Forward Partners Grp - Final Results
04/05/2023 07:00
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RNS Number : 3453Y Forward Partners Group PLC 04 May 2023
Forward Partners Group plc
("Forward Partners", "Forward", "the Group" or "the Company")
FINAL RESULTS FOR THE YEAR ENDED 31 DECEMBER 2022
Forward Partners Group plc (LSE: FWD), the London-based investment firm
specialising in supporting high-growth, early-stage technology businesses,
announces its final results for the year to 31 December 2022.
2022 was a challenging year for Forward Partners. The Company faced
significant valuation headwinds, driven primarily by turbulent macro-economic
conditions, but underlying performance of the portfolio remains strong.
Financial highlights
● Portfolio Fair Value of £80.0m (2021: £117.1m) inclusive of new investments.
● Year-on-year decline of 39.0% exclusive of realisations and new investments,
rate of decline slowing from £28.0m (23.9%) in H1 to £17.7m (15.1%) in H2.
● NAV per share of 72p (2021: 104p).
● Cash at the end of year was £17.2m (2021: £31.1m).
Portfolio highlights
· 2022 Top 15 companies by Fair Value delivered a weighted average
revenue growth of 144%.2
· 82% of Top 152 portfolio companies have 18 months or more cash
runway, are on the path to break even without the need for further
fund-raising or are profitable3.
· 23 investments made totalling £9.7m into 19 businesses (2021: £8.8m
into 22 businesses).
o Three new investments totalling £2.4m: DevOps platform Baselime, AI
healthcare analytics platform Sonrai and 'hospitality operating system' Dines.
o 20 follow-on investments totalling £7.3m including participation in Robin
AI's $10.5m series A and Gravity Sketch's $33m series A.
· Realisations of £1.1m from Somo and Cazoo Group Limited.
Post-period review
● Strong deal flow with one deal closed, two at term-sheet stage.
● Portfolio companies including RobinAI and Baselime leverage generative AI in
new product releases.
● Increasing signs of confidence in the VC market.
● Koyo has appointed advisors to secure their future. Worst case for Forward is
a full write-down of the £2.3m valuation by the interim date.
● Portfolio companies delaying exit plans until conditions improve in order to
maximise value.
● Strong cost discipline. Following cost reductions in 2022, Forward is on track
to reduce Net Operating Expenses by circa 40% compared with the £7.7m
incurred in 2022.
Nic Brisbourne, CEO at Forward Partners, commented:
"We responded decisively to challenging economic conditions in the year,
taking steps to make our business more robust and ready to accelerate activity
when conditions permit. We are a hands-on investor, and so a key focus in the
year, alongside providing capital through follow-on rounds, was to provide our
companies with support and guidance on how to navigate a difficult backdrop.
Now, we hold a portfolio of strong and lean businesses that can grow fast even
when times are tough. Whilst there is always risk around individual assets, we
are confident that in aggregate our portfolio is performing well.
It is difficult to predict how long this period of uncertainty will last,
particularly in the wake of the ongoing banking crisis. Nevertheless, we
continue to see great deals and continue to invest with generative AI being an
area of increasing focus for our portfolio and new deals.
For the moment we continue to support or portfolio while waiting for market
confidence to return which we expect to be the catalyst for our portfolio to
raise funding at attractive valuations and a return to NAV growth for the
Group. With luck that turning point is not far away."
Webcast for investors
Nic Brisbourne, CEO, Lloyd Smith, CFO and Luke Smith, Investment Partner will
host a webcast for investors to present the results on 12th May 2023 at 09.30
UK time via the Investor Meet Company platform.
The presentation is open to all existing and potential retail investors. To
sign up to Investor Meet Company for free and register for the webcast, please
click the following link:
(http://www.investormeetcompany.com/forward-partners-group-plc/register-investor)
www.investormeetcompany.com/forward-partners-group-plc/register-investor
(http://www.investormeetcompany.com/forward-partners-group-plc/register-investor)
.
Those who already follow Forward Partners Group plc on the Investor Meet
Company platform will automatically be invited. Questions can be submitted
pre-event via the Investor Meet Company dashboard up until 9:00am the day
before the meeting or at any time during the live presentation.
The presentation materials and a recording of the webcast will be available
following its conclusion on the Group's website
(http://www.forwardpartners.com) www.forwardpartners.com
(http://www.forwardpartners.com) .
Availability of Annual Report and Notice of AGM
The Company's Annual Report for the period ending 31 December 2022 is
available on Forward Partners' website at
(https://forwardpartners.com/investor-centre)
https://forwardpartners.com/investor-centre
(https://forwardpartners.com/investor-centre) . The notice of the Annual
General Meeting ("AGM") of Forward Partners will be sent separately.
Notes
(1) Net Operating Expenses refers to the operating costs of the business less
the revenue generated by the Studio.
( )
(2) Top 15 portfolio investments denote the most valuable companies held in
Forward's portfolio by Fair Value at a point in time. Except where otherwise
noted in this release, we refer to the Top 15 cohort as at 31 December 2022 to
provide a meaningful basis for comparison. At that time, the Top 15 comprised
Gravity Sketch, Robin AI, Spoke, Makers, OutThink, Ably, Apexx, Breedr, Juno,
KoruKids, Snaptrip, Plyable, Koyo Loans, Silico and Patch. The Top 15 is
updated in Forward's final year results.
(3) Management estimates as at 30th April 2023. These are based on portfolio
company forecasts and assume no further material deterioration in the economy
or public technology stocks that the Company utilises in comparable
valuations. Where Management expects funding rounds to close soon and that
completion is extremely likely to occur, then the runway analysis is made on
the basis that the round is closed.
Enquiries
Forward Partners Group plc Via Alma PR
Nic Brisbourne, CEO
Lloyd Smith, CFO
Liberum Capital Limited Tel: +44 (0)20 3100 2222
(Nominated Adviser and Broker)
Chris Clarke
Lauren Kettle
Cara Murphy
Alma PR Email: forward@almapr.co.uk
(Financial PR Adviser) Tel: +44 (0)20 3405 0205
David Ison
Andy Bryant
Will Ellis Hancock
About Forward Partners
Founded in 2013, Forward Partners is an established and respected London-based
venture capital firm, specialising in supporting high growth, early-stage
technology businesses in the UK.
The Group brings together venture capital provider Forward Ventures and highly
specialised growth support from Forward Studio. This model supports founders
to build stronger businesses faster to provide better outcomes for companies
and investors alike.
The Group makes equity investments in early-stage, high-growth UK companies,
and from inception to its admission to London's AIM market in July 2021 had
made over 60 unique investments. It holds a nine-year track record of making
venture capital investments and targets underlying NAV growth of 20% per annum
over the cycle.
The management team brings together highly experienced venture capitalists,
entrepreneurs, and expert consultants. Since 2015, Forward Partners has been
backed by BlackRock, one of the largest institutional investors in the world.
The Group receives over 4,000 start-up funding applications every year.
For more information, visit (http://www.forwardpartners.com)
www.forwardpartners.com (http://www.forwardpartners.com) .
CHAIR'S INTRODUCTION
2022 was a challenging year for UK-based technology startups. As macroeconomic
headwinds buffeted businesses across the ecosystem, we saw investment drop by
almost 30% from the outlier levels of 2021. At Forward, we spotted these
trends early and adjusted our strategy to focus on resilience. We implemented
plans within Forward and our portfolio to prioritise capital efficiency,
strong balance sheets and sustainable growth strategies. As a result, Forward
and our portfolio are well-funded, strong, and ready to accelerate growth when
the time is right.
As we navigate through 2023, the prevailing macroeconomic headwinds continue
to impact investor confidence and valuations. While it's difficult to predict
how long this period of uncertainty will persist, we remain optimistic as we
observe positive indicators in the market, such as the slowing rate of decline
in our portfolio Fair Value from 23.9% in the first half to 15.1% in the
second half. We closely monitor market conditions and wait patiently for a
rebound in investor confidence - and with it a return to portfolio Fair Value
growth.
Forward succeeds by providing more support to founders than other investors.
At Forward, we're united by a belief that entrepreneurs are changing the world
for the better. Our ambition is to give founders their best shot at success,
to drive great outcomes for our portfolio companies, and in turn to deliver
returns for our shareholders.
To achieve this vision our strategy focuses on three key areas. We build and
nurture a world-class portfolio by finding and backing the best
entrepreneurial talent at the earliest stages of company development. We
provide forward-thinking capital that's more supportive, positively
influencing every part of our model - from deal flow to deal-making and
portfolio outcomes. And finally, we strengthen for scale, ensuring that our
business operations and governance are appropriate to support our long-term
goals.
In 2022 we evolved our investment strategy, as described in our 2021 Annual
Report, introducing applied Web3 as a new investment area - to take the place
of eCommerce, whilst continuing to focus on businesses leveraging applied AI
and marketplace operating models. Over time, our approach has built a balanced
portfolio of companies with a series of emerging front-runners and we continue
to see good deal flow across these three areas.
Forward's key point of differentiation is our Studio. We believe that
providing capital with capability attracts great startups, wins more deals and
ultimately helps our investments to grow faster and produce better returns. In
2022, the Studio expanded its offering to founders with the addition of talent
recruitment. We have seen positive results from this new talent offering and
aim to continue providing hands-on support to help founders find the right
people to accelerate growth.
An adaptable and resilient business.
As the market adjusted in the second half of 2022 the Board focused on
strengthening our business and portfolio to navigate the challenges that we
faced, whilst providing the necessary foundations for execution and scale.
This involved building resilience and capital efficiency. We moved fast to
adapt internally whilst supporting our portfolio to do the same. During the
year we began the wind-down of the startup debt subsidiary Forward Advances -
a decision that impacted profit, but strengthens our business for the longer
term. We also welcomed new members to our extended finance team, and the
Studio which was restructured to focus on talent acquisition. Now as we move
through 2023, we believe that we have the right team to deliver our goals
through this period - one that is skilled, motivated, happy and guided by a
common mission.
We have once again considered our role as a responsible company and investor
to ensure that our efforts and our investments positively impact
environmental, social and governance criteria. We continue to build an
environment that reflects the high-growth attitude of our best companies: lean
and efficient, whilst being bold, caring and wise.
Investing in the future
As we look forward into 2023 and beyond, we are mindful that these remain
challenging times, but we are confident in the strength of our portfolio and
the long-term potential for venture capital investment.
We believe that venture continues to hold the potential for great returns. The
fundamentals behind our business haven't changed: startups, challengers and
disruptors continue to create change and drive value across the globe. The
momentum continues, no matter the economic conditions. AI's 'iPhone moment'
with the recent release of ChatGPT is a great example of this - heightening
public awareness of its capabilities whilst attracting the attention of
entrepreneurs and investors across the world. Venture enables Forward, and our
shareholders to invest in companies leveraging technology and trends like
these, powering their progress and sharing in their long-term success.
I would like to express my gratitude to our employees, partners, and
shareholders for their ongoing support as we develop an exceptional portfolio
and a dedicated organisation to back it.
Jonathan McKay
Chair
4 May 2023
CEO'S REVIEW
Overview
In 2022, we saw the macroeconomic headwinds that impacted investor confidence
and public markets trickle down into earlier-stage private companies'
valuations. As a result, investment rounds took longer to complete, the door
on IPOs largely closed, and the M&A market slowed. We recognised the
potential impact that these factors held for Forward and our portfolio and
took steps to adapt: reducing operational expenditure; adjusting investment
criteria whilst advising founders to prioritise resilience.
Through this period, we continued to support our top portfolio companies in
strengthening their balance sheets, investing £7.3m into 20 follow-on rounds,
with our endorsement ultimately unlocking £54.7m in additional funding. Now,
we hold a portfolio of lean, strong and capital-efficient businesses that are
well-equipped for the period to come. I am pleased to report that many of
these businesses continue to achieve remarkable revenue growth and are poised
to accelerate further when the market improves.
Despite the positive news at the portfolio level, I'm sorry to be reporting a
decline in Portfolio Fair Value over the year. The full year decline, which
can be largely attributed to valuation headwinds, was a slight improvement
over guidance issued at our interim results.In times like this it's important
to remember that the venture capital model is built to be resilient to
downturns. We expect to hold our successful companies for seven to ten years
or more and hence it is very likely that they will experience at least one
difficult period during the normal cycle before they exit. It's also important
to remember the asymmetric profile of startup investing where we make many
times our money on our winners, whilst only losing one times our capital on
our losers.
It is difficult to predict how long this period of uncertainty will last,
particularly in the wake of the recent banking crisis. But we continue to see
great deals and continue to invest. Technology innovation continues at pace
(particularly within our focus area of applied AI), the ecosystem remains
strong, founders are positive, and investors wait in the wings with committed
capital to deploy. For the moment we wait for market confidence to return
which we expect to be the catalyst for a return to portfolio Fair Value growth
as our companies are able to raise follow-on rounds at attractive valuations.
As a business, we remain focused on what we love to do: helping the UK's best
tech founders to build incredible companies.
Operating review
Our mission is to build the UK's leading and most admired early-stage venture
firm. That means being entrepreneurs' first choice for funding, and delivering
long-term, compounding net asset growth for investors. To deliver on this
mission, we invest our funds in, and support, visionary entrepreneurs leading
high-potential companies. We not only offer capital to founders, but work hard
to be supportive investors, helping them find their path to leadership in
their markets with guidance from our Investment and Studio Teams.
A focused strategy
This year, we focused our strategy on three core priorities:
Building and nurturing a world-class portfolio. In 2022, we focused on
strengthening our portfolio, mentoring, coaching and investing in our
companies that we already know and trust - participating in 20 follow-on
rounds in total, to ensure that their business models and balance sheets were
robust enough to navigate this uncertain period. We responded to increased
market risk by slowing on new investments, adding only three new companies to
the portfolio. Dealflow has remained strong, but pricing and next-round
financing risk led us to be prudent and cautious.
Providing forward-thinking capital. We offer founders capital with support
because we believe that it leads to better outcomes. In 2022, we continued to
provide our founders with expert guidance from our investors and expanded our
Studio talent offer to help our portfolio hire more of the right people and
grow their businesses faster in a labour market that remained challenging for
much of the year.
Strengthening for scale. In 2022, we focused on strengthening the foundations
of the Forward business. We recruited specialist talent into our Finance Team
with deep audit and valuation expertise to bolster financial management and
reporting capabilities; and into our Studio team too, enhancing leadership and
operational capacity as we expand our talent offer. The Board and Management
Team also worked to implement new processes and controls to ensure that our
portfolio remains robust.
A lean company
On 24 August 2022 we announced our decision to conduct a managed wind-down of
Forward Advances. The Advances subsidiary was established as a startup within
Forward in 2020 to meet the demand of the fast-growing alternative SME funding
market, separate to venture capital. Advances had a strong start, originating
£14.9m in loan financing from inception. However, in 2022 the market became
more competitive and the Group determined that the macroeconomic environment
and the low margins necessary for Advances to compete for limited
opportunities for future profitable growth and shareholder returns. While no
further loans were originated, existing customers were fully serviced for the
duration of their contracts, and so the remaining loan book is in managed
wind-down. Repayments from outstanding Advances remain in line with revised
forecasts, and losses in 2022, including wind-down costs, are £100k better
than expected, totalling £2.8m.
During this time, we also carried out a cost reduction programme across the
Group. This involved a thorough review of all our cost base, and the
implementation cost-reduction measures that included reducing headcount. We
believe these actions were necessary to secure the long-term sustainability of
the Company and to ensure that we can continue to deliver value to our
shareholders and wider stakeholder community.
Financial performance
The Fair Value of Forward's venture portfolio (the gross value of the Group's
investments in the funds before deductions for carried interest liability) as
at 31 December 2022 was £80.0m (31 December 2021: £117.1m), a decline of
39.0% over the period, exclusive of realisations and new investments . These
results are a slight improvement on our guidance at the half year and
signify a slowing in the rate of decline from 23.9% in the first half to 15.1%
in the second half.
Realisations during 2022 were £1.1m from the third-party exit of digital
product agency Somo and disposal of Forward's holding in online car retailer
Cazoo Group Limited.
As stated in the half-year report, macroeconomic challenges have driven a
decline in the valuations of our portfolio companies. The decrease in Fair
Value was primarily due to the compounding effect of stock market headwinds,
lengthening time between rounds, and the increased impact of liquidation
preferences at lower valuations (liquidation preferences favour later stage
investors). As the market improves these factors will unwind and the
compounding effect will work in our favour. A more comprehensive explanation
is provided in the Financial Review section of this report.
Portfolio review
In the first half of 2022, many VCs, including Forward, advised their
portfolio companies to reduce their burn rate and extend their cash runways,
whilst organising internal rounds to ensure portfolios were resilient to a
downturn. As a result we now have a portfolio where the vast majority are
strong businesses right-sized for the current environment. Over 82% have 18
months or more cash runway, are anticipated to reach break-even without
further fundraising, or are already profitable. They are growing fast and
ready to seek investment and accelerate when the time is right. We are pleased
to report that our top 15 portfolio investments by Fair Value delivered a
weighted average revenue growth of 144% over the course of 2022.
Through 2022, Forward Ventures invested in 19 businesses, deploying a total of
£9.7m in follow-on and new investments.
Follow-on investments
This year, we focused on providing further support to the frontrunners in our
portfolio, making 20 follow-on investments. Forward's endorsement unlocked
further capital for our portfolio - over 7 times the amount we put in during
this period. We deployed a total of £7.3m in 2022 with our companies
ultimately raising £54.7m.
Key follow-on investments include:
Gravity Sketch (gravitysketch.com): a platform revolutionising collaboration
and design in 3D and virtual reality, raised a $33m Series A led by Accel
finalised in February 2022 and announced publicly in April. A valuation uplift
of £6.7m was recorded in 2021 when the deal was agreed, in accordance with
our valuation policy. Forward participated with a further £0.7m and has
supported Gravity Sketch since leading their pre-seed round in 2014. We're
excited to see their continued growth, with this new round of funding as
Gravity Sketch passes 100,000 users, including product design teams at firms
like Adidas, Reebok, Volkswagen and Ford.
Robin AI (robinai.co.uk): a legal-tech company that combines generative AI
with a team of world-class legal professionals to radically improve the speed
and reduce the cost of agreeing contracts. In 2022, Forward invested £0.25m
into Robin as part of an £8.5m round announced post-period - led by Plural,
the VC co-founded by Taavet Hinrikus - co-founder and ex-Chairman of Wise,
with further participation from Forward, Episode 1 and angel investors
including Tom Blomfield - ex CEO and President of Monzo. Forward has been an
investor since 2019.
New investments
In 2022, Forward's Investment Team considered 4,672 investment opportunities,
met with 543 of these and progressed 70 to the final stages of assessment.
Despite the economic downturn, the quality of these deals has remained high.
In the period Forward invested £2.4m into three new companies, which was
below our normal investment rate of four to eight new deals a year. We aimed
for four new deals in 2022 and were disappointed to end the year having only
secured three, although it's worthy of note that we ended the year with a
further term sheet outstanding.
Post period Forward's pace of investment is ahead of target with one new deal
closed and a further two at term sheet stage.
New investments in 2022:
Baselime (baselime.io): a DevOps platform that helps engineering teams to
build and debug serverless applications faster. We invested £0.4m into
Baselime as part of the company's £1.5m round, led by Arc, Sequoia's fund for
outlier founders.
Sonrai (sonraianalytics.com): an analytics platform that leverages AI to speed
up drug and healthcare developments, empowering researchers to cleanse, manage
and analyse disparate data sources faster and cheaper than ever before. We
invested £1.0m into Sonrai, as part of the company's £2.2m round, alongside
Techstart Ventures.
Dines (dines.co.uk): a hospitality management company whose 'Hospitality
Operating System' product enables businesses to run their operations through a
single, powerful, omnichannel platform.
New investments post-period
Vision Funding (visionfunding.co.uk). Forward Partners invested £200k via a
Convertible Loan Note (CLN) in Vision's pre-seed round. The company is
building a platform that helps car dealers to connect buyers with the right
motor finance for their needs.
Outlook
We find ourselves in a period of high economic uncertainty. While preparing
this report, we've seen an ongoing banking crisis and unprecedented volatility
in investor confidence. That makes this a challenging time to write an outlook
statement.
Despite the uncertainty and the challenges it brings we remain confident that
we will return to Fair Value growth before long. Our portfolio remains strong
and the ever-increasing pace of change continues to drive value from large
companies to startups, providing a great tailwind for our investments and for
venture capital as an asset class more widely. As noted above, most of the key
companies in our portfolio are enjoying good growth and have ample cash
reserves. We continue to deploy capital and expect to reach at least the lower
boundary of our usual run rate of four to eight new investments this year.
We are impatient to get back to growth, but we are dependent on investor
confidence and it is hard to predict how fast market sentiment will recover.
In the immediate term, we're mindful that these are still challenging times.
On the one hand we expect some near-term valuation upside from revenue growth
in our portfolio, but on the other hand fundraising may be difficult for some
companies in our portfolio. At the beginning of the year, there were signs
that confidence amongst venture capitalists was improving. That took a knock
when Silicon Valley Bank collapsed. This factor coupled with macroeconomic
headwinds may lead to further downgrades at individual portfolio companies.
Koyo is at risk, as it has appointed advisors to secure their future. If a
satisfactory outcome cannot be achieved the worst case for Forward is a full
write down.
Looking further ahead, as the macro-economic picture stabilises we expect VC
markets to open up again. With increased investor confidence comes further
follow-on funding rounds which companies in our portfolio will use to increase
investment in growth and accelerate value creation. This will serve as a
catalyst for portfolio growth and an increase in our Fair Value. The good news
is that there are plenty of VCs with funds to invest who so we expect this to
happen quickly when the markets recover.
Nic Brisbourne
Chief Executive Officer
4th May 2023
PORTFOLIO REVIEW
At 31 December 2022, Forward Partners' portfolio consisted of 43 active
companies.
The Fair Value of Forward's venture portfolio (the gross value of the Group's
investments in the funds before deductions for carried interest liability) was
£80.0m (December 2021: £117.1m), a decline of £45.7m or 39.0%, exclusive of
realisations and new investments.
Additional movements in the year result from £1.1m in portfolio realisations
(reducing the size of the portfolio) and new investments of £9.7m (increasing
the size of the portfolio). The portfolio companies by valuation' table
provides further detail on Fair Value movements within the portfolio.
Portfolio
Our portfolio has been constructed to maximise risk-adjusted returns by
balancing upside potential, chance of failure, likely holding period and
concentration risk.
Forward has historically invested into three key operating models: applied AI,
marketplaces and eCommerce (recently replacing the latter with Web3). These
represent 40%, 29% and 13% of the portfolio respectively at 31 December
2022. The top fifteen core holdings represent 73.6% of Ventures Portfolio
Value with the largest holding, Gravity Sketch representing 10%.
At 31 December 2022, Forward Partners' portfolio core holdings (Top 15 by
portfolio value) were Gravity Sketch, Robin, Spoke Makers, OutThink, Ably,
Apexx, Breedr Juno, KoruKids, Snaptrip, Plyable Koyo Loans, Silico and Patch.
Investments
In the period from 1 January 2022 to 31 December 2022, Forward Partners
invested £9.7m of which £2.4m was invested in three new portfolio companies
and £7.3m was invested into 16 existing portfolio companies through follow-on
rounds.
New investments
-- Current period to 31 December 2022
● Baselime (https://baselime.io (https://baselime.io) ). Forward Partners
invested £0.4m into serverless technology company Baselime as part of the
company's £1.5m round, led by Arc, Sequoia's catalyst for outlier founders.
● Sonrai (https://sonraianalytics.com (https://sonraianalytics.com) ). Forward
Partners invested £1.0m into Sonrai, an analytics platform that leverages AI
to speed up drug and healthcare developments as part of the company's £2.2m
round, alongside Techstart Ventures.
● Dines (https://dines.co.uk (https://dines.co.uk) ). Forward Partners invested
£1.0m into Dines, an omni-channel platform that powers operations for
hospitality businesses.
-- Post period end
● Vision Funding (https://www.visionfunding.co.uk
(https://www.visionfunding.co.uk) ). Forward Partners invested £200k via a
Convertible Loan Note (CLN) in Vision's pre-seed round. The company is
building a platform that helps car dealers to connect buyers with the right
motor finance for their needs.
Follow-on investments
-- Current period to 31 December 2022
● 20 follow-on investments at existing portfolio companies totalling £7.3m.
(Apexx, Breedr, Fy, Gravity Sketch, Highr, KoruKids, Koyo Loans, Lyvly,
Makers, OutThink, Patch, Plyable, Robin AI, Silico and Spoke).
Realisations
-- Current period
The Group achieved two realisations in the period between 1 January 2022 to 31
December 2022 totalling £1.1m.
● Somo. Forward Partners realised £0.5m from the third-party exit of digital
product agency Somo in the first half of 2022, representing a 1.5x return on
the £0.3m of funds invested. The last reported fair value was £0.5m on 31
December 2021.
● Cazoo. Forward Partners disposed of 91% of its holding in online car retailer
Cazoo Group Limited in July 2022, realising £0.6m. The remaining 9% holding
was sold in August, realising less than £0.1m. Forward invested a total of
£1.62m into the company, representing a return of 0.4x. The last reported
fair value was £0.6m on 30 June 2022.
-- Post period end
There were no realisations in the period from 31 December 2022 to publication.
Top 15 Portfolio Companies by valuation
Figures shown below, including total investment, Portfolio Fair Value and
illustrative return, are audited and correct as at 31 December 2022. The Top
15 investments cover 73.6% of the portfolio by Fair Value.
Fair Value Invested Realised Fair value Fair Value Invested Realised Fair value Fair Value
at 31/12/21 change at 30/06/22 change at 31/12/22
£m £m £m £m £m £m £m £m £m
Gravity Sketch 8.4 0.7 0.0 0.0 9.1 0.0 0.0 (1.5) 7.6
Robin 4.7 0.9 0.0 0.0 5.6 0.3 0.0 0.3 6.2
Spoke 5.2 0.3 0.0 0.6 6.1 0.0 0.0 0.0 6.1
Makers 8.3 0.4 0.0 (2.9) 5.8 0.0 0.0 (0.7) 5.1
OutThink 1.6 0.0 0.0 2.5 4.1 0.5 0.0 0.0 4.6
Ably 12.9 0.0 0.0 (8.8) 4.1 0.0 0.0 (0.1) 4.0
Apexx 4.7 0.2 0.0 0.0 4.9 0.5 0.0 (1.8) 3.6
Breedr 2.5 0.0 0.0 0.0 2.5 0.3 0.0 0.8 3.6
Juno 4.5 0.0 0.0 0.0 4.5 0.1 0.0 (1.1) 3.5
KoruKids 3.9 0.5 0.0 0.0 4.4 0.0 0.0 (1.2) 3.2
Snaptrip 5.0 0.0 0.0 (2.3) 2.7 0.0 0.0 (0.1) 2.6
Plyable 1.2 0.2 0.0 0.7 2.1 0.3 0.0 (0.1) 2.3
Koyo Loans 3.3 0.5 0.0 2.0 5.8 0.5 0.0 (4.0) 2.3
Silico 1.7 0.5 0.0 0.0 2.2 0.0 0.0 0.0 2.2
Patch 5.2 0.3 0.0 (3.0) 2.5 0.0 0.0 (0.6) 1.9
Top 15 Value 73.1 4.5 0.0 (11.2) 66.4 2.5 0.0 (10.1) 58.8
Remaining portfolio 44.0 1.8 (0.5) (16.8) 28.5 0.9 (0.6) (7.6) 21.2
Portfolio Value 117.1 6.3 (0.5) (28.0) 94.9 3.4 (0.6) (17.7) 80.0
PORTFOLIO UPDATE
Note: FD Category represents fully diluted interest shares categorised as
follows: Cat A: 0-5%, Cat B: 6-10%, Cat C: 11-15%, Cat D: 16-25%, Cat E:
>25%.
Gravity Sketch
Gravity Sketch was founded in 2014 by Oluwaseyi Sosanya and Daniela Paredes.
Their vision: to revolutionise the way physical products are designed,
developed and brought to market. Today, the company is a leading innovator in
the digital design industry, offering intuitive 3D design software for
cross-disciplinary teams to create, collaborate, and review in an entirely new
way, addressing a market worth an estimated $10bn in 2022.
Recent news
● In April 2022, Gravity Sketch announced the completion of a $33m funding
round. Forward participated with a further £0.7m in this Series A led by
Accel alongside Google Ventures.
● In November 2021, Gravity Sketch launched LandingPad Collab, which allows
users to create personalised spaces for real-time collaboration.
Total invested: £1.9m | Fair Value: £7.6m | Fair Value / Investment: 4.0x
| FD Category C
Robin AI
Robin AI is a legal-tech company that combines software, generative AI,
machine learning and a team of world-class legal professionals, to deliver
solutions to radically improve the speed and reduce the cost of agreeing
simple contracts. Established in 2019 by Richard Robinson, Robin was developed
on Richard's personal experiences as a lawyer.
Recent news
● In February 2022, Richard Robinson was profiled in The Times
(https://www.thetimes.co.uk/article/if-black-lives-matter-had-not-happened-we-would-not-be-having-this-conversation-z2qc7n6nb)
, outlining the challenges that minority founders face.
● Robin AI raised £2.5m in December 2021 in a seed extension round, with
participation from the Softbank Emerge Program, Tom Blomfield (the founder of
Monzo) and existing investors.
● In February 2023, the company announced a $10.5 million round
(https://sifted.eu/articles/wise-monzo-founders-generative-ai-news/) led by
Plural, the VC co-founded by (https://www.linkedin.com/in/taavethinrikus/)
Taavet Hinrikus (https://www.linkedin.com/in/taavethinrikus/) - co-founder and
ex-Chairman of Wise, with further participation from Forward, Episode 1 and
angel investors including (https://www.linkedin.com/in/tomblomfield) Tom
Blomfield (https://www.linkedin.com/in/tomblomfield) - ex CEO and President
of Monzo. Forward has been an investor since 2019.
Total invested: £1.7m | Fair Value: £6.2m | Fair Value / Investment: 3.7x
| FD Category D
Spoke
Spoke is a direct-to-consumer eCommerce company that provides better-fitting,
better-looking men's clothes. Established in 2013, the company has over
200,000 customers to date. It has been featured in GQ and Esquire and holds a
Trustpilot rating of 4.7/5.
Recent news
● In June 2022, Spoke completed a £5m crowdfunding round on Seedrs, deemed the
platform's largest campaign of the year.
● In May 2021, Spoke announced a media-for-equity deal with ITV. Since then, the
company has been advertising alongside major sporting events, news programmes,
films and top drama shows, including The Six Nations, ITV News, James Bond and
The Brit Awards.
Total invested: £2.5m | Fair Value: £6.1m | Fair Value / Investment: 2.4x
| FD Category C
Makers
Makers is creating a new generation of tech talent by identifying
high-potential career switchers who possess no background in tech, training
them in software development, then placing them in industry-leading
companies. Makers has trained 3000 people into junior software engineers and
placed them in over 300 businesses, including Google, Tesco, Starling Bank,
and the BBC. Makers hold a rating of 4.7/5 from customers on bootcamp review
site SwitchUp.
Recent news
● Makers' engineers are significantly more diverse than industry averages. 40%
are female, 2x higher than the industry average and 40% are from unrepresented
ethnic backgrounds.
● In December 2022, the company announced the completion of a £7m round led by
BGF. It will use the funding to expand its product offering and drive
sustainable growth.
● The company works with some of the world's leading companies, including Meta,
Google, Deloitte and Ford.
Total invested: £1.5m | Fair Value: £5.1m | Fair Value / Investment: 3.4x
| FD Category E
OutThink
OutThink is the world's first cybersecurity human risk management platform.
Founded in 2019 by Flavius Plesu, the Company provides next-generation
security awareness training to large and complex organisations across the
world. It has been developed specifically to identify and measure human risk
and affect behaviour change. OutThink holds a rating of 5/5 on Gartner.
Recent news
● In October 2022, the company announced the completion of a $10m round, led by
AlbionVC. The company will use the funding to expand its leadership expertise
and accelerate international distribution as its solution continues to gain
market traction.
● In June 2022, the company announced a partnership with QA to enhance its
cybersecurity training portfolio.
● In March 2022, the company announced a partnership with RANt Group to enhance
its cybersecurity training portfolio across UK and US markets.
Total invested: £1.6m | Fair Value: £4.6m | Fair Value / Investment: 2.9x
| FD Category D
Ably
Ably is a realtime platform that powers live and collaborative experiences.
Established in 2016 by Matthew O'Riordan and Paddy Byers, the company is
trusted by brands like HubSpot, Toyota, and Webflow to power shared live
experiences including business-critical chat, order delivery tracking and
document collaboration for millions of simultaneously connected devices around
the world. Ably holds a rating of 4.7/5 on G2.
Recent news
● In May 2022, Ably released The State of Edge Messaging Report, which revealed
that two-thirds of organisations with self-built real-time edge messaging
infrastructure had experienced significant downtime in the past 12-18 months.
● In February 2022, Ably announced the appointment of James Aley as Chief
Technology Officer and Tim Buntel as Chief Product Officer.
● In June 2021, Ably announced a successful raise of $70m led by Insight
Partners and Dawn Capital.
Total invested: £1.7m | Fair Value: £4.0m | Fair Value / Investment: 2.3x
| FD Category B
Apexx Global
Apexx's platform allows merchants to connect via a simple API to the world's
payment ecosystem, increasing conversion at lower cost and powering digital
payments. Established in 2015 by Rodney Bain, Peter Keenan and Toreson Lloyd,
the team has grown to 41 people working across 3 countries, serving clients
that include ASOS, Avon, Xe, eShopworld and Air Seychelles.
Recent news
● Apexx now has over 120 integrated partners and operates across more than 70
countries.
● In June 2022, Apexx announced its partnership with Ryanair to transform
payments ahead of the post-COVID travel boom.
● In January 2022, Apexx announced its entry into the US payment provider
market.
Total invested: £2.3m | Fair Value: £3.6m | Fair Value / Investment: 1.6x
| FD Category B
Breedr
Breedr is a platform that helps farmers to manage, buy and sell livestock.
Founded in 2018 by Ian Wheal, their solution boosts efficiency, output and
returns whilst reducing the carbon footprint of farms by up to 28%. Their
solution has grown into a network of thousands of farmers with over half a
million animals on the platform.
Recent news
● In February 2022, Dunibia announced a partnership with FAI Farms and Breedr on
a low-carbon beef demonstrator trial, including on-farm trials and a carbon
footprinting programme with over 500 farmer suppliers.
● In March 2022, Breedr announced a $16m Series A round led by Investbridge
Capital, with participation from LocalGlobe and Forward Partners.
● In May 2022, the company announced that it had secured enterprise deals in UK
and US markets.
Total invested: £1.4m | Fair Value: £3.6m | Fair Value / Investment: 2.5x
| FD Category C
Juno
Juno brings together legal expertise with software and AI to offer
conveyancing that's clear, convenient and reliable. Established in 2017 by
Etienne Pollard and Henry Hadlow, their vision is to make the legal side of
home buying simpler, clearer and faster - and for Juno to become the UK's
largest and most trusted property law firm. The founders saw an opportunity in
a fragmented, people-intensive legal and conveyancing sector. Their disruptive
solution takes a data-driven approach to drive better, faster, and more
cost-efficient services. It holds a Trustpilot rating of 4.8/5.
Recent news
● Juno launched the next iteration of its AI-enabled legal service to complete
property purchases, targeting 10x-faster-than-average completions.
● The company also launched a new buy-to-let remortgaging product, targeting a
5x speed-up versus the industry average.
● LendInvest, the UK's leading property finance platform, appointed Juno to
their buy-to-let legal panel.
Total invested: £2.4m | Fair Value: £3.5m | Fair Value / Investment: 1.5x
| FD Category D
Koru Kids
Koru Kids is a childcare marketplace that connects parents with vetted
part-time nannies and childminders. Established in 2016 by Rachel Carrell, the
company has delivered over 1 million hours of childcare to families and works
with over 10,000 nannies across the UK. It holds a TrustPilot rating of 4.8/5.
Recent news
● In November 2022, London VC Nesta announced Koru Kids as one of the first
investments from their newly secured £50M fund.
● In October 2022, Research commissioned by Koru Kids, in conjunction with The
Fatherhood Institute examined the current state of UK paternity leave. Its
results were widely covered by the UK media, including The Guardian, The
Independent and The Evening Standard.
● In August 2022, Koru Kid's Home Nursery Service was awarded the highest
possible grade at registration.
Total invested: £2.2m | Fair Value: £3.2m | Fair Value / Investment: 1.5x
| FD Category B
Snaptrip
Snaptrip is a marketplace that helps people to discover the best last-minute
cottage holiday deals in the UK. Founded in 2014 by Dan Harrison and Matthew
Fox, Snaptrip has grown to offer over 60,000 professionally managed cottages
from big-name partners. They hold a rating of 4.4/5 on Trustpilot.
Recent news
● In March 2022, Snaptrip acquired Independent Cottages for a seven-figure fee.
This was the company's second acquisition in 12 months following the
acquisition of Hot Tub Hideaways in Summer 2021.
● Snaptrip now operates a family of brands, including Dog-Friendly Cottages,
Last Minute Cottages and Big Cottages, giving it access to several targeted
markets.
● The company was EBITDA positive last year and is expected to continue to be in
the short to medium term.
Total invested: £0.6m | Fair Value: £2.6m | Fair Value / Investment: 4.2x
| FD Category D
Plyable
Plyable is the world's leading custom composite mold producer. Its platform
delivers the highest quality precision molds up to 45% faster using advanced
AI technology coupled with industry experts. Founded in 2012 by Martin Oughton
and Adam Lofts, Plyable is used by leading automotive and aeronautics
companies including McLaren, Mercedes and Boeing.
Recent news
● In October 2022, Plyable secured a $3.2m round Led by Maven Capital Partners,
supported by composite industry leaders Solvay with participation from Forward
Partners.
● In 2020, Plyable was selected to be part of Boeing's Accelerator Programme.
Total invested: £1.1m | Fair Value: £2.3m | Fair Value / Investment: 2.1x
| FD Category D
Koyo Loans
Koyo uses open banking and applied AI to offer personal loans to consumers who
lack traditional historical credit data, without excessive fees for credit.
Established in 2018 by Thomas Olszewski, Koyo is on a mission to provide loans
that are personal and transparent, to those with limited credit history. Koyo
has a Trustpilot score of 4.9.
Recent news
● Fintech businesses across the UK faced significant pressures in 2022. These
challenges persist as macroeconomic headwinds drive hikes in interest rates
and events such as the recent banking crisis heighten investor uncertainty.
● In October 2022, the company secured a £5m extension of its Series A funding
round, which financed the company into 2023.
● Koyo and their appointed advisors are working through options to secure its
future, if a satisfactory outcome cannot be achieved the worst case for
Forward is a full write down.
Total invested: £3.0m | Fair Value: £2.3m | Fair Value / Investment: 0.8x
| FD Category D
Silico
Silico is a business simulation platform that enables enterprises to build
'digital twins', leveraging real-time data from across an organisation to
simulate the impact of decisions before they are made. Founded in 2019 by
Chris Spencer and John Hill, the company enables its customers to improve
processes, cut costs and increase revenue.
Recent news
● In March 2022, the company announced a £3.4m seed round led by German VC Join
Capital with participation from Forward Partners.
● The company is working with global enterprises across the banking, telecoms,
healthcare and chemicals industries. Clients include Vodafone.
Total invested: £1.1m | Fair Value: £2.2m | Fair Value / Investment: 1.9x
| FD Category C
Patch
Patch is one of the leading online UK direct-to-consumer plant stores. Shortly
after the year-end, Patch merged with Arena, the UK's leading ethical flower
business to become part of the Arena Group. Together, the Group becomes a
leading brand for plants and flowers, as both a direct-to-consumer offer and
as a supplier to some of the UK's best-known brands.
Recent news
● In January 2023, Patch merged with Arena. Forward Partners join Arena's
shareholder register. The Group expects no material change in the value of its
holding in the short term.
● In 2021, Patch plant doctors helped 12,000 customers diagnose problems with
their plants.
● Patch won a silver gilt medal at the 2021 Chelsea Flower Show for their
studio: the Pharmacy of House Plants.
Total invested: £1.4m | Fair Value: £1.9m | Fair Value / Investment: 1.4x
| FD Category D
FINANCIAL REVIEW
Overview
2022 was a year characterised by market headwinds and the corresponding
pressure on public market share prices. We have not been immune to these
market forces, which can be seen in the valuation changes we have navigated
this year. Through FY22, we saw the portfolio Fair Value (the gross value of
the Group's investments in the funds before deductions for carried interest
liability) decline by 23.9% to the interim date and 15.1% since the interim
reporting date to a total 39.0% year on year. The decline is attributable to
comparable multiples reducing valuation metrics and liquidation preferences
that favour later-stage investors. Conversely, as growth stocks and associated
technology valuation metrics improve, the unwinding of the liquidation
preferences will provide a greater uplift for Forward given it is an
early-stage investor.
Despite valuation pressures, our portfolio has maintained strength. At
Forward, we focus on backing companies with high potential and strong
fundamentals. Many of our companies have demonstrated resilience to the wider
economic downturn and have grown their revenues through innovative products
and market share gains. Despite our encouragement to focus on runway and
resilience through the period, we saw weighted year-on-year revenue for our
Top 15(1) grow by 144% through the period. At 31 December 2022, the overall
Net Asset Value of the Group was £96.7m, a decrease of 30.7% year on year.
The reduction was primarily driven by this decline in portfolio Fair Value to
£80.0m, which is recognised at Fair Value through profit or loss in the
consolidated statement of financial position.
Aside from the Portfolio, Forward's year-end cash balance was £17.2m,
enabling us to continue to invest in exciting new venture opportunities whilst
meeting day-to-day operational expenditure requirements. We remain excited
about the opportunities in the market and continue to invest in exciting new
UK startups, particularly in Web3 and Applied AI.
Portfolio
Valuations
The Fair Value of Forward's Portfolio (the gross value of the Group's
investments in the funds before any deductions for carry interest) at the
year-end was £80.0m (31 December 2021: £117.1m), a 31.7% year-on-year
decline including new investments 39.0% excluding new investments and
realisations).
Portfolio Fair Value decline slowed significantly in the second half of the
year. In H1, Gross Portfolio Value reduced to £80.0m, a decline in Fair Value
of 23.9% exclusive of new investments and realisations. In H2 Fair Value
declined by 15.1%.
The Fair Value reduction is largely attributable to market headwinds and
downward pressure on comparable valuations and liquidation preferences
impacting earlier-stage investors such as Forward.
As market headwinds dissipate, liquidation preferences will have a reduced
weight on our Fair Value calculation and in turn, Forward will see a greater
share of valuation increases compared with other investors who substantially
hold liquidation preferences. A more detailed explanation of liquidation
preferences is included later in this review.
Another factor that has impacted our valuations is revenue growth rates for
early-stage companies are closely aligned to investor deployment rates and VC
deal activity. The market sentiment that typified the technology sector during
2022 slowed the rate of investment, and the completion of portfolio company
fundraising rounds. As a result, many start-ups have sought to extend cash
runways to ensure they can see through a period of fundraising uncertainty.
The practical implications of this mean portfolio companies typically hold
back on hiring key sales and software development teams, who directly
contribute to revenue through sales and product development. So whilst the
revenue growth is good, as market conditions improve we expect revenue growth
rates in the portfolio to increase.
Realisations
Realisations through the period totalled £1.1m from the exit of digital
product agency, Somo and disposal of Forward's holding in online car retailer
Cazoo Group Limited. The gross portfolio value movements between relevant
periods are reflected in the table further on in this section.
Liquidation Preferences - an explanation
Liquidation preferences in venture capital refer to the order in which
investors receive their money back in the event of a company's sale or
liquidation. In simple terms, investors with liquidation preferences will
receive their investment back before other investors that do not. Furthermore,
some liquidation preferences rank before others in the order of pay out.
Later-stage investors are typically more interested in liquidation preferences
as they are investing in more mature companies with a greater likelihood of
being sold or going public, so their expected returns are less than those
expected by an early-stage investor. Accordingly, liquidation preferences are
used to protect the value at which a later-stage investor invests if the
company is unable to achieve its valuation expectations on sale.
In a scenario where valuation headwinds result in a company's decline shortly
after a round in which a later-stage investor invests, a greater proportion of
the current value will be assigned to them. Meaning an earlier stage
investor's share of the valuation goes down more than the overall decline in
the company's valuation.
Conversely, as valuations go back up the proportion of the early-stage
investor's share will go up more than the percentage increase of the company
where the value previously was weighted to the later-stage investor due to
them holding more recent liquidation preferences.
I hope this general explanation is helpful in understanding how liquidation
preferences work and therefore our thesis as to why when valuation headwinds
improve, it will have a more pronounced positive impact on Forward's Gross
Portfolio Value.
Advances
Towards the end of August, we took the difficult decision to conduct a managed
wind-down of Forward Advances. Whilst the company had made some traction in
the UK revenue-based funding market, the path to profitability and cash
generation was unclear. As a result, total losses for the year were limited to
£2.8m and enabled the Group to focus its financial resources on new venture
investments and supporting our current portfolio.
Consolidated statement of financial position
The nature of the Group's business means that the balance sheet primarily
consists of its Financial Assets held at fair value (the Net Asset value of
the investment funds) and its Cash.
Net assets at 31 December 2022 were £96.7m (2021: £139.6m), resulting in a
Net Asset Value (NAV) per share of 72 pence. The Group's Net assets are
substantially made up of its investments in the portfolio. The Fair Value of
the funds on the balance sheet at the year-end is £80.0m.
The Group's year-end cash balance of £17.2m demonstrates that it is able to
continue to invest in exciting new venture opportunities whilst meeting its
day-to-day operational expenditure.
During the year the Group repaid £1.1m it owed in respect of a £5m revolving
credit facility put in place for the benefit of Forward Advances. As a result,
the Group no longer holds any institutional debt on its balance sheet.
The Group seeks to maintain sufficient cash availability for a period greater
than 12 months.
Consolidated statement of comprehensive income
The largest movement on the consolidated statement of comprehensive income is
the Fair Value change in the value of the portfolio companies, being a loss of
£45.7m (2021: gain of £27.2m), a 39.0% decline year on year.
Revenue generated in fees by Forward Advances was £346k (2021: £266k) the
increase year on year due to the full-year effect of loans being collected
versus the six months in 2021. Prior to the IPO midway through 2021, Forward
Advances was an investment in one of the Funds, so revenue was not included in
the Group's results. Revenue generated by the Studio was £132k (2021:
£543k), the substantial decrease relating to the work completed by the Studio
for Forward Advances being eliminated in full on consolidation.
Net operating costs increased year-on-year to £7.7m (2021: £4.8m)
predominantly due to the inclusion of Forward Advances for a full 8 months and
the associated wind-down costs. During 2021, only 6 months of Forward Advances
costs were included due to it being in the fund prior to IPO.
Consolidated statement of cash flows
During the year the Group utilised £13.9m of cash, investments in new and
exciting startups totalled £2.4m (2021: £4.3m) with £7.3m (2021: £4.5m)
invested into the current portfolio supporting the companies with maintaining
their growth in innovative technology products and services. Cash generated
from realisations was £1.1m (2021: £8.2m). The Forward Advances Rolling
Capital Facility was fully repaid, along with interest totaling £1.1m. Cash
collected from the unwinding of the Forward Advances loan book generated cash
of £2.2m (2021 outlay: £2.3m). Net cash outflows from operating activities,
excluding Advances loan book movements, was £6.3m (2021: £5.4m).
2023 Outlook
The last year has been challenging for technology companies and venture
capital investors, but we remain confident that healthy returns can be
generated from the investment in early-stage UK startups over the long-term.
Our investment teams continue to see good deal flow and plan to invest in a
minimum of 4 new early-stage companies this year. We continue to support our
current portfolio with follow-on investments, albeit with tighter thresholds
so we only invest where long-term returns can be maximised for Forward and its
shareholders.
As recently reported in the Financial Times, dealmaking in the first quarter
of 2023 has suffered its slowest start since 2013 with the value of M&A
transactions dropping 45% year on year to $550bn, the largest decline since
2001 according to Refinitiv. It is generally considered that valuations remain
the main driver to depressed dealmaking. Whilst some of our portfolio
companies continue to be approached by prospective buyers seeking an
acquisition for strategic enhancement we understand founders wish to continue
to grow their companies to maximise potentially their single biggest wealth
creation opportunity to exit in a more favourable market. Accordingly, whilst
we are not budgeting for any significant realisations in 2023, we remain on
standby to support portfolio companies through any exit process.
Following the wind-down of Forward Advances in Q3 and the right sizing of the
remaining Forward team in Q4 of 2022, net operating costs will be closer to
the 2021 number of £4.8m in 2023.
Our portfolio contains a number of lean and capital-efficient businesses with
good cash runways and high growth prospects. As is the nature of venture, I do
expect a small number of the portfolio will falter as the prolonged tough
macro trading environment takes its toll on their business models. The recent
banking crisis triggered by Silicon Valley Bank in March 2023, coupled with
the recent increases in interest rates, has created challenging conditions for
fintech companies seeking additional funding and credit lines. As a
consequence, the valuations of fintech lending companies - which represent 7%
of the portfolio fair value - are now exposed to additional downside risk. In
particular, Koyo is most at risk as it has appointed advisors to secure their
future. As a result, it is likely Koyo's valuation of £2.3m, representing
2.9% of the portfolio fair value, will be fully written down by the interim
date.
Looking ahead to the next period, we wait patiently for the return of market
confidence whilst closely monitoring headwinds - and the impact that they have
on portfolio performance, valuations, exits and cash. To this end my 2023
focus will be on optimising the Group's cash to continue to invest in the next
generation of startups, support our investments and ensure efficiency in our
operational expenditure. As the markets open up, we expect to see performance
return as follow-on investments boost valuations, liquidation preference
pressures ease and our companies turn from resilience to revenue growth.
(1)Top 15 portfolio investments denote the most valuable companies held in
Forward's portfolio by Fair Value at a point in time. Except where otherwise
noted in this release, we refer to the Top 15 cohort as at 31 December 2022 to
provide a meaningful basis for comparison. At that time, the Top 15 comprised
Gravity Sketch, Robin AI, Spoke, Makers, OutThink, Ably, Apexx, Breedr, Juno,
KoruKids, Snaptrip, Plyable, Koyo Loans, Silico and Patch. The Top 15 is
updated in Forward's final year results.
Lloyd Smith
Chief Financial Officer
4th May 2023
FINANCIAL INFORMATION ON FORWARD PARTNERS GROUP PLC
Consolidated Statement of Comprehensive Income
Year Ended 31.12.22 Year Ended 31.12.21
£'000 £'000
Fair value change in gains on investments held at fair value through profit or (46,200) 27,247
loss
(Loss)/profit on disposal of investments (17) 34
Revenue 509 826
Interest income - 100
Total (loss)/income (45,708) 28,207
Administrative expenses (8,202) (5,770)
Total operating expense (8,202) (5,770)
(Loss)/profit from operations (53,910) 22,437
Finance costs (197) (88)
Carried interest charge 11,288 (5,650)
Depreciation, amortisation, and impairment (127) (213)
Share-based payments (137) (6)
(Loss)/profit before taxation (43,083) 16,480
Corporation tax credit/(expense) 33 (3)
(Loss)/profit for the year after tax attributable to owners
of the parent (43,050) 16,477
Other comprehensive income - -
Total comprehensive (loss)/income attributable to owners
of the parent (43,050) 16,477
Basic and diluted (Loss)/Earnings per Share from continuing operations
(32p) 12p
Consolidated Statement of Financial Position
31.12.22 31.12.21
£'000 £'000
Non-Current Assets
Intangible assets - 71
Financial assets held at fair value through profit or loss 80,003 117,597
Property, plant and equipment 21 35
Right of use assets - 37
Deferred tax asset 24 -
80,048 117,740
Current Assets
Trade and other receivables 208 1,411
Financial assets held at amortised cost 28 1,499
Financial assets held at fair value through profit or loss 67 804
Cash and cash equivalents 17,188 31,066
17,491 34,780
Total Assets 97,539 152,520
Current Liabilities
Trade and other payables 875 682
Lease Liabilities - 30
875 712
Non-Current Liabilities
Deferred tax liabilities - 9
Financial liabilities - 934
Provision for carried interest - 11,288
- 12,231
Total Liabilities 875 12,943
Net Assets 96,664 139,577
Capital and reserves attributable to equity holders of the Group
Called up share capital 1,346 1,346
Share premium account 130,991 130,991
Merger reserve (33,189) (33,189)
Share based payment reserve 143 6
Retained earnings (2,627) 40,423
96,664 139,577
Basic and diluted NAV per share 72p 104p
The financial statements were approved and authorised for issue by the board
of directors on 3 May 2023, and were signed on its behalf by:
Lloyd Smith
Director
Consolidated Statement of Cash Flows
31.12.22 31.12.21
£'000 £'000
Cash flows from operating activities
(Loss)/Profit before tax (43,083) 16,480
Adjustments to reconcile operating profit to net cash flows used in operating
activities
Revaluation of investments held at fair value through profit or loss 46,200 (27,247)
Loss on disposal of fixed assets 18 2
Finance expense 197 88
Carried interest (credit)/charge (11,288) 5,650
Depreciation, amortisation and impairment 127 213
Decrease/(increase) in trade and other receivables 1,203 (825)
Decrease/(increase) in loans receivable 2,208 (2,303)
Increase in trade and other payables 193 240
Share based payments 137 6
Net cash outflows from operating activities (4,088) (7,696)
Tax received - 23
Net cash outflows from operating activities (4,088) (7,673)
Cash flows used in investing activities
Purchase of investments (9,714) (11,399)
Proceeds from disposals 1,094 8,175
Purchase of property, plant and equipment (19) (21)
Sale of property, plant and equipment 10 -
Purchase of intangible assets - (79)
Net cash outflows from investing activities (8,629) (3,324)
Cash flows used in financing activities
Proceeds from borrowings - 1,000
Repayment of borrowings (934) -
Fees paid on issuance of loan - (84)
Interest paid (197) (70)
Repayment of leasing liabilities (30) (178)
Change in investment in Fund I & II - 6,568
Gross proceeds from issue of share capital - 36,600
Equity issuance costs - (2,276)
Net cash (outflow)/inflow from financing activities (1,161) 41,560
Net (decrease)/increase in cash and cash equivalents (13,878) 30,563
Cash and cash equivalents at beginning of year 31,066 503
Cash and cash equivalents at end of year 17,188 31,066
Consolidated Statement of Changes in Equity
Share Based Payment Reserve
Non- Controlling Interest £'000
Share Share Merger Reserve £'000 Retained
Capital Premium £'000 Earnings Total
£'000 £'000 £'000 £'000
Balance at 1 January 2021 - - 49,373 20,368 - 11,962 81,703
Issue of Ordinary Shares 1,346 133,267 - - - - 134,613
Listing fees expensed to Share Premium - (2,276) - - - - (2,276)
Change in merger reserve arising on reorganisation - - (82,562) (20,368) - 11,984 (90,946)
Options granted and awards exercised - - - - 6 - 6
Profit for year attributable to equity holders - - - - - 16,477 16,477
Balance at 31 December 2021 1,346 130,991 (33,189) - 6 40,423 139,577
Options granted and awards exercised - - - - 216 - 216
Options forfeited - - - - (79) - (79)
Profit for year attributable to equity holders - - - - - (43,050) (43,050)
Balance at 31 December 2022 1,346 130,991 (33,189) - 143 (2,627) 96,664
Notes to the Consolidated Financial Statements
General information
The consolidated financial statements of Forward Partners Group Plc and its
subsidiaries (collectively, the Group), for the year 1 January 2022 to 31
December 2022, were authorised for issue in accordance with a resolution of
the directors on 3 May 2023. Forward Partners Group Plc (the Company or the
parent) is a limited company incorporated and domiciled in England and Wales
and whose shares are publicly traded on AIM, a sub-market of the London Stock
Exchange. The address of the registered office is given at the end of this
report.
The nature of the Group's operations and its principal activities are set out
in the strategic report. Information on the Group's structure is provided
below under the Basis of consolidation. Information on other related party
relationships of the Group is provided in Note 22 of the Group's consolidated
financial statements. The financial statements are presented in pounds
sterling (GBP) which is the Group's functional and presentation currency. The
figures shown in the financial statements are rounded to the nearest thousand
pounds.
1. Accounting Policies
Basis of preparation of financial statements
The Group's financial statements have been prepared in accordance with
UK-adopted International Accounting Standards ('IFRS'). The financial
statements have been prepared under the historical cost convention except as
noted below.
The preparation of financial statements in conformity with IFRS requires the
use of certain critical accounting estimates. It also requires management to
exercise its judgement in the process of applying the Group's accounting
policies. The areas involving a higher degree of judgement or complexity, or
areas where assumptions and estimates are significant to the financial
statements are disclosed in Note 2.
Accounting standards require the directors to consider the appropriateness of
the going concern basis when preparing the financial statements. The directors
confirm that they consider that the going concern basis remains appropriate as
the Group has adequate resources to continue in operational existence for the
foreseeable future based upon forecasts.
Basis of consolidation
The Group financial statements consolidate the financial statements of Forward
Partners Group Plc and all its subsidiary undertakings made up to 31 December
2022.
Name of Undertaking Nature of Business Country of Incorporation % Ownership
Forward Partners Management Company Limited Management Company England 100%
Forward Partners Venture Advance Ltd Provider of business loans England 100%
Forward Partners General Partner Limited* General Partner England 100%
Forward Partners Carried Interest General Partner Limited* General Partner Scotland 100%
Forward Partners 1 L. P. Limited Partner Fund England 100%
Forward Partners II L. P. Limited Partner Fund England 100%
Forward Partners III L. P. Limited Partner Fund England 100%
FPGP Nominees Ltd* Dormant Scotland 100%
Forward Partners Investment Company Limited* (dissolved on 22 February 2022) Dormant England 100%
* These companies are either direct or indirect subsidiaries of Forward
Partners Management Company Limited.
Subsidiaries are entities over which the Group has control. Control is the
power to govern the financial and operating policies of the entity so as to
obtain benefits from its activities. The Group obtains and exercises control
through voting rights.
1. ACCOUNTING POLICIES (continued)
Consolidation of the Carried Interest Partnership
The Group participates in the carried interest issued by Forward Partners 1 L.
P., Forward Partners II L. P., and Forward Partners III L. P. (collectively,
'the Funds') through Forward Partners Carried Interest General Partner
Limited's (the 'CI GP') carry rights in the carried interest partner, Forward
Partners Carried Interest L.P. (the 'CIP'). The participants in the CIP carry
include the CI GP and certain of the Group's employees and others connected to
the underlying funds. The CIP has been established to facilitate payments of
carried interest from the fund to carried interest participants.
The directors have undertaken a control assessment of the 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 Funds, the CIP 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 CIP and the carry rights in the
Funds 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 from the gains on the movement in
its underlying investment portfolio. While the Group has some power over the
Board of the CIP, 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
from the CIP 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 of approximately 6% (2021: 6%) 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.
Accounting for merger on formation of the group
Inter-company transactions (including unrealised gains/losses) and balances
are eliminated. Unrealised losses are also eliminated, unless the transaction
provides evidence of an impairment of the asset transferred. Amounts reported
in the financial statements of subsidiaries had been adjusted where necessary
to ensure consistency with the accounting policies adopted by the Group.
Immediately prior to the Forward Partners Group Plc's admission to AIM, the
company acquired all equity interests in Forward Management Company Limited
and its subsidiaries. Forward Partners Management Company Limited became a
100% owned direct subsidiary of Forward Partners Group Plc and was
consolidated into these financial statements. For purposes of this transaction
Forward Partners Management Company Limited was deemed to be the accounting
acquirer, as Forward Partners Group Plc had a majority shareholder post
admission who had a controlling interest in the underlying funds that were
acquired. Therefore, the consolidated financial statements of the reporting
entity, Forward Partners Group Plc, had been prepared as a continuation of the
accounting acquirer's financial statements.
Contemporaneous to Forward Partners Group Plc's admission to AIM, the company
acquired all the equity interests in Forward Partners 1 L. P., Forward
Partners II L. P. and Forward Partners III L. P.. The Funds became 100% owned
direct subsidiaries of Forward Partners Group Plc and consolidated into these
financial statements.
The day after Forward Partners Group Plc's admission to AIM, the company
acquired all equity interests in Forward Partners Venture Advance Ltd. Forward
Partners Venture Advance Ltd became a 100% owned direct subsidiary of Forward
Partners Group Plc and consolidated into these financial statements.
1. ACCOUNTING POLICIES (continued)
Accounting for merger on formation of the group (continued)
In preparing these consolidated financial statements, the Group is required to
determine whether the transactions fall within the scope of IFRS 3 Business
Combinations to determine the appropriate basis for disclosure and the
substance of the transaction. It is the directors' view that the transactions
fall within the scope exclusion of IFRS 3, as a common control transaction and
as such an alternative accounting policy must be selected. In the opinion of
the directors, there is no other IFRS that specifically applies to these
transactions.
IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors (paras
10-12) requires the Company to develop and apply an accounting policy suitable
to the transaction, in accordance with the particulars laid out in the
standard. IAS 8 paragraph 12 also states that "In making the judgement
described in paragraph 10, management may also consider the most recent
pronouncements of other standard-setting bodies that use a similar conceptual
framework to develop accounting standards, other accounting literature and
accepted industry practices."
In reviewing the scope of the mergers and group formation, including IFRS 3
Business Combinations the directors have determined the selection of an
accounting policy analogous to that of the UK's FRS 102 section 19 Business
Combinations and Goodwill (merger accounting method) will provide the most
relevant, reliable and representative accounting treatment, which reflects the
economic substance of the transactions.
In applying merger accounting when preparing these Consolidated Financial
Statements, to the extent the carrying value of the assets and liabilities
acquired under merger accounting is different to the cost of investment, the
difference is recorded in equity within the merger reserve. Under merger
accounting the results of the Group entities are combined from the beginning
of the comparative period before the merger occurred.
Going concern
The directors have considered the going concern assessment undertaken at
Group. The directors have reviewed cash flow forecasts for the Group and
considered the impact of economic headwind and market conditions on them,
which has included stress testing the Group's cash flow forecasts for severe
but plausible downside scenarios and performing a reverse stress test covering
the period 12 months from date of signing the financial statements (the going
concern assessment period). This period is appropriate due to continued
economic uncertainty. The directors have a reasonable expectation that the
Group has adequate resources and cash reserves to continue in operational
existence over the going concern assessment period even if the resulting
economic instability were to have an impact on the portfolio valuations.
After making reasonable enquiries and having considered the matters described
above, the directors believe that the Group is a sustainable business, will be
able to meet its liabilities as they fall due and will have adequate resources
to continue in operational existence from the date of approval of these
financial statements for a period of at least 12 months. Accordingly, the
directors continue to adopt the going concern basis in preparing the financial
statements for the year ended 31 December 2022.
Revenue recognition
Revenue is recognised at an amount that reflects the consideration to which
the Group is expected to be entitled in exchange for transferring services to
a customer. For each contract with a customer, the Group: identifies the
contract with a customer, identifies the performance obligations in the
contract; determines the transaction price which takes into account the time
value of money; allocates the transaction price to the separate performance
obligations on the basis of the relative standalone selling price of each
distinct service to be delivered; and recognises revenue when or as each
performance obligation is satisfied in a manner that depicts the transfer to
the customer of the services promised.
1. ACCOUNTING POLICIES (continued)
Revenue recognition (continued)
Revenue stream Nature, timing of satisfaction of performance obligations and significant
payment terms
Advances Fee Income Forward Advances originates two types of loans, revenue based variable
repayment and fixed repayment loans.
Variable repayment loans
The first type of loan has a variable repayment obligation calculated on the
revenue generated by the client. These loan receivables are recognised at fair
value; therefore, Revenue arises from the movement in the fair value of the
loan receivable through profit or loss.
Fixed repayment
The second type of loan receivable originated by Forward Advances has a fixed
repayment obligation, these loans are recognised at amortised cost and
therefore Interest Income is recognised using the effective interest rate
method to give a constant rate of income based on the amount outstanding.
Both types of loan income are subject to the requirements of IFRS 9.
Accordingly, please see the Financial Instruments section within Accounting
Policies for further detail on the specific revenue recognition principles.
Studio Services Income The Group provides services such as product discovery, mobile & web
engineering, branding & design, marketing & growth, talent acquisition
services and people & culture consultancy services.
The performance obligation for studio services overall is that the Group
delivers the service to the customer that the customer has contracted with the
Group to deliver, subject to the requirements of IFRS 15.
For recruitment placement, revenue is recognised as performance conditions
detailed in the placement agreement are fulfilled.
Revenue from other studio services is recognised over time as the Group
recognises revenues monthly for the services delivered in that month. Revenue
recognition for studio services is based on the number of hours worked by each
employee on the customer engagement multiplied by the hourly rate.
An unbilled receivable (accrued income) is recognised when a performance
obligation to a customer is satisfied (and the unconditional right to receive
payment is present) but the actual invoice has not been raised and sent to the
customer at the year end. Post year end, the invoices are raised and sent to
the customer at which point the unbilled receivable is reclassified as trade
receivable.
Recruitment fees are recognised as performance conditions detailed in the
placement agreement are fulfilled. Portion of the recruitment fees
attributable to performance conditions that have not been met are recorded as
deferred revenues.
Finance income and costs
Finance costs comprise interest charged on bank loans in the Forward Advances
business and lease liabilities.
Segmental reporting
An operating segment is defined as a component of an entity:
● that engages in business activities from which it could earn
revenues and incur expenses (including revenues and expenses relating to
transactions with other components of the same entity);
● whose operating results are regularly reviewed by the entity's
Chief Operating Decision Makers (CODM) to make decisions about resources to be
allocated to the segment and assess its performance; and
● for which discrete financial information is available.
1. ACCOUNTING POLICIES (continued)
Segmental reporting (continued)
During the year ended 31 December 2022, the CODM is considered to be the Board
of Directors which consists of two executive Directors, three non-executive
Directors and two executive Directors of the subsidiaries who are not
Directors of Forward Partners Group Plc. The executive Directors take an
active role in the operations of the Group on a day-to-day basis
The Group reports its business activities in three areas: venture capitalist
services, loan advances and Studio services, which is reported in a manner
consistent with the internal reporting to the Board of Directors.
Leases
At inception of a contract, the Group assesses whether a contract is, or
contains, a lease. A contract is, or contains, a lease if the contract conveys
the right to control the use of an identified asset for a period of time in
exchange for consideration. To assess whether a contract conveys the right to
control the use of an identified asset, the Group assesses whether:
● the contract involves the use of an identified asset - this may
be specified, explicitly or implicitly, and should be physically distinct or
represent substantially all of the capacity of a physically distinct asset. If
the supplier has a substantive substitution right, then the asset is not
identified;
● the Group has the right to obtain substantially all of the
economic benefits from the use of the asset throughout the period of use; and
● the Group has the right to operate the asset; or
● the Group designed the asset in a way that predetermines how and
for what purpose it will be used.
At inception or on reassessment of a contract that contains a lease component,
the Group allocates the consideration in the contract to each lease component
on the basis of their relative stand-alone prices.
The Group recognises a right-of-use asset and a lease liability at the lease
commencement date. The right-of-use asset is initially measured at cost, which
comprises the initial amount of the lease liability adjusted for any lease
payments made at or before the commencement date, plus any initial direct
costs incurred and an estimate of costs to dismantle and remove the underlying
asset or to restore the underlying asset, less any lease incentives received.
The right-of-use asset is subsequently depreciated using the straight-line
method from the commencement date to the earlier of the end of the useful life
of the right-of-use asset or the end of the lease term.
The lease liability is initially measured at the present value of the 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. The lease liability is
measured at amortised cost using the effective interest method. It is
re-measured when there is a change in future lease payments.
When the lease liability is re-measured, a corresponding adjustment is made to
the carrying amount of the right-of-use asset or is recorded in the income
statement if the carrying amount of the right-of use asset has been reduced to
zero.
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 low-value assets, including IT equipment. The Group would recognise the
lease payments associated with these leases as an expense on a straight-line
basis over the lease term.
Foreign currencies
Transactions in foreign currencies are recorded at the rate of exchange at the
date of the transaction. Monetary assets and liabilities denominated in
foreign currencies at the date of the Group statement of financial position
are reported at the rates of exchange prevailing at that date. All foreign
exchange gains and losses are presented in the statement of comprehensive
income within the administrative expenses heading.
1. ACCOUNTING POLICIES (continued)
Intangible assets
All finite-life intangible assets are accounted for using the cost model
whereby capitalised costs are amortised on a straight-line basis over their
estimated useful lives. Residual values and useful lives are reviewed at each
reporting date. In addition, they are subject to impairments testing as
described below. Forward Advances software development costs are amortised on
a straight-line basis over their useful economic lives.
Forward Advances software - 20% of cost on a straight-line basis
Management have determined that 5 years is the most appropriate life as the
development of the software is expected to service customers for the
foreseeable future.
Impairment
For the purposes of assessing impairment, assets are grouped at the lowest
levels for which there are separately identifiable cash flows (cash-generating
units). As a result, some assets are tested individually for impairment and
some are tested at cash-generating unit level. All property, plant and
equipment with a finite life are tested for impairment whenever events or
changes in circumstances indicate that the carrying amount may not be
recoverable.
An impairment loss is recognised for the amount by which the assets or
cash-generating unit's carrying amount exceeds its recoverable amount. The
recoverable amount is the higher of fair value, reflecting market conditions
less costs to sell, and value in use, based on an internal discounted cash
flow evaluation. All assets are subsequently reassessed for indications that
an impairment loss previously recognised may no longer exist. Impairment
losses are charged to administrative expenses.
Property, plant and equipment
Property, plant and equipment are stated at cost, net of depreciation and any
provision for impairment. Cost includes expenditure that is directly
attributable to the acquisition of the items. Subsequent costs are included in
the asset's carrying amount only when it is probable that future economic
benefits associated with the item will flow to the Group and the cost of the
item can be measured reliably. All other repairs and maintenance are charged
to profit and loss in the period in which they are incurred.
Depreciation is provided on all property, plant and equipment, other than
freehold land, at rates calculated to write off the cost, less estimated
residual value, of each asset over the shorter of the expected useful life or
lease term, as follows:
Long leasehold & leasehold improvements - Over the term of the lease
Right of use assets - Over the term of the lease
Fixtures and fittings - 25% of cost on a straight-line basis
Computer equipment - 33% of cost on a straight-line basis
An item of property, plant and equipment and any significant part initially
recognised is derecognised upon disposal (i.e., at the date the recipient
obtains control) or when no future economic benefits are expected from its use
or disposal. Any gain or loss arising on derecognition of the asset
(calculated as the difference between the net disposal proceeds and the
carrying amount of the asset) is included in the statement of comprehensive
income when the asset is derecognised.
The residual values, useful lives and methods of depreciation of property,
plant and equipment are reviewed at each financial year end and adjusted
prospectively, if appropriate.
Cash and cash equivalents
Cash and cash equivalents comprise cash in hand, demand deposits, bank
overdrafts, and short-term, highly liquid investments that are readily
convertible into known amounts of cash and are subject to an insignificant
risk of changes in value.
1. ACCOUNTING POLICIES (continued)
Financial instruments
Recognition and derecognition
Financial assets and financial liabilities are recognised when the Group
becomes a party to the contractual provisions of the financial instrument.
Financial assets are derecognised when the contractual rights to the cash
flows from the financial asset expire, or when the financial asset and
substantially all the risks and rewards are transferred. A financial liability
is derecognised when it is extinguished, discharged, cancelled or expires.
Classification and initial measurement of financial assets
Except for those trade receivables that do not contain a significant financing
component and are measured at the transaction price in accordance with IFRS
15, all financial assets are initially measured at fair value adjusted for
transaction costs (where applicable).
Financial assets, other than those designated and effective as hedging
instruments, are classified into one of the following categories:
● amortised cost;
● fair value through profit or loss (FVTPL); or
● fair value through other comprehensive income (FVOCI).
In the year presented the Group does not have any financial assets that would
be designated as hedging instruments or financial assets categorised as FVOCI.
The classification is determined by both:
● the entity's business model for managing the financial asset;
and
● the contractual cash flow characteristics of the financial
asset.
All revenue and expenses relating to financial assets that are recognised in
profit or loss are presented within finance costs, finance income or other
financial items, except for impairment of trade receivables which is presented
within other expenses.
Subsequent measurement of financial assets
Financial assets are measured at amortised cost if the assets meet the
following conditions (and are not designated as FVTPL):
● they are held within a business model whose objective is to hold
the financial assets and collect its contractual cash flows; and
● the contractual terms of the financial assets give rise to cash
flows that are solely payments of principal and interest on the principal
amount outstanding.
After initial recognition, these are measured at amortised cost using the
effective interest rate (EIR) method. Discounting is omitted where the effect
of discounting is immaterial.
The Group's financial assets at amortised cost includes trade receivables,
loan receivables on a fixed repayment schedule and a loan to a director
included under other current financial assets (Note 8 of the Group's
consolidated financial statements).
Financial assets at fair value through profit or loss (FVTPL) are carried in
the statement of financial position at fair value with net changes in fair
value recognised in the statement of profit or loss. Further, financial assets
whose contractual cash flows are not solely payments of principal and interest
are accounted for at FVTPL.
1. ACCOUNTING POLICIES (continued)
Financial instruments (continued)
Impairment of financial assets
Trade Receivables are accounted for under the simplified approach. IFRS 9's
impairment requirements use forward-looking information to recognise expected
credit losses - the 'expected credit loss (ECL) model'. Instruments within the
scope of the requirements included loans and other debt-type financial assets
measured at amortised cost and FVOCI, trade receivables, contract assets
recognised and measured under IFRS 15, loan commitments and some financial
guarantee contracts (for the issuer) that are not measured at fair value
through profit or loss.
The Group considers a broader range of information when assessing credit risk
and measuring expected credit losses, including past events, current
conditions, reasonable and supportable forecasts that affect the expected
collectability of the future cash flows of the instrument.
The Group applies the impairment requirements of IFRS 9. The IFRS 9 impairment
model requires a three-stage approach:
● Stage 1 includes financial instruments that have not had a
significant increase in credit risk since initial recognition or that have low
credit risk at the reporting date. For these assets, 12-month expected credit
losses ("ECLs") (that is, expected losses arising from the risk of default in
the next 12 months) are recognised and interest income is calculated on the
gross carrying amount of the asset (that is, without deduction for credit
allowance).
● Stage 2 includes financial instruments that have had a significant
increase in credit risk since initial recognition (unless they have low credit
risk at the reporting date) but are not credit-impaired. For these assets,
lifetime ECLs (that is, expected losses arising from the risk of default over
the life of the financial instrument) are recognised, and interest income is
still calculated on the gross carrying amount of the asset. The Group assumes
there has been a significant increase in credit risk if outstanding amounts on
the financial assets exceed 30 days, in line with the rebuttable presumption
per IFRS 9 at which point the assets are considered to be stage 2.
● Stage 3 consists of financial assets that are credit-impaired,
which is when one or more events that have a detrimental impact on the
estimated future cash flows of the financial asset have occurred. For these
assets, lifetime ECLs are also recognised, but interest income is calculated
on the net carrying amount (that is, net of the ECL allowance). The Group
defines a default, classified as stage 3, as an asset with any outstanding
amounts exceeding a 60-day due date, which reflects the point at which the
asset is considered to be credit-impaired.
The Group assesses on a forward-looking basis the expected credit losses
associated with its financial assets carried at amortised cost and recognises
a loss allowance for such losses at each reporting date. The measurement of
ECLs reflects:
● an unbiased and probability-weighted amount that is determined by
evaluating a range of possible outcomes;
● the time value of money; and
● reasonable and supportable information that is available without
undue cost or effort at the reporting date about past events, current
conditions and forecasts of future economic conditions.
If in a subsequent period the amount of the impairment loss decreases and the
decrease can be related objectively to an event occurring after the impairment
was recognised, the previously recognised impairment loss is reversed, to the
extent that the carrying value of the asset does not exceed its amortised cost
at the reversal date.
Non-current financial assets
Non-current financial assets comprise investments in unquoted equity
instruments, quoted equity investments and loan notes (unquoted investments)
which are measured at fair value.
Fair value of the underlying portfolio of investments will be estimated using
one or more of the below valuation methods at each calendar quarter end:
● Market approach based on multiples, being principally
price-revenue or price-earnings multiples
● Probability-weighted expected return method (PWERM)
● Quoted equity investments are based on the bid price at the
reporting date.
1. ACCOUNTING POLICIES (continued)
Financial instruments (continued)
When the Price of a Recent Investment ("PoRI"), resulting from an orderly
transaction, is an appropriate starting point for estimating fair value, it
will be used as a calibration point. For the calibration, adequate
consideration will be given to the current facts and circumstances, including,
but not limited to, changes in the market or changes in the performance of the
investee company.
Where the funds have reason to believe the investee company is about to be
wound up or has suffered a significant downturn in prospects, it will write
the value down to zero or to whatever value is in our best estimate
appropriate. Any gain or loss on revaluation is recognised immediately in the
profit and loss account.
The values the funds have assigned to the investments are based upon available
information and do not necessarily represent amounts which might ultimately be
realised. Due to the inherent uncertainty of the valuation, the estimated fair
value may differ significantly from the values that would have been determined
had the investments been liquidated and those differences could be material.
The value of the Group's non-current financial assets are held at fair value
through profit or loss, any listed investments are valued on the quoted price
at the balance sheet date.
Changes in fair value are recognised in the profit and loss.
Trade and other receivables
The Group makes use of a simplified approach in accounting for trade
receivables and records the loss allowance as lifetime expected credit losses.
These are the expected shortfalls in contractual cash flows, considering the
potential for default at any point during the life of the financial
instrument. In calculating, the Group uses its historical experience, external
indicators and forward-looking information to calculate the expected credit
losses using a provision matrix.
The Group assesses impairment of trade receivables on a collective basis as
they possess shared credit risk characteristics they have been grouped based
on the days past due. Refer to Note 8 of the Group's consolidated financial
statements for a detailed analysis of how the impairment requirements of IFRS
9 are applied.
Loan receivables
The Group has determined that loan receivables with fixed repayment
obligations are financial assets which are measured at amortised cost.
Further, loan receivables with variable repayments and other financial assets
are measured at FVTPL" .
Classification and measurement of financial liabilities
The Group's financial liabilities include borrowings and trade and other
payables.
Financial liabilities are initially measured at fair value, and, where
applicable, adjusted for transaction costs unless the Group designated a
financial liability at FVTPL.
Classification and measurement of financial liabilities continued)
Subsequently, financial liabilities are measured at amortised cost using the
effective interest method except for financial liabilities designated at
FVTPL, which are carried subsequently at fair value with gains or losses
recognised in profit or loss.
All interest-related charges and, if applicable, changes in an instrument's
fair value that are reported in profit or loss are included within finance
costs or finance income.
1. ACCOUNTING POLICIES (continued)
Taxation
Current tax is the tax currently payable based on the taxable profit for the
year.
Deferred tax is provided in full on temporary differences between the carrying
amounts of assets and liabilities and their tax bases, except when, at the
initial recognition of the asset or liability, there is no effect on
accounting or taxable profit or loss under a business combination. Deferred
tax is determined using tax rates and laws that have been substantially
enacted by the statement of financial position date, and that are expected to
apply when the temporary difference reverses.
Tax losses available to be carried forward, and other tax credits to the
Group, are recognised as deferred tax assets, to the extent that it is
probable that there will be future taxable profits against which the temporary
differences can be utilised.
Changes in deferred tax assets or liabilities are recognised as a component of
the tax expense in the statement of comprehensive income, 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 equity.
Provisions
These are recognised when the Group has a present legal or constructive
obligation as a result of past events, when it is probable that an outflow of
resources will be required to settle the obligation, and the amount can be
reliably estimated.
Provisions are measured at the present value of the expenditure expected to be
required to settle the obligation, using a pre-tax rate that reflects current
market assessments of the time value of money and the risks specific to the
obligation. The increase in the provision due to the passage of time is
recognised as a finance cost.
Carried interest
The Group has established carried interest plans for the Executive Directors,
other members of the investment team and certain other employees (together the
"Plan Participants") in respect of any investments and follow-on investments
made within the Groups Limited Partnership Funds. Plan Participants will
receive, the amounts as set out in the table below of the net realised cash
profits from the investments and follow-on investments made over the relevant
period once the Group has been repaid the Priority Profit Share (PPS) and
received an aggregate amount equal to 6% per annum (the 'hurdle') calculated
on a monthly basis, compounded annually on the initial capital and loan funds
put into the partnerships to fund the investments and PPS (the 'Preferred
Return'). The Plan Participants' return is subject to a "catch-up" in their
favour.
Carried interest distribution
Limited Partnership Catch Up Profit Share Hurdle
Fund I 100% 20.8% higher of 6% or the Bank of England Base Rate plus 2%, but not exceeding 8%
Fund II 50.0% 20.0% 6.0%
Fund III 50.0% 10.0% 6.0%
The carried interest plans run from inception to cessation of the partnership
for Fund I and II and for Fund III the carried interest fee operates in
respect of investments made during a 24 month period and related follow-on
investments made for a further 36 month period, save that the first carried
interest fee shall be in respect of the period from the Group admission to AIM
to 31 December 2021.
Carried interest is measured at FVTPL with reference to the performance
conditions described above and is accounted for using the Ownership Model.
Under the Ownership Model, carried interest is recognised as reallocation of
profits of the Funds between the partners. On a consolidated basis, carried
interest reserves is eliminated and the portion of carried interest reserve
due to external parties is presented as a financial liability of the Group.
1. ACCOUNTING POLICIES (continued)
Carried interest (continued)
Carried Interest is calculated based on the valuation of the Company's
investments as at the year end, assuming all the investments were converted to
cash at that point and net of selling costs. The actual amount payable will be
dependent on the amount and timing of the actual realisations of the portfolio
investments. At each valuation date, carried interest balance is adjusted to
reflect the impact of investment valuation on the amount of carried interest
to be payable. A decrease in the fair value of the investment portfolio at
valuation date would result in a decline in the carried interest value. At a
consolidated level, this would result in a credit adjustment to the total
carried interest expense recognised for the Group.
Based on the investment valuations as at 31 December 2022 the hurdle has not
been met by the Funds, on an unrealised basis, as such carried interest has
not been provided for in the year (2021: £11.3m). A credit adjustment of
£11.3m (2021: debit adjustment of £5.7m) to carried interest has been
charged to profit and loss to bring total carried interest provision to Nil
(2021: £11.3m). This will only be payable if the hurdle is met on a realised
basis and a carried interest fee is paid by the Group to the Plan
Participants. The carried interest arrangements have been set up with aim of
incentivising employees of the Group and aligning them with shareholders
through participation in the realised investment profits of the Group. The
Remuneration Committee determine the allocation of the carried interest
amongst employees of the Group. Each carried interest plan is subject to good
and bad leaver provisions. Any unvested carried interest resulting from a Plan
Participant becoming a leaver can be reallocated by the Remuneration
Committee. Non-executive Directors of the Company are not eligible to
participate in the carried interest arrangements.
Merger reserve
To the extent the carrying value of the assets and liabilities acquired under
merger accounting is different to the cost of investment, the difference is
recorded in equity within the merger reserve, along with an adjustment to
reflect the share capital and share premium of the legal parent. Under merger
accounting the results of the Group entities are combined from the beginning
of the comparative period before the merger occurred. Comparatives are
restated on a combined basis and adjustments made as necessary to achieve
consistency of accounting principles.
Share capital
Ordinary shares are classified as equity. Incremental costs directly
attributable to the issue of new shares or options are shown in equity as a
deduction, net of tax, from the proceeds. The proceeds of share issues,
received net of any directly attributable transaction costs, are credited to
share capital at nominal value and the excess credited to the share premium
account.
Retained earnings represent the accumulated profits and losses, less dividends
since the Group was formed.
Employee benefits and Pensions
The Group supports various personal pension arrangements and is auto-enrolment
compliant. Payments are made to individual defined contribution pension
schemes. Agreed contributions are charged to the statement of comprehensive
income as they become payable.
Employees (including directors) of the Group receive remuneration in the form
of share-based payments, whereby employees render services as consideration
for equity instruments (equity-settled transactions). The Group has not issued
any cash-settled awards during the year.
Equity-settled transactions
The cost of equity-settled transactions is determined by the fair value at the
date when the grant is made using an appropriate valuation model, further
details of which are given in Note 16 of the Group's consolidated financial
statements.
That cost is recognised in employee benefits expense (Note 15 of the Group's
consolidated financial statements), together with a corresponding increase in
equity (retained earnings), over the period in which the service and, where
applicable, the performance conditions are fulfilled (the vesting period). The
cumulative expense recognised for equity-settled transactions at each
reporting date until the vesting date reflects the extent to which the vesting
period has expired and the Group's best estimate of the number of equity
instruments that will ultimately vest. The expense or credit in the statement
of profit or loss for a period represents the movement in cumulative expense
recognised as at the beginning and end of that period.
1. ACCOUNTING POLICIES (continued)
Share based payments
Service and non-market performance conditions are not taken into account when
determining the grant date fair value of awards, but the likelihood of the
conditions being met is assessed as part of the Group's best estimate of the
number of equity instruments that will ultimately vest. Market performance
conditions are reflected within the grant date fair value. Any other
conditions attached to an award, but without an associated service
requirement, are considered to be non-vesting conditions. Non-vesting
conditions are reflected in the fair value of an award and lead to an
immediate expensing of an award unless there are also service and/or
performance conditions.
No expense is recognised for awards that do not ultimately vest because
non-market performance and/or service conditions have not been met.
When the terms of an equity-settled award are modified, the minimum expense
recognised is the grant date fair value of the unmodified award, provided the
original vesting terms of the award are met. An additional expense, measured
as at the date of modification, is recognised for any modification that
increases the total fair value of the share-based payment transaction, or is
otherwise beneficial to the employee. Where an award is cancelled by the
entity or by the counterparty, any remaining element of the fair value of the
award is expensed immediately through profit or loss. The dilutive effect of
outstanding options is reflected as additional share dilution in the
computation of diluted earnings per share (further details are given in Note
3).
Financial Risk Management
Financial risk
The Group's activities expose it to a variety of financial risks. The Group's
overall risk management programme focuses on the unpredictability of financial
markets and seeks to minimise potential adverse effects on the Group's
financial performance.
Risk management is carried out by the board which evaluate and manage
financial risks in close co-operation with the managing directors of the
subsidiary companies. The Group:
● regularly reviews credit extended to customers with appropriate
action being taken to minimise the cost of bad debts;
● balances risk and return when assessing where to place cash
surplus to the Group's immediate requirements; and
● keeps open options to employ debt finance to ensure that the
Group has sufficient funds for continuing operations and planned expansions.
Market risk
The Group is exposed to market risk through its use of financial instruments
and specifically to interest rate risk, currency risk, and certain other price
risks, which result from both its operating and investing activities. The
Group has interest-bearing assets which are subject to a fixed rate of
interest. Thus, the Group is exposed to interest rate risk, which is not
expected to have a significant impact on profit or loss or equity. The Group
considers its exposure to currency risk as minimal.
Foreign exchange risk
Most of the Group's transactions are carried out in GBP. Exposures to currency
exchange rates arise from the Group's portfolio company investments in
overseas companies, which are primarily denominated in US dollars (USD) and
Euros (EUR). The Group has two non-current asset investments dominated in US
dollars (USD). These investments will have revenues dominated in US dollars
(USD), which could impact the fair value, albeit do not have a direct impact
on the Group's operations. The Group monitors its exposure to foreign exchange
risks on a regular basis but its exposure to date has been de-minimis and the
cost of any FX hedging strategy is not deemed cost effective.
Concentration risk
The principal concentration risk for the Group arises from its significant
cash holding in a single banking institution which exposes it to potential
losses should the bank fails. As at 31 December 2022, the Group had cash
balance of £17.2m (2021: £31.1m) held between Barclays Bank UK Plc and
Silicon Valley Bank, split 33% and 67% respectively (2021: 18% and 82%
respectively). The Group monitors the performance of the banks it has
relationships with and is able to mitigate the risk through holding active
accounts in other banking institutions.
1. ACCOUNTING POLICIES (continued)
Financial Risk Management (continued)
Credit risk
Credit risk is the risk that a counterparty fails to discharge an obligation
to the Group. The Group is exposed to credit risk from financial assets
including cash and cash equivalents held at banks, trade and other receivables
and financial assets.
Liquidity risk
The Group keeps open avenues for securing debt finance to ensure that funds
may be called upon if and when needed for operations and payments due in
respect of acquisitions. The board monitors the Group's liquidity position on
the basis of expected cash flow on a regular basis. The following table
analyses the Group's financial liabilities, which will be settled on a net
basis, into relevant maturity groupings, based on the remaining period to
maturity at 31 December. The amounts disclosed are the contractual
undiscounted cash flows:
At 31 December 2022 Less than 1 year Between Between Over
£'000 1 & 2 yrs 2 & 5 yrs 5 yrs
£'000 £'000 £'000
Trade and other payables 127 - - -
Current financial liabilities - - - -
Non-current financial liabilities - - - -
Total 127 - - -
At 31 December 2021 Less than 1 year Between Between Over
£'000 1 & 2 yrs 2 & 5 yrs 5 yrs
£'000 £'000 £'000
Trade and other payables 165 - - -
Current financial liabilities 30 - - -
Non-current financial liabilities - - 934 11,288
Total 195 - 934 11,288
Capital risk
The Group's objectives when managing capital are to safeguard the Group's
ability to continue as a going concern in order to provide returns to
shareholders. The Group defines capital as loans, share capital plus reserves.
As a Small authorised UK AIFM, the Group has a capital requirement of £5k or
6/52 expenditure, whichever is higher, in line with Chapter 5 of the Interim
Prudential sourcebook for Investment Businesses (IPRU-INV). The board monitors
levels of cash and any excess levels have historically been used for
acquisition.
Other pricing sensitivities
The Group is exposed to other price risk in respect of its listed equity
securities and within the use of the multiples-based valuation method of
investments (Note 2). The investments in listed and unlisted equity securities
are considered long-term, strategic investments. In accordance with the
Group's policies, no specific hedging activities are undertaken in relation to
these investments. The investments are continuously monitored and voting
rights arising from these equity instruments are utilised in the Group's
favour.
2. SIGNIFICANT ACCOUNTING JUDGEMENTS, ESTIMATES AND
ASSUMPTIONS
The Group may be required to make estimates and assumptions concerning the
future. These estimates and judgements are based on historical experience and
other factors, including expectations of future events that are believed to be
reasonable under the circumstances. The resulting accounting estimates will,
by definition, seldom equal the related actual results. The principal areas
where judgement has been exercised are as follows:
Estimates and assumptions
The key assumptions concerning the future and other key sources of estimation
uncertainty at the reporting date, that have a significant risk of causing a
material adjustment to the carrying amounts of assets and liabilities within
the next financial year, are described below. The Group based its assumptions
and estimates on parameters available when the consolidated financial
statements were prepared. Existing circumstances and assumptions about future
developments, however, may change due to market changes or circumstances
arising that are beyond the control of the Group. Such changes are reflected
in the assumptions when they occur.
Non-current financial assets
The Group's Non-current financial assets held at fair value through profit or
loss represent our investments in the equity of quoted and unquoted companies
which are very thinly traded and for which no market exists. These investments
are measured at fair value through profit or loss at the year end. The Group's
valuation of investments measured at fair value through profit or loss is
therefore dependent upon estimations of the valuation of the underlying
portfolio companies.
The fair value of unlisted securities is established with reference to the
International Private Equity and Venture Capital Valuation Guidelines December
2022 as well as the IPEV Board, Special Valuation Guidance issued on 31 March
2020 in response to the Covid-19 crisis ("IPEV Guidelines"). An assessment
will be made at each measurement date as to the most appropriate valuation
methodology.
The Group invests in early-stage and growth technology companies. Given the
nature of these investments, there are often no current or short-term future
earnings or positive cash flows. Consequently, although not considered to be
the default valuation technique, the appropriate approach to determine fair
value may be based on a methodology with reference to observable market data,
being the price of the most recent transaction. Fair value estimates that are
based on observable market data will be of greater reliability than those
based on estimates and assumptions and accordingly where there have been
recent investments by third parties, the price of that investment will
generally provide a basis of the valuation. Recent transactions may include
post year-end as well as pre year-end transactions depending on the nature and
timing of these transactions.
If this methodology is used, its initial use and the length of period for
which it remains appropriate to use the calibration of last round price
depends on the specific circumstances of the investment, and the Group will
consider whether this basis remains appropriate each time valuations are
reviewed. In addition, the inputs to the valuation model (e.g. revenue,
comparable peer group, product roadmap) will be recalibrated to assess the
appropriateness of the methodology used in relation to the market performance
and technical/product milestones since the round and the company's trading
performance relative to the expectations of the round.
The Group considers alternative methodologies in the IPEV Guidelines, being
principally price-revenue or price-earnings multiples, depending upon the
stage of the asset, requiring management to make assumptions over the timing
and nature of future revenues and earnings when calculating fair value. When
using multiples, we consider public traded multiples in similar lines of
business, which are adjusted based on the relative growth potential and risk
profile of the subject company versus the market and to reflect the degree of
control and lack of liquidity.
Where a fair value cannot be estimated reliably, the investment is reported at
the carrying value at the previous reporting date unless there is evidence
that the investment has since been impaired.
In all cases, valuations are based on the judgement of the Directors after
consideration of the above and upon available information believed to be
reliable, which may be affected by conditions in the financial markets. Due to
the inherent uncertainty of the investment valuations, the estimated values
may differ significantly from the values that would have been used had a ready
market for the investments existed, and the differences could be material. Due
to this uncertainty, the Group may not be able to sell its investments at the
carrying value in these financial statements when it desires to do so or to
realise what it perceives to be fair value in the event of a sale.
2. SIGNIFICANT ACCOUNTING JUDGEMENTS, ESTIMATES AND
ASSUMPTIONS (continued)
Provision for expected credit losses of financial assets
On 24 August 2022 the Directors announced their intention to wind down the
Advances business, and from this date the business ceased offering new loans,
however the Directors intend for the business to continue to operate for the
purposes of recovering all receivables and settling its liabilities as they
fall due.
The assessment of the information correlation between recent trading history,
forward looking information, forecast economic conditions and ECLs is a
significant estimate. The amount of ECLs is sensitive to changes in
circumstances and of forecast economic conditions. The Group's recent credit
loss experience and forecast of economic conditions may also not be
representative of customer's actual default in the future. The information
about the ECLs on the Group's financial assets is disclosed in Note 8 &
9 of the Group's consolidated financial statements.
Accounting for merger on formation of the group
As disclosed in the Group's accounting policies the Group is required to apply
a suitable accounting policy to account for the formation of the Group. IAS 8
para 12 specifically states '…management may also consider the most recent
pronouncements of other standard-setting bodies that use a similar conceptual
framework to develop accounting standards, other accounting literature and
accepted industry practices…". Accordingly, managements considerations in
formulating the accounting policy are a significant accounting judgement.
Accounting for merger on formation of the group (continued)
The Group was formed in July 2021 to bring together the investment management
company and the funds it managed into a new venture capital investment group
realising the vision of members of the Management team which was shared with
key investors. Management consider that Forward Partners Management Company
Limited was the accounting acquirer of Forward Partners Group Plc as the
latter did not trade, nor was it considered a business, prior to the merger
and the transaction was not one that is subject to common control.
In relation to the merger of Forward Partners 1 Limited Partnership, Forward
Partners II Limited Partnership, Forward Partners III Limited Partnership with
Forward Partners Group Plc management applied merger accounting on the basis
that the transaction was one under common control. Management elected to
present the numbers on a retrospective presentation method, so that it is
consistent with the accounting treatment for Forward Management Company
Limited.
Management also considered that the transaction to acquire Forward Advances
took place under common control and therefore have applied the same policy as
those for the funds. Up until Forward Advances was acquired in 2021, the
company was held as an investment at fair value within the fund, Forward
Partners II Limited Partnership. From the date of the transaction, management
considered that the Forward Partners Venture Advance Ltd is no longer an
investment held at fair value, as its purpose was to enable the Group to offer
revenue-based financing to its customers as an alternative to venture capital
funding.
Assessment of whether Forward Advances meet the definition of a discontinued
operation
Following the announcement of Forward Advances' Directors of their intention
to wind down the business, the business ceased offering new loans, but
continues to operate for the purposes of recovering all receivables and
settling its liabilities as they fall due. We have considered whether Forward
Advances meet the definition of a discontinued operation in line with IFRS 5
and note that the operation cannot be classified as discontinued until the
final interest payment has been collected, which is the point that the
revenue-generating activity ceases.
3. EARNINGS PER SHARE & NAV PER SHARE
Basic earnings per share is calculated by dividing the profit attributable to
equity holders of the Group by the weighted average number of ordinary shares
in issue during the year.
31.12.22 31.12.21
Profit attributable to equity holders of the Group (£'000) (43,050) 16,477
Net assets (£'000) 81,703
96,664 139,577
Weighted average number of ordinary shares in issue 134,613,117 134,613,117
Basic earnings per share (pence per share) (32) 12
NAV* per share (pence per share) 72 104
96,664
139,577
Weighted average number of ordinary shares in issue
134,613,117
134,613,117
Basic earnings per share (pence per share)
(32)
12
NAV* per share (pence per share)
72
104
*NAV (Net Asset Value)
The basic and diluted EPS are the same as there are no dilutive financial
instruments.
4. ULTIMATE CONTROLLING PARTY
Forward Partners Group Plc, incorporated in England and Wales, is the ultimate
parent company of the Group. The ultimate beneficiary, and the largest
shareholder is Blackrock International Limited, which holds 70.4% of the
issued share capital of Forward Partners Group Plc.
5. EVENTS AFTER THE REPORTING DATE
The recent banking crisis triggered by Silicon Valley Bank's (SVB) collapse in
March 2023 and the recent increase in interest rates has made securing
additional funding and credit lines particularly challenging for fintech
lending companies. In particular, Koyo is most at risk as it has appointed
advisors to secure their future. As a result, it is likely Koyo's valuation of
£2.3m, representing 2.9% of the portfolio fair value, will be fully written
down by the interim date.
Shortly before the Bank of England's 10th March statement announcing its
intention to place SVB into an insolvency procedure, 92% of the funds the
Group held with SVB were transferred to Barclays Bank Plc. The Group is
currently reviewing its banking facilities in light of the recent banking
crisis with a view to ensuring their cash is only held with tier 1
institutions.
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