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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 |
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Fundraising and capital deployment on track
Intermediate Capital Group plc (ICG) announces its first half results
for the six months ended 30 September 2016.
Operational highlights
-- Total AUM up 2% to EUR22.0bn, with EUR1.4bn of new money raised; third
party fee earning AUM up 5% to EUR16.5bn
-- Fundraising performance in line with expectations, driven by our real
estate fund, ICG Longbow Fund IV, reaching its maximum GBP1bn size and
strong momentum for our Strategic Secondaries fund
-- Strong pipeline of opportunities to continue the growth of our fund
management franchise
-- Capital deployment on track in a competitive investment market
-- Investment Company portfolio performance robust, net impairments at
GBP23.8m (H1 2016: GBP18.1m), and unrealised capital gains remaining
strong
Financial highlights
-- Group profit before tax of GBP126.2m (H1 2016: GBP93.9m), driven by a
strong period of capital gains.
-- Adjusted Group profit before tax1 was GBP133.0m (H1 2016: GBP88.1m)
-- Fund Management Company profits up 17% to GBP34.0m (H1 2016: GBP29.0m),
with third party fee income up 26%
-- Investment Company profit is higher at GBP92.2m (H1 2016: GBP64.9m)
-- Interim ordinary dividend up 4.2% to 7.5 pence per share in addition to
the GBP200m special dividend paid in August 2016
Commenting on the results, Christophe Evain, CEO, said:
'We have delivered a strong set of results for the first half of FY17.
AUM is now at a record EUR22.0bn and both fundraising and capital
deployment are on track. There has been strong investment performance
across our strategies and we are delighted that our newer, smaller
strategies are showing steady momentum.
'ICG now has a more diversified business than at any point in our
history. This is built on our expertise in understanding and valuing
risks. We are highly experienced in both investing and managing
investments in more volatile market conditions and we are well
positioned to benefit from opportunities that arise. Current market
conditions, not limited to the UK's decision to leave the EU, are
creating a positive trend favouring alternative asset classes, and
sustained low interest rates are creating greater demand from investors
for our funds'.
Commenting on the results, Kevin Parry, Chairman, said:
'Following the series of special dividends and the re-gearing of the
balance sheet, we are now delivering good returns for our shareholders.
The Board has commenced a review to determine a progressive dividend
policy that will better link our ordinary dividends to our robust
business model.'
Financials
Unaudited Unaudited Audited
6 months to 6 months to 12 months to
30 September 2016 30 September 2015 31 March 2016
Fund Management GBP34.0m GBP29.0m GBP61.2m
Company profit before
tax
Investment Company GBP92.2m GBP64.9m GBP97.6m
profit before tax
Adjusted Investment GBP99.0m GBP59.1m GBP114.4m
Company profit before
tax(1)
Adjusted Group profit GBP133.0m GBP88.1m GBP175.6m
before tax(1)
Group profit before GBP126.2m GBP93.9m GBP158.8m
tax
Adjusted earnings per 39.8p 22.2p 48.1p
share(1)
Earnings per share 37.4p 24.2p 41.9p
Dividend per share 7.5p 7.2p 23.0p
Gearing 1.01x 0.80x 0.70x
Net debt GBP965.0m GBP803.7m GBP753.7m
Net asset value per GBP3.81 GBP3.71 GBP3.94
share(2)
(1) As internally reported and excluding the impact of fair value
movements on derivatives (H1 2017: GBP7.6m; FY16: GBP17.3m; H1 2016:
GBP3.5m). Internally reported numbers exclude the impact of the
consolidation of eleven credit funds following the adoption of IFRS 10.
(2)Net asset value per share has reduced as a result of the GBP200m
(63.4 pence per share) special dividend paid in August 2016.
Assets under management
Third party assets under management EUR19,848m EUR17,822m EUR19,312m
Investment portfolio EUR2,163m EUR2,362m EUR2,270m
Total assets under management EUR22,011m EUR20,184m EUR21,582m
Third party fee earning assets under
management EUR16,537m EUR14,426m EUR15,757m
The following foreign exchange rates have been used.
30 September 2016 30 September 2015 31 March 2016 30 September 2016 30 September 2015 31 March 2016
Average Average Average Period end Period end Period end
GBP:EUR 1.2154 1.3854 1.3624 1.1549 1.3544 1.2624
GBP:USD 1.3608 1.5412 1.5016 1.2972 1.5129 1.4374
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:
Christophe Evain, CEO, ICG +44 (0) 20 3201 7700
Philip Keller, CFO, 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 Helen Gustard, Corporate Communications, ICG +44 (0) 20 3201 7760
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 27 years' history in private
debt, credit and equity. Our objective is to generate income and
consistently high returns whilst protecting against investment downside.
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 are committed to innovation and pioneering new
strategies where we can deliver value to our investors. ICG has
EUR22.0bn of assets under management globally (as at 30 September,
2016); we are listed on the London Stock Exchange (ticker symbol: ICP),
and regulated in the UK by the Financial Conduct Authority (FCA).
Intermediate Capital Group, Inc. is a wholly-owned subsidiary of ICG and
is registered as an investment adviser under the U.S. Investment
Advisers Act of 1940. Further information is available at:
www.icgam.com.
Business review
This has been another period of delivery against our strategic
objectives as we continue to grow our specialist asset manager
franchise. The highlights of the first half of the financial year have
included:
-- Fundraising (inflows) in line with expectations including momentum
developed for newer strategies
-- Weighted average fee rate unchanged
-- Capital deployment on track in a competitive investment market
-- Investment Company portfolio performing robustly. Currently little impact
from wider macroeconomic uncertainty, with a healthy level of
realisations and strong capital gains
-- Interim dividend increased to 7.5 pence per share and ongoing capital
management sees gearing within target range following GBP200m capital
return to shareholders
Alternative asset market growing strongly
Alternative asset classes are 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 in the first half of the financial
year. 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
remain low thereby impacting the returns of traditional asset classes.
Arguably, the current macroeconomic uncertainty, including but not
limited to the UK's decision to leave the European Union in June
(Brexit), may prolong and enhance the positive trend in favour of
alternative asset classes.
The current fundraising environment is inevitably attracting new
entrants into the alternative asset market. With increased competition,
our established approach of focussing on capital preservation and yield
across mid-market transactions in four strategic asset classes and
identifying market opportunities to develop differentiated strategies is
a competitive advantage. Furthermore, unlike new market entrants, we are
increasingly 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.
Fundraising momentum for newer strategies
At EUR1.4bn the pace of fundraising in the first half of the financial
year was, as expected and previously indicated, lower than in prior
periods. The pace of fundraising for our closed end funds, which
represent 97% of our assets under management, is dependent on when our
larger funds come to market. We are currently fundraising for our
smaller and newer strategies whereas in the prior year fundraising was
driven by our larger European funds. The period saw the successful
closing of our real estate fund, ICG Longbow Fund IV, at its maximum
size of GBP1.0bn, of which GBP146m was raised following the UK's EU
referendum. This makes it 33% larger than its predecessor fund and of a
similar size to the combined total previously raised for this strategy.
The strategy continues to appeal to investors because of its focus on
selectively investing into mid market assets across the UK, avoiding
City of London office assets and those with cyclical cash flows.
Elsewhere, we have made good progress in raising our first Strategic
Secondaries fund which is dedicated to the highly complex and structured
part of the secondaries market. To date we have raised $347m, of which
$180m was raised in the first half of the financial year. As one of our
newer strategies, the success of this fund, with fees charged on
committed capital, is contributing to our growing fund management
profits. We have also seen increased interest in our liquid strategies
following the arrival of Zak Summerscale to lead this business in June
2016. We are cautiously optimistic that we will be able to convert
investor interest into investor commitments over the coming months,
thereby increasing the profitability of this scalable strategy.
Capital deployment on track in a competitive investment market
Our increasing number of strategies means that we operate in a
diversified investment market. However, across all of our strategies we
have seen the investment market remain competitive as institutions seek
to deploy the increasing amounts of capital raised, combined with the
attractiveness of the returns offered by private capital.
In this environment, the competitive advantage gained from our local
teams, sector specialisms and ability to deploy capital flexibly comes
to the fore and has helped us to source attractive deals whilst
maintaining our investment discipline. In Asia, the slowdown in China
has made us particularly cautious when selecting deals resulting in a
slower than planned investment pace. Elsewhere, we are pleased to have
maintained the pace of investment across our direct investment funds in
the first half of the financial year and have a strong pipeline of
investment opportunities for the second half. As a result we are
confident that each of our funds will deploy their available capital
during their investment period.
Investment Company portfolio performing robustly
Liquidity in the market has also contributed to a period of healthy
realisations from the Investment Company's mezzanine portfolio.
Furthermore, as previously indicated, the period saw strong capital
gains, in part from the disposal of the Group's remaining investment in
AAS Link, and in part due to healthy unrealised gains arising from the
period end mark to market review. Whilst we expect the current pace of
realisations to continue into the second half of the financial year, the
overall level of capital gains recognised in the income statement is
likely to be lower.
It remains too early to determine the impact, if any, of Brexit on our
portfolio. At present the performance of the Investment Company's
mezzanine portfolio remains robust, with only a small number of assets
underperforming. By number, 75% of our portfolio companies (80% on a
weighted average value basis) are recording EBITDA above or at the same
level as the previous year, a post 2009 record. Net impairments of
GBP23.8m in the first half of the financial year are marginally higher
than the comparative period, but remain in line with the long term
average of 2.5% of the opening Investment Company portfolio.
Interim dividend increased and ongoing capital management
The Board recommends an interim dividend of 7.5p, an increase of 4.2% on
the prior year interim dividend. The dividend will be paid on 9 January
2017 to shareholders on the register on 2 December 2016. Following
approval at the AGM, a special dividend of GBP200m, with an associated
share consolidation, was paid in August 2016 resulting in the Board
meeting the gearing and return on equity targets set out in May 2014.
We continue to actively manage our sources of balance sheet financing to
ensure we have access to sufficient cash and debt facilities. During
the first half of the financial year, $292m and EUR74m of US private
placements were raised with five, eight and 10 year maturities.
Following this debt raising, the weighted average life of drawn debt at
30 September was 3.6 years with a weighted average cost of 3.7%.
Outlook
There remains significant potential to expand our portfolio of
strategies and thereby further grow our fund management franchise. Our
balance sheet is a facilitator of this organic growth as we use our
capital to demonstrate proof of concept and seed new funds. At present
we see plenty of opportunities to expand existing strategies into new
geographies and add complementary strategies to the portfolio. We will
further update the market on these initiatives at the appropriate time.
The current pace of fundraising is expected to continue for the
remainder of the financial year as we continue raising money for our
newer strategies. Our continued ability to access attractive investment
opportunities means that some of our more established strategies are
investing well and could be back fundraising during the next financial
year.
ICG now has a more diversified business than at any point in our
history. As such, we are well placed to manage, and indeed take
advantage of opportunities arising from the attractiveness of the
alternative asset market, as well as the uncertainties arising from the
UK's vote to leave the European Union. We have a long established,
substantial presence in Europe operating through existing subsidiaries
and will maintain multiple options for new fund licences to ensure
access to EU and non EU clients. However, we do not anticipate the need
for any significant organisational change and have no intention of
moving our UK operations.
Overall, we remain committed to generating strong returns for our
shareholders by continuing to focus on return on equity through growth
whilst maintaining gearing within our target range of 0.8-1.2x. In light
of the ongoing progress to grow and diversify the business, the Board
has begun a review of the dividend policy and will provide a further
update with the full year results.
Finance and operating review
The financial statements include the impact of those credit funds and
CLOs required to be consolidated under IFRS 10. Internally reported
information excludes these items.
A reconciliation between the internally reported management information
and the financial statements is shown below with more detail in note 3
on page 37.
30 September
30 September 30 September 30 September 30 September 2015
2016 2016 30 September 2016 2015 2015 Restated
Internally reported Consolidate structured entities and joint venture Financial statements Internally reported Consolidate structured entities and joint venture Financial statements
GBPm GBPm GBPm GBPm GBPm GBPm
Income
Statement
Revenue 264.6 34.3 298.9 203.2 25.5 228.7
Profit
before tax 125.4 0.8 126.2 84.6 9.3 93.9
Statement of
financial
position
Total assets 2,547.7 3,002.5 5,550.2 2,269.4 1,699.8 3,969.2
Total equity
and
liabilities 2,547.7 3,002.5 5,550.2 2,269.4 1,699.8 3,969.2
The information in this review is presented on an internally reported
basis and excludes the impact of these
adjustments.
Overview
The Group's profit before tax for the period was up 48% at GBP125.4m (H1
2016: GBP84.6m), with FMC profit of GBP34.0m and IC profit of GBP91.4m.
We continue to make operational progress in developing our fund
management franchise, with new strategies contributing to the growth in
FMC profit. IC profits are up compared to the first half of the prior
year due to a strong period of capital gains.
6 months to 30 September 2016 6 months to 30 September 2015
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 34.0 - 34.0 29.0 - 29.0
Investment
Company 91.4 7.6 99.0 55.6 3.5 59.1
Profit
before
tax 125.4 7.6 133.0 84.6 3.5 88.1
Tax (16.6) - (16.6) (11.1) - (11.1)
Profit
after tax 108.8 7.6 116.4 73.5 3.5 77.0
The adjusted profit of the IC and Group in the above table excludes the
impact of the fair value charge on hedging derivatives of GBP7.6m (H1
2016: GBP3.5m). Throughout this review all numbers are presented
excluding this adjusting item, unless otherwise stated. The effective
tax rate for the period is 12% (H1 2016: 13%). The tax rate is lower
than the standard corporation tax rate of 20%. This is principally due
to the impact of differences in overseas tax rates where we invest
directly into funds which are based offshore.
Based on the adjusted profit above, the Group generated an ROE of 20.8%
(H1 2016: 12.1%), an increase on prior period reflecting lower
shareholder funds following the GBP200m special dividend paid in August
and strong capital gains. As expected, capital gains have benefitted
from the one off recycling of GBP48.4m of realised gains from reserves,
primarily on the disposal of the remainder of AAS Link, and a healthy
level of unrealised capital gains arising from the period end mark to
market review. The recycling of realised gains from reserves is an
accounting treatment for unrealised gains on pre 2011 equity assets
recognised in prior years through reserves. As such the ROE for the
first half of the financial year should not be seen as indicative of the
full year performance and longer term trend. Adjusted earnings per share
for the period were 39.8p (H1 2016: 22.2p).
Net current assets of GBP403.4m are up from GBP229.8m at 31 March 2016
due to a higher cash balance. In early October, GBP206m of cash was
used to settle non current debt liabilities reducing net current assets
to 31 March 2016 levels.
Fund Management Company
In this review we have, for the first time, aligned the presentation of
financial information with the four strategic asset classes in which we
operate - corporate investments, capital markets, real assets and
secondaries - to simplify and enhance the understanding of our financial
performance. The principal difference between this classification and
that previously adopted is that the Senior Debt Partners strategy falls
within the corporate investment asset class whereas all other funds
previously reported as credit funds fall within the capital markets
asset class. A reconciliation between the two presentations can be found
on page 49 of this statement.
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.
New AUM (inflows) is our best lead indicator to sustainable future fee
streams and therefore increasing sustainable profits.
After two years that have benefitted from fundraising our larger
European funds, the pace of fundraising has been, as expected and
previously indicated, slower with new AUM of EUR1,405m raised in the
first half of the financial year. This is due to the funds currently in
fundraising being smaller and strategies newer than those of the last
two years.
In the six month period to 30 September 2016, the net impact of
fundraising and realisations saw third party AUM increased 3% to
EUR19.8bn. AUM by strategic asset class is detailed below, where all
figures are quoted in EURm.
Third party
AUM by Total
strategic Corporate Investments Capital Markets Real Assets Secondaries Third Party AUM
asset class EURm EURm EURm EURm EURm
At 1 April
2016 10,431 4,637 3,305 939 19,312
Additions 137 761 345 162 1,405
Realisations (442) (81) (10) - (533)
FX and other (13) - (300) (23) (336)
At 30
September
2016 10,113 5,317 3,340 1,078 19,848
Change % (3%) 15% 1% 15% 3%
Corporate Investments
Corporate Investments third party funds under management have decreased
3% to EUR10.1bn in the period as new AUM of EUR137m was outstripped by
the run off of our older funds. As previously noted, fundraising for our
third Asia Pacific fund has been slower than anticipated as alternative
asset allocations to the Asian market remain small and the slowdown in
growth in China has had a real impact on the region. Since 30 September
we have closed the fund below its target size, at EUR615m ($691m),
including a $200m commitment from the balance sheet and EUR12m ($13m) of
third party money raised during the first half of the financial year.
Elsewhere, we raised EUR125m from segregated mandates into our Senior
Debt Partners strategy.
Capital Markets
Capital Markets third party funds under management have increased 15% to
EUR5.3bn, with new third party AUM of EUR761m raised in the period,
primarily from our CLO programme. During the first half of the financial
year we closed two CLOs, one in Europe and one in the US, raising a
total EUR772m, including EUR42m committed from the balance sheet. We
expect to price further CLOs, market conditions permitting, during the
current financial year thereby further increasing the operating leverage
of this strategy.
Real Assets
Real Assets third party funds under management have increased 1% to
EUR3.3bn, with new AUM of EUR345m (GBP275m) raised in the period for our
UK real estate fund, ICG Longbow Fund IV. The additional money raised in
the current year has contributed to the fund reaching its maximum size
of GBP1.0bn, including a GBP50m commitment from the balance sheet,
making it the second successive UK real estate fund to reach that
milestone.
Secondaries
Secondaries third party funds under management have increased 15% to
EUR1.1bn, with new AUM of EUR162m ($183m) raised in the period for our
Strategic Secondaries strategy. A further close is expected shortly and
there is a good pipeline of investors which would take the Fund to its
target size of $1bn, including a $200m commitment from the balance
sheet.
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 GBP1.3bn in the period compared to GBP1.4bn in the
first half of the last financial year. In addition, our Investment
Company invested a total of GBP178m in the period, compared to GBP154m
in the comparative period. The direct investment funds are investing as
follows:
Strategic % invested at % invested at Assets in fund at Deals completed
asset class Fund 30 September 2016 31 March 2016 30 September 2016 in period
Corporate ICG Europe
Investments Fund VI 29% 10% 7 4
North
American
Corporate Private
Investments Debt Fund 53% 46% 10 3
Senior Debt
Corporate Partners
Investments II 45% 31% 18 4
Corporate Asia Pacific
Investments Fund III 29% 27% 3 0
ICG Longbow
Real Estate
Real Assets Fund IV 59% 42% 20 3
Strategic
Secondaries Secondaries 51% 20% 3 1
% invested is based on third party funds raised at 30 September 2016.
The investment pace of our direct investment funds has resulted in fee
earning AUM increasing 5% to EUR16.5bn since 1 April 2016 as detailed
below.
Third party Total
fee earning Corporate Investments Capital Markets Real Assets Secondaries Third Party AUM
AUM bridge EURm EURm EURm EURm EURm
At 1 April
2016 7,891 4,637 2,521 708 15,757
Additions 745 761 275 162 1,943
Realisations (843) (81) (11) - (935)
FX and other (13) (1) (228) 14 (228)
At 30
September
2016 7,780 5,316 2,557 884 16,537
Fee income
Third party fee income of GBP62.9m was 26% higher than the prior year
driven by the investment of those funds that charge fees on invested
capital, fees from our recently established secondaries business and the
CLO issuance programme. Details of movements are shown below:
6 months to 6 months to
30 September 2016 30 September 2015 Change
Fee income GBPm GBPm %
Corporate Investments 36.0 33.1 9%
Capital Markets 11.3 8.4 35%
Real Assets 10.5 7.9 33%
Secondaries 5.1 0.5 n/a
Total third party funds 62.9 49.9 26%
IC management fee 9.2 9.1 1%
Total 72.1 59.0 22%
Corporate investments third party fees include GBP4.1m of performance
fees (H1 2016: GBP6.4m) as the realisation of assets from older vintages
helped trigger the performance hurdles. Performance fees are an integral
recurring part of the fee income profile and profitability stream of the
Group.
Third party fees are 73% denominated in Euros or US Dollars. However,
the impact of the devaluation of Sterling in recent months will only be
fully felt in the next financial year when the current hedges roll off.
The Group's policy is to hedge non Sterling fee income, to the extent
that it is not matched by costs and is predictable. Total fee income
included a GBP2.5m FX benefit in the period.
The weighted average fee rate, excluding performance fees, across our
fee earning AUM at 0.88% is the same as the prior year.
Dividend income
Dividend income of GBP11.6m (H1 2016: GBP9.3m) reflects the increased
number and improved performance of our US CLOs.
Operating expenses
Operating expenses of the FMC were GBP49.5m (H1 2016: GBP39.1m),
including salaries and incentive scheme costs. The devaluation of
Sterling has had a more immediate impact on the cost base where 12% of
costs are Euro denominated and 16% US dollar denominated. Costs are
GBP1.3m higher in the period due to FX.
Salaries were GBP19.1m (H1 2016: GBP14.2m) as average headcount
increased 15% from 205 to 236. This increase is directly related to
investing in our capital markets strategy, the ICG Enterprise Trust team
and our operations infrastructure. Other administrative costs have
increased to GBP15.9m (H1 2016: GBP13.1m) as a result of increased
occupancy and IT costs in the current year and a one off reduction in
placement fees recognised in the prior period.
The FMC operating margin was 40.7% down from 41.9% in the prior year,
reflecting the increased operating costs detailed above.
Investment Company
Balance sheet investments
The balance sheet investment portfolio increased 4% in the period to
GBP1,873m at 30 September 2016, as illustrated in the investment
portfolio bridge below:
Balance Sheet Portfolio Bridge GBPm
At 1 April 2016 1,798
New and follow on investments 178
Accrued interest income 40
Realisations (335)
Impairments (24)
Fair value gains 75
FX and other 141
At 30 September 2016 1,873
Realisations comprise the return of GBP169.2m of principal, the
crystallisation of GBP4.5m of rolled up interest and GBP161.5m of
realised capital gains.
In the period GBP125.8m was invested alongside our corporate investment
strategies for new and follow on investments. Of the remaining GBP52.4m,
GBP31.4m was invested in CLOs in accordance with regulatory requirements
and GBP20.1m in our new strategic secondaries strategy.
The Sterling value of the portfolio increased by GBP141.9m due to
foreign exchange movements. The portfolio is 48% Euro denominated and
28% US dollar denominated. Sterling denominated assets account only for
14% of the portfolio. The Group minimises foreign exchange impact of non
sterling assets through non sterling liabilities and derivative
transactions. An analysis of the portfolio by instrument is outlined
below:
As at As at
Balance Sheet 30 September 2016 31 March 2016
Portfolio GBPm % of total GBPm % of total
Senior mezzanine
and senior debt 416 22% 386 21%
Junior mezzanine 201 11% 182 10%
Interest bearing
equity 119 6% 115 6%
Non interest
bearing equity 427 23% 531 30%
Co-investment
portfolio 1,163 62% 1,214 67%
Investment in
equity funds 143 8% 104 6%
Investment in
credit funds 264 14% 225 13%
Investment in CLOs 177 9% 131 7%
Investment in real
estate funds 126 7% 124 7%
Total balance
sheet portfolio 1,873 100% 1,798 100%
Current assets held on the balance sheet at 30 September 2016 will be
transferred to third party funds once their fundraising is complete. The
use of the balance sheet in this way enables our investment teams to
continue to source attractive deals whilst a fund is being raised, and
in turn facilitates the fundraising as potential investors can see the
types of assets they will be investing in. At 30 September 2016, 48% of
these assets were held for syndication into our Asia Pacific Fund once
fundraising is completed.
Investment income
Investment income of GBP190.1m represents the total income earned from
the balance sheet portfolio in the period, analysed as follows:
6 months to 6 months to
30 September 2016 30 September 2015 Change
Investment income GBPm GBPm %
Interest income 60.0 71.1 (16%)
Dividend and other income 4.6 10.4 (56%)
Capital gains 125.5 62.5 101%
190.1 144.0 32%
Interest income was below the prior period due to a 6% reduction in the
average interest bearing loan book and a GBP5.5m reduction in interest
from current assets. Cash interest income has increased to 35% (H1 2016:
32%) of the total as the growing US mezzanine portfolio is weighted
towards cash pay interest.
Dividend income is received from our real estate and senior debt funds.
The prior year included a dividend from our secondaries investment in
Diamond Castle.
Capital gains were, as expected, strong in the first half of the
financial year as the income statement benefited from the recycling of
GBP48.4m of capital gains from reserves on realisation of the underlying
assets. Of this, GBP26.4m related to the sale of the remaining holding
in AAS Link following its IPO in 2015. In addition, the valuation of the
portfolio as at 30 September 2016 benefitted from the strength in global
stock markets and the improved performance across a large number of
portfolio assets over the last six months.
Net realised capital gains in the period were GBP161.2m (H1 2016:
GBP21.5m), of which GBP106.5m (H1 2016: GBP11.7m) had previously been
recognised as unrealised gains in the P&L with the remaining GBP54.7m
(H1 2016: GBP9.8m) recognised in the current period. Fair valuing the
equity and warrants gave rise to a further GBP65.5m (H1 2016: GBP60.4m)
of unrealised gains in the current period. Of this, GBP70.8m (H1 2016:
GBP52.7m) is recognised in the income statement and a GBP5.3m unrealised
loss in reserves (H1 2016: GBP7.7m unrealised gain).
Interest expense
Interest expense of GBP24.4m was GBP1.7m higher than the prior period
(H1 2016: GBP22.7m), principally due to the FX impact of interest paid
on non Sterling borrowings.
Operating expenses
Operating expenses of the IC amounted to GBP33.7m (H1 2016: GBP28.0m),
of which incentive scheme costs of GBP22.9m (H1 2016: GBP19.1m) were the
largest component. The GBP3.8m increase is due to the cost of balance
sheet carry increasing following the healthy level of realisations in
the period. Other staff and administrative costs were GBP10.8m compared
to GBP8.9m in the first half of last year, a GBP1.9m increase. This
increase is due to an increase in business development costs, of which
the largest component is the amortisation on the ICG Enterprise Trust
management contract.
Impairments
During the period we took asset specific impairments against our weaker
assets of GBP23.8m compared to GBP18.1m in the first half of the last
financial year, with no write backs in either period. Subject to the
impact of macroeconomic uncertainty on the portfolio, current
performance would indicate that net impairments for the full year will
be broadly in line with our long term average of 2.5% of the opening
Investment Company portfolio.
Group cash flow, debt and capital position
The Group has continued to actively manage its sources of financing,
extending debt facilities and lowering pricing where possible. During
the first half of the financial year, $292m and EUR74m of US private
placements were raised with five, eight and 10 year maturities.
Following this debt raising, the weighted average life of total debt at
30 September was 3.6 years with a weighted average cost of 3.7%, in line
with 31 March 2016.
The balance sheet remains strong, with GBP802.1m of available cash and
debt facilities at 30 September 2016. The movement in the Group's
unutilised cash and debt facilities during the period is detailed as
follows:
Headroom bridge GBPm
At 1 April 2016 781.3
New bank facilities available 100.0
Bank facilities matured (150.0)
New Private Placement notes issued 225.1
Movement in cash 6.4
Movement in drawn debt (217.7)
FX and other 57.0
At 30 September 2016 802.1
Total drawn debt at 30 September 2016 was GBP1,290m compared to GBP866m
at 31 March 2016, with unencumbered cash of GBP325m compared to GBP112m
at 31 March 2016. The Group's gearing calculation excludes GBP206m of
drawn credit facilities which were repaid in early October, but were in
the process of being settled on 30 September 2016.
Cashflow
Operating cash inflow for the period of GBP272.7m (H1 2016: GBP21.1m
outflow) was higher than the prior period due to a strong period of
realisations, including the Group's largest asset Parkeon.
6 months to 6 months to
30 September 2016 30 September 2015
Operating cash flow statement GBPm GBPm
Cash in from realisations 302.9 166.4
Cash in from dividends 39.2 24.4
Cash in from fees 70.1 34.0
Cash in from cash interest 25.7 47.2
Total cash inflow 437.9 272.0
Cash interest paid (20.8) (24.5)
Cash paid to purchase loans and investments (178.2) (153.9)
Cash movement in assets held for syndication 99.6 (37.0)
Operating expenses paid (65.8) (77.7)
Total cash outflow (165.2) (293.1)
Net cash generated from / (used in) operating activities,
before taxes 272.7 (21.1)
Capital position
Shareholders' funds decreased by GBP172.7m to GBP1,068.5m (31 March
2016: GBP1,241.2m) in the period as GBP200m was returned to shareholders
by means of a special dividend, in addition to the final ordinary
dividend of GBP50m. Total debt to shareholders' funds (gearing) as at 30
September 2016 increased to 1.01x from 0.70x at 31 March 2016.
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
14 November 2016 and is signed on its behalf by:
Christophe Evain Philip Keller
CEO CFO
Consolidated Income Statement
For the six months ended 30 September 2016
Six months ended Six months ended Year ended
30 September 2016 30 September 2015 31 March 2016
(Unaudited) (Unaudited) (Audited)
GBPm GBPm GBPm
Finance and dividend income 125.4 89.6 207.3
Gains on investments 113.9 91.0 137.7
Fee and other operating income 59.6 48.1 104.3
Total revenue 298.9 228.7 449.3
Finance costs (69.1) (49.9) (121.9)
Impairments (13.3) (9.8) (8.9)
Administrative expenses (90.4) (67.9) (141.9)
Share of results of joint ventures accounted for using
equity method 0.1 (0.2) -
Change in deferred consideration estimate - (7.0) (17.8)
Profit before tax 126.2 93.9 158.8
Tax charge (16.6) (11.1) (20.2)
Profit for the period 109.6 82.8 138.6
Attributable to:
Equity holders of the parent 109.3 83.9 138.6
Non controlling interests 0.3 (1.1) -
109.6 82.8 138.6
Earnings per share 37.4p 24.2p 41.9p
Diluted earnings per share 37.4p 24.2p 41.9p
All activities represent continuing operations.
Consolidated Statement of Comprehensive Income
For the six months ended 30 September 2016
Six months ended Six months ended Year ended
30 September 2016 30 September 2015 31 March 2016
(Unaudited) (Unaudited) (Audited)
GBPm GBPm GBPm
Profit for the period 109.6 82.8 138.6
Available for sale assets that will not be reclassified
subsequently to profit or loss
Reclassification of gains recycled to profit (45.5) (5.0) (18.0)
Items that may be reclassified subsequently to profit
or loss
(Loss)/gain arising in the period on available for
sale assets (2.9) 7.3 42.6
Exchange differences on translation of foreign
operations 18.2 (0.8) 9.5
(30.2) 1.5 34.1
Tax on items taken directly to or transferred from
equity 8.9 (1.0) (2.4)
Other comprehensive (expense)/income for the period (21.3) 0.5 31.7
Total comprehensive income for the period 88.3 83.3 170.3
Consolidated Statement of Financial Position
30 September 2016 30 September 2015 31 March 2016
(Unaudited) (Unaudited) (Audited)
As at 30 September 2016 GBPm GBPm GBPm
Non current assets
Intangible assets 22.1 6.1 23.6
Property, plant and
equipment 8.1 7.4 8.1
Financial assets: loans,
investments and
warrants 4,552.1 3,341.9 3,715.9
Deferred tax asset 0.3 0.4 0.4
Derivative financial
assets 6.4 13.1 3.3
4,589.0 3,368.9 3,751.3
Current assets
Trade and other
receivables 158.8 100.2 216.4
Financial assets: loans
and investments 150.3 273.6 182.6
Derivative financial
assets 48.9 7.2 28.3
Current tax debtor 6.9 1.2 15.1
Cash and cash equivalents 596.3 218.1 182.5
961.2 600.3 624.9
Total assets 5,550.2 3,969.2 4,376.2
Equity and reserves
Called up share capital 77.0 77.0 77.0
Share premium account 178.2 677.2 177.6
Capital redemption
reserve 5.0 5.0 5.0
Own shares reserve (82.1) (77.0) (77.0)
Other reserves 55.7 65.9 95.5
Retained earnings 834.7 419.6 963.1
Equity attributable to
owners of the Company 1,068.5 1,167.7 1,241.2
Non controlling interest 0.8 1.0 0.9
Total equity 1,069.3 1,168.7 1,242.1
Non current liabilities
Provisions 1.6 2.3 2.0
Financial liabilities 3,997.1 2,502.8 2,674.2
Derivative financial
liabilities 48.2 13.2 31.6
Deferred tax liabilities 40.7 41.5 51.0
4,087.6 2,559.8 2,758.8
Current liabilities
Provisions 0.7 0.7 0.7
Trade and other payables 263.8 189.3 233.4
Financial liabilities 88.3 38.2 106.6
Current tax creditor 9.3 2.1 5.1
Derivative financial
liabilities 31.2 10.4 29.5
393.3 240.7 375.3
Total liabilities 4,480.9 2,800.5 3,134.1
Total equity and
liabilities 5,550.2 3,969.2 4,376.2
Consolidated Statement of Cash Flows
Six months ended Six months ended Year ended
30 September 2016 30 September 2015 31 March 2016
(Unaudited) (Unaudited) (Audited)
For the six months ended 30 September 2016 GBPm GBPm GBPm
Operating activities
Interest received 82.5 83.1 206.3
Fees received 68.4 31.6 77.9
Dividends received 32.5 16.5 28.4
Interest paid (60.2) (48.1) (95.3)
Payments to suppliers and employees (78.9) (78.0) (141.2)
Net proceeds/(purchase) from sale of current financial
assets 99.6 (37.0) (35.8)
Purchase of loans and investments (1,128.5) (686.0) (1,378.3)
Recoveries on previously impaired assets - - 1.7
Proceeds from sale of loans and investments - principal 666.9 536.6 1,034.1
Proceeds from sale of loans and investments - gains
on investments 161.5 12.2 66.6
Cash used in operations (156.2) (169.1) (235.6)
Taxes (paid)/received (4.9) 8.6 (3.9)
Net cash used in operating activities (161.1) (160.5) (239.5)
Investing activities
Purchase of property, plant and equipment (1.4) (2.1) (4.2)
Purchase of intangible asset - - (18.3)
Purchase of remaining 49% of Longbow Real Estate Capital
LLP (41.7) - -
Loss of control of subsidiary - (9.2) (9.1)
Net cash used in investing activities (43.1) (11.3) (31.6)
Financing activities
Dividends paid (249.9) (355.5) (378.2)
Increase in long term borrowings 1,032.9 415.4 679.1
Repayment of long term borrowings (48.3) (59.8) (183.1)
Net cash (outflow)/inflow from derivative contracts (114.8) 25.5 (40.5)
Net purchase of own shares (23.6) (27.5) (27.4)
Proceeds on issue of shares 0.6 2.9 3.4
Net cash generated from financing activities 596.9 1.0 53.3
Net increase/(decrease) in cash 392.7 (170.8) (217.8)
Cash and cash equivalents at beginning of period 182.5 391.9 391.9
Effect of foreign exchange rate changes 21.1 (3.0) 8.4
Net cash and cash equivalents at end of period 596.3 218.1 182.5
Presented on the statement of financial position as:
Cash and cash equivalents 596.3 218.1 182.5
Consolidated Statement of Changes in Equity
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
For the six months ended 30 September 2015
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 2015 80.6 674.3 1.4 45.8 32.5 (162.0) 783.8 1,456.4 2.2 1,458.6
Profit for the period - - - - - - 83.9 83.9 (1.1) 82.8
Available for sale financial assets - - - - 2.3 - - 2.3 - 2.3
Exchange differences on translation of foreign
operations - - - - - - (0.7) (0.7) (0.1) (0.8)
Tax on items taken directly to or transferred from
equity - - - - (1.0) - - (1.0) - (1.0)
Total comprehensive income for the period - - - - 1.3 - 83.2 84.5 (1.2) 83.3
Loss of control of subsidiary - - - - - - (14.7) (14.7) - (14.7)
Movement in control of subsidiary - - - - - - 10.2 10.2 - 10.2
Own shares acquired in the period - - - - - (24.7) - (24.7) - (24.7)
Options/awards exercised - 2.9 - (22.3) - 30.4 (8.1) 2.9 - 2.9
Credit for equity settled share schemes - - - 8.6 - - - 8.6 - 8.6
Cancellation of shares (3.6) - 3.6 - - 79.3 (79.3) - - -
Dividends paid - - - - - - (355.5) (355.5) - (355.5)
Balance at 30 September 2015 77.0 677.2 5.0 32.1 33.8 (77.0) 419.6 1,167.7 1.0 1,168.7
Consolidated Statement of Changes in Equity
For the year ended 31 March 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
(Audited) GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
Balance at 1 April 2015 80.6 674.3 1.4 45.8 32.5 (162.0) 783.8 1,456.4 2.2 1,458.6
Profit for the year - - - - - - 138.6 138.6 - 138.6
Available for sale financial assets - - - - 24.6 - - 24.6 - 24.6
Exchange differences on translation of foreign
operations - - - - - - 9.5 9.5 - 9.5
Tax on items taken directly to or transferred from
equity - - - 2.8 (5.2) - - (2.4) - (2.4)
Total comprehensive income for the year - - - 2.8 19.4 - 148.1 170.3 - 170.3
Loss of control of subsidiary - - - - - - (13.4) (13.4) (1.3) (14.7)
Movement in control of subsidiary - - - - - - 10.2 10.2 - 10.2
Own shares acquired in the year - - - - - (24.7) - (24.7) - (24.7)
Options/awards exercised - 3.3 - (22.3) - 30.4 (8.1) 3.3 - 3.3
Credit for equity settled share schemes - - - 17.3 - - - 17.3 - 17.3
Reduction in share premium - (500.0) - - - - 500.0 - - -
Cancellation of shares (3.6) - 3.6 - - 79.3 (79.3) - - -
Dividends paid - - - - - - (378.2) (378.2) - (378.2)
Balance at 31 March 2016 77.0 177.6 5.0 43.6 51.9 (77.0) 963.1 1,241.2 0.9 1,242.1
The adjustment of GBP13.4m to retained earnings on loss of control of
the subsidiary ICG European Loan Fund in the first half of the prior
year relates to the reclassification of liabilities of a consolidated
structured entity which had been incorrectly recorded in reserves. The
correction of this item has no impact on the income statement in the
prior year, or the internally reported numbers in that year.
Notes to the Half Year Report
For the six months ended 30 September 2016
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 2016.
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 2016 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 2016 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 GBP802.1m 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 2016.
Notes to the Half Year Report continued
For the six months ended 30 September 2016
1. Financial risk management
Six months ended Six months ended Year ended
30 September 2016 30 September 2015 31 March 2016
(Unaudited) (Unaudited) (Audited)
Financial assets - non current GBPm GBPm GBPm
Loans and receivables held at amortised cost 457.4 571.8 445.4
AFS financial assets held at fair value 93.9 144.0 159.4
Financial assets designated as FVTPL 3,219.6 2,026.0 2,457.2
Associates designated as FVTPL 768.7 578.1 633.0
Investments in equity accounted joint ventures 1.2 0.9 1.1
Derivative financial instruments held at fair value
- warrants 11.3 21.1 19.8
4,552.1 3,341.9 3,715.9
Other derivative financial instruments held at fair
value 6.4 13.1 3.3
4,558.5 3,355.0 3,719.2
Included within associates designated as FVTPL is GBP618.5m (30
September 2015: GBP447.6m / 31 March 2016: GBP508.3m) 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 GBPnil (30
September 2015: GBP77.9m / 31 March 2016: GBP94.6m) related to the
Group's joint venture investments in Via Location and Parkeon, and
GBP2,906.7m (30 September 2015: GBP1,753.4m / 31 March 2016:
GBP2,092.7m) 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 and by geography. The
Group is required to provide disclosures at a more detailed level than
by asset category, segregating each asset category by sector or
geography. The Group has chosen to present financial instruments by
geography as the diverse nature of the Group's assets makes any
disclosure of assets by industry less meaningful to the Group's risk
profile than geographical factors.
Notes to the Half Year Report continued
For the six months ended 30 September 2016
2. Financial risk management continued
Fair value measurements recognised in the statement of financial
position continued
Fair value
Fair value Fair value as at Relationship
as at as at 31 March of
30 September 2016 30 September 2015 2016 unobservable
(Unaudited) (Unaudited) (Audited) Fair Significant unobservable inputs to
Financial assets / Financial liabilities GBPm GBPm GBPm value hierarchy Valuation techniques and inputs inputs fair value
A small number of assets have been listed on various
stock exchanges around the world, providing an external
Listed portfolio investments 1.2 17.8 62.1 1 basis for valuing the Group's holdings n/a n/a
Listed
credit fund investments 72.6 59.5 64.2 1 Quoted bid prices in an active market n/a n/a
Level 1 assets 73.8 77.3 126.3
Level 2 assets within structured entities controlled The fair value has been determined using independent
by the Group 2,856.0 1,704.3 2,048.7 2 broker quotes based on observable inputs n/a n/a
Internally modelled valuation based on combination
Listed portfolio investments 36.7 - 33.1 2 of market prices and 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,
internally calculated and verified to externally sourced
Current and non-current derivative assets 55.3 20.3 31.6 2 data and are therefore included within level 2 n/a n/a
Level 2 assets 2,948.0 1,724.6 2,113.4
Level 3 investments 220.0 351.2 308.7 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 69%. A premium the adjusted
or relevant market transaction multiples. has been applied to five assets in the range of 1% multiple,
A premium or discount is applied to the earnings multiple - 62%. the higher
to adjust for points of difference relating to risk The earnings multiple is generally in the range of the
and earnings growth prospects between the comparable 8 - 15 and exceptionally as high as 18 and as low valuation
company set and the private company being valued. as 4
Earnings 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 2016
2. Financial risk management continued
Fair value measurements recognised in the statement of financial
position continued
Restated Fair value
Fair value Fair value as at
as at as at 31 March
30 September 2016 30 September 2015 2016
(Unaudited) (Unaudited) (Audited) Fair Significant unobservable
Financial assets / Financial liabilities GBPm 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 of debt, credit rating,
Illiquid debt investments within structured entities adjusting the proxy value for differences in the risk current debt, interest coupon, maturity of the loan The higher the premium, the higher the valuation.
controlled by the Group 49.5 49.1 40.9 3 profile of the instruments and jurisdiction of the loan The higher the discount, the lower the valuation
Discounted cash flow at a discount rate of 11%. The
following assumptions are applied to each investment's
cashflows: 2% annual default rate, 20% annual prepayment The higher the cash flows the higher the fair
Investments in unlisted CLOs 37.7 32.3 33.4 3 rate, 70% recovery rate Discounted cash flows value.
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 NAV is received from the funds'
administrator or fund manager. We have reviewed the
underlying valuation techniques and consider them The NAV of the underlying fund, typically calculated
Investments in unlisted funds 819.8 555.0 678.3 3 to be in line with the Group's under IFRS The higher the NAV, the higher the fair value
Level 3 assets 1,127.0 987.6 1,061.3
The fair value of debt securities issued at fair value
through profit or loss is dependent upon the fair
value of investment securities and derivative financial
Level 2 liabilities within structured entities controlled instruments. Any changes in the valuation have a direct
by the Group (2,800.7) (1,601.1) (1,913.0) 2 impact on the fair value of debt securities issued 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,
internally calculated and verified to externally sourced
Current and non-current derivative liabilities (79.4) (23.6) (61.1) 2 data and are therefore included within level 2 n/a n/a
Level 2 liabilities (2,880.1) (1,624.7) (1,974.1)
Notes to the Half Year Report continued
For the six months ended 30 September 2016
2. Financial risk management continued
Fair value measurements recognised in the statement of financial
position continued
As at 30 September 2016
Level 1 Level 2 Level 3 Total
(Unaudited) GBPm GBPm GBPm GBPm
Financial assets held at fair value
Designated as FVTPL
- US - 1,856.3 199.4 2,055.7
- UK 72.8 163.1 701.8 937.7
- France 1.0 228.5 101.0 330.5
- Germany - 174.3 5.0 179.3
- Netherlands - 122.1 2.0 124.1
- Other - 311.7 49.3 361.0
73.8 2,856.0 1,058.5 3,988.3
Derivative financial instruments -
warrants
- Germany - - 6.4 6.4
- France - - 4.9 4.9
- - 11.3 11.3
AFS financial assets
- US - 36.7 1.8 38.5
- France - - 32.6 32.6
- UK - - 18.0 18.0
- Italy - - 2.7 2.7
- Other - - 2.1 2.1
- 36.7 57.2 93.9
Other derivative financial instruments - 55.3 - 55.3
73.8 2,948.0 1,127.0 4,148.8
Financial liabilities at FVTPL
- Structured entities controlled by the
Group - 2,800.7 - 2,800.7
Other derivative financial instruments - 79.4 - 79.4
- 2,880.1 - 2,880.1
Notes to the Half Year Report continued
For the six months ended 30 September 2016
2. Financial risk management continued
Fair value measurements recognised in the statement of financial
position continued
As at 30 September 2015
Level 1 Level 2 Level 3 Total
(Unaudited) GBPm GBPm GBPm GBPm
Financial assets held at fair value
Designated as FVTPL
- US - 1,057.1 57.2 1,114.3
- UK 59.5 113.1 578.7 751.3
- France - 122.3 141.1 263.4
- Germany - 110.5 4.1 114.6
- Netherlands - 102.6 4.0 106.6
- Other - 198.7 55.2 253.9
59.5 1,704.3 840.3 2,604.1
Derivative financial instruments -
warrants
- UK - - 10.0 10.0
- France - - 5.9 5.9
- Germany - - 5.2 5.2
- - 21.1 21.1
AFS financial assets
- Australia - - 47.3 47.3
- France - - 42.2 42.2
- US 11.2 - 13.7 24.9
- UK - - 22.5 22.5
- Other 6.6 - 0.5 7.1
17.8 - 126.2 144.0
Other derivative financial instruments - 20.3 - 20.3
77.3 1,724.6 987.6 2,789.5
Financial liabilities at FVTPL
- Structured entities controlled by the
Group - 1,601.1 - 1,601.1
Other derivative financial instruments - 23.6 - 23.6
- 1,624.7 - 1,624.7
Notes to the Half Year Report continued
For the six months ended 30 September 2016
2. Financial risk management continued
Fair value measurements recognised in the statement of financial
position continued
As at 31 March 2016
Level 1 Level 2 Level 3 Total
(Audited) GBPm GBPm GBPm GBPm
Financial assets held at fair value
Designated as FVTPL
- US - 1,368.9 147.7 1,516.6
- UK 67.3 98.2 592.6 758.1
- France - 137.0 168.3 305.3
- Germany - 119.2 3.3 122.5
- Netherlands - 95.3 2.1 97.4
- Other 11.9 230.1 48.3 290.3
79.2 2,048.7 962.3 3,090.2
Derivative financial instruments -
warrants
- France - - 12.3 12.3
- Germany - - 7.5 7.5
- - 19.8 19.8
AFS financial assets held at fair value
- Australia 40.7 - 4.5 45.2
- France - - 42.3 42.3
- US - 33.1 14.1 47.2
- UK - - 18.1 18.1
- Other 6.4 - 0.2 6.6
47.1 33.1 79.2 159.4
Other derivative financial instruments - 31.6 - 31.6
126.3 2,113.4 1,061.3 3,301.0
Financial liabilities at FVTPL
- Structured entities controlled by the
Group - 1,913.0 - 1,913.0
Other derivative financial instruments - 61.1 - 61.1
- 1,974.1 - 1,974.1
Notes to the Half Year Report continued
For the six months ended 30 September 2016
2. Financial risk management continued
Reconciliation of Level 3 fair value measurements of financial assets
The tables detail the movements in financial assets valued using the
Level 3 basis of measurement in aggregate and geographically by asset
category.
Within the income statement, realised gains and fair value movements are
included within gains on investments and foreign exchange is included
within finance costs.
For the six months ended 30 September 2016
Financial
assets at AFS
FVTPL Derivative financial instruments - warrants assets Total
(Unaudited) GBPm GBPm GBPm GBPm
At 1 April
2016 962.3 19.8 79.2 1,061.3
Total gains or
losses in the
income
statement
- Realised
gains (5.2) (10.3) (12.4) (27.9)
- Fair value
gains 72.2 0.3 - 72.5
- Foreign
exchange 73.8 1.5 5.7 81.0
Total gains or
losses in
other
comprehensive
income
- Unrealised
losses - - (0.9) (0.9)
Purchases 129.1 - 0.2 129.3
Realisations (173.1) - (14.6) (187.7)
Transfer
between
assets (0.6) - - (0.6)
At 30
September
2016 1,058.5 11.3 57.2 1,127.0
For the six months ended 30 September 2015
Financial
assets at Derivative financial instruments AFS
FVTPL - warrants assets Total
(Unaudited) GBPm GBPm GBPm GBPm
At 1 April 2015 679.8 13.8 117.1 810.7
Total gains or
losses in the
income
statement
- Realised
gains (1.7) (0.3) (2.0) (4.0)
- Fair value
gains 48.0 7.4 - 55.4
- Foreign
exchange 10.1 0.2 (2.7) 7.6
Total gains or
losses in other
comprehensive
income
- Unrealised
gains - - 20.7 20.7
Purchases 129.9 - 0.1 130.0
Realisations (31.5) - (7.0) (38.5)
Transfer
between
assets 2.0 - - 2.0
Transfers
between
levels 3.7 - - 3.7
At 30 September
2015 840.3 21.1 126.2 987.6
Notes to the Half Year Report continued
For the six months ended 30 September 2016
2. Financial risk management continued
Reconciliation of Level 3 fair value measurements of financial assets
continued
For the year ended 31 March 2016
Financial
assets at Derivative financial instruments AFS
FVTPL - warrants assets Total
(Audited) GBPm GBPm GBPm GBPm
At 1 April
2015 679.8 13.8 117.1 810.7
Total gains or
losses in the
income
statement
- Realised
gains (22.4) (10.0) (0.9) (33.3)
- Fair value
gains 89.6 15.0 - 104.6
- Foreign
exchange 49.2 1.0 1.9 52.1
Total gains or
losses in
other
comprehensive
income
- Unrealised
gains - - 23.8 23.8
Purchases 192.3 - 0.4 192.7
Realisations (69.5) - (19.3) (88.8)
Transfer
between
assets 61.8 - - 61.8
Transfer
between
levels (18.5) - (43.8) (62.3)
At 31 March
2016 962.3 19.8 79.2 1,061.3
Notes to the Half Year Report continued
For the six months ended 30 September 2016
1. Financial risk management continued
Reconciliation of Level 3 fair value movements by geography
For the six months ended 30 September 2016
(Unaudited) US UK France Singapore Australia Other Total
Financial
assets at
FVTPL GBPm GBPm GBPm GBPm GBPm GBPm GBPm
At 1 April 2016 147.7 592.6 168.3 10.5 12.8 30.4 962.3
Total gains or losses in
the income statement
- Realised
gains - (4.1) - - - (1.1) (5.2)
- Fair value
gains/(losses) 12.5 39.9 18.8 1.1 1.4 (1.5) 72.2
- Foreign
exchange 18.0 43.2 7.0 1.4 1.4 2.8 73.8
Purchases 35.5 87.6 0.2 0.5 - 5.3 129.1
Realisations (13.7) (57.4) (93.3) (0.2) - (8.5) (173.1)
Transfer
between
assets (0.6) - - - - - (0.6)
At 30 September
2016 199.4 701.8 101.0 13.3 15.6 27.4 1,058.5
(Unaudited) France Germany Total
Derivative financial instruments - warrants GBPm GBPm GBPm
At 1 April 2016 12.3 7.5 19.8
Total gains or losses in the income statement
- Realised gains (10.3) - (10.3)
- Fair value gains 2.1 (1.8) 0.3
- Foreign exchange 0.8 0.7 1.5
At 30 September 2016 4.9 6.4 11.3
(Unaudited) France US UK Other Total
AFS assets GBPm GBPm GBPm GBPm GBPm
At 1 April 2016 42.3 14.1 18.1 4.7 79.2
Total gains or losses in the income
statement
- Realised gains (3.9) (8.5) - - (12.4)
- Foreign exchange 3.5 0.4 1.3 0.5 5.7
Total gains or losses in other
comprehensive income
- Unrealised gains/(losses) 1.0 (0.7) (0.8) (0.4) (0.9)
Purchases - - 0.2 - 0.2
Realisations (10.3) (3.5) (0.8) - (14.6)
At 30 September 2016 32.6 1.8 18.0 4.8 57.2
Notes to the Half Year Report continued
For the six months ended 30 September 2016
2. Financial risk management continued
Reconciliation of Level 3 fair value movements by geography continued
For the six months ended 30 September 2015
(Unaudited) US UK France Germany Netherlands Other Total
Financial assets
at FVTPL GBPm GBPm GBPm GBPm GBPm GBPm GBPm
At 1 April 2015 37.9 464.3 120.2 6.7 7.4 43.3 679.8
Total gains or losses in
the income statement
- Realised gains - (1.3) - - (0.4) - (1.7)
- Fair value
gains/(losses) 4.0 22.3 20.3 (0.1) (0.1) 1.6 48.0
- Foreign
exchange (0.6) 11.9 2.2 (0.2) (0.2) (3.0) 10.1
Purchases 2.4 113.6 1.4 1.5 0.2 10.8 129.9
Realisations (2.0) (20.4) (2.2) (3.8) (2.9) (0.2) (31.5)
Transfer between
assets 16.6 (14.6) - - - - 2.0
Transfer between
levels (1.1) 2.9 (0.8) - - 2.7 3.7
At 30 September
2015 57.2 578.7 141.1 4.1 4.0 55.2 840.3
(Unaudited) UK France Germany Total
Derivative financial instruments - warrants GBPm GBPm GBPm GBPm
At 1 April 2015 4.8 5.4 3.6 13.8
Total gains or losses in the income statement
- Realised gains - (0.3) - (0.3)
- Fair value gains 5.2 0.7 1.5 7.4
- Foreign exchange - 0.1 0.1 0.2
At 30 September 2015 10.0 5.9 5.2 21.1
(Unaudited) Australia France US UK Other Total
AFS assets GBPm GBPm GBPm GBPm GBPm GBPm
At 1 April 2015 38.9 37.8 12.5 25.9 2.0 117.1
Total gains or losses in the income statement
- Realised gains - (0.1) - (1.9) - (2.0)
- Foreign exchange (3.6) 0.8 (0.2) 0.2 0.1 (2.7)
Total gains or losses in other comprehensive income
- Unrealised gains/(losses) 12.0 4.6 1.4 4.3 (1.6) 20.7
Purchases - - - 0.1 - 0.1
Realisations - (0.9) - (6.1) - (7.0)
At 30 September 2015 47.3 42.2 13.7 22.5 0.5 126.2
Notes to the Half Year Report continued
For the six months ended 30 September 2016
2. Financial risk management continued
Reconciliation of Level 3 fair value movements by geography continued
For the year ended 31 March 2016
(Audited) US UK France Singapore Australia Other Total
Financial assets
at FVTPL GBPm GBPm GBPm GBPm GBPm GBPm GBPm
At 1 April 2015 37.9 464.3 120.2 2.4 24.2 30.8 679.8
Total gains or losses in the income statement
- Realised gains - (15.7) - - - (6.7) (22.4)
- Fair value
gains 18.5 36.6 29.8 1.6 2.3 0.8 89.6
- Foreign
exchange 1.4 34.0 13.6 0.1 (0.7) 0.8 49.2
Purchases 30.6 132.3 11.3 6.4 - 11.7 192.3
Realisations (9.6) (44.3) (2.9) - - (12.7) (69.5)
Transfer between
assets 70.7 (14.6) - - - 5.7 61.8
Transfer between
levels (1.8) - (3.7) - (13.0) - (18.5)
At 31 March 2016 147.7 592.6 168.3 10.5 12.8 30.4 962.3
(Audited) France UK Germany Total
Derivative financial instruments - warrants GBPm GBPm GBPm GBPm
At 1 April 2015 5.4 4.8 3.6 13.8
Total gains or losses in the income statement
- Realised gains - (10.0) - (10.0)
- Fair value gains 6.4 5.2 3.4 15.0
- Foreign exchange 0.5 - 0.5 1.0
At 31 March 2016 12.3 - 7.5 19.8
(Audited) France Australia US UK Other Total
AFS assets GBPm GBPm GBPm GBPm GBPm GBPm
At 1 April 2015 37.8 38.9 12.5 25.9 2.0 117.1
Total gains or losses in the income statement
- Realised gains (0.9) - - - - (0.9)
- Foreign exchange 3.3 (3.5) 0.5 1.5 0.1 1.9
Total gains or losses in other comprehensive income
- Unrealised gains/(losses) 10.0 12.9 1.1 1.7 (1.9) 23.8
Purchases - - - 0.4 - 0.4
Realisations (7.9) - - (11.4) - (19.3)
Transfer between levels - (43.8) - - - (43.8)
At 31 March 2016 42.3 4.5 14.1 18.1 0.2 79.2
Notes to the Half Year Report continued
For the six months ended 30 September 2016
2. Financial risk management continued
Fair value sensitivity analysis
The following table shows the sensitivity of fair values grouped in
Level 3 to adjusted earnings multiples in the valuation models, for a
selection of the largest financial assets. It is assumed that the
multiple was changed by 10% while all the other variables were held
constant.
30 September 2016 Value +10% -10%
(Unaudited) GBPm GBPm GBPm
Investments designated as FVTPL 1,058.5 1,162.6 910.8
Derivative financial instruments held at fair value
- warrants 11.3 13.0 9.6
AFS financial assets held at fair value 57.2 63.5 50.8
1,127.0 1,239.1 971.2
30 September 2015 Value +10% -10%
(Unaudited) GBPm GBPm GBPm
Investments designated as FVTPL 840.3 973.4 677.6
Derivative financial instruments held at fair value
- warrants 21.1 25.9 16.3
AFS financial assets held at fair value 126.2 150.2 102.2
987.6 1,149.5 796.1
31 March 2016 Value +10% -10%
(Audited) GBPm GBPm GBPm
Investments designated as FVTPL 962.3 1,071.5 820.3
Derivative financial instruments held at fair value
- warrants 19.8 25.2 14.3
AFS financial assets held at fair value 79.2 86.3 72.2
1,061.3 1,183.0 906.8
Notes to the Half Year Report continued
For the six months ended 30 September 2016
2. Financial risk management continued
Derivatives
The Group utilises the following derivative instruments for economic
hedging purposes:
30 September 2016
(Unaudited) Fair values
Contract of underlying
principal amount Asset Liability
Foreign exchange contracts GBPm GBPm GBPm
Forward foreign exchange contracts 1,126.9 6.7 (22.8)
Cross currency swaps 499.0 46.7 (56.6)
Interest rate swaps 20.0 1.9 -
Balance at 30 September 2016 1,645.9 55.3 (79.4)
Included in derivative financial instruments is accrued interest on
swaps of GBP2.1m.
30 September 2015
(Unaudited) Fair values
Contract of
underlying
principal amount Asset Liability
Foreign exchange contracts GBPm GBPm GBPm
Forward foreign exchange contracts 1,066.3 2.8 (13.2)
Cross currency swaps 490.1 15.0 (10.4)
Interest rate swaps 20.0 2.5 -
Balance at 30 September 2015 1,576.4 20.3 (23.6)
Included in derivative financial instruments is accrued interest on
swaps of GBP1.8m.
31 March 2016
(Audited) Fair values
Contract of
underlying
principal amount Asset Liability
Foreign exchange contracts GBPm GBPm GBPm
Forward foreign exchange contracts 1,172.8 5.6 (24.6)
Cross currency swaps 456.5 23.8 (36.5)
Interest rate swaps 20.0 2.2 -
Balance at 31 March 2016 1,649.3 31.6 (61.1)
Included in derivative financial instruments is accrued interest on
swaps of GBP1.9m.
Notes to the Half Year Report continued
For the six months ended 30 September 2016
2. Financial risk management continued
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 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 2016.
The capital structure comprises debts, which includes borrowings
disclosed in note 24 of the audited Group Financial Statements for the
year ended 31 March 2016, 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 - Impairments
Six months ended Six months ended Year ended
30 September 2016 30 September 2015 31 March 2016
(Unaudited) (Unaudited) (Audited)
GBPm GBPm GBPm
Balance at 1 April 196.9 306.0 306.0
Charged to income
statement 13.3 9.8 12.3
Recovery of previously
impaired assets - - (3.4)
Assets written off in
year (83.4) (48.9) (138.8)
Foreign exchange 18.3 4.4 20.8
Balance at 30
September / 31 March 145.1 271.3 196.9
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 2016 was GBP95.3m
to Gerflor (30 September 2015: GBP91.3m to Parkeon / 31 March 2016:
GBP110.1m to Parkeon).
Notes to the Half Year Report continued
For the six months ended 30 September 2016
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 as 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. In the current period
external fee income has been shown by strategic asset class and interest
income and interest expense have been shown separately whereas
previously these were disclosed as net interest income. The prior
periods have been restated to reflect these changes.
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 Managing Directors is allocated equally
to the FMC and the IC.
Six months ended Real Total
30 September 2016 Corporate Investments Capital Markets Assets Secondaries FMC IC Total
(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
Notes to the Half Year Report continued
For the six months ended 30 September 2016
3. Business segments continued
Six months ended Real Total
30 September 2015 Corporate Investments Capital Markets Assets Secondaries FMC IC Total
(Unaudited) GBPm GBPm GBPm GBPm GBPm GBPm GBPm
External fee income 33.1 8.4 7.9 0.5 49.9 - 49.9
Inter-segmental fee 6.9 1.0 0.7 0.5 9.1 (9.1) -
Fund management fee
income 40.0 9.4 8.6 1.0 59.0 (9.1) 49.9
Other operating
income - 2.3 2.3
Gains on
investments - 62.5 62.5
Interest income - 71.1 71.1
Dividend income 9.3 8.1 17.4
Total revenue 68.3 134.9 203.2
Interest expense (0.2) (22.7) (22.9)
Net fair value loss
on derivatives - (3.5) (3.5)
Impairment - (18.1) (18.1)
Staff costs (14.2) (4.0) (18.2)
Incentive scheme
costs (11.8) (19.1) (30.9)
Other
administrative
expenses (13.1) (4.9) (18.0)
Change in deferred
consideration - (7.0) (7.0)
Profit before tax 29.0 55.6 84.6
Real Total
Year ended 31 March 2016 Corporate Investments Capital Markets Assets Secondaries FMC IC Total
(Audited) GBPm GBPm GBPm GBPm GBPm GBPm GBPm
External fee income 70.0 17.7 19.1 2.1 108.9 - 108.9
Inter-segmental fee 13.5 2.0 1.7 1.2 18.4 (18.4) -
Fund management fee
income 83.5 19.7 20.8 3.3 127.3 (18.4) 108.9
Other operating income - 5.0 5.0
Gains on investments - 128.6 128.6
Interest income - 126.0 126.0
Dividend income 19.3 16.4 35.7
Total revenue 146.6 257.6 404.2
Interest expense (0.4) (45.9) (46.3)
Net fair value loss on
derivatives - (17.3) (17.3)
Impairment - (39.4) (39.4)
Staff costs (30.4) (8.8) (39.2)
Incentive scheme costs (24.5) (39.7) (64.2)
Other administrative
expenses (30.1) (9.4) (39.5)
Profit before tax 61.2 97.1 158.3
Notes to the Half Year Report continued
For the six months ended 30 September 2016
3. Business segments continued
Reconciliation of financial statements reported to the executive
committee to the IFRS financial statements
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 we co-invest in funds (ICG Europe Fund V, ICG
Europe Fund VI, ICG North America Private Debt Fund, ICG Asia Pacific
Fund III) is presented within interest income/impairments whereas under
IFRS it is included within the value of the investment
-- 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 principally 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
Consolidated Income Statement
Six months ended
30 September 2016 Internally reported Reclass of interest and impairments 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 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 2016 3. Business segments continued Consolidated Income Statement continued Six months ended 30 September 2015 Internally reported Reclass of interest to gains Consolidated structured entities Deferred dividend income Other adjustments Total adjustments Financial Statements (Unaudited) GBPm GBPm GBPm GBPm GBPm GBPm GBPm Fund management fee income 49.9 - (4.3) - (0.3) (4.6) 45.3 Other operating income 2.3 - 0.5 - - 0.5 2.8 Gains on investments 62.5 3.1 25.6 - (0.2) 28.5 91.0 Interest income 71.1 (11.4) 16.4 (4.4) - 0.6 71.7 Dividend income 17.4 - (8.0) 8.5 - 0.5 17.9 Total revenue 203.2 (8.3) 30.2 4.1 (0.5) 25.5 228.7 Share of results of joint ventures accounted for using equity method - - - - (0.2) (0.2) (0.2) Interest expense (22.9) (18.0) - - (18.0) (40.9) Net fair value loss on derivatives (3.5) - (5.5) - - (5.5) (9.0) Impairment (18.1) 8.3 - - - 8.3 (9.8) Staff costs (18.2) - - - 0.2 0.2 (18.0) Incentive scheme costs (30.9) - - - - - (30.9) Other administrative expenses (18.0) - (1.2) - 0.2 (1.0) (19.0) Change in deferred consideration (7.0) - - - - - (7.0) Profit before tax 84.6 - 5.5 4.1 (0.3) 9.3 93.9 Notes to the Half Year Report continued For the six months ended 30 September 2016 3. Business segments continued Consolidated Income Statement continued Year ended 31 March 2016 Internally reported Reclass of interest to gains Consolidated structured entities Longbow deferred consideration EBT settlement Other adjustments Total adjustments Financial statements (Audited) GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm Fund management fee income 108.9 - (9.9) - - (0.7) (10.6) 98.3 Other operating income 5.0 - 1.0 - - - 1.0 6.0 Gains on investments 128.6 (6.0) 15.5 - - (0.4) 9.1 137.7 Interest income 126.0 (24.5) 87.4 - - - 62.9 188.9 Dividend income 35.7 - (17.3) - - - (17.3) 18.4 Total revenue 404.2 (30.5) 76.7 - - (1.1) 45.1 449.3 Interest expense (46.3) - (57.3) - - - (57.3) (103.6) Net fair value (loss)/gain on derivatives (17.3) - (1.0) - - - (1.0) (18.3) Impairment (39.4) 30.5 - - - - 30.5 (8.9) Staff costs (39.2) - - - - 0.4 0.4 (38.8) Incentive scheme costs (64.2) - - - - - - (64.2) Other administrative expenses (39.5) - (2.2) - 2.3 0.5 0.6 (38.9) Change in deferred consideration estimate - - - (17.8) - - (17.8) (17.8) Profit before tax 158.3 - 16.2 (17.8) 2.3 (0.2) 0.5 158.8 On 1 October 2014, the Group acquired the remaining 49% of Longbow Real Estate Capital LLP, giving it 100% of the equity of the UK real estate debt specialist. The final deferred consideration amount was calculated at 31 March 2016 as GBP41.7m following the outstanding success of this business, resulting in a GBP17.8m increase to the original estimate. This was recognised through the income statement. Notes to the Half Year Report continued For the six months ended 30 September 2016 3. Business segments continued Consolidated Statement of Financial Position 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 Non current financial assets 1,873.0 (0.4) 2,678.3 1.2 2,679.1 4,552.1 Other non current assets 32.2 - 4.7 - 4.7 36.9 Cash 325.7 - 272.5 (1.9) 270.6 596.3 Current financial assets 150.3 - - - - 150.3 Other current assets 166.5 0.4 48.8 (1.1) 48.1 214.6 Total assets 2,547.7 - 3,004.3 (1.8) 3,002.5 5,550.2 Non current financial
liabilities 1,196.5 - 2,800.6 - 2,800.6 3,997.1 Other non current liabilities 90.5 - - - - 90.5 Current financial liabilities 88.3 - - - - 88.3 Other current liabilities 150.8 - 155.7 (1.5) 154.2 305.0 Total liabilities 1,526.1 - 2,956.3 (1.5) 2,954.8 4,480.9 Equity 1,021.6 - 48.0 (0.3) 47.7 1,069.3 Total equity and liabilities 2,547.7 - 3,004.3 (1.8) 3,002.5 5,550.2 30 September 2015 Internally reported Reclass of interest to gains Consolidated structured entities Deferred dividend income Other adjustments Total adjustments Financial Statements (Unaudited) GBPm GBPm GBPm GBPm GBPm GBPm GBPm Non current financial assets 1,744.1 0.6 1,596.4 - 0.8 1,597.8 3,341.9 Other non current assets 26.1 - 0.9 - - 0.9 27.0 Cash 135.3 - 83.9 - (1.1) 82.8 218.1 Current financial assets 273.6 - - - - - 273.6 Other current assets 90.3 (0.6) 20.2 - (1.3) 18.3 108.6 Total assets 2,269.4 - 1,701.4 - (1.6) 1,699.8 3,969.2 Non current financial liabilities 901.7 - 1,601.1 - - 1,601.1 2,502.8 Other non current liabilities 57.7 - (0.7) - - (0.7) 57.0 Current financial liabilities 38.2 - - - - - 38.2 Other current liabilities 135.5 - 72.8 (4.1) (1.7) 67.0 202.5 Total liabilities 1,133.1 - 1,673.2 (4.1) (1.7) 1,667.4 2,800.5 Equity 1,136.3 - 28.2 4.1 0.1 32.4 1,168.7 Total equity and liabilities 2,269.4 - 1,701.4 - (1.6) 1,699.8 3,969.2 Notes to the Half Year Report continued For the six months ended 30 September 2016 1. Business segments continued Consolidated Statement of Financial Position continued 31 March 2016 Internally reported Reclass of interest to gains Consolidated structured entities Longbow deferred consideration EBT Settlement Other adjustments Total adjustments Financial Statements (Audited) GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm Non current financial assets 1,798.0 (2.9) 1,919.7 - - 1.1 1,917.9 3,715.9 Other non current assets 34.1 - 1.3 - - - 1.3 35.4 Cash 112.7 - 72.2 - - (2.4) 69.8 182.5 Current financial assets 182.6 - - - - - - 182.6 Other current assets 202.8 2.9 55.1 - - (1.0) 57.0 259.8 Total assets 2,330.2 - 2,048.3 - - (2.3) 2,046.0 4,376.2 Non current financial liabilities 761.2 - 1,913.0 - - - 1,913.0 2,674.2 Other non current liabilities 84.6 - - - - - - 84.6 Current financial liabilities 106.6 - - - - - - 106.6 Other current liabilities 161.7 - 93.8 17.8 (2.3) (2.3) 107.0 268.7 Total liabilities 1,114.1 - 2,006.8 17.8 (2.3) (2.3) 2,020.0 3,134.1 Equity 1,216.1 - 41.5 (17.8) 2.3 - 26.0 1,242.1 Total equity and liabilities 2,330.2 - 2,048.3 - - (2.3) 2,046.0 4,376.2 Notes to the Half Year Report continued For the six months ended 30 September 2016 3. Business segments continued Consolidated Statement of Cash flows 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 (70.7) (14.0) 0.9 (83.8) 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) Increase in long-term borrowings 363.6 621.0 - 984.6 Net cash flow 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
equivalent 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
equivalent at end
of period 325.7 272.5 (1.9) 596.3
Notes to the Half Year Report continued
For the six months ended 30 September 2016
3. Business segments continued
Consolidated Statement of Cash flows continued
Other
30 September 2015 Internally reported Consolidated structured entities adjustments Financial Statements
(Unaudited) GBPm GBPm GBPm GBPm
Interest, fees and
dividends received 105.6 25.7 (0.1) 131.2
Interest paid (24.5) (23.6) - (48.1)
Net purchase of
current financial
assets (37.0) - - (37.0)
Purchase of loans
and investments (153.9) (532.1) - (686.0)
Cash in from
realisations 166.4 382.4 - 548.8
Other operating
expenses (69.1) (1.0) 0.7 (69.4)
Net cash (used
in)/generated from
operating
activities (12.5) (148.6) 0.6 (160.5)
Net cash used in
investing
activities (2.1) (9.2) - (11.3)
Dividends paid (355.5) - - (355.5)
Increase in
long-term
borrowings 230.4 125.2 - 355.6
Net cash flow from
derivatives 23.8 1.7 - 25.5
Purchase of own
shares (27.5) - - (27.5)
Proceeds on issue of
shares 2.9 - - 2.9
Net cash (used in)/
from financing
activities (125.9) 126.9 - 1.0
Net (decrease)/
increase in cash (140.5) (30.9) 0.6 (170.8)
Cash and cash
equivalent at
beginning of
period 278.5 115.3 (1.9) 391.9
FX impact on cash (2.7) (0.5) 0.2 (3.0)
Cash and cash
equivalent at end
of period 135.3 83.9 (1.1) 218.1
Notes to the Half Year Report continued
For the six months ended 30 September 2016
3. Business segments continued
Consolidated Statement of Cash flows continued
Internally Other
31 March 2016 reported Consolidated structured entities adjustments Financial Statements
(Audited) GBPm GBPm GBPm GBPm
Interest, fees
and dividends
received 256.3 58.8 (2.5) 312.6
Interest paid (47.0) (48.3) - (95.3)
Net purchase of
current
financial
assets (35.8) - - (35.8)
Purchase of
loans and
investments (247.1) (1,131.2) - (1,378.3)
Cash in from
realisations 394.3 708.1 - 1,102.4
Other operating
expenses (144.2) (2.3) 1.4 (145.1)
Net cash
generated
from/(used in)
operating
activities 176.5 (414.9) (1.1) (239.5)
Net cash used in
investing
activities (22.5) (9.1) - (31.6)
Dividends paid (378.2) - - (378.2)
Increase in
long-term
borrowings 131.1 364.9 - 496.0
Net cash flow
from
derivatives (52.5) 12.0 - (40.5)
Purchase of own
shares (27.4) - - (27.4)
Proceeds on
issue of
shares 3.4 - - 3.4
Net cash (used
in)/from
financing
activities (323.6) 376.9 - 53.3
Net decrease in
cash (169.6) (47.1) (1.1) (217.8)
Cash and cash
equivalent at
beginning of
period 278.5 115.3 (1.9) 391.9
FX impact on
cash 3.8 4.0 0.6 8.4
Cash and cash
equivalent at
end of period 112.7 72.2 (2.4) 182.5
1. Earnings per share
Six months ended Six months ended Year ended
30 September 2016 30 September 2015 31 March 2016
(Unaudited) (Unaudited) (Audited)
GBPm GBPm GBPm
Earnings for the purposes of basic and diluted earnings
per share being net profit attributable to the equity
holders of the parent 109.3 83.9 138.6
Number of shares
Weighted average number of ordinary shares for the
purposes of basic earnings per share 292,200,567 346,159,885 330,685,568
Effect of dilutive potential ordinary share options 22,510 50,356 42,077
Weighted average number of ordinary shares for the
purposes of diluted earnings per share 292,223,077 346,210,241 330,727,645
Earnings per share 37.4p 24.2p 41.9p
Diluted earnings per share 37.4p 24.2p 41.9p
Notes to the Half Year Report continued
For the six months ended 30 September 2016
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
2016 330,310,239 15,010,728
Purchased - 3,611,309
Options/awards
exercised 120,681 (3,587,843)
330,430,920 15,034,194
Share
consolidation (36,714,547) (1,670,466)
293,716,373 13,363,728
Purchased 4,000 -
As at 30
September 2016 293,720,373 13,363,728
On 1 August 2016, the Company undertook a share consolidation issuing
eight new ordinary shares at 26 and a quarter pence each for each
holding of nine existing ordinary shares of 23 and a third pence each,
reducing shares in issue to 293,716,373.
As at 30 September 2015 the total number of shares allotted, called up
and in issue was 330,211,149, of which 15,010,728 were held in the own
shares reserve.
1. Dividends
The Board has approved an interim dividend of 7.5p per share (H1 2016:
7.2p).
1. Gains and losses arising on investments
2. Gains and losses arising on AFS financial assets recognised in other
comprehensive income
Six months ended Six months ended Year ended
30 September 2016 30 September 2015 31 March 2016
(Unaudited) (Unaudited) (Audited)
GBPm GBPm GBPm
Realised gains on
ordinary shares
recycled to profit (48.4) (5.0) (19.8)
Impairments of AFS
financial assets
recycled to profit 2.9 - 1.8
Net gains recycled to
profit (45.5) (5.0) (18.0)
Gains and losses
arising on AFS
financial assets
- Fair value movement
on equity
instruments (4.5) 8.5 38.4
- Fair value movement
on other assets (0.8) (0.8) 1.4
Foreign exchange 2.4 (0.4) 2.8
(Losses)/gains
arising in the AFS
reserve in the
period (2.9) 7.3 42.6
Net movement in the
AFS reserve in the
period (48.4) 2.3 24.6
Notes to the Half Year Report continued
For the six months ended 30 September 2016
1. Gains and losses arising on investments continued
2. Gains and losses on investments recognised in the income statement
Six months ended Six months ended Year ended
30 September 2016 30 September 2015 31 March 2016
(Unaudited) (Unaudited) (Audited)
GBPm GBPm GBPm
Realised gains on warrants - 0.3 0.3
Realised gains/(losses) on assets designated as FVTPL 6.7 0.2 (1.0)
Realised gains in structured entities controlled by
the Group 0.8 20.7 5.7
Realised gains on AFS financial assets recycled from
AFS reserves 48.4 5.0 19.8
Realised (losses)/gains on other assets (0.4) 0.7 2.1
55.5 26.9 26.9
Unrealised gains and losses on assets designated as
FVTPL:
- On equity instruments excluding those held within
structured entities controlled by the Group 52.8 43.4 95.9
- On warrants 1.1 8.5 17.1
- In structured entities controlled by the Group 66.9 (15.7) (81.8)
120.8 36.2 31.2
Unrealised gains and losses on liabilities designated
as FVTPL:
- In structured entities controlled by the Group (65.4) 23.6 70.9
Realised gains and losses on liabilities designated
as FVTPL:
- In structured entities controlled by the Group 3.0 4.3 8.8
Fair value movements on FVTPL financial assets 113.9 91.0 137.8
Realised losses on amortised cost assets - - (0.1)
Gains on investments 113.9 91.0 137.7
Notes to the Half Year Report continued
For the six months ended 30 September 2016
1. Tax expense
Six months ended Six months ended Year ended
30 September 2016 30 September 2015 31 March 2016
Analysis of tax on (Unaudited) (Unaudited) (Audited)
ordinary activities GBPm GBPm GBPm
Current tax:
Corporate tax 18.1 4.6 3.1
Prior year adjustment
- other - (0.5) 2.8
18.1 4.1 5.9
Deferred tax:
Current period (1.5) 8.2 16.4
Prior year adjustment - (1.2) (2.1)
(1.5) 7.0 14.3
Tax charge on profit
on ordinary
activities 16.6 11.1 20.2
The Group's effective tax rate is lower than the standard rate of UK
corporation tax of 20%. This reflects the mix of the Group's balance
sheet investment returns in the year being weighted towards non UK
sourced dividend income and capital gains rather than interest income.
As dividend income is exempt from UK corporation tax it has the impact
of reducing the Group's effective tax rate.
1. Financial liabilities
Financial liabilities have increased by GBP1,304.6m in the period since
31 March 2016 of which GBP887.6m relates to structured entities
controlled by the Group. Of the remaining GBP417.0m, GBP216.5m is the
result of the Group establishing new private placements with maturities
of between five and ten years, with the balance principally due to the
impact of FX on foreign currency denominated financial liabilities.
The fair value of financial liabilities is GBP4,085.4m (30 September
2015: GBP2,541.0m / 31 March 2016: GBP2,780.8m), 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 subsidiaries during the
period:
1. The Group holds 55.6% of the equity in US CLO 2016-1, a structured entity
which was raised in the period and consolidated from September 2016
2. The Group holds 53.2% of the equity in St Paul's CLO VI, a structured
entity which was raised in the period and consolidated from June 2016
3. The Group retains control of ICG High Yield Bond Fund although it has
increased its ownership interest to 96.2%
The following changes are of note to the Group's associates during the
period:
1. The Group retains significant interest of ICG Total Credit Fund although
it has reduced its ownership interest to 36.3%
There were no other changes in the Group's ownership interests in
associates.
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 2016 which comprises the consolidated income
statement, the consolidated statement of comprehensive income, the
consolidated statement of financial position, the consolidated statement
of changes in equity, the consolidated statement of cash flows and
related notes 1 to 9. 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 Ireland) 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 2016
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
Chartered Accountants and Statutory Auditor
London, United Kingdom
15 November 2016
Reporting by strategic asset class
External fee income and AUM are presented by strategic asset class. This
differs from the previous presentation principally in the treatment of
the Senior Debt Partners strategy which falls within the corporate
investments asset class but along with the capital markets funds were
previously reported within credit funds.
Six months ended Six months ended Six months ended
(Unaudited) 30 September 2016 31 March 2016 30 September 2015
AUM AUM AUM
(EURm) Fees (GBPm) (EURm) Fees (GBPm) (EURm) Fees (GBPm)
Corporate
Investments
Management Fee
Income -
Mezzanine 5,738 26.1 6,008 25.4 6,205 22.7
Performance
Fee Income -
Mezzanine - 3.6 - 3.3 - 6.4
Management Fee
Income -
Senior Debt
Partners 4,375 5.8 4,423 5.6 4,253 4.0
Performance
Fee Income -
Senior Debt
Partners - 0.5 - 2.6 - -
10,113 36.0 10,431 36.9 10,458 33.1
IC
co-investment
- Mezzanine 1,342 5.9 1,611 6.2 1,777 6.5
IC
co-investment
- Senior Debt
Partners 37 0.2 41 0.2 45 0.1
IC
co-investment
- Australian
Senior Loans 81 0.3 81 0.2 78 0.3
Total 11,573 42.4 12,164 43.5 12,358 40.0
Capital
Markets
CLOs 4,681 9.7 4,015 8.3 3,860 7.1
Managed
Accounts and
Pooled Funds 636 1.5 622 1.0 546 1.2
Performance
Fee Income - 0.1 - - - 0.1
5,317 11.3 4,637 9.3 4,406 8.4
IC
co-investment 391 1.1 249 1.0 269 1.0
Total 5,708 12.4 4,886 10.3 4,675 9.4
Real Assets
Management Fee
Income 3,340 10.5 3,305 9.5 2,825 7.9
Performance
Fee Income - - - 1.7 - -
3,340 10.5 3,305 11.2 2,825 7.9
IC
co-investment 146 0.9 157 1.0 147 0.7
Total 3,486 11.4 3,462 12.2 2,972 8.6
Secondaries
Management Fee
Income 1,078 4.8 939 1.6 133 0.5
Performance
Fee Income - 0.3 - - - -
1,078 5.1 939 1.6 133 0.5
IC
co-investment 166 0.8 131 0.7 46 0.5
Total 1,244 5.9 1,070 2.3 179 1.0
Total External 19,848 62.9 19,312 59.0 17,822 49.9
Total IC
co-investment 2,163 9.2 2,270 9.3 2,362 9.1
Total 22,011 72.1 21,582 68.3 20,184 59.0
Glossary
Term Short Definition
form
Adjusted Adjusted Adjusted profit after tax divided by the weighted
earnings per EPS average number of ordinary shares.
share
Adjusted Profit after tax (annualised when reporting a six
profit after month period's results), adjusted for fair value movements
tax on derivatives, changes to the estimate of Longbow
deferred consideration and the impact of the settlement
of the employee benefit trust.
Adjusted Adjusted Adjusted profit after tax divided by average shareholders'
return on ROE funds for the period.
equity
AIFMD The EU Alternative Investment Fund Managers Directive.
Assets under AUM Value of all funds and assets managed by the FMC.
management 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.
Cash core CCI Profit before tax excluding fair value movement on
income derivatives, capital gains, impairments and unrealised
rolled up interest.
Catch up fees Fees not previously recognised as either the fund
commitment had not been contractually agreed or the
income was otherwise uncertain.
Closed end A fund where the amount of investable capital is fixed.
fund
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.
Gearing Gross borrowings divided by shareholders' 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 business of ICG plc. It co-invests
Company alongside third party funds.
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.
Operating Total fee income less operating expenses divided by
margin total fee income.
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 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.
Profit margin Profit divided by total income.
Proforma Adjusted profit after tax divided by average shareholders'
return on funds for the period, assuming any special dividends
equity were paid at the beginning of the reporting period.
Return on ROA Returns divided by the average IC investment portfolio.
assets Returns comprise interest and dividend income, plus
net gains on investments, less impairments.
Return on ROE Profit after tax (annualised when reporting a six
equity month period's results) divided by average shareholders'
funds for the period.
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 Information
Timetable
Ex-dividend date 1 December 2016
Record date for interim dividend 2
December 2016
Last date for dividend reinvestment election 14 December 2016
Payment of interim dividend 9 January 2017
Trading update 31 January 2017
Full year results announcement 25 May 2017
Stockbrokers Auditor
JPMorgan Cazenove Deloitte LLP
25 Bank Street Chartered Accountants and Statutory Auditor
Canary Wharf 2 New Street Square
London London
E14 5JP EC4A 3BZ
Numis Securities Limited Registrars
The London Stock Exchange Building Computershare Investor Services PLC
10 Paternoster Square PO Box 92
London The Pavilions
EC4M 7LT Bridgwater Road
Bankers Bristol
Lloyds TSB plc BS99 7NH
25 Gresham Street Company Registration Number
London 02234775
EC2V 7HN
The Royal Bank of Scotland plc
135 Bishopsgate
London
EC2M 3UR
Registered office
Juxon House
100 St Paul's Churchyard
London
EC4M 8BU
Website
The Company's website address is www.icgam.com. Copies of the Annual and
Interim Reports and other information about the Company are available on
this site.
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 15, 2016 04:12 ET (09:12 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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