TIDMFSG
RNS Number : 0474V
Foresight Group Holdings Limited
09 December 2021
LEI: 213800NNT42FFIZB1T09
9 December 2021
Foresight Group Holdings Limited
Half-year results for the six months ended 30 September 2021
Foresight Group Holdings Limited ("Foresight", "the Company",
"the Group"), a leading infrastructure and private equity manager,
is pleased to announce its results for the six months ended 30
September 2021 ("H1 FY22").
'A strong financial and operational performance, significant
organic growth and a very favourable outlook'
Highlights
-- Significant organic growth in Assets under Management
("AUM") to GBP8.1 billion and Funds under Management
("FUM") to GBP6.1 billion at 30 September 2021, up 13%
and 18% respectively, in the six-months from 31 March
2021
- Successful final close of Foresight Energy Infrastructure
Partners ("FEIP"), with total commitments of EUR851
million secured, 70% ahead of original target
- Net inflows of GBP0.7 billion delivered across both
retail and institutional funds, highlighting the benefits
of Foresight's broad range of strategies
- Retail net inflows of GBP0.3 billion during the six-month
period, back to similar levels seen in the six-month
period pre-pandemic
-- Group Revenue of GBP39.7 million, up 22% on the prior
year period; high quality recurring revenue comprised
89.5% of total revenue, comfortably within target range
-- Core EBITDA pre-share-based payments1 ("SBP") up 43%
to GBP15.2 million (GBP10.6 million in the prior year
period ("H1 FY21")); Core EBITDA pre-SBP margin improved
to 38.3% (32.8% in H1 FY21), on track to deliver medium-term
margin target of c.43%
-- Interim dividend of 4 pence per share reflecting increased
payout ratio of 60% announced in July 2021
-- Strong capital deployment across Infrastructure and Private
Equity with GBP295 million deployed in the six-month
period across 51 assets, up from GBP206 million in H1
FY21
Post-period end and outlook
-- Post-period end the Group listed its first dedicated forestry
fund, raising GBP130 million and underlining Foresight's ongoing
commitment to climate solutions and strength in product development
-- Excellently positioned to capture benefits of the strong sector
tailwinds further highlighted by COP26
-- Significant pipeline of new fund launches and deployment opportunities
in H2 FY22 and beyond
-- Foresight remains on track to deliver against its ambitious
strategic and financial targets
Management update
-- To reflect both the rapid growth of the Infrastructure Division
in recent years and its significant future growth plans the Group
has appointed Ricardo Piñeiro as Co-Head of Infrastructure
alongside Nigel Aitchison, effective 1 January 2022. Ricardo will
join the Group's Executive Committee and will take responsibility
for day-to-day management of the Division.
Bernard Fairman, Executive Chairman of Foresight Group Holdings
Limited, commented:
"I am delighted with the Group's continued strong performance
over the last six months, delivering a significant increase in AUM
on an organic basis, driven by strong retail net inflows and
further institutional closings. This performance, combined with a
very favourable sector outlook, the recent successful listing of
our first dedicated forestry fund and a strong near-term pipeline
of new launches and deployment, underpins the Board's considerable
confidence in achieving the Group's targets for the full year to 31
March 2022.
"With our unique combination of skills and expertise across
sustainable infrastructure and regional private equity investment
in the UK, Foresight is optimally positioned to continue to grow by
sourcing high quality opportunities in these attractive and
expanding markets."
1. In line with previous periods we continue to quote Core
EBITDA pre-SBP and have updated nomenclature to make this
clear.
Analyst presentation
The pre-recorded presentation will be available to view on the
Company's website ( https://www.fsg-investors.com ) from 7.00 a.m.
(UK time) on 9 December 2021.
It will be repeated at the start of the webcast at 9.00a.m. (UK
time) on 9 December 2021, 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
For further information please contact:
Foresight Group Investors Citigate Dewe Rogerson
Caroline Merrell / Toby
Liz Scorer Moore
+44 (0) 7852 210329
/ +44 (0) 7768 981763
+44 (0) 7966 966956 caroline.merrell@citigatedewerogerson.com
ir@foresightgroup.eu /
toby.moore@citigatedewerogerson.com
------------------------- ------------------------------------------
About Foresight Group Holdings Limited
Foresight Group was founded in 1984 and is a leading
infrastructure and private equity investment manager, operating
from 12 offices across six countries in Europe and Australia with
AUM of c. GBP8.1 billion as at 30 September 2021. 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 Group
manages over 300 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 eight regionally focused
investment funds across the UK, supporting over 120 SMEs. Foresight
Group listed on the Main Market of the London Stock Exchange in
February 2021. https://www.fsg-investors.com/
Disclaimer - Forward-looking statements
This statement, 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
Group 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 2021. 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 statement should be construed as a profit forecast.
EXECUTIVE CHAIRMAN'S STATEMENT
Introduction
During the six-month period to 30 September 2021, we continued
to build on the positive momentum generated by Foresight's listing
earlier this year. FUM grew substantially with strong retail net
inflows and institutional fund closes which, combined with the
forecast near-term pipeline of new fund launches and deployment,
gives the Board confidence in achieving the Group's targets for the
full year to 31 March 2022.
Operational and financial highlights
The first six months of FY22 saw strong growth in AUM to GBP8.1
billion and FUM to GBP6.1 billion, from GBP7.2 billion and GBP5.1
billion respectively at year end.
In terms of fundraising and new fund launches, following the
easing of COVID-19 pandemic restrictions, it is good to see retail
net inflows returning to pre-pandemic levels. On 6 September 2021,
we delivered the final close of Foresight Energy Infrastructure
Partners ("FEIP"), 70% ahead of our original target and with total
commitments of EUR851 million, which was an excellent achievement.
On the Private Equity side, Foresight Regional Investment Fund III
("FRIF III") delivered its first close of GBP66 million in May
2021.
There are a number of additional launches and capital
fundraisings planned for other Foresight funds in the second half
of FY22, underlining our ability to raise funds across a
diversified investor base in a range of differentiated
products.
After the period end, Foresight's new sustainable forestry fund
issued its Prospectus and successfully listed on 24 November with
GBP130 million raised. This is the Group's first dedicated forestry
investment vehicle, and very much a fund of its time. It is
particularly timely as investment mandates evolve to reflect a
greater emphasis on ESG and is evidence of our ongoing commitment
to sustainability.
We also saw strong capital deployment across Infrastructure and
Private Equity with GBP295 million deployed during the period
compared with GBP206 million for the corresponding period of the
prior financial year.
Revenues in the period were in line with Group expectations, up
22% to GBP39.7 million (30 September 2020: GBP32.4 million) with
most of the growth in the top line coming from an increase in
management fees as a result of our increased FUM. We continue to
experience minimal fee margin compression.
Recurring revenues for the six--month period represented 89.5%
of total revenues. Our continued expectation for recurring annual
revenue is a range of 85%--90%, which incorporates an element of
performance fee recognition principally from the regionally based
private equity funds as they reach the realisation phase of their
investment cycle.
Core EBITDA pre-share based payments was in line with
expectations at GBP15.2 million for the six-month period (30
September 2020: GBP10.6 million) with the associated margin also
increasing to 38.3% from 32.8% as we continue to benefit from
increased operational gearing and progress towards our medium--term
target.
More detail on our financial highlights can be found in the
Financial Review section of this Half-year Report.
Dividend
Following the success of FY21, we increased the proposed
dividend payout to 60% and it is our intention to maintain this
going forward, paying approximately one-third of the total dividend
for the year as an interim dividend and approximately two-thirds as
a final dividend.
The Board has therefore recommended an interim dividend of 4.0
pence per share (equating to GBP4.3 million) be paid on 25 March
2022 with an ex--dividend date of 10 March 2022 and a record date
of 11 March 2022.
Sustainability
The agreements reached at COP26 over cutting methane emissions
by 30% by 2030, the ending of financing unabated fossil fuels
projects and the pledge to end deforestation are expected to lead
to many more investment opportunities for Foresight, adding
momentum across all our business areas.
We continue to focus on our ESG strategies, developing our
policies and activities across our existing portfolio and new
investments. As part of our strategy, in November we became a
member of the Sustainable Market Initiative's Natural Capital
Investment Alliance ("NCIA"), established in January 2021 by His
Royal Highness The Prince of Wales.
NCIA members plan to launch, or have launched, investment
products aligned to Natural Capital themes that are expected to
mobilise more than $10 billion in aggregate.
The themes range from direct investment in forestry, through to
investments in businesses that are helping to move us from a "take,
make, waste" economy to one that emphasises sustainability as a key
component of alleviating pressure on forestry, biodiversity and
natural systems.
As a sustainability-led investment manager, we have continued to
review our own carbon footprint and are developing our net zero
goals, on which we will provide more detail in the near future. We
will also provide an update on our reporting requirements relating
to TCFD in the Annual Results for FY22.
Power price volatility
Foresight currently manages c.GBP4.0 billion of electricity
generating assets. As noted in our October trading update, the
recent significant increases in power pricing in the UK and beyond
have provided positive momentum for Foresight's balanced portfolio
of infrastructure assets. The Governor of the Bank of England
recently spoke of permanently higher energy prices because of the
shift to green policies.
More broadly, this highlights the need for further acceleration
in the transition to reliable, resilient and low carbon energy
systems, an area in which Foresight has established itself as a
leader.
Management update
To reflect both the rapid growth of the Infrastructure Division
in recent years and its significant future growth plans, I am
delighted to announce the appointment of Ricardo Piñeiro as Co-Head
of Infrastructure alongside Nigel Aitchison, effective 1 January
2022. Ricardo is the Foresight partner responsible for Foresight
Solar Fund and the company's infrastructure asset management
activities and will join the Group's Executive Committee, taking
responsibility for day-to-day management of the Division. Nigel has
made the decision to reduce his time commitment to three days per
week and will utilise his significant experience in sustainable
investment to focus on driving the longer-term ambitions of the
business and managing a number of strategic initiatives.
Outlook
It has been refreshing to see our offices return to life during
the Autumn with the easing of restrictions across the UK, and with
it the reinvigoration of Foresight's creative spark that has always
underpinned our innovative and entrepreneurial spirit. However,
with the identification of the Omicron variant we have been
reminded that the COVID-19 pandemic is not over yet and we will
continue to prioritise the health and safety of our staff, our
clients and our suppliers as we navigate the evolving impacts of
this global pandemic.
The Group achieved strong results in the first half of FY22,
having achieved our stated AUM growth target from wholly organic
sources. We continue to anticipate high growth in the underlying
markets we serve and are confident in our ability to identify
attractive investment opportunities which will allow us to
strengthen our position as a leading presence in those markets. We
believe we are excellently positioned to capture the benefits of
the positive tailwinds driving sustainable infrastructure
investment and are on track to achieve our targets for the full
year and beyond.
Bernard Fairman
Executive Chairman
8 December 2021
FINANCIAL REVIEW
for the six months ended 30 September 2021
Continuing the progress made since IPO, the first six months of
FY22 have delivered another strong performance, with AUM, revenue
and Core EBITDA pre share-based payments ("SBP") all growing
year-on-year.
KPIs
30 September 30 September 31 March
2021 2020 2021
------------------------------------------------ ------------ ------------ --------
Period-end AUM (GBPm) 8,133 6,766 7,193
Period-end FUM (GBPm) 6,067 4,761 5,132
Average AUM (GBPm) 7,728 6,098 6,547
Average FUM (GBPm) 5,650 4,402 4,691
Total revenue (GBP000) 39,707 32,417 69,098
Recurring revenue (GBP000) 35,546 29,508 62,379
Recurring revenue/total revenue (%) 89.5% 91.0% 90.3%
Core EBITDA pre share-based payments (GBP000) 15,202 10,625 23,910
Core EBITDA pre share-based payments margin (%) 38.3% 32.8% 34.6%
------------------------------------------------ ------------ ------------ --------
In line with previous periods, and for comparability, we
continue to quote Core EBITDA pre-SBP and have changed nomenclature
in order to make this clear. Core EBITDA pre-SBP was introduced as
our key performance measure because the Group believes this measure
is the main profitability comparator used within the asset
management market and reflects the trading performance of the
underlying business without distortion from the uncontrollable
nature of the share based payments charge. 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.
Assets Under Management/Funds Under Management ("AUM/FUM")
AUM and FUM both grew by GBP0.9 billion in the six-month period.
Retail net inflows totalled GBP0.3 billion, which included GBP0.2
billion from our OEIC products. Institutional net inflows totalled
GBP0.4 billion, primarily through further closes from our Foresight
Energy Infrastructure Partners ("FEIP") fund and the first close of
our new Private Equity regional fund ("FRIF III").
Summary Statement of Comprehensive Income and Core EBITDA
reconciliation
30 September 30 September 31 March
2021 2020 2021
GBP000 GBP000 GBP000
------------------------------------------------------------------------- ------------ ------------ --------
Revenue 39,707 32,417 69,098
Cost of sales (2,447) (2,331) (4,639)
------------------------------------------------------------------------- ------------ ------------ --------
Gross profit 37,260 30,086 64,459
Administrative expenses (24,130) (21,490) (48,709)
Other operating income 250 46 394
------------------------------------------------------------------------- ------------ ------------ --------
Operating profit 13,380 8,642 16,144
Finance income and expense (360) (348) (707)
Fair value gains on investments 83 51 192
Share of post-tax profits of equity accounted joint venture 8 (19) 26
------------------------------------------------------------------------- ------------ ------------ --------
Profit on ordinary activities before taxation 13,111 8,326 15,655
Tax on profit on ordinary activities (1,644) (8) (481)
------------------------------------------------------------------------- ------------ ------------ --------
Profit 11,467 8,318 15,174
Other comprehensive income
Translation differences on foreign subsidiaries 67 (272) (293)
------------------------------------------------------------------------- ------------ ------------ --------
Total comprehensive income 11,534 8,046 14,881
------------------------------------------------------------------------- ------------ ------------ --------
Adjustments:
Non-operational staff costs 300 670 3,186
Non-operational legal costs - 475 2,744
Profit on disposal of tangible fixed assets and gain on bargain purchase - (174) (344)
Other operating income (250) (46) (394)
Finance income and expense 360 348 707
Tax on profit on ordinary activities 1,644 8 481
Depreciation and amortisation 1,404 1,298 2,649
------------------------------------------------------------------------- ------------ ------------ --------
Core EBITDA 14,992 10,625 23,910
Share-based payments 210 - -
------------------------------------------------------------------------- ------------ ------------ --------
Core EBITDA pre share-based payments(1) 15,202 10,625 23,910
------------------------------------------------------------------------- ------------ ------------ --------
1. The Group uses Core EBITDA pre--SBP to assess the financial
performance of the business. 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 quantum,
nature or volatility of such items are considered by the Directors
to otherwise distort the underlying performance of the Group.
Revenue
30 September 30 September 31 March
2021 2020 2021
GBP000 GBP000 GBP000
----------------- ------------ ------------ --------
Management fees 33,655 22,582 50,245
Secretarial fees 695 5,883 9,828
Directors' fees 1,196 1,043 2,306
----------------- ------------ ------------ --------
Recurring fees 35,546 29,508 62,379
Marketing fees 2,114 1,290 2,841
Arrangement fees 1,435 1,610 3,858
Other fees 612 9 20
----------------- ------------ ------------ --------
Total 39,707 32,417 69,098
----------------- ------------ ------------ --------
Total revenue in the six-month period increased by 22%
year-on-year to GBP39.7 million (30 September 2020: GBP32.4
million) with recurring revenue increasing by 20% to GBP35.5
million (30 September 2020: GBP29.5 million), maintaining the c.90%
level of recurring fees we reported in last year's results. As we
begin to make further realisations from our Private Equity
portfolios, we anticipate that performance fees will contribute a
larger part of the revenue mix. 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.
As a result of FUM growth, the largest revenue increase
year-on-year came from management fees with FEIP contributing
c.GBP2.4 million of the uplift following further interim and final
closes during the period. The continued growth in Foresight Capital
Management also contributed to an increase of c.GBP2.3 million. The
annualised impact from the PiP acquisition in August 2020
contributed a further c.GBP1.0 million in management fees.
As explained in our Annual Report, we restructured the fee on
our ITS product in January 2021, removing the secretarial fee, and
at the same time also removing the dependence of the management fee
on a performance hurdle.
Marketing fees are the initial fees recognised as a percentage
of funds raised on our tax-based retail products. This revenue line
increased during the six-month period as a result of the UK coming
out of lockdown, with fundraising returning to pre-pandemic levels.
This gives the Board further confidence in the outlook for the rest
of this financial year and beyond.
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 is broadly in line with the prior six-month period.
Administrative expenses
30 September 30 September 31 March
2021 2020 2021
GBP000 GBP000 GBP000
------------------------------ ------------ ------------ --------
Staff costs 16,609 15,519 33,751
Depreciation and amortisation 1,404 1,298 2,649
Legal & professional 1,594 2,116 5,984
Other administration costs 4,523 2,557 6,325
------------------------------ ------------ ------------ --------
24,130 21,490 48,709
------------------------------ ------------ ------------ --------
Year-on-year, the overall cost base has increased by c.12%.
Staff costs have increased by c.GBP1.1 million, due to the annual
pay review process; the implementation of the staff SIP and PSP
schemes post-IPO; and an increase in FTE of 15.6 in the twelve
months. This increase in FTE has predominantly occurred in the high
growth areas across the business: FCM as our net inflows continue
to increase and we launch new funds; Infrastructure in line with
our increase in AUM and number of assets in the portfolio; and
finally, in Retail Sales, where we have expanded the team to drive
further inflows, which is already reaping rewards through strong
inflows on our ITS product in the first six months of FY22.
The increase in Other administration costs principally relates
to an increased irrecoverable VAT charge. As with most financial
services businesses, we are not able to recover all the VAT on our
purchases because some of our revenue streams are VAT exempt. The
management fees from our FCM OEIC businesses are VAT exempt and
their recent strong growth has driven a related increase in the
irrecoverable VAT charge. In addition to this, there have been some
increased costs year-on-year following our listing in February,
which include the costs associated with the Annual and Half-year
Reports and re-design of the Group's website.
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).
Core EBITDA pre share-based payments increased 43% year-on-year
to GBP15.2 million for the period ended 30 September 2021 (30
September 2020: GBP10.6 million) with the margin percentage
improving to 38.3% (30 September 2020: 32.8%) as we continue to
progress towards our medium-term target of 43%.
The Group has concluded that the following are non-underlying
items for the purposes of calculating Core EBITDA pre share-based
payments:
Non-operational staff costs
The non-operational staff costs in the period ended 30 September
2021 relate to retention payments made to key members of staff.
The equivalent cost in the prior year related to pre-IPO profit
share for FY20. These distributions made to members were classified
as remuneration expenses under IFRS but considered to be equity
transactions for the purposes of calculating Core EBITDA.
Non-operational legal costs
There have been no costs of this nature in the six-month period
ended 30 September 2021. The period ended 30 September 2020
included c.GBP0.2 million of redundancy costs and c.GBP0.3 million
of IPO costs.
Other operating income
In the six-month period ended 30 September 2021, all other
operating income arose from the development of a reserve power
plant in Shirebrook, Derbyshire on behalf of the Foresight ITS
product.
The GBP46k in the prior period related to grant income from the
Coronavirus Job Retention Scheme.
Interest and tax
The only major variance in these line items year-on-year relates
to tax. As noted in the Annual Report, historically, the taxation
on profits earned by the Group was generally the personal liability
of the members of Foresight Group LLP, where the majority of the
Group's profits are generated. Following the IPO, more of the
Group's profits are subject to corporation tax, as demonstrated by
the charge recognised in the period.
Share-based payments
The share-based payments charge relates to the SIP and PSP
schemes implemented in the period.
Summary Statement of Financial Position
30 September 30 September 31 March
2021 2020 2021
GBP000 GBP000 GBP000
--------------------------------------------------------- ------------ ------------ --------
Assets
Property, plant and equipment 2,838 3,600 3,012
Right-of-use assets 8,791 9,490 9,120
Intangible assets 3,014 3,099 3,012
Investments 2,455 1,792 2,326
Deferred tax asset 860 169 977
Contract costs 4,848 739 837
Trade and other receivables 20,780 18,322 19,881
Cash and cash equivalents 42,760 11,971 39,431
Net assets of disposal group classified as held for sale 64 64 64
--------------------------------------------------------- ------------ ------------ --------
Total assets 86,410 49,246 78,660
--------------------------------------------------------- ------------ ------------ --------
Liabilities
Trade and other payables (21,401) (12,907) (20,939)
Loans and borrowings (3,649) (4,279) (4,324)
Lease liabilities (11,547) (12,524) (12,019)
Deferred tax liability (516) (544) (1,581)
--------------------------------------------------------- ------------ ------------ --------
Total liabilities (37,113) (30,254) (38,863)
--------------------------------------------------------- ------------ ------------ --------
Net assets 49,297 18,992 39,797
--------------------------------------------------------- ------------ ------------ --------
Net assets have increased by GBP9.5 million in the six-month
period. The key variances since year end are explained below:
Contract costs
The increase of GBP4.0 million since year end is due to the
incremental placement agency fees on the further closes of FEIP in
the period (as explained in note 3 to these accounts).
Cash and cash equivalents
The cash balance has continued to grow since year end due to
positive cash generation from a strong trading performance and the
collection of some aged receivables.
Dividends
As noted in our Annual Report, the Board decided to increase and
maintain the dividend payout ratio at 60% going forward and has
recommended an interim dividend payment of 4.0 pence per share. The
dividend will be paid on 25 March 2022 with an ex--dividend date of
10 March 2022 and a record date of 11 March 2022.
Gary Fraser
Chief Financial Officer
8 December 2021
BUSINESS REVIEW
INFRASTRUCTURE
17
FORESTRY INVESTMENTS MADE DURING THE PERIOD
4,440
TOTAL HECTARES
Overview
Foresight's Infrastructure team originates investment
opportunities and manages assets in the renewable energy and energy
transition markets as well as the social and core infrastructure
sectors. Its investment strategies primarily focus on investment in
solar and onshore wind assets, bioenergy and waste, as well as
renewable energy enabling projects (such as flexible generation and
battery storage), geothermal heat, energy efficiency management
solutions, social infrastructure projects and sustainable forestry
assets.
The team has a strong origination and execution capability, an
active approach to asset management and an established track record
of managing retail and institutional capital. The staff have
extensive experience of deploying capital into a variety of
renewable energy and infrastructure projects throughout their
development, construction and operational phases.
As at 30 September 2021, Foresight Infrastructure had a total
AUM of GBP6.0 billion. The team consists of 85 investment,
portfolio and technical professionals who facilitate the
acquisition and management of 338 infrastructure assets across 16
asset classes with a total renewable energy generating capacity of
3.1GW.
As at 30 September 2021, Foresight Infrastructure managed GBP1.6
billion of solar assets in the UK, Portugal, Spain, Italy and
Australia, with 1.7GW of installed capacity as well as wind assets
with 885MW of generation capacity across the UK, Sweden, Germany,
France and Spain.
Foresight Infrastructure provides a complete end--to--end
solution for investors. From investment origination and execution,
including sourcing and structuring all elements of the capital
structure required, to the ongoing and active technical asset
management of operating assets, including performance and financial
optimisation of an asset immediately upon its acquisition. The
asset management process is driven by an in-house team which is
focused on the relevant O&M contractor's performance,
operational performance, cost management and asset life enhancement
with the objective of generating sustainable long-term asset
operation and economic benefits.
Capital deployment and fundraising
Foresight's Infrastructure team completed 25 transactions in the
first half of the year, committing GBP254 million of capital.
Investments were made across a wide range of our funds and across
multiple sectors and geographies. Deployment in H1 FY22 has
predominantly been focused on Foresight's forestry strategy with
the acquisition of 4,400 hectares of land across 17 assets in the
period.
On 14 September 2021, Foresight Energy Infrastructure Partners
completed its final close. The Fund secured total commitments of
EUR851.4 million, 70% over the EUR500 million original target.
Including co--investments to date of EUR170 million, this
represents a total capital pool in excess of EUR1 billion for
Foresight's energy transition strategy. Commitments were made by
over 35 leading global institutional investors from Europe and
North America.
Fundraising was strong in the first six months of FY22, with
additional fundraises across a number of our existing funds. We
received additional commitments of GBP1.1 billion during the
period. There were no notable account losses or outflows during the
period.
Investment into new technologies
Post period end, Foresight expanded the type of assets it
invests in with the acquisition of a 51% shareholding in a Dutch
geothermal heat pipeline. The investment, acquired by Foresight
Energy Infrastructure Partners, involved both the acquisition of
operational wells (c.15MW) and the construction of new wells
(c.23MW). There is also a significant pipeline of development
projects representing a potential build out capacity of
c.200MW.
The technology utilises heat extracted from high temperature
water which is located in the sub--surface of the earth and output
heat is distributed via a heat network to surrounding houses and
industry.
Geothermal is strongly supported by the Dutch government as a
strategic priority because of the substantial role it can play in
the decarbonisation of domestic and industrial heat. Studies of
geothermal heat provision have demonstrated that geothermal heat
can achieve carbon savings in excess of 90% by displacing the need
for fossil fuel usage.
Sustainability at the heart of the investment process
To ensure that all potential Infrastructure investments have
been adequately assessed to meet our high standard of
sustainability and ESG-related performance, they are evaluated in
line with Foresight's Sustainable Evaluation Tool ("SET"). The SET
is designed to provide an objective view of sustainability
performance through use of recognised quantitative KPIs and forms
part of the Investment Committee papers. During the investment
process, the analysis is read and approved by all those involved
and once an asset has been acquired, Foresight's Asset Management
team monitors performance and continually investigates ways for the
asset to improve sustainability performance.
Asset-level KPIs are used to score an investment against a set
of 15-18 key assessment parameters across five key areas:
-- Sustainable Development Contribution
-- Environmental Footprint
-- Social Welfare
-- Governance
-- Third Party Interactions
All KPIs are weighted based on internal prioritisation and
materiality assessments and are scored in line with response bands
corresponding to the five-point scale as below:
-- 5 = High performance
-- 4 = Above average
-- 3 = Average performance
-- 2 = Below average
-- 1 = Low performance
Whilst a specific minimum standard for the scoring against each
assessment parameter is not set, in the context of the five-point
scoring scale, we aim for all our assets to score at least an
average of 3/5 and be consistent with the sustainability and ESG
standards set across the Foresight portfolio. This quantitative
KPI-based approach to assessing a project's sustainability
credentials helps to standardise the quality of sustainability
assessment applied across the portfolio and also helps guide and
focus investment teams' resources to the areas that require the
most attention.
Market outlook
In the period to 30 September 2021, there were several
government announcements which aid Foresight Infrastructure's
objective to decarbonise the power grid.
In April 2021, the UK government announced a new and more
ambitious climate change target - to reduce emissions by 78% by
2035 compared to 1990 levels(1) . In line with the recommendation
from the independent Climate Change Committee, the sixth Carbon
Budget limits the volume of greenhouse gases emitted over a
five--year period from 2033 to 2037.
This action will take the UK more than three-quarters of the way
to reaching net zero by 2050. The Carbon Budget is intended to
ensure the UK remains on track to reduce its contribution to
climate change and remain consistent with the Paris Agreement
temperature goal to limit global warming to well below 2degC and
pursue efforts towards 1.5degC. In the Balanced Net Zero Pathway
set out in the Carbon Budget, in-year capital investment increases
significantly during the 2020s and early 2030s, from around GBP10
billion in 2020 to around GBP50 billion by 2030(2) .
In July 2021, the European Commission unveiled its plan to meet
its 55% emission reduction target by 2030. This plan is the first
step towards carbon neutrality set for 2050 and aims to make Europe
the first climate neutral continent in the world. The Commission
proposes to increase the binding target for renewable energy in the
EU's energy mix to 40%.
This aims to promote the uptake of renewable energy and has
increased energy efficiency targets at the EU level, making these
binding, to achieve an overall reduction of 36%-39% by 2030 for
final and primary energy consumption(3) . In order to fund this, it
is estimated that annual investment in the European energy system
will need to increase by around EUR350 billion in the coming decade
(2021-2030) compared to the previous decade (2011-2020). This is
mainly due to new capacity and interconnectors, including building
renovations and the replacement of old power and industrial plants
as they come to the end of their economic lives.
It is believed that this level of investment can provide a
much--needed stimulus to promote a long-lasting recovery from the
Covid-19 crisis for the benefit of the European economy and
people.
The European Council believes that directing funds to
appropriate investments is more important than ever in the current
context, and economies cannot afford to invest in assets that may
become obsolete in the near future(4) .
The outlook for Foresight Infrastructure is favourable with
moves towards increased incentivisation of private capital to
deliver public infrastructure projects. This is a consistent theme
across many global economic development plans. The decarbonisation
agenda is a major tailwind to the strategy with governments and
corporates demanding more renewable energy and energy transition
projects.
COP26
In November 2021, government officials from around the world met
at COP26 in Glasgow to discuss plans on how to tackle the climate
crisis. The first major announcement was the agreement by more than
100 world leaders to end and reverse deforestation by 2030. The
countries which signed the pledge cover 85% of the world's forests
and included Canada, Brazil, Russia, China, the United States and
the United Kingdom(5) . The recently listed Foresight Sustainable
Forestry Company ("FSFC") is well placed to benefit from government
support to achieve this target. With its diversified portfolio of
UK forestry and afforestation assets, FSFC is targeting to plant
40% of the UK's annual target of 30k hectares in the first
year.
1. Source:
https://www.gov.uk/government/news/uk-enshrines-new-target-in-law-to-slash-emissions-by-78-by-2035
2. Source: https://www.theccc.org.uk/wp-content/uploads/2020/12/The-Sixth-Carbon-Budget-The-UKs-path-to-Net-Zero.pdf
3. Source: https://ec.europa.eu/info/strategy/priorities-2019-2024/european-green-deal/delivering-european-green-deal_en
4. Source: https://ec.europa.eu/commission/presscorner/detail/en/qanda_20_1598
5. Source: https://ukcop26.org/glasgow-leaders-declaration-on-forests-and-land-use/
PRIVATE EQUITY
7
UK OFFICES
c.2,000
BUSINESS PLANS REVIEWED EVERY YEAR
129
PORTFOLIO COMPANIES
GBP810m
AUM
11
DIFFERENT INVESTMENT VEHICLES
32
INVESTMENT PROFESSIONALS
Overview
Foresight Private Equity offers a variety of fund structures to
facilitate investment from both institutional and retail investors,
such as regional institutional funds, Venture Capital Trusts,
Enterprise Investment Schemes ("EIS") and Inheritance Tax Solutions
("ITS"). Foresight provides venture, growth capital and replacement
capital investments through Foresight's network of seven regional
UK offices.
The team makes investments of up to GBP5 million, targeting
investment in sectors with favourable long--term trends and
structural growth drivers. As over 80% of all UK SMEs are based
outside London, we believe our UK regional focus is a key strength
and differentiator. These investments also cover a range of
maturity profiles from early stage to more mature small companies.
Annual revenues at portfolio companies predominantly range between
GBP2 million and GBP20 million for equity release and buyout
transactions, although venture and seed investments can be into
high tech, pre-revenue companies, which are often university
spin--outs.
ESG considerations are core to Foresight's investment management
approach. 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 continuous
improvement. We understand that many SMEs struggle to adopt ESG
best practices and we work in partnership with our portfolio
companies to put ESG principles at the heart of their businesses.
This not only helps to improve performance, but also differentiates
them from their competitors and drives real value at time of
exit.
Performance
In the six months to 30 September 2021, the Private Equity team
had another period of strong activity, benefiting from the full
reopening of the UK economy. GBP41.5 million of capital was
deployed across 26 transactions to support 22 UK SMEs. The funding
came from nine different investment vehicles, covering a wide
variety of sectors and investment types. A further GBP40 million
was committed to portfolio companies which provide lending to third
parties. The Foresight Williams Technology funds and Foresight VCTs
were particularly active, completing eight and seven transactions
respectively, including follow-on investments.
Foresight has seen a revival in the 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.
The impact of Covid-19 will increase investment opportunities
over time. SMEs that have demonstrated their resilience during the
last 18 months are now assessing their growth funding requirements.
Those that have required government support, which has been
primarily in the form of debt, will be looking to raise equity to
strengthen their balance sheets ahead of expansion.
In the six months to 30 September 2021, the Private Equity team
also completed several successful realisations from both retail and
institutional funds. Notable examples include Mologic, a health
diagnostics company providing both contract research services for
clients and developing its own range of proprietary point-of-care
diagnostics products. The company was sold to Global Access Health,
a not--for--profit company financed by the Soros Economic
Development Fund, returning 3.1x to Foresight funds in three
years.
Poppy & Jacks, a nursery chain, was Foresight's fourth
successful exit this year as it was sold to Kids Planet Day
Nurseries, a national nursery chain, returning 2.5x the initial
investment.
During the period, the portfolio has shown good recovery as
businesses adapt to the new economic climate combined with the
easing of restrictions in the Autumn.
The Private Equity team is ensuring that finance directors at
the portfolio companies continue to tightly manage overheads and
critically assess capital expenditure given the uncertain macro
environment, which includes undertaking scenario analysis that
covers the potential for another lockdown in winter 2021/22.
Foresight will continue to provide support to its portfolio
companies using the same toolbox of support as during the first
lockdowns in 2020.
The portfolio has faced new challenges stemming from the Brexit
transition and COVID-19 headwinds, including supply chain issues
and staff shortages. In the medium term, businesses must remain
cautious through this transition to the "new normal".
Thanks to the diverse nature of the portfolio, across investment
stage, sectors and end markets, Foresight remains confident that
its portfolio is well positioned to respond to new challenges as
the market adapts to an evolving macro landscape.
Fundraising
With regard to retail funds, Foresight VCT plc announced the
launch of an offer for subscription to raise up to GBP20 million,
with an over--allotment facility to raise up to a further GBP10
million. The fundraise is progressing well and applications will
close in April 2022. Post period end, Foresight Enterprise VCT plc
announced that it also intends to launch an offer for subscription
to raise up to GBP20 million, with an over-allotment of up to GBP10
million. The Prospectus, which will contain full details and the
terms and conditions of the offer, is expected to be available in
January 2022.
Within institutional fundraising, in May, Foresight held the
first close of its latest regional Private Equity fund, the North
West-focused Foresight Regional Investment III LP. The Fund raised
an initial GBP66 million from investors, exceeding the size of the
previous Foresight fund focused on this region.
The Fund is cornerstoned by the Greater Manchester Pension Fund,
with support from Clwyd and Merseyside Pension Funds. Like its
predecessor, the Fund is targeting investments in established SMEs
valued at up to GBP30 million in North West England, North Wales
and beyond.
Despite the challenges COVID-19 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.
Foresight believes that transactions between GBP1-GBP5 million
are the least competitive and most attractive in the UK Private
Equity market, from a value creation perspective. The economic
consequences of COVID-19 will only widen the SME equity gap,
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.
FORESIGHT CAPITAL MANAGEMENT
GBP1.4bn
FUM AT 30 SEPTEMBER 2021
GBP208m
NET INFLOWS IN THE SIX-MONTH PERIOD
Overview
Foresight Capital Management ("FCM") was established in 2017 to
facilitate retail and institutional investors accessing
infrastructure, renewables and real estate investment opportunities
through actively managed open-ended funds investing in listed
securities.
Following continued strong fundraising and investment
performance, as well as the addition of a new mandate, as at 30
September 2021, FUM totalled GBP1.4 billion compared to GBP1.1
billion at 31 March 2021, an increase of 20% over the six--month
period.
The portfolio currently comprises the FP Foresight UK
Infrastructure Income Fund ("FIIF"), launched in December 2017; the
FP Foresight Global Real Infrastructure Fund ("GRIF"), launched in
June 2019; the FP Foresight Sustainable Real Estate Securities Fund
("REF"), launched in June 2020; and the VAM Global Infrastructure
Fund ("VAM"), launched in June 2021.
As the open-ended funds represent a growing proportion of
Foresight's total AUM, FCM is now treated as a separate business
line within the Group, alongside Infrastructure and Private
Equity.
FCM open-ended funds
An open-ended investment company ("OEIC") is a professionally
managed FCA authorised company which purchases shares in other
financial assets or companies. When units are purchased in an OEIC,
the OEIC fund manager pools that money with that of other
investors. This allows individual investors access to a greater
variety of financial assets.
The value of an OEIC is directly linked to the performance of
its underlying investments. As the value of the underlying
investments change, so do the value of the units purchased.
FCM works with a third party to provide detailed reporting on
alignment with sustainability and regulatory disclosure
requirements where relevant. All our OEICs are aligned with a
bespoke ESG policy in order to vote in a manner that is consistent
with widely accepted ESG practices. If an investment fails to meet
our sustainable investment criteria, FCM will divest.
FP Foresight UK Infrastructure Income Fund ("FIIF")
FIIF harnesses Foresight's infrastructure investment expertise
and taps into the demand for low volatility, predictable
index-linked income. Launched in 2017, FIIF has grown to total net
assets in excess of GBP620 million at 30 September 2021. The
portfolio comprises listed companies active across renewable
energy, core infrastructure and real estate with a UK focus.
FP Foresight Global Real Infrastructure Fund ("GRIF")
GRIF invests in the publicly traded shares of companies located
in developed economies that own or operate real infrastructure or
renewable energy assets anywhere in the world. With a
growth--focused investment objective, GRIF was launched in June
2019 and has grown its total net assets to more than GBP590 million
at 30 September 2021 in just over two years.
FP Foresight Sustainable Real Estate Securities Fund ("REF")
REF was launched in June 2020 to provide investors with exposure
to a highly liquid and globally diversified portfolio of Real
Estate Investment Trusts. Given the lack of OEICs in the UK that
are addressing both sustainability and real estate, REF is a highly
differentiated strategy and one that has delivered both strong
returns and low risk characteristics for investors since
launch.
Fundraising and performance
During the period, the OEICs have continued to generate positive
net inflows every month, bolstered by the launch of the VAM mandate
(see details below). Retail fundraising delivered net inflows of
GBP208 million between 1 April 2021 and 30 September 2021 (of which
GBP22 million was raised into VAM by its distribution team).
All three of the UK OEICs (FIIF, GRIF and REF) have delivered
positive total returns during the period, and continue to deliver
performance since inception in line with, or in excess of, their
investment objectives (VAM not included below given it launched
during the period).
UK OEIC performance since inception
Fund Inception date Fund
----------------------------------------------------- --------------- ------
4 December
FP Foresight UK Infrastructure Income Fund 2017 35.29%
FP Foresight Global Real Infrastructure Fund 3 June 2019 47.39%
FP Foresight Sustainable Real Estate Securities Fund 15 June 2020 20.64%
------------------------------------------------------ -------------- ------
Growth
On 1 June 2021, Foresight announced the launch of VAM Global
Infrastructure Fund ("VAM"), a Luxembourg UCITS V Fund, through a
new partnership with VAM Funds, a Luxembourg-based SICAV fund
management company. Foresight Capital Management has been appointed
investment manager to VAM, which is being distributed in South
Africa, Singapore, the Middle East and Europe through VAM's
established global distribution platform. VAM's investment strategy
mirrors that of GRIF, with a focus on globally listed asset-owning
infrastructure and renewables businesses, tapping into the growth
potential and attractive risk-adjusted returns available to
investors in these asset classes. This partnership has already
delivered positive results, with net inflows of GBP22 million
during the four months of the period that the mandate was in place.
Underlying investors in the VAM fund have included clients in South
Africa and the Middle East; markets where Foresight has not
previously raised retail capital.
Post period end Foresight launched a new SICAV. This will
initially provide investors with access to the GRIF investment
strategy via a Luxembourg-domiciled SICAV with UK tax reporting
status. The addition of further strategies to the SICAV, such as
REF, will also form part of the medium-term growth strategy for
Foresight Capital Management.
The growing OEIC market in the UK provides positive tailwinds
for retail fundraising and Foresight's FUM in the near to medium
term. The launch of other new open-ended funds, also drawing on
Foresight's core competencies and with a sustainability focus, is
being considered.
SUSTAINABILITY
ENVIRONMENTAL, SOCIAL & GOVERNANCE
Acting conscientiously as a company and investing responsibly
are critical to the long-term success of both Foresight and the
capital it manages.
Response to COP26
Following the COP26 agreement, there is likely to be an
increased demand for infrastructure and PE investments which
simultaneously deliver measurable sustainable impact alongside
attractive risk-adjusted returns. Foresight is already acting on
climate change and protecting the natural environment by investing
in sustainable infrastructure and real assets that contribute in a
tangible and measurable way to decarbonisation.
Investing in renewables that support the phase out of fossil
fuels, investing in the decarbonisation of transport and investing
in the sustainable production of timber used in construction and
packaging, are only a few of the strategies being actively pursued
that seek to address some of the greatest challenges the global
community is facing.
SMEs have a key role to play in driving long-term sustainable
economic growth. This is particularly true in the UK outside of
London and the South East, where levels of economic activity,
social mobility and economic growth are commonly lower.
Foresight's Private Equity team has a regional approach,
investing in some of the more disadvantaged areas of the UK, and
targeting a clear equity gap, for both capital and expertise.
However, many SMEs struggle to identify how to harness
sustainability and adapt to systemic challenges such as climate
change, human rights and globalisation.
Foresight works with companies to increase their efficiency,
differentiate them from their competitors and drive real change. We
believe putting sustainable principles at the heart of these
businesses provides them with the greatest opportunity to
succeed.
SUSTAINABLE INVESTOR
-- Signatory to the Principles for Responsible Investment since 2013
Investments assessed for alignment to UN Sustainable Development
-- Goals
-- Bespoke methodologies used to assess and monitor ESG across Infrastructure,
Private Equity and Foresight Capital Management investments
-- As a signatory to the Investing in Women Code, we are committed
to producing statistics from across the investment cycle and driving
concrete action
-- Foresight has joined the Sustainable Markets Initiative: Natural
Capital Investment Alliance ("NCIA") to accelerate the development
of Natural Capital as a mainstream investment theme and mobilise
this private capital efficiently and effectively for Natural Capital
opportunities
Signatory of Playfair Capital's Female Founder Office Hours initiative,
-- alongside 100 investors and over 300 female founders
Partnered with a third party to perform enhanced due diligence
-- across our key solar supply chain counterparties
Suite of sustainability KPIs launched across our infrastructure
-- assets
RESPONSIBLE BUSINESS
-- Climate change readiness
- We continue to establish our TCFD reporting methodology and
have completed our carbon footprinting analysis on our corporate
business activities
- Aiming to establish science-based emissions targets in 2022
-- People and community
- Mandatory unconscious bias training has been conducted for all staff
-- Supporting a diverse and inclusive culture
- Established our Inclusion & Diversity committee and rolled
out the "Count Me In" initiative, which aims to improve the
diversity data that our staff share with us. This will help us to
make meaningful commitments for our business and staff long
term
- Signatory to the HM Treasury Women in Finance Charter
-- Communication and transparency
- In September, we hosted Foresight Sustainability Week in partnership with the Goodwood Estate https://www.foresightgroup.eu/insight/watch-on-demand-foresight-sustainability-week/
25%
WOMEN IN SENIOR MANAGEMENT POSITIONS WITHIN FORESIGHT
82%
RESPONSE RATE TO SHARING OF PERSONAL DIVERSITY DATA IN OUR
"COUNT ME IN" INITIATIVE
A+, A+, A
FORESIGHT'S PRI SCORES
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 are set out in the risks section of the 2021 Annual
Report and is established through the Risk Management Framework. An
effective Risk Management Framework is driven by "top-down" Board
leadership and "bottom--up" involvement of management.
Engagement by management at all levels is expected across the
Group and is measured through cooperation 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 has identified nine principal risk areas for the
Group which are set out in the 2021 Annual Report. The risk
assessment processes are continuous and principal risk categories
may be updated in the event of material change to the business
constituency or market conditions.
Developments in relation to the UK governance, risk and
compliance frameworks since the publication of the 2021 Annual
Report, particularly those which could potentially have a short to
medium-term impact during the period to 31 March 2022, are
currently underway in the areas outlined below.
Governance Risk Compliance
--------------------------------------------------------- --------------------------------------------------------- ----------------------------------------------------
* A comprehensive organisational and governance * A comprehensive Risk Management Framework for the * A regulatory compliance system that includes a
framework, comprising clearly defined staff roles, Group, including a robust and scalable control risk--based compliance monitoring programme
responsibilities and authorities, supported by Grou framework, supported by a dedicated resource
p
policies * Governance oversight programme that includes
* Risk aggregation across businesses to deliver information security and data protection
aggregate analytics to the Executive Committee and
* A framework of policies and procedural documents to the Board
ensure compliance with applicable legislation, * Additional training and competence activities,
regulations, standards and industry best practices such
and quality of service(1) * Communications programme to further staff awareness as in-house best practice sessions, external c
of their responsibilities for managing risks within ourses,
their respective business areas and in support of as well as supporting staff development via
Group initiatives professional qualifications and ongoing CPD
--------------------------------------------------------- --------------------------------------------------------- ----------------------------------------------------
1. The UK operation also undergoes an annual ISAE 3402 review of its operations.
Three lines of defence
The first line of defence is the businesses and functions
themselves, where day--to--day front-line ownership of performance
and risk management resides. Heads of businesses and functions are
responsible for implementing controls to manage risks.
The second line of defence is responsible for the design and
implementation of Group--wide risk frameworks. The risk function
provides additional oversight, enforcing limits set by the Board,
independent measurement and monitoring of front-line activities,
and challenges to measurements and assumptions.
The third line of defence provides external assurance with
respect to the suitability and adequacy of the risk frameworks in
place.
Risk governance structure
The Group's principal operation is based in the UK, with the
London office providing support services to all UK regional and
global offices. The risk function is coordinated by the CFO, who is
based in London, and the Head of Governance, who is based in
Guernsey. Foresight is committed to following a three lines of
defence model for the Group and is investing additional resources
to develop the independent risk management function, including the
hire of a Head of Risk. Independent oversight is in place through
external audits of the compliance and risk functions, the Group's
financial systems and position, and the Group's information
security arrangements related to ISO 27001.
Risk appetite
As a provider of regulated services, Foresight is required to
document its risk appetite in relation to its 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.
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 Disclosures Guidance
and Transparency Rules of the United Kingdom's Financial Conduct
Authority
By order of the Board
Jo-anna Nicolle
Company Secretary
8 December 2021
INDEPENT REVIEW REPORT
to Foresight Group Holdings Limited ("The Group")
Introduction
We have been engaged by the Group to review the condensed set of
financial statements in the half-year financial report for the six
months ended 30 September 2021 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
and the unaudited condensed consolidated cash flow statement.
We have read the other information contained in the half-year
financial report and considered whether it contains any apparent
misstatements or material inconsistencies with the information in
the condensed set of financial statements.
Directors' responsibilities
The half-year financial report is the responsibility of and has
been approved by the Directors. The Directors are responsible for
preparing the half-year financial report in accordance with the
Disclosure Guidance and Transparency Rules of the United Kingdom's
Financial Conduct Authority.
As disclosed in note 2, the annual financial statements of the
Group will be prepared in accordance with International Financial
Reporting Standards ("IFRS") as adopted by the European Union
("EU"). The condensed set of financial statements included in this
half--year financial report has been prepared in accordance with
International Accounting Standard 34, "Interim Financial Reporting"
as adopted by the EU.
Our responsibility
Our responsibility is to express to the Group a conclusion on
the condensed set of financial statements in the half-year
financial report based on our review.
Scope of review
We conducted our review in accordance with International
Standard on Review Engagements (UK and Ireland) 2410, "Review of
Interim Financial Information Performed by the Independent Auditor
of the Entity", issued by the Financial Reporting Council for use
in the United Kingdom. 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.
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 financial report for the six months ended 30
September 2021 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.
Use of our report
Our report has been prepared in accordance with the terms of our
engagement to assist the Group in meeting its responsibilities in
respect of half-year financial reporting in accordance with 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
8 December 2021
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 months ended 30 September 2021
Unaudited Unaudited
six six Audited
months months
ended ended year ended
30 September 30 September 31 March
2021 2020 2021
Note GBP000 GBP000 GBP000
------------------------------------------------------------------------ ---- ------------ ------------ ----------
Revenue 5 39,707 32,417 69,098
Cost of sales (2,447) (2,331) (4,639)
------------------------------------------------------------------------ ---- ------------ ------------ ----------
Gross profit 37,260 30,086 64,459
Administrative expenses 7 (24,130) (21,490) (48,709)
Other operating income 10 250 46 394
------------------------------------------------------------------------ ---- ------------ ------------ ----------
Operating profit 13,380 8,642 16,144
Finance income 11 - 2 3
Finance expense 11 (360) (350) (710)
Fair value gains on investments 83 51 192
Share of post-tax profits/(losses) of equity accounted joint ventures 8 (19) 26
------------------------------------------------------------------------ ---- ------------ ------------ ----------
Profit on ordinary activities before taxation 13,111 8,326 15,655
Tax on profit on ordinary activities 12 (1,644) (8) (481)
------------------------------------------------------------------------ ---- ------------ ------------ ----------
Profit 11,467 8,318 15,174
Other comprehensive income
Items that will or may be reclassified to profit or loss:
Translation differences on foreign subsidiaries 67 (272) (293)
------------------------------------------------------------------------ ---- ------------ ------------ ----------
Total comprehensive income 11,534 8,046 14,881
------------------------------------------------------------------------ ---- ------------ ------------ ----------
Earnings per share attributable to the ordinary equity holders of the
parent
Profit or loss
Basic (GBP) 14 0.11 0.09 0.15
Diluted (GBP) 14 0.11 0.09 0.15
------------------------------------------------------------------------ ---- ------------ ------------ ----------
The notes on pages 21 to 37 form part of this financial
information.
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
as at 30 September 2021
Audited
Unaudited Unaudited 31 March
30 September 30 September 2021
2021 2020 as restated
Note GBP000 GBP000 GBP000
--------------------------------------------------------------------- ---- ------------ ------------ -----------
Non-current assets
Property, plant and equipment 2,838 3,600 3,012
Right--of--use assets 19 8,791 9,490 9,120
Intangible assets 3,014 3,099 3,012
Investments at FVTPL 2,196 1,577 2,075
Investments in equity accounted joint ventures 259 215 251
Deferred tax asset 20 860 169 977
Contract costs 15 4,259 648 712
Trade and other receivables 16 3,619 3,549 3,411
--------------------------------------------------------------------- ---- ------------ ------------ -----------
25,836 22,347 22,570
--------------------------------------------------------------------- ---- ------------ ------------ -----------
Current assets
Contract costs 15 589 91 125
Trade and other receivables 16 17,161 14,773 16,470
Cash and cash equivalents 42,760 11,971 39,431
--------------------------------------------------------------------- ---- ------------ ------------ -----------
60,510 26,835 56,026
Assets and liabilities of disposal group classified as held for sale 64 64 64
--------------------------------------------------------------------- ---- ------------ ------------ -----------
Current liabilities
Trade and other payables 17 (21,217) (12,469) (20,644)
Loans and borrowings 21 (619) (606) (688)
Lease liabilities 19 (2,239) (2,033) (2,157)
--------------------------------------------------------------------- ---- ------------ ------------ -----------
(24,075) (15,108) (23,489)
--------------------------------------------------------------------- ---- ------------ ------------ -----------
Net current assets 36,499 11,791 32,601
Non-current liabilities
Loans and borrowings 21 (3,030) (3,673) (3,636)
Lease liabilities 19 (9,308) (10,491) (9,862)
Accruals 18 (184) (438) (295)
Deferred tax liability 20 (516) (544) (1,581)
--------------------------------------------------------------------- ---- ------------ ------------ -----------
(13,038) (15,146) (15,374)
--------------------------------------------------------------------- ---- ------------ ------------ -----------
Net assets 49,297 18,992 39,797
--------------------------------------------------------------------- ---- ------------ ------------ -----------
Equity
Share capital 22 - 1 -
Share premium 22 32,040 (231) 32,040
Own share reserve 22 (402) - -
Share-based payment reserve 22 210 125 -
Group reorganisation reserve 22 30 30 30
Retained earnings 22 17,419 19,067 7,727
--------------------------------------------------------------------- ---- ------------ ------------ -----------
Total equity 49,297 18,992 39,797
--------------------------------------------------------------------- ---- ------------ ------------ -----------
The financial statements were approved and authorised for issue
by the Board of Directors on 8 December 2021 and were signed on its
behalf by:
Gary Fraser
Chief Financial Officer
Geoffrey Gavey
Director
The notes on pages 21 to 37 form part of this financial
information.
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the six months ended 30 September 2021
Group
Share-based re-
Share Share Own share payment organisation Retained Total
capital premium reserve reserve reserve earnings equity
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
------------------------------------------ ------- ------- --------- ----------- ------------ -------- --------
Unaudited balance at 1 April 2020 1 - - 101 30 15,701 15,833
Profit for the six months - - - - - 8,318 8,318
Other comprehensive income - - - - - (272) (272)
Contributions by and distributions to
owners
Share issue costs - (231) - - - - (231)
Dividends and distributions to equity
members - - - - - (1,930) (1,930)
Share-based payments - - - 24 - - 24
Premium on redemption of Preference Shares - - - - - (2,750) (2,750)
------------------------------------------ ------- ------- --------- ----------- ------------ -------- --------
Unaudited balance at 30 September 2020 1 (231) - 125 30 19,067 18,992
------------------------------------------ ------- ------- --------- ----------- ------------ -------- --------
Profit for the six months - - - - - 6,856 6,856
Other comprehensive income - - - - - (21) (21)
Contributions by and distributions to
owners
Premium on issue of shares - 35,000 - - - - 35,000
Share issue costs - (2,729) - - - - (2,729)
Dividends and distributions to equity
members - - - - - (16,299) (16,299)
Share-based payments - - - 11 - - 11
Share buyback (cancellation) - - - - - (10) (10)
Transfer of share-based payments to
retained earnings on vesting and
cessation of Foresight
Plan - - - (136) - 136 -
Premium on redemption of Preference Shares - - - - - (2,002) (2,002)
Redemption of Preference Shares (1) - - - - - (1)
------------------------------------------ ------- ------- --------- ----------- ------------ -------- --------
Audited balance at 31 March 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
------------------------------------------ ------- ------- --------- ----------- ------------ -------- --------
The notes on pages 21 to 37 form part of this financial
information.
CONDENSED CONSOLIDATED CASH FLOW STATEMENT
for the six months ended 30 September 2021
Audited
Unaudited Unaudited
six six year ended
months months
ended ended 31 March
30 September 30 September 2021
2021 2020 as restated
Note GBP000 GBP000 GBP000
---------------------------------------------------------------------- ---- ------------ ------------ -----------
Cash generated from operations 9,648 2,372 17,268
Tax paid (1,594) (1) (174)
Bank interest paid 11 (3) (2) (7)
Loan interest paid (97) - -
Interest on ROU lease liabilities 11 (314) (311) (621)
---------------------------------------------------------------------- ---- ------------ ------------ -----------
Net cash from operating activities 7,640 2,058 16,466
---------------------------------------------------------------------- ---- ------------ ------------ -----------
Cash flows from investing activities
Acquisition of property, plant and equipment (198) (69) (141)
Acquisition of intangible assets (125) (13) (48)
Acquisition of investments at FVTPL (339) (435) (881)
Sale of investments 303 144 230
Proceeds on disposal of fixed assets - - 450
Interest received 11 - 2 3
Proceeds on disposal of Group entities - 819 819
Acquisition of subsidiaries - 2,348 2,348
---------------------------------------------------------------------- ---- ------------ ------------ -----------
Net cash from investing activities (359) 2,796 2,780
---------------------------------------------------------------------- ---- ------------ ------------ -----------
Cash flows from financing activities
Dividends and distributions to equity members 13 (1,842) (1,930) (18,229)
Share buyback 13 - - (10)
Shareholder loan repaid - - (750)
FGLLP members' capital contributions (38) - 1,455
Redemption and premium on redemption of Preference Shares 13 - (2,750) (4,753)
Purchase of own shares 22 (402) - -
Repayment of lease liabilities (principal) 19 (1,049) (974) (2,570)
Repayment of loan liabilities (principal) (621) - -
Gross proceeds of IPO share issue 22 - - 35,000
Costs of IPO share issue 22 - (231) (2,960)
---------------------------------------------------------------------- ---- ------------ ------------ -----------
Net cash from financing activities (3,952) (5,885) 7,183
---------------------------------------------------------------------- ---- ------------ ------------ -----------
Net increase/(decrease) in cash and cash equivalents 3,329 (1,031) 26,429
Cash and cash equivalents at beginning of period 39,431 13,002 13,002
---------------------------------------------------------------------- ---- ------------ ------------ -----------
Cash and cash equivalents at end of period 42,760 11,971 39,431
---------------------------------------------------------------------- ---- ------------ ------------ -----------
Reconciliation of profit before tax to cash generated from operations
Profit before taxation 13,111 8,326 15,655
(Profit)/loss from share in joint venture (8) 19 (26)
Fair value gains on investments (83) (51) (192)
Finance costs 360 350 710
Finance income - (2) (3)
Share-based payment 8 210 24 35
Depreciation and amortisation 1,404 1,298 2,648
(Profit) on disposal of fixed assets - - (170)
Gain on bargain purchase - (174) (174)
Foreign currency gains/(losses) 61 (275) (295)
(Increase)/decrease in contract costs (4,011) 116 19
Increase in trade and other receivables (900) (2,967) (4,526)
(Decrease)/increase in trade and other payables (496) (4,292) 3,587
---------------------------------------------------------------------- ---- ------------ ------------ -----------
Total 9,648 2,372 17,268
---------------------------------------------------------------------- ---- ------------ ------------ -----------
The notes on pages 21 to 37 form part of this financial
information.
NOTES TO THE FINANCIAL STATEMENTS
for the six months ended 30 September 2021
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 2021 (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 2021 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 2021, 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 2021 was
unqualified and did not contain an emphasis of matter paragraph.
The financial statements for the six months ended 30 September 2021
and 30 September 2020 are unaudited but have been subject to review
by the Group's auditor.
As the Company listed on the London Stock Exchange on 4 February
2021, the financial statements for the six months ended 30
September 2020 and substantially for the year ended 31 March 2021
are when the Group was in private ownership.
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 2021.
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 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, including the
impact of COVID-19 on global markets and potential implications for
the Group's financial performance. 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 COVID-19 on the wider economic
environment, 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. 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 2021:
Placement fees arising on interim and final closes of Foresight
Energy Infrastructure Partners ("FEIP")
In the six months ended 30 September 2021, FEIP, a
sustainability--led energy transition infrastructure fund managed
by Foresight, had further interim and final closes giving rise to
placement agency fees of GBP3.9/EUR4.6 million. A specific
accounting policy for costs arising from placement agency fees is
disclosed below, see note 4A.
Commencement of the Share Incentive Plan ("SIP") and first grant
under the Performance Share Plan ("PSP")
As noted in the annual financial statements for the year ended
31 March 2021, the first grant date of the SIP was 28 February 2021
but was trivial to account for in that period. Therefore,
accounting for the SIP has commenced in the six months ended 30
September 2021. The first grant date under the PSP was 6 September
2021 and is accounted for in the six months ended 30 September
2021. See note 4B for the associated accounting policy.
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 2021 except for
the policies below. No new standards that have become effective in
the period have had a material effect on the Group's financial
statements.
A. Contract costs (Placement agency fees)
The Group may enter into placement agency agreements with
providers who will seek to raise investor monies. Where placement
agency fees are incremental to obtaining, extending or modifying a
contract with a customer, these fees are capitalised and then
amortised on a systematic basis consistent with the pattern of
transfer of the services to which the asset relates. Where
placement agency fees are not considered to be incremental, these
are expensed as they are incurred. Capitalised placement fees are
included within contract costs.
Retainer amounts paid to placement agents are recognised as an
asset. Where the placement agent is successful in obtaining a
contract with a customer, the retainer amounts are offset against
the gross placement agency fees when incurred. If unsuccessful, the
retainer amounts are expensed.
B. Share-based payments
The Group engages in share-based payment transactions in respect
of services receivable from certain participants by granting the
right to either shares or options over shares, subject to certain
vesting conditions and exercise prices. These have been accounted
for as equity-settled share-based payments.
The fair value of the awards granted in the form of shares or
share options is recognised as an expense over the appropriate
performance and vesting period. The corresponding credit is
recognised within total equity. The fair value of the awards is
calculated using an option pricing model, the principal inputs
being the market value on the date of award and an adjustment for
expected and actual levels of vesting which includes estimating the
number of eligible participants leaving the Group and the number of
participants satisfying the relevant performance conditions. Shares
and options vest on the occurrence of a specified event under the
rules of the relevant plan.
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 2021.
5. Revenue
The Group's revenue arises largely from the charging of
management, secretarial, Directors', marketing, arrangement and
performance incentive fees. Revenue over the period was as
follows:
Unaudited Unaudited
six six Audited
months months
ended ended year ended
30 September 30 September 31 March
2021 2020 2021
GBP000 GBP000 GBP000
--------------------------- ------------ ------------ ----------
Management fees 33,655 22,582 50,245
Secretarial fees 695 5,883 9,828
Directors' fees 1,196 1,043 2,306
--------------------------- ------------ ------------ ----------
Recurring fees 35,546 29,508 62,379
Marketing fees 2,114 1,290 2,841
Arrangement fees 1,435 1,610 3,858
Performance incentive fees 609 - -
Other income 3 9 20
--------------------------- ------------ ------------ ----------
39,707 32,417 69,098
--------------------------- ------------ ------------ ----------
Unaudited Unaudited
six six Audited
months months
ended ended year ended
30 September 30 September 31 March
2021 2020 2021
GBP000 GBP000 GBP000
-------------------------------- ------------ ------------ ----------
Timing of transfer of services:
Point in time 4,161 2,909 6,719
Over time 35,546 29,508 62,379
-------------------------------- ------------ ------------ ----------
39,707 32,417 69,098
-------------------------------- ------------ ------------ ----------
Unaudited Unaudited
six six Audited
months months
ended ended year ended
30 September 30 September 31 March
2021 2020 2021
Contract Contract Contract
liabilities liabilities liabilities
Contract balances GBP000 GBP000 GBP000
---------------------------------------------- ------------ ------------ -----------
At beginning of period (541) (73) (73)
Amounts included in contract liabilities that
were recognised as revenue during the period 541 73 73
Cash received in advance of performance and
not recognised as revenue during the period (56) (20) (541)
---------------------------------------------- ------------ ------------ -----------
At end of period (56) (20) (541)
---------------------------------------------- ------------ ------------ -----------
The timing of revenue recognition, billings and cash collections
results in either trade receivables, accrued income or deferred
income in the Statement of Financial Position. For recurring fees,
amounts are billed either in advance or in arrears pursuant to a
management or advisory agreement. The contract liabilities above
reflect the deferred income in trade and other payables.
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.
Foresight Capital Management had previously been included within
Infrastructure but as reported in the Business Review in the Annual
Report for the year ended 31 March 2021, from FY22 onwards it is to
be treated as a separate business unit. Accordingly, segmental
revenue has been represented for the year ended 31 March 2021.
Foresight Capital Management commenced in 2017 and had FUM of
GBP1.1 billion at 31 March 2021 which had grown further to GBP1.4
billion at 30 September 2021.
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
six six Audited
months months
ended ended year ended
30 September 30 September 31 March
2021 2020 2021
GBP000 GBP000 GBP000
----------------------------- ------------ ------------ ----------
Infrastructure 24,682 20,229 43,392
Private Equity 9,771 8,881 18,225
Foresight Capital Management 5,254 3,307 7,481
----------------------------- ------------ ------------ ----------
39,707 32,417 69,098
----------------------------- ------------ ------------ ----------
Revenue by region is summarised below:
Unaudited Unaudited
six six Audited
months months
ended ended year ended
30 September 30 September 31 March
2021 2020 2021
GBP000 GBP000 GBP000
--------------- ------------ ------------ ----------
United Kingdom 35,017 31,536 65,999
Italy 246 210 1,177
Luxembourg 3,367 90 676
Spain 299 227 533
Australia 778 354 713
--------------- ------------ ------------ ----------
39,707 32,417 69,098
--------------- ------------ ------------ ----------
Non-current assets (excluding deferred tax assets, contract
costs and trade and other receivables) by region are summarised
below:
Unaudited Unaudited Audited
30 September 30 September 31 March
2021 2020 2021
GBP000 GBP000 GBP000
--------------- ------------ ------------ --------
United Kingdom 14,338 16,594 15,397
Italy 779 819 808
Luxembourg 1,444 564 778
Spain 535 - 486
Australia 2 4 1
--------------- ------------ ------------ --------
17,098 17,981 17,470
--------------- ------------ ------------ --------
7. Administrative expenses
These are summarised as follows:
Unaudited Unaudited
six six Audited
months months
ended ended year ended
30 September 30 September 31 March
2021 2020 2021
GBP000 GBP000 GBP000
------------------------------ ------------ ------------ ----------
Staff costs 16,609 15,519 33,751
Depreciation and amortisation 1,404 1,298 2,649
Legal and professional 1,594 2,116 5,984
Other administration costs 4,523 2,557 6,325
------------------------------ ------------ ------------ ----------
24,130 21,490 48,709
------------------------------ ------------ ------------ ----------
Other administration costs mainly relate to irrecoverable VAT,
office costs, conferences, computer maintenance, travelling and
entertainment and sundries.
8. Share-based payments
Expenses arising from share-based payments are summarised
below:
Unaudited Unaudited
six six Audited
months months
ended ended year ended
30 September 30 September 31 March
2021 2020 2021
GBP000 GBP000 GBP000
----------------------- ------------ ------------ ----------
Performance Share Plan 134 - -
Share Incentive Plan 76 - -
Foresight Plan - 24 35
----------------------- ------------ ------------ ----------
210 24 35
----------------------- ------------ ------------ ----------
Performance Share Plan
The Group's Performance Share Plan allows for the grant of nil
cost options with vesting dependent on the performance of the Group
and continued service by the participant. The first grant of
options under the plan was made on 6 September 2021 as approved by
the Remuneration Committee. The number of options awarded totalled
1,071,830 and have been fair valued using a Monte-Carlo simulation
and appropriate retention rate %.
Share Incentive Plan
Under the Foresight Share Incentive Plan ("SIP") for each one
partnership share that an employee buys, Foresight offers two free
matching shares. 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.
At 30 September 2021, the number of matching shares purchased
for GBP402,000 was 95,038. 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
140,038.
Foresight Plan
The Foresight Plan was introduced in 2014 and provided for the
grant of shares to members of staff. Shares granted under the
Foresight Plan vested after the members of staff had reached an
uninterrupted period of service of ten years with Foresight Group
(or any of its subsidiaries). The Foresight Plan ceased in February
2021. Full details of the Foresight Plan were included in the
annual financial statements for the year ended 31 March 2021.
9. Core EBITDA pre shared-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 and due to their
uncontrollable 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:
-- Non-operational legal costs. These are costs related to a series
of proposed corporate transactions over the period and redundancy
costs relating to a restructuring of the business. The corporate
transaction costs relate to professional and other costs incurred
in preparing the Group for an IPO and therefore are not considered
to be related to the Group's ongoing business operations. Non
operational legal costs of GBP2.7 million in the financial year
ended 31 March 2021 relate to IPO costs
-- Distributions made to members classified as remuneration expenses
under IFRS have been added back as these are considered to be
equity transactions. These expenses were related to distribution
of the Group profit. They were variable as they were dependent
on Group profit and also the timing of when the distributions
were made
-- Staff advances expensed have been added back as these are not
deemed to reflect the core underlying performance of the business
-- Other operating income as per note 10 below which is not expected
to recur. This relates to Shirebrook development fees and grant
income from a government support programme introduced in response
to the COVID-19 global pandemic
-- Profits or losses on disposal of fixed assets are added back as
these are classed as non--recurring
-- Profits or losses arising on acquisition of subsidiaries are added
back as these are classed as non--recurring
-- All depreciation and amortisation costs are added back
-- All financing and taxation costs are added back
A reconciliation of retained profit to Core EBITDA and Core
EBITDA pre share-based payments is set out below:
Unaudited Unaudited
six six Audited
months months
ended ended year ended
30 September 30 September 31 March
2021 2020 2021
GBP000 GBP000 GBP000
------------------------------------------------------- ------------ ------------ ----------
Net profit after other comprehensive income 11,534 8,046 14,881
Add back depreciation and amortisation 1,404 1,298 2,649
Add back non-operational staff costs
Distributions - 670 2,746
Staff advances expensed 300 - 440
Add back non-operational legal costs - 475 2,744
Profit on disposal of tangible fixed assets - - (170)
Gain on bargain purchase on acquisition of PiP Manager - (174) (174)
Deduct other operating income (250) (46) (394)
Deduct/add back financing 360 348 707
Add back tax 1,644 8 481
------------------------------------------------------- ------------ ------------ ----------
Core EBITDA 14,992 10,625 23,910
Share-based payments 210 - -
------------------------------------------------------- ------------ ------------ ----------
Core EBITDA pre share-based payments 15,202 10,625 23,910
------------------------------------------------------- ------------ ------------ ----------
10. Other operating income
This is summarised as follows:
Unaudited Unaudited
six six Audited
months months
ended ended year ended
30 September 30 September 31 March
2021 2020 2021
GBP000 GBP000 GBP000
--------------------------------------------- ------------ ------------ ----------
Fees arising from the Shirebrook development 250 - 348
Grant income - 46 46
--------------------------------------------- ------------ ------------ ----------
250 46 394
--------------------------------------------- ------------ ------------ ----------
Fees arising from the Shirebrook development
The Group is managing the development of a reserve power plant
site in Shirebrook, Derbyshire on behalf of the Foresight ITS
product. Development fees have been accounted for as other
operating income when it is virtually certain that relevant
contractual conditions have been met. At 30 September 2021, total
fees of GBP2.4 million had been recognised which reflects total
contractual fees on the development.
Grant income
The Group applied for a government support programme introduced
in response to the COVID-19 global pandemic.
11. Finance income and expense
Unaudited Unaudited
six six Audited
months months
ended ended year ended
30 September 30 September 31 March
2021 2020 2021
GBP000 GBP000 GBP000
--------------------------------------------------------------------------- ------------ ------------ ----------
Finance income
Bank interest receivable - 2 3
--------------------------------------------------------------------------- ------------ ------------ ----------
Total finance income - 2 3
--------------------------------------------------------------------------- ------------ ------------ ----------
Finance expenses
Bank interest payable (3) (2) (7)
Loan interest (accrued) (43) (37) (82)
Interest on lease liabilities (314) (311) (621)
--------------------------------------------------------------------------- ------------ ------------ ----------
Total interest expense on financial liabilities measured at amortised cost (360) (350) (710)
--------------------------------------------------------------------------- ------------ ------------ ----------
Net finance expense recognised in the Statement of Comprehensive Income (360) (348) (707)
--------------------------------------------------------------------------- ------------ ------------ ----------
The above finance income and expense includes the following in
respect of assets (liabilities) not at fair value through profit or
loss:
Unaudited Unaudited
six six Audited
months months
ended ended year ended
30 September 30 September 31 March
2021 2020 2021
GBP000 GBP000 GBP000
------------------------------------------------ ------------ ------------ ----------
Total interest income on financial assets - 2 3
Total interest expense on financial liabilities (46) (39) (89)
------------------------------------------------ ------------ ------------ ----------
(46) (37) (86)
------------------------------------------------ ------------ ------------ ----------
12. Taxation
Unaudited Unaudited
six six Audited
months months
ended ended year ended
30 September 30 September 31 March
2021 2020 2021
GBP000 GBP000 GBP000
---------------------------------------------------------------- ------------ ------------ ----------
Current tax
UK corporation tax 2,522 - -
Foreign taxation 68 1 111
Adjustments in respect of prior periods (foreign tax) 2 - 134
---------------------------------------------------------------- ------------ ------------ ----------
Total current tax charge 2,592 1 245
---------------------------------------------------------------- ------------ ------------ ----------
Deferred tax
Origination and reversal of temporary differences (see note 20) (948) 7 279
Recognition of previously unrecognised deferred tax assets - - (43)
---------------------------------------------------------------- ------------ ------------ ----------
Total deferred tax (948) 7 236
---------------------------------------------------------------- ------------ ------------ ----------
Tax on profit on ordinary activities 1,644 8 481
---------------------------------------------------------------- ------------ ------------ ----------
The Group is headquartered in Guernsey and its principal 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.
13. Dividends and redemptions
Equity dividends, distributions and share buybacks were as
follows:
Unaudited Unaudited
six six Audited
months months
ended ended year ended
30 September 30 September 31 March
2021 2020 2021
GBP000 GBP000 GBP000
---------------------------------------------- ------------ ------------ ----------
Distributions subsequent to the IPO
Final dividend 1,842 - -
Distributions prior to the IPO
Dividends and distributions to equity members - 1,930 18,229
Share buybacks - - 10
---------------------------------------------- ------------ ------------ ----------
1,842 1,930 18,239
---------------------------------------------- ------------ ------------ ----------
A final dividend of 1.7 pence per Ordinary Share was approved by
Shareholders and paid during the six months ended 30 September 2021
relating to the previous financial year's results.
Details of distributions prior to the IPO are set out in the
annual financial statements for the year ended 31 March 2021.
Preference Shares
Redemptions on Preference Shares were as follows:
Unaudited Unaudited
six six Audited
months months
ended ended year ended
30 September 30 September 31 March
2021 2020 2021
GBP000 GBP000 GBP000
-------------------------------- ------------ ------------ ----------
Redemption of Preference Shares - 2,750 4,753
-------------------------------- ------------ ------------ ----------
All profit share redemptions took place prior to the IPO via
arrangements in place between Beau Port Investments Ltd ("BPIL")
and Foresight Group CI Ltd. These arrangements were all terminated
before the date of the IPO and all Preference Shares were fully
redeemed and cancelled. Details of redemptions prior to the IPO are
set out in the annual financial statements for the year ended 31
March 2021.
14. Earnings per share
Basic earnings per share is calculated by dividing the profit
attributable to the owners of the parent company by the weighted
average number of shares in issue during the period less the
weighted average number of own shares held (see note 22).
Diluted earnings per share is calculated by dividing the profit
attributable to the owners of the parent 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 8 for Performance Share Plan).
Unaudited Unaudited
six six Audited
months months
ended ended year ended
30 September 30 September 31 March
2021 2020 2021
GBP000 GBP000 GBP000
------------------------------------------------------------------------------ ------------ ------------ ----------
Earnings
Earnings for the purposes of basic earnings per share, being profit
attributable to the owners
of the parent company 11,467 8,318 15,174
------------------------------------------------------------------------------ ------------ ------------ ----------
Unaudited Unaudited
six six Audited
months months
ended ended year ended
30 September 30 September 31 March
2021 2020 2021
'000 '000 '000
------------------------------------------------------------------------------ ------------ ------------ ----------
Number of shares
Weighted average number of shares in issue during the period 108,333 94,918 101,780
Less time--apportioned own shares held (120) - -
------------------------------------------------------------------------------ ------------ ------------ ----------
Weighted average number of Ordinary Shares for the purpose
of basic earnings per share 108,213 94,918 101,780
Add back weighted average number of dilutive potential shares 73 - -
------------------------------------------------------------------------------ ------------ ------------ ----------
Weighted average number of Ordinary Shares for the purpose of diluted earnings
per share 108,286 94,918 101,780
------------------------------------------------------------------------------ ------------ ------------ ----------
Earnings per share Group (basic) (GBP) 0.11 0.09 0.15
------------------------------------------------------------------------------ ------------ ------------ ----------
Earnings per share Group (diluted) (GBP) 0.11 0.09 0.15
------------------------------------------------------------------------------ ------------ ------------ ----------
15. Contract costs
Audited
Unaudited Unaudited 31 March
30 September 30 September 2021
2021 2020 as restated
GBP000 GBP000 GBP000
-------------------------------------------- ------------ ------------ -----------
Incremental placement agency fees of which: 4,848 739 837
Non-current assets 4,259 648 712
Current assets 589 91 125
-------------------------------------------- ------------ ------------ -----------
Incremental placement agency fees have arisen from further
interim and final closes of Foresight Energy Infrastructure
Partners, see note 3. See note 26 for explanation for adjustment to
corresponding amounts.
16. Trade and other receivables
Audited
Unaudited Unaudited 31 March
30 September 30 September 2021
2021 2020 as restated
GBP000 GBP000 GBP000
------------------------- ------------ ------------ -----------
Trade receivables 13,001 9,058 10,988
Other receivables 3,117 4,112 4,255
Prepayments 2,282 1,952 1,958
Staff advances 2,380 3,200 2,680
Less non-current assets:
Trade receivables 1,979 989 1,471
Other receivables - - -
Prepayments - - -
Staff advances 1,640 2,560 1,940
------------------------- ------------ ------------ -----------
Current assets:
Trade receivables 11,022 8,069 9,517
Other receivables 3,117 4,112 4,255
Prepayments 2,282 1,952 1,958
Staff advances 740 640 740
------------------------- ------------ ------------ -----------
17,161 14,773 16,470
------------------------- ------------ ------------ -----------
The Directors consider that the carrying value of trade and
other receivables approximates to their fair value. Staff advances
have been made in order to retain key staff and are expensed over
five years in line with the contractual terms of the advances but
are repayable if the relevant individual leaves the Group. See note
26 for explanation for adjustment to corresponding amounts.
17. Trade and other payables
Unaudited Unaudited Audited
30 September 30 September 31 March
2021 2020 2021
GBP000 GBP000 GBP000
---------------------------------- ------------ ------------ --------
Trade payables 1,096 647 1,175
Accruals 6,452 5,463 8,402
Deferred income 56 20 541
Other payables 8,052 2,482 5,244
VAT and PAYE 2,840 2,873 3,520
Corporation tax 1,140 71 143
Shareholder loan - 750 -
Partnership capital contributions 1,581 163 1,619
---------------------------------- ------------ ------------ --------
21,217 12,469 20,644
---------------------------------- ------------ ------------ --------
Trade and other payables comprise amounts outstanding for trade
purchases and ongoing costs. The Directors consider the carrying
amount of trade and other payables approximates to their fair value
when measured by discounting cash flows at market rates of interest
as at the balance sheet date.
Deferred income relates to fees received in advance.
Other payables include payables arising from placement agency
fees from the FEIP interim and final closes.
Corporation tax is the corporation tax charge for the period
less payments on account plus a tax charge which is offset by a
corresponding reduction in deferred tax liabilities (see note
20).
Partnership capital contributions relate to contributions by
members to Foresight Group LLP.
18. Non-current liabilities - accruals
Unaudited Unaudited Audited
30 September 30 September 31 March
2021 2020 2021
GBP000 GBP000 GBP000
------------- ------------ ------------ --------
LTIP accrual 184 438 295
------------- ------------ ------------ --------
184 438 295
------------- ------------ ------------ --------
The LTIP scheme arises in PiP Manager Limited, a company
acquired by the Group in August 2020. See the annual financial
statements for the year ended 31 March 2021 for full details of
this acquisition.
19. Leases
Set out below are the carrying amounts of the right-of-use
assets recognised and associated lease liabilities (included under
current and non-current liabilities) together with their movements
over the period. The leases all relate to the offices of the Group
as set out in the annual financial statements for the year ended 31
March 2021 plus the new lease entered into by Foresight Group
Luxembourg S.A. in the six months ended 30 September 2021.
The leases are typically of ten years' duration.
Unaudited Unaudited Audited
30 September 30 September 31 March
2021 2020 2021
GBP000 GBP000 GBP000
----------------------- ------------ ------------ --------
Right-of-use asset
At beginning of period 9,120 10,346 10,346
Additions 578 - 486
Depreciation (907) (856) (1,712)
----------------------- ------------ ------------ --------
At end of period 8,791 9,490 9,120
----------------------- ------------ ------------ --------
Lease liability
At beginning of period 12,019 13,498 13,498
----------------------- ------------ ------------ --------
Short term 2,157 1,945 1,945
----------------------- ------------ ------------ --------
Long term 9,862 11,553 11,553
----------------------- ------------ ------------ --------
Additions 577 - 486
Lease payment (1,363) (1,285) (2,570)
Interest 314 311 621
Foreign exchange - - (16)
----------------------- ------------ ------------ --------
At end of period 11,547 12,524 12,019
----------------------- ------------ ------------ --------
Short term 2,239 2,033 2,157
----------------------- ------------ ------------ --------
Long term 9,308 10,491 9,862
----------------------- ------------ ------------ --------
11,547 12,524 12,019
----------------------- ------------ ------------ --------
20. 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 as shown below:
Unaudited Unaudited Audited
30 September 30 September 31 March
2021 2020 2021
GBP000 GBP000 GBP000
-------------------------------- ------------ ------------ --------
At beginning of period (604) 20 20
Recognised in profit and loss
Tax expense 948 (7) (236)
-------------------------------- ------------ ------------ --------
344 13 (216)
-------------------------------- ------------ ------------ --------
Arising on business combination
Intangible asset - (547) (547)
Available losses - 159 159
-------------------------------- ------------ ------------ --------
At end of period 344 (375) (604)
-------------------------------- ------------ ------------ --------
Deferred tax assets have been recognised in respect of all tax
losses and other temporary differences giving rise to deferred tax
assets where the Directors believe it is probable that these assets
will be recovered.
A provision has been made for the deferred tax liability
associated with the recognition of an intangible asset as part of
the acquisition of PiP Manager Limited. Subsequent movement in line
with amortisation of the intangible asset has been recognised in
the income statement and at 30 September 2021 the deferred tax
liability was GBP516,000 (31 March 2021: GBP530,000, 30 September
2020: GBP544,000). The fair value of the deferred tax asset
recognised for tax losses was determined to be GBP159,022 on
acquisition, an increase of GBP109,127 compared to its carrying
value.
The movements in deferred tax assets and liabilities during the
period are shown below:
(Charged)/ (Charged)/
credited
to credited
profit
or loss to equity
Unaudited Unaudited
Asset Liability Net six six
months months
Unaudited Unaudited Unaudited ended ended
30 September 30 September 30 September 30 September 30 September
2021 2021 2021 2021 2021
GBP000 GBP000 GBP000 GBP000 GBP000
------------------------------------------- ------------ ------------ ------------ ------------ ------------
Available losses 860 - 860 2 -
Other temporary and deductible differences - - - 1,051 -
Business combinations - intangible asset - (516) (516) 14 -
Business combinations - available losses - - - (119) -
------------------------------------------- ------------ ------------ ------------ ------------ ------------
860 (516) 344 948 -
------------------------------------------- ------------ ------------ ------------ ------------ ------------
Unaudited Unaudited
six six
months months
Unaudited Unaudited Unaudited ended ended
30 September 30 September 30 September 30 September 30 September
2020 2020 2020 2020 2020
GBP000 GBP000 GBP000 GBP000 GBP000
----------------------------------------- ------------ ------------ ------------ ------------ ------------
Available losses 20 - 20 - -
Business combinations - intangible asset - (544) (544) 3 -
Business combinations - available losses 149 - 149 (10) -
----------------------------------------- ------------ ------------ ------------ ------------ ------------
169 (544) (375) (7) -
----------------------------------------- ------------ ------------ ------------ ------------ ------------
Audited Audited
Audited Audited Audited year ended year ended
31 March 31 March 31 March 31 March 31 March
2021 2021 2021 2021 2021
GBP000 GBP000 GBP000 GBP000 GBP000
------------------------------------------- -------- -------- -------- ---------- ----------
Available losses 858 - 858 838 -
Other temporary and deductible differences - (1,051) (1,051) (1,051) -
Business combinations - intangible asset - (530) (530) 17 -
Business combinations - available losses 119 - 119 (40) -
------------------------------------------- -------- -------- -------- ---------- ----------
977 (1,581) (604) (236) -
------------------------------------------- -------- -------- -------- ---------- ----------
At 31 March 2021, a deferred tax liability of GBP1.1 million was
recognised in relation to income that was booked for accounting
purposes but expected to be taxed in a later period. This income
has been taxed in full in the six months to 30 September 2021.
Consequently, the liability at 30 September 2021 is GBPnil. This
has given rise to a deferred tax credit in the income statement
which is offset by a corresponding current tax charge of the exact
same amount.
21. 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. For more information about the Group's
exposure to interest rate and foreign currency risk, see note
23.
Unaudited Unaudited Audited
30 September 30 September 31 March
2021 2020 2021
GBP000 GBP000 GBP000
------------------------ ------------ ------------ --------
Current liabilities
Loans 619 606 688
Non-current liabilities
Loans 3,030 3,673 3,636
------------------------ ------------ ------------ --------
3,649 4,279 4,324
------------------------ ------------ ------------ --------
Terms and debt repayment schedule
Unaudited
30 September
2021
Nominal Carrying
interest Year of amount(1)
Currency rate maturity GBP000
--------------- --------- -------- -------- ------------
Unsecured loan GBP 2% 2027 3,649
--------------- --------- -------- -------- ------------
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
2021 2020 2021
GBP000 GBP000 GBP000
----------------------- ------------ ------------ --------
At beginning of period 4,324 - -
At acquisition - 4,242 4,242
Interest 43 37 82
Repayment (718) - -
----------------------- ------------ ------------ --------
At end of period 3,649 4,279 4,324
----------------------- ------------ ------------ --------
22. Share capital and other reserves
Ordinary Shares and Preference Shares
Unaudited Unaudited Audited
30 September 30 September 31 March
2021 2020 2021
GBP GBP GBP
----------------------------------------- ------------ ------------ --------
Share capital
Ordinary Shares - - -
----------------------------------------- ------------ ------------ --------
Preference Shares at beginning of period - 849 849
Preference Shares redeemed - (1) (849)
----------------------------------------- ------------ ------------ --------
Preference Shares at end of period - 848 -
----------------------------------------- ------------ ------------ --------
Ordinary Shares
The Company had issued and allotted share capital of 108,333,333
Ordinary Shares of nil par value at 30 September 2021 and at 31
March 2021. A reconciliation of Ordinary Shares prior to the IPO is
set out in the annual financial statements for the year ended 31
March 2021.
Preference Shares
These were held in the books of Foresight Group CI Limited
("FGCI") for the benefit of Beau Port Investments Limited. The
redeemable shares were redeemable at the sole option of FGCI, had
no par value and had no voting rights, save in respect of any
resolution to change the rights attached to them.
The Articles of Association of FGCI gave it the power to issue
an unlimited number of shares of no par value as permitted by
Guernsey law.
These arrangements were all terminated before the date of the
IPO and all Preference Shares were fully redeemed and
cancelled.
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 (net of the direct costs of issue) as follows:
Unaudited Unaudited Audited
30 September 30 September 31 March
2021 2020 2021
GBP000 GBP000 GBP000
----------------------------------- ------------ ------------ --------
At beginning of period 32,040 - -
Cash on primary raise - - 35,000
Transaction costs of primary raise - (231) (2,960)
----------------------------------- ------------ ------------ --------
At end of period 32,040 (231) 32,040
----------------------------------- ------------ ------------ --------
The total transaction costs relating to the IPO amounted to
GBP5.3 million, of which GBP3.0 million was taken to the share
premium account and GBP2.3 million was expensed through
administrative expenses in the Statement of Comprehensive Income in
the year ended 31 March 2021.
Own share reserve
The Group operates a Share Incentive Plan as per note 8. 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 2021, the total number of shares held in trust
was 209,639 including 140,038 of matching shares. Of the 140,038
matching shares, 45,000 had been transferred from Foresight
Guernsey Limited (see IPO Prospectus) and 95,038 shares had been
purchased at a cost of GBP402,000.
Share-based payment reserve
The share-based payment reserve represents the cumulative cost
of the Group's share-based remuneration schemes, see note 8.
Group reorganisation reserve
The Group reorganisation reserve consists of the Ordinary Share
capital of 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.
Retained earnings
Includes all current and prior period retained profits and
losses.
23. Financial instruments - classification and measurement
Financial assets
Financial assets comprise cash and cash equivalents, trade
receivables and other receivables (at amortised cost) and unlisted
investments (at FVTPL), as follows:
Unaudited Unaudited Audited
30 September 30 September 31 March
2021 2020 2021
GBP000 GBP000 GBP000
---------------------------- ------------ ------------ --------
Trade and other receivables 18,498 16,370 17,923
Cash and cash equivalents 42,760 11,971 39,431
Investments at FVTPL 2,196 1,577 2,075
---------------------------- ------------ ------------ --------
63,454 29,918 59,429
---------------------------- ------------ ------------ --------
Financial liabilities
Financial liabilities measured at amortised cost comprise trade
payables, other creditors and accruals, loans and borrowings and
lease liabilities as follows:
Unaudited Unaudited Audited
30 September 30 September 31 March
2021 2020 2021
GBP000 GBP000 GBP000
---------------------------- ------------ ------------ --------
Trade payables 1,096 647 1,175
Other payables and accruals 18,925 10,981 18,785
Loans and borrowings 3,649 4,279 4,324
Lease liabilities 11,547 12,524 12,019
---------------------------- ------------ ------------ --------
35,217 28,431 36,303
---------------------------- ------------ ------------ --------
Financial risk management
The Group's activities expose it to a variety of financial
risks: market risk (including cash flow interest rate risk),
liquidity risk and credit risk. Risk management is carried out by
the Board of Directors. The Group uses financial instruments to
provide flexibility regarding its working capital requirements and
to enable it to manage specific financial risks to which it is
exposed.
(a) Market risk
(i) Market price risk
Market price risk arises from uncertainty about the future
prices of financial instruments held in accordance with the Group's
investment objectives. It represents the potential loss that the
Group might suffer through holding market positions in the face of
market movements.
The investments in equity and loan stocks of unquoted companies
are rarely traded and as such the prices are more difficult to
determine than those of more widely traded securities. In addition,
the ability of the Group to realise the investments at their
carrying value will at times not be possible if there are no
willing purchasers. The potential maximum exposure to market price
risk, being the value of the investments as at 30 September 2021,
was GBP2.2 million (30 September 2020: GBP1.6 million, 31 March
2021: GBP2.1 million).
(ii) Interest rate risk
The Group has only GBP3.6 million of external debt, related to
the PiP acquisition, with a fixed interest rate. As the interest
rates on lease contracts are also fixed, interest rate risk is
considered to be very low. Floating rate investments relate to the
interest-bearing deposit account which earned interest based on the
Bank of England rate of 0.1% at 30 September 2021. As at 30
September 2021, if the interest rate increased or decreased by ten
basis points the interest earned would increase or decrease by
GBP200.
(iii) Foreign exchange risk
The Group is not exposed to significant foreign exchange
translation or transaction risk as the Group's activities are
primarily within the UK. Foreign exchange risk is therefore
considered immaterial.
(b) Liquidity risk
Liquidity risk is the risk that the Group will not be able to
meet its financial obligations as they fall due. The Group ensures
that it has sufficient cash or working capital facilities to meet
the cash requirements of the Group in order to mitigate this risk.
Foresight is financed through a combination of share capital,
undistributed profits and cash.
(c) Credit risk
Credit risk refers to the risk that a counterparty will default
on its contractual obligations resulting in financial loss to the
Group. In order to minimise the risk, the Group endeavours only to
deal with companies which are demonstrably creditworthy and this,
together with the aggregate financial exposure, is continuously
monitored. The maximum exposure to credit risk is the value of the
outstanding amount.
The Group does not consider that there is any concentration of
risk within either trade or other receivables. There are no
impairments to trade or other receivables in each of the years
presented.
Credit risk on cash and cash equivalents is considered to be
very low as the counterparties are all substantial banks with high
credit ratings.
Capital risk management
The Group is equity funded and this makes up the capital
structure of the business. Equity comprises share capital, share
premium and retained profits and is equal to the amount shown as
"Equity" in the balance sheet.
The Group's current objectives when maintaining capital are
to:
Safeguard the Group's ability as a going concern so that it can
-- continue to pursue its growth plans
Maintain adequate financial flexibility to preserve its ability
-- to meet financial obligations, both current and long term
-- Maintain regulatory capital
-- Provide a reasonable expectation of future returns to Shareholders
The Group sets the amount of capital it requires in proportion
to risk. The Group manages its capital structure and makes
adjustments to it in the light of changes in economic conditions
and the risk characteristics of underlying assets. In order to
maintain or adjust the capital structure, the Group may issue new
shares or sell assets to reduce debt.
During the six months to 30 September 2021, the Group's strategy
remained unchanged and all regulatory capital requirements of
subsidiaries in the Group were complied with. Foresight Group LLP
has documented its Pillar III disclosures required by the Financial
Conduct Authority under BIPRU 11. These are available on the
Foresight Group website or from its registered office.
Fair value hierarchy
Unquoted investments 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. When valuing an unquoted investment at
fair value the following factors will be considered:
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 following table shows financial instruments recognised at
fair value, analysed between those whose fair value is based
on:
-- Quoted prices (unadjusted) in active markets for identical assets or liabilities (Level 1)
-- Inputs other than quoted prices included in Level 1 that are
observable for the asset or liability, either directly (as prices)
or indirectly (derived from prices) (Level 2)
-- Inputs for the instrument that are not based on observable
market data (unobservable inputs) (Level 3)
Level 1 Level 2 Level 3 Total
As at 30 September 2021 unaudited GBP000 GBP000 GBP000 GBP000
---------------------------------- ------- ------- ------- ------
Unquoted investments - - 2,196 2,196
Net financial instruments - - 2,196 2,196
---------------------------------- ------- ------- ------- ------
Level 1 Level 2 Level 3 Total
As at 30 September 2020 unaudited GBP000 GBP000 GBP000 GBP000
---------------------------------- ------- ------- ------- ------
Unquoted investments - - 1,577 1,577
Net financial instruments - - 1,577 1,577
---------------------------------- ------- ------- ------- ------
Level 1 Level 2 Level 3 Total
As at 31 March 2021 audited GBP000 GBP000 GBP000 GBP000
---------------------------- ------- ------- ------- ------
Unquoted investments - - 2,075 2,075
Net financial instruments - - 2,075 2,075
---------------------------- ------- ------- ------- ------
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
Change
2021 Significant in
fair value unobservable Range Sensitivity fair value
Asset class and valuation GBP000 inputs estimates factor GBP000
-------------------------- ------------ ------------ --------- ----------- ----------
Net financial instruments 2,196 NAV 1x +/-5% +/- 109.8
-------------------------- ------------ ------------ --------- ----------- ----------
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 GBP109,800.
24. 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 Executive Committee ("Exco") members as
the key management personnel and the table below sets out all
transactions with these personnel:
Unaudited Unaudited Audited
six six year
months months
ended ended ended
31 September 30 September 31 March
2021 2020 2021
GBP000 GBP000 GBP000
------------------------- ------------ ------------ --------
Emoluments 600 508 1,050
Partnership profit share - - 3,217
Equity dividends - 275 9,319
Capital redemptions - 2,750 4,763
Other 10 10 25
IPO proceeds - - 148,070
------------------------- ------------ ------------ --------
Total 610 3,543 166,444
------------------------- ------------ ------------ --------
Other related party transactions
At 30 September 2021, the Group owed Beau Port Investments
Limited, a privately owned company of Bernard Fairman, GBP265,000
(30 September 2020: GBPnil, 31 March 2021: GBP530,000) in unpaid
dividends. This balance is to be fully repaid by 31 March 2022 and
Bernard Fairman has agreed to reduce his salary for the year ending
31 March 2022 as a result of this dividend.
Details of other transactions with key management personnel for
the year ended 31 March 2021, inclusive of the six months ended 30
September 2020, are included in the annual financial statements for
the year ended 31 March 2021.
25. Subsequent events
There are no material subsequent events to report from 30
September 2021 to the date of issue of these accounts.
26. Restatement of corresponding amounts
As restated As reported Change
31 March 31 March 31 March
2021 2021 2021
GBP000 GBP000 GBP000
--------------------------------------------------- ----------- ----------- --------
Non-current assets
Contract costs - incremental placement agency fees 712 - 712
--------------------------------------------------- ----------- ----------- --------
Trade and other receivables - trade receivables 1,471 - 1,471
Trade and other receivables - staff advances 1,940 - 1,940
--------------------------------------------------- ----------- ----------- --------
Current assets
Contract costs - incremental placement agency fees 125 - 125
--------------------------------------------------- ----------- ----------- --------
Trade and other receivables - trade receivables 9,517 10,988 (1,471)
Trade and other receivables - prepayments 1,958 2,795 (837)
Trade and other receivables - staff advances 740 2,680 (1,940)
--------------------------------------------------- ----------- ----------- --------
As restated As reported Change
31 March 31 March 31 March
2020 2020 2020
GBP000 GBP000 GBP000
--------------------------------------------------- ----------- ----------- --------
Non-current assets
Contract costs - incremental placement agency fees 765 - 765
--------------------------------------------------- ----------- ----------- --------
Trade and other receivables - trade receivables 573 - 573
Trade and other receivables - staff advances 1,280 - 1,280
--------------------------------------------------- ----------- ----------- --------
Current assets
Contract costs - incremental placement agency fees 91 - 91
--------------------------------------------------- ----------- ----------- --------
Trade and other receivables - trade receivables 6,269 6,842 (573)
Trade and other receivables - prepayments 2,042 2,898 (856)
Trade and other receivables - staff advances 320 1,600 (1,280)
--------------------------------------------------- ----------- ----------- --------
Corresponding amounts in the financial statements to 31 March
2021 have been restated due to reclassification of amounts
presented in current assets to non-current assets and amounts
presented in trade and other receivables to contract costs. These
reclassifications are as follows:
-- The adjustment to contract costs arises from the
reclassification of capitalised incremental placement agency fees
from trade and other receivables - prepayments. In the annual
financial statements for the year ended 31 March 2021, capitalised
incremental placement agency fees were included in trade and other
receivables - prepayments as they were not material for disclosure
as contract costs
-- The adjustment to trade and other receivables - trade
receivables from current to non-current arises as amounts were not
expected to be recovered within twelve months of the reporting date
in respect of Foresight Williams Technology EIS Fund management
fees
-- The adjustment to trade and other receivables - staff
advances from current to non-current arises as the amounts were not
expected to be released to profit and loss within twelve months of
the reporting date
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AITS
Foresight's Accelerated Inheritance Tax Solution
AUM
Assets Under Management (FUM + DUM)
BPIL
Beau Port Investments Limited
CFO
Chief Financial Officer of Foresight Group
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
EIS
Enterprise Investment Scheme
ESG
Environmental, Social and Governance
FCM
Foresight Capital Management
FEIP
Foresight Energy Infrastructure Partners
FGCI
Foresight Group CI Limited
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
FY20/21/22
Twelve months ending 31 March 2020/21/22
H1 FY20/21/22
Six months ending 30 September 2020/21/22
IFRS
International Financial Reporting Standard(s)
IPO
Initial Public Offering
ISAE 3402
International Standard on Assurance Engagements - 3402,
Assurance Reports on Controls at a Service Organisation
ITS
Foresight's Inheritance Tax Solution
JLEN
JLEN Environmental Assets Group
LTIP
Long-term incentive plan
NAV
Net Asset Value
OEIC
Open Ended Investment Company
O&M
Operations and Maintenance
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
TCFD
Task Force on Climate-related Financial Disclosures
VCT
Venture Capital Trust
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END
IR TPBLTMTBMBFB
(END) Dow Jones Newswires
December 09, 2021 02:00 ET (07:00 GMT)
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