TIDMICP
17 November 2020
First Half Results for the six months ended 30 September 2020
Fund Management Company profits up 6%; Interim dividend up 13%
Growth-orientated and resilient business model drives strong performance
Intermediate Capital Group plc (ICG or the Group) announces its first
half results for the six months ended 30 September 2020.
Highlights
-- Strong, off-cycle fundraising, despite the pandemic, with EUR2.6bn of new
money raised in the period resulting in AUM of EUR46.1bn (+2% on 31 March
2020). Fundraising of EUR6bn expected for the full year
-- Exceptional period of investment activity, particularly for our Strategic
Equity and European Corporate funds, with a total of EUR2.1bn deployed
and a further EUR4.0bn signed or in exclusivity
-- Strong investment performance particularly in our European and Asian
Corporate funds
-- Fund Management Company profit before tax up 6% to GBP89.8m (H1 2020:
GBP85.0m), representing an operating profit margin of 51.1% (H1 2020:
51.7%)
-- Investment Company profit before tax of GBP108.0m (H1 2020: GBP68.4m)
reflecting recovery in portfolio valuations and favourable realisations
-- Group profit before tax on an IFRS basis up 29% to GBP197.8m (H1 2020:
GBP153.4m); earnings per share up 32% to 66.9p (H1 2020: 50.8p)
-- Robust financial position: strong balance sheet, with GBP1bn of available
liquidity and net gearing of 0.67x (31 March 2020: 0.76x)
-- Interim ordinary dividend up 13% to 17.0p per share (H1 2020: 15.0p), in
line with our policy of paying a third of the prior full year dividend
Outlook:
-- Fundraising timetable accelerated: Strategic Equity Fund IV launched, and
Europe Fund VIII expected to launch in the next twelve months.
-- Confident in maintaining our growth momentum given our performance track
record and resilient business model, which additionally benefits from
structural tailwinds for alternative asset management
Commenting on the results, Benoit Durteste, CEO, said:
"The sustained growth of our Fund Management Company profits
demonstrates the strength of our business model in these challenging
times, as we continue to see investor demand for a broad range of our
funds, including a number of new strategies. Our long-life funds are
designed to withstand economic cycles; our portfolios are performing
well, and that is flowing through to profits. While remaining
disciplined, we have experienced a period of exceptional investment
activity since June. The pace of deployment in our flagship funds is
such that we have already launched Strategic Equity IV and expect Europe
Fund VIII to be in the market in the next twelve months. This is much
sooner than planned for both strategies which are expected to be larger
than their predecessors. This will accelerate the growth of our Fund
Management Company.
"I would like to thank all our employees for their continued dedication
and hard work during the pandemic."
Commenting on the results Lord Davies of Abersoch, Chairman, said:
"ICG has an outstanding team who continue to build one of the world's
leading diversified alternative asset management platforms, underpinned
by a strong, well-capitalised balance sheet. Our performance during the
pandemic demonstrates the resilience of our business model, which is
supported by strong long-term industry dynamics, enabling us to maintain
our commitment to value generation and shareholder returns through both
earnings growth and an attractive ordinary dividend. We expect to emerge
from this crisis stronger than before."
Financials
Unaudited Unaudited Audited
6 months to 6 months to % change 12 months to
30 September 2020 30 September 2019 31 March 2020
------------- ------------------ ------------------ ---------- --------------
Alternative
Performance
Measures
-------------
Fund GBP89.8m GBP85.0m 6% GBP183.1m
Management
Company
profit before
tax(1)
Investment GBP103.0m GBP66.0m 56% GBP(72.3)m
Company
profit/(loss)
before
tax(1)
Group profit GBP192.8m GBP151.0m 28% GBP110.8m
before
tax(1)
Earnings per 64.6p 50.4p 28% 38.3p
share(1)
Net 0.67x 0.80x (16%) 0.76x
gearing(1)
Net asset GBP4.88 GBP5.00 (2%) GBP4.63
value per
share
IFRS
Consolidated
-------------
Fund GBP89.8m GBP85.0m 6% GBP183.1m
Management
Company
profit before
tax
Investment GBP108.0m GBP68.4m 58% GBP(68.6)m
Company
profit/(loss)
before tax
Group profit GBP197.8m GBP153.4m 29% GBP114.5m
before tax
Earnings per 66.9p 50.8p 32% 38.2p
share
Dividend per 17.0p 15.0p 13% 50.8p
share in
respect of
the period
------------- ------------------ ------------------ ---------- --------------
(1) These are non-GAAP alternative performance measures and exclude the
impact of the consolidation of certain funds and CLOs following the
adoption of IFRS 10. Further details and a reconciliation are included
on page 31.
Assets under management(1)
30 30
September September 31 March
2020 2019 2020
-------------------------------------------------------- ---------- ---------- ----------
Third-party assets under management EUR43,688m EUR38,380m EUR42,829m
Balance sheet investment portfolio(1) EUR2,410m EUR2,694m EUR2,471m
-------------------------------------------------------- ---------- ---------- ----------
Total assets under management EUR46,098m EUR41,074m EUR45,300m
-------------------------------------------------------- ---------- ---------- ----------
Third-party fee-earning assets under management EUR37,105m EUR32,892m EUR35,868m
Balance sheet portfolio as a percentage of total assets
under management 5.2% 6.6% 5.5%
The following foreign exchange rates have been used.
30 September 2020 30 September 2019 31 March 2020 30 September 2020 30 September 2019 31 March 2020
Average Average Average Period end Period end Period end
-------- ----------------- ----------------- ------------- ----------------- ----------------- -------------
GBP:EUR 1.1166 1.1237 1.1447 1.1025 1.1282 1.1249
GBP:USD 1.2786 1.2497 1.2712 1.2920 1.2292 1.2420
Enquiries
A presentation for investors and analysts will be held at 09:00 GMT
today on our website via the Webcast link under Latest Results
https://www.icgam.com/shareholders. For those unable to dial in it will
be available on demand https://www.icgam.com/shareholders later in the
day.
Analyst / investor enquiries:
Ian Stanlake, Investor Relations, ICG +44 (0) 20 3545 1994
Media enquiries:
Alicia Wyllie, Corporate Communications, ICG
+44 (0) 20 3545 1338
Neil Bennett, Sam Turvey, Maitland +44 (0) 20 7379 5151
This Half Year Results statement has been prepared solely to provide
additional information to shareholders and meets the relevant
requirements of the UK Listing Authority's Disclosure and Transparency
Rules. The Half Year Results statement should not be relied on by any
other party or for any other purpose.
This Half Year Results statement may contain forward-looking statements.
These statements have been made by the Directors in good faith based on
the information available to them up to the time of their approval of
this report and should be treated with caution due to the inherent
uncertainties, including both economic and business risk factors,
underlying such forward looking information.
These written materials are not an offer of securities for sale in the
United States. Securities may not be offered or sold in the United
States absent registration under the US Securities Act of 1933, as
amended, or an exemption therefrom. The issuer has not and does not
intend to register any securities under the US Securities Act of 1933,
as amended, and does not intend to offer any securities to the public in
the United States. No money, securities or other consideration from any
person inside the United States is being solicited and, if sent in
response to the information contained in these written materials, will
not be accepted.
About ICG
ICG is a global alternative asset manager with over 30 years' history.
We manage EUR46.1bn of assets in private debt, credit and equity,
principally in closed-end funds. We provide capital to help companies
grow through private and public markets, developing long-term
relationships with our business partners to deliver value for
shareholders, clients and employees.
We operate across four asset classes -- corporate, capital market, real
asset and secondary investments. In addition to growing existing
strategies, we are committed to innovation and pioneering new strategies
across these asset classes where the market opportunity exists.
ICG is listed on the London Stock Exchange (ticker symbol: ICP). Further
details are available at: www.icgam.com. You can follow ICG on LinkedIn
https://www.globenewswire.com/Tracker?data=jYnd3_H6QY6OXnmP8t3HD07ajpkiv1d5B4g_PUDymmAOYM5PJfqiEHlh1PuBJ1I1OPs7KR5FHOhzOALbVm8gYB6Q3Jo7i7jFfwIFMXl062eyl-FTqa3wA_HUuMD7yeFy
https://www.linkedin.com/company/52126.
Business review
We have continued to grow our global alternative asset management
business in line with our strategic objectives, delivering:
-- Strong fundraising: EUR2.6bn raised in an off-cycle year, with
fundraising of EUR6bn expected for the full year
-- Stable fee rates: weighted average fee rate(1) at 0.85% compared to 0.86%
in the prior year
-- Substantial investment opportunities: EUR2.1bn deployed with a further
EUR4.0bn signed or in exclusivity across our strategies, which
accelerates the fundraising timetable for our flagship funds
-- Robust financial position: strong balance sheet, with GBP1bn of available
liquidity
Resilient and growth-orientated model
In an extraordinary environment when our employees, clients and
portfolio companies around the world are facing many challenges, the
strength of our resilient and growth-orientated business model has been
evident in our performance in the first half of the financial year.
The management and Board of ICG remain focused on the wellbeing of our
employees and those of our portfolio companies, and the role we play in
the communities where we are present, through those companies and more
broadly. Thanks to the dedication and commitment of our employees, their
ability to adapt successfully to new ways of working, and the strength
of our platform, we have been fully operational throughout the pandemic.
We have built a business model that is designed to deliver strong and
sustainable results over the long term, both for investors in our funds,
for our shareholders, and other stakeholders. Our funds are primarily
closed-ended and long in duration which enables us to withstand economic
cycles and to invest where we see opportunities.
Long-term industry tailwinds support ICG's growth
While the pandemic continues, visibility on the short-term economic
outlook remains limited. At the same time, the long-term industry
tailwinds which support ICG's growth are, if anything, intensifying.
Over the last decade, institutional investors, attracted by enhanced
returns, lower volatility and diversification opportunities, have
increased their allocations to alternative investment strategies
year-on-year. Also, the private markets investment landscape has
expanded, with companies staying private for longer, and continuing to
seek alternative sources of financing. These long-term trends are
accelerating the growth of the alternative asset management industry as
a whole. In addition, there is a flight to quality as investors favour
the larger and more diversified managers with a compelling fund
performance track record, such as ICG.
Fundraising set to be ahead of expectations in an off-cycle year
At EUR2.6bn (H1 2020: EUR4.6bn) our fundraising in the first half of the
financial year has been ahead of our expectations in what was always
going to be a slower fundraising year given our natural fundraising
cycle. We now expect overall fundraising in the current financial year
to be in line with our well-established, long-term fundraising plan of
EUR6bn.
We continued to see strong demand for Senior Debt Partners which has to
date raised a total of EUR4.2bn across Fund IV and segregated mandates,
including EUR1.0bn raised in the period. As fees are charged on invested
capital, the pace of fundraising has had no impact on the income
statement.
Our liquid open-ended credit strategies had net inflows in the period,
raising EUR0.5bn of new money. We also raised capital for the fourth
vintage of our Asia Pacific Fund; closed one European CLO; and continued
to make good progress with our new Sale and Leaseback and Infrastructure
Equity strategies. We have also started fundraising for the second
vintage of our Recovery Fund, with a first close in the period, to
invest in opportunities that may arise from the current economic
disruption.
Strong deployment for flagship funds bodes well for future fundraising
We have had an exceptional period of investment activity, while
maintaining our rigorous and disciplined investment approach. In
managing long-term funds our portfolio managers actively prepare for
economic cycles and have flexibility within fund mandates to take
advantage of dislocated markets. In addition, we have benefited from
real competitive advantages in accessing the attractive deal
opportunities that are emerging, thanks in particular to our significant
available dry powder and our local presence in multiple markets, which
brings on-the-ground expertise and relationships while also avoiding the
constraints of current international travel restrictions. We have
deployed EUR2.1bn across our direct investment strategies with a further
EUR4.0bn of deals closed, signed or in exclusivity since 30 September.
This compares to EUR5.9bn deployed across the whole of the last
financial year. As at the end of September 2020, we still had EUR10.8bn
of capital available to deploy across all strategies, of which EUR6.5bn
will be fee-earning once it is invested.
Our Strategic Equity fund in particular is benefiting significantly from
current market conditions, with the investment opportunity expanding to
include single-asset secondary transactions. The growth in this market
is substantial, and as a global player with first-mover advantage, ICG
is a market leader. The third-vintage fund, which only closed early in
2020, is deploying rapidly, and we have already launched fundraising for
the next vintage, an unprecedentedly rapid return to market. Europe Fund
VII is also deploying strongly and is likely to be back in the market in
the next twelve months. As both of these flagship funds charge fees on
committed capital fundraising will have an immediate positive impact on
profit.
Diversified portfolios support long-term fund performance
Diversification is a core strength of our business model. We are
investing across 22 strategies and have very little exposure to
industries which are most negatively affected by the Covid-19 crisis.
Our portfolios have performed well since the year-end and more strongly
than initially expected. Portfolio investments in our Europe and Asia
Pacific funds have performed exceptionally well in the period,
particularly those in healthcare, education and technology. Consequently,
we have very good visibility over the likely performance of these funds.
Our clients assess our performance on the returns we generate over the
life of a fund, and we continue to expect to meet or exceed our
fund-return hurdle rates over the longer term.
Diversified and robust balance sheet
We manage our balance sheet prudently, with a strong focus on liquidity,
which stood at GBP1bn at 30 September 2020. We also continuously manage
our sources of balance sheet financing while maintaining conservative
financial leverage. The weighted-average life of drawn debt at 30
September 2020 was 4.8 years with GBP417m of maturities by the end of
our next financial year (FY22), which includes a GBP250m unutilised
revolving credit facility which we are currently in the process of
refinancing.
These characteristics of prudence and liquidity gives us the flexibility
and agility to support the growth of our business as opportunities
arise. Our balance sheet capital is primarily invested alongside our
funds and is both an enabler and an accelerator of the growth of our
fund-management business. We expect the scale of our balance sheet
commitment to remain broadly stable over time in absolute terms, and for
it to represent a progressively smaller proportion of the overall AUM as
we continue to grow our third-party fund management business. Our
balance sheet portfolio is widely diversified, investing through our
funds in over 300 companies, across 37 industries and 33 countries. The
fund portfolio performance has driven the unrealised gains on our
balance sheet portfolio in the period.
Interim dividend increased
In line with our stated policy that the interim dividend will equate to
a third of the prior-year total, the Board has approved an interim
dividend of 17.0p, an increase of 13%. The dividend will be paid on 8
January 2021 to shareholders on the register on 11 December 2020. We
will continue to make the dividend reinvestment plan available.
Outlook: well-placed for significant sustainable long-term growth
The first half of 2020 was dominated by the social and economic impacts
of Covid-19 globally. These will likely continue for some time.
While we remain cautious about the outlook for the remainder of this
financial year, we expect to fundraise approximately EUR6bn, despite it
being an off-cycle year and notwithstanding the challenges associated
with Covid-19. We also believe that our resilient business model will
deliver strong profitability, with the operating margin of our Fund
Management business expected to be in line with our long-term guidance.
We are confident that the Group is in an excellent position for
long-term growth and shareholder value creation. Our closed-end-funds
model provides excellent visibility on future assets under management
and Fund Management Company profits. We have significant growth
potential from our existing portfolio of strategies, and we also expect
the current environment to present further opportunities for us to
innovate and increase diversification by asset class and geography. We
therefore remain highly confident in our ability to grow our AUM over
the long-term, supported by strong investor demand for our fund
strategies and underpinned by our investment-performance track record.
(1) These are non-GAAP alternative performance measures. Please see the
glossary on page 31 for further information.
Finance and operating review
The financial information prepared for, and reviewed by, management and
the Board is on a non-GAAP basis. These are alternative performance
measures as defined in the glossary on page 31. The IFRS financial
statements are on pages 14 to 30.
Under IFRS, the Group is deemed to control funds when the Group is
exposed, or has rights, to variable returns from its involvement with
those funds and has the ability to affect those returns through its
power over those funds. There are 15 credit funds and CLOs that are
required to be consolidated under this definition of control. This has
the impact of including all of the assets and liabilities of these funds
in the consolidated statement of financial position and recognises all
the related interest income and gains or losses on investments in the
consolidated income statement. However, the legal and economic structure
of these funds means that shareholders are only exposed to the Group's
own investment in, and the fee income from, these funds and CLOs.
The Board believes that presenting the financial information in this
review on a non-GAAP basis, and therefore excluding the impact of the
consolidated credit funds and CLOs, assists shareholders in assessing
their investment and the delivery of the Group's strategy through its
financial performance. This is consistent with the approach taken by
management, the Board and other stakeholders.
The Group's profit after tax on an IFRS basis was above the prior year
at GBP192.8m (H1 2020: GBP147.5m). On the alternative performance
measurement basis, it was above the prior year at GBP183.9m (H1 2020:
GBP143.5m). The reconciliation is below:
6 months to 30 September 2020 6 months to 30 September 2019
-------------------------------------------------------------------- --------------------------------------------------------------------
IFRS IFRS
Income Alternative performance measurement basis Adjustments as reported Alternative performance measurement basis Adjustments as reported
Statement GBPm GBPm GBPm GBPm GBPm GBPm
--------------- ----------------------------------------- ----------- ------------ ----------------------------------------- ----------- ------------
Revenue
--------------- ----------------------------------------- ----------- ------------ ----------------------------------------- ----------- ------------
Fee and other
operating
revenue 154.2 (6.1) 148.1 135.6 (8.0) 127.6
--------------- ----------------------------------------- ----------- ------------ ----------------------------------------- ----------- ------------
Finance and
dividend
income 11.7 (22.0) (10.3) 17.4 (5.7) 11.7
--------------- ----------------------------------------- ----------- ------------ ----------------------------------------- ----------- ------------
Net investment
returns /
gains on
investments 186.6 27.7 214.3 131.6 33.1 164.7
--------------- ----------------------------------------- ----------- ------------ ----------------------------------------- ----------- ------------
Total revenue 352.5 (0.4) 352.1 284.6 19.4 304.0
--------------- ----------------------------------------- ----------- ------------ ----------------------------------------- ----------- ------------
Finance costs (37.9) 7.4 (30.5) (20.3) (8.8) (29.1)
--------------- ----------------------------------------- ----------- ------------ ----------------------------------------- ----------- ------------
Administrative
expenses (121.8) (2.2) (124.0) (113.3) (9.6) (122.9)
--------------- ----------------------------------------- ----------- ------------ ----------------------------------------- ----------- ------------
Other - 0.2 0.2 - 1.4 1.4
--------------- ----------------------------------------- ----------- ------------ ----------------------------------------- ----------- ------------
Profit before
tax 192.8 5.0 197.8 151.0 2.4 153.4
--------------- ----------------------------------------- ----------- ------------ ----------------------------------------- ----------- ------------
Tax (8.9) 3.9 (5.0) (7.5) 1.6 (5.9)
--------------- ----------------------------------------- ----------- ------------ ----------------------------------------- ----------- ------------
Profit after
tax 183.9 8.9 192.8 143.5 4.0 147.5
--------------- ----------------------------------------- ----------- ------------ ----------------------------------------- ----------- ------------
Non-GAAP measures are denoted by (1) throughout this review. The
definition, and where appropriate, reconciliation to a GAAP measure, is
included in the glossary on page 31.
Overview
The Group's profit before tax(1) for the period under the alternative
performance measurement basis was 28% higher at GBP192.8 (H1 2020:
GBP151.0m), with Fund Management Company (FMC) profit 6% higher at
GBP89.8m (H1 2020: GBP85.0m) and Investment Company (IC) profit 56%
higher at GBP103.0m (H1 2020: GBP66.0m).
Our principal profit metric is FMC profit which has benefited from the
increase in assets under management and increased fee income, partially
offset by lower dividend income and increased operating costs in the
period. The IC has reported increased profits with net investment
returns higher primarily due to the recognition of unrealised gains
arising from the period end portfolio valuations.
The IC profit also includes a non-cash loss of GBP7.4m (H1 2020: gain of
GBP8.5m) arising from the fair value movement of hedging derivatives. We
use these to match the currency exposure of our Investment Company
assets and related liabilities.
Income statement 6 months to 30 September 2020 6 months to 30 September 2019 Change
Alternative performance measurement basis GBPm GBPm %
------------------------------------------- ----------------------------- ----------------------------- ------
Fund Management Company 89.8 85.0 6%
------------------------------------------- ----------------------------- ----------------------------- ------
Investment Company 103.0 66.0 56%
------------------------------------------- ----------------------------- ----------------------------- ------
Profit before tax 192.8 151.0 28%
------------------------------------------- ----------------------------- ----------------------------- ------
Tax (8.9) (7.5) 19%
------------------------------------------- ----------------------------- ----------------------------- ------
Profit after tax 183.9 143.5 28%
------------------------------------------- ----------------------------- ----------------------------- ------
The effective tax rate is lower than the standard corporation tax rate
of 19%, as detailed on page 29. This is due to a significant proportion
of the Investment Company's assets being invested directly into funds
based outside the United Kingdom. Investment returns from these funds
are paid to the Group in the form of non-taxable dividend income. This
is in line with other UK investment companies. The Investment Company's
taxable costs offset the taxable profits of our UK Fund Management
business, reducing the overall Group charge.
Based on the alternative performance measurement profit above, the Group
generated a ROE(1) of 28.5% (H1 2020: 21.0%). Adjusted earnings per
share(1) for the period of 64.6p (H1 2020: 50.4p) consisted of: Fund
Management Company 30.1p (H1 2020: 28.4p) and Investment Company 34.5p
(H1 2020: 22.0p).
Net current assets(1) of GBP511.7m are down from GBP762.3m at 31 March
2020, with a net decrease in cash and financial liabilities maturing
within one year of GBP254.5m.
Fund Management Company
Assets under management
A key measure of the success of our strategy to generate value from our
fund management business is our ability to grow assets under
management(1). AUM is our best lead indicator of sustainable future fee
streams and therefore sustainable profit growth. In the six-month period
to 30 September 2020, the net impact of fundraising and realisations saw
third party AUM increase 2% to EUR43.7bn. AUM by strategic asset class
is detailed below, where all figures are quoted in EURm.
Third party
AUM by Total
strategic Corporate Investments Capital Market Investments Real Asset Investments Secondary Investments Third-party AUM
asset class EURm EURm EURm EURm EURm
------------- --------------------- -------------------------- ---------------------- --------------------- -----------------
At 1 April
2020 20,689 13,831 4,944 3,365 42,829
------------- --------------------- -------------------------- ---------------------- --------------------- -----------------
Additions 1,441 869 244 - 2,554
------------- --------------------- -------------------------- ---------------------- --------------------- -----------------
Realisations (561) (226) (159) (18) (964)
------------- --------------------- -------------------------- ---------------------- --------------------- -----------------
FX and other (222) (160) (145) (204) (731)
------------- --------------------- -------------------------- ---------------------- --------------------- -----------------
At 30
September
2020 21,347 14,314 4,884 3,143 43,688
------------- --------------------- -------------------------- ---------------------- --------------------- -----------------
Change % 3% 3% (1%) (7%) 2%
------------- --------------------- -------------------------- ---------------------- --------------------- -----------------
Corporate Investments
Corporate Investments third-party funds under management increased 3% to
EUR21.3bn in the period as additions of EUR1.4bn, including EUR1.0bn for
Senior Debt Partners, EUR0.2bn for Asia Pacific Fund IV and EUR0.2bn for
our recently launched Recovery Fund, outweighed the realisations from
our older funds.
Capital Market Investments
Capital Markets third-party funds under management increased 3% to
EUR14.3bn, with new third party AUM of EUR0.9bn raised in the period. We
priced a EUR0.4bn European CLO in March which closed in the current
period. The remaining EUR0.5bn was raised across our other liquid credit
funds and multi-asset mandates.
Real Asset Investments
Real Assets third-party funds under management decreased 1% to EUR4.9bn.
This reflects the fundraising cycle for our real estate strategies, with
no funds currently being raised and realisations from our older funds.
We raised EUR0.2bn of new AUM in the period across our Infrastructure
Equity and Sale and Leaseback funds.
Secondary Investments
Secondary's third-party funds under management decreased 7% to EUR3.1bn.
With Strategic Equity closing its latest fund at the beginning of this
calendar year, there were no funds being raised during the period. The
decrease in AUM is therefore attributable to realisations from our older
funds.
Fee earning AUM
The deployment rate for our Senior Debt Partners strategy, our Real
Estate funds and our North American Private Debt Fund has a direct
impact on FMC income as fees are charged on an invested-capital basis.
The total amount of third-party capital deployed on behalf of the direct
investment funds was EUR2.1bn in the period compared to EUR2.2bn in the
first half of the last financial year. The direct investment funds are
investing as follows, based on third-party funds raised at 30 September
2020:
Strategic % invested at % invested at Assets in fund at Deals completed
asset class Fund 30 September 2020 31 March 2020 30 September 2020 in period
------------ ----------- ------------------ -------------- ------------------ ---------------
Corporate ICG Europe
Investments Fund VII 53% 52% 8 0
Europe
Corporate Mid-Market
Investments Fund 14% 7% 2 1
North
American
Private
Corporate Debt Fund
Investments II 42% 26% 11 4
Senior Debt
Corporate Partners
Investments IV* 22% 15% 10 6
ICG Longbow
Real
Real Asset Estate
Investments Fund V 69% 61% 15 1
Strategic
Secondary Equity
Investments III 48% 30% 5 2
------------ ----------- ------------------ -------------- ------------------ ---------------
* Co-mingled fund, excluding mandates and undrawn commitments
Fee-earning AUM has increased 3% to EUR37.1bn since 1 April 2020
primarily due to the immediate impact of those funds which charge fees
on committed capital, fundraising across our capital markets strategies,
and the deployment of Senior Debt Partners and Real Estate funds. New
investments made in our direct investment funds are partially offset by
realisations as detailed below:
Third party Capital Market Real Asset Total
fee earning Corporate Investments Investments Investments Secondary Investments Third Party Fee Earning AUM
AUM EURm EURm EURm EURm EURm
------------- --------------------- -------------- ------------ --------------------- -----------------------------
At 1 April
2020 15,641 13,182 3,784 3,261 35,868
------------- --------------------- -------------- ------------ --------------------- -----------------------------
Additions 1,347 1,068 475 5 2,895
------------- --------------------- -------------- ------------ --------------------- -----------------------------
Realisations (665) (262) (147) (24) (1,098)
------------- --------------------- -------------- ------------ --------------------- -----------------------------
FX and other (156) (108) (79) (217) (560)
------------- --------------------- -------------- ------------ --------------------- -----------------------------
At 30
September
2020 16,167 13,880 4,033 3,025 37,105
------------- --------------------- -------------- ------------ --------------------- -----------------------------
Change % 3% 5% 7% (7%) 3%
------------- --------------------- -------------- ------------ --------------------- -----------------------------
Fee income
Third-party fee income(1) of GBP154.2m was 14% higher than the prior
year due to the successful fundraising in the current and prior year of
funds which charge fees on committed capital as well as investments made
by other funds that charge fees on invested capital. Details of
movements are shown below:
6 months to 6 months to
30 September 2020 30 September 2019 Change
Fee income GBPm GBPm %
--------------------------- ------------------ ------------------ ------
Corporate Investments 88.5 81.2 9%
--------------------------- ------------------ ------------------ ------
Capital Market Investments 29.3 25.8 14%
--------------------------- ------------------ ------------------ ------
Real Asset Investments 17.0 11.3 50%
--------------------------- ------------------ ------------------ ------
Secondary Investments 19.4 17.3 12%
--------------------------- ------------------ ------------------ ------
Total third-party funds 154.2 135.6 14%
--------------------------- ------------------ ------------------ ------
IC management fee 10.0 11.4 (12%)
--------------------------- ------------------ ------------------ ------
Total 164.2 147.0 12%
--------------------------- ------------------ ------------------ ------
Third-party fees include GBP15.5m of net performance fees (H1 2020:
GBP15.6m), primarily related to Corporate Investments. Performance fees
are an integral recurring part of the fee income profile and profit
stream of the Group.
Third-party fees are 84% denominated in Euros or US Dollars. The Group's
policy is to hedge non-Sterling fee income to the extent that it is not
matched by costs and is predictable. Total fee income included a GBP1.9m
FX benefit in the period.
The weighted-average fee rate(1), excluding performance fees, across our
fee earning AUM is 0.85% (March 2020: 0.86%).
30 September 2020 31 March 2020
Weighted-average fee rates GBPm GBPm
--------------------------- ----------------- -------------
Corporate Investments 1.07% 1.05%
--------------------------- ----------------- -------------
Capital Market Investments 0.46% 0.49%
--------------------------- ----------------- -------------
Real Asset Investments 0.96% 0.91%
--------------------------- ----------------- -------------
Secondary Investments 1.25% 1.49%
--------------------------- ----------------- -------------
Total third-party funds 0.85% 0.86%
--------------------------- ----------------- -------------
Other income
In addition to fees, the FMC recorded CLO dividend receipts(1) of
GBP11.7m (H1 2020: GBP17.4m). The reduction resulted from Covid-related
credit-rating downgrades of some of the underlying assets meaning that
they are temporarily unable to make dividend distributions. The level of
credit rating downgrades has stabilised, but we remain cautious in our
short-term outlook for CLO dividend receipts.
Operating expenses
Operating expenses of the FMC were GBP86.1m (H1 2020: GBP79.4m).
Salaries were GBP30.3m (H1 2020: GBP27.5m) as average headcount
increased 13% from 326 to 369, the result of continued investment across
our platform in the prior year. This also led to increased incentive
scheme costs of GBP33.9m (H1 2020: GBP30.0m). Other administrative costs
remained flat at GBP21.9m (H1 2020: GBP21.9m), with higher costs from
our new head office offset by lower travel and entertainment expense.
The FMC operating margin(1) was 51.1%, down from 51.7% in the prior year,
as a result of lower CLO dividend receipts and continued investment in
newer strategies. Average fee earning AUM increased 10% to EUR36.6bn for
the six months ending 30 September thereby increasing the operating
leverage of our existing strategies.
Investment Company
Balance sheet investments
The balance sheet investment portfolio(1) remained flat in the period at
GBP2.2bn, representing 5.2% (2020: 5.5%) of total assets under
management, as illustrated in the investment portfolio bridge below.
GBPm
------------------------ -------
At 1 April 2020 2,196.8
--------------------------- -------
New investments 123.0
--------------------------- -------
Realisations (280.7)
--------------------------- -------
Net investment returns* 182.2
--------------------------- -------
Cash interest received (31.7)
--------------------------- -------
FX and other (3.3)
--------------------------- -------
At 30 September 2020 2,186.3
--------------------------- -------
* Excludes net investment returns of GBP3.9m from current assets held on
the balance sheet prior to being transferred to third party investors or
funds
Realisations comprise the return of GBP269.8m of principal and the
crystallisation of GBP10.9m of net investment returns.
In the period GBP39.4m was invested alongside our Corporate Investments
strategies for new and follow-on investments. Of the remaining GBP83.6m,
GBP18.1m was invested in new and reset CLOs, GBP42.7m in our Real Asset
Investment strategies and GBP22.8m in our Strategic Equity strategy.
The Sterling value of the portfolio decreased by GBP2.3m due to FX
movements. The portfolio is 41% Euro denominated, 24% US dollar
denominated and 23% Sterling denominated.
The balance sheet investment portfolio is weighted towards the
higher-returning asset classes as detailed below:
As at As at
30 September 2020 31 March 2020
GBPm % of total GBPm % of total
--------------- ------------------ ---------- -------------- ----------
Corporate
Investments 1,329 61% 1,327 60%
---------------- ------------------ ---------- -------------- ----------
Capital Market
Investments 446 21% 433 20%
---------------- ------------------ ---------- -------------- ----------
Real Asset
Investments 248 11% 297 14%
---------------- ------------------ ---------- -------------- ----------
Secondary
Investments 163 7% 140 6%
---------------- ------------------ ---------- -------------- ----------
Total balance
sheet
portfolio 2,186 100% 2,197 100%
---------------- ------------------ ---------- -------------- ----------
In addition, GBP22.0m (31 March 2020: GBP12.8m) of current assets are
held on the balance sheet prior to being transferred to third-party
investors or funds.
Net investment returns
Net investment returns(1) of GBP186.1m (H1 2020: GBP131.6m) represents
the total return generated in the period from the balance sheet
investments in our third-party funds and represents 17.0% of the average
balance sheet portfolio (H1 2020: 10.8%). As with unrealised losses,
unrealised gains do not result in cash movements. The Group's long-term
business model, involving management of predominantly closed-end funds,
means that teams are not forced to exit investments to meet liquidity
needs. They have the benefit of time and portfolios are structured to
perform through economic cycles.
Net investment returns by asset class were as follows:
As at As at
30 September 2020 30 September 2019
GBPm GBPm Change %
---------------------- ------------------ ------------------ --------
Corporate Investments 156.4 87.0 80%
------------------------ ------------------ ------------------ --------
Capital Market
Investments 17.9 10.3 74%
------------------------ ------------------ ------------------ --------
Real Asset Investments 7.6 6.3 21%
------------------------ ------------------ ------------------ --------
Secondary Investments 4.2 28.0 (85%)
------------------------ ------------------ ------------------ --------
Total net investment
returns 186.1 131.6 41%
------------------------ ------------------ ------------------ --------
The fair value of the funds that the Group's Corporate Investments
represent is determined in line with industry guidelines and uses both
earnings multiple and discounted cash flow valuation techniques. The
increase in net investment return is primarily due to unrealised gains
arising from the half year valuations reflecting the stronger
performance of the fund portfolio investments in the healthcare,
education and technology sectors, and more broadly those in Asia
Pacific.
Within Capital Market Investments is the Group's regulatory investment
in the CLOs it manages. The fair value of the CLO equity assets is
assessed using discounted cash flow models, with CLO debt assets valued
based on observable market prices. Valuations can therefore be volatile
in the short term. With a small number of assets currently in default --
representing only 2% of the CLO portfolio -- we have reduced our peak
default rate assumption from 8% to 6%. The impact of this reduction has
been more than offset by other assumptions, including extending the peak
default timeframe, as we continue to apply a cautious valuation approach
in the light of ongoing uncertainties related to the pandemic.
Net investment returns on our Secondary Investments in the prior year
were enhanced by a significant uplift on one individual portfolio
investment.
Interest expense
Interest expense(1) of GBP30.5m was GBP1.7m higher than the prior period
(H1 2020: GBP28.8m), due to an increase in the average level of drawn
debt in the period.
Operating expenses
Operating expenses(1) of the IC amounted to GBP35.7m (H1 2020: GBP33.9m),
of which incentive scheme costs of GBP24.2m (H1 2020: GBP24.4m) were the
largest component. Other staff and administrative costs were GBP11.5m
compared to GBP9.5m in the first half of last year, a GBP2.0m increase
primarily due to increased head-office costs and investment in our
platform in the prior year.
Group cash flow and debt
Balance sheet liquidity remains healthy, with GBP1,015m of available
cash and unutilised debt facilities at 30 September 2020, excluding the
consolidated structured entities. The movement in the Group's cash and
unutilised debt facilities during the period is detailed as follows:
GBPm
------------------------------- -------
At 1 April 2020 1,216.5
---------------------------------- -------
Private placement notes repaid (170.4)
---------------------------------- -------
Retail bond repaid (80.0)
---------------------------------- -------
Movement in cash (433.6)
---------------------------------- -------
Movement in drawn debt 515.4
---------------------------------- -------
FX and other (33.4)
---------------------------------- -------
At 30 September 2020 1,014.5
---------------------------------- -------
Total drawn debt at 30 September 2020 was GBP1,405m compared to
GBP1,915m at 31 March 2020, with available cash of GBP465m compared to
GBP917m at 31 March 2020.
Capital position
Shareholders' funds increased by GBP80.9m to GBP1,390.1m (31 March 2020:
GBP1,309.2m), as the retained profits in the period were offset by the
payment of the ordinary dividend. Total net debt(1) to shareholders'
funds (net gearing(1)) as at 31 March 2020 decreased to 0.67x from 0.76x
at 31 March 2020, a level we are comfortable with given the current
economic environment.
Principal risks and uncertainties
The principal risks and uncertainties to which the Group is exposed for
the remainder of the year have been subject to robust assessment by the
Directors and remain consistent with those outlined in our annual report
for the year ended 31 March 2020.
The Group is contending with several challenges posed by the Covid-19
pandemic, including market volatility and new ways of working. In the
first half of 2020, we responded positively to the early challenges
presented by the pandemic and adapted successfully to operating remotely,
with minimal disruption to business continuity. Our priority has been,
and remains, the safety and wellbeing of our colleagues and our ability
to continue to serve our clients. Any return to our office locations
has been carefully considered in respect of the best interests of our
team members, risk assessments being conducted in line with local
guidance, and robust return-to-office procedures. We are monitoring
carefully those locations operating in a hybrid home and office
environment which presents its own distinct challenges. While our
working arrangements will continue to evolve with the varied impact of
Covid-19 regionally, we are prepared for our offices to operate with
fewer colleagues on site for an extended period of time, if required.
Our investment teams acted quickly and decisively to take the measures
necessary to best navigate the unexpected challenges presented by the
pandemic, and they continue to interact regularly with clients and
portfolio company management and hold meetings virtually. In line with
our well-established fundraising plan, this was also going to be a lower
fundraising year, but there may also be a slowdown in the broader
fundraising market as clients focus on managing existing portfolios.
Additionally, although it is difficult to fully replace the benefits of
in-person meetings, remote due diligence has been effective, allowing
transactions to still be completed.
Careful attention is being paid to the ongoing potential impacts of
Covid-19 and the resulting impact on our principal risks and the overall
risk profile of the Group. We will continue to monitor the situation and
potential exposures as matters evolve and develop a range of further
plans to put into action should this be required.
Responsibility Statement
We confirm to the best of our knowledge:
-- The condensed set of financial statements have been prepared in
accordance with IAS 34 'Interim Financial Reporting';
-- The interim management report, which is incorporated into the Directors'
report, includes a fair review of the development and performance of the
business and the position of the Group and the undertakings included in
the consolidation taken as a whole, together with a description of the
principal risks and uncertainties that they face; and
-- There have been no material related-party transactions that have an
effect on the financial position or performance of the Group in the first
six months of the current financial year since that reported in the 31
March 2020 Annual Report.
This responsibility statement was approved by the Board of Directors on
16 November 2020 and is signed on its behalf by:
Benoit Durteste Vijay Bharadia
CEO CFOO
Independent Review Report to Intermediate Capital Group plc
Introduction
We have been engaged by Intermediate Capital Group plc (the 'Company' or
the 'Group') to review the condensed consolidated financial statements
in the Half-year financial report for the six months ended 30 September
2020 which comprises the Condensed consolidated income statement,
Condensed consolidated statement of comprehensive income, Condensed
consolidated statement of financial position, Condensed consolidated
statement of cash flows, Condensed consolidated statement of changes in
equity and the related notes 1 to 9 (together the 'condensed
consolidated financial statements'). We have read the other information
contained in the Half-year financial report and considered whether it
contains any apparent misstatements or material inconsistencies with the
information in the condensed consolidated financial statements.
This report is made solely to the Company in accordance with guidance
contained in International Standard on Review Engagements 2410 (UK and
Ireland) "Review of Interim Financial Information Performed by the
Independent Auditor of the Entity" issued by the Auditing Practices
Board. To the fullest extent permitted by law, we do not accept or
assume responsibility to anyone other than the Company, for our work,
for this report, or for the conclusions we have formed.
Directors' Responsibilities
The Half-year financial report is the responsibility of, and has been
approved by, the directors. The directors are responsible for preparing
the Half-year financial report in accordance with the Disclosure
Guidance and Transparency Rules of the United Kingdom's Financial
Conduct Authority.
As disclosed in Note 1, the annual financial statements of the Group are
prepared in accordance with International Financial Reporting Standards
as adopted by the European Union. The condensed consolidated financial
statements included in this Half-yearly financial report has been
prepared in accordance with International Accounting Standard 34,
"Interim Financial Reporting", as adopted by the European Union.
Our Responsibility
Our responsibility is to express to the Company a conclusion on the
condensed consolidated financial statements in the Half-year financial
report based on our review.
Scope of Review
We conducted our review in accordance with International Standard on
Review Engagements (UK and Ireland) 2410, "Review of Interim Financial
Information Performed by the Independent Auditor of the Entity" issued
by the Auditing Practices Board for use in the United Kingdom. A review
of interim financial information consists of making enquiries, primarily
of persons responsible for financial and accounting matters, and
applying analytical and other review procedures. A review is
substantially less in scope than an audit conducted in accordance with
International Standards on Auditing (UK) and consequently does not
enable us to obtain assurance that we would become aware of all
significant matters that might be identified in an audit. Accordingly,
we do not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that causes us to
believe that the condensed consolidated financial statements in the
Half-year financial report for the six months ended 30 September 2020 is
not prepared, in all material respects, in accordance with International
Accounting Standard 34 as adopted by the European Union and the
Disclosure Guidance and Transparency Rules of the United Kingdom's
Financial Conduct Authority.
Ernst & Young LLP
London
16 November 2020
Condensed Consolidated Income Statement
For the six months ended 30 September 2020
Six months ended Six months ended
30 September 2020 30 September 2019
(Unaudited) (Unaudited)
Notes GBPm GBPm
------------------------------------------------------- ------- ------------------ -------------------
Fee and other operating income 2 148.1 127.6
Finance (loss)/income (10.3) 11.7
Net gains on investments 214.3 164.7
Total revenue 352.1 304.0
------------------------------------------------------- ------- ------------------ -------------------
Finance costs (30.5) (29.1)
Administrative expenses (124.0) (122.9)
Share of results of joint ventures accounted for using
equity method 0.2 1.4
Profit before tax 197.8 153.4
------------------------------------------------------- ------- ------------------ -------------------
Tax charge 7 (5.0) (5.9)
------------------------------------------------------- ------- ------------------ -------------------
Profit after tax 192.8 147.5
------------------------------------------------------- ------- ------------------ -------------------
Attributable to:
------------------------------------------------------- ------- ------------------ -------------------
Equity holders of the parent 190.5 144.5
Non controlling interests 2.3 3.0
------------------------------------------------------- ------- ------------------ -------------------
192.8 147.5
------------------------------------------------------- ------- ------------------ -------------------
Earnings per share 5 66.9p 50.8p
------------------------------------------------------- ------- ------------------ -------------------
Diluted earnings per share 5 66.0p 50.0p
------------------------------------------------------- ------- ------------------ -------------------
All activities represent continuing operations. The accompanying notes
are an integral part of these financial statements.
Condensed Consolidated Statement of Comprehensive Income
For the six months ended 30 September 2020
Six months ended Six months ended
30 September 2020 30 September 2019
(Unaudited) (Unaudited)
GBPm GBPm
------------------------------------------------------- ------------------ ------------------
Profit after tax 192.8 147.5
Items that will be reclassified subsequently to profit
or loss
Exchange differences on translation of foreign operations (1.5) 9.6
Tax on items taken to other comprehensive income 3.8 1.1
--------------------------------------------------------- ------------------ ------------------
2.3 10.7
------------------------------------------------------- ------------------ ------------------
Total comprehensive income for the period 195.1 158.2
--------------------------------------------------------- ------------------ ------------------
Attributable to:
------------------------------------------------------- ------------------ ------------------
Equity holders of the parent 192.8 154.6
Non controlling interests 2.3 3.6
--------------------------------------------------------- ------------------ ------------------
195.1 158.2
------------------------------------------------------- ------------------ ------------------
The accompanying notes are an integral part of these financial
statements.
Condensed Consolidated Statement of Financial Position
As at 30 September 2020
30 September 2020 31 March 2020
(Unaudited) (Audited)
Notes GBPm GBPm
---------------------------------------------------- ----- ----------------- --------------------
Non current assets
Intangible assets 26.0 26.7
Property, plant and equipment 9 65.8 13.4
Investment property 1.7 8.1
Investment in joint venture accounted for under the
equity method 2.8 2.5
Financial assets at fair value 4 5,868.6 5,492.6
Derivative financial assets 4 3.5 12.8
Deferred tax asset 13.2 11.1
---------------------------------------------------- ----- ----------------- --------------------
5,981.6 5,567.2
---------------------------------------------------- ----- ----------------- --------------------
Current assets
Trade and other receivables 271.8 201.8
Financial assets at fair value 4 22.0 12.8
Derivative financial assets 4 111.5 126.5
Current tax debtor 20.9 22.8
Cash and cash equivalents 602.5 1,086.9
---------------------------------------------------- ----- ----------------- --------------------
1,028.7 1,450.8
---------------------------------------------------- ----- ----------------- --------------------
Total assets 7,010.3 7,018.0
---------------------------------------------------- ----- ----------------- --------------------
Equity and reserves
Called up share capital 77.2 77.2
Share premium account 179.9 179.9
Other reserves (11.8) (28.3)
Retained earnings 1,144.8 1,080.4
---------------------------------------------------- ----- ----------------- --------------------
Equity attributable to owners of the Company 1,390.1 1,309.2
---------------------------------------------------- ----- ----------------- --------------------
Non controlling interest 3.8 1.5
---------------------------------------------------- ----- ----------------- --------------------
Total equity 1,393.9 1,310.7
---------------------------------------------------- ----- ----------------- --------------------
Non current liabilities
Provisions 0.2 0.1
Financial liabilities at fair value 4,8 3,725.0 3,329.3
Financial liabilities at amortised cost 8 1,308.3 1,664.1
Other financial liabilities 8 56.3 5.5
Derivative financial liabilities 4 48.6 41.4
Deferred tax liabilities 1.8 1.9
---------------------------------------------------- ----- ----------------- --------------------
5,140.2 5,042.3
---------------------------------------------------- ----- ----------------- --------------------
Current liabilities
Provisions 0.6 0.7
Trade and other payables 304.7 336.0
Financial liabilities at amortised cost 8 96.5 252.8
Other financial liabilities 8 3.2 3.2
Current tax creditor 4.9 6.6
Derivative financial liabilities 4 66.3 65.7
---------------------------------------------------- ----- ----------------- --------------------
476.2 665.0
---------------------------------------------------- ----- ----------------- --------------------
Total liabilities 5,616.4 5,707.3
---------------------------------------------------- ----- ----------------- --------------------
Total equity and liabilities 7,010.3 7,018.0
---------------------------------------------------- ----- ----------------- --------------------
The accompanying notes are an integral part of these financial
statements.
Condensed Consolidated Statement of Cash Flows
For the six months ended 30 September 2020
Six months ended
30 September 2020
(Unaudited) Six months ended 30 September 2019 (Unaudited)
GBPm GBPm
--------------------------------------------------- ------------------ ----------------------------------------------
Operating activities
Interest received 125.2 124.0
Fees received 120.2 106.5
Dividends received 2.2 0.5
Payments to suppliers and employees (139.1) (56.3)
Proceeds from sale of current financial assets and
disposal groups 7.2 80.7
Purchase of current financial assets and disposal
groups (12.9) (82.1)
Proceeds from sale of non current financial assets 990.9 1,031.4
Purchase of non current financial assets (872.6) (1,294.0)
Net cash inflow from derivative contracts 8.7 15.4
Cash generated from / (used in) operating activities 229.8 (73.9)
Taxes (paid) / received (0.9) 0.9
---------------------------------------------------- ------------------ ----------------------------------------------
Net cash generated from / (used in) operating
activities 228.9 (73.0)
---------------------------------------------------- ------------------ ----------------------------------------------
Investing activities
Purchase of property, plant and equipment (6.7) (2.7)
Purchase of intangible assets (2.2) -
Net cash used in investing activities (8.9) (2.7)
---------------------------------------------------- ------------------ ----------------------------------------------
Financing activities
Dividends paid (102.3) (100.0)
Interest paid (85.1) (93.8)
Payment of lease liabilities (5.8) (2.4)
Increase in long term borrowings - 496.8
Repayment of long term borrowings (496.7) (150.5)
Purchase of own shares - (48.5)
Net cash (used in) / generated from financing
activities (689.9) 101.6
---------------------------------------------------- ------------------ ----------------------------------------------
Net (decrease) / increase in cash (469.9) 25.9
---------------------------------------------------- ------------------ ----------------------------------------------
Cash and cash equivalents at beginning of period 1,086.9 354.0
Effect of foreign exchange rate changes (14.5) (26.8)
Net cash and cash equivalents at end of period 602.5 353.1
---------------------------------------------------- ------------------ ----------------------------------------------
Presented on the statement of financial position
as:
--------------------------------------------------- ------------------ ----------------------------------------------
Cash and cash equivalents 602.5 353.1
---------------------------------------------------- ------------------ ----------------------------------------------
The Group's cash and cash equivalents includes GBP138.0m (31 March 2020:
GBP172.2m) of restricted cash held principally by structured entities
controlled by the Group.
The accompanying notes are an integral part of these financial
statements.
Condensed Consolidated Statement of Changes in Equity
For the six months ended 30 September 2020
Capital
Share Share redemption Share based Own Retained Total
capital premium reserve payments reserve shares Foreign currency translation reserve earnings Total Non controlling interest equity
(Unaudited) GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
----------------------------------- -------- -------- ----------- ----------------- ------- ------------------------------------ --------- ------- ------------------------ -------
Balance at 1 April 2020 77.2 179.9 5.0 58.4 (114.4) 22.7 1,080.4 1,309.2 1.5 1,310.7
----------------------------------- -------- -------- ----------- ----------------- ------- ------------------------------------ --------- ------- ------------------------ -------
Profit after tax - - - - - - 190.5 190.5 2.3 192.8
Exchange differences on
translation of foreign operations - - - - - (1.5) - (1.5) - (1.5)
Tax on items taken to other
comprehensive income - - - 3.8 - - - 3.8 - 3.8
----------------------------------- -------- -------- ----------- ----------------- ------- ------------------------------------ --------- ------- ------------------------ -------
Total comprehensive income for the
period - - - 3.8 - (1.5) 190.5 192.8 2.3 195.1
----------------------------------- -------- -------- ----------- ----------------- ------- ------------------------------------ --------- ------- ------------------------ -------
Options/awards exercised - - - (31.1) 31.9 - (23.8) (23.0) - (23.0)
Credit for equity settled
share schemes - - - 13.4 - - - 13.4 - 13.4
Dividends paid - - - - - - (102.3) (102.3) - (102.3)
----------------------------------- -------- -------- ----------- ----------------- ------- ------------------------------------ --------- ------- ------------------------ -------
Balance at 30 September 2020 77.2 179.9 5.0 44.5 (82.5) 21.2 1,144.8 1,390.1 3.8 1,393.9
----------------------------------- -------- -------- ----------- ----------------- ------- ------------------------------------ --------- ------- ------------------------ -------
For the six months ended 30 September 2019
Capital
Share Share redemption Share based Own Retained Total
capital premium reserve payments reserve shares Foreign currency translation reserve earnings Total Non controlling interest equity
(Unaudited) GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
----------------------------------- -------- -------- ----------- ----------------- ------- ------------------------------------ --------- ------- ------------------------ -------
Balance at 1 April 2019 77.2 179.5 5.0 64.3 (92.8) 20.0 1,130.2 1,383.4 10.9 1,394.3
----------------------------------- -------- -------- ----------- ----------------- ------- ------------------------------------ --------- ------- ------------------------ -------
Adjustment on initial application
of IFRS 16 - - - - - - (1.8) (1.8) - (1.8)
Profit after tax - - - - - - 144.5 144.5 3.0 147.5
Exchange differences on
translation of foreign operations - - - - - 9.0 - 9.0 0.6 9.6
Tax on items taken to other
comprehensive income - - - 1.1 - - - 1.1 - 1.1
----------------------------------- -------- -------- ----------- ----------------- ------- ------------------------------------ --------- ------- ------------------------ -------
Total comprehensive income for the
period - - - 1.1 - 9.0 142.7 152.8 3.6 156.4
----------------------------------- -------- -------- ----------- ----------------- ------- ------------------------------------ --------- ------- ------------------------ -------
Movement in control of subsidiary - - - - - - (0.9) (0.9) 0.9 -
Own shares acquired in the period - - - - (36.9) - - (36.9) - (36.9)
Options/awards exercised - 0.4 - (30.3) 48.5 - (18.2) 0.4 - 0.4
Credit for equity settled
share schemes - - - 12.5 - - - 12.5 - 12.5
Dividends paid - - - - - - (100.0) (100.0) - (100.0)
----------------------------------- -------- -------- ----------- ----------------- ------- ------------------------------------ --------- ------- ------------------------ -------
Balance at 30 September 2019 77.2 179.9 5.0 47.6 (81.2) 29.0 1,153.8 1,411.3 15.4 1,426.7
----------------------------------- -------- -------- ----------- ----------------- ------- ------------------------------------ --------- ------- ------------------------ -------
The accompanying notes are an integral part of these financial
statements.
Notes to the Half Year Report
For the six months ended 30 September 2020
1. Basis of preparation
(i) Basis of preparation
The interim condensed consolidated financial statements included in this
half year financial report have been prepared in accordance with the
Disclosure Rules and Transparency Rules of the Financial Conduct
Authority and International Accounting Standard (IAS) 34 'Interim
Financial Reporting' as adopted by the European Union, and on the basis
of the accounting policies and methods of computation set out in the
consolidated financial statements of the Group for the year ended 31
March 2020.
While the financial information included in this announcement has been
prepared in accordance with the recognition and measurement criteria of
International Financial Reporting Standards (IFRSs) as adopted by the
European Union, this announcement does not itself contain sufficient
information to comply with IFRSs.
The financial information for the year ended 31 March 2020 contained
within this half year financial report does not constitute statutory
accounts as defined in section 434 of the Companies Act 2006. The
statutory accounts for the year to 31 March 2020 have been reported on
by Deloitte LLP and delivered to the Registrar of Companies. The report
of the auditors was (i) unqualified, (ii) did not include a reference to
any matters which the auditors drew attention by way of emphasis without
qualifying their report, and (iii) did not contain a statement under
section 498 (2) or (3) of the Companies Act 2006.
The consolidated financial statements of the Group as at and for the
year ended 31 March 2020 which were prepared under International
Financial Reporting Standards as adopted by the EU are available on the
Group's website, www.icgam.com.
ii) Going concern
The interim condensed consolidated financial statements are prepared on
a going concern basis, as the Directors have a reasonable expectation
that the Group has adequate resources to continue in operational
existence for the foreseeable future.
In making this assessment, the Directors have considered a range of
information relating to present and future conditions, including future
projections of profitability, cash flows and capital resources. The
Group has good visibility on future management fees due to the long term
and diversified nature of its funds, underpinned by a strong, well
capitalised balance sheet and over GBP1bn of liquidity in cash and
undrawn facilities at 30 September 2020.
The Directors continue to monitor the impact of the Covid-19 pandemic in
assessing the Group's ability to continue in its capacity as a going
concern. The enhanced infrastructure put in place since reporting at 31
March 2020 to ensure the health and wellbeing of employees and to
support business continuity has continued to prove successful during
these unprecedented times. Such enhanced measures will continue to be
reviewed and enhanced where necessary.
The Directors have concluded that the preparation of the interim
condensed consolidated financial statements on a going concern basis
continues to be appropriate.
(iii) Related party transactions
Antje Hensel Roth was appointed Executive Director effective 16 April
2020. Antje joins Vijay Bharadia and Benoit Durteste as Executive
Directors of the Group.
There have been no other material changes to the nature or size of
related party transactions since 31 March 2020.
(iv) Changes in significant accounting policies
The accounting policies adopted in the preparation of the interim
condensed consolidated financial statements are consistent with those
followed in the preparation of the Group's annual consolidated financial
statements for the year then ended 31 March 2020. The Group has not
early adopted any standard, interpretation or amendment that has been
issued but is not yet effective.
1. Basis of preparation continued
(iv) Changes in significant accounting policies continued
The FCA and the Bank of England have imposed significant interest rate
benchmarking reform. As a result, there will be the imminent cessation
of LIBOR. LIBOR publication is expected to cease by 31 December 2021.
Those instruments within the Group that may have exposure to the
cessation of LIBOR will apply the practical expedient as permitted under
the transition rules. The rules permit the change to the contractual
interest rates, from LIBOR to the newly applied rate, to be treated as a
movement in market interest rates rather than as a modification.
Amendments to IFRS 9 'Financial Instruments' were issued in September
2019 and August 2020. The recent amendments to IFRS 9 provide a number
of reliefs, which apply to all hedging relationships that are directly
affected by interest rate benchmark reform. A hedging relationship is
affected if the reform gives rise to uncertainties about the timing and
or amount of benchmark based cash flows of the hedged item or the
hedging instrument. These amendments had no impact on the interim
condensed consolidated financial statements of the Group as it does not
apply hedge accounting to its interest rate hedge relationships.
2. Revenue
Revenue and its related cashflows, within the scope
of IFRS 15, are all derived from the Group's fund
management company activities. The significant components
of the Group's fund management revenues are as follows:
Six months ended Six months ended
30 September 2020 30 September 2019
(Unaudited) (Unaudited)
Type of contract/service GBPm GBPm
------------------------------- ------------------ ------------------
Management fees* 144.2 124.0
Other income 3.9 3.6
------------------------------- ------------------ ------------------
Fee and other operating income 148.1 127.6
------------------------------- ------------------ ------------------
*Included within management fees is GBP15.5m (H1 2020: GBP15.6m) of
performance related fee income.
Management Fees
The Group earns management fees from its performance of investment
management services. Management fees are charged on third party money
managed by ICG and are based on an agreed percentage of either committed
money, invested money or net asset value (NAV), dependent on the fund.
Management fees are variable fee revenue streams which relate to one
performance obligation and contain a non-performance and performance
related fee element. Non-performance related management fees for the
period of GBP128.7m (H1 2020: GBP108.4m) are charged in arrears and are
recognised in the period services are performed.
Performance related fees are recognised only where it is highly probable
that the revenue will not be reversed in the future. This is generally
near the end of the performance period or upon early liquidation of a
fund. The estimate of performance fees is made with reference to the
liquidation profile of the fund, which factors in portfolio exits and
timeframes. A constraint is applied to the estimate to reflect
uncertainty of future fund performance. Performance fees of GBP15.5m (H1
2020: GBP15.6m) have been recognised for services performed during the
period. Performance related fees will only be crystallised and
subsequently paid out in cash when a performance hurdle is met, and
portfolio liquidations are made.
Depending on the strategy of a fund, the Group has contracted fees based
on committed and invested funds. The quantum of the contracted fees
cannot be reliably forecast, without making significant assumptions
around the investment rate, realisation pace and the amount and weighted
average fee rate of new funds raised. There are no other individually
significant components of revenue from contracts with customers.
3. Operating segments
For management purposes, the Group is currently organised into the Fund
Management Company (FMC) and the Investment Company (IC). Segment
information about these businesses is presented below and is reviewed by
the Executive Directors.
The Group reports the profit of the FMC separately from the profits
generated by the IC. The FMC incurs the majority of the Group's costs,
including the cost of the investment teams, as well as the cost of
support functions supporting the investment teams, primarily marketing,
operations, information technology and human resources.
The IC is charged a management fee of 1% of the carrying value of the
average investment portfolio by the FMC and this is shown below as
Inter-segmental fee. The costs of finance, treasury and legal teams, and
the other group costs primarily related to being a listed entity, are
allocated to the IC. The remuneration of the Executive Directors is
allocated equally to the FMC and the IC.
The amounts reported for management purposes in the tables below are
reconciled to the IFRS reported amounts on the following pages.
Six months ended
30 September 2020 FMC IC Operating segments
(Unaudited) GBPm GBPm GBPm
----------------------------------- ------ ------ ------------------
External fee income 154.2 - 154.2
Inter-segmental fee 10.0 (10.0) -
----------------------------------- ------ ------ ------------------
Fund management fee income 164.2 (10.0) 154.2
----------------------------------- ------ ------ ------------------
Net investment returns - 186.6 186.6
Dividend income 11.7 - 11.7
Total revenue 175.9 176.6 352.5
----------------------------------- ------ ------ ------------------
Interest expense - (30.5) (30.5)
Net fair value loss on derivatives - (7.4) (7.4)
Staff costs (30.3) (6.3) (36.6)
Incentive scheme costs (33.9) (24.2) (58.1)
Other administrative expenses (21.9) (5.2) (27.1)
Profit before tax 89.8 103.0 192.8
----------------------------------- ------ ------ ------------------
Six months ended
30 September 2019 FMC IC Operating segments
(Unaudited) GBPm GBPm GBPm
----------------------------------- ------ ------ ------------------
External fee income 135.6 - 135.6
Inter-segmental fee 11.4 (11.4) -
----------------------------------- ------ ------ ------------------
Fund management fee income 147.0 (11.4) 135.6
----------------------------------- ------ ------ ------------------
Net investment returns - 131.6 131.6
Dividend income 17.4 - 17.4
Total revenue 164.4 120.2 284.6
----------------------------------- ------ ------ ------------------
Interest expense - (28.8) (28.8)
Net fair value gain on derivatives - 8.5 8.5
Staff costs (27.5) (4.0) (31.5)
Incentive scheme costs (30.0) (24.4) (54.4)
Other administrative expenses (21.9) (5.5) (27.4)
Profit before tax 85.0 66.0 151.0
----------------------------------- ------ ------ ------------------
3. Operating segments continued
Reconciliation of amounts reported to the Executive Directors to the
financial statements reported
under IFRS
Included in the table below are statutory adjustments made for the
following:
-- All income generated from Investment Company investments is presented as
net investment returns for total operating segments purposes, whereas
under IFRS it is presented within gains on investments and other
operating income. Total operating segment figures are alternative
performance measures ('APMs').
-- The structured entities controlled by the Group are presented as fair
value investments for operating segments, whereas the statutory financial
statements present these entities on a consolidated basis.
Condensed Consolidated Income Statement
Six months ended
30 September 2020 Operating segments Consolidated structured entities Financial statements
(Unaudited) GBPm GBPm GBPm
------------------------------------------------------- --- ------------------ -------------------------------- --------------------
Fund management fee income 154.2 (10.0) 144.2
Other operating income - 3.9 3.9
Fee and other operating income 154.2 (6.1) 148.1
Dividend income 11.7 (11.7) -
Net fair value loss on derivatives - (10.3) (10.3)
Finance income/(loss) 11.7 (22.0) (10.3)
Net investment returns/ gains on investments 186.6 27.7 214.3
-------------------------------------------------------- ------------------ -------------------------------- --------------------
Total revenue 352.5 (0.4) 352.1
-------------------------------------------------------- ------------------ -------------------------------- --------------------
Interest expense (30.5) - (30.5)
Net fair value (loss)/ gain on derivatives (7.4) 7.4 -
Finance costs (37.9) 7.4 (30.5)
Staff costs (36.6) (0.4) (37.0)
Incentive scheme costs (58.1) - (58.1)
Other administrative expenses (27.1) (1.8) (28.9)
Administrative expenses (121.8) (2.2) (124.0)
Share of results of joint ventures accounted for using
equity method - 0.2 0.2
-------------------------------------------------------- ------------------ -------------------------------- --------------------
Profit before tax 192.8 5.0 197.8
-------------------------------------------------------- ------------------ -------------------------------- --------------------
Tax (charge)/credit (8.9) 3.9 (5.0)
-------------------------------------------------------- ------------------ -------------------------------- --------------------
Profit after tax 183.9 8.9 192.8
-------------------------------------------------------- ------------------ -------------------------------- --------------------
3. Operating segments continued
Condensed Consolidated Income Statement continued
Six months ended
30 September 2019 Operating segments Consolidated structured entities Financial statements
(Unaudited) GBPm GBPm GBPm
-------------------------------------- ------------------- -------------------- -------------------------------- --------------------
Fund management fee income 135.6 (11.6) 124.0
Other operating income - 3.6 3.6
Fee and other operating income 135.6 (8.0) 127.6
Dividend income 17.4 (17.4) -
Net fair value gain on derivatives - 11.7 11.7
Finance and dividend income 17.4 (5.7) 11.7
Net investment returns/Net gains on investments 131.6 33.1 164.7
------------------------------------------------------------ ------------------ -------------------------------- --------------------
Total revenue 284.6 19.4 304.0
------------------------------------------------------------ ------------------ -------------------------------- --------------------
Interest expense (28.8) (0.3) (29.1)
Net fair value gain on derivatives 8.5 (8.5) -
Finance costs (20.3) (8.8) (29.1)
Staff costs (31.5) 0.2 (31.3)
Incentive scheme costs (54.4) - (54.4)
Other administrative expenses (27.4) (9.8) (37.2)
Administrative expenses (113.3) (9.6) (122.9)
Share of results of joint ventures accounted for using
equity method - 1.4 1.4
------------------------------------------------------------ ------------------ -------------------------------- --------------------
Profit before tax 151.0 2.4 153.4
--------------------------------------- -------------------- ------------------ -------------------------------- --------------------
Tax (charge)/credit (7.5) 1.6 (5.9)
--------------------------------------- -------------------- ------------------ -------------------------------- --------------------
Profit after tax 143.5 4.0 147.5
--------------------------------------- -------------------- ------------------ -------------------------------- --------------------
4. Financial assets and liabilities
Financial assets
Financial assets are classified into the following categories: Amortised
Cost, Fair Value Through Profit and Loss (FVTPL) and Fair Value Through
Other Comprehensive Income (FVOCI). The Group has classified all
financial assets at FVTPL. Financial assets at FVTPL are initially
recognised and subsequently measured at fair value.
A valuation assessment is performed on a recurring basis with gains or
losses arising from changes in fair value recognised through net gains
on investments in the income statement. Dividends, premiums, discounts
or interest earned on the financial assets are included in the net gains
on investments. Where the Group holds investments in a number of
financial instruments such as debt and equity through a portfolio
company, the Group views their entire investment as a unit of account
for valuation purposes. Industry standard valuation guidelines such as
the International Private Equity and Venture Capital valuation
guidelines ('IPEV'), December 2018, allows for a level of aggregation
where there are a number of financial instruments held within a
portfolio company.
When the Group invests in the capital structure of a portfolio company,
these assets are initially recognised and subsequently measured at fair
value, and transaction costs are written off to the income statement
immediately. Any accrued interest, premium or discount on disposal of a
loan or receivable to a third party are recognised through net gains on
investments in the income statement.
Fair value measurements recognised in the statement of financial
position
The information set out below explains how the Group determines fair
values of various financial assets and financial liabilities.
The following table provides an analysis of financial instruments that
are measured subsequent to initial recognition at fair value, grouped
into Levels 1 to 3 based on the degree to which the fair value is
observable.
-- Level 1 fair value measurements are those derived from quoted prices
(unadjusted) in active markets for identical assets or liabilities;
-- Level 2 fair value measurements are those derived from inputs other than
quoted prices included within Level 1 that are observable for the asset
or liability, either directly (i.e. as prices) or indirectly (i.e.
derived from prices); and
-- Level 3 fair value measurements are those derived from valuation
techniques that include inputs for the asset or liability that are not
based on observable market data (i.e. unobservable inputs).
This is followed by a more detailed analysis of the financial
instruments which are based on unobservable inputs (Level 3 assets). The
subsequent tables provide reconciliations of movement in their fair
value during the period split by asset category.
As at 30 September 2020
Level
1 Level 2 Level 3 Total
(Unaudited) GBPm GBPm GBPm GBPm
------------------------------------------------------- ----- --------- ------- ---------
Financial assets
Investments in managed funds(1) 10.1 - 1,549.9 1,560.0
Investments in loans held in consolidated credit funds - 3,988.9 - 3,988.9
Derivative assets - 115.0 - 115.0
Investments in private companies(2) - - 191.7 191.7
Senior and subordinated notes of CLO vehicles - 111.6 38.4 150.0
------------------------------------------------------- ----- --------- ------- ---------
Total assets 10.1 4,215.5 1,780.0 6,005.6
------------------------------------------------------- ----- --------- ------- ---------
Financial liabilities at fair value
Borrowings and loans held in consolidated credit funds - (3,725.0) - (3,725.0)
Derivative liabilities - (114.9) - (114.9)
Total liabilities - (3,839.9) - (3,839.9)
------------------------------------------------------- ----- --------- ------- ---------
1 Level 3 Investment in managed funds includes GBP36.6m Senior Debt,
GBP1,151.6m Subordinated debt & equity, GBP198.4m of Real Assets and
GBP163.3m Private equity secondaries.
2 Level 3 Investment in private companies includes GBP149.5m,
Subordinated debt and equity and GBP42.2m of Real Assets.
4. Financial assets and liabilities continued
As at 31 March 2020
Level
1 Level 2 Level 3 Total
(Audited) GBPm GBPm GBPm GBPm
------------------------------------------------------- ----- --------- ------- ---------
Financial assets
Investments in managed funds 18.0 - 1,323.4 1,341.4
Investments in loans held in consolidated credit funds - 3,599.8 - 3,599.8
Derivative assets - 139.3 - 139.3
Investments in private companies - - 434.0 434.0
Senior and subordinated notes of CLO vehicles - 97.8 32.4 130.2
------------------------------------------------------- ----- --------- ------- ---------
Total assets 18.0 3,836.9 1,789.8 5,644.7
------------------------------------------------------- ----- --------- ------- ---------
Financial liabilities at fair value
Borrowings and loans held in consolidated credit funds - (3,329.3) - (3,329.3)
Derivative liabilities - (107.1) - (107.1)
Total liabilities - (3,436.4) - (3,436.4)
------------------------------------------------------- ----- --------- ------- ---------
1 Level 3 Investment in managed funds includes GBP36.8m Senior Debt,
GBP910.5m Subordinated debt & equity, GBP236.0m of Real Assets and
GBP140.1m Private equity secondaries.
2 Level 3 Investment in private companies includes GBP388.9m,
Subordinated debt and equity and GBP45.1m of Real Assets.
Included within Financial Assets held at FVTPL is GBP720.4m (31 March
2020: GBP657.5m) relating to the Group's 20% investment in ICG Europe
Fund V Limited, ICG North America Private Debt Fund and ICG Asia Pacific
Fund III, and its 16.67% investment in ICG Europe Fund VI Limited, which
are accounted for as associates classified as FVTPL.
Impact of Covid-19
The preparation and determination of these fair value assessments has
been done so against a backdrop of unprecedented economic disruption
caused by Covid-19. As a result, the Group has placed enhanced focus on
its valuation assessment and the suitableness of methodologies applied,
and these have been detailed by instrument below. The Group has also
included additional sensitivities in respect of its Level 3 valuations,
given elevated uncertainty inherent in them due to Covid-19. These
sensitivities are disclosed further in this note.
Investment in managed funds
When fair values of publicly traded closed-ended and open-ended funds
are based on quoted market prices in an active market for identical
assets without any adjustments, the instruments are included within
Level 1 of the fair value hierarchy. The Group values these investments
at bid price for long positions and ask price for short positions.
The Group also invests in funds, including credit and private equity
secondary funds, which are not quoted in an active market. The Group
considers the valuation techniques and inputs used by these funds to
ensure they are reasonable, appropriate and consistent with the
principles of fair value.
The NAV of these funds are generally used as an input into measuring
their fair value. The NAV of the funds are adjusted, as necessary, to
reflect restrictions on redemptions, and other specific factors relevant
to the funds. In measuring fair value, consideration is also paid for
any transactions in the interests of the funds. The Group classifies
these funds as Level 3.
Investment in loans held in consolidated credit funds
In the absence of quoted prices in an active market, the loan asset
portfolios of the consolidated credit funds and consolidated CLO
vehicles are valued using observable inputs such as recently executed
transaction prices in securities of the issuer or comparable issuers and
from independent loan pricing sources. To the extent that the
significant inputs are observable, the Group classifies these
investments as Level 2. The fair value of liabilities in the
consolidated credit funds and consolidated CLO vehicles is determined
with reference to the fair value of the underlying loan asset portfolios
these liabilities are classified as level 2.
Derivative assets and liabilities
The Group uses widely recognised valuation models for determining fair
values of over-the-counter interest rate swaps, currency swaps and
forward foreign exchange contracts. The most frequently applied
valuation techniques include forward pricing and swap models, using
present value calculations. The models incorporate various inputs
including both credit and debit valuation adjustments for counterparty
and own credit risk, foreign exchange spot and forward rates and
interest rate curves. For these financial instruments, significant
inputs into models are market observable and are included within Level
2.
4. Financial assets and liabilities continued
Investment in private companies
The Group takes debt and equity stakes in private companies that are not
quoted in an active market and uses a market-based valuation technique
for these positions. The Group determines comparable private and public
companies, based on industry, size, location, leverage and strategy, and
calculates an appropriate multiple for each comparable company
identified.
The Group's investments in private companies are fair valued using the
most appropriate valuation technique based on the nature, facts and
circumstances of the private company. Typically an earnings multiple is
applied to return an Enterprise Value 'EV' of the portfolio company.
Where relevant a discounted cashflow 'DCF' is used to calibrate
alongside the 'EV' of the private company. Alternate valuation
techniques may be used where there is a recent offer or a recent
comparable market transaction, which may provide an observable market
price and an approximation to fair value of the private company.
Senior and subordinated notes of CLO vehicles
The Group holds investments in the senior and subordinated notes of the
CLOs it manages, predominately driven by EU risk-retention requirements.
The Group employs DCF analysis to fair value these investments, using
several inputs, such as constant annual default rates, prepayments rates
and recovery rates. Since reporting at 31 March 2020, the capital
markets have seen a significant improvement, which has provided
considerable liquidity and the expected spike in defaults have been
reduced, although defaults are expected to remain higher than
pre-Covid-19 levels and assumed to continue for an extended period.
The DCF analysis at the reporting date shows that the senior notes are
expected to recover all contractual cashflows, including under stressed
scenarios, over the life of the CLOs. Unobservable inputs are used in
determining the fair value of subordinated notes and we have classified
these investments as Level 3 instruments.
Observable inputs are used in determining the fair value of senior notes
and are classified as level 2. We have provided enhanced information on
the model assumptions, further in this note.
Real Estate
To the extent that the Group invests in real estate assets, whether
through an investment in a managed fund or an investment in a private
company, the underlying assets may be a debt instrument or property
classified as investment property under IAS 40 'Investment Property'.
The fair value of the directly held investment properties have been
recorded based on independent valuations prepared by third party real
estate valuation specialists in line with the Royal Institution of
Chartered Surveyors Valuation -- Global Standards 2017. At the end of
each reporting period, the Group reviews its assessment of the fair
value of each property, taking into account the most recent independent
valuations. The Directors determine a property value within a range of
reasonable fair value estimates. In order to determine the fair value of
the assets, an industry standard Gross Development Value 'GDV' is
performed using inputs from a variety of sources including: current
prices in an active market, or recent prices of similar properties in
less active markets adjusted to reflect those differences, discounted
cash flow projections based on reliable estimates of future cash flows,
capitalised income projections based on a property's estimated net
market income, and a capitalisation rate derived from an analysis of
market evidence. All resulting fair value estimates for properties are
included in Level 3.
Due to the onset of Covid-19, valuation specialists have incorporated a
statement of 'material valuation uncertainty' into their reports; this
is to draw attention to the higher degree of caution necessary in this
uncertain time than would ordinarily be applied. The Directors have
added a heightened level of review on the reliance of the reports and
have additionally assessed the stage to completion.
Where the Group invests into funds that hold real estate debt
investments a Loan to Value 'LTV' impairment model is used to determine
any provision for impairment on the underlying loans. The value basis is
determined using the valuations techniques described above for the
Group's investment in Real Estate private companies. Where the LTV of a
performing debt investment is in excess of 95%, the Group impairs the
investment to restore the adjusted LTV to 95% or such other level as is
considered the best estimate of fair value. Where the LTV of a
non-performing debt investment is in excess of 90%, the Group will
obtain an updated valuation by an independent valuer and impair the debt
investment to restore the adjusted LTV to 90% or such other level as is
considered the best estimate of fair value. The Group believes that this
approach to value the underlying investments is consistent with how a
market participant would determine the fair value of investments into
these funds.
4. Financial assets and liabilities continued
Fair value measurements recognised in the statement of financial
position continued
Weighted Effect on Fair Value
Fair Value Fair Value Average/ 30 September
30 September 2020 31 March 2020 Primary Fair 2020
Group (Unaudited) (audited) Valuation Key Unobservable Value Sensitivity/ (Unaudited)
Assets GBPm GBPm Technique(1) Inputs Range Inputs Scenarios GBPm
------------- ------------------ -------------- ------------ ---------------- ------ -------- -------------------------- ---------------------------
Discounted Probability of The higher the probability of default, the lower the
Senior debt 36.6 36.8 Cash Flow Default 16.1% 16.1% fair value
------------- ------------------ -------------- ------------ ---------------- ------ -------- -------------------------------------------------------
Loss Given The higher the loss given default, the lower the fair
Default 18.7% 18.7% value
------------- ------------------ -------------- ------------ ---------------- ------ -------- -------------------------------------------------------
Effective 8.0% - The higher the effective interest rate, the lower
Interest Rate 9.0% 9.0% the fair value
------------- ------------------ -------------- ------------ ---------------- ------ -------- -------------------------------------------------------
Subordinated Market 4.5x
debt and Comparable Earnings --
equity 1,301.1 1,299.5 Companies Multiple 21.8x 13.5x +10% Earnings Multiple 90.1
------------- ------------------ -------------- ------------ ---------------- ------ --------
Discounted
Cash
Flow(2) -10% Earnings Multiple (94.9)
------------- ------------------ -------------- ------------ ---------------- ------ -------- -------------------------- ---------------------------
Subordinated
notes of CLO Scenario
vehicles 38.4 32.4 Analysis Discount rate 11.5% 11.5%
------------- ------------------ -------------- ------------ ---------------- ------ --------
Next 12 months
Discounted Annual Default
Cash Flow Rate (EUR CLOs) 4.0% 4.0% Upside Case(3) 11.8
------------- ------------------ -------------- ------------ ---------------- ------ --------
Next 12 months
Annual Default
Rate (USD CLOs) 6.0% 6.0% Downside Case(3) (18.5)
------------- ------------------ -------------- ------------ ---------------- ------ --------
Subsequent 12
months Default
Rate (All CLOs) 3.3% 3.3%
------------- ------------------ -------------- ------------ ---------------- ------ --------
Prepayment rate 20.0% 20.0%
------------- ------------------ -------------- ------------ ---------------- ------ --------
Recovery rate 75.0% 75.0%
------------- ------------------ -------------- ------------ ---------------- ------ --------
Reinvestment
rate 99.5% 99.5%
------------- ------------------ -------------- ------------ ---------------- ------ -------- -------------------------- ---------------------------
Third Party
Real Assets 240.6 281.0 Valuation N/A N/A N/A +10% Valuation 24.0
------------- ------------------ -------------- ------------ ---------------- ------ --------
LTV based
impairment
model -10% Valuation (24.0)
------------- ------------------ -------------- ------------ ---------------- ------ -------- -------------------------- ---------------------------
Discounted
Cash
Flow(2)
------------- ------------------ -------------- ------------ ---------------- ------ -------- -------------------------- ---------------------------
Private
equity Third Party
secondaries 163.3 140.1 Valuation N/A N/A N/A +10% MOIC(4) 16.3
------------- ------------------ -------------- ------------ ---------------- ------ --------
-10%
MOIC (16.3)
------------- ------------------ -------------- ------------ ---------------- ------ -------- -------------------------- ---------------------------
Total assets 1,780.0 1,789.8
------------- ------------------ -------------- ------------ ---------------- ------ -------- -------------------------- ---------------------------
1 Where the Group has invested into its managed funds, it is the type of
the underlying investment, and the valuation techniques used for these
underlying investments, that we have captured here. Where the Group has
invested directly into private companies, we have also captured here the
type of the investment and the valuation technique used.
2 Investments which are valued using the DCF approach, the implied
earnings multiple of these investments is used for this sensitivity
analysis.
3 The sensitivity analysis is performed on the entire portfolio of
subordinated notes of CLO vehicles that the Group has originated and
invested in GBP151.1m fair value (31 March 2020:GBP171.0m), which itself
is a combination of holdings in CLOs that are not consolidated (GBP38.4m
fair value), and holdings in those CLOs which are consolidated GBP112.7m
fair value (31 March 2020: GBP138.6m). For the sensitivity analysis, the
upside case is based on a default rate of 3.0% in the next 12 months and
a default rate of 3.0% in the subsequent 12 months, keeping all other
parameters constant. The downside case is based on a default rate of
8.0% in the next 12 months and a default rate of 4.3% in the subsequent
12 months, keeping all other parameters constant.
4 The implied multiple of invested capital (MOIC), that currently range
from 0.8x to 2.6x (weighted average: 1.5x) have been used for this
sensitivity analysis.
4. Financial assets and liabilities continued
The following table only includes financial assets. The only financial
liabilities measured subsequently at fair value on Level 3 fair value
measurement represent third party debt held in disposal groups held for
sale, these are non recurring and are therefore excluded from the below
tables.
Reconciliation of Level 3 fair value measurements of financial assets(1)
As at 30 September 2020
Financial assets classified at FVTPL
(Unaudited) GBPm
At 1 April 2020 1,789.8
Total gains or losses in the income
statement
- Realised gains (41.9)
- Fair value gains 188.4
- Foreign exchange (0.7)
Purchases 113.9
Realisations (269.5)
Transfer between levels -
-------------------------------------- --------------------------------------
At 30 September 2020 1,780.0
-------------------------------------- --------------------------------------
As at 31 March 2020
Financial assets classified at FVTPL
(Unaudited) GBPm
At 1 April 2019 1,915.8
Total gains or losses in the income
statement
- Realised gains (229.6)
- Fair value gains 132.0
- Foreign exchange 34.5
Purchases 391.3
Realisations (355.5)
Transfer between levels (98.7)
At 31 March 2020 1,789.8
-------------------------------------- --------------------------------------
1. The presentation of this table has been updated to include both
current & non-current level 3 assets. The comparatives have been
re-presented accordingly.
Transfers in and out of Level 3 financial assets were due to changes to
the observability of inputs used in the valuation of these assets.
5. Earnings per share
Six months ended Six months ended
30 September 2020 30 September 2019(1)
(Unaudited) (Unaudited)
GBPm GBPm
-------------------------------------------------------- ---------------------- ---------------------
Earnings for the purposes of basic and diluted earnings
per share being net profit attributable to the equity
holders of the parent 190.5 144.5
--------------------------------------------------------- ---------------------- ---------------------
Number of shares
Weighted average number of ordinary shares for the
purposes of basic earnings per share 284,882,238 284,681,971
Effect of dilutive potential ordinary share options 3,857,392 4,487,802
--------------------------------------------------------- ---------------------- ---------------------
Weighted average number of ordinary shares for the
purposes of diluted earnings per share 288,739,630 289,169,773
--------------------------------------------------------- ---------------------- ---------------------
Earnings per share 66.9p 50.8p
--------------------------------------------------------- ---------------------- ---------------------
Diluted earnings per share 66.0p 50.0p
--------------------------------------------------------- ---------------------- ---------------------
1. The 2019 diluted earnings per share has been re-presented to include
the dilutive impact of deferred share awards.
The total number of shares issued during the period to 30 September 2020
was 5,118 (H1 2020 82,200).
6. Dividends
Dividends on ordinary shares paid during the period to 30 September 2020
of GBP102.3m, being 35.8p per share (H1 2020 GBP100.0m, 35.0p).
The Board has approved an interim dividend of 17.0p per share (H1 2020:
15.0p).
7. Tax expense
Six months ended Six months ended
30 September 2020 30 September 2019
Analysis of tax on ordinary (Unaudited) (Unaudited)
activities GBPm GBPm
---------------------------------- ------------------ -------------------
Current tax 8.0 0.6
Deferred taxation (3.0) 5.3
Tax charge/(credit) on profit on
ordinary activities 5.0 5.9
----------------------------------- ------------------ -------------------
The effective tax rate reported by the Group for the period ended 30
September 2020 of 2.5% is lower than the statutory UK corporation tax
rate of 19%.
The FMC activities are subject to tax at the relevant statutory rates
ruling in the jurisdictions in which the income is earned.
The lower effective tax rate compared to the statutory UK rate is
largely driven by the IC activities. The IC benefits from statutory UK
tax exemptions on certain forms of income arising from both foreign
dividend receipts and gains from assets qualifying for the substantial
shareholdings exemption. The effect of these exemptions means that the
effective tax rate of the Group is highly sensitive to the relative mix
of IC income, and composition of such income, in any one period.
8. Financial liabilities
The fair value of financial liabilities is GBP5,189.3m (31 March 2020:
GBP5,254.9m), including GBP1,404.8m (31 March 2020: GBP1,916.9m) of
financial liabilities at amortised cost which approximates to fair
value. This is a decrease of GBP65.6m in the period since 31 March 2020
and is driven by GBP496.0m early repayment of long-term borrowings,
partially offset by a GBP395.7m increase relating to structured entities
controlled by the Group.
9. Property, plant and equipment
The Group's property, plant and equipment provide the infrastructure to
enable the Group to operate. Assets are initially stated at cost, which
includes expenditure associated with acquisition. The cost of the asset
is recognised in the income statement as a depreciation charge on a
straight line basis over the estimated useful life, three years for
furniture and equipment, five years for short leasehold premises and
over the life of the lease term for Right Of Use (ROU) assets.
As at 15 May 2020 the Group entered into two long term leases for its
London and Sydney offices, recognising them as ROU assets with
corresponding lease liabilities accordingly.
Group Furniture and equipment ROU asset Short lease premises(1) Total
------------------ -------------------------------- -------------------------------- -------------------------------- ----------------- -------------
30 September 2020 31 March 2020 30 September 2020 31 March 2020 30 September 2020 31 March 2020 30 September 2020 31 March 2020
(Unaudited) (audited) (Unaudited) (audited) (Unaudited) (audited) (Unaudited) (audited)
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
------------------ ----------------- ------------- ----------------- ------------- ----------------- ------------- ----------------- -------------
Cost
------------------ ----------------- ------------- ----------------- ------------- ----------------- ------------- ----------------- -------------
At Period Start 5.5 36.4 42.3 30.6 - 5.8 47.8 72.8
------------------ ----------------- ------------- ----------------- ------------- ----------------- ------------- ----------------- -------------
Reclassified(1,2) - (31.0) - 5.8 - (5.8) - (31.0)
------------------ ----------------- ------------- ----------------- ------------- ----------------- ------------- ----------------- -------------
Additions 1.4 - 55.8 5.9 - - 57.2 5.9
------------------ ----------------- ------------- ----------------- ------------- ----------------- ------------- ----------------- -------------
Disposals (1.3) - (4.9) - - - (6.2) -
------------------ ----------------- ------------- ----------------- ------------- ----------------- ------------- ----------------- -------------
Exchange
differences - 0.1 - - - - - 0.1
------------------ ----------------- ------------- ----------------- ------------- ----------------- ------------- ----------------- -------------
At Period End 5.6 5.5 93.2 42.3 - - 98.8 47.8
------------------ ----------------- ------------- ----------------- ------------- ----------------- ------------- ----------------- -------------
Depreciation
------------------ ----------------- ------------- ----------------- ------------- ----------------- ------------- ----------------- -------------
At Period Start 4.6 24.0 29.8 20.2 - 5.6 34.4 49.8
------------------ ----------------- ------------- ----------------- ------------- ----------------- ------------- ----------------- -------------
Reclassified(1,2) - (19.7) - 5.6 - (5.6) - (19.7)
------------------ ----------------- ------------- ----------------- ------------- ----------------- ------------- ----------------- -------------
Charge for the
year 0.1 0.2 4.1 4.0 - - 4.2 4.2
------------------ ----------------- ------------- ----------------- ------------- ----------------- ------------- ----------------- -------------
Disposals (0.7) - (4.8) - - - (5.5) -
------------------ ----------------- ------------- ----------------- ------------- ----------------- ------------- ----------------- -------------
Exchange
differences - 0.1 (0.1) - - - (0.1) 0.1
------------------ ----------------- ------------- ----------------- ------------- ----------------- ------------- ----------------- -------------
At Period End 4.0 4.6 29.0 29.8 - - 33.0 34.4
------------------ ----------------- ------------- ----------------- ------------- ----------------- ------------- ----------------- -------------
Net book value 1.6 0.9 64.2 12.5 - - 65.8 13.4
------------------ ----------------- ------------- ----------------- ------------- ----------------- ------------- ----------------- -------------
1 With the implementation of IFRS 16 from 1 April 2019, shorthold leases
have been reassessed and those greater than 12 months remaining on the
lease have been reclassified to ROU assets, GBP5.8m was reclassified on
1 April 2019.
2 During the year the Group carried out an assessment of its assets
categorised as furniture and equipment and determined that those assets
relating to computer software are appropriately classified as intangible
assets per note 17 of the Group financial statements for the year ended
31 March 2020.
Glossary
Items denoted with a (1) throughout this document have been identified
as non IFRS alternative performance measures. These are defined below:
Term
Short form
Definition
Adjusted earnings per share
Adjusted EPS
Adjusted profit after tax divided by the weighted average number of
ordinary shares as detailed in note 5.
Adjusted Group profit before tax
Group profit before tax adjusted for the impact of the consolidated
structured entities. As at 30 September, this is calculated as follows:
2020 2019
Profit before tax GBP197.8m GBP153.4m
Less consolidated structured entities (GBP5.0m) (GBP2.4m)
Adjusted group profit before tax GBP192.8m GBP151.0m
Adjusted Investment Company profit before tax
Investment Company profit adjusted for the impact of the consolidated
structured entities. As at 30 September, this is calculated as follows:
2020 2019
Investment Company profit before tax GBP108.0m GBP68.4m
Less consolidated structured entities (GBP5.0m) (GBP2.4m)
Adjusted Investment Company profit before tax GBP103.0m GBP66.0m
Adjusted return on equity
Adjusted profit after tax (annualised when reporting a six month
period's results) divided by average shareholders' funds for the period.
As at 30 September, this is calculated as follows:
2020 2019
Adjusted profit after tax GBP367.9m GBP287.0m
Average shareholders' funds GBP1,292.9m GBP1,364.8m
Adjusted return on equity 28.5% 21.0%
Assets under management
AUM
Value of all funds and assets managed by the FMC. During the investment
period third party (external) AUM is measured on the basis of committed
capital. Once outside the investment period third party AUM is measured
on the basis of cost of investment. AUM is presented in Euros, with
non-Euro denominated at the period end closing rate.
Balance sheet investment portfolio
The balance sheet investment portfolio represents non-current financial
assets from the Statement of Financial Position, adjusted for the impact
of the consolidated structured entities. As at 30 September, this is
calculated as follows:
30 September 2020 31 March 2020
Financial assets at fair value GBP2,186.3m GBP2,196.8m
Derivative financial assets GBP3.5m GBP12.8m
----------------- -------------
Adjusted non-current financial assets GBP2,189.8m GBP2,209.6m
On an IFRS GAAP basis non-current assets are as follows:
30 September 2020 31 March 2020
Financial assets at fair value GBP5,868.6m GBP5,492.6m
Derivative financial assets GBP3.5m GBP12.8m
----------------- -------------
Non-current financial assets GBP5,872.1m GBP5,505.4m
Dividend income
Dividend income represents distributions received from equity
investments. Dividend income reported on an internal basis excludes the
impact of the consolidated structured entities. See note 3 for a full
reconciliation.
Third party fee-earning AUM
AUM for which ICG is paid a management or performance fee. Fee-earning
AUM is determined by the fee basis on which the fund earns fees, either
commitments or investments.
Interest expense
Interest expense excludes the cost of financing associated with the
consolidated structured entities. See note 3 for a full reconciliation.
Net asset value per share
Total equity from the Statement of Financial Position divided by the
closing number of ordinary shares. As at 30 September, this is
calculated as follows:
30 September 2020 31 March 2020
Total equity GBP1,394m GBP1,311m
Closing number of ordinary shares 285,769,292 283,879,690
Net asset value per share 488p 463p
Net current assets
The total of cash, plus current financial assets, plus other current
assets, less current liabilities on an alternative performance measure
basis. This excludes the consolidated structured entities. As at 30
September, this is calculated as follows:
30 September 2020 31 March 2020
Cash GBP486.5m GBP947.9m
Current financial assets GBP22.0m GBP12.8m
Other current assets GBP234.8m GBP240.0m
Current financial liabilities (GBP96.5m) (GBP256.0m)
Other current liabilities (GBP135.1m) (GBP182.4m)
----------------- -------------
Adjusted net current assets GBP511.7m GBP762.3m
On an IFRS GAAP basis net current assets are as follows:
30 September 2020 31 March 2020
Cash GBP602.5m GBP1,086.9m
Current financial assets GBP22.0m GBP12.8m
Other current assets GBP404.2m GBP351.0m
Current financial liabilities (GBP99.7m) (GBP256.0m)
Other current liabilities (GBP376.5m) (GBP409.0m)
----------------- -------------
Net current assets GBP552.5m GBP785.8m
Net debt
Net debt, along with gearing, is used by management as a measure of
balance sheet efficiency. Net debt includes unencumbered cash whereas
gearing uses gross borrowings and is therefore not impacted by movements
in cash balances.
Total drawn debt less unencumbered cash of the Group. As at 30 September,
this is calculated as follows:
30 September 2020 31 March 2020
Adjusted gross borrowings GBP1,399.7m GBP1,915.1m
Less unencumbered cash (GBP464.5m) (GBP916.5m)
Net debt GBP935.2m GBP998.6m
Net gearing
Net gearing is used by management as a measure of balance sheet
efficiency. Net debt, excluding the consolidated structured entities,
divided by closing shareholders' funds. Gross borrowings represent the
cash amount repayable to debt providers. As at 30 September, this is
calculated as follows:
30 September 2020 31 March 2020
Net debt GBP935.2m GBP998.6m
Shareholders' funds GBP1,390.1m GBP1,309.2m
Net gearing 0.67x 0.76x
Net investment returns
Net investment returns is the total of interest income, capital gains,
dividend and other income less asset impairments.
Operating expenses of the Investment Company
Investment Company operating expenses are adjusted for the impact of the
consolidated structured entities. See note 3 for a full reconciliation.
Operating profit margin
Fund Management Company profit divided by Fund Management Company total
revenue. As at 30 September this is calculated as follows:
2020 2019
Fund Management Company Profit GBP89.8m GBP85.0m
Fund Management Company Total Revenue GBP175.9m GBP164.4m
Operating profit margin 51.1% 51.7%
Return on equity
Profit after tax (annualised when reporting a six month period's
results) divided by average shareholders' funds for the period.
Third party fee income
Fees generated on fund management activities as reported in the Fund
Management Company including fees generated on consolidated structured
entities which are excluded from the IFRS consolidation position. See
note 3 for a full reconciliation.
Weighted average fee rate
An average fee rate across all strategies based on fee earning AUM in
which the fees earned are weighted based on the relative AUM.
Other definitions which have not been identified as non IFRS GAAP
alternative performance measures are as follows:
Term Short Definition
form
-------------- --------- ----------------------------------------------------------
AIFMD The EU Alternative Investment Fund Managers Directive.
-------------- --------- ----------------------------------------------------------
Alternative APM These are non-GAAP financial measures.
performance
measure
-------------- --------- ----------------------------------------------------------
Catch up fees Fees charged to investors who commit to a fund after
its first close. This has the impact of backdating
their commitment thereby aligning all investors in
the fund.
-------------- --------- ----------------------------------------------------------
Closed end A fund where investor's commitments are fixed for
fund the duration of the fund and the fund has a defined
investment period.
-------------- --------- ----------------------------------------------------------
Co-investment Co-invest A direct investment made alongside or in a fund taking
a pro-rata share of all instruments.
-------------- --------- ----------------------------------------------------------
Collateralised CDO Investment grade security backed by a pool of non-mortgage
Debt based bonds, loans and other assets.
Obligation
-------------- --------- ----------------------------------------------------------
Collateralised CLO CLO is a type of CDO, which is backed by a portfolio
Loan of loans.
Obligation
-------------- --------- ----------------------------------------------------------
Close A stage in fundraising whereby a fund is able to release
or draw down the capital contractually committed at
that date.
-------------- --------- ----------------------------------------------------------
Core Plus Core+ Assets which have infrastructure characteristics (physical
assets, protected and predictable cash flows) with
a slightly higher risk/return profile than Core assets.
-------------- --------- ----------------------------------------------------------
Direct Funds which invest in self-originated transactions
investment for which there is a low volume, inactive secondary
funds market.
-------------- --------- ----------------------------------------------------------
Earnings per Profit after tax divided by the weighted average number
share of ordinary shares as detailed in note 5.
-------------- --------- ----------------------------------------------------------
Employee EBT Special purpose vehicle used to purchase ICG plc shares
Benefit Trust which are used to satisfy share options and awards
granted under the Group's employee share schemes.
-------------- --------- ----------------------------------------------------------
Environmental, ESG Environmental, social and governance (ESG) criteria
Social, are a set of standards for a company's operations
Governance that socially conscious investors use to screen potential
criteria investments
-------------- --------- ----------------------------------------------------------
Financial FCA Regulates conduct by both retail and wholesale financial
Conduct service firms in provision of services to consumers.
Authority
-------------- --------- ----------------------------------------------------------
Financial FRC The UK's independent regulator responsible for promoting
Reporting high quality corporate governance and reporting.
Council
-------------- --------- ----------------------------------------------------------
Fund FMC The Group's fund management business, which sources
Management and manages investments on behalf of the IC and third
Company party funds.
-------------- --------- ----------------------------------------------------------
HMRC HM Revenue & Customs, the UK tax authority.
-------------- --------- ----------------------------------------------------------
IAS International Accounting Standards.
-------------- --------- ----------------------------------------------------------
IFRS International Financial Reporting Standards as adopted
by the European Union.
-------------- --------- ----------------------------------------------------------
Illiquid Asset classes which are not actively traded.
assets
-------------- --------- ----------------------------------------------------------
Internal ICAAP The ICAAP allows companies to assess the level of
Capital capital that adequately supports all relevant current
Adequacy and future risks in their business.
Assessment
Process
-------------- --------- ----------------------------------------------------------
Investment IC The Investment Company invests the Group's capital
Company in support of third party fundraising and funds the
development of new strategies.
-------------- --------- ----------------------------------------------------------
Internal Rate IRR The annualised return received by an investor in a
of Return fund. It is calculated from cash drawn from and returned
to the investor together with the residual value of
the asset.
-------------- --------- ----------------------------------------------------------
Key Man Certain funds have designated Key Men. The departure
of a Key Man without adequate replacement triggers
a contractual right for investors to cancel their
commitments.
-------------- --------- ----------------------------------------------------------
Key KPI A business metric used to evaluate factors that are
performance crucial to the success of an organisation.
indicator
-------------- --------- ----------------------------------------------------------
Key risk KRI A measure used to indicate how risky an activity is.
indicator It is an indicator of the possibility of future adverse
impact.
-------------- --------- ----------------------------------------------------------
Liquid assets Asset classes with an active, established market in
which assets may be readily bought and sold.
-------------- --------- ----------------------------------------------------------
Open ended A fund which remains open to new commitments and where
fund an investor's commitment may be redeemed with appropriate
notice.
-------------- --------- ----------------------------------------------------------
Payment in PIK Also known as rolled up interest. PIK is the interest
kind accruing on a loan until maturity or refinancing,
without any cash flows until that time.
-------------- --------- ----------------------------------------------------------
Performance Carry Share of profits that the fund manager is due once
fees it has returned the cost of investment and agreed
preferred return to investors.
-------------- --------- ----------------------------------------------------------
Realisation The return of invested capital in the form of principal,
rolled up interest and/or capital gain.
-------------- --------- ----------------------------------------------------------
Securitisation A form of financial structuring whereby a pool of
assets is used as security (collateral) for the issue
of new financial instruments.
-------------- --------- ----------------------------------------------------------
Senior debt Senior debt ranks above mezzanine and equity.
-------------- --------- ----------------------------------------------------------
Structured Entities which are classified investment funds, CLO's
entities or CDO's and are deemed to be controlled by the Group,
though its interest in either an investment, loan,
fee receivable, guarantee or commitment. These entities
can also be interchangeably referred to as credit
funds.
-------------- --------- ----------------------------------------------------------
Total AUM The aggregate of the third party external AUM and
the Investment Company's balance sheet.
-------------- --------- ----------------------------------------------------------
UK Corporate The Code Sets out standards of good practice in relation to
Governance board leadership and effectiveness, remuneration,
Code accountability and relations with shareholders.
-------------- --------- ----------------------------------------------------------
Company timetable
Ex-dividend date 10 December 2020
Record date for interim dividend 11
December 2020
Last date for dividend reinvestment election 15 December 2020
Payment of interim dividend 8 January 2021
Trading Update 28 January 2021
(END) Dow Jones Newswires
November 17, 2020 02:00 ET (07:00 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.
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