REG - Bridgepoint Group - Half-year Report
25/07/2023 07:00
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RNS Number : 0279H Bridgepoint Group plc 25 July 2023
Bridgepoint Group plc
Robust first half performance in a volatile market
Bridgepoint today announces a strong first half of 2023 despite macro
volatility with significant growth in underlying income and fee related
earnings.
Key highlights include:
Financials
• Fee paying assets under management (FPAUM) of €24.6 billion, a 24% increase
from H1 2022;
• Management fees of £124.6 million (including the recognition of only £2.6
million of late fees relating to BE VII) and underlying Fee Related Earnings
(FRE) of £42.9 million increased by 24% and 91% respectively compared to H1
2022. Profit before tax of £53.1 million increased by 10% compared to the
same period;
• Investment income of £12.7 million (H1 2022: £38.7 million) due to lower
exit activity in H1 2023. Expectations for investment income in 2023 and 2024
unchanged in aggregate but weighted to H2 2023 and 2024;
• Capital deployment on track at €1.7 billion invested in H1 2023 (H1 2022:
€3.1 billion); and
• Total assets under management (AUM) of €39.5 billion, an increase of 6% from
H1 2022 and 48% since IPO (FY 2020).
Fundraising
• Bridgepoint Europe VII has commitments of €6 billion of its €7 billion
target and will accept new investors until Q1 2024 to allow investors to use
both 2023 and 2024 allocations;
• The fundraise is now well on the way to completion having received additional
capital commitments of some €0.5 billion over the last quarter. It has also
now exceeded its predecessor fund in size;
• Bridgepoint Direct Lending III and associated separately managed accounts
("SMAs") closed with investable capital of over €3.4 billion. Bridgepoint
Credit Opportunities IV and Bridgepoint Growth II will close within the next
12 months; and
• Expect to launch BDC V and BDL IV into the market in the next 12 months.
Fund performance
• Continued high quality, resilient and stable fund performance with all funds
remaining on or ahead of plan, benefitting from continued organic growth and
cash generation;
• Most recent fully invested funds, BE VI and BDC III, have posted valuation
uplifts at 30 June 2023, are both ahead of plan and top quartile for their
vintages; and
• Continued attractive conditions for the deployment of credit funds.
Dividend and Outlook
• Interim dividend of 4.4 pence per share and final dividend expected to be no
less than 4.4 pence per share;
• Combined with capital return of ca. 3.8 pence per share via share buyback in
H1 2023, total capital return to shareholders in H1 2023 more than double that
in H1 2022; and
• Bridgepoint is well positioned to deliver 2023 performance in line with
current expectations and confirms full year guidance recognising potential
volatility in the precise timing of completing exits in process which drive
investment income splits between 2023 and early 2024.
Commenting on this performance, William Jackson, Chairman, said:
"Bridgepoint has delivered strong FRE growth in the first half of 2023 driven
by both our equity and debt strategies combined with careful cost management.
This performance comes despite market uncertainty and continued macro
volatility.
"The capital raising process for BE VII is well on the way to completion and
the fund has now exceeded its predecessor fund in size with €6 billion of
commitments received to date. In a continued slow fund-raising market we will
keep BE VII open for commitments until early 2024 to allow investors who are
in process to participate in the fund using both 2023 and 2024 capital
allocations.
"BE VII has attracted major new Limited Partners from Asia and EMEA
significantly strengthening the firm's investor base for the longer term.
"Fund capital deployment remains on track across the Company. BE VII has
committed 18 per cent. of its primary capital, as it builds a high-quality
portfolio of growth assets and BDC IV has committed 69 per cent. of its
primary capital. In Credit, across the Direct Lending and Credit Opportunities
strategies the team has deployed around €1.7 billion of capital over the
last 12 months.
"These results reflect a period of strong FRE performance, careful management
of cost growth to match progress in fundraising and the fact that performance
related income is weighted heavily towards the second half. We continue to
be confident in our ability to deliver investment income in line with current
expectations in 2023 and 2024 in aggregate. The business remains well
positioned for current times with multiple routes to delivering performance.
"We are excited by the strategic growth prospects for the Group as we continue
to progress our business development plans and remain confident in
Bridgepoint's ability to deliver attractive returns for our fund investors and
our shareholders alike."
Presentation and Q&A
The 2023 Interim Accounts, along with
presentation slides, will be available on the Bridgepoint website:
https://www.bridgepointgroupplc.com/results-reports-and-presentations
(https://www.bridgepointgroupplc.com/results-reports-and-presentations)
Additionally, management will hold a webcast to answer questions from analysts
and investors at 8.30 a.m. UK time on Tuesday 25(th) July:
Join via weblink:
https://www.lsegissuerservices.com/spark/BRIDGEPOINTGROUP/events/04f32881-f225-49e6-93b7-b718784cd687
(https://www.lsegissuerservices.com/spark/BRIDGEPOINTGROUP/events/04f32881-f225-49e6-93b7-b718784cd687)
Register for conference call:
https://services.choruscall.za.com/DiamondPassRegistration/register?confirmationNumber=9857498&linkSecurityString=19416df698
(https://services.choruscall.za.com/DiamondPassRegistration/register?confirmationNumber=9857498&linkSecurityString=19416df698)
INTERIM DIVIDEND PAYMENT TIMETABLE
The timetable for the payment of the interim dividend of 4.4 pence per share
announced today is as follows:
Ex-dividend date: 17 August 2023
Record date: 18 August 2023
Payment date: 25 September 2023
ENQUIRIES
Bridgepoint
Analysts and investors Media
Adam Key Christian Jones / James Murray
adam.key@bridgepoint.eu (mailto:adam.key@bridgepoint.eu) christian.jones@bridgepoint.eu (mailto:christian.jones@bridgepoint.eu)
+44 7833 748010 james.murray@bridgepoint.eu (mailto:james.murray@bridgepoint.eu)
+44 20 7034 3500
FGS Global (Public Relations Adviser to Bridgepoint)
Charles O'Brien / +44 20 7251 3801 / +44 7825 043 656
Anjali Unnikrishnan / +44 20 7251 3801 / +44 7826 534 233
bridgepoint@fgsglobal.com (mailto:bridgepoint@fgsglobal.com)
Abbreviated income statement
£ million Six months ended Six months ended Six months ended Change Change
30 June
30 June
31 December
H1 23
H1 23
2023
2022
vs H1 22
vs H2 22
2022
(%)
(%)
Management and other fees 124.6 100.9 140.6 23.5% (11.4)%
Investment income 12.7 38.7 26.2 (67.2)% (51.5)%
Total operating income 137.8 140.1 167.3 (1.6)% (17.6)%
Total expenses* (83.5) (79.6) (91.8) 4.9% (9.0)%
Total expenses (excluding exceptional expenses)* (82.2) (78.9) (89.3) 4.2% (8.0)%
EBITDA* 54.3 60.5 75.5 (10.2)% (28.1)%
Underlying EBITDA* 55.6 61.2 78.0 (9.2)% (28.7)%
Underlying FRE* 42.9 22.5 51.8 90.7% (17.2)%
Depreciation and amortisation (8.6) (9.1) (9.2) (5.5)% (6.5)%
Net other income/(expense)** 7.4 (3.1) 12.8 (338.7)% (42.2)%
Net other income/(expense) (excluding exceptional net finance expense)** 1.5 (1.7) (2.2) (188.2)% (168.2)%
Underlying profit before tax 50.0 51.9 68.1 (3.7)% (26.6)%
Reported profit before tax 53.1 48.3 79.1 9.9% (32.9)%
Tax (4.9) (3.4) (3.4) 44.1% 44.1%
Reported profit after tax 48.2 44.9 75.7 7.3% (36.3)%
* 2022 total expenses, total expenses (excluding exceptional expenses),
EBITDA, underlying EBITDA, underlying FRE, underlying operating profit and
reported operating profit has been restated to exclude non-operating foreign
exchange gains/losses.
** 2022 net other income/(expense) and net other income/(expense) (excluding
exceptional net finance expense) has been restated to include non-operating
foreign exchange gains/losses.
Consolidated balance sheet
Summarised consolidated balance sheet As at As at Change
31 December 2022
£ million 30 June (%)
2023
Assets
Non-current assets 565.2 540.0 4.7%
Current assets 1,376.8 1,247.8 10.3%
Total Assets 1,942.0 1,787.8 8.6%
Liabilities
Non-current liabilities 962.5 757.1 27.1%
Current liabilities 220.0 258.0 (14.7)%
Total Liabilities 1,182.5 1,015.1 16.5%
Net Assets 759.5 772.7 (1.7)%
Equity
Share capital and premium 289.9 289.9 0.0%
Other reserves 10.8 9.1 18.7%
Retained earnings 458.8 473.7 (3.1%)
Total Equity 759.5 772.7 (1.7%)
Financial summary
Six months ended Six months ended 30 June Six months ended Change Change
30 June
31 December
H1 23
H1 23
2023 2022
2022
vs H1 22
vs H2 22
(%)
(%)
Total AUM (€bn) 39.5 37.1 38.0 6.5% 3.9%
Fee Paying AUM (€bn) 24.6 19.8 23.4 24.2% 5.1%
Management fee margin on Fee Paying AUM (%) 1.16% 1.17% 1.16% (0.0)ppt (0.01)ppt
Management and other fees (£m) 124.6 100.9 140.6 23.5% (11.4)%
Investment income (£m) 12.7 38.7 26.2 (67.2)% (51.5)%
Total operating income (£m) 137.8 140.1 167.3 (1.6)% (17.6)%
Total expenses (excluding exceptional items)* (£m) (82.2) (78.9) (89.3) 4.2% (8.0)%
Underlying EBITDA* (£m) 55.6 61.2 78.0 (9.2)% (28.7)%
Underlying EBITDA margin* (%) 40.3% 43.7% 46.6% (3.3)ppt (6.3)ppt
Underlying FRE* (£m) 42.9 22.5 51.8 90.7% (17.2)%
Underlying FRE margin* (%) 34.3% 22.2% 36.7% 12.1ppt (2.4)ppt
Underlying profit before tax (£m) 50.0 51.9 68.1 (3.7)% (26.6)%
Reported profit before tax (£m) 53.1 48.3 79.1 9.9% (32.9)%
Reported profit after tax (£m) 48.2 44.9 75.7 7.3% (36.3)%
Reported pro forma basic and diluted EPS (pence) 5.9 5.5 9.3 7.3% (36.3)%
Underlying pro forma basic and diluted EPS (pence) 5.6 6.0 8.0 (6.6)% (30.0)%
* 2022 total expenses (excluding exceptional items), underlying EBITDA,
underlying EBITDA margin, underlying FRE and underlying FRE margin has been
restated to exclude non-operating foreign exchange gains/losses.
Reconciliation between statutory and underlying income statements
Six months ended 30 June 2023 Six months ended 30 June 2022
£ million Underlying Excluded items Reported Underlying Excluded items Reported
Management and other fees 124.6 - 124.6 100.9 - 100.9
Fair value remeasurement of investments and carried interest 12.7 - 12.7 38.7 - 38.7
Other operating income 0.5 - 0.5 0.5 - 0.5
Total operating income 137.8 - 137.8 140.1 - 140.1
Personnel expenses (61.0) (0.3) (61.3) (60.9) (0.6) (61.5)
Other operating expenses (21.2) (1.0) (22.2) (18.0) (0.1) (18.1)
Total expenses (82.2) (1.3) (83.5) (78.9) (0.7) (79.6)
EBITDA 55.6 (1.3) 54.3 61.2 (0.7) 60.5
EBITDA Margin 40.3% 39.4% 43.7% 43.2%
FRE 42.9 (1.3) 41.6 22.5 (0.7) 21.8
FRE Margin 34.3% 33.3% 22.2% 21.5%
Depreciation and amortisation (7.1) (1.5) (8.6) (7.6) (1.5) (9.1)
Net other income/(expense) 1.5 5.9 7.4 (2.2) 15.0 (3.1)
Profit Before Tax 50.0 3.1 53.1 51.9 (3.6) 48.3
Tax (4.7) (0.2) (4.9) (3.4) - (3.4)
Profit After Tax 45.3 2.9 48.2 48.5 (3.6) 44.9
Chairman's statement
William Jackson
I'm pleased to report that Bridgepoint has enjoyed a strong first half of
2023.
During the first six months of the financial year the Company recorded strong
fund performance, enjoyed attractive credit deployment conditions, made
positive progress on fundraisings and committed fund capital in line with
original expectations by exploiting attractive buying conditions in the
European Middle Market.
Market conditions in H1 2023 saw extended transaction timelines with exits,
fundraising and new investments all taking longer to complete as parties
undertake robust and detailed diligence. As we move into H2, we are already
seeing activity increase in the M&A market. In this context, Bridgepoint
remains on track to deliver full year results in line with financial guidance
albeit performance is weighted to the second half of the year with
transactions across the business taking longer to complete.
Our confidence ahead reflects the strength of both our favourable middle
market positioning and Bridgepoint's business model which provides multiple
routes to deliver targeted financial performance.
In summary:
· In the first half of 2023, Bridgepoint generated management and other
fees of £124.6 million (an increase of 24 per cent. from H1 2022), which
included the recognition of only £2.6 million of late fees relating to BE
VII, underlying FRE of £42.9 million (an increase of 91 per cent. from H1
2022) and profit before tax of £53.1 million (an increase of 10 per cent.
from H1 2022);
· As normal we currently have several funds raising, or about to raise, new
capital. The Bridgepoint Europe VII ("BE VII") fund raise is now well on the
way to completion. It received capital commitments of some €0.5 billion over
the last quarter and has now exceeded its predecessor fund in size with €6
billion of commitments received to date. In slower fundraising markets the
fund will remain open for commitments until early 2024 to allow investors in
process to participate in the fund using both 2023 and 2024 capital
allocations. Importantly from a financial perspective, investors joining in Q1
2024 pay catch up fees backdated to the fund's first closing last year;
· In more favourable credit market conditions Bridgepoint Direct Lending
III ("BDL III") and associated Separately Managed Accounts ("SMAs") held a
final close in the first half of 2023 with investable capital of over €3.4
billion. This is materially larger than the predecessor vintage, underlining
strong investor appetite for the Direct Lending product in the current market;
· Bridgepoint Credit Opportunities IV ("BCO IV") and Bridgepoint Growth II
("BG II") are currently in the market and due to close in the next 12 months.
Bridgepoint Development Capital V ("BDC V"), Bridgepoint Direct Lending IV
("BDL IV") and Bridgepoint Credit Opportunities V ("BCO V") are all expected
to begin fundraising in the next 12 months;
· Fund capital deployment remains on track across the Group with M&A
markets starting to see renewed activity in the last quarter. BE VII has now
committed 18 per cent. of its primary capital, as it builds a high quality
portfolio of growth assets and Bridgepoint Development Capital IV ("BDC IV")
has committed 69 per cent. of its primary capital. In credit, across the
Direct Lending and Credit Opportunities strategies the team has deployed
around €1.7 billion of capital over the last 12 months;
· Bridgepoint's equity funds also agreed a range of exits during the first
half of the year which will return over €600 million to fund investors.
These transactions have been weighted mainly to historic funds. The pipeline
of exits on more recent Funds (Bridgepoint Development Capital III ("BDC
III"), Bridgepoint Europe V and VI ("BE V" and "BE VI"), where the Company has
a more material direct economic interest, continues to grow and a return of
some €4 billion of capital is targeted over the next 18 months. We currently
expect our targeted exits for 2023 will be delivered in the second half of the
year, however, some of these exits may move into the 2024 financial year in
current market conditions;
· Strong value creation has also continued across our fund portfolios, with
all flagship funds enjoying trading either on or ahead of plan. Both credit
and equity funds' performance continue to be strong reflecting their sector
positioning, low exposure to companies dependent upon discretionary spend and
the start of input price deflation which we are now seeing in certain sectors.
Company financial performance
The positive performance of our credit and equity funds during the first half
of 2023 and the associated Company financial performance is testament to
Bridgepoint's depth of business and cycle experience and the resilience and
professionalism of our team against a backdrop of challenges in geopolitics,
financial markets, and monetary policy responses to address inflation.
In H1 2023, AUM increased by 6.5 per cent. compared to H1 2022 to reach
€39.5 billion. This represents growth of 48 per cent. since IPO when AUM (at
FY 2020) was €26.6 billion. Across our equity and credit funds, €3.3
billion was deployed in new and follow-on investments and €3.0 billion of
capital was realised during this same period. With the extension to the BE VII
fundraising period, catch up fees relating to future commitments will be
charged from first close and recognised in H2 2023 or H1 2024 depending on the
timing of those final commitments.
As noted above, we continue to be confident in our ability to deliver
investment income in line with current expectations in 2023 and 2024 in
aggregate.
Management fees and other fees and underlying FRE increased by 24 per cent.
and 91 per cent. respectively compared to H1 2022 and profit before tax
increased by 10 per cent. This performance was driven by income from recently
raised funds in H1 2023 combined with carefully matching cost growth to
progress in fundraising. We are well positioned to deliver performance in line
with current expectations recognising volatility in the precise timing of
completing exits in process which drives investment income splits between 2023
and early 2024.
Commentary on fundraising markets
Long term tailwinds behind private markets remain very strong, but since March
2023 macro volatility has led to increased caution with a number of investors
continuing to face allocation issues. The so-called denominator effect
(falling stock market valuations mathematically increasing fund allocations to
other asset classes) has been exacerbated by the relative outperformance of
private assets over the last two years, whilst lower returns of capital from
historic fund commitments have also constrained some LP's new commitments.
With over 85 per cent. of the fund's targeted capital of €7 billion now
committed, the BE VII process is well on the way to completion and will round
out in early 2024. Encouragingly, whilst some mature existing BE investors
have faced allocation issues to date this has been compensated for by a range
of investors with less mature programmes investing in BE VII including major
new Limited Partners ("LPs") from both Asia and EMEA. This significantly
strengthens the firm's investor base for the longer term.
The BE VII process will be followed shortly by the BDC V fundraising which has
already received significant LP interest reflecting the outstanding
performance of our BDC funds in recent years.
Investing in current market conditions
Bridgepoint has been tested through previous cycles and called the autumn of
this economic cycle early. As a result, the firm has constructed credit and
equity portfolios accordingly, focusing on niche sectors with significant
tailwinds behind them. Our investment thesis is focused on growth middle
market companies and deploys leverage prudently. This is reflected in our
robust underlying fund performance with all funds on or ahead of performance
plan. In particular, BE VI and BDC III remain ahead of plan and top quartile
in their latest respective benchmark vintages and are well positioned to
deliver meaningful investment income for the Company in the medium term.
As we look forward, it is worth noting that the PE market is witnessing a new
pricing paradigm with the end of low-cost debt in volume for the time being.
As a result, the middle market, which does not typically use significant
leverage, is currently the most active space with returns in 2023 driven by
real growth and cash generation. Portfolio construction, pricing discipline
and sector selection are critical in the current market, as is a hands-on
approach to value creation to driving value in portfolio companies.
Bridgepoint continues to focus on sectors and niches identified by our
thematic origination strategy doubling down on areas where we have real
conviction and companies benefit from high quality of earnings and strong net
cash conversion. Once in the portfolio, value creation continues to be driven
by international expansion, buy-and-build programmes and driving operational
excellence from a balanced portfolio with low exposure to cyclical sectors and
discretionary spend.
Our Private Credit investment thesis for direct lending, also designed around
the middle market, features first lien, secured, uni-tranche, floating rate
credits. We are typically supporting European financial sponsors to make
acquisitions in their private equity strategies where we are very often the
sole lender. While our most recent fund, BDL III, was targeting 7 to 9 per
cent. unlevered returns when launched, thanks to the increase in base rates
since the beginning of last year, it is currently realising unlevered returns
in low double digits with no realised losses in the strategy since inception.
Importantly the credit quality of the portfolio provides significant comfort
that this trend will continue despite the volatile macro environment.
Private Equity
So far this year our Private Equity funds have committed €0.8 billion to six
platform investments, and returned €0.2 billion to investors.
BE VII has made good progress with its new investment activity, acquiring
Vivacy, a global personal healthcare company as well as agreeing to purchase
Windar, a leading global specialist manufacturer of towers and foundations for
onshore and offshore wind turbines. To date the fund has made >50 add on
acquisitions of which 6 have been transformational.
BDC III has continued to perform well with multiple add-on acquisitions agreed
in H1 2023 and continuing to rank as one of Europe's highest performing
private equity funds for its vintage. BDC IV has now committed 69 per cent. of
its primary fund capital, providing confidence that it is positioned to
complete its investment period in 2024.
The outlook for portfolio exits presents both challenges and opportunities.
The macro environment is complex and buyers are more cautious but the
expectation gap between buyers and sellers is narrowing. Selling assets today
remains more challenging than in previous periods, but the value of growth
remains at a premium in the current market. Safe strategic assets remain
highly sought after. Embedded and portable leverage, where available, is also
highly attractive to buyers.
Middle market sized companies are also more attractive to large corporates who
don't want to 'bet the farm' with large transactions in cautious times and 98
per cent. of Bridgepoint fund realisations over the last 20 years have been
delivered via private transactions, so our funds are not reliant on the IPO
market for returns. In that context, we have agreed two exits recently both
from BE III, Diaverum, a leading operator of private kidney dialysis clinics
and DMC, a leading designer and manufacturer of connector technology systems
for high-voltage power infrastructure. In particular, DMC was exited at an
attractive EBITDA multiple, delivering a money multiple of 21.7 times.
We expect to deliver further exits in the second half of the year with work on
assets in BDC III, BE V and BE VI already underway. As a result, we have a
good pipeline of potential exits in H2 2023 however in current market
conditions there is the possibility of some movement in exits from 2023 into
2024.
Private Credit
Bridgepoint Credit enjoyed a strong first half of 2023. AUM reached €12.0
billion, an increase of 76 per cent. since Bridgepoint acquired EQT Credit.
Bridgepoint Credit funds have now invested c. €8.6 billion in over 200
companies since the acquisition. It is worth noting that the mix of credit
capital has moved towards SMAs and other bespoke vehicles over time. This
reflects the strength of our origination and the sophistication of the
platform enabling us to provide credit investors with vehicles to match their
risk appetite and other investment criteria as an alternative to investing in
our main funds.
Overall, during 2023 credit strategies benefitted from more volatile lending
markets and higher base rates. Bridgepoint Credit is using its disciplined
process to build well diversified funds that deliver attractive returns to
investors whilst mitigating risks. Since inception our flagship Direct Lending
funds have yet to record a loss on any lending exposure.
Across the Direct Lending and Credit Opportunities strategies the team
deployed around €1.7 billion of capital over the last year compared to
realisations of €0.6 billion. BDL III has now invested over €1.9 billion
in 27 companies and with the fund 68 per cent. invested we have commenced
preparations for BDL IV. BCO IV is now 67 per cent. deployed and fundraising
for BCO V will commence within the next 12 months. CLO 4 closed in January
2023 and we expect to close CLO 5 in Q3 2023.
Business Development
As set out at the time of our IPO in July 2021 Bridgepoint remains committed
to continuing to deepen and broaden its middle market investment platform to
accelerate current organic growth through selective acquisition activity. As
noted in March, falling sector valuations have broadened the potential horizon
for potential M&A opportunities and we are engaged in active discussions
which we would expect to finalise positively or negatively by the year end.
Bridgepoint's day job is making good acquisitions. Not surprisingly,
therefore, any acquisition for the platform will have to meet the rigorous
gatekeeping metrics which have been discussed in detail in prior company
announcements. These include strong industrial logic, the ability to diversify
the Group's income base, the need for a strong cultural fit and the ability
for an acquisition to be accretive to short and medium term shareholder
returns.
Turning to our current platform, alongside a rigorous focus on efficiency and
prudent cost control, the Company continues to invest in its operating
resources in a controlled and focused manner. During the first half of the
year we have strengthened further our operating resource which drives
portfolio value creation. We have also continued to expand our investor
relations and solutions presence on the ground globally. In this regard we
have recently made senior Investor Relations hires in the United States
(replacing retirees) and we will be opening new Singapore and Seoul offices
dedicated to investor services in Asia.
By deepening our resource in the key area of Investor Relations and developing
deeper regional coverage while deploying a number of software solutions to
enable efficiency, the Company is well placed to support new products and
further business development.
Dividend
I am pleased to confirm that the Company will be maintaining its progressive
dividend policy this year and will pay an interim dividend of 4.4p per share
in September. We expect our final dividend to be not less than 4.4p per share.
When combined with the capital return of ca. 3.8 pence per share via share
buyback in H1 2023, total capital return to shareholders in H1 2023 was more
than double that in H1 2022, reflecting the Board's strong confidence in the
prospects of the Company.
Outlook
Bridgepoint is encouraged by the outlook for the full year and confirms full
year guidance. Whilst some revenue recognition may be delayed by the revised
BE VII timetable we expect this to be mitigated by careful cost control in the
full year to December 2023. We also remain confident in completing our
targeted exits for H2 2023 which drive part of the Company's investment
income. However, we recognise that the precise timing of exit processes are
not directly within our own control and inevitably have some unpredictability
in current markets. As a result, both fundraising and exits will be subject to
external market conditions not materially deteriorating from today.
Looking ahead, Bridgepoint benefits from having multiple avenues for both
organic and M&A growth. The Company remains asset light, with less than 1
per cent. of AUM as investments, excluding consolidated CLOs, and together
with over £300 million of cash and discounted carried interest receivable
represents around 38 per cent. of our current market capitalisation also
providing material strength to reinforce our business growth strategy.
More widely the alternative investment market continues to enjoy the prospect
of significant future tailwinds with portfolio rebalancing driving increased
long-term allocations as new investors continue to enter the asset class. As a
result, medium term market growth potential remains unchanged, offering a
significant runway of future growth for our business.
BE VII is now already larger than its predecessor and has attracted strong
support from both new and existing investors. In particular, we have seen a
significant acceleration of our strategy for geographic expansion of the
investor base which creates a strong foundation for future fund cycles.
With this market background driving organic growth and with our long duration
capital, strong balance sheet, asset light model, high and stable margins,
strong cash generation and attractive dividend yield, Bridgepoint's outlook
remains attractive. This resilience was central to the Board's decision to
commence a tactical share buyback programme earlier in the year which is now
more than 65 per cent. complete.
Looking forward, we expect market volatility and inflation pressures to
continue in the near term and have positioned our investment activity
accordingly. Bridgepoint will obviously not be immune to macroeconomic events,
but we are excited by the strategic growth prospects for the Group and the
long term prospects for our sector as we continue to progress our business
development plans and remain confident in the Company's ability to deliver
attractive returns for both our fund investors and our shareholders alike.
William Jackson
Chairman
CFO statement
The Group's financial results to 30 June 2023 reflect the step up in
profitability from the latest flagship equity fund BE VII and prudent cost
control.
Underlying fee related earnings of £42.9 million compares to £22.5 million
in the first half of 2022 which is driven by increased management fees of
£124.6 million (including the recognition of only £2.6 million of late fees
relating to BE VII) compared to £100.9 million in the first half of 2022. The
increase of 24% reflects the start of fees from BE VII and growth of fee
earning AUM in our Credit business with good momentum on deployment to take
advantage of the higher interest rate environment. This step up in fees
delivered an underlying FRE margin of 34%, in line with our short-term
guidance.
Total operating income of £137.8 million, a reduction of £2.3 million
compared to the comparative period, have been impacted by lower investment
income of £12.7 million, due to modest changes to fund valuations and a
comparatively slower period for exits. As previously advised, investment
income in 2023 is expected to be heavily weighted towards the second half
driven by exit activity.
In 2023, we now expect investment income to be c.15% of total income versus
previous guidance of c.20%, with a corresponding catch up in 2024.
Costs (excluding exceptional expenses) of £82.2 million have increased
modestly since the first half of 2022, largely reflecting higher premises
costs of our new London office, but flat personnel expenses reflecting a
deliberate phasing of investment team hires to match fundraising progress and
timing of replacement hires for natural attrition.
In January, we announced a £50 million share buyback programme, to
reflect the confidence we have in the resilience of our business. We are
more than 65 per cent of the way through this programme at 30 June 2023.
The Group's balance sheet remains well capitalised. At 30 June 2023, the Group
had a net cash position of £258.4 million (excluding cash within consolidated
CLOs) and had a renewed and larger banking facility of £200 million, which is
undrawn. Furthermore, the Group holds investments in funds of £356.8 million,
including the Group's exposure to CLO notes, and carried interest at a
discounted value of £47.1 million, which provides opportunity for further
future profitability and conversion to cash in the medium-term.
Adam Jones
Group Chief Financial Officer & Chief Operating Officer
Guidance
· Fundraising: Continued progress on BE VII which is expected to hold its
final close in early 2024. The target remains €7bn. BDC V, BDL IV and BCO V
expected to begin fundraising within the next 12 months.
· Investment income: Continue to expect investment income to represent
around 20% of total income in the short term. In 2023, we now expect
investment income to be c.15%, with a catch up in 2024.
· Cost growth: Some inflationary pressures on costs in the near term and
more modest growth in headcount and personnel costs over medium term. Actual
cost growth in H1 was below high single digit guidance despite inflationary
pressures being evident. This reflects deliberate phasing of investment team
hires to match fundraising progress.
· FRE margin: Short term guidance remains unchanged at 30-35%. 2024
expected to be slightly below the bottom of the short-term guidance,
reflecting the usual margin profile of a PE cycle where continued successful
divestments in 2023 and 2024 will, as expected, reduce fees recognised on
invested capital ahead of BDC V generating fees from January 2025.
· Credit deployment: Expect to deploy at least €1bn of incremental FPAUM
each year in Credit in the short term.
· Tax: Subject to any changes in the UK tax code, we expect our 2023
effective tax rate to be at the top end of the 5% ‑ 10% long term range.
Summary
Financial summary
Six months ended Six months ended 30 June Six months ended Change Change
30 June
31 December
H1 23
H1 23
2023 2022
2022
vs H1 22
vs H2 22
(%)
(%)
Total AUM (€bn) 39.5 37.1 38.0 6.5% 3.9%
Fee Paying AUM (€bn) 24.6 19.8 23.4 24.2% 5.1%
Management fee margin on Fee Paying AUM (%) 1.16% 1.17% 1.16% (0.0)ppt (0.01)ppt
Management and other fees (£m) 124.6 100.9 140.6 23.5% (11.4)%
Investment income (£m) 12.7 38.7 26.2 (67.2)% (51.5)%
Total operating income (£m) 137.8 140.1 167.3 (1.6)% (17.6)%
Total expenses (excluding exceptional items)* (£m) (82.2) (78.9) (89.3) 4.2% (8.0)%
Underlying EBITDA* (£m) 55.6 61.2 78.0 (9.2)% (28.7)%
Underlying EBITDA margin* (%) 40.3% 43.7% 46.6% (3.3)ppt (6.3)ppt
Underlying FRE* (£m) 42.9 22.5 51.8 90.7% (17.2)%
Underlying FRE margin* (%) 34.3% 22.2% 36.7% 12.1ppt (2.4)ppt
Underlying profit before tax (£m) 50.0 51.9 68.1 (3.7)% (26.6)%
Reported profit before tax (£m) 53.1 48.3 79.1 9.9% (32.9)%
Reported profit after tax (£m) 48.2 44.9 75.7 7.3% (36.3)%
Reported pro forma basic and diluted EPS (pence) 5.9 5.5 9.3 7.3% (36.3)%
Underlying pro forma basic and diluted EPS (pence) 5.6 6.0 8.0 (6.6)% (30.0)%
* 2022 total expenses (excluding exceptional items), underlying EBITDA,
underlying EBITDA margin, underlying FRE and underlying FRE margin has been
restated to exclude non-operating foreign exchange gains/losses.
Throughout the course of this section reference is made to adjusted measures
which the Company considers to be alternative performance measures ("APMs") or
key performance indicators ("KPIs"). These are not defined or recognised under
International Financial Reporting Standards ("IFRS") but are used by the
Directors and management to analyse the business and financial performance,
track the Group's progress and help develop long-term strategic plans.
Definitions of each of the APMs used within the CFO Statement and how they can
be reconciled back to the condensed consolidated financial statements are set
out in the Alternative Performance Measures (APMs) section.
The analysis below includes two periods for comparison. First, the six months
ended 30 June 2022, which is required to be included within the condensed
financial information. In addition, the six months ended 31 December 2022 has
been included as it provides a helpful comparison to the performance in the
six months to 30 June 2023 because of underlying drivers such as invested
capital and headcount.
Fundraising
In 2023 to date, fundraising for BE VII continued steadily and now amounts to
€6 billion of commitments (including associated vehicles) despite continued
uncertainty in the fundraising market. We now expect the fund to admit final
investors in early 2024.
BDL III concluded fundraising in May. In total, including separately managed
accounts, the strategy has raised over €3.4 billion of investable capital
since its launch in 2021.
Fundraising is also underway for BG II and BCO IV, with the latter expected to
conclude fundraising in the second half of the year. CLO 5 is currently under
construction and is expected to launch during the third quarter.
Fundraising for BDC V, BDL IV and BCO V is expected to commence within the
next twelve months.
Total AUM development during the period
€ billion Private equity Credit Total
30 June 2022 26.7 10.4 37.1
31 December 2022 26.8 11.2 38.0
30 June 2023 27.5 12.0 39.5
Total AUM at 30 June 2023 was €39.5 billion compared to €38.0 billion at
the end of the 2022, of which €27.5 billion is Private Equity and €12.0
billion in Credit. The 3.9% increase since 31 December 2022 is primarily due
to additional commitments raised for BE VII.
Total Fee Paying AUM development during the period
€ billion Private equity Credit Total
30 June 2022 13.3 6.5 19.8
31 December 2022 16.4 7.0 23.4
30 June 2023 16.9 7.7 24.6
Fee Paying AUM at 30 June 2023 was €24.6 billion compared to €23.4 billion
at the end of 2022, with the 5.1% increase due to additional commitments
raised for BE VII becoming fee paying and an increase in invested capital in
our Credit strategies. In aggregate our Credit business is expected to add at
least €1 billion of Fee Paying AUM growth during 2023, including the launch
of new CLOs.
Abbreviated income statement
£ million Six months ended Six months ended Six months ended Change Change
30 June
30 June
31 December
H1 23
H1 23
2023
2022
vs H1 22
vs H2 22
2022
(%)
(%)
Management and other fees 124.6 100.9 140.6 23.5% (11.4)%
Investment income 12.7 38.7 26.2 (67.2)% (51.5)%
Total operating income 137.8 140.1 167.3 (1.6)% (17.6)%
Total expenses* (83.5) (79.6) (91.8) 4.9% (9.0)%
Total expenses (excluding exceptional expenses)* (82.2) (78.9) (89.3) 4.2% (8.0)%
EBITDA* 54.3 60.5 75.5 (10.2)% (28.1)%
Underlying EBITDA* 55.6 61.2 78.0 (9.2)% (28.7)%
Underlying FRE* 42.9 22.5 51.8 90.7% (17.2)%
Depreciation and amortisation (8.6) (9.1) (9.2) (5.5)% (6.5)%
Net other income/(expense)** 7.4 (3.1) 12.8 (338.7)% (42.2)%
Net other income/(expense) (excluding exceptional net finance expense)** 1.5 (1.7) (2.2) (188.2)% (168.2)%
Underlying profit before tax 50.0 51.9 68.1 (3.7)% (26.6)%
Reported profit before tax 53.1 48.3 79.1 9.9% (32.9)%
Tax (4.9) (3.4) (3.4) 44.1% 44.1%
Reported profit after tax 48.2 44.9 75.7 7.3% (36.3)%
* 2022 total expenses, total expenses (excluding exceptional expenses),
EBITDA, underlying EBITDA, underlying FRE, underlying operating profit and
reported operating profit has been restated to exclude non-operating foreign
exchange gains/losses.
** 2022 net other income/(expense) and net other income/(expense) (excluding
exceptional net finance expense) has been restated to include non-operating
foreign exchange gains/losses.
The Group's consolidated income statement has two key components: the first is
the income generated from management and other fees, which are from long-term
fund management contracts. The second component is the variable income from
investments in funds and carried interest. Management fee income plus other
operating income less costs is expressed as Fee Related Earnings ("FRE").
Underlying FRE excludes exceptional expenses and bonuses linked to investment
returns. Profits from co-investment and carried interest together with FRE
form the EBITDA of the business.
Exceptional items are items of income or expense that are material by size or
nature and are not considered to be incurred in the normal course of business.
Exceptional items are classified as "exceptional" within the Group
Consolidated Statement of Profit or Loss are disclosed separately to give a
clearer presentation of the Group's results. In the six month periods ended 30
June 2023, 30 June 2022 and 31 December 2022, exceptional expenses were
recognised relating to the personnel costs in relation to the acquisition of
the EQT Credit business and costs incurred in relation to potential
acquisitions.
Underlying profit before tax excludes the aforementioned expenses and also
certain non-operating other income and expenses which have also been
classified as exceptional. Exceptional net other income primarily includes the
reduction in the estimated deferred contingent consideration payable to EQT AB
in the six months ended 30 June 2023 and six months ended 31 December 2022 for
the acquisition of the EQT Credit business, which is determined by the outcome
of certain fundraising that falls within the definitions in the transaction
documents (rather than total fundraising). Further explanation is included
within note 6(a) of the interim financial statements.
Total operating income
£ million Six months ended Six months ended 30 June Six months ended Change Change
30 June
31 December
H1 23
H1 23
2023 2022
2022
vs H1 22
(%) vs H2 22
(%)
Management and other fees 124.6 100.9 140.6 23.5% (11.4)%
Carried interest 6.4 14.0 10.2 (54.3)% (37.3)%
Fair value remeasurement of investments 6.3 24.7 16.0 (74.5)% (60.6)%
Other operating income 0.5 0.5 0.5 0.0% 0.0%
Total operating income 137.8 140.1 167.3 (1.6)% (17.6)%
Total operating income was £137.8 million for the first six months ended 30
June 2023 compared with £140.1 million for the comparative period in 2022 and
£167.3 million in the six months ended 31 December 2022.
Management and other fees increased by £23.7 million, or 24%, from £100.9
million for the six months ended 30 June 2022. Fees for the six months ended
30 June 2023 were £16.0 million lower than the six month period ended 31
December 2022. Management and other fees by reporting segment is split out
below:
£ million Six months ended Six months Six months ended Change Change
ended
30 June
31 December H1 23 H1 23
30 June
2023
2022 vs H1 22 vs H2 22
2022
(%) (%)
Private equity 95.8 76.7 111.1 24.9% (13.8)%
Credit 27.0 22.7 28.1 18.9% (3.9)%
Central 1.8 1.5 1.4 20.0% 28.6%
Management and other fees 124.6 100.9 140.6 23.5% (11.4)%
The increase in fees compared to the six month period to 30 June 2022 is
principally due to the start of fees from BE VII plus fees on increased levels
of invested capital in BDL III and BCO IV, and related separately managed
accounts, in the Credit business. These increases are partially offset by
reduced fees on older funds, which are in their divestment phase, where fees
are based upon the remaining invested capital and reduce when investments are
sold. Fees have reduced compared to the six months to 31 December 2023, due to
the impact of catch up fees for BE VII for the stub period from May 2022 and
the impact of a reduction of fees on older funds.
Taken together, investment returns from carried interest and co-investments
was £12.7 million compared to £38.7 million in the six month period ended 30
June 2022 and £26.2 million in the six month period ended 31 December 2022
due to modest changes to fund valuations and a slower period for exits.
Operating expenses
£ million Six months ended Six months ended Six months ended Change Change
30 June
30 June
31 December
H1 23
H1 23
2023
2022
vs H1 22
vs H2 22
2022
(%)
(%)
Personnel expenses (61.0) (60.9) (64.9) 0.2% (6.0)%
Other operating expenses (21.2) (18.0) (24.4) 17.8% (13.1)%
Total expenses before exceptional expenses (82.2) (78.9) (89.3) 4.2% (8.0)%
Exceptional expenses (1.3) (0.7) (2.5) 85.7% (48.0)%
Total expenses (83.5) (79.6) (91.8) 4.9% (9.0)%
Personnel expenses (excluding exceptional expenses) of £61.0 million were
flat compared to the period ended 30 June 2022, reflecting timing of
replacement hires for natural attrition and a deliberate phasing of investment
team hires to match fundraising progress.
Personnel expenses were £3.9 million lower than the six months ending 31
December 2022, reflecting a lower bonus accrual associated with lower
investment income recognised in the period. The final annual bonus for 2023
will reflect the achievement of fundraising and exit targets.
Personnel expenses (excluding exceptional expenses) as a percentage of total
operating income were 44% for the six month period ended 30 June 2023,
compared to 43% for the six months ended 30 June 2022 and 39% for the six
months ended 31 December 2022.
Other operating expenses (excluding exceptional expenses) of £21.2 million
are £3.2 million higher than the six months to 30 June 2022 due to the
operating costs on the Group's new London headquarters, 5 Marble Arch, and
fundraising costs associated with BE VII. In comparison to the six month
period ended 31 December, other operating expenses have decreased by £3.2
million due to a fall in professional fees incurred, which related to amounts
paid in relation to the expansion of the Group's regulatory footprint and
higher than normal premises costs during the second half of 2022 on the
transfer to 5 Marble Arch.
Other operating expenses (excluding exceptional expenses) as a percentage of
total operating income are 15% which compares to 13% in the equivalent period
in 2022 and 15% for the six months ended 31 December 2022.
Foreign exchange losses of £0.3 million have been included within other
income/expenses on the basis that they relate predominantly to non-operating
activity. The comparative periods have been restated accordingly (£0.6
million gain for the six months ended 30 June 2022 and £0.5 million gain for
the six months ended 31 December 2022).
EBITDA
£ million Six months ended Six months ended Six months ended Change Change
30 June
30 June
31 December
H1 23
H1 23
2023
2022*
vs H1 22
vs H2 22
2022*
(%)
(%)
Underlying EBITDA 55.6 61.2 78.0 (9.2)% (28.7)%
Exceptional expenses within EBITDA (1.3) (0.7) (2.5) 85.7% (48.0)%
EBITDA 54.3 60.5 75.5 (10.2)% (28.1)%
* 2022 EBITDA and underlying EBITDA have been restated to exclude
non-operating foreign exchange gains/(losses).
Underlying EBITDA reduced to £55.6 million in the six months ended 30 June
2023, excluding exceptional expenses. Whilst management and other fees were
higher than the comparative period in 2022, investment returns were lower.
Investment returns were also a feature of the lower underlying EBITDA compared
to the six months ended 31 December 2022.
Depreciation and amortisation
£ million Six months ended Six months ended Six months ended Change Change
30 June
30 June
31 December
H1 23
H1 23
2023
2022
vs H2 22
vs H1 22
2022
(%)
(%)
Depreciation (7.1) (7.6) (7.7) (6.6)% (7.8)%
Amortisation of intangible assets (1.5) (1.5) (1.5) 0.0% 0.0%
Total depreciation and amortisation (8.6) (9.1) (9.2) (5.5)% (6.5)%
Depreciation and amortisation decreased from £9.1 million in the six months
to 30 June 2022 to £8.6 million in the six months ended 30 June 2023.
Compared to the six months ended 31 December 2022, the expense decreased by
£0.6 million. This reduction is due to the cessation of legacy leases in
London following the move to 5 Marble Arch.
The amortisation of intangibles acquired with the EQT Credit business (fund
customer relationships) of £1.5 million have been excluded from
the adjusted profitability measures for all periods in order to enable a
clearer analysis of underlying profitability.
Other income and expenses
£ million Six months ended Six months ended Six months ended Change Change
30 June
30 June
31 December
H1 23
H1 23
2023
2022*
2022*
vs H1 22
vs H2 22
(%)
(%)
Net other income/(expense), excluding exceptional items 1.5 (1.7) (2.2) (188.2)% (168.2)%
Exceptional net other income/(expense) 5.9 (1.4) 15.0 (521.4)% (60.7)%
Net other income/(expense), including exceptional items 7.4 (3.1) 12.8 (338.7)% (42.2)%
* 2022 net other income/(expense) has been restated to include
non-operating foreign exchange gains/(losses).
Net other income/(expense), excluding exceptional items, was £1.5 million of
income compared to an expense of £1.7 million for the six months ended 30
June 2022 and an expense of £2.2 million for the six months ended 31 December
2022. These movements are principally due to increased interest income from
cash on deposit.
Exceptional net other income primarily includes the reduction in the estimated
deferred contingent consideration payable to EQT AB for the acquisition of the
EQT Credit business, which is determined by the outcome of certain fundraising
that falls within the definitions in the transaction documents (rather than
total fundraising for the Private Credit strategy). Further explanation is
included within note 6(a) of the interim financial statements. The income is
partially offset by the unwind of the discount on the corresponding payable.
Profit before tax
£ million Six months ended Six months ended Six months ended Change Change
30 June
30 June
31 December
H1 23
H1 23
2023
2022
vs H1 22
vs H2 22
2022
(%)
(%)
Underlying profit before tax 50.0 51.9 68.1 (3.7)% (26.6)%
Exceptional expenses (1.3) (0.7) (2.5) 85.7% (48.0)%
Exceptional net other income/(expense) 5.9 (1.4) 15.0 (521.4)% (60.7)%
Amortisation of intangible assets (1.5) (1.5) (1.5) 0.0% 0.0%
Reported profit before tax 53.1 48.3 79.1 9.9% (32.9)%
Underlying profit before tax margin 36.3% 37.0% 40.7% (0.7)% (3.7)%
Underlying profit before tax of £50.0 million represents a 36.3% margin,
which compares 37.0% for the six months ended 30 June 2022 and 40.7% for the
six months ended 31 December 2022.
Underlying profit before tax is £1.9 million lower than the six months ended
30 June 2022 and £18.1 million lower than the six months ended 31 December
2022 due to lower investment returns.
Reported profit before tax of £53.1 million increased by £4.8 million from
£48.3 million in the six months ended 30 June 2022 and compares to £79.1
million in the six months ended 31 December 2022.
Tax
£ million Six months ended Six months ended Six months ended Change Change
30 June
30 June
31 December
H1 23
H1 23
2023
2022
vs H1 22
vs H2 22
2022
(%)
(%)
Tax (4.9) (3.4) (3.4) 44.1% 44.1%
Profit after tax 48.2 44.9 75.7 7.3% (36.3)%
Tax of £4.9 million represents an effective rate of 9.2% compared to 7.0% in
the six months ended 30 June 2022 and 5.4% for the full year ended 31 December
2022. The Group has a lower effective tax rate than the UK statutory rate.
This is largely driven by timing differences on the taxation of management fee
income and significant tax loss carry-forwards in the UK where certain forms
of income are not subject to UK corporation tax.
Profit after tax for the six month period ended 30 June 2023 was £48.2
million, which compares to £44.9 million for the six month period to 30 June
2022 and £75.7 million for the six month period to 31 December 2022,
reflecting the reduced EBITDA from investment income.
Earnings per share and dividend per share
£ pence Six months ended Six months ended Six months ended Change Change
30 June
30 June
31 December
H1 23
H1 23
2023
2022
vs H1 22
vs H2 22
2022
(%)
(%)
Reported pro forma earnings per share 5.9 5.5 9.3 7.3% (36.3)%
Underlying pro forma earnings per share 5.6 6.0 8.0 (6.6)% (30.0)%
Pro forma interim dividend per share 4.4 4.0 4.0 9.0% 9.0%
Reported pro forma earnings per share increased by 0.4 pence to 5.9 pence per
share compared with the six month period ended 30 June 2022, which is
reflective of the higher statutory profit after tax, whereas underlying pro
forma earnings per share fell share fell by 0.4 pence per share, reflecting
the slight decline in underlying earnings, which excludes the exceptional net
other income recognised in the six months ended 30 June 2023.
For the year ended 31 December 2022, the Directors proposed a final dividend
of 4.0 pence per share. The cost of the dividend was £32.7 million. The
Directors have announced an interim dividend of 4.4 pence per share, in
respect of the first half of 2023 to be paid in September 2023. This equates
to an estimated cost of £35.7 million based on the number of shares in issue
at 30 June 2023, but the actual cost will depend upon the number of shares in
issue when the dividend is paid.
Consolidated balance sheet
Summarised consolidated balance sheet As at As at Change
31 December 2022
£ million 30 June (%)
2023
Assets
Non-current assets 565.2 540.0 4.7%
Current assets 1,376.8 1,247.8 10.3%
Total Assets 1,942.0 1,787.8 8.6%
Liabilities
Non-current liabilities 962.5 757.1 27.1%
Current liabilities 220.0 258.0 (14.7)%
Total Liabilities 1,182.5 1,015.1 16.5%
Net Assets 759.5 772.7 (1.7)%
Equity
Share capital and premium 289.9 289.9 0.0%
Other reserves 10.8 9.1 18.7%
Retained earnings 458.8 473.7 (3.1%)
Total Equity 759.5 772.7 (1.7%)
Net assets principally comprise cash and term deposits, the fair value of
investments and carried interest receivable from private equity and credit
funds and goodwill arising from the acquisition of the EQT Credit business.
The Group's total assets and liabilities increased by £154.2 million and
£167.4 million respectively due to an increase in CLO assets and liabilities
consolidated as at 30 June 2023, which now includes CLO 4, following its
format launch. This increase is offset by bonuses and dividends paid and the
cash paid for the share buy backs in the period.
Non-current assets increased by 4.7% from £540.0 million at 31 December 2022
to £565.2 million at 30 June 2023. Current assets increased by 10.3% from
£1,247.8 million at 31 December 2022 to £1,376.8 million. The changes in
non-current and current assets are primarily due to the impact of the build up
of the CLO 4 portfolio following its formal launch.
At 30 June 2023, the Group had cash of £258.4 million (including amounts in
term deposits, but excluding cash belonging to consolidated CLOs). The Group
had no debt, but has the use of a new Revolving Credit Facility for up to
£200 million for a period of three years until May 2026.
Non-current liabilities increased from £757.1 million at 31 December 2022 to
£962.5 million at 30 June 2022, primarily due to consolidation of the
additional CLO vehicle. Current liabilities decreased by 14.7% from £258.0
million at 31 December 2022 to £220.0 million at 30 June 2023, primarily due
to the payment of annual bonuses in March 2023. Excluding the impact of
consolidated CLOs, non-current liabilities increased by 3% due to an increase
in deferred tax liability.
Total equity reduced by 1.7% due to the impact of the final dividend for 2022
and the Share Buyback Programme, offset by profits.
The consolidated balance sheet includes the assets and liabilities of certain
CLOs which are required under IFRS to be presented gross on the balance sheet.
This could distort how a reader of the financial statements interprets the
balance sheet of the Group. A summarised consolidated balance sheet, excluding
third-party CLO assets and liabilities, is included below. The Group's maximum
exposure to loss associated with its interest in the CLOs is limited to its
investment in the relevant CLOs which at 30 June 2023 was £75.0 million and
at 31 December 2022 was £60.3 million.
Summarised consolidated balance sheet (excluding third party CLO assets and As at As at Change
liabilities)(1)
31 December 2022
30 June (%)
£ million
2023
Total Assets (excluding third-party CLO assets) 1,023.3 1,067.1 (4.1)%
Total Liabilities (excluding third-party CLO liabilities) 263.8 294.4 (10.4)%
Net Assets (excluding third-party CLO assets and liabilities) 759.5 772.7 (1.7)%
1. A full consolidated balance sheet excluding third-party CLO assets and
liabilities is included later in this report.
Consolidated cash flows
Summarised consolidated cash flow statement Six months ended Six months ended Change
£ million 30 June 30 June (%)
2023
2022
Net cash flows from operating activities 74.9 (33.7) (322.3)%
Net cash flows from investing activities (133.8) (65.5) 104.3%
Net cash flows from financing activities 129.0 (38.2) (437.7)%
Net (decrease)/increase in cash and cash equivalents 70.1 (137.4) (151.0)%
Total cash and cash equivalents at beginning of the period 220.6 327.3 15.6%
Effect of exchange rate changes (1.6) 1.0 (260.0)%
Total cash and cash equivalents at the end of the period 289.1 190.9 51.4%
of which: cash and cash equivalents at the end of the period (for use within 258.4 139.3 85.5%
the Group)
of which: CLO cash (restricted for use within relevant CLO) 30.7 51.6 (40.5)%
Total cash and cash equivalents at the end of the period 289.1 190.9 51.4%
Net cash flows from operating activities for the six months ended 30 June 2023
was an inflow of £74.9 million. The inflow was due to the receipt of deferred
proceeds from the sale of the Group's investment in Bridgepoint Credit II, the
conversion of FRE and positive net working capital movements offset against
payment of annual bonuses in March 2023.
Net cash flows from investing activities, including carried interest and
investment income proceeds, is driven by the timing of investments and
divestments by the underlying Bridgepoint funds. Net outflows from investments
in the six months ended 30 June 2023 included the impact of the launch of CLO
4, which is consolidated, and resulted in a cash outflow of £204.4 million.
Net investment into Bridgepoint funds as a co-investor and other investors
resulted in a cash outflow of £30.4 million. For the six months ended 30 June
2023 cash inflows from investing activities also include a receipt of £100m
redeemed from cash held in term deposits with an original maturity of more
than three months.
Net cash inflows from financing activities for the six months ended 30 June
2023 of £129.0 million primarily relate to net inflow of CLO cash from
investors in CLO 4 (which is consolidated) of £185.2m, offset by dividends
paid to shareholders, as well as payments to acquire shares as part of the
Share Buyback Programme.
At 30 June 2023 the Group had £30.7 million of consolidated CLO cash which
was held by the consolidated CLO vehicles, legally ringfenced and not
available for use by the Group. The consolidated cash flow statement includes
the gross cash inflows and outflows for the period to, and cash held at 30
June 2023 for those CLOs which are required to be consolidated. This could
distort how a reader of the financial statements interprets the cash flows of
the Group, therefore a cash flow statement without the consolidated CLO
vehicles is presented below.
Summarised consolidated cash flow statement (excluding cash flows relating to Six months ended Six months ended Change
consolidated CLOs)(1)
30 June
30 June
2023
(%)
£ million 2022
Net cash flows from operating activities (excluding consolidated CLOs) 74.9 (33.7) (322.3)%
Net cash flows from investing activities (excluding consolidated CLOs) 54.9 (117.3) (146.8)%
Net cash flows from financing activities (excluding consolidated CLOs) (66.8) (33.8) 97.6%
Net increase in cash and cash equivalents (excluding consolidated CLOs) 63.0 (184.8) (134.1)%
Cash and cash equivalents at beginning of the period (excluding consolidated 196.0 323.1 (39.3)%
CLOs)
Effect of exchange rate changes on cash and cash equivalents (excluding (0.6) 1.0 (160.0)%
consolidated CLOs)
Cash and cash equivalents at the end of the period (excluding consolidated 258.4 139.3 85.5%
CLOs)
Add back: investment in term deposits with original maturities of more than - 100.0 (100.0)%
three months
Net cash at the end of the period (excluding consolidated CLOs) 258.4 239.3 8.0%
1.( ) A full condensed consolidated cash flow statement excluding
third-party CLO assets and liabilities is included later in this report.
Alternative Performance Measures (APMs)
The use of APMs
This interim report includes several measures which are not defined or
recognised under IFRS, including financial and operating measures relating to
the Group which the Group considers to be APMs. These are reconciled to the
IFRS results for the six month period in the table below.
EBITDA Earnings before interest, taxes, depreciation and amortisation. It is
calculated by reference to total operating income and deducting from it, or
adding to it, as applicable, personnel expenses and other expenses.
Underlying EBITDA Calculated by excluding exceptional items from EBITDA. Exceptional items are
items of income or expense that are material by size and/or nature, are not
considered to be incurred in the normal course of business and are not
expected to reoccur. A breakdown is included within note 4 to the condensed
consolidated financial statements.
£ million Six months ended 30 June 2023 Six months ended 30 June 2022*
EBITDA 54.3 60.5
Add back: exceptional items 1.3 0.7
Underlying EBITDA 55.6 61.2
Underlying EBITDA margin Underlying EBITDA as a percentage of total operating income.
Underlying FRE Underlying EBITDA less carried interest and income from the fair value
remeasurement of investments and adding back the cost of bonuses linked to
investment profits.
£ million Six months ended 30 June 2023 Six months ended 30 June 2022*
Underlying EBITDA 55.6 61.2
Less: carried interest and income from fair value of investments (12.7) (38.7)
Add back: investment linked bonuses - -
Underlying FRE 42.9 22.5
Underlying FRE margin Underlying FRE as a percentage of total operating income, excluding carried
interest and income from the fair value remeasurement of investments.
Underlying profit before tax Calculated by excluding exceptional items and the amortisation of intangible
assets from within profit before tax.
Underlying profit before tax (£m) Six months ended 30 June 2023 Six months ended 30 June 2022
Profit before tax 53.1 48.3
Add back: exceptional items within EBITDA 1.3 0.7
Add back: amortisation of intangible assets 1.5 1.5
Less/add-back: exceptional net other income/(expense) (5.9) 1.4
Total underlying profit before tax 50.0 51.9
Underlying profit before tax margin Underlying profit before tax as a percentage of total operating income.
Underlying profit Calculated by excluding exceptional items and the amortisation of intangible
after tax assets from within profit before tax.
Underlying profit after tax margin Underlying profit after tax as a percentage of total operating income.
Underlying pro forma basic and diluted earnings per share Calculated by dividing underlying profit after tax by the number of shares in
issue as at 30 June 2023 including the impact of the Share Buyback Programme.
£ million Six months ended 30 June 2023 Six months ended 30 June 2022
Profit after tax 48.2 44.9
Add back: exceptional items within EBITDA 1.3 0.7
Add back: amortisation of intangible assets 1.5 1.5
Less/add back: exceptional net other income/(expense) (5.9) 1.4
Add back: tax 0.2 -
Total underlying profit after tax 45.3 48.5
Pro forma number of shares (m) 810.3 810.3
Underlying pro forma basic and diluted EPS (pence) 5.6 6.0
Fee Paying AUM Assets under management upon which management fees are charged by the Group,
including CLOs. For all funds with private equity strategies and the
Bridgepoint Credit Opportunities funds I to III, Fee Paying AUM is either
based on total commitments (during the commitment period) or on net invested
capital (normally during the post-commitment period).
For the Bridgepoint Direct Lending funds, Bridgepoint Syndicated Debt funds
and Bridgepoint Credit Opportunities IV and expected future funds, Fee Paying
AUM is based on net invested capital throughout the life of the fund.
Credit fee paying AUM includes separately managed accounts (SMAs) relating to
the direct lending and credit opportunities strategies.
Total AUM The total value of unrealised assets as of the relevant date (as determined
pursuant to the latest quarterly or semi-annual valuation for each Bridgepoint
Fund conducted by the Group) plus undrawn commitments managed by the Group,
inclusive of SMAs and co-investment vehicles. The valuations for Total AUM
come from the Group's valuations of the investments of the Bridgepoint funds.
Management fee margin on Fee Paying AUM The underlying management fee rate in the Bridgepoint funds, excluding
co-investment vehicles, calculated as the weighted average management fee rate
for all Bridgepoint funds contributing to Fee Paying AUM as at the end of the
accounting period.
* 2022 EBITDA and FRE have been restated to exclude non-operating foreign
exchange gains/losses.
Required disclosures
Principal risks
The Group believes that risk management is a fundamental part of robust
corporate governance and our ongoing success.
Details of the Group's response to risk management is set out within pages 78
to 83 of the 2022 Annual Report and Accounts, which is available in the
shareholder section of the Bridgepoint Group plc website: bridgepoint.eu
The principal risks within the 2022 Annual Report and Accounts include:
fundraising challenges, law and regulation, changes in macroeconomic
environment, fund under-performance, decreased pace or size of investments
made by Bridgepoint funds, personnel and key people, information technology
and cyber security, and third-party service providers. The directors do not
consider there to have been any material changes to the principal risks since
the 2022 Annual Report and Accounts were published.
The principal risks and uncertainties to which the Group will be exposed in
the second half of 2023 are expected to be substantially the same as those
described in the 2022 Annual Report and Accounts.
Directors
The directors of Bridgepoint Group plc at 25 July 2023 are:
· William Jackson
· Archie Norman
· Adam Jones
· Angeles Garcia-Poveda
· Carolyn McCall
· Tim Score
· Cyrus Taraporevala
Statement of directors' responsibilities
The directors confirm that, to the best of their knowledge, the interim
condensed consolidated financial statements:
· Have been prepared in accordance with UK-adopted International Accounting
Standard 34 "Interim Financial Reporting", and give a true and fair view of
the assets, liabilities, financial position and profit of the Group;
· Include a fair review of the information required by Disclosure Guidance
and Transparency Rule 4.2.7, namely important events that have occurred during
the first six months of the financial period and their impact on the interim
financial statements, as well as a description of the principal risks and
uncertainties for the remaining six months of the financial year; and
· Include, as required by Disclosure Guidance and Transparency Rule 4.2.8,
a fair review of material related party transactions that have taken place in
the first six months of the financial period and any material changes to the
related party transactions described in the last Annual Report and Accounts.
On behalf of the Board
Adam Jones
Group Chief Financial Officer & Chief Operating Officer
25 July 2023
Independent Review Report to Bridgepoint Group plc
Conclusion
We have been engaged by Bridgepoint Group plc (the "Company") to review the
financial information for the six months ended 30 June 2023 which comprises
the condensed consolidated statement of profit or loss, the condensed
consolidated statement of comprehensive income, the condensed consolidated
statement of financial position, the condensed consolidated statement of
changes in equity, the condensed consolidated statement of cash flows and
related notes 1 to 14.
We have read the other information contained in the interim report and
considered whether it contains any apparent misstatements or material
inconsistencies with the financial information.
Based on our review, nothing has come to our attention that causes us to
believe that the condensed set of consolidated financial statements in the
half-yearly financial report for the six months ended 30 June 2023 is not
prepared, in all material respects, in accordance with UK adopted
International Accounting Standard 34 and the Disclosure Guidance and
Transparency Rules of the United Kingdom's Financial Conduct Authority.
Basis for conclusion
We conducted our review in accordance with International Standard on Review
Engagements (UK) 2410 (Revised), "Review of Interim Financial Information
Performed by the Independent Auditor of the Entity" issued 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.
As disclosed in note 1, the annual financial statements are prepared in
accordance with UK-adopted international accounting standards. The condensed
set of financial statements included in this half-yearly financial report has
been prepared in accordance with UK adopted International Accounting Standard
34, "Interim Financial Reporting".
Conclusions relating to Going Concern
Based on our review procedures, which are less extensive than those performed
in an audit as described in the Basis of Conclusion section of this report,
nothing has come to our attention to suggest that management have
inappropriately adopted the going concern basis of accounting or that
management have identified material uncertainties relating to going concern
that are not appropriately disclosed.
This conclusion is based on the review procedures performed in accordance with
ISRE (UK) 2410 (Revised), however future events or conditions may cause the
entity to cease to continue as a going concern.
Responsibilities of directors
The interim report, including the financial information contained therein, is
the responsibility of, and has been approved by, the directors. The directors
are responsible for preparing the interim report in accordance with UK adopted
International Accounting Standard 34 and the Disclosure Guidance and
Transparency Rules of the United Kingdom's Financial Conduct Authority, which
requires that the interim report must be prepared and presented in a form
consistent with that which will be adopted in the Company's annual accounts
having regard to the accounting standards applicable to such annual accounts.
In preparing the interim financial report, the directors are responsible for
assessing the Company's ability to continue as a going concern, disclosing, as
applicable, matters related to going concern and using the going concern basis
of accounting unless the directors either intend to liquidate the Company or
to cease operations, or have no realistic alternative but to do so.
Our responsibilities for the review of the financial information
In reviewing the interim report, we are responsible for expressing to the
company a conclusion on the condensed set of financial statement in the
half-yearly financial report. Our conclusion, including our Conclusions
Relating to Going Concern, are based on procedures that are less extensive
than audit procedures, as described in the Basis for Conclusion paragraph of
this report.
Use of the review report
This report is made solely to the Company in accordance with International
Standard on Review Engagements (UK) 2410 issued by the Financial Reporting
Council and our Engagement Letter dated 13 July 2023. Our work has been
undertaken so that we might state to the Company those matters we are required
to state to it in an independent review report and for no other purpose. To
the fullest extent permitted by law, we do not accept or assume responsibility
to anyone other than the Company, for our review work, for this report, or for
the conclusions we have formed.
Mazars LLP
Chartered Accountants
30 Old Bailey
London
EC4M 7AU
25 July 2023
Notes:
1. The maintenance and integrity of the Bridgepoint Group plc web site is the
responsibility of the directors; the work carried out by us does not involve
consideration of these matters and, accordingly, we accept no responsibility
for any changes that may have occurred to the interim report since it was
initially presented on the web site.
2. Legislation in the United Kingdom governing the preparation and
dissemination of financial information may differ from legislation in other
jurisdictions.
Condensed Consolidated Statement of Profit or Loss
for the six months ended 30 June
Note 2023 (Restated)
£m
2022
£m
Management and other fees 124.6 100.9
Carried interest 6.4 14.0
Fair value remeasurement of investments 6.3 24.7
Other operating income 0.5 0.5
Total operating income 137.8 140.1
Personnel expenses 3 (61.3) (61.5)
Other operating expenses (22.2) (18.1)
EBITDA* 54.3 60.5
Depreciation and amortisation 5 (8.6) (9.1)
Other income 6 10.9 1.1
Other expenses 6 (3.5) (4.2)
Profit before tax* 53.1 48.3
Tax 7 (4.9) (3.4)
Profit after tax 48.2 44.9
Attributable to:
Equity holders of the parent 48.2 44.9
£ £
Basic and diluted earnings per share 8 0.06 0.05
* Exceptional expenses of £1.3m (2022: £0.7m) are included in EBITDA.
Profit before tax includes exceptional expenses of £1.3m (2022: £2.1m) and
exceptional income of £5.9m (2022: nil). Details of exceptional items are
included in note 4.
** The Group has changed the presentation of the Condensed Consolidated
Statement of Profit or Loss for the six months ended 30 June 2022 to
reclassify foreign exchange gains/losses from EBITDA to other income/expenses
with nil impact in profit before tax or profit after tax. Further details are
provided in note 1.
The notes to the accounts form an integral part of these interim financial
statements.
Condensed Consolidated Statement of Comprehensive Income
for the six months ended 30 June
Note 2023 2022
£m
£m
Profit after tax 48.2 44.9
Items that may be reclassified to the statement of profit or loss in
subsequent periods:
Exchange differences on translation of foreign operations (8.7) 6.2
Change in the fair value of hedging instruments 8.8 (11.3)
Reclassifications to the Condensed Consolidated Statement of Profit or Loss 2.2 2.2
Total tax on components of other comprehensive income (2.5) 2.1
Other comprehensive expense net of tax (0.2) (0.8)
Total comprehensive income net of tax 48.0 44.1
Total comprehensive income attributable to:
Equity holders of the parent 48.0 44.1
The notes to the accounts form an integral part of these interim financial
statements.
Condensed Consolidated Statement of Financial Position
Note 30 June 2023 31 December 2022
£m
£m
Assets
Non-current assets
Property, plant and equipment 84.5 85.5
Goodwill and intangible assets 118.1 119.6
Carried interest receivable 9 47.1 42.0
Fair value of fund investments 10 (a) 296.8 273.0
Trade and other receivables 10 (a) 18.7 19.9
Total non-current assets 565.2 540.0
Current assets
Consolidated CLO assets* 10 (a) 948.0 741.3
Trade and other receivables 10 (a) 120.0 184.9
Derivative financial assets 10 (a) 3.7 1.0
Other investments, at fair value 10 (a) 16.0 -
Cash and cash equivalents 10 (a) 258.4 196.0
Term deposits with original maturities of more than three months 10 (a) - 100.0
Consolidated CLO cash* 10 (a) 30.7 24.6
Total current assets 1,376.8 1,247.8
Total assets 1,942.0 1,787.8
Liabilities
Non-current liabilities
Trade and other payables 10 (b) 13.7 13.6
Other financial liabilities 10 (b) 50.3 49.5
Fair value of consolidated CLO liabilities* 10 (b) 797.4 597.5
Lease liabilities 10 (b) 75.3 77.1
Deferred tax liabilities 25.8 19.4
Total non-current liabilities 962.5 757.1
Current liabilities
Trade and other payables 10 (b) 83.0 115.5
Lease liabilities 10 (b) 11.3 6.1
Derivative financial liabilities 10 (b) 4.4 13.2
Consolidated CLO liabilities* 10 (b) 5.9 2.6
Consolidated CLO purchases awaiting settlement* 10 (b) 115.4 120.6
Total current liabilities 220.0 258.0
Total liabilities 1,182.5 1,015.1
Net assets 759.5 772.7
Equity
Share capital 13 (a) 0.1 0.1
Share premium 13 (a) 289.8 289.8
Capital redemption reserve 13 (f) - -
Share-based payment reserve 13 (e) 3.0 3.6
Cash flow hedge reserve 13 (c) 2.1 (8.9)
Net exchange differences reserve 13 (d) 5.7 14.4
Retained earnings 458.8 473.7
Total equity 759.5 772.7
*Detail of the Group's interest in consolidated CLOs are included in note 10.
The equity holders' exposure in the consolidated CLOs is £60.0m at 30 June
2023 (31 December 2022: £45.2m). The Group's investment in CLOs which are not
consolidated is £15.0m (31 December 2022: £15.1m) and are included within
fair value of fund investments. A Condensed Consolidated Statement of
Financial Position, excluding consolidated CLOs is presented later in this
report.
The notes to the accounts form an integral part of these interim financial
statements.
Condensed Consolidated Statement of Changes in Equity
for the six months ended 30 June
Note Share capital Share premium Capital redemption reserve Share-based payment reserve Cash flow hedge reserve Net exchange differences reserve Retained earnings Total
£m
£m
£m
£m
£m
£m
£m
equity
£m
At 1 January 2023 0.1 289.8 - 3.6 (8.9) 14.4 473.7 772.7
Profit for the period - - - - - - 48.2 48.2
Other comprehensive income - - - - 11.0 (8.7) (2.5) (0.2)
Total comprehensive income - - - - 11.0 (8.7) 45.7 48.0
Share-based payments 3 - - - 2.2 - - - 2.2
Transfer of share-based payment reserve into retained earnings 13 (e) - - - (2.8) - - 2.8 -
Share buyback programme 13 (f) - - - - - - (30.7) (30.7)
Dividends 11 - - - - - - (32.7) (32.7)
At 30 June 2023 0.1 289.8 0.0 3.0 2.1 5.7 458.8 759.5
Note Share capital Share premium Capital redemption reserve Share-based payment reserve Cash flow hedge reserve Net exchange differences reserve Retained earnings Total
£m
£m
£m
£m
£m
£m
£m
equity
£m
At 1 January 2022 0.1 289.8 - 3.2 7.5 3.1 412.6 716.3
Profit for the period - - - - - - 44.9 44.9
Other comprehensive income - - - - (9.1) 6.2 2.1 (0.8)
Total comprehensive income - - - - (9.1) 6.2 47.0 44.1
Share-based payments 3 - - - 0.4 - - - 0.4
Dividends 11 - - - - - - (30.0) (30.0)
At 30 June 2022 0.1 289.8 - 3.6 (1.6) 9.3 429.6 730.8
The notes to the accounts form an integral part of these interim financial
statements.
Condensed Consolidated Statement of Cash Flows
for the six months ended 30 June
Note 2023 2022
£m
£m
Cash flows from operating activities
Cash generated from operations 12 77.4 (32.6)
Tax paid (2.5) (1.1)
Net cash (outflow)/inflow from operating activities 74.9 (33.7)
Cash flows from investing activities
Investment in term deposits with original maturities of more than three months 10 (a) 100.0 (100.0)
Receipts from investments (non-CLO) 6.4 28.3
Purchase of investments (non-CLO) (21.3) (22.7)
Purchase of other investments (non-CLO) (14.3) -
Interest received (non-CLO) 1.6 0.5
Payments for property, plant and equipment (2.0) (12.0)
Acquisition of CLOs (15.5) (11.4)
Receipts from investments (consolidated CLOs) 117.5 76.0
Purchase of investments (consolidated CLOs) (306.2) (81.0)
Cash movements from the consolidation of CLOs - 56.8
Net cash (outflow)/inflow from investing activities (133.8) (65.5)
Cash flows from financing activities
Exceptional transaction costs - (2.2)
Dividends paid to shareholders of the Company 11 (32.7) (30.0)
Share buyback (30.7) -
Drawings from related party investors in intermediate fund holding entities - 3.5
Principal elements of lease payments (1.0) (2.8)
Drawn funding (consolidated CLOs) 26.1 -
Repayment of CLO borrowings (consolidated CLOs) (101.7) (4.4)
Cash from CLO investors (consolidated CLOs) 271.4 -
Interest paid (non-CLO) (2.4) (2.3)
Net cash (outflow)/inflow from financing activities 129.0 (38.2)
Net increase/(decrease) in cash and cash equivalents 70.1 (137.4)
Total cash and cash equivalents at the beginning of the period 220.6 327.3
Effect of exchange rate changes on cash and cash equivalents (1.6) 1.0
Total cash and cash equivalents at the end of period 289.1 190.9
Cash and cash equivalents (for use within the Group) 10 (a) 258.4 139.3
Consolidated CLO cash (restricted for use within relevant CLO) 10 (a) 30.7 51.6
Total cash and cash equivalents at the end of period 289.1 190.9
1. The Condensed Consolidated Statement of Cash Flows includes the cash
flows of consolidated CLOs. A Condensed Consolidated Statement of Cash Flows
excluding the impact of consolidating CLOs is included later in this report.
The notes to the accounts form an integral part of these interim financial
statements.
Notes to the condensed consolidated interim financial statements
1 General information and basis of preparation
General information
Bridgepoint Group plc (the "Company") is a public company limited by shares,
incorporated, domiciled and registered in England and Wales. The Company's
registration number is 11443992 and the address of its registered office is 5
Marble Arch, London, W1H 7EJ.
The principal activity of the Company and entities controlled by the Company
(collectively, the "Group") is to act as a private equity and credit fund
manager.
Basis of preparation
The condensed consolidated interim financial statements ("interim financial
statements") for the six months ended 30 June 2023 have been prepared in
accordance with UK-adopted IAS 34 "Interim Financial Reporting" and the
Disclosure Guidance and Transparency Rules of the United Kingdom's Financial
Conduct Authority.
The interim financial statements should be read in conjunction with the Annual
Report and Accounts for the year ended 31 December 2022 including the
statutory accounts for the year to 31 December 2022 (the "2022 financial
statements"). The Group's accounting policies, areas of significant judgement
and the key sources of estimation uncertainty are consistent with those
applied to the 2022 financial statements.
The financial information contained within this half year financial report
does not constitute statutory accounts as defined in Section 434 of the
Companies Act 2006. The 2022 financial statements have been reported on by
Mazars LLP and delivered to the Registrar of Companies. The report of the
auditors was (i) unqualified, (ii) did not include a reference to any matters
which the auditors drew attention by way of emphasis without qualifying their
report, and (iii) did not contain a statement under section 498 (2) or (3) of
the Companies Act 2006. Financial information dated 30 June 2023 and
comparative financial information dated 30 June 2022 has not been audited,
while comparative financial information dated 31 December 2022 has been
audited as part of the 2022 financial statements unless noted.
The consolidated financial statements of Bridgepoint Group plc and entities
controlled by the Company for the year ended 31 December 2022 were prepared
in accordance with UK-adopted International Accounting Standards ("IAS") and
the legal requirements of the Companies Act 2006 and have been prepared under
the historical cost convention, except for financial instruments measured at
fair value and are available on the Group's website: bridgepoint.eu. The 2023
financial statements will be prepared in a consistent manner.
Future accounting developments
The Group has not early adopted any standard, interpretation or amendment that
has been issued but is not yet effective. No other standards or
interpretations have been issued that are expected to have a material impact
on the Group's interim financial statements.
Change to comparative period financial information
The following change has been made to the comparative period presented within
these financial statements:
· The presentation of foreign exchange gains has been changed in the
Condensed Consolidated Statement of Profit or Loss as it primarily relates to
non-operating activities. As a result the comparative information for the
affected line items for the six months ended 30 June 2022 has been restated to
reclassify foreign exchange gains of £0.6m into other income. The restatement
will also impact the prior period EBITDA and FRE subtotals throughout the
report but there is no impact on net profit in either period.
Related party transactions
All related party transactions that took place in the six months ended 30 June
2023 are consistent in nature with the disclosures in note 25 to the 2022
financial statements. There have been no material changes to the nature or
size of related party transactions since 31 December 2022.
2 Operating segments
Operating segments are the components of the Group whose results are regularly
reviewed by the Group's chief operating decision maker to make decisions about
resources to be allocated to the segment and assess its performance.
The Executive Directors are considered to be the chief operating decision
maker of the Group, which is divided into operating segments based on how key
management reviews and evaluates the operation and performance of the
business.
The Group's operations are divided into two groups, the core business,
consisting of the Private Equity and Private Credit fund management and
associated Central support, and Other. Other includes the Group's procurement
consulting business, PEPCO Services LLP, and costs relating to strategic
projects.
The Group's core operations are divided into two business segments: Private
Equity and Private Credit. The operations of both business segments consist of
providing investment management services to the underlying funds and their
investors. The investment management services comprise of identification and
structuring of new investments, the monitoring of investments and the sale and
exit from investments. The two business segments are supported by the Central
support functions which include investor relations, head office, finance,
human resources, IT and marketing.
In 2022 certain investor relations and legal related costs were reclassified
to Central from Credit reflecting team restructuring.
Segmental income and profit before tax analysis
The Executive Directors assess the operating segments based on the line items
below, primarily on operating income and underlying EBITDA. The EBITDA for
each segment, together with depreciation and amortisation and net other income
or expenses forms profit before tax. Depreciation and amortisation, net other
income or expense and exceptional expenses are not allocated to operating
segments and are included in the Group total.
Six months ended 30 June 2023 Private Equity Private Credit Central Total Core Total Other Total Group
£m
£m
£m
£m
£m
£m
Management and other fees 95.8 27.0 1.8 124.6 - 124.6
Carried interest 6.4 - - 6.4 - 6.4
Fair value remeasurement of investments 4.9 1.4 - 6.3 - 6.3
Other operating income - - - - 0.5 0.5
Total operating income 107.1 28.4 1.8 137.3 0.5 137.8
Personnel expenses (34.1) (10.7) (15.7) (60.5) (0.5) (61.0)
Other operating expenses (8.1) (4.1) (8.9) (21.1) (0.1) (21.2)
Underlying EBITDA (excluding exceptional expenses) 64.9 13.6 (22.8) 55.7 (0.1) 55.6
Exceptional expenses (1.3)
EBITDA (including exceptional expenses) 54.3
Depreciation and amortisation (8.6)
Other income and expenses 7.4
Profit before tax 53.1
Six months ended 30 June 2022 (Restated) Private Equity Private Credit Central Total Core Total Other Total Group
£m
£m
£m
£m
£m
£m
Management and other fees 76.6 22.8 1.5 100.9 - 100.9
Carried interest 14.0 - - 14.0 - 14.0
Fair value remeasurement of investments 22.8 1.9 - 24.7 - 24.7
Other operating income - - - - 0.5 0.5
Total operating income 113.4 24.7 1.5 139.6 0.5 140.1
Personnel expenses (30.6) (11.5) (18.3) (60.4) (0.5) (60.9)
Other operating expenses (5.5) (3.8) (8.6) (17.9) (0.1) (18.0)
Underlying EBITDA (excluding exceptional expenses) 77.3 9.4 (25.4) 61.3 (0.1) 61.2
Exceptional expenses (0.7)
EBITDA (including exceptional expenses) 60.5
Depreciation and amortisation (9.1)
Other income and expenses (3.1)
Profit before tax 48.3
Assets and liabilities analysis
The Group's Condensed Consolidated Statement of Financial Position is managed
as a single unit rather than by segment. The only distinction for the business
segments relates to the Group's investments in funds, carried interest
receivable and other investments, which can be split between Private Equity
and Private Credit (split between that attributable to the Group and to third
party investors).
30 June 2023 31 December 2022
£m
£m
Investments
Private equity 256.6 241.3
Private equity - other investments 16.0 -
Private credit (assets attributable to the Group) 100.2 76.9
Private credit (CLO assets attributable to third party investors) 888.0 696.1
Total investments 1,260.8 1,014.3
Carried interest receivable
Private equity 44.5 39.4
Private credit 2.6 2.6
Total carried interest receivable 47.1 42.0
3 Operating expenses
Operating expenses include:
Six months ended 30 June 2023 2022
£m
£m
Wages and bonuses (44.9) (47.7)
Social security costs (8.9) (7.9)
Pensions (1.0) (1.0)
Share-based payments (2.2) (0.4)
Other employee expenses (4.3) (4.5)
Personnel expenses (61.3) (61.5)
Total personnel expenses include £0.3m (2022: £0.6m) of exceptional
expenses, and accordingly are excluded from the calculation of underlying
profitability measures (see note 4 for further details).
a) Long-term incentive plans
A new long-term incentive plan ("LTIP") was granted to qualifying employees on
31 March 2023, of total value of the awards of £5.6m on grant date. The Group
will settle the awards, vesting over the period 30 June 2023 to 31 March 2025
either in Bridgepoint Group plc shares or an equivalent cash payment, with no
consideration paid by the participants. As the LTIP awards vest subject to the
achievement of certain service conditions, namely the continued employment in
the Group, they are accounted for as either equity-settled or cash-settled
share-based payment transactions under the Group's accounting policy in line
with IFRS 2 "Share-based Payment". This requires each award to be measured at
fair value on its grant date, and in the case of the cash-settled share-based
payments revalued at each reporting date. The fair value is calculated based
on the market value of the shares at the grant date, adjusted for any market
or non-vesting conditions of the shares.
A share-based payment is recognised over the applicable vesting period as a
personnel expense, with a corresponding entry in the share-based payment
reserve within equity for equity-settled awards or as a liability for
cash-settled awards, along with any employment taxes to be incurred by the
Group.
Number of shares Weighted average fair value per share granted (£)
30 June 2023 30 June 2022 30 June 2023 30 June 2022
Rights outstanding at beginning of the period - - - -
Granted 2,777,453 - 2.15 -
Forfeited (28,506) - 2.17 -
Vested (743,473) - 2.17 -
Rights outstanding (unvested) at end of the period 2,005,474 - 2.14 -
b) Restricted share plan
On 31 March 2023, a director of the Company was granted a conditional share
award of 114,953 shares at a value of £2.17 per share, with total value
£250,000, vesting on 31 March 2026.
As of 30 June 2023, the Group recognised £2.1m in personnel expenses related
to these new awards and a further £0.1m relating to previous awards for which
there have been no changes in the period.
4 Exceptional items
Exceptional items are material items of income or expenditure that are not
considered to be incurred in the normal course of business and without
separate disclosure could distort an understanding of the financial
statements. Accordingly, exceptional items are excluded from the calculation
of underlying profitability measures.
Six months ended 30 June 2023 2022
£m
£m
Personnel expenses (0.3) (0.6)
Other operating expenses (1.0) (0.1)
Total exceptional expenses within EBITDA (1.3) (0.7)
Other expenses - (1.4)
Total exceptional expenses (1.3) (2.1)
Six months ended 30 June 2023 2022
£m
£m
Other income 5.9 -
Total exceptional income 5.9 -
a) Exceptional personnel expenses
In 2023 and 2022, exceptional personnel expenses include deferred transaction
related bonuses and associated social security costs from the acquisition of
EQT Credit in 2020. Specific bonus payments payable to employees in relation
to the EQT acquisition are exceptional as similar awards were only granted
once. The awards incentivise employees to align their goals with those of the
business through being awarded over multiple periods, hence such expenses will
continue to be recognised until 2025.
b) Exceptional other operating expenses
In 2022 and 2023, exceptional other operating expenses include costs incurred
in relation to strategic projects, including potential acquisitions.
c) Exceptional other income
Exceptional other income of £5.9m (2022: nil) relates to remeasurement and
revaluation of the deferred contingent consideration payable and associated
unwind of discount to EQT AB in relation to the acquisition of EQT Credit in
2020. The deferred consideration payable to EQT AB was recognised upon
acquisition and is considered exceptional as there are no similar contractual
liabilities with EQT AB. Due to the contractual arrangement underlying the
deferred consideration, which is a payable in a future accounting period,
there have been exceptional items related to the valuation in multiple
periods.
5 Depreciation and amortisation
The following table summarises the depreciation and amortisation charge during
the period.
Six months ended 30 June 2023 2022
£m
£m
Depreciation on property, plant and equipment (7.1) (7.6)
Amortisation of intangible assets (1.5) (1.5)
Total depreciation and amortisation (8.6) (9.1)
The amortisation of intangible assets is excluded from the calculation of
underlying profitability measures in order to enhance the understanding of the
underlying performance.
6 Other income and expenses
2023 (Restated)
£ m
Six months ended 30 June 2022
£ m
Interest income on term deposits 4.4 -
Finance income on subleases 0.3 0.5
Foreign exchange gains - 0.6
Finance income on amounts receivable from related party investors 0.3 -
Other income 5.9 -
Total other income 10.9 1.1
Interest expense on bank overdrafts and borrowings (0.7) (0.7)
Interest expense on lease liabilities (2.0) (1.7)
Other expenses (0.4) (1.7)
Finance expense on amounts payable to related party investors (0.1) (0.1)
Foreign exchange losses (0.3) -
Total other expenses (3.5) (4.2)
Net other income/(expense), including exceptional items 7.4 (3.1)
a) Other income
Other income in 2023 primarily relates to the remeasurement and revaluation of
the deferred contingent consideration payable and associated unwind of
discount to EQT AB of £5.9m (2022: nil). The deferred contingent
consideration is payable to EQT AB and relates to the outcome of certain
fundraising for the Bridgepoint Direct Lending III and Bridgepoint Credit
Opportunities IV funds that falls within the definitions applying to deferred
consideration in the transaction documents. These fundraises have either
completed or are expected to complete during 2023. At 30 June 2023, the Group
remeasured the expected liability at that point, which equated to £10.4m
(2022: £16.7m), through the profit and loss.
This income is considered exceptional income, and accordingly is excluded from
the calculation of underlying profitability measures.
b) Other expenses
Other expenses of £0.4m (2022: £0.2m) include borrowing facility fees which
are being amortised over the term of a new £200m facility with a duration of
three years and the accelerated amortisation of a previous capitalised
borrowing facility fee, which related to the pre-existing facility, which was
terminated on the commencement of the new facility. Further detail is included
in note 10 (b).
In the six months ended 30 June 2022, other expenses of £1.5m related to the
unwind of discounting of the deferred contingent payable to EQT AB and is
considered an exceptional expense, and accordingly excluded from the
calculation of underlying profitability measures.
c) Finance income and expense on amounts with related party investors
Finance income and expense represent amounts due to or from related party
investors in Opal Investments LP, BE VI (French) Co-Invest LP, BDC IV (French)
Co-Investment LP and Maple Tree VII LP under the limited partnership
agreements.
7 Tax expense
Analysis of tax expense reported in the income statement:
Six months ended 30 June 2023 2022
£m
£m
Current tax (1.1) (1.0)
Deferred tax (3.8) (2.4)
Total tax expense (4.9) (3.4)
The tax expense for the half year to 30 June 2023 is calculated based on a
forecast full year effective tax rate for the Group which is then applied to
the actual profit before tax for the half year.
8 Earnings per share
Six months ended 30 June 2023 2022
Profit attributable to equity holders of the Company (£m) 48.2 44.9
Weighted average number of ordinary shares for purposes of basic and diluted 816.8 823.3
EPS (m)
Basic and diluted earnings per share (£) 0.06 0.05
The adjusted earnings per share on underlying profit after tax of £45.3m
(2022: £48.5m) based on the number of shares in issue at 30 June 2023 is
£0.06 (2022: £0.06 on underlying profit after tax of £48.5m based on the
number of shares in issue at 30 June 2022).
The underlying profit after tax is calculated by excluding exceptional items
and the amortisation of intangible assets from within profit after tax.
The number of ordinary shares used in the calculation of earnings per share
excludes shares held by the Group itself and those subject to the Share
Buyback Programme. Further detail is included in note 13 (f).
9 Carried interest receivable
The carried interest receivable relates to revenue which has been recognised
by the Group relating to its share of fund profits through its holdings in
Carried Interest Partnerships ("CIPs").
Revenue is only recognised to the extent it is highly probable that the
revenue recognised would not result in significant revenue reversal of any
accumulated revenue recognised on the completion of a fund. The reversal risk
is mitigated through the application of discounts. If adjustments to the
carried interest receivable recognised in previous periods are required, they
are adjusted through revenue.
As at 30 June 2023, the undiscounted carried interest asset is £113.8m (2022:
£103.5m).
30 June 31 December 2022
2023
£m
£m
Opening balance 42.0 38.9
Income recognised in the period/year 5.7 23.1
Foreign exchange movements recognised as profit or loss (0.5) 1.1
Foreign exchange movements recognised as other comprehensive income (0.1) 0.1
Receipts of carried interest - (21.2)
Closing balance 47.1 42.0
10 Financial assets and liabilities
(a) Classification of financial assets
The following tables analyse the Group's assets in accordance with the
categories of financial instruments in IFRS 9 "Financial Instruments" ("IFRS
9"). Assets which are not considered as financial assets, for example
prepayments and lease receivables, under IFRS 9 are also shown in the table in
a separate column in order to reconcile to the face of the Condensed
Consolidated Statement of Financial Position.
As at 30 June 2023 Fair value through Hedging derivatives Financial assets at amortised cost Assets which are not financial assets Total
profit or loss
£m
£m
£m
£m
£m
Fair value of fund investments 296.8 - - - 296.8
Consolidated CLO assets 925.1 - 22.9 - 948.0
Trade and other receivables - - 107.9 30.8 138.7
Derivative financial instruments - 3.7 - - 3.7
Other investments, at fair value* 16.0 - - - 16.0
Cash and cash equivalents - - 258.4 - 258.4
Term deposits with original maturities of more than three months - - - - -
Consolidated CLO cash - - 30.7 - 30.7
Total 1,237.9 3.7 419.9 30.8 1,692.3
As at 31 December 2022 Fair value through Hedging derivatives Financial assets at amortised cost Assets which are not financial assets Total
profit or loss
£m
£m
£m
£m
£m
Fair value of fund investments 273.0 - - - 273.0
Consolidated CLO assets 726.3 - 15.0 - 741.3
Trade and other receivables - - 181.6 23.2 204.8
Derivative financial instruments - 1.0 - - 1.0
Cash and cash equivalents - - 196.0 - 196.0
Term deposits with original maturities of more than three months - - 100.0 - 100.0
Consolidated CLO cash - - 24.6 - 24.6
Total 999.3 1.0 517.2 23.2 1,540.7
* Other investments have been designated as financial assets at fair value
through profit or loss upon initial recognition.
There are no material differences between the above amounts for trade and
other receivables and their fair value.
i) Fair value of fund investments
Investments representing the Group's interests in private equity and credit
funds are initially recognised at fair value and subsequently remeasured at
fair value through profit or loss within operating income.
The investments primarily consist of loans or commitments made in relation to
the Bridgepoint Europe VI, V and III, Bridgepoint Development Capital IV and
III private equity funds, the Bridgepoint Credit I, Direct Lending II and I,
and Credit Opportunities IV and III credit funds.
The fund investments are measured at fair value through profit or loss as the
business model of each vehicle is to manage the assets and to evaluate their
performance on a fair value basis.
ii) Other investments, at fair value
Other investments include, but is not limited to, loans made to a Group
portfolio company. The Group elected the fair value option on these loans.
Interest income is accrued on the principal amount of the loans based on its
contractual interest rate. Other income is reported in other operating income
within the Condensed Consolidated Statements of Profit or Loss. Changes in the
value of other investments are measured at fair value through profit and loss.
iii) CLO assets
The balance shown includes the gross value of the assets held by CLO 1, CLO 3,
CLO 4 and CLO 5 (2022: CLO 1, CLO3 and CLO 4), which are consolidated by the
Group, but of which the Group only holds the rights and liabilities in
relation to a small portion. The CLO assets are measured at fair value through
profit or loss as the business model of each vehicle is to manage the assets
and to evaluate their performance on a fair value basis.
30 June 31 December 2022
2023
£m
£m
Consolidated CLO assets consolidated by the Group 948.0 741.3
Consolidated CLO assets attributable to third party investors (888.0) (696.1)
Group's exposure to consolidated CLO assets 60.0 45.2
iv) Cash and term deposits
30 June 31 December 2022
2023
£m
£m
Cash at bank and in hand 41.8 78.3
Money market funds 116.6 17.7
Term deposits with original maturities of less than three months 100.0 100.0
Total cash and cash equivalents 258.4 196.0
Term deposits with original maturities of more than three months - 100.0
Consolidated CLO cash 30.7 24.6
Total cash and term deposits 289.1 320.6
Cash and cash equivalents comprise cash in hand and call deposits, and other
short-term highly liquid investments including term deposits with original
maturities of three months or less and money market funds, which are readily
convertible to a known amount of cash and are subject to an insignificant risk
of changes in value.
Term deposits represent fixed term deposits placed with banks and financial
institutions.
Consolidated CLO cash is cash held by CLO vehicles consolidated by the Group
and is not available for the Group's operating activities.
There are no material differences between the carrying amounts and fair values
of cash and cash equivalents, term deposits with original maturities of more
than three months and consolidated CLO cash.
Credit risk exposure on cash and term deposits is managed in accordance with
the Group's Treasury & Risk Management Policy which provides limits on
exposures with any single financial institution. The Group's surplus cash is
held with financial institutions or money market funds which are rated as
investment grade by third party rating agencies. As at 30 June 2023, 100% of
cash and term deposits were held with institutions or funds that are rated
investment grade or above and all money market funds are AAA rated.
(b) Classification of financial liabilities
The following tables analyse the Group and Company's financial liabilities in
accordance with the categories of financial instruments defined in IFRS 9.
Liabilities such as deferred income, long-term employee benefits, social
security and other taxes are excluded as they do not constitute a financial
liability and are shown in the table in a separate column in order to
reconcile to the face of the Condensed Consolidated Statement of Financial
Position.
As at 30 June 2023 Fair value through Hedging Financial liabilities at amortised cost Liabilities Total
profit or loss
derivatives
£m
which are not financial liabilities
£m
£m
£m
£m
Trade and other payables 10.4 - 25.4 60.9 96.7
Other financial liabilities 50.3 - - - 50.3
Lease liabilities - - 86.6 - 86.6
Derivative financial instruments - 4.4 - - 4.4
Consolidated CLO liabilities 797.4 - 5.9 - 803.3
Consolidated CLO purchases awaiting settlement - - 115.4 - 115.4
Total 858.1 4.4 233.3 60.9 1,156.7
As at 31 December 2022 Fair value through Hedging Financial liabilities at amortised cost Liabilities Total
profit or loss
derivatives
£m
which are not financial liabilities
£m
£m
£m
£m
Trade and other payables 16.7 - 51.8 60.6 129.1
Other financial liabilities 49.5 - - - 49.5
Lease liabilities - - 83.2 - 83.2
Derivative financial instruments - 13.2 - - 13.2
Consolidated CLO liabilities 597.5 - 2.6 - 600.1
Consolidated CLO purchases awaiting settlement - - 120.6 - 120.6
Total 663.7 13.2 258.2 60.6 995.7
The carrying amount of financial liabilities carried at amortised cost
approximates their fair value, and therefore have not been included in the
disclosure within this section.
i) Borrowing
On 1 June 2023, the Company entered into a new Revolving Facility Agreement
for £200m for a period of three years. At 30 June 2023, there were no drawn
amounts on the facility. This new borrowing arrangement replaced a £125m
facility held by another Group entity, which was terminated on the same date.
(c) Fair value measurement
Fair value is the price that would be received to sell an asset or paid to
transfer a liability in an orderly transaction between market participants at
the measurement date in the principal, or in its absence, the most
advantageous market to which the Group has access to at that date. The fair
value of a liability reflects its non-performance risk.
The Group discloses fair values using the following fair value hierarchy that
reflects the significance of the inputs used in making the measurements:
· Quoted prices (unadjusted) in active markets (level 1);
· Inputs - other than quoted prices included within level 1 - that are
observable for assets or liabilities, either directly (as prices) or
indirectly (derived from prices) (level 2);
· Inputs for assets or liabilities that are not based on observable market
data (level 3).
Investments in funds, which hold portfolios of private equity and credit
assets are valued in line with the International Private Equity and Venture
Capital Valuation ("IPEV") Guidelines using a variety of methodologies. These
investments are classified as level 3 financial assets due to the level of
unobservable inputs within the determination of the valuation of individual
assets within each fund and the lack of an observable price for each
investment in a fund.
The assets of the CLO vehicles, which are fully consolidated by the Group, are
classified as level 2 fair values as they are priced using independent loan
pricing sources. These sources consolidate broker quotes where depth
represents the number of quotes supporting the price provided.
Further details of the valuation methodologies, process and governance for
investments in funds and investments held by consolidated CLOs is set out
within the notes to the 2022 financial statements.
Derivatives used for hedging, which are fair valued, are classified as level 2
fair values as the inputs are observable.
Financial Assets Financial Liabilities
30 June 31 December 2022 30 June 31 December 2022
2023
£m
2023
£m
£m
£m
Financial assets and liabilities at fair value through profit or loss
Level 1 - - - -
Level 2 953.6 727.3 4.4 13.2
Level 3 288.0 273.0 858.1 663.7
Total 1,241.6 1,000.3 862.5 676.9
i) Reconciliation of level 3 fair value measurements of financial assets
A reconciliation of level 3 fair values for financial assets which represent
the Group's interest in private equity and credit funds, including the Group's
investment in CLOs which are not consolidated, is set out in the table below:
30 June 31 December 2022
2023
£m
£m
Level 3 financial assets at fair value through profit or loss
Opening balance 273.0 313.7
Additions 21.3 38.5
Change in fair value 5.1 32.9
Foreign exchange movements recognised as profit or loss (1.9) 5.8
Foreign exchange movements recognised as other comprehensive income (6.3) 8.2
Disposals (3.2) (126.1)
Transfers (to)/from Level 1 or 2 - -
Closing balance 288.0 273.0
The underlying assets in each fund consist of portfolios of investments in
controlling or minority stakes, typically in private companies, and their
debt. Due to the level of unobservable inputs within the determination of the
valuation of individual assets within each fund, and no observable price for
each investment, such investments are classified as level 3 financial assets
under IFRS 13 "Fair Value Measurement".
A sensitivity analysis of a change in the value of investments at fair value
through profit or loss is set out in note 10 (d).
ii) Reconciliation of level 3 fair value measurements of financial liabilities
The valuation methodology for valuing and subordinated debt liabilities of the
consolidated CLOs is valued based upon internal discounted cash flow models
with unobservable market data inputs, such as asset coupons, constant annual
default rates, prepayment rates, reinvestment rates, recovery rates and
discount rates and are therefore considered level 3 financial liabilities.
Financial liabilities classified as level 3 under the fair value hierarchy
consist of the deferred contingent consideration, liabilities of CLOs
consolidated by the Group and other financial liabilities, which represent CLO
repurchase agreements, and payables to related party investors other
intermediate fund holding entities. The valuation of these liabilities is
based on unobservable market data and therefore classified as level 3.
30 June 31 December 2022
2023
£m
£m
Level 3 financial liabilities at fair value through profit or loss
Deferred contingent consideration 10.4 16.7
Consolidated CLO liabilities 797.4 597.5
Other financial liabilities 50.3 49.5
Total 858.1 663.7
A reconciliation of level 3 fair values for CLO liabilities at fair value
through profit or loss is set out in the table below.
A reconciliation is not provided for the deferred contingent consideration and
other financial liabilities on the basis that the movements between 30 June
2022 and 31 December 2022 relate to the remeasurement and revaluation of the
payable.
30 June 31 December 2022
2023
£m
£m
Movement in CLO liabilities at fair value through profit or loss which are
level 3
Opening balance 597.5 29.7
On acquisition - 287.9
Repayment (52.1) -
Drawn 247.1 52.8
Foreign exchange movements (19.6) 24.2
Change in fair value 24.5 (9.0)
Transfers (to)/from Level 1 or 2 - 211.9
Closing balance 797.4 597.5
The impact of a 1% change in the value of the CLO liabilities is included in
the table below.
30 June 31 December 2022
£m
2023
£m
Increase or decrease of 1% 8.0 6.0
(d) Valuation inputs and sensitivity analysis
The number of unique investments that the Group indirectly invests into
through its investments in private equity and credit funds is numerous, and it
is not practical to provide a summary of the principal inputs into each
investment. The table below summarises the valuation methodologies used to
fair value investments in private equity and credit funds which are classified
as level 3 financial assets. Due to the level of unobservable inputs within
the determination of the valuation of individual assets within each fund, and
the lack of an observable price for each investment in a fund, fund
investments at fair value are classified as level 3. Whilst some assets held
by the funds may be classified as level 2 instruments, the Group does not
consolidate the funds and treats the unit of account as the fund rather than
the individual asset.
Nature of asset/liability Fair value at 30 June 2023 Fair value at 31 December 2022 (£m) Number of unique investments Valuation methodology Description Inputs
(£m)
Private equity fund investments 256.6 241.3 72 Earnings Where a portfolio company is profitable and for which a set of listed Earnings multiples are applied to the earnings of each portfolio company to
companies and precedent transactions are available. This is the most commonly determine the enterprise value. The most common measure of earnings is EBITDA.
used private equity valuation methodology. Earnings are adjusted for non-recurring items and run-rate adjustments to
arrive at maintainable earnings. Earnings are usually obtained from portfolio
company management accounts or forecast/ budgeted earnings, as considered
appropriate.
When selecting earning multiples consideration is given to:
· The original transaction price/entry multiple;
· Recent transactions in the same or similar instruments;
· Relevant comparable listed company multiples;
· Exit expectations and other company specific factors.
The resulting enterprise value is then adjusted to take into account the
capital structure of the portfolio company, including any assets or
liabilities such as cash or debt that should be included. The fund's share of
the value is calculated by calculating its holding.
At 30 June 2023, 97% (2022: 97%) of private equity fund investments were
valued using the earnings multiple approach.
Listed price Where a portfolio company has instruments traded on a recognised exchange the The traded price is applied to the number of shares held by the fund in the
traded price is used to value the investment. portfolio company. The value is then adjusted to take into account any assets
or liabilities in holding entities outside of the listed company.
As at 30 June 2023, there were two listed portfolio companies (3%) (2022: 3%)
which were priced using the prevailing share price.
Nature of asset/liability Fair value at 30 June 2023 (£m) Fair value at 31 December 2022 (£m) Number of unique investments Valuation methodology Description Inputs
Credit funds 100.2 76.9 125 Market price Where a loan is traded in the market, market prices can be obtained for use in Market prices can be obtained from third-party market price aggregation
pricing. services or broker quotes where there is an active market. The extent to how
active the market is depends upon the 'depth' of the pricing, (being the
number of distinct price quotations available from different sources). Before
the use of market pricing, consideration is given to identify anomalies or
other inaccuracies in market pricing or whether there are other factors that
should be considered, for example, recent transactions. As at 30 June 2023, 9%
(2022: 8%) of the Credit fund assets were priced using market prices.
Earnings Where a loan may be impaired an earnings basis is typically used to determine Where there are circumstances which indicate there is risk of non-performance
the enterprise value of the of the borrower, the enterprise value of the borrower will typically be
determined in accordance with an earnings methodology (as described above),
borrower, following which a waterfall approach is used to determine the value following which a waterfall approach is used to determine the value of the
of the loan. loan. As at 30 June 2023, 1% (2022: 4%) of the Credit fund assets were priced
using earnings basis.
Amortising to par method Where a performing loan that has been originated is valued based upon its Provided that there are no circumstances which indicate a material
amortised cost. underperformance or inability of the borrower to pay interest or repay the
principal, the valuation of loans that have been originated is determined by
apportioning any arrangement fees, similar fees or discount on a linear basis
over the anticipated holding period (which is typically three years). As at 30
June 2023, 80% (2022: 80%) of the Credit fund assets were priced using the
amortising to par method.
Discounted cash flows Where the Group holds an interest in the note of a CLO, a discounted cash flow Inputs used in the discounted cash flow analysis include discount rates and
analysis is used to determine the valuation. those used to project the expected cash flows relating to the CLO's underlying
asset portfolio including annual loan default rates and associated recovery
rates, prepayment rates, reinvestment rates and spreads. As at 30 June 2023,
100% (2022: 100%) of the investments in CLO notes were priced using discounted
cash flow method.
Other Other valuation techniques may be utilised where the above methodologies are Considering the broad array of debt instruments that may be held by the funds,
not deemed appropriate. it may be deemed appropriate for other valuation techniques to be utilised in
certain cases. As at 30 June 2023, 10% (2022: 8%) of the Credit fund assets
were priced using other valuation techniques.
Nature of asset/liability Fair value at 30 June 2023 (£ m) Fair value at 31 December 2022 (£ m) Number of unique investments Valuation methodology Description Inputs
Consolidated CLO assets 865.1 681.1 179 Market price Where a loan is traded in the market, market prices can be obtained for use in Market price aggregation services or broker quotes where there is an active
pricing. market. The extent to how active the market is depends upon the 'depth' of the
pricing, (being the number of distinct price quotations available from
different sources). Before the use of market pricing, consideration is given
to identify anomalies or other inaccuracies in market pricing or whether there
are other factors that should be considered, for example, recent transactions.
As at 30 June 2023, 100% (2022: 100%) of the CLO fund assets were priced using
market prices.
Other investments, at fair value 16.0 - 1 Market price Where a loan is traded in the market, market prices can be obtained for use in Market price aggregation services or broker quotes where there is an active
pricing. market.
Total assets 1,237.9 999.3
Nature of asset/liability Fair value at 30 June 2023 (£ m) Fair value at 31 December 2022 (£ m) Number of unique investments Valuation methodology Description Inputs
Non-investment grade and subordinated debt liabilities of the consolidated 797.4 597.5 22 Net asset value Where the Group is required to consolidate the liabilities of a CLO, a net The inputs to the valuation are the quotes obtained from Markit and Bloomberg
CLOs asset approach is used where the value of the liabilities is driven by the of the CLO assets.
value of the consolidated loan asset portfolio and any residual cash, accrued
interest and expenses contained within the vehicle.
The cash, accrued interest and expenses are at their book value.
Deferred contingent consid-eration 10.4 16.7 N/A Discounted cash flows Future consideration to be paid to EQT AB in relation to the acquisition of Inputs used in the calculation of the deferred consideration calculation
EQT Credit business and relates to the outcome of fundraising for certain include estimated outcome of certain fundraising, minimum and maximum
funds. thresholds and payout ratio set out in the sales and purchase agreement and
discount rate.
CLO repurchase agreements 28.1 28.1 N/A Discounted cash flows Where the Group is subject to a sale and repurchase agreement relating to Inputs used in the discounted cash flow analysis include discount rates and
CLOs, a discounted cash flow analysis is used to determine the valuation forecast cash flows relating to the CLO's underlying asset portfolio including
assumptions for annual loan default rates and associated recovery rates,
prepayment rates, reinvestment rates and spreads.
Other financial liabilities 22.2 21.4 N/A Other Where the Group enters a limited partnership agreement with related party N/A
investors to contractually share profits from those partnerships, other
valuation techniques may be utilised where the above methodologies are not
deemed appropriate.
Total liabilities 858.1 663.7
A reasonably possible change in the values of investments at fair value
through profit or loss is shown in the table below. This is modelled as 10% of
private equity fund investments and 1% of credit fund investments. As above,
investments in private equity inherently have greater potential for larger
changes in their valuation as the upside is not capped. The downside is
limited to the amount invested in the funds. For credit investments, the
upside is capped to the maximum of the principal and interest receipts and the
downside is limited to the amount invested in the funds, but due to the
investment strategy of the fund, losses are expected to be very small.
The sensitivity analysis considers only the net impact on the Group from
changes in the consolidated CLO portfolio, as the Group's exposure to price
risk is limited to its interest within the CLO and not the gross assets and
liabilities.
30 June 31 December 2022
2023
£m
£m
(+/-)
(+/-)
Fair value sensitivity
10% private equity fund investments 25.7 24.1
1% credit fund investments 1.0 0.8
11 Dividends
The Company paid a final dividend of 4.0 pence per share, which equates to
£32.7m, in May 2023 in respect of the second half of 2022.
The directors have announced an interim dividend of 4.4 pence per share, which
equates to £35.7m based on the number of shares at 30 June 2023, but may
change due to the Share Buyback Programme. This will be paid to be paid in
September 2023 to shareholders on the register as at 18 August 2023.
Six months ended 30 June 2023 Six months ended 30 June 2022
Ordinary dividends paid: £m Pence per share £m Pence per share
Prior period final dividend paid 32.7 4.0 30.0 3.6
12 Cash flow generated from operations
Six months ended 30 June 2023 (Restated)
£m
2022
£m
Profit before tax 53.1 48.3
Adjustments for
Exceptional expenses - 0.7
Share-based payments 1.8 0.4
Depreciation and amortisation 8.6 9.1
Net other (income)/expense (7.4) 3.1
Carried interest (6.4) (14.0)
Fair value remeasurement of investments (6.3) (24.7)
Decrease/(increase) in trade and other receivables 56.0 (17.1)
(Decrease) in trade and other payables (22.0) (38.4)
Cash generated from operations 77.4 (32.6)
13 Equity
(a) Share capital and premium
Allotted, called up and fully paid shares
Company
30 June 2023 31 December 2022
No. £ No. £
Ordinary of £0.00005 each 810,303,505 40,515 823,268,774 41,163
Deferred of £81 each 500 40,500 500 40,500
Deferred of £1 each 1 1 1 1
Deferred of £0.01 each 1 0.01 1 0.01
Total 810,304,007 81,016 823,269,276 81,664
Share capital represents the number of ordinary shares issued in the Company
multiplied by their nominal value of £0.00005 each. Share premium
substantially represents the aggregate of all amounts that have ever been paid
above nominal value to the Company when it has issued ordinary shares.
The holders of the ordinary shares have the right to receive notice of and to
attend and vote at any general meeting of the Company. The shares have one
vote per share on a resolution.
Each ordinary share is eligible for ordinary course dividends and
distributions on a liquidation, and is generally entitled to participate in a
return of capital, in each case subject to the provisions set out in the
Articles of the Company.
Deferred shares have no rights other than the right to receive their nominal
value in a liquidation after all other shares have received £1.0m per share.
(b) Own shares
Own shares are recorded by the Group when ordinary shares are acquired by the
Company and they are deducted from shareholders' equity. The Company held
886,484 ordinary shares and 501 deferred shares (2022: 886,484 ordinary
shares; 501 deferred shares) within retained earnings as at 30 June 2023 at a
cost of nil (2022: nil).
(c) Cash flow hedge reserve
Hedge reserves consist of the cash flow hedge reserve and the costs of hedging
reserve, such as the change in fair value related to forward points basis
adjustment.
(d) Net exchange differences reserve
Other comprehensive income reported in the net exchange differences reserve
comprises the net foreign exchange gain/(loss) on the translation of foreign
operations.
(e) Share-based payment reserve
The share-based payment reserve relates to the accumulated expense from the
recognition of equity-settled share-based payments to employees.
In the six months ended 30 June 2023, a £2.8m transfer was made between
share-based payment reserve and retained earnings which related to the full
vesting of the IPO Share Award.
(f) Capital redemption reserve
On 24 January 2023, the Company announced an on-market Share Buyback Programme
of up to £50.0m ("Share Buyback Programme"). The sole purpose of the Share
Buyback Programme is to reduce the Company's share capital. The Share Buyback
Programme commenced on 24 January 2023 and is expected to be completed on or
before 30 September 2023.
As at 30 June 2023, in aggregate 13,511,869 ordinary shares have been bought
back for £30.7m pursuant to the Share Buyback Programme. Of these shares, in
aggregate 12,965,269 ordinary shares have been cancelled at period end.
14 Events after the reporting period
Between 30 June 2023 and 23 July 2023, being the latest practicable date
before the publication of these interim financial statements, a further
2,012,541 ordinary shares have been bought back in aggregate for £4.0m
pursuant to the Share Buyback Programme. Of these shares, in aggregate
1,227,464 have been cancelled as at 23 July 2023.
There have been no other material subsequent events since 30 June 2023.
Supplementary Information: Condensed Consolidated Statement of Financial
Position, excluding CLOs
30 June 2023 (Unaudited)
£m
31 December 2022
£m
Assets
Non-current assets
Property, plant and equipment 84.5 85.5
Goodwill and intangible assets 118.1 119.6
Carried interest receivable 47.1 42.0
Fair value of fund investments* 356.8 318.2
Trade and other receivables 18.7 19.9
Total non-current assets 625.2 585.2
Current assets
Trade and other receivables 120.0 184.9
Derivative financial assets 3.7 1.0
Other investments, at fair value 16.0 -
Cash and cash equivalents 258.4 196.0
Term deposits with original maturities of more than three months - 100.0
Total current assets 398.1 481.9
Total assets 1,023.3 1,067.1
Liabilities
Non-current liabilities
Trade and other payables 13.7 13.6
Other financial liabilities 50.3 49.5
Lease liabilities 75.3 77.1
Deferred tax liabilities 25.8 19.4
Total non-current liabilities 165.1 159.6
Current liabilities
Trade and other payables 83.0 115.5
Lease liabilities 11.3 6.1
Derivative financial liabilities 4.4 13.2
Total current liabilities 98.7 134.8
Total liabilities 263.8 294.4
Net assets 759.5 772.7
Equity
Share capital 0.1 0.1
Share premium 289.8 289.8
Capital redemption reserve - -
Share-based payment reserve 3.0 3.6
Cash flow hedge reserve 2.1 (8.9)
Net exchange differences reserve 5.7 14.4
Retained earnings 458.8 473.7
Total equity 759.5 772.7
* The fair value of fund investments includes the Group's own exposures in
consolidated CLOs 1, 3, 4 and 5 of £60.0m (2022: CLOs 1, 3 and 4 of £45.2m)
as at 30 June 2023.
This condensed consolidated statement of financial position applies all of the
measurement and recognition requirements of UK adopted IAS and the accounting
policies of the Group, except for the requirement to consolidate CLOs. CLOs
are presented as an investment held at fair value in line with how they are
managed by the Group, rather than being consolidated in accordance with IFRS
10 "Consolidated Financial Statements".
Supplementary Information: Condensed Consolidated Statement of Cash Flows,
excluding CLOs
for the six months ended 30 June
2023 2022
£m
£m
Cash flows from operating activities
Cash generated from operations 77.4 (32.6)
Tax paid (2.5) (1.1)
Net cash flows from operating activities 74.9 (33.7)
Cash flows from investing activities
Investment in term deposits with original maturities of more than three months 100.0 (100.0)
Receipts from investments 6.4 28.3
Purchase of investments (21.3) (22.7)
Purchase of other investments (14.3) -
Interest received 1.6 0.5
Acquisition of CLOs (15.5) (11.4)
Payments for property, plant and equipment (2.0) (12.0)
Net cash flows from investing activities 54.9 (117.3)
Cash flows from financing activities
Exceptional transaction costs - (2.2)
Dividends paid to shareholders of the Company (32.7) (30.0)
Share buyback (30.7) -
Drawings from related party investors in intermediate fund holding entities - 3.5
Principal elements of lease payments (1.0) (2.8)
Interest paid (non-CLO) (2.4) (2.3)
Net cash flows from financing activities (66.8) (33.8)
Net (decrease)/increase in cash and cash equivalents 63.0 (184.8)
Cash and cash equivalents at the beginning of the period 196.0 323.1
Effect of exchange rate changes on cash and cash equivalents (0.6) 1.0
Cash and cash equivalents at the end of the period 258.4 139.3
This condensed consolidated statement of cash flows applies all of the
measurement and recognition requirements of UK-adopted IAS and the accounting
policies of the Group, except for the requirement to consolidate CLOs.
Consolidated CLO cash is not presented in the opening or closing cash
positions in this statement and all cash flows relate to the non-CLO
activities of the Group.
Forward Looking Statements
This announcement may include forward-looking statements. Forward-looking
statements are statements that are not historical facts and may be identified
by words such as "plans", "targets", "aims", "believes", "expects",
"anticipates", "intends", "estimates", "will", "may", "continues", "should"
and similar expressions. These forward-looking statements reflect, at the time
made, the beliefs, intentions and current targets/aims of Bridgepoint Group
plc (the "Company"). Forward-looking statements involve risks and
uncertainties because they relate to events and depend on circumstances that
may or may not occur in the future. The forward-looking statements in this
announcement are based upon various assumptions. Although the Company believes
that these assumptions were reasonable when made, these assumptions are
inherently subject to significant known and unknown risks, uncertainties,
contingencies and other important factors which are difficult or impossible to
predict and are beyond its control. Forward-looking statements are not
guarantees of future performance and such risks, uncertainties, contingencies
and other important factors could cause the actual outcomes and the results of
operations, financial condition and liquidity of the Company, its subsidiary
undertakings or the industry to differ materially from those results expressed
or implied in this announcement by such forward-looking statements. No
representation or warranty, express or implied, is made that any of these
forward-looking statements or forecasts will come to pass or that any forecast
result will be achieved. Undue influence should not be given to, and no
reliance should be placed on, any forward-looking statement. No statement in
this announcement is intended to be nor may be construed as a profit forecast.
Neither the Company, nor any of its subsidiaries nor any of their affiliates,
nor any of its or their officers, employees, agents or advisers, undertake to
publicly update or revise any such forward-looking statement, except to the
extent required by applicable law.
Issued by Bridgepoint Group plc
LEI: 213800KFNMVI8PDZX472
Registered in England and Wales no. 11443992.
Registered office: 5 Marble Arch, London, W1H 7EJ
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