REG - Bridgepoint Group - Preliminary Results
24/03/2022 07:00
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RNS Number : 8347F Bridgepoint Group plc 24 March 2022
Bridgepoint Group plc
Strong Performance in 2021 and Good Momentum Looking Ahead
Bridgepoint Group plc (the "Company" and together with its subsidiaries the
"Group") announces its preliminary results for the year ended 31 December
2021.
2021 full year highlights:
• Strong trading performance in the year in which Bridgepoint listed on the
London Stock Exchange: revenues increased by 41% and underlying EBITDA by 72%
compared to the prior year period
• Total Assets Under Management (AUM) of €32.9 billion, an increase of 23.7%
year on year
• Fee paying AUM of €18.3 billion, a 13.7% increase from December 2020
• Capital deployment in line with expectations: €5.4 billion invested in 2021
compared to €1.8 billion for the prior year period (which included
disruption from start of COVID pandemic)
• Fund Portfolio performance exceeded expectations, benefitting from continued
improvement in economies across Europe and delivered strong equity fund
realisations with €4.7 billion of gross exits completed in the period
• Good progress in fundraising: Bridgepoint Europe VII (BE VII) and Bridgepoint
Credit Direct Lending III (BDL III) making progress towards their targets
despite crowded fundraising markets
• Fundraisings will continue during 2022 with Bridgepoint Credit already
deploying capital from BDL III and BE VII expected to start deployment by end
of H2 2022 in line with expectations
Commenting on this performance, William Jackson, Executive Chairman, said:
"I am pleased to be sharing our results for 2021 which are ahead of the
expectations we set at the time of our IPO. Bridgepoint delivered strong
growth in revenues and profits in 2021 with these results illustrating the
strength and potential of Bridgepoint's alternative asset investment platform
with its particular focus on European growth companies.
"Following the disruption caused by the COVID pandemic in 2020, capital
deployment returned to normal levels across all our asset classes in 2021 and
we capitalised upon market conditions to deliver very strong exits and
valuation growth across our funds during the year which has driven fund
performance ahead of our original expectations. Our capital raising plans for
Bridgepoint Europe and Direct Lending remain unchanged despite congested
fundraising markets and we remain well positioned to deliver 2022 financial
performance in line with expectations.
"Looking forward, whilst we expect market volatility to continue, we are
excited by the medium term strategic growth prospects for the Group with our
business development plans continuing to evolve post IPO and we remain
confident in Bridgepoint's ability to deliver strong returns for our fund
investors and our shareholders alike."
Presentation and Q&A
Management will hold a webcast to answer questions from analysts and investors
at 8.30am UK time on Thursday 24(th) March:
Join via weblink:
https://www.lsegissuerservices.com/spark/BRIDGEPOINTGROUP/events/b0c844d4-5f70-416a-903b-d6a2e3c36008
(https://www.lsegissuerservices.com/spark/BRIDGEPOINTGROUP/events/b0c844d4-5f70-416a-903b-d6a2e3c36008)
Register for conference call:
https://cossprereg.btci.com/prereg/key.process?key=PV87TY3BG
(https://cossprereg.btci.com/prereg/key.process?key=PV87TY3BG)
The slides from this presentation will be available on the company's
website:
https://www.bridgepointgroupplc.com/r
(https://www.bridgepointgroupplc.com/results-reports-and-presentations)
esults-reports-and-presentations
(https://www.bridgepointgroupplc.com/results-reports-and-presentations)
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
Finsbury Glover Hering (Public Relations Adviser to Bridgepoint)
Charles O'Brien / +44 20 7251 3801 / +44 7825 043656
Anjali Unnikrishnan / +44 20 7251 3801 / +44 7826 534233
Bridgepoint@Finsbury.com (mailto:Burgundy@Finsbury.com)
Abbreviated Income Statement
£ million Year ended Year ended Change
31 December
31 December
(%)
2021
2020
Management fees 197.7 148.6 33.0%
Investment income 71.2 42.3 68.3%
Total operating income 270.6 191.8 41.1%
Total expenses (185.3) (133.1) 39.2%
Total expenses (excluding exceptional expenses) (156.7) (125.4) 25.0%
EBITDA 85.3 58.7 45.3%
Underlying EBITDA 113.9 66.4 71.5%
Underlying FRE 48.5 24.9 94.8%
Depreciation (11.9) (8.2) 45.1%
Underlying operating profit 102.0 58.2 75.3%
Reported operating profit 70.3 49.9 40.9%
Net finance expense (excluding exceptional net income) (11.5) (5.6) 105.4%
Net finance expense (7.7) (1.4) 450.0%
Underlying profit before tax 90.5 52.6 72.1%
Reported profit before tax 62.6 48.5 29.1%
Tax (4.8) (0.8) 500.0%
Reported profit after tax 57.8 47.7 21.2%
Consolidated balance sheet
Summarised consolidated balance sheet (statutory basis) As at As at Change
31 December
31 December
(%)
£ million
2021
2020
Assets
Non-current assets 567.9 438.0 29.7%
Current assets 712.2 607.0 17.3%
Total Assets 1,280.1 1,045.0 22.5%
Liabilities
Non-current liabilities 432.3 346.8 24.7%
Current liabilities 131.5 307.7 (57.3)%
Total Liabilities 563.8 654.5 (13.9)%
Net Assets 716.3 390.5 83.4%
Equity
Share capital and premium 289.9 241.4 20.1%
Other reserves 13.8 27.7 (50.2)%
Retained earnings 412.6 39.7 939.3%
Non-controlling interests - 81.7 (100.0)%
Total Equity 716.3 390.5 83.4%
Key metrics
Year ended Year ended Change
31 December
31 December
(%)
2021
2020
Total AUM (€bn) 32.9 26.6 23.7%
Fee paying AUM (€bn) 18.3 16.1 13.7%
Management fee margin on FPAUM (%) 1.23% 1.22% +0.01ppt
Management fees (£m) 197.7 148.6 33.0%
Investment income (£m) 71.2 42.3 68.3%
Total expenses (excluding exceptional items) (156.7) (125.4) 25.0%
Underlying EBITDA (£m) 113.9 66.4 71.5%
Underlying EBITDA margin (%) 42.1% 34.6% +7.5ppt
Underlying FRE (£m) 48.5 24.9 94.8%
Underlying FRE margin (%) 24.3% 16.7% +7.6ppt
Underlying profit before tax (£m) 90.5 52.6 72.1%
Reported profit before tax (£m) 62.6 48.5 29.1%
Reported profit after tax (£m) 57.8 47.7 21.2%
Reported pro forma basic and diluted EPS (p) 7.02 5.79 21.2%
Adjusted pro forma basic and diluted EPS (p) 10.41 6.29 65.5%
Reconciliation between statutory and underlying income statements
Year ended 31 December 2021 Year ended 31 December 2020
£m Underlying Excluded items Reported Underlying Excluded items Reported
Management fees 197.7 - 197.7 148.6 - 148.6
Profits from fair value remeasurement of co-investments and carried interest 71.2 - 71.2 42.3 - 42.3
Other operating income 1.7 - 1.7 0.9 - 0.9
Total operating income 270.6 - 270.6 191.8 - 191.8
Personnel expenses -121.4 -11.3 -132.7 -96.0 -0.3 -96.3
Other Expenses -36.4 -17.3 -53.7 -29.2 -7.4 -36.6
Foreign exchange gains/(losses) 1.1 - 1.1 -0.2 - -0.2
Total Expenses -156.7 -28.6 -185.3 -125.4 -7.7 -133.1
EBITDA 113.9 -28.6 85.3 66.4 -7.7 58.7
EBITDA Margin 42% 32% 35% 31%
FRE 48.5 -28.6 19.9 24.9 -7.7 17.2
FRE Margin 24% 10% 17% 12%
Depreciation and amortisation expense -11.9 -3.1 -15.0 -8.2 -0.6 -8.8
Net finance expense -11.5 3.8 -7.7 -5.6 4.2 -1.4
Profit Before Tax 90.5 -27.9 62.6 52.6 -4.1 48.5
Tax -4.8 - -4.8 -0.8 - -0.8
Profit After Tax 85.7 -27.9 57.8 51.8 -4.1 47.7
Overview of Bridgepoint funds at 31 December 2021
Fund Fund size Total FP Vintage Invested (%) Hurdle rate Carried interest Catch-up rate Group share of carried interest
AUM
AUM
Equity funds
BE IV €4,835m €1,638m €1,168m 2008 93% 8% 20% 100% 9%
BE V €4,000m €4,850m €3,164m 2015 93% 8% 20% 100% 2%
BE VI €5,766m €7,466m €5,735m 2019 71% 8% 20% 100% 5%
BDC II €353m €25m €0m 2012 96% 8% 20% 100% 3%
BDC III £605m €1,140m €597m 2016 87% 8% 20% 100% 25%
BDC IV £1,559m €1,858m €1,857m 2021 16% 8% 20% 100% 35%
Growth I £105m €137m €125m 2017 82% 8% 20% 100% 35%
BEP IV €728m €883m €823m 2019 115% 8% 10% 100% 25%
BDCP II €222m €205m €187m 2021 84% Variable Variable 100% 20%
Credit funds
Credit Opps II €845m €423m €92m 2012 11% 8% 20% 100% 9%
Credit Opps III €1,272m €1,404m €877m 2016 69% 8% 20% 100% 19%
Credit Opps IV €225m €225m €130m 2021 59% 7% 20% 100% tbc
BC I €182m €169m €61m 2019 71% 5% 12.50% 100% 22%
BC II €681m €681m €231m 2020 87% 5% 12.50% 100% 25%
BDL I €525m €422m €217m 2015 43% 5% / 5% 10% / 20% 100% / 0% 26%
BDL II €2,256m €2,457m €1,459m 2017 92% 5% / 6% 10% / 15% 50% / 50% 18%
BDL III €1,054m €1,167m €398m 2021 41% 5% / 6% 10% / 15% 100% tbc
CLOs €1,064m €1,064m €0m 2020 100% 10% 20% n/a 40%
EXECUTIVE CHAIR'S STATEMENT
Using the local insights we have in individual markets, along with the sector
expertise and the deep industrial knowledge of our investment and credit
teams, we identify, invest and support growth companies and work closely with
management teams to build stronger, broader-based businesses with greatly
enhanced long-term potential. This is what drives long-term returns for both
our fund investors and consequently for shareholders in Bridgepoint itself. As
I stated during our IPO, if Bridgepoint performs for its fund investors our
shareholders will also do well.
Generating financial returns across our funds, however, is not the sum of our
ambitions. We seek to create non-financial value too. Our duty to invest
responsibly to achieve positive impacts on the environment and society lies at
the heart of our ethos. It underscores everything we do. It is my longstanding
view that financial and non-financial value endeavours are not mutually
exclusive, instead, they are mutually reinforcing - businesses that adopt
sustainable and inclusive practices across their operations and have diverse
workforces are proven to perform better and, ultimately, deliver higher
returns for shareholders. We work closely with our investee companies to
achieve these outcomes and on occasions when we don't get things right we try
again.
We are mindful, however, that, as a progressive investor, we must do as we
say. In line with this, Bridgepoint is committed to a diverse and inclusive
working environment both within the Group itself and its portfolio companies.
We are a signatory to ILPA's 'Diversity in Action' initiative which aims to
advance diversity, equality and inclusion, and we are actively involved in a
range of other programmes including 'Level 20', which aims to promote gender
diversity in the European private equity industry. Bridgepoint commits to
initiatives such as the above because all of us are driven by a shared set of
values and beliefs regarding how we should do business: performance driven,
thoughtful, straightforward.
These are fundamental to our professional and personal conduct. They help us
to try and maintain the highest levels of corporate governance and apply the
highest standards of professionalism across the Group.
These shared values have come to the fore during the last 24 months during a
period of greater uncertainty than many of us have ever known. How we worked
and lived changed completely. Like many, Bridgepoint's priority was to ensure
that our people were safe, that the companies in which we are invested were
properly supported and that we, as a group, played our part in helping the
communities in which we operate. I am proud of how our people rallied together
during such a disruptive period - the strong set of financial results reported
here speaks for itself.
Continued growth in a challenging environment
In our first results following IPO I'm pleased to report that Bridgepoint
delivered strong performance in 2021 ahead of the expectations that we set
when we sought to raise capital from new investors in July 2021. The Group
performed consistently well over the course of the year as the economic
recovery from Covid has gathered pace: increasing assets under management to
€32.9 billion; deploying funds on new and follow-on investments; and
returning €3.3 billion of capital to our equity and credit investors and the
30 million beneficiaries they represent.
Importantly the fund investment returns that we have generated across our
funds in 2021 have also exceeded the expectations that we set at our Funds
Annual meetings in 2020 by some measure. Indeed our most mature flagship fund,
Bridgepoint Europe V, saw an exceptional 87% increase in the value of its
underlying unrealised assets during the year.
Our strong overall financial performance has enabled us to declare our first
dividend in our debut year as a quoted company. This excellent set of results
shows that our decision to list Bridgepoint on the London Stock Exchange, our
landmark corporate event in 2021, did not distract us from our day-to-day
operations. We took the decision to list so that we can continue to build our
business from a position of strength as we have done over the last 20 years
and especially since 2018, when we raised our first external capital which saw
Dyal Capital become a shareholder. Back then we used the funds to finance the
successful acquisition of EQT Credit and open new Bridgepoint Europe offices.
Similarly, whilst Bridgepoint remains "asset light" from a balance sheet
perspective, the capital raised from the IPO strengthens our resources and
provide us with a platform for future growth. This single event sets us
further down the road to achieve our long-term ambitions of continuing to
successfully build and develop our business.
We are delighted to welcome our new shareholders for this next stage in
Bridgepoint's journey as we do our new plc Board. We've already begun to
benefit from valuable insights from our new Board members and this
contribution will be further strengthened during the year ahead with our
intention to add two further directors to the Board following an on going
recruitment process. Importantly these new appointments will also increase our
diversity at Board level in line with best practice.
Delivering on our promises
Our focus over the last 12 months has been on driving returns for our fund
investors and shareholders. The continued success of our funds and the
resultant strong Group financial performance we are reporting today is
testament to the full depth of business experience and professionalism of our
team.
For the year ended 31 December 2021, Bridgepoint Group plc delivered
underlying EBITDA and profits before tax of £113.9 million and £90.5 million
respectively.
This translated into earnings per share of 7 pence, and reported profits of
£62.6 million before tax and earnings per share of 10 pence (excluding
exceptional items and amortisation of intangible assets). Assets under
management also grew by 23.7% to €32.9 billion.
These results, which were in line or ahead of expectations, were driven by our
two main strategies - private equity and private debt.
Private Equity
Over the course of the year under review, Bridgepoint's main private equity
funds committed €1.9 billion to new investments, completed 71 add-on
acquisitions, and returned €2.9 billion to our fund investors. This strong
progress has continued during the first quarter of 2022.
During the year Bridgepoint Europe fund investments collectively generated 24%
and 31% year-on-year average revenue and EBITDA growth - an indication of the
underlying strength of our portfolio companies. Importantly, over 7,000 jobs
were added by Bridgepoint portfolio companies during the year - an indication
of the contribution middle market businesses make to both the economy and
society.
Drilling down to the individual fund level, Bridgepoint Europe VI, our current
flagship €5.8 billion buyout fund, committed €1.5 billion in 5 new
investments and at the year-end had committed 88% of its primary capital,
bringing the total number of investments to 16. By the end of 2021,
Bridgepoint Europe V, a €4 billion fully invested fund, had completed or
agreed the sale of 4 of its 16 investments at an average multiple of 19.0x,
realising €4.4 billion from these assets. Bridgepoint Development Capital
('BDC'), our lower mid-market business, also had a very strong year: BDC III
completed its final investment and the team successfully raised a successor
fund - their largest to date - Bridgepoint Development Capital IV, a €1.6
billion fund, which completed 4 investments in the year.
Reflecting our continuing drive to invest responsibly, in 2021 we actively
committed to aligning all our new private equity funds to Article 8 of the
Sustainable Financial Disclosure Regulation ('SFDR'). As a result, our most
recently launched funds (Bridgepoint Europe VII and Bridgepoint Growth II)
will be SFDR Article 8 aligned. The official journal of the European Union
defines an Article 8 Fund as one that 'promotes, among other characteristics,
environmental or social characteristics, or a combination of those
characteristics, provided that the companies in which the investments are made
follow good governance practices.' During the year, we also became a signatory
to Initiative Climat International (iCI), recognising that climate change is
having an adverse effect on all of us.
Private Debt
Bridgepoint's second core strategy, our private debt business known as
Bridgepoint Credit, also enjoyed a strong year across the board. Our Direct
Lending and Credit Opportunities fund invested €3.5 billion across 46
companies whilst our CLOs ('collateralised loan obligations') fund invested
€0.7 billion across 96 companies.
During the year, Bridgepoint Credit also announced the pricing of its second
and third European CLO funds, the €355 million Bridgepoint CLO 2 DAC
("Bridgepoint CLO 2") and €408 million Bridgepoint CLO 3 DAC ("Bridgepoint
CLO 3"). In line with Bridgepoint's continued commitment to responsible
investing, Bridgepoint CLO 2 and CLO 3 contains specific ESG eligibility
criteria as well as an enhanced level of reporting transparency with respect
to the ESG profile of the portfolio.
Capital Raising
As already noted, Bridgepoint continued to grow its AUM during 2021 with its
main Direct Lending fund, BDL III, being launched during the middle of the
year and Bridgepoint Europe VII being launched towards the end of the year.
Both fund raisings are making progress towards their targets despite busy
capital raising markets and recent market volatility arising from the conflict
in Ukraine. These fund raisings will continue during 2022 with Bridgepoint
Credit now already committing capital from BDL III and our new flagship equity
fund, BE VII, expected to start committing capital by the end of the first
half of 2022 in line with previous expectations.
The right kind of returns
Bridgepoint provides capital to companies to help them to grow. To achieve
this, we look to support growth businesses that have the potential to
flourish, through international expansion, operational improvement or
acquisitions.
But it is no longer good enough to focus solely on financial returns. The
climate crisis and the Covid-19 pandemic underscore the need for all of us to
act in order to protect our environment and have a positive impact on society
and, for Bridgepoint specifically, to ensure our partner businesses are
governed according to high standards in order to foster success. Bridgepoint's
capacity and reach to support great businesses gives us both the means and
responsibility to act.
Taking a proactive approach to societal and environmental issues is not just a
social responsibility; it is also a matter of good guardianship. Businesses
that do good, grow both faster and sustainably. Our ambition is to create
lasting, sustainable and positive impacts so that our investors, shareholders
and employees are proud of how we generate returns.
It is imperative that we set an example and this year Bridgepoint Group plc
became a carbon-neutral company. Recognising the broader role we can play, we
also became a founding member of the Private Equity Sustainable Markets
Initiative Task Force launched by HRH The Prince of Wales at the World
Economic Forum 2020 ahead of COP26.
Outlook
We have all been shocked and hugely concerned by the conflict in Ukraine. I
can confirm that we have no material direct exposure. We have no material
portfolio assets in either country, nor do we have any Russian investors in
our funds.
Bridgepoint's market focus, the private equity and credit markets,
nevertheless remain attractive investment arenas, which are capable of
delivering excellent returns as these last 24 months have shown.
Bridgepoint's prime geographic focus, Europe, continues to be the home of
multiple world-leading domestic and exporting enterprises (accounting for one
third of global exports) and supports a high-quality spectrum of growth
businesses operating within areas that exhibit compelling sector and
geographic growth prospects.
Bridgepoint's business focus, the alternative investment market, has expanded
rapidly in recent years, with assets under management having grown by more
than 50 per cent from 2015 to 2020. Importantly, growth is forecast to
continue with private equity and private credit markets AUM expected to grow
at a compound annual growth rate (CAGR) of 15.9% and 17.4% respectively
between 2021 and 2026.
We recognise the opportunity before us. As our performance in 2021 shows,
Bridgepoint's operational model and people demonstrated a capacity to absorb
new business, continue to grow funds under management and to increase
profitability. As a team we are all committed to delivering strong returns for
our fund investors and shareholders and continuing to build our business
efficiently and effectively and having a positive influence on the environment
and communities around us. Our people remain our greatest asset and I thank
all our stakeholders for their support in 2021. Together with the platform we
have gained following our IPO, I am confident in our ability to continue to
build on our achievements to date.
William Jackson
Executive Chair
CHIEF FINANCIAL OFFICER'S STATEMENT
Group financial performance in 2021 benefited from a first full year's
contribution from the EQT Credit business and also from increased investment
profits as a result of strong fund returns. Primary capital raised in the IPO
allowed the Group to pay down external borrowing, leaving the balance sheet
with a net cash position at year end and well positioned to support the
execution of the Group's strategy.
Group financial performance in 2021 was underpinned by 23.7 per cent growth in
Total AUM to reach €32.9 billion at year end. The increase in Total AUM in
turn drove an increase in management fee income and the operational leverage
which is a feature of our business model was clearly demonstrated by 94.8 per
cent growth in underlying FRE.
Underlying profit before tax of £90.5 million was £37.9 million or 72.1 per
cent higher than the previous year, driven by a full year of contribution from
the acquired EQT Credit business and increased investment profits.
Reported profit after tax of £57.8 million was £10.1 million or 21.2 per
cent higher than the previous year due to increased underlying profits,
partially offset by £27.9 million of exceptional items and amortisation of
intangibles, which related predominantly to the IPO.
Proceeds from issuance of new shares in the IPO of £300 million, before
costs, allowed the Group to pay down its borrowings under the Group's
Revolving Credit Facility ("RCF"). Combined with the final instalment of the
deferred cash consideration from Dyal of £114.3 million which was received in
December 2021, the Group had a net cash position on its balance sheet
(excluding consolidated CLO fund cash) at 31 December 2021 of £323.1 million.
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
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. The section of this announcement titled 'Alternative
Performance Measures' sets out definitions of each of the APMs used within the
CFO review and how they can be reconciled back to the financial information.
Financial summary
Year ended 31 December Year ended 31 December
2021 2020 Change (%)
Total AUM (€bn) 32.9 26.6 23.7%
Fee paying AUM (€bn) 18.3 16.1 13.7%
Management fee margin on fee paying AUM (%) 1.23% 1.22% +0.01ppt
Management fees (£m) 197.7 148.6 33.0%
Investment income (£m) 71.2 42.3 68.3%
Total expenses (excluding exceptional items) (£m) (156.7) (125.4) 25.0%
Underlying EBITDA (£m) 113.9 66.4 71.5%
Underlying EBITDA margin (%) 42.1% 34.6% +7.5ppt
Underlying FRE (£m) 48.5 24.9 94.8%
Underlying FRE margin (%) 24.3% 16.7% +7.6ppt
Underlying profit before tax (£m) 90.5 52.6 72.1%
Reported profit before tax (£m) 62.6 48.5 29.1%
Reported profit after tax (£m) 57.8 47.7 21.2%
Reported pro forma basic and diluted EPS (pence) 7.02 5.79 21.2%
Adjusted pro forma basic and diluted EPS (pence) 10.41 6.29 65.5%
Fundraising
Bridgepoint Europe VII ("BE VII") was launched in late 2021 with a target size
of €7.0 billion. Private equity AUM at 31 December 2021 amounted to €22.9
billion.
Bridgepoint Credit Opportunities IV ("BCO IV") held a first closing in October
2021, raising €0.2 billion and in November Bridgepoint Direct Lending III
("BDL III") held a first closing at €1.2 billion. Bridgepoint CLO 2 ("CLO
2") closed in July at €355 million and in November Bridgepoint CLO 3 ("CLO
3") closed, raising €408 million. As a result of these fundraisings, credit
AUM ended the year at €10.0 billion.
Total AUM development during the last twelve months
EURbn Private equity Credit Total
31 December 2020 19.2 7.4 26.6
Fundraising 1.3 2.8 4.1
Divestments (2.9) (0.6) (3.5)
Revaluations 5.3 0.4 5.7
31 December 2021 22.9 10.0 32.9
Total AUM at 31 December 2021 was €32.9 billion compared to €26.6 billion
at the end of the 2020. The 23.7 per cent increase is due to revaluations of
fund investments and the impact of successful fundraises for our credit
strategies.
Total Fee Paying AUM development during the last twelve months
EURbn Private equity Credit Total
31 December 2020 11.9 4.2 16.1
Fundraising/invested 2.1 2.5 4.6
Divestments (0.2) (1.7) (1.9)
Step down (0.1) (0.4) (0.5)
31 December 2021 13.7 4.6 18.3
Fee paying AUM at 31 December 2021 was €18.3 billion compared to €16.1
billion at the end of 2020 with the 13.7 per cent increase primarily due to
BDC IV becoming fee paying during the year as well as the increase in invested
capital in our credit strategies.
Abbreviated Income Statement
Year ended 31 December Year ended 31 December Change
(%)
£ million 2021 2020
Management fees 197.7 148.6 33.0%
Investment income 71.2 42.3 68.3%
Total operating income 270.6 191.8 41.1%
Total expenses (185.3) (133.1) 39.2%
Total expenses (excluding exceptional expenses) (156.7) (125.4) 25.0%
EBITDA 85.3 58.7 45.3%
Underlying EBITDA 113.9 66.4 71.5%
Underlying FRE 48.5 24.9 94.8%
Depreciation (11.9) (8.2) 45.1%
Underlying operating profit 102.0 58.2 75.3%
Reported operating profit 70.3 49.9 40.9%
Net finance expense (excluding exceptional net income) (11.5) (5.6) 105.4%
Net finance expense (7.7) (1.4) 450.0%
Underlying profit before tax 90.5 52.6 72.1%
Reported profit before tax 62.6 48.5 29.1%
Tax (4.8) (0.8) 500.0%
Reported profit after tax 57.8 47.7 21.2%
The Group's consolidated income statement has two key components: the first is
the income generated from management 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 from the calculation. Profits from co-investment and carried interest
together with FRE form the EBITDA of the business.
In the year ended 31 December 2021, exceptional expenses were recorded
relating the Company's IPO as well as further costs relating to the
acquisition of the EQT Credit business. In the year ended 31 December 2020,
exceptional expenses were recorded relating to the acquisition of the EQT
Credit business. 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. Exceptional items
are classified as "exceptional" within the Group's consolidated income
statement and disclosed separately to give a clearer presentation of the
Group's results.
Underlying operating profit excludes exceptional expenses within EBITDA and
the amortisation of intangible assets arising from the acquisition of EQT
Credit. Underlying profit before tax excludes the aforementioned expenses and
also certain finance income and expenses which have also been classified as
exceptional. These relate to the acquisition of EQT Credit and the investment
by Dyal Capital Partners. Further explanation of these items is included
within note 8 of the financial information.
Total operating income
Year ended 31 December Year ended 31 December
£ million 2021 2020 Change
(%)
Management fees 197.7 148.6 33.0%
Carried interest 14.3 12.9 10.9%
Income from the fair value remeasurement of investments 56.9 29.4 93.5%
Other operating income 1.7 0.9 88.9%
Total operating income 270.6 191.8 41.1%
Total operating income grew strongly and increased by 41.1 per cent from
£191.8 million in 2020 to £270.6 million in 2021 reflecting an increase in
management fees, carried interest and income from the fair value remeasurement
of investments.
Management fees increased by £49.1 million, or 33.0 per cent, from £148.6
million for the year ended 31 December 2020 to £197.7 million for the year
ended 31 December 2021.
Year ended 31 December Year ended 31 December
2021 2020 Change
£ million (%)
Private equity 157.3 136.6 15.2%
Credit 37.9 10.2 271.6%
Central 2.5 1.8 38.9%
Total management fees 197.7 148.6 33.0%
This increase was primarily due to the full year impact of the enlarged Credit
business following its acquisition in the fourth quarter of 2020. Private
equity fees increased due to BDC IV, which started charging management fees on
1 January 2021, partially offset by reduced fees on older funds which are in
their divestment phase, when fees are based upon the remaining invested
capital.
Income from the Group's share of carried interest income of £14.3 million in
2021 was driven by Bridgepoint Europe V ("BE V") and Bridgepoint Development
Capital III ("BDC III") portfolios. Income recognised as a result of increases
in the value of co-investments increased by 93.5 per cent from £29.4 million
in 2020 to £56.9 million in 2021, reflecting the increase in valuation of
assets across the private equity fund range, but particularly within the
Bridgepoint Europe V and VI portfolios ("BE V" and "BE VI").
Other operating income includes fees and commissions receivable by the Group's
procurement consulting business, PEPCO. Its income continued to be impacted by
COVID through a reduction in the number of projects being undertaken.
Operating and other expenses
Year ended 31 December Year ended 31 December
£ million 2021 2020 Change
(%)
Personnel expenses (121.4) (96.0) 26.2%
Other expenses (36.4) (29.2) 24.7%
Foreign exchange gains/(losses) 1.1 (0.2) (650.0)%%
Total expenses before exceptional expenses (156.7) (125.4) 25.0%
Exceptional expenses (28.6) (7.7) 271.4%
Total expenses (185.3) (133.1) 39.2%
Personnel expenses (excluding exceptional expenses) increased by 26.5 per
cent, from £96.0 million in 2020 to £121.4 million in 2021. This increase
was primarily due to the increase of the number of employees following the
acquisition of EQT Credit, as well as continuing investment in the Group's
operating platform and bonuses linked to the BE V carried interest income
recognised by the Group during 2021.
Other expenses (excluding exceptional expenses) increased by 24.7 per cent,
from £29.2 million in 2020 to £36.4 million in 2021. The increase reflects
predominantly the annualised impact of the acquisition of EQT Credit. Whilst
the Group realised some COVID-related savings such as reduced travel,
corporate hospitality and staff expenses, these were offset by higher legal
and regulatory spend to support the growth of the Group and costs incurred
relating to the Group's exit from its current London premises.
Foreign exchange gains/(losses) changed by £1.3 million from a loss of £0.2
million in 2020 to a gain of £1.1 million in 2021. This change was primarily
due to the strengthening of sterling versus the euro, and the corresponding
remeasurement of the Group's euro borrowings up to the point at which they
were repaid following the IPO.
Personnel expenses (excluding exceptional expenses) as a percentage of total
operating income was 44.9 per cent for the year ended 31 December 2021,
compared to 50.1 per cent for the year ended 31 December 2020 and would have
been lower but for the £5.8 million of non-recurring BE V carried interest
linked bonuses incurred in 2021. The percentage decrease in 2021 compared to
2020 was due to the increase in operating income being greater than the
increase in personnel expenses. Other expenses (excluding exceptional
expenses) as a percentage of total operating income reduced to 13.5 per cent
for the year ended 31 December 2021, compared to 15.2 per cent for the year
ended 31 December 2020 for the same reason.
EBITDA
Year ended 31 December Year ended 31 December
£ million 2021 2020 Change
(%)
Underlying EBITDA 113.9 66.4 71.5%
Exceptional expenses (28.6) (7.7) 271.4%
EBITDA 85.3 58.7 45.3%
Underlying EBITDA increased strongly by 71.5 per cent from £66.4 million in
2020 to £113.9 million in 2021, excluding exceptional expenses associated
with the IPO of the Group in 2021 and the acquisition of EQT Credit in 2020.
This was largely driven by the operational leverage resulting from the growth
in total operating income of 41.1 per cent representing a multiple of 1.65x
the growth in total expenses, excluding exceptional expenses, of 25.0 per
cent.
Exceptional expenses of £28.6 million in 2021 related to the costs associated
with the Group's IPO of £27.1 million, costs of £1.0 million relating to the
acquisition of EQT Credit and £0.5 million relating to potential M&A
costs. A further £18.4 million of expenses relating to the Group's IPO have
been recognised as issuance costs and are included within equity. The £7.7
million of exceptional expenses recorded in 2020 related only to expenses
associated with the acquisition of EQT Credit.
EBITDA, including exceptional expenses, increased by 45.3 per cent as
exceptional expenses recorded in 2021 offset the majority of the increase in
total operating income.
Depreciation and amortisation expense
Year ended 31 December Year ended 31 December
2021 2020 Change
£ million (%)
Depreciation (11.9) (8.2) 45.1%
Amortisation of intangibles (3.1) (0.6) 416.7%
Total depreciation and amortisation expense (15.0) (8.8) 70.5%
Depreciation and amortisation expense increased by 70.5 per cent from £8.8
million in 2020 to £15.0 million in 2021. This increase was primarily due to
two factors, firstly the start of the lease of the Group's new London
headquarters, 5 Marble Arch, in July 2021 resulting in an increased
depreciation charge from that date onwards and, secondly, the full year of
amortisation of the intangible assets acquired with the EQT Credit business
(fund customer relationships) which are being expensed over seven years. The
amortisation of intangibles has been excluded from the adjusted profitability
measures in order to enable a clearer analysis of underlying profitability.
Total operating profit
Year ended 31 December Year ended 31 December
2021 2020 Change
£ million (%)
Underlying operating profit 102.0 58.2 75.3%
Exceptional expenses (28.6) (7.7) 271.4%
Amortisation of intangibles (3.1) (0.6) 416.7%
Reported operating profit 70.3 49.9 40.9%
Underlying operating profit margin 37.7% 30.3% +7.4ppt
Underlying operating profit increased by 75.3 per cent or £43.8 million from
a profit of £58.2 million in 2020 to a profit of £102.0 million in 2021,
reflecting the £47.5 million increase in underlying EBITDA, partially offset
by the £2.5 million increase in depreciation and amortisation expenses.
Reported operating profit increased by 40.9 per cent from £49.9 million in
2020 to £70.3 million in 2021.
The underlying operating profit margin increased from 30.3 per cent for the
year ended 31 December 2020 to 37.7 per cent for the year ended 31 December
2021. This increase was primarily due to increased total operating income
which outpaced the growth in operating expenses
Finance income and expense
Year ended 31 December Year ended 31 December
2021 2020 Change
£ million (%)
Net finance expense, excluding exceptional items (11.5) (5.6) 105.4%
Exceptional net finance income 3.8 4.2 (9.5)%
Net finance expense, including exceptional items (7.7) (1.4) 450.0%
Net finance expenses, excluding exceptional items, increased by £5.9 million
to £11.5 million, from a net expense of £5.6 million for the year ended 31
December 2020. This movement was primarily due to:
· an increase in amounts payable to investors who have a 15 per cent
interest in the profits of the BE V co-investment vehicle;
· increased interest expense from borrowings under the Group's
Revolving Credit Facility, which was used, in part, for financing the
acquisition of the EQT Credit business. The borrowings were repaid in July
2021 following the IPO; and
· increased finance charge relating to the 5 Marble Arch lease.
Exceptional net finance income includes the unwind of the discount applied to
amounts due following the investment by Dyal Capital Partners and the impact
of the remeasurement, discount unwind and re-translation into Sterling of the
deferred contingent consideration payable to EQT AB in relation to the
acquisition of the EQT Credit business.
Profit before tax
Year ended 31 December Year ended 31 December
2021 2020 Change
£ million (%)
Underlying profit before tax 90.5 52.6 72.1%
Exceptional expenses (28.6) (7.7) 271.4%
Exceptional net finance income 3.8 4.2 (9.5)%
Amortisation of intangible assets (3.1) (0.6) 416.7%
Reported profit before tax 62.6 48.5 29.1%
Underlying profit before tax margin 33.4% 27.4% +6.0ppt
Underlying profit before tax increased by 72.1 per cent from £52.6 million in
2020 to £90.5 million in 2021.
Reported profit before tax increased by 29.1 per cent from £48.5 million in
2020 to £62.6 million in 2021, reflecting increased underlying operating
profits, partially offset by the IPO and other exceptional expenses and
amortisation of intangibles of £27.9 million.
The underlying profit before tax margin increased from 27.4 per cent for the
year ended 31 December 2020 to 33.4 per cent for the year ended 31 December
2021.
Tax
Year ended 31 December Year ended 31 December
2021 2020 Change
£ million (%)
Tax (4.8) (0.8) 500.0%
Tax increased from £0.8 million in 2020 to £4.8 million in 2021. This was
primarily due to movements in deferred tax liabilities.
The effective tax rate for the year ended 31 December 2021 was 7.7 per cent
compared to 1.6 per cent for the year ended 31 December 202. As detailed in
note 11 to the financial information, 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
Year ended 31 December Year ended 31 December
2021 2020 Change
£ million (%)
Profit after tax 57.8 47.7 21.2%
Profit after tax increased by 21.2 per cent from £47.7 million in 2020 to
£57.8 million in 2021 which reflected the higher tax charge in 2021.
Earnings per share and dividend per share
Year ended 31 December Year ended 31 December
2021 2020(2) Change
£ pence
Reported Pro forma Earnings per share 7.02 5.79 1.23
Adjusted Pro forma Earnings per share 10.41 6.29 4.12
Dividend per share 3.64 0.79 2.85
2. 2020 earnings per share and dividend per share are presented on a pro forma basis using the number of shares in issue at 31 December 2021
Adjusted earnings per share grew by 4.12 pence per share, reflecting the
increase in profit after income tax and the use of the number of shares in
issue following the IPO at the end of 2021 to calculate proforma earnings per
share for the comparative period.
A dividend of £30 million, or 3.64 pence per pro forma share, was paid prior
to listing to shareholders on the register as of 20 July 2021.
The directors are proposing a final dividend of £30 million, or 3.64 pence
per share, in respect of the second half of 2021, reflecting the period for
which the Group was listed.
Consolidated balance sheet
As at As at
31 December 31 December
Summarised consolidated balance sheet (statutory basis)
Change
2021 2020
£ million (%)
Assets
Non-current assets 567.9 438.0 29.7%
Current assets 712.2 607.0 17.3%
Total Assets 1,280.1 1,045.0 22.5%
Liabilities
Non-current liabilities 432.3 346.8 24.7%
Current liabilities 131.5 307.7 (57.3)%
Total Liabilities 563.8 654.5 (13.9)%
Net Assets 716.3 390.5 83.4%
Equity
Share capital and premium 289.9 241.4 20.1%
Other reserves 13.8 27.7 (50.2)%
Retained earnings 412.6 39.7 939.3%
Non-controlling interests - 81.7 (100.0)%
Total Equity 716.3 390.5 83.4%
Net assets principally comprise cash, 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 balance sheet, notably the structure of its liabilities and
equity, changed in 2021 as a result of the IPO which saw additional equity
raised and all bank borrowings subsequently repaid from the proceeds of the
issuance of new shares.
The Group's total assets grew by 22.5 per cent from £1,045.0 million at 31
December 2020 to £1,280.1 million at 31 December 2021. Non-current assets
increased by 29.7 per cent from £438.0 million at 31 December 2020 to £567.9
million at 31 December 2021 predominantly due to increases in the value and
investment into the Bridgepoint funds. Current assets increased by 17.3 per
cent from £607.0 million at 31 December 2020 to £712.2 million at 31
December 2021 primarily due to increased cash and cash equivalents.
The IPO provided the Group with £300 million of new primary proceeds, before
costs, which were used to repay borrowings under the Group's RCF. As a result,
total liabilities decreased by 13.9 per cent from £654.5 million at 31
December 2020 to £563.8 million at 31 December 2021. Within that total,
current liabilities decreased by 57.3 per cent from £307.7 million at 31
December 2020 to £131.5 million at 31 December 2021 mostly due to the
repayment of bank debt following the IPO and a reduction in the value of CLO
purchases awaiting settlement, within consolidated CLO vehicles. Non-current
liabilities increased from £346.8 million at 31 December 2020 to £432.3
million at 31 December 2021 primarily due to the recognition of the lease
liability associated with the 5 Marble Arch property.
Total equity benefitted from the proceeds of the new issue of shares at IPO of
£300 million, before costs, resulting in total equity of £390.5 million at
31 December 2020 increasing to total equity of £716.3 million at 31 December
2021.
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 information interprets the
balance sheet of the Group. 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 31 December 2021 was £12.3 million (2020: £19.5 million).
As at 31 December As at 31 December
Summarised consolidated balance sheet (excluding third party CLO assets and 2021 2020 Change
liabilities, non-statutory)
(%)
£ million
Total Assets (excluding third party CLO assets) 1,001.4 677.3 47.9%
Total Liabilities (excluding third party CLO liabilities) (285.1) (286.8) (0.6)%
Net Assets 716.3 390.5 83.4%
Liquidity
The Group's liquidity requirements arise primarily in relation to the funding
of operations and the Group's plans in connection with its expansion and
diversification strategy. The Group funds its business using cash from its
operations (retained profits), capital from shareholders and third-party debt.
Total financial debt and net cash position
As at 31 December As at 31 December
2021 2020 Change
£ million (%)
Bank borrowings - (99.7) NM
Cash and cash equivalents (excluding CLO cash) 323.1 42.3 663.8%
Net cash/(debt) 323.1 (57.4) 662.9%
At 31 December 2021, the Group had net cash of £323.1 million compared with
net debt of £57.4 million at 31 December 2020.
The increase in net cash of £380.5 million since 31 December 2020 resulted
from the IPO which raised £300 million of gross primary capital, before
costs, the receipt of £114.3 million of deferred investment proceeds from
Dyal Capital Partners IV (C) LP and cash generated from operating activities
and investment activities, offset by cash used in investing activities.
Cash from the IPO was also used to repay borrowings under the RCF, which had
been used, in part, to finance the acquisition of the EQT Credit business. The
borrowings were repaid in July 2021 following the IPO. At 31 December 2021,
the Group had no debt, but still has in place the £125m revolving credit
facility, which remains available for re-drawing until October 2023.
As at 31 December 2021, in addition to the liabilities shown on the balance
sheet, the Group had approximately £113.7 million and £28.5 million of
remaining undrawn capital commitments to the Bridgepoint funds in each of the
private equity and private credit segments, respectively.
Consolidated cash flows
Year ended 31 December Year ended 31 December
Summarised consolidated cash flow statement (statutory basis) 2021 2020 Change
£ million (%)
Net cash flows from operating activities 23.1 28.4 (18.7)%
Net cash flows from investing activities (163.0) (111.5) 46.2%
Net cash flows from financing activities 318.6 225.2 41.5%
Net increase in cash and cash equivalents 178.7 142.1 25.8%
Cash and cash equivalents at beginning of the year 157.1 12.1 1198.3%
Effect of exchange rate changes (8.5) 2.9 (393.1)%
Cash and cash equivalents at the end of the year 327.3 157.1 108.3%
of which: cash and cash equivalents at the end of the year (for use within the 323.1 42.3 663.8%
Group)
of which: CLO cash (restricted) 4.2 114.8 (96.3)%
Total cash at the end of the year 327.3 157.1 108.3%
Cash flows from operating activities for the year ended 31 December 2021 was
£23.1 million. The decrease of £5.3 million in the cash flows from operating
activities compared to the year ended 31 December 2020 was primarily due to
the payment of IPO related costs and adverse movements in the Group's working
capital.
Cash flows from investing activities primarily relates to investments in the
Bridgepoint funds. The timing of investments and divestments in Bridgepoint
funds, which impacts carried interest and investment income, depends on the
investment activity of the Bridgepoint funds. For the year ended 31 December
2021 cash outflows from investing activities of £163.0 million primarily
relate to investments by the consolidated Bridgepoint CLO vehicles with
£281.2 million of cash outflows, partially offset by £113.3 million of
receipts. Receipts from investments in the Bridgepoint funds broadly offset
investment into the funds. Receipts from sale and repurchase agreements
relating to the Group's holding in CLOs generated £28.1m.
Cash flows from financing activities for the year ended 31 December 2021 of
£318.6 million primarily resulted from the £300m of gross primary capital
from the IPO, the receipt of £114.3m of deferred investment proceeds from
Dyal Capital Partners IV (C) LP, offset by the repayment of borrowings under
the Group's RCF.
In addition, at 31 December 2021 the Group had £4.2 million recorded on the
balance sheet as 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 the 31 December 2021 for those
CLOs which are required to be consolidated. This could distort how a reader of
the financial information interprets the cash flows of the Group, therefore a
cash flow statement without the consolidated CLO vehicles is presented below.
Year ended 31 December Year ended 31 December
Summarised consolidated cash flow statement (excluding cash flows relating to 2021 2020 Change
consolidated CLOs, non-statutory)
(%)
£ million
Net cash flows from operating activities (excluding consolidated CLOs) 23.1 28.4 (18.7)%
Net cash flows from investing activities (excluding consolidated CLOs) 10.6 (109.3) (109.7)%
Net cash flows from financing activities (excluding consolidated CLOs) 251.3 108.1 132.9%
Net increase in cash and cash equivalents (excluding consolidated CLOs) 285.0 27.2 947.8%
Cash and cash equivalents at beginning of the year (excluding consolidated 42.3 12.1 249.6%
CLOs)
Effect of exchange rate changes on cash and cash equivalents (excluding (4.2) 3.0 (240.0)%
consolidated CLOs)
Cash and cash equivalents at the end of the year (excluding consolidated CLOs) 323.1 42.3 663.8%
Guidance
· Transition guidance for BE VI to BE VII: 30 June 2022
· Management fee rates expected to continue to remain stable across our
businesses
· Investment income guidance unchanged
· Target of 2% to 3% co-investments in future funds
· Modest growth in headcount and personnel costs (relative to fee rate
growth) over near term after 2022
· FRE margin expected to reach 45 to 50 per cent in the longer term.
· Effective tax rate guidance remains unchanged
PRINCIPAL RISKS AND UNCERTAINTIES
The Board monitors the principal risks and uncertainties which could have a
material effect on the Group's results. The principal risks and uncertainties
identified are listed below. Full disclosure of the risks including the
factors which mitigate them will be set out within the 2021 Annual Report and
Accounts.
Fundraising challenges
Category: Strategic and External
Challenges:
The current Bridgepoint funds have a finite life and a finite amount of
commitments from fund investors. Once a fund nears the end of its investment
period, the Group raises additional or successor funds in order to keep making
investments and, over the long-term, earn management fees (although funds and
investment vehicles continue to earn management fees after the expiration of
their investment periods, they generally do so at a reduced rate). Fundraising
activities can be affected by a number of factors, including competition for
investments or investors (as described below) and general macroeconomic
conditions.
The Group has a number of new fundraises continuing in 2022, however
fundraising markets are more congested than they were earlier in 2021.
The inability to raise additional or successor funds (or raise successor funds
of a comparable size to predecessor funds), or a change in the terms on which
investors are willing to invest, could have a material adverse impact on the
Group's business, revenue, net income, cash flows or the ability to retain
employees.
Mitigation:
The Group's capital raising efforts are supported by an in-house global
investor services team, which utilises the Group's data and technology
capabilities.
The Group has made efforts to broaden its investor base, both in terms of the
number of investors across the platform and the geographic spread of such
investors.
Increased competition
Category: Strategic and External
Challenges:
The investment management industry is intensely competitive, with the Group
competing with a number of other persons for investor funds, including
sponsors of public and private investment funds, and fundraising markets are
currently congested. If market conditions for competing investment products
become more favourable and such products begin to offer rates of return
superior to those achieved by the Bridgepoint funds, the attractiveness of
Bridgepoint funds to investors could decrease. In order to remain attractive
the Group may then need to offer fund terms that are less favourable to it
than those previously offered.
The Group also competes for investment opportunities for the Bridgepoint
funds, and such competition is based primarily on the ability to source such
investment opportunities, the pricing, terms and structure of a proposed
investment and certainty of execution.
An increase in competition for either investors or investments could adversely
affect the Group's revenue.
Mitigation:
As the leader in middle market investing, the Group offers investors a
differentiated approach arising from its global reach and ability to deploy
capital across middle market strategies. This insulates the Group, to some
extent, against the competitive pressures arising in respect of attracting
fund investors.
In addition, as mentioned above, the Group has made efforts to broaden its
investor base, both in terms of the number of investors across the platform
and the geographic spread of such investors, helping to alleviate competitive
pressures.
In respect of investments, the Group's deal flow is driven by its sector
strategy which is continually refined to exploit market conditions, including
changes in competitive pressures.
The Group's investment approach has evolved through different economic cycles,
helping it to resist temporary competitive pressures caused by economic
cycles.
Reputational damage
Category: Strategic and External
Challenges:
There is a risk that factors such as poor fund performance, negative press,
insufficient sustainability procedures and overriding of ESG factors by any
portfolio company of a Bridgepoint fund, or employees or affiliates thereof,
the insolvency, liquidation or bankruptcy of a portfolio company or
non-compliance with applicable laws and regulations could lead to fund
investor dissatisfaction and a decreased ability or inability by the Group to
raise capital for new funds, as well as impair its ability to attract and
retain key talent.
Mitigation:
The Group's investment processes are designed to comply with accepted
standards of investment management practice.
The Group has an ESG Committee, composed of a cross-section of senior and
appropriately experienced professionals operating in various geographies. This
committee ensures that senior management gives due consideration and attention
to ESG matters.
Fund underperformance
Category: Investment
Challenges:
In the event that certain of the Bridgepoint funds were to perform
unsatisfactorily, in particular if this were the case for a larger Bridgepoint
fund (for example the current flagship fund, Bridgepoint Europe VI or its
successors), this may adversely affect the Group's business, brand and
reputation and lead to difficulties for the Group in attracting fund investors
and raising capital for new funds in the future.
Mitigation:
The Group has in place a robust and disciplined investment process where
investments are analysed and selected by the Group's Operating Committees and
Investment Advisory Committees. The Portfolio Management Committees regularly
monitor investment performance and delivery of investment objectives. Any 'at
risk' investments are subject to a detailed review by a Portfolio Working
Group.
Investment processes not only evaluate and mitigate the risks inherent in
particular investments or divestments, but also ensure that all investment
decisions are taken in accordance with the relevant fund's investment
strategy.
The Group limits the extent of market risk by diversifying portfolio assets
held within the Bridgepoint funds in terms of sector, size and geography.
Decreased pace or size of investments made by Bridgepoint funds
Category: Investment
Challenges:
The Group's revenue is driven in part by the pace at which the Bridgepoint
funds make investments and the size of those investments, and a decline in the
pace or the size of such investments may reduce the Group's revenue. The
market for private equity transactions, for example, has at times been
characterised by relatively high prices, which can make the deployment of
capital more difficult. In addition, many other factors could cause a decline
in the pace of investment, including the inability of the Group's investment
professionals to identify attractive investment opportunities, competition for
such opportunities among potential acquirers, decreased availability of
capital on attractive terms and the failure to consummate identified
investment opportunities because of business, regulatory or legal
complexities, new regulations, guidance or other actions provided or taken by
regulatory authorities or uncertainty and adverse developments in the global
economy or financial markets.
A failure to deploy committed capital in a timely manner may also have a
negative impact on investment performance and the ability to raise new funds.
Mitigation:
The rate of investment is kept under review by senior management to ensure
that it is maintained at an acceptable level.
The Group has ongoing dialogue with its investors and is sensitive to their
concerns regarding investment and realisation pace. These concerns are taken
into consideration when setting the short and long-term strategy of a fund,
and where necessary consent is sought to modify investment periods to align
with the pace of investment that is reasonably and responsibly achievable.
Personnel and key people
Category: Operational
Challenges:
The Group's personnel, including its investment professionals and specialist
teams, are highly important to the Group's business and its strategy
implementation, and the market for such persons is highly competitive. The
Group's continued success is therefore dependent upon its ability to retain
and motivate its personnel and to strategically recruit, retain and motivate
new talented professionals.
In particular, the Group depends on the efforts, skill, reputations and
business contacts of its executive management and other key senior team
members and the information and deal flow they generate during the normal
course of their activities.
Mitigation:
The Group has competitive reward schemes in place for all employees, with
rewards weighted towards performance and long-term alignment with fund
investors, driving value for the Group. For senior management, these include a
blend of short and long-term incentives.
The Group performs ongoing succession planning and invests in leadership
development.
Information technology and cyber security
Category: Operational
Challenges:
The Group relies on the secure processing, storage and transmission of
confidential and other information in the Bridgepoint computer systems and
networks. Cyber-security incidents and cyber-attacks have been occurring
globally at a more frequent and severe level and will likely continue to
increase in frequency in the future. The Group faces various cyber-security
threats on a regular basis, including ongoing cyber-security threats to, and
attacks on, information technology infrastructure that are intended to gain
access to proprietary information, destroy data or disable or degrade or
sabotage the Group's systems.
Cyber-security failures, technology failures or data security breaches could
result in the confidentiality, integrity or availability of data being
negatively affected, or cause disruption to the Group's business.
Mitigation:
The Group has in place an internal vulnerability management programme, as well
as critical asset processes to patch critical vulnerabilities. Phishing
testing is performed at least quarterly, and penetration testing is undertaken
annually. The Group has a disaster recovery plan in place, and all key systems
are hosted in the cloud, providing an inherent level of resilience.
Inadequate control systems
Category: Operational
Challenges:
The Group is dependent on an effective control system to mitigate operational
risks. For example, the Group is dependent both on it and the Bridgepoint
funds having sufficient processes in place to prevent money laundering and
other regulatory requirements, and any failures in this regard may result in
financial penalties, fund investor claims or rescission rights or loss of fund
approvals.
Mitigation:
Senior management is actively engaged in maintaining an appropriate control
environment. The effectiveness of the control framework for key business
processes is subject to periodic review.
Third-party service providers
Category: Operational
Challenges:
Certain of the Group's funds and Group activities depend on the services of
third-party service providers, including those providing banking and foreign
exchange, information technology, insurance broking, depository and
alternative investment management services. The Group is subject to the risk
of errors and mistakes by such persons, which may be attributed to the Group
and subject it or the Bridgepoint funds to reputational damage, penalties or
losses.
Mitigation:
The Group ensures appropriate due diligence is undertaken in respect of
third-party service providers prior to appointment, and appropriate monitoring
and oversight of appointed third party service providers is undertaken on a
periodic basis.
Increased law and regulation
Category: Operational
Challenges:
The international nature of the Group's business, with corporate and fund
entities located in multiple jurisdictions and a diverse investor base, makes
it subject to a wide range of laws and regulations. It is regulated by a
number of regulators, including (among others) the Financial Conduct Authority
in the UK, the Securities and Exchange Commission in the United States and the
Autorité des Marchés Financiers in France. Failure to comply with these laws
and regulations may put the Group at risk of fines, lawsuits or reputational
damage.
Changes in laws and regulations can materially impact the Group or the market
in which it operates.
Mitigation:
The Group conducts regular and ongoing compliance monitoring and is supported
by an experienced legal and compliance team. The legal and compliance team has
full access to management information and is represented on the Group's
executive committee.
Employees of the Group are provided with periodic training on the laws and
regulations relevant to the Group.
Horizon scanning for relevant regulatory and legislative change is a key part
of the legal and compliance process and, where appropriate, external advisers
are commissioned to support this.
Consolidated Income Statement
for the year ended 31 December 2021 2020
Note £ m £ m
Management fees 5 197.7 148.6
Carried interest 5 14.3 12.9
Fair value remeasurement of investments 5 56.9 29.4
Other operating income 5 1.7 0.9
Total operating income 5 270.6 191.8
Personnel expenses 6 (132.7) (96.3)
Other expenses 7 (53.7) (36.6)
Foreign exchange gains/(losses) 1.1 (0.2)
EBITDA* 85.3 58.7
Depreciation and amortisation expense 9 (15.0) (8.8)
Total operating profit 70.3 49.9
Finance income 10 4.2 4.7
Finance expenses 10 (11.9) (6.1)
Profit before tax* 62.6 48.5
Tax 11 (4.8) (0.8)
Profit after tax 57.8 47.7
Attributable to:
Equity holders of the parent 57.8 36.5
Non-controlling interests - 11.2
57.8 47.7
£ £
Basic and diluted earnings per share 12 0.16 11.59
* Exceptional expenses of £28.6m (2020: £7.7m) are included in EBITDA.
Profit before tax includes exceptional expenses of £28.6m (2020: £7.9m) and
exceptional income of £3.8m (2020: £4.4m). Details of exceptional items are
included in note 8.
Consolidated Statement of Comprehensive Income
2021 2020
for the year ended 31 December Note £ m £ m
Profit after tax 57.8 47.7
Items that may be reclassified to income statement in subsequent years:
Exchange differences on translation of foreign operations (3.6) 2.8
Change in the fair value of hedging instrument 12.8 (4.8)
Reclassifications to income statement (1.6) (1.4)
Total tax on components of other comprehensive (expense)/income 11 (c) (2.1) 0.9
5.5 (2.5)
Total comprehensive income for the year, net of tax 63.3 45.2
Total comprehensive income attributable to:
Equity holders of the parent 63.3 34.6
Non-controlling interests 23 (f) - 10.6
63.3 45.2
Consolidated Statement of Financial Position
as at 31 December Note 2021 2020
£ m £ m
Assets
Non-current assets
Property, plant and equipment 13 75.8 41.6
Goodwill and intangible assets 15 122.6 125.7
Carried interest receivable 16 38.9 27.9
Fair value of fund investments 17 313.7 235.9
Trade and other receivables 17 16.9 6.9
Total non-current assets 567.9 438.0
Current assets
Fair value of CLO assets* 17 286.8 272.5
Trade and other receivables 17 88.2 176.7
Derivative financial instruments 17 9.9 0.7
Cash and cash equivalents 17 323.1 42.3
CLO cash* 17 4.2 114.8
Total current assets 712.2 607.0
Total assets 1,280.1 1,045.0
Liabilities
Non-current liabilities
Trade and other payables 18 43.5 32.2
Other financial liabilities 18 46.9 6.2
CLO liabilities* 18 241.4 256.6
Lease liabilities 19 80.8 35.9
Deferred tax liabilities 22 19.7 15.9
Total non-current liabilities 432.3 346.8
Current liabilities
Trade and other payables 18 90.2 85.9
Borrowings 18 - 99.7
Lease liabilities 19 4.0 6.1
Derivative financial instruments 18 - 4.9
CLO liabilities* 18 1.5 17.9
CLO purchases awaiting settlement* 18 35.8 93.2
Total current liabilities 131.5 307.7
Total liabilities 563.8 654.5
Net assets 716.3 390.5
Equity
Share capital 23 0.1 240.9
Share premium 23 289.8 0.5
Capital redemption reserve 23 - 24.6
Share-based payment reserve 23 3.2 -
Cash flow hedge reserve 23 7.5 (2.2)
Net exchange differences reserve 23 3.1 5.3
Retained earnings 23 412.6 39.7
Capital and reserves attributable to equity holders of the company 716.3 308.8
Non-controlling interests 23 - 81.7
Total equity 716.3 390.5
*Detail of the Group's interest in consolidated Collateralised Loan
Obligations ("CLOs") are included in note 17 (c). The equity holders' exposure
in the consolidated CLOs is £12.3m at 31 December 2021 (2020: £19.5m). The
Group's investment in CLOs which are not consolidated is £38.0m (2020: nil)
and are included within fair value of fund investments.
Consolidated Statement of Changes in Equity
for the year ended 31 December Note Share capital Share premium Capital Share-based Cash flow hedge Net Retained Total Non-controlling Total equity
redemption reserve
payment
reserve
exchange
earnings
interests
£ m £ m
reserve
differences
£ m
£ m
£ m
£ m
reserve £ m £ m
£ m
£ m
At 1 January 2021 240.9 0.5 24.6 - (2.2) 5.3 39.7 308.8 81.7 390.5
Profit for the year - - - - - - 57.8 57.8 - 57.8
Other comprehensive income - - - - 11.2 (3.6) (2.1) 5.5 - 5.5
Total comprehensive income - - - - 11.2 (3.6) 55.7 63.3 - 63.3
Share capital issuance 23 (a) - 289.3 - 3.2 - - - 292.5 - 292.5
Share capital reorganisation 23 (a) (240.8) - (24.6) - - - 265.4 - - -
Dividends 24 - - - - - - (30.0) (30.0) - (30.0)
Movement in non-controlling
interests 23 (f) - - - - (1.5) 1.4 81.8 81.7 (81.7) -
At 31 December 2021 0.1 289.8 - 3.2 7.5 3.1 412.6 716.3 - 716.3
for the year ended 31 December Note Share capital Share premium Capital Share-based Cash flow hedge Net Retained Total Non-controlling Total equity
redemption reserve
payment
reserve
exchange
earnings
interests
£ m £ m
reserve
differences
£ m
£ m
£ m
£ m
reserve £ m £ m
£ m
£ m
At 1 January 2020 240.9 0.5 24.6 - 2.6 3.1 (6.2) 265.5 90.9 356.4
Profit for the year - - - - - - 36.5 36.5 11.2 47.7
Other comprehensive income - - - - (4.8) 2.2 0.7 (1.9) (0.6) (2.5)
Total comprehensive income - - - - (4.8) 2.2 37.2 34.6 10.6 45.2
Purchase of own shares 23 (b) - - - - - - (0.1) (0.1) - (0.1)
Dividends 24 - - - - - - (6.6) (6.6) (4.4) (11.0)
Movement in non-controlling
interests 23 (f) - - - - - - 15.4 15.4 (15.4) -
At 31 December 2020 240.9 0.5 24.6 - (2.2) 5.3 39.7 308.8 81.7 390.5
Consolidated Statement of Cashflows
Note 2021 2020
for the year ended 31 December £ m £ m
Cash flows from operating activities
Cash generated from operations 25 (a) 24.5 32.4
Tax paid (1.4) (4.0)
Net cash inflow from operating activities 23.1 28.4
Cash flows from investing activities
Payment for acquisition of subsidiary, net of cash acquired 14 - (86.3)
Payments for property, plant and equipment 13 (6.3) (3.2)
Receipts from investments (non-CLO) 16, 17 (b) 69.0 57.4
Purchase of investments (non-CLO) 16, 17 (b) (86.9) (77.3)
Interest received (non-CLO) 1.0 0.1
Receipts from investments (CLO) 113.3 2.1
Purchase of investments (CLO) (281.2) (6.2)
Cash acquired on acquisition of CLO (CLO) - 1.9
Receipts from sale and repurchase of the Group's holding in CLOs 18 (d) 28.1 -
Net cash flows from investing activities (163.0) (111.5)
Cash flows from financing activities
Receipt from non-controlling interest 114.3 71.4
Proceeds from issue of shares by subsidiary 4.7 -
Proceeds from issue of shares by the Company 23 (a) 305.1 -
IPO costs (36.4) -
Dividends paid to shareholders of the Company 24 (30.0) (6.6)
Dividends paid to non-controlling interests - (4.4)
Drawings on banking facilities 49.2 130.3
Repayment of banking facilities (146.9) (73.5)
Drawings from related party investors in intermediate fund holding entities 4.0 1.7
Principal elements of lease payments (6.8) (5.9)
Drawn funding (CLO) 65.4 6.2
Repayment of CLO borrowings (CLO) (1.4) (124.2)
Cash from CLO investors (CLO) 3.3 235.1
Interest paid (non-CLO) (5.9) (4.9)
Net cash flows from financing activities 318.6 225.2
Net increase in cash and cash equivalents 178.7 142.1
Cash and cash equivalents at the beginning of the year 157.1 12.1
Effect of exchange rate changes on cash and cash equivalents (8.5) 2.9
Cash and cash equivalents at the end of year 327.3 157.1
Cash and cash equivalents (for use within the Group) 17 (f) 323.1 42.3
CLO cash (restricted) 17 (f) 4.2 114.8
Total cash at the end of the year 327.3 157.1
Company Statement of Financial Position
as at 31 December Note 2021 2020
£ m £ m
Assets
Non-current assets
Investments in subsidiaries 28 451.2 448.0
Deferred tax asset 22 1.1 -
Total non-current assets 452.3 448.0
Current assets
Trade and other receivables 17 (e) 106.5 -
Cash and cash equivalents 17 (f) 159.0 9.4
Total current assets 265.5 9.4
Total assets 717.8 457.4
Liabilities
Current liabilities
Trade and other payables 18 (b) 23.1 0.9
Total liabilities 23.1 0.9
Net assets 694.7 456.5
Equity
Share capital 23 0.1 240.9
Share premium 23 289.8 0.5
Capital redemption reserve 23 - 24.6
Share-based payment reserve 23 3.2 -
Retained earnings 23 401.6 190.5
Total equity 694.7 456.5
Company Statement of Changes in Equity
for the year ended 31 December Note Share capital Share premium Capital Share-based Retained Total equity
redemption reserve
payment
earnings
£ m £ m
reserve
£ m
£ m
£ m
£ m
At 1 January 2021 240.9 0.5 24.6 - 190.5 456.5
Loss for the year - - - - (24.3) (24.3)
Other comprehensive income - - - - - -
Total comprehensive expense - - - - (24.3) (24.3)
Share capital issuance 23 (a) - 289.3 - 3.2 - 292.5
Share capital reorganisation 23 (a) (240.8) - (24.6) - 265.4 -
Dividends 24 - - - - (30.0) (30.0)
At 31 December 2021 0.1 289.8 - 3.2 401.6 694.7
for the year ended 31 December Note Share capital Share premium Capital Share-based Retained Total equity
redemption reserve
payment
earnings
£ m £ m
reserve
£ m
£ m
£ m
£ m
At 1 January 2020 240.9 0.5 24.6 - 184.3 450.3
Profit for the year - - - - 12.9 12.9
Other comprehensive income - - - - - -
Total comprehensive income - - - - 12.9 12.9
Purchase of own shares 23 (b) - - - - (0.1) (0.1)
Dividends 24 - - - - (6.6) (6.6)
At 31 December 2020 240.9 0.5 24.6 - 190.5 456.5
Company Statement of Cashflows
for the year ended 31 December Note 2021 2020
£ m £ m
Cash flows from operating activities
Cash generated from operations 25 (89.5) (2.5)
Net cash (outflow)/inflow from operating activities (89.5) (2.5)
Cash flows from investing activities - 15.5
Dividends received
Net cash flows from investing activities - 15.5
Cash flows from financing activities
Proceeds from issue of shares of the Company 23 (a) 305.1 -
IPO costs (36.0) -
Dividends paid to shareholders of the Company 24 (30.0) (6.6)
Net cash flows from financing activities 239.1 (6.6)
Net increase in cash and cash equivalents 149.6 6.4
Cash and cash equivalents at the beginning of the year 9.4 3.0
Effect of exchange rate changes on cash and cash equivalents - -
Cash and cash equivalents at the end of year 17 (f) 159.0 9.4
Notes to the consolidated and company financial information
1. General information and basis of preparation
General information
Bridgepoint Group plc (the "Company") is a public company limited by shares
and domiciled in the United Kingdom. The country of incorporation is England
and Wales. The Company's registration number is 11443992 and the address of
its registered office is 95 Wigmore Street, London, England, W1U 1FB.
The financial information set out in this preliminary announcement does not
constitute the Company's statutory accounts for the years ended 31 December
2021 or 31 December 2020.
The financial information for 2020 is derived from the statutory accounts for
that year which have been delivered to the Register of Companies, and adjusted
for IFRS, as set out below within the Company's IPO prospectus. The auditors
reported on those accounts: their report was unqualified, did not draw
attention to any matters by way of emphasis and did not contain a statement
under s498(2) or (3) of the Companies Act 2006.
The audit of the statutory accounts for the year ended 31 December 2021 is
substantially complete, with only a number of minor procedural matters
outstanding. These accounts will be finalised on the basis of the financial
information presented by the directors in this results announcement and will
be delivered to the Registrar of Companies following the Company's annual
general meeting.
The principal activity of the Company and entities controlled by the Company
(the "Group") is to act as a private equity and credit fund manager.
Basis of preparation
The financial information for the year ended 31 December 2021 comprises
financial information of the Group and the Company.
The financial information has been prepared in accordance with UK-adopted
international accounting standards, International Financial Reporting
Standards ("IFRS") 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.
The principal accounting policies applied in the preparation of the financial
information are set out within note 2. These policies have been consistently
applied to all the periods presented, unless otherwise stated.
The preparation of the financial information in conformity with IFRS requires
the use of certain critical accounting estimates. It also requires management
to exercise judgement in the process of applying the Group's accounting
policies. Details of the critical judgements and key sources of estimation
uncertainty are set out in note 3. Actual results may differ from these
estimates.
The financial information is presented in pound sterling and all values are
rounded to the nearest £0.1m except where otherwise indicated.
Transition to IFRS
The 2021 financial statements will be the first set of IFRS statutory
financial information prepared by the Company and the Group.
The Group's prospectus for Admission to the London Stock Exchange included
restated historical information for the years ended 31 December 2018, 2019 and
2020. A reconciliation of the adjustments from the statutory accounts for the
Group, which had been prepared in compliance with United Kingdom Accounting
Standards, including Financial Reporting Standard 102, "The Financial
Reporting Standard applicable in the United Kingdom and the Republic of
Ireland" ("FRS 102") and IFRS is set out in the prospectus, which can be found
in the shareholder section of the Bridgepoint website, within IPO documents.
The Company's financial information under IFRS were not included in the
prospectus, however as there are no transition differences between the Company
numbers under FRS 102 and IFRS, no reconciliations have been included within
this financial information.
Changes to comparatives
A number of minor changes to the numbers included within the historical
financial information within the prospectus have been made to the comparative
period presented within this financial information to make them comparable
with the current period, however there is no impact on the profit, net assets
and cash flow of the Group.
Expenses of £0.3m relating to the acquisition of EQT AB's Credit business
("EQT Credit") are now treated as exceptional. Whilst these costs were not
material in the comparative period, they are now more significant in the
current year and therefore the comparative has been updated to include them.
Other changes can be summarised as:
• Investments in funds and other financial liabilities have been grossed up by
£2.4m and cashflows from investing and financing activities have been grossed
up by £1.7m, in relation to a number of limited partnerships that the Group
consolidates, through which some of the Group's investment in funds are held,
but where the Group's interest only constitutes a portion of the total of the
investment;
• Derivative financial instrument assets of £0.7m have been presented gross
rather than net of liabilities within the consolidated balance sheet;
• Interest receipt cash flows of £0.1m have been reclassified from financing
activities to investing activities in the consolidated cash flow statement;
and
• Other operating income of £1.8m, personnel expenses of £1.1m and other
expenses of £0.5m have been reclassified to the Central segment within the
operating segment disclosure note (note 4).
Adoption of new and revised standards
The Group has adopted all relevant amendments to existing standards and
interpretations issued by the International Accounting Standards Board
("IASB") that are effective from 1 January 2021. Other amendments to IFRSs not
adopted are not material. The Group has not early adopted any other standard,
interpretation or amendment that has been issued but is not yet effective. The
Group plans to adopt the "Amendments to IAS 1 'Presentation of Financial
Statements' classification of liabilities" issued by IASB and IFRIC when it
becomes effective on 1 January 2023. The impact of this standard on the
Group's financial statements is currently being reviewed.
No other standards or interpretations issued are expected to have a material
impact on the Group or Company's financial information.
Going concern
The financial information has been prepared on a going concern basis as the
directors have a reasonable expectation that the Group and Company have
adequate resources to continue in operational existence for the foreseeable
future having assessed the business risks, financial position and resources of
both the Group and Company.
Company result
As permitted by section 408 of the Companies Act 2006, the income statement
and the statement of comprehensive income of the Company will not be presented
as part of the financial statements. The Company's loss for the year amounted
to £24.3m, which includes costs relating to the IPO (2020: profit of
£12.9m).
2. Accounting policies
(a) Consolidation
The consolidated financial information include the comprehensive gains or
losses, the financial position and the cash flows of the Company, its
subsidiaries and the entities that the Group is deemed to control, drawn up to
the end of the relevant period, which includes elimination of all intra-group
transactions. Uniform accounting policies have been adopted across the Group.
Assessment of control
Control is achieved when the Group has power over the relevant activities,
exposure to variable returns from the investee, and the ability to affect
those returns through its power over the investee.
The Group controls an investee (entity) if, and only if, the Group has all of
the following:
• power over the investee (i.e. existing rights that give it the current ability
to direct the relevant activities of the investee);
• exposure, or rights, to variable returns from its involvement with the
investee; and
• ability to use its power over the investee to affect its returns.
The Group reassesses whether or not it controls an investee if facts and
circumstances indicate that there are changes to one or more of the three
elements of control listed above.
When the Group holds less than a majority of the voting rights of an investee,
it has power over the investee when the voting rights are sufficient to give
it the practical ability to direct the relevant activities of the investee
unilaterally. The Group considers all relevant facts and circumstances in
assessing whether or not the Group's voting rights in an investee are
sufficient to give it power, including:
• the size of the Group's holding of voting rights relative to the size and
dispersion of holdings of the other vote holders;
• potential voting rights held by the Group, other vote holders or other
parties;
• rights arising from other contractual arrangements; and
• any additional facts and circumstances that indicate that the Group has, or
does not have, the current ability to direct the relevant activities at the
time when decisions need to be made, including voting patterns at previous
shareholders meetings.
The assessment of control is based on all relevant facts and circumstances and
the Group reassesses its conclusion if there is an indication that there are
changes in facts and circumstances.
Consolidation of a subsidiary begins when the Group obtains control over the
subsidiary and ceases when the Group loses control over the subsidiary.
Specifically, income and expenses of a subsidiary acquired or disposed of
during the year are included in the consolidated statement of comprehensive
income from the date the Group gains control until the date when the Group
ceases to control the subsidiary.
Transactions with non-controlling interests are recognised in equity.
(b) Foreign currencies
Presentation currency
The presentational currency of the Company and Group is pound sterling.
Foreign currency transactions
Foreign currency transactions are translated into the functional currency
using the opening spot exchange rate for the month in which the transaction
occurs as an approximate for the actual rate at the date of the transaction.
Foreign exchange gains and losses resulting from the settlement of such
transactions, and from the translation of monetary assets and liabilities
denominated in foreign currencies at year end exchange rates, are generally
recognised in profit or loss. They are deferred in equity and recognised in
other comprehensive income if they relate to qualifying cash flow hedges or
are attributable to part of the net investment in a foreign operation.
The impact of the revaluation of investments and carried interest held in
foreign currencies is presented together with the income from the fair value
measurement of the income receivable.
Non-monetary assets and liabilities denominated in foreign currencies that are
measured at fair value are translated to the functional currency at the
applicable foreign currency exchange rate on the date the fair value was
determined.
Translation differences on assets and liabilities carried at fair value are
reported as part of the fair value gain or loss. For example, translation
differences on non-monetary assets and liabilities such as investments held at
fair value through profit or loss are recognised in profit or loss as part of
the fair value gain or loss.
Foreign operations
The results and financial position of foreign operations that have a
functional currency different from the presentation currency are translated
into the presentation currency of the Group and Company as follows:
• assets and liabilities for each statement of financial position presented are
translated at the closing rate at the date of that statement of financial
position;
• income and expenses for each profit and loss period are translated using the
opening spot rate for the month; and
• all resulting exchange differences are recognised in other comprehensive
income
(c) Operating income
Operating income primarily comprises of management fees, carried interest
income and investment profits from the management of investment in private
equity and credit fund partnerships. The parties to agreements for fund
management services comprise the Group and the investors of each fund as a
body. Accordingly, the group of investors of each fund are identified as a
customer for accounting purposes.
Income is measured based on the consideration specified in the contracts and
exclude amounts collected on behalf of third parties, discounts and value
added taxes.
Management fees
The Group earns management fees and carried interest from its provision of
various investment management services to funds, which are treated as a single
performance obligation.
Management fees are recognised over time over the life of each fund, generally
10 - 12 years, occasionally subject to an extension, if agreed with the
investors of that fund.
Management fees are based on an agreed percentage of either committed or
invested capital, depending on the fund and its life stage. Fees are billed in
accordance with the Limited Partnership Agreement ("LPA") and are either
billed semi-annually or quarterly in advance or arrears.
Carried interest
The Group receives a share of fund profits through its holdings in Founder
Partnerships as variable consideration dependent on the level of fund returns.
The entitlement to carried interest and the amount is determined by the level
of accumulated profits exceeding an agreed threshold (the "hurdle") over the
life-time of each fund. The carried interest income is recognised when the
performance obligations are expected to be met.
Income is only recognised to the extent it is highly probable that there would
not be a significant reversal of any accumulated revenue recognised on the
completion of a fund. The reversal risk due to uncertainty of future fund
performance is managed through the application of discounts. This is explained
further within note 3.
The carried interest receivable represents a contract asset under IFRS 15
"Revenue from contracts with customers". Amounts are typically presented as
non-current assets unless they are expected to be received within the next 12
months.
The Group applies the simplified approach for measuring impairment of the
contract asset and the practical expedient permitted by IFRS 9 "Financial
instruments".
Investment income
Investment income consists primarily of fair value measurements of the Group's
investments in private equity and credit funds. Details of the valuation of
such investments is explained further within note 3.
Other operating income
Other operating income includes fees and commissions receivable by the Group's
procurement consulting business, PEPCO Services LLP. Amounts payable to
sub-contractors who contribute to the provision of services are presented net
of other operating income. Amounts are recognised in the income statement on
an accruals basis.
(d) Deferred acquisition costs
Professional costs, particularly legal and other advisor costs, are incurred
when raising a new fund. The LPA of each fund dictates the aggregate expense
that can be recharged to the fund investors on the close of a new fund. Costs
in excess of the Cap and any/all fees paid to placement agents are capitalised
as a non-current asset.
The benefit of the incurred costs for private equity funds is primarily
considered to be attributable to the period when the primary fund investment
activity is carried out. Therefore, the useful life of the asset is the
commitment period for the fund. A useful life of three years is used for
private equity funds, being the shortest likely commitment period, but is
typically between three and five years.
For credit funds, the period of portfolio construction is typically longer,
therefore a five year useful life is used, which correlates with the period
over which the management fees build up to a maximum leveI.
(e) Personnel benefits
Short-term employee benefits
Short-term employee benefits, which include employee salaries and bonuses, are
expensed as the related service is provided. A liability is recognised for the
amount expected to be paid if the Group has a present or constructive
obligation to pay this amount as a result of past service provided by the
employee and the obligation can be estimated reliably.
Accumulated holiday balances are accrued at each period end, if an employee's
entitlement is not used in full.
Long-term employee benefits
Long-term employee benefits, which are those that are not expected to be
settled wholly before 12 months after the period end in which the employee
renders the service that gives rise to the benefit, include certain long-term
bonuses. An expense is recognised over the period in which the related service
is provided. A liability is recognised for the amount expected to be paid if
the Group has a present or constructive obligation to pay this amount as a
result of past service provided by the employee and the obligation can be
estimated reliably.
Defined contribution pensions
Amounts payable in respect of employers' contributions to the Group's defined
contribution pension scheme are recognised as employee expenses as incurred.
The assets of the scheme are held separately from those of the Group in an
independently administered fund.
Share-based payments
Equity-settled share-based payments to employees and others providing similar
services are measured at the fair value of the equity instruments at the grant
date.
The fair value determined at the grant date of the equity-settled share-based
payments is expensed on a straight-line basis over the vesting period, based
on an estimate of the number of equity instruments that will eventually vest.
A corresponding credit is made to the Share-based payment reserve within
equity.
At each reporting date, the Group revises its estimate of the number of equity
instruments expected to vest. The impact of the revision of the original
estimates, if any, is recognised in the Income Statement such that the
cumulative expense reflects the revised estimate, with a corresponding
adjustment to equity.
(f) EBITDA
EBITDA means earnings before interest, taxes, depreciation and amortisation.
It is used to provide an overview of the profitability of the Group's business
and segments. Underlying EBITDA is calculated by deducting exceptional items
within EBITDA.
EBITDA and Underlying EBITDA are alternative performance measures and non-IFRS
measures.
The Group uses Underlying EBITDA as exceptional income or expenditure could
distort an understanding of the performance of the Group. Details of
exceptional expenses are set out in note 8.
(g) Operating profit
Operating profit means earnings before finance income, finance expenses and
taxes. Operating profit is an alternative performance measure and non-IFRS
measure.
(h) Leases
Leases for office premises
The Group has applied IFRS 16 "Leases" where the Group has the right-of-use of
an asset under a lease contract for a period of more than 12 months. Such
contracts represent leases of office premises where the Group is a tenant.
Assets are recorded initially at cost and depreciated on a straight-line basis
over the shorter of the lease term or the estimated useful life. Cost is
defined as the lease liabilities recognised plus any initial costs and
dilapidations provisions less any incentives received. The right-to-use assets
are depreciated during the lease term, generally 5 to 10 years. Right-of-use
assets are included within property, plant and equipment in the statement of
financial position.
The lease liability is initially measured at the net present value of future
lease payments that are not paid at the commencement date discounted using the
interest rate implicit in the lease or, if that rate cannot be readily
determined, the Group's incremental borrowing rate ("IBR"). Generally, the
Group uses its IBR as the discount rate as the implicit rate is not readily
determinable for the rented office premises. The lease liability is
subsequently measured at amortised cost using the effective interest method.
The IBR is the rate that the individual lessee would have to pay to borrow the
funds necessary to obtain an asset of similar value to the right-of-use asset
in a similar economic environment within similar terms, security and
conditions.
Lease payments due within the next 12 months are recognised within current
liabilities, payments due after 12 months are recognised within non-current
payables.
Group as lessor
Where the Group acts as an intermediate lessor by entering into a subletting
agreement and has transferred substantially all the risks and rewards
incidental to ownership of the underlying asset, the Group accounts for these
subleases as finance leases under IFRS 16 "Leases". Such contracts represent
subleases of office premises.
At commencement of the lease term, the Group derecognises the right-of-use
asset relating to the head lease and recognises the net investments in the
sublease as a receivable. The difference between the right-of-use asset and
the net investment is in the sublease is recognised in profit or loss. The
Group uses the IBR used for the head lease to measure the net investment in
the lease (adjusted for any initial direct costs associated with the
sublease). During the term of the sublease, the Group recognises both finance
income on the sublease and finance expense on the head lease.
The Group applies the simplified approach for measuring impairment of lease
receivables and the practical expedient permitted by IFRS 9 "Financial
instruments".
Short-term leases and leases of low value assets
The Group has elected not to recognise right-of-use assets and lease
liabilities for short-term leases that have a lease term of 12 months or less
and leases of low-value assets. The Group recognises the lease payments
associated with these leases as an expense on a straight-line basis over the
lease term within operating expenses.
(i) Finance income and finance expenses
Finance income comprises of the net income from the remeasurement and
revaluation of the deferred contingent consideration payable and associated
unwind of the discount, and the unwind of the discount on the deferred
proceeds receivable, in addition to interest earned on cash deposited with
bank balances and finance income on sublease agreements. Finance expenses
comprises of interest on interest-bearing liabilities and finance expenses on
lease liabilities.
Recurring fees and charges levied on committed bank facilities are charged to
the Income Statement as accrued. Credit facility arrangement fees are
capitalised and amortised to the Income Statement using the effective interest
method over the term of the facility.
Interest income and expense is recognised using the effective interest method.
The calculation includes all fees and points paid or received between parties
to the contract that are an integral part of the effective interest rate,
transaction costs, and all other premiums and discounts.
(j) Exceptional items
Items of income and expense that are material by size and/or nature and are
not considered to be incurred in the normal course of business are classified
as 'exceptional' within the income statement and disclosed separately to give
a clearer presentation of the Group's underlying financial performance.
(k) Taxation
Taxation expense for the period comprises of current and deferred tax
recognised in the reporting period. Tax is recognised in the Income Statement,
except to the extent that it relates to items recognised in other
comprehensive income or directly in equity. In this case tax is also
recognised in other comprehensive income or directly in equity respectively.
Current tax
Current tax is the amount of corporation tax payable in respect of the taxable
profit for the period or prior period. Tax is calculated on the basis of tax
rates and laws that have been enacted or substantively enacted by the period
end.
Deferred tax
Deferred tax arises from temporary differences at the reporting date between
the carrying amounts of assets and liabilities and the amounts used for
taxation purposes. Deferred tax is not recognised if the temporary difference
arises from the initial recognition of goodwill or from the initial
recognition of other assets and liabilities in a transaction, other than a
business combination, that affects neither the tax nor the accounting profit.
Deferred tax liabilities are recognised for all taxable temporary differences.
Unrelieved tax losses and other deferred tax assets are only recognised when
it is probable that they will be recovered against the reversal of deferred
tax liabilities or other future taxable profits will be available against
which the deferred tax assets can be utilised.
Deferred tax assets and liabilities are calculated at the tax rates that are
expected to be applied to their respective period of realisation, provided
they are enacted or substantively enacted at the reporting date. Deferred tax
assets and liabilities are offset when there is a legally enforceable right of
set off, when they relate to income taxes levied by the same tax authority and
the Group intends to settle on a net basis. Changes in deferred tax assets or
liabilities are recognised as a component of tax expense in the income
statement, except where they relate to items that are charged or credited
directly to equity, in which case the related deferred tax is also charged or
credited directly to other comprehensive income or equity.
Current or deferred taxation assets and liabilities are not discounted.
(l) Property, Plant and Equipment
Property, plant and equipment are stated at cost less accumulated depreciation
and any provision for impairment.
The cost includes the purchase price as well as expenditure directly
attributable to put the asset in place and order to be used in accordance with
the purpose of the acquisition.
Assets are depreciated so as to write off their cost, on a straight-line
basis, over their estimated useful lives as follows:
Asset class Depreciation rate
Computers, Furniture and Other 3 to 5 years
Leasehold Improvements Over the shorter of their useful economic life or the lease term
The loss to reduce the carrying amount of any assets that are impaired is
recognised within the Income Statement and reversed if there are indications
that the need for impairment is no longer present. The carrying amount of an
item of property, plant and equipment is derecognised from the statement of
financial position at disposal or when no future economic benefits are
expected from the use or disposal of the asset. The depreciation is included
within 'Depreciation and Amortisation' within the Income Statement.
(m) Intangible assets
Intangible assets, which constitute acquired customer relationship assets
acquired from a business combination, are stated at cost less accumulated
amortisation and accumulated impairment losses.
Intangible assets are annually assessed for impairment when there are
indicators of impairment.
Amortisation is calculated, using the straight-line method, to allocate the
depreciable amount of the assets to their residual values over their estimated
useful lives. The amortisation is included within 'Depreciation and
Amortisation' within the Income Statement.
(n) Business combinations and goodwill
Business combinations of subsidiaries and businesses are accounted for by
applying the acquisition method. The cost of a business combination is the
fair value of the consideration given, liabilities incurred or assumed and of
equity instruments issued. Costs attributable to the business combination are
expensed in the Income Statement. Where control is achieved in stages the cost
is the consideration at the date of each transaction.
On acquisition of a business, fair values are attributed to the identifiable
assets, liabilities and contingent liabilities. Intangible assets are only
recognised separately from goodwill where they are separable and arise from
contractual or other legal rights. Where the fair value of contingent
liabilities cannot be reliably measured, they are disclosed on the same basis
as other contingent liabilities.
Contingent consideration is recognised at the acquisition date. It is
classified as a financial liability and subsequently remeasured to fair value,
with changes in fair value recognised in the Income Statement.
Goodwill recognised represents the excess of the fair value of the purchase
consideration over the fair values to the Group's interest in the identifiable
net assets, liabilities and contingent liabilities acquired.
Goodwill is assessed for impairment annually or more frequently if events or
changes in circumstances indicate potential impairment loss. Any identified
impairment is charged to the income statement. No reversals of impairment are
recognised. Intangible assets are annually assessed for impairment when there
are indicators of impairment. Impairment triggers could include the loss of a
fund management contract or a failure to raise a new fund.
(o) Financial instruments
Financial assets
The Group's financial assets consist of investments in funds, investments made
by Collateralised Loan Obligations ("CLOs") consolidated by the Group,
derivative financial instruments, accounts receivable and other receivables
and cash and cash equivalents.
The Company's financial assets consist of investments in subsidiaries,
accounts receivable and other receivables and cash and cash equivalents.
Recognition
A financial asset is recognised when the Group or Company becomes party to the
contractual provisions of the instrument.
Classification and measurement
A financial asset is initially classified into one of three measurement
categories. The classification depends on how the asset is managed (business
model) and the characteristics of the assets contractual cash flows. The
measurement categories for financial assets are as follows:
• Fair value through profit or loss;
• Fair value through other comprehensive income; and
• Amortised cost.
Financial assets must be measured through profit of loss unless they are
measured at amortised cost or through other comprehensive income. The Group's
investments in funds and investments in CLOs are measured at fair value
through profit of loss as such assets are held for investment returns.
Derivative instruments used for hedging foreign exchange, are measured at fair
value through profit of loss. Where they qualify for hedge accounting the
effective portion of the gain or loss on the hedging instrument is recognised
in other comprehensive income until the recognition of the hedged transaction
affects profit or loss, at which point the amount recognised in other
comprehensive income is recycled to the income statement.
Financial assets are measured at amortised cost only if both of the following
criteria are met:
• the asset is held within a business model whose objective is to collect the
contractual cash flows; and
• the contractual terms give rise to cash flows that are solely payments of
principal and interest on the principal amount outstanding.
The Group's trade and other receivables are short-term receivables relating to
non-financing transactions and are therefore subsequently measured at
amortised cost using the effective interest method less loss allowance.
Receivables due in greater that one year are initially discounted to their
present value using an equivalent rate of interest that would be due on
borrowings. The discount is released over time to the Income Statement.
Cash and cash equivalents are measured at amortised cost.
Derecognition
A financial asset is derecognised when the contractual rights to the cash
flows from the asset expire, or when the Group or Company transfers the rights
to receive the contractual cash flows in a transaction in which substantially
all the risks and rewards of ownership of the financial asset are transferred.
Impairment
Expected credit losses are calculated on financial assets measured at
amortised cost and are recognised within the income statement. For trade and
other receivables, the Group and Company applies the simplified approach and
the practical expedient permitted by IFRS 9 "Financial Instruments" to apply a
provision matrix that is based on its historic default rates over the expected
life of the short-term receivables.
Financial liabilities
Financial liabilities, with the exception of financial liabilities at or
designated at fair value through profit or loss, are initially recognised at
fair value, net of transaction costs, and subsequently measured at amortised
cost using the effective interest rate method, with interest expense
recognised on an effective yield basis.
Derivative financial liabilities are initially measured at fair value and are
subsequently measured at fair value at each reporting date.
Liabilities of CLOs consolidated by the Group are designated as financial
liabilities measured at fair value through profit or loss. Financial
liabilities at fair value through profit or loss related to CLOs are initially
recognised and subsequently measured at fair value on a recurring basis with
gains or losses arising from changes in fair value recognised through the fair
value remeasurements of investments line within the income statement along
with interest paid on the CLO financial liabilities.
Amounts payable for purchases of CLO assets awaiting settlement are recognised
at the point at which the CLO has a contractual obligation to exchange cash.
Deferred contingent consideration payable relating to business combinations is
measured at fair value through profit or loss.
Borrowings are initially recognised at the amount of cash received from the
bank, less separately incurred transaction costs. They are measured
subsequently at amortised cost using the effective interest rate method.
Repurchase agreements are measured at fair value and fees associated with
repurchase agreements are capitalised and amortised over the life of the
agreement.
All of the Group's and Company's other financial liabilities are measured at
amortised cost using the effective interest rate method.
The Group and Company derecognises financial liabilities when the Group's or
Company's obligations are discharged, cancelled or expired.
Derivative instruments and hedge accounting
Derivative financial instruments are initially measured at fair value on the
date on which the derivative contract is entered into and are subsequently
measured at fair value at each reporting date.
For derivatives designated as cash flow hedges, prior to their settlement the
fair value movements on the effective portion of the gain or loss on the
hedging instrument is recognised in other comprehensive income and within the
cash flow hedge reserve within equity, while any ineffective portion is
recognised immediately in the Income Statement as gain/loss on cash flow hedge
within operating expenses. Amounts recognised in the Statement of
Comprehensive Income are transferred to the Income Statement when the hedged
transaction affects profit or loss, such as when the hedged cash flow occurs.
For derivatives that are not designated as cash flow hedges, all fair value
movements are recognised in the Income Statement. Where a derivative relates
to a hedge of investments in foreign currencies, the profit or loss on the
revaluation of the hedging instrument is recognised together with the
investment returns in the Income Statement.
Prior to their settlement, derivatives are carried as assets when the fair
value is positive and as a liability when fair value is negative. The fair
value of unsettled forward currency contracts is calculated by reference to
the market for forward contracts with similar maturities.
(p) Investment in subsidiaries
Investments in subsidiaries in the Statement of Financial Position of the
Company are recorded at cost less provision for impairments. All transactions
between the Company and its subsidiary undertakings are classified as related
party transactions for the Company accounts and are eliminated on
consolidation.
(q) Investments in associates
Associates are entities in which the Group has an investment and over which it
has significant influence, but not control, through participation in the
financial and operating policy decisions. Such entities are funds or carried
interest partnerships where the Group holds more than a 20% interest in the
entity. The Group initially records the investment at fair value through
profit or loss as operating income within the Income Statement. The
investments are recorded as financial assets or carried interest receivable
within the Group's Statement of Financial Position.
(r) Cash and cash equivalents
Cash and cash equivalents comprise cash in hand and call deposits, held at
call with banks with an original maturity of three months or less. The
carrying amount of these assets approximates to their fair value.
CLO cash is cash held by CLO vehicles consolidated by the Group and is not
available for the Group's other operating activities.
(s) Dividends
Dividends and other distributions to the Company's shareholders are recognised
in the period in which the dividends and other distributions are paid to the
shareholders. These amounts are recognised in the Statement of Changes in
Equity.
(t) Own shares
Own shares are recorded by the Group when ordinary shares are purchased
through special purpose vehicles, which have the purpose of purchasing and
holding surplus shares of the Company from employees who have left the
employment of the Group or from other means. The special purpose vehicles
include Atlantic SAV Limited, Atlantic SAV 2 Limited and the Bridgepoint Group
plc Employee Benefit Trust. These entities are aggregated together with the
financial information of the Company and are consolidated within this
financial information. Own shares are held at cost and their purchase reduces
the Group's net assets by the amount spent. They are recognised as a deduction
to retained earnings. When shares are sold, they are transferred at their
weighted average cost. No gain or loss is recognised on the purchase, sale,
issue or cancellation of the Company's own shares.
3. Critical judgements in the application of accounting policies and key
sources of estimation uncertainty
The judgements and other key sources of estimation uncertainty at the
reporting date, which may have a significant risk of causing a material
adjustment to the carrying amounts of assets and liabilities within the next
financial year are summarised below.
(a) Judgements
Consolidation of fund investments
The directors have considered whether the Group should consolidate investments
in funds into the results of the Group. Control is determined by the extent of
decision-making authority, rights held by other parties, remuneration and
exposure to returns.
The directors have assessed the legal nature of the relationships between the
Group, the relevant fund and fund investors and have determined that as the
manager, the Group has the power to influence the returns generated by the
fund, but the Group's interests typically represent only a small proportion of
the total capital within each fund (c. 2% of commitments). The directors have
therefore concluded that the Group acts as an agent, which is primarily
engaged to act on behalf, and for the benefit, of the fund investors rather
than act for its own benefit.
Where the Group holds an interest that is greater than 20% the Group is
considered to have significant influence, but not control through
participation in the financial and operating policy decisions. This includes
the Group's investment in Bridgepoint Credit "C" II LP, where the Group has a
commitment of 27% in the fund. Details of the associate are set out within
note 28 (d).
Returns from the Group's investments in Bridgepoint funds, including those
considered associates, are accordingly measured at fair value through profit
or loss as operating income within the Income Statement.
Consolidation of CLOs
The Group holds investments in the senior and subordinated notes of CLOs that
it manages, predominately driven by risk-retention regulations. As the Group
has power, as the asset manager, to impact the returns of the vehicles, the
level of exposure to variable returns from its involvement as an investor in
the notes requires assessment to whether this indicates the Group has a
principal or agent relationship and therefore whether the CLO should be
consolidated under IFRS 10 "Consolidated Financial Statements".
The Group consolidates Bridgepoint CLO 1 DAC ("CLO 1") as the Group has
exposure to variable returns as an investor in the subordinated notes. The
subordinated notes are the tranche that is most exposed to the risk of
portfolio assets failing to pay as they are the first to absorb any losses.
The Group holds the majority of the subordinated notes in CLO 1. The Group's
holding is 55% and the directors have therefore concluded that the Group is
principal and should consolidate.
The assets and liabilities of the CLO are held within separate legal entities
and, as a result, the liabilities of the CLO are non-recourse to the Group.
The consolidation of the CLOs has a significant gross-up on the Group's assets
and liabilities, which is shown gross on the face of the statement of
financial position and cash flow statement as separate lines but has no net
effect on the profit or loss, cash flows or net assets. Details of the assets
and liabilities are included in note 17 and 18.
Bridgepoint CLO 2 DAC ("CLO 2") was consolidated in the financial information
of the Group at 31 December 2020 during its warehousing and until its formal
launch on 28 June 2021, as the Group held a majority interest in the warehouse
equity. On its launch the Group's exposure to the variable returns reduced to
5% of all notes, therefore CLO 2 is not consolidated in the financial
information as at 31 December 2021.
Bridgepoint CLO 3 DAC ("CLO 3") was consolidated from the start of its
warehousing in June 2021 until its formal launch to external investors on 22
December 2021. On its launch, the Group's holding was 7% of all notes, with a
31% interest in the subordinated notes and a minority exposure to the variable
returns, therefore CLO 3 is treated as an associate in the financial
information as at 31 December 2021. Details of the associate are set out
within note 28 (d).
Consolidation of Carried Interest Partnerships
As a fund manager to its Private Equity and Credit Funds, the Group
participates in Carried Interest Partnerships ("CIPs"), the participants of
which are the Group, certain of the Group's employees and others connected to
the underlying fund. These vehicles have two purposes: 1) to facilitate
payments of carried interest from the fund to carried interest participants,
and 2) to facilitate individual co-investment into the funds.
The directors have undertaken a control assessment of each CIP in accordance
with IFRS 10 "Consolidated Financial Statements" to consider whether they
should consolidate the CIP.
The directors have considered the legal nature of the relationships between
the relevant fund, the CIPs and the CIP participants and have determined that
the power to control the CIPs (which are entitled to the carried interest from
the funds) ultimately resides with the fund investors and that the Group is
therefore an agent and not a principal.
This is because the purpose and design of the CIPs and the carry rights in the
fund are determined at the outset by the fund's LPA which requires investor
agreement and reflects investor expectations to incentivise individuals to
enhance performance of the underlying fund. The Group does not primarily
benefit as its principal revenue stream is management fees based on
commitments or invested capital. While the Group has some power over the
Adjudication Committees of the CIPs, these powers are limited and represent
the best interests of all carried interest holders collectively and hence,
these are assessed to be on behalf of the fund investors.
The directors have assessed the payments and the returns the carried interest
holders make and receive from their investment in carried interest and have
considered whether those carried interest holders who are also employees of
the Group were providing a service for the benefit of the Group or the
investors in the fund. The directors have concluded that the carried interest
represents a separate relationship between the fund investors and the
individual employees and that the carried interest represents an investment
requiring the individuals to put their own capital at risk and that, after an
initial vesting period, continued rights to returns from the investment is not
dictated by continuation of employment.
In addition, the directors have also considered the variability of returns for
all CIPs that currently have value under IFRS 15 "Revenue from contracts with
customers" and in doing so have determined that the Group is exposed to
limited variable returns in the range 5-26% with the main beneficiaries of the
CIP variable returns being the other participants. The directors concluded
that the CIPs are not controlled by the Group and therefore should not be
consolidated.
Where the Group has a share of 20% or more of the rights to the carried
interest, the Group is considered to have significant influence. Accordingly,
the BDC III carry scheme, where the Group holds an interest of 26%, is
considered an associate. Details of the associate are set out within note 28
(d).
Consolidation of employee share partnership
On listing, the founder employee shareholders created a separate ring-fenced
vehicle, Burgundy Investments Holdings LP (the "Burgundy Partnership"). The
Burgundy Partnership is a pool of assets, which will comprise the Company's
shares and other investments. The shares were contributed by founder employee
shareholders electing to donate a portion of their shares to the partnership.
This pool is ring-fenced for allocating to future partners in the business, as
a means of allowing them to build a meaningful long-term shareholding in
Bridgepoint and other investments and reflect the opportunities that previous
partners were offered. The existing employee shareholders prior to listing,
and certain new employee partners, will wholly own the interest in the
Burgundy Partnership.
The Group does not have any direct economic interest in the Burgundy
Partnership, and awards of new points to existing and future employees will be
made by the Advisory Committee of the Burgundy Partnership, which is made up
of some of the largest founder employee shareholders.
The directors have considered the requirements of IFRS 10 "Consolidated
Financial Statements" to determine whether they should consolidate the
Burgundy Partnership. As the Group does not meet all three criteria: 1) power
over the investee, 2) exposure, or rights, to variable returns from its
involvement with the investee, and 3) the ability to use its power over the
investee to affect its returns, they have concluded that the Burgundy
Partnership should not be consolidated.
(b) Estimates
Recognition and measurement of carried interest revenue
Carried interest revenue is only recognised to the extent it is highly
probable that there would not be a significant reversal of any accumulated
revenue recognised on the completion of a fund.
In determining the amount of revenue to be recognised the Group is required to
make assumptions and estimates when determining (i) whether or not revenue
should be recognised and (ii) the timing and measurement of such amounts.
The Group base their assessment on the best available information pertaining
to the funds and the activity of the underlying assets within that fund. This
includes the current fund valuation and internal forecasts on the expected
timing and disposal of fund assets.
For private equity funds, the reversal risk is managed through the application
of discounts of 30 to 50 percent to the fair values of unrealised investments
where the realised and unrealised valuation of a fund exceeds the relevant
carried interest hurdle.
For credit funds, which are more sensitive to the performance of individual
investments within the portfolio, only funds that have either reached their
hurdle or are expected to do so imminently are modelled on the same basis.
The discount applied for each fund depends on the specific circumstances of
each fund, taking into account diversity of assets, whether there has been a
recent market correction (and whether this has been already factored into the
valuation of the fund) and the expected average remaining holding period. The
level of discounts applied are reassessed annually.
A sensitivity analysis on the impact of a change in the fair value of
unrealised investments has been included in note 5.
Valuation of fund investments at fair value
Fund investments at fair value consist of investments in private equity and
credit funds. The investments are fair valued using the net asset value of
each fund, determined by the Manager. These funds are invested into direct and
indirect equity and debt investments.
Portfolio assets within each fund are stated at fair value as determined in
good faith by the Manager in accordance with the terms of the LPA of each fund
and the International Private Equity and Venture Capital Valuation Guidelines
("IPEV") and are reviewed and approved by the relevant Bridgepoint Valuation
Committee. The valuations provided by the Managers typically reflect the fair
value of the Group's proportionate share of capital account balance of each
investment as at the reporting date or the latest available date.
The market approach is typically used for the valuation of the assets. This
comprises valuation techniques such as market comparable companies and
multiple techniques. A market comparable approach uses quoted market prices or
third-party quotes for similar instruments to determine the fair value of a
financial asset. A multiple approach can be used in the valuation of less
liquid securities, which typically form the majority of assets within a
private equity or credit fund.
Comparable companies and multiple techniques assume that the valuation of
unquoted direct investments can be assessed by comparing performance measure
multiples of similar quoted assets for which observable market prices are
readily available. Comparable public companies are selected based on factors
such as industry, size, stage of development and strategy. The most
appropriate performance measure for determining the valuation of the relevant
investment is selected (which may include EBITDA, price/earning ratios for
earnings or price/book ratios for book values). Trading multiples for each
comparable company identified are calculated by dividing the value of the
comparable company by the defined performance measure. The relevant trading
multiples might be subject to adjustment for general qualitative differences
such as liquidity, growth rate or quality of customer base between the valued
direct investment and the group of comparable companies. The indicated fair
value of the direct investment is determined by applying the relevant adjusted
trading multiple to the identified performance measure of the valued company.
Where available, valuation techniques use market-observable assumptions and
inputs. If such information is not available, inputs may be derived by
reference to similar assets and active markets, from recent prices for
comparable transactions or from other observable market data. When measuring
fair value, the Manager selects the non-market-observable inputs to be used in
its valuation techniques based on a combination of historical experience,
deviation of input levels based upon similar investments with observable price
levels and knowledge of current market conditions and valuation approaches.
Within its valuation techniques the Manager typically uses different
unobservable input factors. Significant unobservable inputs include EBITDA
multiples (based on budget/forward-looking EBITDA or historical EBITDA of the
issuer and EBITDA multiples of comparable listed companies for an equivalent
period), discount rates, price/earnings ratios and enterprise value/sales
multiples. The Manager also considers the original transaction prices, recent
transactions in the same or similar instruments and completed third party
transactions in comparable instruments and adjusts the model as deemed
necessary.
Debt instruments may be valued using the market approach, independent loan
pricing sources or at amortised cost, which requires the determination of the
effective interest rate from a number of inputs, including an estimation of
the expected maturity of each loan.
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 in a fund, fund investments at fair value are classified as
level 3 financial assets under IFRS 13 "Fair Value Measurement".
Further detail on the valuation methodologies, inputs and the number of fund
investments valued using each technique, along with a sensitivity analysis of
the impact of a change in the fair value of fund investments is included
within note 20 (a).
Valuation of CLO assets and liabilities
The loan asset portfolios of the consolidated CLO vehicles are valued using
observable inputs such as recently executed transaction prices in securities
of the issuer or comparable issuers and from independent loan pricing sources.
To the extent that the significant inputs are observable, the Group
categorises these investments as Level 2.
CLO investments in debt instruments are classified as level 2 financial assets
under IFRS 13 "Fair Value Measurement" on the basis that the prices have been
corroborated externally.
The liabilities of consolidated CLOs are also fair valued through profit or
loss. They are valued, based upon broker prices, which use discounted cash
flow analyses with observable market data inputs, such as constant annual
default rates, prepayment rates, reinvestment rates, recovery rates and
discount rates and therefore considered as level 3 financial liabilities under
IFRS 13 "Fair Value Measurement". A sensitivity analysis has been included
within note 20 (f).
Measurement of deferred contingent consideration payable
Under the sale and purchase agreement for EQT Credit the Group has an
obligation to settle an amount of deferred contingent consideration on the
completion of fundraising for Bridgepoint Direct Lending III and Bridgepoint
Credit Opportunities IV. Both processes completed a first round of fundraising
during 2021 and fundraising will continue during 2022 and is expected to
complete in 2023. The amount payable has been based upon management's current
best estimate of each fundraising, which is consistent with approved budgets.
A sensitivity analysis has been included within note 18 (b).
Measurement of intangible assets, useful lives and impairment
A customer relationship asset was recognised following the Group's acquisition
in October 2020 of EQT Credit to reflect the value of current investor
relationships to the Group in the future.
At the time of the acquisition, the cost of the acquired customer relationship
was measured at fair value by discounting estimated contractual future cash
flows over a period in which the customer was expected to remain invested
within the Group's funds. Key assumptions in the model included forecast
earnings for 2021 to 2025, a growth rate applied from 2025 onwards, which was
based upon the long-term operating plan for the business, an investor
reinvestment rate from one fund to another and a discount rate of 10.5%, which
was calculated by using comparable company information.
The useful life of the intangible assets arising from this transaction have
been determined as 7 years, which represents the period over which the net
present value of cash flows from the acquired customer relationships reduce to
nil.
The customer relationship asset is assessed for impairment when there are
indicators of impairment. Such indicators would include fundraising lower than
targets. No impairment has been identified.
Goodwill is assessed for impairment annually or more frequently if events or
changes in circumstances indicate potential impairment loss. Goodwill arose
from the acquisition of EQT Credit. It is the Group's judgement that the
lowest level of cash generating unit ("CGU") used to determine impairment is
the credit business segment. The Group has assessed that it consists of a
single CGU for the purposes of monitoring and assessing goodwill for
impairment. In performing the impairment test, management prepares a
calculation of the recoverable amount of the goodwill, using the value-in-use
approach and compares this to the carrying value. In order to validate this, a
value-in-use forecast based on approved budgets has been prepared by
management to compare the forecast of the Credit business segment to the
carrying amount of the goodwill. Key assumptions in the forecast include
forecast earnings for 2022 to 2026, including new fundraising, and a pre-tax
discount rate of 10.7%, which was calculated by using comparable company
information.
A sensitivity analysis of goodwill and the intangible asset has been included
within note 15.
4. Operating segments
The key management of the Group for the period up to the Admission to the
London Stock Exchange was considered to be the directors of Bridgepoint
Advisers Group Limited, a subsidiary company, and from Admission onwards the
executive directors are considered to represent the key management of the
Group. The Group is divided into operating segments based on how key
management reviews and evaluates the operation and performance of the
business. The operating segments correspond to the internal reporting used to
assess performance and to allocate resources.
The Group's operations are divided into two groups, the Core business,
consisting of the Private Equity and 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 Credit. The operations of both business segments consist of
providing investment management services to the respective 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. Together the Private Equity, Credit and
Central segments form the Core business.
Segmental Income Statement analysis
The executive directors assess the operating segments based on the line items
below, primarily on operating income and operating profit.
The EBITDA for each segment (the segment result), together with depreciation
and amortisation and net finance expense forms Profit before Tax.
Depreciation, net finance expense and exceptional expenses are not allocated
to operating segments and are included in the Group total. Foreign exchange
gains/losses are allocated to Central.
The comparative period has been amended from the numbers included within the
historical financial information included within the prospectus to reclassify
income and costs relating to the Group's Luxembourg fund administration
platform to Central. There is no impact on EBITDA or profit before tax.
Group
Year ended 31 December 2021 Private Credit Central Total Core Total Other Total Group
Equity
£ m £ m £ m £ m £ m
£ m
Management fees 157.3 37.9 2.5 197.7 - 197.7
Carried interest 14.3 - - 14.3 - 14.3
Fair value remeasurement of investments 54.5 2.4 - 56.9 - 56.9
Other operating income 0.8 - - 0.8 0.9 1.7
Total operating income 226.9 40.3 2.5 269.7 0.9 270.6
Personnel expenses (66.2) (22.1) (32.0) (120.3) (1.1) (121.4)
Other expenses (13.3) (9.1) (13.7) (36.1) (0.3) (36.4)
Foreign exchange - - 1.1 1.1 - 1.1
EBITDA (excluding exceptional expenses) 147.4 9.1 (42.1) 114.4 (0.5) 113.9
Exceptional expenses (28.6)
EBITDA (including exceptional expenses) 85.3
Depreciation and amortisation (15.0)
Net finance expense (7.7)
Profit before tax 62.6
Group
Year ended 31 December 2020 Private Credit Central Total Core Total Other Total Group
Equity
£ m £ m £ m £ m £ m
£ m
Management fees 136.6 10.2 1.8 148.6 - 148.6
Carried interest 12.9 - - 12.9 - 12.9
Fair value remeasurement of investments 25.3 4.1 - 29.4 - 29.4
Other operating income 0.2 - - 0.2 0.7 0.9
Total operating income 175.0 14.3 1.8 191.1 0.7 191.8
Personnel expenses (54.5) (11.6) (28.7) (94.8) (1.2) (96.0)
Other expenses (10.6) (2.5) (15.7) (28.8) (0.4) (29.2)
Foreign exchange - - (0.2) (0.2) - (0.2)
EBITDA (excluding exceptional expenses) 109.9 0.2 (42.8) 67.3 (0.9) 66.4
Exceptional expenses (7.7)
EBITDA (including exceptional expenses) 58.7
Depreciation and amortisation (8.8)
Net finance expense (1.4)
Profit before tax 48.5
Geographical analysis and customer concentrations
The Group's income from funds is earned from funds entirely domiciled within
Europe. The Group's operating expenses are incurred in the locations where the
Group has offices, to identify and support portfolio companies which is
unconnected to the domicile of the fund or the location of the fund investors.
Therefore, the Group's operating results cannot be analysed in a meaningful
way by geography.
No single fund investor constitutes more than 10% of assets under management.
Assets and liabilities analysis
The Group's 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 and the carried interest receivable, which can be
split between private equity and credit (split between attributable to the
Group and third party investors).
31 December
2021 2020
£ m £ m
Investments:
Private equity 217.9 191.2
Credit (assets attributable to the Group) 108.1 64.2
Credit (CLO assets attributable to third party investors) 274.5 253.0
Total investments 600.5 508.4
Carried interest receivable:
Private equity 36.4 24.9
Credit 2.5 3.0
Total carried interest receivable 38.9 27.9
5. Operating income
Operating income primarily comprises management fees, carried interest income
and investment profits from the management of and investment in private equity
and credit fund partnerships.
Management fees
Management fees are presented net of the profit or loss impact of the
settlement of foreign exchange hedging used to limit the volatility of foreign
exchange on fees earned in euros.
Group
2021 2020
£ m £ m
Gross management fees 196.7 148.0
Settlement of FX hedges 1.0 0.6
Management fees, net 197.7 148.6
Carried interest
The amount of carried interest recognised in operating income and the carrying
value of the related asset is sensitive to the fair value of unrealised
investment within each fund. The reversal risk in carried interest income,
which is accounted for under IFRS 15 "Revenue from contracts with customers",
is managed through the application of discounts of 30 to 50 percent to the
fair value of the fund investments and the later recognition of carried
interest relating to credit funds.
If the fair value of unrealised investments of each relevant fund had been
higher/lower at each year end, the impact on carried interest income in each
year is shown in the table below.
Group
Carried interest income: 2021 2020
£ m £ m
10% lower value of unrealised assets (4.2) (2.9)
10% higher value of unrealised assets 5.4 2.9
As at 31 December 2021, the unrecognised carried interest asset due to the
discounts applied is £49.3m (2020: £28.6m).
Note 20 (a) includes a sensitivity analysis for co-investment valuations and
the impact on profit or loss.
Investment income
Investment income consists of net changes in the fair value of the Group's
investments in private equity and credit funds.
Investment income is presented net of the profit or loss impact of the
remeasurement of foreign exchange hedging used to limit the volatility of
foreign exchange on investment income earned in euros.
Group
2021 2020
£ m £ m
Investment income 53.8 29.4
Remeasurement of FX hedges 3.1 -
Investment income, net 56.9 29.4
Investment income also includes the remeasurement of the fair value of
investments in CLOs which are fully consolidated by the Group. The CLO
investment expense is the amount of investment income due to third party note
holders who have invested in the CLOs.
Group
2021 2020
£ m £ m
CLO investment income 3.0 3.3
CLO investment expense (1.3) (2.8)
CLO investment income, net 1.7 0.5
Other operating income
Other income includes fees and commissions receivable by the Group's
procurement consulting business, PEPCO Services LLP.
Group
2021 2020
£ m £ m
Other operating income 2.4 1.8
Commissions payable (0.7) (0.9)
Total other operating income 1.7 0.9
6. Personnel expenses
Aggregate personnel expenses (including directors' remuneration) in each year
were as follows:
Group
2021 2020
£ m £ m
Wages and bonuses 104.4 76.3
Social security costs 15.8 12.0
Pensions 1.9 1.6
Share-based payments 3.2 -
Other employee expenses 7.4 6.4
Total Personnel expenses 132.7 96.3
Total personnel expenses include £11.3m (2020: £0.3m) of exceptional
expenses, and accordingly are excluded from the calculation of underlying
profitability measures (see note 8 for further details).
a) Pensions
The Group operates a defined contribution pension scheme for its directors and
employees. The assets of the scheme are held separately from those of the
Group in an independently administered fund. The scheme is a non-contributory
scheme but does permit employee contributions.
b) Share-based payments
The total charge to the Income Statement for the year was £3.2m (2020: nil)
and this was credited to the Share-based payments reserve in equity. Details
of the different types of awards making up the charge are set out below.
In June 2021, the Company issued 612,000 A3 ordinary shares of £0.01 nominal
value to certain employees for consideration of £1.50 per share. The A3
shares would vest on the fifth anniversary of their issue provided that the
shareholder remains an employee throughout this period. As part of the
Company's share reorganisation, the A3 shares were converted into ordinary
shares. The fair value of the share issued was calculated as £3.96 per share.
This was determined by a third party valuation.
In July 2021, as part of the Admission to the London Stock Exchange, the
Company offered employees ordinary shares in the Company under the IPO Share
Award. 870,090 ordinary shares were issued to employees as part of the IPO
Share Award Plan with the nominal value of £0.00005 per share being fully
paid up. A further 29,053 ordinary shares are held in the Bridgepoint Group
plc Employee Benefit Trust. The shares had a fair value of £3.50 per share,
being the Admission Offer Price. The shares are generally forfeited to the
Bridgepoint Group plc Employee Benefit Trust in the event that the relevant
employee ceases employment or is given notice to the same.
No other share-based payment awards were made during the year to 31 December
2021.
Group and Company
Number Fair value of award (£)
A3 Share IPO Share A3 Share IPO Share
Award Award Award Award
Opening - - - -
Share reorganisation/granted 612,000 870,090 3.96 3.50
Vested - - 3.96 3.50
Forfeited (10,000) (32,860) 3.96 3.50
Outstanding at 31 December 2021 602,000 837,230 3.96 3.50
c) Other employee expenses
Other employee expenses include insurance, healthcare, training and
recruitment costs.
Staff numbers
The monthly average number of persons, including directors, employed by the
Group during the year split by geography was as follows:
Group
2021 2020
No. No.
UK 207 165
Other 133 117
Total 340 282
The Company has 4 employees (2020: nil).
7. Other expenses
Other expenses include expenditure on IT, travel and legal and professional
fees. Other expenses include fees paid to the auditors for the audit of the
Group and relevant subsidiary financial statements and other fees for other
services and expenditure relating to low-value asset leases are required to be
disclosed separately and are set out below.
a) Auditor's remuneration
PricewaterhouseCoopers LLP ("PwC") resigned as auditor of the Company and the
Group on the Company's Admission to the London Stock Exchange. The table below
sets out fees earned by PwC up until their resignation. Fees paid to PwC in
the year ended 31 December 2020 included transaction related services relating
to the acquisition of the EQT Credit business. Fees paid to PwC in the year
ended 31 December 2021 included services relating to the IPO.
Group
Fees paid to PwC 2021 2020
£ m
£ m
Audit fees
Fees payable to the external auditor for the audit of the Company and the - 0.1
consolidated financial statements
Fees payable to 'the external auditor for the audit of the accounts of the - 0.3
Company's subsidiaries
Total audit fees - 0.4
Non-audit fees
Tax compliance 1.0 0.1
Other non-audit services 5.3 1.6
Total non-audit fees 6.3 1.7
Total auditor's remuneration 6.3 2.1
Mazars LLP ("Mazars") were appointed to replace PwC. The table below sets out
fees earned by Mazars in relation to the year ended 31 December 2021.
Group
Fees paid to Mazars 2021 2020
£ m
£ m
Audit fees
Fees payable to the external auditor for the audit of the Company and the 0.4 -
consolidated financial statements
Fees payable to the external auditor for the audit of the Company's 0.8 -
subsidiaries
Total audit fees 1.2 -
Non-audit fees
Audit-related assurance services 0.1 -
Total non-audit fees 0.1 -
Total auditor's remuneration 1.3 -
b) Low-value asset leases
Group
2021 2020
£ m
£ m
Expense relating to low-value assets leases
- Low-value assets leases 0.2 0.2
8. Exceptional items
The amounts shown in the table below have been recognised separately as
exceptional where the income or expenditure is material, is not considered to
be incurred in the normal course of business and without disclosure could
distort an understanding of the financial information. Accordingly,
exceptional items are excluded from the calculation of underlying
profitability measures.
Exceptional items in the year ended 31 December 2021 relate to costs
associated with the Group's Admission to the London Stock Exchange, further
costs relating to the Group's acquisition of EQT Credit and costs incurred in
relation to potential acquisitions. Exceptional finance income relates to an
unwind of a discount on deferred proceeds receivable. Further explanation is
included below the table.
Group
2021 2020
£ m £ m
Personnel expenses 11.3 0.3
Other expenses 17.3 7.4
Total exceptional expenses within EBITDA 28.6 7.7
Finance expenses - 0.2
Total exceptional expenses 28.6 7.9
Group
2021 2020
£ m £ m
Finance income (3.8) (4.4)
Total exceptional income (3.8) (4.4)
a) Exceptional personnel expenses
In 2021, exceptional personnel expenses arose from the IPO, including specific
transaction related bonuses, share based payment expenses and associated
social security costs, and from the acquisition of EQT Credit, including
deferred transaction related bonuses and associated social security costs.
In the year ended 31 December 2020, exceptional personnel expenses represent
deferred transaction related bonuses and associated social security costs
relating to the EQT Credit acquisition.
b) Exceptional other expenses
In 2021, exceptional other expenses include professional costs relating to the
IPO and costs incurred in relation to potential acquisitions. Separately,
£18.4m of costs incurred during the IPO have been recognised within equity,
which are considered to represent costs of issuing the related share capital
on listing.
In the year ended 31 December 2020, exceptional other expenses represent
transaction costs relating to the EQT Credit acquisition.
c) Exceptional finance income and expenses
In 2021, exceptional finance income of £3.8m (2020: £4.4m) relates to
remeasurement and revaluation of the deferred contingent consideration payable
to EQT AB and associated unwind of the discount and deferred proceeds
receivable under the Investment Agreement with Dyal Capital Partners IV (C)
LP. In the year ended 31 December 2020, exceptional finance expenses of £0.2m
related to the unwind of the discount of the deferred contingent consideration
payable to EQT AB.
9. Depreciation and amortisation
The following table summarises the depreciation and amortisation charge during
the year.
Group
2021 2020
£ m £ m
Depreciation on property, plant and equipment 11.9 8.2
Amortisation of intangible assets 3.1 0.6
Total depreciation and amortisation 15.0 8.8
The amortisation of intangible assets is excluded from the calculation of
underlying profitability measures in order to distinguish from underlying
performance.
10. Finance income and expenses
Group
2021 2020
£ m £ m
Other finance income 4.2 4.7
Total finance income 4.2 4.7
Interest expense on bank overdrafts and borrowings (3.1) (3.1)
Interest expense on lease liabilities (2.8) (1.8)
Other finance expenses (0.4) (0.2)
Finance expense on amounts payable to related party investors in Opal (5.6) (1.0)
Investments LP
Total finance expenses (11.9) (6.1)
a) Other finance income
The other finance income primarily relates to the unwind of discounting on the
deferred proceeds receivable from Dyal Partners IV (C) LP of £2.6m (2020:
£4.4m) and the remeasurement and revaluation of the deferred contingent
consideration payable and associated unwind of discount to EQT AB (see note 18
(b) for further details) of £1.2m (2020: expense £0.2m). Both are
considered exceptional income, and accordingly are excluded from the
calculation of underlying profitability measures. Also included is the finance
income on sub-leases of £0.4m (2020: £0.2m).
b) Other finance expenses
The other finance expenses includes facility fees which are being amortised
over the term of the facility of £0.4m (2020: nil). In the year ended 31
December 2020, finance expenses of £0.2m related to the unwind of discounting
of the deferred contingent payable to EQT AB (see note 18 (b) for further
details) and is considered an exceptional expense, and accordingly excluded
from the calculation of underlying profitability measures.
c) Finance expense on amounts payable to related party investors in Opal
Investments LP
Finance expense on other financial liabilities represent amounts due to
related party investors in the Opal Investments LP partnership under the
limited partnership agreement (see note 18 (d) for further detail).
11. Tax expense
(a) Tax expense
Tax charged in the Income Statement:
Group
2021 2020
£ m £ m
Current taxation
Current tax - current year 2.8 1.9
Current tax - prior year 0.3 -
Total current tax expense 3.1 1.9
Deferred taxation
Deferred tax - current year 2.8 -
Deferred tax - prior year (1.1) (1.1)
Total deferred taxation 1.7 (1.1)
Tax expense 4.8 0.8
(b) Reconciliation of tax expense
The tax on profit before tax is different to the standard rate of corporation
tax in the UK of 19% (2020: 19%) primarily due to timing differences on
taxation of management fee income, losses carried forward, a proportion of
which are not recognised, and other timing differences. The 2021 tax charge
also includes the effect on deferred tax liabilities of the corporation tax
rate increase from 19% to 25% effective from April 2023 and capital gains on
cancellation of own shares.
Group
2021 2020
£ m £ m
Profit before tax 62.6 48.5
Tax on profit before taxation at the standard rate of corporation tax in the 11.9 9.2
UK of 19.0% (2020: 19.0%)
Non-taxable and non-deductible items (5.3) (28.7)
Deferred tax adjustments regarding management fee income and investments (13.9) 4.7
Capital gains transferred 3.1 -
Effect of tax rate changes 5.3 1.2
Effect of foreign tax rates 0.5 1.3
Deferred tax not recognised 4.0 14.2
Prior year adjustment (0.8) (1.1)
Total tax expense for the year 4.8 0.8
In the Spring Budget 2021, the Government announced that from 1 April 2023 the
corporation tax rate will increase to 25%. As the change has been
substantively enacted at the balance sheet date, the deferred tax balances
have been revalued during the year ended 31 December 2021.
(c) Tax on amounts recognised directly in other comprehensive income
Tax on amounts recognised in other comprehensive income relate to deferred tax
timing differences on foreign exchange forward contracts used for hedging
purposes.
2021 2020
£ m £ m
Tax on amounts recognised in other comprehensive income (2.1) 0.9
(d) Tax losses not recognised
The Group and Company have deferred tax assets of £113.0m (2020: £70.0m) and
£1.1m (2020: nil) respectively as at 31 December 2021, relating to tax losses
carried forward that have not been recognised due to the uncertainty of future
taxable profits against which the asset can be utilised in the foreseeable
future.
The Group has an asset of £25.0m (2020: £16.1m) and the Company an asset of
£1.1m (2020: nil) that have been recognised where there is an expectation
that the tax losses can be utilised against profits. See note 22 for further
detail on deferred tax assets recognised.
12. Earnings per share
Group
2021 2020
Profit attributable to equity holders of the Company (£m) 57.8 36.5
Weighted average number of ordinary shares for purposes of basic and diluted 356.0 3.1
EPS (m)
Basic and diluted earnings per share (£) 0.16 11.59
The weighted average number of shares for the year ended 31 December 2021
reflects the number of shares both pre and post simplification of the share
structure and issue of new shares in the IPO. Had the shares in issue at 31
December 2021 been in issue throughout 2021, the weighted average number of
shares would have been 823.3m and the earnings per share would have been
£0.07. The 2020 equivalent earnings per share for the number of shares in
issue at 31 December 2021 would have been £0.04.
The adjusted earnings per share on underlying profit after tax of £85.7m
based on the number of shares in issue at 31 December 2021 is £0.10 (2020:
£0.06 on underlying profit after tax of £51.8m gross of non-controlling
interests).
See note 23 for further details on the changes in the number of shares.
The number of ordinary shares included in the calculation of earnings per
share excludes own shares held by the Group.
13. Property, plant and equipment
Group
Cost Right-of-use assets Leasehold improvements Computers, Total
furniture and other
£ m £ m
£ m
£ m
Balance at 1 January 2021 50.1 9.9 10.0 70.0
Foreign exchange - (0.2) (0.1) (0.3)
Additions 65.1 5.5 1.0 71.6
Disposals (37.8) - (0.1) (37.9)
Balance at 31 December 2021 77.4 15.2 10.8 103.4
Accumulated depreciation
Balance at 1 January 2021 (17.5) (4.3) (6.6) (28.4)
Foreign exchange - 0.1 0.1 0.2
Depreciation (9.0) (1.4) (1.5) (11.9)
Disposals 12.3 - 0.2 12.5
Balance at 31 December 2021 (14.2) (5.6) (7.8) (27.6)
Carrying value at 31 December 2021 63.2 9.6 3.0 75.8
Group
Right-of-use assets Leasehold improvements Computers, Total
furniture and other
Cost £ m £ m
£ m
£ m
Balance at 1 January 2020 50.4 8.7 7.8 66.9
Foreign exchange - 0.1 0.1 0.2
Additions - 1.1 2.1 3.2
Disposals (0.3) - - (0.3)
Balance at 31 December 2020 50.1 9.9 10.0 70.0
Accumulated depreciation
Balance at 1 January 2020 (11.3) (3.4) (5.5) (20.2)
Depreciation (6.2) (0.9) (1.1) (8.2)
Balance at 31 December 2020 (17.5) (4.3) (6.6) (28.4)
Carrying value at 31 December 2020 32.6 5.6 3.4 41.6
The Company has no plant, property or equipment.
14. Business combinations
On 23 October 2020, the Group acquired 100% of the equity instruments in
entities representing the EQT Credit fund management business and interests in
certain funds and carried interest managed by EQT Credit, for initial cash
consideration of £98.9m (including liabilities incurred) and a deferred
element of up to €50.0m (£42.0m), which is payable to EQT AB based on the
outcome of fundraising for certain funds. This excludes consideration paid in
relation to the acquisition of the interests in funds and carried interest
which has been detailed in note 16 and 17. The acquisition was undertaken to
increase the scale of the Group's credit offering.
The amount of deferred consideration recorded of £30.3m (2020: £31.6m) is
based on management's expectation of the fundraising at the acquisition date
and adjusted thereafter for any change in expectation and at current exchange
rates. The deferred consideration is expected to be paid in 2023. See note 18
(b) for further detail.
As part of the acquisition of the EQT Credit business, the Group also acquired
an interest in CLO notes in CLO 1 and CLO 2 for cash consideration of £23.6m.
On acquisition, as an investor in the subordinated notes, the Group has
exposure to variable returns and was considered to have both power over the
investee and the ability to use that power and so was required to consolidate
the CLO vehicles. On CLO 2's formal launch on 28 June 2021, the Group's
exposure to the variable returns was reduced to 5% of all notes, therefore CLO
2 is not consolidated in the financial information as at 31 December 2021.
The following table summarises the consideration paid by the Group, the fair
value of assets acquired and liabilities assumed at the acquisition date. This
excludes consideration paid in relation to the acquisition of the interests in
funds and carried interest.
Group
Fair value of assets acquired Total
£ m
Intangible assets 21.2
Cash and cash equivalents 18.0
Trade debtors 8.4
Trade creditors (19.1)
Total identifiable EQT Credit net assets acquired 28.5
CLO assets 173.6
CLO cash 1.9
CLO liabilities (151.9)
Total identifiable CLO net assets acquired 23.6
Deferred tax liabilities (4.0)
Goodwill 105.1
Total purchase consideration 153.2
Goodwill arising from the acquisition is attributable to the workforce and
track record of the acquired business.
Adjustments to book values arising on acquisition were principally in relation
to the recognition of acquired fund management contracts as intangible assets
and deferred tax liabilities in relation to the amortisation of the intangible
assets and goodwill. The useful life of intangible assets is estimated to be 7
years, which represents the period over which the net present value of cash
flows from the acquired investor relationships reduce to nil.
The acquisition costs of the business combination were £7.4m and were
recognised in the Income Statement as an exceptional expense.
15. Goodwill and intangible assets
Group
Cost Goodwill Intangibles Total
£ m £ m £ m
Balance at 1 January 2021 105.1 21.2 126.3
Balance at 31 December 2021 105.1 21.2 126.3
Accumulated depreciation and impairment
Balance at 1 January 2021 - (0.6) (0.6)
Amortisation - (3.1) (3.1)
Balance at 31 December 2021 - (3.7) (3.7)
Carrying value
Balance at 1 January 2021 105.1 20.6 125.7
Balance at 31 December 2021 105.1 17.5 122.6
Group
Cost Goodwill Intangibles Total
£ m £ m £ m
Balance at 1 January 2020 - - -
Additions 105.1 21.2 126.3
Balance at 31 December 2020 105.1 21.2 126.3
Accumulated depreciation and impairment
Balance at 1 January 2020 - - -
Amortisation - (0.6) (0.6)
Balance at 31 December 2020 - (0.6) (0.6)
Carrying value
Balance at 1 January 2020 - - -
Balance at 31 December 2020 105.1 20.6 125.7
The goodwill arose following the acquisition of EQT Credit in 2020. All
goodwill is attributable to the Credit operating segment.
Goodwill is required to be assessed for impairment annually or more frequently
if events or changes in circumstances indicate potential impairment loss. In
performing the impairment test, management prepares a calculation of the
recoverable amount of the goodwill, using the value-in-use approach and
compares this to the carrying value. The value-in-use is determined by
discounting the expected future cash flows generated from the continuing use
of the Credit operating segment and is based on the following key assumptions:
• The cash flows are projected based on the actual operating results and a
five-year estimate (2022-2026). Cash flows for the time thereafter are taken
into account by calculating a terminal value based on the discount factor
applied by the Group.
• Operating profits are based on Board approved income, future fundraising,
deployment of capital and costs of the business, taking into account growth
plans for the Credit business as well as past experience.
• A pre-tax discount rate of 10.7%, which is based on the Group's weighted
average cost of capital, is applied in determining the recoverable amount.
• A long-term growth rate of 5.0%, which is based on an assessment of the
private debt industry rates of growth, and management's experience, is applied
to the terminal value.
As at 31 December 2021 a significant headroom is noted, and therefore no
impairment is identified (2020: nil). The Credit business would need to fall
short of its projected profit margins by over 76.0% over the period 2022 to
2026 for the goodwill to be impaired.
The intangible asset represents a customer relationship asset which arose as
part of the acquisition of EQT Credit.
The intangible asset was valued based on a number of assumptions. These
include profit margins, size of funds, level of reinvestment/attrition in new
funds and the discount rate applied to the projections. The valuation is
sensitive to any number of changes to one or a combination of these
assumptions. As an illustration, a +/-20% change to the level of investor
reinvestment has a £6m impact on the carrying value of the intangible assets.
The Company has no goodwill or intangibles.
16. 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
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.
A sensitivity analysis of the impact of a change in the value of unrealised
fund assets is included within note 5.
Group
2021 2020
£ m £ m
Opening balance 27.9 13.0
Purchases - 4.1
Income recognised in the year 15.2 12.2
Foreign exchange movements (1.1) 0.7
Receipts of carried interest (3.1) (2.1)
Closing balance 38.9 27.9
The Company has no carried interest receivable.
17. Financial assets
(a) Classification of financial assets
The following tables analyse the Group and Company's assets in accordance with
the categories of financial instruments in IFRS 9 "Financial Instruments".
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 Statement of Financial
Position.
Group
As at 31 December 2021 Fair value through Hedging derivatives Financial assets at amortised Assets which are not financial assets Total
profit or loss
cost
£ m
£ m £ m
£ m £ m
Fair value of fund investments 313.7 - - - 313.7
Fair value of CLO assets 286.8 - - - 286.8
Trade and other receivables - - 76.4 28.7 105.1
Derivative financial instruments - 9.9 - - 9.9
Cash and cash equivalents - - 323.1 - 323.1
CLO cash - - 4.2 - 4.2
Total 600.5 9.9 403.7 28.7 1,042.8
Group
As at 31 December 2020 Fair value through Hedging derivatives Financial assets at amortised Assets which are not financial assets Total
profit or loss
cost
£ m
£ m £ m
£ m £ m
Fair value of fund investments 235.9 - - - 235.9
Fair value of CLO assets 272.5 - - - 272.5
Trade and other receivables - - 173.0 10.6 183.6
Derivative financial instruments - 0.7 - - 0.7
Cash and cash equivalents - - 42.3 - 42.3
CLO cash - - 114.8 - 114.8
Total 508.4 0.7 330.1 10.6 849.8
Company
As at 31 December 2021 Fair value through Hedging derivatives Financial assets at amortised Assets which are not financial assets Total
profit or loss
cost
£ m
£ m £ m
£ m £ m
Trade and other receivables - - 106.5 - 106.5
Cash and cash equivalents - - 159.0 - 159.0
Total - - 265.5 - 265.5
Company
As at 31 December 2020 Fair value through Hedging derivatives Financial assets at amortised Assets which are not financial assets Total
profit or loss
cost
£ m
£ m £ m
£ m £ m
Trade and other receivables - - - - -
Cash and cash equivalents - - 9.4 - 9.4
Total - - 9.4 - 9.4
(b) 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 measured at fair
value through the Income Statement within operating income.
The investments primarily consist of loans or commitments made in relation to
the Bridgepoint VI, V and III private equity funds, the Bridgepoint Credit I,
II, Direct Lending I, II and Credit Opportunities III 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.
Group
2021 2020
£ m £ m
Opening balance 235.9 206.1
Additions 92.7 49.6
Change in fair value 65.7 20.1
Foreign exchange movements (14.7) 11.3
Receipts (65.9) (51.2)
Closing balance 313.7 235.9
The Company has no investment in funds at 31 December 2021 (2020: nil).
(c) Fair value of CLO assets
The balance shown includes the gross value of the assets held by CLO 1 (2020:
CLO 1 and CLO 2), which is consolidated by the Group, but of which the Group
only holds the right 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.
Group
2021 2020
£ m £ m
Fair value of CLO assets consolidated by the Group 286.8 272.5
Fair value of CLO assets attributable to third party investors (274.5) (253.0)
Group's exposure to consolidated CLO assets 12.3 19.5
The Company has no investments in CLO assets at 31 December 2021 (2020: nil).
(d) Derivative financial assets
Group
2021 2020
£ m £ m
Derivative financial assets:
Forward contracts 9.9 0.7
The derivative financial assets relate to forward contracts that are used to
hedge foreign exchange risk. Further detail on the hedging programme is set
out in note 20 (b).
The Company has no derivative financial assets at 31 December 2021 (2020:
nil).
€ Trade and other receivables
Group Company
2021 2020 2021 2020
£ m £ m £ m £ m
Non-current:
Trade receivables 16.9 6.9 - -
16.9 6.9 - -
Current:
Trade receivables 16.0 13.1 -
Accrued income 2.8 1.0 - -
Prepayments 11.4 3.5 - -
Other receivables 58.0 47.4 106.5 -
Deferred proceeds receivable - 111.7 - -
88.2 176.7 106.5 -
Total trade and other receivables 105.1 183.6 106.5 -
There are no material differences between the above amounts for trade and
other receivables and their fair value.
i) Other receivables
Other receivables primarily relate to amounts to be invoiced to funds managed
by the Group in relation to costs incurred on their behalf. Such costs include
deal and fundraising expenditure. Amounts receivable from the funds at year
end were £37.6m (2020: £27.7m). Amounts receivable from portfolio companies
of the funds at the end of the year were £2.1m (2020: £1.6m).
ii) Deferred proceeds receivable
Deferred proceeds receivable relate to additional consideration payable under
an Investment Agreement with a shareholder of the Group, Dyal Capital Partners
IV (C) LP. The outstanding amount at 31 December 2020 was paid during 2021.
iii) Cost of acquisition
Current and non-current trade and other receivables also include the deferred
cost of acquisition and consist of expenditure in excess of the cap within the
LPA and fees paid to placement agents. Such costs are capitalised as a
non-current asset and amortised between three and five years. The movement in
the capitalised costs of acquisition is set out in the following table.
Group
2021 2020
£ m £ m
Opening balance 1.1 2.0
Additions - 0.6
Amortisation (1.0) (1.5)
Closing balance 0.1 1.1
iv) Lease receivables
Non-current and current trade and other receivables include lease receivables
on sub-let office premises. Two of the sub-leases run until the end of the
related head lease and expire on 31 December 2027. The third sub-lease runs
for 10 years and expires on 16 August 2031. The undiscounted cashflows for
these lease receivables during the year ended 31 December 2021 were £1.0m
(2020: £1.0m). The finance income earned on the subleases during the year
ended 31 December 2021 were £0.4m (2020: £0.2m).
The following table sets out the maturity analysis of lease receivables,
showing undiscounted lease payments to be received after the reporting date.
Group
2021 2020
£ m £ m
Due within 1 year 1.4 1.0
Due between 1-2 years 2.5 1.0
Due between 2-3 years 2.5 1.0
Due between 3-4 years 2.5 1.0
Due between 4-5 years 2.5 1.0
Due more than 5 years 7.9 2.1
Total undiscounted lease payments receivable 19.3 7.1
Unearned finance income (3.1) (0.9)
Net investment in leases 16.2 6.2
Current 0.8 0.8
Non-current 15.4 5.4
16.2 6.2
The Company does not have any lease receivables.
(f) Cash and cash equivalents
Group Company
2021 2020 2021 2020
£ m £ m £ m £ m
Cash and cash equivalents 323.1 42.3 159.0 9.4
CLO cash 4.2 114.8 - -
327.3 157.1 159.0 9.4
CLO cash is cash held by CLO vehicles consolidated by the Group and is not
available for the Group's other operating activities.
There are no material differences between cash and cash equivalents and CLO
cash and their fair value.
18. Financial liabilities
(a) Classification of financial liabilities
The following tables analyse the Group and Company's financial liabilities in
accordance with the categories of financial instruments in IFRS 9 "Financial
Instruments". Liabilities such as deferred income, long-tern employee
benefits, social security and other taxes are excluded as they do not
constitute a financial liability under IFRS 9 are shown in the table in a
separate column in order to reconcile to the face of the Statement of
Financial Position.
Group
As at 31 December 2021 Fair value through Hedging derivatives Financial liabilities at amortised Liabilities which are not financial liabilities Total
profit or loss
cost
£ m
£ m £ m
£ m £ m
Trade and other payables 30.3 - 39.0 64.4 133.7
Other financial liabilities 18.8 - 28.1 - 46.9
Lease liabilities - - 84.8 - 84.8
Fair value of CLO liabilities 242.9 - - - 242.9
CLO purchases awaiting settlement - - 35.8 - 35.8
Total 292.0 - 187.7 64.4 544.1
Group
As at 31 December 2020 Fair value through Hedging derivatives Financial liabilities at amortised Liabilities which are not financial liabilities Total
profit or loss
cost
£ m
£ m £ m
£ m £ m
Trade and other payables 31.6 - 35.6 50.9 118.1
Borrowings - - 99.7 - 99.7
Other financial liabilities 6.2 - - - 6.2
Lease liabilities - - 42.0 - 42.0
Derivative financial instruments - 4.9 - - 4.9
Fair value of CLO liabilities 274.5 - - - 274.5
CLO purchases awaiting settlement - - 93.2 - 93.2
Total 312.3 4.9 270.5 50.9 638.6
Company
As at 31 December 2021 Fair value through Hedging derivatives Financial liabilities at amortised Liabilities which are not financial liabilities Total
profit or loss
cost
£ m
£ m £ m
£ m £ m
Trade and other payables - - 23.1 - 23.1
Total - - 23.1 - 23.1
Company
As at 31 December 2020 Fair value through Hedging derivatives Financial liabilities at amortised Liabilities which are not financial liabilities Total
profit or loss
cost
£ m
£ m £ m
£ m £ m
Trade and other payables - - 0.9 - 0.9
Total - - 0.9 - 0.9
(b) Trade and other payables
Group Company
2021 2020 2021 2020
£ m £ m £ m £ m
Amounts due in more than one year:
Deferred contingent consideration payable 30.3 31.6 - -
Management incentive scheme 12.6 - - -
Accrued expenses 0.6 0.6 - -
43.5 32.2 - -
Amounts due within one year:
Trade payables 8.0 5.1 - -
Accrued expenses 70.2 78.2 2.9 -
Amounts due to related parties 0.7 - 20.2 0.9
Social security and other taxes 2.7 2.4 - -
Other payables 8.6 0.2 - -
90.2 85.9 23.1 0.9
Total trade and other payables 133.7 118.1 23.1 0.9
i) Deferred contingent consideration
The deferred contingent consideration is payable to EQT AB and relates to the
outcome of fundraising for the Bridgepoint Direct Lending III and Bridgepoint
Credit Opportunities IV funds. The maximum amount payable is €50.0m
(£42.0m). Both funds completed a number of rounds of fundraising during 2021
and fundraising will continue during 2022 and is expected to complete in 2023.
The amount payable has been based upon management's current best estimate of
each fundraising. Were the eventual fund sizes over 40% lower than the
estimate used within the financial information, no deferred contingent
consideration would be payable. The fund sizes would need to be 15% higher
than the estimate for the maximum deferred contingent consideration to be
payable.
ii) Management incentive scheme
In April 2021, a subsidiary company, Bridgepoint Credit Holdings Limited,
issued shares to certain employees of the Group as part of a management
incentive scheme. The shares are subject to a put and call option, whereby the
participating employees have the option to sell and the Group has the option
to buy back the shares in the future based upon a pre-determined formula which
considers the amount of funds raised and the resulting management fees over a
five year-period. The scheme has been accounted for as a other long-term
employment benefit under IAS 19 "Employment Benefits". As at 31 December 2021,
the expense and corresponding liability has been based upon funds raised and
expected management fees which exceed the targets at that date.
iii) Accruals and deferred income
Accruals and deferred income include amounts that have been incurred, but not
yet invoiced, employee bonuses and amounts that have been received in relation
to fund management activity for services that have not been provided, but are
owed to the Bridgepoint funds
iv) Other payables
Other payables include costs due to be incurred on the assignment of a lease.
There are no material differences between the above amounts for trade and
other payables and their fair value.
(c) Borrowings
Group
2021 2020
£ m £ m
Liabilities held at amortised cost:
Bank loans due in less than one year - 99.7
On 19 October 2020, Bridgepoint Advisers Holdings, entered into a Revolving
Facility Agreement for £125m for a period of three years. At 31 December 2021
there were no drawn amounts on the facility (2020: £90.7m drawn). Loan
arrangement fees of £1.25m have been capitalised and are being amortised over
the life of the facility. At 31 December 2021 the unamortised fees are £0.7m
(2020: £1.2m).
On 17 October 2017, Opal Investments LP, a subsidiary, entered into a
Revolving Credit Agreement for €40.0m for a period of 50 months. On 31
January 2020 the size of the facility was reduced to €25.0m and on 9 October
2020 was reduced to €15.0m. The facility was cancelled in October 2021
having been fully repaid in July 2021. At 31 December 2020, £10.1m had been
drawn on the facility.
There are no material differences between the above amounts for borrowings
held at amortised cost and their fair value.
The Company has no borrowings at 31 December 2021 (2020: nil).
(d) Other financial liabilities
Group
2021 2020
£ m £ m
Liabilities held at amortised cost:
CLO repurchase agreement 28.1 -
28.1 -
The Group has entered into an arrangement to sell and repurchase an interest
in CLO 2 and 3. For CLO 2, the repurchase liability is €14.9m (£12.5m) and
will be repaid at face value as at the scheduled repurchase date of 15 April
2035, unless an earlier date is agreed as per the agreement. For CLO 3, the
repurchase liability is €18.6m (£15.6m) and will be repaid at face value as
at the scheduled repurchase date of 15 January 2036, unless an earlier date is
agreed as per the agreement.
Group
2021 2020
£ m £ m
Liabilities held at fair value through profit and loss:
Amounts payable to related party investors in Opal Investments LP 9.5 3.8
Amounts payable to related party investors in intermediate holding entities 9.3 2.4
18.8 6.2
(i) Amounts payable to related parties in Opal Investment LP
The Group has an investment in Opal Investments LP, which is an investor in
the Bridgepoint Europe V Fund partnerships. Under the limited partnership
agreement, related party investors had the right to receive up to 100% of the
profits from the partnership unless the Group exercised an option to trigger
up to 85% of the profits of the partnership from the date of the exercise of
the option. Effective 31 December 2020, the option was exercised therefore 85%
of the accumulated profits from the partnership were allocated to the equity
shareholders of the Company from non-controlling interests. 15% of the
residual profits are classified as a financial liability payable to related
party investors.
(ii) Amounts payable to related party investors in intermediate fund holding
entities
The Group consolidates a number of limited partnerships through which some of
the Group's investment in funds is held. The Group's interest only constitutes
a portion of the total and therefore other financial liabilities include the
fair value of the amounts due to external parties, who are related party
investors, under the limited partnership agreement.
The Company has no other financial liabilities at 31 December 2021 (2020:
nil).
(e) CLO liabilities
Group
2021 2020
£ m £ m
Liabilities held at fair value through profit and loss:
Liabilities of CLOs consolidated by the Group (non-current) 241.4 256.6
Liabilities of CLOs consolidated by the Group (current) 1.5 17.9
242.9 274.5
CLO liabilities are designated as financial liabilities at fair value through
profit and loss.
Financial liabilities held at fair value through profit or loss represent
notes and loans issued by CLOs which are consolidated by and have been
originated by the Group. They are initially recognised and subsequently
measured at fair value with gains or losses arising from changes in fair value
and interest paid on financial instruments recognised through investment
income in the Income Statement.
The notes and loans issued by CLOs have rights to the assets of the respective
CLO and there is no recourse to the Group.
(f) CLO purchases awaiting settlement
Group
2021 2020
£ m £ m
CLO purchases awaiting settlement 35.8 93.2
35.8 93.2
(g) Derivative financial liabilities
Group
2021 2020
£ m £ m
Derivative financial liabilities:
Forward contracts - 4.9
The derivative financial liabilities relate to forward contracts that are used
to hedge foreign exchange risk. Further detail on the hedging programme is set
out in note 20 (b).
The Company has no derivative financial liabilities (2020: nil).
(h) Commitments
The Group's undrawn capital commitments to the Bridgepoint funds at each year
end is shown in the table below. Capital commitments are called over time,
typically between one to five years following the subscription of the
commitment. Capital commitments are a financial liability, but the Group does
not have an obligation to pay cash until the capital is called. Commitments
may increase where distributions made by the fund are recallable.
Group
2021 2020
£ m £ m
Private equity funds 113.7 135.3
Credit funds 28.5 27.6
142.2 162.9
19. Lease liabilities
Group
2021 2020
£ m £ m
Lease liabilities
Current 4.0 6.1
Non-current 80.8 35.9
84.8 42.0
The lease liabilities relate to rental payments in respect of the Group's
rented offices. The lease contracts range from 5 to 10 years.
The lease liability is initially measured at the net present value of future
lease payments that are not paid at the commencement date discounted using the
interest rate implicit in the lease or, if that rate cannot be readily
determined, the Group's IBR. Generally, the Group uses its IBR as the discount
rate as the implicit rate is not readily determinable for the rented office
premises.
The lease contracts include either inflationary increases to the rent payable
or periodic review of the rent payable. The liability has been determined at
each period end, based upon expected changes in the contractual rent payable,
as well as any planned exercise of any break/early exit.
A number of leases have extension options which have not been incorporated
into the lease liability on the basis that the Group does not currently expect
to take them.
The lease liability is therefore sensitive to assumptions relating to the
selection and application of the IBR and those relating to the
exercise/non-exercise of lease break clauses.
The Group periodically reassesses the lease term and this assessment is based
on all relevant facts and circumstances. Should a change occur, the Group
modifies the lease liability and associated right of use asset to reflect the
remaining expected cash flows.
The IBR has been determined by combining the relevant reference risk free rate
for each currency, consideration of adjustments for country specific risks and
applying a financing spread observable to comparable companies. In order to
validate the reasonableness of the IBR, it has been compared to the margin
payable on the Group's Revolving Credit Facility, and found to be comparable.
If the IBR had been 1% higher/lower, the impact on the lease liability would
be:
Group
2021 2020
£ m £ m
Increase of 1% (3.5) (1.3)
Decrease of 1% 3.8 1.3
All lease liabilities have been modelled to the end of their non-cancellable
lease term, or where expected to be exercised to the break date. Therefore,
the lease exposure stated is the maximum exposure, ignoring any extension
options.
The lease payments are allocated between principal and finance expense. The
finance expense is charged to the profit or loss over the lease period so as
to produce a constant periodic rate of interest on the remaining balance of
the liability.
The Consolidated Income Statement includes the following amounts relating to
the lease liabilities:
Group
2021 2020
£ m £ m
Interest on lease liability 2.8 1.8
The lease liability excludes those leases which have not yet commenced, but to
which the Group is committed.
Details of leases that the Group is committed to but have not yet commenced
are:
Lease start date Indicative IBR Right-of-use asset Lease liability
% £ m £ m
1 April 2022 3.8 1.4 (1.4)
1 May 2022 3.3 0.9 (0.9)
The Company has no lease liabilities (2020: nil).
20. Financial risk management
In its activities, the Group is exposed to various financial risks:
price/valuation risk, market risk (including exposure to interest rates and
foreign currencies), liquidity risk and credit risk arising from financial
instruments. The Group's senior management is responsible for the creation and
control of an overall risk management policy in the Group.
The Group's balance sheet is made up predominately of investments into private
equity and credit funds, consolidated CLO assets and cash and cash
equivalents. The assets of a private equity fund are controlling or minority
stakes, typically in private companies, and their debt. The assets of credit
funds and the consolidated CLO vehicles are loans to private companies. The
financial risks relating to such investment are inherently different, due to
the nature of the investment as equity or debt and recovery and returns from
capital invested will depend upon the financial health and prospects of each
underlying investee entity. As part of their construction, each fund is
constructed as a diversified portfolio of assets, diversified by the number of
assets, their industry and geography.
Risk management policies are established to identify and analyse the risks
faced by the Group and to set appropriate risk limits and controls. Policies
are reviewed on a regular basis to reflect changes in the market conditions
and the Group's activities. The Group, through its training and management
standards and procedures, aims to develop a disciplined and constructive
control environment in which all employees understand their roles and
obligations.
The Company's balance sheet is made up predominantly of an investment in
subsidiary and cash and cash equivalents.
(a) Price/valuation risk
Price/valuation risk is the uncertainty about the difference between the
reported value and the price that could be obtained on exit or maturity. This
relates to investments in funds, which hold portfolios of private equity and
debt investments, and the investments held by consolidated CLOs.
This uncertainty arises due to the use of unobservable inputs, such as EBITDA,
in the calculation of fair value, the performance and financial health of
portfolio companies, and ultimately - as it relates to investments in private
equity - what a third party may be willing to pay for the business. There is
less uncertainty for investments in debt as the upside is capped to the
maximum of the principal and interest receipts, whereas private equity
investments have greater potential for larger changes in their valuation as
the upside is not capped.
The Group monitors the performance of each investment closely. Portfolio
monitoring is embedded and maintains focus throughout the investment life of
each company. All investments are formally reviewed through dedicated
Portfolio Monitoring Committees. The review process involves a rigorous
assessment of the company financial performance, financial health (including
covenant coverage) and exit prospects.
The Group values all investments in line with the IPEV Guidelines at least
twice a year, and in most cases quarterly. Each investment undergoes the same
detailed valuation process, in accordance with the Group's valuation policies.
Completed valuations are presented and discussed at the relevant Bridgepoint
valuation committee for approval.
The number of unique investments that the Group indirectly invests into
through its investments in private equity and credit funds is numerous, 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
no 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 investments Fair value at 31 December 2021 (£m) Number of unique investments Valuation methodology Description Inputs
Private equity funds 217.9 69 Earnings Where a portfolio company is Earnings multiples are applied to the earnings of each portfolio company to
determine the enterprise value. The most common measure of earnings is EBITDA.
profitable and for which a set of listed companies and precedent transactions Earnings are adjusted for non-recurring items and run-rate adjustments to
are available. This is the most commonly used private equity valuation arrive at maintainable earnings. Earnings are usually obtained from portfolio
methodology. 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; and
- 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 funds share of
the value is calculated by calculating its holding.
At 31 December 2021, 97% of private equity fund investments were valued using
the earnings multiples 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 31
December 2021, there were two listed portfolio companies (3%) which were
priced using the prevailing share price.
Nature of investments Fair value at 31 December 2021 (£m) Number of unique investments Valuation methodology Description Inputs
Credit funds 382.6 194 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 31 December 2021, 8% of the Credit fund assets (excluding CLOs) were
priced using market prices. 99% of the CLO fund assets were priced using
market prices.
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 31 December 2021, 82% of the Credit fund assets were priced using the
amortising to par method.
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 borrower, following which a waterfall approach is of the borrower, the enterprise value of the borrower will typically be
used to determine the value of the loan. determined in accordance with an earnings methodology (as described above),
following which a waterfall approach is used to determine the value of the
loan.
As at 31 December 2021, 4% of the Credit fund assets were priced using
earnings basis.
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 31 December 2021, 6% of the Credit fund assets were priced using other
valuation techniques.
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, 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 only its interest within the CLO and not the gross assets
and liabilities.
Group
2021 2020
£ m £ m
(+/-) (+/-)
Fair value sensitivity:
10% private equity fund investments 21.8 19.1
1% credit fund investments 1.1 0.6
The Company has no significant exposure to price/valuation risk.
(b) Foreign currency risk
Foreign currency ('FX') risk is the risk of losses or other adverse effects
resulting from a change in a foreign exchange rate, or from other unfavourable
changes in relation to a foreign currency. The Group is primarily exposed to
two types of FX risk:
• Transaction risk: The adverse effect that foreign exchange rate fluctuations
can have on a completed transaction prior to settlement. It is the exchange
rate, or currency risk associated specifically with the time delay between
entering into a trade or contract and then settling it. As the majority of the
Group's income is denominated in euro, this means that its income when
recognised in sterling is subject to exposure to FX rate movements over time.
• Translation risk: Is the risk that changes in the rates at which assets,
liabilities, income or costs in foreign currencies are translated into the
reporting currency. The Group holds assets denominated in currencies other
than sterling, the measurement currency of the Group. Consequently, the Group
is exposed to currency risk since the value of investments denominated in
other currencies will fluctuate due to change in exchange rate.
Hedging of EUR management fees
In order to hedge EUR denominated management fee income, the Group has entered
into a series of forward trades and swap agreements to sell EUR and buy GBP at
various dates in the future to reduce the currency exposure of EUR denominated
income to future spot rate volatility. The level of hedging is determined with
reference to the amount of sterling denominated costs and dividends. The level
of hedging provides for almost full coverage in 2022, and reducing in 2023 and
2024, which will be increased and extended as part of the ongoing hedging
strategy over time.
The nominal value of open trades at the year end date to match certain
expected future cash flows is shown in the table below, along with the
aggregate mark-to market of the year end date.
Group
2021 2020
£ m £ m
Nominal value of forward trades in GBP 266.4 197.4
Market-to-market value at year-end 6.8 (4.2)
These hedges are in place to match known future cash flows, and the Group has
decided to use cash flow hedge accounting as allowed and determined under IFRS
9 "Financial instruments". The effective portion of the gain or loss on these
hedging instruments are recognised in the other comprehensive income in cash
flow hedge reserves while any ineffective portion is recognised immediately in
the Income Statement as gain or loss on cash flow hedges within operating
expenses. When the hedge is settled all gains or losses relating to the hedge
are transferred to the Income Statement.
The change in value that has been recognised as ineffective in the Income
Statement, the amount of the effective portion recognised within the cash flow
hedge reserve and amounts released to the Income Statement during the year is
shown in the table below. There was no hedge ineffectiveness.
Group
2021 2020
£ m £ m
Ineffective portion recognised in the Income Statement - -
Effective portion recognised in the Other Comprehensive Income 12.8 (4.8)
Released to the Income Statement on settlement of hedges (1.6) (1.4)
Hedge ineffectiveness could occur if the amount of hedging is more than the
amount of the EUR denominated income and timing differences between receipt of
the income and settlement of the hedge.
Hedging of investments in EUR
The Group's primary exposure to assets and liabilities in foreign currencies
is to investments in funds and carried interest receivable, which are
predominately held in EUR. In order to remove the risk of volatility in the
Group's earnings on the translation of assets at each year end, the Group has
entered into a series of forward trades and swap agreements to sell EUR and
buy GBP at various dates in the future that match the expected date of
receipts from the underlying funds.
The Group's exposure to EUR investments and borrowings at each year end is
summarised below, along with a sensitivity of the impact of a 5% change in the
FX rate. This analysis excludes the CLO assets, which are attributable to
third party investors.
Group
2021 2020
m m
EUR denominated investments (EUR) 347.7 307.4
Borrowings (EUR) - (100.2)
Investment hedges (EUR) (180.0) -
EUR denominated investments, net (EUR) 167.7 207.2
+/- 5% sensitivity (GBP) impact on P&L and net assets 7.0 8.8
The nominal value of open trades at the year end date is shown in the table
below, along with the aggregate mark-to-market.
Group
2021 2020
£ m £ m
Nominal value of forward trades in GBP 159.7 -
Mark-to-market value at year-end 3.1 -
The profit or loss on the revaluation of the hedging instrument is recognised
together with the investment returns in the Income Statement.
A change to FX rates will impact the fair value of derivative contracts,
however an opposing movement will be seen in the hedged item.
The Company has no significant exposure to foreign currency risk.
(c) Interest rate risk
The Group's income and operating cash flows are substantially independent of
changes in market interest rates. The amounts drawn under the Group's
Revolving Credit Agreements, however, bear interest at a floating rate that
could rise and increase the Group's interest cost and debt, although at 31
December 2021 the Group had no outstanding borrowings.
If interest rates were to change by 1%, the Group's finance expense applied on
the borrowings at year-end would have increased/(decreased) by the amounts set
out in the table below.
Group
2021 2020
£ m £ m
Increase or decrease of 1% - 0.5
(d) Credit risk
Credit risk is the risk that a counterparty is be unable to meet their
contractual obligations in full, when due. Potential areas of credit risk
consist of cash and cash equivalents, including deposits with banks and
financial institutions, short-term receivables and derivative financial
instruments. The Company and the Group have not experienced any significant
defaults in prior periods.
Group exposure
The Group's exposure to credit risk is influenced mainly by the individual
characteristics of each counterparty. Expected credit losses are calculated on
all of the Group's financial assets that are measured at amortised cost.
Factors considered in determining whether a default has taken place include
how many days past the due date a payment is, deterioration in the credit
quality of a counterparty, and knowledge of specific events that could
influence a counterparty's ability to pay.
IFRS 9 "Financial instruments" requires a three-stage model to be used to
calculate expected credit losses, which requires financial assets to be
assessed as:
• Performing (stage 1) - Financial assets where there has been no significant
increase in credit risk since original recognition
• Under-performing (stage 2) - Financial assets where there has been a
significant increase in credit risk since initial recognition, but no default
• Non-performing (stage 3) - Financial assets that are in default
The maximum exposure to credit risk at the reporting date of these financial
assets is their carrying amount. Expected credit losses are not expected to be
material and there are no financial assets that are impaired.
Cash and cash equivalents
The Group limits its exposure in relation to cash balances and derivative
financial instruments by only dealing with well-established financial
institutions of high-quality credit standing. At each period end, the Group's
cash was held with banks that were investment grade credit quality (BBB or
higher).
Investments in CLOs
At 31 December 2021 the Group fully consolidated CLO 1, which was launched in
November 2020. The Group's interest in CLO 1 comprises an interest in
subordinated notes which incur the first loss if there is any default within
the portfolio of assets by an individual borrower. Whilst the Group has
entered into a sale and repurchase agreement for CLO 2 and 3, it remains
contractually exposed to the performance of CLOs, however as the interest is
held vertically across all notes of the CLO the holdings are more diversified
than the Group's interest in CLO 1. Under the sale and repurchase agreement,
the Group is subject to credit risk with the counterparty to £28.5m, however
is holding cash collateral of £28.4m, reducing the risk.
The Group is required to hold a 5% interest in such vehicles after they are
launched under risk retention rules. Each CLO portfolio typically invests in
70-100 individual loans issued by private equity borrowers. The portfolios are
highly diversified by geography, industry and sponsor. The Group's maximum
exposure to credit risk is the carrying amount of the consolidated assets.
However, the Group's net exposure to loss associated with its interest in the
CLOs is limited to the carrying amounts of the notes held by the Group, which
at 31 December 2021 was £50.3m (2020: £19.5m).
Investments in private equity and credit funds
The Group's investments in private equity and credit funds indirectly expose
it to credit risk via loans to investee entities. The maximum exposure to loss
associated to funds is limited to the carrying value at 31 December 2021 which
was £266.4m (2020: £233.5m).
The Group applies the simplified approach to calculate expected credit losses
for trade and other receivables. Under this approach, instruments are not
categorised into three stages and expected credit losses are calculated based
on the life of the instrument.
Trade and other receivables
Trade and other receivables are primarily amounts due from funds or amounts
due from portfolio companies, which are collected by the Group, for the
benefit of the fund. The funds are managed by the Group on behalf of
investors, who have made commitments to the funds. Therefore, trade and other
receivables with the funds are collateralised against unfunded investor
commitments. These commitments can be drawn at any time. The Group therefore
considers the probability of default to be remote.
As a lessor the Group has exposure to payments by lessees. The Group considers
there to be a low risk of default due to the quality of the counterparty.
Carried interest receivable
The Group's carried interest receivable represents income expected from CIPs.
The Group considers there to be no risk of default on these receivables on the
basis that these amounts are due from the funds for reasons set out above
(e.g. investor commitments).
Company exposure
Potential areas of credit risk for the Company consist of cash and cash
equivalents, including deposits with banks and financial institutions and
short-term receivables. The maximum exposure to credit risk the year end of
these financial assets is their carrying value. The Company limits its
exposure to cash balances by only dealing with well established financial
institutions of high quality credit standing.
(e) Liquidity risk
Liquidity risk is the risk that the Group or Company will encounter difficulty
in meeting the obligations associated with its financial liabilities that are
settled by delivering cash or another financial asset. The Group's approach to
managing liquidity is to ensure, as far as possible, that it will always have
sufficient liquidity to meet its liabilities when due, under both normal and
stressed conditions, without incurring unacceptable losses or risking damage
to the Group's reputation.
Liquidity outlook is monitored at least monthly by management and regularly
reviewed by the board of directors.
The timing of the Group's management fee receipts and operating expenditure
are predictable. The timing, amount and profits from the Group's investments
into and divestments from the Funds are inherently less predictable, however a
reasonable period of notice is given to all investors, including the Group,
ahead of drawing of funds.
The Group's policy is to maintain sufficient amounts of cash and cash
equivalents to meet its commitments at a given date. The Group has the use of
a Revolving Credit Facility to assist in managing liquidity. Due to the
long-term nature of the Group's assets, the Group seeks to ensure that the
maturity of its debt instruments is matched to fee cash generated from the
business.
The Company has sufficient cash reserves to assist in managing liquidity. The
risk is not considered to be material as the majority of the balances are held
with the Group companies.
The tables below summarise the Group and Company's financial liabilities by
the time frame they are contractually due to be settled, undiscounted and
including interest payable. This also excludes liabilities which are not
financial liabilities (for example, deferred income).
Group
As at 31 December 2021 Due within 1 year Due between 1 Due within 2 Due more than 5 years Total
£ m and 2 years and 5 years £ m £ m
£ m £ m
Borrowings - - - - -
Other financial liabilities 18.8 - - 28.1 46.9
Derivative financial instruments - - - - -
Trade and other payables 39.0 - - - 39.0
Deferred contingent consideration - 33.2 - - 33.2
Lease liabilities 7.2 8.9 38.8 47.1 102.0
CLO liabilities 1.5 - - 241.2 242.9
CLO purchases awaiting settlement 35.8 - - - 35.8
102.3 42.1 38.8 316.6 499.8
Group
As at 31 December 2020 Due within Due between 1 Due within 2 Due more than 5 years Total
1 year
and 2 years and 5 years £ m £ m
£ m
£ m £ m
Borrowings 99.7 - - - 99.7
Other financial liabilities 6.2 - - - 6.2
Derivative financial instruments 1.8 1.6 1.5 - 4.9
Trade and other payables 35.6 - - - 35.6
Deferred contingent consideration - 33.2 - - 33.2
Lease liabilities 7.7 7.4 20.0 13.1 48.2
CLO liabilities 17.9 - - 256.6 274.5
CLO purchases awaiting settlement 93.2 - - - 93.2
262.1 42.2 21.5 269.7 595.5
Company
As at 31 December 2021 Due within 1 year Due between 1 Due within 2 Due more than 5 years Total
£ m and 2 years and 5 years £ m £ m
£ m £ m
Trade and other payables 23.1 - - - 23.1
23.1 - - - 23.1
Company
As at 31 December 2020 Due within 1 year Due between 1 Due within 2 Due more than 5 years Total
£ m and 2 years and 5 years £ m £ m
£ m £ m
Trade and other payables 0.9 - - - 0.9
0.9 - - - 0.9
(f) 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).
Financial assets presented in the statement of financial position as
investments in funds through profit or loss use inputs based on unobservable
market data and therefore classified as level 3 in the fair value hierarchy.
Further details of the approach to the valuation of investments are set out
within note 3. There have not been any transfers between levels in the fair
value hierarchy during the year.
Derivatives used for hedging, which are fair valued, are classified as Level 1
fair values as the inputs are observable.
Group
2021 2020
£ m
£ m
Financial assets at fair value through profit or loss:
Level 1 - -
Level 2 286.8 272.5
Level 3 313.7 235.9
Total 600.5 508.4
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.
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:
Group
2021 2020
£ m
£ m
Level 3 financial assets at fair value through profit or loss:
Opening balance 235.9 206.1
Additions 92.7 49.6
Change in fair value 65.7 20.1
Foreign exchange movements (14.7) 11.3
Receipts (65.9) (51.2)
Transfers (to)/from Level 1 or 2 - -
Closing balance 313.7 235.9
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 20 (a).
Group
2021 2020
£ m
£ m
Financial liabilities at fair value through profit or loss:
Level 1 - -
Level 2 213.2 236.7
Level 3 78.8 75.6
Total 292.0 312.3
The investment grade debt liabilities of consolidated CLOs are marked using
broker quotes based on market-related discount spreads and are therefore
classified as level 2 financial liabilities under IFRS 13.
Non-investment grade and subordinated debt liabilities of the consolidated
CLOs are valued based upon broker prices, which use discounted cash flow
analyses with unobservable market data inputs, such as 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 a
payable to related party investors in Opal Investments LP and amounts payable
to related party investors in intermediate fund holding entities. The
valuation of these liabilities is based on unobservable market data and
therefore classified as level 3. There have been no transfers between levels
in the fair value hierarchy during the year (2020: nil).
Group
2021 2020
£ m
£ m
Level 3 financial liabilities at fair value through profit or loss:
Deferred contingent consideration 30.3 31.6
CLO liabilities 29.7 37.8
Other financial liabilities 18.8 6.2
Total 78.8 75.6
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 on the basis that the
movement between 31 December 2021 and 31 December 2020 relates to foreign
exchange movements and for other financial liabilities refer to note 18 (d).
Group
2021 2020
£ m
£ m
Movement in CLO liabilities at fair value through profit or loss which are
level 3:
Opening balance 37.8 -
On acquisition - 24.5
Repayment (5.5) (18.7)
Drawn - 31.8
Foreign exchange movements (2.2) (0.2)
Change in fair value (0.4) 0.4
Transfers (to)/from Level 1 or 2 - -
Closing balance 29.7 37.8
A change in the value of the CLO liabilities is included in the table below. A
sensitivity analysis for the deferred contingent consideration is included
within note 18 (b).
Group
2021 2020
£ m
£ m
Increase or decrease of 1% 0.3 0.4
The Company does not hold any liabilities at fair value.
21. Capital management
The primary objective of the Group's capital management is to ensure that the
Group and its subsidiaries have sufficient capital both now and, in the
future, having considered risks in the business and mitigants to those risks,
while managing returns to the Group's shareholders. The Group also manages its
capital position to ensure compliance with capital requirements imposed by the
Financial Conduct Authority ("FCA") and other regulatory authorities on
individual regulated entities.
The Investment Firms Prudential Regime ("IFPR") for MiFID investment firms
came into effect from 1 January 2022. This regime applies to MiFID investment
firms, Collective Portfolio Management Investment Firms and regulated and
unregulated holding companies of groups that contain one or more of the
aforementioned firms. From 2022, the Group and certain regulated subsidiaries
will be required to report to the FCA on own funds, the own funds requirement
and a basic liquid asset requirement.
The capital structure comprises cash and cash equivalents, borrowings and the
capital and reserves of the Company, comprising share capital, share premium,
capital contributions, other reserves and retained earnings as set out below.
2021 2020
£ m
£ m
Cash and cash equivalents (for use within the Group) 323.1 42.3
Loans and borrowings - (99.7)
Net cash 323.1 (57.4)
Share capital 0.1 240.9
Share premium 289.8 0.5
Capital redemption reserve - 24.6
Share-based payment reserve 3.2 -
Cash flow hedge reserve 7.5 (2.2)
Net exchange differences reserve 3.1 5.3
Retained earnings 412.6 39.7
Equity attributable to equity holders 716.3 308.8
The Group's banking facilities are subject to financial covenants. The
Bridgepoint Advisers Holdings Revolving Credit Agreement is subject to a ratio
of adjusted EBITDA to net finance charges and ratio of total net debt to
adjusted EBITDA on a rolling 12 month period.
During the year the Group was fully compliant with regulatory capital
requirements and banking covenants.
22. Deferred tax
Group
2021 2020
£ m
£ m
Deferred tax assets 47.8 26.0
Deferred tax liabilities (67.5) (41.9)
Total (19.7) (15.9)
Group
2021 2020
£ m
£ m
Deferred tax assets
Opening balance 26.0 24.4
(Charge)/credit to other comprehensive income (0.8) 0.8
Credit to income statement 22.6 0.8
Closing balance 47.8 26.0
Analysed as:
Other timing differences 22.8 9.1
Management fee hedges 0.8
Losses carried forward 25.0 16.1
47.8 26.0
Group
2021 2020
£ m
£ m
Deferred tax liabilities
Opening balance (41.9) (38.3)
(Charge)/credit to other comprehensive income (1.3) 0.1
Charge to income statement (24.3) (3.7)
Closing balance (67.5) (41.9)
Analysed as:
Management fee income and investments (42.8) (31.3)
Capital allowance (2.5) -
Other timing differences (20.9) (10.6)
Management fee hedges (1.3) -
(67.5) (41.9)
Deferred tax liabilities primarily represent a future tax on the Group's fee
income and a timing difference arising on the remeasurement of the fair value
of investments. They unwind as fees become taxable and investments are
realised.
Deferred tax assets primarily relate to tax losses carried forward, to the
extent that they can be utilised under relevant tax legislation.
The deferred tax asset and liabilities also include deferred tax on
right-of-use assets and lease liabilities which will unwind over the period of
the lease.
The Company had a deferred tax asset of £1.1m (2020: nil) which relates to
tax losses carried forward. The deferred tax has been measured using the
applicable tax rate expected at the point at which the income or cost will
become taxable.
23. Equity
(a) Share capital and premium
Allotted, called up and fully paid shares
2021 2020
No. £ No £
Ordinary of £0.00005 each 823,268,774 41,163 - -
Deferred of £81 each 500 40,500 - -
Deferred of £1 each 1 1 - -
Deferred of £0.01 each 1 0.01 - -
A1 of £81 each - - 2,280,000 184,680,000
A2 of £0.01 each - - 552,000 5,520
A4 of £0.01 each - - 235,540 2,335
C1 of £170 each - - 59,460 10,108,200
C2 of £70 each - - 105,000 7,350,000
C3 of £85 each - - 95,000 8,075,000
C4 of £165 each - - 60,000 9,900,000
C5 of £150 each - - 65,000 9,750,000
C6 of £275 each - - 40,000 11,000,000
YY of £1 each - - 1 1
823,269,276 81,664.01 3,492,001 240,871,076
The shares included for 2020 in the table above were in issue for the full
year with no new shares issued or shares cancelled in the period.
In June 2021, the Company cancelled 201,499 A1 shares held by Atlantic SAV
Limited, cancelled the capital redemption reserve of the Company, reduce the
nominal value of the A1, C1, C2, C3, C4, C5 and C6 shares to £0.01 per share,
redesignate 500 A1 shares held by Atlantic SAV 2 Limited as deferred shares,
redesignate all outstanding A4, C1, C2, C3, C4, C5 and C6 shares as A1 shares,
and cancelled 98,000 A1 shares and 72,500 A2 shares held by Atlantic SAV 2
Limited.
In June 2021, the Company issued 612,000 A3 ordinary shares of £0.01 nominal
value for consideration of £1.50 per share.
In July 2021, the Company issued 18,500 A3 shares of £0.01 each to the EBT
for consideration of £0.01 per share, redesignated the YY share into a
deferred share of £1.00 and sub-divided the classes of ordinary shares into
A1, A2 and A3 ordinary shares and deferred shares. The resulting A1, A2 and A3
ordinary shares were redesignated as ordinary shares. In addition, following
the redesignation, an amount of £8,571 within the share premium account was
capitalised and appropriated as capital to the holdings of ordinary shares as
part of a bonus share issue of 171,428,571 fully paid-up ordinary shares at a
rate of three shares for every seven existing ordinary shares held. The
deferred shares were resolved to be gifted to the Company for no consideration
and cancelled through the capital redemption reserve.
In July 2021, as part of the Admission to the London Stock Exchange, the
Company issued 85,714,286 new shares with a nominal value of £0.00005 for
consideration of £3.50 each.
At the same time, Dyal Capital Partners IV (C) LP exchanged shares in
Bridgepoint Group Holdings Limited (formerly Bridgepoint Group Limited) for
163,263,206 shares in the Company. The transaction qualified for merger relief
under s.612 of the Companies Act 2006 and therefore the shares issued were
recognised at the nominal value of £0.00005 per share.
In addition, 1,963,571 ordinary shares were issued to certain executives in
leadership positions and non-executive directors with a nominal value of
£0.00005 for consideration of £3.50 each and 870,090 ordinary shares were
awarded to employees as part of the IPO Share Award Plan for consideration
equal to the nominal value of £0.00005 per share and a further 29,053 held in
the Bridgepoint Group plc Employee Benefit Trust.
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.
(b) Own shares
The Company held 853,624 ordinary shares and 501 deferred shares (2020:
326,500 A1 shares; 55,000 A2 shares) within retained earnings as at 31
December 2021 at a cost of £nil (2020: £0.3m).
(c) Cash flow hedge reserve
Other reserves consist of the cash flow hedge reserve and the costs of hedging
reserve. The cash flow hedge reserve is used to recognise the effective
portion of gains or losses on foreign exchange forward contracts that are
designated and qualify as cash flow hedges, as described in note 20 (b)
amounts are subsequently either
transferred to deferred income or reclassified to the Income Statement as
appropriate.
(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.
(f) Non-controlling interests
At 31 December 2020, non-controlling interests included Dyal Capital Partners
IV (C) LP's interest in Bridgepoint Group Holdings Limited, a majority owned
direct subsidiary of the Company. As part of the Company's Admission to the
London Stock Exchange, its interest was novated to an interest in the shares
of the Company, as set out above. As a result, the non-controlling interest
previously recognised has been reassigned to equity holders.
2021 2020
£ m
£ m
Non-controlling interest in Bridgepoint Group Holdings Limited - 81.7
Total - 81.7
24. Dividends
A dividend of £30m was paid to eligible A1 and A2 ordinary shareholders on
the day immediately before Admission to the London Stock Exchange, which
equates to £9.61 per share.
The Company paid a dividend of £3.3m in July 2020 and £3.3m in December 2020
to qualifying shareholders, which equates to £2.50 per share.
2021 2020
Ordinary dividends paid: £m Pence per share £m Pence per
share
Interim 30.0 961.00 6.6 2.50
Proposed final dividend 30.0 3.64 - -
25. Cash flow information
(a) Cash generated from operations
Group Company
2021 2020 2021 2020
£ m £ m £ m £ m
Profit/(loss) before tax 62.6 48.5 (25.8) 12.9
Adjustments for:
Exceptional expenses 21.6 7.4 21.2 -
Share-based payments 2.9 - - -
Profit on disposal of right-of-use asset (0.6) - - -
Depreciation and amortisation expense 15.0 8.8 - -
Net finance expense 7.7 1.4 - (15.5)
Carried interest (14.3) (12.9) - -
Fair value remeasurement of investments (56.9) (29.4) - -
Net exchange gains (1.1) (0.6) - -
Increase in trade and other receivables (10.3) (14.2) (108.5) -
(Decrease)/increase in trade and other payables (2.1) 23.4 23.6 0.1
Cash generated from operations 24.5 32.4 (89.5) (2.5)
(b) Cash outflows from leases
Group
2021 2020
£ m
£ m
Financing 9.6 7.7
Operating 0.2 0.2
Cash generated from leases 9.8 7.9
The Company has no leases (2020: nil).
(c) Reconciliation of liabilities arising from financial activities
Group
Non-cash changes
1 January 2021 Cash flows Additions Disposals Foreign exchange movements 31 December 2021
£ m
£ m
£ m
£ m
£ m
£ m
Borrowings 99.7 (97.7) - - (2.0) -
Lease liabilities 42.0 (9.6) 67.9 (15.5) - 84.8
Total 141.7 (107.3) 67.9 (15.5) (2.0) 84.8
Group
Non-cash changes
1 January 2020 Cash flows Additions Disposals Foreign exchange movements 31 December 2020
£ m
£ m
£ m
£ m
£ m
£ m
Borrowings 42.3 56.8 - - 0.6 99.7
Lease liabilities 48.2 (7.7) 1.8 (0.3) - 42.0
Total 90.5 49.1 1.8 (0.3) 0.6 141.7
The Company has no borrowings or lease liabilities (2020: nil).
26. Related party transactions
(a) Key management compensation
The key management of the Group for the period up to the Admission to the
London Stock Exchange was considered to be the directors of Bridgepoint
Advisers Group Limited, a subsidiary company, from admission onwards, the
executive directors are considered to represent the key management of the
Group. The compensation paid or payable to the key management is set out in
the table below and is presented pro rata for 2021.
2021 2020
£ m
£ m
Salary, bonus and other benefits 5.0 8.0
Total 5.0 8.0
Further information on the remuneration of the directors can be found in the
Remuneration Report.
(b) Directors remuneration
The directors of the Company since their appointment or the point of their
resignation were remunerated as set out below. The aggregate value of
remuneration expenses in relation to pensions and share based payments are
less than £0.1m.
2021 2020
£ m
£ m
Salary, bonus and other benefits 6.6 3.9
Total 6.6 3.9
(c) Transactions with directors
On the Company's Admission to the London Stock Exchange, 275,000 shares were
issued to Archie Norman, 94,286 shares to Angeles Garcia-Poveda, and 75,714
shares to each of Carolyn McCall and Tim Score for consideration of £3.50 per
share.
On 7 June 2021, the directors of the Company, Adam Jones and William Jackson,
were granted 10,000 and 25,000 A3 shares respectively for consideration of
£1.50 per share.
Jonathan Raoul Hughes, a director of the Company until 25 June 2021, received
a loan from a subsidiary company that totalled £0.6m at 31 December 2019. The
loan was made on arms' length terms. It was repaid in April 2020.
(d) Carried interest
Fund investors expect certain members of the Group's senior executive
management to invest in carried interest and co-investment in the Group's
third-party funds to demonstrate alignment of interest, and as such the
directors of the Company have made significant personal commitments from their
own resources to some of these third-party funds. The funds and CIPs (which
are entitled to the carry) are not consolidated by the Group but are related
parties. The returns (in the form of investment income and capital
appreciation) are fully dependent on the performance of the relevant fund and
its underlying investments.
The directors of the Company at 31 December 2021 have committed amounts from
their personal resources across multiple funds totalling £11.8m (the
directors at 31 December 2020: £18.9m).
(e) Transactions with funds
The Bridgepoint funds are related parties of the Group. Amounts received as
fees from and reimbursement of expenses paid on behalf of the funds during the
year are shown in the table below, along with the amounts receivable at year
end.
Group
2021 2020
£ m
£ m
Amounts received from funds 216.0 167.3
Amounts receivable from funds 39.6 27.7
27. Parent and ultimate controlling party
The Company is owned by a number of individual shareholders and companies,
none of whom own more than 20% of the issued share capital of the Company.
Accordingly, there is no parent entity nor ultimate controlling party.
28. Subsidiaries
The Group consists of the Company and entities controlled by the Company. This
note sets out those subsidiary entities owned by the Company and that are
consolidated, those which are not, and those structured entities which are
consolidated in the financial information.
Company
2021 2020
£ m
£ m
Balance as at 1 January 448.0 448.0
Increase in investment in subsidiary 3.2 -
At 31 December 451.2 448.0
As part of the Company's Admission to the London Stock Exchange, the
non-controlling interests in Bridgepoint Group Holdings Limited novated to an
interest in the shares of the Company, increasing the Company's holding.
The Group holds a direct interest in Bridgepoint Group Holdings Limited as at
31 December 2021 representing 100% (2020: 77.8%). Its registered office is
referenced in the table below the list of subsidiaries.
(a) List of subsidiaries
Name of subsidiary Ref Country of incorporation Principal activity Share class Company's proportion of ownership interest
Bridgepoint Group Holdings Limited 1 UK Holding company Ordinary shares 100%
The table below shows details of subsidiaries owned directly or indirectly by
Bridgepoint Group Holdings Limited as at 31 December 2021 and its ownership
interest in each entity. The registered office of each subsidiary is
referenced to a table below the list of subsidiaries.
Name of subsidiary Ref Country of incorporation Principal activity Share class Company's proportion of ownership interest
101 Investments (GP) Limited 1 UK General Partner Ordinary shares 100%
101 Investments Nominees Limited 1 UK Nominee company Ordinary shares 100%
Atlantic GP 1 Limited 1 UK General Partner Ordinary shares 100%
Atlantic GP 2 Limited 1 UK General Partner Ordinary shares 100%
Atlantic GP LLP 2 UK General Partner N/A -
BBTPS (GP) Limited 1 UK General Partner Ordinary shares 100%
BBTPS FP GP Limited 2 UK General Partner Ordinary shares 100%
BBTPS Nominees Limited 1 UK Nominee company Ordinary shares 100%
BC II FP Limited 1 UK Dormant entity Ordinary shares 100%
BC II FP SGP Limited 2 UK Dormant entity Ordinary shares 100%
BC GP 1 Limited 1 UK General Partner Ordinary shares 100%
BC GP 2 Limited 1 UK General Partner Ordinary shares 100%
BC II GP LLP 2 UK General Partner N/A -
BC II GP LP 2 UK General Partner N/A -
BC II MLP Limited 1 UK Managing Limited Partner Ordinary shares 100%
BC MLP UK Limited 1 UK Managing Limited Partner Ordinary shares 100%
BC SMA Carry GP S.à r.l. 3 Luxembourg General Partner Ordinary shares 100%
BC SMA II Carry GP LLP 2 UK General Partner N/A -
BC SMA II FP Limited 2 UK Founder Partner Ordinary shares 100%
BCLO Credit Investments I S.à r.l. 3 Luxembourg CLO management company Ordinary shares 100%
BCO II Carry GP LLP 2 UK General Partner N/A -
BCO III Carry GP LLP 2 UK General Partner N/A -
BCO IV Carry GP LLP 2 UK General Partner N/A -
BCO IV FP Limited 1 UK Founder Partner Ordinary shares 100%
BDC GP LP 2 UK General Partner N/A -
BDC II (SGP) Limited 2 UK General Partner Ordinary shares 100%
BDC II FP GP Limited 2 UK General Partner Ordinary shares 100%
BDC II GP LP 2 UK General Partner N/A -
BDC II Limited 1 UK Investment holding company Ordinary shares 100%
BDC II Nominees Limited 1 UK Nominee company Ordinary shares 100%
BDC III GP 1 Limited 1 UK General Partner Ordinary shares 100%
BDC III GP 2 Limited 1 UK General Partner Ordinary shares 100%
BDC III GP LLP 1 UK General Partner N/A -
BDC III Limited 1 UK Dormant entity Ordinary shares 100%
BDC III Nominees Limited 1 UK Nominee company Ordinary shares 100%
BDC III SFP GP Limited 2 UK General Partner Ordinary shares 100%
BDC IV Nominees Limited 1 UK Nominee company Ordinary shares 100%
BDC IV Limited 1 UK Dormant entity Ordinary shares 100%
BDC IV GP 1 Limited 1 UK General Partner Ordinary shares 100%
BDC IV GP 2 Limited 1 UK General Partner Ordinary shares 100%
BDC IV MLP Limited 1 UK Managing Limited Partner Ordinary shares 100%
BDC IV GP LLP 2 UK General Partner N/A -
BDC IV GP LP 2 UK General Partner N/A -
BDC IV SFP GP Limited 2 UK General Partner Ordinary shares 100%
BDC Special 1 Limited 2 UK Dormant entity Ordinary shares 100%
BDC Special 2 Limited 2 UK Dormant entity Ordinary shares 100%
BDC Special GP LLP 2 UK Dormant entity N/A -
BDCP II (Nominees) Limited 1 UK Nominee company Ordinary shares 100%
BDCP II GP 1 Limited 1 UK General Partner Ordinary shares 100%
BDCP II GP 2 Limited 1 UK General Partner Ordinary shares 100%
BDCP II GP LLP 2 UK General Partner N/A -
BDCP II GP LP 2 UK General Partner N/A -
BDCP II Limited 1 UK Investment holding company Ordinary shares 100%
BDCP II MLP Limited 1 UK Managing Limited Partner Ordinary shares 100%
BDCP II SFP GP Limited 2 UK General Partner Ordinary shares 100%
BDL I Carry GP LLP 2 UK General Partner N/A -
BDL II Carry GP S.à r.l. 3 Luxembourg General Partner Ordinary shares 100%
BDL III Carry GP LLP 2 UK General Partner N/A -
BDL III FP Limited 1 UK Founder Partner Ordinary shares 100%
BE Advisers S.à r.L 3 Luxembourg Dormant entity Ordinary shares 100%
BE II Investments (GP) Limited 1 UK General Partner Ordinary shares 100%
BEP IV (Nominees) Limited 1 UK Nominee company Ordinary shares 100%
BEP IV FP Limited 1 UK Founder Partner Ordinary shares 100%
BEP IV FP SGP Limited 2 UK General Partner Ordinary shares 100%
BEP IV GP 2 Limited 1 UK General Partner Ordinary shares 100%
BEP IV GP LLP 2 UK General Partner N/A -
BEP IV GP LP 2 UK General Partner N/A -
BEP IV MLP Limited 1 UK Managing Limited Partner Ordinary shares 100%
BE V Germany GP Co Limited 4 Guernsey General Partner Ordinary shares 100%
BEV FP Limited 1 UK Founder Partner Ordinary shares 100%
BEV GP LLP 1 UK General Partner N/A -
BEV FP SGP Limited 2 UK General Partner Ordinary shares 100%
BEV GP 2 Limited 1 UK General Partner Ordinary shares 100%
BEV GPC Limited 1 UK General Partner Ordinary shares 100%
BEV MLP Limited 1 UK Managing Limited Partner Ordinary shares 100%
BEV Nominees Limited 1 UK Nominee company Ordinary shares 100%
BEV Nominees II Limited 1 UK Nominee company Ordinary shares 100%
BE VI FP Limited 1 UK Dormant entity Ordinary shares 100%
BE VI FP SGP Limited 2 UK Dormant entity Ordinary shares 100%
BE VI GP 2 Limited 1 UK Dormant entity Ordinary shares 100%
BE VI GP LLP 2 UK Dormant entity N/A -
BE VI GP LP 2 UK Dormant entity N/A -
BE VI Limited 4 Guernsey Dormant entity Ordinary shares 100%
BE VI MLP Limited 1 UK Managing Limited Partner Ordinary shares 100%
BE VI Nominees Limited 1 UK Nominee company Ordinary shares 100%
BG Holdco 1 Limited 4 Guernsey Dormant entity Ordinary shares 100%
BG II GP LLP 1 UK General Partner N/A -
Bridgepoint AB 5 Sweden Private equity advisory company Ordinary shares 100%
Bridgepoint Advantage Limited 1 UK Dormant entity Ordinary shares 100%
Bridgepoint Advantage MLP Limited 1 UK Managing Limited Partner Ordinary shares 100%
Bridgepoint Advantage FP Limited 1 UK Dormant entity Ordinary shares 100%
Bridgepoint Advantage FP SGP Limited 2 UK General Partner Ordinary shares 100%
Bridgepoint Advantage GP 2 Limited 1 UK General Partner Ordinary shares 100%
Bridgepoint Advantage GP LLP 2 UK General Partner N/A -
Bridgepoint Advantage GP LP 2 UK General Partner N/A -
Bridgepoint Advantage Nominees Limited 1 UK Nominee company Ordinary shares 100%
Bridgepoint Advisers Europe Limited 1 UK Private equity advisory company Ordinary shares 100%
Bridgepoint Advisers Group Limited 1 UK Investment holding company Ordinary shares 100%
Bridgepoint Advisers Holdings 1 UK Investment holding company Ordinary shares 100%
Bridgepoint Advisers II Limited 1 UK Private equity management company Ordinary shares 100%
Bridgepoint Advisers Limited 1 UK Private equity management company Ordinary shares 100%
Bridgepoint Advisers UK Limited 1 UK Private equity management company Ordinary shares 100%
Bridgepoint Capital (Doolittle) Limited 1 UK Dormant entity Ordinary shares 100%
Bridgepoint Capital (GP) Limited 1 UK General Partner Ordinary shares 100%
Bridgepoint Capital (Nominees) Limited 1 UK Nominee company Ordinary shares 100%
Bridgepoint Capital (Nominees) 2 Limited 1 UK Nominee company Ordinary shares 100%
Bridgepoint Capital Delaware GP LP 6 United States of America General Partner N/A -
Bridgepoint Capital Directorships Limited 1 UK Dormant entity Ordinary shares 100%
Bridgepoint Capital General Partner LP 2 UK General Partner N/A -
Bridgepoint Capital General Partner II LP 2 UK General Partner N/A -
Bridgepoint Capital Group Limited Employee Benefit Trust 1 UK Employee Benefit Trust N/A -
Bridgepoint Capital Scottish GP Limited 2 UK General Partner Ordinary shares 100%
Bridgepoint Capital Scottish GP II Limited 2 UK General Partner Ordinary shares 100%
Bridgepoint Capital Partners Limited 1 UK Dormant entity Ordinary shares 100%
Bridgepoint Capital Trustee Limited 1 UK Dormant entity Ordinary shares 100%
Bridgepoint Capital Verwaltungs Gmbh 7 Germany General Partner Ordinary shares 100%
Bridgepoint Credit AD GP S.à r.l. 3 Luxembourg General Partner Ordinary shares 100%
Bridgepoint Credit Advisers Limited 1 UK Credit fund advisory company Ordinary shares 100%
Bridgepoint Credit Advisers UK Limited 1 UK Credit fund advisory company Ordinary shares 100%
Bridgepoint Credit BOCPIF GP S.à r.l. 3 Luxembourg General Partner Ordinary shares 100%
Bridgepoint Credit Carry LP 2 UK Investment holding company N/A -
Bridgepoint Credit Carry GP LLP 2 UK General Partner N/A -
Bridgepoint Credit Co-Invest GP S.à r.l. 3 Luxembourg General Partner Ordinary shares 100%
Bridgepoint Credit Empire GP S.à r.l. 3 Luxembourg General Partner Ordinary shares 100%
Bridgepoint Credit Europe Limited 1 UK Credit fund advisory company Ordinary shares 100%
Bridgepoint Credit France SAS 8 France Credit fund management company Ordinary shares 100%
Bridgepoint Credit GP Verwaltungs GmbH 7 Germany General Partner Ordinary shares 100%
Bridgepoint Credit Holdings Limited 1 UK Investment holding company Ordinary shares 100%
Bridgepoint Credit Limited 1 UK Credit fund management company Ordinary shares 100%
Bridgepoint Credit Management Limited* 1 UK Credit fund management company Ordinary shares 49%
Bridgepoint Credit MSPD GP S.à r.l 3 Luxembourg General Partner Ordinary shares 100%
Bridgepoint Credit MPD GP S.à r.l. 3 Luxembourg General Partner Ordinary shares 100%
Bridgepoint Credit Nominees Limited 1 UK Nominee company Ordinary shares 100%
Bridgepoint Credit Opportunities II GP GmbH & Co. KG 7 Germany General Partner Ordinary shares 100%
Bridgepoint Credit Opportunities II GP Limited 1 UK General Partner Ordinary shares 100%
Bridgepoint Credit Opportunities II GP LP 2 UK General Partner N/A -
Bridgepoint Credit Opportunities III GP Limited 1 UK General Partner Ordinary shares 100%
Bridgepoint Credit Opportunities III GP LP 2 UK General Partner N/A -
Bridgepoint Credit Opportunities IV GP S.à r.l. 3 Luxembourg General Partner Ordinary shares 100%
Bridgepoint Credit Opportunities SICAV GP 3 Luxembourg General Partner Ordinary shares 100%
S.à r.l.
Bridgepoint Credit Partners Limited 1 UK Dormant entity Ordinary shares 100%
Bridgepoint Credit PPF GP S.à r.l. 3 Luxembourg General Partner Ordinary shares 100%
Bridgepoint Credit Services S.à r.l. 3 Luxembourg Credit fund advisory company Ordinary shares 100%
Bridgepoint Credit UK Limited 1 UK Credit fund advisory company Ordinary shares 100%
Bridgepoint Debt Funding Limited 1 UK Dormant entity Ordinary shares 100%
Bridgepoint Debt Management Limited 1 UK Dormant entity Ordinary shares 100%
Bridgepoint Debt Managers Limited 1 UK Dormant entity Ordinary shares 100%
Bridgepoint Development Capital Limited 1 UK Dormant entity Ordinary shares 100%
Bridgepoint Direct Lending II GP S.à r.l. 3 Luxembourg General Partner Ordinary shares 100%
Bridgepoint Direct Lending III GP S.à r.l. 3 Luxembourg General Partner Ordinary shares 100%
Bridgepoint Europe (SGP) Limited 2 UK General Partner Ordinary shares 100%
Bridgepoint Europe III FP (GP) Limited 2 UK General Partner Ordinary shares 100%
Bridgepoint Europe III (GP) Limited 2 UK General Partner Ordinary shares 100%
Bridgepoint Europe III GP LP 2 UK General Partner N/A -
Bridgepoint Europe IV (Nominees) 1 Limited 1 UK Nominee entity Ordinary shares 100%
Bridgepoint Europe IV (Nominees) Limited 1 UK Nominee entity Ordinary shares 100%
Bridgepoint Europe IV FP (GP) Limited 2 UK General Partner Ordinary shares 100%
Bridgepoint Europe IV General Partner LP 2 UK General Partner N/A -
Bridgepoint Europe IV General Partner 'F' LP 2 UK General Partner N/A -
Bridgepoint Europe Limited 1 UK Limited Partner Ordinary shares 100%
Bridgepoint Europe Managerial LLP 1 UK Limited Partner N/A -
Bridgepoint Europe VII (GP) S.à r.l. 3 Luxemburg General Partner Ordinary shares 100%
Bridgepoint Europe VII FP Limited 1 UK Founder Partner Ordinary shares 100%
Bridgepoint Europe VII GP 2 Limited 1 UK General Partner Ordinary shares 100%
Bridgepoint Europe VII GP LLP 1 UK General Partner N/A -
Bridgepoint Europe VII Nominees Limited 1 UK Nominee company Ordinary shares 100%
Bridgepoint Europe VII MLP Limited 1 UK Managing Limited Partner Ordinary shares 100%
Bridgepoint Finance Limited 1 UK Dormant entity Ordinary shares 100%
Bridgepoint GmbH 7 Germany Private equity advisory company Ordinary shares 100%
Bridgepoint GP2 LLP 2 UK General Partner N/A -
Bridgepoint Growth I GP LLP 1 UK General Partner N/A -
Bridgepoint Growth Limited 1 UK Dormant entity Ordinary shares 100%
Bridgepoint Growth Nominees Limited 1 UK Nominee company Ordinary shares 100%
Bridgepoint Holdco 1 Limited 1 UK Dormant entity Ordinary shares 100%
Bridgepoint Holdings Group Limited 1 UK Dormant entity Ordinary shares 100%
Bridgepoint Holdings Limited 1 UK Dormant entity Ordinary shares 100%
Bridgepoint Infrastructure Advisers Limited 1 UK Dormant entity Ordinary shares 100%
Bridgepoint Infrastructure Development Limited 1 UK Dormant entity Ordinary shares 100%
Bridgepoint Infrastructure Limited 1 UK Dormant entity Ordinary shares 100%
Bridgepoint International Limited 1 UK Dormant entity Ordinary shares 100%
Bridgepoint Investment Consultants (Shanghai) Co Ltd 9 China Private equity advisory company Ordinary shares 100%
Bridgepoint Loan Fund GP GmbH & Co. KG 7 Germany General Partner Ordinary shares 100%
Bridgepoint Loan Fund GP S.à r.l. 3 Luxembourg General Partner Ordinary shares 100%
Bridgepoint Netherlands BV 10 Luxembourg Private equity advisory company Ordinary shares 100%
Bridgepoint Partners Limited 1 UK Dormant entity Ordinary shares 100%
Bridgepoint SAS 8 France Private equity advisory company Ordinary shares 100%
Bridgepoint Portfolio Services SAS 8 France Private equity advisory company Ordinary shares 100%
Bridgepoint Private Equity Group Limited 1 UK Dormant entity Ordinary shares 100%
Bridgepoint Private Equity Growth Fund Limited 1 UK Dormant entity Ordinary shares 100%
Bridgepoint Private Equity Limited 1 UK Dormant entity Ordinary shares 100%
Bridgepoint Property Advisers Limited 1 UK Dormant entity Ordinary shares 100%
Bridgepoint Property Development Limited 1 UK Dormant entity Ordinary shares 100%
Bridgepoint Real Estate Advisers Limited 1 UK Dormant entity Ordinary shares 100%
Bridgepoint Real Estate Development Limited 1 UK Dormant entity Ordinary shares 100%
Bridgepoint Real Estate Limited 1 UK Dormant entity Ordinary shares 100%
Bridgepoint Real Limited 1 UK Dormant entity Ordinary shares 100%
Bridgepoint SA 11 Spain Private equity advisory company Ordinary shares 100%
Bridgepoint Services S.à r.l. 3 Luxembourg Private equity advisory company Ordinary shares 100%
Bridgepoint Sp Zoo 12 Poland Private equity advisory company Ordinary shares 100%
Bridgepoint Sp Zoo sp.k 12 Poland Private equity advisory company N/A -
Bridgepoint Structured Credit Limited 1 UK Dormant entity Ordinary shares 100%
Bridgepoint Team Paris S.à r.l. 14 Luxembourg Dormant entity Ordinary shares 100%
Bridgepoint US Holdco Limited 1 UK Dormant entity Ordinary shares 100%
Bridgepoint Ventures Limited 1 UK Dormant entity Ordinary shares 100%
Bridgepoint, LLC 15 United States of Private equity advisory company Ordinary shares 100%
Burgundy GP LLP 1 UK General Partner N/A -
Burgundy GP 2 Limited 1 UK General Partner Ordinary shares 100%
George Town (Nominees) Limited 1 UK Dormant entity Ordinary shares 100%
Horninghaven Limited 1 UK Dormant entity Ordinary shares 100%
Horningway Limited 1 UK General Partner Ordinary shares 100%
HPE II GP LP 2 UK General Partner N/A -
HPE SGP Limited 2 UK General Partner Ordinary shares 100%
LORAC 5 Limited 1 UK Investment holding company Ordinary shares 100%
LORAC 6 Limited 1 UK Investment holding company Ordinary shares 100%
LORAC BC Co-Investment Limited 1 UK Investment holding company Ordinary shares 100%
LORAC BC II Limited 1 UK Investment holding company Ordinary shares 100%
LORAC BDC III Limited 1 UK Investment holding company Ordinary shares 100%
LORAC BDC IV Limited 1 UK Investment holding company Ordinary shares 100%
LORAC BDC Limited 1 UK Investment holding company Ordinary shares 100%
LORAC BDCP Limited 1 UK Investment holding company Ordinary shares 100%
LORAC BEP IV Limited 1 UK Investment holding company Ordinary shares 100%
LORAC BE VI Co-investment Limited 1 UK Investment holding company Ordinary shares 100%
LORAC BG I Limited 1 UK Investment holding company Ordinary shares 100%
LORAC Eagle Limited 1 UK Investment holding company Ordinary shares 100%
LORAC KITE Limited 1 UK Investment holding company Ordinary shares 100%
New HPE II GP LP 2 UK Investment holding company Ordinary shares 100%
Opal Investments LP 2 UK Investment holding company N/A -
PEPCO Services LLP 1 UK Collective purchasing negotiator N/A -
Ruby Germany GP Limited 4 Guernsey General Partner Ordinary shares 100%
Ruby Investments (UK) Limited 1 UK Investment holding company Ordinary shares 100%
Sapphire Investments (Guernsey) Limited 4 Guernsey Investment holding company Ordinary shares 100%
Throttle Nominees Limited 1 UK Nominee entity Ordinary shares 100%
Vigny Advisory S.à r.l. 13 France Dormant entity Ordinary shares 100%
Vigny Participation S.à r.l. 13 France Dormant entity Ordinary shares 100%
Vigny Holding S.à r.l. 13 France Dormant entity Ordinary shares 100%
* The Group holds 49% of A Shares and 100% of B
shares
Ref Registered office
1 95 Wigmore Street, London, W1U 1FB, UK
2 50 Lothian Road, Edinburgh, EH3 9WJ, UK
3 2 Avenue Charles de Gaulle, L-1653, Luxembourg
4 1 Royal Plaza, St. Peter Port, Guernsey, GY1 2HL
5 Mäster Samuelsgatan 1, 111 44 Stockholm, Sweden
6 One Rodney Square, 10th Floor, Tenth and King Streets, Wilmington, New Castle
County, Delaware 19801, USA
7 Neue Mainzer Strasse 28, 60311 Frankfurt am Main, Germany
8 21 Avenue Kléber, 75116 Paris, France
9 Shanghai One ICC, 999 Huaihai Road (Middle), 20031 Shanghai, China
10 Honthorststraat 16H, 1071 DE Amsterdam, The Netherlands
11 Calle Rafael Calvo 39A-4 , 28010 Madrid, Spain
12 Marsalkowska 126/134, 00-008 Warsaw, Poland
13 21 rue La Perouse, 75116 Paris, France
14 153-155, rue du Kien, L-8030 Strassen, Luxembourg
15 10 East 53rd St. 28th Floor, New York, NY 10022, USA
(b) Entities not consolidated
The table below shows entities that are indirect subsidiaries of the Company,
but the Group does not have the power to direct activities or rights to
variable returns from the entity and are therefore not consolidated in the
financial information.
Name of subsidiary Ref Country of incorporation Principal activity Share class Proportion of ownership interest
Bridgepoint PE CI Limited 1 UK Investment holding company Ordinary shares 52.53%
Sapphire Fund II South Limited 4 Guernsey Investment holding company Ordinary shares 25%
Sapphire Sub II A Limited 4 Guernsey Investment holding company Ordinary shares 100%
Sapphire Sub II B Limited 4 Guernsey Investment holding company Ordinary shares 100%
Sapphire Sub III A Limited 4 Guernsey Investment holding company Ordinary shares 100%
Sapphire Sub III B Limited 4 Guernsey Investment holding company Ordinary shares 100%
Sapphire Sub III C Limited 4 Guernsey Investment holding company Ordinary shares 100%
Sapphire Sub South Limited 4 Guernsey Investment holding company Ordinary shares 25%
The profit and loss for the above entities are not material.
(c) Consolidated structured entities
The table below shows details of structured entities that the Group has deemed
to control and are consolidated within the financial information for the
periods referenced.
Country of incorporation Company's proportion of ownership interest Nature of interest Periods consolidated
Name of subsidiary:
Bridgepoint CLO 1 DAC Ireland 55% Subordinated note in the residual class All periods
Bridgepoint CLO 2 DAC Ireland 50% Subordinated note in the residual class YE 2020
Opal Investments LP United Kingdom 85% Limited partner All periods
BE VI (French) Co-Invest LP United Kingdom 92% Limited partner All periods
BE VI Co-Investment (Feeder) Partnership LP United Kingdom 53% Limited partner All periods
(d) Associates
Where the Group hold investments in funds or CIPs that give the Group
significant influence, but not control, through participation in the financial
and operating policy decisions, the Group measures investments in associates
at fair value through profit or loss. Information about the Group's associates
measured at fair value is shown below. The investments are recorded as
financial assets or carried interest receivable within the Group's statement
of financial position.
Bridgepoint Credit II "C" LP
Within investments in funds, the Group has an investment that represents 27%
of the total committed capital of Bridgepoint Credit II (C) LP, a fund that
lends to private companies. Where the Group holds an interest that is greater
than 20% the Group is considered to have significant influence, but not
control. Accordingly, Bridgepoint Credit II is considered to be an associate
of the Group. Key financial information about the fund is set out in the table
below.
31 December
2021 2020
£ m
£ m
Investments at fair value 399.6 251.2
Other assets 22.4 10.6
Total liabilities (234.9) (156.6)
Total 187.1 105.2
Profit for the year 15.9 6.9
Country of domicile UK UK
Group's interest in the associate 27.2% 27.2%
The Partnership's registered address is 95 Wigmore Street, London, W1U 1FB,
UK.
BDC III SFP LP
The Group has an interest in a CIP which has a share of 26% of the rights to
the carried interest from the BDC III fund partnerships and is therefore
considered to have significant influence. Where the Group holds an interest
that is greater than 20% the Group is considered to have significant
influence, but not control. Accordingly, the BDC III carry scheme is
considered an associate of the Group. Key financial information is set out in
the table below.
31 December
2021 2020
£ m
£ m
Carried interest receivable 65.8 43.9
Country of domicile UK UK
Group's interest in the associate 25.9% 25.0%
The Partnership's registered address is 50 Lothian Road, Edinburgh, EH3 9WJ,
UK.
BEP IV SFP LP
Within investments in funds, the Group has an investment that has an
entitlement of 49.7% of the limited partner commitments of BEP IV SFP LP, a
partnership that is a co-investor into the BEP IV fund partnerships. The Group
also has a 31.8% of the entitlement to the founder partner commitments of the
entity, which currently has no value. Where the Group holds an interest that
is greater than 20% the Group is considered to have significant influence, but
not control. Accordingly, BEP IV SFP LP is considered to be an associate of
the Group. Key financial information
is set out in the table below.
31 December
2021 2020
£ m
£ m
Investments at fair value 46.6 51.4
Other assets 1.7 1.3
Total liabilities (0.5) (2.9)
Total 47.8 49.8
Profit for the year 5.8 9.7
Country of domicile UK UK
Group's interest in the associate 49.7% 49.7%
Bridgepoint CLO 3 DAC
Within investment in funds, the Group has an interest that includes 31% of the
subordinated notes of CLO 3. Where the Group holds an interest that is greater
than 20% the Group is considered to have significant influence, but not
control. Accordingly, CLO 3 is considered an associate of the Group. Key
financial information about CLO 3 is set out in the table below.
31 December 2021
£ m
CLO assets 337.4
CLO liabilities (339.0)
Total (1.6)
Loss for the period (5.3)
Country of domicile Ireland
Group's interest in the associate 31.0%
The CLO's registered address is 5th Floor, The Exchange, George's Dock, IFSC,
Dublin 1, D01 W3P9, Ireland.
Other associates
In addition to the associates listed above, there are four other entities
where the Group considers itself to have significant influence with ownership
above 20%. These are immaterial individually and in aggregate and have no
balances or transactions associated with them for the years presented.
(e) Subsidiaries not audited
For the year ending 31 December 2021 the following UK subsidiaries were
expected to be entitled to exemption from audit under section 479A of the
Companies Act 2006 relating to subsidiary companies:
· BBTPS FP GP Limited
· BC II FP SGP Limited
· BDC II Limited
· BDC II FP GP Limited
· BDC III Limited
· BDC III SFP GP Limited
· BDC IV Limited
· BDC Special 1 Limited
· BDC Special 2 Limited
· BDC Special GP LLP
· BDCP II SFP GP Limited
· BDCP II Limited
· BEV FP SGP Limited
· Bridgepoint Advantage FP SGP Limited
· Bridgepoint Europe III FP (GP) Limited
· Bridgepoint Europe IV FP (GP) Limited
29. Unconsolidated structured entities
A structured entity is an entity that has been designed so that voting or
similar rights are not the dominant factor in deciding who controls the
entity, such as when any voting rights relate to administrative tasks only and
the relevant activities are directed by means of contractual arrangements.
The Group has determined that where the Group holds an investment, loan, fee
receivable, commitment with an investment fund, CIP with a right to carried
interest, that this represents an interest in a structured entity. Where the
Group does not hold an investment in the structured entity, the Group has
determined that the characteristics of control are not met. As set out in note
3 (a), CIPs that currently have value are those where the Group is exposed to
variable returns in the range of 5-26% with the main beneficiaries of the CIP
being the other participants.
The disclosure below includes CLO 2 and 3 for the year ended 31 December 2021,
which are not consolidated, as explained in note 3 (a) (2020: CLO 1 and 2 were
consolidated).
The Group acts in accordance within pre-determined parameters set out in
various agreements and the decision-making authority is well defined,
including third-party rights in respect of the investment manager. The
agreements include management fees that are commensurate with the services
provided and performance fee arrangements that are industry standard. As such
the Group is acting as agent on behalf of these investors and therefore these
entities are not consolidated into the Group's financial information.
The Group's interest in and exposure to unconsolidated structured entities
including outstanding management fees is detailed in the table below and
recognised within trade and other receivables in the statement of financial
position. The carried interest receivable is included within the statement of
financial position.
Value of the Group's co-invest-ments at year-end Typical Group commit-ment to the Total Net asset value of the funds at year-end Manage-ment fees received by the Group Typical manage-ment fee range Carried interest rate Group share of carried interest Group accrued carried interest receivable at year-end Group maximum exposure to loss at year-end
£m
fund as
investor commit-ments
£bn
%
%
%
£m
£m
%
£bn £m
31 December 2021
Private equity funds 217.9 <2% 23.0 13.8 157.3 0.75 - 2.00% Generally up to 20% of profits over threshold Up to 35% 36.4 254.3
Credit funds 108.1 <2% 5.9 3.8 37.9 1.00 - 1.75% Generally up to 20% of profits over threshold Up to 35% 2.5 110.6
326.0 28.9 17.6 195.2 38.9 364.9
31 December 2020
Private equity funds 191.2 <2% 23.9 11.4 136.6 0.75 - 2.00% Generally up to 20% of profits over threshold Up to 35% 24.9 216.1
Credit funds 64.2 <2% 4.9 2.8 10.2 1.00 - 1.75% Generally up to 20% of profits over threshold Up to 35% 3.0 67.2
255.4 28.8 14.2 146.8 27.9 283.3
ALTERNATIVE PERFORMANCE MEASURES
These full-year results include several measures which are not defined or
recognised under IFRS (International Financial Reporting Standards), including
financial and operating measures relating to the Group such as EBITDA,
Underlying EBITDA, Underlying EBITDA Margin, Underlying FRE, Underlying FRE
Margin, Total AUM and AUM, all of which the Group considers to be alternative
performance measures ("APMs"). These are reconciled to the statutory results
in the table below.
These APMs and KPIs are used by the Board and management to analyse the
business and financial performance, track the Group's progress and help
develop long-term strategic plans. These APMs are presented to provide
additional information to investors and enhance their understanding of the
Group's results and operations. Furthermore, the Board believes that these
APMs are widely used by certain investors, securities analysts and other
interested parties as supplemental measures of performance and liquidity.
However, as these measures are not determined in accordance with IFRS or any
generally accepted accounting standards, and are thus susceptible to varying
calculations, they may not be comparable to other similarly titled measures
used by other companies and have limitations as analytical tools. In
particular, there are no generally accepted principles governing the
calculation of these measures and the criteria on which these measures are
based can vary from company to company, which means that other companies may
define and calculate such measures differently from the Group.
APMs should not be considered in isolation and investors should not consider
such information as alternatives to total operating income, profit/(loss)
before tax or cash flows from operating activities calculated in accordance
with IFRS, as indications of operating performance or as measures of the
Group's profitability or liquidity. Such financial information must be
considered only in addition to, and not as a substitute for or superior to,
financial information prepared in accordance with IFRS.
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 as well as
foreign exchange gains/(losses).
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. Examples include costs directly resulting from
substantial corporate business acquisitions or capital raising for the Group.
A breakdown is included within note 8 of the financial information. Underlying
EBITDA for 2020 has been updated from the numbers included within the
Company's prospectus to exclude additional cost items of £0.3m, as explained
in note 1 of the financial information under the heading, 'Changes to
comparatives'.
2021 2020
Underlying EBITDA £m £m
EBITDA 85.3 58.7
Add back: exceptional items 28.6 7.7
Underlying EBITDA 113.9 66.4
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. Underlying FRE for 2020 has been updated from the numbers
included within the Company's prospectus to exclude investment linked bonuses
of £0.8m, in line with the revised definition of the APM.
2021 2020
Underlying FRE £m £m
Underlying EBITDA 113.9 66.4
Less: carried interest and income from fair value remeasurement of
investments (71.2) (42.3)
Add back: investment linked bonuses 5.9 0.8
Underlying FRE 48.5 24.9
Underlying FRE Margin Underlying FRE as a percentage of total operating income, excluding carried
interest and income from the fair value remeasurement of investments and
adding back the cost of bonuses linked to investment profits.
Underlying operating profit Calculated by excluding exceptional items and the amortisation of intangible
assets from within operating profit.
2021 2020
Underlying operating profit £m £m
Operating profit 70.3 49.9
Add back: exceptional items within EBITDA 28.6 7.7
Add back: amortisation of intangible assets 3.1 0.6
Total underlying operating profit 102.0 58.2
Underlying operating profit margin Calculated by excluding exceptional items and the amortisation of intangible
assets from within operating profit.
Underlying profit before tax Calculated by excluding exceptional items and the amortisation of intangible
assets from within profit before income tax
2021 2020
Underlying profit before tax £m £m
Profit before tax 62.6 48.5
Add back: exceptional items within EBITDA 28.6 7.7
Add back: amortisation of intangible assets 3.1 0.6
Less: exceptional net finance income (3.8) (4.2)
Total underlying profit before tax 90.5 52.6
Underlying profit before tax margin Underlying profit before tax as a percentage of total operating income.
Underlying profit after tax Calculated by excluding exceptional items and the amortisation of intangible
assets from within profit after 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 gross of non-controlling
interests by the number of shares in issue after the IPO.
2021 2020
Underlying pro forma basic and diluted EPS £m £m
Profit after tax 57.8 47.7
Add back: exceptional items within EBITDA 28.6 7.7
Add back: amortisation of intangible assets 3.1 0.6
Less: exceptional net finance income (3.8) (4.2)
Tax adjusted 0.0 0.0
Total underlying profit after tax 85.7 51.8
Pro forma number of shares 823.3 823.3
Underlying pro forma basic and diluted EPS (£) 0.10 0.06
Fee Paying AUM Assets under management, excluding CLOs, upon which management fees are
charged by the Group. 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 and Bridgepoint Syndicated Debt funds as well as expected
future Bridgepoint Credit Opportunities funds, Fee Paying AUM is based on Net
Invested Capital throughout the life of the fund.
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.
The valuations for Total AUM come from the Group's valuations of the
investments of the Bridgepoint funds. The Group values all investments of the
Bridgepoint funds at least twice a year, but in most cases four times a year.
Each investment undergoes the same detailed valuation process, in accordance
with the Group's valuation policies and in line with fund requirements.
Completed valuations are presented and discussed at the relevant Bridgepoint
valuation committee and are audited at year end by the relevant fund auditor.
FORWARD LOOKING STATEMENTS
This announcement includes 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 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: 95 Wigmore Street, London, W1U 1FB
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