a low carbon
energy system.
The Infrastructure Team comprises 163 investment, commercial and
technical professionals whose extensive experience and track record
facilitate the deployment and management of capital across a wide
range of infrastructure sectors at various stages of an asset's
life.
As at 30 September 2022, the division managed 399 infrastructure
assets across 12 distinct infrastructure sectors, including 4.3GW
of total green energy technology capacity.
Infrastructure AUM as at 30 September 2022 was GBP9.7 billion,
an increase of 54% in the period (FY22: GBP6.3 billion), reflecting
the significant acquisition of Australia - based Infrastructure
Capital, which added GBP3.0 billion to the Group's AUM.
Performance, fundraising and capital deployment
The value of our sustainable energy infrastructure assets rose
by GBP0.1 billion in the half. This largely reflects increases in
merchant and forward contract energy pricing, being partially
offset by the impact of the electricity generator levy that was
announced in the UK Government's Autumn Statement on 17 November
2022. The current revenue split across the portfolio is
approximately 35% merchant; 60% fixed price (government subsidies
and forward contracts); and 5% other.
Having deployed the full GBP130 million of proceeds raised in
its IPO in November 2021 into quality forestry and afforestation
assets, Foresight Sustainable Forestry Company Plc ("FSFC")
successfully completed a GBP45 million equity raise in June 2022.
The successful deployment of its IPO equity proceeds and the
significant pipeline of opportunities provided additional
validation of our investment strategy and our ability to further
grow the Fund.
In the first six months of FY23, the rate of capital deployment
increased substantially, with 24 transactions completed at a total
value of GBP539 million. This is more than the total deployed in
the whole prior year. When coupled with future deployment rights of
GBP409 million, this gives a total potential investment of GBP948
million in the period, with the average deal size twice that of the
FY22 average.
This deployment demonstrates the continued scaling up of the
division as we originate larger deals in high - quality projects,
such as Foresight Energy Infrastructure Partners' tenth and largest
investment to date in the 277MW Kölvallen greenfield wind farm
project in Sweden. Our deployment during the period has deepened
our investment in core asset classes, such as renewable energy
generation, battery storage and fibre networks, whilst also
expanding into adjacent classes such as green hydrogen and
aquaculture.
Looking ahead, we expect support from investors for sustainable
investment strategies to continue. This demand, combined with our
track record of successful deployment of capital into high -
quality projects, positions the Infrastructure division well for
growth on a greater scale than that previously achieved.
Outlook
The ongoing global effort to reach net zero continues to drive
expansion within our end markets and provides a strong foundation
for our ongoing growth. However, given the current global
geopolitical uncertainty, an important driver over the short to
medium term is the increased focus on energy security. This is
essentially uninterrupted availability of energy at affordable
prices, reducing the reliance on the importation of oil, gas and
coal and therefore making renewable energy a much more attractive
alternative.
In April 2022, the UK Government published its energy security
strategy and in May 2022 the European Commission presented its
REPowerEU plan, both of which aim to drive improved energy
efficiency and the integration of renewable energy options into the
power matrix. We have continued to see political impetus for these
policies to achieve energy security, creating increased investment
opportunities for us to participate in.
This period of geopolitical uncertainty has had a material
impact on energy markets that we cannot overlook, with increases in
merchant and forward contract energy pricing seen during the
period. Whilst we are mindful of our own long-term investment
objectives and the opportunities that exist for us in a high price
environment, we also appreciate that for the sector to grow and
bring long-term financial benefits for our investors, markets need
clearer visibility of government plans and the related impact on
energy markets.
The Autumn Statement announced on 17 November 2022 introduced
the electricity generator levy, being a 45% temporary levy on
revenues made by renewable electricity generators when wholesale
power prices exceed GBP75/MWh. Foresight welcomes the Statement's
regulatory clarity provided by the announcement after a period of
uncertainty and challenging economic conditions. The temporary
introduction of the new levy will impact investment returns at a
period when the cost of capital for energy transition investments
is increasing, potentially impacting the development of new
projects. We remain committed to investing in energy transition
strategies and will continue to engage with the UK Government to
deliver an investment landscape that delivers high-quality energy
infrastructure that is crucial for boosting energy security and
economic productivity.
Against the backdrop of the current macroeconomic situation, we
believe that investment into sustainable infrastructure can
contribute significantly to global energy security, economic growth
and job creation. In turn, this will create high - quality short,
medium and long-term sustainable investment opportunities that will
continue to drive successful growth for the division.
The 2022 United Nations Climate Change Conference, or COP27,
that took place from 6 November until 18 November 2022 in Egypt
delivered limited progress in strengthening the objective of
reducing emissions and not exceeding the 1.5 Celsius threshold. The
final overarching deal between nations did not include commitments
to reduce use of fossil fuels, but an historic deal has been agreed
that will see developed nations pay for the damage and economic
losses caused by climate change in the most affected countries. We
remain confident that the commitment to climate change initiatives
will grow stronger in the coming years and more global emissions
are covered by net zero pledges, effectively supporting further
investment in energy transition.
Strategic acquisition of Infrastructure Capital
The acquisition of Infrastructure Capital in the period has
established Foresight as one of the leading renewable generation
and infrastructure investors in Australia. Supporting Foresight
Group's acquisition strategy, the highly complementary nature of
the business, along with its focus on sustainable investing and
strong reputation across Australia, will help the Group expand its
presence in Australia and elsewhere.
The enlarged Foresight Australia will benefit from enhanced
investment, product development and distribution capabilities, in
turn facilitating the introduction of new products into both new
sectors and new geographies. It is also better positioned to
address Asian markets in future, while delivering scale in the
large and growing Australian infrastructure and renewables
market.
The integration of Infrastructure Capital is progressing well,
with a number of successful investments completed post period end,
including a 50/50 joint partnership with Shell to acquire
development rights to a 370MW Western Australia-based renewables
project covering wind, solar and battery storage.
A key focus for Foresight Australia will be the growth of the
existing Australian Renewable Infrastructure Fund ("ARIF"), which
will be marketed to its existing investors, Foresight's broader
investor base, and new investors. We expect to deliver c.10% EPS
accretion in the first full year post-acquisition and believe that
further value will be delivered over time as we capitalise on the
opportunities previously set out.
PRIVATE EQUITY
Portfolio split by carrying value
Secured lending | 23%
TMT | 22%
Healthcare | 17%
Industrial and manufacturing | 12%
Business services | 10%
Consumer/leisure | 10%
Engineering/industrials | 6%
Overview
Foresight Private Equity managed investments in 281 small and
medium-sized enterprises ("SMEs") as at the end of the period. This
covered a broad range of sectors including healthcare, business
services and Telecommunications, Media & Technology ("TMT").
Our strategy of targeting GBP1-5 million investments in companies
is supported by favourable long-term trends and structural growth
drivers. In combination with the strength of our relationships and
capabilities fostered over a number of decades, our Private Equity
division is well positioned to continue to deliver strong
performance, further increasing our geographic reach and investor
base.
The success of this strategy was evidenced by our stand - out
performance in the period to 30 September 2022, with divisional AUM
up 39% to GBP1.3 billion (March 2022: GBP930 million) through a
combination of organic and inorganic activity.
Fundraising activity contributed to AUM growth, with the first
close of three new private equity funds substantially increasing
our local footprint.
On 4 July 2022, Foresight Group completed the acquisition of the
technology ventures division of Downing LLP, a UK-based asset
manager. Foresight acquired the management contracts of two VCT
funds and one EIS fund, adding a combined AUM of GBP275 million.
These funds have added c.12,000 retail investors to Foresight's
venture capability, with an investment focus of GBP2 million to
GBP4 million and investments predominantly across the UK as well as
in the US, UAE and Israel. The funds include early - stage venture
investments with a thematic focus on enterprise software, deep
technology and consumer. This complements the Foresight Williams
Technology hard tech and industrial software focus.
The investment team of seven, including international venture
partners, have transitioned successfully from Downing to
Foresight.
ESG principles are embedded within Foresight's business model.
Foresight's Private Equity Team makes sustainable growth
investments into SMEs that have the potential to create broad, long
- term ESG benefits through their operations and we are proud to
report achieving the top five - star classification from the UN
Principles for Responsible Investment 2021 for Foresight Private
Equity. We also understand that many SMEs struggle to adopt ESG
best practices due to the demands of business as usual. Therefore,
we work in partnership with our portfolio companies to help put ESG
principles at the heart of their decision making. We believe this
improves performance, differentiates them from their competitors
and drives real value at the time of exit.
The division's achievements also continue to be recognised by
the industry. During the period, Foresight was shortlisted for a
number of awards, including Real Deals' ESG Awards in the Small Cap
Manager category, British Venture Private Equity Awards 2022 for
Small Buyout Exit of the Year and Venture Capital House of the
Year, and for five awards at the Growth Investor Awards 2022. The
latter included "Most Impactful Investment" for investment into
flood mapping and prevention company Previsico, "Exit of the Year"
for sale of technology and software tool developer Codeplay, and
"Growth Investor of the Year".
Performance
In the six months to 30 September 2022, the Private Equity Team
delivered another period of strong activity and exceptional growth.
The portfolio remains balanced with exposure to a broad base of
both well-established smaller companies and earlier-stage high -
quality growth companies across a range of sectors.
During the period GBP46.3 million of capital was deployed across
31 equity transactions to support 28 SMEs. The funding came from 13
different investment vehicles, covering a wide variety of sectors
and investment types. New investments of GBP35.2 million were made
during the period across a range of sectors, including Copptech, an
antimicrobial technologies provider that focuses on environmentally
friendly antibacterial solutions for a variety of hygiene, health
and safety applications.
GBP11.1 million was used to fund follow - on investments to meet
the growth requirements of various companies across the portfolio.
Highlights included financial advisory company Beckett Investment
Management Group and radiology diagnostics company Hexarad. A
further GBP39.8 million was committed to portfolio companies that
provide specialist lending to third parties.
Foresight continues to maintain a strong pipeline of potential
investments and has a considerable number of opportunities under
exclusivity or in due diligence across all of its active Private
Equity funds. All funds are on track to deliver on deployment
targets and Foresight's regional approach is yielding positive
origination outcomes as we build deep connections with local
business communities.
In the period, the Private Equity Team also completed several
successful realisations from both retail and institutional funds.
Noteworthy examples include the successful sale of technology and
software tool developer Codeplay to a US corporate buyer,
delivering an impressive 16.0x return on funds invested, and TFC,
an industrial fastener products supplier, which was sold at a
notable 12.6x cash - on - cash return.
Following a number of strong exits, the Foresight Regional
Investment Fund LP ("FRIF") has already delivered a gross cash
return of GBP115.0 million on GBP53.8 million invested, with 12
portfolio companies remaining. FRIF is based in the North-West of
England and was one of the first in a series of Foresight regional
investment funds, with different geographic remits across the UK.
In addition to financial returns, the Fund has also created over
1,200 high - quality jobs.
The Private Equity Team has over 500 years of collective
investment experience through economic cycles. It continues to
share this expertise, with the toolkit we applied throughout the
COVID-19 pandemic still relevant and applicable in today's market.
A number of our portfolio companies are experiencing a downturn for
the first time in their lifecycle. We will partner with them to
manage growth, overheads, critically assess capital expenditure and
focus on cash generation to ensure that they are optimally
positioned to perform during any extended periods of both high
inflation and interest rates.
Fundraising
Within the period, the Private Equity Team added an exceptional
three new institutional funds, bolstering its regional presence in
the UK, launching overseas and further building the team's
reputation as the SME investment partner of choice.
The Foresight Regional Investment IV LP is a continuation of
Foresight's regional investment strategy and will support the
growth of smaller companies throughout the North - East of England,
North Yorkshire, West Yorkshire, the East Riding of Yorkshire and
North Lincolnshire. The Fund is cornerstoned by Durham County
Council, with support from Teesside Pension Fund. It held a first
close at GBP38 million and has an overall target of GBP60
million.
The Private Equity Team has also been appointed by the West
Yorkshire Combined Authority to manage a new GBP20 million fund to
support SMEs throughout West Yorkshire. The Foresight West
Yorkshire SME Investment Fund will make a significant contribution
to West Yorkshire's economy by supporting companies' growth plans
and creating high-quality, local jobs.
Finally, AIB, Ireland's largest financial services provider, has
appointed Foresight to manage a new SME equity fund. The AIB
Foresight SME Impact Fund, which is aiming to raise EUR75 million,
will support small and medium enterprises in building a greener
future for Ireland.
As a result of these fundraising activities, offices have now
opened in Dublin and Leeds, with a Newcastle office due to open in
Q1 2023 to establish the team's presence in each region.
The Foresight Regional Investment III LP secured additional
capital during the period from both existing and new investors,
enabling it to further its impact and support of established,
profitable Small Cap companies in the North-West region.
During the period, Foresight Enterprise VCT plc also announced
the launch of an offer for subscription to raise up to GBP20
million, with an over-allotment of up to GBP10 million. Post period
end, Thames Ventures VCT 1 plc and Thames Ventures VCT 2 plc both
announced the launch of an offer for subscription to each raise up
to GBP10 million, with an over-allotment of up to GBP10 million.
The Prospectuses, which contain full details and the terms and
conditions of all three offers, were released post period end.
Private equity market outlook
Foresight believes that transactions in the GBP1-GBP5 million
segment continue to be the most attractive in the UK private equity
market from a value creation perspective. This is where we are a
market leader.
We believe that the consequences of rising inflation and
continuing post - pandemic supply chain issues, exacerbated by the
current events in Ukraine, will only widen the SME equity gap as
bank funding for companies further contracts, increasing the number
of attractive opportunities available to our funds. New investments
will be well positioned to benefit from the growth phase of the
next economic cycle.
Despite the challenges that the current economic environment
presents, in the medium term the UK remains an excellent place to
start, scale and sell a business, with broad pools of talent and an
entrepreneurial culture. We are conscious of the wider market
headwinds and, to date, our technology portfolio valuations have
proven largely resilient, with international investors recognising
the opportunity to invest in quality UK assets at a time of
favourable FX rates.
Following the recent acquisition of Downing's venture business,
the Foresight Private Equity Team now also benefits from access to
international deal flow from the world's leading technology hubs,
predominantly Silicon Valley, USA, but reaching as far as Tel Aviv,
Israel and Dubai, UAE. This differentiated deal flow is facilitated
by an established network of international introducers and venture
partners with a focus on technology businesses that are expanding
operations to the UK and are eligible to receive Enterprise
Investment Scheme ("EIS") investment.
The diverse Foresight Private Equity portfolio, across
investment stage, sectors and end markets, remains well positioned
to respond to new challenges as the market adapts to a challenging
macro landscape and also to take advantage of opportunities
arising.
Foresight Private Equity offers a broad range of fund structures
to facilitate investment from both institutional and retail
investors, including regional institutional funds, Venture Capital
Trusts, Enterprise Investment Schemes ("EIS") and Inheritance Tax
Solutions ("ITS").
FORESIGHT CAPITAL MANAGEMENT
AUM by strategy as at period end
UK Infrastructure Income | 51%
Global Real Infrastructure | 40%
Sustainable Real Estate | 8%
Sustainable Future Themes | 1%
Overview
Global demand from retail and institutional investors continues
to grow for differentiated, sustainability - oriented investment
products that hold listed securities in hard - to - access asset
classes such as infrastructure and real estate.
FCM's team of nine specialist public securities professionals
follow a sustainable, active and bottom - up investment process. It
draws on the Group's experience in investing in private markets
through its other divisions and applies these skills and knowledge
to investing in public markets. This experience, combined with
dedicated internal resource focused on sustainability due diligence
and analysis, creates valuable capabilities and insights that are
hard to replicate.
FCM's product distribution is primarily through intermediaries,
principally independent financial advisers ("IFAs"), wealth
managers and private banks. The division works to develop strong
relationships with these intermediaries, aiding capital retention
as seen during the period.
At 30 September 2022, FCM had GBP1.5 billion of AUM, down 8.5%
during the six month period (31 March 2022: GBP1.6 billion). This
reflected significant volatility in global equity markets driven by
high inflation leading central banks to tighten monetary policy at
an unprecedented pace.
However, the market opportunity that the FCM division is well
placed to capitalise on remains compelling, as evidenced by:
-- Delivery of net inflows of GBP26 million in the six month period,
reflecting continued strong demand for FCM's sustainable strategies
despite very challenging market conditions in listed markets
-- International investors increasingly demanding access to sustainable
investment strategies
-- Significant demand in the global sub-advisory market where established
distributors and capital allocators seek access to high - quality,
specialist managers with differentiated investment strategies
Investment strategies and funds
FCM offers four investment strategies, which clients can access
through four UK funds and two Luxembourg domiciled funds:
Strategy Funds Investment focus
----------------- ------------------------------ --------------------------------------------
UK Infrastructure FP Foresight UK Infrastructure Harnesses Foresight's infrastructure
Income Income Fund ("FIIF") investment expertise and taps into
the demand for lower-volatility,
predictable inflation-linked income.
Launched in 2017, the strategy has
grown to total net assets of GBP746
million at 30 September 2022. The
portfolio comprises listed companies
active across renewable energy,
core infrastructure and real estate,
with a UK focus.
----------------- ------------------------------ --------------------------------------------
Global Real FP Foresight Global Real Invests in the publicly traded shares
Infrastructure Infrastructure Fund ("GRIF") of companies located in developed
economies, which own or operate
VAM Global Infrastructure real infrastructure or renewable
Fund ("VAM") energy assets anywhere in the world.
With a growth - focused investment
Foresight Global Real objective, the strategy was launched
Infrastructure (Lux) Fund in June 2019 and has grown its total
("Foresight SICAV") net assets to GBP597 million at
30 September 2022.
----------------- ------------------------------ --------------------------------------------
Sustainable FP Foresight Sustainable This strategy was launched in June
Real Estate Real Estate Securities 2020 to provide investors with exposure
Fund ("REF") to a highly liquid and globally
diversified portfolio of Real Estate
Investment Trusts. Given the lack
of liquid open-ended funds in the
UK that address sustainable real
estate in a focused manner, REF
is a highly differentiated strategy.
As at 30 September 2022, the strategy's
total net assets were GBP121 million.
----------------- ------------------------------ --------------------------------------------
Sustainable FP Foresight Sustainable The Sustainable Future Themes strategy
Future Themes Future Themes Fund ("SFT") aims to grow capital over a five-year
period by investing in companies
which meet the manager's sustainability
criteria for positive environmental
and/or social impact. The strategy
targets attractive risk adjusted
returns by investing in a global
portfolio of scalable listed companies
that address the core themes of
sustainable development and decarbonisation
as a key sustainable investment
focus. As at 30 September 2022,
the strategy's total net assets
were GBP10 million.
----------------- ------------------------------ --------------------------------------------
Performance
The six months to 30 September 2022 represented particularly
challenging market conditions, with concerns around interest rates,
inflation and economic growth all increasing turbulence in equity
markets. Within this environment, FCM - managed funds saw a
performance drawdown of GBP163 million, which was partially offset
by positive net inflows of GBP26 million.
FCM's positive net inflows performance against a backdrop of
substantial net outflows from the wider UK open-end fund sector
demonstrates the resilient demand for the team's sustainability -
focused strategies.
At the end of the period, FCM had six funds active across four
strategies. All strategies remain on track to deliver their
investment objectives.
Inception 12-month TSR since
Fund date TSR inception
---------------------------------------- ----------------- ----------- ----------
FP Foresight UK Infrastructure Income
Fund 4 December 2017 0.27% 32.27%
FP Foresight Global Real Infrastructure
Fund 3 June 2019 (3.98%) 32.61%
FP Foresight Sustainable Real Estate
Securities Fund 15 June 2020 (16.80%) (4.61%)
VAM Global Infrastructure Fund (USD
hedged) 1 June 2021 (21.26%) (24.13%)
Foresight Global Real Infrastructure
Fund (Lux) (GBP) 12 November 2021 (11.65%)(1) (11.65%)
FP Foresight Sustainable Future Themes
Fund 28 March 2022 (6.43%)(1) (6.43%)
---------------------------------------- ----------------- ----------- ----------
1. TSR since inception.
FCM market outlook
The long-term outlook for FCM remains positive. Notwithstanding
the uncertainly and turbulence that has hit markets during the
period, the demand for sustainability - focused strategies, as well
as continued political alignment behind decarbonisation, supports
FCM's core investment theses. Material legislation passed during
the period, such as the Inflation Reduction Act in the US, should
ensure continued flows of investment capital over many decades into
core FCM investment themes such as the energy transition.
The period has also seen inflation become higher and more
persistent than had been previously expected by markets. Several of
FCM's strategies invest into underlying asset classes and sectors
that can provide exposure to companies with inflation - linked
returns.
This element of inflation-linkage should remain valuable to
FCM's target investor base and support continued positive inflows
into the funds as IFAs, wealth managers and Discretionary Fund
Managers ("DFMs") seek to protect client portfolios from the
effects of inflation.
FCM is also aiming to broaden its distribution. Having focused
to date on IFAs and wealth managers, we see good potential for
distributing our funds through private banks and to family offices,
as well as establishing a greater presence in direct - to -
consumer sales, as the Foresight brand becomes increasingly
recognised.
Continued progress in the sub - advisory market
During the period, FCM's first sub - advisory mandate, the VAM
Global Infrastructure Fund ("the VAM Fund"), reached its 12-month
anniversary.
The VAM Fund remains a key growth opportunity into international
distribution markets such as South Africa, the Middle East and
Asia.
Building on FCM's capabilities and growing track record as a
sub-adviser, the team has been focused on identifying sub-advisory
opportunities in the US, which is the largest asset management
market globally. Long term, we believe this growth opportunity
could exceed FCM's current UK business.
SUSTAINABILITY
Overview
During Q2, we have worked with Rio ESG to calculate our
corporate business emissions as well as to better understand the
emissions of our investments and assets under management. This has
led us closer to our final goal of developing a net zero strategy
for the business.
Rio ESG also supported us in further developing our approach to
meeting the TCFD requirements and we have undertaken high level
climate scenario analysis with their support.
We continue to push our business forward with sustainability in
mind and bring our staff on the journey with us. In June we
showcased our employee values, which were developed from the
engagement and insight received from a wide range of Foresight
employees across different teams and offices.
Those values are:
SUSTAINABLE IMPACT Creating tangible impact that has long-term
benefits and shared value.
ACHIEVE WITH AMBITION Executing, achieving our best, and delivering
results.
RELATIONSHIPS WITH INTEGRITY Engendering good relationships by earning
and maintaining trust.
COLLECTIVE SUCCESS Getting there together.
---------------------------- ---------------------------------------------
Over the next year we will be focusing on each of these values
in turn to emphasise and understand what each means and articulate
how staff can embed and display these behaviours.
Foresight awards 2022
-------------------------------------------------------------------------
Award category: Award category: Award category:
Most Innovative Sustainable Infrastructure Finance Real Estate Fund
Fund Launch - FSF Initiative of the Year - FCM
of the Year - FSF
---------------------------- ----------------------- ------------------
HIGHLIGHTS
-- Forum members of the Taskforce on Nature-related Financial Disclosures
("TNFD").
-- We have now completed a full year of operational sustainability
performance across our Infrastructure portfolio. Over the last
year
our sustainability team has worked closely with asset managers
to improve reporting, now at 68% of assets. Future work will see
continued growth in this area.
-- Foresight Capital Management will be releasing an impact report
shortly centred around the Sustainable Future Themes Fund. The
report will incorporate case studies of the SDG-focused Sustainability
Investment Process undertaken for all investments.
-- Renewed membership of the UK Sustainable Investment and Finance
Association, Living Wage Foundation and Solar Energy UK.
-- Active contributors to the United Nations Global Compact ("UNGC").
-- Signed up to the Climate Ambition Accelerator programme
-- October - post period end, hosted a debate on "the role of nature
vs. technology as our most effective means of tackling climate
change" on the final day of the UNGC's annual summit
-- Held climate disclosure workshops, with Rio ESG and all investment
streams, to assess the use of the Network for Greening the Financial
System ("NGFS") scenario database for future quantitative analysis
of climate risk.
-- Updated our Modern Slavery Statement in September 2022 jointly
with Foresight Group Australia (and we are currently establishing
our approach following the Infrastructure Capital acquisition earlier
this year).
-- Incorporating our Responsible Investment approach in our three
investment divisions. https://www.foresightgroup.eu/strategies
-- Employees trained annually on a range of compliance and other policies
through various online and in-house training sessions, which include
the obligations under the UK and Australian Modern Slavery Acts.
-- 2,418GWh of renewable energy generated in the last six months.
-- Expanded on the qualitative scenario analysis of our physical and
transition risk frameworks (aligning with TCFD requirements).
LOOKING AHEAD
The Eden Project partnership
-- Publishing a nature recovery ambition statement and hosting a
launch event for the Eden Project collaboration in November 2022
-- Working closely with forestry and solar assets to develop positive
outcomes for nature and biodiversity
Net zero strategy
-- Assessing our approach to net zero and improving emissions reporting
in the coming months following appointment of Rio ESG in June
-- Renewal of carbon neutrality status based on renewed calculations
for corporate GHG emissions for FY22
-- Calculation of Scope 3 financed emissions to be conducted in
FY23
Eden Project partnership update
In August, the Eden Project's National Wildflower Centre ("NWC")
provided wildflower seed collection training via Zoom-link to our
Infrastructure portfolio members, which included asset managers and
operations and maintenance contractors. The following month,
Foresight worked in partnership with the NWC to carry out
wildflower seed collection events at two forestry assets in
Scotland: Upper Barr and Fordie. The events provided insights on
the benefits of biodiversity for the local community and Foresight
management through the appropriate collection and cleaning of local
provenance flowers for the Foresight seed bank. Seed species
gathered included Whorled Caraway, Tormentil and Meadow Buttercup
from Upper Barr and Harebell/Scottish Bluebell, Tormentil and
Lady's Bedstraw from Fordie. The seed bank is storing the seeds to
support future nature recovery projects across the Foresight
portfolio, which is of utmost importance to our local stakeholders
and biodiversity ambitions.
Foresight recognises the scale at which global ecosystems are
under threat and its position to initiate changes to improve nature
recovery and mitigate the risks. Biodiversity loss is having, and
will continue to have, significant macroeconomic and financial
implications due to reductions in the productivity and resilience
of ecosystems along supply chains. Foresight's 16,000+ hectares of
forestry land under management in the UK alone provides an
opportunity to contribute to biodiversity alongside decarbonisation
efforts.
Foresight intends to lead and inspire the industry through the
Taskforce on Nature-related Financial Disclosures ("TNFD") forum
and the blossoming partnership with the Eden Project. In addition
to wildflower seed gathering for the Foresight seed bank, the
upcoming joint release of a nature recovery ambition statement and
launch event for this multi-faceted collaboration demonstrates the
potential of the relationship.
Read more about our Foresight nature recovery ambition statement
at:
https://media.umbraco.io/foresight/upjf4mww/foresight-nature-recovery-ambition-statement.pdf
FINANCIAL REVIEW
FOR THE SIX MONTHSED 30 September 2022
We have continued our recent robust growth, with AUM
significantly ahead of target, leading to considerable year-on-year
increases in revenue and Core EBITDA pre-SBP.
Key financial metrics
30 September 30 September 31 March
2022 2021 2022
------------------------------------------------ ------------ ------------ --------
Period-end AUM (GBPm) 12,483 8,133 8,839
Retail 3,996 3,084 3,643
Institutional 8,487 5,049 5,196
Period-end FUM (GBPm) 9,203 6,067 6,675
Retail 3,901 2,986 3,546
Institutional 5,302 3,081 3,129
Average AUM (GBPm) 10,022 7,728 8,108
Average FUM (GBPm) 7,576 5,650 6,015
Total revenue (GBP000) 50,720 39,707 86,071
Recurring revenue (GBP000) 45,347 35,546 74,825
Recurring revenue/total revenue (%) 89.4% 89.5% 86.9%
Core EBITDA pre share-based payments (GBP000) 21,522 15,202 31,825
Core EBITDA pre share-based payments margin (%) 42.4% 38.3% 37.0%
Adjusted basic earnings per share (pence) 15.9 10.7 22.5
Dividend per share (pence) 4.6 4.0 13.8
------------------------------------------------ ------------ ------------ --------
1. APMs.
Key highlights in the period
We completed two strategic acquisitions in the period:
Downing
Our acquisition of the Downing ventures business completed on 4
July 2022 for a total consideration of GBP17.0 million. Provisional
net assets of GBP7.0 million were acquired, resulting in
provisional goodwill of GBP10.0 million.
Infrastructure Capital
This acquisition completed on 8 September 2022. The total
consideration was GBP36.5 million, with all other payments to
sellers being treated as remuneration for post-combination services
due to the requirement of continued employment. Provisional net
assets of GBP48.7 million were acquired, resulting in a GBP12.2
million gain on business combination.
Assets Under Management/Funds Under Management ("AUM/FUM")
AUM and FUM both grew significantly in the six month period. The
majority of the growth was a result of the Downing and
Infrastructure Capital acquisitions referred to above, which
contributed GBP0.3 billion and GBP3.1 billion of AUM, respectively.
Since FY18, we have grown AUM 4.9x (GBP2.6 billion to GBP12.5
billion).
Retail net inflows totalled GBP0.1 billion, lower than in recent
periods but reflecting the wider turmoil witnessed across stock
markets. Our OEIC products ended the period with modest positive
net inflows of GBP26 million, a good performance compared with
significant outflows seen across the sector elsewhere. Our Business
Relief ("BR") inflows remained strong and ahead of the six month
period to 30 September 2021.
Institutional net inflows totalled GBP0.1 billion following the
close of three Private Equity regional funds in the period (AIB
Foresight Impact Fund, Foresight West Yorkshire SME Investment Fund
and Foresight Regional Investment IV) plus a further equity raise
for Foresight Sustainable Forestry Company Plc, following its
successful IPO last year.
Summary Statement of Comprehensive Income and Core EBITDA
reconciliation
30 September 30 September 31 March
2022 2021 2022
GBP000 GBP000 GBP000
---------------------------------------------------------------------- ------------ ------------ --------
Revenue 50,720 39,707 86,071
Cost of sales (3,033) (2,447) (5,106)
---------------------------------------------------------------------- ------------ ------------ --------
Gross profit 47,687 37,260 80,965
Administrative expenses (30,683) (24,130) (54,398)
Acquisition-related costs (3,474) - -
Other operating income - 250 250
---------------------------------------------------------------------- ------------ ------------ --------
Operating profit 13,530 13,380 26,817
Gain on business combination (provisional) 12,203 - 1,012
Finance income 83 - 2
Finance expense (490) (360) (653)
Other 28 91 691
---------------------------------------------------------------------- ------------ ------------ --------
Profit on ordinary activities before taxation 25,354 13,111 27,869
Tax on profit on ordinary activities (2,008) (1,644) (2,793)
---------------------------------------------------------------------- ------------ ------------ --------
Profit 23,346 11,467 25,076
Other comprehensive income
Translation differences on foreign subsidiaries 5 67 (138)
---------------------------------------------------------------------- ------------ ------------ --------
Total comprehensive income 23,351 11,534 24,938
---------------------------------------------------------------------- ------------ ------------ --------
Adjustments:
Gain on business combination (12,203) - (1,012)
Staff costs - acquisitions 746 - -
Amortisation in relation to intangible assets (customer contracts) 751 72 292
Acquisition-related costs 3,474 - -
Fair value losses on contingent consideration (incl. finance expense) 66 - -
Non-operational staff costs 300 300 728
Other operating income - (250) (250)
Finance income and expense (excl. fair value gain on derivative) 483 360 651
Foreign exchange from acquisitions (178) - -
Tax on profit on ordinary activities 2,008 1,644 2,793
Depreciation and amortisation and loss on disposal of tangible
fixed assets 1,225 1,332 3,226
---------------------------------------------------------------------- ------------ ------------ --------
Core EBITDA 20,023 14,992 31,366
Share-based payments 1,499 210 459
---------------------------------------------------------------------- ------------ ------------ --------
Core EBITDA pre share-based payments(1) 21,522 15,202 31,825
---------------------------------------------------------------------- ------------ ------------ --------
1. In line with previous periods, and for comparability, we
continue to quote Core EBITDA pre-SBP to assess the financial
performance of the business. This measure was introduced as our key
performance measure because the Group believes this reflects the
trading performance of the underlying business, without distortion
from the uncontrollable nature of the share-based payments charge.
This measure is a non - IFRS measure because it excludes amounts
that are included in the most directly comparable measure
calculated and presented in accordance with IFRS. The specific
items excluded are non-underlying items, which are defined as non -
trading or one - off items where the Directors consider the
quantum, nature or volatility of such items to otherwise distort
the underlying performance of the Group. While the Group
appreciates that APMs are not considered to be a substitute for or
superior to IFRS measures, we believe the selected use of these
provides stakeholders with additional information which will assist
in the understanding of the business.
Revenue
30 September 30 September 31 March
2022 2021 2022
GBP000 GBP000 GBP000
--------------------------- ------------ ------------ --------
Management fees 42,923 33,655 70,906
Secretarial fees 975 695 1,413
Directors' fees 1,449 1,196 2,506
--------------------------- ------------ ------------ --------
Recurring fees 45,347 35,546 74,825
Marketing fees 2,564 2,114 5,046
Arrangement fees 1,331 1,435 2,964
Performance and other fees 1,478 612 3,236
--------------------------- ------------ ------------ --------
Total 50,720 39,707 86,071
--------------------------- ------------ ------------ --------
Total revenue in the six month period increased by 28%
year-on-year to GBP50.7 million (30 September 2021: GBP39.7
million) with recurring revenue also increasing by 28% to GBP45.3
million (30 September 2021: GBP35.5 million), maintaining our c.90%
level of recurring fees. As stated previously, as some of our
portfolios mature and we begin to make further realisations, we
anticipate that performance fees will contribute a larger part of
the revenue mix in the future. This is in line with our
expectations and does not alter our previously stated target range
of generating 85-90% of revenue from recurring fees. During the
period, c.10% of our revenues were generated in non-GBP currencies,
but with the inclusion of a full six months of the expanded
Australian business, we anticipate this increasing to over 15% for
the full year.
As a result of both organic and inorganic FUM growth, the
largest revenue increase year-on-year came from management fees
with the continued growth of our BR, VCT and EIS products
contributing c.GBP4.0 million of the uplift. The new institutional
funds launched in the last 12 months contributed c.GBP1.0 million
and despite more challenging market conditions for our Foresight
Capital Management division, the revenue contribution increased
c.GBP1.2 million for OEIC business year-on-year, with the AUM
remaining robust at period end at GBP1.5 billion. The acquisitions
of Downing and Infrastructure Capital contributed incremental
revenue of c.GBP0.9 million and GBP1.1 million respectively in the
period.
Secretarial fees and Directors' fees were up slightly
year-on-year, the former principally due to the launch of FSFC in
November 2021 and the Infrastructure Capital acquisition; with the
latter a result of the larger number of companies within the
Private Equity portfolio following continued deployment and the
Downing acquisition.
Marketing fees are the initial fees recognised as a percentage
of funds raised on our tax-based retail products. This revenue line
increased year-on-year as a result of strong fundraising in
relation to our BR products.
Performance fees were generated in the period following further
successful realisations from two of our Private Equity regional
funds.
Cost of sales
Cost of sales comprises insurance costs associated with our
Accelerated ITS ("AITS") product and authorised corporate director
costs payable to a third party in relation to our OEIC products.
This charge was slightly higher than the six month period to 30
September 2021 as a result of increased insurance costs in this
sector, plus the growth of FCM.
Administrative expenses
30 September 30 September 31 March
2022 2021 2022
GBP000 GBP000 GBP000
-------------------------------------------------------------------------------- ------------ ------------ --------
Staff costs 19,926 16,609 35,395
Staff costs - acquisitions 1,795 - -
Depreciation and amortisation (excluding amortisation in relation to intangible
assets (customer
contracts)) 1,225 1,332 3,193
Amortisation in relation to intangible assets (customer contracts) 751 72 292
Legal and professional 2,235 1,594 6,067
Other administration costs 4,751 4,523 9,451
-------------------------------------------------------------------------------- ------------ ------------ --------
30,683 24,130 54,398
-------------------------------------------------------------------------------- ------------ ------------ --------
Year-on-year, the overall cost base increased by c.GBP6.6
million, of which c.GBP1.0 million related to administrative
expenses incurred within the acquired businesses during the period.
A further c.GBP1.8 million of the increase ("Staff costs -
acquisitions") relates to the acquisitions in the period, of which
GBP1.3 million reflects the IFRS 3 accounting treatment of the
contingent consideration from the Infrastructure Capital
acquisition, which is being treated as remuneration for
post-combination services and will continue to accumulate over the
vesting period (see note 21 of the accounts for further
information). In addition, there was a further c.GBP0.7 million
increase as a result of the amortisation of the intangible assets
recognised for customer contracts acquired from the recent
acquisitions.
Core staff costs increased by c.GBP3.3 million, due to the
annual pay review process, which was in line with previous years;
the increased cost of the PSP scheme as it entered its second year
following implementation post-IPO; and an increase in FTE of 82.3
over the last 12 months. This increase in FTE was predominantly a
result of the acquisitions over the last few months (contributing
52.3 of the increase), plus increases in our Private Equity
division to support the launch of the new UK and Ireland funds.
Legal and professional costs were higher year-on-year as a
result of increased placement fees linked with the ongoing
deployment of FEIP, whilst the increase in other administration
costs principally related to the growth in FUM and associated
headcount (e.g. FCA fees and IT-related costs) plus increased
travel and entertainment costs reflecting the impact of COVID-19 in
the comparable period.
We expect underlying costs for the full year to be in line with
the c.12% guidance we have previously noted, excluding certain
expenses arising from the recent acquisitions that are included
within administrative expenses, but which will only recur for a
limited timeframe. Run rate admin expenses for Infrastructure
Capital and Downing for the second half of the year are anticipated
to be an additional c.GBP1 million per month.
Acquisition-related costs
The charge of GBP3.5 million for the six months ended 30
September 2022 related to legal and professional costs incurred on
the acquisitions.
Gain on business combination
The gain on business combination arises from the Infrastructure
Capital acquisition; of the total payments to be made to the
sellers, only GBP36.5 million has been accounted for as
consideration under IFRS 3, as all other payments require the
sellers to remain in employment with the Group post-acquisition and
hence are being treated as remuneration for post-combination
services. As the provisional fair value of net assets acquired was
GBP48.7 million, a GBP12.2 million gain on business combination has
been recognised.
Core EBITDA pre share-based payments
The Group uses Core EBITDA pre share-based payments as one of
its key metrics to measure performance as it views this as the
profitability number that is most comparable to the Group's
recurring revenue model (i.e. a cash profit number after taking out
any one - offs, both positive and negative). In addition to the
adjustments for the acquisitions as explained above, the other
principal items adjusted for in calculating Core EBITDA pre-SBP
relate to retention payments made to key members of staff and the
SIP, PSP and overseas phantom share plan schemes implemented post -
IPO. See note 11 for further explanation of adjustments made when
calculating Core EBITDA.
Core EBITDA pre share-based payments increased 41% year-on-year
to GBP21.5 million for the six months ended 30 September 2022 (30
September 2021: GBP15.2 million) with the margin percentage
improving to 42.4% (30 September 2021: 38.3%). We expect our
full-year margin percentage to be slightly lower than this but
remain above 40%. At the halfway point of the year, we are tracking
slightly ahead due to the profile of our recruitment and other
costs, plus the recognition of the one-off performance fees
referred to above.
Adjusted earnings per share
Adjusted profit has been calculated for the first time as per
note 13 of the financial statements to exclude acquisition items as
they include non-recurring gains and costs. The Group believes this
will allow users of the financial statements to get a useful
supplemental understanding of the Group's results and their
comparability period on period. The Group continues to also provide
diluted earnings per share due to the potential dilutive Ordinary
Shares arising from the Performance Share Plan.
Summary Statement of Financial Position
30 September 30 September 31 March
2022 2021 2022
GBP000 GBP000 GBP000
--------------------------------------------------------- ------------ ------------ --------
Assets
Property, plant and equipment 2,536 2,838 2,656
Right-of-use assets 8,036 8,791 8,260
Intangible assets 82,744 3,014 4,431
Investments 3,321 2,455 2,781
Deferred tax asset 791 860 615
Derivative asset 89 - -
Contract costs 4,259 4,848 4,555
Trade and other receivables 23,281 20,780 21,207
Cash and cash equivalents 32,271 42,760 54,289
Net assets of disposal group classified as held for sale 64 64 64
--------------------------------------------------------- ------------ ------------ --------
Total assets 157,392 86,410 98,858
--------------------------------------------------------- ------------ ------------ --------
Liabilities
Trade and other payables (45,699) (21,401) (24,042)
Loans and borrowings (3,048) (3,649) (3,690)
Lease liabilities (10,223) (11,547) (10,408)
Contingent consideration (3,974) - -
Derivative liability (13) - -
Deferred tax liability (18,198) (516) (1,198)
Provisions (783) - (933)
--------------------------------------------------------- ------------ ------------ --------
Total liabilities (81,938) (37,113) (40,271)
--------------------------------------------------------- ------------ ------------ --------
Net assets 75,454 49,297 58,587
--------------------------------------------------------- ------------ ------------ --------
Net assets have increased by GBP16.9 million in the six month
period. The key variances since the year end are explained
below:
Intangible assets and deferred tax liability
The increase of GBP78.3 million since year end comprises GBP68.3
million of intangible assets in respect of customer contracts
related to the Downing and Infrastructure Capital acquisitions and
GBP10.0 million of goodwill as detailed further in note 14 of the
accounts. The intangible assets in respect of customer contracts
are provisional whilst the Group gathers further information to
conclude its purchase price allocation in accordance with IFRS 3
para 45. Provisional deferred tax liabilities have been recognised
with the intangible assets.
Cash and cash equivalents
The reduction in the cash balance since year end is primarily
due to the completion of the acquisitions in the period, offset by
positive cash generation from another period of strong trading and
the collection of some aged receivables.
Trade and other payables
The increase in the balance from year end largely relates to the
FY22 final dividend of 9.8 pence per share, which was approved by
Shareholders at the August 2022 AGM and paid in October 2022. Part
of the increase also reflects the Infrastructure Capital completion
payment, which will be settled in the second half of FY23, plus an
element of the performance fee from FRIF payable to staff in the
Private Equity Team following successful exits from that Fund
towards the end of the period.
Contingent consideration
Contingent consideration arises primarily in respect of the
Downing acquisition of c.GBP3.7 million and c.GBP0.3 million of
consideration from post-combination expenses recognised for the
Infrastructure Capital acquisition. See note 21 for further
explanation.
Dividends
In our most recent Annual Report, we noted that interim
dividends will be calculated as 30% of the total dividend from the
prior year. However, given the strong performance of the business
over the last six months, the Board has reviewed this approach and
agreed to increase this to one-third going forward with immediate
effect. In FY22, the total dividend was 13.8 pence per share,
resulting in the Board now recommending an FY23 interim dividend
payment of 4.6 pence per share. The dividend will be paid on 27
January 2023 with an ex-dividend date of 12 January 2023 and a
record date of 13 January 2023.
Gary Fraser
Chief Financial Officer
30 November 2022
RISKS
The Board is accountable for risks and has oversight of the risk
management process across the Group.
The Board is also responsible for establishing the risk culture
across the Group's businesses and functions.
Our approach to risk management
The Group's approach to risk management, risk governance and
risk appetite is set out in the risks section of the 2022 Annual
Report and is established through the Risk Management Framework.
Engagement by management at all levels is expected across the Group
and is measured principally through co - operation with and support
of the second line of defence functions.
The executive oversight of the risk framework is delegated by
the Board to the Chief Financial Officer, who is currently
responsible for the risk and control frameworks across the
Group.
The Company identifies principal risk areas for the Group, which
are set out in the 2022 Annual Report. The risk assessment
processes are continuous and principal risk categories may be
updated in the event of material change to the business
constituents or market conditions. The types of risks to which the
Group is exposed have not changed materially over the period,
although the relative focus has shifted towards energy prices and
the potential for inflation to remain at elevated levels.
Top ten risks
-- Energy price risk
-- Data theft and cyber events
-- Personnel
-- Regulatory change
-- Investment landscape
-- Outsourcing and operational resilience
-- Technology infrastructure and platforms
-- Anti-money laundering and other financial crime
-- Conduct and culture
-- Geopolitical uncertainty
Risk appetite
As a provider of regulated services, Foresight is required to
document its risk appetite in relation to the entities within the
Group. Foresight Group LLP has its principal office based in London
and the risk appetite for this entity is considered the minimum
standard for the Group.
Foresight's risk appetite statement sets out the level and types
of risk that it is willing to assume to achieve its strategic
objectives and business plan.
The risk appetite statement has early - warning triggers and
hard risk limits covering business and strategic risk, market risk,
credit risk, operational risk, legal and regulatory risk, financial
crime risk, conduct risk and information security risk.
Risk position versus risk appetite is reviewed annually, with
any changes to key metrics reviewed, challenged and adopted by the
Board if appropriate, through the risk appetite framework.
The Group continues to maintain strong liquidity across a range
of scenarios, with the greatest threats to capital and liquidity
positions represented by the risks of new and escalating conflicts,
persistent inflation, tightening fiscal and monetary policies and
levies on renewable energy providers.
DIRECTORS' RESPONSIBILITY STATEMENT
The condensed consolidated half - year financial statements are
the responsibility of, and have been approved by, the Directors. In
that regard, we confirm that to the best of our knowledge:
-- The condensed consolidated half-year financial statements have
been prepared in accordance with IAS 34 "Interim Financial Reporting"
as adopted by the European Union ("EU") and give a true and
fair view of the assets, liabilities, financial position and
profit or loss of the Company and the undertakings included
in the consolidation taken as a whole
-- The Half-year Report includes a fair review of the information
required by sections 4.2.7R and 4.2.8R of the Disclosure
Guidance and Transparency Rules of the United Kingdom's Financial
Conduct Authority
By order of the Board
Jo-anna Nicolle
Company Secretary
30 November 2022
INDEPENT REVIEW REPORT
TO FORESIGHT GROUP HOLDINGS LIMITED ("THE GROUP")
Conclusion
Based on our review, nothing has come to our attention that
causes us to believe that the condensed set of financial statements
in the half-year report for the six months ended 30 September 2022
is not prepared, in all material respects, in accordance with EU
adopted International Accounting Standard 34 and the Disclosure
Guidance and Transparency Rules of the United Kingdom's Financial
Conduct Authority.
We have been engaged by the Group to review the condensed set of
financial statements in the half-year report for the six months
ended 30 September 2022 which comprises the unaudited condensed
consolidated statement of comprehensive income, the unaudited
condensed consolidated statement of financial position, the
unaudited condensed consolidated statement of changes in equity,
the unaudited condensed consolidated cash flow statement and the
related unaudited notes to the financial statements.
Basis for conclusion
We conducted our review in accordance with International
Standard on Review Engagements (UK) 2410, "Review of Interim
Financial Information Performed by the Independent Auditor of the
Entity" ("ISRE (UK) 2410"). A review of interim financial
information consists of making enquiries, primarily of persons
responsible for financial and accounting matters, and applying
analytical and other review procedures. A review is substantially
less in scope than an audit conducted in accordance with
International Standards on Auditing (UK) and consequently does not
enable us to obtain assurance that we would become aware of all
significant matters that might be identified in an audit.
Accordingly, we do not express an audit opinion.
As disclosed in note 2, the annual financial statements of the
Group are prepared in accordance with EU adopted international
accounting standards. The condensed set of financial statements
included in this half-year report has been prepared in accordance
with EU adopted International Accounting Standard 34, "Interim
Financial Reporting".
Conclusions relating to going concern
Based on our review procedures, which are less extensive than
those performed in an audit as described in the Basis for
conclusion section of this report, nothing has come to our
attention to suggest that the directors have inappropriately
adopted the going concern basis of accounting or that the directors
have identified material uncertainties relating to going concern
that are not appropriately disclosed.
This conclusion is based on the review procedures performed in
accordance with ISRE (UK) 2410, however future events or conditions
may cause the group to cease to continue as a going concern.
Responsibilities of directors
The directors are responsible for preparing the half-year report
in accordance with the Disclosure Guidance and Transparency Rules
of the United Kingdom's Financial Conduct Authority.
In preparing the half-year report, the directors are responsible
for assessing the Group's ability to continue as a going concern,
disclosing, as applicable, matters related to going concern and
using the going concern basis of accounting unless the directors
either intend to liquidate the Group or to cease operations, or
have no realistic alternative but to do so.
Auditor's responsibilities for the review of the financial
information
In reviewing the half-year report, we are responsible for
expressing to the Group a conclusion on the condensed set of
financial statement in the half-year report. Our conclusion,
including our Conclusions Relating to Going Concern, are based on
procedures that are less extensive than audit procedures, as
described in the Basis for Conclusion paragraph of this report.
Use of our report
Our report has been prepared in accordance with the terms of our
engagement to assist the Group in meeting the requirements of the
Disclosure Guidance and Transparency Rules of the United Kingdom's
Financial Conduct Authority and for no other purpose. No person is
entitled to rely on this report unless such a person is a person
entitled to rely upon this report by virtue of and for the purpose
of our terms of engagement or has been expressly authorised to do
so by our prior written consent. Save as above, we do not accept
responsibility for this report to any other person or for any other
purpose and we hereby expressly disclaim any and all such
liability.
BDO LLP
Chartered Accountants
London, UK
30 November 2022
BDO LLP is a limited liability partnership registered in England
and Wales (with registered number OC305127).
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE SIX MONTHSED 30 September 2022
Unaudited Unaudited Audited
six six
months months year ended
ended ended
30 September 30 September 31 March
2022 2021 2022
Note GBP000 GBP000 GBP000
------------------------------------------------ ---- ------------ ------------ ----------
Revenue 5 50,720 39,707 86,071
Cost of sales (3,033) (2,447) (5,106)
------------------------------------------------ ---- ------------ ------------ ----------
Gross profit 47,687 37,260 80,965
Administrative expenses 7 (30,683) (24,130) (54,398)
Acquisition-related costs 8 (3,474) - -
Other operating income - 250 250
------------------------------------------------ ---- ------------ ------------ ----------
Operating profit 13,530 13,380 26,817
Finance income 83 - 2
Finance expense (490) (360) (653)
Fair value gains on investments 94 83 638
Fair value losses on contingent consideration
(incl. finance expense) (66) - -
Share of post-tax profits of equity
accounted joint ventures - 8 53
Gain on business combination (provisional) 9 12,203 - 1,012
Profit on ordinary activities before
taxation 25,354 13,111 27,869
Tax on profit on ordinary activities 12 (2,008) (1,644) (2,793)
------------------------------------------------ ---- ------------ ------------ ----------
Profit for the period attributable
to Ordinary Shareholders 23,346 11,467 25,076
Other comprehensive income
Items that will or may be reclassified
to profit or loss:
Translation differences on foreign subsidiaries 5 67 (138)
------------------------------------------------ ---- ------------ ------------ ----------
Total comprehensive income 23,351 11,534 24,938
------------------------------------------------ ---- ------------ ------------ ----------
Earnings per share attributable to
Ordinary Shareholders
Profit or loss
Basic (pence) 13 21.6 10.6 23.2
Diluted (pence) 13 21.3 10.6 23.0
Adjusted basic (pence) (non -- IFRS
measure) 13 15.9 10.7 22.5
Adjusted diluted (pence) (non -- IFRS
measure) 13 15.7 10.7 22.4
------------------------------------------------ ---- ------------ ------------ ----------
The notes to the financial statements form part of this
financial information.
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 September 2022
Unaudited Unaudited Audited
30 September 30 September 31 March
2022 2021 2022
Note GBP000 GBP000 GBP000
--------------------------------------------------------------------- ---- ------------ ------------ --------
Non-current assets
Property, plant and equipment 2,536 2,838 2,656
Right -- of -- use assets 8,036 8,791 8,260
Intangible assets 14 82,744 3,014 4,431
Investments at FVTPL 15 3,321 2,196 2,781
Investments in equity accounted joint ventures - 259 -
Derivative asset 15 22 - -
Deferred tax asset 17 791 860 615
Contract costs 3,729 4,259 3,976
Trade and other receivables 2,480 3,619 3,260
--------------------------------------------------------------------- ---- ------------ ------------ --------
103,659 25,836 25,979
--------------------------------------------------------------------- ---- ------------ ------------ --------
Current assets
Derivative asset 15 67 - -
Contract costs 530 589 579
Trade and other receivables 20,801 17,161 17,947
Cash and cash equivalents 32,271 42,760 54,289
--------------------------------------------------------------------- ---- ------------ ------------ --------
53,669 60,510 72,815
Assets and liabilities of disposal group classified as held for sale 64 64 64
--------------------------------------------------------------------- ---- ------------ ------------ --------
Current liabilities
Trade and other payables (45,635) (21,217) (23,978)
Loans and borrowings 16 (624) (619) (660)
Lease liabilities (2,593) (2,239) (2,302)
Contingent consideration 15 (1,392) - -
--------------------------------------------------------------------- ---- ------------ ------------ --------
(50,244) (24,075) (26,940)
--------------------------------------------------------------------- ---- ------------ ------------ --------
Net current assets 3,489 36,499 45,939
Non-current liabilities
Trade and other payables (64) (184) (64)
Loans and borrowings 16 (2,424) (3,030) (3,030)
Lease liabilities (7,630) (9,308) (8,106)
Contingent consideration 15 (2,582) - -
Derivative liability 15 (13) - -
Provisions (783) - (933)
Deferred tax liability 17 (18,198) (516) (1,198)
--------------------------------------------------------------------- ---- ------------ ------------ --------
(31,694) (13,038) (13,331)
--------------------------------------------------------------------- ---- ------------ ------------ --------
Net assets 75,454 49,297 58,587
--------------------------------------------------------------------- ---- ------------ ------------ --------
Equity
Share capital 18 - - -
Share premium 18 61,886 32,040 32,040
Shares held in escrow reserve 18 (26,966) - -
Own share reserve 18 (668) (402) (454)
Share-based payment reserve 18 1,948 210 481
Group reorganisation reserve 18 30 30 30
Foreign exchange reserve 18 (205) - -
Retained earnings 18 39,429 17,419 26,490
--------------------------------------------------------------------- ---- ------------ ------------ --------
Total equity 75,454 49,297 58,587
--------------------------------------------------------------------- ---- ------------ ------------ --------
The financial statements were approved and authorised for issue
by the Board of Directors on 30 November 2022 and were signed on
its behalf by:
Gary Fraser Geoffrey Gavey
Chief Financial Officer Director
The notes to the financial statements form part of this
financial information.
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE SIX MONTHSED 30 September 2022
Shares Share-
held based Group Foreign
in re-
Share Share escrow Own share payment organisation exchange Retained Total
capital premium reserve reserve reserve reserve reserve earnings equity
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
-------------------------- ------- ------- -------- --------- ------- ------------ -------- -------- --------
Audited balance
at 1 April 2021 - 32,040 - - - 30 - 7,727 39,797
Profit for the six
months - - - - - - - 11,467 11,467
Other comprehensive
income - - - - - - - 67 67
Contributions by
and distributions
to owners
Dividends - - - - - - - (1,842) (1,842)
Purchase of own shares - - - (402) - - - - (402)
Share-based payments - - - - 210 - - - 210
-------------------------- ------- ------- -------- --------- ------- ------------ -------- -------- --------
Unaudited balance
at 30 September 2021 - 32,040 - (402) 210 30 - 17,419 49,297
-------------------------- ------- ------- -------- --------- ------- ------------ -------- -------- --------
Profit for the six
months - - - - - - - 13,609 13,609
Other comprehensive
income - - - - - - - (205) (205)
Contributions by
and distributions
to owners
Dividends - - - - - - - (4,333) (4,333)
Purchase of own shares - - - (52) - - - - (52)
Share-based payments - - - - 249 - - - 249
Deferred tax - - - - 22 - - - 22
-------------------------- ------- ------- -------- --------- ------- ------------ -------- -------- --------
Audited balance
at 31 March 2022 - 32,040 - (454) 481 30 - 26,490 58,587
-------------------------- ------- ------- -------- --------- ------- ------------ -------- -------- --------
Transfer - - - - - - (210) 210 -
Profit for the six
months - - - - - - - 23,346 23,346
Other comprehensive - - - - - - 5 - 5
income
Contributions by
and distributions
to owners
Premium on issue
of shares - 29,846 - - - - - - 29,846
Dividends - - - - - - - (10,617) (10,617)
Shares held in escrow
arising from acquisition - - (26,966) - - - - - (26,966)
Purchase of own shares - - - (214) - - - - (214)
Share-based payments - - - - 1,450 - - - 1,450
Deferred tax - - - - 17 - - - 17
-------------------------- ------- ------- -------- --------- ------- ------------ -------- -------- --------
Unaudited balance
at 30 September 2022 - 61,886 (26,966) (668) 1,948 30 (205) 39,429 75,454
-------------------------- ------- ------- -------- --------- ------- ------------ -------- -------- --------
The notes to the financial statements form part of this
financial information.
CONDENSED CONSOLIDATED CASH FLOW STATEMENT
FOR THE SIX MONTHSED 30 September 2022
Unaudited Unaudited Audited
six six
months months year ended
ended ended
30 September 30 September 31 March
2022 2021 2022
Note GBP000 GBP000 GBP000
---------------------------------------------------------------------- ---- ------------ ------------ ----------
Cash generated from operations 25,446 9,648 29,130
Tax paid (1,361) (1,594) (3,399)
Other interest paid - (3) (4)
Loan interest paid 16 (92) (97) (97)
Interest on lease liabilities (249) (314) (564)
---------------------------------------------------------------------- ---- ------------ ------------ ----------
Net cash from operating activities 23,744 7,640 25,066
---------------------------------------------------------------------- ---- ------------ ------------ ----------
Cash flows from investing activities
Acquisition of property, plant and equipment (218) (198) (398)
Acquisition of intangible assets (4) (125) (171)
Acquisition of investments at FVTPL (850) (339) (712)
Sale of investments at FVTPL 403 303 752
Proceeds on disposal of fixed assets 29 - 3
Interest received 7 - 2
Acquisition of FV Solar Lab S.R.L. - - (339)
Acquisition of Infrastructure Capital 21 (29,557) - -
Acquisition of the technology ventures division of Downing LLP 21 (13,633) - -
---------------------------------------------------------------------- ---- ------------ ------------ ----------
Net cash from investing activities (43,823) (359) (863)
---------------------------------------------------------------------- ---- ------------ ------------ ----------
Cash flows from financing activities
Dividends and distributions to equity members 19 - (1,842) (6,175)
FGLLP members' capital contributions/(repayments) 35 (38) 61
Purchase of own shares 10 (214) (402) (454)
Repayment of lease liabilities (principal) (1,154) (1,049) (2,155)
Repayment of loan liabilities (principal) 16 (606) (621) (622)
---------------------------------------------------------------------- ---- ------------ ------------ ----------
Net cash from financing activities (1,939) (3,952) (9,345)
---------------------------------------------------------------------- ---- ------------ ------------ ----------
Net (decrease)/increase in cash and cash equivalents (22,018) 3,329 14,858
Cash and cash equivalents at beginning of period 54,289 39,431 39,431
---------------------------------------------------------------------- ---- ------------ ------------ ----------
Cash and cash equivalents at end of period 32,271 42,760 54,289
---------------------------------------------------------------------- ---- ------------ ------------ ----------
Reconciliation of profit before tax to cash generated from operations
Profit before taxation 25,354 13,111 27,869
Gain on business combination (provisional) 9 (12,203) - (1,012)
Profit from share in joint venture - (8) (53)
Fair value gains on investments (94) (83) (638)
Finance costs 490 360 653
Finance income (83) - (2)
Fair value losses on contingent consideration (incl. finance expense) 66 - -
Share-based payment 10 1,499 210 459
Staff costs - acquisitions 21 288 - -
Amortisation in relation to intangible assets (customer contracts) 7 751 72 292
Depreciation and amortisation 7 1,225 1,332 3,193
Loss on disposal of fixed assets - - 33
Gain on disposal of investments at FVTPL - - (108)
Foreign currency (337) 61 (163)
Decrease/(increase) in contract costs 296 (4,011) (3,718)
Decrease/(increase) in trade and other receivables 2,006 (900) (222)
Increase/(decrease) in trade and other payables 6,188 (496) 2,547
---------------------------------------------------------------------- ---- ------------ ------------ ----------
Total 25,446 9,648 29,130
---------------------------------------------------------------------- ---- ------------ ------------ ----------
The notes to the financial statements form part of this
financial information.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE SIX MONTHSED 30 September 2022
1. Corporate information
Foresight Group Holdings Limited (the "Company") is a public
limited company incorporated and domiciled in Guernsey and whose
shares are publicly traded on the Main Market of the London Stock
Exchange. The registered office is located at Ground Floor, Dorey
Court, Admiral Park, St Peter Port, Guernsey GY1 2HT. The condensed
consolidated half-year financial statements for the six months
ended 30 September 2022 (the "Group accounts") comprise the
financial statements of the Company and its subsidiaries
(collectively, the "Group").
2. Basis of preparation
The condensed consolidated half -- year financial statements
(the "half-year financial statements") for the six months to 30
September 2022 have been prepared in accordance with IAS 34
"Interim Financial Reporting" as adopted by the European Union
("EU"), the Disclosure Guidance and Transparency Rules sourcebook
of the United Kingdom's Financial Conduct Authority and the
Companies (Guernsey) Law, 2008. They do not include all the
information required for a complete set of IFRS financial
statements. Accordingly, the half -- year financial statements
should be read in conjunction with the annual consolidated
financial statements for the year ended 31 March 2022, which have
been prepared in accordance with International Financial Reporting
Standards ("IFRS") as adopted by the EU.
The Independent Auditor's Report on the annual consolidated
financial statements for the year ended 31 March 2022 was
unqualified and did not contain an emphasis of matter paragraph.
The half-year financial statements for the six months ended 30
September 2022 and 30 September 2021 are unaudited but have been
subject to review by the Group's auditor.
Selected explanatory notes are included to explain events and
transactions that are significant to an understanding of the
changes in the Group's financial position and performance since the
last annual consolidated financial statements for the year ended 31
March 2022.
The financial information is presented in sterling, which is the
Company's functional currency. All information is given to the
nearest thousand (except where specified otherwise).
The half-year financial statements have been prepared on a
historical cost basis, except for investments, derivatives and
contingent consideration that have been measured at fair value.
Going concern
These financial statements have been prepared on the going
concern basis.
The Directors of the Group have considered the resilience of the
Group, taking into account its current financial position and the
principal and emerging risks facing the business. The Board
reviewed the Group's cash flow forecasts and trading budgets for a
period of at least 12 months from the date of approval of these
accounts, and concluded that, taking into account plausible
downside scenarios that could reasonably be anticipated, the Group
will have sufficient funds to pay its liabilities as they fall due
for that period. Taking into consideration the impact of Russia's
invasion of Ukraine on global markets and the wider economic
environment, including inflation, rising interest rates and changes
in power prices, the forecasts have been stress tested to ensure
that a robust assessment of the Group's working capital and cash
requirements has been performed. The stress test scenarios adopted
involved severe but plausible downside scenarios with respect to
the Group's trading performance. Downside scenarios included a
material reduction in revenues through lower fundraising and
deployment and lower valuations. Worst-case scenarios included the
loss of key management contracts. Any mitigating actions available
to protect working capital and strengthen the balance sheet,
including deferring non-essential capital expenditure and increased
cost control, were also taken into account.
In considering the above, the Directors have formed the view
that the Group will generate sufficient cash to meet its ongoing
liabilities as they fall due for at least the next 12 months;
accordingly, the going concern basis of preparation has been
adopted.
3. Significant events and transactions
The financial position and performance of the Group was affected
by the following events and transactions during the six months
ended 30 September 2022:
Acquisition of Infrastructure Capital Holdings Pty Ltd
("Infrastructure Capital") and issuance of new shares
The Group completed the acquisition of Infrastructure Capital,
an established, specialist infrastructure manager in the Australian
market, on 8 September 2022. Initial consideration of A$105 million
was paid 50% in cash and 50% in shares in the Company albeit under
IFRS 3 the initial consideration paid in shares is to be accounted
for as a post-combination expense. This is due to the initial
shares being subject to forfeiture if a seller ceases to be
employed or contracted to an Infrastructure Capital during the next
three years. There was also further contingent consideration
granted on 8 September 2022; an explanation of this and the overall
accounting for the acquisition is explained in note 21.
Acquisition of the technology ventures division of Downing
LLP
The Group completed the acquisition of the technology ventures
division of Downing LLP on 4 July 2022, which has been accounted
for as the acquisition of a business under IFRS 3. Initial
consideration of GBP13.4 million was paid in cash with further
contingent consideration of up to GBP4.2 million payable in cash
over a three year period. The accounting for the acquisition is
further explained in note 21.
Foreign currency risk
In order to mitigate the risk associated with the increase in
Group cash flows arising in a foreign currency following the
acquisition of Infrastructure Capital, the Group entered into a
number of forward foreign currency contracts in September 2022.
These forward foreign currency contracts are considered to be
derivatives so are accounted for as financial instruments within
the scope of IFRS 9 but are not designated as hedging instruments
and are not subject to hedge accounting.
The Group had eight forward foreign currency contracts, with a
notional amount of A$20.0 million to sell for GBP11.7 million at 30
September 2022. The first contract matures on 30 March 2023 and
thereafter at quarterly intervals.
4. Accounting policies
The accounting policies applied in these half-year financial
statements are the same as those applied by the Group in its annual
financial statements for the year ended 31 March 2022 except for
the policies below and the mandatory amendments that had an
effective date prior to the start of the six month period. None of
the mandatory amendments had an impact on the Group's financial
statements. The changes in accounting policies will also be
reflected in the Group's annual financial statements for the year
ended 31 March 2023.
A number of new amendments to standards and interpretations will
be effective for periods beginning on or after 1 April 2023. None
are expected to have a material impact on the Group's financial
statements.
A. Business combinations - contingent consideration
Contingent consideration payable is measured at fair value at
acquisition and assessed annually with particular reference to the
conditions upon which the consideration is contingent.
B. Key sources of estimation uncertainty and judgements
The preparation of the half-year financial statements requires
management to make judgements, estimates and assumptions that
affect the application of accounting policies and the reported
amounts of assets, liabilities, income and expenses at the
reporting date.
In preparing these half-year financial statements, the
significant judgements made by management in applying the Group's
accounting policies and the key sources of estimation were the same
as those that applied to the annual financial statements for the
year ended 31 March 2022 except for the below:
Key sources of estimation uncertainty
Provisional identifiable assets acquired and liabilities assumed
on business combinations
The Group carries out a purchase price allocation after the
completion of a business combination. This often includes an
intangible asset at fair value in respect of the earnings the
investment management contracts acquired are expected to generate,
together with an associated deferred tax liability.
The fair value of the identifiable assets acquired and
liabilities assumed on business combinations in the period are
provisional at 30 September 2022 as explained further in note 21
and are therefore, a key source of estimation uncertainty in these
half-year financial statements. Given that the valuation of the
intangible assets is provisional, no sensitivity is provided at
this stage.
Fair value of contingent consideration
As noted above, contingent consideration payable (including
consideration that is judged to be remuneration for
post-combination services) is measured at fair value at acquisition
and assessed annually with particular reference to the conditions
upon which the consideration is contingent. Contingent
consideration accounted for reflects the Group's best estimate of
the amounts that are expected to be paid, discounted to their
present value.
Key judgements
Customer contract intangibles purchased through acquisitions
When the Group purchases customer contracts through
acquisitions, a judgement is made as to whether the transaction
should be accounted for as a business combination or as a separate
purchase of intangible assets. In making this judgement, the Group
assesses the assets, liabilities, operations and processes that
were the subject of the transaction against the definition of a
business combination in IFRS 3. In particular, consideration is
given to the scale of the operations subject to the transaction and
whether ownership of a corporate entity has been acquired, among
other factors.
The acquisition of the technology ventures division of Downing
LLP has been accounted for as the acquisition of a business under
IFRS 3.
Payments to newly recruited investment managers arising on
acquisitions
The Group assesses whether payments made to newly recruited
investment managers arising on acquisitions under contractual
agreements represent payments for the acquisition of customer
contract intangibles or remuneration for ongoing services provided
to the Group. If these payments are incremental costs of acquiring
customer contracts and are considered to be recoverable (i.e.
through future revenues earned from the funds that transfer), they
are capitalised. Otherwise, they are judged to be in relation to
the provision of ongoing services and are expensed in the period in
which they are incurred.
Treatment of consideration transferred
The purchase price payable in respect of the acquisitions can be
split into a number of different components. The payment of certain
elements are deferred; and the timing and value of these are
contingent on certain employment conditions and operational and
financial targets being met. The proportion of the deferred
payments that are contingent on the recipients remaining employees
of the Group for a specific period is accounted for as remuneration
for post-combination services.
Consolidation of VCF Partners and IPO costs
These judgements were relevant to comparatives in the annual
financial statements for the year ended 31 March 2022 and financial
statements for the six months ended 31 March 2021 but do not apply
to any period disclosed in this half-year report.
5. Revenue
Unaudited Unaudited Audited
six six
months months year ended
ended ended
30 September 30 September 31 March
2022 2021 2022
GBP000 GBP000 GBP000
--------------------------- ------------ ------------ ----------
Management fees 42,923 33,655 70,906
Secretarial fees 975 695 1,413
Directors' fees 1,449 1,196 2,506
--------------------------- ------------ ------------ ----------
Recurring fees 45,347 35,546 74,825
Marketing fees 2,564 2,114 5,046
Arrangement fees 1,331 1,435 2,964
Performance incentive fees 1,388 609 3,232
Other income 90 3 4
--------------------------- ------------ ------------ ----------
50,720 39,707 86,071
--------------------------- ------------ ------------ ----------
6. Business segments
Management monitors the performance and strategic priorities of
the business from a business unit ("BU") perspective, and in this
regard has identified the following three key "reportable
segments": Infrastructure, Private Equity and Foresight Capital
Management.
The Group's senior management assesses the performance of the
operating segments based on revenue.
Revenue is measured in a manner consistent with that in the
income statement. Segmental revenue is set out below:
Unaudited Unaudited Audited
six six
months months year ended
ended ended
30 September 30 September 31 March
2022 2021 2022
GBP000 GBP000 GBP000
----------------------------- ------------ ------------ ----------
Infrastructure 28,366 24,682 50,753
Private Equity 15,425 9,771 23,874
Foresight Capital Management 6,929 5,254 11,444
----------------------------- ------------ ------------ ----------
50,720 39,707 86,071
----------------------------- ------------ ------------ ----------
Revenue by region is summarised below:
Unaudited Unaudited Audited
six six
months months year ended
ended ended
30 September 30 September 31 March
2022 2021 2022
GBP000 GBP000 GBP000
--------------- ------------ ------------ ----------
United Kingdom 45,769 35,017 78,562
Italy 663 246 778
Luxembourg 2,366 3,367 5,312
Spain 275 299 568
Australia 1,647 778 851
--------------- ------------ ------------ ----------
50,720 39,707 86,071
--------------- ------------ ------------ ----------
Non-current assets (excluding derivative asset, deferred tax
assets, contract costs and trade and other receivables) by region
are summarised below:
Unaudited Unaudited Audited
six six
months months year ended
ended ended
30 September 30 September 31 March
2022 2021 2022
GBP000 GBP000 GBP000
--------------- ------------ ------------ ----------
United Kingdom 31,466 14,338 14,016
Italy 1,689 779 2,021
Luxembourg 2,041 1,444 1,521
Spain 558 535 566
Australia 60,883 2 4
--------------- ------------ ------------ ----------
96,637 17,098 18,128
--------------- ------------ ------------ ----------
The Statement of Financial Position is reported to the Board on
a single segment basis. No further segmental information is
provided as this would not aid strategic and financial management
decisions.
7. Administrative expenses
Unaudited Unaudited Audited
six six
months months year ended
ended ended
30 September 30 September 31 March
2022 2021 2022
GBP000 GBP000 GBP000
------------------------------------------------------------------------------ ------------ ------------ ----------
Staff costs 19,926 16,609 35,395
Staff costs - acquisitions 1,795 - -
Depreciation and amortisation (excluding amortisation in relation to
intangible assets (customer
contracts)) 1,225 1,332 3,193
Amortisation in relation to intangible assets (customer contracts) 751 72 292
Legal and professional 2,235 1,594 6,067
Other administration costs 4,751 4,523 9,451
------------------------------------------------------------------------------ ------------ ------------ ----------
30,683 24,130 54,398
------------------------------------------------------------------------------ ------------ ------------ ----------
Other administration costs mainly relate to irrecoverable VAT,
computer maintenance, conferences, bank charges and sundries.
8. Acquisition-related costs
The Group has incurred the following legal and professional
costs in respect of its acquisitions and other costs which are
considered to be non-operational and are excluded from Core EBITDA
(see note 11).
Unaudited Unaudited Audited
six six
months months year ended
ended ended
30 September 30 September 31 March
2022 2021 2022
GBP000 GBP000 GBP000
----------------------------------------------------------------------------- ------------ ------------ ----------
Acquisition of Infrastructure Capital (see note 21) 3,006 - -
Acquisition of the technology ventures division of Downing LLP (see note 21) 365 - -
Other 103 - -
----------------------------------------------------------------------------- ------------ ------------ ----------
3,474 - -
----------------------------------------------------------------------------- ------------ ------------ ----------
9. Gain on business combination (provisional)
Unaudited Unaudited Audited
six six
months months year ended
ended ended
30 September 30 September 31 March
2022 2021 2022
GBP000 GBP000 GBP000
--------------------------------------------------- ------------ ------------ ----------
Infrastructure Capital (provisional) (see note 21) 12,203 - -
FV Solar Lab S.R.L. - - 1,012
--------------------------------------------------- ------------ ------------ ----------
12,203 - 1,012
--------------------------------------------------- ------------ ------------ ----------
10. Share-based payments
Unaudited Unaudited Audited
six six
months months year ended
ended ended
30 September 30 September 31 March
2022 2021 2022
GBP000 GBP000 GBP000
----------------------------------------------------------------- ------------ ------------ ----------
Included in staff costs (note 7)
Performance Share Plan 289 134 299
UK Share Incentive Plan 112 76 160
Overseas Phantom Share Plan 49 - -
----------------------------------------------------------------- ------------ ------------ ----------
450 210 459
Included in staff costs - acquisitions (note 7)
Infrastructure Capital - post-combination services (see note 21) 1,049 - -
----------------------------------------------------------------- ------------ ------------ ----------
1,499 210 459
----------------------------------------------------------------- ------------ ------------ ----------
Performance Share Plan
The Remuneration Committee approved the implementation of the
Performance Share Plan ("PSP") during 2021. Options are granted
under the plan for no consideration and are linked to an absolute
total shareholder return ("TSR") of 6% compound growth per annum
over a three year period. The absolute TSR condition vests over a
range as set out in the Remuneration Committee Report in the Annual
Report for the year ended 31 March 2022. The exercise price is
GBPnil. The Group is authorised to issue new shares to satisfy
share plans which must not exceed 10% of the issued share capital
in any rolling ten year period. The Group's position against the
dilution limits at 30 September 2022 since Admission was c.2%.
Details of movements in the number of shares are as follows (no
options expired during the periods covered by the table below):
Unaudited 30 September Unaudited 30 September Audited 31 March
2022 2021 2022
------------------------- ------------------------- -------------------------
Average Average Average
exercise exercise exercise
Number price per Number price per Number price per
of shares share option of shares share option of shares share option
granted GBP granted GBP granted GBP
---------------------- ---------- ------------- ---------- ------------- ---------- -------------
At the beginning of
period 1,071,830 - - - - -
Granted 1,316,700 - 1,071,830 - 1,071,830 -
Vested - - - - - -
Extinguished (3,500) - - - - -
---------------------- ---------- ------------- ---------- ------------- ---------- -------------
Awards outstanding at
end of period 2,385,030 - 1,071,830 - 1,071,830 -
---------------------- ---------- ------------- ---------- ------------- ---------- -------------
Share options outstanding at the end of the period have the
following expiry dates and exercise prices:
Share options Share options Share options
Exercise 30 September 30 September 31 March
Grant date Expiry date price 2022 2021 2022
---------------- --------------- ---------- ------------- ------------- -------------
4 September
2021 31 July 2024 - 1,068,330 1,071,830 1,071,830
9 August 2022 31 July 2025 - 1,316,700 - -
---------------- --------------- ---------- ------------- ------------- -------------
2,385,030 1,071,830 1,071,830
------------------------------------------- ------------- -------------
Weighted average remaining contractual 2.39 years 2.83 years
life of options outstanding at end of
period 2.33 years
--------------------------------------------- ------------- ------------- -------------
UK Share Incentive Plan
Under the Foresight UK Share Incentive Plan ("SIP"), for each
one partnership share that an employee buys, Foresight offers two
free matching shares. The SIP is available to all UK employees. In
each tax year, employees can buy up to GBP1,800 or 10% of salary
(whichever is lower) of partnership shares from their pre-tax
salary. If an employee leaves the Group, any matching shares held
for less than three years will be withdrawn, i.e. the vesting
period of the matching shares is three years with the performance
condition of continuous service. The SIP shares are held in trust
by Yorkshire Building Society (the SIP Trustee). Voting rights are
exercised by the SIP Trustee on receipt of participants'
instructions.
As the SIP options have a zero strike price and the participant
is entitled to dividends during the vesting period, the fair value
of the award is indistinguishable from the share price. Therefore,
the share price on the award date is used when calculating the
share-based payment expense.
In the six months ended 30 September 2022, the number of
matching shares purchased for GBP214,000 was 53,060 (30 September
2021: for GBP402,000 was 95,038; 31 March 2022: for GBP454,000 was
107,138). An additional 45,000 shares were transferred into trust
from Foresight Guernsey Limited (see IPO Prospectus) so that the
total matching shares held in trust was 205,198.
Overseas Phantom Share Plan
During the six months ended 30 September 2022, the Group
launched the Overseas Phantom Share Plan ("the Plan") which was
introduced to create a plan similar to the UK Share Incentive Plan
for non-UK employees. Non-UK employees may participate, except
those who participate in the Performance Share Plan. The Plan is a
cash-bonus scheme whereby each participating non-UK employee is
granted a number of notional share options replicating the terms of
the SIP . At 30 September 2022, the Group had recognised an expense
of GBP49,000 in respect of the Plan.
Infrastructure Capital - post-combination services (see note
21)
Payments of consideration arising from the acquisition of
Infrastructure Capital require the sellers to remain either
employed or contracted to the Group or the payments will be
forfeited. They are therefore accounted for as remuneration for
post-combination services. Where the consideration is paid in
shares, these are accounted for as equity-settled share-based
payments under IFRS 2. Further explanation of the consideration is
contained in note 21.
11. Core EBITDA pre share-based payments
The Group uses Core EBITDA and Core EBITDA pre share-based
payments as two of its key metrics to measure performance because
it views these as the closest profitability number comparable to
the Group's recurring revenue model (i.e. a cash profit number
after removing/adjusting for any one-offs, both positive and
negative). Core EBITDA pre share-based payments is shown as the
Group considers that there is no cash alternative to the
share-based payments and are uncontrollable in nature. Core EBITDA
and Core EBITDA pre share-based payments may not be comparable to
other similarly titled measures used by other companies and they
have limitations as an analytical tool and should not be considered
in isolation or as a substitute for analysis of the Group's
operating results as reported under IFRS.
The specific items excluded from Core EBITDA and Core EBITDA pre
share-based payments are non-underlying items. Non-underlying items
are non-trading or one-off items disclosed separately below, where
the quantum, nature or volatility of such items are considered by
the Directors to otherwise distort the underlying performance of
the Group. The Group has assessed that the following items are
non-underlying items for the purposes of calculating Core EBITDA
and Core EBITDA pre share-based payments:
-- Gain on business combination which is non-recurring (see note
9)
-- Acquisition-related costs: these are costs related to acquisitions
in the period (see note 8)
-- Staff costs - acquisitions being the expense of consideration
from acquisition of Infrastructure Capital which has the requirement
of continued employment plus non-recurring staff bonuses related
to the acquisitions (see note 21)
-- All depreciation and amortisation costs are added back including
amortisation arising on intangible assets (customer contracts)
-- Non-operational staff costs: staff advances expensed have been
added back as these are not deemed to reflect the core underlying
performance of the business
-- Profits or losses on disposal of fixed assets are added back
as these are classed as non -- recurring
-- Other operating income: non-recurring fees arising from the Shirebrook
development
-- Fair value gains/(losses) on contingent consideration (incl.
finance expense): This gain or loss is also related to contingent
consideration arising from acquisitions
-- All financing and taxation costs are added back
-- Foreign exchange gains or losses on balances arising from acquisitions,
including a foreign exchange gain on the share issuance, a loss
on the transfer of the Infrastructure Capital cash consideration
and a loss on the provisional intangible asset and associated
deferred tax liability recognised on acquisition of Infrastructure
Capital
A reconciliation of net profit after other comprehensive income
to Core EBITDA and Core EBITDA pre share-based payments is set out
below:
Unaudited Unaudited Audited
six six
months months year ended
ended ended
30 September 30 September 31 March
2022 2021 2022
GBP000 GBP000 GBP000
------------------------------------------------------------------------------ ------------ ------------ ----------
Net profit after other comprehensive income 23,351 11,534 24,938
Gain on business combination (provisional) (12,203) - (1,012)
Acquisition-related costs 3,474 - -
Staff costs - acquisitions (excluding share-based payments) 746 - -
Amortisation in relation to intangible assets (customer contracts) 751 72 292
Non-operational staff costs 300 300 728
Depreciation and amortisation (excluding amortisation in relation to
intangible assets (customer
contracts)) 1,225 1,332 3,193
Loss on disposal of tangible fixed assets - - 33
Other operating income - (250) (250)
Finance income and expense (excluding fair value gain on derivative) 483 360 651
Fair value losses on contingent consideration (incl. finance expense) 66 - -
Foreign exchange - administrative expenses (116) - -
Foreign exchange - translation differences on foreign subsidiaries (62) - -
Tax on profit on ordinary activities 2,008 1,644 2,793
Core EBITDA 20,023 14,992 31,366
Share-based payments 1,499 210 459
------------------------------------------------------------------------------ ------------ ------------ ----------
Core EBITDA pre share-based payments 21,522 15,202 31,825
------------------------------------------------------------------------------ ------------ ------------ ----------
12. Taxation
Unaudited Unaudited Audited
six six
months months year ended
ended ended
30 September 30 September 31 March
2022 2021 2022
GBP000 GBP000 GBP000
---------------------------------------------------------------- ------------ ------------ ----------
Current tax
UK corporation tax 2,079 2,522 3,098
Foreign taxation 97 70 71
---------------------------------------------------------------- ------------ ------------ ----------
Total current tax charge 2,176 2,592 3,169
---------------------------------------------------------------- ------------ ------------ ----------
Deferred tax
Origination and reversal of temporary differences (see note 17) (168) (948) (376)
---------------------------------------------------------------- ------------ ------------ ----------
Total deferred tax (168) (948) (376)
---------------------------------------------------------------- ------------ ------------ ----------
Tax on profit on ordinary activities 2,008 1,644 2,793
---------------------------------------------------------------- ------------ ------------ ----------
The Group is headquartered in Guernsey although its principal
trading office is in the UK. The Group also has international
offices in Italy, Australia, Spain and Luxembourg. The Group pays
taxes according to the rates applicable in the countries in which
it operates.
Tax is charged at 7.9% for the six months ended 30 September
2022 (30 September 2021: 12.5%, 31 March 2022: 10.0%). Excluding
the gain on business combination and staff costs - acquisitions
from profit before tax, tax would be charged at 13.4% representing
the best estimate of the average annual effective tax rate expected
to apply for the full year, applied to the pre-tax profit of the
six month period.
13. Earnings per share
Basic earnings per share is calculated by dividing the profit
attributable to the owners of the Company by the weighted average
number of shares in issue during the period less the weighted
average number of own shares held (see note 18 "Shares held in
escrow reserve" and "Own share reserve").
Diluted earnings per share is calculated by dividing the profit
attributable to the owners of the Company by the weighted average
number of shares for the purposes of the basic earnings per share
plus the weighted average number of shares that would be issued on
the conversion of dilutive potential Ordinary Shares into Ordinary
Shares (see note 10 for Performance Share Plan).
A reconciliation of the figures used in calculating the basic,
diluted and adjusted basic and diluted earnings per share ("EPS")
figures is as follows:
Unaudited Unaudited Audited
six six
months months year ended
ended ended
30 September 30 September 31 March
2022 2021 2022
GBP000 GBP000 GBP000
------------------------------------------------------------------------------ ------------ ------------ ----------
Earnings
Profit after tax for purpose of basic and diluted EPS 23,346 11,467 25,076
------------------------------------------------------------------------------ ------------ ------------ ----------
Adjustments (post-tax):
Administrative expenses
Staff costs - acquisitions 1,795 - -
Amortisation in relation to intangible assets (customer contracts) 751 72 292
Acquisition-related costs 3,474 - -
Fair value losses on contingent consideration (incl. finance expense) 66 - -
Gain on business combination (provisional) (12,203) - (1,012)
Profit after tax for purpose of adjusted basic and adjusted diluted EPS 17,229 11,539 24,356
------------------------------------------------------------------------------ ------------ ------------ ----------
Unaudited Unaudited Audited
six six
months months year ended
ended ended
30 September 30 September 31 March
2022 2021 2022
'000 '000 '000
------------------------------------------------------------------------------ ------------ ------------ ----------
Weighted average number of shares
Weighted average number of shares in issue during the period 109,288 108,333 108,333
Less time -- apportioned own shares held and shares held in escrow (1,033) (120) (133)
------------------------------------------------------------------------------ ------------ ------------ ----------
Weighted average number of Ordinary Shares for the purpose of basic earnings
per share 108,255 108,213 108,200
Add back weighted average number of dilutive potential shares 1,162 73 608
------------------------------------------------------------------------------ ------------ ------------ ----------
Weighted average number of Ordinary Shares for the purpose of diluted earnings
per share 109,417 108,286 108,808
------------------------------------------------------------------------------ ------------ ------------ ----------
Unaudited Unaudited Audited
six six
months months year ended
ended ended
30 September 30 September 31 March
2022 2021 2022
pence pence pence
------------------------------------------------------------------------------ ------------ ------------ ----------
Earnings per share
Basic 21.6 10.6 23.2
Diluted 21.3 10.6 23.0
Adjusted basic 15.9 10.7 22.5
Adjusted diluted 15.7 10.7 22.4
------------------------------------------------------------------------------ ------------ ------------ ----------
Acquisition items were excluded from the adjusted EPS
calculations as they include non-recurring gains and costs (see
notes 7, 8 and 9). The Group believes this will allow users of the
financial statements to get a useful supplemental understanding of
the Group's results and their comparability period on period.
14. Intangible assets
Computer Customer
software contracts Goodwill Total
Unaudited GBP000 GBP000 GBP000 GBP000
------------------------------------ -------- --------- -------- ------
Cost
At 1 April 2022 650 4,558 - 5,208
Additions 4 - - 4
Business combinations (provisional)
(see note 21) - 69,940 10,028 79,968
Foreign exchange - (858) - (858)
Disposals - - - -
------------------------------------ -------- --------- -------- ------
At 30 September 2022 654 73,640 10,028 84,322
------------------------------------ -------- --------- -------- ------
Amortisation/impairment
At 1 April 2022 394 383 - 777
Charge for the year 50 751 - 801
Disposals - - - -
------------------------------------ -------- --------- -------- ------
At 30 September 2022 444 1,134 - 1,578
------------------------------------ -------- --------- -------- ------
Net book value at 30 September 2022 210 72,506 10,028 82,744
------------------------------------ -------- --------- -------- ------
Computer Customer
software contracts Goodwill Total
Unaudited GBP000 GBP000 GBP000 GBP000
------------------------------------ -------- --------- -------- ------
Cost
At 1 April 2021 479 2,914 - 3,393
Additions 125 - - 125
Business combinations - - - -
Disposals - - - -
------------------------------------ -------- --------- -------- ------
At 30 September 2021 604 2,914 - 3,518
------------------------------------ -------- --------- -------- ------
Amortisation/impairment
At 1 April 2021 289 92 - 381
Charge for the year 48 75 - 123
Disposals - - - -
------------------------------------ -------- --------- -------- ------
At 30 September 2021 337 167 - 504
------------------------------------ -------- --------- -------- ------
Net book value at 30 September 2021 267 2,747 - 3,014
------------------------------------ -------- --------- -------- ------
Computer Customer
software contracts Goodwill Total
Audited GBP000 GBP000 GBP000 GBP000
-------------------------------- -------- --------- -------- ------
Cost
At 1 April 2021 479 2,914 - 3,393
Additions 171 - - 171
Business combinations - 1,679 - 1,679
Disposals - (35) - (35)
-------------------------------- -------- --------- -------- ------
At 31 March 2022 650 4,558 - 5,208
-------------------------------- -------- --------- -------- ------
Amortisation/impairment -
At 1 April 2021 289 92 - 381
Charge for the year 105 292 - 397
Disposals - (1) - (1)
-------------------------------- -------- --------- -------- ------
At 31 March 2022 394 383 - 777
-------------------------------- -------- --------- -------- ------
Net book value at 31 March 2022 256 4,175 - 4,431
-------------------------------- -------- --------- -------- ------
Customer contracts
The table below shows the carrying amount assigned to each
component of customer contracts and the remaining amortisation
period.
Carrying Remaining
value amortisation
GBP000 period
------------------------------------------------------- -------- ------------
Acquisition of PiP Manager Limited 2,573 13.5 years
Acquisition of FV Solar Lab S.R.L. 1,237 2.0 years
Acquisition of technology ventures business of Downing 11.5 years
LLP (provisional) (see note 22) 8,420
Acquisition of Infrastructure Capital (provisional) 24.9 years
(see note 22) 60,276
------------------------------------------------------- -------- ------------
72,506
------------------------------------------------------- -------- ------------
Goodwill
Goodwill relates to the acquisition of the technology ventures
business of Downing LLP (see note 21). Goodwill is tested for
impairment at least on an annual basis or more frequently when
there are indications that goodwill may be impaired. The Group has
reviewed the customer contracts at 30 September 2022 and has
concluded that there are no indicators of impairment.
The remaining element of intangible assets relates to
capitalised software costs, which are amortised over five years.
The amortisation charges above are recognised within administrative
expenses in the Statement of Comprehensive Income.
15. Financial instruments held at fair value
Financial assets at fair value through profit or loss
Unaudited Unaudited Audited
30 September 30 September 31 March
2022 2021 2022
GBP000 GBP000 GBP000
--------------------- ------------ ------------ --------
Non-current:
Investments at FVTPL 3,321 2,196 2,781
Derivative asset 22 - -
--------------------- ------------ ------------ --------
3,343 2,196 2,781
Current:
Derivative asset 67 - -
--------------------- ------------ ------------ --------
3,410 2,196 2,781
--------------------- ------------ ------------ --------
Investments at FVTPL are the Group's co-investment positions
across its LP funds.
A derivative asset has arisen from the forward foreign currency
contracts entered into during the six month period (see note
3).
Financial liabilities at fair value through profit or loss
Unaudited Unaudited Audited
30 September 30 September 31 March
2022 2021 2022
GBP000 GBP000 GBP000
------------------------- ------------ ------------ --------
Current:
Contingent consideration 1,392 - -
------------------------- ------------ ------------ --------
Non-current:
Contingent consideration 2,582 - -
Derivative liability 13 - -
------------------------- ------------ ------------ --------
2,595 - -
3,987 - -
------------------------- ------------ ------------ --------
Contingent consideration arises from the acquisitions of
Infrastructure Capital and the technology ventures division of
Downing LLP (see note 21).
A derivative liability has arisen from the forward foreign
currency contracts entered into during the six month period (see
note 3).
16. Other interest-bearing loans and borrowings
This note provides information about the contractual terms of
the Group's interest-bearing loans and borrowings, which are
measured at amortised cost.
Unaudited Unaudited Audited
30 September 30 September 31 March
2022 2021 2022
GBP000 GBP000 GBP000
------------------------ ------------ ------------ --------
Current liabilities
Loans 624 619 660
Non-current liabilities
Loans 2,424 3,030 3,030
------------------------ ------------ ------------ --------
3,048 3,649 3,690
------------------------ ------------ ------------ --------
Terms and debt repayment schedule
Unaudited
30 September
2022
Nominal Carrying
interest Year of amount(1)
Currency rate maturity GBP000
--------------- --------- ---------- --------- ------------
Base rate
Unsecured loan GBP + 2% 2027 3,048
--------------- --------- ---------- --------- ------------
1. The carrying amount of these loans and borrowings equates to the fair value.
The movement on the above loans may be summarised as
follows:
Unaudited Unaudited Audited
30 September 30 September 31 March
2022 2021 2022
GBP000 GBP000 GBP000
----------------------- ------------ ------------ --------
At beginning of period 3,690 4,324 4,324
At acquisition - - -
Interest 56 43 85
Repayment (698) (718) (719)
----------------------- ------------ ------------ --------
At end of period 3,048 3,649 3,690
----------------------- ------------ ------------ --------
17. Deferred taxation
Deferred tax assets and liabilities are measured at the tax
rates that are expected to apply to the period when the asset is
realised or the liability is settled, based on tax rates (and tax
legislation) that have been enacted or substantively enacted at the
balance sheet date.
The movement on the deferred tax account is shown below:
Unaudited Unaudited Audited
30 September 30 September 31 March
2022 2021 2022
GBP000 GBP000 GBP000
------------------------------------------------------------------- ------------ ------------ --------
At beginning of period (583) (604) (604)
Recognised in profit and loss
Tax expense 168 948 376
Foreign exchange 240 - 26
------------------------------------------------------------------- ------------ ------------ --------
408 948 402
------------------------------------------------------------------- ------------ ------------ --------
Recognised in equity
Share-based payment reserve 17 - 22
------------------------------------------------------------------- ------------ ------------ --------
Arising on business combination
Intangible assets - customer contracts (provisional) (see note 21) (17,485) - (403)
Other temporary and deductible differences 236 - -
------------------------------------------------------------------- ------------ ------------ --------
At end of period (17,407) 344 (583)
------------------------------------------------------------------- ------------ ------------ --------
The movements in deferred tax assets and liabilities during the
period are shown below:
(Charged)/ (Charged)/
credited credited
to
profit to equity
or loss
Asset Liability Net Unaudited Unaudited
six six
Unaudited Unaudited Unaudited months months
ended ended
30 September 30 September 30 September 30 September 30 September
2022 2022 2022 2022 2022
GBP000 GBP000 GBP000 GBP000 GBP000
----------------------------------- ------------ ------------ ------------ ------------ ------------
Other temporary and deductible
differences 791 (115) 676 (17) 17
Business combinations - intangible
asset - (18,083) (18,083) 185 -
----------------------------------- ------------ ------------ ------------ ------------ ------------
791 (18,198) (17,407) 168 17
----------------------------------- ------------ ------------ ------------ ------------ ------------
(Charged)/ (Charged)/
credited credited
to
profit to equity
or loss
Asset Liability Net Unaudited Unaudited
six six
Unaudited Unaudited Unaudited months months
ended ended
30 September 30 September 30 September 30 September 30 September
2021 2021 2021 2021 2021
GBP000 GBP000 GBP000 GBP000 GBP000
------------------------------------------- ------------ ------------ ------------ ------------ ------------
Other temporary and deductible differences 860 - 860 1,053 -
Business combinations - intangible asset - (516) (516) 14 -
Business combinations - available losses - - - (119) -
------------------------------------------- ------------ ------------ ------------ ------------ ------------
860 (516) 344 948 -
------------------------------------------- ------------ ------------ ------------ ------------ ------------
(Charged)/ (Charged)/
credited credited
to
profit to equity
or loss
Asset Liability Net Audited Audited
Audited Audited Audited year ended year ended
31 March 31 March 31 March 31 March 31 March
2022 2022 2022 2022 2022
GBP000 GBP000 GBP000 GBP000 GBP000
--------------------------------------------------------------- -------- --------- -------- ---------- ----------
Other temporary and deductible differences 615 (178) 437 582 22
Business combinations - intangible asset - (1,020) (1,020) (87) -
Business combinations - other temporary and deductible
differences - - - (119) -
--------------------------------------------------------------- -------- --------- -------- ---------- ----------
615 (1,198) (583) 376 22
--------------------------------------------------------------- -------- --------- -------- ---------- ----------
18. Share capital and other reserves
Ordinary Shares and share premium
Ordinary Shares issued by the Group are recognised at the
proceeds or fair value received, with the excess of the amount
received over nominal value being credited to the share premium
account, as follows:
Unaudited Unaudited Unaudited Unaudited Audited Audited
30 September 30 September 30 September 30 September 31 March 31 March
2022 2022 2021 2021 2022 2022
Number GBP000 Number GBP000 Number GBP000
----------------------------- ------------ ------------ ------------ ------------ ----------- --------
At beginning of period 108,333,333 32,040 108,333,333 32,040 108,333,333 32,040
Shares issued on acquisition
of Infrastructure
Capital (see note
21) 7,937,879 29,846 - - - -
----------------------------- ------------ ------------ ------------ ------------ ----------- --------
At end of period 116,271,212 61,886 108,333,333 32,040 108,333,333 32,040
----------------------------- ------------ ------------ ------------ ------------ ----------- --------
Shares held in escrow reserve
The shares held in escrow reserve arises from the acquisition of
Infrastructure Capital and accounting treatment of the initial
share consideration under IFRS 3 (see note 21).
Own share reserve
The Group operates a Share Incentive Plan as per note 10. The
Group operates a trust which holds shares that have not yet vested
unconditionally to employees of the Group. These shares are
recorded at cost and are classified as own shares.
At 30 September 2022, the total number of shares held in trust
was 310,539, including 205,198 of matching shares. Of the 205,198
matching shares, 45,000 had been transferred from Foresight
Guernsey Limited (see IPO Prospectus) and 160,198 shares had been
purchased at a cost of GBP668,000.
Share-based payment reserve
The share-based payment reserve represents the cumulative cost
of the Group's equity settled share plans and cost of consideration
for the acquisition of Infrastructure Capital payable in shares
with the requirement for the sellers to remain in employment with
the Group for the duration of the respective deferral periods. The
breakdown of the cost taken to the reserve in each period is as
follows:
Unaudited Unaudited Audited
six six
months months year ended
ended ended
30 September 30 September 31 March
2022 2021 2022
GBP000 GBP000 GBP000
------------------------------------------------------------------------------ ------------ ------------ ----------
Performance Share Plan (see note 10) 289 134 299
UK Share Incentive Plan (see note 10) 112 76 160
Share consideration for the acquisition of Infrastructure Capital (see note
21) 1,049 - -
------------------------------------------------------------------------------ ------------ ------------ ----------
1,450 210 459
------------------------------------------------------------------------------ ------------ ------------ ----------
Group reorganisation reserve
The Group reorganisation reserve consists of the Ordinary Share
capital of Foresight Group CI Limited ("FGCI"). As there is no
investment in FGCI held in the books of any holding companies
(Foresight Group Holdings Limited) this balance is left as a Group
reserve.
Foreign exchange reserve
Includes cumulative translation differences on translating
foreign subsidiaries from their local currency into sterling.
Retained earnings
Includes all current and prior period retained profits and
losses less dividends.
19. Dividends
Unaudited Unaudited Audited
six six
months months year ended
ended ended
30 September 30 September 31 March
2022 2021 2022
GBP000 GBP000 GBP000
----------------- ------------ ------------ ----------
Interim dividend - - 4,333
Final dividend 10,617 1,842 1,842
----------------- ------------ ------------ ----------
10,617 1,842 6,175
----------------- ------------ ------------ ----------
A final dividend relating to the year ended 31 March 2022 of 9.8
pence per Ordinary Share was approved by Shareholders at the Annual
General Meeting held on 10 August 2022 and paid on 14 October 2022.
Accordingly, this was accounted for as a payable at 30 September
2022.
20. Financial instruments - classification and measurement
Financial assets
Financial assets comprise cash and cash equivalents, trade
receivables and other receivables (at amortised cost) and
investments and derivative assets at FVTPL, as follows:
Unaudited Unaudited Audited
30 September 30 September 31 March
2022 2021 2022
GBP000 GBP000 GBP000
---------------------------- ------------ ------------ --------
Trade and other receivables 21,093 18,498 18,573
Cash and cash equivalents 32,271 42,760 54,289
Derivative asset 89 - -
Investments at FVTPL 3,321 2,196 2,781
56,774 63,454 75,643
---------------------------- ------------ ------------ --------
Financial liabilities
Financial liabilities comprise trade payables, other payables,
accruals, loans and borrowings and lease liabilities (at amortised
cost) and contingent consideration and derivative liability at
FVTPL as follows:
Unaudited Unaudited Audited
30 September 30 September 31 March
2022 2021 2022
as restated as restated
GBP000 GBP000 GBP000
------------------------- ------------ ------------ -----------
Trade payables 2,519 1,095 1,322
Other payables 20,823 9,633 6,396
Accruals 11,155 6,068 12,176
Loans and borrowings 3,048 3,649 3,690
Lease liabilities 10,223 11,547 10,408
Contingent consideration 3,974 - -
Derivative liability 13 - -
51,755 31,992 33,992
------------------------- ------------ ------------ -----------
Financial liabilities for the period ended 30 September 2021
have been restated due to incorrect inclusion of statutory
obligations and exclusion of loans and borrowings and lease
liabilities. Financial liabilities for the year ended 31 March 2022
have been restated to include accruals.
Fair value hierarchy
For financial instruments not traded in an active market, such
as forward foreign currency contracts, the fair value is determined
using appropriate valuation techniques that take into account the
terms and conditions of the contracts and utilise observable market
data, such as spot and forward rates, as inputs. Investments at
FVTPL represent the Group's share of the value of the underlying
investments held across various Funds Under Management. These
unquoted investments are valued on a net asset basis by the Group.
The actual underlying investments are valued in accordance with the
following rules, which are consistent with the IPEV Valuation
Guidelines.
i) Where a value is indicated by a material arms-length transaction
by an independent third party in the shares of a company, this
value will be used
ii) In the absence of (i), and depending upon both the subsequent
trading performance and investment structure of an investee
company, the valuation basis will usually move to either:
a) an earnings multiple basis. The shares may be valued by applying
a suitable multiple to that company's historic, current or
forecast earnings before tax, interest, depreciation and
amortisation (the ratio used being based on a comparable
sector but the resulting value being adjusted to reflect
points of difference identified compared to the sector including,
inter alia, illiquidity); or
b) where a company's under-performance against plan indicates
a diminution in the value of the investment, a write down
against cost is made, as appropriate. Where the value of
an investment has fallen permanently below cost, the loss
is treated as a permanent write down and as a realised loss,
even though the investment is still held. The Group assesses
the portfolio for such investments and, after agreement with
the relevant manager, will agree the values that represent
the extent to which a realised loss should be recognised.
This is based upon an assessment of objective evidence of
that investment's future prospects, to determine whether
there is potential for the investment to recover in value
iii) Premiums on loan investments are accrued at fair value when
the Company receives the right to the premium and when considered
recoverable
iv) Where an earnings multiple or cost less impairment basis is
not appropriate and overriding factors apply, discounted cash
flow, a net asset valuation, or industry specific valuation
benchmarks may be applied. An example of an industry specific
valuation benchmark would be the application of a multiple to
that company's historic, current or forecast turnover (the multiple
being based on a comparable sector but with the resulting value
being adjusted to reflect points of difference including, inter
alia, illiquidity)
The Group uses the following hierarchy for determining and
disclosing the fair value of financial instruments by valuation
technique:
Level 1: quoted (unadjusted) prices in active markets for
identical assets or liabilities.
Level 2: other techniques for which all inputs which have a
significant effect on the recorded fair value are observable,
either
directly or indirectly.
Level 3: techniques which use inputs which have a significant
effect on the recorded fair value that are not based on
observable
market data.
Level Level Level Total
1 2 3
As at 30 September 2022 unaudited GBP000 GBP000 GBP000 GBP000
---------------------------------- ------- ------ ------ ------
Financial assets
Investments at FVTPL - - 3,321 3,321
Derivative asset - 89 - 89
---------------------------------- ------- ------ ------ ------
- 89 3,321 3,410
------------------------------------------ ------ ------ ------
Financial liabilities
Contingent consideration - - 3,974 3,974
Derivative liability - 13 - 13
---------------------------------- ------- ------ ------ ------
- 13 3,974 3,987
------------------------------------------ ------ ------ ------
Level 1 Level 2 Level 3 Total
As at 30 September 2021 unaudited GBP000 GBP000 GBP000 GBP000
---------------------------------- ------- ------- ------- ------
Financial assets
Investments at FVTPL - - 2,196 2,196
Derivative asset - - - -
---------------------------------- ------- ------- ------- ------
- - 2,196 2,196
---------------------------------- ------- ------- ------- ------
Financial liabilities
Contingent consideration - - - -
Derivative liability - - - -
---------------------------------- ------- ------- ------- ------
- - - -
---------------------------------- ------- ------- ------- ------
Level 1 Level 2 Level 3 Total
As at 31 March 2022 audited GBP000 GBP000 GBP000 GBP000
---------------------------- ------- ------- ------- ------
Financial assets
Investments at FVTPL - - 2,781 2,781
Derivative asset - - - -
---------------------------- ------- ------- ------- ------
- - 2,781 2,781
---------------------------- ------- ------- ------- ------
Financial liabilities
Contingent consideration - - - -
Derivative liability - - - -
---------------------------- ------- ------- ------- ------
- - - -
---------------------------- ------- ------- ------- ------
Derivative assets and liabilities have arisen from the forward
foreign currency contracts entered into during the six month period
and are classified as Level 2. These were fair valued using
valuation techniques that incorporate foreign exchange spot and
forward rates. Otherwise, financial assets and liabilities are
classified as Level 3.
Transfers
During the period there were no transfers between Levels 1, 2 or
3.
The unobservable inputs may be summarised as follows:
Unaudited
30 September
2022 Change
Significant in
fair value unobservable Range Sensitivity fair value
Instrument GBP000 inputs estimates factor GBP000
------------------------- ------------ ------------ --------- ----------- ----------
Investments at FVTPL 3,321 NAV 1x +/-5% +/- 166
------------------------- ------------ ------------ --------- ----------- ----------
Contingent consideration 3,974 Forecast 1x +/-5% +5 / -199
------------------------- ------------ ------------ --------- ----------- ----------
As can be seen in the table above, the most significant
unobservable input is in relation to the NAV of the relevant
investments. A change of 5% to this assumption would increase or
decrease the value of these investments by GBP166,000.
21. Business combinations
Acquisitions in the six months ended 30 September 2022
Infrastructure Capital Holdings Pty Ltd ("Infrastructure
Capital")
On 8 September 2022, the Group completed the acquisition of 100%
of the issued share capital of Infrastructure Capital.
Infrastructure Capital consists of the following companies:
-- Infrastructure Capital Holdings Pty Limited
-- Infrastructure Capital Group Limited
-- Infrastructure Capital Services Pty Ltd
-- Infrastructure Specialist Asset Management Limited
-- Infra Asset Management Pty Limited
Infrastructure Capital is expected to deliver a meaningful
contribution to the Group's growth, increasing AUM by GBP3 billion.
It enables the Group to strengthen its presence in the attractive
Australian infrastructure and renewables market and to diversify
its revenue profile, increasingly positioning the Group
internationally. Additional value is expected to be unlocked
through synergies over time.
Combining Infrastructure Capital's strong market position in
Australia with the Group's strengths as an international
sustainability-led alternative asset manager provides significant
growth potential for both organisations. The combined Group will be
one of the largest renewable generation and infrastructure
investors in Australia and will benefit from a stronger business
profile and broader investor reach. The acquisition will also
enhance Infrastructure Capital's and the Group's investment,
product development and institutional distribution capabilities and
facilitate the introduction of new products in both new sectors and
new geographies, providing clients access to a wider suite of
products and services.
The acquisition also creates a pathway for the Group to address
Asian markets which represent a compelling opportunity for real
asset investors, especially in the energy infrastructure sector
where the combined Group is better positioned to successfully raise
and deploy capital over time.
Consideration transferred
The following table summarises the acquisition date fair value
of each class of consideration transferred:
GBP000
---------------------------- ------
Initial cash consideration 32,643
Initial share consideration 3,826
---------------------------- ------
Total carrying value 36,469
---------------------------- ------
Initial cash consideration comprises an initial cash payment of
GBP30,792,000 (A$52,500,000) paid on 8 September 2022 and a further
payment of GBP1,851,000 (A$3,125,000) to be paid in December 2022
for working capital.
Initial share consideration comprises 7,937,879 shares in the
company issued on 8 September 2022 valued at GBP3.76 per share.
These shares will be subject to forfeiture if a seller ceases to be
employed or contracted by Infrastructure Capital during the next
three years, with 100% of a seller's shares being forfeited if this
occurs prior to 30 September 2023, 66.66% from 30 September 2023 to
29 September 2024 and 33.33% from 30 September 2024 to 29 September
2025. Forfeiture does not apply to good leavers, of which there
were three on completion. Initial share consideration for good
leavers is included in consideration, otherwise the initial share
consideration is treated as remuneration for post-combination
services and the expense charged to the Statement of Comprehensive
Income over the vesting period. The total initial share
consideration for post-combination services of GBP26,966,000 has
been debited to the Shares held in escrow reserve (see note
18).
Other deferred payments
The sale and purchase agreement and supplementary management
incentive deed details other deferred and contingent payments to be
made to sellers for the sale of the shares of Infrastructure
Capital. However, these payments require the sellers to remain in
employment with or contracted to the Group for the duration of the
respective deferral periods. Hence, they are being accounted for as
remuneration for post-combination services and the expense charged
to the Statement of Comprehensive Income over the respective
vesting periods. Details of each of these elements are as
follows:
Grant date fair
Gross amount value Expected
vesting
GBP000 A$000 Grant date GBP000 A$000 date
-------------------------- ------ ------ ----------- -------- ------- ------------
8 September
Earn-out consideration 17,595 30,000 2022 17,595 30,000 30 June 2028
Revenue earn-out 8 September 30 June 2023
consideration 2,933 5,000 2022 1,181 2,013 2026
8 September
Performance consideration 14,633 25,000 2022 10,391 17,716 30 June 2026
-------------------------- ------ ------ ----------- -------- ------- ------------
The consideration above will be paid in either cash and/or
shares as explained below. Where consideration is paid in shares,
these will be accounted for as equity-settled share-based payments
under IFRS 2.
-- Earn-out consideration of up to A$30,000,000 was granted on
the date of acquisition and is payable A$15,000,000 in cash
and A$15,000,000 in shares in the Company dependent on the
achievement of management fee revenue targets for the 12-month
period ending 30 June 2025 and the sellers being employed or
contracted by Infrastructure Capital on 30 June 2025. These
shares will be subject to forfeiture if a seller ceases to
be employed or contracted by Infrastructure Capital during
the two years that follow, with 100% of a seller's shares being
forfeited if this occurs prior to 30 June 2026 and 50.00% from
30 June 2026 to 30 June 2027. There is a further clawback up
to 30 June 2028 if there is a reversal in management fee revenue
so that the total vesting period is to this date.
-- Revenue earn-out consideration of up to A$5,000,000 was granted
on the date of acquisition and is payable A$5,000,000 in cash
and is based on a revenue share mechanism for incremental asset
management revenues over the period from acquisition to 30
June 2026 and the sellers being employed or contracted by Infrastructure
Capital during this period.
-- Performance consideration of up to A$25,000,000 was granted
on the date of acquisition and is payable A$12,500,000 in cash
and A$12,500,000 in shares in the Company dependent on the
achievement of management fee revenue targets for the 12-month
period ending 30 June 2026 and the sellers being employed or
contracted by Infrastructure Capital on 30 June 2026. These
shares will be subject to forfeiture if a seller ceases to
be employed or contracted by Infrastructure Capital during
the year that follows, with 100% of a seller's shares being
forfeited if this occurs prior to 31 December 2026 and 50.00%
from 31 December 2026 to 30 June 2027.
The fair value of this consideration has been estimated at the
date of acquisition (grant date) using estimated outcomes and the
probability of those outcomes. The fair value will be assessed at
each reporting period.
The cost recognised in profit or loss for the six months ended
30 September 2022 for the above consideration and the initial share
consideration is as follows:
Cash Shares Total
GBP000 GBP000 GBP000
------------------------------- ------ ------ ------
Initial share consideration - 897 897
Earn-out consideration 179 86 265
Revenue earn-out consideration 33 - 33
Performance consideration 76 66 142
------------------------------- ------ ------ ------
288 1,049 1,337
------------------------------- ------ ------ ------
Further bonuses of GBP119,000 were paid to staff who worked on
the acquisition. These costs are being reported as staff costs -
acquisitions within administrative expenses (see note 7).
Consideration payable in shares has been credited to the
share-based payment reserve (see note 18) and the consideration
payable in cash has been included in contingent consideration.
Acquisition-related costs
Costs of GBP3,006,000 for legal and advisory fees have been
recognised in acquisition-related costs (note 8) in the period in
relation to this transaction.
Provisional identifiable assets acquired and liabilities
assumed
The provisional fair value of the identifiable net assets
acquired at the acquisition date were as follows.
Carrying Fair Recognised
amounts value amounts
GBP000 GBP000 GBP000
--------------------------------------- -------- -------- ----------
Property, plant and equipment 73 - 73
Right -- of -- use assets 560 - 560
Intangible assets - customer contracts - 61,337 61,337
Deferred tax assets 239 - 239
Trade and other receivables 3,890 - 3,890
Cash and cash equivalents 1,235 - 1,235
Trade and other payables (2,706) - (2,706)
Lease liabilities (619) - (619)
Deferred tax liability (3) (15,334) (15,337)
--------------------------------------- -------- -------- ----------
Total net assets acquired 2,669 46,003 48,672
--------------------------------------- -------- -------- ----------
The Group requires further information to conclude its purchase
price allocation in accordance with IFRS 3 para 45 so that
currently the fair value of the identifiable net assets is
provisional. More specifically, a provisional valuation of
intangible asset - customer contracts has been carried out for the
purpose of this half-year report. This represents the present value
of the earnings that the investment management contracts acquired
are expected to generate, however, more analysis is required to
finalise this valuation. Therefore, the Group will conclude this
exercise and provide finalised net assets in the annual
consolidated financial statements for the year ended 31 March 2023.
Any change in the fair value of the net assets will then impact on
the gain on business combination.
The acquisition is reflected in the Cash Flow Statement as
follows at 30 September 2022:
GBP000
------------------------------------------- --------
Cash paid (30,792)
Cash acquired on acquisition of subsidiary 1,235
------------------------------------------- --------
Total per Cash Flow Statement (29,557)
------------------------------------------- --------
Goodwill - Gain on business combination
The provisional gain on business combination arising from the
acquisition has been recognised as follows:
GBP000
----------------------------------------------------------- --------
Total consideration (see above) 36,469
Fair value of identifiable net assets acquired (see above) (48,672)
----------------------------------------------------------- --------
(12,203)
----------------------------------------------------------- --------
The Group has credited this total gain to the Statement of
Comprehensive Income (see note 9). The Group does not consider that
commercially the acquisition is a bargain purchase. Due to various
components of consideration being accounted for as remuneration for
post-combination services, the provisional fair value of
identifiable net assets acquired is greater than consideration
under IFRS 3. Therefore, the gain on business combination arises
from accounting treatment rather than for commercial reasons. IFRS
3 requires negative goodwill to be credited to profit and loss on
acquisition.
Revenue and profits of Infrastructure Capital
Amounts that the acquisition contributed to both Group revenue
and profit in the post-acquisition period are as follows:
GBP000
---------------------------------------------- ------
Revenue contribution 1,100
Profit on ordinary activities before taxation 409
---------------------------------------------- ------
Had the acquisition occurred at the start of the period, the
acquisition would have made the following contributions to both
Group revenue and profit:
GBP000
---------------------------------------------- ------
Revenue contribution 9,456
Profit on ordinary activities before taxation 3,534
---------------------------------------------- ------
Downing's technology ventures business
On 4 July 2022, the Group completed the acquisition of the
technology ventures division of Downing LLP.
Through this acquisition, the Group acquired the investment
mandates of Downing ONE VCT Plc (renamed Thames Ventures VCT 1 Plc
on 7 September 2022), Downing FOUR VCT Plc (renamed Thames Ventures
VCT 2 Plc on 7 September 2022) (excluding the Healthcare share
class) and Downing Ventures EIS Scheme, representing a combined AUM
of c.GBP275 million deployed across venture capital, AIM-quoted
investee companies and a small number of legacy asset-backed debt
investments. These venture-focused funds, with c.12,000 investors
and assets predominantly across the UK as well as in the US and
Israel, are complementary to the existing funds managed by the
Group's Private Equity Team.
With a thematic focus on enterprise software, deep technology
and consumer, the acquisition will diversify the Group's existing
ventures offering and complement the Foresight Williams Technology
hard tech and industrial software focus. Additionally, as the
Downing venture capital trusts hold shares in AIM-listed companies,
the acquired portfolio provides the Group with a platform to
potentially expand into a new asset class. This broader client
offering, when combined with the Group's regional footprint and
strong retail sales platform is anticipated to provide enhanced
growth opportunities.
Consideration transferred
The following table summarises the acquisition date fair value
of each class of consideration transferred:
GBP000
------------------------------ ------
Initial cash consideration 13,425
Contingent cash consideration 3,620
------------------------------ ------
Total carrying value 17,045
------------------------------ ------
Initial cash consideration comprises an initial cash payment of
GBP13,633,000 paid on 4 July 2022 and then an adjustment payment of
GBP(208,000) following the finalisation of the marked to market
adjustments on the AUM of the AIM portfolio. This was received on 3
October 2022 and so is included in other receivables at 30
September 2022.
Contingent cash consideration with an expected fair value of
GBP3,620,000 will be payable in cash over a three year period
conditional on achieving certain AUM targets. The fair value of
this consideration has been estimated at the date of acquisition
using estimated outcomes, the probability of those outcomes and
discounting this at 7.5%. As such, this will be recognised as a
liability on the balance sheet and the fair value assessed each
reporting period.
The potential undiscounted amount of all future payments that
the Group could be required to make under the contingent
consideration
arrangement is between GBPnil and GBP4,200,000.
Acquisition-related costs
Costs of GBP365,000 for legal and advisory fees have been
recognised in acquisition-related costs (see note 8) in the year in
relation to this transaction.
Bonuses of GBP295,000 have been recognised for payments to staff
transferring from Downing to the Group with associated social
security costs of GBP44,000 as staff costs - acquisitions within
administrative expenses (see note 7).
Provisional identifiable assets acquired and liabilities
assumed
The provisional fair value of the identifiable net assets
acquired at the acquisition date were as follows:
Carrying Fair Recognised
amounts value amounts
GBP000 GBP000 GBP000
--------------------------------------- -------- ------- ----------
Intangible assets - customer contracts - 8,603 8,603
Trade and other receivables 565 - 565
Deferred tax liability - (2,151) (2,151)
--------------------------------------- -------- ------- ----------
Total net assets acquired 565 6,452 7,017
--------------------------------------- -------- ------- ----------
The Group requires further information to conclude its purchase
price allocation in accordance with IFRS 3 para 45 so that
currently the fair value of the identifiable net assets is
provisional. More specifically, a provisional valuation of
intangible asset - customer contracts has been carried out for the
purpose of this half-year report. This represents the present value
of the earnings that the investment management contracts acquired
are expected to generate, however, more analysis is required to
finalise this valuation. Therefore, the Group will conclude this
exercise and provide finalised net assets in the annual
consolidated financial statements for the year ended 31 March 2023.
Any change in the fair value of the net assets will then impact on
goodwill.
Goodwill
The provisional goodwill arising from the acquisition has been
recognised as follows:
GBP000
----------------------------------------------------------- -------
Total consideration (see above) 17,045
Fair value of identifiable net assets acquired (see above) (7,017)
----------------------------------------------------------- -------
10,028
----------------------------------------------------------- -------
Provisional goodwill of GBP10,028,000 arises as a result of the
acquired workforce, expected future growth, as well as operational
and revenue synergies arising post-integration.
Revenue and profits of Downing
Amounts that the acquisition contributed to both Group revenue
and profit in the post-acquisition period are as follows:
GBP000
---------------------------------------------- ------
Revenue contribution 862
Profit on ordinary activities before taxation 464
---------------------------------------------- ------
The disclosure of hypothetical revenues and profits of Downing
for the six months ended 30 September 2022 is not considered
relevant due to the nature of the transaction. The entire Downing
business was not acquired and there will be revenues and expenses
not relevant to the business acquired.
22. Related party transactions
Transactions between the parent company and its subsidiaries,
which are related parties, have been eliminated on consolidation
and are not disclosed.
Transactions with key management personnel
The Group considers the members of the Foresight Group LLP
Executive Committee as the key management personnel together with
Directors and the Secretary of the Company and the table below sets
out all transactions with these personnel:
Unaudited Unaudited Audited
six six
months months year ended
ended ended
30 September 30 September 31 March
2022 2021 2022
GBP000 GBP000 GBP000
Emoluments 1,121 600 1,240
Other benefits 15 10 23
Share-based payments 81 - -
Total 1,217 610 1,263
Emoluments increased compared to the six months ended 30
September 2021 because of the increase in emoluments paid to
Bernard Fairman as disclosed in the Remuneration Committee Report
in the Annual Report for the year ended 31 March 2022 and because
of the increased headcount of the Executive Committee as disclosed
in the Strategic Report in the Annual Report for the year ended 31
March 2022.
23. Subsequent events
The final dividend for the year ended 31 March 2022 was paid on
14 October 2022.
There are no further material subsequent events to report from
30 September 2022 to the date of issue of these accounts.
GLOSSARY
AITS
Foresight's Accelerated Inheritance Tax Solution
AUM
Assets Under Management (FUM + DUM)
Company
Foresight Group Holdings Limited
Core EBITDA
Core earnings before interest, taxes, depreciation and
amortisation. See explanation in note 9 of the financial
statements
DUM
Debt Under Management
ESG
Environmental, Social and Governance
FCM
Foresight Capital Management
FEIP
Foresight Energy Infrastructure Partners
FGLLP/LLP
Foresight Group LLP
Foresight/Foresight Group/Group
Foresight Group Holdings Limited together with its direct and
indirect subsidiary undertakings
FSFL
Foresight Solar Fund Limited
FTE
Full-Time Equivalent
FUM
Funds Under Management
FVTPL
Fair value through profit and loss
FY21/22/23
Twelve months ending 31 March 2021/22/23
H1 FY21/22/23
Six months ending 30 September 2020/21/22
IFRS
International Financial Reporting Standard(s)
Infrastructure Capital
Infrastructure Capital Holdings Pty Ltd
IPO
Initial Public Offering
ITS
Foresight's Inheritance Tax Solution
JLEN
JLEN Environmental Assets Group
OEIC
Open Ended Investment Company
PiP
Pensions Infrastructure Platform
PSP
Performance Share Plan
Recurring revenue
Management, secretarial and Directors' fees
SBP
Share-based payment
Shareholder
Holder of the Company's Ordinary Shares
SIP
Share Incentive Plan
SME
Small and Medium Sized Enterprise
TCFD
Task Force on Climate-related Financial Disclosures
VCT
Venture Capital Trust
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