FORESIGHT

GROUP HOLDINGS

LIMITED

ANNUAL REPORT AND

FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 MARCH 2022

FORESIGHT GROUP HOLDINGS LIMITED Annual Report and Financial Statements 2022

OUR PURPOSE

At Foresight, we’re investing

for a smarter future.

Our world is changing, which means

finding new ways to drive progress and

seize opportunities. As a sustainable

growth investor, we invest in innovation,

back ambitious SMEs and make complex

investment products accessible.

This is how we’re creating

asustainablelegacy.

Foresight was awarded the Green Economy Mark at IPO. This recognises

companies that derive 50% or more of their revenues from environmental solutions.

OUR VALUES

Sustainable

impact

Achieve with

ambition

Relationships

with integrity

Collective

success

Shortlisted for

BestESGMateriality

Reporting(small cap)

FINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT OVERVIEW BUSINESS REVIEW PERFORMANCE AND RISKINTRODUCTION

FORESIGHT GROUP HOLDINGS LIMITED Annual Report and Financial Statements FY22 1

HIGHLIGHTS CONTENTS

Introduction

Highlights 1

Executive Chairman’s statement 2

Strategic report

Overview

At a glance 6

Investment case 8

Business model 18

Strategic priorities 20

Key performance indicators 22

Business review

Infrastructure 26

Private Equity 34

Foresight Capital Management 42

Sustainability 48

– UN Global Compact

communication on progress 52

– Natural environment 66

– Greenhouse gas emissions 68

– Climate disclosure: TCFD 70

Our stakeholders 82

Section 172(1) statement 86

Performance and risk

Financial review 88

Risks 96

Viability statement 106

Governance

Executive Chairman’s introduction 108

Board of Directors 110

Corporate governance 112

Nomination Committee report 118

Audit & Risk Committee report 122

Remuneration Committee report 126

Directors’ report 137

Financial statements

Independent Auditor’s report 143

Consolidated statement

of comprehensive income 151

Consolidated statement

of financial position 152

Consolidated statement

of changes in equity 154

Consolidated cash flow statement 155

Notes to the financial statements 157

Glossary 210

Corporate information 212

£8.8bn

AUM

(31 March 2021: £7.2bn)

23%

AUM growth

(31 March 2021: 59%)

£6.7bn

FUM

(31 March 2021: £5.1bn)

£1.3bn

Net organic fundraising

(31 March 2021: £0.8bn)

£86.1m

Total revenue

(31 March 2021: £69.1m)

86.9%

Recurring revenues

(31 March 2021: 90.3%)

£24.9m

Total comprehensive

income

(31 March 2021: £14.9m)

£31.8m

Core EBITDA pre-SBP

(31 March 2021: £23.9m)

83%

Overall staff engagement

score

5.17TWh

Renewable energy

generated

An excellent year delivering

significant progress across our

strategic priorities to grow,

diversify and expand.

1. ALTERNATIVE PERFORMANCE MEASURES

Alternative performance measures (“APMs”) have been included to better

reflect the Group’s underlying activities. Whilst appreciating that APMs are

not considered to be a substitute for, or superior, to IFRS measures, the

Group believes their selected use may provide stakeholders with additional

information, which will assist in their understanding of the business. In particular,

the Group believes Core EBITDA pre-SBP reflects the trading performance of

the underlyingbusiness without distortion from the uncontrollable nature of

the share-based payments charge. Recurring revenues % is recurring revenue

divided by total revenue.

2 FORESIGHT GROUP HOLDINGS LIMITED Annual Report and Financial Statements FY22

EXECUTIVE CHAIRMAN’S STATEMENT

We delivered on the

promiseswe made when

welisted in February 2021.

Bernard Fairman

Executive Chairman

Introduction

It is rarely the case that any

businessbenefits from all its divisions

performing strongly at the same

time, with an accommodative policy

background, but that is how we are

positioned right now. The diversity

of Foresight’s offering, with over

35retail and institutional solutions,

also provides a high degree of

resilience against changing market

conditions and positions us well for

continued success.

This was our first full year as a public

company and I am delighted to

report that it was highly successful,

as we delivered on the promises we

made when we listed in February

2021. Our financial performance was

ahead of our expectations, reflecting

the quality of our business, and

weachieved strong growth in AUM.

We also made excellent progress

with implementing our strategic

objectives as we launched new

funds, further diversified our

investor base, successfully deployed

significant amounts of capital into

both infrastructure and private

equity and expanded into new

assetclasses. Following the year end

we also completed our first strategic

acquisition post-IPO as described in

Post year end events below.

To support our growth, it is important

to align our people strategies with

our strategic objectives. This year

we have strengthened and expanded

our executive leadership team by

adding Ricardo Piñeiro (Co-Head

of Infrastructure), Matt Smith and

JamesLivingston (Co-Heads of

Private Equity)

These promotions reflect the key

contributions and impact each of

these individuals have made to

our success to date and the depth

of management strength we have

built at Foresight over the past

38years. Their contribution to the

executive leadership team will enrich

our business and shape the future

ofForesight.

The Group is a key player in two

markets that are growing rapidly:

worldwide renewable energy

infrastructure and UK-based regional

private equity. Renewable energy

infrastructure is being driven by

favourable economics, as well as the

heightened focus on energy security,

following Russia’s invasion of Ukraine.

This benefits both our

infrastructure funds and our

sustainability-orientated investment

products within the Foresight

CapitalManagement division.

We aim to be a

marketleader in both

renewable energy

infrastructure and

regional UK private

equity

337

INFRASTRUCTUREASSETS

131

PE PORTFOLIOCOMPANIES

43%

FCM AUM GROWTH

1. Subject to FCA approval.

STRATEGIC REPORT OVERVIEW BUSINESS REVIEW PERFORMANCE AND RISK GOVERNANCE FINANCIAL STATEMENTSINTRODUCTION

FORESIGHT GROUP HOLDINGS LIMITED Annual Report and Financial Statements FY22 3

In Private Equity, theeconomic impact

of the pandemic has further increased

the need for capital to flow to SMEs

in the UK regions, and our work here

aligns with the government’s agenda

to reduce regional inequalities and

create new jobs. These macro trends

will present opportunities for Foresight

for many years to come.

Operational and

financial highlights

The Group generated significant

organic growth across our

international footprint during the year,

resulting in an improved competitive

position. The substantial AUM growth

we delivered during the year, at

£1.6billion, reflect our position as

a player of increasing scale that is

well positioned to take advantage of

growing markets.

AUM rose by c.23% to £8.8 billion

(31March 2021: £7.2 billion), with FUM

up 30% to £6.7 billion (31March2021:

£5.1 billion).

Revenues increased by 25% to

£86.1million (31 March 2021:

£69.1million), largely driven by higher

management fees as a result of the

growth in FUM. Recurring revenues

were 86.9% of the total, within our

expected range of 85-90%. Total

revenues include performance fees,

principally from one of our private

equity funds (Foresight Regional

Investment Fund) which exceeded

its performance hurdles and our

expectations.

Core EBITDA pre share-based

payments grew 33% to £31.8 million

(31 March 2021: £23.9 million),

reflecting the revenue increase and

the operational gearing inherent

in the business. This resulted

in an associated margin of 37%

(31March2021: 34.6%).

More information on our financial

and operational performance can

be found in the Financial Review

and Business Review sections of

thisreport.

Dividend

The Board targets a total dividend

payout of 60% of profit after tax,

paying approximately one-third of

the total dividend for the year as an

interim dividend and approximately

two-thirds as a final dividend. In line

with this policy, we have declared

a final dividend of 9.8 pence per

share. Combined with the interim

dividend of 4.0pence per share,

this gives a total in respect of

the year of 13.8pence per share.

The final dividend will be paid

on 14 October2022 based on an

ex-dividend date of 18August 2022,

with a record date of 19August2022.

Moving forward, the Board’s

intention is that the interim dividend

will represent 30% of the prior year’s

total dividend.

People and culture

Foresight is a people business and

we continue to build on our people

strategies to attract, retain, develop

and engage with the talented and

ambitious people we employ. As

we grow the business, we look to

give people increased opportunity

to make a sustainable impact, to

achieve collective success working

for one of the market leaders and

create relationships based on

integrity. Thisyear, we have invested

significant time in developing our

employee value proposition, which

is covered in more detail on page 16

within the investment case.

As the pandemic abated and allowed

us to return to our offices, wewere

proud to achieve our highest-ever

employee engagement score, at 83%.

This reflects our focus on creating a

sustainable culture, where everyone

who joins usis given the opportunity

to thrive.

Delivering the opportunity

Growth that

powers change

GREW GROUP AUM BY

£1.6bn

NEW EQUITY TRANSACTIONS

ACROSS INFRASTRUCTURE

ANDPRIVATE EQUITY

4 FORESIGHT GROUP HOLDINGS LIMITED Annual Report and Financial Statements FY22

EXECUTIVE CHAIRMAN’S STATEMENT CONTINUED

We believe that sustainable businesses are

better businesses and will deliver superior

returns, particularly over the long term.

Sustainability

Our belief is that sustainability and

economics are interlinked which

means that first and foremost, the

projects and companies we invest

in must generate attractive returns

for our investors. Only by achieving

these returns will we be able to

raise further capital and continue

to deliver important benefits to

society. At the same time, we believe

that sustainable businesses are

better businesses and will deliver

superior returns, particularly over

the long term. It is this combination

of economics and sustainability

that underpins the culture we are

soproud of at Foresight.

Our Infrastructure investments are

playing a key role in the transition to

a low-carbon power system, while

in Private Equity we have a rigorous

approach to helping investee

companies manage their approach to

sustainability and ESG. We are also

addressing our own environmental

performance, having offset our scope

1, 2 and 3 emissions

this year and

initiated a plan to reach net zero

by2050.

In addition, we agreed aninnovative

collaboration withthe Eden Project

in June 2022, which will start with

the creation of a nature recovery

approach for Foresight. This will

define how businesses such as ours

can respond to nature recovery,

demonstrate tangible positive

outcomes for nature through our

portfolio of assets and engage with

communities and stakeholders to

create action.

Further details on this exciting new

partnership for the Group can be

found in our Sustainability section on

pages 48 to 81, which also includes

information on our continued support

for the UN Global Compact.

Post year end events

Following the year end we had

further significant success in our

private equity fundraising activity

with the launch of two newUK

regional funds and our first

non-UKfund in partnership with

AIBin Ireland.

We were also able to announce our

first strategic acquisition post-IPO

with the acquisition of the investment

mandates of Downing’s ventures

businesses. These provide an

excellent strategic fit for Foresight,

complementing our existing portfolio

and adding scale. This transaction

represents a significant strategic

step and, in conjunction with the new

funds, takes our private equity AUM

to over £1.2 billion.

Outlook

We have excellent positions and

proven expertise in sustainable

infrastructure and UK regional

private equity. The UK Government’s

levelling up agenda, supporting

business growth in the regions and

the growing demand for sustainable

investments and OEIC products are

just two examples of the long-term

structural trends in our core markets

that combine to create a rapidly

growing opportunity for Foresight,

asevidenced by the recent expansion

in our private equity footprint.

In addition, we believe that the

energy transition will affect many

sectors in addition to energy

itself, including industry and

transport. Wealso expect increased

appreciation of the importance

of natural capital, from more

sustainable farming practices to the

critical role of forests, soil and oceans

in tackling climate change and

promoting biodiversity. We will be

launching new funds to address these

incredibly important markets soon.

While the decarbonisation of energy

generation and the shift to a more

sustainable society are accelerating,

these changes cannot happen

instantly and they present multi-year

opportunities across our international

footprint, which we remain

committed to expanding. We are

therefore confident that the outlook

for the Group in the coming year and

beyond continues to be very positive.

Bernard Fairman

Executive Chairman

11 July 2022

1. Excluding category 15, emissions from investments.

STRATEGIC REPORT OVERVIEW BUSINESS REVIEW PERFORMANCE AND RISKINTRODUCTION GOVERNANCE FINANCIAL STATEMENTS

WHAT’S IN THIS SECTION

AT A GLANCE 6

INVESTMENT CASE 8

BUSINESS MODEL 18

STRATEGIC PRIORITIES 20

KEY PERFORMANCE INDICATORS 22

FORESIGHT GROUP HOLDINGS LIMITED Annual Report and Financial Statements FY22

OVERVIEW

6 FORESIGHT GROUP HOLDINGS LIMITED Annual Report and Financial Statements FY22

Foresight Group, a leading, sustainability-led

infrastructure and private equity manager.

AT A GLANCE

We’ve been backing innovation that drives

progressand supporting ambitious, entrepreneurial

SMEs across different sectors since 1984.

We understand the role sustainable investing can

play in evolving established markets, creating new

ones and generating long-term value and impact.

200+

INSTITUTIONAL CLIENTS

INSTITUTIONAL SOLUTIONS

59%

INSTITUTIONAL AUM

c.29,000

RETAIL INVESTORS

RETAIL SOLUTIONS

41%

RETAIL AUM

1. This may include investors with more than one investment.

2. Retail funds include FSFL, JLEN and FSFC which are majority held by institutional investors but also available to retail investors.

STRATEGIC REPORT OVERVIEW BUSINESS REVIEW PERFORMANCE AND RISKINTRODUCTION GOVERNANCE FINANCIAL STATEMENTS

FORESIGHT GROUP HOLDINGS LIMITED Annual Report and Financial Statements FY22 7

Our businesses

INFRASTRUCTURE

£6.3bn

AUM 71%

(FY21: £5.4bn)

337

Assets

(FY21: 317)

Highlights

•

FEIP reached final close,

raisinga total of €851.4million

across FY21 and FY22,

70%ahead of target

•

IPO of Foresight Sustainable

Forestry Company, raised

£130million – the first UK

natural capital-focused

investment trust listed onthe

main market of the London

Stock Exchange

Highlights

•

First close of FRIF III

cornerstoned by Greater

Manchester Pension Fund,

raised £65 million, increasing

to £83 million post period end

with a successful second close

•

Performance of FRIF I exceeded

expectations, generating a cash

return of 1.8xafter three exits

with 14 portfolio companies

remaining

Highlights

•

Significant expansion of FCM

offering:

•

VAM Global Listed

Infrastructure, a

sub-advisory mandate

•

GRIF Lux to access European

capital anddistribution

networks

•

New investment strategy

launched with the Foresight

Sustainable Future Themes

Fund

PRIVATE EQUITY

£930m

AUM 11%

(FY21: £714m)

131

Portfolio Companies

(FY21: 115)

FORESIGHT CAPITAL

MANAGEMENT ("FCM")

£1.6bn

AUM 18%

(FY21: £1.1bn)

Investment vehicles

(FY21: 3)

8 FORESIGHT GROUP HOLDINGS LIMITED Annual Report and Financial Statements FY22

Here are four compelling

reasonstoinvest in Foresight.

INVESTMENT CASE

1 | OUR RESPONSIBLE

APPROACH TO

INVESTMENT

For us, investing isn’t just about backing

companies and their progress. It’s about the

wider world and the positive impact we can

have on it. As a sustainable growth investor,

we invest in innovation, back promising

smaller companies and make complex

investment products accessible. This is

howwe’re creating a sustainable legacy.

See pages 10 and 11

2 | DIVERSIFIED

PORTFOLIO,

GROWING

MARKETS

Foresight consistently raises funds from

a diverse investor base. More than 200

institutional and c.29,000 retail investors

from across the globe choose Foresight,

dueto our strong track record of performance

and proven access to quality investment

opportunities in growing markets, across

bothprivate and public investment vehicles.

See pages 12 and 13

STRATEGIC REPORT OVERVIEW BUSINESS REVIEW PERFORMANCE AND RISKINTRODUCTION GOVERNANCE FINANCIAL STATEMENTS

FORESIGHT GROUP HOLDINGS LIMITED Annual Report and Financial Statements FY22 9

Investing for a smarter future is what we

have been doing for more than 35 years.

3 | DELIVERING

ONTARGETS

In our first year post-listing, we achieved

ourtarget AUM growth organically, delivered

high-quality recurring revenues in line

with our stated range, grew Core EBITDA

pre-SBP by 33% and improved our Core

EBITDA margin to 37%. Post period end we

completed our first strategic acquisition,

adding c.£275 million of AUM and pushing

our Private Equity AUM through £1.2billion.

See pages 14 and 15

4 | OUR CULTURE

ANDPEOPLE

Our people are our most important asset.

They drive the business forward, powering

our growth through their knowledge,

experience and ambition. In our employee

survey, our employees stated that the people

are the best reason to work at Foresight and

that the culture is one of the key reasons

people stay with us.

See pages 16 and 17

INVESTMENT CASE CONTINUED

10 FORESIGHT GROUP HOLDINGS LIMITED Annual Report and Financial Statements FY22

100% of Infrastructure

funds are Article 8 or

Article 9 under SFDR.

Foresight Infrastructure’s

investment strategies are

focused on investment in, and

management of, a range of

assets in the renewable energy,

energy transition, social and core

infrastructure sectors.

These assets can be optimised,

in terms of their operational and

financial performance, and actively

managed over the long term.

When considering such investment

strategies, Foresight Infrastructure

evaluates the assets against five

criteria to ensure the investments

meet the Group’s values and

approach to sustainable investing.

See Business Review: Infrastructure

on page 26 for more details.

A+, A+, A

PRI SCORES IN 2021

We have a strong

trackrecord of

sustainability

and ESG-focused

investment that

is responsive to

investordemand

We’re contributing to the

creationof a resilient,

decarbonised world and aim to

deliver high-quality jobs that will

power tomorrow’s economy.

1 |

OUR RESPONSIBLE

APPROACH TO

INVESTMENT

Bespoke sustainable

investmentpolicy

FCM has a specific objective to mobilise capital towards sustainable

goals. The team’s sustainable investment process is founded on

researchto maximise each fund’s real-world climate impact. Sustainability

is embedded into theinvestment research, capital allocation and

day-to-day running of each fund.

FCM leverages the Group’s existing private market sustainability expertise

– as direct asset owners of forests, recycling plants, healthcare companies

and renewable energy facilities, for example – providing the team with

expert private market insight across the sustainable investment spectrum.

The team also analyses prospective holdings through a double materiality

lens, focusing on a company’s operational footprint while also assessing

the environmental and social impacts of the products and services that

the company provides.

1. Correct as of June 2022.

STRATEGIC REPORT OVERVIEW BUSINESS REVIEW PERFORMANCE AND RISKINTRODUCTION GOVERNANCE FINANCIAL STATEMENTS

FORESIGHT GROUP HOLDINGS LIMITED Annual Report and Financial Statements FY22 11

Investment philosophy

We act

conscientiously

We invest

responsibly

We value sustainable,

attractive returns

Read more on pages 34 to 41

1,050+ jobs created across the

Foresight Regional Investment

Fund (“FRIF”) portfolio

Our regional private equity strategy allows us to play an active part in

levelling the playing field across the UK economy, by empowering SMEs

and supporting them with their growth ambitions. This way, the full

potential of all regions across the UK can be realised.

Additionally, we actively encourage our portfolio companies to make

positive local, societal impacts by adopting ESG strategies. We believe

that taking this approach will deliver greater returns for our investors over

the longer term and will create more successful, sustainable businesses.

1. Based on internal assessments.

INVESTMENT CASE CONTINUED

12 FORESIGHT GROUP HOLDINGS LIMITED Annual Report and Financial Statements FY22

131

PRIVATE EQUITY

PORTFOLIO COMPANIES

337

INFRASTRUCTURE ASSETS

2 |

DIVERSIFIED

PORTFOLIO,

GROWING MARKETS

We align our investment

strategies to the key themes

shaping societies and the planet

to benefit our investors and

future generations.

Specialist investment

capabilities in large

and thematically

growing,

difficult-to-access

markets

Diverse

investor base

Foresight consistently raises

funds from a diverse investor

base, currently comprising

200+institutional investors

across 21 solutions and over

29,000 retail investors across 16

solutions. We have clients across

the globe who choose Foresight

due to our strong track record

of performance and proven

access to quality investment

opportunities in growing markets

through both private and public

investment vehicles.

Demand for

net zero

The world is at a pivotal point

in its history. Countries and

companies are responding

by transitioning to a carbon

neutral way of working and

living using innovative methods

and technologies to find a

better way to do things. This

change is essential and valuable.

Asa sustainably led investor,

Foresight is particularly well

positioned to facilitate this

change. For example, we

anticipate that the demand for

carbon credits will grow 100x

by 2050, as UK corporates

navigate their way to net zero.

Our listed forestry fund, through

its afforestation activity, will be a

net creator of carbon credits.

35+

RETAIL AND INSTITUTIONAL

SOLUTIONS

59%

INSTITUTIONAL AUM

41%

RETAIL AUM

STRATEGIC REPORT OVERVIEW BUSINESS REVIEW PERFORMANCE AND RISKINTRODUCTION GOVERNANCE FINANCIAL STATEMENTS

FORESIGHT GROUP HOLDINGS LIMITED Annual Report and Financial Statements FY22 13

Globalisation

Foresight invests across ten

countries, with a physical

presence in six. Every country

is at a different stage on its

energy transition journey and

we utilise our experience and

depth of market knowledge to

invest in the right opportunities

when they arise. This year

we materially expanded our

European investor base, driven

by the successful FEIP fundraise,

and launched our first non-UK

PE fund post period end, with

the sustainability-focused AIB

Foresight Impact Fund.

We continue to actively seek

further opportunities to expand

our footprint and create

additional access to international

funds and assets for investors.

Levelling up

The UK Government remains

supportive of driving investment

in businesses throughout the

UK regions, in partnership with

institutions such as the British

Business Bank. The Chancellor

of the Exchequer has also

encouraged local government

pension schemes to invest more

locally, creating meaningful

macro tailwinds for our regional

private equity strategy. Foresight

has long recognised the

potential of local SMEs, building

a reputation for excellence and

an extensive network in the

regional business communities in

which we operate. As a market

leader in this space, Foresight

is well positioned to capture

its fair share of future funding

opportunities.

Certified carbon neutral

company

c.£50bn

In-year estimated UK capital

investment by 2030 in the

Balanced Net Zero Pathway

increase in solar

capacityby2035

April 2022 UK Government

energysecurity strategy

INVESTMENT CASE CONTINUED

14 FORESIGHT GROUP HOLDINGS LIMITED Annual Report and Financial Statements FY22

In our first full year post-listing

we met our target AUM growth

organically.

We completed our largest-ever

single fund institutional fundraise,

closing 70% ahead of target with

€851.4 million for Foresight Energy

Infrastructure Partners (“FEIP”).

We launched our first natural

capital-focused investment trust

on the LSE, Foresight Sustainable

Forestry Company, raising gross

proceeds of £130 million.

Net retail fundraising totalled

£598 million, with OEICs reaching

£1.6billion AUM.

We delivered high-quality

recurring revenues in line with

our stated 85-90% target range.

The contribution from predictable

Management, Secretarial and

Directors’ fees in FY22 was 86.9%.

Performance of the Group’s

first North West fund, Foresight

RegionalInvestment Fund (“FRIF”),

has exceeded expectations after three

exits, delivering a cash return of 1.8x

with 14 portfolio companies remaining.

This has generated performance fees

in H2 FY22 but does not change our

target recurringrevenue range.

GREW AUM BY

£1.6bn

IN FY22

44%

THREE-YEAR AUM CAGR

Able to raise funds

consistently from a

diverse investor base

At Foresight, we understand that

delivering the critical changes

the planet needs doesn’tmean

having to compromise on

financialperformance.

3 |

DELIVERING

ONTARGETS

AUM bridge (£bn)

31 Mar 2021

AUM

Key: Retail includes OEICs and tax-advantaged products.

Inflow

Outflow

Retail Institutional

Inflow Outflow

Market

movement

31 Mar 2022

AUM

Market

movement

7.2

1.2

(0.6)

0.3

(0.3)

8.80.4

0.6

1. Includes dividend payments.

STRATEGIC REPORT OVERVIEW BUSINESS REVIEW PERFORMANCE AND RISKINTRODUCTION GOVERNANCE FINANCIAL STATEMENTS

FORESIGHT GROUP HOLDINGS LIMITED Annual Report and Financial Statements FY22 15

We grew Core EBITDA pre-SBP

by 33% and improved our Core

EBITDA margin to 37%.

Core EBITDA pre-SBP grew to

£31.8million, reflecting the growth

of the business, maintenance of fee

margins and careful management

ofthe cost base.

We are continuing our journey to

a targeted Core EBITDA pre-SBP

margin of 43% over the medium term,

benefiting from operational gearing

and performance fees in the period.

Post period end we completed

our first strategic acquisition,

creating amarket-leading

ventures proposition and adding

approximately £275million of

AUM increasing our Private Equity

business to over £1.2billion AUM.

86.9%

RECURRING REVENUE

37.0%

CORE EBITDA PRE-SBP MARGIN

Recurring revenues

and strong margins

with low capital

intensity

Margin progression

Core EBITDA pre-SBP margin.

FY22

FY21

FY20

37.0%

34.6%

22.1%

INVESTMENT CASE CONTINUED

16 FORESIGHT GROUP HOLDINGS LIMITED Annual Report and Financial Statements FY22

4 |

Our sustainable culture

Sustainability is at the core of

Foresight's investment approach

and it also drives how we think about

our people, who are our biggest and

most important asset.

Our team are innovative, passionate

and look to challenge the norm

and improve on what has been

done before. We welcome that

each employee can bring a unique

perspective to the workplace. We

aim to foster a collaborative culture,

where everyone has a voice – from

our most junior team members

through to our Executive Committee.

As we continue to grow, both

organically and through acquisitions,

we are focused on creating and

maintaining a sustainable culture.

This year, we worked with our

employees to reimagine our

Employee Value Proposition (“EVP”).

We wanted to ensure we understood

and were aligned with our people

and their goals, as well as our stated

strategic objectives.

Our EVP

Growth that lasts

The experience people get from

making things happen here will

last a lifetime

Impact that inspires

You can create a positive, tangible

impact on society and the planet

Culture that empowers

You can take ownership of your

ideas and turn them into results

An experienced

specialist team

delivering strong

returns

c.150

INVESTMENT, PORTFOLIO AND

TECHNICAL PROFESSIONALS

Foresight’s culture supports

ourexpertise, creating

bright ideas and informed

decisionmaking.

OUR CULTURE

ANDPEOPLE

" The work is fast-paced,

an entrepreneurial

attitude is encouraged

and there is a culture of

working collegiately."

Chris Wardle,

Director, Private Equity

" It is great to work

within a team which

encourages taking an

entrepreneurial mindset

and is always open to

considering new ideas

or approaches."

Anouska Morjaria,

Investment Manager

STRATEGIC REPORT OVERVIEW BUSINESS REVIEW PERFORMANCE AND RISKINTRODUCTION GOVERNANCE FINANCIAL STATEMENTS

FORESIGHT GROUP HOLDINGS LIMITED Annual Report and Financial Statements FY22 17

Our values

The focus over the next 12 months

will be to embed our four core

values; Sustainable Impact, Achieve

with Ambition, Relationships with

Integrity, and Collective Success.

Connecting with our people

We recognise that effective

communication is critical to our

success and have developed several

channels to allow open and honest

communication.

We run Foresight Connect

sessions throughout the year,

which supplement the quarterly All

Company Meetings (“ACMs”) hosted

by our Chairman. The ACMs also have

speakers from around the business

who share compelling stories, from

fund launches to new investments and

team successes that inspire employees

across all departments, helping to

build a feeling of collective success.

Our annual engagement survey

provides us with qualitative and

quantitative data, enabling us to

work with our people to shape

Foresight for future success.

In 2022 we achieved an overall

engagement score of 83%, from an

86% participation rate, with 87% of

staff saying that they were proud to

work at Foresight. Additionally, we

have an Employee Forum, chaired by

our designated NED for workforce

engagement and a Partner from the

senior leadership team. This forum

has a representative from each

grade and area within the business

and its purpose is to help cultivate

and maintain the sustainable culture

we are building at Foresight, with a

direct line to the Board.

Leading our people

We lead with ambition from the

senior leadership team right

throughout the business. Our

executive leadership coaching

for the senior management team

at Foresight continues to have

a positive impact and ensures a

consistent focus on the people at

Foresight. Itfacilitates building

relationships with integrity

throughout the business.

Inclusive leadership training has

beenrolled out over the last year,

which ensures that our leaders

actively coach their teams and have

the tools and skills to do this in an

inclusive way.

Over the next 12 months, we will be

working to develop our leadership

pathway, to train and support

managers over the course of their

career at Foresight.

Achieve

with ambition

Executing, achieving

our best and delivering

results

Sustainable

impact

Creating tangible

impactthat has

long-term benefits and

shared values

Relationships

with integrity

Maintaining good

relationships by earning

and keeping trust

Collective

success

Getting there together

18 FORESIGHT GROUP HOLDINGS LIMITED Annual Report and Financial Statements FY22

Infrastructure

BUSINESS MODEL

What influences

our approach

Creating value across three

business divisions

Our markets

See pages 24 to 47

Our assets

See pages 24 to 47

Our stakeholders’ views

See pages 82 to 85

Our workforce

See pages 16 and 17

Our sustainability

See pages 48 to 81

Infrastructure

INFRASTRUCTURE

Our established infrastructure funds provide direct access to a broad range

of infrastructure classes, from renewable energy to social infrastructure.

Our experienced team continually assesses the landscape for investment

opportunities in core and adjacent asset classes, to complement our existing

infrastructure offering.

Our global investment team sources, develops, operates and manages these

investments sustainably, on behalf of our clients.

Read more about Infrastructure See pages 26 to 33

PRIVATE EQUITY

Our Private Equity Team supports smaller UK companies as they grow,

byproviding both capital and management expertise.

Our regional network of UK offices invests in businesses within their

communities, sourcing attractive opportunities which allow investors

tosupport an underserved yet critical segment of the UK economy.

Read more about Private Equity See pages 34 to 41

FORESIGHT CAPITAL MANAGEMENT

Foresight Capital Management was established in 2017 to facilitate

retail and institutional investors’ access to real assets and sustainable

investmentopportunities, through actively managed open-ended

funds which invest in listed securities. We are a sustainability-focused

asset manager that applies private market expertise to opportunities in

listedmarkets.

Read more about Foresight Capital Management See pages 42 to 47

In a changing world, we use innovative investment

solutions to create a sustainable legacy.

STRATEGIC REPORT OVERVIEW BUSINESS REVIEW PERFORMANCE AND RISKINTRODUCTION GOVERNANCE FINANCIAL STATEMENTS

FORESIGHT GROUP HOLDINGS LIMITED Annual Report and Financial Statements FY22 19

Infrastructure

Outcomes

Creating value across three

business divisions

Infrastructure

INFRASTRUCTURE

Our established infrastructure funds provide direct access to a broad range

of infrastructure classes, from renewable energy to social infrastructure.

Our experienced team continually assesses the landscape for investment

opportunities in core and adjacent asset classes, to complement our existing

infrastructure offering.

Our global investment team sources, develops, operates and manages these

investments sustainably, on behalf of our clients.

Global infrastructure platform allows us tosource

high-quality, risk-adjusted returnsacross the world

Foresight Private Equity aim to be the provider

ofchoice for £1 million – £5 million investments

Sustainability considerations embedded in

processesthroughout investment lifecycle

Network and track record built over 38 years

ofinvesting in UK SMEs

Strong distribution capabilities through large,

experienced retail sales team

Careful management of project cash flows

providesattractive income for investors

Significant added value forinvestee companies

Full-service model from deal origination, including

active asset management to optimise assets and

investor returns

Regional model with strong local ties

Focused in-house team with access to Group expertise

Four strategies across six investment vehicles

Sustainability-led investors

PRIVATE EQUITY

Our Private Equity Team supports smaller UK companies as they grow,

byproviding both capital and management expertise.

Our regional network of UK offices invests in businesses within their

communities, sourcing attractive opportunities which allow investors

tosupport an underserved yet critical segment of the UK economy.

FORESIGHT CAPITAL MANAGEMENT

Foresight Capital Management was established in 2017 to facilitate

retail and institutional investors’ access to real assets and sustainable

investmentopportunities, through actively managed open-ended

funds which invest in listed securities. We are a sustainability-focused

asset manager that applies private market expertise to opportunities in

listedmarkets.

Our purpose drives what we do

Foresight is a sustainable growth

investor. We’ve been backing

innovation that drives progress

and supporting promising,

entrepreneurial smaller companies

across different sectors since 1984.

From finding better ways to power

the world’s societies to partnering

with dynamic businesses, we

understand the role sustainable

investing can play in evolving

established markets, creating new

ones and generating long-term value

and impact. We use our insight,

expertise and guidance to actively

manage assets and create flexible

and innovative investment solutions

for some of the largest institutional

investors, as well as individuals.

We believe this is how we can help

create a sustainable legacy for future

generations.

At Foresight, we aren’t just

lookingfor short-term returns.

Ourpurpose is to invest for a

smarter future, providing institutional

and private investors with access to

hard-to-reach private markets, using

sustainable, ESG-oriented strategies

at the core of our investment process

to enable our investors to meet their

financial goals, while contributing to

a more sustainable world.

Attractive

risk-adjusted

investor returns

4.1m tonnes CO

emissions avoided

inFY22

A+

PRI assessment

Supporting global

decarbonisation

efforts

Provided 5.17TWh

of renewable energy

inFY22

1.78m UK homes

provided with renewable

energy

1,000+

jobs created

Supporting >130

UK SMEs

2,200+ business

plans reviewed

PRI assessment

Attractive

investor returns

Local

economic growth

AUM grown to

£1.6billion in five

years

Sustainable Future

Themes Fund

launched March 2022

FIIF +41.38% total

return since inception

(Dec 2017)

Mobilising capital

towards sustainable

goals

REF +25.67% total

return since inception

(June 2020)

GRIF +47.14% total

return since inception

(June 2019)

1. Since FIIF launch.

20 FORESIGHT GROUP HOLDINGS LIMITED Annual Report and Financial Statements FY22

Our strategic priorities are to scale our

investment platform, diversify our investment

offerings and attract new clients worldwide.

STRATEGIC PRIORITIES

Grow

our existing investment

platform

Diversify

and develop new

investment strategies

Expand

our investor base

Goal:

•

Develop pipeline of institutional

fundlaunches, leveraging our

existingcapabilities

•

Increase rate of deployment by

PrivateEquity Team

Goal:

•

Diversify and deepen renewables

investment and assetmanagement

footprint

•

Increase contribution to green economy

Goal:

•

Expand investment strategies

geographically

•

Attract investors from across the globe

STRATEGIC REPORT OVERVIEW BUSINESS REVIEW PERFORMANCE AND RISKINTRODUCTION GOVERNANCE FINANCIAL STATEMENTS

FORESIGHT GROUP HOLDINGS LIMITED Annual Report and Financial Statements FY22 21

Next steps:

•

Leverage sustainable infrastructure

expertise, to expand in our core areas

•

Develop strong investment

capabilities in adjacent areas,

targeting the UK and international

markets

•

Build on Private Equity’s market

leadership in ESG

•

Continue to optimise capital

deployment processes across

thebusiness

Next steps:

•

Continue to mobilise significant

amounts of capital, mainly in the

UK and Europe, including the future

deployment rights of FY22 deals

completed

•

Conclude further deals in newer

areas such as geothermal energy,

pumped hydro, batteries and

interconnectors

•

Assess areas to expand our

capabilities, for example in

naturalcapital

Next steps:

•

Continue to expand our investor

reach, for example through:

•

Increased use of the Luxembourg

AIFM authorisation, to deepen our

EU and Nordic footprint

•

Launching further innovative

products to attract retail funds

•

Exploring partnerships with large

pension funds, family offices and

ultra-high-net-worth investors

outside the UK

Progress:

•

Final close of Foresight Energy Infrastructure Partners for €851.4 million

•

Received follow-on investments from a number of institutions

•

Leveraged capabilities into new regions, for example through solar deals

in Iberia

•

Infrastructure deployed £484 million (FY21: £595 million), with

substantial future deployment rights of £427 million (FY21: £47 million)

•

Increased Private Equity deployment at £81 million (FY21: £59 million)

and secured lending by £47 million (FY21: £13 million)

•

Private Equity won ESG Champion of the Year at the Growth Investor

Awards

•

Transformational year for FCM, with launch of new investment strategy

and funds

Progress:

•

Continued to invest in existing assets classes including regional

broadband rollouts and low-carbon transport

•

Further diversified into adjacent assets such as geothermal

energy, pumped hydro, interconnectors and battery storage

•

Successful IPO of our first dedicated forestry investment vehicle,

raising £130 million

Progress:

•

Positive progress with utilising our Luxembourg AIFM

authorisation, including launch of a SICAV

•

Launched VAM and the Sustainable Future Themes Fund

•

Launched Irish Private Equity fund post year end, in conjunction

with AIB

•

Attracted further investment from international investors,

particularly in central and northern Europe

22 FORESIGHT GROUP HOLDINGS LIMITED Annual Report and Financial Statements FY22

The successful implementation of our

strategy resulted in excellent progress

against our KPIs during the year.

KEY PERFORMANCE INDICATORS

AUM

£8.8bn

(FY21: £7.2bn)

£4.5bn

FY20

£7. 2bn

FY21

£8.8bn

FY22

£1.6bn (23%) increase

year-on-year

•

AUM is used to monitor the

growth of our business and is a

key KPI used within our industry

which allows comparison with

ourpeers

•

It demonstrates strength of

fundraising and future revenue

potential

Strategic alignment

Grow Expand

Revenue

£86.1m

(FY21: £69.1m)

£57. 3m

£48.9m

FY20

£69.1m

£62.4m

FY21

£86.1m

FY22

£74.8m

Total

revenue

Recurring

revenue

86.9% recurring

revenue

(FY21: 90.3%)

•

Revenue growth is a key KPI as

it allows us to understand any

underlying fee margin pressure

that may arise when comparing

with our rate of AUM growth

•

Monitoring the balance between

recurring and non-recurring

revenue is important to ensure

we maintain our high quality of

earnings

•

Our revenues are highly

predictable as we continue to

meet our target of 85%-90%

recurring revenues

Strategic alignment

Grow Expand

Core EBITDA pre-SBP

£31.8m

(FY21: £23.9m)

£12.6m

FY20

£23.9m

FY21

£31.8m

FY22

Core EBITDA margin %

2.4pts increase

year-on-year

•

This KPI is monitored to ensure

we are growing the business

efficiently, managing our cost

base and maximising our

operational leverage for the

benefit of our Shareholders

•

We view this as the profitability

measure most relevant to the

Group’s recurring revenue model

(i.e.a cash profit measure after

taking out any one-off items, both

positive and negative)

Strategic alignment

Grow Expand

37.0%34.6%

22.1%

The following KPIs are alternative performance measures:

Assets Under Management (“AUM”) – Recurring revenue – Core EBITDA pre-SBP – Deployment – Staff engagement score

STRATEGIC REPORT OVERVIEW BUSINESS REVIEW PERFORMANCE AND RISKINTRODUCTION GOVERNANCE FINANCIAL STATEMENTS

FORESIGHT GROUP HOLDINGS LIMITED Annual Report and Financial Statements FY22 23

Dividend payout post-IPO

13.8p per share

(FY21: 1.7p per share

)

1.7p

FY21

13.8p

FY22

60% payout ratio

(FY21: 60% payout ratio)

•

We monitor this KPI as it is

linked to the cash generation of

the business and our returns to

Shareholders

•

A balance is maintained between

offering returns to Shareholders

and retaining cash within the

business for re-investment and

M&A opportunities

Strategic alignment

Grow

Deployment

£1,883m

(FY21: £1,493m)

£47m

£1,446m

FY21

£427m

FY22

£1,456m

£m

deployed

Future deployment

rights £m

26% increase

year-on-year

•

Our deployment metric includes

100% of gross inflows into the

FCM division in addition to

investments made in private

markets across the Infrastructure

and Private Equity divisions

•

We track the rate of deployment

of our funds as it provides a lead

indicator of our competitive

position within our areas of

expertise

•

It is critical for us to source

attractive investment

opportunities for us to deploy

capital and ultimately generate

returns for our underlying

investors. Successful deployment

creates a strong track record

which is an important component

in our ability to raise more funds in

the future

Strategic alignment

Expand

Diversify

Staff engagement score

83%

(FY21: 46%)

46%

FY21

83%

FY22

86% participation rate

(FY21: 84%)

•

Our Engagement Survey

measures our employees’

emotional connection working for

Foresight, their plans to stay, and

motivation to go the extra mile

•

We ask four employee

engagement questions, then

take the average score across

those questions which gives us

the overall engagement score for

thesurvey

•

FY22 saw our highest ever

engagement score and a material

bounce-back from the scores

achieved during the global

pandemic

Strategic alignment

Grow

1. Pro-rated from date of IPO to year end.

WHAT’S IN THIS SECTION

INFRASTRUCTURE 26

PRIVATE EQUITY 34

FORESIGHT CAPITAL MANAGEMENT 42

SUSTAINABILITY 48

OUR STAKEHOLDERS 82

SECTION 172(1) STATEMENT 86

BUSINESS

REVIEW

24 FORESIGHT GROUP HOLDINGS LIMITED Annual Report and Financial Statements FY22

STRATEGIC REPORT OVERVIEW BUSINESS REVIEW PERFORMANCE AND RISKINTRODUCTION GOVERNANCE FINANCIAL STATEMENTS

FORESIGHT GROUP HOLDINGS LIMITED Annual Report and Financial Statements FY22 25

FORESIGHT CAPITAL

MANAGEMENT (“FCM”)

Our FCM Team applies private

market expertise to opportunities

in listed markets. The FCM Team

and investment approach were

established in 2017 to facilitate

retail and institutional investors

accessing infrastructure,

renewables and real estate

investment opportunities through

actively managed open-ended

funds investing in listed securities.

Foresight's investment strategies are designed to

generate long-term investment returns that have a

positive impact on the world and create a sustainable

legacy for future generations.

BUSINESS REVIEW

Investment

Distribution

INFRASTRUCTURE

Foresight is one of Europe’s

most established real assets

investors. Our infrastructure

investment strategy focuses on

all forms of renewable energy

and waste projects, as well as

batteries, reserve power and

interconnectors. In addition,

weinvest in transport businesses,

social infrastructure, broadband

companies and natural capital.

PRIVATE EQUITY

Foresight is one of the most active

UK regional SME investors, having

supported nearly 300 companies

through various economic cycles.

We partner with promising SMEs

across all sectors and deal stages,

and work together to achieve

long-term sustainable growth.

Each year we review over 2,200

business plans and are currently

supporting more than 120 SMEs.

71%

of AUM

59%

of revenue

11%

of AUM

28%

of revenue

18%

of AUM

13%

of revenue

INSTITUTIONAL RETAIL

59%

Institutional AUM

41%

Retail AUM

BUSINESS REVIEW CONTINUED

INFR ASTRU CTURE

AT A GLANCE

26 FORESIGHT GROUP HOLDINGS LIMITED Annual Report and Financial Statements FY22

One of Europe's most established

investors with sustainability at the

heart of our investment process.

Total team of 110

investment, portfolio and

technical professionals,

including:

45 investment

professionals, with broad

infrastructure experience

55 asset management

experts, who provide full

lifecycle support from

investment to exit

STRATEGIC REPORT OVERVIEW BUSINESS REVIEW PERFORMANCE AND RISKINTRODUCTION GOVERNANCE FINANCIAL STATEMENTS

FORESIGHT GROUP HOLDINGS LIMITED Annual Report and Financial Statements FY22 27

Foresight is one of Europe’s most established real assets investors. Our sustainable

investment strategies primarily focus on renewable energy generation; renewable

energy enabling projects (such as flexible generation and battery storage);

energy efficiency management solutions; social and core infrastructure projects;

sustainable forestry assets; and decarbonisation technologies such as hydrogen.

Infrastructure

AUM by sector

Infrastructure

AUM by

clienttype

Energy generating 66%

Social and core infrastructure 18%

Uncommitted 12%

Low carbon and energy efficiency 2%

Forestry 2%

Institutional 77%

Retail 23%

337

Assets managed

3.1GW

Total installed capacity

Italy

58 assets

Portugal

2 assets

242 assets

Australia

5 assets

Spain

23 assets

Sweden

1 asset

Finland

1 asset

Netherlands

3 assets

Germany

2 assets

MARKET OPPORTUNITY

The infrastructure market is characterised

by powerful long-term structural trends,

in particular the transition to a low-carbon

energy system. We are also seeing

increasing emphasis on sustainable

agriculture, aquaculture and natural capital,

including the role of forests, soil and oceans

in sequestering carbon and maintaining

biodiversity.

Strong global decarbonisation and green

recovery agendas

Energy security is a much greater priority for

many governments, following Russia’s invasion

ofUkraine

Sustainability-led investment is increasing across

key markets

Investors increasingly attracted to uncorrelated

returns offered by sustainable infrastructure

28 FORESIGHT GROUP HOLDINGS LIMITED Annual Report and Financial Statements FY22

BUSINESS REVIEW CONTINUED

Overview

As one of Europe’s most established

real assets investors, we provide a

complete end-to-end solution for

retail and institutional investors, from

investment origination and execution,

including sourcing and structuring

the transaction, to the ongoing and

active technical asset management

of operating assets.

An important part of our approach

is utilising our international presence

to access the best available markets

at any given time and originate new

deals through established networks.

Due to the Infrastructure Team’s

extensive experience and track

record, Foresight is able to deploy

and manage capital across a wide

range of infrastructure sectors at

various stages of an asset’s life,

from development, construction

and operational. This creates

further investment opportunities

and generates strong returns on

investment.

The asset management process

focuses on operational performance,

asset optimisation, commercial

management and useful life

enhancement, with the objective of

generating sustainable long-term

asset operations and associated

economic benefits.

As at 31 March 2022, Foresight

Infrastructure had AUM of £6.3billion.

The portfolio comprised 337

infrastructure assets across 15asset

classes, with a total installed capacity

of 3.1GW. This included £4.0 billion

of renewable generating assets in

the UK, Europe and Australia, with

2.6GW of capacity, as well as 572MW

of flexible generation and 11,385

hectares of forestry assets.

Sustainability at the heart

of the investment process

To ensure that all Infrastructure

investments meet our high standards

of sustainability and ESG-related

performance, we evaluate them

using our Sustainability Evaluation

Tool (“SET”). Our SET provides

an objective view of sustainability

credentials and performance through

the use of recognised quantitative

KPIs, guiding our team to the areas

that require the most attention.

The output from our SET forms

an integral part of the investment

approval process at Foresight.

We score investments against key

assessment parameters, across five

areas:

•

Sustainable development

contribution: contribution towards

decarbonisation

•

Environmental footprint: localised

environmental impacts

•

Social engagement: role in the

local communities

•

Governance: compliance with laws

and regulations

•

Third-party interactions: supply

chain sustainability

All KPIs are weighted based on

internal prioritisation and materiality

assessments and scored from

one to five. While we do not have

a minimum score against each

assessment parameter, we aim for

all our assets to score at least an

average of three out of five after

mitigation and be consistent with

the sustainability andESG standards

across the Foresight portfolio.

Once we have acquired an asset, our

asset management team monitors

performance and continually

investigates ways to improve the

asset’s sustainability. During the

year, we created a new module

for sustainability KPIs within our

management system. Thisallows

us to centralise data on key

environmental and social metrics

andanalyse our performance.

Capital deployment

and fundraising

Foresight Infrastructure performed

very well during the year. The team

continues to position itself as a

sustainability-led partner for projects

in the low-carbon energy generation

and enabling infrastructure,

natural capital and social and core

infrastructure sectors.

We invested across a wide range of

funds and across multiple sectors

and geographies. We invested further

into our core asset classes, including

solar, wind and forestry, continued

our rollout of compressed natural

gas fuelling stations and grew our

footprint in biomass, which enables

24/7 energy generation. We also

invested further in fibre networks in

underserved communities, which will

help people gain access to services

and support economic levelling up.

The Infrastructure Team also

expanded its investments into

new asset classes, such as

geothermal energy, pumped hydro,

interconnectors and hydrogen,

which are described in the case

studies on pages 29, 31 and 33.

These transactions have enabled

us to develop platforms requiring

development capital, while giving

us access to large, long-term capital

projects. As a result, we expect these

asset classes to become part of

our core business, as we add scale

through diversification.

In total, we completed 41 transactions

during the year, committing

£484million of capital.

The transactions also incorporate

substantial future deployment

rights totalling £427 million, to

give a total potential investment

secured in the year of £911 million.

This is a significant increase on

the total for FY21 of £642 million,

which comprised £595 million of

deployment and £47 million of

future deployment rights, across

46transactions.

STRATEGIC REPORT OVERVIEW BUSINESS REVIEW PERFORMANCE AND RISKINTRODUCTION GOVERNANCE FINANCIAL STATEMENTS

FORESIGHT GROUP HOLDINGS LIMITED Annual Report and Financial Statements FY22 29

In October 2021, FEIP invested in a

joint venture in a Dutch geothermal

heat pipeline. This technology

extracts heat from high-temperature

water in the sub-surface of the earth

and distributes it to surrounding

houses and industry.

The investment includes the

acquisition of operational wells and

constructing new wells. There is also

a significant pipeline of development

projects, with a potential build out

capacity of c.200MW.

Geothermal energy is a strategic

priority for the Dutch government,

because of the substantial role it can

play in decarbonising domestic and

industrial heating. The investment

will also make a material social and

economic contribution to local areas,

by supplying price-competitive heat

to farmers and residents within the

vicinity of assets.

85 DEGREES

GEOTHERMAL ENERGY

AND DISTRICT

HEATING PROJECT

c.200MW

potential build out capacity

Significant pipeline of

development projects

85 Degrees

30 FORESIGHT GROUP HOLDINGS LIMITED Annual Report and Financial Statements FY22

BUSINESS REVIEW CONTINUED

Capital deployment

and fundraising continued

Fundraising was strong during the

year. Foresight Energy Infrastructure

Partners (“FEIP”) completed its final

close on 14 September 2021, securing

total commitments of €851.4 million,

70% over the original €500 million

target. Including co-investments to

date of €170 million, this represents

a total capital pool in excess of

€1 billion for Foresight’s energy

transition strategy. Commitments

were made by over 35 leading

institutional investors from the UK,

Europe and North America.

In November 2021, Foresight

Sustainable Forestry Company Plc

(“FSFC”) successfully listed on the

London Stock Exchange, raising

gross proceeds of £130 million.

Thisisthe Group’s first investment

vehicle dedicated to forestry and

offers a different economic profile

tomost listed funds, based on

long-term capital growth and yield.

We also completed fundraises across

a number of our existing funds,

including strong additional fund

flows from retail investors, who tend

to generate relatively consistent

inflows for us throughout the

financial year.

During the year we had one mandate

transfer to another investment

manager, representing less than 3%

of Foresight’s AUM.

Infrastructure market outlook

The sustainability transition

The overall transition to sustainable energy and infrastructure can be categorised into three distinct phases, which

frame the wide range of opportunities resulting from it. These phases are shown in the table below. We provide our

institutional and retail investors with access to investment opportunities that address these three phases, as well as the

broader core and social infrastructure markets. As we leverage our expertise and grow the scale of our investments in

phases 2 and 3, they will increasingly become part of our core asset classes, continuing our growth.

Phase 1:

Initial power transition

Phase 2:

Systemic power transition

Phase 3:

Wider sustainable transition

Phase 1 was characterised almost

entirely by renewables being

added to power grids, with

no particular need to upgrade

systems to accommodate them.

During this phase, renewables

became a mature and highly

popular asset class for institutional

investors. Phase 1 continues to

present significant investment

opportunities for us over the

coming years.

As power systems in Europe,

North America, China and

elsewhere increasingly

decarbonise, there is more

focus on taking a systemic view

of electricity production. This

particularly relates to energy

storage and grid flexibility, and

new power transmission and

distribution infrastructure. This

informs the strategy of funds such

as FEIP.

In addition to energy, we

need to address the c.70% of

emissions from other segments

of the global economy. Financing

decarbonisation of these sectors

is likely to be more complex than

renewables but represents a large

opportunity for investors.

Sectors of opportunity:

•

Solar

•

Onshore and offshore wind

•

Bioenergy

•

Hydro

Sectors of opportunity:

•

Battery storage

•

Offshore wind transmission

links

•

Interconnector cables

•

Geothermal energy

•

Pumped hydro

•

Electric vehicle charging

infrastructure

Sectors of opportunity:

•

Controlled environment food

production (e.g. high-tech

glasshouses, vertical farms or

onshore fish farms)

•

Clean and advanced transport

(e.g. sustainable biofuels and

electric vehicles)

•

Industrial decarbonisation

•

Hydrogen

STRATEGIC REPORT OVERVIEW BUSINESS REVIEW PERFORMANCE AND RISKINTRODUCTION GOVERNANCE FINANCIAL STATEMENTS

FORESIGHT GROUP HOLDINGS LIMITED Annual Report and Financial Statements FY22 31

In February 2022, FEIP bought a

majority stake in MaresConnect

Holdings Limited (Ireland), which

will construct a 750MW high-voltage

direct current interconnector

between Bodelwyddan in North

Wales and Dublin, Ireland. The

project is in the development phase.

When complete, the interconnector

will comprise a 245-kilometre cable

running under the Irish Sea.

Interconnectors will play an

important role in the energy

transition.

They connect the electricity systems

of different countries so they can

trade excess energy generated, for

example from renewable sources,

preventing waste and ensuring the

power systems are more sustainable

and efficient.

MaresConnect is considered one

of Europe’s most important energy

infrastructure projects. It will form

part of a system that is secure,

sustainable and affordable, and

that integrates Ireland’s renewable

energy, thereby providing an

essential contribution to the

European GreenDeal.

MARESCONNECT

INTERCONNECTOR

245km

cable running under the sea

750MW

interconnector

MaresConnect

32 FORESIGHT GROUP HOLDINGS LIMITED Annual Report and Financial Statements FY22

Market developments in FY22

During the period, there were a

number of government and other

announcements that supported

Foresight Infrastructure’s aim to

decarbonise the energy system.

These are summarised below:

•

In April 2021, the UK Government

announced a more ambitious

climate change target, to reduce

emissions by 78% by 2035

compared to 1990 levels. This will

take the UK more than three-

quarters of the way to reaching

net zero by 2050. In the Balanced

Net Zero Pathway set out in the

Carbon Budget, in-year capital

investment increases significantly

during the 2020s and early 2030s,

from around £10 billion in 2020 to

around £50 billion by 2030.

•

In July 2021, the European

Commission unveiled its plan

to meet its target of reducing

emissions by 55% by 2030, as a

first step towards carbon neutrality

in 2050. The Commission proposed

to increase the binding target

for renewable energy in the EU’s

energy mix to 40%. To fund this, it

is estimated that annual investment

in the European energy system

will need to increase by around

€350billion in the decade to 2030.

•

In November 2021, government

officials from around the world

met at COP26 in Glasgow to

discuss plans for tackling the

climate crisis. This included an

agreement to end and reverse

deforestation by 2030, signed

by countries covering 85% of

the world’s forests. FSF intends

to invest up to 10,000 hectares

into afforestation projects in its

first year, contributing c.1/3rd

of the annual target of the UK

Government.

More recently, Russia’s invasion of

Ukraine has caused a significant

increase in governments’ focus

on energy security, particularly in

Europe, where a number of countries

are reliant on Russian fossil fuels. This

has given even greater momentum to

policy changes driving the transition

to clean energy.

In April 2022, the UK Government

published its energy security

strategy. In addition to measures

to improve energy efficiency and

support investment in nuclear power

and network infrastructure, this

included, among other things:

•

Increasing deployment of offshore

wind by 25%, to deliver up to

50GW by 2030

•

Targeting a five-fold increase in

solar capacity by 2035

•

Setting an ambition for 10GW of

hydrogen production by 2030

In May 2022, the European

Commission presented its

REPowerEU plan, “to rapidly reduce

dependence on Russian fossil

fuels and fast forward the green

transition”. Among a wide range of

measures, this included:

•

An EU Solar Strategy, to double

solar photovoltaic capacity by

2025 and install 600GW by 2030

•

Measures to integrate geothermal

and solar thermal energy in

modernised district and communal

heating systems

•

Tackling the slow and complex

issue of permits for major

renewable projects

•

Targeting 10 million tonnes of

domestic renewable hydrogen

production by 2030, with

additional funding of €200 million

for research

Delivering the objectives of

REPowerEU requires additional

investment of €210 billion by 2027.

Elsewhere, the Australian general

election in May 2022 is likely to lead

to a material change in the country’s

energy policy. The victorious Labor

Party’s Powering Australia plan is

intended to stimulate AUS€76 billion

of investment to provide cheaper

renewable energy. The plan targets

an increase in the share of renewable

electricity to 83% by 2030.

The combination of the requirement

to decarbonise the power system,

increase energy security and shift to

a sustainable society more generally

means that Foresight Infrastructure’s

offering has become even more

valuable in the last year, across

all the sectors that we invest in.

These changes will require growing

amounts of private capital to deliver

public infrastructure projects and the

outlook for Foresight Infrastructure is

therefore highly positive.

BUSINESS REVIEW CONTINUED

STRATEGIC REPORT OVERVIEW BUSINESS REVIEW PERFORMANCE AND RISKINTRODUCTION GOVERNANCE FINANCIAL STATEMENTS

FORESIGHT GROUP HOLDINGS LIMITED Annual Report and Financial Statements FY22 33

In February 2022, FEIP agreed to

acquire

the total shareholding of a

co-located Pumped Storage Hydro

and Wind project in Argyle and Bute,

Scotland.

Pumped storage hydro generates

energy by allowing water to flow

from a higher reservoir to a lower

reservoir through turbines. Water

is then pumped back to the higher

reservoir at times of excess energy

production, lower demand and lower

prices. The system effectively acts as

a long-duration store of energy, since

power can be released as needed.

The Glenmuckloch project will have

generating capacity of 210MW

andstorage capacity of 1,600MWh

and also includes 33.6MW of wind

generating capacity.

We anticipate the wind project will

take two years to build and the

total project will take five years to

complete. The expected lifespan of

the asset is up to 100 years, making

ittruly long-term infrastructure.

GLENMUCKLOCH

PUMPED STORAGE

HYDRO

210MW

generating capacity

1,600MWh

storage capacity

Glenmuckloch

1. Subject to conditions being satisfied.

AT A GLANCE

34 FORESIGHT GROUP HOLDINGS LIMITED Annual Report and Financial Statements FY22

We aim to be the provider of choice for

sub-£5million investments into UK SMEs,

investingacross abroad range of sectors.

BUSINESS REVIEW CONTINUED

PRIVATE EQUITY

Sectors

Business services

Consumer & leisure

Engineering & industrials

Healthcare

Specialist lending

Technology, media &

telecommunications

STRATEGIC REPORT OVERVIEW BUSINESS REVIEW PERFORMANCE AND RISKINTRODUCTION GOVERNANCE FINANCIAL STATEMENTS

FORESIGHT GROUP HOLDINGS LIMITED Annual Report and Financial Statements FY22 35

Foresight Private Equity offers a variety of fund structures to facilitate investment from both

institutional and retail investors. It provides venture, growth capital and replacement capital

investments through its growing network of seven regional UK offices. In addition, Foresight

Private Equity provides funding lines to specialist lending companies, the majority of which

service the UK SME market.

£930m

AUM

2,200

business plans reviewed

UK offices

131

portfolio companies

investment vehicles

investment professionals

MARKET OPPORTUNITY

Foresight Private Equity has a UK regional

focus, which we believe is a key strength

and differentiator. We target investment in

sectors with favourable long-term trends

and structural growth drivers. Investments

cover a range of maturity profiles,

from early stage to more mature small

companies. Annual revenues at portfolio

companies are typically in the £2 million

to £20 million range, although venture and

seed investments can be into high tech,

pre-revenue companies, which include

university spin-outs.

Our analysis shows that more than 80% of all UK

SMEs are based outside London and the South East

Foresight’s regional focus aligns with the UK

Government’s agenda to invest in and grow regional

economies outside London and the South East

Foresight believes transactions requiring between

£1 million and £5 million are the least competitive

and most attractive in the UK private equity market,

from a value creation perspective

The funding gap for SMEs has further widened

inthe aftermath of COVID-19

Opportunities are increasing in the specialist

lending market, as SMEs look for alternatives to the

high street banks for borrowing

Portfolio split

bycarrying

value

Business services 11%

Consumer & leisure 9%

Engineering & industrials 18%

Healthcare 10%

Specialist lending 28%

Technology, media &

telecommunications 24%

36 FORESIGHT GROUP HOLDINGS LIMITED Annual Report and Financial Statements FY22

BUSINESS REVIEW CONTINUED

Overview

Foresight Private Equity manages

investments in 131 UK SMEs,

across a range of sectors. AUM at

31March2022 stood at £930million,

up 30% from £714 million at

31March2021.

We use a broad mix of product

types to facilitate fundraising

from both institutional and retail

investors, with 11 different investment

vehicles including Venture Capital

Trusts, regional institutional funds,

Enterprise Investment Schemes and

Inheritance Tax Solutions.

ESG considerations are core to

Foresight’s investment management

approach. Our Private Equity

Team makes sustainable growth

investments into SMEs that have

the potential to create broad,

long-term ESG benefits through

their operations and continuous

improvement.

We understand that many SMEs

struggle to adopt ESG best practices

and we work in partnership with

our portfolio companies to put

ESG principles at the heart of their

decision making. This improves

performance, differentiates them

from their competitors and drives

real value at the time of exit.

The Private Equity Team’s approach

to ESG is under continuous review

and development, with a view to

making regular improvements

reflecting market best practice.

The Private Equity Team reviews

investments across four Sustainable

Development Goal aligned Themes,

to understand where each investment

may have the greatest impact:

•

Health

•

Research and Innovation

•

Quality employment at scale

•

Local infrastructure and the

environment

The investment team then use five

ESG principles to evaluate, monitor

and encourage portfolio companies

to make improvements:

1. Awareness: ESG/sustainability

issues on the agenda at board

meetings

2. Environmental: Environmental

policies and track record

3. Social engagement: Community

and stakeholder engagement

4. Governance: Policies and risk

management

5. Third-party interactions: Supply

chain transparency, including

modern slavery

Foresight Private Equity received

ESG Champion of the Year at the

Growth Investor Awards 2021,

reflecting its ongoing success with

driving ESGperformance.

Performance

The Private Equity Team had another

active year, with SMEs more able to

focus on their corporate strategies

as the uncertainties created by

COVID-19 eased. In total, the team

deployed £81 million across 53 equity

transactions (FY21: £59 million

deployed across 39 businesses,

through 41 equity transactions).

Foresight Private Equity also

significantly increased its provision of

capital to specialist lenders to SMEs,

investing £47 million in the year, up

from £13 million in FY21.

The funds deployed come from 13

vehicles of which 11 continue to make

new investments and cover a wide

variety of sectors and investment

types. All our funds are making good

progress with deployment, investing

capital at the rate we expected, and

our strong exit returns track record

was further enhanced. This supports

both our earnings and our ability to

raise further money in the future.

During the year, the Private Equity

Team completed successful

realisations from both retail and

institutional funds. Notable examples

include:

•

Mologic, a health diagnostics

company providing contract

research services for clients

and developing its own range

of proprietary point-of-care

diagnostics products. The

company was sold to Global

Access Health, a not-for-profit

company financed by the Soros

Economic Development Fund,

returning 3.1x to Foresight funds,

inclusive of expected deferred

consideration.

•

Poppy & Jacks, a nursery chain,

was sold to national chain Kids

Planet Day Nurseries, returning

2.5x the initial investment.

•

DA Languages, a

Manchester-based business

providing translation and

interpretation services.

Following the DA Languages

disposal, and supported by the two

previous strong exits, the Foresight

Regional Investment Fund LP

(“FRIF”) has already delivered a

gross cash return of 1.8x total fund

cost, with 14 portfolio companies

remaining. FRIF is based in the

North West and was the first in

a series of regional investment

funds for Foresight, with different

geographic remits across the UK

(seeFundraising).

Is there a higher res photo - 99dpi

STRATEGIC REPORT OVERVIEW BUSINESS REVIEW PERFORMANCE AND RISKINTRODUCTION GOVERNANCE FINANCIAL STATEMENTS

FORESIGHT GROUP HOLDINGS LIMITED Annual Report and Financial Statements FY22 37

In March 2022, Foresight made

a £2.15 million investment into

HomeLink Healthcare Limited

(“HomeLink” or “the company”)

from Foresight VCT plc and

Foresight Enterprise VCT plc.

Formed in 2015, HomeLink has

provided Hospital-at-Home services

since 2019. The company employs

highly qualified and experienced

nurses and rehabilitation teams

to deliver contracts with the NHS

to provide services to patients in

their own homes. Services provided

include wound care, intravenous

therapies, physiotherapy and

rehabilitation.

By delivering critical services to the

NHS, HomeLink relieves pressure

on the NHS, provides a better

experience for patients at home,

reduces hospital admissions and

facilitates the efficient discharge of

patients, thereby freeing up vital

hospital bed space. Bed-blocking

is an endemic issue across the

NHS with significant delays in the

discharge of patients and increasing

hospital admissions due to a lack of

viable alternatives, exacerbated by

demographic shifts and the elective

surgery backlog following

the pandemic.

In the 12 months to March 2022,

HomeLink delivered in excess of

30,000 appointments to 1,352

patients saving the NHS 38,000

beddays.

The investment aligns with

Foresight’s ESG themes of health

and quality employment at scale.

The quality of service provided by

HomeLink is evidenced by the fact

that only one complaint has been

received after 55,000 appointments.

The company also provides an

alternative route of employment for

nurses from the NHS. In addition,

by being dedicated to ongoing

training, it provides paid leave

for study and hopes to provide a

wellness programme for staff in

the near future. The superior work

environment is demonstrated by the

retention rate of HomeLink at over

95%, with only one departure in then

12 months prior to investment.

Foresight’s investment will support

the scaling of the business by

expanding the clinical team,

allowingHomeLink to meet the

demands of clients and prospects,

whilst also investing in supportive

technologies. HomeLink plans to

expand outside its current client

geography into new hospitals and

regions. The company also aims

to explore additional treatment

pathways and grow its virtual ward

offering which is a key pillar of NHS

England’s strategy of delivering over

25,000 additional beds.

GROWTH

HOMELINK

£2.15m

Investment

38 FORESIGHT GROUP HOLDINGS LIMITED Annual Report and Financial Statements FY22

BUSINESS REVIEW CONTINUED

During the year, portfolio companies

have had to continue to adapt to

challenges stemming from COVID-19

and the Brexit transition, including

disruptions to supply chains which

are leading to longer lead times

for certain goods and inflationary

pressures. At the same time, so far

portfolio companies are generally

proving able to maintain their gross

margins through price increases,

while some leisure and industrial

companies are currently benefiting

from the substantial pent-up demand

caused by the COVID-19 shutdowns.

Our analysis of the portfolio has

shown very limited direct impact

of the Russia-Ukraine war on our

portfolio companies. However, all

businesses will face the indirect

impact of increasing inflation,

including energy costs, over the

coming months.

As a result of these economic

conditions, we have encouraged

companies to closely monitor cost

pressures in the supply chain and

to implement long-term pricing

strategies, ensuring they have

plans to manage a variety of future

inflation scenarios.

Fundraising

In the retail funds market, Foresight

VCT plc and Foresight Enterprise VCT

plc launched offers for subscription

during the year. At the date of this

report, these offers had raised

approximately £24 million, with the

Foresight Enterprise VCT offer for

subscription remaining open.

In May 2021, Foresight held the first

close of its latest regional private

equity fund, the North West-focused

Foresight Regional Investment

Fund III LP. The Fund raised an

initial £66million from institutional

investors, exceeding the size of the

previous Foresight fund focused

on this region, and increased to

£83million with a second close post

year end. The Greater Manchester

Pension Fund is the cornerstone

investor, with support from Clwyd

and Merseyside Pension Funds.

Like its predecessor, the Fund is

targeting investments in established

SMEs valued at up to £30million in

NorthWest England, North Wales

and beyond. This is the third fund

in the series of regional investment

funds, following the initial North

West fund and a second fund

focused on the East of England.

Post period end

Since the end of the financial year, we

have announced our appointment by

Allied Irish Banks (“AIB”) to manage

a new equity fund which will support

SMEs across Ireland. AIB will be a

cornerstone investor in the fund,

which aims to stimulate job creation

and deliver a more sustainable

future. The fund will typically provide

equity investments of €2 million

to €5million and should close

imminently, subject to customary

regulatory approvals.

AIB has signed an initial commitment

of €30 million to the fund, which

will target a total raise of €75 million

over time. Foresight will shortly open

an office in Dublin to support the

delivery of the fund and is actively

seeking investment opportunities.

This is our first expansion into Ireland

and the first fund outside the UK

for the Private Equity Team. The

fund is positioned to benefit from

Foresight's breadth of experience

across both private equity and

infrastructure, leveraging their

specialisms to deliver attractive

risk-adjusted returns to its investors.

We had further significant success

in our fundraising activity with the

launch of two new UK regional funds

covering the North East, Yorkshire

and West Yorkshire regions. These

strategically important funds will

support the establishment of new

offices in Leeds and Newcastle.

We were also able to announce

the acquisition of the investment

mandates of Downing's ventures

businesses, which provide an

excellent strategic fit for our

business, complementing our

existing ventures portfolio and

adding scale. The transaction

represents a significant strategic

step and, in conjunction with the

new funds, takes our private

equity AUM to over £1.2 billion.

Private equity market outlook

The UK remains an excellent place

to start, scale and sell a business,

with broad pools of talent and an

entrepreneurial culture. Our analysis

shows that more than 80% of the

UK’s SMEs are outside London

and the South East, presenting

a significant base of potential

investments for us. The markets

we target have varying levels of

competition and we continue to be

a leader in the provision of capital in

those markets, particularly for

sub-£5 million investments.

The government remains supportive

of driving investment in businesses

throughout the UK regions, through

the British Business Bank among

other mechanisms. The Chancellor of

the Exchequer has also encouraged

local government pension schemes

to invest more locally, although it

remains to be seen if this will lead to

greater activity.

The equity gap we fill with our

investments remains firmly in

place and has only been increased

by COVID-19. Forward-thinking

companies that used government

support during the pandemic,

which was primarily in the form

of debt, are now looking to raise

equity to strengthen their balance

sheets ahead of expansion. New

investments will be well positioned

to benefit from the growth phase

of the next economic cycle. SMEs

are also looking for alternatives to

the high street banks for borrowing,

increasing the potential for us in the

specialist lending market.

We also see many corporates and

large private equity investors looking

to deploy capital. This means the

M&A market for SMEs remains open

and we have a promising pipeline of

potential exits.

STRATEGIC REPORT OVERVIEW BUSINESS REVIEW PERFORMANCE AND RISKINTRODUCTION GOVERNANCE FINANCIAL STATEMENTS

FORESIGHT GROUP HOLDINGS LIMITED Annual Report and Financial Statements FY22 39

VENTURE

REFEYN

In January 2019, Foresight made an

initial EIS investment of £1 million

into Refeyn Limited (“Refeyn” or

“the company”) from its Foresight

Williams Technology EIS fund. Refeyn

was spun out of the University of

Oxford in 2018 to commercialise its

revolutionary patented technology,

“Mass Photometry”, which,building

on a decade of cutting-edge

academic research, is able to

determine molecular mass, for

instance of proteins, using light.

Identifying and measuring protein

molecules is an integral part of life

sciences research, particularly in

the development of new medicines.

Refeyn’s technology is disrupting this

high value market.

The technology developed by

Refeyn has now been packaged into

a compact desktop instrument with a

simple user interface. It can provide

data within seconds, reducing the

duration of biomolecule research

projects or quality control checks

by 40%.

The associated increase in

productivity translates directly into

cost savings which can lead to the

acceleration of highly expensive

drug development.

Foresight’s investment into Refeyn is

a good example of the collaborative

and value-add nature of Foresight’s

partnership with Williams Advanced

Engineering. Since the fund’s initial

investment, Refeyn has worked with

the Williams team on product design

and manufacture, and electrical

systems design and development.

Refeyn has grown rapidly and has

achieved many of the milestones

laid out in the original business plan.

The company has grown from a lab in

Oxford with less than ten employees,

to a business with an international

footprint and a staff of 100+. It has

also attracted two further rounds

of funding led by international VCs,

both of which were oversubscribed

and at a significant uplift in valuation

to the initial investment.

40%

reduction in the duration

of biomolecule research

projects

100+

staff

Refeyn

40 FORESIGHT GROUP HOLDINGS LIMITED Annual Report and Financial Statements FY22

BUSINESS REVIEW CONTINUED

SPECIALIST LENDING

RETO

In September 2021, Foresight

provided a £15 million senior secured

debt facility into Reto Finance

Limited (“Reto” or “the company”)

from its Inheritance Tax Solutions

Fund. Reto is a specialist lending

business operating in the Channel

Islands. The company was launched

in 2019 following a buy-out from

Shawbrook International. Reto has

since served hundreds of consumer

and SME borrowers across the

Channel Islands and is increasingly

seen as the “go-to” specialist lender

offering a wider range of products to

SMEs and consumers than many of

its rivals.

Investment into lenders such as

Reto Finance aligns with Foresight’s

regional approach to investing,

offering support to local economies

and businesses that are unable to

access traditional forms of financing.

By providing capital to a range

of consumers and SMEs that are

typically underserved by mainstream

lenders, Reto promotes financial

inclusion and is focused on

supporting its local economy, with

all borrowers located in Jersey and

Guernsey.

Similar to the UK, the region is

facing a housing crisis as demand for

housing far outweighs the supply of

new homes. Foresight’s investment

was designed to expand Reto’s

product suite, allowing it to offer a

development finance product to the

region’s SME property developers

and increase the supply of homes in

the region. Since investment, Reto

has financed nine developments with

56 units either in the planning phase

or under construction.

£15m

senior secured debt

facilityprovided

developments financed

STRATEGIC REPORT OVERVIEW BUSINESS REVIEW PERFORMANCE AND RISKINTRODUCTION GOVERNANCE FINANCIAL STATEMENTS

FORESIGHT GROUP HOLDINGS LIMITED Annual Report and Financial Statements FY22 41

PRIVATE EQUITY EXIT

DA LANGUAGES

In December 2021, Foresight

completed the successful sale

of language services provider

DA Languages Limited (“DAL” or

“the company”) to IK Partners

Small Cap Fund II, which typically

invests in companies with enterprise

values of between €50 million and

€150million. This was the third

exit from the Foresight Regional

Investment Fund which has returned

c.1.8x gross cost to date, with 14

companies remaining in the portfolio.

The average return for the first

three exits is 9x.

Founded in 1998 and headquartered

in Manchester, DAL is one of the

fastest-growing language services

providers in the UK, providing

critical services to organisations

communicating with non-English

speakers. With a network of over

8,000 mother tongue interpreters

and translators, DAL’s offering spans

face-to-face, video and telephone

interpretation along with written

translation services.

Over 450 languages and dialects

are served, including sign language,

enabling better outcomes for all

stakeholders. Promoting inclusivity

and equality is at the heart of DAL’s

operations, ensuring that language

barriers are removed in critical

situations, particularly in healthcare

and legal settings.

Foresight originally invested in DAL

in 2018. During Foresight’s ownership,

DAL strengthened its management

team, moved into modern new offices,

substantially grew its employee base

from 55 to 150+ and developed a

highly diverse client base of NHS

trusts, charities, city councils and

corporates, while building a strong

reputation for quality provision.

The business also invested

significantly in technology and IT

infrastructure to support its clients,

including the acquisition of Miton

Systems, an interpreting technology

specialist, enabling DAL to offer its

own proprietary video and telephone

remote interpreting products.

450+

languages provided

average return for first

threeexits (FRIF)

BUSINESS REVIEW CONTINUED

42 FORESIGHT GROUP HOLDINGS LIMITED Annual Report and Financial Statements FY22

AT A GLANCE

Providing access to real assets and sustainable

investment opportunities in listed markets.

FORESIGHT CAPITAL

MANAGEMENT

Investment strategies

UK Infrastructure

Global Infrastructure

Sustainable Real Estate

Sustainable Future Themes

STRATEGIC REPORT OVERVIEW BUSINESS REVIEW PERFORMANCE AND RISKINTRODUCTION GOVERNANCE FINANCIAL STATEMENTS

FORESIGHT GROUP HOLDINGS LIMITED Annual Report and Financial Statements FY22 43

FCM was established in 2017 to enable retail and institutional investors to access

infrastructure, renewables and real estate investment opportunities through actively

managed open-ended funds, investing in listed securities.

£1.6bn

assets under management

43%

FY22 AUM growth

distinct investment strategies

dedicated professionals

institutional sub-advisory

mandate secured

investment vehicles

MARKET OPPORTUNITY

There is growing demand, both in the

UK and internationally, for retail and

institutional investors to be able to

access sustainability-oriented investment

products that hold listed securities. FCM

has a differentiated approach to this

market, being able to draw on the Group’s

experience in investing in private markets

through Foresight’s Infrastructure and

Private Equity divisions, and apply those

skills and knowledge to investing in public

markets. This gives FCM capabilities that are

hard to replicate.

Raised net inflows into all our strategies, pointing

to strong demand for our open ended funds

International investors also increasingly

demanding access to sustainable investment

strategies

Opportunity for FCM to launch further

investment vehicles to provide access to its

existing strategies

FCM’s platform is scalable and has significant

capacity for further growth in AUM

Potential to target a wider range of investors,

inaddition to the current focus on IFAs and

wealth managers

AUM by

strategyas

atyear end

UK Infrastructure

Income £781m

Global Real

Infrastructure £679m

Sustainable

Real Estate £145m

Sustainable

Future Themes £10m

44 FORESIGHT GROUP HOLDINGS LIMITED Annual Report and Financial Statements FY22

BUSINESS REVIEW CONTINUED

Overview

FCM has a team of nine investment

professionals, who follow an active,

hands-on investment process.

The team is highly focused on the

underlying assets and regularly

visits companies around the world,

reflecting its global investment remit.

As a sustainability-led investor, FCM

has a clear view of the speeds at

which different sectors in different

geographies are addressing

sustainability risks and opportunities.

The investment approach is

bottom-up and conviction-based,

allowing FCM to invest in the best

opportunities, wherever it finds them.

FCM primarily distributes its

products through intermediaries,

principally independent financial

advisers (“IFAs”), wealth managers

and private banks. The division works

to develop strong relationships with

these intermediaries, aiding capital

retention and making these assets

less volatile than is often seen with

direct-to-consumer distribution.

At 31 March 2022, FCM had

£1.6billion of AUM, up 43% during

the year (31 March 2021: £1.1billion).

This reflected robust inflows

during the year and the benefit of

investment performance.

FCM has dedicated internal resource

focused on sustainability due

diligence and analysis. Several

of FCM’s strategies are aligned

with a bespoke sustainable

investment policy, which alongside

active engagement with investee

management helps to ensure we

vote in a manner that is consistent

with widely accepted ESG practices.

If an investment fails to meet our

sustainable investment criteria and

that company chooses not to engage,

we will consider divestment.

Investment strategies and funds

FCM offers four investment strategies, which clients can access through five UK and one Luxembourg domiciled fund:

Strategy Funds Investment focus

Foresight UK

Infrastructure

FP Foresight UK Infrastructure

Income Fund (“FIIF”)

Harnesses Foresight’s infrastructure investment

expertise and taps into the demand for low-volatility,

predictable inflation-linked income. Launched in

2017, the strategy has grown to total net assets

of £780.9million at 31 March 2022. The portfolio

comprises listed companies active across renewable

energy, core infrastructure and real estate, with a

UKfocus.

Foresight Global

Infrastructure

FP Foresight Global Real

Infrastructure Fund (“GRIF”)

VAM Global Infrastructure Fund

(“VAM”)

Foresight Global Real

Infrastructure (Lux) Fund

(“Foresight SICAV”)

Invests in the publicly traded shares of companies

located in developed economies, which own or

operate real infrastructure or renewable energy

assets anywhere in the world. With a growth-focused

investment objective, the strategy was launched

in June 2019 and has grown its total net assets to

£679.3million at 31 March 2022.

Foresight

Sustainable Real

Estate

FP Foresight Sustainable Real

Estate Securities Fund (“REF”)

This strategy was launched in June 2020 to provide

investors with exposure to a highly liquid and globally

diversified portfolio of Real Estate Investment Trusts.

Given the lack of OEICs in the UK that are addressing

both sustainability and real estate, REF is a highly

differentiated strategy which has delivered both strong

returns and low-risk characteristics since launch.

As at 31 March 2022, the strategy’s total net assets

were £144.5 million.

Foresight

Sustainable

Future Themes

FP Foresight Sustainable Future

Themes Fund

This strategy was launched in March 2022. More

information can be found in the case study on page 45.

STRATEGIC REPORT OVERVIEW BUSINESS REVIEW PERFORMANCE AND RISKINTRODUCTION GOVERNANCE FINANCIAL STATEMENTS

FORESIGHT GROUP HOLDINGS LIMITED Annual Report and Financial Statements FY22 45

On 28 March 2022, FCM announced

the launch of the FP Foresight

Sustainable Future Themes Fund

(“SFT”). The Fund will invest in a

global portfolio of 20-40 scalable

listed companies.

Potential investments are carefully

selected based on our approach to

“double materiality”. First, companies

can only qualify for investment if

they have sustainable operations

embedded into their long-term

strategies. This means they need to

be industry leading in areas such

as their environmental impact and

labour practices. Second, they need

to offer innovative products and

services that contribute to achieving

a sustainable, decarbonised and

socially inclusive world.

Companies that meet both these

criteria are likely to be the winners

as society and economies rapidly

change in response to the need for

sustainable development. This means

they will deliver the best financial

outcomes and the most tangible,

real-world impact. The double

materiality approach goes beyond

the industry standard for sustainable

investment funds and we see it as a

key differentiator for SFT.

The Fund will provide capital to

companies at the core of sustainable

development across five sustainable

future themes. Foresight has

significant experience of managing

private assets that align to these

themes, giving us insight into how

these industries work and their

sustainability credentials.

The five themes are:

•

Sustainable Energy: companies

actively contributing to global

decarbonisation through

sustainable energy generation,

storage and usage

•

Sustainable Food, Land and

Forestry: companies involved

in the sustainable production of

food, use of land, agriculture or

forestry and those focused on

protecting biodiversity

•

Waste, Water and the Circular

Economy: companies that are

actively involved in delivering

sustainable water and waste

solutions and companies that

meaningfully contribute to

sustainable resource management

•

Health and Education: companies

that own assets or provide

services that contribute towards

the delivery of sustainable,

high-quality and inclusive

healthcare and education

•

Digital World: companies that

support the transition to a digital

economy in a sustainable and

socially inclusive way

Only companies which derive 80%

or more of their revenue from

activities that align with one or more

of these themes will be considered

for the portfolio. FCM has developed

a proprietary sustainability-led

research methodology to better

identify investments that meet the

Fund’s objectives that would not

be possible using only traditional

third-party ratings agencies.

Engagement will play a key role in

managing SFT’s assets. FCM will

regularly monitor and engage with

management teams and exercise

voting rights in a way that aligns to

the UN Sustainable Development

Goals applicable to each industry.

LAUNCHING

SUSTAINABLE

FUTURE THEMES

46 FORESIGHT GROUP HOLDINGS LIMITED Annual Report and Financial Statements FY22

BUSINESS REVIEW CONTINUED

Performance

This was a transformational year for FCM. In addition to achieving a material increase in AUM, the division built a

platform for future growth, with the launch of a new investment strategy and new funds, the diversification of its

sources of capital through the sub-advisory mandate with VAM (see below) and investment in its team.

Against a backdrop of challenging markets, in which equity funds as an asset class saw net outflows, FCM achieved

total net inflows and performance of £455 million, with net inflows across each of its funds. Retail fundraising delivered

net inflows of £455million and in addition £25 million was raised into VAM by its distribution team.

At the start of the year, FCM had three established UK OEICS – FIIF, GRIF and REF. All three remain on track to deliver

their investment objectives, with positive total returns during the year and since inception.

Fund Inception date 12-month TSR TSR since inception

FIIF 4 December 2017 10.65% 41.38%

GRIF 3 June 2019 7.51% 47.14%

REF 15 June 2020 19.54% 25.67%

Investment performance during the year added £94 million to FCM’s AUM, resulting in a total increase in AUM across

the year of £455 million.

New fund launches

In June 2021, Foresight announced

the launch of the VAM Global

Infrastructure Fund, a Luxembourg

UCITS V Fund, through a new

partnership with VAM Funds,

a Luxembourg-based fund

management company. FCM

has been appointed the fund’s

investment manager and the fund

is being distributed in Europe,

South Africa, Singapore and the

Middle East, through VAM Funds’

established global distribution

platform. The fund gives investors in

these geographies access to FCM’s

Global Infrastructure strategy. The

partnership has already delivered

positive net inflows of £24.7 million

since launch. Investors in VAM have

included clients in South Africa and

the Middle East, where Foresight has

not previously raised retail capital.

In November 2021, FCM launched

a new Luxembourg-domiciled

SICAV with UK tax reporting

status. Thiswill initially provide

investors with access to the Global

Infrastructure investment strategy.

The medium-term growth strategy

includes adding further strategies to

the SICAV, such as Sustainable Real

Estate Securities. The SICAV has

generated inflows from international

investors, following our initial focus

on offshore jurisdictions such as the

Channel Islands and the Isle of Man,

and we are planning to target Europe

and other geographies during FY23.

In March 2022, FCM launched a new

investment strategy, Sustainable

Future Themes, and a new UK OEIC,

the FP Foresight Sustainable Future

Themes Fund. More information can

be found on page 45.

FCM market outlook

The outlook for FCM is highly

positive. There is growing demand

for OEICs in the UK and the launch

of VAM and the Foresight SICAV

during the year have opened up new

international sources of institutional

and retail investment. The business

is highly scalable, with the Global

Infrastructure, Sustainable Real

Estate and Sustainable Future

Themes strategies each having

the potential to reach in excess of

£1billion of AUM. FCM has invested in

its business during the year to ensure

it has the capacity to successfully

manage its growth, which it expects

to lead to rising profit margins,

reflecting the operational gearing in

its business model.

FCM also has scope to broaden its

distribution. Having to date focused

on IFAs and wealth managers, we see

good potential for distributing our

funds through private banks and to

family offices, as well as establishing

a greater presence in direct-to-

consumer sales, as the Foresight

brand becomes increasingly

recognised.

STRATEGIC REPORT OVERVIEW BUSINESS REVIEW PERFORMANCE AND RISKINTRODUCTION GOVERNANCE FINANCIAL STATEMENTS

FORESIGHT GROUP HOLDINGS LIMITED Annual Report and Financial Statements FY22 47

In June 2021, following a

competitiveselection process, FCM

was appointed as the Investment

Adviser to the VAM Global

Infrastructure Fund (“the VAM Fund”),

a Luxembourg SICAV managed by

global fund management group VAM

Funds. TheVAM Fund reflects FCM’s

Global Real Infrastructure strategy

and receives the same investment

resource and portfolio management

resource as Foresight’s UK-domiciled

vehicle. The VAM Fund provides IFAs,

wealth managers and other investors

in global markets with the ability to

allocate to a differentiated portfolio

of real asset owning infrastructure,

renewables and real estate companies.

Multi-decade investment themes

driving the energy transition, societal

resilience and infrastructure renewal

are all addressed through the VAM

Fund, and strong early fundraising

suggests appetite frominvestors.

VAM Funds is a Luxembourg-based

fund manager with global distribution

capabilities that have extended FCM’s

strategies into markets such asSouth

Africa, Europe and Asia. Asat

31March2022, the VAM Fund had

grown to net assets of £33 million with

strong potential for further growth

as VAM Funds continue to expand

their own distribution capability.

Sub-advisory represents an efficient

and scalable channel for FCM to

further grow assets, particularly where

distribution markets are unlocked in

geographies where Foresight Group

has not been historically active.

FCM EXPANDS

INTO SUB-ADVISORY

MARKET

48 FORESIGHT GROUP HOLDINGS LIMITED Annual Report and Financial Statements FY22

SUSTAINABILITY

Foresight’s investments are focused on

afuture that depends on the continued

drive and migration towards sustainability,

renewable energy and technology.

Introduction 50

UN Global Compact

communication on progress 52

Human rights 53

Case study:

Foresight supporting B-Corps 56

Labour 57

Environment 61

Anti-corruption 64

Case study:

EthiXbase platform 65

Natural environment 66

Eden Project Partnership 67

Greenhouse gas emissions 68

Climate disclosure: TCFD 70

A+

FOR STRATEGY

& GOVERNANCE

A+

FOR

INFRASTRUCTURE

FOR

PRIVATE EQUITY

Image of Glen Loyne owned by Foresight Inheritance Tax Fund.

1. PRI scores correct as of June 2022.

STRATEGIC REPORT OVERVIEW BUSINESS REVIEW PERFORMANCE AND RISKINTRODUCTION GOVERNANCE FINANCIAL STATEMENTS

FORESIGHT GROUP HOLDINGS LIMITED Annual Report and Financial Statements FY22 49

Last year’s sustainability update set out our position in terms of how we aligned

with the UN Global Compact, the Sustainable Development Goals and our

journey towards compliance with the Task Force on Climate-related Financial

Disclosures (“TCFD”) recommendations.

This year we are pleased to report on our progress in these areas and highlight

further initiatives which we expect will continue to support our development

towards these goals.

50 FORESIGHT GROUP HOLDINGS LIMITED Annual Report and Financial Statements FY22

We continue to be a transparent

investor, with a strong focus on

sustainability. We engage across all

aspects of sustainability including

nature recovery, climate change,

waste recycling and community

engagement. We seek to be a good

corporate citizen and a model

employer.

People work at Foresight because

they want to be part of our

forward-thinking business and to

make a positive impact in the work

they do.

Last year’s Annual Report set out

our alignment with the UN Global

Compact and the Sustainable

Development Goals, and our

journey towards compliance with

the Task Force on Climate-related

Financial Disclosures (“TCFD”)

recommendations.

We are pleased to report on our

progress in these areas and highlight

further initiatives to continue our

development.

Foresight has made progress in

better understanding the impact

of our business on the natural

environment, communities, people

and the transition to a greener

economy. We often think of our

business as having two key focus

areas: how we operate our business

and conduct ourselves (our

conscience), and how we invest

responsibly, with the future in mind.

Over the past year, we have looked to

better express ourselves and define

what we mean when we talk about

sustainability and ESG. Sustainability

is our ethos, an all-encompassing

approach to being a responsible

business with a conscience.

Over the years, there have been

many definitions of sustainability,

which often overlap with three key

themes: social, environmental and

economic.

ESG (environment, social and

governance) is a framework that

supports us in delivering sustainable

outcomes for our business, in

line with these themes. It helps

us to organise our approach to

sustainability and report in a way that

is meaningful to our stakeholders.

Sustainability is therefore more

complex than ESG alone. It lies at

the heart of our business, from our

investments through to how we run

our business operations. It is about

embedding responsible and ethical

thinking into each business decision,

as well as our investments. This is

something we are working hard to

achieve and demonstrate.

SUSTAINABILITY CONTINUED

Eden Project partnership:

https://www.foresightgroup.eu/landing/

the-eden-project-partnership

INTRODUCTION

STRATEGIC REPORT OVERVIEW BUSINESS REVIEW PERFORMANCE AND RISKINTRODUCTION GOVERNANCE FINANCIAL STATEMENTS

FORESIGHT GROUP HOLDINGS LIMITED Annual Report and Financial Statements FY22 51

In 2021, we established a new role,

Group Sustainability Lead, to focus

on Group-wide sustainability and

bring together the valuable work

that our three investment streams

are doing. This appointment enables

Foresight to set its own global

sustainability agenda, with a focus

for the coming year on establishing

our road to net zero. Following

this appointment we established

a sustainability partnership with

the Eden Project in June 2022 (see

page 67), neutralised our 2021

carbon emissions and committed to

continuing to do so year-on-year.

We have also relaunched our

Sustainability Committee with new

Terms of Reference, establishing a

number of key working groups to

support the business in delivering

sustainable outcomes across our

offices, IT and improving social

value and charitable work, as well as

better co-ordinating our approach

togovernance.

The Sustainability Committee’s aims

include:

•

Enhancing our data collection and

analytics across our businesses,

our Group functions and for all our

strategies

•

The continuing professional

development of all staff in

sustainability-focused topics

•

Disclosing how we integrate

sustainability into each strategy,

as well as the broader Group

•

Increasing the reporting of our

portfolios’ sustainability and

climate characteristics

•

Aligning our Group climate

reporting with TCFD

With the leadership of our Group

Sustainability Lead, our team of

seven sustainability champions

and the wider investment streams,

sustainability is incorporated

throughout the investment

decision-making and investment

management processes.

The following pages demonstrate

the impact we have made this year,

on people, our environment and

the global transition to a greener

economy and a just and equitable

society.

Principles for

Responsible Investment

Foresight is a signatory to the

Principles for Responsible Investment

(“PRI”), a set of voluntary guidelines

that help companies to address

social, ethical, environmental and

corporate governance issues as part

of the investment process. The PRI

assessed Foresight’s wider approach

to its six responsible investment

principles in 2021, for the year ended

31 December 2020. In summary, our

results were:

A+ for Strategy & Governance

A+ for Infrastructure

A for Private Equity

The 2020 assessment transparency

report is available on our website, or

on the UN PRI website

. At the time of

publication we are still awaiting our

latest PRI scores.

1. https://stpublic.blob.core.windows.net/pri-ra/2020/Investor/Public-TR/

(Merged)_Public_Transparency_Report_Foresight%20Group%20LLP_2020.pdf

SUSTAINABILITY CONTINUED

52 FORESIGHT GROUP HOLDINGS LIMITED Annual Report and Financial Statements FY22

HUMAN RIGHTS

PRINCIPLE 1

Businesses should support and respect the protection of internationally

proclaimed human rights.

PRINCIPLE 2

Make sure they are not complicit in human rights abuses.

LABOUR

PRINCIPLE 3

Businesses should uphold freedom of association and the effective recognition

ofthe right to collective bargaining.

PRINCIPLE 4

The elimination of all forms of forced and compulsory labour.

PRINCIPLE 5

The effective abolition of child labour.

PRINCIPLE 6

The elimination of discrimination in respect to employment and occupation.

ENVIRONMENT

PRINCIPLE 7

Businesses should support a precautionary approach to environmental

challenges.

PRINCIPLE 8

Undertake initiatives to promote greater environmental responsibility.

PRINCIPLE 9

Encourage the development and diffusion of environmentally friendly

technologies.

ANTI-CORRUPTION

PRINCIPLE 10

Businesses should work against corruption in all its forms, including extortion

and bribery.

UN GLOBAL

COMPACT

Communication on progress.

We’ve embedded our UNGC intothefollowing section.

STRATEGIC REPORT OVERVIEW BUSINESS REVIEW PERFORMANCE AND RISKINTRODUCTION GOVERNANCE FINANCIAL STATEMENTS

FORESIGHT GROUP HOLDINGS LIMITED Annual Report and Financial Statements FY22 53

HUMAN

RIGHTS

Our commitment to human

rights – UN Global Compact,

communication on progress

As a business operating in multiple

geographies, we take human

rights and modern slavery risks

very seriously. Weendeavour to

comply with the UK’s Modern

Slavery Act across all our

businesses globally, including the

supply chains to which we are

party, and in 2021 we updated our

Modern Slavery Statement with

a further update scheduled for

later this year. We are continually

developing the measures we

take to promote increased

supply chain transparency in line

with internationally recognised

standards and to support wider

industry efforts in that regard.

This includes increased

engagement with manufacturers

and contractors in our

Infrastructure portfolio. We also

recognise that collaboration with

other asset managers and industry

bodies will have greater impact

when seeking to eradicate forced

labour and other human rights

abuses. Earlier this year, Foresight

participated in the PRI roundtable

on Human Rights in Private

Markets Investing, with discussions

centring on how to build an

organisational approach to human

rights, managing supply chain

risk and empowering portfolio

companies and assets.

Please see our EthiXbase platform

case study on page 65.

Throughout the year, we have

conducted assessments to better

understand the supply chain risks

Foresight could be exposed to,

and the risk of involvement in any

human rights abuses at a portfolio

level. This year, our Foresight

Regional Investment Fund

conducted a material analysis of

its Private Equity portfolio, with

deep dives on companies that we

felt required further clarification

on their supply chain risks. These

companies were predominantly

in the apparel/consumer goods

sector or imported goods from

Asia. In line with our outcome-

orientated approach, risks

were determined on actual and

potential negative outcomes.

Human rights due diligence is built

into our investment processes

and we request human rights

policies or statements from key

counterparties, in addition to the

standard due diligence processes

we undertake through World-

Check. In particularly high-risk

areas such as solar, where the

supply chain can often be traced

to regions with a heightened risk

of modern slavery and human

rights abuses, we now also use

the EthiXbase due diligence

platform. We remain members

of Solar Energy UK’s responsible

sourcing working group and look

to increase industry-wide leverage

through collaborating with other

actors who share our ambition

to increase transparency in the

supply chain.

Our FCM investment team

specifically addresses the ten

principles of the UN Global

Compact as part of the investment

process. The investment team

regularly monitors the companies

in which its funds invest against

these criteria. If an investee

company appears to no longer

meet the criteria, FCM would not

make further investments in the

company and its position would be

realised in an orderly fashion.

PRINCIPLE 1:

BUSINESSES SHOULD

SUPPORT AND RESPECT

THE PROTECTION OF

INTERNATIONALLY

PROCLAIMED HUMAN

RIGHTS

PRINCIPLE 2:

BUSINESSES SHOULD

MAKE SURE THAT THEY

ARE NOT COMPLICIT IN

HUMAN RIGHTS ABUSES

SUSTAINABILITY CONTINUED

54 FORESIGHT GROUP HOLDINGS LIMITED Annual Report and Financial Statements FY22

HUMAN

RIGHTS

CONTINUED

We have increasingly aligned our

investment approach with the UN

Sustainable Development Goals

(“SDGs”), recognising that small

businesses play a crucial role in

delivering the targets set under

these goals to bring about an end

to poverty and protect the planet.

More recently, we have further

evolved our investment strategy to

an outcome-orientated approach

that identifies and measures the

contribution our companies make

to societal challenges based on

the SDGs. This includes ensuring

we proactively manage our risk of

complicity in human rights abuses

and other potential harms, for

example by protecting people’s

right to breathe clean air by

avoiding or reducing greenhouse

gas emissions.

Our Infrastructure portfolio

naturally avoids greenhouse

gas emissions by producing

green energy and facilitating the

transition to a greener economy.

Last year we were responsible

for avoiding 3.4 million tonnes

of CO

e, as a result of the green

energy we produce and enable,

which we report against in line

with SDG 3.

We have continued to engage

with key stakeholders, including

communities and charities in which

investee companies participate,

communities local to Foresight

Group’s offices and charities

selected by our staff. Supporting

those communities by ensuring

investee companies recognise

and uphold sustainability values

and standards is achieved via

our due diligence process and

ongoing monitoring and reporting

post-investment.

We are currently embedding

key sustainability risks into our

risk framework, including human

rights, and we will develop a

Human Rights Policy by the end

of the next financial year. This will

identify material human rights

issues connected with Foresight’s

operations and value chain and

outline the actions that we will

follow.

WE ARE

DEVELOPING

A FORESIGHT

HUMANRIGHTS

POLICY

STRATEGIC REPORT OVERVIEW BUSINESS REVIEW PERFORMANCE AND RISKINTRODUCTION GOVERNANCE FINANCIAL STATEMENTS

FORESIGHT GROUP HOLDINGS LIMITED Annual Report and Financial Statements FY22 55

Modern slavery

Foresight Group’s Modern Slavery

Statement is made pursuant to

section 54(1) of the UK Modern

Slavery Act 2015 and, in relation to

the Group’s Australian subsidiary,

Foresight Group Australia Pty Ltd

(“FG Australia”), Section 14 (1) (2)

of the Australian Modern Slavery

Act 2018. This is therefore a joint

statement made in conformance

with both Acts.

The scope of the statement covers

all/any Group entities falling

within scope of the above Acts,

including the Group’s principal

operating subsidiary, Foresight

Group LLP, which is a limited

liability partnership operating in

England and Wales, as well as FG

Australia. The statement sets out

actions that we take as a business

to reduce the risk of exposure to

forced labour, child labour and

modern slavery, as a result of our

business practices.

As part of our work with EthiXbase

(see page 65), we have distributed

a modern slavery questionnaire to

all key counterparties across our

solar portfolio.

WE TAKE

DATA

PROTECTION

SERIOUSLY

Data

We take data protection seriously,

including the personal data of our

staff and information regarding

our stakeholders. To support

the security of our data, we

have implemented a number of

policies and procedures that cover

data protection (see below) in

addition to aligning with ISO27001

Information Security Management

and holding Cyber Essentials

Plus accreditation. Aligning and

complying with these standards

provides assurance on systems

and processes related to the

security of our data.

A selection of our data protection

policies are shown below:

•

Acceptable Use Policy

•

Access Management Policy

•

Change Management Policy

•

Cryptography Policy

•

Cyber Security Policy

•

Information Security Incident

Management Policy

Health and safety

Health and safety is a human

rights issue. Everyone deserves

to work in a safe place and to go

home safely to their families. It is

our responsibility to provide safe

and healthy working conditions for

our staff.

The health and safety of all

employees and visitors is a

number one priority and we have

worked to provide COVID-secure

workplaces and mental wellbeing

to support staff in the transition to

hybrid working and coming back

into the office. We also encourage

all of our portfolio companies

to provide workplace benefits

covering a range of areas such as

medical cover and cycle to work

schemes.

Our investment due diligence

process also assesses evidence

of health and safety policies

and processes at the point of

investment.

56 FORESIGHT GROUP HOLDINGS LIMITED Annual Report and Financial Statements FY22

SUSTAINABILITY CONTINUED

FORESIGHT

SUPPORTING B-CORPS

B Corporation (“B-Corp”)

certification is a third-party

certification standard issued

by the non-profit B Lab, which

is behind the B Corporation

movement. Thecertification

shows that a company has had its

claims voluntarily investigated by

a third party and has taken legal

accountability for its impact on

stakeholders.

In 2021, Foresight engaged with

consultant Seismic to conduct

an initial diagnostic, to better

understand how we are performing

across each of the five impact areas

of the “B Impact Assessment”. This

assessment gave an indication of

our performance and identified our

areas of strength and opportunities

to better inform our sustainability

approach as we look to strengthen

our sustainability strategy over the

coming months.

As an example, one of our portfolio

companies that has achieved

B-Corp status is Suffolk-based

financial services company Beckett

Investment Management Group

(“Beckett”). This is its journey:

Nearly a year after an investment

from the £100 million Foresight

East of England Fund, Beckett has

grown its assets under management

from £775 million to £1.2 billion and

expanded its team by 26 people.

Itisapproaching 100 employees.

The B-Corp certification marks

another landmark moment for

Beckett. Its application was

supported by its Social Impact

Portfolio – launched in January

2016 – which invests predominantly

in collective investment schemes

which have a stated ESG objective

and policy, or a stated Socially

Responsible Investment (“SRI”)

objective and policy.

The certification demonstrates

just how seriously Beckett takes

sustainability:

•

Beckett was an early signatory to

HM Treasury’s Women in Finance

Charter

•

Beckett has been granted the

Bronze level of the Suffolk Carbon

Charter, in recognition of the steps

it has taken to reduce its carbon

footprint

•

Beckett was recognised with the

Best Employer 2021 (medium

company) award at the Best

Employers Eastern Region Awards

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FORESIGHT GROUP HOLDINGS LIMITED Annual Report and Financial Statements FY22 57

LABOUR

Our commitment to fair

labour – UN Global Compact,

communication on progress

Conversations around fair labour,

inclusion and discrimination are

being amplified on the global

stage. Our priority is to empower

individuals and contribute to

generating similar attitudes in

respect of equality, diversity,

social mobility, flexible working

and inclusion in our workplaces,

investee companies and the

wider community. As part of

this, we are committed to better

understanding our workforce

and promoting fair employment

conditions in our offices and

throughout our supply chains,

including developing a Human

Rights & Labour Rights Policy,

which will be in place by the end

of the next financial year.

As part of our commitment to

operational transparency, we

carefully monitor Foresight’s

supply chains and subcontracting

arrangements. We have also

become more engaged in efforts

to eliminate human and labour

rights violations within the

wider renewable infrastructure

technologies manufacturing

and procurement chains, which

is the area where Foresight has

the greatest exposure. For our

solar portfolio, we are working

with EthiXbase (see page 65), in

evolving both our approach and

the industry-wide response to

issues related to these four UN

Global Compact themes, including

modern slavery.

Empowering our workforce:

wellbeing and work-life

balance

This year, we have continued

with a variety of initiatives to

empower our staff, broaden their

skill set and establish an inclusive

workplace culture. We encourage

staff to undertake development

training and run a successful

internal mentor programme, with

35% of staff currently involved.

Inaddition, we have extended our

programme of Foresight Connect

sessions – a series of internal,

educational talks from staff

across the business – to support

knowledge building.

We recognise the need for flexible

working. This year we have

reviewed and updated our Flexible

Working Policy and published a

Sabbatical Policy, acknowledging

that as the working landscape

evolves, flexibility is not a set

number of days in the office or

at home, but about trust and

communication. We encourage

all our people to manage their

work commitments to suit their

personal situations and equip our

managers to lead a flexible and

adaptive workforce.

PRINCIPLE 3:

BUSINESSES SHOULD

UPHOLD THE FREEDOM

OF ASSOCIATION AND THE

EFFECTIVE RECOGNITION

OF THE RIGHT TO

COLLECTIVE BARGAINING

PRINCIPLE 4:

THE ELIMINATION OF ALL

FORMS OF FORCED AND

COMPULSORY LABOUR

PRINCIPLE 5:

THE EFFECTIVE ABOLITION

OF CHILD LABOUR

PRINCIPLE 6:

THE ELIMINATION OF

DISCRIMINATION IN

RESPECT OF EMPLOYMENT

AND OCCUPATION

SUSTAINABILITY CONTINUED

58 FORESIGHT GROUP HOLDINGS LIMITED Annual Report and Financial Statements FY22

LABOUR CONTINUED

Staff wellbeing also remains

a priority. To fully understand

this, we have included questions

focused on wellbeing in our

employee engagement survey.

These responses are translated

into meaningful actions for our

people. We have four mental

health first aiders, and celebrate

mental health awareness week

with a wide variety of enlightening

and engaging activities in support

of holistic wellbeing.

We want to ensure the health

ofour employees is a priority

andprovide some certainty

around their futures. We have

therefore enhanced the cover

provided for health care and

increased how we match

pension contributions. We are

also supporting our employees

by implementing an enhanced

leave policy for miscarriages and

stillbirths across all jurisdictions.

To help our employees engage

with their benefits, UK employees

will soon have access to an

app which enables them to

easily access all their benefits

information and make any

relevantchanges.

Equal opportunities

We acknowledge that the

financialsector does not reflect the

diversity of wider society and as a

proud Living Wage Employer we

understand that cultural and

socio-economic factors

definitely should not be a

barrier for candidates during

therecruitmentprocess.

We therefore have mechanisms

inplace to ensure our recruitment

process is above industry

standard. This starts with how we

manage the recruitment process,

through to the training offered

to staff and initiatives introduced

to better understand our

workforce. Foresight’s policies and

procedures make qualifications,

skills and experience the basis

for the recruitment, placement,

training and advancement of

staff at all levels. To guide equal

employment practices, this is

the fourth year that we require

hiring managers to undertake

unconscious bias training.

TheInclusion and Diversity

(“I&D”)Committee is responsible

for equal employment issues.

Inclusion and diversity (“I&D”)

Foresight’s I&D Committee

relaunched this year and is made

up of the Heads of Department

from across the business. As of

2022, each Head of Department

is responsible for the role

their department plays, taking

ownership of their division’s I&D

statistics and what they mean.

This will enable senior

stakeholders to work with their

teams, ensuring we not only meet,

but surpass, our I&D commitments

and ensure we have provided the

necessary framework to build an

inclusive culture. Further examples

of how we address I&D are

available on our website.

We are continuing to develop

our inclusion and diversity

practices, which is helped by a

93% completion rate of our People

metrics. Our successful “Count

me in” initiative supported this

engagement. This demonstrated

everyone’s role in I&D at Foresight

and the importance of having our

own data set to reference and

shape our approach.

35%

STAFF ENROLLED

ON THE MENTORSHIP

PROGRAMME

1,050+

JOBS CREATED

ACROSS THE FRIF

PORTFOLIO

STRATEGIC REPORT OVERVIEW BUSINESS REVIEW PERFORMANCE AND RISKINTRODUCTION GOVERNANCE FINANCIAL STATEMENTS

FORESIGHT GROUP HOLDINGS LIMITED Annual Report and Financial Statements FY22 59

We know an inclusive business

system is good for all in society,

which is why we have pledged our

support for gender balance across

financial services. Together, we

are working towards creating an

entrepreneurial ecosystem where

women have the necessary tools

and resources to successfully

grow businesses and excel in the

finance industry. Foresight is now

a signatory to the Investing in

Women Code and our commitment

is outlined on our website.

With females currently

representing 37% of our total

workforce, we remain a signatory

of HM Treasury’s Women in

Finance Charter and are working

towards our five-year target

of 30% of women in senior

management roles by 2024.

Weannounced we were at 25% as

of September 2021. This was also

the first year of official Gender Pay

Gap reporting.

As a long-term investment partner,

we will continue to play our part

in enabling financial inclusion and

supporting the needs of growing

promising UK businesses.

This year, Foresight Private Equity

participated in Playfair Capital’s

Female Founders Office Hours

initiative. Female founders had

the opportunity to meet over

125 investors and engage in

one-to-one mentoring sessions

and pitch meetings.

In addition, team members

support Fund Her North, an

initiative to improve access to

funding by creating a network of

angel and institutional investors.

This is visible in our flagship

Foresight Regional Investment

Fund. Within the private equity

portfolio, 33% of businesses

are female founded

and board

diversity is improving, with 20%

of the portfolio boards having

female representation. As well as

gender, Foresight is committed to

improving racial diversity and has

added KPIs to its annual reporting

this year relating to racial and

ethnic diversity at portfolio

companies, both at a board level

and across the workforce.

37%

FEMALE

WORKFORCE

33%

OF BUSINESSES ARE

FEMALE FOUNDED

1. Within our Foresight Regional

Investment Funds.

SUSTAINABILITY CONTINUED

60 FORESIGHT GROUP HOLDINGS LIMITED Annual Report and Financial Statements FY22

LABOUR CONTINUED

Empowering the future

workforce

Since returning to a state of

“new normal”, we have been able

to re-establish our community

outreach initiatives. Given the

nature of Foresight’s business, we

feel well equipped to offer careers

guidance and financial skills

training to children and young

adults in the areas local to

our offices.

•

Staff involvement in the Finance

Industry Programme with Amos

Bursary, an organisation which

helps young people of African

and Caribbean heritageto

excel in education and other

opportunities, providing

insights and an introduction

to financial services to over

30students.

•

Hosting a careers day for

A-Level business students

from the Sacred Heart School

in London Bridge. Our staff

have also visited the school for

business and careers talks.

•

Partnering with Diversity VC

on its Future VC programme,

to offer paid internships to

talented individuals from

diverse backgrounds and

provide them with hands-on

experience that will help them

succeed in their chosen careers.

In addition, Health and Education is

one of five fundamental investment

themes of the FP Foresight

Sustainable Future Themes Fund

which was launched in March 2022.

Itinvests explicitly in companies

that own assets or provide services

that contribute towards the delivery

of sustainable, high-quality and

inclusive healthcare and education.

STRATEGIC REPORT OVERVIEW BUSINESS REVIEW PERFORMANCE AND RISKINTRODUCTION GOVERNANCE FINANCIAL STATEMENTS

FORESIGHT GROUP HOLDINGS LIMITED Annual Report and Financial Statements FY22 61

ENVIRONMENT

Our commitment to the

environment – UN Global

Compact, communication

on progress

We inherently contribute to

sustainable development, as

a business that supports local

economies, finances sustainable

infrastructure investments to

facilitate the energy transition,

protects and restores natural

forest ecosystems and invests

in companies that are actively

delivering a sustainable future.

Understanding and reducing our

environmental impact remain

key considerations for Foresight

Group at a corporate level. Be it

through design, organisation or our

behaviours, we are committed to

minimising greenhouse gas (“GHG”)

emissions, water and paper waste,

and to sustainable procurement.

Our Sustainability and ESG Policy

https://www.foresightgroup.eu/

about-us/sustainability outlines

our commitments.

The appointment of new

Sustainability and Risk resources

this year attests to the Group’s

desire to embed climate and

sustainability considerations

throughout the business. The

newly relaunched Sustainability

Committee will accelerate

these ambitions and help us

to disseminate best practice

in environmental stewardship.

Targets will be set later this year.

Key working groups delivering

environmental outcomes are as

follows:

•

Sustainable Offices

•

Sustainability in Governance

•

Charity & Social Value

•

Sustainable Investment Streams

As part of our vision to

demonstrate leadership

in sustainable business, a

priority this year has been to

better understand our carbon

footprint and, as of March 2022,

Foresight was officially certified

CarbonNeutral®.

This includes changing business

activities such as purchasing to a

more responsible and conscious

approach, which can be as simple

as moving our utility contracts

to green energy tariffs where

possible. At a Group level, we

continue to analyse climaterelated

risks and opportunities (read more

in the TCFD section on pages 70

to 81) and will be looking to set

science-based carbon reduction

targets.

Sustainable investing

in infrastructure

Reflecting the momentum behind

the global decarbonisation

agenda, this year our investment

divisions have made demonstrable

progress to support the transition

and mobilise finance towards

sustainable projects, especially

within the energy transition and

natural capital markets.

PRINCIPLE 7:

BUSINESSES

SHOULD SUPPORT

A PRECAUTIONARY

APPROACH TO

ENVIRONMENTAL

CHALLENGES

PRINCIPLE 8:

UNDERTAKE INITIATIVES

TO PROMOTE GREATER

ENVIRONMENTAL

RESPONSIBILITY

PRINCIPLE 9:

ENCOURAGE THE

DEVELOPMENT

AND DIFFUSION OF

ENVIRONMENTALLY

FRIENDLY TECHNOLOGIES

SUSTAINABILITY CONTINUED

62 FORESIGHT GROUP HOLDINGS LIMITED Annual Report and Financial Statements FY22

ENVIRONMENT

CONTINUED

All of Foresight’s infrastructure

funds have a sustainability

theme. Our bespoke approach to

infrastructure investing provides

assurance to our investors that

projects are making a genuine

contribution to sustainability

targets. There are effective

management systems in place

to integrate environmental and

social principles, such as the

Sustainability Evaluation Tool

(“SET”), which was launched

in October. Its methodology

and application is outlined in

our Sustainable Investing in

Infrastructure paper – which was

updated this year, reflecting the

ever-evolving landscape.

Four of Foresight’s infrastructure

funds (FSFL, FSFC, ITS, JLEN)

have been assessed internally using

the EU Taxonomy framework.

The assessment involves

scrutinising each asset against

the six Do No Significant Harm

(“DNSH”) criteria, to ensure that

each asset meets the required

standard. Separately, third-party

validation (Aardvark) has been

conducted for all FEIP assets, and

at the time of assessment all were

in the scope of theTaxonomy.

Efficiency and innovation

Energy efficiency is a critical issue.

During our analysis of scope 2

emissions for the solar portfolio,

a few sites had disproportionately

higher energy consumption on a per

MW basis. Further analysis verified

these results and investigations are

now underway to understand what

we can do to reduce both energy

consumption and the associated

scope 2 emissions.

Resolving this variance will result

in both lower operational costs

and a lower carbon footprint

at the portfolio level. Possible

solutions may include upgrades

to equipment that has been

identified as inefficient and too

energy intensive.

Equally, to future-proof our

operations, the lifecycles of

investments and/or assets is

evaluated during the investment

process via our SET. They are

considered with environmental

and technological resilience in

mind. Furthermore, to safeguard

care for the communities and

environments in which we

operate, the SET factors in the

decommissioning of assets at

theend of their useful lives.

4.1m

TONNES OF CO

E AVOIDED (INFRA) VS COAL

(2020/21: 2,741,075 TONNES CO

+24.8%

INCREASE ON LAST YEAR

1.78m

EQUIVALENT HOMES SUPPLIED WITH GREEN

ENERGY

(2020/21: 1.2m HOMES SUPPLIED)

+365,000 homes

INCREASE ON LAST YEAR

During the year ended 31 March 2022, our infrastructure investments have achieved the following:

1. This year’s figure relates not only to emissions avoided through renewable energy generation but also our CNG assets.

2. To calculate these figures, we use an average household electricity consumption figure from OFGEM, which is 2.9MWh

per year.

STRATEGIC REPORT OVERVIEW BUSINESS REVIEW PERFORMANCE AND RISKINTRODUCTION GOVERNANCE FINANCIAL STATEMENTS

FORESIGHT GROUP HOLDINGS LIMITED Annual Report and Financial Statements FY22 63

Progress on environmental

sustainability

Climate change is increasingly

important internationally, with

growing public momentum

towards promoting change and

securing a “sustainable” world.

Some examples of Foresight’s

educational initiatives to

promote greater environmental

responsibility and the importance

of sustainable investment include:

•

October whitepaper, Directing

the tide: UK advisers, htt ps: //

www.foresightgroup.eu/news/

directing-the-tide-uk-advisers-

role-in-driving-uk-wealth-

towards-sustainable-investing

which explores the materiality of

ESG issues for financial advisers

and retail investors, based on

research we conducted this year

among UK IFAs

•

Foresight Sustainability Week,

https://www.foresightgroup.

eu/news/watch-on-demand-

foresight-sustainability-week

aseries of five virtual breakfast

discussions, with leading

industry experts sharing their

insights into the challenges and

opportunities that arise as the

private sector mobilises behind

the global sustainability agenda

•

At COP26, Foresight helped

to raise awareness amongst

younger audiences about

the impacts of their financial

decisions and how they can

use their pound to protect

theenvironment, and hosteda

panel with Make My Money

Matter. https://vimeo.

com/644836552

•

EthiXbase Platform for Solar

•

Creating a bespoke ITS and

AITS sustainability calculator,

for financial advisers to use to

better understand the positive

environmental impact of a

client’s investment

•

Building out Sennen and

integrating core sustainability

metrics. Sennen is bespoke

software that enables all staff to

better understand and manage

our infrastructure portfolio and

their KPIs

ALL INFRASTRUCTURE

FUNDS HAVE A

SUSTAINABILITY

THEME

INFRASTRUCTURE

HAS 4 SFDR ARTICLE

9 FUNDS

•

JLEN Environmental

Assets Group Limited

•

Foresight Solar

FundLimited

•

Foresight Energy

Infrastructure Partners

•

Foresight Italian Green

Bond Fund

INFRASTRUCTURE

HAS 2 SFDR ARTICLE

8 FUNDS

•

Foresight Solar

FundLimited

•

Foresight Inheritance Tax

Solution

SUSTAINABILITY CONTINUED

64 FORESIGHT GROUP HOLDINGS LIMITED Annual Report and Financial Statements FY22

Our commitment to

anti-corruption – UN Global

Compact, communication on

progress

Eliminating corruption and

ensuring corporate integrity

are crucial for any business.

Foresight has a no-tolerance

approach to corruption across

our separate investment streams.

We maintain detailed policies and

procedures relating to Anti-Money

Laundering, Anti-Bribery &

Corruption, Conflicts of Interest

and Whistleblowing, which are

periodically assessed via our

compliance and governance

monitoring programmes. Our

participation in the UN Global

Compact and support for

its Ten Principles, including

anti-corruption, help to shape

our investment activities and

corporate behaviours.

Commitment to this approach

comes from the Board, Foresight’s

Head of Risk and Governance, and

our Compliance teams in each

jurisdiction. They oversee the

quality control measures and that

all Foresight operations meet the

relevant standards. Measures we

continue to implement are:

•

All transactions with

counterparties are subject to

a rigorous know-your-client

verification that includes

bribery and corruption risk

assessments, checks against

global sanctions lists and

political exposure

•

Counterparty risks are ranked

according to factors such as

operating jurisdiction, sector

risk, transaction type and

counterparty negative press

•

External forensic due diligence

experts are also engaged for

certain higher-risk transactions,

which determines whether the

transactions will or will not

proceed

Within the workplace, we continue

to develop and embed measures

that ensure all employees are

equipped to handle any concerns.

During this reporting cycle we

have:

•

Continued mandatory

anti-money laundering

and anti-terrorism online

training modules for all

employees. Thisyear we

intend to introduce specific

mandatoryanti-corruption

andbribery training

•

Launched a new intranet that

hosts all of Foresight’s policies

and procedures

•

Hosted a hybrid compliance

training module, which

reiterated the requirements

around declaration of all gifts

and hospitality given and

received, with specific approval

required for gifts and hospitality

over a certain threshold

•

Encouraged staff to report any

issues of concern and continued

to explore opportunities

to improve internal

communications around

Foresight’s Whistleblowing

Policy

PRINCIPLE 10:

BUSINESSES SHOULD

WORK AGAINST ALL

FORMS OF CORRUPTION,

INCLUDING EXTORTION

AND BRIBERY

ANTI-

CORRUPTION

FINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT OVERVIEW BUSINESS REVIEW PERFORMANCE AND RISKINTRODUCTION

FORESIGHT GROUP HOLDINGS LIMITED Annual Report and Financial Statements FY22 65

ETHIXBASE

PLATFORM

To seek greater insight into the

risks within our solar supply chain,

Foresight engaged EthiXbase,

aplatform that offers a cost-effective

and risk-based approach to

third-party risk management.

Theorganisation is a member of the

UN Global Compact (“UNGC”) and

has developed a holistic solution

and supply chain risk management

programme, to identify risks across

UNGC key themes.

EthiXbase’s Enhanced Due Diligence

(“EDD”) reporting includes

independent in-country investigation

of the suppliers, covering detailed

company registry records,

directorship background searches,

local language media searches

and civil litigation, bankruptcy and

criminality checks from across more

than 800 databases. The approach

followed by EthiXbase enhances

our due diligence process, as we

do not rely on the completion of

questionnaires by third parties to

gather data – all data is accessed

online and through publicly available

information.

The key areas of ESG-specific

research are detailed below, with

the EDD report providing red flag

analysis on any identified areas of

risk, enabling immediate focus on

material areas of concern, such as:

•

Company Background and

Corporate Findings

•

Shareholders and Management

•

Sanctions, Enforcements and

Watch Lists

•

Political Exposure Risk

•

Bribery and Corruption

•

Human Rights and Modern Slavery

•

Environmental Practices

•

Labour Practices

•

Health and Safety

•

Information, Cyber Security

andPrivacy

•

Fraud

•

Money Laundering and Terrorism

•

Regulatory Breaches and

Anti-Competitive Behaviour

•

Country Specific Risks

In addition, EthiXbase has also

collaborated with global law firm

Norton Rose Fulbright to design

and distribute a supply chain

modern slavery questionnaire,

which includes a risk assessment

enabling businesses to identify the

potential for human rights abuses

across their supply chains. Foresight

prioritised its solar supply chain

analysis across three key stakeholder

groups: panel manufacturers, inverter

manufacturers and O&M providers.

Any concerns that are raised will

result in further scrutiny from the

Foresight team, to assess whether

the risk is relevant or material to

business operations.

We are now looking at other supply

chains across our portfolio, to

determine where we will benefit

from better understanding any risks

identified through enhanced ESG

duediligence.

SUSTAINABILITY CONTINUED

66 FORESIGHT GROUP HOLDINGS LIMITED Annual Report and Financial Statements FY22

NATURAL

ENVIRONMENT

Towards a nature rich future:

defining the role of business

in nature recovery

We believe landowners and

businesses have a vital role

in preserving our natural

environment for future

generations. We therefore need

to think differently and creatively

about how we manage and make

the most of the opportunities

our land affords. As one of the

UK’s most active natural capital

investors, and a significant

landowner now with 11,200

hectares of forestry assets,

Foresight is particularly engaged

in the nature recovery discourse.

This ranges from how we manage

our land to the investments

wemake and the partnerships

wepursue.

Natural capital investor

By prioritising the long-term

enhancement and conservation

of natural capital and the delicate

ecosystems that support us, we

are delivering value for the planet

as well as our stakeholders. In

November, Foresight Sustainable

Forestry Company (“FSFC”) listed

on the London Stock Exchange

(“LSE”) as the LSE’s first, and only,

listed natural capital investment

vehicle. Launched to make a

direct contribution in the twin

fights against climate change

and biodiversity loss, through

forestry and afforestation carbon

sequestration initiatives, the IPO

proceeds alone are expected to

enable over 4 million tonnes of

sequestration. This is the

equivalent of offsetting the entire

carbon footprint of Edinburgh for

a year.

Earlier that month, Foresight

announced its membership

of the Sustainable Market

Initiative’s Natural Capital

Investment Alliance (“NCIA”),

established in January 2021 by

His Royal Highness The Prince

of Wales. Thiswill accelerate the

development of natural capital as

a mainstream investment theme

and mobilise private capital

efficiently and effectively for

natural capital opportunities.

Looking to the year ahead, we

see Foresight’s involvement

as an opportunity to catalyse

broader awareness of natural

capital and the energy transition

as investment themes and we are

excited to be supporting a number

of NCIA working streams.

FINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT OVERVIEW BUSINESS REVIEW PERFORMANCE AND RISKINTRODUCTION

FORESIGHT GROUP HOLDINGS LIMITED Annual Report and Financial Statements FY22 67

This year, we announced our

sustainability partnership with the

Eden Project, a UK based educational

charity and social enterprise. Guided

by a mutual understanding of the

significance of a nature rich future,

the partnership will demonstrate,

and highlight the role of business in

supporting UK nature recovery, as

well as creating investment products

with higher social and environmental

value, both local to our assets

and nationwide. As spearheads

of a growing movement to build

relationships between people and

the natural world, it is a valuable

opportunity to shape the wider

debate around nature recovery.

The partnership holds huge potential.

Initially it will focus on three key

areas:

1. Define. Defining how a business

like ours can respond to nature

recovery

2. Demonstrate. Demonstrating

tangible positive outcomes for

nature through our portfolio of

assets and engagement with

communities

3. Engage. Engaging with our

stakeholders, internally and

externally, to educate others on

nature recovery and what they

cando to contribute

The UK is considered to be one

of the most nature depleted

countries in the world and the UK

Nature RecoveryNetwork has

been established to deliver some

of the key objectives of the UK

Government’s Environmental Plan.

Thispartnership will engage the

public and communities in the

movement, thinking holistically about

green space and the benefits and

opportunities it offers communities.

We will deliver community benefits

directly through Foresight's nature

recovery plans.

Our first deliverable under the

partnership is to produce a Nature

Recovery approach for the Group

that will help us to better frame

these three key areas. Our business

has three investment streams and

they will all be able to offer different

approaches to nature recovery and

in time will be able to work with the

Eden Project to deliver a variety of

sustainable outcomes.

We are also launching the Foresight

Seed Bank which will be housed

at the Eden Project’s national

wildflower centre. Over time, we

will build up the seed bank from

seeds collected across our UK-based

sites. We will then be able to plant

these seeds across sites that require

further wildflower planting and share

the seeds with community groups,

as part of our engagement and

education around nature recovery.

We are delighted to partner with

the Eden Project, a bastion of

conservation. Together we will create

and restore diverse, wildlife-rich and

better connected habitats.

EDEN PROJECT

PARTNERSHIP

SUSTAINABILITY CONTINUED

68 FORESIGHT GROUP HOLDINGS LIMITED Annual Report and Financial Statements FY22

GHG EMISSIONS

OUR ROAD TO NET ZERO

It is incumbent upon businesses to

show leadership in sustainability,

make decisions that will ultimately

bring us closer to net zero before

2050 and bring about a speedy

recovery for nature. Reducing our

carbon footprint is primarily about

slowing climate change. However,

there are many benefits to

reducing our emissions, including

better air quality, improved health

and wellbeing and enhancing

biodiversity.

We are carrying out further work

to understand our wider emissions

footprint and the ways it can be

reduced. As noted in the TCFD

section on pages 78 and 79,

wehave carried out a carbon

assessment on our scope 1, 2

and 3 emissions (not including

financed emissions) for calendar

years 2019 and 2020. We have

recently offset our 2020 emissions

using verified carbon credits from

ClimateCare and in March we

announced that Foresight is an

officially certified CarbonNeutral®

company, in accordance with the

CarbonNeutral Protocol.

Our commitment is to continue

learning, improve how we

understand and measure our

emissions and to set ourselves a

strategic approach to reducing our

emissions across the Group.

Foresight’s route to net zero

and decarbonisation

We are taking action now to

demonstrate our commitment to

becoming a net zero business.

“Neutralising” our current

emissions is the first major step

on this journey. This is an enduring

commitment and we will continue

to measure our footprint, focus

on reducing our emissions and

offset those that we cannot avoid

year-on-year. Right now, we are

working to better understand our

emissions at fund level and set

science-based targets accordingly

– outlining when we expect to

achieve “net zero”.

Annual review

Every year we will collate our

data and conduct the necessary

calculations to understand and

publish our emissions for the year.

This will help us to understand our

progress against the strategy and

net zero plans weset across the

business.

STRATEGIC REPORT OVERVIEW BUSINESS REVIEW PERFORMANCE AND RISKINTRODUCTION GOVERNANCE FINANCIAL STATEMENTS

FORESIGHT GROUP HOLDINGS LIMITED Annual Report and Financial Statements FY22 69

Step 2: Offsetting

Based on this information, Foresight has now purchased offsets for our 2020 emissions.

This work will then be done on an annual basis to “neutralise” Foresight's emissions following each

financial year end. Equal emphasis will also be placed on further decarbonising Foresight's activities and

lowering its overall footprint in order to become a “net zero” business.

Step 4: Set targets

With the support of a specialist, we will look to commit to and align with science-based targets, with the

intention of submitting our targets for verification by the SBTi by the end of the current financial year.

Step 5: Strategy

Working with the Sustainability Committee and sub-committees, we will agree a net zero

strategy for the business and each division.

Step 6: Ongoing reporting

Improving our reporting through better data collection, automation and a data management system.

With the right tools, we can identify information gaps and improve data quality.

Step 1: Business emissions

A baseline carbon footprint for 2019 and 2020 has been calculated.

This includes all utilities, business travel, services and purchases made on behalf of Foresight Group but

doesnot include our financed emissions at fund level. The area in which we generate the most emissions

isthrough business travel – which accounted for 109.5 tonnes CO

emissions during 2019.

Step 3: Financed emissions

Foresight works to better understand the emissions from its investments and to align with the Science Based

Targets initiative (“SBTi”). Such targets are defined as “science-based” if they are developed in line with the

scale of reductions required to keep global warming below 1.5°C (i.e. net zero by 2050).

Foresight aims to have aligned with science-based targets by the end of FY23.

Foresight’s route to net zero and decarbonisation

SUSTAINABILITY CONTINUED

70 FORESIGHT GROUP HOLDINGS LIMITED Annual Report and Financial Statements FY22

CLIMATE DISCLOSURE:

TCFD

Foresight continues its journey to full alignment

with the recommendations of the Task Force on

Climate-Related Financial Disclosures (“TCFD”).

Statement

The TCFD summary should be

read together with our stand-alone

TCFD report which can be found on

our website. The full TCFD report

contains additional information

on our exposure to Transition Risk

and Physical Risk. The disclosures

in this annual report are consistent

with the recommendations setting

out how the Group incorporates

climate-related risks and

opportunities into governance,

strategy and risk management.

The Group continues to develop its

metrics and performance targets

to better manage climate related

risks and opportunities, and achieve

full alignment with the TCFD

recommendations. We expect

this capability to be in place in the

coming financial year (FY23).

Our stakeholders expect

transparency on our climate-related

risks and opportunities, and our

reporting assists understanding

ofclimate change implications for

the Group.

Summary: FSB Task Force

on Climate-related Financial

Disclosures

Climate change will continue to

be a defining driver of the global

economy, financial markets and

society in the future. Investors will

be unable to avoid the impact of

climate change but can support

investment strategies intended to

slow, halt and even reverse the rise

of average global temperatures.

As the manager of funds invested

in sustainable resources and

technology, we are predominantly

concerned with the indirect

emissions from our investments

and their potential impact on the

environment.

We are committed to improving

our analyses of climate-related

risks and opportunities, in order to

mitigate the risks and safeguard

our clients’ investments. We

are therefore a supporter of the

Financial Stability Board’s Task

Force on Climate-related Financial

Disclosures (“TCFD”). TCFD

seeks to provide investors with

a common reference framework

to assess the comparative

approaches of investment firms

to climate-related initiatives

and reporting.

Source: Recommendations of the Task Force on Climate-related Financial Disclosures (June 2017).

Governance

The Company's governance around

climate-related risks and opportunities

Strategy

The actual and potential impacts of

climate-related risks and opportunities

onthe Company's business divisions

(Infrastructure, PE and FCM), strategy and

financial planning

Risk

Management

The processes used by the Company

toidentify, assess and manage

climate-related risks

Metrics &

Targets

The metrics and targets used to assess

andmanage relevant climate-related risks

and opportunities

Metrics

& Targets

Risk

Management

Strategy

Governance

STRATEGIC REPORT OVERVIEW BUSINESS REVIEW PERFORMANCE AND RISKINTRODUCTION GOVERNANCE FINANCIAL STATEMENTS

FORESIGHT GROUP HOLDINGS LIMITED Annual Report and Financial Statements FY22 71

TCFD will increase awareness of climate-related risks and opportunities for investors and we support this

objective across our operations.

This is the second year we have reported our progress towards the TCFD recommendations. Thefollowing

pages summarise our full TCFD report, which can beaccessed on our website.

TCFD disclosures for listed AIFs we manage can be found on their respective websites or in their most recent

Annual Reports

Governance: Describe the Board’s oversight of climate-related risks and opportunities

Disclosure

The Board has overall responsibility for managing Foresight Group’s climate-related risks and

opportunities, by setting its strategies in that regard, reviewing reports from the business and authorising

new initiatives, including launching products or initiating risk control measures. The Board receives a

quarterly report on the Group’s sustainability activities. Alison Hutchinson CBE is the Board member

accountable for the Group’s sustainability strategy and performance.

Governance: Describe management’s role in assessing and managing climate-related risks

and opportunities

Disclosure

The Board has tasked the Executive Committee with executing the Group’s sustainability strategy.

Ricardo Piñeiro is the nominated Executive Committee member responsible for sustainability and ESG

matters. He is also a member of the Sustainability Committee (“SC”), which was established in 2018 as a

sub-committee of the Executive Committee. Lily Crompton, the Group Sustainability Lead, chairs

the SC. Further details of our governance structure are included on pages 98 and 99.

Alongside the work on investment risk considerations, the Risk function is also integrating climate models

into the capital stress testing processes, to be reviewed by the Executive Committee as part of the

regulatory capital assessment and reported in the Internal Capital Adequacy and Risk Assessment review.

The Chief Risk Officer (“CRO”) leads the Group’s overall risk strategy and delegates operational and

prudential climate-related risk to the Head of Risk. The Head of Risk attends the SC working groups, which

are responsible for implementing and supporting the Group’s sustainability governance framework and

policies. The Head of Risk chairs the Risk Committee, which oversees how our teams manage all risks,

including climate and sustainability risks, within our businesses and across our shared functions.

A Regulatory Change Working Group was established in early 2022, to ensure compliance with current

climate change regulations such as the Sustainable Finance Disclosure Regulation (“SFDR”) and emerging

regulations (for example, the UK Sustainable Disclosure Requirements, or SDR).

Strategy: Describe the climate-related risks and opportunities the organisation has

identified over the short, medium and long term

Disclosure

The Group continues to analyse short, medium and long-term risks arising from climate change that could

have a material financial impact on it. We consider the short term to be from zero to five years, the medium

term to be between five and ten years, and the long term to be greater than ten years.

Climate-related risks and opportunities beyond 30 years are not considered.

The climate-related risks and opportunities are set out in the table on the following page.

1. JLEN's TCFD report can be found here: https://jlen.com/wp-content/uploads/2022/07/02_Web_JLEN_AR22.pdf

SUSTAINABILITY CONTINUED

72 FORESIGHT GROUP HOLDINGS LIMITED Annual Report and Financial Statements FY22

Summary: FSB Task Force on Climate-related Financial Disclosures continued

Impact of climate-related risks

Risk Description

Risk

category Risk type Likelihood

Horizon

(years) Impact Response

Changes to

power prices

The risk of lower than forecast power prices due to

warmer winters or increased renewables deployment.

Increased power prices due to short-term shocks/

decreased energy supplies from low wind resource

or problems in gas supply could lead to governments

turning to less sustainable ways of generating energy

that are available in the immediate or shorter term –

e.g. coal.

Transition Market Risk Likely 0-10+ years Strategy,

Financial

Planning

The majority of assets in the portfolio earn revenues

that are not dependent on merchant power sales and

various mechanisms are in place to help mitigate the

risk of lower power prices (see principal risks).

Trends towards less sustainable alternatives to manage

short-term power price shocks are on the whole not

supported by society, but continued pricing pressure

arising from conflicts in countries that affect our

energy supply may shift public opinion.

Extreme

weather-

related events

Extreme weather-related events either chronic (e.g.

changing wind patterns, heat stress, rising sea levels)

or acute (e.g. storms, heat wave, drought, floods)

causing damage to Company and/or Fund assets

negatively impacting their production, significant

disruption to operations and/or physical and

information resources being disabled or inaccessible.

Physical Acute,

Chronic

Likely 5-10+ years Strategy,

Company's

investments

The physical risks to the portfolio (see pages 74 and

75) are largely localised and the impact of a single

event or limited set of events is deemed to have a

negligible impact on the overall portfolio; nevertheless,

this is an area kept under close review by the

Investment Manager.

Changes in

regulation and

government

support

Changes to regulations covering activities and

businesses in which the Group is already invested.

Anexample could be where changes to farming

regulation impact the Group's agricultural anaerobic

digestion operations with the consequence that the

projects would no longer meet all the criteria for

inclusion in the EU Taxonomy.

Government support for short-term energy solutions

that negatively impact the transition to low-carbon

future, e.g. support for coal, could increase as a matter

of political expediency.

Transition Governance,

Regulation,

Reputational

Possible 0-10 years Strategy,

Financial

Planning

Given the diversified nature of the assets across the

Group's investments, the impact is likely to be limited

to a small part of the portfolio.

The passage of regulation provides opportunities for

industry consultation and the Group keeps abreast of

regulatory initiatives that have the potential to impact

the profitability of the businesses.

The risk over the long term is considered negligible

as other avenues or solutions would be found for the

asset or technology affected.

Displacement

of existing

assets with

new or other

technologies

As more resources and scientific research are

dedicated to achieving net-zero goals, technologies

could be developed that make current renewables or

environmental infrastructure technologies obsolete.

An example of this could be fusion power displacing

allother forms of energy.

Other technologies such as nuclear or coal may be

prioritised in the short to medium term.

Transition Technological Unlikely 0-10+ years Strategy,

Financial

Planning

It is likely that many new technologies will be

developed and the Group is well positioned to invest

in new energy solutions once they become proven

at scale. It is unlikely that a single solution will be

found for all energy needs and, if it were, this would

necessitate considerable build out beyond the lifetime

of the Group's current assets.

CLIMATE DISCLOSURE:

TCFD

CONTINUED

STRATEGIC REPORT OVERVIEW BUSINESS REVIEW PERFORMANCE AND RISKINTRODUCTION GOVERNANCE FINANCIAL STATEMENTS

FORESIGHT GROUP HOLDINGS LIMITED Annual Report and Financial Statements FY22 73

Summary: FSB Task Force on Climate-related Financial Disclosures continued

Impact of climate-related risks

Risk Description

Risk

category Risk type Likelihood

Horizon

(years) Impact Response

Changes to

power prices

The risk of lower than forecast power prices due to

warmer winters or increased renewables deployment.

Increased power prices due to short-term shocks/

decreased energy supplies from low wind resource

or problems in gas supply could lead to governments

turning to less sustainable ways of generating energy

that are available in the immediate or shorter term –

e.g. coal.

Transition Market Risk Likely 0-10+ years Strategy,

Financial

Planning

The majority of assets in the portfolio earn revenues

that are not dependent on merchant power sales and

various mechanisms are in place to help mitigate the

risk of lower power prices (see principal risks).

Trends towards less sustainable alternatives to manage

short-term power price shocks are on the whole not

supported by society, but continued pricing pressure

arising from conflicts in countries that affect our

energy supply may shift public opinion.

Extreme

weather-

related events

Extreme weather-related events either chronic (e.g.

changing wind patterns, heat stress, rising sea levels)

or acute (e.g. storms, heat wave, drought, floods)

causing damage to Company and/or Fund assets

negatively impacting their production, significant

disruption to operations and/or physical and

information resources being disabled or inaccessible.

Physical Acute,

Chronic

Likely 5-10+ years Strategy,

Company's

investments

The physical risks to the portfolio (see pages 74 and

75) are largely localised and the impact of a single

event or limited set of events is deemed to have a

negligible impact on the overall portfolio; nevertheless,

this is an area kept under close review by the

Investment Manager.

Changes in

regulation and

government

support

Changes to regulations covering activities and

businesses in which the Group is already invested.

Anexample could be where changes to farming

regulation impact the Group's agricultural anaerobic

digestion operations with the consequence that the

projects would no longer meet all the criteria for

inclusion in the EU Taxonomy.

Government support for short-term energy solutions

that negatively impact the transition to low-carbon

future, e.g. support for coal, could increase as a matter

of political expediency.

Transition Governance,

Regulation,

Reputational

Possible 0-10 years Strategy,

Financial

Planning

Given the diversified nature of the assets across the

Group's investments, the impact is likely to be limited

to a small part of the portfolio.

The passage of regulation provides opportunities for

industry consultation and the Group keeps abreast of

regulatory initiatives that have the potential to impact

the profitability of the businesses.

The risk over the long term is considered negligible

as other avenues or solutions would be found for the

asset or technology affected.

Displacement

of existing

assets with

new or other

technologies

As more resources and scientific research are

dedicated to achieving net-zero goals, technologies

could be developed that make current renewables or

environmental infrastructure technologies obsolete.

An example of this could be fusion power displacing

allother forms of energy.

Other technologies such as nuclear or coal may be

prioritised in the short to medium term.

Transition Technological Unlikely 0-10+ years Strategy,

Financial

Planning

It is likely that many new technologies will be

developed and the Group is well positioned to invest

in new energy solutions once they become proven

at scale. It is unlikely that a single solution will be

found for all energy needs and, if it were, this would

necessitate considerable build out beyond the lifetime

of the Group's current assets.

SUSTAINABILITY CONTINUED

74 FORESIGHT GROUP HOLDINGS LIMITED Annual Report and Financial Statements FY22

Summary: FSB Task Force on Climate-related Financial Disclosures continued

Impact of climate-related risks continued

Opportunity Description

Risk

category Risk type Likelihood

Horizon

(years) Impact Response

Increased demand

for environmental

infrastructure and

businesses which

support the transition to

a low-carbon economy

Increased demand for infrastructure which

helps to balance the intermittent generation

profile of renewables – e.g. battery storage.

Increased demand for shorter-term solutions

to reach net zero by 2050, e.g.CNG

refuelling stations as a low-carbon transport

option while other solutions such as

hydrogen power are further developed.

Transition Market Risk Almost

Certain

0-10+ years Strategy,

Financial

Planning

Foresight is well positioned to invest further in

environmental infrastructure sectors and emerging

technologies that support the transition to a

low-carbon economy. Please see the sections on

Infrastructure and Private Equity for further details.

Increased

governmental support

for environmental

infrastructure projects

Government policies aimed at facilitating

the transition to a net zero carbon economy

may subsidise certain technologies to

increase their uptake or build out, creating

further opportunities for the Group's

investment teams.

Transition Governance,

Regulation,

Reputational

Likely 0-10+ years Strategy,

Financial

Planning

Government support for emerging sectors can

change the risk profile of certain opportunities and

open up areas that would otherwise be unsuitable

forinvestment.

Technological

developments

and build outs in

the environmental

infrastructure space

As new technologies become better

developed, the Company is well positioned

to invest in a diversified range of projects.

Transition Technological Almost

Certain

0-10 years Strategy,

Financial

Planning

Attractiveness of investment opportunities will also

depend on the business models as well as the proven

nature of the technology.

Changes in weather

patterns leading to

build out of certain

types of environmental

infrastructure or

business

Changes in weather patterns could lead to

opportunities for new types of infrastructure

or further investment into existing

categories. An example of this could be

flood defence infrastructure in response

to increased rainfall or sea level rise or

controlled environment agriculture facilities

in response to higher temperatures.

Physical Physical Possible 0-10 years Strategy,

Financial

Planning

Foresight has well-established relationships at

research and development level and with early-stage

investee firms focused on renewable alternatives.

These relationships provide us with opportunities

to invest or provide additional investment in the

technologies that will contribute to meeting climate

targets.

CLIMATE DISCLOSURE:

TCFD

CONTINUED

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FORESIGHT GROUP HOLDINGS LIMITED Annual Report and Financial Statements FY22 75

Summary: FSB Task Force on Climate-related Financial Disclosures continued

Impact of climate-related risks continued

Opportunity Description

Risk

category Risk type Likelihood

Horizon

(years) Impact Response

Increased demand

for environmental

infrastructure and

businesses which

support the transition to

a low-carbon economy

Increased demand for infrastructure which

helps to balance the intermittent generation

profile of renewables – e.g. battery storage.

Increased demand for shorter-term solutions

to reach net zero by 2050, e.g.CNG

refuelling stations as a low-carbon transport

option while other solutions such as

hydrogen power are further developed.

Transition Market Risk Almost

Certain

0-10+ years Strategy,

Financial

Planning

Foresight is well positioned to invest further in

environmental infrastructure sectors and emerging

technologies that support the transition to a

low-carbon economy. Please see the sections on

Infrastructure and Private Equity for further details.

Increased

governmental support

for environmental

infrastructure projects

Government policies aimed at facilitating

the transition to a net zero carbon economy

may subsidise certain technologies to

increase their uptake or build out, creating

further opportunities for the Group's

investment teams.

Transition Governance,

Regulation,

Reputational

Likely 0-10+ years Strategy,

Financial

Planning

Government support for emerging sectors can

change the risk profile of certain opportunities and

open up areas that would otherwise be unsuitable

forinvestment.

Technological

developments

and build outs in

the environmental

infrastructure space

As new technologies become better

developed, the Company is well positioned

to invest in a diversified range of projects.

Transition Technological Almost

Certain

0-10 years Strategy,

Financial

Planning

Attractiveness of investment opportunities will also

depend on the business models as well as the proven

nature of the technology.

Changes in weather

patterns leading to

build out of certain

types of environmental

infrastructure or

business

Changes in weather patterns could lead to

opportunities for new types of infrastructure

or further investment into existing

categories. An example of this could be

flood defence infrastructure in response

to increased rainfall or sea level rise or

controlled environment agriculture facilities

in response to higher temperatures.

Physical Physical Possible 0-10 years Strategy,

Financial

Planning

Foresight has well-established relationships at

research and development level and with early-stage

investee firms focused on renewable alternatives.

These relationships provide us with opportunities

to invest or provide additional investment in the

technologies that will contribute to meeting climate

targets.

SUSTAINABILITY CONTINUED

76 FORESIGHT GROUP HOLDINGS LIMITED Annual Report and Financial Statements FY22

Summary: FSB Task Force on Climate-related Financial Disclosures continued

Strategy: Describe the impact of climate-related risks and opportunities on the

organisation’s businesses, strategy and financial planning

Disclosure

The key factors we consider in formulating our approach include regulation, observed changes in climate

and climate change impact on extreme weather patterns. We define a substantive financial impact as

onethat affects more than 5% of Group profit before tax. More details are available in the full TCFD

document at https://www.fsg-investors.com/corporate-governance

Strategy: Describe the resilience of the organisation’s strategy, taking into consideration

different climate-related scenarios, including a 2°C or lower scenario

Disclosure

We follow the evolving scenarios spectrum closely and have chosen to perform our analyses against the

Intergovernmental Panel on Climate Change (“IPCC”) Shared Socioeconomic Pathways (“SSPs”), which are

scenarios for socioeconomic global changes up to the year 2100, developed in the IPCC’s sixth Assessment

Report (“AR6”).

The SSPs can be combined with Representative Concentration Pathways (“RCPs”) to model different

climate scenarios. We continue to develop our approach to scenario analysis and are engaging with a

consultancy to explore the following scenarios:

SSP Scenario

Risk

category

Estimated warming

(2041–2060)

SSP1-1.9 Very low GHG emissions:

emissions cut to net zero around 2050. Considered

best-case scenario if net zero targets are met.

Physical 1.6°C

SSP2-4.5 Intermediate GHG emissions:

emissions around current levels until 2050, then

falling but not reaching net zero by 2100. Considered

“middle of the road” scenario.

Physical 2.0°C

SSP5-8.5 Very high GHG emissions:

emissions triple by 2075. Considered

worst-casescenario.

Physical 2.4°C

IEA SDS Assumes a surge in clean energy policies and investment,

with broad achievement of net-zero pledges, with

significant near-term emissions reductions

Transition 2.0°C

CLIMATE DISCLOSURE:

TCFD

CONTINUED

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FORESIGHT GROUP HOLDINGS LIMITED Annual Report and Financial Statements FY22 77

Risk: Describe the organisation’s processes for identifying and assessing

climate-related risks

Disclosure

We have a comprehensive risk management framework overseen by the Risk Committee, which is

responsible for overseeing our current and potential risk exposures and advising the Executive Committee.

The Risk Committee has a particular focus on our key or material risks, and the controls in place to mitigate

those risks, including climate-related risks.

The Risk Committee considers climate-related risks as a separate topic. The Sustainability Committee

mayalso consider risks and opportunities associated with climate change as part of its remit, although

itisprimarily concerned with setting the Group’s guiding principles and strategies in respect of

sustainability matters.

Over the last year, we have been working to integrate climate risk into our Group risk frameworks and

alignwith our Risk Taxonomy. The investment teams are working with a service provider to automate

theanalysis of climate risk for our portfolios and report these to the fund management teams and the

relevant committees.

Risk: Describe the organisation’s processes for managing climate-related risks

Disclosure

We are partnering with a specialist to model scenarios that quantify climate change risk and allow us to

better understand its impact on the Group. Later this year, we expect to have completed our modelling of

climate scenarios, demonstrating the likely impact of SSPs on the Group’s income statement and balance

sheet from physical risks. Transition risks are not expected to have such a significant impact on the Group,

since revenues are predominantly generated via management fees from funds managing sustainable/

renewable assets and SME private equity investments. We also do not anticipate the impact of transitional

risk to be significant for our capital requirements, as we expect that our businesses will continue to be able

to adjust to market repricing and the impact of changes in climate policy, technology and market sentiment

over time.

Risk: Describe how processes for identifying, assessing and managing climate-related risks

are integrated into the organisation’s overall risk management

Disclosure

Our investment managers consider climate-related risks in their investment decisions as part of their

due diligence and continuing asset management. This includes considering the effects of carbon pricing,

substitution of existing products and services with lower-emission options and the risks of changes to

customer behaviour.

Following our analysis and work throughout the year, we are now in a position to take the following steps

inFY23:

•

Approve our updates to the strategy and our approach to climate risk at Board level

•

Finalise the integration of climate risks in our risk management framework

•

Continue to support the investment managers with further tools and more training

•

Disclose how the Group is integrating climate scenarios within investment management

•

Ensure all relevant staff are trained on new policies and processes

SUSTAINABILITY CONTINUED

78 FORESIGHT GROUP HOLDINGS LIMITED Annual Report and Financial Statements FY22

Summary: FSB Task Force on Climate-related Financial Disclosures continued

Metrics and Targets: Disclose the metrics used by the organisation to assess

climate-related risks and opportunities in line with its strategy and risk

management process

Disclosure

This year we have worked closely with our asset managers and portfolio companies to further develop our

wider sustainability and ESG reporting, with a focus on scope 1, 2 and 3 emissions. This has also involved

internal and external educational projects to better understand the terminology and work required around

emissions reporting. During the year, the Infrastructure division introduced a set of sustainability KPIs across

the portfolio, engaged with asset managers and operations and maintenance contractors to further develop

these KPIs and put in place a data management system to capture the relevant data.

Metrics and Targets: Disclose scope 1, scope 2 and, if appropriate, scope 3 greenhouse

gas (“GHG”) emissions, and the related risks

Disclosure

Our carbon footprint is calculated in line with the Greenhouse Gas Protocol Corporate Accounting

and Reporting Standard and the GHG Protocol Corporate Value Chain (Scope 3) Standard. We collect

consumption-level data across all of our offices, which covers energy, waste, water, business travel, staff

commuting habits, office and IT equipment, food and stationery.

In 2021, we completed a carbon assessment to gather baseline carbon data for the 2019 and 2020 calendar

years. This did not include category 15 emissions from our investments as part of our scope 3 data,

however this is something we plan to collate later this year. Therefore, the information below covers only

the 2019 and 2020 calendar years.

Emissions by source

Electricity 25.0%

Business travel: Air 20.8%

Home working 17.5%

Food and drink 9.0%

Gas 7.8%

Business travel: Road 5.4%

Employee commuting: Rail 4.5%

Employee commuting: Road 3.5%

Water 1.8%

Paper 1.4%

Business travel: Rail 1.3%

Hotel stay 0.9%

Other 1.1%

2020

2019

Business travel: Air 44.4%

Electricity 15.5%

Food and drink 9.1%

Business travel: Road 8.3%

Employee commuting: Rail 7.7%

Employee commuting: Road 5.5%

Gas 2.7%

Employee commuting: Air 2.0%

Business travel: Rail 1.8%

Hotel stay 1.6%

Paper 0.6%

Water 0.5%

Other 0.3%

CLIMATE DISCLOSURE:

TCFD

CONTINUED

STRATEGIC REPORT OVERVIEW BUSINESS REVIEW PERFORMANCE AND RISKINTRODUCTION GOVERNANCE FINANCIAL STATEMENTS

FORESIGHT GROUP HOLDINGS LIMITED Annual Report and Financial Statements FY22 79

tCO

e/£

2019 million of

Scope Total (tCO

e) revenue tCO

e/FTE

Scope 1 32 0.8 0.1

Scope 2 170 4.3 0.7

Scope 3 1,149 28.8 4.9

All scopes 1,351 33.9 5.7

tCO

e/£

2020 million of

Scope Total (tCO

e) revenue tCO

e/FTE

Scope 1 46 1.1 0.2

Scope 2 136 3.3 0.6

Scope 3 491 12.1 2.1

All scopes 673 16.5 2.9

In 2020, there was a significant drop in scope 2 and 3 emissions, which was directly linked to the COVID-19

pandemic, with less business travel and minimal commuting and office use. However, our scope 1 emissions

increased in 2020, which we attribute to gas used for home working purposes.

In the absence of data for Q4 of the 2020/21 financial year, we undertook an alignment exercise to extrapolate

data for January to March. Please see our 2020/21 figures based on this exercise. Going forward, all carbon

data will align to the financial year.

SUSTAINABILITY CONTINUED

80 FORESIGHT GROUP HOLDINGS LIMITED Annual Report and Financial Statements FY22

Summary: FSB Task Force on Climate-related Financial Disclosures continued

Metrics and Targets continued

Foresight Group Holdings Ltd GHG statements (tCO

e), as follows:

Foresight Group Holdings Ltd

Reporting period 1 April 2020 to 31 March 2021

UK Overseas

offices offices

Annual energy consumption: (kWh)

– Electricity 476,000 58,000

– Gas 271,000 —

– Transport fuel 48,000 14,000

Total 795,000 72,000

Annual GHG emissions (tCO

Scope 1

Emissions from combustion of gas 50 —

Emissions from combustion of fuel for transport purposes — —

Scope 2

Emissions from purchased electricity – location based 110.6 20.3

Emissions from purchased electricity – market based 110.6 20.3

Scope 3

Emissions from business travel in rental cars or employee vehicles

where company is responsible for purchasing the fuel 15 4

Emissions from electricity upstream transportation and distribution

losses and excavation and transport of fuels – location based 17 2

Emissions from upstream transport and distribution losses and

excavation and transport of fuels – market based 17 2

Total tCO

e emissions (location based) 193 27

Total tCO

e emissions (market based) 193 27

Intensity (tCO

e/FTE)

Full Time Equivalent (“FTE”) employees 191 18

Intensity ratio: total location based tonnes per FTE employee (tCO

e / FTE) 1.0 1.5

Intensity ratio: total market based tonnes per FTE employee (tCO

e / FTE) 1.0 1.5

Intensity (tCO

e/£ million revenue)

Revenue (£m) 69.1

Intensity ratio: total location based tonnes per million revenue (tCO

e/£m) 3.2

Intensity ratio: total market based tonnes per million revenue (tCO

e/£m) 3.2

Methodology GHG Protocol Corporate

Accounting and Reporting Standard

In line with the UK Government’s Streamlined Energy and Carbon Reporting (“SECR”) guidance, Scope 3

emissions in the above table for FY21 include only business travel in rental or employee-owned vehicles.

CLIMATE DISCLOSURE:

TCFD

CONTINUED

STRATEGIC REPORT OVERVIEW BUSINESS REVIEW PERFORMANCE AND RISKINTRODUCTION GOVERNANCE FINANCIAL STATEMENTS

FORESIGHT GROUP HOLDINGS LIMITED Annual Report and Financial Statements FY22 81

Undertaking this carbon audit will enable us to set science-based carbon reduction targets, in line with

the Paris Agreement and according to the Science Based Targets initiative (“SBTi”) criteria. This means we

will work to reduce our carbon emissions, in line with the IPCC’s recommended cap of 1.5°C degrees above

pre-industrial levels by 2050 with low or no overshoot, and thereby attain our target of science-based net

zero carbon by2050.

The Group already tracks and reports the greenhouse gas savings delivered by all clean energy investments

assessed to be contributing significantly to climate change mitigation through net avoidance of carbon

emissions and other pollutants.

Metrics and Targets: Describe the targets used by the organisation to manage

climate-related risks and opportunities and performance against targets

Disclosure

We have appointed a carbon specialist to support us in calculating our scope 1, 2 and 3 emissions. This will,

in future, include the emissions from our investments. This will be the first time we have conducted this

exercise to include category 15 financed emissions. The process involves gathering a wide array of data and

we are not yet in a position to set targets. However, we have the ambition to align targets with the SBTi.

To support us in delivering these targets, we shall also publish a net zero strategy which demonstrates our

plan to reduce our emissions across our business.

We continue to improve our risk planning for the Group. We have incorporated climate change into our

Group-wide risk framework and we continue to evolve our understanding of how climate change willimpact

the Group and our investments.

Additionally we follow the SECR standard of reporting, details of which can be found here:

https://www.gov.uk/government/publications/academy-trust-financial-management-good-practice-

guides/streamlined-energy-and-carbon-reporting#definition-of-emission-scopes-and-their-minimum-

reporting-requirements-under-ghg-protocol

82 FORESIGHT GROUP HOLDINGS LIMITED Annual Report and Financial Statements FY22

Our stakeholder relationships

We recognise the fundamental roles

our stakeholders play in our continued

success. By taking account of their

views, we can ensure the outcomes

of our operational, investment and

strategic decisions are more robust

and sustainable. It is important

and appropriate that we keep our

stakeholders well informed.

We aim to report clearly on our

economic, environmental and social

impacts, and to be transparent

about our approach to sustainability

considerations, both in our business

activities and as a corporate entity.

The Executive Committee provides

details of stakeholder feedback to

the Board in various forms.

The Board also has the opportunity

to access all main stakeholders

directly. More information on how the

Board engages can be found in the

section 172(1) statement on page 86.

The table on the following pages

summarises our stakeholder

engagement in the year and the

outcomes of that engagement:

We are accountable to our stakeholders and aim to

have constructive, two-way relationships with them, so

we can consider their perspectives, insights and needs.

OUR STAKEHOLDERS

CASE STUDY:

LISTING FORESIGHT SUSTAINABLE FORESTRY

StakeholdersStrategic pillars

How the Company engaged with

key stakeholders

Foresight Sustainable Forestry Company plc (“FSFC”)

is the first and only UK listed investment trust focused

on UK forestry, afforestation and natural capital. Pre

and post-IPO, extensive engagement with an extensive

set of stakeholders took place:

The below illustrates the effects of Foresight’s

stakeholder considerations for long-term

consequences of decisions, fostering relationships,

maintaining reputation and community impact, as set

out in our Section 172 statement (page 86).

Pre-IPO – extensive engagement programme with

potential listed market investors and early market

testing with c.10 leading institutional investors

provided valuable feedback on the proposed strategy.

More extensive ‘pilot fishing’ followed with over 100

institutional investors. This engagement resulted

in Foresight adjusting the strategy to better meet

investors requirements, including increasing the target

allocation to afforestation and providing investors

with a greater level of exposure to nascent voluntary

carbon markets.

Post-IPO – series of stakeholder engagement sessions

including:

•

Local community meeting on proposed

afforestation schemes

•

Community planting days for schoolchildren

to learn about biodiversity conservation, new

silviculture skills, and the importance of healthy

forests to the wider world

•

Forestry skills training programme in Wales

sponsoring members of the local farming

community to receive training, mentoring and

equipment to enable careers in forestry

•

Promoting local tourism and job creation by

working to install luxury glamping pods across

several afforestation sites

•

Engaging with several renewable energy developers

to explore the co-location of renewable energy

generation

Ongoing – FSFC is highly engaged with various

industry and regulatory bodies including:

•

the Woodland Carbon Code, who have been in

consultation about making changes to the voluntary

carbon credit additionally criteria, and

•

the London Stock Exchange on its proposed

Voluntary Carbon Market (“VCM”) designation.

STRATEGIC REPORT OVERVIEW BUSINESS REVIEW PERFORMANCE AND RISKINTRODUCTION GOVERNANCE FINANCIAL STATEMENTS

FORESIGHT GROUP HOLDINGS LIMITED Annual Report and Financial Statements FY22 83

SHAREHOLDERS STAFF CLIENTS,

ADVISERS

AND INVESTORS

Institutions and individual investors

who own shares in the Company.

Staff, members and Partners of

Foresight Group, who may also

be Shareholders.

We create funds for, and provide

services to, pension funds and other

institutions. We also offer retail funds,

which we sell via advisers to retail

investors.

Reason for engagement

Shareholders own Foresight Group

and are entitled to timely and

accurate information from the Board.

Shareholders also have the right to

vote on important Company matters at

the Annual General Meeting (“AGM”)

and to be consulted on significant

corporate actions.

Reason for engagement

Our people are our most valuable

asset. They hold the expertise,

knowledge and talent on which the

Group’s success is built. Engagement

helps us to understand their views of

Foresight as an employer, helping us

to attract, retain and develop the

best people.

Reason for engagement

Clients and investors are our lifeblood.

We need to provide them with their

expected risk-adjusted returns and a

high-quality service, to ensure they

continue to invest in our products.

Financial advisers and wealth managers

are key distribution channels for selling

our products to retail investors.

Activities

We keep our Shareholders and

the market appraised of important

developments in the business via RNS

announcements throughout the year.

Any interested party can sign up to

receive Foresight Group RNS alerts

through our corporate website. We also

run an extensive investor engagement

programme that enables our

Shareholders to meet our Executive

Directors and Group Investor Relations

Director at conferences, investor

roadshows and on an ad hoc basis.

The Board receives verbatim feedback

from our investor base at least

twice annually following our results

roadshows, which enables them to

keep abreast of the areas of focus for

this stakeholder group.

Activities

We share the results of our annual

engagement survey with all staff.

Heads of departments also receive

their team results, along with

individual managers. Their results

arethen considered so they can

driveimprovements where needed.

Our Employee Forum was established

in February 2022 and is chaired by

our designated NED for workforce

engagement and a Partner from the

senior leadership team. Ithelps to

shape the culture at Foresight and also

provide direct employee feedback to

the Board.

The HR team works with team heads on

talent mapping, succession planning,

career development, remuneration,

appraisals and promotion. We also

support professional qualifications.

Activities

The Investor Relations Teams

(Institutional and Retail) ensure

investors receive the reporting and

support they need.

The Retail Sales Team works with

financial advisers and wealth managers

to educate and provide training on our

products, and information and advice

on the suitability of new products to

target investor types.

Outcomes of engagement

This engagement highlighted the

growing interest in ESG among

our investors. In response, we have

initiated a plan to reach net zero by

2050 and offset our scope 1, 2 and 3

emissions. We are also in the process of

introducing sustainability metrics into

the long-term incentive plan.

Outcomes of engagement

As a result of listening to staff, we have

been working on improving our benefits.

This includes financial benefits, such

as pensions, as well as non-financial

aspects such as the ability to have

greater interaction with charities and

take part in community-led projects.

We have also understood the need

for better communication. As such,

we have embarked on our Employee

Value Proposition and are committed

to becoming better at communicating

our people strategies.

Outcomes of engagement

Having engaged with clients,

intermediaries and investors (via

theiradvisers where appropriate) by

video call during the pandemic, we

have stepped up face-to-face meetings

in recent months. Our engagement

showed demand for self-service

tools to improve efficiency, so we are

introducing a client portal, which will

enable these stakeholders to obtain

information and reports when they

need it.

84 FORESIGHT GROUP HOLDINGS LIMITED Annual Report and Financial Statements FY22

OUR STAKEHOLDERS CONTINUED

COMMUNITIES

AND CHARITIES

SUPPLIERS

AND SERVICE

PROVIDERS

REGULATORS

AND INDUSTRY

BODIES

These include the communities in

which investee companies operate,

communities local to the Group’s

offices and charities selected by our

staff.

This stakeholder group includes the

suppliers of business critical services to

companies within the Group and/or the

Group’s funds. We carefully select our

service providers, as the services they

provide are effectively an extension of

our own, as they impact the service to

our clients and to our business, and can

therefore affect our reputation.

A number of the Group entities located

in the UK, Luxembourg, Jersey and

Guernsey carry out regulated activities

and are therefore subject to regulatory

oversight in these jurisdictions and

the USA. Several of our funds utilise

government tax incentives, subsidies

and other initiatives. We also engage

with a wide range of UK and global

industry bodies and initiatives that are

relevant to our business and industry.

Reason for engagement

We have a strong sustainability and

ESG culture, which extends to the

communities around our investee

companies and office locations, and

support for charities that are either

relevant to our business or important

to our people. Engagement helps

us to create social value, which we

recognise as an increasing demand on

all businesses.

Reason for engagement

Certain areas of our operations

rely on the support of third-party

service providers. Engagement helps

to ensure we continue to receive a

high-quality and reliable service, in turn

underpinning the quality and efficiency

of our operations and that of our funds.

Reason for engagement

To maintain our licences and

authorities to carry out regulated

activities, we need transparent and

open relationships with regulators.

The industry bodies and initiatives we

align with often set standards for our

businesses or represent the industry’s

views with governments and others.

Activities

We support communities by ensuring

investee companies recognise and

uphold our ESG values and standards.

This is enabled by our due diligence

process and ongoing monitoring

and reporting post-investment. Our

activities also include charity days, with

the Company providing a budget to

support charitable projects.

Activities

Our engagement with our largest and

regulated service providers includes

periodic due diligence visits. We also

carry out appropriate due diligence

when selecting suppliers and they

may also conduct due diligence on

us, for example where required to by

regulation.

Activities

Compliance teams in our regulated

business locations ensure we comply

with local regulations and make all

required filings. The teams may also

support regulatory consultations and

thematic reviews.

We are active participants in bodies

such as the CBI and the AIC and

attended COP26 during the year.

Outcomes of engagement

Through the Future VC programme, we

support people from backgrounds that

are underrepresented in the investment

industry by providing work placements.

We continue to work with the Sacred

Heart High School and will be running

a number of business breakfasts,

skill-based workshops, mentoring

sessions and placements for their

students.

In FY22, the Group provided funding

for charitable causes, as well as other

support such as donations of computer

equipment.

Outcomes of engagement

We have continued to enjoy good

relationships and to receive appropriate

standards of service from our key

suppliers.

As a result of our ongoing due

diligence programme for key/

significant suppliers/service providers,

we are able to ensure they provide the

level of service required in accordance

with the contracts and any service

level agreements. This also allows us to

manage service issues as/if they arise.

Outcomes of engagement

We have maintained transparent

relationships with regulators and

ensured compliance with regulatory

requirements.

Our work with industry bodies enables

us to provide input to government

policy initiatives, such as helping to

formulate policy in relation to SME

funding in the long term.

STRATEGIC REPORT OVERVIEW BUSINESS REVIEW PERFORMANCE AND RISKINTRODUCTION GOVERNANCE FINANCIAL STATEMENTS

FORESIGHT GROUP HOLDINGS LIMITED Annual Report and Financial Statements FY22 85

Background

The Board understands the critical

importance of the Group’s employees

to its current and future success.

The Directors regularly meet with

senior management below Executive

Committee level, to receive updates

on specific parts of the business

and to increase their insight into

employee issues.

As a result of these meetings, the

Directors determined that a formal

channel for employee feedback

would be valuable, resulting in the

creation of the Employee Forum

during the year. The Forum is chaired

by Alison Hutchinson, who is our

designated Non-Executive Director

for workforce engagement.

The creation of the Forum has

subsequently led to the Board

commissioning an employee value

proposition for the Group.

This has involved considerable

staff engagement at all levels, to

understand what sets Foresight

apart as an employer, what staff

expectations are and what changes

our people would like to see. The

output from this work will help the

Group to attract and retain the

talent we need and will be reviewed

by the Executive Committee and

recommended to the Board for

approval when complete. For more

information on the EVP, please refer

to pages 16 and 17.

Impact of the decision

While the Group’s employees have

been the primary focus of this work

ensuring that the Group retains

talented people with high levels of

job satisfaction, this is also crucial

for all our stakeholders, including

the returns and service quality our

clients receive and the successful

execution of our strategy on behalf

of Shareholders. The creation

of the Employee Forum and the

employee value proposition are

therefore expected to have important

long-term benefits for the Group and

its stakeholders.

CASE STUDY:

CONSIDERING

EMPLOYEE INTERESTS

86 FORESIGHT GROUP HOLDINGS LIMITED Annual Report and Financial Statements FY22

Section 172(1) of the Companies

Act 2006 requires a director of

a company to act in a way they

consider, in good faith, would most

likely promote the success of the

Company for the benefit of its

members as a whole. In doing so,

Directors must have regard to the

matters listed in the table below.

The Company is incorporated under

Guernsey law, which does not have

a statutory equivalent to section

172. However, the Directors are

committed to complying with the

UK Corporate Governance Code and

have therefore provided a statement

describing how they considered the

matters set out in section 172, in line

with Provision 5 of the Code.

Taking account of stakeholder

interests

Section 172 requires the Board to

understand and consider stakeholder

interests in its decision-making.

The Group’s key stakeholders and

its engagement with them are set

out on pages 83 and 84. The Board

receives reports from management

on stakeholder interactions as part of

its formal meetings and the Directors

are satisfied that this mechanism has

worked effectively during the year.

In addition, members of the Board

engage directly with a number

of important stakeholder groups,

notably:

•

The Executive Directors meet

frequently with the Company’s

institutional Shareholders

•

The CFO attends Board meetings

for our largest funds

•

The Senior Independent

Director chairs the Employee

Forum, providing a direct and

independent channel for employee

views to reach the Board

•

The Executive Directors take part

in industry consultations and

initiatives, and are members of

industry bodies such as the CBI

and AIC

Please see the case study on page

82 that illustrates how stakeholder

interests were considered in relation

to the listing of our new forestry

fund, FSFC.

Matters considered

The likely consequences of any decision in

thelongterm

The Group has a rolling three year strategic plan and the Board

considers any updates to the plan in terms of their impact in

areas such as the Group’s competitive position, its stakeholders

and its projected financial performance.

The Board also considers the longer-term impact of individual

decisions.

The interests of the Group’s employees

The Board receives direct feedback from employees via

the Employee Forum and indirectly through reports from

management and the results of employee surveys. This has led

the Board, for example, to commission work on an employee

value proposition for the Group, as described in the case study

on page 85.

The need to foster the Group’s business relationships

with suppliers, customers andothers

The Group’s engagement with suppliers, customers and other

stakeholders, including how the Board is kept informed, is

described on page 84. The Group’s strategy, which is approved

and monitored by the Board, relies on strong relationships with

clients, advisers, investee companies and others, as the Group

looks to broaden its capabilities and geographical reach, and

reach new investors for its funds.

The impact of the Group’s operations on

thecommunity and the environment

The Board believes that having a positive impact on

communities and strong environmental credentials are key

parts of the Group’s culture. One example during the year

was the decision to adjust the Group’s plans for its forestry

project in Frongoch, Wales. In response to community input,

we agreed to plant trees on less of the land and to broaden

the range of tree species, which will support biodiversity and

enhance the visual appeal of the forest.

The desirability of the Group maintaining a reputation

for high standards of business conduct

As a financial services business, a reputation for high standards

of conduct is essential for the Group’s continued success.

The UK domiciled members of the Executive Committee are

subject to the Senior Managers and Certification Regime,

which includes mandatory training and competency

assessments on an annual basis. The Board members have also

undergone mandatory training programmes during the year.

The Board also receives assurance on the Group’s standards

in certain functional areas through third-party reviews and

audits. These include the Cyber Essentials accreditation in

relation to IT security measures, and the ISAE 3402 report

for the Group’s operational arrangements in the UK. The

Group also invites expert firms to undertake specific reviews

and engages with them for training and advice, to ensure the

Group’s arrangements continue to meet regulatory, legal and

best practice standards.

The need to act fairly as between members

oftheCompany

Executive Chairman Bernard Fairman and parties associated

with him control 29.9% of the Company’s share capital.

Asdescribed on page 137, the Company has entered into a

relationship agreement with parties including the Executive

Chairman and CFO. The relationship agreement ensures that

the Executive Directors do not have undue influence on the

Board’s decisions, including any matters where there could be

a potential conflict with the interests of the Company’s other

Shareholders. There is also a dual voting system at AGMs,

to ensure that certain votes are only passed with a majority

excluding the parties to the relationship agreement.

SECTION 172(1) STATEMENT

STRATEGIC REPORT OVERVIEW BUSINESS REVIEW PERFORMANCE AND RISKINTRODUCTION GOVERNANCE FINANCIAL STATEMENTS

FORESIGHT GROUP HOLDINGS LIMITED Annual Report and Financial Statements FY22 87

WHAT’S IN THIS SECTION

FINANCIAL REVIEW 88

RISKS 96

VIABILITY STATEMENT 106

PERFORMANCE

AND RISK

88 FORESIGHT GROUP HOLDINGS LIMITED Annual Report and Financial Statements FY22

FINANCIAL REVIEW

Building on the Group’s enhanced profile following our IPO in February 2021, the business

increased AUM, revenue and Core EBITDA year-on-year, in line with our expectations.

Key financial metrics

31 March 31 March

2022 2021

Year-end AUM (£m) 8,839 7,193

Year-end FUM (£m) 6,675 5,132

Average AUM (£m) 8,108 6,547

Average FUM (£m) 6,015 4,691

Total revenue (£000) 86,071 69,098

Recurring revenue (£000) 74,825 62,379

Recurring revenue/total revenue (%) 86.9% 90.3%

Core EBITDA pre share-based payments (£000) 31,825 23,910

Core EBITDA pre share-based payments margin (%) 37.0% 34.6%

Highlights during the year

•

May 2021 – Achieved first close on Foresight Regional Fund III at £66 million

•

September 2021 – Reached final close on FEIP at €851.4 million, exceeding target by 70%

•

November 2021 – Successful IPO of Foresight Sustainable Forestry Company

•

December 2021 – Performance fee generated following successful first three exits from FRIF

•

March 2022 – £0.6 billion of net retail inflows achieved, in line with prior year

Summary

The year ended 31 March 2022 was another successful period for the Group. We achieved the AUM and

recurring revenue targets we outlined at IPO; continued our progression towards our medium-term Core EBITDA

pre share-based payment (“SBP”) margin target; and, subject to Shareholder approval at the forthcoming AGM,

will continue with the 60% dividend payout ratio established in last year’s Annual Report.

Revenue for the year was £86.1 million (31 March 2021: £69.1 million) with total comprehensive income of £24.9million

(31March2021:£14.9 million), an increase of 68%. Further details on the key areas that have driven this financial

performance are outlined on the following page.

We had a successful first full

year since IPO, continuing our

recent growth trajectory and

hitting our ambitious targets.

Gary Fraser

Chief Financial Officer

FOR THE YEAR ENDED 31 MARCH 2022

INTRODUCTION GOVERNANCE FINANCIAL STATEMENTSSTRATEGIC REPORT OVERVIEW BUSINESS REVIEW PERFORMANCE AND RISK

FORESIGHT GROUP HOLDINGS LIMITED Annual Report and Financial Statements FY22 89

Assets Under Management/Funds Under Management (“AUM/FUM”)

AUM again grew significantly, from £7.2 billion at the start of the year to £8.8 billion at 31 March 2022, an increase of

c.23% in the middle of our ambitious 20%-25% target range. We achieved this substantially through organic growth

driven by net retail inflows of £0.6 billion, net institutional inflows of £0.3 billion and favourable fund performance of

£0.7 billion.

6.0

6.5

7.0

7.5

8.0

8.5

9.0

AUM bridge

31 Mar 2021

AUM

Key: Retail includes OEICs and tax-advantaged products.

Inflow

Outflow

Retail Institutional

Inflow

Outflow

Market movement

31 Mar 2022

AUM

Market movement

£bn

7.2

1.2

(0.6)

0.3

(0.3)

8.80.4

0.6

Net inflows

Our Retail Sales Team, which distributes our VCT, EIS, Business Relief and OEIC products, had another successful year

of fundraising, with total net inflows of £0.6 billion, of which £0.4 billion related to our OEIC products. Net inflows

from our OEIC products were impacted in the final quarter of the year by wider macroeconomic factors resulting from

the conflict in Ukraine, but our tax-based products mitigated this by performing strongly in the run-up to the tax year

end, again demonstrating the advantage of managing a diverse pool of funds.

On the institutional side, we benefited from closes from our FEIP and FRIF III institutional funds in H1, as highlighted

in our Half-year Report, as well as the IPO of our new Forestry fund in October 2021 (£0.1 billion) and the acquisition

of the other 50% of our JV in Italy (£0.1 billion). This was offset by a non-strategic mandate moving to a different fund

manager towards the end of the year (£0.2 billion).

Post year end, we announced the launch of the AIB Foresight Impact Fund, broadening our regional Private Equity

strategy into a new geography, Ireland. This fund will provide equity investments of between €2 million and €5 million,

supporting Irish businesses to contribute to a more sustainable, low carbon future. We also announced the first close

of two further UK regional funds in the North East and Yorkshire regions, totalling £58 million.

90 FORESIGHT GROUP HOLDINGS LIMITED Annual Report and Financial Statements FY22

FINANCIAL REVIEW CONTINUED

Summary Statement of Comprehensive Income

31 March 31 March

2022 2021

£000 £000

Revenue 86,071 69,098

Cost of sales (5,106) (4,639)

Gross profit 80,965 64,459

Administrative expenses (54,398) (48,883)

Other operating income 250 394

Operating profit 26,817 15,970

Finance income and expense (651) (707)

Fair value gains on investments 638 192

Share of post-tax profits of equity accounted joint venture 53 26

Gain on business combination 1,012 174

Profit on ordinary activities before taxation 27,869 15,655

Tax on profit on ordinary activities (2,793) (481)

Profit 25,076 15,174

Other comprehensive income

Translation differences on foreign subsidiaries (138) (293)

Total comprehensive income 24,938 14,881

Core EBITDA calculation

Total comprehensive income 24,938 14,881

Adjustments:

Non-operational staff costs 728 3,186

Non-operational legal costs — 2,744

Profit on disposal of tangible fixed assets and gain on business combination (979) (344)

Other operating income (250) (394)

Finance income and expense 651 707

Tax on profit on ordinary activities 2,793 481

Depreciation and amortisation 3,485 2,649

Core EBITDA 31,366 23,910

Share-based payments 459 —

Core EBITDA pre share-based payments

31,825 23,910

1. In line with previous periods, and for comparability, we continue to quote Core EBITDA pre-SBP to assess the financial performance

of the business. This measure was introduced as our key performance measure because the Group believes this reflects the trading

performance of the underlying business, without distortion from the uncontrollable nature of the share-based payments charge.

This measure is a non-IFRS measure because it excludes amounts that are included in the most directly comparable measure

calculated and presented in accordance with IFRS. The specific items excluded are non-underlying items, which are defined as

non-trading or one-off items where the quantum, nature or volatility of such items are considered by the Directors to otherwise

distort the Group’s underlying performance. While the Group appreciates that APMs are not considered to be a substitute for or

superior to IFRS measures, we believe the selected use of these provides stakeholders with additional information which will assist

their understanding of the business.

FOR THE YEAR ENDED 31 MARCH 2022

INTRODUCTION GOVERNANCE FINANCIAL STATEMENTSSTRATEGIC REPORT OVERVIEW BUSINESS REVIEW PERFORMANCE AND RISK

FORESIGHT GROUP HOLDINGS LIMITED Annual Report and Financial Statements FY22 91

Segmental Core EBITDA pre share-based payments is set out below:

31 March 31 March

2022 2021

£000 £000

Infrastructure 17, 805 15,854

Private Equity 11,376 6,940

Foresight Capital Management 2,644 1,116

31,825 23,910

Revenue

31 March 31 March

2022 2021

£000 £000

Management fees 70,906 50,245

Secretarial fees 1,413 9,828

Directors’ fees 2,506 2,306

Recurring fees 74,825 62,379

Marketing fees 5,046 2,841

Arrangement fees 2,964 3,858

Performance and other fees 3,236 20

Total 86,071 69,098

Total revenue increased by 25% year-on-year to £86.1 million (31 March 2021: £69.1 million) with recurring revenue

increasing by 20% to £74.8 million (31 March 2021: £62.4 million). The Group has continued to focus on recurring

revenue and remained within our 85%-95% target range, despite recognising some one-off performance fee income,

which is covered in more detail below. The year finished with 86.9% of our revenue being classified asrecurring.

As a result of FUM growth, the largest increase year-on-year was again from management fees. The growth in

Foresight Capital Management (“FCM”) FUM to £1.6 billion at year end (31 March 2021: £1.1 billion) generated an

additional c.£4 million of gross revenue. NAV growth across our ITS, VCT, EIS and infrastructure investment trusts

resulted in c.£11 million of additional management fees. The increase in ITS management fees was partly offset by

lower secretarial fees as a result of the fee for that fund being restructured towards the end of FY21, as disclosed in

last year’s Annual Report. Thefurther closes on our FEIP fund resulted in catch-up management fees of c.£1.7 million,

while the annualised impact of the PiP acquisition in August 2020 contributed c.£1.1 million to the increase.

Marketing fees are the initial fees recognised as a percentage of funds raised on our tax-based retail products.

Theincrease year-on-year reflects a return to business-as-usual for meetings between our Retail Sales Team, financial

intermediaries and their clients.

Other fees in FY22 principally consisted of a performance fee generated from our first North West regional fund,

following a successful exit from that portfolio during H2. As our Private Equity regional strategy begins to mature,

we expect to generate further performance fees from successful exits in the medium term, whilst still maintaining our

85%-90% recurring revenue target.

92 FORESIGHT GROUP HOLDINGS LIMITED Annual Report and Financial Statements FY22

Summary Statement of Comprehensive Income continued

Cost of sales

Cost of sales comprises insurance costs associated with our Accelerated ITS product and authorised corporate director

costs payable to a third party in relation to our OEIC products. The increase reflects the continuing growth in FCM.

Administrative expenses

31 March 31 March

2022 2021

£000 £000

Staff costs 35,395 33,751

Depreciation and amortisation 3,485 2,648

Legal & professional 6,067 5,984

Other administration costs 9,451 6,500

54,398 48,883

1. Adjusted for gain on business combination from PiP acquisition (now disclosed on a separate line in the primary statements).

Year-on-year, the overall cost base increased by c.11%. Our largest expense, staff costs, increased by c.£1.6 million,

due to the annual pay review process, the implementation of the staff PSP scheme and an increase in FTE of 26.1.

Thisincrease in FTE was predominantly in the high-growth areas across the business: FCM as our net inflows continue

to increase and we launch new funds; Infrastructure in line with our increase in AUM and the number of assets in the

portfolio; and Retail Sales, where we have expanded the team to drive further inflows.

Legal & professional costs were in line with the prior year. While the comparative figure included c.£2.3 m of one-off

IPO costs, this year included one-off costs of c.£2 million associated with developing and launching new funds, such as

ourlisted Forestry fund which launched in November and the further closes on FEIP.

The largest increase year-on-year was in Other administration costs, which rose by c.£2.9 million primarily due to an

increased irrecoverable VAT charge. As with most financial services businesses, we cannot recover all the VAT on our

purchases because some of our revenue streams are VAT exempt. The management fees from FCM’s OEIC funds are

VAT exempt and their continued strong growth has driven the increase in the irrecoverable VAT charge. Also within

Other administration costs, travel and entertainment costs rose by c.£0.5 million as the UK COVID-19 restrictions were

relaxed, enabling our staff to return to face-to-face meetings with investors and portfolio companies.

Core EBITDA pre share-based payments

The Group uses Core EBITDA pre share-based payments as one of its key performance metrics, as it views this as the

profitability number that is most comparable to the Group’s recurring revenue model (i.e. a cash profit number after

taking out any one-offs, both positive and negative).

Core EBITDA pre share-based payments increased 33% year-on-year to £31.8 million (31 March 2021: £23.9 million),

with the margin percentage improving to 37.0% (31 March 2021: 34.6%) as we continue our progression towards our

medium-term target of 43%. The margin percentage for the full year was slightly lower than the 38.3% reported at the

half year, due to the timing of the FEIP catch-up fees recognised in H1, one-off costs incurred on the launch of our new

Forestry investment trust and preparation of new fund launches in H2, and a full six months of salary costs in H2 for

staff who joined us in H1.

The Group has determined that the following are non-underlying items for the purposes of calculating Core EBITDA

pre share-based payments:

Non-operational staff costs

The non-operational staff costs in the year relate to retention payments made to key members of staff and a severance

package for a leaver.

The equivalent cost in the prior year related to pre-IPO profit share for FY20. These distributions made to members

were classified as remuneration expenses under IFRS but were considered to be equity transactions for the purposes

of calculating Core EBITDA.

FINANCIAL REVIEW CONTINUED

FOR THE YEAR ENDED 31 MARCH 2022

INTRODUCTION GOVERNANCE FINANCIAL STATEMENTSSTRATEGIC REPORT OVERVIEW BUSINESS REVIEW PERFORMANCE AND RISK

FORESIGHT GROUP HOLDINGS LIMITED Annual Report and Financial Statements FY22 93

Non-operational legal costs

There were no costs of this nature in the year ended 31 March 2022. The prior year figure included c.£2.3 million of

IPO costs, c.£0.2 million of redundancy costs and c.£0.2 million of legal transaction costs.

Profit on disposal of tangible fixed assets and gain on business combination

The Group had a 50% holding in FV Solar Lab SRL before it acquired the remaining 50% in January 2022. The Group

fair valued the assets and liabilities of FV Solar Lab SRL on the date of acquisition using the acquisition method, which

gave rise to a bargain purchase. This resulted in a credit being recognised in the Statement of Comprehensive Income.

In the prior year, there was an equivalent gain on bargain purchase from the acquisition of PiP Manager Ltd.

Other operating income

In the year ended 31 March 2022, the other operating income arose from the final fee received in relation to the

development of a reserve power plant in Shirebrook, Derbyshire, on behalf of the Foresight ITS product. This is

considered non-core as it was a non-recurring transaction outside the normal course of business.

In the prior year, £46k related to grant income from the Coronavirus Job Retention Scheme, with the remainder

relating to the first part of the development fee received from the Shirebrook project described above.

Interest, tax, depreciation and amortisation

The major variance in these line items year-on-year relates to tax. As noted in last year’s Annual Report, historically,

taxation on the Group’s profits was generally the personal liability of the members of Foresight Group LLP, which

generates the majority of the Group’s profits. Following the IPO, more of the Group’s profits are subject to corporation

tax, as demonstrated by the charge recognised in the period.

Share-based payments

The share-based payments charge in FY22 relates to the SIP and PSP schemes implemented in the period. Please read

more about our SIP and PSP schemes in the remuneration report on pages 126 to 136.

Summary Statement of Financial Position

31 March 31 March

2022 2021

£000 £000

Assets

Property, plant and equipment 2,656 3,012

Right-of-use assets 8,260 9,120

Intangible assets 4,431 3,012

Investments 2,781 2,326

Deferred tax asset 615 977

Contract costs 4,555 837

Trade and other receivables 21,207 19,881

Cash and cash equivalents 54,289 39,431

Net assets of disposal group classified as held for sale 64 64

Total assets 98,858 78,660

Liabilities

Trade and other payables (24,042) (20,939)

Loans and borrowings (3,690) (4, 324)

Lease liabilities (10,408) (12,019)

Deferred tax liability (1,198) (1,581)

Provisions (933) —

Total liabilities (40,271) (38,863)

Net assets 58,587 39,797

94 FORESIGHT GROUP HOLDINGS LIMITED Annual Report and Financial Statements FY22

Summary Statement of Financial Position continued

Key balance sheet items and their year-on-year movements are summarised below:

Intangible assets

This comprises capitalised software development costs and other intangibles recognised in relation to the

management contract acquired as part of the PiP acquisition in August 2020 and the acquisition of the remainder

ofour JV with FV Solar Lab SRL in January 2022.

Investments

This contains the Group’s co-investment positions across our LP funds, plus investments in joint ventures.

Themovement in the year has been driven by deployment across our LP funds and is broken down as follows:

31 March 31 March

2022 2021

£000 £000

Investment in securities

Foresight Energy Infrastructure Partners 571 423

Foresight VCT portfolio companies 458 296

Foresight Nottingham Fund 435 264

Italian Green Bond Fund 421 355

Foresight Regional Investment Fund 292 344

Midlands Engine Investment Fund 274 223

Foresight Regional Investment Fund II 118 76

Northern Ireland Opportunities Fund 85 23

Foresight Regional Investment Fund III 33 —

Northern Ireland Opportunities Fund II 30 —

Other 64 71

Investment in joint ventures

FV Solar Lab JV — 251

Total investments 2,781 2,326

Contract costs

The increase of £3.7 million is due to the incremental placement agency fees on the further closes of FEIP in the year

(as explained further in note 18 to these accounts).

Cash and cash equivalents

The cash balance has increased due to positive cash generation from a strong trading performance. Operating

cash flows generated cash of c.£29.1 million offset by tax payments of c.£3.4 million, interest on lease liabilities of

£0.6million, investing activities of c.£0.8 million andfinancing activities of c.£9.4 million.

Investing activities included further co-invest payments of c.£0.7 million although this was offset by proceeds of

c.£0.7million. There was an outflow of c.£0.5 million in relation to the acquisition of assets and thenet cash outflow on

the acquisition of FV Solar Lab SRL was c.£0.3 million.

Financing activities included c.£6.2 million of dividend payments, c.£2.1 million of lease repayments, c.£0.6 million

ofloan repayments and purchase of own shares of c.£0.5 million.

Loans and borrowings

This balance relates to founder loans taken on as part of the consideration for the PiP acquisition in August 2020.

Themovement in the year is due to the first annual payment made under that agreement.

Lease liabilities

This relates to the liabilities arising from IFRS 16 lease accounting. The year-on-year decrease is a result of lease

repayments offset by an increase in liability in relation to our new office in Luxembourg.

FINANCIAL REVIEW CONTINUED

FOR THE YEAR ENDED 31 MARCH 2022

INTRODUCTION GOVERNANCE FINANCIAL STATEMENTSSTRATEGIC REPORT OVERVIEW BUSINESS REVIEW PERFORMANCE AND RISK

FORESIGHT GROUP HOLDINGS LIMITED Annual Report and Financial Statements FY22 95

Dividends

As noted in last year’s Annual Report, the Board decided to increase and maintain the dividend payout ratio at 60%

(versus the target of 50% moving to 60%, as outlined at IPO).

An interim dividend of 4.0 pence per share was paid on 25 March 2022, with an ex-dividend date of 10 March 2022

anda record date of 11 March 2022.

As noted in the Executive Chairman’s statement on pages 2 to 4, the Board has recommended a final dividend

payment of 9.8 pence per share for approval by Shareholders at the upcoming AGM. If approved, the dividend will be

paid on 14October 2022, based on an ex-dividend date of 18 August 2022, with a record date of 19 August 2022.

Going forward, we intend to link interim dividends to the prior-year profits, paying out 30% of the total dividend from

the prior year. These interim dividends will be paid in January each year. The balance of the 60% target will then be

recommended to Shareholders each year at the AGM as a final dividend.

Going concern

The financial statements have been prepared on a going concern basis. In adopting this basis, the Directors have

reviewed the financial processes and controls embedded across the business and examined the three-year plan.

Theyhave considered the business activities as set out on pages 24 to 47, and the principal risks and uncertainties

disclosed within this report on pages 102 to 105, and concluded that the adoption of a going concern basis, covering

aperiod of at least 12 months from the date of this report, is appropriate.

Outlook

The Group is well positioned to continue with further AUM, revenue and profit growth, as we progress towards our

medium-term Core EBITDA pre-SBP margin target of 43%. Our strong balance sheet puts us in a good position to be

able to capitalise on any future M&A opportunities that may arise, to supplement our recent strong organic growth.

Gary Fraser

Chief Financial Officer

11 July 2022

96 FORESIGHT GROUP HOLDINGS LIMITED Annual Report and Financial Statements FY22

Strong leadership and setting standards of

conduct from the top are critical to ensuring

that the Group has a healthy risk culture.

RISKS

Risk governance

The Board of Directors is

accountable for the Group’s

risk management activities and

responsible for setting the risk

culture. This culture is based

on all staff having a sense of

ownership and accountability for

risk management. The Board of

Directors is majority independent

and the Audit & Risk Committee

has complete independence.

The Group’s governance

arrangements provide a direct

line of sight on the risk profile

of the businesses and functions

that comprise the operational

areas. The Board delegates the

risk management activities to

the Executive Committee. Gary

Fraser is the Chief Risk Officer

and a member of both the Board

and the Executive Committee.

Heis supported by the Head

of Risk, Jonathan Parsons, who

chairs the Risk Committee and is

assuming responsibility for the

Risk Management Framework

(“RMF”) across the Group.

The Group operates a three lines

of defence model, as shown in

the diagram below. Given the

growth of the business, the Group

is reviewing the requirement

for an internal audit function to

supplement the current external

oversight arrangements, to

provide additional independent

assurance that the Group’s

governance and risk management

activities are operating

effectively.

INTRODUCTION GOVERNANCE FINANCIAL STATEMENTSSTRATEGIC REPORT OVERVIEW BUSINESS REVIEW PERFORMANCE AND RISK

FORESIGHT GROUP HOLDINGS LIMITED Annual Report and Financial Statements FY22 97

•

Periodic reviews of integrity and adequacy of risk reporting

•

Independent review of adherence to risk policies/procedures

•

Recommendations and verification of implementation for

detailed process and control improvements

•

Tracking and reporting of incidents, losses and breaches

•

Primary responsibility for ensuring adequate control

environment and adherence to risk policies and procedures

•

Primary responsibility for managing investment risk in

accordance with fund mandates

•

Input into risk identification and scoring managed by Risk

function

•

Notification and escalation of losses and incidents

•

Provision of data for risk reporting

•

Verification of the adequacy of the Group Risk Framework

•

Non-executive challenge of the overall adequacy and

effectiveness of actions taken by the Risk Committee

•

Day-to-day responsibility for implementation of Risk

Framework

•

Risk identification, scoring and prioritisation with input from

first line of defence

•

Preparation of risk reporting

•

Implement and monitor risk policies and procedures

•

Advises on risk impact of regulatory issues/other external

changes

•

Loss/incident analysis

•

Monitoring of investment limits

Board of Foresight Group Holdings Limited

(the “Group”)

Executive Committee

Risk Committee

Risk & Compliance

Business Functions

Third line of defence

External oversight/assurance

First line of defence

Second line of defence

•

Accountable for the overall adequacy and effectiveness of

the Group-wide Risk Framework and the Group’s risk culture

•

Delegates responsibility to the Executive Committee

•

Responsible for the overall adequacy and effectiveness of the

Group-wide Risk Framework

•

Approves risk policies and procedures, risk roles and

responsibilities

•

Communicates “tone from the top” and establishes tangible

risk appetite and strategy

•

Monitors risk reporting and ensures actions are taken to

mitigate risk

98 FORESIGHT GROUP HOLDINGS LIMITED Annual Report and Financial Statements FY22

RISKS CONTINUED

Risk governance continued

Each business and function has a risk owner, who is responsible for identifying, assessing, monitoring and

controlling its risks. The risk owners are key to ensuring clear lines of oversight from the Board to the business

activities and represent the risk function at committee level, for example at the Investment Committee.

Board of Directors

Note: Shading denotes chairmanship.

Alison Hutchinson, CBE

Senior Independent

Non-Executive Director

Gary Fraser

Chief Financial Officer

and Chief Operating Officer

Michael Liston, OBE

Independent

Non-Executive Director

Bernard Fairman

Executive Chairman

Geoffrey Gavey

Independent

Non-Executive Director

Board Committee membership Board Committee membership Board Committee membership

Board Committee membership Board Committee membership

Market Disclosure Market Disclosure Market Disclosure

Audit & Risk

Audit & Risk Audit & Risk

Remuneration

Remuneration Remuneration

Nomination

Nomination Nomination

INTRODUCTION GOVERNANCE FINANCIAL STATEMENTSSTRATEGIC REPORT OVERVIEW BUSINESS REVIEW PERFORMANCE AND RISK

FORESIGHT GROUP HOLDINGS LIMITED Annual Report and Financial Statements FY22 99

Product strategy and

business development

Product strategy and

business development

Executive Committee

Bernard Fairman

Non-voting member

Gary Fraser

Partner, CFO &COO

Ricardo Piñeiro

Partner, Co-Head

ofInfrastructure

Nigel Aitchison

Partner, Co-Head

ofInfrastructure

David Hughes

Partner, Chief Investment

Officer

Russell Healey

Private Equity

Matthew Smith

Partner, Co-Head ofPrivate

Equity

James Livingston

Partner, Co-Head ofPrivate

Equity

1. Ricardo Piñeiro was appointed 1 April 2022.

2. Matt Smith and James Livingston will replace Russell Healey on the Executive Committee on approval of the FCA.

Infrastructure Infrastructure

Private Equity Private Equity

Foresight Capital

Management

Private Equity

Finance

Sustainability

Investor Relations Retail

People & Culture

Governance Risk &

Compliance

Investor Relations

Corporate & Inst’l

Marketing

Operational responsibility

Operational responsibilityOperational responsibility

Operational responsibility

Sub-committees

Risk

Employee Remuneration

Valuation

Sustainability

Inclusion & Diversity

IT Steering

Weightings

Information Security &Data Protection

Investment

Health & Safety

100 FORESIGHT GROUP HOLDINGS LIMITED Annual Report and Financial Statements FY22

RISKS CONTINUED

Risk appetite

As a provider of regulated services,

Foresight is required to document the

risk appetite of the regulated entities

within the Group. As Foresight’s

London office is the Group’s principal

office and the location of the

Collective Portfolio Management

Investment (“CPMI”) firm, its risk

appetite reflects the threshold

appetite for the broader Group.

Foresight’s risk appetite statement

sets out the types and levels of

risk that it is willing to assume, to

achieve its strategic objectives and

its business plan. The statement

sets out hard risk limits and early

warning indicators for each of the

eight principal risk categories:

strategic and business risk, market

risk, credit risk, operational risk, legal

and regulatory risk, financial crime

risk, conduct risk and information

security risk. The key risk indicators

include regulatory capital, income

diversity, compliance risk assessment

findings, legal claims, staff turnover,

data security breaches, suspicious

activity reports and other measures

calculated for the purposes of

additional own-funds capital

requirements. The risk appetite

statement is reviewed annually,

to ensure it remains aligned

to the overall strategy and the

businessplan.

Role of the Alternative

Investment Fund Manager

(“AIFM”)

Foresight is a full-scope AIFM in the

UK and Luxembourg, regulated by

the FCA and CSSF respectively. We

are required to implement effective

RMFs to allow us to identify,

measure, monitor and manage the

risks to which the AIFs we manage

are or may be exposed. The Group

reviews the RMFs and the efficacy of

the systems annually.

Risk management

The Group’s principal operations are

based in the UK, with the London

office operating the RMF and

providing support services to all

UK regional and global offices.

The Group’s approach to risk

management comprises interrelated

processes set out in policies within

the RMF, which is designed to meet

the demands of a growing business,

support decision-making at a

strategic and operational level and

protect the interests of stakeholders.

The RMF comprises the policies and

procedures that ensure current risks

and emerging risks are identified,

assessed, controlled, monitored and

aligned with the Group risk taxonomy.

All investment decisions for all

funds are made by the Investment

Committee (“IC”) (or a fund’s board

of directors, where applicable)

after carefully considering the risks

and other relevant aspects of any

potential investments. The Foresight

IC comprises the Chief Investment

Officer, Co-Heads of Private Equity,

Co-Heads of Infrastructure and

investment team partners, as

required for the investment deals.

The businesses and the shared

functions are responsible for actively

identifying the risks associated

with their key business processes,

business changes and external

threats. The Risk Management

function works in partnership with

the businesses and shared functions

to ensure that there is adequate

understanding, assessment and

accountability for all risks that relate

to the Group.

The Group uses a Risk Control

Self-Assessment (“RCSA”) process to

identify risks and assess the efficacy

of the controls to mitigate them.

The process is designed to minimise,

or where possible obviate, harms

to clients from operational errors

or failures, potential financial losses

arising from such errors, compliance

breaches and reputational damage

for the Group. The Group is

implementing an Integrated Risk

Management platform to centralise

the RCSA process and enhance

risk reporting. The platform will be

used to maintain RCSAs, key risk

indicators and tracking of operational

risk events.

INTRODUCTION GOVERNANCE FINANCIAL STATEMENTSSTRATEGIC REPORT OVERVIEW BUSINESS REVIEW PERFORMANCE AND RISK

FORESIGHT GROUP HOLDINGS LIMITED Annual Report and Financial Statements FY22 101

Emerging risks

Foresight tracks emerging risks.

The Risk Committee considers

topical, emerging and developing

risks at each meeting and tracks

the progress of key and emerging

risk constituents, ensuring that the

latest information is communicated

to the Executive Committee. Risks

on the emerging risk list could

be reclassified as principal risks,

depending on the scale of the

risk and the extent to which the

businesses mitigate that risk.

Third-party risk management

Foresight relies on third-party

providers for some services. The

Group seeks to reduce the risk of

operational disruption and harm

to clients by regularly assessing

and effectively managing these

providers. Foresight maps workflows,

technology and the data necessary

to deliver its critical and important

business services, including people

as well as third parties. As part of the

RMF, Foresight seeks to understand

the full extent of supplier risk to the

regulated entities, and regularly

assesses the risks and controls in

place to maintain their operational

resilience.

Cyber security

Although no significant or material

breaches occurred in the financial

year, the Group continues to track

and report on attempts and remains

at a heightened threat-level. This

position is driven by several factors,

including current geopolitical

instability, the increased arsenal

available to bad actors and the ease

of deployment and the evidence

of use by state-aligned agencies to

improve the competitive standing of

their national enterprises.

External Source of

Business Risk

Internal/External

Consumers of Risk

Information

Group Risk Management

Foresight Group LLP

Macroeconomic

Environment

Board of DirectorsCorporate and Governance Oversight

Integrated Risk Management Framework –

Systems and Controls

Political Environment

Audit & Risk

Committee

Competitive Environment Executive Committee

Regulatory, Statutory

Business and

Function Heads

Shocks & Natural Events Regulators

External Stakeholders &

Third Parties

Counterparties

Customers

Risk Identification and Assessment

Control Assessment

Risk Incident Collation/Aggregation

Risk Incident Reporting

Risk Register

Risk Appetite

102 FORESIGHT GROUP HOLDINGS LIMITED Annual Report and Financial Statements FY22

RISKS CONTINUED

Cyber security continued

The number of controls and level of

oversight is proportionate to the type

of asset and the sector it belongs

to, the nature and volume of data

held, the potential impact to Group

revenues and the level of potential

harm a security breach could have for

our clients.

Reputational risk

Reputational risk is not a principal

risk but it is an important

consideration in assessing all

current and emerging risks to the

Group, since it could arise as a

consequence of many individual

risks or combinations of risks,

such as poor conduct, weakness in

systems and controls, or negligence.

82% of our senior management

participate in a Share Investment

Plan and/or Performance Share Plan

scheme, further aligning employee

interests with the Group’s long-term

reputation.

Conduct risk

Conduct risk is the risk of harm to

our clients arising from misconduct

by our employees or by third parties

or other counterparties engaged

by the Group. This risk is mitigated

by promoting a strong compliance

and risk culture through the firm.

Identifying conduct risks inherent to

our businesses is a prominent part

of our RCSA activities and the Group

provides training in conduct risk

topics. Personal conduct in achieving

objectives plays an important

role in employees’ performance

assessments and remuneration

reviews.

Financial crime risk

Foresight has policies and

procedures in the over-arching

RMF that it believes are both

comprehensive and proportionate

to the nature, scale and complexity

of its activities. These include

Anti-Money Laundering (“AML”),

Anti-Bribery and Corruption and

Anti-Market Abuse policies.

The Group expects these policies to

reduce the chances of it knowingly

or unwittingly being utilised by

criminals or suffering reputational

damage following investigation by

regulators and law enforcement

agencies. Foresight’s AML framework

embeds a risk-based approach, which

applies more resources and scrutiny

to higher-risk business relationships

and clients, to minimise the residual

risk. TheGroup has zero tolerance

for breaches of legal and regulatory

requirements or AML-related policies.

The Group has a risk-based

monitoring programme to assess

the effectiveness of its policies,

processes and procedures, including

those related to financial crime. The

Group also annually provides training

to employees on key financial crime

areas.

Sustainability and ESG

The Group considers environmental,

social and governance initiatives

to be critical to the sustainability

of our businesses and long-term

strategic goals. The Group therefore

integrates ESG risk factors into its

risk management activities. The risk

taxonomy supports risk management

reporting across ESG categories,

which include climate-related risks,

inclusion and diversity risks and

conduct and regulatory risks, as well

as risks related to our frameworks

and other governance activities. Like

reputational risk, many risks in other

categories may have a sustainability

element to them that will be reflected

in a key risk or key control indicator.

These risks cover a broad agenda

and the risk function is continuing to

develop our capability to capture the

Group’s exposure to ESG-related risks

and monitor our ability to effectively

manage them.

Our approach to measuring and

reporting our sustainability and

ESG risks continues to evolve, and

we are aligning our approach to the

requirements of several upcoming

regulatory initiatives.

In particular, given the long-term

and potentially existential

nature of climate risks, we are

committed to aligning our

reporting and disclosures with the

recommendations of the TaskForce

on Climate-related Financial

Disclosures (“TCFD”). The work

required in this area continues to

increase and the Group has made

several key appointments in order

to meet the potential challenges to

implementing new regulations and

standards.

Principal risks

Foresight Group’s principal risk

categories reflect the concentration

of business activities and have

changed little from last year, meaning

that most of the principal risks

remain and we are reporting on the

evolution of the risks and controls.

The Pandemic risk has moved off the

list of principal risks, reflecting the

significant advances in mitigating the

risk at both national and Group level,

where our robust business continuity

planning arrangements supported

our employees through one of the

most volatile and uncertain periods in

recent times.

The Group’s businesses are focused

on delivering sustainable outcomes

through our investment strategies

and business plan and we are

well placed to deliver our return

objectives for our clients within a

framework that is flexible enough to

support our businesses as they tackle

the challenges of evolving risks.

We are strengthening our systems

and controls to improve our oversight

across our investments. Information

and technology security is vital to

delivering our investment strategy

and reducing risks to our clients.

INTRODUCTION GOVERNANCE FINANCIAL STATEMENTSSTRATEGIC REPORT OVERVIEW BUSINESS REVIEW PERFORMANCE AND RISK

FORESIGHT GROUP HOLDINGS LIMITED Annual Report and Financial Statements FY22 103

1: CYBER

Risk description

Foresight employs various systems across its business to

process and hold its business data. As a result, it is exposed to

external and internal cyber-related risks. Included in these risks

are information security and personal data risks. As IT solutions

are increasingly used to improve efficiency for the business and

the sophistication of attempted cyber-attacks increases, the

risks increase.

Impact and mitigation

Foresight has engaged an external IT service provider

to support its IT Team and to provide expert advice and

assistance with the security, business continuity and

architecture of its systems. Various policies are also employed

across the business to ensure staff are aware of the measures

to be taken to prevent cyber crime, protect Foresight’s

business data and prevent loss, misuse and corruption of its

data. Foresight engages external experts to carry out tests

and audits on its security measures (including penetration

testing) within its UKoperation, which serves as the IT hub

forthe Group.

Trend and outlook

As the incidence of cyber-crime increases, regulators and

business stakeholders are increasingly concerned to ensure

businesses employ robust security systems and measures to

protect themselves. As the volume and sophistication of cyber

threats continues to rise, it is important we keep up to date

on protecting our systems by maintaining close engagement

with cyber experts, with whom we have a 24x7 retainer and

indemnity, so we can tackle unexpected events immediately

as well as maintain relevant protection from this evolving risk.

Foresight is committed to attain and improve on industry

standards of cyber protection including SIEM and Cyber

Essentials.

Opportunity

Membership of industry working groups in the cyber security

space afford us an opportunity to contribute and learn from

our peers, and be at the front of developments in combating

cybercrime.

Movement in risk

Link to strategic priorities

Expand

2: INVESTMENT LANDSCAPE

Risk description

The opportunity for investment in the markets in which

Foresight operates is highly competitive. Identifying and

committing capital to investment opportunities involves a

high degree of uncertainty. Competitors may compete more

aggressively than Foresight and the number of available

opportunities may fall, causing a higher proportion of Foresight

funds’ cash to be held for alonger-than-expected period.

Impact and mitigation

Foresight has developed a series of networks of reliable

contacts over the years, which help source its investment

opportunities. Foresight’s reputation and track record is also

a key factor in identifying Foresight as a counterparty of

choice. Foresight has, and continues to, widen its investment

focus both geographically and in terms of sectors to

optimise its access to investment opportunities and meet its

investment strategy/objectives. Foresight actively supports

the communities impacted by the activities of its investments,

promoting the importance of its core sustainability and

ESGvalues.

Trend and outlook

Competition has increased in recent years, particularly in

theinfrastructure investment market, and is likely to increase

further in the future, due in large part to the increased

amountof capital raised by competitors in the Foresight

Group’s primary markets.

Opportunity

The outlook remains positive as companies and governments

commit to net zero, and this on its own should deliver

compound growth of around 20% per annum over the next ten

years. In addition, the recent reaction to the sensitivity of the

UK economy to energy price shocks should ensure continued

support for investments in the renewable energy space that

support energy independency.

Movement in risk

Link to strategic priorities

Grow



Expand

The principal risks facing the Group are considered to be:

104 FORESIGHT GROUP HOLDINGS LIMITED Annual Report and Financial Statements FY22

RISKS CONTINUED

Principal risks continued

3: PERSONNEL

Risk description

Foresight’s continued success depends upon its ability to attract

and retain highly skilled investment professionals and other key

personnel and failure to retain its senior investment managers,

senior management or other key employees, may:

•

Trigger provisions in a number of Foresight’s agreements,

which might result in outflows from Foresight funds

•

Hinder Foresight from winning new business and raising

new funds, impacting related fee revenue and potentially

hindering Foresight’s growth strategy

•

Result in Foresight’s strategy not being executed effectively

or at all, or could result in a decline in the standards of its

management or business operation

Impact and mitigation

UK employees may take part in a Share Incentive Plan scheme.

The 71% uptake (market average is 41%) is a strong indication

that employees wish to develop careers with Foresight.

Non-UK employees will be able to access an equivalent SIP

scheme.

A large proportion of Foresight’s Directors and Partners

have five-year retention bonuses, with a decreasing leaver

clawback. Also, some senior staff may participate in a Share

Option Scheme, which will vest over three years, before a

further two years’ holding period prior to sale.

Future performance bonuses exceeding 50% of salary will be

deferred until the following year to aid with retention.

Trend and outlook

The market for experienced and qualified investment,

management and other professionals is extremely competitive

and therefore such personnel are difficult to attract and replace.

Although Foresight intends for overall compensation levels

to remain competitive and attractive, there is no assurance its

compensation model will be successful going forward.

Opportunity

The IPO last year has improved the visibility of Foresight.

Thestrong growth in AUM and the Group’s sustainable

investment focus continue to attract exceptional talent.

TheGroup investment proposition and our reputation remain

strong drivers in attracting talent and will continue to do so

for the foreseeable future.

Movement in risk

Link to strategic priorities

Grow Expand Diversify

4: ENERGY PRICES

Risk description

We should expect increased price volatility and prepare for

the possibility that difficult market conditions or a sustained

recession could reverse the current elevated prices. The Group

secures energy prices on the forward market over the short

term to mitigate volatility in revenues and asset valuations, and

adopts market expert forecasts in the medium to long term that

currently demonstrate a material reduction in power price from

their current values. We are therefore mindful of the extent to

which a correction could happen and the rate at which it might.

Impact and mitigation

Foresight funds’ exposure to reduced energy prices is

mitigated in the following ways:

•

Where a Foresight fund’s investment policy permits,

constructing a diversified portfolio with assets that

generate revenues from sources other than the merchant

sale of energy. For generation assets, this may include

revenues from subsidies, from the sale of green certificates

or through contracting with a private off-taker on a fixed

price basis. Non-generation assets will typically have

revenues that are uncorrelated with energy markets,

removing the exposure altogether

•

For generation assets that have material revenues from the

merchant sale of energy, entering into arrangements that fix

the price received for energy for an agreed period

Trend and outlook

Energy prices rebounded strongly in 2021 from their two-year

lows. Prior to the Russia-Ukraine war, the price of natural

gas was already relatively high (gas plants tend to be the

price-setting generators on the UK network). The war has

highlighted the risks of depending on a perception of mutual

dependency to secure critical energy supplies. It is likely that

the larger economies in Europe will seek to diversify their

energy sources away from a dependency on any one nation.

This will be expensive and it will take time.

Opportunity

Longer term in the UK, which is the Group’s principal market,

the outlook is still uncertain and is affected by factors such as

the rate of deployment of low marginal cost wind and solar

renewables, the speed and extent of electrification of major

sectors such as transport and the appetite of government

to drive decarbonisation through regulation such as carbon

pricing.

Movement in risk

Link to strategic priorities

Grow Expand Diversify

INTRODUCTION GOVERNANCE FINANCIAL STATEMENTSSTRATEGIC REPORT OVERVIEW BUSINESS REVIEW PERFORMANCE AND RISK

FORESIGHT GROUP HOLDINGS LIMITED Annual Report and Financial Statements FY22 105

5: LEGAL/REGULATORY

Risk description

Foresight Group operates in a highly regulated industry and

changes in laws or regulations may adversely affect its ability to

conduct its business and may impact its results of operations.

A failure to comply with applicable laws and regulations could

result in material unanticipated losses.

Impact and mitigation

Foresight adheres to all relevant rules and regulations.

Itutilises the services of a regulatory consultant to provide

expert advice and to provide Foresight and its compliance

team with information on forthcoming regulatory changes

and new rules and regulations. The consultant is also engaged

to carry out periodic independent reviews of aspects of the

Group’s regulatory and risk arrangements to ensure they are

relevant, up to date and meet current requirements.

Foresight also maintains relations withvarious legal firms

specialising in the areas in which it operates as well as relevant

industry bodies to ensure it is aware of and can manage the

impact of new legal requirements.

Foresight employees also receive newsletters, attend seminars

and round table discussions, take part in governmental

consultations and utilise Foresight’s network to ensure their

knowledge base remains strong and relevant.

Trend and outlook

Foresight will continue to engage with legal and regulatory

experts to ensure the business stays ahead of changes in

legislation and regulation affecting its business. It continues to

expand its UK compliance team and continues to monitor legal

and regulatory resources elsewhere in the Group. It will also

keep its legal and compliance resources underreview.

Opportunity

Regulatory change is also discussed at the Risk Committee.

New regulatory initiatives are communicated through the

committee and working groups to the business divisions and

functions in order to establish (with the assistance of our

regulatory consultant) thepotential gaps and opportunities

for the Group, whether for example through new product

initiatives ordisclosure requirements.

Movement in risk

Link to strategic priorities

Expand

106 FORESIGHT GROUP HOLDINGS LIMITED Annual Report and Financial Statements FY22

VIABILITY STATEMENT

In accordance with the UK Corporate

Governance Code, the Directors have

carried out a comprehensive and

robust assessment of the Group’s

prospects and viability.

Process and period for

assessing viability

The Directors have assessed the

Group’s viability over a three year

period to 31 March 2025, taking

account of the Group’s current

financial position and the potential

impact of our principal risks.

The Group’s long-term prospects

are primarily assessed through the

strategic and financial planning

process. The main output of this

process is the Group’s three year

plan, which is produced by the

Finance Team with detailed input

from Team Heads across each area

of the business. The Executive

Committee and Group Board

reviewand challenge the plan.

The assessment of the Group’s

viability requires the Directors to

consider the principal risks that could

affect the Group, which are outlined

on pages 102 to 105. TheDirectors

review the principal risks regularly

and consider the options available

to the Group to mitigate these

risks, to maintain the Group’s

ongoingviability.

As part of the Internal Capital

Adequacy and Risk Assessment

process (“ICARA”), stress testing

is performed on the Group’s

three year plan, which considers

the impact of one or more of the

key risks crystallising over the

assessment period. Severe but

plausible downside scenarios applied

totheplan included:

•

50% lower fundraising

•

10% reduction in valuation of the

funds managed by the Group

•

25% lower deployment

•

A combination of the three

scenarios above

Having reviewed the results of

thestress tests, the Directors have

concluded that the Group would

have sufficient resources in each

scenario and that the Group’s

ongoing viability would be sustained.

The shift in recent years to a more

recurring revenue model, with c.90%

recurring revenues from evergreen

or long-term funds, means the Group

has a stable baseline profitability.

Under all the scenarios above, the

Group remains profitable and in the

event of any of these happening,

mitigating actions would be taken

toincrease this profitability further.

As of 31 March 2022, the Group

balance sheet was strong. The cash

balance at year end was £54.3million

and this financial position provides

confidence that the Group has

sufficient financial resources for

theforeseeable future.

Viability statement

Based on the results described

above, the Directors confirm they

have a reasonable expectation that

the Group is well positioned to

manage its operations and meet its

liabilities as they fall due, over the

three year period they assessed.

The Directors also consider

it appropriate to prepare the

financialstatements on the

goingconcern basis.

Pages 5 to 106 constitute the

Strategic Report, which was

approved by the Board on

11July2022 and signed on its

behalf by:

Jo-anna Nicolle

Company Secretary

STRATEGIC REPORT OVERVIEW BUSINESS REVIEW PERFORMANCE AND RISKINTRODUCTION GOVERNANCE FINANCIAL STATEMENTS

FORESIGHT GROUP HOLDINGS LIMITED Annual Report and Financial Statements FY22 107

WHAT’S IN THIS SECTION

EXECUTIVE CHAIRMAN’S

INTRODUCTION 108

BOARD OF DIRECTORS 110

CORPORATE GOVERNANCE 112

NOMINATION COMMITTEE REPORT 118

AUDIT & RISK COMMITTEE REPORT 122

REMUNERATION COMMITTEE

REPORT 126

DIRECTORS’ REPORT 137

GOVERNANCE

108 FORESIGHT GROUP HOLDINGS LIMITED Annual Report and Financial Statements FY22

The Board believes that strong and

supportivecorporate governance is

thefoundationofa successful business.

Bernard Fairman

Executive Chairman

EXECUTIVE CHAIRMAN’S INTRODUCTION

The Board believes that strong and

supportive corporate governance

is the foundation of a successful

business, providing a framework

within which we can implement

our strategy and benefit from our

entrepreneurial culture. The Group

also includes a number of regulated

entities, which further increases the

importance of a rigorous approach to

governance and internal controls.

The Board is committed to

complying with the UK Corporate

Governance Code and information on

our compliance can be found in the

Directors’ Report. As I am Executive

Chairman, the Senior Independent

Director has assumed more duties

than would be typical. We have a

clear understanding of our respective

responsibilities, which are set out in

a document adopted by the Board,

entitled “Division of Responsibilities

between the Executive Chair and the

Senior Independent Director”.

One of the Board’s primary roles

is to approve the Group’s strategy

and oversee its implementation.

Wehave a rolling three year strategic

plan, through which the Executive

Committee sets out its goals for

the business. The Board then holds

an annual strategy meeting, during

which we discuss and challenge

this plan. We then receive reports

on the implementation of the

strategy at Board and committee

meetings throughout the year.

Thenon‑executive Board members

also have an open invitation to attend

Executive Committee meetings and

do so from time to time, to gain

additional insight into the operation

of the business and the execution

of strategy. As I outline in my

statement in the Strategic Report,

we have made excellent progress

with implementing the strategy, both

during the year under review and

subsequently.

Given the importance of our

people to the Group’s success,

thenon‑executive Board members

take a keen interest in meeting and

gaining direct feedback from them.

This has resulted in the creation of

the Employee Forum during the year

and the subsequent work to develop

an employee value proposition, as

described in the case study on page

85. The Senior Independent Director

plays a key role here, as chair of the

Forum and our designated Director

for workforce engagement. The

Board also carefully reviews the

results of staff surveys, with this

year’s excellent results indicative

of the strength of our culture.

STRATEGIC REPORT OVERVIEW BUSINESS REVIEW PERFORMANCE AND RISKINTRODUCTION GOVERNANCE FINANCIAL STATEMENTS

FORESIGHT GROUP HOLDINGS LIMITED Annual Report and Financial Statements FY22 109

As this was our first full year

since IPO, we have continued to

embed our governance processes,

including establishing a regular

meeting programme and agendas

for the Board and its committees.

Theinternally facilitated evaluation

of the Board and the committees we

conducted during the year showed

that they are functioning effectively

and to the standard that would be

expected at this stage in our life as

a public company. The information

flow to the Board is appropriate

and ensures we have the necessary

background to make our decisions.

More detail on the outcomes of the

evaluation is set out on page 121.

Looking ahead, we will continue

to focus on our commitment to

continually develop and improve

our governance framework as the

business grows. I look forward to

reporting on our progress in the

nextAnnual Report.

Bernard Fairman

Executive Chairman

11 July 2022

UK Corporate Governance

Code 2018 – Principles

BOARD LEADERSHIP

AND COMPANY PURPOSE

See pages 108 to 112

COMPOSITION,

SUCCESSION AND

EVALUATION

See pages 118 to 121

REMUNERATION

See pages 126 to 136

DIVISION OF

RESPONSIBILITIES

See page 113

AUDIT, RISK AND

INTERNAL CONTROL

See pages 122 to 125

110 FORESIGHT GROUP HOLDINGS LIMITED Annual Report and Financial Statements FY22

BOARD OF DIRECTORS

The Board is responsible for shapingthe Group’s

strategy and seeks to encourage a culture of strong

governance across the business.

Bernard Fairman

Executive Chairman

Gary Fraser

Chief Financial Officer

and Chief Operating Officer

Background

Bernard co‑founded Foresight

Group in 1984 to raise a new

fund for investment in unquoted

technology companies based in the

UK, the United States and France.

He is the executive chairman with

over 40 years of private equity and

infrastructure experience. Bernard

is responsible for the strategic

direction and management of the

Group through organic growth

and acquisitions to reach a leading

position in the UK small cap

private equity and international

infrastructure markets.

Prior to founding Foresight Group,

Bernard worked at 3i Ventures as an

investment manager where he was

responsible for sourcing, evaluating

and negotiating investments.

Qualifications

BA in Applied Economics from the

University of Nottingham.

External directorships

Beau Port Investments Limited.

Background

Gary joined Foresight in 2004 and

is the Chief Financial Officer and

Chief Operating Officer based in the

London office. He has over 27 years

of experience and is responsible for

all financial and operational matters

including providing and facilitating

specialist financial input into

corporate, portfolio and investment

decisions.

Prior to joining Foresight, Gary

worked at F&C Asset Management

as a company secretary, where he

focused on legal and tax compliance,

financial compliance, technical and

financial reporting and corporate

finance. He has also worked at EY,

focusing on audit and risk assurance,

and corporate finance.

Qualifications

Chartered Fellow of the Securities

Institute, Chartered Accountant,

BAcc from the University of Stirling.

External directorships

None.

Audit & Risk Committee

Nomination Committee

Remuneration Committee

Market Disclosure Committee

Chair

Committee membership key

STRATEGIC REPORT OVERVIEW BUSINESS REVIEW PERFORMANCE AND RISKINTRODUCTION GOVERNANCE FINANCIAL STATEMENTS

FORESIGHT GROUP HOLDINGS LIMITED Annual Report and Financial Statements FY22 111

Alison Hutchinson, CBE

Senior Independent

Non‑Executive Director

Geoffrey Gavey

Independent

Non‑Executive Director

Michael Liston, OBE

Independent

Non‑Executive Director

Background

Alison is CEO of fintech charity

The Pennies Foundation (which

she founded in 2009) working

with retailers to enable digital

giving, and serves as the senior

independent non‑executive director

at DFS Furniture plc and Yorkshire

BuildingSociety.

Alison has a strong background in

both IT and retail financial services,

having started her career at IBM and

becoming global director of online

financial services before joining

Barclays Bank and then specialist

mortgage provider Kensington

Group PLC as managing director and

then group CEO.

In 2016, Alison was awarded a

CBEfor services to the economy

andcharities.

Qualifications

BSc in Technology & Business

Studies from Strathclyde University.

External directorships

DFS Furniture plc, Yorkshire Building

Society and Your Penny Limited.

Background

Geoff joined the Foresight Group

Board in 2015 as an Independent

Non‑Executive Director and sits

on the Remuneration, Audit & Risk,

and Nomination Committees. He

is the managing director of FNB

International Trustees Limited

(“FNB”) and deputy head of banking

for FNB Channel Islands Bank. He

is a member of the audit and risk

committee of both FNB International

Trustees Limited and FNB Channel

Islands Bank.

He was formerly a director of

Fairbairn Trust Company Limited,

a subsidiary of Old Mutual, and

worked for Lloyds Bank International

in both Guernsey and Gibraltar.

Qualifications

Associate of the Chartered Institute

of Bankers, Member of the Chartered

Institute of Marketing, registered

Trust and Estate Practitioner, BSc in

Mining Engineering from University

College, Cardiff.

External directorships

Ashburton Investments International

Holdings Limited plus various

directorships of companies serviced

by FNB for its clients.

Background

Formerly Chief Executive of the

electricity utility Jersey Electricity

plc, Mike is the Non‑Executive

Chairman of JTC plc and has

extensive experience across public

and private sector businesses.

Mike has held a number of

non‑executive roles including

Chairman of AIM‑listed Renewable

Energy Generation Limited and

was formerly chairman of The

Jersey Appointments Commission,

established by the Government of

Jersey to ensure probity in senior

public sector appointments. He is

a Fellow of the Royal Academy of

Engineering.

In 2007, Mike was awarded an

OBE for services to the electricity

industry and charity. He was elected

to the judiciary of the Royal Court

of Jersey in 2012, retiring from this

position in 2017.

External directorships

JTC plc chairman.

112 FORESIGHT GROUP HOLDINGS LIMITED Annual Report and Financial Statements FY22

CORPORATE GOVERNANCE

Our Board

The Board has overseen the

Group’s corporate governance and

business activities throughout the

financialyear.

As has been illustrated throughout

this Report, significant progress has

been made by the Group in meeting

its targets and IPO promises and

the Board has worked with senior

management to ensure the Group’s

corporate governance standards are

developed and improved to support

the Group to achieve its goals

for enabling revenue generation,

operational resilience and growth for

the long‑term success of the Group

for the benefit of its stakeholders and

the wider society.

Area of focus Board activities Strategy

Purpose, values and strategy

The Board receives regular

updates from senior management

on the Group’s performance

against strategy and targets

through meetings and calls giving

opportunity for questions and

challenge

•

Board meetings/Board reporting

•

Board strategy day(s)

•

Ad‑hoc meetings and calls with senior management

on key projects and key areas of the business

•

Attendance at employee engagement forums where

strategy is a key value driver

 

Overseeing operational

performance againststrategy

The Board has open invitations

to attend the key team and

committee meetings across the

business at their discretion

•

Ad‑hoc NED attendance at staff and team meetings

•

Annual NED meetings with specific team heads

•

Regular reporting from team heads

•

Engagement by the Chairs of the Board Committees

directly with key personnel

•

Presentations by key personnel to the Board

•

KPI reviews

 

Financial management

andperformance

The Board oversees the financial

management and performance

of the Group via open

communication channels with the

finance staff, team heads and the

auditor

•

Regular liaison of finance staff with Chair of Audit

and Risk Committee

•

Chair of Audit and Risk Committee meeting with

auditor partner pre‑reporting cycles

•

Management report generated by auditor

•

Updates on financial targets from team heads via

team meetings and Board reporting

•

KPI and APM reviews

 

Outcome of engagement

withstakeholders

Main focus has been on

Shareholders and employees

•

Regular meetings with institutional Shareholders and

market analysts

•

Establishment of Employee Forum and Employee

Value Proposition initiative

•

Attendance and participation in a variety of industry

bodies to shape the investment management and

related industries

 

Grow Diversify Expand

STRATEGIC REPORT OVERVIEW BUSINESS REVIEW PERFORMANCE AND RISKINTRODUCTION GOVERNANCE FINANCIAL STATEMENTS

FORESIGHT GROUP HOLDINGS LIMITED Annual Report and Financial Statements FY22 113

Board roles

Board Role overview

Executive Chairman

•

Identify, develop and propose Group strategy, annual budget, business plans

andcommercial objectives

•

Oversight of the Executive Committee’s management of the Group and

executionof Group strategy

•

Promote appropriate standards of governance across the Group and ensure

compliance with legal and regulatory responsibilities

•

Ensure timely flow of accurate and reliable information within the Group and

withthe Board

•

Health, safety and wellbeing of workforce and workforce engagement

•

Communication with workforce and ensuring Board awareness of staff views

•

Board evaluation oversight

CFO/COO

•

Supports the Executive Chairman in developing Group strategy, annual budget,

business plans and commercial objectives

•

Serves on the Executive Committee

•

Responsible for the Group’s operations and operational strategy via the Executive

Committee

Senior Independent

Non‑Executive Director

•

Acts as a Non‑Executive Director

•

Acts as intermediary for other Directors and the Shareholders to ensure views

arecommunicated and understood

•

Leads the Board when the Executive Chairman is absent

•

Designated NED for workforce engagement

•

Ensures effective communication by the Group with its workforce and

stakeholders

•

Leads on the appraisal of the Executive Chairman’s performance and evaluates

thesame

•

Contributes to succession planning of the Executive Chairman, the other Directors

and the Board’s Committees

Non‑Executive Directors

•

Monitor the Group’s delivery of strategy

•

Ensure internal controls are robust and that an external audit is carried out

•

Engage with internal and external stakeholders, providing feedback to the Board

•

Provide constructive input to the development of the Group’s strategy

•

Have a key role in succession planning for the Board and senior management

•

Serve on the Board’s Committees

Company Secretary

•

Provides advice and support to the Board as necessary

•

Ensures timely and accurate information flows to the Board

•

Ensures compliance with the Company’s Board and corporate governance policies

•

Keeps the Board updated on changes to applicable regulation, legislation and best

practice standards

•

Tailors and carries out comprehensive inductions for new Directors

•

Provides support to the Chairman

•

Supports the Chairman with the Board evaluation

114 FORESIGHT GROUP HOLDINGS LIMITED Annual Report and Financial Statements FY22

Board Independence

The independence of the NEDs was judged as part of the annual evaluation and they were all considered to remain

independent.

Board meeting attendance

Audit & Risk Remuneration Nomination

Meetings Board Committee Committee Committee

Bernard Fairman

(Appointed: 22/02/2010)

Geoff Gavey

(Appointed: 31/05/2015)

Alison Hutchinson

(Appointed: 03/02/2021)

Michael Liston

(Appointed: 03/02/2021)

Gary Fraser

(Appointed: 03/02/2021)

A description of the roles of each Committee is provided on page 115, and reports by each of the Audit & Risk

Committee, Nomination Committee and Remuneration Committee are provided on pages 118 to 136.

CORPORATE GOVERNANCE CONTINUED

Our governance framework

The Board has adopted a formal document “Matters Reserved for the Board”, which is available to view by writing to

the Company Secretary at the registered office. It has also appointed four standing committees, as listed below, which

make recommendations to the Board in specific areas.

Market Disclosure

Committee

Oversees disclosure of

information by Foresight

Group Holdings Limited

to meet its regulatory

obligations.

The Board

The role of the Board is to collectively promote the long‑term success of the Group. Also, to shape the Group’s strategy,

having regard to all stakeholders, while maintaining a balanced approach to risk within a framework of effective controls.

Executive Committee

The Board has authorised Foresight Group’s Executive Committee to manage the Group on a day‑to‑day

basis.TheCommittee meets at least weekly and receives regular reports on risks to major projects, financial and

key business matters.

Audit & Risk

Committee

Oversees financial

reporting and

monitors internal

controls including risk

management. Monitors

the effectiveness of the

external auditors.

See pages 115 and 122

to 125

Remuneration

Committee

Sets, reviews and

recommends the

Group’s overall

remuneration policy and

strategy and monitors

their implementation.

See pages 115 and 126

to 136

Nomination

Committee

Evaluates and makes

recommendations

regarding Board and

Committee composition

and succession

planning.

See pages 115 and 118

to 121

See page 115

STRATEGIC REPORT OVERVIEW BUSINESS REVIEW PERFORMANCE AND RISKINTRODUCTION GOVERNANCE FINANCIAL STATEMENTS

FORESIGHT GROUP HOLDINGS LIMITED Annual Report and Financial Statements FY22 115

Board evaluation

A board evaluation was carried out

during the financial year, the results

of which are noted in the Nomination

Committee report on page 121.

Internal controls

The Board is responsible for the

Group’s system of internal controls.

This includes its financial, operational

and compliance controls and risk

management, and also for reviewing

the system’s effectiveness.

TheGroup’s UK policies set the

minimum best practice standard for

all Group entities.

The Board takes advice from

external advisers where considered

necessary in all areas of the business.

The Boardis satisfied with the

effectiveness of the internal controls

but, by their very nature, these

controls can provide reasonable,

but not absolute, assurance against

material misstatement or loss.

Board Committees

Audit & Risk Committee

The Audit & Risk Committee’s role is

to assist the Board with the discharge

of its responsibilities in relation to

external audits and internal controls

and risk management. Thisincludes

annual financial statements and

risk appetite, considering the

scope of the annual audit and

the extent of the non‑audit work

undertaken by the External Auditor,

advising on the appointment of the

External Auditor and reviewing the

effectiveness of the internal control

systems (including risk management

processes) in place within the Group.

The Audit & Risk Committee will

normally meet not less than three

times a year.

Nomination Committee

The Nomination Committee assists

the Board in determining the

composition and make‑up of the

Board. It is also responsible for

periodically reviewing the Board’s

structure and identifying potential

candidates to be appointed as

Directors, as the need may arise.

The Nomination Committee also

determines succession plans for the

Board. The Nomination Committee

will normally meet not less than

oncea year.

Remuneration Committee

The Remuneration Committee

provides the Board with

recommendations as regards the

remuneration policy for executive

remuneration, levels of remuneration

for each of the Directors as well

as making recommendations in

regard to and monitoring the

remuneration of the Group’s senior

management. The Remuneration

Committee will also prepare an

annual remuneration report to be

approved by the members of the

Company at the Annual General

Meeting (“AGM”). The Chair of the

Remuneration Committee will be

available at Annual General Meetings

of the Company to respond to

questions from Shareholders on the

Remuneration Committee’s activities.

The Remuneration Committee will

normally meet no less than twice

ayear.

Market Disclosure Committee

The Board has delegated to the

Committee responsibility for

overseeing the disclosure of

information by the Company to

meet its obligations under MAR.

TheCommittee is required to

maintain procedures, systems

and controls for the identification,

treatment and disclosure of inside

information and for complying

with the obligations falling on

the Company and its Directors

and employees under MAR.

TheCommittee meets as necessary

or appropriate as determined by

its Chair, Bernard Fairman. It is

authorised to investigate any matter

within its Terms of Reference and

to seek any information it requires

from any employee of the Company

in order to perform its duties and

all employees are directed to

co‑operate with any request made

bythe Committee.

The Committee will conduct

an annual review of its work,

membership and Terms of Reference

to ensure it is operating at maximum

effectiveness. It will also make

recommendations about any changes

it considers necessary to the Board.

Executive Committee

The Executive Committee, under

theoversight of the Group’s

Executive Chairman, and within

the authority delegated by the

Board, has been tasked with the

management of the Group on a

day‑to‑day basis; in particular, to

pursue the Group’s commercial

objectives and execute and deliver

Group strategy, as approved by

the Board, and to provide periodic

updates to the Board accordingly.

116 FORESIGHT GROUP HOLDINGS LIMITED Annual Report and Financial Statements FY22

CORPORATE GOVERNANCE CONTINUED

David Hughes,

Chief Investment Officer

•

David joined the Group in

2004 and is the Group’s Chief

Investment Officer. He is based

in the London office. He has

over 45 years of experience and

is responsible for the overall

management of the Foresight

Group investment portfolio

through the complete investment

cycle from initial investment to

ultimate realisation.

•

Prior to joining Foresight, David

worked at Advent Venture

Partners as a Principal in the VCT

Unit, where he was responsible

for managing Advent’s two listed

VCTs, comprising a portfolio of

over 30 unquoted investments,

mainly in technology companies.

He also spent almost 20 years

working at 3i, where he provided

advice to public and private

companies on corporate strategy,

acquisitions, disposals, mergers

and capital raising.

•

David is a Fellow of the Chartered

Association of Certified

Accountants and holds a First

Class BSc in Chemistry from the

University of Bristol.

Nigel Aitchison,

Co-Head of Infrastructure

•

Nigel joined Foresight in

September 2008 and is Co‑Head

of Infrastructure based in the

London office. He has over

30years of experience covering

specific areas such as waste

management, project finance

andfund management.

•

Prior to joining Foresight, Nigel

was a director within Shanks

Group where he was responsible

for strategy and managing

relationships with key stakeholders

for the UK business. Prior to that

he led the management of their

PFI division both in terms of

bidding and operational profit and

loss responsibility.

•

Nigel is a Chartered

Environmentalist and a member

of the Chartered Institute of

Waste Management. He also

holds a Diploma with Distinction

in Environmental Science from

Crewe and Alsager College.

Russell Healey,

Private Equity

•

Russell joined the Group

in2007and is based in the

Londonoffice. He has over

25years of experience.

•

Prior to joining Foresight Group,

Russell worked at merchant bank

Parkmead Group, where he was

involved in a number of corporate

and principal finance projects.

Before that, he spent ten years

in technology and marketing

management positions, including

four years with Thomson Financial,

following its acquisition of a

financial information company

where he was CTO.

•

Russell holds an MBA with

Distinction from the London

Business School, and a BA in

Classics from the University

ofExeter.

Executive Committee continued

The Committee’s membership includes Board members Bernard Fairman (Group Executive Chairman) and Gary Fraser

(CFO/COO), together with:

STRATEGIC REPORT OVERVIEW BUSINESS REVIEW PERFORMANCE AND RISKINTRODUCTION GOVERNANCE FINANCIAL STATEMENTS

FORESIGHT GROUP HOLDINGS LIMITED Annual Report and Financial Statements FY22 117

Ricardo Piñeiro,

Co-Head of Infrastructure

•

Ricardo joined Foresight in 2011

and is Co‑Head of Infrastructure

based in the London office.

He has 17 years of experience in

fund management, sustainable

infrastructure investment

and financing in the UK and

internationally.

•

Prior to joining Foresight,

Ricardo worked at Espirito Santo

Investment where he focused

on lending and advisory for

the energy infrastructure and

transportation sectors.

•

Ricardo holds a BA in Business

Administration with Finance

from the Universidade Católica

Portuguesa.

James Livingston,

Co-Head of Private Equity

•

James joined Foresight in 2007

and is Co‑Head of Private Equity

and based in the London office.

James has 17 years of experience

and is a member of the Investment

Committee. James is responsible

for originating, negotiating and

managing growth and buyout

investments in a variety of sectors.

•

In 2016, James led the investment

into Simulity, and nine months

later its sale to ARM, generating

3x return and a 400% IRR. Other

successfully exited investments

include FFX and Channel Safety

Systems.

•

Prior to joining Foresight,

James was in Deloitte’s Strategy

Consulting team. James holds

a Master’s degree in Natural

Sciences and Management studies

from Cambridge University as well

as the CIMA Advanced Diploma in

Management Accounting.

Matthew Smith,

Co-Head of Private Equity

•

Matt joined Foresight in 2010

and is Co‑Head of Private Equity

and based in the London office.

Matt has 17 years of experience

and is a member of the Investment

Committee. Matt has a particular

focus on ESG considerations and

has helped develop Foresight’s

approach.

•

Prior to joining Foresight, Matt

worked for Rothschild, where

he spent six years advising

companies in a range of sectors

ona variety of transaction types.

•

Matt graduated from Oxford

University with a Master’s degree

in Biological Sciences and a

postgraduate degree

in Physiology.

1. Following the promotions of James Livingston and Matthew Smith they will join the Executive Committee once approved by the FCA.

118 FORESIGHT GROUP HOLDINGS LIMITED Annual Report and Financial Statements FY22

The Nomination Committee has focused its

attentionon acquiring deep and meaningful

insightinto the quality of leadership throughout

theCompany and has been very encouraged

by theinitiatives being taken by the Group,

particularlyfor the benefit of employees.

Mike Liston OBE

Chair of the Nomination Committee

Dear Shareholders,

I am pleased to present the

Nomination Committee report for the

year ended 31 March 2022.

Our priorities

This was our first full year as a

committee of the Board of Foresight

Group Holdings Ltd, which listed

in February 2021. We have focused

therefore on acquiring deep and

meaningful insight into the quality of

leadership throughout the Company

in the key areas of culture, purpose,

values and behaviours to assess the

adequacy of skills, knowledge and

independence amongst members of

the Board and senior management on

which the Company’s performance in

these key areas depends.

We have been afforded

commendably comprehensive,

unfettered access to every function

and forum of management activity

and have regularly been present

throughout management and

staff meetings across the entire

organisation.

In addition, the Senior Independent

Director, Alison Hutchinson, helped

establish the Employee Forum, which

she now chairs, and which was set

up during the year with members

representing a broad cross‑section

of the business at all levels. Her

considerable experience in such

forums is already proving valuable

in promoting candid discussion and

her formal feedback to the Board

at each of its meetings has been a

valuable aid to its engagement with

employees.

The work of the Employee Forum

and other vehicles such as the

independently managed annual

engagement survey have paid

particular attention to wellbeing,

diversity and inclusion. Whilst the

findings have been very encouraging,

management is responding

to identified opportunities for

improvement in areas including

employee empowerment, flexible

working policies and the alignment

ofbenefits across the business and

its jurisdictions.

Among its other activities, the

Nomination Committee agreed a

succession plan for the most senior

executive groups, agreed a policy

for Board diversity and inclusion and

undertook a structured evaluation of

Board effectiveness.

Inclusion and diversity

The Group remains committed to

inclusion and diversity and approved

a Board Diversity Policy during the

year, which will remain under review,

particularly in view of the FCA’s

new listing rules for diversity and

inclusion, which came into effect for

financial years starting on or after

1April 2022. As can be seen from

the Directors’ Report, only one of

the Board’s five members is female.

Thisis not compliant with the FCA’s

rules at this time and is explained by

the small size of the Board at IPO and

the absence of any recognised need

to increase its size in the near future.

The Committee keeps under

constant review the adequacy

of the Company’s leadership

resource, especially as the scale and

complexity of the business increases,

and it is entirely convinced by the

evidence of enhanced effectiveness

brought to Boards by diversity and

inclusion. The Committee has found

no existing cultural or structural

barriers for women, ethnic and

other under‑represented groups

and the Company’s policy is to

use best endeavours in all future

appointments to make continuous

progress in achieving the FCA

targets. More details of the Group’s

approach to inclusion and diversity

can be found on page 58.

NOMINATION COMMITTEE REPORT

STRATEGIC REPORT OVERVIEW BUSINESS REVIEW PERFORMANCE AND RISKINTRODUCTION GOVERNANCE FINANCIAL STATEMENTS

FORESIGHT GROUP HOLDINGS LIMITED Annual Report and Financial Statements FY22 119

Diversity of Board and Senior Management

The FCA published a Policy Statement in April 2022 setting out the changes to be made to the Listing Rules as

concerns diversity and inclusion on Boards. While those new Listing Rules come into force for financial years ending

on or after 1 April 2022, the Board has opted for early adoption as recommended by the FCA.

Number of Number in Percentage

Number of Percentage of senior Executive of Executive

Sex/gender Board Members the Board

positions Management Management

Men 4 80% 2 7 87.5%

Women 1 20% 1 1 12.5%

Total 5 100% 3 8 100%

Minority ethnic background

White British or other White 5 100% 3 8 100%

Total 5 100% 3 8 100%

1. Senior positions include CEO, CFO, SID and Chair.

2. For Foresight, Executive Management includes the members of the Executive Committee and the Company Secretary.

SeeGlossaryon page 210 for full definition.

3. See Glossary on page 211 for full definition.

Non-compliance

The Listing Rules will require that at least 40% of the individuals on a company’s board are women, that at least

one of the senior positions on its board is held by a woman and that at least one individual is from a minority ethnic

background.

Foresight listed on 4 February 2021 with its current Board composition. It is considered that the current size of the

Company does not warrant a Board of more than its current number of five members, two of which are Executive

Directors. The three Non‑Executive Directors were selected due to their knowledge and experience. The Board is

of the opinion that to increase the number of Directors on its Board would not provide value to the Company and

would result in additional expenses. Also, that to change the Board at such an early stage after its listing would

not bebeneficial to the Company or its stakeholders. The Board has agreed that it will keep its composition under

reviewand in the event of a change, for whatever reason,diversity and inclusion will be a key consideration in

identifying and recruiting any new member.

120 FORESIGHT GROUP HOLDINGS LIMITED Annual Report and Financial Statements FY22

NOMINATION COMMITTEE REPORT CONTINUED

Nomination Committee

Members of the Committee are Alison Hutchinson, Geoffrey Gavey and Mike Liston (Chair). There have been no

changes in composition during the year.

Composition

There have been no changes in the Committee’s composition during the year, which remains as all the Non‑Executive

Directors, with me as Chairman. The composition of the Committee meets with the requirements of the Code,

including in relation to independence, and the continued appointment of each member is subject to their re‑election

at the 2022 AGM.

Board appointments

In accordance with its Terms of Reference, the Committee will make recommendations to the Board for any new

Director and when considering Board appointments and succession planning, the Committee will have regard to the

composition and structure of the Board, as well as the Board’s diversity, balance of skills and experience.

Succession planning

The succession plan approved during the year outlined the Group’s approach for ensuring the identification and

development of talent internally was being actively pursued to ensure preparedness for eventual succession,

plannedor otherwise, including attractiveness to talent outside the Group.

The succession planning has seen a change in composition of the Executive Committee during the year.

Othermembers of senior management are also incentivised to encourage talent retention and personal/business

development.

Responsibilities

The Committee is responsible for ensuring that skills are appropriately and continuously reassessed to meet the

evolving strategic needs of the organisation, while embracing the underlying imperative to create, retain and protect

value for the benefit of both its Shareholders and wider stakeholders.

Board independence

The Board regularly takes steps to monitor the independence of the Directors, including the Conflicts of Interest

members’ positions. A formal process would also be applied in the event a new external member was proposed for

appointment to the Board. The Committee is satisfied that these processes appropriately inform the assessment

of a non‑executive Director’s independence. Having undertaken a review of each of the non‑executive Director’s

independence during the financial year, the Committee considers that all the non‑executive Directors are independent

and there are no circumstances or relationships which could affect their independent judgment. In particular,

theCommittee considered Geoffrey Gavey’s tenure on the Board, as an Independent Non‑Executive Director,

priortothe Company’s IPO in 2021. During the review, the Committee noted that Geoffrey has not been an employee

of the Group and does not participate in the Group’s pension schemes and the Committee, therefore, continues to

consider that there are no relevant factors that would impact his independence. The Committee will continue to

consider the independence of the Board as on ongoing objective.

Committee meetings

It remains the case that Committee meetings may be attended by the Executive Directors upon invitation. The only

meeting the Executive Directors were not invited to was the meeting of 2 March 2022 to review the Board effectiveness

evaluation. The Committee’s activities aim to fulfil its Terms of Reference, which can be found on Foresight’s website:

https://www.fsg-investors.com/corporate-governance.

The number of Committee meetings held during the year exceeded the minimum required and attendance was

asfollows:

3 December 2 March 25 March

Member 2021 2022 2022

Mike Liston



Alison Hutchinson



Geoffrey Gavey



STRATEGIC REPORT OVERVIEW BUSINESS REVIEW PERFORMANCE AND RISKINTRODUCTION GOVERNANCE FINANCIAL STATEMENTS

FORESIGHT GROUP HOLDINGS LIMITED Annual Report and Financial Statements FY22 121

Board effectiveness evaluation

During the year the Committee conducted a Board effectiveness evaluation by anonymous questionnaire, which

tested Board performance in the key components of strategy, risk management and governance and whether it

was properly leveraging the core drivers of process, conduct and talent. The findings were favourable overall and

weaknesses, where observed, were administrative and not unusual in a company so new to the reporting rigours of

aPremium LSE listing. At least one of the next two annual evaluations will be independently facilitated.

2021/2022 Internal Board effectiveness evaluation process

Initiate process

Collation of responses

Committee review

Report to Executive

Chairman

The evaluation

questionnaire was

produced by the Chair

of the Nomination

Committee and Company

Secretary with both

scored and open text

sections. This was

circulated to the Board

members for completion

in January 2022.

The Company Secretary

collated all responses on

an anonymous basis into

a single, consolidated

document, which was

then circulated to the

Board members.

The Nomination

Committee reviewed the

results on 2 March 2022

and various points were

highlighted for discussion

with the Executive

Chairman.

The Senior Independent

Director met with the

Executive Chairman in

March 2022 to discuss

the points highlighted.

Key findings

•

Overall, the scored results were middle of the range,

based on a scoring range of 1‑4 with 1 being the

lowest score and 4 being the highest

•

It was acknowledged that the Board had worked

together for one year and that the scores were

considered to be in line with expectations for such a

new Board

•

It was noted that Board reporting was continually

evolving with senior management responding to the

Board’s requirements

•

The Board’s interaction with senior management

was also evolving with the introduction of an annual

meeting with key team leaders and initiatives for

connection with staff via the Senior Independent

Director as the Board’s workforce engagement

representative

•

No changes proposed to the current Board

composition

•

That an external evaluation will be sought in

2023‑2024

Re-election of Directors

It is the Committee’s recommendation, and in compliance with the Company’s Articles of Association and the Code,

that all Directors will retire at the forthcoming AGM and offer themselves for re‑election. This recommendation

was made following the Committee’s consideration of the collective skills, knowledge and experience of the Board

and of each Director’s contribution towards achieving the Group’s strategy and the creation of long‑term value for

stakeholders. All Directors have confirmed their willingness to be re‑elected.

On behalf of the Nomination Committee

Mike Liston

Chair of the Nomination Committee

11 July 2022

122 FORESIGHT GROUP HOLDINGS LIMITED Annual Report and Financial Statements FY22

AUDIT & RISK COMMITTEE REPORT

Dear Shareholders,

I am pleased to present the report of

the Audit & Risk Committee for the

year ended 31 March 2022.

Key areas of focus

Over the last 12 months the

Committee has focused on

monitoring the integrity of the

Group’s financial statements and

evaluating the further development

of its risk management function.

As noted in my report last year,

the Group engaged an external

regulatory and compliance adviser

to conduct a thorough review of the

Group’s risk management processes.

The Group hired a Head of Risk

part way through this financial

year to address the requirements

highlighted in the report. The

Committee was recently updated on

the developments in this area and is

satisfied with the progress.

Composition

The Committee was formed on

3 February 2021 as part of the

preparation for the Company’s

Admission to the Main Market

of the London Stock Exchange.

Its members are me as Chairman,

alongside fellow independent NEDs

Alison Hutchison and Mike Liston.

The UK Corporate Governance

Code recommends that all members

of the Audit & Risk Committee

be Independent Non‑Executive

Directors, that one such member

has recent and relevant financial

experience and that the Committee

as a whole shall have competence

relevant to the sector in which the

Company operates.

Whilst no member of the Audit &

Risk Committee has an accounting

or audit qualification, the Board

considers that the Company

complies with the requirements

of the UK Corporate Governance

Code, as I have recent and relevant

financial experience, being a member

of the Audit & Risk Committee at

other companies. The absence

of a member of the Audit & Risk

Committee with an accounting and/

or audit qualification will be kept

under periodic review by the Board.

Committee meetings

The Committee meets at least three

times per year and at such other

times as required. The Company’s

External Auditor or Chief Risk Officer

(“CRO”) may also request a meeting

if they consider it necessary.

The Committee met on seven

occasions during the financial year

under review to discuss and approve

both the Annual and Half‑year

Reports; plan for the audit for the

year ended 31 March 2022; and

discuss a number of other risk areas

within the remit of the Committee.

Responsibilities

As part of the IPO in February 2021,

Terms of Reference (“ToR”) were

defined and documented for the

Committee, which reflect the current

statutory requirements and best

practice appropriate to a group of

Foresight’s size. The Committee

is principally responsible for the

following:

(i) Considering and reporting any

significant issues that arise

in relation to the audit of the

financial statements

(ii) Reviewing the adequacy and

effectiveness of the Group’s

internal financial controls

and internal control and risk

management systems

(iii) Considering the need for an

internal audit function

(iv) Reviewing the independence

and effectiveness of the external

audit process, including the

provision of any non‑audit

services

A copy of the ToR can be found at

https://www.fsg-

investors.com/corporate-

governance#BoardCommittees

The Audit & Risk Committee continues to play

a key role in developing Foresight Group’s risk

management and governance framework whilst

ensuring the integrity of its financial reporting

andinternal controls through the scrutiny,

monitoringand review of its systems.

Geoffrey Gavey

Chair of the Audit & Risk Committee

STRATEGIC REPORT OVERVIEW BUSINESS REVIEW PERFORMANCE AND RISKINTRODUCTION GOVERNANCE FINANCIAL STATEMENTS

FORESIGHT GROUP HOLDINGS LIMITED Annual Report and Financial Statements FY22 123

(i) Significant financial reporting areas

The key areas of risk identified and considered by the Committee in relation to the business activities and financial

statements of the Group for the year ended 31 March 2022 were as follows:

Area of focus Comments and conclusions

Revenue recognition

(Management and

Secretarial fees;

Marketing fees; Directors’

fees; Arrangement fees;

and Performance fees)

Management fees

Revenue is recognised in line with the investment management or advisory

agreements in place with the appropriate funds. These are typically based on the Net

Asset Value (“NAV”) or committed capital of Limited Partnership funds managed or

advised by the Group. Where NAV is used, it is typically the last audited or publicly

available NAV approved by the independent boards of the relevant companies.

Secretarial fees

Relate to services provided to funds Foresight manages (such as company

secretarial, accounts preparation, administration, etc.) and are generally driven

byFunds Under Management (“FUM”) and calculated as a percentage of NAV or

asafixed fee depending on the terms of the individual contract agreements.

Marketing fees

These are fees recognised as a percentage of initial funds raised from the tax‑based

retail products.

Directors’ fees

Relate to services provided by Foresight staff where they are appointed as Directors

on the boards of portfolio companies in which the Foresight funds invest. The fees

are recognised in line with the contractual agreements between Foresight and the

portfolio companies.

Arrangement fees

Earned by Foresight for its role in arranging certain deals (including capital

deployments, fundraisings and refinancings), based on a percentage of the capital

raised/deployed/refinanced.

Performance fees

Usually one‑off in nature and earned from carried interest arrangements.

Performance fees are recognised only at the point in time when theGroup

hascertainty as to the receipt of such revenue, such that it is highly probable

that a significant reversal in the amount of revenue recognised will not occur.

Aperformance fee was recognised during the year following successful exits from

the Foresight Regional Investment Fund LP (“FRIF”). The revenue was recognised

once the cash had been received by the Group.

Following discussions with management and review of the Group’s controls and

procedures as part of the meetings held throughout the year, the Committee is

comfortable that revenue has been properly recognised in the financial statements

inline with the Group’s accounting policies.

IFRS 2 – Performance

Share Plan

The Group implemented a new IFRS 2 Performance Share Plan (“PSP”) scheme

during the year with the first grant of options in September 2021. The implementation

of this plan involved management judgement and complex accounting in particular

around the grant and vesting start date, and the fair value of the options including

appropriate retention rates.

Management engaged with a third‑party firm specialising in IFRS 2 valuations

to assist with the valuation in this area. Discussions were held between the firm

and management who challenged the assumptions used and assessed their

appropriateness.

Following discussions with management and review of the output from the

third‑party firm, the Committee has concluded that the financial statements

havebeen accurately presented in accordance with IFRS 2.

124 FORESIGHT GROUP HOLDINGS LIMITED Annual Report and Financial Statements FY22

AUDIT & RISK COMMITTEE REPORT CONTINUED

Area of focus Comments and conclusions

Placement fees Following the further closes of the FEIP fund during the year, there was a large

increase in placement fees, representing the costs of onboarding new investors into

the fund. These placement fees were incremental to modifying the contract with the

end customers and as a result were recognised as an asset and will be subsequently

amortised on a systematic basis consistent with the pattern of transfer of the

servicesto which the asset relates.

Following discussions with management and review of the Group’s accounting

policies and procedures in this particular area, the Committee is comfortable that

theaccounting treatment and disclosures in the Annual Report are appropriate.

Recognition and

measurement of

intangible assets

The Group acquired the remaining 50% of the JV holding in FV Solar Lab SRL during

the year. The acquisition was accounted for as a business combination under IFRS 3

and resulted in the recognition of an intangible asset of £1.7 million.

Management engaged a third‑party firm specialising in IFRS 3 valuations to assist

with the accounting surrounding this transaction. The valuation of the intangible

asset was determined by using a combination of a Multi period Excess Earnings

Method (“MEEM”) and Discounted Cash Flow (“DCF”).

Following discussions with management and review of the report from the

third‑party firm, the Committee is comfortable that the transaction has been

accounted for correctly under IFRS 3 and there are no indications of impairment

at31March 2022.

Fair value of investments

in underlying funds

The Group has various “co‑investments” in underlying Limited Partnership funds.

Thefair value of these investments is based on the NAV of the respective funds.

There is some element of judgement involved in arriving at the valuation of the

investments held by these funds, but the Committee is comfortable with the

processes and controls in place across the Group, as evidenced by the ISAE 3402

report produced for the 12 month period to 31 March 2022. Comfort was also

obtained by the fact that these funds were externally audited during the year.

(ii) Risk management and

internal controls

Each business and functional area

across the Group identifies risks

and assesses the risk and controls

framework. Oversight of risks and

risk management activity remains

with the Group’s Risk Committee,

with some committee‑relevant risks

discussed at those committees as

well, with escalation to the Executive

Committee and Audit & Risk

Committee as required.

The Board of Directors is accountable

for the risk management activities

of the Group and responsible for

setting the tone for the Group’s

risk culture. The Board therefore

has the ultimate responsibility for

the effective management of risk,

including determining the Group’s

risk appetite, identifying key strategic

and emerging risks, and reviewing

Foresight’s risk management

and internal control framework.

Forinformation on the Group’s

principal and material risks please

refer to pages 102 to 105 of the

Strategic Report.

In addition to the Group Risk

Committee, the Audit & Risk

Committee continues to rely on

a number of different sources,

including the production of the

annual ISAE 3402 report which

covers controls around the valuation

of the Group's funds, as well as third

parties providing additional support

in specialist areas such as tax, risk,

compliance and governance.

The Committee provided its

confirmation to the Board that it has

reviewed the effectiveness of the

systems of internal control, including

financial, operational and compliance

controls, and risk management for

the reporting period, as required

under the provisions of the Code.

Responsibilities continued

(i) Significant financial reporting areas continued

STRATEGIC REPORT OVERVIEW BUSINESS REVIEW PERFORMANCE AND RISKINTRODUCTION GOVERNANCE FINANCIAL STATEMENTS

FORESIGHT GROUP HOLDINGS LIMITED Annual Report and Financial Statements FY22 125

(iii) Internal audit

Taking account of the nature, scale

and complexity of the Group’s

business, Foresight does not

currently have a dedicated internal

audit function. However, the

Committee keeps this under constant

review and is now expecting to

implement an internal audit function

in the near future as a result of the

continued growth of the business.

We also appointed a Head of Risk

during the year to build on the

development of our risk governance

function.

Foresight prepares a controls

report in accordance with

International Standards on Assurance

Engagements (ISAE 3402) which is

also reviewed by BDO. This report

describes the controls in place for

processing investment transactions

across the Group including the

procedures in place to deal with

conflicts of interest. The most

recent report was produced and

audited for the 12 month period

to 31March2022. In addition, to

ensure CASS rules are followed, an

independent review is performed

by the internal compliance function

as part of its annual compliance

monitoring plan.

(iv) External audit, including

non-audit services

The Committee is responsible for

ensuring that the External Auditor

provides an effective audit of

Foresight’s financial statements,

including overseeing the relationship,

and evaluating the effectiveness of

the service provided and its ongoing

independence.

BDO are engaged as the External

Auditor and have audited the

principal trading business within the

Group (Foresight Group LLP) since

2019 – Peter Smith has been BDO’s

senior statutory audit partner since

then. The External Auditor is required

to rotate its engagement partner at

least every five years, and the audit

partner will change in 2024 in line

with these requirements.

In assessing the quality and

effectiveness of the external audit,

the Committee reviewed the audit

team’s demonstrated competence,

experience, diligence, objectivity,

professional scepticism, current

knowledge and its relationship

with the Executive Directors and

senior management. In particular,

the Committee met with the lead

partner and senior members of

the audit team to review the audit

scope and audit findings, provide

challenge and assess the depth of

review provided by BDO over the

significant judgements and estimates

made by management. I also held

private meetings with Peter Smith

during theaudit to understand

BDO's processes, capability of

their staff and observations about

management, all of which I was

satisfied with.

BDO confirmed its independence

and objectivity from Foresight

during the reporting period and

both the Committee and the

Board are satisfied that BDO has

adequate policies and safeguards in

place to ensure its objectivity and

independence are maintained.

When assessing the independence

of BDO, the Committee considered,

amongst other things, the value

of non‑audit services provided by

BDO, and the relationship with them

as a whole. The provision of non‑

audit services is considered by the

Committee in the policy they have

adopted on the independence and

objectivity of external auditors.

This policy is aligned to the

recommendations of the Financial

Reporting Council’s (“FRC’s”)

Guidance on Audit Committees

(2016) and the requirements of the

FRC’s Revised Ethical Standard

(2019) (the “Ethical Standard”).

An external audit firm will only

be appointed to perform a non‑

audit service when doing so

would be consistent with both the

requirements and overarching

principles of the Ethical Standard,

and when its skills and experience

make it the most suitable supplier.

Details of the fees paid to BDO for

audit and non‑audit services are

shown in note 6 to these financial

statements. The non‑audit services

provided by BDO for the year

ended 31 March 2022 related to an

assurance report on the internal

controls environment of the Group

in accordance with ISAE 3402;

the interim review of the Group’s

Half‑year Report; services in respect

of offers for new shares in the VCTs

the Group manages; and the annual

CASS audits.

The Committee is also responsible

for recommending to the Board the

appointment, reappointment and

removal of the External Auditor.

The Committee has recommended

to the Board that, subject to

Shareholder approval at the 2022

AGM, BDO be reappointed as

External Auditor of the Group for

the forthcoming year.

On behalf of the Audit & Risk

Committee

Geoffrey Gavey

Chair of the Audit & Risk Committee

11 July 2022

126 FORESIGHT GROUP HOLDINGS LIMITED Annual Report and Financial Statements FY22

The Remuneration Committee’s aim is to

maintainremuneration policies which promote

long‑term value creation through transparent

alignment with the Board’s corporate strategy.

Mike Liston, OBE

Chair of the Remuneration Committee

REMUNERATION COMMITTEE REPORT

Dear Shareholders,

I am pleased to present the report of the Remuneration Committee for the year ended 31 March 2022, which sets

outthe current remuneration policy and the remuneration paid to the Directors during the year.

Our priorities

This was Foresight Group’s first full year as a public company, so naturally the Committee’s initial priority was to assess

whether the remuneration policies and practices set at IPO remain appropriate for the future. Our assessment is that the

current policy supports continuation of the strong executive performance evident in the Company throughout its history

under private ownership and retains alignment with the Board’s corporate strategy to create value for Shareholders and

other stakeholders. It possesses strong features of transparency and simplicity, notably that the Executive Directors

receive only fixed remuneration, having no entitlement to performance bonuses and having elected not to participate in

the Company’s Performance Share Plan which operates amongst the wider management group.

Powerful alignment with Shareholders’ interests is very evident amongst the current Executive Directors who

themselves have substantial shareholdings and whilst continuity in the benefits to the Company of a strong “owners’

mentality” looks assured for the foreseeable future, the Committee has begun to examine mechanisms to future‑proof

remuneration policy so that a more market‑aligned package can be offered to Executive Directors in future executive

recruitment. Similarly, some structural improvements to current arrangements below Board level would improve

consistency, cascade and alignment with Executive Directors whilst supporting the Company’s culture of internal

talentdevelopment and succession from within.

For the reasons I give above and in view of some Shareholder feedback at the August 2021 AGM regarding the merits

of selected non‑financial measures in performance pay, we have engaged a remuneration consultant, Korn Ferry, to

assist in a “fit for the future” review. Iwill report on the outcomes of this review in due course and will consult with

Shareholders before proposing any significant changes to our existing Remuneration Policy.

The Group’s current Remuneration Policy, detailed later in my report, was approved by Shareholders at the AGM on

26August 2021 and remains unchanged.

AGM Shareholder voting August 2021

Votes Votes Votes

Resolution for against withheld

That the Remuneration Committee’s report for the

financial year ended 31 March 2021 be approved 92,093,990 1,423,815 175

98.48% 1.52%

That the Remuneration Policy set out in the Remuneration Report contained

in the Governance section of the Annual Report and Financial Statements for

the financial year ended 31 March 2021 be approved. 91,703,711 1,814,094 175

98.06% 1.94%

STRATEGIC REPORT OVERVIEW BUSINESS REVIEW PERFORMANCE AND RISKINTRODUCTION GOVERNANCE FINANCIAL STATEMENTS

FORESIGHT GROUP HOLDINGS LIMITED Annual Report and Financial Statements FY22 127

Composition

The Committee was formed on

3 February 2021 as part of the

preparations for the Company’s

IPO. Its membership comprises

me as Chairman, alongside fellow

Non‑Executive Directors Alison

Hutchinson and Geoffrey Gavey.

The UK Corporate Governance

Code (the “Code”) recommends

that before appointment as Chair of

the Remuneration Committee, the

appointee should have served on a

remuneration committee for at least

12 months. I fulfil this requirement,

having served on the remuneration

committee of JTC Group for in excess

of 12 months.

Committee meetings

The Committee meets at least

twice each year, inviting such

attendees, in an advisory capacity,

as are considered necessary and

appropriate to the business to be

discussed.

During the year ended

31March2022, the Committee met

four times to discuss a number of

areas including the implementation

of the Group’s Performance Share

Plan (“PSP”); annual review of the

Group’s remuneration policy; and

consideration of further non‑financial

KPIs to be included in future option

allocations under the PSP.

Responsibilities

As part of the preparation for

Admission, Terms of Reference

(“ToR”) were defined and

documented for the Committee,

which reflect the current statutory

requirements and best practice

appropriate to a group of

Foresight’s size. A copy of the

ToR can be found at https://www.

fsg-investors.com/corporate-

governance#BoardCommittees

The Committee is principally

responsible for determining, in

accordance with the principles and

provisions of the Code, the policy

for the Directors’ remuneration

and setting remuneration for the

Executive Chair of the Board,

Executive Director(s) and senior

management (as defined in

the Code), being the Executive

Committee and the Company

Secretary (the “Executive Group”).

No member of the Executive Group

is involved in any decisions as to their

own remuneration.

The Board itself, or, where required

by the Articles of Incorporation,

the Shareholders, determine the

remuneration of the Non‑Executive

Directors, within the limits set in the

Articles of Incorporation.

In determining the Executive Director

remuneration policy and practices

(including for the Executive Chair),

the Committee ensures the following

is addressed:

•

Clarity: remuneration

arrangements should be

transparent and promote effective

management with Shareholders

and the workforce

•

Simplicity: remuneration

structures should avoid

complexity and their rationale

and operation should be easy to

understand

•

Risk: remuneration arrangements

should ensure reputational and

other risks from excessive rewards,

and behavioural risks that can

arise from target‑based incentive

plans, are identified and mitigated

•

Predictability: the range of

possible values of rewards to

individual Directors and any other

limits or discretions should be

identified and explained at the

time of approving the policy

•

Proportionality: the link between

individual rewards, the delivery

of strategy and the long‑term

performance of the Company

should be clear. Outcomes should

not reward poor performance

•

Alignment to culture: incentive

schemes should drive behaviours

consistent with Company purpose,

values and strategy

The Executive remuneration for the

year just ended and the year ahead

is described in more detail later in

this report, and the Committee is of

the view that the current Executive

remuneration packages address all

the points outlined above.

The Committee also reviews (i) pay

and employment conditions and

remuneration trends across the

Group, especially when determining

annual salary increases; and (ii) the

alignment of workforce incentives

and rewards with culture.

128 FORESIGHT GROUP HOLDINGS LIMITED Annual Report and Financial Statements FY22

REMUNERATION COMMITTEE REPORT CONTINUED

Remuneration policy

The remuneration policy below was approved by Shareholders at the Company’s AGM on 26 August 2021. It became

effective from that date and remains effective for three years.

The Remuneration Committee has decided, as a matter of good corporate governance, to adhere to the requirements

of the UK remuneration reporting regulations whenever practicable, although, as a Guernsey registered company,

the Company is not technically required to do so. The UK remuneration reporting regulations contain provisions

which make Shareholder approval of the policy of UK incorporated companies binding. As the Company is not UK

incorporated those provisions have no legal effect. However, the Company will limit the power of the Committee so

that it may only authorise payments to Directors that are consistent with the policy as approved by Shareholders.

Inthat way the Company considers the vote of Shareholders on the policy to be binding in its application.

The policy explains the purpose and principles underlying the structure of remuneration packages and how the

policylinks remuneration to the achievement of sustained high performance and long‑term value creation.

Overall remuneration is structured and set at levels to enable Foresight to recruit and retain high calibre

colleaguesnecessary for business success whilst ensuring that:

•

Our reward structure, performance measures and mix between fixed and variable elements is comparable

withsimilar organisations

•

Rewards are aligned to the strategy and aims of the business

•

The approach is simple to communicate to participants and Shareholders

•

Particular account has been taken of structures used within FTSE 350 companies and other comparable organisations

•

The incentive structure for senior management does not raise ESG risks by inadvertently motivating irresponsible

behaviour – the Committee is able to consider corporate performance on ESG issues when setting Executive

Directors’ remuneration

Executive Directors

Remuneration Purpose and link to strategy Operation Maximum opportunity

Base salary

Provides a set level of

remuneration sufficient to

attract and retain Executives

with appropriate experience

andexpertise.

The Committee will consider a

number of factors when setting

and reviewing salaries, including:

•

Scope and responsibility of

the role

•

Any changes to the scope or

size of the role

•

Salary levels for similar

roles within appropriate

comparators

•

Value of the remuneration

package as a whole

There is no maximum to salary

levels or salary increases.

Account will be taken of

increases applied to the

workforce as a whole when

determining salary increases for

Executive Directors. However,

the Committee retains the

discretion to award higher

increases where it considers it

appropriate, particularly where

salary at the outset has been set

at a relatively low level.

Pension

Provides a competitive

remuneration package sufficient

to attract and retain the most

talented people with appropriate

experience and expertise.

N/A – The Executive Directors

have waived their entitlement to

a pension.

N/A – The Executive Directors

have waived their entitlement

toa pension.

Benefits

Provides benefits sufficient to

attract and retain Executives

with the appropriate experience

and expertise.

Executive Directors are currently

entitled to the following benefits:

•

Partial private medical

insurance

•

Certain de minimis benefits

in kind

Executive Directors may also

be eligible to participate in

the Group Performance Share

Plan at the discretion of the

Committee. However, the current

Executive Directors have elected

not to participate in the PSP for

the foreseeable future.

The Committee recognises

the need to maintain suitable

flexibility in the benefits provided

to ensure it is able to support

the objective of attracting

and retaining personnel in

order to deliver the Company

strategy. The maximum will be

set at the cost of providing the

benefits described. One‑off

payments such as legal fees

or outplacement costs may

also be paid if it is considered

appropriate.

STRATEGIC REPORT OVERVIEW BUSINESS REVIEW PERFORMANCE AND RISKINTRODUCTION GOVERNANCE FINANCIAL STATEMENTS

FORESIGHT GROUP HOLDINGS LIMITED Annual Report and Financial Statements FY22 129

Other employees

Remuneration

Purpose and link

tostrategy Operation

Maximum

opportunity

Performance

metrics

Base salary

Provides a set level

of remuneration

sufficient to attract

and retain the most

talented people with

appropriate experience

and expertise.

Base salaries are

reviewed annually

on 1 August. When

conducting the annual

salary review for

all staff, account is

taken of the external

market (including

market data provided

by independent

advisers) and individual

performance.

When benchmarking

roles against the

external market,

salary bands stating

a minimum and

maximum will be

agreed for each role.

Account will also be

taken of increases

applied to colleagues

as a whole when

determining salary

increases across the

business.

In addition to the

benchmarking exercise,

individual performance

will also be considered,

including financial,

operational, strategic

and individual goals set

at the start of the year.

Pension

Provides a competitive

remuneration package

sufficient to attract

and retain the most

talented people with

appropriate experience

and expertise.

Staff below Partner

grade are entitled

to participate in the

Group’s pension

scheme. As part of the

government’s pension

auto‑enrolment

programme, all new

starters (if eligible) are

automatically enrolled

into the scheme.

The Group contributes

up to 8% of qualifying

earnings into the

pension scheme.

N/A

Annual bonus

Variable remuneration

that rewards the

achievement of annual

financial, operational

and individual

objectives integral to

the Group strategy.

Objectives are set

annually based on

the achievement of

strategic goals. At the

end of the year, the

Committee meets to

review performance

against the agreed

objectives and

determines payout

levels.

In the event that staff

are in receipt of a

bonus equating to

more than 50% of their

base salary then this

additional amount

(above 50%) will be

deferred.

Awards are based on

financial, operational,

strategic and individual

goals set at the start

of the year. The

Committee reserves

the right to make an

award of a different

amount produced by

achievement against

the measures if it

believes the outcome is

not a fair reflection of

Company performance.

The split between these

performance measures

will be determined

annually bythe

Committee.

Incentive Plan

(“SIP”) for UK

employees

The Company

attaches considerable

importance to the role

of performance‑based

bonuses to drive

profitability and

business growth and

to the importance of

wider all‑employee

share and/or

performance‑based

incentives to align

employees’ interests

with the interests of

Shareholders. The SIP

has been adopted to

further those aims.

UK employees of

the Company and its

subsidiaries will be

eligible to be granted

an award under the SIP

at the discretion of the

Committee.

Executive Directors

and senior managers

are not eligible to

participate in the SIP.

The SIP is an

HMRC‑approved

scheme, whereby

UK employees can

purchase up to

£1,800 of partnership

shares per tax year,

with the Group then

awarding two free

matching shares for

each partnership share

purchased.

Shares need to be held

for three to five years

to benefit from the

advantageous HMRC

tax treatment.

1. We intend to implement a similar scheme for our overseas staff shortly.

130 FORESIGHT GROUP HOLDINGS LIMITED Annual Report and Financial Statements FY22

REMUNERATION COMMITTEE REPORT CONTINUED

Remuneration

Purpose and link

tostrategy Operation

Maximum

opportunity

Performance

metrics

Performance

Share Plan

(“PSP”)

Variable remuneration

designed to incentivise

and reward the

achievement of

long‑term targets

aligned with

Shareholder interests.

The PSP also

provides flexibility

in the retention

and recruitment of

Executive Directors.

Awards granted under

the PSP vest subject

to achievement

of performance

conditions measured

over a three year

period. PSP awards

may be made as

conditional share

awards or in other

forms (e.g. nil

cost options) if

it is considered

appropriate. Accrued

dividends may be paid

in cash or shares, to

the extent that awards

vest. The Committee

may adjust and amend

awards in accordance

with the PSP rules.

Malus and clawback

provisions may be

applied in exceptional

circumstances.

In any financial year,

the total market value

of shares over which

awards can be made

under the PSP to any

participant cannot

normally exceed

150% of their annual

base salary, but the

plan rules will allow

the Remuneration

Committee the

discretion to award up

to 300% of annual base

salary in exceptional

circumstances.

PSP options will

vest depending on

the Company’s total

shareholder return

(“TSR”) performance.

The Committee

has determined the

percentage that would

vest as set out on

page135.

Fixed elements of remuneration for Non-Executive Directors

Remuneration Purpose and link to strategy Operation Maximum opportunity

Non‑Executive

Director fees

Fees are set at a level to reflect

the amount of time and level of

involvement required in order

to carry out their duties as

members of the Board and its

Committees, and to attract and

retain Non‑Executive Directors

of the highest calibre with

relevant commercial and other

experience.

The fees paid to the

Non‑Executive Directors are

determined by the Board as

a whole. Additional fees are

payable for acting as Senior

Independent Director and as

Chair of the Board’s Audit &

Risk Committee, Remuneration

Committee and Nomination

Committee.

Fee levels are set by reference to

Non‑Executive Director fees at

other FTSE companies of similar

size, sector and complexity and

general increases for salaried

employees within the Company.

Notes to the Policy table

As described in this Policy, the Committee may exercise its discretion to (i) determine the size of the annual bonus and

PSP awards; (ii) set the performance measures and targets attaching to the annual bonus and PSP awards; (iii) amend

those performance measures and targets during a year if they are no longer considered a fair measure of performance;

(iv) override the formulaic outcomes of performance measures and targets (where applicable) to ensure that

payments under the annual bonus plan reflect the underlying performance of the business or of the Executive Director

concerned; (v) apply malus and clawback; (vi) adjust the shares subject to the SIP and PSP awards in the event of a

variation of a corporate event by the Company; (vii) apply a holding period where appropriate; (viii) act within the

terms of the Termination Policy; and (ix) act within the terms of the Recruitment Policy. Additionally, the Committee

may exercise its discretion in order to make such other non‑material decisions affecting the Executive Directors’

awards in order to facilitate the administration of the annual bonus, PSP and SIP respectively. Any and all decisions will

be made in compliance with the Company’s policies and in accordance with the applicable plan rules. Use of discretion

will be disclosed in the relevant Directors’ Remuneration Report.

Remuneration policy continued

Other employees continued

STRATEGIC REPORT OVERVIEW BUSINESS REVIEW PERFORMANCE AND RISKINTRODUCTION GOVERNANCE FINANCIAL STATEMENTS

FORESIGHT GROUP HOLDINGS LIMITED Annual Report and Financial Statements FY22 131

Legacy matters

The Committee reserves the right to

make any remuneration payments

where the terms of the payment were

agreed (i) prior to the Company’s

IPO, or (ii) before the Policy came

into effect, or (iii) at a time when

the relevant individual was not a

Director of the Company and, in

the opinion of the Committee, the

payment was not in consideration for

the individual becoming a Director

of the Company. This does not apply

to pension contributions for new

appointments to the Board. Details of

any such payments will be set out in

the Annual Report on Remuneration

as they arise.

Shareholder dialogue

The Committee is committed to

ongoing dialogue with Shareholders

and welcomes feedback on

Executive Directors’ remuneration.

We will seek to engage with

major Shareholders and their

representative bodies on changes

to our Policy. The Committee

will also consider Shareholder

feedback on remuneration‑related

resolutions following each

year’s Annual General Meeting.

This, along with any additional

feedback received (including on

any updates to Shareholders’

remuneration guidelines), will be

considered as part of our annual

review of our Remuneration Policy

and its implementation. The

Committee also actively monitors

changes in the expectations of

institutional investors and considers

good practice guidelines from

institutionalShareholders and

Shareholder bodies.

Remuneration policy for

other employees

As with the Executive Directors,

salary for other employees is set

at a level sufficient to attract and

retain them, taking into account

their experience and expertise.

Remuneration packages comprise

salaries plus cash bonuses and/or

employee share awards.

The Group regards membership of

its share plans as a key part of its

reward strategy which also aligns

with the interests of employees

and other stakeholders. Most

employees receive benefits such as a

contribution towards private medical

cover and life assurance.

Recruitment policy

Consistent with best practice, new

senior management hires (including

those promoted internally) will be

offered packages in line with the

Remuneration Policy in force at the

time. It is the Committee’s policy that

no special arrangements will be made,

and in the event that any deviation

from standard policy is required to

recruit a new hire, approval would be

sought at the AGM.

The Committee recognises

that it may be necessary in

some circumstances to provide

compensation for amounts foregone

from a previous employer (“buyout

awards”). Any buyout awards would

be limited to what is felt to be a fair

estimate of the value of remuneration

foregone when leaving the former

employer and would be structured

so as to be, to the extent possible,

no more generous in terms of the fair

value and other key terms (e.g. time

to vesting and performance targets)

than the incentives it is replacing.

Termination policy

In the event of termination, service

contracts provide for payments of

base salary and benefits only over

the notice period.

There is no contractual right to

any bonus payment in the event of

termination although in certain “good

leaver” circumstances the Committee

may exercise its discretion to pay a

bonus for the period of employment

and based on performance assessed

after the end of the financial year.

The default treatment for any

share‑based entitlements under the

share plans is that any outstanding

awards lapse on cessation of

employment. However, in certain

prescribed circumstances, or at

the discretion of the Remuneration

Committee, “good leaver” status can

be applied. In these circumstances a

participant’s awards will, ordinarily,

vest subject to the satisfaction of the

relevant performance criteria and

on a time pro‑rata basis, with the

balance of the awards lapsing.

Share ownership guidelines

In accordance with good practice

and further aligning Executive

Directors with the long‑term interests

of the Company, Executive Directors

are required to build or maintain a

shareholding equivalent to at least

150% of their annual base salary and

after they have left the employment

of the Group, they are required to

retain a shareholding equivalent to

150% of their annual salary at the

time of departure for at least two

years after they have departed.

BothExecutive Directors hold a

significant shareholding, as detailed

on page 132.

Appointment of Directors

At every AGM, each of the Directors

on the Board will retire. A Director

who retires at an Annual General

Meeting may be reappointed if they

are willing to act as a Director.

132 FORESIGHT GROUP HOLDINGS LIMITED Annual Report and Financial Statements FY22

REMUNERATION COMMITTEE REPORT CONTINUED

Directors’ emoluments (audited)

The Executive Directors’ emoluments for the financial year to 31 March 2022 are summarised in the table below.

2022 2021

Bernard Gary Bernard Gary

Total earnings (£000) Fairman Fraser Fairman Fraser

Salary/drawings

20 220 — 220

Partnership profit share and dividends — — 9,329 766

Capital redemptions/buybacks — — 4,763 —

Private medical insurance 4 2 2 1

Other benefits

6 — 1 —

Sub-total 30 222 14,095 987

% movement on prior year (100)% (78)% (38)% (57)%

IPO proceeds — — 93,058 14,711

Total 30 222 107,153 15,698

Amount fixed 30 222 553 221

Amount variable — — 106,600 15,477

1. As disclosed in the pre‑IPO Prospectus, a distribution was made in Bernard Fairman’s favour immediately pre‑Admission, so for

theyear ending 31 March 2022 he agreed to reduce his base salary to £20,000.

2. As disclosed in the pre‑IPO Prospectus, Foresight Group LLP sold a long leasehold flat to Bernard Fairman’s wife for a

consideration of £450k, being the fair market value. Foresight Group LLP continues to pay council tax, utilities, service charges

andrates payable in connection with the flat for as long as Bernard Fairman acts as Executive Chairman of FGHL.

Neither of the Executive Directors are entitled to any pension entitlement or additional benefits or special awards

as they have elected not to participate in the Group’s pension scheme. Last year (pre‑Admission), the level of

remuneration paid to the Executive Directors was reviewed and they proposed that their base pay would remain the

same post‑Admission at £550,000 for Bernard Fairman and £220,000 for Gary Fraser. This proposal was made on the

basis that they had significant shareholdings (subject to lock‑in arrangements), which they felt was sufficient incentive

to continue to work to generate returns for Shareholders. As noted above, a distribution was made in Bernard

Fairman’s favour immediately pre‑Admission and he therefore agreed to reduce his base pay to £20,000 for the year

ending 31 March 2022. For the year ending 31 March 2023, Bernard Fairman’s base pay will return to £550,000.

During the year ended 31 March 2022, the Committee reviewed the above arrangements and whilst acknowledging the

intention to benefit Shareholders through this approach, the Committee agreed to appoint a remuneration consultant

post year end to gain an independent view into the level of remuneration paid to the Executive Directors, NEDs and

senior management to ensure the levels of remuneration are at least equal to the market norm and sufficient to retain

the Executives and ensure alignment with the strategy and aims of the business.

The table below illustrates the current shareholdings of each Executive Director, based on the closing share price on

31March 2022 (£3.70).

Number Value

of shares of shareholding

Executive Director at year end at year end

Bernard Fairman

32,324,699 £119,601,386

Gary Fraser

4,413,365 £16,329,450

1. Bernard Fairman holds his shares in the Company through Beau Port Investments Limited.

2. All held in the name of his wife, Susan Fraser.

There have been no changes to shareholdings of the Executive Directors between the year end and the date of

thisreport.

Both Executive Directors are entitled to 30 days’ holiday each year (in addition to the usual bank holidays) and their

notice periods are 12 months and six months (by either party) for Bernard Fairman and Gary Fraser respectively.

STRATEGIC REPORT OVERVIEW BUSINESS REVIEW PERFORMANCE AND RISKINTRODUCTION GOVERNANCE FINANCIAL STATEMENTS

FORESIGHT GROUP HOLDINGS LIMITED Annual Report and Financial Statements FY22 133

Remuneration for the year ending 31 March 2023

From 1 April 2022 onwards, Bernard Fairman’s remuneration has reverted to his previously agreed base pay of

£550,000. Gary Fraser will receive a base salary of £220,000 for the year ending 31 March 2023. Both Executive

Directors will benefit from a partial private medical insurance contribution and will be entitled to receive any

dividendsdeclared and paid by the Group in accordance with the number of shares held.

Notwithstanding that Foresight over‑achieved against its performance targets for the year ending 31 March 2022,

theExecutive Directors have again elected not to benefit from the Group’s Performance Share Plan.

CEO pay ratio

As a non‑UK incorporated company with fewer than 250 UK employees, Foresight is not required to adhere to the CEO

pay reporting regulations. However, as noted at the start of the Remuneration Policy earlier in my report, the Committee

has decided, as a matter of good corporate governance, to adhere to the requirements of the UK remuneration reporting

regulations whenever practicable and so has chosen to make a voluntary disclosure of CEOpay ratios.

25th Median 75th

percentile pay percentile

Year Method ratio ratio ratio

FY22

Option A 0.6 0.3 0.2

Employee pay is calculated on the basis of the CEO single figure, which is “Option A” under the reporting requirements

and the methodology the Committee believes to be the most comparable and robust. Option A requires the Group

to calculate the pay and benefits of all its UK employees for the relevant financial year in order to identify the total

remuneration at the 25th percentile, at the median and at the 75th percentile. Employee pay data is based on full‑time

equivalent pay for UK employees as at 31 March 2022, in line with the CEO single figure methodology. In calculating

these ratios, we have annualised any part‑time employees or new joiners to a full‑time equivalent (where relevant)

andhave used the earnings for FY22 of our Executive Chairman, Bernard Fairman.

Gender pay gap

As predicted through our talent mapping, we have seen women progress into senior roles. This is also considered

when we are recruiting for senior vacancies we have within the business.

We are pleased to have increased the number of women in senior roles within the business, and this has positively

impacted our gender pay gap, which is currently at 12%. Our median gender pay gap is 13%.

The data below shows we are still on our journey, but we are determined to make headway with the strategies we have

in place to continue to have a sustainable impact on closing the gender pay gap.

FY22

% of men % of women

Upper Quartile 68 32

Upper Middle Quartile 72 28

Lower Middle Quartile 60 40

Lower Quartile 36 64

Mean Gender Pay Gap 12%

Median Gender Pay Gap 13%

1. If using Bernard Fairman’s normalised base pay of £550,000, the ratios in the table above would be 11, 6 and 4 respectively.

134 FORESIGHT GROUP HOLDINGS LIMITED Annual Report and Financial Statements FY22

REMUNERATION COMMITTEE REPORT CONTINUED

Relative spend on pay

The table and graph below show the amount of dividends, distributions and buybacks against employee costs for the

last two financial years. These figures are underpinned by the amounts from the notes to the financial statements.

Pre‑IPO, as the Group was an owner‑managed business, dividends, distributions and buybacks were an important

element of remuneration for Shareholders.

31 March 31 March %

£m 2022 2021 change

Total employee costs 35.4 33.8 5%

Dividends, distributions and buybacks in financial year 6.2 18.2 (66)%

31 March 2022

31 March 2021

Relative importance of spend on pay (£m)

0 10 15 25 355 20 30 40

Dividends, distributions and buybacks in financial year Total employee costs

Total shareholder return performance

The graph below shows the value at 31 March 2022 of £100 invested in Foresight Group at the start of the financial

year, compared to £100 invested in the FTSE Small Cap Index (both with dividends re‑invested). The Group is a

member of the Small Cap index and this is therefore deemed to be the most relevant benchmark to use.

105

100

110

115

Total shareholder return

1 April

2021

1 June

2021

1 August

2021

1 October

2021

1 December

2021

1 February

2022

31 March

2022

Foresight Group Holdings FTSE Small Cap

STRATEGIC REPORT OVERVIEW BUSINESS REVIEW PERFORMANCE AND RISKINTRODUCTION GOVERNANCE FINANCIAL STATEMENTS

FORESIGHT GROUP HOLDINGS LIMITED Annual Report and Financial Statements FY22 135

Senior management

As noted in my prior year report, the Committee approved the implementation of a Group PSP this year.

The first grantof options under the scheme was made on 6 September 2021. The scheme is linked to an absolute

total shareholder return (“TSR”) of 6% compound growth per annum over a three year period. The absolute TSR

conditionvests over a range as per the table below:

TSR growth over measurement period Percentage of award that vests

6% TSR compound growth or more 100%

More than 3% but less than 6% TSR compound growth Pro‑rata between 25% and 100% (on a straight‑line basis)

3% TSR compound growth 25%

Less than 3% TSR compound growth Nil

When reviewing the first‑year allocations, the Committee gave regard to succession planning, flight risk and recent

personal performance. Neither of the Executive Directors participated in the PSP in the first year of allocations for the

rationale detailed earlier in my report. No remuneration consultants were engaged in the year ended 31March2022,

but, as noted earlier in my report, Korn Ferry was engaged post year end and has no other connection with the

Company or individual directors.

Commitments under all‑share schemes satisfied by newly issued shares must not exceed 10% of the issued share

capital in any rolling ten year period, with flexibility on what can be used to satisfy options under executive share

schemes. The Group’s position against the dilution limits at 31 March 2022 since Admission was 1% across all schemes.

Wider Group workforce

The Committee reviews the ongoing appropriateness of the wider workforce remuneration and related policies.

Theremuneration package for staff is structured to be competitive in the market in which the Group operates in order

to retainthe most talented people. The package offered includes the following elements:

•

Base salary

•

Pension

•

Annual bonus

•

Other benefits (e.g. private medical insurance and life assurance)

•

Share Incentive Plan (“SIP”)

•

Performance Share Plan (“PSP”)

The Group seeks to promote and maintain good relations with staff as part of its broader staff engagement strategy.

The Senior Independent Director has met with the Head of People on several occasions throughout the year and staff

engagement has increased through the establishment of an Employee Forum. This initiative represents staff at all

grades and departments across the business, with a primary focus on the culture at Foresight.

Non-Executive Directors (“NEDs”)

At listing, all three NEDs entered into a three year contract, but each NED may be invited by the Company to serve

for a further period or periods. In any event, each NED appointment is subject to annual re‑election by Shareholders

at each Annual General Meeting of the Company and a NED’s appointment may be terminated at any time by either

party giving the other one month’s written notice or in accordance with the Articles of Incorporation. In the event

Shareholders do not re‑elect a NED, or he/she is retired from office under the Articles of Incorporation, the relevant

appointment shall terminate automatically, with immediate effect and without compensation. On termination of

appointment, NEDs are only entitled to such fees as may have accrued to the date of termination, together with

reimbursement in the normal way of any expenses properly incurred prior to that date.

NEDs are not eligible to participate in any of the Group’s long‑term incentive, bonus or pension schemes. There were

no payments made for loss of office during the year. Details of the policy on fees paid to our NEDs is set out overleaf.

136 FORESIGHT GROUP HOLDINGS LIMITED Annual Report and Financial Statements FY22

REMUNERATION COMMITTEE REPORT CONTINUED

Non-Executive Directors (“NEDs”) continued

Fees

To attract and retain NEDs of the highest calibre with broad commercial experience relevant to the Group, fee

levelsare reviewed periodically by considering external advice on best practice and fee levels at other FTSE

companies of broadly similar size and sector to Foresight. Time commitment and responsibility are also considered

when reviewing fees.

The annual NED fees are outlined below. A base fee is agreed, with additional fees payable for chairing Board

Committees:

NED fee type Annual fee

Base fee for independent NEDs £50,000

Additional fee for chairing a sub‑committee £5,000

Additional fee as Senior Independent Director £10,000

Additional fee for acting as NED of a licensed subsidiary £10,000

Salary for Salary for No. of Value of

Annual year ended year ended % movement shares held shareholding

NED fee 31 March 2022 31 March 2021

on prior year at year end at year end

Alison Hutchinson

(Senior Independent Director) £60,000 £60,000 £8,218 630% 5,952 £22,022

Mike Liston

(Chair of the Nomination and

Remuneration Committees) £60,000 £60,000 £8,218 630% 11,904 £44,045

Geoffrey Gavey

(Chair of the Audit & Risk Committee)

£65,000 £65,000 £32,534

100% 11,904 £44,045

1. Geoffrey Gavey receives an additional £10,000 per annum for acting as NED of a licensed subsidiary within the Group.

2. Pro‑rated as Company listed part way through the year.

3. Includes NED fees earned pre‑Admission.

4. Based on closing share price of £3.70 on 31 March 2022.

Shareholder views

The Committee will consider any Shareholder views received throughout the year, as well as guidance from

shareholder representative bodies more broadly. The Directors’ Remuneration Policy will be kept under regular

review, to ensure it aligns the interests of the Executive Directors with those of Shareholders. We will consult with

Shareholders before making any significant changes to our Directors’ Remuneration Policy.

On behalf of the Remuneration Committee

Mike Liston

Chair of the Remuneration Committee

11 July 2022

STRATEGIC REPORT OVERVIEW BUSINESS REVIEW PERFORMANCE AND RISKINTRODUCTION GOVERNANCE FINANCIAL STATEMENTS

FORESIGHT GROUP HOLDINGS LIMITED Annual Report and Financial Statements FY22 137

DIRECTORS’ REPORT

The Directors present their report and the audited financial statements of the Group for the year ended 31 March 2022.

The Company

The Company, Foresight Group Holdings Limited, is a public company incorporated in Guernsey and is listed on the

London Stock Exchange Main Market with a premium listing.

Subsidiary undertakings

The Company operates via its various subsidiary undertakings, which are domiciled in a number of jurisdictions

globally. A list can be found in note 16 to the financial statements, which notes the domicile of each undertaking

atthedate of this report.

Compliance with the UK Corporate Governance Code (the “Code”)

It is a requirement of Listing Rule 9.8.7R that the Company must comply with the Code, which is published by the

Financial Reporting Council, or explain in its Annual Report and Financial Statements any areas of non‑compliance

andthe Company’s reasons for this. A copy of the Code can be found at www.frc.org.uk.

The Directors remain committed to comply with the Code, and it is intended that any areas of non‑compliance must

be justifiable. Those areas are noted below:

Provision Explanation

9, 19 The Code recommends that the role of chairman and chief executive officer should not be

exercised by the same individual. On and since Admission, Bernard Fairman has exercised the

role of Executive Chairman, combining the role of chairman and chief executive officer, which

does not comply with the UK Corporate Governance Code. He has also been on the Board longer

than nine years. The Nomination Committee and the Board continue to consider that the role of

an Executive Chairman is in the interests of Shareholders in order to utilise the proven leadership

qualities and significant experience of Bernard Fairman to ensure the ongoing commercial

success of the Group. Furthermore, Bernard Fairman was one of the founders of the Company

in 1984 and can therefore provide stability and continuity through his detailed understanding of

the Group’s operations and the markets in which it operates.

26 Due to the size of Foresight Group, it has not been considered necessary to appoint an internal

audit function; however, this matter will remain under constant review of the Board and

Executive Committee.

Disclosure Guidance and Transparency Rules (“DTRs”)

The Company complies with the corporate governance statement requirements of the FCA’s DTRs by virtue of the

information included in the Governance section of the Annual Report and Financial Statements.

Relationship Agreement – controlling Shareholder

As at 31 March 2022, Beau Port Investments Limited (the investment vehicle through which Bernard Fairman holds his

shares) held, together with its concert parties, 44.9% of the Company’s issued share capital. Consequently, under the

Listing Rules, Bernard Fairman was, and continues to be, a controlling Shareholder of the Company.

Pursuant to Listing Rule 9.8.4, the Company has entered into a relationship agreement with Bernard Fairman,

BeauPort Investments Limited and other parties with whom they are deemed to be acting in concert (the

“Relationship Agreement”). Since the date of the Relationship Agreement, the Company has complied with the

mandatory independence provisions in the Relationship Agreement and, as far as the Company is aware, Bernard

Fairman, Beau Port Investments Limited and the other parties to the Relationship Agreement have also complied.

138 FORESIGHT GROUP HOLDINGS LIMITED Annual Report and Financial Statements FY22

DIRECTORS’ REPORT CONTINUED

UK Listing Rule 9.8.4

There are no disclosures required

to be made under UK Listing Rule

9.8.4 which have not been disclosed

elsewhere in this Report. Details of

long‑term incentive plans can be

found in the Remuneration Report.

Securities dealing code

In accordance with the UK Market

Abuse Regulations, the Company

has adopted a Securities Dealing

Code and Securities Dealing

Code Guidance that sets out

their responsibilities for ensuring

compliance when dealing in the

Company’s shares. The Code and

Guidance have been shared with

all persons named as insiders

from time to time, including the

Company’s Directors, other PDMRs

(persons discharging managerial

responsibility), external parties

and certain employees, and those

documents are also available to

all employees via the Foresight

Governance and Compliance Library.

Results and dividends

The Consolidated Statement of

Comprehensive Income is set out on

page 151 and shows the results for the

year ended 31 March 2022.

The Directors recommend that the

Company pays a final dividend for

the year ended 31 March 2022 of

9.8pence per share, to be paid on

14October 2022.

Principal activities, review

of business and future

developments

The Group is principally involved in

the provision of the management of

infrastructure assets, private equity

investments and OEICs on behalf of

both institutional and retail investors

using ESG‑oriented strategies.

The review of the business and a

summary of future developments are

included in the Executive Chairman’s

statement on pages 2 to 4 and in the

Strategic Report on pages 5 to 106.

Principal risks and

uncertainties

The Board has carried out a robust

assessment of the emerging principal

risks and uncertainties affecting the

Group. These risks and uncertainties

are explained in the Risks section on

pages 96 to 105.

Directors

The names and details of the

Directors serving at the date of this

report are provided on pages 110 and

111. The Directors who served during

the period under review were:

•

Bernard Fairman, Executive

Chairman

•

Gary Fraser, CFO/COO

•

Geoffrey Gavey, NED

•

Alison Hutchinson, Senior

Independent NED

•

Mike Liston, NED

In accordance with the Company’s

Articles of Incorporation, all Directors

will stand for re‑election at the

forthcoming Annual General Meeting

of the Company. The Board believes

that it is in the best interests of

Shareholders that the Directors listed

for re‑election be re‑elected.

Board diversity

See the Nomination Committee

report for our update on Board

diversity following the Listing Rules

changes in April 2022.

Directors’ indemnity

The Company has maintained a

Directors’ and Officers’ liability

insurance policy on behalf of the

Directors, indemnifying them in

respect of certain liabilities that may

be incurred by them in connection

with the activities of the Company.

This policy does not provide cover

for fraudulent or dishonest actions

bythe Directors.

Articles of Incorporation

The Company’s Articles of

Incorporation are available upon

request from the Group Company

Secretary and at the AGM.

Acopy has also been published

in the Shareholder Centre on

theCompany’s website:

https://www.fsg-investors.com/

Share capital and voting rights

The Company’s capital structure and

details of share movements during

the year are shown in note 27 to the

financial statements.

No shares were issued during the

year; as at 31 March 2022, there

were 108,333,333 Ordinary Shares

(“Shares”) in issue of nil par value.

The Shares are quoted on the

Main Market of the London Stock

Exchange.

Details of substantial shareholdings

and control can be found in the table

overleaf. Shareholder rights and

entitlements are as follows:

•

Shareholders are entitled to

dividends and other distributions

declared, made or paid on the

Ordinary Share capital of the

Company

•

On a show of hands every

Shareholder who is present in

person shall have one vote and on

a poll every Shareholder present in

person or by proxy shall have one

vote per Share. Any Shareholder

entitled to more than one vote

need not cast all votes in the

sameway

•

Shareholders are entitled to

participate in any surplus assets in

a winding up in proportion to their

Shareholdings

STRATEGIC REPORT OVERVIEW BUSINESS REVIEW PERFORMANCE AND RISKINTRODUCTION GOVERNANCE FINANCIAL STATEMENTS

FORESIGHT GROUP HOLDINGS LIMITED Annual Report and Financial Statements FY22 139

Allotment of Shares

At the Company’s AGM held in 2021

(the “2021 AGM”), the Shareholders

have authorised the Directors to

issue Shares in the Company’s

Share capital of up to two‑thirds

of the issued Share capital. It is

the Directors’ intention to seek

the renewal of this authority by

Shareholder resolution which will

be set outin the notice of the

forthcoming AGM (the “2022 AGM”).

Also at the 2021 AGM, the

Shareholders authorised the

Directors to allot Shares without

application of the pre‑emption

rights contained in Article 5.1 of the

Company’s Articles equivalent to

approximately 5% of the Company’s

issued Share capital until the

conclusion of the 2022 AGM.

The Directors will also seek to renew

this extra authority by proposing

a special resolution be passed at

the 2022 AGM provided the extra

5% is used only in connection with

the financing (or refinancing) of

an acquisition or specified capital

investment as contemplated by

the Statement of Principles on

Disapplying Pre‑Emption Rights

published by the Pre‑Emption Group

in 2015.

Purchase of own Shares

At the 2021 AGM, the Company was

authorised to buy back up to 10% of

its own Shares by market purchase

until the conclusion of the 2022 AGM.

The Directors will seek to renew

the authority to buy back up to 10%

of its issued share capital at the

2022 AGM. This power will only be

exercised if the Directors are satisfied

that the purchase is in the interest of

Shareholders and was not exercised

during the year.

Relations with Shareholders

The Board recognises the

importance of regular and

effective communication with

Shareholders, particularly the

need for open communication

on the Company’s strategy.

As a result, the Executive

Directors and members of senior

management have regular

dialogue with the Company’s

major Shareholders to ensure that

their views are communicated

fully to the Board.

Other forms of communication

typically include the annual and

interim financial statements,

announcements released to the

London Stock Exchange, the AGM

and regular face‑to‑face meetings

with major Shareholders and

management. These meetings enable

the Executive Chairman and the CFO

to update Shareholders on strategy

and the Group’s performance. The

Company also has an ongoing

programme of individual meetings

with institutional Shareholders and

analysts following the preliminary

and half‑year results presentations.

As soon as practicable following

the conclusion of any general

meeting, the results of the meeting

are released through a regulatory

news service and a copy of the

announcements placed in the

Shareholder Centre on the website

https://www.fsg-investors.com/

shareholder-centre. In the event

that 20% or more of votes were

cast against any resolution at a

general meeting, an explanation of

the actions proposed to be taken in

response would be outlined.

The Shareholder Centre on the

Company’s website includes Annual

and Half‑year Reports, notices of

meetings and other governance‑

related material, such as investor

presentations and marketing

materials.

140 FORESIGHT GROUP HOLDINGS LIMITED Annual Report and Financial Statements FY22

DIRECTORS’ REPORT CONTINUED

Miscellaneous disclosures

•

The Directors’ powers are

conferred on them by Guernsey

company law and by the Articles

of Incorporation.

•

A statement showing the interests

disclosed to the listed company in

accordance with DTR 5 as at the

end of the period under review

and:

(a) all interests disclosed to the

listed company in accordance

with DTR 5 that have occurred

between the end of the period

under review and a date not

more than one month prior to

the date of the notice of the

annual general meeting; or

(b) if no interests have been

disclosed to the listed

company in accordance with

DTR 5 in the period described

in (a), a statement that no

changes have been disclosed

to the listed company.

•

The provisions concerning the

appointment and replacement

of Directors are contained

in the Company’s Articles

ofIncorporation (which in line

withthe UK Corporate Governance

Code require the Directors to be

subject to annualre‑election)

andthe Companies (Guernsey)

Law, 2008.

•

The Company’s Shares have been

admitted to trading on the London

Stock Exchange and may be

traded through theCREST system.

•

There are no restrictions on the

transfer of the Company Shares

other than those restrictions which

may from time totime be imposed

by law; for example, insider

trading law.

•

The Company is not aware of any

agreements between Shareholders

that may result in restrictions on

the transfer ofsecurities and/or

voting rights.

•

With respect to the UK’s Market

Abuse Regulation, all Group

employees are required to seek

the approval of the Company to

deal in its Shares.

•

The Company’s Articles of

Incorporation may only be

amended by special resolution at

ageneral meeting of Shareholders.

A copy of the Articles has been

published in the Shareholder

Centre on the Company’s website:

https://www.fsg-investors.com/

•

The Company is not aware of any

significant agreements to which

it is party that take effect, alter

or terminate upon achange of

control of the Company following

a takeover.

•

The Sustainability section of this

Annual Report and Financial

Statements sets out the Group’s

approach to greenhousegas.

•

The Company has no branches

but certain of its subsidiaries have

branches in the UK and elsewhere.

•

Details of the financial

instrumentsutilised by Foresight

and the associated risks are

described in note 30 to the

financial statements.

•

Likely future developments in the

Group’s activities are noted in the

Strategic Report.

•

Foresight has not conducted any

activities in the field of research

and development.

Engagement with stakeholders

The Directors are required to

promote the success of the

Company as a whole and, in

doing so, have regard to a range

of stakeholders. Alist of the

Group’s key stakeholder groups

is provided on pages 83 and 84

along with a brief description of

the way in which the Group has

engaged with them.

Financial risk

management objectives

The Group’s financial risk

management objectives can be found

in note 30 to the financial statements.

Website publication

The Board is responsible for

publishing the audited Annual

Report and Financial Statements

on the Company’s website in

accordance with applicable

legislation governing the

preparation and dissemination of

financial statements. The Board is

responsible for the maintenance

and integrity of the Company’s

website, as well as the information

published therein, including the

Company’s financial statements.

Legislation in Guernsey governing

the preparation and dissemination

of financial statements may

differ from legislation in

otherjurisdictions.

Substantial interests

At the Company’s year end, 31 March 2022, and as at 11 July 2022, being the date this Annual Report and Financial

Statements was finalised for publication, the following were the only substantial holdings representing 5% or more of

the Company’s total voting rights notified to the Company pursuant to DTR 5.

Number of % of issued

Beneficial Shareholder Shares share capital

Beau Port Investments Limited

32.32m 29.84%

Jupiter Fund Management PLC 7.90m 7. 3%

Slater Investments Limited 6.00m 5.5%

Janus Henderson Group PLC 6.74m 6.2%

Liontrust Investment Partners LLP 5.49m 5.0%

1. A private company wholly and beneficially owned by Bernard Fairman, through which his Company shares are held.

STRATEGIC REPORT OVERVIEW BUSINESS REVIEW PERFORMANCE AND RISKINTRODUCTION GOVERNANCE FINANCIAL STATEMENTS

FORESIGHT GROUP HOLDINGS LIMITED Annual Report and Financial Statements FY22 141

Auditor’s right to information

So far as each of the Directors is

aware, there is no relevant audit

information (as defined by section

249 of The Companies (Guernsey)

Law 2008) of which the Company’s

Auditor is unaware, and each

Director has taken all the steps that

he or she ought to have taken as a

Director in order to make himself or

herself aware of any relevant audit

information and to establish that the

Company’s Auditor is aware of that

information.

Post-balance sheet events

On 13 June 2022, the Group

announced the acquisition of

the technology ventures division

of Downing LLP, including the

management of Downing's venture

capital trusts, Downing ONE VCT

Plc, Downing FOUR VCT Plc, and

the Downing's Ventures Enterprise

Investment Scheme, representing a

combined AUM of c.£275 million. The

Group will pay an initial consideration

of c.£13.6 million, with a further

consideration of up to £4.2 million

payable over a three year period

subject to the achievement of certain

criteria, and an additional capped

fee sharing arrangement in respect

of future performance and other

fees. The acquisition will be funded

from existing financial resources and

will diversify the Group’s existing

ventures offering.

Completion of the acquisition was on

4 July 2022.

Donations and political

expenditure

As can be seen in Our Stakeholders

on pages 83 and 84 Foresight

supports charities and undertakes

charitable initiatives as part of

its engagement with staff and

communities.

No donations of a political nature

have been made during the year.

Going concern

After making enquiries, the Directors

have formed a judgement that at

the time of approving the financial

statements, there is a reasonable

expectation that the Group has

adequate resources to continue

its operational existence for the

foreseeable future. For this reason,

the Directors continue to adopt a

going concern basis in preparing the

Company’s financial statements.

Responsibility statement of

the Directors in respect of the

Annual Report and Financial

Statements

The Annual Report and Financial

Statements complies with

the Disclosure Guidance and

Transparency Rules of the United

Kingdom’s Financial Conduct

Authority and the UK Corporate

Governance Code in respect of the

requirements to produce annual

financial accounts. The Annual

Report and Financial Statements are

the responsibility of, and have been

approved by, the Directors. In that

regard, the Directors confirm that to

the best of their knowledge:

•

The Annual Report and Financial

Statements, prepared in

accordance with International

Financial Reporting Standards

(“IFRS”) as adopted by the

European Union (“EU”) for the

year ended 31 March 2022 give a

true and fair view of the assets,

liabilities, financial position and

profit or loss of the Company and

the undertakings included in the

consolidation takenas a whole

•

The Strategic Report (contained

on pages 5 to 106) includes a fair

review of the development and

performance of the business and

the position of the Company and

the undertakings included in the

consolidation taken as a whole,

together with a description of the

principal risks and uncertainties

that they face

•

The Directors consider the Annual

Report and Financial Statements,

taken as a whole, is fair, balanced

and understandable and provides

the information necessary for

Shareholders to assess the Group’s

position, performance, business

model and strategy

AGM

The Annual General Meeting will

be held on 10 August 2022 at the

below address. A copy of the Notice

of Meeting can be found on the

Company’s website.

Voting at the AGM will be facilitated

by proxies for those unable to attend.

The registrar will provide proxies to

each of the registered Shareholders

and a blank copy will be available

on the Company’s website: h ttp s://

www.fsg-investors.com/. Details of

CREST voting are provided in the

Notice of AGM, which will also be

posted to registered Shareholders

and be published on the Company’s

website. Shareholders are welcome

to submit questions for the Board to

the Company Secretary by 1.00 pm

on 8 August 2022.

By Order of the Board

Jo-anna Nicolle

Company Secretary

11 July 2022

Ground Floor, Dorey Court

Admiral Park

St Peter Port

Guernsey

GY1 2HT

WHAT’S IN THIS SECTION

INDEPENDENT AUDITOR’S REPORT 143

CONSOLIDATED STATEMENT

OFCOMPREHENSIVE INCOME 151

CONSOLIDATED STATEMENT

OFFINANCIAL POSITION 152

CONSOLIDATED STATEMENT

OFCHANGES IN EQUITY 154

CONSOLIDATED CASH FLOW

STATEMENT 155

NOTES TO THE

FINANCIAL STATEMENTS 157

GLOSSARY 210

CORPORATE INFORMATION 212

142 FORESIGHT GROUP HOLDINGS LIMITED Annual Report and Financial Statements FY22

FINANCIAL

STATEMENTS

STRATEGIC REPORT OVERVIEW BUSINESS REVIEW PERFORMANCE AND RISKINTRODUCTION GOVERNANCE FINANCIAL STATEMENTS

FORESIGHT GROUP HOLDINGS LIMITED Annual Report and Financial Statements FY22 143

Opinion on the financial

statements

In our opinion:

•

the group financial statements

give a true and fair view of the

state of the Group’s affairs as at

31 March 2022 and of the Group’s

profit for the year then ended;

•

the Group financial statements

have been properly prepared in

accordance with IFRSs as adopted

by the European Union; and

•

the Group financial statements

have been properly prepared in

accordance with the requirements

of the Companies (Guernsey) Law,

2008.

We have audited the financial

statements of Foresight Group

Holdings Limited (the “Parent

Company”) and its subsidiaries

(the “Group”) for the year ended

31 March 2022 which comprise

the consolidated statement

of comprehensive income,

the consolidated statement of

financial position, the consolidated

statement of changes in equity

and the consolidated cash flow

statement and notes to the financial

statements, including a summary

of significant accounting policies.

The financial reporting framework

that has been applied in their

preparation is applicable law and

International Financial Reporting

Standards (“IFRS”) as adopted by

theEuropeanUnion.

Basis for opinion

We conducted our audit in

accordance with International

Standards on Auditing (UK)

(ISAs (UK)) and applicable law.

Our responsibilities under those

standards are further described in

the Auditor’s responsibilities for the

audit of the financial statements

section of our report. We believe

that the audit evidence we have

obtained is sufficient and appropriate

to provide a basis for our opinion.

Ouraudit opinion is consistent with

the additional report to the Audit

andRisk Committee.

Independence

Following the recommendation of

the Audit and Risk Committee, we

were appointed by the Board on

14 April2021 to audit the financial

statements for the year ending

31 March 2021 and subsequent

financial periods. The period of total

uninterrupted engagement including

retenders and reappointments is

2years, covering the years ending

31 March 2021 to 31 March 2022.

Weremain independent of the

Group and the parent company

in accordance with the ethical

requirements that are relevant to our

audit of the financial statements in

the UK, including the FRC’s Ethical

Standard as applied to listed public

interest entities, and we have fulfilled

our other ethical responsibilities in

accordance with these requirements.

The non-audit services prohibited by

that standard were not provided to

the Group or parent company.

Conclusions relating

to going concern

In auditing the financial statements,

we have concluded that the

Directors’ use of the going concern

basis of accounting in the preparation

of the financial statements is

appropriate. Our evaluation of the

Directors’ assessment of the Group’s

ability to continue to adopt the going

concern basis of accounting included:

•

Obtaining Directors’ cash flow

forecasts for the Group for a

period of at least 12 months

from the date of approval of the

financial statements that support

the Directors’ assessment and

conclusion with respect to the

going concern basis of preparation

of the financial statements and

performing the following:

•

Assessing the reasonableness

of Directors’ assumptions with

respect to revenue growth and

fundraising against historical

performance and planned

future fundraising activities;

•

Evaluating the reasonableness

of Directors’ downside scenario

and the assumptions used,

considering the impact on

the expected receipt of cash

from revenue streams and

future expenditure as well as

the likelihood of this scenario

occurring;

•

Performing a highly stressed

scenario where revenues are

not forecast to increase from

current levels but expenditure

continues to rise in line with

planned forecast to assess the

available headroom; and

•

Assessing the overall group

liquidity and sufficiency of the

cash reserves to cover current

liabilities.

INDEPENDENT AUDITOR’S REPORT

TO THE MEMBERS OF FORESIGHT GROUP HOLDINGS LIMITED

144 FORESIGHT GROUP HOLDINGS LIMITED Annual Report and Financial Statements FY22

Based on the work we have performed, we have not identified any material uncertainties relating to events or

conditions that, individually or collectively, may cast significant doubt on the Group’s ability to continue as a going

concern for a period of at least 12 months from when the financial statements are authorised for issue.

In relation to the parent company’s reporting on how it has applied the UK Corporate Governance Code, we have

nothing material to add or draw attention to in relation to the Directors’ statement in the financial statements about

whether the Directors considered it appropriate to adopt the going concern basis of accounting.

Our responsibilities and the responsibilities of the Directors with respect to going concern are described in the

relevant sections of this report.

Overview

Coverage 99% (2021: 94%) of Group profit before tax

94% (2021: 98%) of Group revenue

90% (2021: 96%) of Group total assets

Key audit matters 2022 2021

Revenue recognition

✓✓ ✓

Acquisition of PiP Manager

Limited

✗✗ ✓

IFRS Conversion

✗✗ ✓

The acquisition of PIP Manager and the IFRS conversion are

no longer considered to be key audit matters due to the fact

that PIP Manager was a prior year transaction and the IFRS

conversion was a one-off event.

Materiality Group financial statements as a whole

£1,400,000 (2021: £880,000) based on 5% (2021: 5%) of Group

Profit before Tax

An overview of the scope of our audit

Our Group audit was scoped by obtaining an understanding of the Group and its environment, including the Group’s

system of internal control, and assessing the risks of material misstatement in the financial statements. We also

addressed the risk of management override of internal controls, including assessing whether there was evidence of

bias by the Directors that may have represented a risk of material misstatement.

The Group consists of the parent company and a number of subsidiary undertakings. The Group audit engagement

team carried out full scope audits for the parent company and four of the six significant components of the Group.

Theremaining two significant components were audited by BDO member firms based in Luxembourg and Guernsey.

For non-significant components, the Group engagement team performed specific procedures over significant

balances and classes of transactions, as well as analytical procedures, based on their individual financial significance

to the Group with reference to their profit before tax, revenue and total assets.

INDEPENDENT AUDITOR’S REPORT CONTINUED

TO THE MEMBERS OF FORESIGHT GROUP HOLDINGS LIMITED

STRATEGIC REPORT OVERVIEW BUSINESS REVIEW PERFORMANCE AND RISKINTRODUCTION GOVERNANCE FINANCIAL STATEMENTS

FORESIGHT GROUP HOLDINGS LIMITED Annual Report and Financial Statements FY22 145

Our involvement with component auditors

For the work performed by component auditors, we determined the level of involvement needed in order to be

able to conclude whether sufficient appropriate audit evidence has been obtained as a basis for our opinion on the

Group financial statements as a whole. Our involvement with component auditors included the following:

•

Discussing with the component auditors the timing of their involvement and timeline for reporting;

•

Discussing with the component auditors the risks identified at Group level and the risks that are relevant to the

component entity;

•

Sending detailed instructions, including the materiality thresholds to be applied in the testing of the component

entity;

•

Obtaining and assessing the results of their audit work performed; and

•

Performing a review of their relevant working papers in order to ensure that appropriate audit evidence has

been obtained.

Key audit matters

Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the

financial statements of the current period and include the most significant assessed risks of material misstatement

(whether or not due to fraud) that we identified, including those which had the greatest effect on: the overall audit

strategy, the allocation of resources in the audit, and directing the efforts of the engagement team. These matters

were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon,

and we do not provide a separate opinion on these matters.

146 FORESIGHT GROUP HOLDINGS LIMITED Annual Report and Financial Statements FY22

Key audit matter How the scope of our audit addressed the key audit matter

Revenue recognition

Note 4

Revenue is a key driver in demonstrating

performance, therefore there is an incentive

tooverstate revenue.

There is a risk that revenue may be misstated

as a result of complex calculations, judgement

in the Net Asset Values (“NAVs”) of underlying

funds, use of inappropriate accounting policies,

or from an inappropriate use of judgments in

calculating revenue.

In terms of performance fees, there is

also judgement around whether the

performance conditions have been met and

complex calculations that could give rise to

managementoverride.

We performed the following procedures:

•

We reviewed the Group’s accounting policies and assessed whether it is

inline with the requirements of the standards; and

•

We assessed the relevant management or service agreements and

supporting fee calculations and ensured that managements calculations

were in-line with the supporting agreements.

Management fees and Secretarial fees (84% of Group

Revenue, including ITS and ATS fees discussed below):

•

For a sample of management fee and secretarial fee arrangements, we

obtained the relevant agreements and corroborated the fee rates used in

the calculation and the calculation bases used for fee calculations to the

relevant agreements. We recalculated the fees receivable for the year based

on the relevant fee structure in accordance with the relevant agreement

and the underlying fund commitments or net asset values (“NAVs”) as

applicable;

•

We vouched fund commitments and fund NAVs to underlying workings,

agreed the NAVs used to RNS announcements on the LSE website where

applicable (or investor reports) and commitments to relevant agreement/

investor documentation;

•

We reviewed the ISAE 3402 controls report which covers the controls over

the production of NAVs which drives the majority of management fee and

secretarial fee calculations to identify any issues which could affect the

determination of the NAVs;

•

For fund NAVs (see ‘NAV Testing’ below), we vouched the NAV to audited

accounts of the respective fund and reviewed the reasons for movements

since the most recent audited accounts; and

•

The performance obligations are deemed to be correctly recognised over

time for both management and secretarial fees in accordance with IFRS15.

This is also aligned with the accounting policy disclosed in the financial

statements.

Inheritance Tax Solutions (ITS and AITS):

•

We obtained calculations for ITS and AITS management fees and reviewed

these for arithmetic accuracy;

•

We reviewed the prospectuses for these products and confirmed that the

calculation of the ITS and AITS management fees were aligned to the terms

of these documents;

•

We verified key inputs to the calculation on a sample basis, such as

amounts invested and withdrawals, by agreeing to investor applications,

withdrawal statements, encashment forms and other relevant supporting

documentation; and

•

The performance obligation under IFRS 15 is deemed to be correctly

recognised over time. This is also aligned with the accounting policy

disclosed in the financial statements.

INDEPENDENT AUDITOR’S REPORT CONTINUED

TO THE MEMBERS OF FORESIGHT GROUP HOLDINGS LIMITED

STRATEGIC REPORT OVERVIEW BUSINESS REVIEW PERFORMANCE AND RISKINTRODUCTION GOVERNANCE FINANCIAL STATEMENTS

FORESIGHT GROUP HOLDINGS LIMITED Annual Report and Financial Statements FY22 147

Key audit matter How the scope of our audit addressed the key audit matter

Revenue recognition continued

Note 4

Arrangement/advisory and marketing fees (9% of Group

Revenue):

•

For a sample of arrangement/advisory and marketing fees, we obtained

the relevant sale purchase agreements, investment agreements or evidence

of new investor commitments as appropriate and recalculated the fees in

accordance with the terms of the contract; and

•

The performance obligation under IFRS 15 is the securing of funding

and subsequent signing of the contracts. This is correctly deemed to be

recognised at a point in time.

Directors’ fees (3% of Group revenue):

•

For a sample of Directors’ fees which are fixed fees with annual Retail Price

Index (“RPI”) adjustments, we obtained agreements in order to support the

existence of the fees;

•

We recalculated the annual RPI uplifts for accuracy and checked that it was

time-apportioned correctly;

•

We agreed the Directors’ existence to relevant payroll listing or Companies

House. This fee is correctly deemed to be recognised over time and

therefore aligned with the accounting policy disclosed in the financial

statements; and

•

The performance obligation under IFRS 15 for Directors’ fees is satisfied as

the Directors perform their duties.

Performance Fees (4% of Group revenue):

•

We have inspected the agreement to verify initial existence of the fee and

summarised the background/basis of the fee;

•

We obtained supporting documentation to gain comfort over the existence

and entitlement to this fee based on the crystallisation of gains;

•

We recalculated the fee based on the agreement to ensure accuracy;

•

We agreed the fee receipt to bank statements; and

•

The performance obligation under IFRS 15 is the expiry or sale of the fund.

This is correctly deemed to be recognised at a point in time.

NAV Testing:

For a sample of NAVs used as the basis of the calculation of fee income:

•

We obtained a detailed understanding of the underlying asset valuation

process;

•

For one quarter we requested all supporting process documentation and

for the other quarters obtained the final valuation workbook and inspected

the approval of valuations by the Valuations Committee;

•

We assessed the movements in the NAV values over the measurement

period (quarterly) and documented the reasonableness of the movement;

•

We agreed the NAV to supporting documentation (e.g. RNS

announcements) to confirm the accuracy of the NAV used in the fee

calculation; and

•

Due to the fact that NAVs are a significant input into the fee calculation, the

above procedures have been performed to provide further audit evidence

around the accuracy of the fee revenue.

Key observations:

•

Based on our procedures performed, we found the recognition of revenue

to be appropriate and no evidence of management override in the

calculations of the underlying fund values and subsequent revenue fee

calculations.

148 FORESIGHT GROUP HOLDINGS LIMITED Annual Report and Financial Statements FY22

Our application of materiality

We apply the concept of materiality both in planning and performing our audit, and in evaluating the effect of

misstatements. We consider materiality to be the magnitude by which misstatements, including omissions, could

influence the economic decisions of reasonable users that are taken on the basis of the financial statements.

In order to reduce to an appropriately low level the probability that any misstatements exceed materiality, we use a

lower materiality level, performance materiality, to determine the extent of testing needed. Importantly, misstatements

below these levels will not necessarily be evaluated as immaterial as we also take account of the nature of identified

misstatements, and the particular circumstances of their occurrence, when evaluating their effect on the financial

statements as a whole.

Based on our professional judgement, we determined materiality for the financial statements as a whole and

performance materiality as follows:

Group financial statements

2022

2021

Materiality 1,400,000 880,000

Basis for

determining

materiality

5% of Group Profit Before Tax 5% of Group Profit Before Tax

adjusted for share issue costs

Rationale for the

benchmark applied

This was determined as the most

appropriate benchmark given that

profit before tax is an important

measure for users of the financial

statements in assessing the

performance of the Group.

This was determined as the most

appropriate benchmark given that

profit before tax is an important

measure for users of the financial

statements in assessing the

performance of the Group. The

calculation of materiality was adjusted

for the distortive effect of IPO costs.

Performance

materiality

980,000 570,000

Basis for

determining

performance

materiality

70% of materiality on the basis of our

risk assessment, together with our

assessment of the Group’s overall

control environment.

65% of materiality on the basis of our

risk assessment, together with our

assessment of the Group’s overall

control environment.

Component materiality

We set materiality for each component of the Group based on the lower of their individual statutory materiality

threshold and component materiality, which was determined in reference to a percentage of group materiality based

on the size and our assessment of the risk of material misstatement of that component. Component materiality ranged

from £66,000 (2021: £13,000) to £1,296,000 (2021: £836,000). In the audit of each component, we further applied

performance materiality levels of 70% (2021: 65%) of the component materiality to our testing to ensure that the risk

of errors exceeding component materiality was appropriately mitigated.

Reporting threshold

We agreed with the Audit Committee that we would report to them all individual audit differences in excess of

£70,000 (2021: £44,000). We also agreed to report differences below this threshold that, in our view, warranted

reporting on qualitative grounds.

TO THE MEMBERS OF FORESIGHT GROUP HOLDINGS LIMITED

INDEPENDENT AUDITOR’S REPORT CONTINUED

STRATEGIC REPORT OVERVIEW BUSINESS REVIEW PERFORMANCE AND RISKINTRODUCTION GOVERNANCE FINANCIAL STATEMENTS

FORESIGHT GROUP HOLDINGS LIMITED Annual Report and Financial Statements FY22 149

Other information

The Directors are responsible for the other information. The other information comprises the information included

in the annual report and financial statements other than the financial statements and our auditor’s report thereon.

Our opinion on the financial statements does not cover the other information and, except to the extent otherwise

explicitly stated in our report, we do not express any form of assurance conclusion thereon. Our responsibility is

to read the other information and, in doing so, consider whether the other information is materially inconsistent

with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be

materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are

required to determine whether this gives rise to a material misstatement in the financial statements themselves.

If,based on the work we have performed, we conclude that there is a material misstatement of this other

information, we are required to report that fact.

We have nothing to report in this regard.

Corporate governance statement

The Listing Rules require us to review the Directors’ statement in relation to going concern, longer-term viability

and that part of the Corporate Governance Statement relating to the Parent company’s compliance with the

provisions of the UK Corporate Governance Code specified for our review.

Based on the work undertaken as part of our audit, we have concluded that each of the following elements of the

Corporate Governance Statement is materially consistent with the financial statements or our knowledge obtained

during the audit.

Going concern and

longer-term viability

•

The Directors’ statement with regards to the appropriateness of adopting the

going concern basis of accounting and any material uncertainties identified set out

on page 106; and

•

The Directors’ explanation as to its assessment of the entity’s prospects, the period

this assessment covers and why the period is appropriate set out on page 106.

Other Code

provisions

•

The Directors’ statement on fair, balanced and understandable set out on page 141;

•

The Board’s confirmation that it has carried out a robust assessment of the

emerging and principal risks set out on pages 96 to 105;

•

The section of the Annual Report that describes the review of effectiveness of risk

management and internal control systems set out on pages 96 to 105; and

•

The section describing the work of the Audit & Risk Committee set out on

pages 122 to 125.

Other Companies (Guernsey) Law, 2008 reporting

We have nothing to report in respect of the following matters where the Companies (Guernsey) Law, 2008 requires

us to report to you if, in our opinion:

•

Proper accounting records have not been kept by the parent company; or

•

The Parent Company financial statements are not in agreement with the accounting records; or

•

We have failed to obtain all the information and explanations which, to the best of our knowledge and belief,

arenecessary for the purposes of our audit.

Responsibilities of Directors

As explained more fully in the Responsibility statement of the Directors in respect of the Annual Report and

Financial Statements, the Directors are responsible for the preparation of the financial statements and for being

satisfied that they give a true and fair view, and for such internal control as the Directors determine is necessary

toenable the preparation of financial statements that are free from material misstatement, whether due to fraud

orerror.

In preparing the financial statements, the Directors are responsible for assessing the Group’s and the Parent

Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and

using the going concern basis of accounting unless the Directors either intend to liquidate the Group or the Parent

Company or to cease operations, or have no realistic alternative but to do so.

150 FORESIGHT GROUP HOLDINGS LIMITED Annual Report and Financial Statements FY22

Auditor’s responsibilities for the audit of the financial statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from

material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion.

Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance

with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error

and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the

economic decisions of users taken on the basis of these financial statements.

Extent to which the audit was capable of detecting irregularities, including fraud

Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line

with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud.

The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below:

•

We gained an understanding of the legal and regulatory framework applicable to the Group and the industry in

which it operates, and considered the risk of acts by the Company and its subsidiaries which were contrary to

applicable laws and regulations, including fraud;

•

We considered the significant laws and regulations to be the Companies (Guernsey) Law, 2008, the FCA rules,

theprinciples of the UK Corporate Governance Code and IFRS as adopted by the European Union;

•

We considered compliance with these laws and regulations through discussions held with management, Directors

and the Audit & Risk Committee and reviewed correspondence with regulators and reviewed minutes of Board

meetings to assess how the Group is complying with these laws and regulations;

•

We issued group audit instructions to component auditors to report any instances of fraud as part of their audit and

reviewed their relevant working papers in this regard;

•

We assessed the susceptibility of the financial statements to material misstatement including fraud and considered

the significant fraud risk areas to be revenue recognition which involves management judgement, and is therefore

subject to bias and management override of controls. Our procedures included those set out in the Key audit

matters section above, and in respect of management override, we have tested a risk-based sample of journals back

to supporting documentation; and

•

We also communicated relevant identified laws and regulations and potential fraud risks to all engagement team

members and remained alert to any indications of fraud or non-compliance with laws and regulations throughout

the audit.

Our audit procedures were designed to respond to risks of material misstatement in the financial statements,

recognising that the risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting

one resulting from error, as fraud may involve deliberate concealment by, for example, forgery, misrepresentations

or through collusion. There are inherent limitations in the audit procedures performed and the further removed

non-compliance with laws and regulations is from the events and transactions reflected in the financial statements,

theless likely we are to become aware of it.

A further description of our responsibilities is available on the Financial Reporting Council’s website at:

www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report.

Use of our report

This report is made solely to the Parent Company’s members, as a body, in accordance with Section 262 of the

Companies (Guernsey) Law, 2008. Our audit work has been undertaken so that we might state to the Parent

Company’s members those matters we are required to state to them in an auditor’s report and for no other purpose.

To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Parent

Company and the Parent Company’s members as a body, for our audit work, for this report, or for the opinions we

have formed.

Peter Smith

For and on behalf of BDO LLP, Chartered Accountants and Recognised Auditor

London, UK

11 July 2022

BDO LLP is a limited liability partnership registered in England and Wales (with registered number OC305127).

TO THE MEMBERS OF FORESIGHT GROUP HOLDINGS LIMITED

INDEPENDENT AUDITOR’S REPORT CONTINUED

STRATEGIC REPORT OVERVIEW BUSINESS REVIEW PERFORMANCE AND RISKINTRODUCTION GOVERNANCE FINANCIAL STATEMENTS

FORESIGHT GROUP HOLDINGS LIMITED Annual Report and Financial Statements FY22 151

FOR THE YEAR ENDED 31 MARCH 2022

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

31 March

31 March 2021

2022 as restated

Note £000 £000

Revenue 4 8 6 , 07 1 69,09 8

Cost of sales (5 ,1 0 6) (4 , 6 3 9)

Gross profit 80, 9 65 64 ,459

Administrative expenses 6 (5 4 , 3 9 8) (48,883)

Other operating income 10 250 394

Operating profit 26 , 8 17 1 5 , 970

Finance income 11 2 3

Finance expense 11 (653) (7 1 0)

Fair value gains on investments 16 638 192

Share of post-tax profits of equity accounted joint venture 17 53 26

Gain on business combination 31 1, 012 1 74

Profit on ordinary activities before taxation 2 7, 8 69 1 5,65 5

Tax on profit on ordinary activities 12 (2 ,7 93) (4 8 1)

Profit for the period attributable to Ordinary Shareholders 25 ,07 6 1 5 ,1 74

Other comprehensive income

Items that will or may be reclassified to profit or loss:

Translation differences on foreign subsidiaries (13 8) (29 3)

Total comprehensive income for the period 24 , 938 14 , 88 1

Earnings per share attributable to Ordinary Shareholders

Profit or loss

Basic (£) 13 0.2 3 0.15

Diluted (£) 13 0.2 3 0.15

The notes on pages 157 to 209 form part of this financial information.

Details of the restatement are provided in note 36.

152 FORESIGHT GROUP HOLDINGS LIMITED Annual Report and Financial Statements FY22

AS AT 31 MARCH 2022

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

31 March

31 March 2021

2022 as restated

Note £000 £000

Non-current assets

Property, plant and equipment 14 2,656 3,012

Right-of-use assets 23 8 , 260 9,120

Intangible assets 15 4 ,431 3,012

Investments at FVTPL 16 2 ,781 2, 07 5

Investments in equity accounted joint ventures 17 — 251

Deferred tax asset 25 615 977

Contract costs 18 3 , 976 712

Trade and other receivables 19 3 , 260 3 , 41 1

2 5 , 979 2 2 , 5 70

Current assets

Contract costs 18 57 9 125

Trade and other receivables 19 1 7, 9 4 7 1 6 , 47 0

Cash and cash equivalents 20 54 , 289 39,431

72, 815 56 ,02 6

Assets and liabilities of disposal group classified as held for sale 32 64 64

Current liabilities

Trade and other payables 21 (2 3 , 978) (2 0 , 6 4 4)

Loans and borrowings 22 (66 0) (6 8 8)

Lease liabilities 23 (2 , 3 02) (2 ,1 57)

(26,940) (2 3 , 4 8 9)

Net current assets 45 , 939 32 ,6 01

Non-current liabilities

Trade and other payables 21 (64) (29 5)

Loans and borrowings 22 (3 , 0 3 0) (3, 63 6)

Lease liabilities 23 (8 ,10 6) (9 , 8 62)

Provisions 24 (933) —

Deferred tax liability 25 (1 ,1 9 8) (1 , 5 8 1)

(13 , 33 1) (15 , 3 74)

Net assets 58,587 39,7 97

STRATEGIC REPORT OVERVIEW BUSINESS REVIEW PERFORMANCE AND RISKINTRODUCTION GOVERNANCE FINANCIAL STATEMENTS

FORESIGHT GROUP HOLDINGS LIMITED Annual Report and Financial Statements FY22 153

31 March

31 March 2021

2022 as restated

Note £000 £000

Equity

Share capital 27 — —

Share premium 27 32 ,0 40 32,0 40

Own share reserve 27 (4 5 4) —

Share-based payment reserve 27 481 —

Group reorganisation reserve 27 30 30

Retained earnings 27 26 ,49 0 7, 7 2 7

Total equity 58, 587 3 9 ,797

The financial statements were approved and authorised for issue by the Board of Directors on 11 July 2022 and were

signed on its behalf by:

Gary Fraser Geoffrey Gavey

Chief Financial Officer Director

The notes on pages 157 to 209 form part of this financial information.

Details of the restatements are provided in note 36.

154 FORESIGHT GROUP HOLDINGS LIMITED Annual Report and Financial Statements FY22

FOR THE YEAR ENDED 31 MARCH 2022

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

Own Share-based Group

Share Share share payment re-organisation Retained Total

capital premium reserve reserve reserve earnings equity

£000 £000 £000 £000 £000 £000 £000

At 1 April 2021 — 32 ,0 4 0 — — 3 0 7 ,727 39,7 97

Profit for the period — — — — — 25 , 076 25 ,076

Other comprehensive income — — — — — (1 38) (13 8)

Total comprehensive income — — — — — 24 , 93 8 24 , 93 8

Contributions by and

distributions to owners

Dividends — — — — — (6,175) (6,175)

Purchase of own shares — — (4 5 4) — — — (45 4)

Share-based payments — — — 45 9 — — 459

Deferred tax — — — 22 — — 22

At 31 March 2022 — 32 ,0 40 (45 4) 48 1 30 26 , 49 0 5 8 , 5 87

Own Share-based Group

Share Share share payment re-organisation Retained Total

capital premium reserve reserve reserve earnings equity

£000 £000 £000 £000 £000 £000 £000

At 1 April 2020 1 — — 101 30 15 ,701 1 5 , 8 3 3

Profit for the period — — — — — 1 5 ,17 4 15 ,174

Other comprehensive income — — — — — (2 93) (293)

Total comprehensive income — — — — — 14 , 8 8 1 14, 8 8 1

Contributions by and

distributions to owners

Premium on issue of shares — 35, 0 0 0 — — — — 35 ,0 0 0

Share issue costs — (2 , 9 6 0) — — — — (2, 9 60)

Dividends and distributions

to equity members — — — — — (1 8 , 2 29) (1 8 , 2 2 9)

Share-based payments — — — 35 — — 35

Share buyback (cancellation) — — — — — (1 0) (1 0)

Transfer of share-based payments

to retained earnings on vesting

of Foresight Plans — — — (26) — 26 —

Transfer of share-based payments

to retained earnings on cessation

of Foresight Plan — — — (11 0) — 11 0 —

Premium on redemption of

Preference Shares — — — — — (4 ,752) (4,7 52)

Redemption of Preference Shares (1) — — — — — (1)

At 31 March 2021 — 32 ,0 4 0 — — 30 7,727 3 9,797

The notes on pages 157 to 209 form part of this financial information.

STRATEGIC REPORT OVERVIEW BUSINESS REVIEW PERFORMANCE AND RISKINTRODUCTION GOVERNANCE FINANCIAL STATEMENTS

FORESIGHT GROUP HOLDINGS LIMITED Annual Report and Financial Statements FY22 155

FOR THE YEAR ENDED 31 MARCH 2022

CONSOLIDATED CASH FLOW STATEMENT

31 March

31 March 2021

2022 as restated

Note £000 £000

Cash generated from operations 29,13 0 1 7, 2 6 8

Tax paid (3 , 39 9) ( 1 74)

Other interest paid 11 (4) (7)

Loan interest paid (97) —

Interest on lease liabilities (5 6 4) (621)

Net cash from operating activities 25 ,0 66 16,466

Cash flows from investing activities

Acquisition of property, plant and equipment 14 (39 8) (1 41)

Acquisition of intangible assets 15 (1 71) (4 8)

Acquisition of investments at FVTPL 16 (7 12) (88 1)

Sale of investments at FVTPL 752 230

Proceeds on disposal of fixed assets 3 450

Interest received 11 2 3

Proceeds on disposal of Group entities — 819

Acquisition of subsidiaries 31 (33 9) 2,34 8

Net cash from investing activities (86 3) 2,78 0

Cash flows from financing activities

Dividends and distributions to equity members 28 (6 ,1 75) (18,229)

Share buyback 28 — (1 0)

Shareholder loan repaid — (7 5 0)

FGLLP members’ capital contributions 61 1 ,455

Redemption and premium on redemption of Preference Shares 28 — (4 , 7 5 3)

Purchase of own shares 27 (4 5 4) —

Repayment of lease liabilities (principal) (2 ,15 5) (2, 570)

Repayment of loan liabilities (principal) (62 2) —

Gross proceeds of IPO share issue 27 — 35,000

Costs of IPO share issue 27 — (2 , 9 6 0)

Net cash from financing activities (9, 3 45)

7,183

Net increase in cash and cash equivalents 14, 85 8 26 , 42 9

Cash and cash equivalents at beginning of period 39,431 13 ,0 02

Cash and cash equivalents at end of period 54, 289 39,431

156 FORESIGHT GROUP HOLDINGS LIMITED Annual Report and Financial Statements FY22

FOR THE YEAR ENDED 31 MARCH 2022

CONSOLIDATED CASH FLOW STATEMENT CONTINUED

31 March

31 March 2021

2022 as restated

Note £000 £000

Reconciliation of profit before tax to cash generated from operations

Profit before taxation 2 7, 8 6 9 15 ,655

Gain on business combination (1 ,012) (1 74)

Profit from share in joint venture (53) (2 6)

Fair value gains on investments (6 3 8) (1 92)

Finance costs 11 653 7 10

Finance income 11 (2) (3)

Share-based payment 8 459 35

Depreciation and amortisation 3,485 2,648

Loss/(profit) on disposal of tangible and intangible fixed assets 33 (1 7 0)

Gain on disposal of investments at FVTPL (10 8) —

Foreign currency losses (163) (29 5)

(Increase)/decrease in contract costs (3,7 18) 19

Increase in trade and other receivables (222) (4 , 5 2 6)

Increase in trade and other payables 2 , 5 47 3, 5 87

Total 29 ,13 0

17,268

The notes on pages 157 to 209 form part of this financial information.

Details of the restatements are provided in note 36.

STRATEGIC REPORT OVERVIEW BUSINESS REVIEW PERFORMANCE AND RISKINTRODUCTION GOVERNANCE FINANCIAL STATEMENTS

FORESIGHT GROUP HOLDINGS LIMITED Annual Report and Financial Statements FY22 157

1. Corporate information

Foresight Group Holdings Limited

(the “Company”) is a public limited

company incorporated and domiciled

in Guernsey and whose shares are

publicly traded on the Main Market

of the London Stock Exchange. The

registered office is located at Ground

Floor, Dorey Court, Admiral Park, St

Peter Port, Guernsey GY1 2HT. The

consolidated financial statements

(the “Group financial statements”)

comprise the financial statements

of the Company and its subsidiaries.

Details of subsidiaries are disclosed

in note 16.

The Group is principally involved in

the provision of the management of

infrastructure assets, private equity

investments and OEICs on behalf of

both institutional and retail investors

using ESG-oriented strategies.

Going concern

These financial statements have been

prepared on the going concern basis.

The Directors of the Group have

considered the resilience of the

Group, taking into account its

current financial position and the

principal and emerging risks facing

the business, including the impact

of COVID-19 on global markets and

potential implications for the Group’s

financial performance. The Board

reviewed the Group’s cash flow

forecasts and trading budgets for a

period of at least 12 months from the

date of approval of these accounts,

and concluded that, taking into

account plausible downside scenarios

that could reasonably be anticipated,

the Group will have sufficient funds

to pay its liabilities as they fall due for

that period.

Taking into consideration the impact

of COVID-19 on the wider economic

environment, the forecasts have been

stress tested to ensure that a robust

assessment of the Group’s working

capital and cash requirements has

been performed.

The stress test scenarios adopted

involved severe but plausible

downside scenarios with respect to

the Group’s trading performance.

Downside scenarios included a

material reduction in revenues

through lower fundraising and

deployment and lower valuations.

Worst case scenarios included the

loss of key management contracts

and a terrorist attack on the Shard.

Any mitigating actions available

to protect working capital and

strengthen the balance sheet,

including deferring non-essential

capital expenditure and increased

cost control, were also taken into

account.

In considering the above, the

Directors have formed the view that

the Group will generate sufficient

cash to meet its ongoing liabilities

as they fall due for at least the next

12 months; accordingly, the going

concern basis of preparation has

been adopted.

2a. Basis of preparation

The Group financial statements have

been prepared in accordance with

International Financial Reporting

Standards ("IFRS") as adopted by the

European Union.

The Company has taken advantage

of the exemption in section 244 of

the Companies (Guernsey) Law, 2008

(as amended) not to present its own

individual financial statements or

related notes.

The Group did not implement the

requirements of any other standards

or interpretations that were in

issue; these were not required to

be adopted by the Group for the

year ended 31March 2022. No

other standards or interpretations

have been issued that are expected

to have a material impact on the

Group’s financial statements.

The consolidated financial

statements have been prepared

on a historical cost basis, except

for investments that have been

measured at fair value.

The financial information is presented

in sterling, which is the Company’s

functional currency. All information

is given to the nearest thousand

(except where specified otherwise).

2b. Basis of consolidation

The consolidated financial

statements comprise the financial

statements of the Company and its

subsidiaries as at 31 March 2022.

Control is achieved when the Group

is exposed, or has rights, to variable

returns from its involvement with the

investee and has the ability to affect

those returns through its power over

the investee. Specifically, the Group

controls an investee if, and only if, the

Group has:

•

Power over the investee (i.e.

existing rights that give it the

current ability to direct the

relevant activities of the investee)

•

Exposure, or rights, to variable

returns from its involvement with

the investee

•

The ability to use its power over

the investee to affect its returns

Generally, there is a presumption that

a majority of voting rights results in

control. To support this presumption

and when the Group has less than a

majority of the voting or similar rights

of an investee, the Group considers

all relevant facts and circumstances

in assessing whether it has power

over an investee, including:

•

The contractual arrangement(s)

with the other vote holders of the

investee

•

Rights arising from other

contractual arrangements

•

The Group’s voting rights and

potential voting rights

The Group re-assesses whether or

not it controls an investee if facts and

circumstances indicate that there are

changes to one or more of the three

elements of control.

FOR THE YEAR ENDED 31 MARCH 2022

NOTES TO THE FINANCIAL STATEMENTS

158 FORESIGHT GROUP HOLDINGS LIMITED Annual Report and Financial Statements FY22

FOR THE YEAR ENDED 31 MARCH 2022

NOTES TO THE FINANCIAL STATEMENTS CONTINUED

2b. Basis of consolidation

continued

Consolidation of a subsidiary begins

when the Group obtains control over

the subsidiary and ceases when the

Group loses control of the subsidiary.

Assets, liabilities, income and

expenses of a subsidiary acquired

or disposed of during the year are

included in the consolidated financial

statements from the date the Group

gains control until the date the Group

ceases to control the subsidiary.

Profit or loss and each component of

other comprehensive income (“OCI”)

are attributed to the equity holders

of the parent of the Group. When

necessary, adjustments are made to

the financial statements of subsidiaries

to bring their accounting policies

in line with the Group’s accounting

policies. All intra-group assets and

liabilities, equity, income, expenses

and cash flows relating to transactions

between members of the Group are

eliminated in full on consolidation.

A change in the ownership interest

of a subsidiary, without a loss of

control, is accounted for as an

equitytransaction.

If the Group loses control

overasubsidiary, it derecognises

the related assets (including

goodwill), liabilities, non-controlling

interest and other components

of equity, while any resultant gain

or loss is recognised in profit or

loss. Anyinvestment retained is

recognised at fair value.

3. Accounting policies

This section sets out the accounting

policies of the Group that relate to

the financial statements. Where an

accounting policy is specific to one

note, the policy is described in the

note to which it relates.

The accounting policies have been

applied consistently to all periods

presented within the financial

information.

This section also details new

accounting standards that have been

endorsed in the period and have either

become effective for the financial

period beginning on 1 April 2021 or

willbecome effective in later periods.

New standards, interpretations

and amendments adopted from

1 April 2021

There were no new standards

adopted during the year.

New standards not yet

implemented

There were no standards or

interpretations that were in issue

and required to be adopted by the

Group as at the date of authorisation

of these consolidated financial

statements. No standards or

interpretations have been issued

that are expected to have a material

impact on the Group’s financial

statements.

A. Foreign exchange

Monetary assets and liabilities in

foreign currencies are translated

into sterling at the rates of exchange

ruling at the Statement of Financial

Position date. Transactions in foreign

currencies are translated into sterling

at the rate of exchange ruling at

the date of transaction. Exchange

differences are taken into account

inarriving at the operating result.

The assets and liabilities of Group

entities that have a functional

currency different from the

presentational currency are

translated at the closing rate

at the balance sheet date, with

transactions translated at average

monthly exchange rates. Resulting

exchange differences are recognised

as a separate component of other

comprehensive income and are

recycled to the income statement on

disposal or liquidation of the relevant

branch or subsidiary.

B. Use of judgements

and estimates

The preparation of the financial

statements requires the Directors

to make estimates and assumptions

that affect the reported amounts of

assets and liabilities at the Statement

of Financial Position date, amounts

reported for revenues and expenses

during the year, and the disclosure

of contingent liabilities at the

reportingdate.

However, uncertainty about these

assumptions and estimates could

result in outcomes that require a

material adjustment to the carrying

amount of the assets or liabilities

affected in the future.

Where the estimate or judgement is

specific to one note, the judgement

is described in the note to which it

relates.

Key sources of estimation

uncertainty

The estimates and assumptions

whichhave a significant risk of

causing material adjustment to

the carrying amount of assets

andliabilities are as follows:

•

Share-based payments –

see note 8

•

Recognition and measurement

ofintangible assets – see notes

15 and 31

•

Valuation of investments –

seenote16(a)

Key judgements

These are as follows:

•

Consolidation of VCF Partners

VCF Partners was a general

partnership of which Gary Fraser

and David Hughes were the sole

members and was used to hold

certain of Foresight Group’s

leasehold interests. Soon after

the IPO, these leasehold interests,

together with the other assets and

liabilities of VCF Partners, were

transferred to VCF II LLP.

Despite it being a general

partnership and not a subsidiary,

VCF Partners was considered

to meet the requirements for

consolidation, on the basis that

VCF Partners was judged to be

effectively controlled by the

Company and is therefore included

in the consolidated financial

statements. Following the transfer

of assets and liabilities to VCF II LLP,

VCF Partners has now been closed.

•

Impairment of intangible assets –

see note 15

•

Contract costs – see note 18

•

Deferred tax assets – see note 25

•

IPO costs – see note 27

STRATEGIC REPORT OVERVIEW BUSINESS REVIEW PERFORMANCE AND RISKINTRODUCTION GOVERNANCE FINANCIAL STATEMENTS

FORESIGHT GROUP HOLDINGS LIMITED Annual Report and Financial Statements FY22 159

4. Revenue

Accounting policy:

IFRS 15 establishes a comprehensive framework for determining whether, how much and when revenue is

recognised. The core principle of IFRS 15 is that an entity should recognise revenue to depict the transfer of

promised goods or services to customers in an amount that reflects the consideration to which the entity expects

to be entitled in exchange for those goods or services.

The Group’s revenue is measured based on the consideration specified in a contract with a customer and excludes

amounts collected on behalf of third parties. Revenue represents the fair value of the consideration receivable

in respect of services provided during the period, exclusive of value added taxes. A contract with a customer is

recognised when a contract is legally enforceable by the Group; this will be prior to the commencement of work for

a customer and therefore before any revenue is recognised by the Group. Performance obligations are identified on

a contract-by-contract basis; where contracts are entered into at the same time with the same customer at differing

rates, these may be considered a single contract for the purposes of revenue recognition.

The Group does not provide extended payment terms on its services and therefore no significant financing

components are identified by the Group. Revenue is only recognised on contingent matters from the point

at which it is highly probable that a significant reversal in the amount of cumulative revenue recognised will

not occur.

The principal components of revenue comprise management fees, secretarial fees, Directors’ fees, marketing fees,

arrangement fees and performance incentive fees.

Management fees and most secretarial fees are generally based on a percentage of fund Net Asset Value (“NAV”)

or committed capital as defined in the funds’ Prospectus and/or offering documents, with some secretarial fees

being based on an agreed fixed rate. Directors’ fees are based on a specified fixed fee agreed with the customer.

Management, secretarial and Directors’ fees are recognised over time to the extent that it is probable that there

will be economic benefit and income can be reliably measured. This revenue is recognised over time on the basis

that the customer simultaneously receives and consumes the economic benefits of the provided asset as the Group

performs its obligations.

Marketing fees are based on a rate agreed with the customer and recognised at the point in time when the related

funds have been allotted.

Arrangement fees are based on a set rate agreed with the customer and recognised at the point in time when the

related service obligations have been achieved.

Performance incentive fees are based on the returns achieved over a predetermined threshold as defined in the

funds’ Prospectus or offering documents and are recognised only at the point in time when management have

certainty as to the receipt of such revenue, such that it is highly probable that a significant reversal in the amount

ofrevenue recognised will not occur.

Other income is based on the contract agreed before services are provided and is recognised in line with the

delivery of the services provided.

31 March 31 March

2022 2021

£000 £000

Management fees 70,906 50,245

Secretarial fees 1,413 9,828

Directors’ fees 2,506 2,306

Recurring fees 74,825 62,379

Marketing fees 5,046 2,841

Arrangement fees 2,964 3,858

Performance incentive fees 3,232 —

Other income 4 20

86,071 69,098

160 FORESIGHT GROUP HOLDINGS LIMITED Annual Report and Financial Statements FY22

FOR THE YEAR ENDED 31 MARCH 2022

NOTES TO THE FINANCIAL STATEMENTS CONTINUED

4. Revenue continued

The timing of revenue is as follows:

31 March 31 March

2022 2021

£000 £000

Timing of transfer of goods and services:

Point in time 11,246 6,719

Over time 74,825 62,379

86,071 69,098

Contract balances are as follows:

31 March 31 March

2022 2021

Contract Contract

liabilities liabilities

£000 £000

At beginning of period (541) (73)

Amounts included in contract liabilities that were recognised as revenue during the period 541 73

Cash received in advance of performance and not recognised as revenue during the period (134) (541)

At end of period (134) (541)

The timing of revenue recognition, billings and cash collections results in either trade receivables, accrued income or

deferred income in the Statement of Financial Position. For recurring fees, amounts are billed either in advance or in

arrears pursuant to a management or advisory agreement. The contract liabilities above reflect the deferred income in

trade and other payables.

5. Business segments

Accounting policy:

Segment information is provided based on the operating segments which are reviewed by the Executive

Committee (“Exco”), which is considered to be the Chief Operating Decision Maker. These operating segments,

which comprise Infrastructure, Private Equity and Foresight Capital Management (“FCM”) are aggregated if

they meet certain criteria. Segment results include items directly attributable to a segment as well as those that

can be allocated on a reasonable basis. No disclosure is made for net assets/liabilities as these are not reported

by segment to Exco.

Management monitors the performance and strategic priorities of the business from a business unit (“BU”) perspective,

and in this regard has identified the following three key “reportable segments”: Infrastructure, Private Equity and FCM.

FCM had previously been included within Infrastructure but, as reported in the Business Review in the Annual Report

for the year ended 31 March 2021, from FY22 onwards it is to be treated as a separate business unit. Accordingly,

segmental revenue has been re-presented for the year ended 31 March 2021.

FCM commenced in 2017 and had FUM of £1.1 billion at 31 March 2021 which had grown further to £1.6 billion at

31March 2022.

The Group’s senior management assesses the performance of the operating segments based on revenue.

Revenue is measured in a manner consistent with that in the income statement. Segmental revenue is set out below:

31 March 31 March

2022 2021

£000 £000

Infrastructure 50,753 43,392

Private Equity 23,874 18,225

Foresight Capital Management 11,444 7,481

86,071 69,098

STRATEGIC REPORT OVERVIEW BUSINESS REVIEW PERFORMANCE AND RISKINTRODUCTION GOVERNANCE FINANCIAL STATEMENTS

FORESIGHT GROUP HOLDINGS LIMITED Annual Report and Financial Statements FY22 161

Revenue by region is summarised below:

31 March 31 March

2022 2021

£000 £000

United Kingdom 78,562 65,999

Italy 778 1,177

Luxembourg 5,312 676

Spain 568 533

Australia 851 713

86,071 69,098

In accordance with IFRS 8 paragraph 34, the Group has a single customer with revenues which amount to 10% or more

of Group revenue. Total revenues from this customer in FY22 were £23,555,000 of which £19,147,000 was attributable

to Infrastructure, £3,225,000 to Private Equity and £1,183,00 to FCM.

Non-current assets (excluding deferred tax assets, contract costs and trade and other receivables) by region are

summarised below:

31 March 31 March

2022 2021

£000 £000

UK 14,016 15,397

Italy 2,021 808

Luxembourg 1,521 778

Spain 566 486

Australia 4 1

18,128 17,470

The Statement of Financial Position is reported to the Board on a single segment basis. No further segmental

information is provided as this would not aid strategic and financial management decisions.

162 FORESIGHT GROUP HOLDINGS LIMITED Annual Report and Financial Statements FY22

FOR THE YEAR ENDED 31 MARCH 2022

NOTES TO THE FINANCIAL STATEMENTS CONTINUED

6. Administrative expenses

Accounting policy:

The Group’s administrative expenses are recognised as the services are received by the Group. Staff costs are the

largest component of the Group’s operating costs and include salaries and wages, together with the cost of other

benefits provided to staff such as pensions and bonuses.

31 March 2021

2022 as restated

£000 £000

Staff costs 35,395 33,751

Depreciation and amortisation 3,485 2,648

Legal and professional 6,067 5,984

Other administration costs 9,451 6,500

54,398 48,883

Details of the restatement are provided in note 36.

Other administrative costs mainly relate to irrecoverable VAT, computer maintenance, conferences, minor capital

purchases written off, bank charges and sundries.

Specific administrative expenses are as follows:

31 March 31 March

2022 2021

£000 £000

Auditor’s remuneration 587 419

Net foreign exchange gains (222) (251)

Low-value and short-term lease expenses 117 241

Bad debt write-offs 138 112

Loss/(profit) on disposal of fixed assets 33 (170)

Auditor’s remuneration is further disclosed as follows:

31 March 31 March

2022 2021

£000 £000

Audit services

Statutory audit – Company 77 124

– Subsidiaries 238 109

Total audit services 315 233

Non-audit services

Regulatory assurance services 34 13

Other assurance services 133 196

Other services 105 35

Total non-audit services 272 244

Total audit and non-audit services 587 477

In FY21, total auditor’s remuneration was £477,000 of which £419,000 was expensed in the Statement of

Comprehensive Income and £57,500 was taken to share premium. This was due to the attribution of IPO costs

between the issuing and listing of shares (see note 27) as £115,000 of auditor’s remuneration related to interim audit

services specifically for the IPO.

STRATEGIC REPORT OVERVIEW BUSINESS REVIEW PERFORMANCE AND RISKINTRODUCTION GOVERNANCE FINANCIAL STATEMENTS

FORESIGHT GROUP HOLDINGS LIMITED Annual Report and Financial Statements FY22 163

Non-audit services included the following:

•

Regulatory assurance services: These services are for CASS assurance audits for Foresight Group LLP and PiP

Manager Limited

•

Other assurance services: These services are for the ISAE 3402 assurance report on the internal controls of Foresight

Group LLP, in FY22 the interim review of the Half-year Report and in FY21 the interim non-statutory audit work in

relation to the IPO

•

Other services: These services are in respect of an offer for new shares in Foresight VCT plc, Foresight Enterprise

VCT plc and Foresight Solar & Technology VCT (FY22 and FY21)

7. Staff costs and Directors’ remuneration

The average number of employees was:

31 March 31 March

2022 2021

Number Number

Operations 135 135

Sales and Marketing 46 40

Administration 70 58

251 233

Their aggregate remuneration comprised:

31 March 31 March

2022 2021

£000 £000

Wages and salaries 29,556 26,666

Social security costs 2,744 2,380

Pension costs 608 601

Other staff costs 2,028 1,323

34,936 30,970

Distributions — 2,746

Share-based payments (see note 8) 459 35

Total staff costs 35,395 33,751

Details regarding the total remuneration paid to Directors is disclosed in the Remuneration Committee Report

(see pages 126 to 136).

164 FORESIGHT GROUP HOLDINGS LIMITED Annual Report and Financial Statements FY22

FOR THE YEAR ENDED 31 MARCH 2022

NOTES TO THE FINANCIAL STATEMENTS CONTINUED

8. Share-based payments

Accounting policy:

The Group engages in share-based payment transactions in respect of services receivable from certain employees

by granting the right to either shares or options over shares, subject to certain vesting conditions and exercise

prices. These have been accounted for as equity-settled share-based payments.

The fair value of the awards granted in the form of shares or share options is recognised as an expense over the

appropriate performance and vesting period. The corresponding credit is recognised in retained earnings within

total equity. The fair value of the awards is calculated using an option pricing model, the principal inputs being

the market value on the date of award and an adjustment for expected and actual levels of vesting which includes

estimating the number of eligible employees leaving the Group and the number of employees satisfying the relevant

performance conditions. Shares and options vest on the occurrence of a specified event under the rules of the

relevant plan.

Estimation uncertainty and judgements:

The Group’s Performance Share Plan allows for the grant of nil cost options with vesting dependent on the

performance of the Group and continued service by the participant. The first grant of options under the plan was

made on 6 September 2021 as approved by the Remuneration Committee. The number of options awarded totalled

1,071,830 and have been fair valued using a Monte-Carlo simulation and appropriate retention rate % based on

historical evidence. The assumptions used in the Monte-Carlo simulation are described below.

31 March 31 March

2022 2021

£000 £000

Performance Share Plan 299 —

Share Incentive Plan 160 —

Foresight Plan — 35

459 35

Performance Share Plan

The Remuneration Committee approved the implementation of the Performance Share Plan (“PSP”) during the

year.Options are granted under the plan for no consideration, carry no dividend or voting rights and are linked to an

absolute total shareholder return (“TSR”) of 6% compound growth per annum over a three year period. Theabsolute

TSR condition vests over a range as set out in the Remuneration Committee Report. The exercise price is £nil.

TheGroup is allowed to issue new shares to satisfy the share schemes which must not exceed 10% of the issued share

capital in any rolling ten year period. The Group’s position against the dilution limits at 31 March 2022 since Admission

was 1%.

Details of movements in the number of shares are as follows:

31 March 2022 31 March 2021

Average Average

exercise exercise

Number of price per Number of price per

shares share option shares share option

granted £000 granted £000

At the beginning of period — — — —

Granted 1,071,830 — — —

Vested — — — —

Extinguished — — — —

Awards outstanding at end of period 1,071,830 — — —

No options expired during the periods covered by the above table.

STRATEGIC REPORT OVERVIEW BUSINESS REVIEW PERFORMANCE AND RISKINTRODUCTION GOVERNANCE FINANCIAL STATEMENTS

FORESIGHT GROUP HOLDINGS LIMITED Annual Report and Financial Statements FY22 165

Share options outstanding at the end of the year have the following expiry dates and exercise prices:

Share options Share options

Exercise 31 March 31 March

Grant date Expiry date price 2022 2021

4 September 2022 31 July 2024 — 1,071,830 —

Weighted average remaining contractual

life of options outstanding at end of period 2.33 years —

Fair value of options granted

The assumptions used in the Monte-Carlo simulation were as follows:

•

Starting share price of 378.4 pence (the three month average share price of the Company on the date of grant)

•

Annual volatility of 40% (based on volatility of share price from IPO to grant date)

•

Vesting period of three years

•

Holding period of two years with associated 30% deduction for lack of marketability (based on empirical studies)

•

Exercise price of 0 pence

•

Risk-free rate of 1% per annum which has been used as a discount factor (based on government bond yields)

•

Annual dividend of 14 pence per annum

The simulation based on these assumptions resulted in a fair value of 143.83 pence per option.

Share Incentive Plan

Under the Foresight Share Incentive Plan (“SIP”), for each one partnership share that an employee buys, Foresight

offers two free matching shares. In each tax year, employees can buy up to £1,800 or 10% of salary (whichever is

lower) of partnership shares from their pre-tax salary. If an employee leaves the Group, any matching shares held

for less than three years will be withdrawn, i.e. the vesting period of the matching shares is three years with the

performance condition of continuous service. The SIP shares are held in trust by Yorkshire Building Society (the SIP

Trustee). Voting rights are exercised by the SIP Trustee on receipt of participants’ instructions.

As the SIP options have a zero strike price and the participant is entitled to dividends during the vesting period, the

fair value of the award is indistinguishable from the share price. Therefore, the share price on the award date is used

when calculating the share-based payment expense.

At 31 March 2022, the number of matching shares purchased for £454,000 was 107,769. An additional 45,000 shares

were transferred into trust from Foresight Guernsey Limited (see IPO Prospectus) so that the total matching shares

held in trust was 152,769.

166 FORESIGHT GROUP HOLDINGS LIMITED Annual Report and Financial Statements FY22

FOR THE YEAR ENDED 31 MARCH 2022

NOTES TO THE FINANCIAL STATEMENTS CONTINUED

8. Share-based payments continued

Foresight Plan

The Foresight Plan was introduced in 2014 and provided for the grant of shares to members of staff. Shares granted

under the Foresight Plan vested after the members of staff had reached an uninterrupted period of service of ten

years with Foresight Group (or any of its subsidiaries). Shares granted under the Foresight Plan were accounted for as

equity-settled. The Foresight Plan ceased in February 2021.

The equity-settled payments below represent the share-based payments related to the Foresight Plan. The valuation

attributed to the payments was on an EBITDA market multiple basis; this did not take into consideration any future

dividends or other features of equity instruments in determining this valuation.

Total expense for each year in which shares were granted (excluding national insurance) was as follows:

31 March 31 March

2022 2021

Year of grant £ £

2014 — —

2015 — 6,589

2016 — —

2017 — 587

2018 — 5,721

2019 — 7,577

2020 — 14,752

2021 — —

Total Foresight share-based payments expense reported in comprehensive income — 35,226

Unvested shares outstanding under the Foresight Plan were as follows:

31 March 2022 31 March 2021

Weighted Weighted

Number of average Number of average

shares share price shares share price

granted £ granted £

At the beginning of period — — 45,605 6

Granted — — 11,654 4

Vested — — (1,830) (12)

Extinguished — — (55,429) (4)

Awards outstanding at end of period — — — —

STRATEGIC REPORT OVERVIEW BUSINESS REVIEW PERFORMANCE AND RISKINTRODUCTION GOVERNANCE FINANCIAL STATEMENTS

FORESIGHT GROUP HOLDINGS LIMITED Annual Report and Financial Statements FY22 167

9. Core EBITDA

The Group uses Core EBITDA and Core EBITDA pre share-based payments as two of its key metrics to measure

performance because it views these as the closest profitability number comparable to the Group’s recurring revenue

model (i.e. a cash profit number after removing/adjusting for any one-offs, both positive and negative). Core EBITDA pre

share-based payments is shown as the Group considers that there is no cash alternative to the share-based payments and

due to their uncontrollable nature. Core EBITDA and Core EBITDA pre share-based payments may not be comparable to

other similarly titled measures used by other companies and they have limitations as an analytical tool and should not be

considered in isolation or as a substitute for analysis of the Group’s operating results as reported under IFRS.

The specific items excluded from Core EBITDA and Core EBITDA pre share-based payments are non-underlying

items. Non-underlying items are non-trading or one-off items disclosed separately below, where the quantum, nature

or volatility of such items are considered by the Directors to otherwise distort the underlying performance of the

Group. The Group has assessed that the following items are non-underlying items for the purposes of calculating Core

EBITDA and Core EBITDA pre share-based payments:

•

Non-operational legal costs. These are costs related to a series of proposed corporate transactions over the period

and redundancy costs relating to a restructuring of the business. The corporate transaction costs relate to

professional and other costs incurred in preparing the Group for an IPO and therefore are not considered to be

related to the Group’s ongoing business operations. Non-operational legal costs of £2.7 million in the financial year

ended 31 March 2021 related to IPO costs

•

Distributions made to members classified as remuneration expenses under IFRS have been added back as these are

considered to be equity transactions. These expenses were related to distribution of the Group profit. They were

variable as they were dependent on Group profit and also the timing of when the distributions were made

•

Staff advances expensed have been added back as these are not deemed to reflect the core underlying

performance of the business

•

Other operating income as per note 10 below which is not expected to recur. This relates to Shirebrook development

fees and grant income from a government support programme introduced in response to the COVID-19

globalpandemic

•

Profits or losses on disposal of fixed assets are added back as these are classed as non-recurring

•

Profits or losses arising on acquisition of subsidiaries are added back as these are classed as non-recurring

•

All depreciation and amortisation costs are added back

•

All financing and taxation costs are added back

A reconciliation of retained profit to Core EBITDA and Core EBITDA pre share-based payments is set out below:

31 March 31 March

2022 2021

£000 £000

Net profit after other comprehensive income 24,938 14,881

Add back depreciation and amortisation 3,485 2,649

Add back non-operational staff costs

Distributions — 2,746

Staff advances expensed 580 440

Other 148 —

Add back non-operational legal costs — 2,744

Loss/(profit) on disposal of tangible and intangible fixed assets 33 (170)

Gain on business combination (1,012) (174)

Deduct other operating income (250) (394)

Add back financing 651 707

Add back tax 2,793 481

Core EBITDA 31,366 23,910

Share-based payments 459 —

Core EBITDA pre share-based payments 31,825 23,910

168 FORESIGHT GROUP HOLDINGS LIMITED Annual Report and Financial Statements FY22

NOTES TO THE FINANCIAL STATEMENTS CONTINUED

FOR THE YEAR ENDED 31 MARCH 2022

10. Other operating income

Accounting policy:

Government grants are recognised where there is reasonable assurance that the grant will be received and all

attached conditions will be complied with. When the grant relates to an expense item, it is recognised as income

on a systematic basis over the periods that the related costs, for which it is intended to compensate,

are expensed. When the grant relates to an asset, it is recognised as income in equal amounts over the expected

useful life of the related asset.

31 March 31 March

2022 2021

£000 £000

Fees arising from the Shirebrook development 250 348

Grant income — 46

250 394

Fees arising from the Shirebrook development

The Group is managing the development of a reserve power plant site in Shirebrook, Derbyshire on behalf of the

Foresight ITS product. Development fees have been accounted for as other operating income when it is virtually

certain that relevant contractual conditions have been met. At 31 March 2022, total fees of £2.4 million had been

recognised, which reflects total contractual fees on the development.

Grant income

The Group applied for a government support programme introduced in response to the COVID-19 global pandemic

in the year ended 31 March 2021. It related to the payroll of the Group’s employees and the Group does not have any

unfulfilled obligations relating to this programme.

STRATEGIC REPORT OVERVIEW BUSINESS REVIEW PERFORMANCE AND RISKINTRODUCTION GOVERNANCE FINANCIAL STATEMENTS

FORESIGHT GROUP HOLDINGS LIMITED Annual Report and Financial Statements FY22 169

11. Finance income and expense

Accounting policy:

Finance income

Finance income comprises interest receivable on cash deposits. Interest income is recognised in profit or loss as

it accrues using the effective interest method.

Finance costs

Finance costs comprise interest payable on leases, borrowings and direct issue costs and are expensed in the

period in which they are incurred.

31 March 31 March

2022 2021

£000 £000

Finance income

Bank interest receivable 2 3

Total finance income 2 3

Finance expenses

Other interest payable 4 7

Loan interest (accrued) 85 82

Interest on lease liabilities 564 621

Total finance expense on financial liabilities measured at amortised cost 653 710

Net finance expense recognised in the Statement of Comprehensive Income (651) (707)

The above finance income and expense includes the following in respect of assets (liabilities) not at fair value through

profit or loss:

31 March 31 March

2022 2021

£000 £000

Total finance income on financial assets 2 3

Total finance expense on financial liabilities (653) (710)

(651) (707)

170 FORESIGHT GROUP HOLDINGS LIMITED Annual Report and Financial Statements FY22

FOR THE YEAR ENDED 31 MARCH 2022

NOTES TO THE FINANCIAL STATEMENTS CONTINUED

12. Taxation

Accounting policy:

Current tax

The tax expense represents the current tax relating to the corporate subsidiaries. The current tax expense is

based on taxable profits of these companies for the year. Taxable profit differs from net profit as reported in

the Statement of Comprehensive Income because it excludes items of income or expense that are taxable or

deductible in other years and it further excludes items that are never taxable or deductible. The current tax liability

is calculated using tax rates that have been enacted or substantively enacted by the Statement of Financial Position

date. Current tax assets and liabilities are offset only when there is a legally enforceable right to set off the amounts

and the Group intends to either settle on a net basis or realise the asset and settle the liability simultaneously.

A provision is recognised for those matters for which the tax determination is uncertain, but it is considered

probable that there will be a future outflow of funds to a tax authority. The provisions are measured at the

best estimate of the amount expected to become payable. The assessment is based on the judgement of tax

professionals within the Group supported by previous experience in respect of such activities and in certain cases

based on specialist independent tax advice.

Deferred tax

Deferred tax is recognised on differences between the carrying amount of assets and liabilities in the financial

statements and the corresponding tax bases used in the computation of taxable profit and is accounted for using

the Statement of Financial Position liability method. Deferred tax is calculated using tax rates that have been

enacted or substantively enacted by the reporting date. Deferred tax is charged or credited to the statement

of profit or loss, except when it relates to items charged or credited to other comprehensive income or directly

to equity, in which case the deferred tax is also dealt with in the Statement of Other Comprehensive Income or

directlyin equity. See note 25.

31 March 31 March

2022 2021

£000 £000

Current tax

UK corporation tax 3,098 —

Foreign taxation 66 111

Adjustments in respect of prior periods (foreign tax) 5 134

Total current tax charge 3,169 245

Deferred tax

Origination and reversal of temporary differences (376) 236

Total deferred tax (376) 236

Tax on profit on ordinary activities 2,793 481

Total tax expense

From above 2,793 481

Share of tax expense of equity accounted joint ventures 21 14

2,814 495

STRATEGIC REPORT OVERVIEW BUSINESS REVIEW PERFORMANCE AND RISKINTRODUCTION GOVERNANCE FINANCIAL STATEMENTS

FORESIGHT GROUP HOLDINGS LIMITED Annual Report and Financial Statements FY22 171

The effective tax rate has varied through the historical period, and is explained as:

31 March 31 March

2022 2021

£000 £000

Profit for the year 25,076 15,174

Add back total tax 2,814 495

Profit before all tax 27,890 15,669

Profit before tax at 19% 5,299 2,977

Profits not assessable to corporation tax (762) (405)

Profit share allocation from partnership funds 654 (78)

Unrecognised deferred tax 350 (446)

Adjustments to previous periods 5 134

Differences on overseas tax rate (4,126) (2,213)

Remeasurement of deferred tax 150 —

Expenses not deductible for tax purposes 1,482 579

Other – share based payments (46) (20)

Gain on business combination (192) (33)

Total tax charge 2,814 495

The Company is resident for taxation purposes in Guernsey and its income is subject to income tax in Guernsey,

presently at a rate of 0% per annum. The tax reconciliation for the Group has been prepared using the current UK

corporation tax rate of 19%, as most of the Group’s trading activities are carried out in the UK.

172 FORESIGHT GROUP HOLDINGS LIMITED Annual Report and Financial Statements FY22

FOR THE YEAR ENDED 31 MARCH 2022

NOTES TO THE FINANCIAL STATEMENTS CONTINUED

13. Earnings per share

Accounting policy:

Basic earnings per share is calculated by dividing the profit attributable to the owners of the parent company

by the weighted average number of shares in issue during the period less the weighted average number of own

shares held (see note 27).

Diluted earnings per share is calculated by dividing the profit attributable to the owners of the parent company

by the weighted average number of shares for the purposes of the basic earnings per share plus the weighted

average number of shares that would be issued on the conversion of dilutive potential Ordinary Shares into

Ordinary Shares (see note 8 for Performance Share Plan).

31 March 31 March

2022 2021

£000 £000

Earnings

Earnings for the purposes of basic earnings per share,

being profit attributable to the owners of the parent company 25,076 15,174

31 March 31 March

2022 2021

‘000 ‘000

Number of shares

Weighted average number of shares in issue during the period 108,333 101,780

Less time apportioned own shares held (133) —

Weighted average number of Ordinary Shares for the purpose of basic earnings per share 108,200 101,780

Add back weighted average number of dilutive potential shares 608 —

Weighted average number of Ordinary Shares for the purpose of diluted earnings per share 108,808 101,780

Earnings per share Group (Basic) (£) 0.23 0.15

Earnings per share Group (Diluted) (£) 0.23 0.15

14. Property, plant and equipment

Accounting policy:

Property, plant and equipment are stated at cost less accumulated depreciation and any recognised impairment

loss. Depreciation is provided on all property, plant and equipment at rates calculated to write off the cost less

estimated residual value of each asset evenly using a straight-line method over its estimated useful life (charged

through administrative expenses) as follows:

•

Fixtures and fittings:

•

Office equipment over ten years

•

Computer equipment over five years

•

Short leasehold property over term of lease

•

Long leasehold flat over term of lease

•

Motor vehicles over four years

The carrying values of items of property, plant and equipment are reviewed for impairment when events or

changes in circumstances indicate that the carrying value may not be recoverable.

The gain or loss arising on the disposal or retirement of an asset is determined as the difference between the sales

proceeds and the carrying amount of the asset and is recognised in the Statement of Comprehensive Income.

STRATEGIC REPORT OVERVIEW BUSINESS REVIEW PERFORMANCE AND RISKINTRODUCTION GOVERNANCE FINANCIAL STATEMENTS

FORESIGHT GROUP HOLDINGS LIMITED Annual Report and Financial Statements FY22 173

Fixtures, Short Long

fittings and leasehold leasehold Motor

equipment property flat vehicles Total

£000 £000 £000 £000 £000

Cost

At 1 April 2021 341 5,385 — 15 5,741

Additions 308 90 — — 398

Foreign exchange movement (2) (1) — — (3)

Disposals (193) — — — (193)

At 31 March 2022 454 5,474 — 15 5,943

Depreciation

At 1 April 2021 193 2,531 — 5 2,729

Depreciation charge for the year 172 576 — 3 751

Disposals (191) — — — (191)

Foreign exchange movement (1) (1) — — (2)

At 31 March 2022 173 3,106 — 8 3,287

Net book value at 31 March 2022 281 2,368 — 7 2,656

Fixtures, Short Long

fittings and leasehold leasehold Motor

equipment property flat vehicles Total

£000 £000 £000 £000 £000

Cost

At 1 April 2020 322 5,364 326 15 6,027

Additions 113 28 — — 141

Foreign exchange movement — (7) — — (7)

Disposals (94) — (326) — (420)

At 31 March 2021 341 5,385 — 15 5,741

Depreciation

At 1 April 2020 139 1,960 20 2 2,121

Depreciation charge for the year 145 575 26 3 749

Disposals (93) — (46) — (139)

Foreign exchange movement 2 (4) — — (2)

At 31 March 2021 193 2,531 — 5 2,729

Net book value at 31 March 2021 148 2,854 — 10 3,012

174 FORESIGHT GROUP HOLDINGS LIMITED Annual Report and Financial Statements FY22

FOR THE YEAR ENDED 31 MARCH 2022

NOTES TO THE FINANCIAL STATEMENTS CONTINUED

15. Intangible assets

Accounting policy:

Intangible assets in respect of customer contracts (acquired) reflect the fair value of the investment management

contracts obtained, which is equal to the present value of the earnings they are expected to generate. This is on the

basis that it is probable that future economic benefits attributable to the investment management contracts will

flow to the Group and the fair value of the intangible asset can be measured reliably.

Computer software (internally generated) represents software licences and development costs to bring software

into use. Costs associated with developing or maintaining computer software programmes that do not meet the

capitalisation criteria under IAS 38 are recognised as an expense as incurred.

Amortisation is provided, where material, at rates calculated to write off the cost, less estimated residual value,

of each asset evenly using a straight-line method over its estimated useful life (charged through administrative

expenses) as follows:

•

Customer contracts over remaining term of investment management contract

•

Computer software over three to four years

The carrying values of customer contracts (acquired) and computer software (internally generated) are reviewed

for impairment when events or changes in circumstances indicate that the carrying value may not be recoverable.

Ifany such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the

impairment loss (if any). Where the asset does not generate cash flows that are independent from other assets, the

Group estimates the recoverable amount of the cash-generating unit to which the asset belongs. Recoverable amount

is the higher of fair value less costs to sell and value in use. If the recoverable amount of an asset is estimated to be less

than its carrying amount, the carrying amount of the asset is reduced to its recoverable amount.

An impairment loss is recognised as an expense in the Statement of Comprehensive Income immediately.

The gain or loss arising on the disposal or retirement of an asset is determined as the difference between the sales

proceeds and the carrying amount of the asset and is recognised in Statement of Comprehensive Income.

Estimation uncertainty and judgements:

Acquisition of FV Solar Lab S.R.L.

The valuation of investment management contracts represents an estimation of the present value of the earnings

that those contracts were expected to generate at the completion date. The net present value was calculated using

a discounted profitability model, with reference to the projected profitability of the fund over three years based

on internal forecasts and a weighted average cost of capital (“WACC”) of 7% using various inputs to reflect the

operations which are principally based in Italy.

A 1% increase in the WACC would result in a decrease in the intangible asset recognised by £26,000; likewise, a 1%

decrease would result in an increase of £27,000. The intangible asset is amortised over three years. An impairment

review was undertaken by reference to the ongoing revenue to which the investment management contracts relate.

There were no indicators of impairment of the asset at the reporting date.

Acquisition of PiP Manager Limited

The valuation of investment management contracts represents an estimation of the present value of the earnings

that those contracts were expected to generate at the completion date. The net present value was calculated using

a discounted profitability model, with reference to the projected profitability of the fund over 20 years based on

internal forecasts and a weighted average cost of capital (“WACC”) of 13.75% using various inputs to reflect the

operations which are principally based in the UK.

A 1% increase in the WACC would result in a decrease in the intangible asset recognised by £123,000; likewise, a 1%

decrease would result in an increase of £133,000. The intangible asset is amortised over 20 years. An impairment

review was undertaken by reference to the AUM of the funds to which the investment management contracts relate.

There were no indicators of impairment of the asset at the reporting date.

Impairment of intangible assets

In determining whether there are indicators of impairment of the Group’s intangible assets, the Directors take into

consideration various factors including the economic viability and expected future financial performance of the

asset and, when it relates to the intangible assets arising from investment management contracts, the expected

future performance of the contract acquired.

STRATEGIC REPORT OVERVIEW BUSINESS REVIEW PERFORMANCE AND RISKINTRODUCTION GOVERNANCE FINANCIAL STATEMENTS

FORESIGHT GROUP HOLDINGS LIMITED Annual Report and Financial Statements FY22 175

Computer Customer

software contracts Total

£000 £000 £000

Cost

At 1 April 2021 479 2,914 3,393

Additions 171 — 171

Business combinations — 1,679 1,679

Disposals — (35) (35)

At 31 March 2022 650 4,558 5,208

Amortisation/impairment

At 1 April 2021 289 92 381

Charge for the year 105 292 397

Disposals — (1) (1)

At 31 March 2022 394 383 777

Net book value at 31 March 2022 256 4,175 4,431

Computer Customer

software contracts Total

£000 £000 £000

Cost

At 1 April 2020 663 — 663

Additions 13 35 48

Business combinations — 2,879 2,879

Disposals (197) — (197)

At 31 March 2021 479 2,914 3,393

Amortisation/impairment

At 1 April 2020 391 — 391

Charge for the year 95 92 187

Disposals (197) — (197)

At 31 March 2021 289 92 381

Net book value at 31 March 2021 190 2,822 3,012

The table below shows the carrying amount assigned to each component of customer contracts and the remaining

amortisation period.

Carrying Remaining

value amortisation

£000 period

Acquisition of PiP Manager Limited (see note 31) 2,644 14 years

Acquisition of FV Solar Lab S.R.L. (see note 31) 1,531 2.5 years

4,175

The remaining element of intangible assets relates to capitalised software costs, which are amortised over five years.

The amortisation charges above are recognised within administrative expenses in the Statement of Comprehensive

Income.

176 FORESIGHT GROUP HOLDINGS LIMITED Annual Report and Financial Statements FY22

FOR THE YEAR ENDED 31 MARCH 2022

NOTES TO THE FINANCIAL STATEMENTS CONTINUED

16(a). Investments at FVTPL

Accounting policy:

Investments at FVTPL are recognised initially at fair value, which is normally the transaction price. Subsequent

to initial recognition, investments at FVTPL are measured at fair value with changes recognised in the Statement

of Comprehensive Income.

Estimation uncertainty and judgements:

Fair value is calculated as the share of net assets of the underlying fund to which the investment relates.

The underlying fund values its investments in accordance with International Private Equity and Venture Capital

(“IPEV”) Valuation Guidelines (December 2018 and further COVID-19 guidance for March 2020) developed by the

British Venture Capital Association and other organisations.

While valuations of investments are based on assumptions that the Directors consider are reasonable under the

circumstances, the actual realised gains and losses will depend on, amongst other factors, future operating results,

the value of the assets and market conditions at the time of disposal, any related transaction costs and the timing

and manner of sale, all of which may ultimately differ significantly from the assumptions on which the valuations were

based. Further details on the key assumptions made and a sensitivity analysis are set out in note 30.

31 March 31 March

2022 2021

£000 £000

At beginning of period 2,075 1,233

Additions 712 881

Fair value movements 638 192

Sales proceeds (617) (231)

Disposal (27) —

At end of period 2,781 2,075

Investments comprise investments in underlying funds which are measured at fair value.

16(b). Investments in subsidiaries

The Company has investments in the following undertakings:

Country of

Entity Domicile Type registration Interest

Subsidiary undertakings

Foresight Solar Australia (UK) Limited UK Company England & Wales 100%

FGB S.à r.l. Luxembourg Company Luxembourg 100%

Foresight Group Holdings (UK) Limited UK Company England & Wales 100%

Foresight Asset Management Limited UK Company England & Wales 100%

Foresight Fund Managers Limited UK Company England & Wales 100%

Foresight Group (SK) Limited UK Company England & Wales 100%

Pinecroft Corporate Services Limited UK Company England & Wales 100%

Foresight Environmental GP Co. Limited UK Company Scotland 100%

Foresight NF GP Limited UK Company England & Wales 100%

Foresight Environmental FP GP Co. Limited UK Company Scotland 100%

Foresight NF FP GP Limited UK Company England & Wales 100%

Foresight Company 1 Limited UK Company England & Wales 100%

Foresight Company 2 Limited UK Company England & Wales 100%

Foresight Regional Investment General Partner LLP UK LLP Scotland 100%

Foresight Impact Midlands Engine GP LLP UK LLP Scotland 100%

STRATEGIC REPORT OVERVIEW BUSINESS REVIEW PERFORMANCE AND RISKINTRODUCTION GOVERNANCE FINANCIAL STATEMENTS

FORESIGHT GROUP HOLDINGS LIMITED Annual Report and Financial Statements FY22 177

Country of

Entity Domicile Type registration Interest

Foresight Regional Investment II General Partner LLP UK LLP Scotland 100%

Foresight Group Equity Finance (SGS) GP LLP UK LLP Scotland 100%

NI Opportunities GP LLP UK LLP Scotland 100%

Foresight Legolas Founder Partner GP LLP UK LLP Scotland 100%

Foresight Regional Investment III General Partner LLP UK LLP Scotland 100%

AIB Foresight SME Impact General Partner LLP UK LLP Scotland 100%

Foresight West Yorkshire Business Accelerator

General Partner LLP UK LLP Scotland 100%

AIB Foresight SME Impact Fund GP Limited Ireland Company Ireland 100%

Foresight Infra Hold Co Limited UK Company England & Wales 100%

PiP Manager Limited UK Company England & Wales 100%

PiP Multi-Strategy Infrastructure Limited UK Company England & Wales 100%

PiP Multi-Strategy Infrastructure (Scotland) Limited UK Company England & Wales 100%

PiP Multi-Strategy Infrastructure GP LLP UK LLP England & Wales 100%

Foresight Group CI Limited Guernsey Company Guernsey 100%

Foresight European Solar Fund GP Ltd Jersey Company Jersey 100%

Foresight Holdco 2 Limited UK Company England & Wales 100%

VCF II LLP UK LLP England & Wales 100%

Foresight Group LLP UK LLP England & Wales 100%

Foresight Group Promoter LLP UK LLP England & Wales 100%

Foresight Investor LLP UK LLP England & Wales 100%

Foresight Group S.R.L. Italy Company Italy 100%

FV Solar Lab S.R.L. Italy Company Italy 100%

Foresight Group Australia Pty Limited Australia Company Australia 100%

FGA Ventures Pty Ltd Australia Company Australia 100%

Above It Pty Ltd Australia Company Australia 100%

Foresight Group Australia Services Pty Limited Australia Company Australia 100%

Foresight Group Iberia SL Spain Company Spain 100%

Foresight Energy Infrastructure Partners GP S.à r.l. Luxembourg Company Luxembourg 100%

Foresight Group S.à r.l. Luxembourg Company Luxembourg 100%

Foresight Group Luxembourg S.A. Luxembourg Company Luxembourg 100%

Foresight Solar LLP UK LLP England & Wales 100%

Foresight European Solar Fund CIP GP Limited UK Company Scotland 100%

Foresight 1 VCT Limited UK Company England & Wales 100%

Foresight Energy VCT Limited UK Company England & Wales 100%

In liquidation

Foresight Metering Limited UK Company England & Wales 100%

178 FORESIGHT GROUP HOLDINGS LIMITED Annual Report and Financial Statements FY22

FOR THE YEAR ENDED 31 MARCH 2022

NOTES TO THE FINANCIAL STATEMENTS CONTINUED

17. Investments in equity accounted joint ventures

Accounting policy:

Joint ventures are accounted for using the equity method, where the Group’s share of post-acquisition profits

and losses and other comprehensive income is recognised in the Statement of Comprehensive Income.

31 March 31 March

2022 2021

£000 £000

At beginning of period 251 235

Share of post-tax profits 53 26

Foreign exchange movement — (10)

Disposal (304) —

At end of period — 251

The investment in joint venture related to a joint venture entered into by Foresight Group S.R.L. which held a 50%

holding in FV Solar Lab S.R.L.

Joint venture

FV Solar Lab S.R.L. is a separate structured vehicle incorporated and operating in Italy. It was set up by the Group and

VEI Green on commencement of ForVEI II, an investment platform which specialises in acquiring solar assets in Italy.

The platform was managed by the Group and VEI Green who shared equally in the assets and liabilities of FV Solar Lab

S.R.L. and under IFRS 11 this joint arrangement was classified as a joint venture and was included in the consolidated

financial statements using the equity method.

On 21 January 2022, the Group acquired VEI Green’s 50% holding in FV Solar S.R.L.; see note 31 for business

combinations. Consequently, FV Solar Lab S.R.L. ceased to be accounted for as a joint venture under IFRS 11 but as a

subsidiary under IFRS 10.

Summarised financial information in relation to the joint venture is presented below up to 21 January 2022:

31 March 31 March

2022 2021

£000 £000

Profit or loss 53 26

Other comprehensive income

Translation differences on foreign subsidiaries — (10)

Total comprehensive income 53 16

STRATEGIC REPORT OVERVIEW BUSINESS REVIEW PERFORMANCE AND RISKINTRODUCTION GOVERNANCE FINANCIAL STATEMENTS

FORESIGHT GROUP HOLDINGS LIMITED Annual Report and Financial Statements FY22 179

18. Contract costs

Accounting policy:

The Group may enter into placement agency agreements with providers who will seek to raise investor monies.

Where placement agency fees are incremental to obtaining, extending or modifying a contract with a customer,

these fees are capitalised and then amortised on a systematic basis consistent with the pattern of transfer of the

services to which the asset relates. Where placement agency fees are not considered to be incremental, these are

expensed as they are incurred. Capitalised placement fees are included within contract costs.

Retainer amounts paid to placement agents are recognised as an asset. Where the placement agent is successful

in obtaining a contract with a customer, the retainer amounts are offset against the gross placement agency fees

when incurred. If unsuccessful, the retainer amounts are expensed.

Estimation uncertainty and judgements:

When deciding whether placement agency fees are incremental to obtaining, extending or modifying a contract

with a customer, the Group must consider whether an individual investor is the customer or whether the fund

that the investor is investing into is the customer. Where the individual investor is the customer, the fees will be

incremental. Where the customer is the fund, the fees for the individual investor would not be incremental.

31 March

31 March 2021

2022 as restated

£000 £000

Incremental placement agency fees, of which: 4,555 837

Non-current assets 3,976 712

Current assets 579 125

Incremental placement agency fees have arisen from further interim and final closes of Foresight Energy Infrastructure

Partners. See note 36 for explanation for adjustment to corresponding amounts.

180 FORESIGHT GROUP HOLDINGS LIMITED Annual Report and Financial Statements FY22

FOR THE YEAR ENDED 31 MARCH 2022

NOTES TO THE FINANCIAL STATEMENTS CONTINUED

19. Trade and other receivables

Accounting policy:

Trade and other receivables are recognised initially at transaction price less attributable transaction costs.

Subsequent to initial recognition they are measured at amortised cost using the effective interest method, less any

impairment losses. For trade receivables this is because they meet the criteria set out under IFRS 9, being assets

held within a business model that give rise to contractual cash flows and are solely payments of principal and

interest (“SPPI”). If the arrangement constitutes a financing transaction, for example if payment is deferred beyond

normal business terms, then it is measured at the present value of future payments discounted at a market rate of

interest for a similar debt instrument.

The Group applies the IFRS 9 simplified approach to measuring expected credit losses. The expected credit losses

are estimated using a provision matrix by reference to past default experience and an analysis of the receivables’

current financial position, adjusted for factors that are specific to the receivable, general economic conditions of the

industry and an assessment of both the current as well as the forecast direction of conditions at the reporting date.

This encompasses trade receivables and balances within other receivables such as recharges yet to be invoiced to

funds and investee companies.

Additionally, when a trade receivable is credit impaired, it is written off against trade receivables and the amount

of the loss is recognised in the income statement. Subsequent recoveries of amounts previously written off are

credited to the Statement of Comprehensive Income. In line with the Group’s historical experience, and after

consideration of current credit exposures, the Group does not expect to incur any credit losses and has not

recognised any ECLs in the current year (2021: £nil).

Amortised cost

The amortised cost of a financial asset is the amount at which the financial asset is measured at initial recognition,

minus principal repayments, plus or minus the cumulative amortisation using the effective interest method of any

difference between the initial amount recognised and the maturity amount, minus any reduction for impairment.

Derecognition

The Group derecognises a financial asset when the contractual rights to the cash flows from the asset expire,

or it transfers the rights to receive the contractual cash flows in a transaction in which substantially all of the

risks and rewards of ownership of the financial asset are transferred or in which the Group neither transfers nor

retains substantially all of the risks and rewards of ownership and does not retain control of the financial asset.

Onderecognition of a financial asset, the difference between the carrying amount of the asset (or the carrying

amount allocated to the portion of the asset that is derecognised) and the consideration received (including any

new asset obtained less any new liability assumed) is recognised in the Statement of Comprehensive Income.

Anyinterest in such transferred financial assets that is created or retained by the Group is recognised as a

separateasset or liability.

Prepayments arise where the Group pays cash in advance for services. As the service is provided, the prepayment

isreduced and the operating expense is recognised in the statement of profit or loss.

STRATEGIC REPORT OVERVIEW BUSINESS REVIEW PERFORMANCE AND RISKINTRODUCTION GOVERNANCE FINANCIAL STATEMENTS

FORESIGHT GROUP HOLDINGS LIMITED Annual Report and Financial Statements FY22 181

31 March

31 March 2021

2022 as restated

£000 £000

Trade receivables 13,383 10,988

Other receivables 2,310 4,255

Prepayments 2,050 1,958

Staff advances 2,880 2,680

Tax receivable 584 —

Less non-current assets:

Trade receivables 1,120 1,471

Other receivables — —

Prepayments — —

Staff advances 2,140 1,940

Tax receivable — —

Current assets:

Trade receivables 12,263 9,517

Other receivables 2,310 4,255

Prepayments 2,050 1,958

Staff advances 740 740

Tax receivable 584 —

17,947 16,470

The Directors consider that the carrying value of trade and other receivables approximates to their fair value. Staff

advances have been made in order to retain key staff and are expensed over five years in line with the contractual

terms of the advances but are repayable if the relevant individual leaves the Group. See note 36 for explanation for

adjustment to corresponding amounts.

The ageing profile of the Group’s trade receivables is as follows:

31 March 31 March

2022 2021

£000 £000

Current 7, 254 7,139

Overdue

< 30 days 705 101

30-60 days 449 526

60-90 days 81 77

> 90 days 4,894 3,145

13,383 10,988

182 FORESIGHT GROUP HOLDINGS LIMITED Annual Report and Financial Statements FY22

FOR THE YEAR ENDED 31 MARCH 2022

NOTES TO THE FINANCIAL STATEMENTS CONTINUED

19. Trade and other receivables continued

The movement in the impairment allowance for trade receivables is as follows:

31 March 31 March

2022 2021

£000 £000

At beginning of period 232 532

Written off during the period as uncollectible (159) (355)

Increase during the period 140 55

At end of period 213 232

Trade receivables include amounts which are past due at the reporting date but against which the Group has not

recognised a provision for impairment as there has been no significant change in credit quality and the amounts are

still considered recoverable.

In determining the recoverability of trade receivables the Directors considered any change in the credit quality of the

trade receivable from the date the credit was initially granted up to the reporting date. Such changes would include

when one or more detrimental events have occurred, such as significant financial difficulty of the counterparty or it

becoming probable that the counterparty will enter bankruptcy or other financial reorganisation. As the majority of

trade receivables are fees settled directly from the assets of the respective funds, the credit risk is considered to be

very low. When trade receivables are fees settled directly from investee companies, i.e. Directors' fees there is the

possibility of financial difficulty, however these fees individually are not significant. See note 30 for management of

credit risk.

20. Cash and cash equivalents

Accounting policy:

Cash and cash equivalents comprise cash on hand and cash at banks.

31 March 31 March

2022 2021

£000 £000

Cash and cash equivalents per Statement of Financial Position 54,289 39,431

Cash and cash equivalents per Cash Flow Statement 54,289 39,431

STRATEGIC REPORT OVERVIEW BUSINESS REVIEW PERFORMANCE AND RISKINTRODUCTION GOVERNANCE FINANCIAL STATEMENTS

FORESIGHT GROUP HOLDINGS LIMITED Annual Report and Financial Statements FY22 183

21. Trade and other payables

Accounting policy:

Trade and other payables are recognised initially at transaction price plus attributable transaction costs.

Subsequent to initial recognition they are measured at amortised cost using the effective interest method.

Amortised cost

The amortised cost of a financial liability is the amount at which the financial liability is measured at initial

recognition, minus principal repayments, plus or minus the cumulative amortisation using the effective interest

method of any difference between the initial amount recognised and the maturity amount.

Derecognition

The Company derecognises a financial liability when its contractual obligations are discharged or cancelled

or expire.

31 March 31 March

2022 2021

£000 £000

Trade payables 1,322 1,175

Accruals 12,459 8,697

Deferred income 134 541

Other payables 4,716 5,244

VAT and PAYE 3,234 3,520

Corporation tax 497 143

Partnership capital contributions 1,680 1,619

Less non-current liabilities:

Trade payables — —

Accruals 64 295

Deferred income — —

Other payables — —

VAT and PAYE — —

Corporation tax — —

Partnership capital contributions — —

Current liabilities:

Trade payables 1,322 1,175

Accruals 12,395 8,402

Deferred income 134 541

Other payables 4,716 5,244

VAT and PAYE 3,234 3,520

Corporation tax 497 143

Partnership capital contributions 1,680 1,619

23,978 20,644

Trade and other payables comprise amounts outstanding for trade purchases and ongoing costs.

The Directors consider the carrying amount of trade and other payables approximates to their fair value when

measured by discounting cash flows at market rates of interest as at the Statement of Financial Position date.

Deferred income relates to fees received in advance. Partnership capital contributions relate to contributions by

members to Foresight Group LLP. The main component of accruals are bonuses relating to the financial period but

substantially settled in July in the following financial year.

184 FORESIGHT GROUP HOLDINGS LIMITED Annual Report and Financial Statements FY22

FOR THE YEAR ENDED 31 MARCH 2022

NOTES TO THE FINANCIAL STATEMENTS CONTINUED

22. Loans and borrowings

Accounting policy:

Loans and borrowings are recognised initially at fair value, net of transaction costs incurred. Loans and borrowings

are subsequently carried at amortised cost; any difference between the proceeds (net of transaction costs) and the

redemption value is recognised in the Statement of Comprehensive Income over the period of the borrowings using

the effective interest method.

Loans and borrowings are derecognised from the Statement of Financial Position when the obligation specified in

the contract is discharged, is cancelled or expires.

The difference between the carrying amount of a financial liability that has been extinguished or transferred to

another party and the consideration paid, including any non-cash assets transferred or liabilities assumed, is

recognised in profit or loss as other operating income or finance costs.

Loans and borrowings are classified as current liabilities unless the Group has an unconditional right to defer

settlement of the liability for at least 12 months after the reporting period.

Loans and borrowings arose from the acquisition of PiP Manager Limited in the year ended 31 March 2021

(seen note 31).

31 March 31 March

2022 2021

£000 £000

Current liabilities

Loans and borrowings 660 688

Non-current liabilities

Loans and borrowings 3,030 3,636

3,690 4,324

Terms and debt repayment schedule

31 March

2022

Nominal Carrying

interest Year of amount

Currency rate maturity £000

Unsecured loan GBP 2% 2027 3,690

1. The carrying amount of these loans and borrowings equates to the fair value.

The movement on the above loans may be summarised as follows:

31 March 31 March

2022 2021

£000 £000

At beginning of period 4,324 —

At acquisition — 4,242

Interest 85 82

Repayment (719) —

At end of period 3,690 4,324

For more information about the Group’s exposure to interest rate and foreign currency risk, see note 30.

STRATEGIC REPORT OVERVIEW BUSINESS REVIEW PERFORMANCE AND RISKINTRODUCTION GOVERNANCE FINANCIAL STATEMENTS

FORESIGHT GROUP HOLDINGS LIMITED Annual Report and Financial Statements FY22 185

23. Lease liabilities

Accounting policy:

Applying IFRS 16, for all leases, the Group:

•

Recognises right-of-use assets and lease liabilities in the Statement of Financial Position, initially measured at

thepresent value of the future lease payment

•

Recognises depreciation of right-of-use assets and interest on lease liabilities in the Statement of Comprehensive

Income

•

Separates the total amount of cash paid into a principal portion (presented within financing activities) and

interest (presented within operating activities) in the Cash Flow Statement

Right-of-use assets are measured at cost less accumulated depreciation and impairment losses. The carrying

valueis also adjusted for any remeasurement of the lease liability. The entity has chosen to apply the practical

expedient in C3 of IFRS 16 to not reassess whether a contract is, or contains, a lease at the date of initial

application.The lease liability is measured in subsequent periods using the effective interest rate method and

adjusted for lease payments.

Lease incentives (e.g. rent-free periods) are recognised as part of the measurement of the right-of-use assets and

lease liabilities, whereas under IAS 17 they resulted in the recognition of a lease incentive, amortised as a reduction

of rental expenses on a straight-line basis. For short-term leases (lease term of 12 months or less) and leases of

low-value assets, the Group has opted to recognise a lease expense on a straight-line basis as permitted by IFRS

16.53 (c). This expense is presented within administrative expenses in the Statement of Comprehensive Income.

The cost of any contractual requirements to dismantle, remove or restore the leased asset, typically dilapidations,

are to be included in the initial recognition of right-of-use assets.

Estimation uncertainty and judgements:

The Group cannot readily determine the interest rates implicit in the leases; therefore, it uses its incremental

borrowing rate (“IBR”) to measure lease liabilities. The IBR is the rate of interest that the Group would have to

payto borrow over a similar term, and with a similar security, the funds necessary to obtain an asset of a similar

value to the right-of-use asset in a similar economic environment. The IBR therefore reflects what the Group

“wouldhave to pay”, which requires estimation when no observable rates are available (such as for subsidiaries

thatdo not enter into financing transactions) or when they need to be adjusted to reflect the terms and conditions

of the lease (for example, when adjustments are required to reflect the underlying economic market where

overseassubsidiaries are located).

The Group estimates the IBR using observable inputs (such as market interest rates) when available and is

requiredto make certain entity-specific estimates (such as the subsidiary’s standalone credit rating).

186 FORESIGHT GROUP HOLDINGS LIMITED Annual Report and Financial Statements FY22

FOR THE YEAR ENDED 31 MARCH 2022

NOTES TO THE FINANCIAL STATEMENTS CONTINUED

23. Lease liabilities continued

Set out below are the carrying amounts of the right-of-use assets recognised and associated lease liabilities (included

under current and non-current liabilities) together with their movements over the period. The leases all relate to the

offices of the Group as follows:

VCF II LLP

•

23rd Floor Shard, London

•

18th Floor Shard, London

•

Park Row, Nottingham 3rd Floor

•

Park Row, Nottingham 4th Floor

Foresight Group LLP

•

George Street, Edinburgh, Scotland

•

Station Road, Cambridge

•

King Street, Manchester

Foresight Group S.R.L.

•

Piazza Barberini, Rome

Foresight Group Iberia SL

•

Planta Tercera, Madrid

New lease in year ended 31 March 2022:

Foresight Group Luxembourg S.A.

•

Europe Building, Allee Scheffer, Luxembourg

The leases are typically of ten years’ duration.

31 March 31 March

2022 2021

£000 £000

Right-of-use asset

At beginning of period 9,120 10,346

Additions 1,477 486

Depreciation (2,337) (1,712)

At end of period 8,260 9,120

Lease liability

At beginning of period 12,019 13,498

Current 2,157 1,945

Non-current 9,862 11,553

Additions 544 486

Lease payment (2,719) (2,570)

Interest 564 621

Foreign exchange — (16)

At end of period 10,408 12,019

Current 2,302 2,157

Non-current 8,106 9,862

10,408 12,019

STRATEGIC REPORT OVERVIEW BUSINESS REVIEW PERFORMANCE AND RISKINTRODUCTION GOVERNANCE FINANCIAL STATEMENTS

FORESIGHT GROUP HOLDINGS LIMITED Annual Report and Financial Statements FY22 187

The table below summarises the maturity profile of the Group’s lease liabilities based on contractual undiscounted

payments at 31 March 2022.

Less than One to two Two to five More than

Total one year years years five years

£000 £000 £000 £000 £000

11,634 2,799 2,800 5,172 863

The table below summarises the maturity profile of the Group’s lease liabilities based on contractual undiscounted

payments at 31 March 2021.

Less than One to two Two to five More than

Total one year years years five years

£000 £000 £000 £000 £000

13,817 2,712 2,735 7,289 1,081

The following are the amounts recognised in the Statement of Comprehensive Income:

31 March 31 March

2022 2021

£000 £000

Depreciation expense on right-of-use assets 2,337 1,712

Interest expense on lease liabilities 564 621

2,901 2,333

The weighted average incremental borrowing rate applied to lease liabilities recognised in the Statement of Financial

Position at the date of initial application was 4.79%.

In accordance with IFRS 16.53(c), (d) and (e) (in respect of short-term, low-value and variable lease expenses), the

Group has opted to recognise a lease expense on a straight-line basis as permitted by IFRS 16 for these items.

This expense is presented within administrative expenses in the Statement of Comprehensive Income as follows and

for the year ended 31 March 2022 was £117,000 (2021: 241,000).

In the financial period, the Group recognised dilapidation provisions on its offices of £933,000 as right-of-use assets

and a depreciation charge of £528,000.

24. Provisions

Accounting policy:

A provision is recognised in the Statement of Financial Position when the Group has a present legal or constructive

obligation as a result of a past event, and it is probable that an outflow of economic benefits will be required to

settle the obligation. If the effect is material, provisions are determined by discounting the expected future cash

flows at a pre-tax rate that reflects current market assessments of the time value of money and, when appropriate,

the risks specific to the liability. The increase in the provision due to the passage of time is recognised in finance

costs.

31 March 31 March

2022 2021

£000 £000

Dilapidations provisions 933 —

Dilapidations provision

As part of its operating lease agreement for its various premises, the Group has an obligation to pay for dilapidation

costs at the end of the lease term. Independent surveyors carried out inspections during the period to assess the likely

dilapidations which the Group has now included provisions for.

188 FORESIGHT GROUP HOLDINGS LIMITED Annual Report and Financial Statements FY22

FOR THE YEAR ENDED 31 MARCH 2022

NOTES TO THE FINANCIAL STATEMENTS CONTINUED

25. Deferred tax assets and liabilities

Accounting policy:

Deferred tax is recognised based on differences between the carrying value of assets and liabilities for accounting

purposes and their tax values (see note 12). Deferred tax liabilities are generally recognised for all taxable

temporary differences and deferred tax assets are only recognised to the extent that the Group considers them to

be recoverable, which is determined by reference to estimates that future taxable profits will be available against

which deductible temporary differences can be utilised.

The carrying amount of deferred tax assets is reviewed at each Statement of Financial Position date and reduced to

the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset

to be recovered.

Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets

against current tax liabilities and when they relate to income taxes levied by the same taxation authority and the

Group intends to settle its current tax assets and liabilities on a net basis.

Estimation uncertainty and judgements:

Judgement is required to determine the amount of deferred tax assets that can be recognised, based upon the

likely timing and the level of future taxable profits.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the period when the

asset is realised or the liability is settled, based on tax rates (and tax legislation) that have been enacted or

substantively enacted at the Statement of Financial Position date.

The movement on the deferred tax account is as shown below:

31 March 31 March

2022 2021

£000 £000

At beginning of period (604) 20

Recognised in Statement of Comprehensive Income

Tax expense 376 (236)

Foreign exchange 26 —

402 (236)

Recognised in equity

Share-based payment reserve 22 —

Arising on business combination

Intangible asset (see note 31) (403) (547)

Other temporary and deductible differences — 159

At end of period (583) (604)

STRATEGIC REPORT OVERVIEW BUSINESS REVIEW PERFORMANCE AND RISKINTRODUCTION GOVERNANCE FINANCIAL STATEMENTS

FORESIGHT GROUP HOLDINGS LIMITED Annual Report and Financial Statements FY22 189

The movements in deferred tax assets and liabilities during the period are shown below:

(Charged)/

credited (Charged)/

to profit credited

Asset Liability Net or loss to equity

2022 2022 2022 2022 2022

£000 £000 £000 £000 £000

Other temporary and deductible differences 615 (178) 437 582 22

Business combinations – intangible asset — (1,020) (1,020) (87) —

Business combinations – other temporary

and deductible differences — — — (119) —

615 (1,198) (583) 376 22

(Charged)/

credited (Charged)/

to profit credited

Asset Liability Net or loss to equity

2021 2021 2021 2021 2021

£000 £000 £000 £000 £000

Other temporary and deductible differences 858 (1,051) (193) (213) —

Business combinations – intangible asset — (530) (530) 17 —

Business combinations – other temporary

and deductible differences 119 — 119 (40) —

977 (1,581) (604) (236) —

26. Employee benefits

Accounting policy:

The Group operates a defined contribution pension plan. A defined contribution plan is a pension plan under

which the Group pays fixed contributions to a third party. The Group has no legal or constructive obligations to

pay further contributions if the fund does not hold sufficient assets to pay all employees the benefits relating to

employee service in the current and prior periods.

The Group has no further payment obligations once the contributions have been paid. The contributions are

recognised as an employee benefit expense when they are due. Prepaid contributions are recognised as an asset to

the extent that a cash refund or a reduction in the future payments is available.

The amounts charged to the Statement of Comprehensive Income in respect of these schemes represents contributions

payable in respect of the accounting period. The total annual pension cost for the defined contribution schemes for the

year ended 31 March 2022 was £608,000 (2021: 601,000).

190 FORESIGHT GROUP HOLDINGS LIMITED Annual Report and Financial Statements FY22

FOR THE YEAR ENDED 31 MARCH 2022

NOTES TO THE FINANCIAL STATEMENTS CONTINUED

27. Share capital and other reserves

Accounting policy:

Ordinary Shares are classified as equity. Incremental costs directly attributable to the issue of new shares are

shown in share premium as a deduction from the proceeds.

Ordinary Shares and Preference Shares

31 March 31 March

2022 2021

£ £

Share capital

Ordinary Shares — —

Preference Shares at beginning of period — 849

Preference Shares redeemed — (849)

Preference shares at end of period — —

Ordinary Shares

31 March 31 March 31 March 31 March

2022 2022 2021 2021

Number £ Number £

Ordinary Shares of no par value

In issue at start of the year 108,333,333 — —

Redesignated — — 1,000,000 —

Subdivided — —

99,000,000

—

Issued — — 8,333,333 —

In issue at end of the year 108,333,333 —

108,333,333

—

A shares of no par value

In issue at start of the year — — 1 —

Cancelled during the year — — (1) —

In issue at end of the year — — — —

B shares of no par value

In issue at start of the year — — 539,840 —

Issued during the year — — 464,215 —

Cancelled during the year — — (4,055) —

Redesignated during the year — — (1,000,000) —

In issue at end of the year — — — —

D shares of no par value

In issue at start of the year — — 1,000 —

Cancelled during the year — — (1,000) —

In issue at end of the year — — — —

F shares of no par value

In issue at start of the year — — 1,000 —

Cancelled during the year — — (1,000) —

In issue at end of the year — — — —

STRATEGIC REPORT OVERVIEW BUSINESS REVIEW PERFORMANCE AND RISKINTRODUCTION GOVERNANCE FINANCIAL STATEMENTS

FORESIGHT GROUP HOLDINGS LIMITED Annual Report and Financial Statements FY22 191

31 March 31 March 31 March 31 March

2022 2022 2021 2021

Number £ Number £

H shares of no par value

In issue at start of the year — — 1,000 —

Cancelled during the year — — (1,000) —

In issue at end of the year — — — —

I shares of no par value

In issue at start of the year — — 1,000 —

Cancelled during the year — — (1,000) —

In issue at end of the year — — — —

J shares of no par value

In issue at start of the year — — 1,000 —

Cancelled during the year — — (1,000) —

In issue at end of the year — — — —

L shares of no par value

In issue at start of the year — — 1,000 —

Cancelled during the year — — (1,000) —

In issue at end of the year — — — —

M shares of no par value

In issue at start of the year — — 1,000 —

Cancelled during the year — — (1,000) —

In issue at end of the year — — — —

N shares of no par value

In issue at start of the year — — 1,000 —

Cancelled during the year — — (1,000) —

In issue at end of the year — — — —

P shares of no par value

In issue at start of the year — — 1,000 —

Cancelled during the year — — (1,000) —

In issue at end of the year — — — —

Q shares of no par value

In issue at start of the year — — 1,000 —

Cancelled during the year — — (1,000) —

In issue at end of the year — — — —

R shares of no par value

In issue at start of the year — — 1,000 —

Cancelled during the year — — (1,000) —

In issue at end of the year — — — —

S shares of no par value

In issue at start of the year — — 1,000 —

Cancelled during the year — — (1,000) —

In issue at end of the year — — — —

192 FORESIGHT GROUP HOLDINGS LIMITED Annual Report and Financial Statements FY22

FOR THE YEAR ENDED 31 MARCH 2022

NOTES TO THE FINANCIAL STATEMENTS CONTINUED

27. Share capital and other reserves continued

Ordinary Shares continued

31 March 31 March 31 March 31 March

2022 2022 2021 2021

Number £ Number £

T shares of no par value

In issue at start of the year — — 1,000 —

Cancelled during the year — — (1,000) —

In issue at end of the year — — — —

U shares of no par value

In issue at start of the year — — 1,000 —

Cancelled during the year — — (1,000) —

In issue at end of the year — — — —

V shares of no par value

In issue at start of the year — — 1,000 —

Cancelled during the year — — (1,000) —

In issue at end of the year — — — —

W shares of no par value

In issue at start of the year — — 1,000 —

Cancelled during the year — — (1,000) —

In issue at end of the year — — — —

X shares of no par value

In issue at start of the year — — 1,000 —

Cancelled during the year — — (1,000) —

In issue at end of the year — — — —

Y shares of no par value

In issue at start of the year — — 1,000 —

Cancelled during the year — — (1,000) —

In issue at end of the year — — — —

Z shares of no par value

In issue at start of the year — — 1,000 —

Cancelled during the year — — (1,000) —

In issue at end of the year — — — —

AA shares of no par value

In issue at start of the year — — 500 —

Cancelled during the year — — (500) —

In issue at end of the year — — — —

STRATEGIC REPORT OVERVIEW BUSINESS REVIEW PERFORMANCE AND RISKINTRODUCTION GOVERNANCE FINANCIAL STATEMENTS

FORESIGHT GROUP HOLDINGS LIMITED Annual Report and Financial Statements FY22 193

Rights for each Ordinary Share class

Ordinary Shares

The rights attaching to the shares are uniform in all respects and they form a single class for all purposes, including

with respect to voting and for all dividends and other distributions declared, made or paid on the Ordinary Share

capital of the Company.

Subject to any rights and restrictions attached to any shares, on a show of hands every Shareholder who is present in

person shall have one vote and on a poll every Shareholder present in person or by proxy shall have one vote per share.

Except as provided by the rights and restrictions attached to any class of shares, Shareholders are under general law

entitled to participate in any surplus assets in a winding up in proportion to their shareholdings.

Note that for all share classes discussed below in the following sub-section, these shares were cancelled at the date of

the IPO and replaced with the new Ordinary Shares discussed above.

A shares

Rights:

Income – entitled to receive and participate in dividends or other distributions attributable to the A shares resolved

by the Board to be so distributed in respect of any accounting period or any other income or right to participate

therein.

Capital – entitled on a winding up or sale to participate in the distribution of capital in the manner described in

Companies Law and solely in respect of amounts paid up on such A shares.

Voting – entitled to receive notice of and to attend general meetings of the Company but not vote at such meetings.

B shares

Rights:

Income – entitled to receive and participate in dividends or other distributions attributable to the B shares resolved

by the Board to be so distributed in respect of any accounting period or any other income or right to participate

therein.

Capital – entitled on a winding up or sale to participate in the distribution of capital in the manner described in

Companies Law and in proportion to the number of B shares held by them.

Redemption – redeemable at the option of the Company upon the member ceasing to be an employee or ceasing to

hold the shares for an employee.

Voting – entitled to receive notice of and to attend and vote at general meetings of the Company.

D to AA shares (“Alphabet shares” – each a separate share class)

Rights:

Income – entitled to receive and participate in dividends or other distributions attributable to the respective class

of the Alphabet shares resolved by the Board to be so distributed in respect of any accounting period or any other

income or right to participate therein.

Capital – entitled on a winding up or sale to participate in the distribution of capital in the manner described in

Companies Law and solely in respect of amounts paid up on such Alphabet shares.

Voting – entitled to receive notice of and to attend general meetings of the Company but not vote at such meetings.

Dividends paid on the above shares are included in note 28 below.

Preference Shares

31 March 31 March

2022 2021

£ £

Allotted, called up and fully paid

Redeemable shares of no par value paid up at £1 per share

At beginning of period — 849

Fully redeemed and cancelled during the year — (849)

At end of period — —

194 FORESIGHT GROUP HOLDINGS LIMITED Annual Report and Financial Statements FY22

FOR THE YEAR ENDED 31 MARCH 2022

NOTES TO THE FINANCIAL STATEMENTS CONTINUED

27. Share capital and other reserves continued

Preference Shares continued

These were held in the books of Foresight Group CI Limited (“FGCI”) for the benefit of Beau Port Investments Limited.

The redeemable shares were redeemable at the sole option of FGCI, had no par value and had no voting rights, save in

respect of any resolution to change the rights attached to them.

The Articles of Association of FGCI gave it the power to issue an unlimited number of shares of no par value as

permitted by law.

The redemptions of Preference Shares over the period are included in note 28 below.

The Preference Shares were fully redeemed during the year ended 31 March 2021 (pre-IPO).

Share premium

Accounting policy:

Ordinary Shares issued by the Group are recognised at the proceeds or fair value received, with the excess of

the amount received over nominal value being credited to the share premium account (net of the direct costs

of issue).

Estimation uncertainty and judgements

The costs incurred for the IPO have been accounted for under IAS 32 as follows:

Incremental costs that were directly attributable to the issuing of new shares have been taken to equity (share

premium). Costs that relate to the listing, or are otherwise not incremental and directly attributable to issuing new

shares, have been recorded as an expense in the Statement of Comprehensive Income.

Where costs relate to both share issuance and listing, these are required to be allocated on a rational and consistent

basis between the two functions. The Directors considered that an appropriate allocation basis would be the

objectives of the IPO where 50% of the objectives were for the benefit of the Group and have therefore allocated

50% of the costs to equity (share premium).

31 March 31 March

2022 2021

£000 £000

At beginning of period 32,040 —

Cash on primary raise — 35,000

Transaction costs of primary raise — (2,960)

At end of period 32,040 32,040

The total transaction costs relating to the IPO amounted to £5.275 million, of which £2.96 million was taken to

the share premium account and £2.3 million was expensed through administrative expenses in the Statement of

Comprehensive Income in the year ended 31 March 2021.

Own share reserve

The Group operates a Share Incentive Plan as per note 8. The Group operates a trust which holds shares that have

not yet vested unconditionally to employees of the Group. These shares are recorded at cost and are classified as

own shares.

At 31 March 2022, the total number of shares held in trust was 228,838 including 152,769 of matching shares.

Of the 152,769 matching shares, 45,000 had been transferred from Foresight Guernsey Limited (see IPO Prospectus)

and 107,769 shares had been purchased at a cost of £454,000.

Share-based payment reserve

The share-based payment reserve represents the cumulative cost of the Group’s share-based remuneration schemes

and associated deferred tax; see note 8.

STRATEGIC REPORT OVERVIEW BUSINESS REVIEW PERFORMANCE AND RISKINTRODUCTION GOVERNANCE FINANCIAL STATEMENTS

FORESIGHT GROUP HOLDINGS LIMITED Annual Report and Financial Statements FY22 195

Group reorganisation reserve

The Group reorganisation reserve consists of the Ordinary Share capital of FGCI. As there is no investment in FGCI

held in the books of any holding companies (Foresight Group Holdings Limited) this balance is left as a Group reserve.

Retained earnings

Includes all current and prior period retained profits and losses.

28. Dividends and redemptions

Accounting policy:

Equity dividends are recognised when they become legally payable. Interim dividends are recognised when they

are paid. Final equity dividends are recognised when approved by the Shareholders. Redemptions of Preference

Shares were recognised when approved by the Directors of Foresight Group CI Limited upon request from the

Shareholder. Share buybacks are recognised in equity when approved by the Directors.

31 March 31 March

2022 2021

£000 £000

Distributions subsequent to the IPO

Interim dividend 4,303 —

Final dividend 1,872 —

Distributions prior to the IPO

Dividends and distributions to equity members — 18,229

Share buybacks — 10

6,175 18,239

Set out below are the details of all equity dividends, distributions and share buybacks for the year ended

31March2022 and year ended 31 March 2021. On IPO, there was a restructuring of the share capital of the Company

so that dividends per share pre and post-IPO would be incomparable. Therefore, the disclosure of dividends per share

has not been made for pre-IPO equity dividends as it would be both unhelpful and misleading and not reflective of

future dividend policy.

Year ended 31 March 2022

Ordinary Shares

•

A final dividend of 1.7 pence per share in respect of the year ended 31 March 2021 was paid on 24 September 2021

with an ex-dividend date of 9 September 2021 and a record date of 10 September 2021

•

An interim dividend of 4.0 pence per share in respect of the year ended 31 March 2022 was paid on 25 March 2022

with an ex-dividend date of 10 March 2022 and a record date of 11 March 2022

Year ended 31 March 2021

A shares

•

On 22 May 2020, the Company declared dividends of £137,500 in respect of the Company’s A shares

•

On 21 August 2020, the Company declared dividends of £137,500 in respect of the Company’s A shares

•

On 26 November 2020, the Company declared dividends of £183,333 in respect of the Company’s A shares

•

On 1 February 2021, the Company declared dividends of £8,870,838 in respect of the Company’s A shares

Alphabet shares

•

On 1 February 2021, the Company paid dividends of £16,561 in respect of the Company’s Alphabet shares

Distributions

•

During the financial year, Foresight Group LLP paid distributions of £8,792,208 to its members

•

During the financial year, VCF Partners paid distributions of £91,117 to its members

Share buyback

•

On 9 February 2021, the Company enacted a share buyback of £10,000 per share, in respect of one of the

Company’s A shares

196 FORESIGHT GROUP HOLDINGS LIMITED Annual Report and Financial Statements FY22

FOR THE YEAR ENDED 31 MARCH 2022

NOTES TO THE FINANCIAL STATEMENTS CONTINUED

28. Dividends and redemptions continued

Preference Shares

Redemptions on Preference Shares were as follows:

31 March 31 March

2022 2021

£000 £000

Redemption of Preference Shares — 4,753

In terms of Preference Shares redemptions, these all took place prior to the IPO via arrangements in place between

Beau Port Investments Limited (“BPIL”) and Foresight Group CI Limited. These arrangements were all terminated

before the date of the IPO and all Preference Shares were fully redeemed and cancelled.

Year ended 31 March 2021

•

On 31 July 2020, Foresight Group CI Limited exercised its right to redeem one redeemable share for a total

consideration of £2,750,000

•

On 17 December 2020, Foresight Group CI Limited redeemed two redeemable shares for a total consideration of

£2,003,191

•

On 28 January 2021, Foresight Group CI Limited redeemed the remaining 846 redeemable shares for nil value and

these were subsequently cancelled

•

The value of these redemptions was determined by the Board of Directors of FGCI after taking into account FGCI’s

profits and working capital requirements

29. Commitments and contingencies

There were no capital commitments or contingencies at 31 March 2022 or 31 March 2021.

30. Financial instruments – classification and measurement

Financial assets

Financial assets comprise cash and cash equivalents, trade receivables and other receivables (at amortised cost) and

investments at FVTPL, as follows:

31 March 31 March

2022 2021

£000 £000

Trade and other receivables 18,573 17,923

Cash and cash equivalents 54,289 39,431

Investments at FVTPL 2,781 2,075

75,643 59,429

Financial liabilities

Financial liabilities measured at amortised cost comprise trade payables, other payables, loans and borrowings and

lease liabilities as follows:

31 March

31 March 2021

2022 as restated

£000 £000

Trade payables 1,322 1,175

Other payables 6,396 6,863

Loans and borrowings 3,690 4,324

Lease liabilities 10,408 12,019

21,816 24,381

Financial liabilities for the year ended 31 March 2021 have been restated due to incorrect inclusion of statutory

obligations and exclusion of loans and borrowings and lease liabilities.

STRATEGIC REPORT OVERVIEW BUSINESS REVIEW PERFORMANCE AND RISKINTRODUCTION GOVERNANCE FINANCIAL STATEMENTS

FORESIGHT GROUP HOLDINGS LIMITED Annual Report and Financial Statements FY22 197

Financial risk management

The Group’s activities expose it to a variety of financial risks: market risk (including cash flow interest rate risk),

liquidity risk and credit risk. Risk management is carried out by the Board of Directors. The Group uses financial

instruments to provide flexibility regarding its working capital requirements and to enable it to manage specific

financial risks to which it is exposed.

(a) Market risk

(i) Market price risk

Market price risk arises from uncertainty about the future prices of financial instruments held in accordance with the

Group’s investment objectives. It represents the potential loss that the Group might suffer through holding market

positions in the face of market movements.

The investments in equity and loan stocks of unquoted companies are rarely traded and as such the prices are more

difficult to determine than those of more widely traded securities. In addition, the ability of the Group to realise

the investments at their carrying value will at times not be possible if there are no willing purchasers. The potential

maximum exposure to market price risk, being the value of the investments as at 31 March 2022, was £2.8 million

(2021: £2.1 million).

(ii) Interest rate risk

The Group has only £3.7 million of external debt, related to the PiP acquisition during the year ended 31 March 2021

(see notes 22 and 31) with a fixed interest rate. As the interest rates on Shareholders’ loans and lease contracts are

also fixed, interest rate risk is considered to be very low. Cash and cash equivalents include an interest-bearing deposit

account which earned interest at 0.05% per annum at 31 March 2022. As at 31 March 2022, if the interest rate increased

or decreased by ten basis points the interest earned would increase or decrease by £7,000.

(iii) Foreign exchange risk

The Group is not exposed to significant foreign exchange transaction risk as the Group’s activities are primarily within

the UK. Foreign exchange risk is therefore considered immaterial.

(b) Liquidity risk

Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. The Group

maintains significant liquid resources in the form of cash or cash deposits in order to meet working capital and

regulatory needs. Foresight is predominantly financed through a combination of share capital, undistributed profits

and cash.

The contractual maturities (representing undiscounted contractual cash flows) of financial liabilities are contained in

the respective note for each category of liability as follows:

•

Trade and other payables – see note 21

•

Loans and borrowings – see note 22

•

Lease liabilities – see note 23

Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to

the Group. In order to minimise the risk, the Group endeavours only to deal with companies which are demonstrably

creditworthy and this, together with the aggregate financial exposure, is continuously monitored. The maximum

exposure to credit risk is the value of the outstanding amount.

The Group does not consider that there is any concentration of risk within either trade or other receivables.

Credit risk on cash and cash equivalents is considered to be very low as the counterparties are all substantial banks

with high credit ratings.

198 FORESIGHT GROUP HOLDINGS LIMITED Annual Report and Financial Statements FY22

FOR THE YEAR ENDED 31 MARCH 2022

NOTES TO THE FINANCIAL STATEMENTS CONTINUED

30. Financial instruments – classification and measurement continued

Capital risk management

The Group is predominantly equity funded and this makes up the capital structure of the business. Equity comprises

share capital, share premium and retained profits and is equal to the amount shown as “Equity” in the balance sheet.

The Group’s current objectives when maintaining capital are to:

•

Safeguard the Group’s ability as a going concern so that it can continue to pursue its growth plans

•

Maintain adequate financial flexibility to preserve its ability to meet financial obligations, both current and long term

•

Maintain regulatory capital

•

Provide a reasonable expectation of future returns to Shareholders

The Group sets the amount of capital it requires in proportion to risk. The Group manages its capital structure and

makes adjustments to it in the light of changes in economic conditions and the risk characteristics of underlying

assets. In order to maintain or adjust the capital structure, the Group may issue new shares or sell assets to

reduce debt.

During the year to 31 March 2022, the Group’s strategy remained unchanged and all regulatory capital requirements

of subsidiaries in the Group were complied with. Foresight Group LLP has documented its Pillar III disclosures required

by the Financial Conduct Authority under BIPRU 11. These are available on the Foresight Group website or from its

registered office.

Fair value hierarchy

Unquoted investments represents the Group’s share of the value of the underlying investments held across various

Funds Under Management. These unquoted investments are valued on a net asset basis by the Group. The actual

underlying investments are valued in accordance with the following rules, which are consistent with the IPEV Valuation

Guidelines. When valuing an unquoted investment at fair value the following factors will be considered:

(i) Where a value is indicated by a material arms-length transaction by an independent third party in the shares of

acompany, this value will be used

(ii) In the absence of (i), and depending upon both the subsequent trading performance and investment structure of

an investee company, the valuation basis will usually move to either:

(a) an earnings multiple basis. The shares may be valued by applying a suitable multiple to that company’s

historic, current or forecast earnings before tax, interest, depreciation and amortisation (the ratio used being

based on a comparable sector but the resulting value being adjusted to reflect points of difference identified

compared to the sector including, inter alia, illiquidity); or

(b) where a company’s under-performance against plan indicates a diminution in the value of the investment,

awrite down against cost is made, as appropriate. Where the value of an investment has fallen permanently

below cost, the loss is treated as a permanent write down and as a realised loss, even though the investment

is still held. The Group assesses the portfolio for such investments and, after agreement with the relevant

manager, will agree the values that represent the extent to which a realised loss should be recognised. This is

based upon an assessment of objective evidence of that investment’s future prospects, to determine whether

there is potential for the investment to recover in value

(iii) Premiums on loan investments are accrued at fair value when the Company receives the right to the premium and

when considered recoverable

(iv) Where an earnings multiple or cost less impairment basis is not appropriate and overriding factors apply,

discounted cash flow, a net asset valuation, or industry specific valuation benchmarks may be applied. An example

of an industry specific valuation benchmark would be the application of a multiple to that company’s historic,

current or forecast turnover (the multiple being based on a comparable sector but with the resulting value being

adjusted to reflect points of difference including, inter alia, illiquidity)

STRATEGIC REPORT OVERVIEW BUSINESS REVIEW PERFORMANCE AND RISKINTRODUCTION GOVERNANCE FINANCIAL STATEMENTS

FORESIGHT GROUP HOLDINGS LIMITED Annual Report and Financial Statements FY22 199

The following table shows financial instruments recognised at fair value, analysed between those whose fair value is

based on:

•

Quoted prices (unadjusted) in active markets for identical assets or liabilities (Level 1)

•

Inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (as

prices) or indirectly (derived from prices) (Level 2)

•

Inputs for the instrument that are not based on observable market data (unobservable inputs) (Level 3)

Level 1 Level 2 Level 3 Total

As at 31 March 2022 £000 £000 £000 £000

Unquoted investments — — 2,781 2,781

Net financial instruments — — 2,781 2,781

Level 1 Level 2 Level 3 Total

As at 31 March 2021 £000 £000 £000 £000

Unquoted investments — — 2,075 2,075

Net financial instruments — — 2,075 2,075

Transfers

During the period there were no transfers between Levels 1, 2 or 3.

The unobservable inputs may be summarised as follows:

31 March

2022 Significant Change in

fair value unobservable Range Sensitivity fair value

Asset class and valuation £000 inputs estimates factor £000

Net financial instruments 2,781 NAV 1x +/-5% +/- 139

As can be seen in the table above, the most significant unobservable input is in relation to the NAV of the relevant

investments. A change of 5% to this assumption would increase or decrease the value of these investments by £139,000.

200 FORESIGHT GROUP HOLDINGS LIMITED Annual Report and Financial Statements FY22

FOR THE YEAR ENDED 31 MARCH 2022

NOTES TO THE FINANCIAL STATEMENTS CONTINUED

31. Business combinations

Accounting policy:

The acquisition of subsidiaries is accounted for using the acquisition method. The cost of the acquisition is

measured as the aggregate of the fair values, at the date of exchange, of assets given, liabilities incurred or

assumed, and equity instruments issued by the Group in exchange for control of the acquiree. The acquiree’s

identifiable assets, liabilities and contingent liabilities that meet the conditions for recognition under IFRS 3 are

recognised at their fair value at the acquisition date.

Acquisition-related costs are expensed as incurred and included within administrative expenses in the Statement

ofComprehensive Income.

Where applicable, the Group applies the optional concentration test to assess whether an acquired set of activities

is not a business. If the concentration test is not met, the Group then determines that it has acquired a business

when the acquired set of activities and assets include an input and a substantive process that together significantly

contribute to the ability to create outputs.

Goodwill

Goodwill arising on consolidation represents the excess of the cost of acquisition over the Group’s interest in the

fair value of the identifiable assets and liabilities of a subsidiary, associate, or jointly controlled entity at the date of

acquisition. Goodwill is initially recognised as an asset at cost assessed for impairment at each reporting date and is

subsequently measured at cost less any accumulated impairment losses. Any gain on bargain purchase is credited

to administrative expenses in the Statement of Comprehensive Income in the year such gain on bargain purchase

arises.

Any impairment is recognised immediately in profit or loss and is not subsequently reversed. On disposal of a

subsidiary, associate or jointly controlled entity, the attributable amount of goodwill is included in the determination

of the profit or loss on disposal.

Acquisitions in the year ended 31 March 2022

Details of the acquisition in the year ended 31 March 2022 are as follows:

Country of Nature of Date of Consideration Percentage

Business incorporation activity acquisition £000 ownership

FV Solar Lab S.R.L. Italy Asset 21 January 557 100%

management 2022

and investment

advisory services

to ForVEI II

The entity was acquired via direct investment in the share capital of the target. The Group previously held 50%

ownership as per note 17. The acquisition represented an opportunity for the Group to expand its Italian business

by becoming the sole manager of ForVEI II which presented growth opportunities and secured additional recurring

revenue. By completing the transaction, AUM increased by £0.1 billion.

STRATEGIC REPORT OVERVIEW BUSINESS REVIEW PERFORMANCE AND RISKINTRODUCTION GOVERNANCE FINANCIAL STATEMENTS

FORESIGHT GROUP HOLDINGS LIMITED Annual Report and Financial Statements FY22 201

The carrying amount of assets and liabilities in the books of the acquiree at the date of acquisition was as follows:

£000

Trade and other receivables 520

Cash and cash equivalents 218

Trade and other payables (141)

Total carrying value 597

Purchase consideration was £557,000 and there were no transaction costs.

The above acquisition is reflected in the Cash Flow Statement as follows:

£000

Cash paid (557)

(557)

Cash acquired on acquisition of subsidiary 218

Total per Cash Flow Statement (339)

The following intangible assets were recognised at acquisition:

£000

Intangible asset – customer lists 1,679

The fair values of the assets and liabilities arising from the acquisition are as follows:

£000

Intangible asset 1,679

Trade and other receivables 520

Cash and cash equivalents 218

Trade and other payables (141)

Deferred tax liability – intangible asset (403)

Total fair value 1,873

The fair value of the intangible asset above was derived from cash flow forecasts for the FV Solar Lab S.R.L.

standalone business, being the fees arising from management contracts for ForVEI II using a 7% discount rate

based on the weighted average cost of capital (“WACC”) derived from a capital asset pricing model (“CAPM”).

The intangible asset is being amortised over the remaining life of the ForVEI II contracts.

202 FORESIGHT GROUP HOLDINGS LIMITED Annual Report and Financial Statements FY22

FOR THE YEAR ENDED 31 MARCH 2022

NOTES TO THE FINANCIAL STATEMENTS CONTINUED

31. Business combinations continued

Acquisitions in the year ended 31 March 2022 continued

The gain on disposal of the Group’s existing interest in FV Solar Lab S.R.L is as follows:

£000

Fair value of investment in joint venture 937

Less carrying value of investment in joint venture (see note 17) (304)

Gain on disposal of investment in joint venture 633

The gain on the acquisition of FV Solar Lab S.R.L. is as follows:

£000

Fair value of net assets acquired 1,873

Less fair value of previously held investment in joint venture (937)

Less consideration (557)

Gain on bargain purchase 379

Total gain arising from business combination achieved in stages:

£000

Gain on disposal of investment in joint venture 633

Gain on bargain purchase 379

Total gain 1,012

The Group has credited this total gain to the Statement of Comprehensive Income during the year ended 31 March 2022.

Due to the materiality of the gain, this is shown as a separate line item in the Statement of Comprehensive Income.

Amounts that the acquisition contributed to both Group revenue and profit in the post-acquisition period are as follows:

£000

Revenue contribution 148

Profit before tax contribution 65

Had the acquisition occurred at the start of the period, the acquisition would have made the following contributions to

both Group revenue and profit:

£000

Revenue contribution 806

Profit before tax contribution 230

STRATEGIC REPORT OVERVIEW BUSINESS REVIEW PERFORMANCE AND RISKINTRODUCTION GOVERNANCE FINANCIAL STATEMENTS

FORESIGHT GROUP HOLDINGS LIMITED Annual Report and Financial Statements FY22 203

Acquisitions in the year ended 31 March 2021

Details of the acquisition in the year ended 31 March 2021 are as follows:

Country of Nature of Date of Consideration Percentage

Business incorporation activity acquisition £000 ownership

PiP Manager Limited UK Asset management 18 August 2020 5,339 100%

services to pension funds

The entity was acquired via direct investment in the share capital of the target. The following subsidiaries of PiP

Manager Limited were also acquired:

•

PiP Multi-Strategy Infrastructure Limited

•

PiP Multi-Strategy Infrastructure (Scotland) Limited

•

PiP RP-MA GP LLP

•

PiP Multi-Strategy Infrastructure GP LLP

•

PiP WM-MA GP LLP

The carrying amount of assets and liabilities in the books of the acquiree at the date of acquisition was as follows:

£000

Trade and other receivables 377

Cash and cash equivalents 3,446

Trade and other payables (362)

Non-current payables (439)

Deferred tax asset 50

Total carrying value 3,072

Purchase consideration was £1.1 million of cash and £4.2 million of loans due to the vendors taken on by the Group at

acquisition (further details of these loans are included in note 22 above). Transaction costs of £184,000 (which have

been expensed) comprise adviser fees, including financial, tax and legal due diligence costs. Consideration is broken

down as follows:

£000

Cash paid 1,098

1,098

Founder loans taken on 4,241

Total consideration 5,339

The above acquisition is reflected in the Cash Flow Statement as follows:

£000

Cash paid (1,098)

(1,098)

Cash acquired on acquisition of subsidiary 3,446

Total per Cash Flow Statement 2,348

The following intangible assets were recognised at acquisition:

£000

Intangible asset – customer lists 2,879

204 FORESIGHT GROUP HOLDINGS LIMITED Annual Report and Financial Statements FY22

FOR THE YEAR ENDED 31 MARCH 2022

NOTES TO THE FINANCIAL STATEMENTS CONTINUED

31. Business combinations continued

Acquisitions in the year ended 31 March 2021 continued

The fair values of the assets and liabilities arising from the acquisition are as follows:

£000

Intangible asset 2,879

Trade and other receivables 377

Cash and cash equivalents 3,446

Trade and other payables (362)

Non-current payables (439)

Deferred taxation asset 159

Deferred taxation liability – intangible asset (547)

Net assets acquired 5,513

Consideration 5,339

Gain on bargain purchase (174)

Transaction costs 184

The fair value of the intangible asset above was derived from cash flow forecasts for the PiP standalone business, over

a 20 year period using a 13.75% discount rate based on the weighted average cost of capital (“WACC”) derived from a

capital asset pricing model (“CAPM”). The intangible asset is being amortised over a useful life of 20 years.

The acquisition of PiP resulted in a small gain on bargain purchase as a result of the assessment of fair value of

assets acquired and liabilities assumed marginally exceeding the total of the fair value of the purchase consideration.

The Group has credited the gain on bargain purchase to the Statement of Comprehensive Income during the year

ended 31 March 2021, as a separate line item in the Statement of Comprehensive Income within gain on business

combination (due to the materiality of the gain in FY22).

Amounts that the acquisition contributed to both Group revenue and profit in the post-acquisition period are as

follows:

£000

Revenue contribution 1,432

Profit before tax contribution 212

STRATEGIC REPORT OVERVIEW BUSINESS REVIEW PERFORMANCE AND RISKINTRODUCTION GOVERNANCE FINANCIAL STATEMENTS

FORESIGHT GROUP HOLDINGS LIMITED Annual Report and Financial Statements FY22 205

32. Assets and liabilities of disposal group as held for sale

Accounting policy:

The Group classifies non-current assets and disposal groups as held for sale if their carrying amounts will be

recovered principally through a sale transaction rather than through continuing use. Non-current assets and

disposal groups classified as held for sale are measured at the lower of their carrying amount and fair value less

costs to sell. Costs to sell are the incremental costs directly attributable to the disposal of an asset (disposal group),

excluding finance costs and income tax expense.

Assets and liabilities classified as held for sale are presented separately as current items in the Statement of

Financial Position.

A disposal group qualifies as a discontinued operation if it is a component of an entity that either has been disposed

of, or is classified as held for sale, and:

•

Represents a separate major line of business or geographical area of operations

•

Is part of a single co-ordinated plan to dispose of a separate major line of business or geographical area of

operations

•

Is a subsidiary acquired exclusively with a view to resale

Discontinued operations are excluded from the results of continuing operations and are presented as a single

amount as profit or loss after tax from discontinued operations in the Statement of Comprehensive Income.

The assets and liabilities of operations classified as a disposal group are as follows:

31 March 31 March

2022 2021

£000 £000

Assets

Current assets

Cash 65 65

Total assets 65 65

Liabilities

Current liabilities

Trade and other payables (1) (1)

Total liabilities (1) (1)

Net assets and liabilities 64 64

The assets above at 31 March 2022 and 2021 relate to residual cash balances in Foresight Metering Limited.

The liabilities at the same dates relate to accruals made for liquidator costs.

206 FORESIGHT GROUP HOLDINGS LIMITED Annual Report and Financial Statements FY22

FOR THE YEAR ENDED 31 MARCH 2022

NOTES TO THE FINANCIAL STATEMENTS CONTINUED

33. Related party transactions

Transactions between the parent company and its subsidiaries, which are related parties, have been eliminated on

consolidation and are not disclosed.

Transactions with key management personnel

The Group considers the Executive Committee (“Exco”) members as the key management personnel and the table

below sets out all transactions with these personnel and the Directors:

31 March 31 March

2022 2021

£000 £000

Emoluments 1,240 1,050

Partnership profit share — 3,217

Equity dividends — 9,319

Capital redemptions — 4,763

Other benefits 23 25

IPO proceeds — 148,070

Total 1,263 166,444

Staff advances

Accounting policy:

Advances to staff (including Partners of Foresight Group LLP) are accounted for as employee benefits under IAS 19.

In line with IAS 19, the advance is initially recognised as a financial asset and then as an expense when services are

provided, also taking into account the contractual terms of the advances.

Staff advances are made to various members of Foresight Group LLP or employees to be expensed over five years in

line with the contractual terms of the advances but are repayable if the relevant individuals leave the Group.

During the year ended 31 March 2022, a further £1,000,000 (2021: £1,500,000) of advances were made by Foresight

Group LLP and £580,000 (2021: £440,000) of the advances were expensed.

Disposal of long leasehold property

On 2 February 2021, the leasehold interest for Flat 18, Railway & Bicycle, 205 London Road, Sevenoaks was purchased

from Foresight Group LLP by Julia Fairman, the wife of the Executive Chairman of the Group, for £450,000 (being the

fair market value) resulting in a profit on disposal of £170,000. As part of this transaction, it was agreed that Foresight

Group LLP will continue to pay any council tax, utilities, services charges and rates payable in connection with the

flat for as long as Bernard Fairman acts as Executive Chairman of FGHL. These expenses are included above in other

benefits and amount to £6,000 (2021: £1,000).

Other related party transactions

At 31 March 2021, the Company owed Beau Port Investments Limited, a privately owned company of Bernard Fairman,

£530,000 in unpaid dividends. This balance was fully repaid by March 2022.

STRATEGIC REPORT OVERVIEW BUSINESS REVIEW PERFORMANCE AND RISKINTRODUCTION GOVERNANCE FINANCIAL STATEMENTS

FORESIGHT GROUP HOLDINGS LIMITED Annual Report and Financial Statements FY22 207

34. Ultimate holding company

Foresight Group Holdings Limited is the ultimate parent company of a group of companies that form the Group

presented in this financial information. The Company is a company incorporated and domiciled in Guernsey.

35. Subsequent events

Subsidiaries

On 1 April 2022, FV Solar Lab S.R.L. merged with Foresight Group S.R.L..

Business combinations

On 13 June 2022, the Group announced the acquisition of the technology ventures division of Downing LLP, including

the management of Downing's venture capital trusts, Downing ONE VCT Plc, Downing FOUR VCT Plc, and the

Downing's Ventures Enterprise Investment Scheme, representing a combined AUM of c.£275 million. The Group paid

an initial consideration of c.£13.6 million, with a further consideration of up to £4.2 million payable over a three year

period subject to the achievement of certain criteria, and an additional capped fee sharing arrangement in respect of

future performance and other fees. The acquisition will be funded from existing financial resources and will diversify

the Group’s existing ventures offering.

Completion of the acquisition was on 4 July 2022. Accordingly, at the date these consolidated financial statements

were authorised for issue, it was impracticable to disclose all the information required by IFRS 3 Business

Combinations as the Group has not completed its initial accounting of the business combination including the

purchase price allocation. More specifically, the valuation of investment management contracts acquired, and

valuation of the deferred consideration has not yet been finalised. The Group will provide this finalised information

inits Half-year Report for the six months ended 30 September 2022.

The acquisition is expected to contribute £4.8 million and £1.6 million to Group revenue and profit respectively

in the post-acquisition period to 31 March 2023. Annualised contribution to Group revenue and profit is expected

tobe£5.6 million and £2.1 million, respectively.

208 FORESIGHT GROUP HOLDINGS LIMITED Annual Report and Financial Statements FY22

36. Restatement of corresponding amounts

Consolidated Statement of Comprehensive Income

As restated As reported Change

31 March 31 March 31 March

2021 2021 2021

£000 £000 £000

Administrative expenses (48,883) (48,709) (174)

Gain on business combination 174 — 174

Corresponding amounts in the Consolidated Statement of Comprehensive Income to 31 March 2021 have been restated

due to reclassification of amounts presented in administrative expenses to a new line in the primary statement "Gain

on business combination". In the annual financial statements for the year ended 31 March 2021, gainon business

combination was included in administrative expenses as it was not material for separate disclosure.

Consolidated Statement of Financial Position

As restated As reported Change

31 March 31 March 31 March

2021 2021 2021

£000 £000 £000

Non-current assets

Contract costs – incremental placement agency fees 712 — 712

Trade and other receivables – trade receivables 1,471 — 1,471

Trade and other receivables – staff advances 1,940 — 1,940

Current assets

Contract costs – incremental placement agency fees 125 — 125

Trade and other receivables – trade receivables 9,517 10,988 (1,471)

Trade and other receivables – prepayments 1,958 2,795 (837)

Trade and other receivables – staff advances 740 2,680 (1,940)

As restated As reported Change

31 March 31 March 31 March

2020 2020 2020

£000 £000 £000

Non-current assets

Contract costs – incremental placement agency fees 765 — 765

Trade and other receivables – trade receivables 573 — 573

Trade and other receivables – staff advances 1,280 — 1,280

Current assets

Contract costs – incremental placement agency fees 91 — 91

Trade and other receivables – trade receivables 6,269 6,842 (573)

Trade and other receivables – prepayments 2,042 2,898 (856)

Trade and other receivables – staff advances 320 1,600 (1,280)

FOR THE YEAR ENDED 31 MARCH 2022

NOTES TO THE FINANCIAL STATEMENTS CONTINUED

STRATEGIC REPORT OVERVIEW BUSINESS REVIEW PERFORMANCE AND RISKINTRODUCTION GOVERNANCE FINANCIAL STATEMENTS

FORESIGHT GROUP HOLDINGS LIMITED Annual Report and Financial Statements FY22 209

Corresponding amounts in the Consolidated Statement of Financial Position to 31 March 2021 have been restated due

to reclassification of amounts presented in current assets to non-current assets and amounts presented in trade and

other receivables to contract costs. These reclassifications are as follows:

•

The adjustment to contract costs arises from the reclassification of capitalised incremental placement agency

fees from trade and other receivables – prepayments. In the annual financial statements for the year ended

31March2021, capitalised incremental placement agency fees were included in trade and other receivables

–prepayments as they were not material for disclosure as contract costs

•

The adjustment to trade and other receivables – trade receivables from current to non-current arises as amounts

were not expected to be recovered within 12 months of the reporting date in respect of Foresight Williams

Technology EIS Fund management fees

•

The adjustment to trade and other receivables – staff advances from current to non-current arises as the amounts

were not expected to be released to the Statement of Comprehensive Income within 12 months of the reporting date

210 FORESIGHT GROUP HOLDINGS LIMITED Annual Report and Financial Statements FY22

GLOSSARY

Absolute TSR Share price appreciation plus

dividends paid to show total return

to a Shareholder, expressed as a

percentage

AGM Annual General Meeting

AIFM Alternative Investment Fund Manager

AITS Foresight’s Accelerated Inheritance

Tax Solution

AML Anti-Money Laundering

AUM Assets Under Management

(FUM + DUM)

CAGR Compound Annual Growth Rate

CASS The Financial Conduct Authority’s

Client Assets Sourcebook

CFO Chief Financial Officer of Foresight

Group

Company Foresight Group Holdings Limited

COO Chief Operating Officer

Core EBITDA Core earnings before interest, taxes,

depreciation and amortisation. See

explanation in note 9 of the financial

statements

CRO Chief Risk Officer of Foresight Group

DTRs Disclosure Guidance and

Transparency Rules

DUM Debt Under Management

EDD Enhanced Due Diligence

EIS Enterprise Investment Scheme

EPS Earnings per share

ESG Environmental, Social and

Governance

Ethical

Standard

FRC’s Revised Ethical Standard

(2019)

Exco Executive Committee

Executive

Group

Executive Committee and the

Company Secretary

Executive

Management

Definition to be inserted into the

FCA’s Listing Rules under LR App 1,

App 1.1: “the executive committee

or most senior executive or

managerial body below the board

(or where there is no such formal

committee or body, the most senior

level of managers reporting to

the chief executive), including the

company secretary but excluding

administrative and support staff”

EU European Union

FCA Financial Conduct Authority

FCM Foresight Capital Management

FEIP Foresight Energy Infrastructure

Partners

FG Australia Foresight Group Australia Pty Ltd

FGCI Foresight Group CI Limited

FGLLP Foresight Group LLP

FIIF FP Foresight UK Infrastructure

Income Fund

Foresight/

Foresight

Group/Group

Foresight Group Holdings Limited

together with its direct and indirect

subsidiary undertakings

Foresight

SICAV

Foresight Global Real Infrastructure

(Lux) Fund

FRIF Foresight Regional Investment

FundLP

FSFC Foresight Sustainable Forestry

Company plc

FSFL Foresight Solar Fund Limited

FTE Full-Time Equivalent

FUM Funds Under Management

FVTPL Fair value through profit and loss

FY20/21/22 Year ending 31 March 2020/21/22

GHGs Greenhouse gases

GRIF FP Foresight Global Real

Infrastructure Fund

HR Human Resources

IASB International Accounting Standards

Board

IBR Incremental Borrowing Rate

STRATEGIC REPORT OVERVIEW BUSINESS REVIEW PERFORMANCE AND RISKINTRODUCTION GOVERNANCE FINANCIAL STATEMENTS

FORESIGHT GROUP HOLDINGS LIMITED Annual Report and Financial Statements FY22 211

IC Investment Committee

I&D Inclusion and Diversity

IFA Independent financial advisers

IFRS International Financial Reporting

Standard(s)

IPEV International Private Equity and

Venture Capital

IPO Initial Public Offering

ISAE 3402 International Standard on Assurance

Engagements – 3402, Assurance

Reports on Controls at a Service

Organisation

ITS Foresight’s Inheritance Tax Solution

JLEN JLEN Environmental Assets Group

LSE London Stock Exchange

MAR Market Abuse Regulation, being the

UK version of Regulation (EU) No

596/2014 which has effect in English

law by virtue of the European Union

(Withdrawal) Act 2018

Minority ethnic

background

Definition to be inserted into the

FCA’s Listing Rules under LR App1,

App 1.1: from one of the following

categories of ethnic background, as

set out in the tables in LR 9 Annex

2.1R(b) and LR 14 Annex 1.1R(b),

excluding the category “White

Britishor other White (including

minority-white groups)”

NAV Net Asset Value

NCIA Sustainable Market Initiative’s Natural

Capital Investment Alliance

NEDs Non-Executive Directors

OEIC Open Ended Investment Company

O&M Operations and maintenance

Parent

Company

Foresight Group Holdings Limited

PiP Pensions Infrastructure Platform

PRI The UN’s Principles for Responsible

Investment

PSP Performance Share Plan

RCSA Risk Control Self-Assessment

Recurring

revenue

Management, secretarial and

Directors’ fees

REF FP Foresight Sustainable Real Estate

Securities Fund

Relationship

Agreement

Pursuant to Listing Rule 9.8.4,

the Company has entered into

a relationship agreement with

BernardFairman, Beau Port

Investments Limited and other parties

with whom they are deemed tobe

acting in concert

RMF Risk Management Framework

RPI Retail Price Index

SBP Share-based payment

SBTi Science Based Targets initiative

SC Sustainability Committee

SDGs Sustainable Development Goals

SDR UK Sustainable Disclosure

Requirements

SECR Streamlined Energy and Carbon

Reporting

SET Sustainability Evaluation Tool

SFDR Sustainable Finance Disclosure

Regulation

SFT Sustainable Future Themes Fund

Shareholder Holder of the Company’s Ordinary

SIP Share Incentive Plan

SSPs Shared Socioeconomic Pathways

TCFD Task Force on Climate-related

Financial Disclosures

the Code The UK Corporate Governance Code

ToR Terms of Reference

TSR Total Shareholder Return

UNGC UN Global Compact

VAM VAM Global Infrastructure Fund

VCM Voluntary Carbon Market

VCT Venture Capital Trust

WACC Weighted average cost of capital

212 FORESIGHT GROUP HOLDINGS LIMITED Annual Report and Financial Statements FY22

Registered number

51521

Directors

Bernard Fairman

(Executive Chairman)

Gary Fraser

(Chief Financial Officer

and Chief Operating Officer)

Alison Hutchinson, CBE

(Senior Independent Non-Executive

Director)

Geoffrey Gavey

(Independent

Non-Executive Director)

Mike Liston, OBE

(Independent

Non-Executive Director)

Company Secretary

Jo-anna Nicolle

Registered office

Ground Floor

Dorey Court

Admiral Park

St Peter Port

Guernsey GY1 2HT

Principal office

The Shard

32 London Bridge Street

London SE1 9SG

Joint corporate brokers

Numis Securities Limited

45 Gresham Street

London EC2V 7BF

Jefferies International Limited

100 Bishopsgate

London EC2N 4JL

English and US legal advisers

Travers Smith LLP

10 Snow Hill

London EC1A 2AL

Guernsey legal advisers

Ogier (Guernsey) LLP

Redwood House

St Julian’s Avenue

St Peter Port

Guernsey GY1 1WA

Auditors

BDO LLP

55 Baker Street

London W1U 7EU

Registrar

Computershare Investor Services

(Guernsey) Limited

13 Castle Street

St Helier

Jersey JE1 1ES

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Foresight Group Holdings Limited

Ground Floor, Dorey Court

Admiral Park

St Peter Port

Guernsey

GY1 2HT

www.foresightgroup.eu

FORESIGHT GROUP HOLDINGS LIMITED Annual Report and Financial Statements 2022