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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Intermediate Capital Group Plc | LSE:ICP | London | Ordinary Share | GB00BYT1DJ19 | ORD 26 1/4P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 2,124.00 | 2,128.00 | 2,130.00 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| Security Brokers & Dealers | 737.1M | 280.6M | 0.9801 | 21.67 | 6.08B |
Hot Features
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TIDMICP
ICG delivers record EUR5.7bn fundraising
Intermediate Capital Group plc (ICG) announces its first half results
for the six months ended 30 September 2017.
Operational highlights
-- Total AUM up 14% on 31 March 2017 to EUR27.2bn, with EUR5.7bn of new
money raised, driven by our Senior Debt Partners strategy raising
EUR4.2bn in the six month period and growing momentum across our European
capital markets strategies
-- The new money raised earns fees as it is invested, as such there is
minimal short term, but greater medium term impact from these funds.
Third party fee earning AUM down 1% on 31 March 2017 to EUR18.5bn due to
the impact of FX
-- Fundraising pipeline strong with a number of our larger strategies
expected to begin raising successor funds in the next 12 months
-- Strong fund deployment for our larger strategies. Investment discipline
in a competitive market being maintained
-- Portfolios continue to perform well
Financial highlights
-- Fund Management Company profits up 30% to GBP44.3m (H1 2017: GBP34.0m),
with third party fee(1) income up 24%
-- Investment Company profits are lower at GBP51.2m (H1 2017: GBP92.2m), due
to lower investment income
-- Group profit before tax of GBP95.5m (H1 2017: GBP126.2m), Adjusted Group
profit before tax1 was GBP81.0m (H1 2017: GBP133.0m)
-- Earnings per share of 33.1p (H1 2017: 37.4p); Fund Management Company
15.5p (H1 2017: 10.2p) and Investment Company 17.6p (H1 2017: 27.2p)
-- Interim ordinary dividend up 20.0% to 9.0 pence per share
Commenting on the results, Benoit Durteste, CEO, said:
'I am delighted to report another strong set of results for the first
half, as well as a record fundraising performance. With AUM at EUR27.2bn,
a healthy fundraising pipeline and strong fund investment for our larger
strategies we continue to deliver on our strategic objectives and grow
our specialist asset manager franchise.
'ICG's diversified investor base underpins our ability to scale proven,
successful strategies, such as Senior Debt Partners. This fundraising
success, now our largest single strategy, makes us one of the few asset
managers with the scale, reputation, origination network and track
record to take full advantage of the attractive European direct lending
market. This serves as a blueprint for growing our existing strategies
whilst at the same time continuing to innovate and pioneer new
strategies, backed by our balance sheet capital and disciplined
investment culture.'
Commenting on the results, Kevin Parry, Chairman, said:
'These results continue to demonstrate our transformation to a
specialist asset manager. Fundraising has been excellent as investors
have trusted us with their funds due to our sustained strong investment
performance.'
Financials
Unaudited Unaudited Audited
6 months to 6 months to % change 12 months to
30 September 2017 30 September 2016 31 March 2017
Fund GBP44.3m GBP34.0m 30% GBP74.0m
Management
Company
profit
before
tax(1)
Investment GBP51.2m GBP92.2m (44%) GBP178.4m
Company
profit
before
tax
Adjusted GBP36.7m GBP99.0m (63%) GBP163.5m
Investment
Company
profit
before
tax(1)
Adjusted GBP81.0m GBP133.0m (39%) GBP237.5m
Group
profit
before
tax(1)
Group GBP95.5m GBP126.2m (24%) GBP252.4m
profit
before
tax
Adjusted 28.3p 39.8p (29%) 69.3p
earnings
per
share(1)
Earnings 33.1p 37.4p (11%) 74.5p
per share
Dividend 9.0p 7.5p 20% 27.0p
per share
in respect
of the
period
Gearing(1) 0.92x 1.01x (9%) 0.95x
Net GBP945.0m GBP965.0m (2%) GBP629.1m
debt(1)
Net asset GBP4.20 GBP3.81 10% GBP4.18
value per
share(1)
(1) These are non IFRS GAAP alternative performance measures and
represent internally reported numbers excluding the impact of fair value
movements on derivatives (H1 FY18: GBP0.3m; H1 FY17: GBP7.6m; FY17:
GBP1.3m). Internally reported numbers exclude the impact of the
consolidation of 12 credit funds following the adoption of IFRS 10.
Further details can be found on page 35.
Assets under management(1)
30 September 2017 30 September 2016 31 March 2017
Third party assets under
management EUR25,320m EUR19,848m EUR21,817m
Investment portfolio EUR1,892m EUR2,163m EUR2,008m
Total assets under
management EUR27,212m EUR22,011m EUR23,825m
Third party fee earning
assets under management EUR18,515m EUR16,537m EUR18,742m
The following foreign exchange rates have been used.
30 September 2017 30 September 2016 31 March 2017 30 September 2017 30 September 2016 31 March 2017
Average Average Average Period end Period end Period end
GBP:EUR 1.1351 1.2154 1.1890 1.1344 1.1549 1.1730
GBP:USD 1.3058 1.3608 1.3020 1.3402 1.2972 1.2534
Enquiries
A presentation for investors and analysts will be held at 09:30 GMT
today at ICG's offices, Juxon House, 100 St Paul's Churchyard, London,
EC4M 8BU. The presentation will also be streamed live at 09:30 GMT and
be available on demand from 14:00 GMT at
http://www.icgam.com/shareholders/Pages/shareholders.aspx.
Analyst / Investor enquiries:
Philip Keller, CFOO, ICG +44 (0) 20 3201 7700
Ian Stanlake, Investor Relations, ICG +44 (0) 20 3201 7880
Media enquiries:
Neil Bennett, Tom Eckersley, Maitland +44 (0) 20 7379 5151 Susan Tether, Corporate Communications, ICG +44 (0) 20 3201 7917
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.
This Half Year Results statement contains information which prior to
this announcement was insider information.
About ICG
ICG is a specialist asset manager with over 28 years' history. We manage
EUR27.2bn of assets in third party funds and proprietary capital,
principally in closed end funds. Our strategy is to grow our specialist
asset management activities to deliver increased shareholder value. Our
goal is to generate income and consistently high returns whilst
protecting against investment downside for our fund investors. We seek
to achieve this through our expertise in investing across the capital
structure. We combine flexible capital solutions, local access and
insight with an entrepreneurial approach to give us a competitive edge
in our markets. 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 to deliver value to our fund investors and increase
shareholder value.
We are listed on the London Stock Exchange (ticker symbol: ICP) and
provide investment management and advisory services in support of our
strategy and goal through a number of regulated subsidiaries, further
details of which are available at: www.icgam.com.
Business review
We have continued to deliver against our strategic objectives of growing
our specialist asset manager business. The highlights of the first half
of the financial year are:
-- Fundraising (inflows): EUR5.7bn raised in total with EUR4.2bn raised for
our Senior Debt Partners strategy
-- Fees: Weighted average fee rate(1) of 0.89%, down from 0.91% due to the
shift in mix of investment strategies
-- Fund investments: Deployment remains strong for our larger strategies
while we maintain investment discipline in a competitive market
-- Returns: All funds are on course to meet or exceed their return hurdle
rates
-- Dividend: Interim dividend of 9.0 pence per share in line with dividend
policy and up 20%
Alternative asset market growing strongly
Alternative asset classes continue to be attractive to institutional
investors for their enhanced returns and diversification opportunities.
The characteristics that have driven the growth in alternative asset
classes in recent years remain unchanged. The increasing wealth of
developing nations, combined with ageing populations, supports the trend
of increasing the absolute size of institutional assets under
management. At the same time, bond yields and interest rates remain low
thereby impacting the returns of traditional asset classes. We expect
the conditions driving the long term attractiveness of alternative asset
classes to remain even if Central Banks increase interest rates.
The current fundraising environment is inevitably attracting new
entrants into the alternative asset management market. With increased
competition, we believe that our established approach and disciplined
investment culture is a competitive advantage. By focussing on capital
preservation and yield across mid-market transactions in four strategic
asset classes we are able to identify market opportunities to develop
differentiated strategies. We are of a size and scale that enables
resource constrained investors to access our range of strategies through
multi strategy mandates tailored to their individual requirements.
Strong fundraising across our strategic asset classes
At EUR5.7bn of inflows, fundraising activity in the first half of the
financial year was, as expected and previously indicated, stronger than
in prior periods. As 96% of our assets under management are in closed
end funds the pace of fundraising is dependent on when our larger funds
come to market. Senior Debt Partners, closed its third vintage, raising
EUR4.2bn in the period through both a co-mingled fund and segregated
mandates, is our largest single strategy and one of the largest direct
lending funds in Europe.
The increase in size of our Senior Debt Partners strategy, with assets
under management up 79% since 31 March 2017, acts as a differentiator in
the European direct lending market as it allows us to offer a broader
range of finance solutions to mid-market companies. A further reason for
our decision to upscale this strategy is that the strategy is permitted
to make limited investments in North American mid-market companies,
thereby leveraging our European success with our existing US presence to
broaden our direct lending strategy. We have achieved all this whilst
attracting investors without the need to offer any fee discounts,
increasing the average fee rate of the strategy.
Elsewhere, we have made steady progress in converting investor interest
into investor commitments for our liquid strategies, raising EUR0.5bn in
the period and increasing the profitability of these scalable
strategies. We had further success in closing our Strategic Secondaries
fund above target at $1.1bn, including $200m from the balance sheet,
closing the third vintage of our real estate senior debt strategy and
raising a US CLO.
Capital deployment in a competitive investment market
The breadth of our portfolio of strategies means that we operate in a
diversified investment market. Across all of our strategies we have
continued to see the investment market remain competitive as
institutions seek to deploy the increasing amounts of capital raised so
as to access the attractive returns available in private markets.
In these competitive markets, the focus of our local teams and sector
specialists together with their longstanding relationships and
understanding of the markets in which they operate continues to provide
deal flow and early access to investment opportunities. The strong
investment pace of Europe Fund VI is evidence of this as our
longstanding relationships and speed of execution has given us access to
attractive deals ahead of competitors. Strategic Secondaries is also
investing ahead of its linear investment pace. As a result we expect
both strategies to begin raising successor funds during the next twelve
months. Elsewhere, a solid pipeline of investment opportunities means we
are confident that each of our direct investment funds will deploy their
available capital within their stated investment periods.
Fund returns benefiting from robust portfolio performance
Liquidity in the market continues to provide a healthy environment for
realisations. Where possible, our portfolio managers are seeking to
capitalise on this liquidity and actively realise assets within their
portfolio. This enables them to lock in performance, thereby
underpinning future performance fees and providing the foundations for
future fundraising success.
The portfolios are performing well, with only a small number of assets
underperforming, as reflected in the period end valuation review. We
expect the performance of our portfolios and level of realisations to
remain robust through the second half of the financial year.
Interim dividend increased and ongoing capital management
The Board recommends an interim dividend of 9.0p, an increase of 20.0%
on the prior year interim dividend and in line with the Company's stated
policy that the interim dividend will equate to a third of the prior
year total dividend. The dividend will be paid on 12 January 2018 to
shareholders on the register on 8 December 2017. We will continue to
make available the dividend reinvestment plan.
We continue to actively manage our sources of balance sheet financing to
ensure we have access to sufficient cash and debt facilities. The
weighted average life of drawn debt at 30 September was 4.3 years.
Outlook
We have a healthy pipeline of new strategies and expect a number of our
larger existing strategies will begin raising successor funds during the
next 12 months. Current year fundraising will, as expected, be weighted
to the first half of the financial year. With the second half of the
year being more aligned to our long term fundraising target, FY18 will
be a record fundraising year. In addition, based on our fundraising
pipeline, we expect that FY19 will meet or exceed our long term
fundraising target.
We will not compromise our commitment to our disciplined investment
culture. We will therefore continue to size our funds to the market
opportunity and aim to deploy capital in line with the required
investment pace. Where the opportunity arises we will seek to scale
proven, successful strategies to further differentiate our offering from
other asset managers and, as a result, improve operating leverage. In
addition, we continue to look for attractive opportunities to grow and
further expand our range of strategies, and will update the market on
these at the appropriate time.
The strength of ICG's business model with a disciplined investment
culture and focus on closed end funds is that earnings are underpinned
by long term, predictable and highly cash generative fee income streams.
This, combined with a proven fund investment performance, permits good
medium term visibility of fundraising and fees, whilst offering
protection against short term macroeconomic uncertainty. This 'locked-in
value' will be the subject of further discussion at our capital markets
update on 1 February 2018.
(1) These are non IFRS GAAP alternative performance measures. Please see
the glossary on page 35 for further information.
Finance and operating review
Financial information enables management to monitor the performance of
the business and inform decision making in support of delivering the
Group's strategic objectives. The financial information prepared for,
and reviewed by, management and the Board is on a non IFRS basis and
therefore differs from the IFRS financial statements on pages 14 to 32.
The Group's profit before tax on an IFRS basis was below last year at
GBP95.5m (H1 2017: GBP126.2m), due to a lower finance income than in the
comparative period.
6 months to 30 September 2017 6 months to 30 September 2016
IFRS IFRS
Income as reported Adjustments Internally reported adjusted as reported Adjustments Internally reported adjusted
Statement GBPm GBPm GBPm GBPm GBPm GBPm
Revenue
Finance and
dividend
income 92.3 (28.2) 64.1 125.4 (51.5) 73.9
Gains on
investments 120.1 (49.3) 70.8 113.9 11.6 125.5
Fee and other
operating
revenue 72.7 8.5 81.2 59.6 5.6 65.2
Total revenue 285.1 (69.0) 216.1 298.9 (34.3) 264.6
Finance costs (80.5) 52.2 (28.3) (69.1) 44.5 (24.6)
Impairments (10.0) - (10.0) (13.3) (10.5) (23.8)
Staff and
incentive
scheme costs (74.8) (1.1) (75.9) (61.1) (1.0) (62.1)
Other
administrative
expenses (24.3) 3.4 (20.9) (29.2) 8.1 (21.1)
Profit before
tax 95.5 (14.5) 81.0 126.2 6.8 133.0
A full reconciliation between the internally reported financial
information and the IFRS consolidated income statement, consolidated
statement of financial position and consolidated statement of cash flows
is provided in note 3 to the financial statements. The adjustments can
be summarised as follows:
Consolidated structured entities
IFRS deems the Group to control funds where it can make significant
decisions that can substantially affect the variable returns of
investors. There are 12 credit funds and CLOs required to be
consolidated under this definition of control. This has the impact of
including the assets and liabilities of these funds in the consolidated
statement of financial position and to recognise interest income and
gains or losses on investments in the consolidated income statement.
The Group is not exposed to the liabilities and cannot access the assets
of these entities except for the investment made by the Group into these
structured funds. Financial information prepared for internal reporting
purposes includes the fair value of the balance sheet investment in the
statement of financial position, and includes the management fee and
dividend income received from these entities in the income statement.
This is consistent with the treatment of the CLOs for regulatory
reporting purposes.
Other entities
There are two entities, Nomura ICG KK and Questus Energy Pty Limited
where the presentation in the IFRS financial statements is different to
the internal reporting. The Group's 50% share of the revenue and costs
from Nomura ICG KK are included on a line by line basis in the income
statement for internal reporting purposes. These items are collapsed
into a single line in the IFRS financial statements to reflect its
status as a jointly controlled entity. For Questus Energy Pty Limited,
the costs are included on a line by line basis in the income statement
for internal reporting purposes whereas in the IFRS financial statements
these are collapsed into a single line, administrative expenses, to
reflect its status as a non-controlled entity.
Reclassification of income
The Group invests in its European mezzanine, Asia Pacific mezzanine and
North American Private Debt strategies either through a fund structure
or directly into the underlying assets, depending on the fund. This
impacts the presentation of the income statement for investments in debt
instruments under IFRS. For those investments made directly the Group
generates interest income and is subject to impairment risk, whereas for
the investments made through a fund structure the income is recognised
as a net gain on investment.
Regardless of the investment mechanics, the performance of the
investment is reviewed and managed at an asset level. As such, internal
financial information is presented on an asset by asset basis for all
European mezzanine, Asia Pacific mezzanine and North American Private
Debt strategies. This is presentational only and has no impact on the
profit of the Group.
Other
The Group excludes the fair value movement on derivatives from its
internally reported numbers until such time as the derivative settles
and is matched in the income statement against the item that was hedged.
The Board believes that presenting the financial information in this
review on a non GAAP basis assists shareholders in assessing the
delivery of the Group's strategy through its financial performance,
consistent with the approach taken by management and the Board.
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 35.
Overview
The Group's internally reported unadjusted profit before tax(1) for the
period was 36% lower at GBP80.7m (H1 2017: GBP125.4m), with Fund
Management Company (FMC) profit of GBP44.3m (H1 2017: 34.0m) and
Investment Company (IC) profit of GBP36.4m (H1 2017: GBP91.4m). We
continue to make operational progress in developing our fund management
business, with the investment of money raised for new and existing
strategies contributing to the growth in FMC profit. IC profits have, as
expected, normalised after the first half of the prior year included the
one off recycling of GBP48.4m of realised capital gains from reserves.
Excluding this one off recycling, IC profit was broadly in line with the
prior period.
6 months to 30 September 2017 6 months to 30 September 2016
Income Internally reported unadjusted Fair value charge on derivatives Internally reported adjusted Internally reported unadjusted Fair value charge on derivatives Internally reported adjusted
Statement GBPm GBPm GBPm GBPm GBPm GBPm
Fund
Management
Company 44.3 - 44.3 34.0 - 34.0
Investment
Company 36.4 0.3 36.7 91.4 7.6 99.0
Profit
before
tax 80.7 0.3 81.0 125.4 7.6 133.0
Tax (1.2) - (1.2) (16.6) - (16.6)
Profit
after tax 79.5 0.3 79.8 108.8 7.6 116.4
The internally reported adjusted profit of the IC and Group in the above
table excludes the impact of the fair value charge on hedging
derivatives of GBP0.3m (H1 2017: GBP7.6m). Throughout this review all
numbers are presented excluding this adjusting item, unless otherwise
stated. The effective tax rate for the period is 1% (H1 2017: 12%). The
tax rate is lower than the standard corporation tax rate of 20%, as
detailed in note 6 to the financial statements.
Based on the adjusted profit above, the Group generated an ROE(1) of
14.0% (H1 2017: 20.8%) and adjusted earnings per share(1) for the period
of 28.3p (H1 2017: 39.8p).
Net current assets(1) of GBP564.8m are down from GBP594.1m at 31 March
2017.
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). New AUM (inflows) is our best lead indicator to
sustainable future fee streams and therefore increasing sustainable
profits.
In the six month period to 30 September 2017, the net impact of
fundraising and realisations saw third party AUM increased 16% to
EUR25.3bn. 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
2017 10,805 6,171 3,290 1,551 21,817
Additions 4,245 964 416 74 5,699
Realisations (928) (307) (215) - (1,450)
FX and other (283) (270) (98) (95) (746)
At 30
September
2017 13,839 6,558 3,393 1,530 25,320
Change % 28% 6% 3% (1%) 16%
Corporate Investments
Corporate Investments third party funds under management have increased
28% to EUR13.8bn in the period as new AUM of EUR4.2m more than
outstripped the run off of our older funds. As previously noted,
fundraising in the period related to our Senior Debt Partners strategy.
Capital Market Investments
Capital Markets third party funds under management have increased 6% to
EUR6.6bn, with new third party AUM of EUR964m raised in the period,
including EUR505m for our liquid European loan strategies. In addition,
we closed one US CLO raising a total EUR426m, including EUR26m committed
from the balance sheet. We expect to raise further money for our liquid
and CLO strategies during the current financial year thereby further
increasing the operating leverage of this strategy.
Real Asset Investments
Real Assets third party funds under management have increased 3% to
EUR3.4bn, with new AUM of EUR416m (GBP370m) raised in the period for our
UK real estate senior debt programme. The additional money raised in the
current year has resulted in a total of GBP1.2bn raised for this
scalable strategy.
Secondary Investments
Secondaries third party funds under management have decreased 1% to
EUR1.5bn, with new AUM of EUR74m ($85m) raised in the period for our
Strategic Secondaries strategy offsetting the negative impact of FX. The
new AUM in the period resulted in a final close for our Strategic
Secondaries Fund at $1.1bn, including a $200m commitment from the
balance sheet, in excess of its target size of $1bn.
Fee earning AUM
The investment 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 GBP1.7bn in the period compared to GBP1.3bn 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
2017:
Strategic % invested at % invested at Assets in fund at Deals completed
asset class Fund 30 September 2017 31 March 2017 30 September 2017 in period
Corporate ICG Europe
Investments Fund VI 65% 40% 12 4
North
American
Corporate Private
Investments Debt Fund 72% 64% 14 2
Senior Debt
Corporate Partners
Investments II 87% 64% 28 5
Corporate Asia Pacific
Investments Fund III 44% 44% 4 0
ICG Longbow
Real Asset Real Estate
Investments Fund IV 87% 71% 26 3
Secondary Strategic
Investments Secondaries 50% 21% 6 3
Fee earning AUM has decreased 1% to EUR18.5bn since 1 April 2017 as the
investment pace of our direct investment funds has been offset by
realisations and the adverse movement on FX 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
2017 8,516 6,171 2,667 1,388 18,742
Additions 661 634 398 74 1,767
Realisations (763) (261) (376) - (1,400)
FX and other (142) (277) (79) (96) (594)
At 30
September
2017 8,272 6,267 2,610 1,366 18,515
Fee income
Third party fee income(1) of GBP77.8m was 24% higher than the prior year
driven by the investment of those funds that charge fees on invested
capital, fees from our recently raised Strategic Secondaries Fund and
the CLO issuance programme. Details of movements are shown below:
6 months to 6 months to
30 September 2017 30 September 2016 Change
Fee income GBPm GBPm %
Corporate Investments 45.9 36.0 28%
Capital Market Investments 14.6 11.3 29%
Real Asset Investments 7.7 10.5 (27%)
Secondary Investments 9.6 5.1 88%
Total third party funds 77.8 62.9 24%
IC management fee 8.3 9.2 (10%)
Total 86.1 72.1 19%
Third party fees include GBP6.3m of net performance fees (H1 2017:
GBP4.4m), primarily related to Corporate Investments. Performance fees
are an integral recurring part of the fee income profile and
profitability stream of the Group.
Third party fees are 81% 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. As such, the full impact of the
devaluation of Sterling in June 2016 has been felt across both the
current and prior financial years as the hedges in place at the time
have rolled off. Total fee income included a GBP3.7m FX benefit in the
period.
The weighted average fee rate, excluding performance fees, across our
fee earning AUM is 0.89% (H1 2017: 0.88%).
Dividend income
Dividend receipts(1) of GBP12.3m (H1 2017: GBP11.6m) reflects the
increased number and improved performance of our US CLOs.
Operating expenses
Operating expenses of the FMC were GBP54.1m (H1 2017: GBP49.5m),
including salaries and incentive scheme costs.
Salaries were GBP20.7m (H1 2017: GBP19.1m) as average headcount
increased 6% from 236 to 249. This increase is directly related to
investing in our capital markets and senior debt strategies. Other
administrative costs have decreased to GBP15.6m (H1 2017: GBP15.9m) as
the amortisation cost of historic placement fees reduces.
The FMC operating margin(1) was 45.0% up from 40.7% in the prior year,
as a result of average fee earning AUM increasing 13% to EUR18.3bn for
the six months ending 30 September 2017 thereby increasing the operating
leverage of our existing strategies.
Investment Company
Balance sheet investments
The balance sheet investment portfolio(1) decreased 2% in the period to
GBP1,668m at 30 September 2017, as illustrated in the investment
portfolio bridge below:
GBPm
At 1 April 2017 1,711.6
New and follow on investments 261.9
Accrued interest income 44.0
Realisations (362.8)
Cash interest received (19.9)
Asset impairments (10.0)
Fair value gains 65.6
FX and other (22.4)
At 30 September 2017 1,668.0
Realisations comprise the return of GBP189.5m of principal, the
crystallisation of GBP24.0m of rolled up interest and GBP149.3m of
realised capital gains.
In the period GBP133.5m was invested alongside our corporate investment
strategies for new and follow on investments. Of the remaining GBP128.4m,
GBP76.6m was invested in our capital market strategies and GBP48.7m in
our Strategic Secondaries strategy.
The Sterling value of the portfolio decreased by GBP19.7m due to FX
movements. The portfolio is 40% Euro denominated, 34% US dollar
denominated and 18% Sterling denominated. The Group minimises the FX
impact of non-Sterling assets through asset/liability management and
derivative transactions.
The balance sheet investment portfolio is weighted towards the higher
returning asset classes as detailed below:
As at As at
Return 30 September 2017 % of 31 March 2017 % of
profile GBPm total GBPm total
Corporate
Investments 15-20% 1,081 65% 1,120 66%
Capital
Market
Investments 5-10% 352 21% 333 19%
Real Asset
Investments c10% 85 5% 107 6%
Secondary
Investments 15-20% 150 9% 152 9%
Total
balance
sheet
portfolio 1,668 100% 1,712 100%
In addition, GBP294.3m (31 March 2017: GBP89.7m) of current assets are
held on the balance sheet with the intention of being transferred to
third party investors or funds. The flexibility of our balance sheet
enables our investment teams to continue to source attractive deals
whilst a fund is being raised and where a deal exceeds a fund strategy's
capacity to offer third party investors co-investment opportunities. At
30 September 2017, 57% of these assets were in respect of European
mezzanine transactions completed late in the period and held for
syndication to third party investors.
Investment returns
Investment returns(1) of GBP116.0m (H1 2017: GBP166.3m) represents the
total return generated from the balance sheet portfolio in the period,
analysed as follows:
6 months to 6 months to
30 September 2017 30 September 2016 Change
Investment returns GBPm GBPm %
Interest income 51.8 60.0 (14%)
Other income 3.4 4.6 (26%)
Capital gains 70.8 125.5 (44%)
Investment income 126.0 190.1 (34%)
Asset impairments (10.0) (23.8) (58%)
Total investment returns 116.0 166.3 (30%)
Interest income(1) was below the prior period as the mix of the average
interest bearing loan book was weighted towards lower risk and lower
return assets and a GBP4.0m reduction in interest from current assets.
Cash interest income has increased to 37% (H1 2017: 35%) of the total.
Capital gains(1) were, as expected, lower than the first half of the
prior financial year when the income statement benefited from the
recycling of GBP48.4m of capital gains from reserves on realisation of
the underlying assets. Excluding this one off item, capital gains were
GBP6.3m lower than the prior year as the valuation of the portfolio
benefited from the continued strength of global stock markets and the
improved performance of a number of portfolio companies.
Net realised capital gains(1) in the period were GBP93.3m (H1 2017:
GBP161.2m), of which GBP91.2m (H1 2017: GBP106.5m) had previously been
recognised as unrealised gains in the P&L with the remaining GBP2.1m (H1
2017: GBP54.7m) recognised in the current period. Fair valuing the
equity and warrants gave rise to a further GBP65.2m (H1 2017: GBP65.5m)
of unrealised gains in the current period. Of this, GBP68.7m (H1 2017:
GBP70.8m) is recognised in the income statement and a GBP3.5m unrealised
loss in reserves (H1 2017: GBP5.3m).
During the period we took asset specific impairments against our weaker
assets of GBP12.3m compared to GBP23.8m in the first half of the last
financial year. With write backs of GBP2.3m (H1 2017: GBPnil), net asset
impairments(1) were GBP10.0m (H1 2017: GBP23.8m). Subject to the impact
of the macro economy on the portfolio, current performance would
indicate that net impairments for the full year will be below our long
term average of 2.5% of the opening Investment Company portfolio.
Interest expense
Interest expense(1) of GBP28.3m was GBP3.9m higher than the prior period
(H1 2017: GBP24.4m), due to the increase in private placement debt and
the FX impact of interest paid on non-Sterling borrowings.
Operating expenses
Operating expenses(1) of the IC amounted to GBP42.7m (H1 2017: GBP33.7m),
of which incentive scheme costs of GBP31.5m (H1 2017: GBP22.9m) were the
largest component. The GBP8.6m increase is due to higher bonus accruals
as a direct result of the level of realisations in the period. Other
staff and administrative costs were GBP11.2m compared to GBP10.8m in the
first half of last year, a GBP0.4m increase.
Group cash flow and debt
The balance sheet remains strong, with GBP627.0m of available cash and
debt facilities at 30 September 2017. The movement in the Group's
unutilised cash and debt facilities during the period is detailed as
follows:
Headroom bridge GBPm
At 1 April 2017 970.8
Movement in cash (345.2)
Movement in drawn debt 29.2
FX and other (27.8)
At 30 September 2017 627.0
Total drawn debt at 30 September 2017 was GBP1,090m compared to
GBP1,119m at 31 March 2017, with unencumbered cash of GBP145m compared
to GBP490m at 31 March 2017.
Cashflow
Operating cash outflow for the period of GBP250.0m (H1 2017: GBP272.7m
inflow) due to the strong investment pace and increase in assets held
for syndication.
6 months to 6 months to
30 September 2017 30 September 2016
Operating cash flow statement GBPm GBPm
Cash in from realisations 227.5 302.9
Cash in from dividends 13.0 39.2
Cash in from fees 70.2 70.1
Cash in from cash interest 35.0 25.7
Cash movement in current assets held in warehouse
for syndication - 99.6
Total cash receipts 345.7 537.5
Cash interest paid (26.6) (20.8)
Cash paid to purchase loans and investments (261.9) (178.2)
Cash movement in current assets held in warehouse
for syndication (204.9) -
Operating expenses paid (102.3) (65.8)
Total cash paid (595.7) (264.8)
Total cash (utilised in)/generated from operating
activities (250.0) 272.7
Capital position
Shareholders' funds increased by GBP15.7m to GBP1,188.3m (31 March 2017:
GBP1,172.6m), as the retained profits in the period were offset by the
payment of the ordinary dividend. Total debt to shareholders' funds
(gearing) as at 30 September 2017 decreased to 0.92x from 0.95x at 31
March 2017.
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 includes a fair review of the information
required by DTR 4.2.7R (indication of important events during the first
six months and description of principal risks and uncertainties for the
remaining six months of the year); and
-- The interim management report includes a fair review of the information
required by DTR 4.2.8R (disclosure of related parties' transactions and
changes therein).
This responsibility statement was approved by the Board of Directors on
13 November 2017 and is signed on its behalf by:
Benoit Durteste Philip Keller
CEO CFOO
Consolidated Income Statement
For the six months ended 30 September 2017
Six months ended Six months ended
30 September 2017 30 September 2016
(Unaudited) (Unaudited)
GBPm GBPm
Finance and dividend income 92.3 125.4
Gains on investments 120.1 113.9
Fee and other operating income 72.7 59.6
Total revenue 285.1 298.9
Finance costs (80.5) (69.1)
Impairments (10.0) (13.3)
Administrative expenses (99.3) (90.4)
Share of results of joint ventures accounted for using
equity method 0.2 0.1
Profit before tax 95.5 126.2
Tax charge (2.2) (16.6)
Profit for the period 93.3 109.6
Attributable to:
Equity holders of the parent 93.3 109.3
Non controlling interests - 0.3
93.3 109.6
Earnings per share 33.1p 37.4p
Diluted earnings per share 33.1p 37.4p
All activities represent continuing operations.
Consolidated Statement of Comprehensive Income
For the six months ended 30 September 2017
Six months ended Six months ended
30 September 2017 30 September 2016
(Unaudited) (Unaudited)
GBPm GBPm
Profit for the period 93.3 109.6
Available for sale financial assets:
Losses arising in the period which may be reclassified
to profit or loss in future periods (2.6) (2.9)
Reclassification adjustment for net gains recycled
to profit (0.7) (45.5)
Exchange differences on translation of foreign
operations (9.6) 18.2
(12.9) (30.2)
Tax credit on items taken directly to or transferred
from equity 0.4 8.9
Other comprehensive expense for the period (12.5) (21.3)
Total comprehensive income for the period 80.8 88.3
Consolidated Statement of Financial Position
30 September 2017 31 March 2017
(Unaudited) (Audited)
As at 30 September 2017 GBPm GBPm
Non current assets
Intangible assets 19.3 20.7
Property, plant and equipment 9.8 9.2
Financial assets: loans, investments and
warrants 4,683.3 4,886.7
Derivative financial assets 4.5 6.4
Deferred tax asset 0.4 0.3
4,717.3 4,923.3
Current assets
Trade and other receivables 480.0 208.3
Financial assets: loans and investments 294.3 89.7
Derivative financial assets 81.1 40.3
Current tax debtor 41.6 33.7
Cash and cash equivalents 392.5 780.9
1,289.5 1,152.9
Total assets 6,006.8 6,076.2
Equity and reserves
Called up share capital 77.1 77.1
Share premium account 179.0 179.0
Capital redemption reserve 5.0 5.0
Own shares reserve (72.4) (82.2)
Other reserves 55.8 66.5
Retained earnings 943.8 927.2
Equity attributable to owners of the
Company 1,188.3 1,172.6
Non controlling interest 0.7 0.7
Total equity 1,189.0 1,173.3
Non current liabilities
Provisions 1.1 1.3
Financial liabilities 4,058.3 4,304.9
Derivative financial liabilities 64.4 33.6
Deferred tax liabilities 76.9 77.0
4,200.7 4,416.8
Current liabilities
Provisions 0.9 0.7
Trade and other payables 509.0 464.8
Financial liabilities 85.6 -
Current tax creditor 19.5 14.0
Derivative financial liabilities 2.1 6.6
617.1 486.1
Total liabilities 4,817.8 4,902.9
Total equity and liabilities 6,006.8 6,076.2
Consolidated Statement of Cash Flows
Six months ended Six months ended
30 September 2017 30 September 2016
(Unaudited) (Unaudited)
For the six months ended 30 September 2017 GBPm GBPm
Operating activities
Interest received 92.6 82.5
Fees received 62.9 68.4
Dividends received 94.4 32.5
Interest paid (69.6) (60.2)
Payments to suppliers and employees (103.8) (78.9)
Net (purchase)/proceeds from sale of current financial
assets (204.9) 99.6
Purchase of loans and investments (1,634.9) (1,128.5)
Recoveries on previously impaired assets 2.3 -
Proceeds from sale of loans and investments 1,481.9 828.4
Cash used in operations (279.1) (156.2)
Taxes paid (3.6) (4.9)
Net cash used in operating activities (282.7) (161.1)
Investing activities
Purchase of property, plant and equipment (1.9) (1.4)
Purchase of remaining 49% of Longbow Real Estate Capital
LLP - (41.7)
Net cash used in investing activities (1.9) (43.1)
Financing activities
Dividends paid (55.2) (249.9)
Increase in long term borrowings 43.6 1,032.9
Repayment of long term borrowings (43.9) (48.3)
Net cash outflow from derivative contracts (26.4) (114.8)
Purchase of own shares (21.0) (23.6)
Proceeds on issue of shares - 0.6
Net cash (used in)/generated from financing activities (102.9) 596.9
Net (decrease)/increase in cash (387.5) 392.7
Cash and cash equivalents at beginning of period 780.9 182.5
Effect of foreign exchange rate changes (0.9) 21.1
Net cash and cash equivalents at end of period 392.5 596.3
Presented on the statement of financial position as:
Cash and cash equivalents 392.5 596.3
Consolidated Statement of Changes in Equity
For the six months ended 30 September 2017
Capital Available
Share Share redemption Share based for sale Own Retained Total
capital premium reserve payments reserve reserve shares earnings Total Non controlling interest equity
(Unaudited) GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
Balance at 1 April 2017 77.1 179.0 5.0 53.8 12.7 (82.2) 927.2 1,172.6 0.7 1,173.3
Profit for the period - - - - - - 93.3 93.3 - 93.3
Available for sale financial assets - - - - (3.3) - - (3.3) - (3.3)
Exchange differences on translation of foreign
operations - - - - - - (9.6) (9.6) - (9.6)
Tax on items taken directly to or transferred from
equity - - - - 0.4 - - 0.4 - 0.4
Total comprehensive income for the period - - - - (2.9) - 83.7 80.8 - 80.8
Own shares acquired in the period - - - - - (21.0) - (21.0) - (21.0)
Options/awards exercised - - - (18.9) - 30.8 (11.9) - - -
Credit for equity settled share schemes - - - 11.1 - - - 11.1 - 11.1
Dividends paid - - - - - (55.2) (55.2) - (55.2)
Balance at 30 September 2017 77.1 179.0 5.0 46.0 9.8 (72.4) 943.8 1,188.3 0.7 1,189.0
For the six months ended 30 September 2016
Capital Available
Share Share redemption Share based for sale Own Retained Total
capital premium reserve payments reserve reserve shares earnings Total Non controlling interest equity
(Unaudited) GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
Balance at 1 April 2016 77.0 177.6 5.0 43.6 51.9 (77.0) 963.1 1,241.2 0.9 1,242.1
Profit for the period - - - - - - 109.3 109.3 0.3 109.6
Available for sale financial assets - - - - (48.4) - - (48.4) - (48.4)
Exchange differences on translation of foreign
operations - - - - - - 18.2 18.2 - 18.2
Tax on items taken directly to or transferred from
equity - - - - 8.9 - 8.9 - 8.9
Total comprehensive income for the period - - - - (39.5) - 127.5 88.0 0.3 88.3
Movement in control of subsidiary - - - - - - 0.4 0.4 (0.4) -
Own shares acquired in the period - - - - - (23.6) - (23.6) - (23.6)
Options/awards exercised - 0.6 - (12.1) - 18.5 (6.4) 0.6 - 0.6
Credit for equity settled share schemes - - - 11.8 - - - 11.8 - 11.8
Dividends paid - - - - - - (249.9) (249.9) - (249.9)
Balance at 30 September 2016 77.0 178.2 5.0 43.3 12.4 (82.1) 834.7 1,068.5 0.8 1,069.3
Notes to the Half Year Report
For the six months ended 30 September 2017
1. Basis of preparation
(i) Basis of preparation
The condensed set of financial statements included in this half year
financial report have been prepared in accordance with 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 2017.
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 comparative figures for the financial year ended 31 March 2017 are
not the Group's statutory accounts for the financial year. As defined in
section 434 of the Companies Act 2006 those accounts have been reported
on by the Group's auditors 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 2017 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 Directors have prepared the condensed financial statements on a
going concern basis which requires the Directors to have a reasonable
expectation that the Group has adequate resources to continue in
operational existence for the foreseeable future. The Directors made
this assessment in light of GBP627.0m of cash and unutilised debt
facilities, no significant bank facilities maturing within the next 18
months, and after reviewing the Group's latest forecasts for a period of
18 months from the period end.
(iii) Related party transactions
There have been no material changes to the nature or size of related
party transactions since 31 March 2017.
Notes to the Half Year Report continued
For the six months ended 30 September 2017
1. Financial risk management
Six months ended Year ended
30 September 2017 31 March 2017
(Unaudited) (Unaudited)
Financial assets - non current GBPm GBPm
Loans and receivables held at amortised cost 143.1 218.0
AFS financial assets held at fair value 80.7 86.1
Financial assets designated as FVTPL 3,654.6 3,768.4
Associates designated as FVTPL 793.9 802.7
Investments in equity accounted joint ventures 1.7 1.3
Derivative financial instruments held at fair value
- warrants 9.3 10.2
4,683.3 4,886.7
Other derivative financial instruments held at fair
value 4.5 6.4
4,687.8 4,893.1
Included within associates designated as FVTPL is GBP775.0m (31 March
2017: GBP653.4m) 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 16.67% investment in ICG Europe Fund VI Limited.
Included within financial assets designated as FVTPL is GBP3,274.0m (31
March 2017: GBP3,403.2m) relating to the structured entities controlled
by the Group.
Fair value measurements recognised in the statement of financial
position
The information set out below provides information about 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)
-- 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.
Notes to the Half Year Report continued
For the six months ended 30 September 2017
2. Financial risk management continued
Fair value measurements recognised in the statement of financial
position continued
Fair value
Fair value as at Relationship
as at 31 March of
30 September 2017 2017 unobservable
(Unaudited) (Audited) Fair Significant unobservable inputs to
Financial assets / Financial liabilities GBPm GBPm value hierarchy Valuation techniques and inputs inputs fair value
A small number of assets have been listed on various
Listed portfolio investments (including GBP3.5m within stock exchanges around the world, providing an external
structured entities controlled by the Group) - 4.3 1 basis for valuing the Group's holdings n/a n/a
Listed
credit fund investments 33.4 50.2 1 Quoted bid prices in an active market n/a n/a
Level 1 assets 33.4 54.5
Internally modelled valuation based on combination
Listed portfolio investments 35.5 38.0 2 of market prices and observable inputs n/a n/a
Level 2 assets within structured entities controlled The fair value has been determined using independent
by the Group 3,266.6 3,337.2 2 broker quotes based on observable inputs n/a n/a
The Group uses widely recognised valuation models
for determining the fair values of over the counter
interest rate swaps and forward foreign exchange contracts.
The most frequently applied valuation techniques include
forward pricing and swap models, using present value
calculations. The valuations are market observable,
Current and non current internally calculated and verified to externally sourced
derivative assets 85.6 46.7 2 data and are therefore included within Level 2 n/a n/a
Level 2 assets 3,387.7 3,421.9
Level 3 investments 105.2 204.1 3 Earnings based technique. The earnings multiple is The discount applied is generally in a range of 10% The higher
derived from a set of comparable listed companies - 40% and exceptionally as high as 62%. A premium the adjusted
or relevant market transaction multiples. A premium has been applied to seven assets in the range of 1% multiple,
or discount is applied to the earnings multiple to - 96%. the higher
adjust for points of difference relating to risk and The earnings multiple is generally in the range of the
earnings growth prospects between the comparable company 8 - 15 and exceptionally as high as 17 and as low valuation
set and the private company being valued. Earnings as 4
multiples are applied to the maintainable earnings
to determine the enterprise value. From this, the
value attributable to the Group is calculated based
on its holding in the company after making deductions
for higher ranking instruments in the capital structure.
To determine the value of warrants, the exercise price
is deducted from the equity value
Notes to the Half Year Report continued
for the six months ended 30 September 2017
2. Financial risk management continued
Fair value measurements recognised in the statement of financial
position continued
Fair value
Fair value as at
as at 31 March
30 September 2017 2017
(Unaudited) (Audited) Fair Significant unobservable
Financial assets / Financial liabilities GBPm GBPm value hierarchy Valuation techniques and inputs inputs Relationship of unobservable inputs to fair value
Where there are no recent transactions, fair value
may be determined from the last market price adjusted
for all changes in risks and information since that
date. Where a close proxy instrument is quoted in A premium/discount is applied taking into account
an active market, then fair value is determined by market comparisons, seniority
Illiquid debt investments within structured entities adjusting the proxy value for differences in the risk of debt, credit rating, current debt, interest coupon, The higher the premium, the higher the valuation.
controlled by the Group 7.4 62.5 3 profile of the instruments maturity of the loan and jurisdiction of the loan The higher the discount, the lower the valuation
The net asset value (NAV) of the fund is based on
the underlying investments which are held either as
FVTPL assets or as loans and receivables initially
recognised at fair value and subsequently valued at
amortised cost. The carrying value of loans and receivables
held at amortised cost are considered a reasonable
approximation of fair value. We have reviewed the
underlying valuation techniques of the funds and consider The NAV of the underlying fund, typically calculated
Investments in unlisted funds 1,025.0 916.2 3 them to be in line with those of the Group under IFRS The higher the NAV, the higher the fair value
Discounted cash flow at a discount rate of 11%. The
following assumptions are applied to each investment's
cashflows: 3% annual default rate, 20% annual prepayment The higher the cash flows the higher the fair value.
Investments in unlisted CLOs 65.4 54.9 3 rate, 70% recovery rate Discounted cash flows The higher the discount, the lower the fair value
Level 3 assets 1,203.0 1,237.7
Level 2 liabilities within structured entities controlled (3,050.0) (3,183.4) 2 The fair value of debt securities issued at FVTPL n/a n/a
by the Group is dependent upon the fair value of investment securities
and derivative financial instruments. Any changes
in the valuation have a direct impact to the fair
value of debt securities issued
Notes to the Half Year Report continued
for the six months ended 30 September 2017
2. Financial risk management continued
Fair value measurements recognised in the statement of financial
position continued
Fair value
Fair value as at Relationship
as at 31 March of
30 September 2017 2017 unobservable
Financial assets / (Unaudited) (Audited) Fair Significant unobservable inputs to
Financial liabilities GBPm GBPm value hierarchy Valuation techniques and inputs inputs fair value
The Group uses widely recognised valuation models
for determining the fair values of over the counter
interest rate swaps and forward foreign exchange contracts.
The most frequently applied valuation techniques include
forward pricing and swap models, using present value
calculations. The valuations are market observable,
Current and non current internally calculated and verified to externally sourced
derivative liabilities (66.5) (40.2) 2 data and are therefore included within Level 2 n/a n/a
Level 2 liabilities (3,116.5) (3,223.6)
During the period GBP48.7m of assets have been transferred from Level 3
to Level 2 following a reassessment of valuation techniques.
As at 30 September 2017
Level 1 Level 2 Level 3 Total
(Unaudited) GBPm GBPm GBPm GBPm
Financial assets held at fair value
Designated as FVTPL 33.4 3,266.6 1,148.5 4,448.5
Derivative financial instruments -
warrants - - 9.3 9.3
AFS financial assets held at fair
value - 35.5 45.2 80.7
Other derivative financial instruments - 85.6 - 85.6
33.4 3,387.7 1,203.0 4,624.1
Financial liabilities at FVTPL
- Structured entities controlled by
the Group - (3,050.0) - (3,050.0)
Other derivative financial instruments - (66.5) - (66.5)
- (3,116.5) - (3,116.5)
Notes to the Half Year Report continued
for the six months ended 30 September 2017
2. Financial risk management continued
Fair value measurements recognised in the statement of financial
position continued
As at 31 March 2017
Level 1 Level 2 Level 3 Total
(Audited) GBPm GBPm GBPm GBPm
Financial assets held at fair value
Designated as FVTPL 54.5 3,337.2 1,179.4 4,571.1
Derivative financial instruments -
warrants - - 10.2 10.2
AFS financial assets held at fair value - 38.0 48.1 86.1
Other derivative financial instruments - 46.7 - 46.7
54.5 3,421.9 1,237.7 4,714.1
Financial liabilities at FVTPL
- Structured entities controlled by the
Group - 3,183.4 - 3,183.4
Other derivative financial instruments - 40.2 - 40.2
- 3,223.6 - 3,223.6
Capital management
The primary objectives of the Group's capital management are to ensure
that the Group complies with externally imposed capital requirements by
the Financial Conduct Authority (FCA) and ensure that the Group
maximises the return to Shareholders through the optimisation of the
debt and equity balance. The Group's strategy has remained unchanged
from the year ended 31 March 2017.
The capital structure comprises debts, which includes the borrowings
disclosed in note 24 of audited Group Financial Statements for the year
ended 31 March 2017, cash and cash equivalents, and capital and reserves
of the Parent Company, comprising called up share capital, reserves and
retained earnings as disclosed in the Consolidated Statement of Changes
in Equity.
The Group has complied with the imposed minimum capital throughout the
year. The full Pillar 3 disclosures are
available on the Company's website www.icgam.com.
Credit Risk
The carrying amount of financial assets represents the Directors'
assessment of the maximum credit risk exposure of the Group at the
balance sheet date. Impairment losses taken during the period reflect
the decline in recoverability on individual assets, either as a result
of company specific or of general macroeconomic conditions.
The Directors believe that credit risk as a result of the concentration
of significant counterparties is low as there is no individual
counterparty comprising more than 10% of the Group's total exposure. The
Group's largest individual exposure as at 30 September 2017 was
GBP111.8m to Minimax (31 March 2017: GBP114.5m to Diamond Castle
Partners 2014 LP, a portfolio of investments).
Notes to the Half Year Report continued
For the six months ended 30 September 2017
1. Business 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 Committee.
The Group reports the profit of the FMC separately from the profits
generated by the IC. The FMC is defined as the operating unit and as
such incurs the majority of the Group's costs, including the cost of the
investment network, i.e. the Investment Executives and the local offices,
as well as the cost of most support functions, primarily information
technology, human resources and marketing.
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 fee
income. The costs of finance, treasury and portfolio administration
teams, and the costs 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.
Six months ended Real Total
30 September 2017 Corporate Investments Capital Market Investments Asset Investments Secondary Investments FMC IC Total internally reported
(Unaudited) GBPm GBPm GBPm GBPm GBPm GBPm GBPm
External fee income 45.9 14.6 7.7 9.6 77.8 - 77.8
Inter-segmental fee 5.5 1.4 0.7 0.7 8.3 (8.3) -
Fund management fee
income 51.4 16.0 8.4 10.3 86.1 (8.3) 77.8
Other operating
income - 3.4 3.4
Gains on
investments - 70.8 70.8
Interest income - 51.8 51.8
Dividend income 12.3 - 12.3
Total revenue 98.4 117.7 216.1
Interest expense - (28.3) (28.3)
Net fair value loss
on derivatives - (0.3) (0.3)
Impairment - (10.0) (10.0) Staff costs (20.7) (5.9) (26.6) Incentive scheme costs (17.8) (31.5) (49.3) Other administrative expenses (15.6) (5.3) (20.9) Profit before tax 44.3 36.4 80.7 Notes to the Half Year Report continued For the six months ended 30 September 2017 1. Business segments continued Six months ended Real Total 30 September 2016 Corporate Investments Capital Market Investments Asset Investments Secondary Investments FMC IC Total internally reported (Unaudited) GBPm GBPm GBPm GBPm GBPm GBPm GBPm External fee income 36.0 11.3 10.5 5.1 62.9 - 62.9 Inter-segmental fee 6.4 1.1 0.9 0.8 9.2 (9.2) - Fund management fee income 42.4 12.4 11.4 5.9 72.1 (9.2) 62.9 Other operating income - 2.3 2.3 Gains on investments - 125.5 125.5 Interest income - 60.0 60.0 Dividend income 11.6 2.3 13.9 Total revenue 83.7 180.9 264.6 Interest expense (0.2) (24.4) (24.6) Net fair value loss on derivatives - (7.6) (7.6) Impairment - (23.8) (23.8) Staff costs (19.1) (5.6) (24.7) Incentive scheme costs (14.5) (22.9) (37.4) Other administrative expenses (15.9) (5.2) (21.1) Profit before tax 34.0 91.4 125.4 Reconciliation of financial statements reported to the Executive Committee to the position reported under IFRS Included in the table below are statutory adjustments made to the Investment Company for the following: - For internal reporting purposes, the interest earned and impairments charged on assets where the Group co-invests in funds (ICG Europe Fund V, ICG Europe Fund VI, ICG Asia Pacific Fund III and ICG North America Private Debt Fund) and where the investment is in a fund where the underlying assets are interest bearing (real estate, liquid credit and senior debt funds) is presented within interest income/impairments whereas under IFRS it is included within the value of the investment/dividends. - The structured entities controlled by the Group are presented as fair value investments for internal reporting purposes, whereas the statutory financial statements present these entities on a fully consolidated basis. - Other adjustments relate to the joint venture investment in Nomura ICG KK which is presented internally on a proportional consolidation basis, whereas it is equity accounted under IFRS and Questus Energy Pty Limited where the costs are included on a line by line basis in the income statement for internal reporting purposes whereas in the IFRS financial statements these are collapsed into a single line, administrative expenses, to reflect its status as a non-controlled entity. Notes to the Half Year Report continued For the six months ended 30 September 2017 3. Business segments continued Consolidated Income Statement Six months ended 30 September 2017 Internally reported Reclass of interest to dividends and gains Consolidated structured entities Other adjustments Total adjustments Financial statements (Unaudited) GBPm GBPm GBPm GBPm GBPm GBPm Fund management fee income 77.8 - (9.0) (0.6) (9.6) 68.2 Other operating income 3.4 - 1.1 - 1.1 4.5 Gains on investments 70.8 37.6 11.9 (0.2) 49.3 120.1 Interest income 51.8 (38.1) 77.2 0.2 39.3 91.1 Dividend income 12.3 0.5 (11.6) - (11.1) 1.2 Total revenue 216.1 - 69.6 (0.6) 69.0 285.1 Share of results of joint ventures accounted for using equity method - - - 0.2 0.2 0.2 Interest expense (28.3) - (51.3) - (51.3) (79.6) Net fair value loss on derivatives (0.3) - (0.6) - (0.6) (0.9) Impairment (10.0) - - - - (10.0) Staff costs (26.6) - - 1.1 1.1 (25.5) Incentive scheme costs (49.3) - - - - (49.3) Other administrative expenses (20.9) - (4.1) 0.5 (3.6) (24.5) Profit before tax 80.7 - 13.6 1.2 14.8 95.5 Six months ended 30 September 2016 Internally reported Reclass of interest to gains Consolidated structured entities Other adjustments Total adjustments Financial statements (Unaudited) GBPm GBPm GBPm GBPm GBPm GBPm Fund management fee income 62.9 - (6.9) (0.4) (7.3) 55.6 Other operating income 2.3 - 1.7 - 1.7 4.0 Gains on investments 125.5 (13.0) 1.7 (0.3) (11.6) 113.9
Interest income 60.0 2.5 59.9 - 62.4 122.4
Dividend income 13.9 - (10.9) - (10.9) 3.0
Total revenue 264.6 (10.5) 45.5 (0.7) 34.3 298.9
Share of results of joint ventures accounted for using
equity method - - - 0.1 0.1 0.1
Interest expense (24.6) - (40.0) - (40.0) (64.6)
Net fair value (loss)/gain on derivatives (7.6) - 3.1 - 3.1 (4.5)
Impairment (23.8) 10.5 - - 10.5 (13.3)
Staff costs (24.7) - - 1.0 1.0 (23.7)
Incentive scheme costs (37.4) - - - - (37.4)
Other administrative expenses (21.1) - (7.5) (0.7) (8.2) (29.3)
Profit before tax 125.4 - 1.1 (0.3) 0.8 126.2
Notes to the Half Year Report continued
For the six months ended 30 September 2017
3. Business segments continued
Consolidated Statement of Financial Position
Financial
30 September 2017 Internally reported Reclass of interest to gains Consolidated structured entities Other adjustments Total adjustments statements
(Unaudited) GBPm GBPm GBPm GBPm GBPm GBPm
Non current
financial assets 1,668.0 0.8 3,012.9 1.6 3,015.3 4,683.3
Other non current
assets 29.8 - 4.1 0.1 4.2 34.0
Cash 145.1 - 249.3 (1.9) 247.4 392.5
Current financial
assets 294.3 - - - - 294.3
Other current
assets 373.0 (0.8) 231.1 (0.6) 229.7 602.7
Total assets 2,510.2 - 3,497.4 (0.8) 3,496.6 6,006.8
Non current
financial
liabilities 1,008.4 - 3,050.0 (0.1) 3,049.9 4,058.3
Other non current
liabilities 136.6 - 5.4 0.4 5.8 142.4
Current financial
liabilities 85.6 - - - - 85.6
Other current
liabilities 162.0 - 371.3 (1.8) 369.5 531.5
Total liabilities 1,392.6 - 3,426.7 (1.5) 3,425.2 4,817.8
Equity 1,117.6 - 70.7 0.7 71.4 1,189.0
Total equity and
liabilities 2,510.2 - 3,497.4 (0.8) 3,496.6 6,006.8
31 March 2017 Internally reported Reclass of interest to gains Consolidated structured entities Other adjustments Total adjustments Financial statements
(Audited) GBPm GBPm GBPm GBPm GBPm GBPm
Non current
financial
assets 1,711.6 1.1 3,172.7 1.3 3,175.1 4,886.7
Other non
current
assets 36.6 - - - - 36.6
Cash 490.3 - 293.5 (2.9) 290.6 780.9
Current
financial
assets 89.7 - - - - 89.7
Other current
assets 172.9 (1.1) 111.9 (1.4) 109.4 282.3
Total assets 2,501.1 - 3,578.1 (3.0) 3,575.1 6,076.2
Non current
financial
liabilities 1,121.5 - 3,183.4 - 3,183.4 4,304.9
Other non
current
liabilities 106.5 - 5.4 - 5.4 111.9
Current
liabilities 158.8 - 329.8 (2.5) 327.3 486.1
Total
liabilities 1,386.8 - 3,518.6 (2.5) 3,516.1 4,902.9
Equity 1,114.3 - 59.5 (0.5) 59.0 1,173.3
Total equity
and
liabilities 2,501.1 - 3,578.1 (3.0) 3,575.1 6,076.2
Notes to the Half Year Report continued
For the six months ended 30 September 2017
3. Business segments continued
Consolidated Statement of Cash flows
30 September 2017 Internally reported Reclass of dividends from realisations Consolidated structured entities Other adjustments Financial statements
(Unaudited) GBPm GBPm GBPm GBPm GBPm
Interest, fees and
dividends received 118.2 78.6 53.1 - 249.9
Interest paid (26.6) - (43.0) - (69.6)
Net purchase of
current financial
assets (204.9) - - - (204.9)
Purchase of loans
and investments (261.9) - (1,373.0) - (1,634.9)
Cash in from
realisations 227.5 (78.6) 1,335.3 - 1,484.2
Other operating
expenses (102.3) - (2.6) 1.1 (103.8)
Cash generated
from/(used in)
operating
activities (250.0) - (30.2) 1.1 (279.1)
Taxes paid (3.6) - - - (3.6)
Net cash generated
from/(used in)
operating
activities (253.6) - (30.2) 1.1 (282.7)
Net cash used in
investing
activities (1.9) - - - (1.9)
Dividends paid (55.2) - - - (55.2)
Net decrease in
long-term
borrowings (0.3) - - - (0.3)
Net cash outflow
from derivatives (23.2) - (3.2) - (26.4)
Purchase of own
shares (21.0) - - - (21.0)
Net cash used in
financing
activities (99.7) - (3.2) - (102.9)
Net
(decrease)/increase
in cash (355.2) - (33.4) 1.1 (387.5)
Cash and cash
equivalents at
beginning of
period 490.3 - 293.5 (2.9) 780.9
FX impact on cash 10.0 - (10.8) (0.1) (0.9)
Cash and cash
equivalents at end
of period 145.1 - 249.3 (1.9) 392.5
Notes to the Half Year Report continued
For the six months ended 30 September 2017
3. Business segments continued
Consolidated Statement of Cash flows continued
30 September 2016 Internally reported Consolidated structured entities Other adjustments Financial statements
(Unaudited) GBPm GBPm GBPm GBPm
Interest, fees and
dividends received 135.0 48.4 - 183.4
Interest paid (20.8) (39.4) - (60.2)
Net purchase of
current financial
assets 99.6 - - 99.6
Purchase of loans
and investments (178.2) (950.3) - (1,128.5)
Cash in from
realisations 302.9 525.5 - 828.4
Other operating
expenses (65.8) (14.0) 0.9 (78.9)
Cash generated
from/(used in)
operating
activities 272.7 (429.8) 0.9 (156.2)
Taxes paid (4.9) - - (4.9)
Net cash generated
from/(used in)
operating
activities 267.8 (429.8) 0.9 (161.1)
Net cash used in
investing
activities (43.1) - - (43.1)
Dividends paid (249.9) - - (249.9)
Net increase in
long-term
borrowings 363.6 621.0 - 984.6
Net cash outflow
from derivatives (113.6) (1.2) - (114.8)
Purchase of own
shares (23.6) - - (23.6)
Proceeds on issue of
shares 0.6 - - 0.6
Net cash (used in)/
from financing
activities (22.9) 619.8 - 596.9
Net increase in cash 201.8 190.0 0.9 392.7
Cash and cash
equivalents at
beginning of
period 112.7 72.2 (2.4) 182.5
FX impact on cash 11.2 10.3 (0.4) 21.1
Cash and cash
equivalents at end
of period 325.7 272.5 (1.9) 596.3
1. Earnings per share
Six months ended Six months ended
30 September 2017 30 September 2016
(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 93.3 109.3
Number of shares
Weighted average number of ordinary shares for the
purposes of basic earnings per share 282,205,125 292,200,567
Effect of dilutive potential ordinary share options 25,512 22,510
Weighted average number of ordinary shares for the
purposes of diluted earnings per share 282,230,637 292,223,077
Earnings per share 33.1p 37.4p
Diluted earnings per share 33.1p 37.4p
Notes to the Half Year Report continued
For the six months ended 30 September 2017
1. Earnings per share continued
Reconciliation of total number of shares allotted, called up and in
issue
Number of
shares in
Total number of shares allotted, called up and in own share
issue reserve
As at 1 April
2017 293,903,724 13,363,728
Purchased 10,372 2,372,220
Options/awards
exercised - (4,880,183)
As at 30
September 2017 293,914,096 10,855,765
As at 30 September 2016 the total number of shares allotted, called up
and in issue was 293,720,373, of which 13,363,728 were held in the own
shares reserve.
1. Dividends
The Board has approved an interim dividend of 9.0p per share (H1 2017:
7.5p).
1. Tax expense
Six months ended Six months ended
30 September 2017 30 September 2016
Analysis of tax on ordinary (Unaudited) (Unaudited)
activities GBPm GBPm
Current tax: current period 1.9 18.1
Deferred tax: current period 0.3 (1.5)
Tax charge on profit on ordinary
activities 2.2 16.6
The Group's effective tax rate is lower than the standard rate of UK
corporation tax of 19%.
In common with many international asset managers a large number of our
third party funds are not UK based. The Group repatriates to the UK the
returns it generates from investing alongside our third party funds. In
compliance with the Corporation Tax Act 2009, where this is in the form
of foreign dividend income, it is exempt from UK corporation tax. As a
result dividend income received on its balance sheet investments is
exempt from tax. Furthermore, the Group has been investing in its FMC
business for a number of years and as a result does not anticipate
having UK taxable profits for at least the next two years.
The Group is currently reviewing its transfer pricing policies and
documentation in the light of the revised 'Base Erosion Profit Shifting'
(BEPS) guidelines issued by the OECD. While the Group has low tax risk
status in the UK, and no open enquiries elsewhere, a provision is being
retained until the review is finalised and the application of the BEPS
guidelines by the tax authorities is known.
Notes to the Half Year Report continued
For the six months ended 30 September 2017
1. Tax expense continued
Six months ended Six months ended
30 September 2017 30 September 2016
(Unaudited) (Unaudited)
GBPm GBPm
Profit on ordinary activities before tax 95.5 126.2
Profit before tax multiplied by the rate of corporation
tax in the UK of 19% (H1 2017: 20%) 18.1 25.2
Effects of:
Non deductible expenditure (1.2) 1.2
Non taxable income (1.5) (0.7)
Overseas withholding tax suffered - 0.1
Different tax rates of overseas subsidiaries (13.2) (14.4)
Current year risk provision charge - current tax - 5.4
Changes in statutory tax rates - (0.2)
Tax charge on profit on ordinary activities 2.2 16.6
1. Financial liabilities
Financial liabilities have decreased by GBP161.0m in the period since 31
March 2017 of which GBP133.4m relates to structured entities controlled
by the Group with the balance principally due to the impact of FX on
foreign currency denominated financial liabilities.
The fair value of financial liabilities is GBP4,143.9m (31 March 2017:
GBP4,304.9m), determined where applicable with reference to their
published market price.
1. Subsidiaries, associates and joint ventures
The following changes are of note to the Group's associates during the
period:
1. The Group reduced its ownership interest in ICG Total Credit Fund to
10.9% during the period to 30 September 2017 (31 March 2017: 21.75%) and
is no longer considered to have significant influence. As a result ICG
Total Credit Fund is no longer classified as an associate and instead is
classified as an investment.
2. The Group reduced its ownership interest in Gerflor Group to 3.0% during
the period to 30 September 2017 and therefore the Group are no longer
considered to have significant influence. Gerflor Group is no longer
classified as an associate and instead is classified as an investment.
3. The Group's investment in HMY which was previously classified as a joint
venture was sold during the period.
There were no other changes of note in the Group's ownership interests
in associates or subsidiaries during the period.
Independent Review Report to Intermediate Capital Group plc
We have been engaged by the company to review the condensed set of
financial statements in the half-yearly financial report for the six
months ended 30 September 2017 which comprises the consolidated income
statement, the consolidated balance sheet, the consolidated statement of
changes in equity, the consolidated cash flow statement and related
notes 1 to 8. We have read the other information contained in the
half-yearly financial report and considered whether it contains any
apparent misstatements or material inconsistencies with the information
in the condensed set of financial statements.
This report is made solely to the company 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. Our work
has been undertaken so that we might state to the company those matters
we are required to state to it in an independent review report and for
no other purpose. To the fullest extent permitted by law, we do not
accept or assume responsibility to anyone other than the company, for
our review work, for this report, or for the conclusions we have formed.
Directors' responsibilities
The half-yearly financial report is the responsibility of, and has been
approved by, the directors. The directors are responsible for preparing
the half-yearly financial report in accordance with the Disclosure 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 IFRSs as adopted by the European Union. The
condensed set of 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 set of financial statements in the half-yearly 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 inquiries, 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 set of financial statements in the
half-yearly financial report for the six months ended 30 September 2017
is not prepared, in all material respects, in accordance with
International Accounting Standard 34 as adopted by the European Union
and the Disclosure and Transparency Rules of the United Kingdom's
Financial Conduct Authority.
Deloitte LLP
Statutory Auditor
London, United Kingdom
13 November 2017
Reporting by strategic asset class
Six months ended Year ended Six months ended
(Unaudited) 30 September 2017 31 March 2017 30 September 2016
AUM AUM AUM
(EURm) Fees (GBPm) (EURm) Fees (GBPm) (EURm) Fees (GBPm)
Corporate
Investments
Management Fee
Income -
Mezzanine 5,689 29.6 6,137 56.2 5,738 26.1
Performance
Fee Income -
Mezzanine - 7.8 - 7.3 - 3.6
Management Fee
Income -
Senior Debt
Partners 7,869 8.4 4,385 13.5 4,375 5.8
Performance
Fee Income -
Senior Debt
Partners - (0.2) - 1.2 - 0.5
Management Fee
Income -
Australian
Senior Loans 281 0.3 283 - - -
13,839 45.9 10,805 78.2 10,113 36.0
IC
co-investment
- Mezzanine 1,191 5.4 1,275 11.8 1,342 5.9
IC
co-investment
- Senior Debt
Partners 35 0.1 38 0.3 37 0.2
IC
co-investment
- Australian
Senior Loans - - - 0.6 81 0.3
Total 15,065 51.4 12,118 90.9 11,573 42.4
Capital Market
Investments
CLOs 5,551 12.4 5,383 20.4 4,681 9.7
Managed
Accounts and
Pooled Funds 1,007 2.0 788 2.9 636 1.5
Performance
Fee Income - 0.2 - 0.4 - 0.1
6,558 14.6 6,171 23.7 5,317 11.3
IC
co-investment 399 1.4 390 2.1 391 1.1
Total 6,957 16.0 6,561 25.8 5,708 12.4
Real Asset
Investments
Management Fee
Income 3,393 9.7 3,290 20.9 3,340 10.5
Performance
Fee Income - (2.0) - 1.0 - -
3,393 7.7 3,290 21.9 3,340 10.5
IC
co-investment 97 0.7 126 1.7 146 0.9
Total 3,490 8.4 3,416 23.6 3,486 11.4
Secondary
Investments
Management Fee
Income 1,530 8.9 1,551 14.5 1,078 4.8
Performance
Fee Income - 0.7 - 0.3 - 0.3
1,530 9.6 1,551 14.8 1,078 5.1
IC
co-investment 170 0.7 179 1.6 166 0.8
Total 1,700 10.3 1,730 16.4 1,244 5.9
Total External 25,320 77.8 21,817 138.6 19,848 62.9
Total IC
co-investment 1,892 8.3 2,008 18.1 2,163 9.2
Total 27,212 86.1 23,825 156.7 22,011 72.1
Glossary
Items denoted with a (1) throughout this document have been identified
as non IFRS GAAP alternative performance measures. These are defined
below:
Term
Short form
Definition
Adjusted earnings per share
Adjusted EPS
Adjusted profit after tax (annualised when reporting a six month
period's results) divided by the weighted average number of ordinary
shares as detailed in note 4.
Adjusted Group profit before tax
Group profit before tax adjusted for the impact of the consolidated
structured entities, the presentation of Nomura ICG KK and Questus
Energy Pty Limited (other adjustments) and the fair value movements on
derivatives.
As at 30 September, this is calculated as follows:
2017 2016
Profit before tax GBP95.5m GBP126.2m
Other adjustments (GBP1.2m) GBP0.3m
Plus fair value movement of derivatives GBP0.3m GBP7.6m
Less consolidated structured entities (GBP13.6m) (GBP1.1m)
Adjusted group profit before tax GBP81.0m GBP133.0m
Adjusted Investment Company profit before tax
Investment Company profit adjusted for the impact of the consolidated
structured entities, the presentation of Nomura ICG KK and Questus
Energy Pty Limited (other adjustments) and the fair value movements on
derivatives.
As at 30 September, this is calculated as follows:
2017 2016
Investment Company profit before tax GBP51.2m GBP92.2m
Plus other adjustments (GBP1.2m) GBP0.3m
Plus fair value movement of derivatives GBP0.3m GBP7.6m
Less consolidated structured entities (GBP13.6m) (GBP1.1m)
Adjusted Investment Company profit before tax GBP36.7m GBP99.0m
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:
2017 2016
Adjusted profit after tax GBP159.6m GBP232.8m
Average shareholders' funds GBP1,136.6m GBP1,120.4m
Adjusted return on equity 14.0% 20.8%
Asset Impairments
Asset impairments are recognised on debt instruments to the extent that
the debt is deemed irrecoverable. Asset impairments are reported on an
internal basis and includes impairments on assets where the Group's
co-investment is through a fund structure, but the underlying assets are
interest bearing. See note 3 for a full reconciliation.
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 and the presentation of Nomura
ICG KK (other adjustments). See note 3 for a full reconciliation.
Capital gains
Capital gains represent the increase in value of equity investments.
Capital gains reported on an internal basis excludes the impact of the
consolidated structured entities and excludes capital gains where the
Group's investment is through a fund structure, but the underlying
assets are interest bearing. See note 3 for a full reconciliation.
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 and includes dividends on
assets where the Group's co-investment is through a fund structure. See
note 3 for a full reconciliation.
Earnings per share
Profit after tax (annualised when reporting a six month period's
results) divided by the weighted average number of ordinary shares as
detailed in note 4.
Gearing
Gross borrowings, excluding the consolidated structured entities,
divided by closing shareholders' funds. Gross borrowings represent the
cash amount repayable to debt providers. As at 30 September 2017 and 31
March 2017, this is calculated as follows:
30 September 2017 31 March 2017
Gross borrowings GBP1,090m GBP1,119m
Shareholders' funds GBP1,188m GBP1,173m
Gearing 0.92x 0.95x
Interest expense
Interest expense excludes the cost of financing associated with the
consolidated structured entities. See note 3 for a full reconciliation.
Interest income
Interest income is contractual income earned on debt investments.
Interest income reported on an internal basis excludes the impact of the
consolidated structured entities and includes interest income on assets
where the Group's co-investment is through a fund structure, but the
underlying assets are interest bearing. See note 3 for a full
reconciliation.
Investment income
Investment income is the total of interest income, capital gains and
dividend and other income.
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 2017 and 31 March
2017, this is calculated as follows:
30 September 2017 31 March 2017
Total equity GBP1,189m GBP1,173m
Closing number of ordinary shares 283,058,331 280,539,996
Net asset value per share 420p 418p
Net current assets
The total of cash, plus current financial assets, plus other current
assets, less current liabilities as internally reported. This excludes
the consolidated structured entities and the presentation of Nomura ICG
KK and Questus Energy Pty Limited (other adjustments). As at 30
September 2017 and 31 March 2017, this is calculated as follows:
30 September 2017 31 March 2017
Cash GBP145.1m GBP490.3m
Current financial assets GBP294.3m GBP89.7m
Other current assets GBP373.0m GBP172.9m
Current liabilities (GBP247.6m) (GBP158.8m)
Net current assets GBP564.8m GBP594.1m
Net debt
Total drawn debt less unencumbered cash of the Group, excluding the
consolidated structured entities and the presentation of Nomura ICG KK
and Questus Energy Pty Limited (other adjustments). As at 30 September
2017, this is calculated as follows:
30 September 2017 31 March 2017
Total drawn debt GBP1,089.7m GBP1,119.0m
Less unencumbered cash (GBP144.7m) (GBP489.9m)
Net debt GBP945.0m GBP629.1m
Operating cashflow
Operating cashflow represents the cash generated from operating
activities from the Statement of Cash Flows, adjusted for the impact of
the consolidated structured entities, the presentation of Nomura ICG KK
(other adjustments). See note 3 for a full reconciliation.
Operating expenses of the Investment Company
Investment Company operating expenses are adjusted for the impact of the
consolidated structured entities, the presentation of Nomura ICG KK and
Questus Energy Pty Limited (other adjustments). 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:
2017 2016
Fund Management Company Profit GBP44.3m GBP34.0m
Fund Management Company Total Revenue GBP98.4m GBP83.5m
Operating profit margin 45.0% 40.7%
Return on assets
ROA
Returns (annualised when reporting a six month period's results) divided
by the average balance sheet investment portfolio. Returns comprise
interest and dividend income, plus net capital gains, less asset
impairments (as defined in this glossary) on the balance sheet
investment portfolio, i.e. excluding assets held for sale. As at 30
September this is calculated as follows:
2017 2016
Interest income GBP44.1m GBP48.0m
Dividend and other income GBP15.7m GBP16.1m
Capital gains GBP69.8m GBP125.9m
Net asset impairments (GBP10.0m) (GBP23.8m)
Total returns GBP119.6m GBP166.2m
Average balance sheet GBP1,689.8m GBP1,835.5m
Return on assets 14.2% 18.1%
Return on equity
ROE
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.
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
Debt mortgage 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.
Direct Funds which invest in self-originated transactions
investment for which there is a low volume, inactive secondary
funds market.
EBITDA Earnings before interest, tax, depreciation and
amortisation.
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.
Financial FCA Regulates conduct by both retail and wholesale financial
Conduct service firms in provision of services to consumers.
Authority
Financial FRC 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.
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.
UNPRI UN Principles for Responsible Investing.
Weighted An average in which each quantity to be averaged is
average assigned a weight. These weightings determine the
relative importance of each quantity on the average.
Company timetable
Ex-dividend date 7 December 2017
Record date for interim dividend 8
December 2017
Last date for dividend reinvestment election 19 December 2017
Payment of interim dividend 12 January 2018
Capital Markets Update and Trading Update 1 February 2018
Full year results announcement 22 May 2018
This announcement is distributed by Nasdaq Corporate Solutions on behalf
of Nasdaq Corporate Solutions clients.
The issuer of this announcement warrants that they are solely
responsible for the content, accuracy and originality of the information
contained therein.
Source: Intermediate Capital Group plc via Globenewswire
http://www.icgplc.com/
(END) Dow Jones Newswires
November 14, 2017 02:00 ET (07:00 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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