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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Intermediate Capital Group Plc | LSE:ICP | London | Ordinary Share | GB00BYT1DJ19 | ORD 26 1/4P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 2,124.00 | 2,128.00 | 2,130.00 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| Security Brokers & Dealers | 737.1M | 280.6M | 0.9801 | 21.67 | 6.08B |
Hot Features
Premium
TIDMICP
ICG delivers exceptional fundraising,
driving fund management profits up 51%
Intermediate Capital Group plc (ICG) announces its final results for the
year ended 31 March 2019.
Highlights
-- AUM up 29% on 31 March 2018 to EUR37.1bn, with EUR10.0bn of new money
raised
-- Third party fee earning AUM up 41% in the year to EUR29.6bn, resulting in
third party fee income up 32%
-- Fund Management Company profits up 51% to GBP143.8m (2018: GBP95.3m);
average fee rates maintained, with individual fund fee rates maintained
or increasing
-- Adjusted Group profit before tax(1) increased 65% to GBP278.3m (2018:
GBP168.3m); Group profit before tax of GBP182.9m (2018: GBP199.1m) which
includes the IFRS impact of the consolidated CLOs
-- Earnings per share of 63.4p (2018: 88.8p); Fund Management Company 49.0p
(2018: 44.9p) and Investment Company 14.4p (2018: 43.9p)
-- Final ordinary dividend up 67% to 35.0p per share; total ordinary
dividends in the year up 50% to 45.0p per share, covered 2.1 times on
adjusted profit
-- Disciplined deployment across strategies, up 23% to EUR6.0bn on the prior
year, with all funds on course to meet or exceed performance hurdle
rates
-- Outlook remains strong, with good visibility on future fundraising
underpinned by a strong and diversified franchise supported by a growing
institutional client base
Commenting on the results, Benoit Durteste, CEO, said:
"This has been an excellent year for ICG. Our disciplined investment
processes and consistent investment performance have generated strong
demand across a broad range of our investment strategies. Our local
teams continue to originate attractive investment opportunities, while
locking in returns by realising existing assets where appropriate.
While our most successful strategies continue to attract higher asset
flows, we are putting in place the foundations for future growth,
incubating new strategies and building out our pool of talent, and
remaining alert for the opportunities any market dislocation may
present."
Commenting on the results, Kevin Parry, Chairman, said:
"These impressive results once again demonstrate the robustness of our
business model. We are now an established and leading global alternative
asset manager. Over our 30 year history we have built high levels of
trust with our longstanding clients. The consistent delivery of strong
investment returns for our clients results in them awarding us more
mandates giving us visibility on likely fundraising success at stable
fee margins. Sustainable growth and future prospects enabled the Board
to recommend a 50% increase in the full year dividend."
Financials
31 March 2019 31 March 2018 % change
-------------------------------- ---------------- ---------------- --------
Adjusted as internally
reported(1)
--------------------------------
Fund Management Company profit
before tax GBP143.8m GBP95.3m 51%
Investment Company profit before
tax GBP134.5m GBP73.0m 84%
Group profit before tax GBP278.3m GBP168.3m 65%
Earnings per share 94.9p 79.3p 20%
Gearing 0.86x 0.77x 12%
Net asset value per share GBP4.93 GBP4.66 6%
IFRS Consolidated
--------------------------------
Fund Management Company profit
before tax GBP143.8m GBP95.3m 51%
Investment Company profit before
tax GBP39.1m GBP103.8m (62%)
Group profit before tax GBP182.9m GBP199.1m (8%)
Earnings per share 63.4p 88.8p (29%)
Dividend per share in respect of
the year 45.0p 30.0p 50%
-------------------------------- ---------------- ---------------- --------
(1) These are non IFRS GAAP alternative performance measures and
represent internally reported numbers excluding the impact of the
consolidation of 16 structured entities funds following the adoption of
IFRS 10. Further details and a reconciliation of the numbers can be
found on page 7.
Assets under management(1)
31 March 2019 31 March 2018 % change
-------------------------------------- ------------- ------------- --------
Third party assets under management EUR34,461m EUR26,534m 30%
Balance sheet portfolio EUR2,621m EUR2,164m 21%
-------------------------------------- ------------- ------------- --------
Total assets under management EUR37,082m EUR28,698m 29%
-------------------------------------- ------------- ------------- --------
Third party fee earning assets under
management EUR29,626m EUR20,972m 41%
The following foreign exchange rates have been used:
31 March 2019 31 March 2018 31 March 2019 31 March 2018
Average Average Period end Period end
-------- ------------- ------------- ------------- -------------
GBP:EUR 1.1343 1.1354 1.1619 1.1399
GBP:USD 1.3090 1.3387 1.3038 1.4019
Enquiries
A presentation for investors and analysts will be held at 09:00 BST
today at ICG's offices, Juxon House, 100 St Paul's Churchyard, London,
EC4M 8BU. The presentation will be also be streamed live at 09:00 BST on
our website via the Webcast link under Latest Results
https://www.icgam.com/shareholders. For those unable to dial in it will
be available on demand https://www.icgam.com/shareholders from 14.00
BST.
Analyst / Investor enquiries:
Philip Keller, CFOO, ICG +44 (0) 20 3201 7700
Ian Stanlake, Investor Relations, ICG +44 (0) 20 3201 7880
Media enquiries:
Alicia Wyllie, Corporate Communications, ICG
+44 (0) 20 3201 7994
Neil Bennett, Sam Turvey, Maitland +44 (0) 20 7379 5151
This 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 results
statement should not be relied on by any other party or for any other
purpose.
This 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 Results statement contains information which prior to this
announcement was insider information.
About ICG
ICG is a global alternative asset manager with over 30 years' history.
We manage EUR37.1bn of assets in third party funds and proprietary
capital, principally in closed end funds. Our strategy is to grow our
specialist asset management activities to deliver increased shareholder
value. Our goal is to generate income and consistently high returns
while protecting against investment downside for our fund investors. We
seek to achieve this through our expertise in investing across the
capital structure. We combine flexible capital solutions, local access
and insight with an entrepreneurial approach to give us a competitive
edge in our markets. We operate across four asset classes -- corporate,
capital markets, real assets and private equity solutions. In addition
to growing existing strategies, we are committed to innovation and
pioneering new strategies across these asset classes where the market
opportunity exists to deliver value to our fund investors and increase
shareholder value.
We are listed on the London Stock Exchange (ticker symbol: ICP) and
provide investment management and advisory services in support of our
strategy and goal through a number of regulated subsidiaries, further
details of which are available at:
https://www.globenewswire.com/Tracker?data=Tq_R9csoMsxSdoQUHUa0I8CsmIU5Vax5yHU7XG0gZxDGgMeJz-frHfn6IjvDXe1oglIwus_mNrEScpBMTELMtg==
www.icgam.com. You can follow ICG on Twitter and LinkedIn.
Business review
This has been an outstanding year for ICG as our global alternative
asset management business continues to grow strongly in line with our
strategic objectives, delivering:
-- Fundraising (inflows): EUR10.0bn raised in total, driven by Europe Fund
VII and capital markets strategies
-- Fees: weighted average fee rate(1) in line with prior year at 0.86%
-- Investment: disciplined deployment remains strong across strategies, up
23% to EUR6.0bn
-- Performance: all funds are on course to meet or exceed their return
hurdle rates
Market conditions remain buoyant for alternative assets
Alternative asset classes continue to be attractive to institutional
investors for their enhanced returns and diversification opportunities.
As an established player in the alternative asset management industry,
we benefit from existing investors increasing their allocations to our
expanding alternative asset strategies and new investors selecting from
our range of strategies. This is resulting in strong growth in assets
under management. The locked in nature of closed end funds,
differentiates alternative asset classes from traditional asset
managers.
These characteristics make our markets attractive to new entrants, but
the length of time required to establish profitable strategies is
extensive and the barriers to entry high, with increasing complexity;
economies of scale; and institutional investors preferring to deal with
a small number of global managers. We are well positioned to continue to
benefit from these trends.
The structurally low interest rate environment impacts the returns from
debt structured asset classes. However, our lending is priced on a
floating rate basis with a margin over the base rate benchmark.
Therefore, our returns rise as base rates increase.
Global economic growth might slow in 2019, with revenue and earnings
growth in the US and Europe moderating. However, we consider recession
risks and systemic default risks to be low, providing a continued
constructive environment for the alternative asset management industry.
The duration of our funds mean they are designed to withstand economic
cycles.
Exceptional fundraising and average fee rates maintained
At EUR10.0bn (2018: EUR7.8bn), this has been an exceptionally strong
year for inflows and a new high for ICG. Our investment performance has
enabled us to scale up our successor funds where we believe the
investment market opportunity exists, while maintaining or increasing
average fee rates on an underlying fund basis.
Europe Fund VII, one of our largest funds, contributed EUR4.0bn to
inflows, a 60% increase on its predecessor fund. The Fund attracted both
existing and new clients with 83% of commitments being from existing ICG
clients. The average fee rate increased from 1.34% to 1.43% of
commitments.
Fundraising for Strategic Equity III is underway, targeting a fund
significantly larger than its predecessor, which raised $0.9bn of third
party money. Strategic Equity III raised $0.8bn in the period. Fees are
payable on committed capital from the first close so fundraising is
having an immediate positive impact on our profits.
We had further success across our liquid open-ended credit strategies
raising over EUR2.0bn in the year. This is double the amount raised in
the prior year and demonstrates our rising profile in this scalable
asset class. We also raised money for our real estate partnership
capital strategy and real estate development strategy; completed the
fundraising for our North American Private Debt strategy; closed four
CLOs; and raised European senior debt mandates, emphasising the depth
and diversity of our product offering.
As 89% of our AUM is in closed end funds, inflows are dependent on when
our larger funds come to market resulting in fluctuating inflows year on
year. Closed end funds lock in investor commitments and related fee
streams for the lifecycle of the fund (typically 6-12 years), providing
high quality recurring income for the Group.
Strong origination capability reflected in capital deployment
We have deployed EUR6.0bn across our direct investment strategies, an
increase of 23% on the prior year, a new high for ICG. This reflects the
increasing size and number of funds, our 'on the ground' investment
resources and a globally strong market backdrop. The flexibility and
size of our fund mandates are a competitive advantage as we are able to
offer bespoke financing solutions to companies.
Our investment teams have been rigorous in assessing the potential
impact of Brexit on their existing portfolios and all new investments.
Most investments are unaffected as cross border activity into and out of
the UK is very limited. However, in the current climate we have become
more selective when investing our UK commercial real estate lending fund
strategies, which represent 10% of total assets under management.
Our funds are investing at, or ahead of, their linear investment pace.
Fund returns benefiting from robust portfolio performance
Liquidity in the market continues to provide a positive environment for
realisations. Where appropriate, our portfolio managers capitalise on
this liquidity and actively realise assets within their portfolios. This
facilitates our ability to lock in performance and return capital to our
fund investors, providing the foundations for future fundraising
success.
Our fund and balance sheet portfolios are performing well. Despite some
macroeconomic uncertainty leading to stock market volatility, portfolio
performance and credit fundamentals are healthy. We expect the
performance of our portfolios and level of realisations to be similarly
strong in the current financial year.
Investing in future growth
We continue to seek opportunities to expand fund strategies to meet the
needs of our clients, and underpin the future growth of our specialist
asset management platform. We have recently launched an infrastructure
equity fund strategy and a European sale and leaseback fund strategy.
Both teams have used balance sheet capital to make initial investments
and demonstrate proof of concept for these scalable strategies. We have
commenced preparations for launching dedicated third party funds later
in the current financial year.
As our European Corporate Fund strategy has grown, the size of deals has
increased presenting an opportunity for us to launch a Europe Mid-Market
fund. This is an investment market that our teams are familiar with,
targeting European mid-market companies with an enterprise value lower
than that of Europe Fund VII. Fundraising for this strategy, which
charges fees on committed capital, is underway with EUR0.6bn of third
party money raised since 31 March 2019. This is in line with our
original target and lets us now aim for the EUR1bn maximum fund size.
Dividend increased and ongoing capital management
The performance of our fund management business has allowed the Board to
recommend a final dividend of 35.0p per share (2018: 21.0p) equating to
a total for the year of 45.0p per share (2018: 30.0p), an increase of
50%. At 89% of the post-tax profits of the Fund Management Company,
using the Group's effective tax rate, the dividend is, for the first
time since the introduction of our updated policy in 2017, fully covered
by our asset management earnings. It is also covered 2.1 times by total
adjusted earnings.
The Board re-confirms its progressive dividend policy, and to pay out
between 80% and 100% of the post-tax earnings of the Fund Management
Company as dividends. The Board has made a refinement to the policy to
the benefit of shareholders by applying the Group's effective tax rate
charge rather than the UK statutory tax rate to pre-tax profits. This
has the benefit of increasing the potential distribution in any given
year. We continue to make the dividend reinvestment plan available.
We continuously manage our sources of balance sheet financing to ensure
we have access to sufficient cash and diversified debt facilities. The
retained earnings and available debt facilities continue to be
sufficient to finance the growth and regulatory capital requirements of
the Group. The weighted average life of drawn debt at 31 March 2019 was
4.2 years.
Board changes
As previously announced, our long standing CFOO, Philip Keller, has
decided to retire from executive life. Philip's successor Vijay Bharadia
joined on 20 May 2019 from Blackstone, where he has spent the last
decade as International CFO. Philip will stand down from the Board at
the AGM and will transition his responsibilities to Vijay.
Philip joined the Group as CFO in 2006 and has latterly been CFOO.
During his tenure, the business has transformed itself resulting in
significant change which Philip has helped oversee. The Board is
grateful for his commitment to ICG's growth and development and, as he
pursues the next stage of his life outside the commercial world, we wish
him the very best for the future.
We anticipate that this will also be Kevin Parry's last year as Chairman
having been on the Board of ICG since 2009. Kevin has therefore served
on the Board for longer than the nine year limit for Chairs specified in
the updated Corporate Governance Code. The Nominations Committee, led by
the Senior Independent Director, is actively engaged in selecting his
successor who will be announced in due course.
Positive outlook
Our long established global business model, with a diversified portfolio
of fund strategies, continues to capitalise on the increasing
allocations of institutional investors to alternative asset classes. Our
focus on closed end funds, with locked in client commitments, enables us
to manage our portfolios through economic cycles, enhancing our
outstanding track record.
We remain focused on steadily building out our existing fund strategies,
while at the same time continuing to innovate to increase
diversification by asset class and geography. We will continue to use
our balance sheet capital solely to enable and accelerate the growth of
our specialist asset management strategies.
We have completed the structural steps necessary to rearrange our
affairs for Brexit and are continuing to monitor political developments.
Our strong fund raising, capital deployment and portfolio performance,
have allowed us to invest in our business, while at the same time
increasing the fund management operating profit margin significantly
ahead of our target of above 43%. The Board have initiated a review of
this target, with an expectation that it will be increased, reinforcing
our positive outlook for the business. The outcome of this review will
be announced with the half year results in November.
(1) These are non IFRS GAAP alternative performance measures. Please see
the glossary on page 36 for further information.
Finance and operating review
The financial information prepared for, and reviewed by, management and
the Board is on a non IFRS basis. These are alternative performance
measures as defined in the glossary on page 36. The IFRS financial
statements are on pages 21 to 34.
Under IFRS the Group is deemed to control funds where it can make
significant decisions that can substantially affect the variable returns
of investors. There are 16 credit funds and CLOs required to be
consolidated under this definition of control. This has the impact of
including all of the assets and liabilities of these funds in the
consolidated statement of financial position and recognises all the
related interest income and gains or losses on investments in the
consolidated income statement. However, the legal and economic structure
of these funds means that shareholders are only at risk for the Group's
investment into these funds.
The Board believes that presenting the financial information in this
review on a non IFRS GAAP basis, and therefore excluding the impact of
the consolidated credit funds and CLOs, assists shareholders in
assessing their investment and the delivery of the Group's strategy
through its financial performance. This is consistent with the approach
taken by management, the Board and other stakeholders.
The Group's profit after tax on an IFRS basis was below the prior year
at GBP184.5m (2018: GBP250.8m). On an internally reported basis it was
above the prior year at GBP269.3m (2018: GBP224.0m). The reconciliation
is below:
2019 2018
---------------------------------------------------------- ----------------------------------------------------------
IFRS IFRS
Income Adjusted as internally reported Adjustments as reported Adjusted as internally reported Adjustments as reported
Statement GBPm GBPm GBPm GBPm GBPm GBPm
--------------- ------------------------------- ----------- ------------ ------------------------------- ----------- ------------
Revenue
--------------- ------------------------------- ----------- ------------ ------------------------------- ----------- ------------
Fee and other
operating
revenue 219.8 (7.2) 212.6 167.1 (9.9) 157.2
--------------- ------------------------------- ----------- ------------ ------------------------------- ----------- ------------
Finance and
dividend
income 34.4 (8.8) 25.6 25.2 (25.2) -
--------------- ------------------------------- ----------- ------------ ------------------------------- ----------- ------------
Net investment
returns /gains
on
investments 275.1 (49.2) 225.9 240.1 79.7 319.8
--------------- ------------------------------- ----------- ------------ ------------------------------- ----------- ------------
Total revenue 529.3 (65.2) 464.1 432.4 44.6 477.0
--------------- ------------------------------- ----------- ------------ ------------------------------- ----------- ------------
Finance costs (36.7) (17.2) (53.9) (63.1) 0.9 (62.2)
--------------- ------------------------------- ----------- ------------ ------------------------------- ----------- ------------
Administrative
expenses (214.3) (13.6) (227.9) (201.0) (15.0) (216.0)
--------------- ------------------------------- ----------- ------------ ------------------------------- ----------- ------------
Other - 0.6 0.6 - 0.3 0.3
--------------- ------------------------------- ----------- ------------ ------------------------------- ----------- ------------
Profit before
tax 278.3 (95.4) 182.9 168.3 30.8 199.1
--------------- ------------------------------- ----------- ------------ ------------------------------- ----------- ------------
Tax (9.0) 10.6 1.6 55.7 (4.0) 51.7
--------------- ------------------------------- ----------- ------------ ------------------------------- ----------- ------------
Profit after
tax 269.3 (84.8) 184.5 224.0 26.8 250.8
--------------- ------------------------------- ----------- ------------ ------------------------------- ----------- ------------
The difference between internal and IFRS numbers is primarily in the
valuation of the CLO loan notes within the Investment Company. The
adoption of IFRS 9 prompted the Group to reconsider the valuation
technique used to determine the valuation of the CLO loan notes in the
IFRS numbers. The IFRS valuation of CLO loan notes has been aligned with
the valuation technique used for the internally reported numbers
resulting in a one-off reduction to the IFRS reported profit after tax
numbers of GBP83.9m. We do not anticipate significant variations in
profit after tax between the internally and IFRS reported numbers going
forward.
There has been no change in approach to, or impact on, the internally
reported numbers.
The Group has adopted IFRS 15 'Revenue from Contracts with Customers'
and IFRS 9 'Financial Instruments' with effect from 1 April 2018. The
impact of adopting these accounting standards is detailed in note 1 to
the financial statements. As previously announced, we have aligned the
presentation of our Investment Company income with that of our third
party clients and are now reporting income at a Net Investment Returns
level.
Non GAAP measures are denoted by (1) throughout this review. The
definition, and where appropriate, reconciliation to a GAAP measure, is
included in the glossary on page 36.
Overview
The Group's internally reported profit before tax(1) for the period was
65% higher at GBP278.3m (2018: GBP168.3m), with Fund Management Company
(FMC) profit of GBP143.8m (2018: GBP95.3m) and Investment Company (IC)
profit of GBP134.5m (2018: GBP73.0m).
Our principal profit metric is FMC profit which has benefited from the
increase in assets under management, increased fee income and a slower
increase in operating costs. IC profits benefit from higher net
investment returns reflecting the performance of our portfolios and
include the impact of the fair value credit on hedging derivatives of
GBP17.2m (2018: GBP6.5m charge). We use derivatives to match the
currency exposure of our Investment Company assets and related
liabilities; the fair value movement reflects the average unhedged net
asset position in the period.
31 March 2019 31 March 2018 Change
Income Statement - adjusted GBPm GBPm %
---------------------------- ------------- ------------- ------
Fund Management Company 143.8 95.3 51%
---------------------------- ------------- ------------- ------
Investment Company 134.5 73.0 84%
---------------------------- ------------- ------------- ------
Profit before tax 278.3 168.3 65%
---------------------------- ------------- ------------- ------
Tax (9.0) 55.7 n/a
---------------------------- ------------- ------------- ------
Profit after tax 269.3 224.0 20%
---------------------------- ------------- ------------- ------
The effective tax rate is lower than the standard corporation tax rate
of 19%, as detailed on page 34. This is due to a significant proportion
of the Investment Company's assets being invested directly into funds
based outside the United Kingdom. Investment returns from these funds
are paid to the Group in the form of non-taxable dividend income. This
outcome is in line with other UK investment companies. The Investment
Company's taxable costs offset the taxable profits of our UK Fund
Management business, reducing the overall Group charge.
Based on the internally reported profit above, the Group generated an
ROE(1) of 20.0% (2018: 19.1%) and adjusted earnings per share(1) for the
period of 94.9p (2018: 79.3p).
Net current assets(1) of GBP328.1m are up from GBP228.1m at 31 March
2018, with financial liabilities maturing within one year reducing by
GBP183.7m.
Fund Management Company
Assets under management
A key measure of the success of our strategy to generate value from our
fund management business is our ability to grow assets under management.
New AUM (inflows) is our best lead indicator to sustainable future fee
streams and therefore increasing sustainable profits. In the year to 31
March 2019, the net impact of fundraising and realisations increased
third party AUM(1) by 30% to EUR34.5bn. AUM by strategic asset class is
detailed below.
Third party
AUM by Capital Market Total
strategic Corporate Investments Investments Real Asset Investments Secondary Investments Third Party AUM
asset class EURm EURm EURm EURm EURm
------------- --------------------- -------------- ---------------------- --------------------- -----------------
At 1 April
2018 13,873 7,683 3,509 1,469 26,534
------------- --------------------- -------------- ---------------------- --------------------- -----------------
Additions 4,705 3,689 741 897 10,032
------------- --------------------- -------------- ---------------------- --------------------- -----------------
Realisations (1,722) (230) (742) (301) (2,995)
------------- --------------------- -------------- ---------------------- --------------------- -----------------
FX and other 288 363 73 166 890
------------- --------------------- -------------- ---------------------- --------------------- -----------------
At 31 March
2019 17,144 11,505 3,581 2,231 34,461
------------- --------------------- -------------- ---------------------- --------------------- -----------------
Change % 24% 50% 2% 52% 30%
------------- --------------------- -------------- ---------------------- --------------------- -----------------
Corporate Investments
Corporate Investments third party funds under management increased 24%
to EUR17.1bn in the year as new AUM of EUR4.7bn, including EUR4.0bn for
Europe Fund VII, outstripped the realisations from our older funds.
Capital Market Investments
Capital Market Investments third party funds under management increased
50% to EUR11.5bn, with new third party AUM of EUR3.7bn raised in the
year. During the year we raised four CLOs, two in Europe and two in the
US, raising a total EUR1.5bn, including EUR43m committed from the
balance sheet to meet regulatory requirements. The remaining EUR2.2bn
was raised across our other liquid credit funds and multi-asset mandates,
a substantial increase on the EUR1.1bn raised in the prior year.
Real Asset Investments
Real Asset Investments third party funds under management increased 2%
to EUR3.6bn, with new AUM of EUR0.7bn (GBP0.7bn) raised in the year,
primarily for ICG Longbow Fund V, our UK real estate partnership capital
strategy, and our UK real estate development strategy. Fundraising has
slowed in the second half of the financial year as we recognise clients'
caution to committing to UK real estate strategies while Brexit
uncertainties persist.
Secondary Investments
Secondaries third party funds under management increased 52% to EUR2.2bn,
with new AUM of EUR0.9bn raised in the year for our Strategic Equity
strategy, including EUR0.7bn ($0.8bn) for Strategic Equity Fund III and
EUR0.2bn of segregated mandates.
Fee earning AUM
The investment rate for our Senior Debt Partners strategy, Real Estate
funds and 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 strategies was EUR6.0bn in the year compared to EUR4.9bn in
the last financial year. The direct investment funds are investing as
follows, based on third party funds raised at 31 March 2019:
Strategic % invested at % invested at Assets in fund at Deals completed
asset class Fund 31 March 2019 31 March 2018 31 March 2019 in year
------------ ------------ -------------- -------------- ----------------- ---------------
Corporate ICG Europe
Investments Fund VII 38% - 6 6
North
American
Private
Corporate Debt Fund
Investments I 100% 85% 23 5
North
American
Private
Corporate Debt Fund
Investments II 22% - 5 5
Senior Debt
Corporate Partners
Investments III 43% 16% 20 16
Corporate Asia Pacific
Investments Fund III 93% 77% 8 2
ICG Longbow
Real Asset Real Estate
Investments Fund V 43% - 8 8
Strategic
Secondary Secondaries
Investments II 82% 54% 11 4
------------ ------------ -------------- -------------- ----------------- ---------------
Fee earning AUM has increased 41% to EUR29.6bn since 1 April 2018
primarily due to the immediate impact of Europe Fund VII which charges
fees on committed capital. All strategic asset classes have seen an
increase in fee earning AUM, although the growth in Real Asset
Investments was slower as it has yet to benefit from the launch of two
new strategies in the year which will broaden our offering from its
current UK real estate lending focus. New investments made in our direct
investment funds are partially offset by realisations as detailed below:
Third party Capital Market Real Asset Total
fee earning Corporate Investments Investments Investments Secondary Investments Third Party Fee Earning AUM
AUM bridge EURm EURm EURm EURm EURm
------------- --------------------- -------------- ------------ --------------------- -----------------------------
At 1 April
2018 9,227 7,682 2,766 1,297 20,972
------------- --------------------- -------------- ------------ --------------------- -----------------------------
Additions 6,448 3,401 594 897 11,340
------------- --------------------- -------------- ------------ --------------------- -----------------------------
Realisations (2,363) (390) (517) (297) (3,567)
------------- --------------------- -------------- ------------ --------------------- -----------------------------
FX and other 233 430 48 170 881
------------- --------------------- -------------- ------------ --------------------- -----------------------------
At 31 March
2019 13,545 11,123 2,891 2,067 29,626
------------- --------------------- -------------- ------------ --------------------- -----------------------------
Change % 47% 45% 5% 59% 41%
------------- --------------------- -------------- ------------ --------------------- -----------------------------
Fee income
Third party fee income(1) of GBP219.8m was 32% higher than the prior
year due to the successful fundraising of Europe Fund VII which charges
fees on committed capital; and investments made by other funds that
charge fees on invested capital. Details of movements are shown below:
31 March 2019 31 March 2018 Change
Fee income GBPm GBPm %
--------------------------- ------------- ------------- ------
Corporate Investments 131.1 93.0 41%
--------------------------- ------------- ------------- ------
Capital Market Investments 42.8 34.9 23%
--------------------------- ------------- ------------- ------
Real Asset Investments 22.4 18.5 21%
--------------------------- ------------- ------------- ------
Secondary Investments 23.5 20.7 14%
--------------------------- ------------- ------------- ------
Total third party funds 219.8 167.1 32%
--------------------------- ------------- ------------- ------
IC management fee 20.5 17.8 15%
--------------------------- ------------- ------------- ------
Total 240.3 184.9 30%
--------------------------- ------------- ------------- ------
Third party fees include GBP21.9m of performance fees (2018: GBP23.1m),
of which GBP16.4m (2018: GBP17.2m) related to Corporate Investments and
GBP5.3m (2018: GBP4.3m) to our Strategic Equity fund strategy.
Performance fees are an integral recurring part of the fee income
profile and profitability stream of the Group.
Third party fees are 82.5% denominated in Euros or US dollars. The
Group's policy is to hedge non Sterling fee income to the extent that it
is not matched by costs and is predictable. Total fee income included a
GBP2.0m (2018: GBP8.6m) FX benefit in the year.
The weighted average fee rate(1), excluding performance fees, across our
fee earning AUM is 0.86% (2018: 0.86%).
31 March 2019 31 March 2018
Weighted average fee rates GBPm GBPm
--------------------------- ------------- -------------
Corporate Investments 1.05% 1.00%
--------------------------- ------------- -------------
Capital Market Investments 0.52% 0.55%
--------------------------- ------------- -------------
Real Asset Investments 0.88% 0.89%
--------------------------- ------------- -------------
Secondary Investments 1.29% 1.40%
--------------------------- ------------- -------------
Total third party funds 0.86% 0.86%
--------------------------- ------------- -------------
Other income
In addition to fees, the FMC recorded dividend receipts(1) of GBP34.4m
(2018: GBP25.2m) from the increased number and improved performance of
CLOs.
Operating expenses
Operating expenses of the FMC were GBP130.9m (2018: GBP114.8m),
including salaries and incentive scheme costs.
Salaries were GBP47.3m (2018: GBP42.1m) as average headcount increased
12% from 252 to 282, with continued investment across our platform.
Incentive scheme costs were GBP44.5m (2018: GBP40.8m). Other
administrative costs have increased to GBP39.1m (2018: GBP31.9m)
including GBP3.8m of one off legal costs incurred to extend the life and
related fee streams of older European CLOs.
The FMC operating margin(1) was 52.3% up from 45.4% in the prior year,
as a result of average fee earning AUM increasing 38% to EUR26.3bn for
the year thereby increasing the operating leverage of our existing
strategies.
Investment Company
Balance sheet investments
The balance sheet investment portfolio(1) increased 19% in the year to
GBP2,255.7m at 31 March 2019, representing 7.1% (2018: 7.5%) of total
assets under management, as illustrated in the investment portfolio
bridge below.
GBPm
--------------------------------- -------
At 1 April 2018 1,898.5
------------------------------------ -------
New investments 620.1
------------------------------------ -------
Net transfer from current assets 150.5
------------------------------------ -------
Realisations (668.2)
------------------------------------ -------
Net investment returns 252.7
------------------------------------ -------
Cash interest received (17.6)
------------------------------------ -------
FX and other 19.7
------------------------------------ -------
At 31 March 2019 2,255.7
------------------------------------ -------
Realisations comprise the return of GBP436.6m of principal and the
crystallisation of GBP231.6m of net investment returns.
In the period GBP383.1m was invested alongside our Corporate Investments
strategies for new and follow on investments. Of the remaining GBP237.0m,
GBP105.9m was invested in new and reset CLOs in accordance with
regulatory requirements, GBP84.4m in our Real Asset Investment
strategies and GBP46.7m in our Strategic Equity strategy.
The Sterling value of the portfolio increased by GBP24.8m due to FX
movements. The portfolio is 39% Euro denominated, 35% US dollar
denominated and 17% Sterling denominated.
The balance sheet investment portfolio is weighted towards the higher
returning asset classes as detailed below:
As at As at
Return 31 March 2019 % of 31 March 2018
profile GBPm total GBPm % of total
------------ --------- -------------- --------- -------------- ----------
Corporate
Investments 15-20% 1,343 59% 1,257 66%
------------ --------- -------------- --------- -------------- ----------
Capital
Market
Investments 5-10% 556 25% 370 19%
------------ --------- -------------- --------- -------------- ----------
Real Asset
Investments c10% 183 8% 111 6%
------------ --------- -------------- --------- -------------- ----------
Secondary
Investments 15-20% 174 8% 161 9%
------------ --------- -------------- --------- -------------- ----------
Total
balance
sheet
portfolio 2,256 100% 1,899 100%
------------ --------- -------------- --------- -------------- ----------
In addition, GBP110.7m (2018: GBP107.2m) of current assets are held on
the balance sheet prior to being transferred to third party investors or
funds. The flexibility of our balance sheet enables our investment teams
to continue to source attractive deals whilst a fund is being raised and
to hold deals in excess of capacity prior to syndication to third party
investors. At 31 March 2019, 38% of these assets were in respect of our
new real estate investment strategies where we are using the balance
sheet to demonstrate proof of concept and in respect of our European
Fund where a proportion of large transactions are being held for
syndication to third party investors.
Net investment returns
Net investment returns(1) of GBP275.1m (2018: GBP240.1m) represent the
total return generated from the balance sheet portfolio in the year. The
returns are closely correlated with the performance of our funds
reflecting our financial commitments to those funds.
At 12.6% of the average balance sheet portfolio, net investment returns
were in line with the prior year. Net investment returns arising on
Corporate Investments contributed 73% (2018: 83%) of the total
reflecting the ongoing performance of the underlying portfolios and
assets in which the balance sheet is invested.
Interest expense
Interest expense(1) of GBP53.9m was GBP2.7m lower than the prior year
(2018: GBP56.6m), following the maturity of private placement debt in
the prior year.
Operating expenses
Operating expenses(1) of the IC amounted to GBP83.4m (2018: GBP86.2m),
of which incentive scheme costs of GBP66.4m (2018: GBP64.0m) were the
largest component. The GBP2.4m increase is due to higher bonuses payable
as a direct result of realisations. Other staff and administrative costs
were GBP17.0m compared to GBP22.2m last year, a GBP5.2m decrease
primarily due to lower business development costs.
Group cash flow and debt
The balance sheet remains healthy, with GBP572.7m of available cash and
debt facilities at 31 March 2019, excluding the consolidated structured
entities. During the year, the Group issued new US private placement
debt, to refinance upcoming debt maturities and extend the overall debt
maturity profile. The US private placement debt has an average coupon of
4.66% and an average maturity of seven years. The movement in the
Group's unutilised cash and debt facilities during the year is detailed
as follows:
GBPm
------------------------------------------ -------
Headroom at 31 March 2018 729.7
--------------------------------------------- -------
Increase in bank facilities 67.9
--------------------------------------------- -------
Private placement notes issued 172.6
--------------------------------------------- -------
Bonds and Private placement notes matured (180.8)
--------------------------------------------- -------
Movement in cash (85.0)
--------------------------------------------- -------
Movement in drawn debt (163.2)
--------------------------------------------- -------
FX 31.5
--------------------------------------------- -------
Headroom at 31 March 2019 572.7
--------------------------------------------- -------
Total drawn debt at 31 March 2019 was GBP1,184m compared to GBP1,021m at
31 March 2018, with unencumbered cash of GBP163m compared to GBP248m at
31 March 2018.
Capital position
Shareholders' funds increased by GBP65.8m to GBP1,383.4m (31 March 2018:
GBP1,317.6m), as the retained profits in the period were offset by the
payment of the ordinary dividend. Total debt to shareholders' funds
(gearing) as at 31 March 2019 increased to 0.86x from 0.77x at 31 March
2018.
Principal risks and uncertainties
Our Risk Management Framework is designed to enable us to deliver our
strategic priorities within the Group's risk appetite.
The Board monitors the Group's risk management and internal control
systems. The Board, taking into account the strategy of the Group, sets
the risk appetite, determines the nature and extent of significant risks
it is willing to take and ensures judgements and decisions are taken
that promote the success of the company and manage conflicts of interest
while avoiding, among other things, unnecessary risks and maintaining
adequate capital and liquidity.
The Risk Committee makes recommendations to the Board regarding its risk
responsibilities. The Group's risk management culture is critical to the
effectiveness of the risk management framework. The Group's culture is
monitored by the Board.
Identifying principal and emerging risks
The principal risks are determined through a consideration of the
strategy, external risk factors, the operating environment of the Group
including risks identified by our peers, and an analysis of individual
processes and procedures. The principal risks to the Group are updated
at least annually.
The review of the Group's principal risks focuses on identifying those
risks that could threaten the business model, future performance,
capital or liquidity of the business. In identifying these risks,
consideration is given to external developments, regulatory expectations
and market standards.
Financial Reporting risk was added as a principal risk of the Group
during the year, disaggregating this risk from the existing Key Business
Process principal risk.
Emerging risks are regularly considered to assess any potential impact
on the Group and to determine whether any actions are required. Emerging
risks include those related to regulatory/legislative change and
macroeconomic and political change, which in the current year have
included the ongoing developments in respect of the UK's decision to
leave the European Union.
Executive responsibility for each principal risk is reviewed and agreed.
The Risk Committee (under delegation from the Board) considers the
appetite for risk across the business and establishes the level of
acceptable risk (risk tolerance) for each of the principal risks. Key
risk indicators are identified and these are monitored by the Risk
Committee which also considers any risk mitigation plans proposed or
implemented by management.
The Directors confirm that they have undertaken a robust assessment of
principal risks in line with the requirements of the UK Corporate
Governance Code.
Our risk framework
The Group's risk management framework operates to identify, measure,
report and control risks in each area of the business. The Group has
established oversight arrangements to ensure risk management
responsibilities are embedded in the business' first line operations.
The Chief Risk Officer (CRO) oversees the operation of the risk
management framework. In addition, the Operational Risk Committee (ORC),
the Group's Investment Committees, Commercial and Operational steering
committees and Treasury Committee meetings provide additional oversight
of specific risks related to the activities of the Group.
Monitoring the effectiveness of controls
The Risk Committee, on behalf of the Board, is provided with a number of
risk reports which it uses to review the Group's risk management
arrangements and works closely with the Audit Committee to review the
system of internal controls. As part of their review the Committees
consider whether the processes in place are sufficient to identify all
material controls. The information provided enables the Board to make a
cumulative assessment of the effectiveness of the internal controls
established to manage or mitigate risks.
Material controls have been defined as those critical to the management
of the principal risks of the business. Management's continuous
monitoring of the effectiveness of material controls ensures the
principal risks are managed within tolerance and supports the delivery
of our strategic objectives. Additional reporting on the effectiveness
of material controls is provided to the Audit Committee on an annual
basis to support the review of the effectiveness of controls in managing
the principal risks.
The Board, on recommendation from the Risk and Audit Committees and
taking into account the work of Internal Audit overseen by the Audit
Committee, confirms that the material controls operated effectively
throughout the year.
Relative willingness to accept risk
The Board acknowledges and recognises that in the normal course of
business the Group is exposed to risk and that it is willing to accept a
level of risk in managing the business to achieve its strategic
objectives. As part of its risk management framework, the Board sets the
risk tolerance in relation to each principal risk, monitors this via key
agreed risk indicators. Where a risk is approaching or is outside the
tolerance set, the Board will consider the appropriateness of actions
being taken to mitigate or manage the risk.
PRINCIPAL RISK IMPACT KEY RISK INDICATOR KEY CONTROLS AND MITIGATION MOVEMENT IN THE YEAR FOCUS FOR FY19
-------------------------------------------------------------- -------------------------------------------------------------- --------------------------------------------------------------------- -------------------------------------------------------------------- ------------------------------------------------------------- --------------------------------------------------------
STRATEGIC AND BUSINESS RISKS
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Adverse macroeconomic conditions could reduce the Deterioration of Group performance compared to plan. The Board regularly receives detailed market reports, During the year this risk has increased due to the Continued monitoring of Brexit to ensure that risk
1. Loss or missed opportunity as a result of major opportunity to deploy capital and impair the ability Deterioration in outlook for investment valuations. reviewing the latest developments in the Group's key ongoing uncertainty over Brexit and continued market mitigation plans remain effective.
external change (including macroeconomic, political of the Group to effectively manage its portfolios, markets. The Investment Committees receive ongoing volatility.
and/or competitive impact) reducing the value of future management fees, investment detailed and specific market reviews for each investment,
income and performance fees. including valuations and impairments.
Adverse macroeconomic conditions could also reduce The Board receives regular updates on external political/economic
demand from clients for the Group's funds or create developments. The business model is based on long
more opportunities for certain asset classes managed term investment in illiquid funds, therefore fee streams
by the Group. are 'locked in'. This provides some mitigation against
market downturn.
-------------------------------------------------------------- -------------------------------------------------------------- --------------------------------------------------------------------- -------------------------------------------------------------------- ------------------------------------------------------------- --------------------------------------------------------
Failure to maintain acceptable relative performance Performance of closed end funds compared to performance The Group has disciplined investment policies, and There have been no material changes in the Group's Maintaining a robust investment process and investment
1. Failure to maintain acceptable relative investment in the funds may result in a failure to raise new hurdles. all investments are selected and regularly monitored investment markets during the year which would lead discipline.
performance funds, reducing the Group's long term income and ability Performance of capital market strategies compared by the Group's Investment Committees. Rigorous credit the Board to consider that this risk has changed.
to invest in future growth. Clients in open ended to benchmark. research and procedures are applied both before Investment performance remains positive across all
funds may reduce or cancel their commitments, reducing Performance of CLOs including the ability to pay dividends and during the period of investment. The Group limits key asset classes.
AUM and fund management fees. to equity holders. the extent of credit and market risk by diversifying
In the short term, fund underperformance may result Deterioration in outlook for its portfolio assets by sector,
in lower performance fees in the FMC. For the IC this investment valuations. size and geography.
may result in a lower return on assets as the IC is Oversight and routine contact with the major portfolio
exposed to credit risk through its investments supports the delivery of both capital
co-investments with, and its investments in, funds. preservation and anticipated returns. ICG's investments
via its balance sheet are also regularly monitored.
-------------------------------------------------------------- -------------------------------------------------------------- --------------------------------------------------------------------- -------------------------------------------------------------------- ------------------------------------------------------------- --------------------------------------------------------
A failure to raise new funds would reduce the Group's Forecast fund inflows The Group has built dedicated fundraising and scalable During the year the Group has seen positive momentum Maintaining discipline on fees and terms.
1. Failure to raise new third party funds long term income and ability to launch new strategies. infrastructure teams to grow and diversify its institutional and delivered above its target for raising third party Continuing to grow existing and new strategies.
A failure to retain funds would reduce the Group's client base by geography and type. funds, including open ended funds. Monitoring investor sentiment in open ended funds.
management fee income. The Group has expanded its product portfolio to address Investor sentiment remains supportive of the Group.
a range of client requirements and continues to build
a strong product pipeline.
The Group monitors client sentiment in open ended
funds through regular engagement with clients.
-------------------------------------------------------------- -------------------------------------------------------------- --------------------------------------------------------------------- -------------------------------------------------------------------- ------------------------------------------------------------- --------------------------------------------------------
Failure to deploy capital reduces the value of future The proportion of direct investment funds behind their The rate of investment is kept under review by the In a highly competitive environment, capital deployment Maintaining investment discipline and local presence.
1. Failure to deploy committed capital in a timely management fees, investment income and performance target investment pace. Investment Committees and senior management to ensure for the larger strategies remains ahead of plan. Closely monitoring external market developments
manner fees. There is also a negative impact on investment acceptable levels are maintained in current market and opportunities.
performance and the ability to raise new funds. conditions.
-------------------------------------------------------------- -------------------------------------------------------------- --------------------------------------------------------------------- -------------------------------------------------------------------- ------------------------------------------------------------- --------------------------------------------------------
MARKET, CREDIT AND LIQUIDITY RISKS
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
1. Loss as a result of adverse market fluctuations Volatility in currency and interest rates leads to Within Treasury Policy hedging thresholds and no material The Group has a policy which seeks to ensure that During the year the Group has applied its hedging Market volatility as a result of political/economic
arising primarily from exposure to interest rates and changes in the value of the assets and liabilities breach of interest rate covenant. any non-Sterling income, expenditure, assets and liabilities policy consistently. uncertainties.
foreign exchange rates of the Group and, to the extent that these are unhedged, are appropriately hedged and that the residual exposure Enhancement of Treasury systems and controls.
will impact on the financial performance of the Group. to market risk is managed to minimise short term volatility
Volatility in currency and interest rates may impact in the financial results of the Group. This is reviewed
on fund performance which may result in a failure annually. Currency and interest rate exposures are
to raise new funds, reducing the Group's long term reported monthly and reviewed by the Group's Treasury
income and ability to invest in future growth. Committee.
Portfolio credit risk is included in Principal Risk
2 above.
-------------------------------------------------------------- -------------------------------------------------------------- --------------------------------------------------------------------- -------------------------------------------------------------------- ------------------------------------------------------------- --------------------------------------------------------
1. Loss as a result of exposure to a failed counterparty The Group uses derivatives to hedge market risk on Counterparty exposure above the Treasury Policy limits. The Group has a policy which seeks to ensure that During the year the Group has applied its policy to Ongoing monitoring of counterparty exposures.
its balance sheet. By entering into these derivatives any counterparty exposures are managed within levels manage counterparty credit risk consistently. Enhancement of Treasury systems and controls.
the Group is exposed to counterparty credit risk. agreed with the Board. This is reviewed annually.
The Group's counterparties are national or multinational Actual counterparty exposures are reported monthly
banks. Should a financial counterparty of the Group and reviewed by the Group's Treasury Committee.
fail, the Group would be exposed to loss.
-------------------------------------------------------------- -------------------------------------------------------------- --------------------------------------------------------------------- -------------------------------------------------------------------- ------------------------------------------------------------- --------------------------------------------------------
An ongoing failure to refinance its liabilities could Forecast breach of financing principles. The Group has a policy which seeks to ensure that During the year the Group has increased its financial Continued focus on balance sheet efficiency.
1. Failure to meet the Group's financial obligations as result in the Group failing to meet its payment obligations debt funding is obtained from diversified sources resources by raising additional capital, further extending Regulatory capital requirements.
they fall due as they fall due. and that the repayment profile is managed to minimise the debt repayment profile.
As a result the Group would not be a going concern. material repayment events. The profile of the debt
facilities available to the Group is reviewed frequently
by the Treasury Committee.
-------------------------------------------------------------- -------------------------------------------------------------- --------------------------------------------------------------------- -------------------------------------------------------------------- ------------------------------------------------------------- --------------------------------------------------------
OPERATIONAL RISKS
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Breach of any 'Key Person' clause could result in Loss of a key Person on a material fund. The Group rewards its investment professionals and There was no significant impact Managing the impact of Brexit on our workforce.
1. Loss of a 'Key Person' and inability to the Group having to stop making investments for the Loss of a key employee without appropriate/timely other key employees in line with market practice. in the year as a result of the loss of Ensuring a smooth transition to the new CFOO.
retain/recruit into key roles relevant fund or may impair the ability of the Group internal succession. Senior investment professionals typically receive any employee. Continued focus on succession planning and managing
to raise new funds if not resolved in a timely manner. Employee engagement survey feedback. Recruitment and long term incentives and are able to participate in During the year the Group has successfully managed 'Key Person' fund clause requirements.
Loss of a key employee to the Group's fund management retention rates. carried interest. The Group periodically engages external succession following the planned retirement of two
business or a critical infrastructure role could impair consultants to benchmark the rewards offered by the senior portfolio managers.
the Group's ability to deliver its strategic objectives Group to ensure they remain attractive and competitive.
as planned if that role is not filled in a timely The feedback from the employee engagement survey is
manner. also considered. The Group has succession plans in
place for key employees. These are reviewed by the
Nominations and Governance Committee of the Board.
The Group has an appraisal and development process
for all its employees to ensure that individuals remain
sufficiently motivated and appropriately competent
to ensure the ongoing operation and development of
the business.
-------------------------------------------------------------- -------------------------------------------------------------- --------------------------------------------------------------------- -------------------------------------------------------------------- ------------------------------------------------------------- --------------------------------------------------------
The Group's reputation, ability to raise new funds Number and significance of any regulatory or legislative The Group has a governance structure in place, supported During the year the Group has continued to enhance Continued monitoring of Brexit to ensure that risk
1. Negative financial or reputational impact arising and operate breaches. by a risk framework that allows for the identification, its processes and controls in order to remain compliant mitigation plans remain effective. Implementation
from regulatory or legislative failing its fund management business would be impaired as Identification and delivery of all material regulatory/legislative control and mitigation of material regulatory/legislative with current and expected legislation. of SMCR.
a result of a material regulatory or legislative failing. change. risks resulting from the geographical and product Preparation for the implementation of the Senior Manager
Adverse regulatory change could impact the ability diversity of the Group. The adequacy of the systems and Certification Regime (SMCR) in December 2019 is
of the Group to deliver its strategy in areas such and controls the Group has in place to comply with progressing.
as people risk, deploying capital, raising new AUM. the regulations and to mitigate the risks that these
represent is periodically assessed. This includes
a tailored compliance monitoring programme that specifically
addresses regulatory and reputational risks Horizon
scanning for relevant regulatory/legislative change
is a key part of the Legal and Compliance process
and external advisers are used to support this.
-------------------------------------------------------------- -------------------------------------------------------------- --------------------------------------------------------------------- -------------------------------------------------------------------- ------------------------------------------------------------- --------------------------------------------------------
The Group's ability to deliver on its strategic objectives Any material breach, attempted breach or severe disruption Application of the Group's information security policies The ongoing evolution of external threats has resulted Cyber security. Continued enhancements to business
1. Technology/ information security inadequate or fails relies on technology and information security which due to systems/data security failure. is supported by a governance structure and a risk in an increase in risk to the Group. In response, continuity planning and disaster recovery processes.
to adapt to changing business requirements and/or adapts to changing business demands and external threats. Any material loss or reputational damage arising from framework that allows for the identification, control the Group has continued to improve its systems and
external threats Failure to deliver an appropriate technology platform external threats. and mitigation of technology risks. The adequacy of controls to identify and manage technology and information
may impact the Group's reputation, and its ability Service availability. the systems and controls the Group has in place to security risks.
to raise new funds and operate its fund management mitigate the technology risks is continuously monitored During the year there continued to be a high level
business. and subject to regular testing. The effectiveness of focus on cyber security and disaster recovery.
of the framework is periodically assessed.
-------------------------------------------------------------- -------------------------------------------------------------- --------------------------------------------------------------------- -------------------------------------------------------------------- ------------------------------------------------------------- --------------------------------------------------------
The Group's ability to raise new funds and operate Any failure of business process resulting in significant Control procedures are in place to ensure that key There were no significant business process failures Enhancing processes to support the growth of the
1. Loss or missed opportunities arising from failure of its fund management business would be impaired as business disruption, financial or reputational damage. business processes are identified, documented and or material control weaknesses identified during the business.
key business processes, including valuations and a result of the failure of key business processes. Increased incidents of processing failures or delays, monitored. The effectiveness and efficiency of the year.
external reporting or over reliance on detective, higher level monitoring control framework for key business processes are subject
or audit validation controls. to periodic review by management, the CRO, and Internal
Audit, and corresponding oversight by the Risk and
Audit Committees of the Board.
-------------------------------------------------------------- -------------------------------------------------------------- --------------------------------------------------------------------- -------------------------------------------------------------------- ------------------------------------------------------------- --------------------------------------------------------
The Group's ability to raise new funds and operate Any failure of oversight processes resulting in significant Control procedures including appropriate due diligence, Monitoring of the third party supplier oversight procedures Ongoing integration of identified enhancements to
1. Loss or missed opportunities arising from a failure its fund management business would be impaired as business disruption, financial or reputational damage. monitoring and oversight are in place to ensure supplier was enhanced during the year. oversight controls.
to adequately select/manage key third party suppliers a result of the failure to select/manage key third management is effectively carried out.
party suppliers.
-------------------------------------------------------------- -------------------------------------------------------------- --------------------------------------------------------------------- -------------------------------------------------------------------- ------------------------------------------------------------- --------------------------------------------------------
Failure to maintain adequate processes and internal Any failure of finance processes resulting in significant Control procedures are in place to ensure that financial There were no significant financial reporting process Ensuring a smooth transition to the new external
1. Loss or reputation damage arising from a failure to controls over financial reporting and related activities business disruption, financial or reputational damage. reporting processes are identified, documented and failures identified during the year. auditors.
ensure financial statements are materially could result in significant losses and/or regulatory monitored. The effectiveness and efficiency of the
accurate/timely and in line with legislative penalties or other claims. control framework for financial reporting is subject
requirements. to periodic review by management, the CRO, and Internal
Audit, and corresponding oversight by the Risk and
Audit Committees of the Board.
-------------------------------------------------------------- -------------------------------------------------------------- --------------------------------------------------------------------- -------------------------------------------------------------------- ------------------------------------------------------------- --------------------------------------------------------
Responsibility statement
The responsibility statement below has been prepared in connection with
the Company's full annual report for the year ending 31 March 2019.
Certain parts thereof are not included within this announcement.
We confirm to the best of our knowledge:
-- the financial statements, prepared in accordance with IFRS as adopted by
the European Union, give a true and fair view of the assets, liabilities,
financial position and profit or loss of the Company and the undertakings
included in the consolidation taken as a whole; and
-- the management report, which is incorporated into the directors' report,
includes a fair review of the development and performance of the business
and the position of the Company and the undertakings included in the
consolidation taken as a whole, together with a description of the
principal risks and uncertainties they face.
This responsibility statement was approved by the Board of Directors on
21 May 2019 and is signed on its behalf by:
Benoit Durteste Philip Keller
CEO CFOO
Consolidated Income Statement
For the year ended 31 March 2019
Year ended Year ended
31 March 2019 31 March 2018
GBPm GBPm
------------------------------------------------------- --------------- ---------------
Fee and other operating income 212.6 157.2
Finance and dividend income 25.6 189.8
Net gains on investments 225.9 253.0
Total revenue 464.1 600.0
--------------------------------------------------------- --------------- ---------------
Finance costs (53.9) (166.4)
Impairments - (18.8)
Administrative expenses (227.9) (216.0)
Share of results of joint ventures accounted for using
equity method 0.6 0.3
Profit before tax 182.9 199.1
--------------------------------------------------------- --------------- ---------------
Tax credit 1.6 51.7
--------------------------------------------------------- --------------- ---------------
Profit for the year 184.5 250.8
--------------------------------------------------------- --------------- ---------------
Attributable to
------------------------------------------------------- --------------- ---------------
Equity holders of the parent 180.1 251.0
Non controlling interests 4.4 (0.2)
--------------------------------------------------------- --------------- ---------------
184.5 250.8
------------------------------------------------------- --------------- ---------------
Earnings per share 63.4p 88.8p
--------------------------------------------------------- --------------- ---------------
Diluted earnings per share 63.4p 88.8p
--------------------------------------------------------- --------------- ---------------
The Group has adopted IFRS 15 and IFRS 9 from 1 April 2018. As permitted
under the transition rules the prior year comparatives have not been
restated in the primary statements. Further information can be found in
note 1.
All activities represent continuing operations.
Consolidated Statement of Comprehensive Income
For the year ended 31 March 2019
Year ended Year ended
31 March 2019 31 March 2018
GBPm GBPm
------------------------------------------------------- -------- --------------- ---------------
Profit for the year 184.5 250.8
Items that may be reclassified subsequently to profit
or loss
Available for sale financial assets:
- Losses arising in the year - (14.6)
- Reclassification adjustment for net gain recycled
to profit - 4.6
- Tax on items taken directly to or transferred from
equity - 3.0
-------------------------------------------------------- ------- --------------- ---------------
- (7.0)
Items that will not be reclassified subsequently to
profit or loss
Exchange differences on translation of foreign
operations 8.8 (19.6)
Tax on items taken directly to or transferred from
equity (1.5) 4.9
-------------------------------------------------------- ------- --------------- ---------------
7.3 (14.7)
Total comprehensive income for the year 191.8 229.1
----------------------------------------------------------------- --------------- ---------------
Consolidated Statement of Financial Position
As at 31 March 2019
31 March 2019 31 March 2018
GBPm GBPm
----------------------------------------------------- ------------- -------------
Non current assets
Intangible assets 15.4 18.0
Property, plant and equipment 12.6 10.5
Investment in joint venture accounted for under the
equity method 1.8 1.7
Financial assets at fair value 5,647.1 5,068.5
Financial assets measured at amortised cost - 171.1
Derivative financial assets 3.1 3.2
Deferred tax asset 12.8 -
----------------------------------------------------- ------------- -------------
5,692.8 5,273.0
----------------------------------------------------- ------------- -------------
Current assets
Trade and other receivables 227.1 312.1
Financial assets at fair value 77.3 107.2
Derivative financial assets 51.6 80.0
Current tax debtor 8.4 13.4
Cash and cash equivalents 354.0 520.7
------------------------------------------------------ ------------- -------------
718.4 1,033.4
----------------------------------------------------- ------------- -------------
Disposal groups held for sale 107.1 -
----------------------------------------------------- ------------- -------------
Total assets 6,518.3 6,306.4
------------------------------------------------------ ------------- -------------
Equity and reserves
Called up share capital 77.2 77.2
Share premium account 179.5 179.4
Other reserves (3.5) 6.2
Retained earnings 1,130.2 1,054.8
------------------------------------------------------ ------------- -------------
Equity attributable to owners of the Company 1,383.4 1,317.6
------------------------------------------------------ ------------- -------------
Non controlling interest 10.9 0.5
------------------------------------------------------ ------------- -------------
Total equity 1,394.3 1,318.1
------------------------------------------------------ ------------- -------------
Non current liabilities
Provisions 0.9 1.2
3,309.1
Financial liabilities at fair value 3,449.0 149.6
Financial liabilities at amortised cost 1,183.5 840.5
Derivative financial liabilities 45.8 76.8
Deferred tax liabilities 0.2 8.9
------------------------------------------------------ ------------- -------------
4,679.4 4,236.5
----------------------------------------------------- ------------- -------------
Current liabilities
Provisions 0.4 0.5
Trade and other payables 350.5 555.3
Other financial liabilities - 183.7
Current tax creditor 2.7 10.8
Derivative financial liabilities 14.1 1.5
------------------------------------------------------ ------------- -------------
367.7 751.8
----------------------------------------------------- ------------- -------------
Liabilities directly associated with disposal groups
held for sale 76.9 -
----------------------------------------------------- ------------- -------------
Total liabilities 5,124.0 4,988.3
------------------------------------------------------ ------------- -------------
Total equity and liabilities 6,518.3 6,306.4
------------------------------------------------------ ------------- -------------
Consolidated Statement of Cash Flows
For the year ended 31 March 2019
Year ended Year ended
31 March 2019 31 March 2018
GBPm GBPm
--------------------------------------------------- -------------- --------------
Operating activities
Interest received 220.8 191.1
Fees received 184.7 139.1
Dividends received 3.3 154.5
Payments to suppliers and employees (174.6) (190.3)
Proceeds from sale of current financial assets and
disposal groups 200.1 276.8
Purchase of current financial assets and disposal
groups (306.9) (368.0)
Proceeds from sale of non current financial assets 2,475.3 3,378.6
Purchase of non current financial assets (2,666.0) (3,914.3)
Recoveries on previously impaired assets - 2.4
Net cash inflow/(outflow) from derivative contracts 55.4 (28.7)
Cash used in operating activities (7.9) (358.8)
Taxes (paid)/received (20.2) 12.5
---------------------------------------------------- -------------- --------------
Net cash used in operating activities (28.1) (346.3)
---------------------------------------------------- -------------- --------------
Investing activities
Purchase of property, plant and equipment (5.2) (4.2)
Change in control of subsidiary 12.9 -
Net cash generated from/(used in) investing
activities 7.7 (4.2)
---------------------------------------------------- -------------- --------------
Financing activities
Dividends paid (88.3) (80.7)
Interest paid (181.4) (188.5)
Increase in long term borrowings 2,338.2 1,578.3
Repayment of long term borrowings (2,152.3) (1,208.9)
Purchase of own shares (49.3) (26.2)
Proceeds on issue of shares - 0.6
---------------------------------------------------- -------------- --------------
Net cash (used in)/generated from financing
activities (133.1) 74.6
---------------------------------------------------- -------------- --------------
Net decrease in cash (153.5) (275.9)
---------------------------------------------------- -------------- --------------
Cash and cash equivalents at beginning of year 520.7 780.9
Effect of foreign exchange rate changes (13.2) 15.7
---------------------------------------------------- -------------- --------------
Net cash and cash equivalents at end of year 354.0 520.7
---------------------------------------------------- -------------- --------------
The Group's cash and cash equivalents includes GBP191.3m (31 March 2018:
GBP273.1m) of restricted cash held principally by structured entities
controlled by the Group.
Consolidated Statement of Changes in Equity
For the year ended 31 March 2019
Capital Available
Share Share redemption Share based for sale Own Retained Total
capital premium reserve payments reserve reserve shares Foreign currency translation reserve earnings Total Non controlling interest equity
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
--------------------------------------------------- -------- -------- ----------- ----------------- --------- ------- ------------------------------------ --------- ------- ------------------------ -------
Balance at 1 April 2018 77.2 179.4 5.0 61.9 5.7 (77.6) 11.2 1,054.8 1,317.6 0.5 1,318.1
--------------------------------------------------- -------- -------- ----------- ----------------- --------- ------- ------------------------------------ --------- ------- ------------------------ -------
Adjustment on initial application of IFRS 9 (note
1) - - - - (5.5) - - 5.5 - - -
Adjustment on initial application of IFRS 15 (note
1) - - - - - - - (5.1) (5.1) - (5.1)
--------------------------------------------------- -------- -------- ----------- ----------------- --------- ------- ------------------------------------ --------- ------- ------------------------ -------
Profit for the year - - - - - - - 180.1 180.1 4.4 184.5
Exchange differences on translation of foreign
operations - - - - - - 8.8 - 8.8 - 8.8
Tax on items taken directly to or transferred from
equity - - - (1.3) (0.2) - - - (1.5) - (1.5)
--------------------------------------------------- -------- -------- ----------- ----------------- --------- ------- ------------------------------------ --------- ------- ------------------------ -------
Total comprehensive (expense)/ income for the year - - - (1.3) (0.2) - 8.8 180.1 187.4 4.4 191.8
--------------------------------------------------- -------- -------- ----------- ----------------- --------- ------- ------------------------------------ --------- ------- ------------------------ -------
Movement in control of subsidiary - - - - - - - (6.0) (6.0) 6.0 -
Own shares acquired in the year - - - - - (49.3) - - (49.3) - (49.3)
Options/awards exercised - 0.1 - (23.3) - 34.1 - (10.8) 0.1 - 0.1
Credit for equity settled share schemes - - - 27.0 - - - - 27.0 - 27.0
Dividends paid - - - - - - - (88.3) (88.3) - (88.3)
--------------------------------------------------- -------- -------- ----------- ----------------- --------- ------- ------------------------------------ --------- ------- ------------------------ -------
Balance at 31 March 2019 77.2 179.5 5.0 64.3 - (92.8) 20.0 1,130.2 1,383.4 10.9 1,394.3
--------------------------------------------------- -------- -------- ----------- ----------------- --------- ------- ------------------------------------ --------- ------- ------------------------ -------
Capital Available
Share Share redemption Share based for sale Own Retained Total
capital premium reserve payments reserve reserve shares Foreign currency translation reserve earnings Total Non controlling interest equity
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
--------------------------------------------------- -------- -------- ----------- ----------------- --------- ------- ------------------------------------ --------- ------- ------------------------ -------
Balance at 1 April 2017 77.1 179.0 5.0 53.8 12.7 (82.2) 30.8 896.4 1,172.6 0.7 1,173.3
--------------------------------------------------- -------- -------- ----------- ----------------- --------- ------- ------------------------------------ --------- ------- ------------------------ -------
Profit for the year - - - - - - - 251.0 251.0 (0.2) 250.8
Available for sale financial assets - - - - (10.0) - - - (10.0) - (10.0)
Exchange differences on translation of foreign
operations - - - - - - (19.6) - (19.6) - (19.6)
Tax on items taken directly to or transferred from
equity - - - 4.9 3.0 - - - 7.9 - 7.9
--------------------------------------------------- -------- -------- ----------- ----------------- --------- ------- ------------------------------------ --------- ------- ------------------------ -------
Total comprehensive income/(expense) for the year - - - 4.9 (7.0) - (19.6) 251.0 229.3 (0.2) 229.1
--------------------------------------------------- -------- -------- ----------- ----------------- --------- ------- ------------------------------------ --------- ------- ------------------------ -------
Own shares acquired in the year - - - - - (26.2) - - (26.2) - (26.2)
Options/awards exercised 0.1 0.4 - (18.9) - 30.8 - (11.9) 0.5 - 0.5
Credit for equity settled share schemes - - - 22.1 - - - - 22.1 - 22.1
Dividends paid - - - - - - - (80.7) (80.7) - (80.7)
Balance at 31 March 2018 77.2 179.4 5.0 61.9 5.7 (77.6) 11.2 1,054.8 1,317.6 0.5 1,318.1
--------------------------------------------------- -------- -------- ----------- ----------------- --------- ------- ------------------------------------ --------- ------- ------------------------ -------
Notes to the Financial Statements
For the year ended 31 March 2019
1. Basis of preparation
The financial information set out in the announcement does not
constitute the Company's statutory accounts for the years ended 31 March
2019 or 2018. The financial information for the years ended 31 March
2019 and 2018 is derived from the statutory accounts for those years.
The statutory accounts for 2018 have been delivered to the Registrar of
Companies and those for 2019 will be delivered to the Registrar of
Companies following the Company's Annual General Meeting. The auditors
reported on those accounts; their report was unqualified, did not draw
attention to any matters by way of emphasis without qualifying their
report and did not contain a statement under s498(2) or (3) Companies
Act 2006.
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 Company expects to publish full
financial statements that comply with IFRSs in June 2019.
Changes in significant accounting policies
During the year the Group has adopted IFRS 15 'Revenue from Contracts
with Customers' and IFRS 9 'Financial Instruments' with effect from 1
April 2018. As permitted under the transition rules, comparative figures
for the year ended 31 March 2018 have not been restated. The impact of
adopting these new accounting standards on the Group's significant
accounting policies are summarised below.
IFRS 15 'Revenue from Contracts with Customers'
We have aligned the Group's revenue recognition policy to IFRS and no
material adjustments have been made on transition.
IFRS 9 'Financial Instruments'
There are no differences in the carrying amounts of financial assets and
financial liabilities resulting from adoption, with the impact being
only to presentation.
As at 31 March 2018 the Group held GBP60.7m of AFS financial assets
measured at fair value on the balance sheet. At 31 March 2018 the
aggregate net gains in the reserve were GBP5.5m. On adoption of IFRS 9
these assets were re-designated as fair value through the profit or loss,
with the balance of the AFS reserve transferred to retained earnings,
and subsequently all changes in fair value will be recognised through
net gains on investments in the Consolidated Income Statement as
incurred.
1. Business segments
For management purposes, the Group is currently organised into the Fund
Management Company (FMC) and the Investment Company (IC). Segment
information about these businesses is presented below and is reviewed by
the Executive Directors.
The Group reports the profit of the FMC separately from the profits
generated by the IC. The FMC is defined as the operating unit and as
such incurs the majority of the Group's costs, including the cost of the
investment network, i.e. the Investment Executives and the local offices,
as well as the cost of most support functions, primarily information
technology, human resources and marketing.
The IC is charged a management fee of 1% of the carrying value of the
average investment portfolio by the FMC and this is shown below as fee
income. The costs of finance, treasury and portfolio administration
teams, and the costs related to being a listed entity, are allocated to
the IC. The remuneration of the Executive Directors is allocated equally
to the FMC and the IC.
Notes to the Financial Statements
For the year ended 31 March 2019
Analysis of income and profit before tax as internally reported
Total
Year ended 31 Corporate Investments Capital Market Investments Real Asset Investments Secondary Investments FMC IC Total
March 2019 GBPm GBPm GBPm GBPm GBPm GBPm GBPm
---------------- --------------------- -------------------------- ---------------------- --------------------- ------ ------ -------
External fee
income 131.1 42.8 22.4 23.5 219.8 - 219.8
Inter-segmental
fee 13.3 3.4 2.0 1.8 20.5 (20.5) -
----------------- --------------------- -------------------------- ---------------------- --------------------- ------ ------ -------
Fund management
fee income 144.4 46.2 24.4 25.3 240.3 (20.5) 219.8
----------------- --------------------- -------------------------- ---------------------- --------------------- ------ ------ -------
Net investment
returns - 275.1 275.1
Dividend income 34.4 - 34.4
Total Revenue 274.7 254.6 529.3
----------------- --------------------- -------------------------- ---------------------- --------------------- ------ ------ -------
Interest expense - (53.9) (53.9)
Net fair value
gain on
derivatives - 17.2 17.2
Staff costs (47.3) (7.8) (55.1)
Incentive scheme
costs (44.5) (66.4) (110.9)
Other
administrative
expenses (39.1) (9.2) (48.3)
----------------- --------------------- -------------------------- ---------------------- --------------------- ------ ------ -------
Profit before tax 143.8 134.5 278.3
----------------- --------------------- -------------------------- ---------------------- --------------------- ------ ------ -------
Total
Year ended 31 Corporate Investments Capital Market Investments Real Asset Investments Secondary Investments FMC IC Total
March 2018 GBPm GBPm GBPm GBPm GBPm GBPm GBPm
---------------- --------------------- -------------------------- ---------------------- --------------------- ------ ------ -------
External fee
income 93.0 34.9 18.5 20.7 167.1 - 167.1
Inter-segmental
fee 11.9 3.2 1.3 1.4 17.8 (17.8) -
----------------- --------------------- -------------------------- ---------------------- --------------------- ------ ------ -------
Fund management
fee income 104.9 38.1 19.8 22.1 184.9 (17.8) 167.1
----------------- --------------------- -------------------------- ---------------------- --------------------- ------ ------ -------
Net investment
returns - 240.1 240.1
Dividend income 25.2 - 25.2
Total Revenue 210.1 222.3 432.4
----------------- --------------------- -------------------------- ---------------------- --------------------- ------ ------ -------
Interest expense - (56.6) (56.6)
Net fair value
loss on
derivatives - (6.5) (6.5)
Staff costs (42.1) (11.1) (53.2)
Incentive scheme
costs (40.8) (64.0) (104.8)
Other
administrative
expenses (31.9) (11.1) (43.0)
----------------- --------------------- -------------------------- ---------------------- --------------------- ------ ------ -------
Profit before tax 95.3 73.0 168.3
----------------- --------------------- -------------------------- ---------------------- --------------------- ------ ------ -------
Notes to the Financial Statements continued
For the year ended 31 March 2019
Reconciliation of financial statements reported to the Executive
Directors to the position reported under IFRS
Included in the table below are adjustments made from internally
reported numbers to IFRS:
-- The primary reconciling item impacting profit after tax is GBP83.9m in
respect of the valuation of the CLO loan notes which has been treated as
a change in estimate during the year, see page 7. Other items are
principally presentational in nature and relate to the consolidated
structured entities. The consolidation of structured entities gross up
the consolidated income statement and consolidated statement of financial
position, and have no material impact on the Group's profit before tax
and net assets.
-- In the current year, all income generated from Investment Company
investments is presented as net investment returns for internal reporting
purposes whereas under IFRS it is presented within net gains on
investments and other operating income. The prior year is presented on
the same basis to aid comparability. The prior year as originally
presented can be found on page 35.
Consolidated Income Statement
Internally Consolidated structured
Year ended reported entities Financial statements
31 March 2019 GBPm GBPm GBPm
------------------------------------------------------ ---------- ----------------------- --------------------
- Fund management fee income 219.8 (20.7) 199.1
- Other operating income - 13.5 13.5
Fee and other operating income 219.8 (7.2) 212.6
- Interest income - 0.1 0.1
- Dividend income 34.4 (34.4) -
- Net fair value gain on derivatives - 25.5 25.5
Finance and dividend income 34.4 (8.8) 25.6
Net investment returns/Gains on investments 275.1 (49.2) 225.9
Total revenue 529.3 (65.2) 464.1
------------------------------------------------------ ---------- ----------------------- --------------------
- Interest expense (53.9) - (53.9)
- Net fair value gain/(loss) on derivatives 17.2 (17.2) -
Finance costs (36.7) (17.2) (53.9)
- Staff costs (55.1) 0.6 (54.5)
- Incentive scheme costs (110.9) - (110.9)
- Other administrative expenses (48.3) (14.2) (62.5)
Administrative expenses (214.3) (13.6) (227.9)
Share of results of joint venture accounted for using
equity method - 0.6 0.6
Profit before tax 278.3 (95.4) 182.9
------------------------------------------------------ ---------- ----------------------- --------------------
Tax (charge)/credit (9.0) 10.6 1.6
------------------------------------------------------ ---------- ----------------------- --------------------
Profit after tax 269.3 (84.8) 184.5
------------------------------------------------------ ---------- ----------------------- --------------------
Notes to the Financial Statements continued
For the year ended 31 March 2019
Consolidated Income Statement
Consolidated structured
Year ended Internally reported entities Financial statements
31 March 2018 GBPm GBPm GBPm
------------------------------------------------------ ------------------- ----------------------- --------------------
- Fund management fee income 167.1 (19.6) 147.5
- Other operating income - 9.7 9.7
Fee and other operating income 167.1 (9.9) 157.2
- Dividend income 25.2 (25.2) -
Finance and dividend income 25.2 (25.2) -
Net investment returns/Gains on investments 240.1 79.7 319.8
Total revenue 432.4 44.6 477.0
------------------------------------------------------ ------------------- ----------------------- --------------------
- Interest expense (56.6) - (56.6)
- Net fair value (loss)/gain on derivatives (6.5) 0.9 (5.6)
Finance costs (63.1) 0.9 (62.2)
- Staff costs (53.2) 2.1 (51.1)
- Incentive scheme costs (104.8) - (104.8)
- Other administrative expenses (43.0) (17.1) (60.1)
Administrative expenses (201.0) (15.0) (216.0)
Share of results of joint venture accounted for using
equity method - 0.3 0.3
Profit before tax 168.3 30.8 199.1
------------------------------------------------------ ------------------- ----------------------- --------------------
Tax credit/(charge) 55.7 (4.0) 51.7
------------------------------------------------------ ------------------- ----------------------- --------------------
Profit after tax 224.0 26.8 250.8
------------------------------------------------------ ------------------- ----------------------- --------------------
.
Notes to the Financial Statements continued
For the year ended 31 March 2019
Consolidated Statement of Financial Position
Internally reported Consolidated structured entities Financial Statements
31 March 2019 GBPm GBPm GBPm
----------------------------------------------------- ------------------- -------------------------------- --------------------
Non current financial assets 2,255.7 3,393.2 5,648.9
Other non current assets 36.1 7.8 43.9
Cash 163.2 190.8 354.0
Current financial assets 110.7 (33.4) 77.3
Other current assets 215.7 71.4 287.1
Disposal groups held for sale - 107.1 107.1
------------------------------------------------------ ------------------- -------------------------------- --------------------
Total assets 2,781.4 3,736.9 6,518.3
------------------------------------------------------ ------------------- -------------------------------- --------------------
Non current financial liabilities 1,183.5 3,449.0 4,632.5
Other non current liabilities 46.7 0.2 46.9
Other current liabilities 161.5 206.2 367.7
Liabilities directly associated with disposal groups
held for sale - 76.9 76.9
------------------------------------------------------ ------------------- -------------------------------- --------------------
Total liabilities 1,391.7 3,732.3 5,124.0
------------------------------------------------------ ------------------- -------------------------------- --------------------
Equity 1,389.7 4.6 1,394.3
------------------------------------------------------ ------------------- -------------------------------- --------------------
Total equity and liabilities 2,781.4 3,736.9 6,518.3
------------------------------------------------------ ------------------- -------------------------------- --------------------
31 March Internally reported Consolidated structured entities Financial Statements
2018 GBPm GBPm GBPm
------------ ------------------------- -------------------------------- --------------------
Non current
financial
assets 1,898.5 3,342.8 5,241.3
Other non
current
assets 28.8 2.9 31.7
Cash 248.0 272.7 520.7
Current
financial
assets 107.2 - 107.2
Other current
assets 244.7 160.8 405.5
------------- ------------------------- -------------------------------- --------------------
Total assets 2,527.2 3,779.2 6,306.4
------------- ------------------------- -------------------------------- --------------------
Non current
financial
liabilities 840.5 3,309.1 4,149.6
Other non
current
liabilities 81.9 5.0 86.9
Current
financial
liabilities 183.7 - 183.7
Other current
liabilities 188.1 380.0 568.1
------------- ------------------------- -------------------------------- --------------------
Total
liabilities 1,294.2 3,694.1 4,988.3
------------- ------------------------- -------------------------------- --------------------
Equity 1,233.0 85.1 1,318.1
------------- ------------------------- -------------------------------- --------------------
Total equity
and
liabilities 2,527.2 3,779.2 6,306.4
------------- ------------------------- -------------------------------- --------------------
Notes to the Financial Statements continued
For the year ended 31 March 2019
Consolidated Statement of Cash Flows
Internally
reported Consolidated structured entities Financial Statements
31 March 2019 GBPm GBPm GBPm
--------------------------------------------------- ---------- -------------------------------- --------------------
Interest received 21.5 199.3 220.8
Fees received 185.0 (0.3) 184.7
Dividends received 35.6 (32.3) 3.3
Payments to suppliers and employees (167.8) (6.8) (174.6)
Proceeds from sale of current financial assets and
disposal groups 201.8 (1.7) 200.1
Purchase of current financial assets and disposal
groups (345.4) 38.5 (306.9)
Proceeds from sale of non current financial assets 643.9 1,831.4 2,475.3
Purchase of non current financial assets (603.1) (2,062.9) (2,666.0)
Net cash inflow from derivative contracts 48.0 7.4 55.4
---------------------------------------------------- ---------- -------------------------------- --------------------
Cash generated from/(used in) operating activities 19.5 (27.4) (7.9)
---------------------------------------------------- ---------- -------------------------------- --------------------
Taxes paid (16.3) (3.9) (20.2)
---------------------------------------------------- ---------- -------------------------------- --------------------
Net cash generated from/(used in) operating
activities 3.2 (31.3) (28.1)
---------------------------------------------------- ---------- -------------------------------- --------------------
Net cash (used in)/generated from investing
activities (5.3) 13.0 7.7
---------------------------------------------------- ---------- -------------------------------- --------------------
Dividends paid (88.3) - (88.3)
Interest paid (51.3) (130.1) (181.4)
Increase in long term borrowings 308.3 2,029.9 2,338.2
Repayment of long term borrowings (181.8) (1,970.5) (2,152.3)
Net purchase of own shares (49.3) - (49.3)
Net cash used in financing activities (62.4) (70.7) (133.1)
---------------------------------------------------- ---------- -------------------------------- --------------------
Net decrease in cash (64.5) (89.0) (153.5)
---------------------------------------------------- ---------- -------------------------------- --------------------
Cash and cash equivalents at beginning of year 247.9 272.8 520.7
Effect of foreign exchange rate changes (20.2) 7.0 (13.2)
---------------------------------------------------- ---------- -------------------------------- --------------------
Cash and cash equivalents at end of year 163.2 190.8 354.0
---------------------------------------------------- ---------- -------------------------------- --------------------
Notes to the Financial Statements continued
For the year ended 31 March 2019
Internally
reported Consolidated structured entities Financial Statements
31 March 2018 GBPm GBPm GBPm
-------------------- ---------- -------------------------------- --------------------
Interest received 73.0 118.1 191.1
Fees received 151.1 (12.0) 139.1
Dividends received 25.8 128.7 154.5
Payments to suppliers
and employees (172.1) (18.2) (190.3)
Proceeds from sale of
current financial
assets 276.8 - 276.8
Purchase of current
financial assets (368.0) - (368.0)
Proceeds from sale of
non current
financial assets 534.8 2,843.8 3,378.6
Purchase of non
current financial
assets (572.4) (3,341.9) (3,914.3)
Recoveries on
previously impaired
assets 2.4 - 2.4
Net cash (outflow) /
inflow from
derivatives
contracts (29.2) 0.5 (28.7)
--------------------- ---------- -------------------------------- --------------------
Cash used in
operating
activities (77.8) (281.0) (358.8)
--------------------- ---------- -------------------------------- --------------------
Taxes received 12.5 - 12.5
--------------------- ---------- -------------------------------- --------------------
Net cash used in
operating
activities (65.3) (281.0) (346.3)
--------------------- ---------- -------------------------------- --------------------
Net cash used in
investing
activities (4.2) - (4.2)
--------------------- ---------- -------------------------------- --------------------
Dividends paid (80.7) - (80.7)
Interest paid (54.7) (133.8) (188.5)
Increase in long term
borrowings (45.8) 1,624.1 1,578.3
Repayment of long
term borrowings - (1,208.9) (1,208.9)
Purchase of own
shares (26.2) - (26.2)
Proceeds on issue of
shares 0.6 - 0.6
--------------------- ---------- -------------------------------- --------------------
Net cash (used
in)/generated from
financing
activities (206.8) 281.4 74.6
--------------------- ---------- -------------------------------- --------------------
Net
(decrease)/increase
in cash (276.3) 0.4 (275.9)
--------------------- ---------- -------------------------------- --------------------
Cash and cash
equivalents at
beginning of year 490.3 290.6 780.9
Effect of foreign
exchange rate
changes 33.9 (18.2) 15.7
--------------------- ---------- -------------------------------- --------------------
Cash and cash
equivalents at end
of year 247.9 272.8 520.7
--------------------- ---------- -------------------------------- --------------------
1. Dividends
The proposed final ordinary dividend for the year ended 31 March 2019 is
35.0 pence per share (2018: 21.0 pence per share), which will amount to
GBP99.0m (2018: GBP59.4m). The total dividend in respect of the year
ended 31 March 2019 was 45.0 pence per share (2018: 30.0 pence per
share)
Of the GBP88.3 (2018: GBP80.7m) of ordinary dividends paid during the
year, GBP1.3m were reinvested under the dividend reinvestment plan that
was offered to shareholders (2018: GBP1.4m).
Notes to the Financial Statements continued
For the year ended 31 March 2019
1. Earnings per share
Year ended Year ended
31 March 2019 31 March 2018
GBPm GBPm
-------------------------------------------------------- -------------- --------------
Earnings for the purposes of basic and diluted earnings
per share being net profit attributable to the equity
holders of the Parent 180.1 251.0
--------------------------------------------------------- --------------- --------------
Number of shares
-------------------------------------------------------- --------------- --------------
Weighted average number of ordinary shares for the
purposes of basic earnings per share 283,915,372 282,649,240
Effect of dilutive potential ordinary share options 25,528 25,601
--------------------------------------------------------- --------------- --------------
Weighted average number of ordinary shares for the
purposes of diluted earnings per share 283,940,900 282,674,841
--------------------------------------------------------- --------------- --------------
Earnings per share 63.4p 88.8p
--------------------------------------------------------- --------------- ----------------
Diluted earnings per share 63.4p 88.8p
--------------------------------------------------------- --------------- ----------------
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 2018 294,055,428 11,355,766
Purchased (ordinary
shares of 26 1/4
p) - 4,481,953
Options/awards
exercised - (4,619,434)
Shares issued 28,923 -
----------------- ------------------------------------------------------ ----------------
As at 31 March 2019 294,084,351 11,218,285
------------------- ------------------------------------------------------ ----------------
1. Tax
Year ended Year ended
31 March 2019 31 March 2018
Analysis of tax on ordinary activities GBPm GBPm
------------------------------------------- -------------- --------------
Current tax
Current year 16.0 (6.4)
Prior year adjustment 5.4 14.6
-------------------------------------------- -------------- --------------
21.4 8.2
------------------------------------------- -------------- --------------
Deferred tax
Current year (19.1) (41.4)
Prior year adjustment (3.9) (18.5)
-------------------------------------------- -------------- --------------
(23.0) (59.9)
------------------------------------------- -------------- --------------
Tax credit on profit on ordinary activities (1.6) (51.7)
-------------------------------------------- -------------- --------------
Notes to the Financial Statements continued
For the year ended 31 March 2019
Year ended Year ended
31 March 2019 31 March 2018
GBPm GBPm
-------------------------------------------------------- -------------- --------------
Profit on ordinary activities before tax 182.9 199.1
Profit before tax multiplied by the rate of corporation
tax in the UK of 19% (2018: 19%) 34.8 37.8
Effects of:
Prior year adjustment to current tax 5.4 14.6
Prior year adjustment to deferred tax (3.9) (18.6)
--------------------------------------------------------- -------------- --------------
1.5 (4.0)
Non-taxable and non-deductible items (0.1) -
Current year risk provision charge/(credit) 1.6 (27.1)
Impairment of tax debtor balance 3.3 -
Different tax rates of overseas subsidiaries (32.5) (38.0)
Changes in statutory tax rates 2.0 -
Substantial shareholder exemption - deferred tax
adjustment - (15.4)
Other temporary differences (12.2) (5.0)
Current tax credit for the year (1.6) (51.7)
--------------------------------------------------------- -------------- --------------
The effective tax rate is lower than the standard corporation tax rate
of 19%. This is in part due to a significant proportion of the
Investment Company's assets being invested directly into funds based
outside the United Kingdom.
Investment returns from these funds are paid to the Group in the form of
non taxable dividend income. This outcome is in line with other UK
investment companies. The Investment Company's taxable costs can
therefore be used to offset the taxable profits of our UK Fund
Management business, reducing the overall Group charge.
Prior year reporting of Consolidated Income Statement
Real Total
Year ended Corporate Investments Capital Market Investments Asset Investments Secondary Investments FMC IC Total internally reported
31 March 2018 GBPm GBPm GBPm GBPm GBPm GBPm GBPm
---------------- --------------------- -------------------------- ------------------ --------------------- ------ ------ -------------------------
External fee
income 93.0 34.9 18.5 20.7 167.1 - 167.1
Inter-segmental
fee 11.9 3.2 1.3 1.4 17.8 (17.8) -
---------------- --------------------- -------------------------- ------------------ --------------------- ------ ------ -------------------------
Fund management
fee income 104.9 38.1 19.8 22.1 184.9 (17.8) 167.1
---------------- --------------------- -------------------------- ------------------ --------------------- ------ ------ -------------------------
Other operating
income - 6.8 6.8
Gains on
investments - 144.7 144.7
Interest income - 113.2 113.2
Dividend income 25.2 0.6 25.8
Total revenue 210.1 247.5 457.6
---------------- --------------------- -------------------------- ------------------ --------------------- ------ ------ -------------------------
Interest expense - (56.6) (56.6)
Net fair value
loss on
derivatives - (6.5) (6.5)
Impairment - (25.2) (25.2)
Staff costs (42.1) (11.1) (53.2)
Incentive scheme
costs (40.8) (64.0) (104.8)
Other
administrative
expenses (31.9) (11.1) (43.0)
Profit before
tax 95.3 73.0 168.3
---------------- --------------------- -------------------------- ------------------ --------------------- ------ ------ -------------------------
Year ended Internally reported Reclass of interest to dividends and gains Consolidated structured entities Financial statements
31 March 2018 GBPm GBPm GBPm GBPm
------------------------------------------------------ -------------------- ------------------------------------------ -------------------------------- --------------------
- Fund management fee income 167.1 - (19.6) 147.5
- Other operating income 6.8 - 2.9 9.7
Fee and other operating income 173.9 - (16.7) 157.2
- Interest income 113.2 (82.8) 156.3 186.7
- Dividend income 25.8 0.8 (23.5) 3.1
Finance and dividend income 139.0 (82.0) 132.8 189.8
Net investment returns/Gains on investments 144.7 75.6 32.7 253.0
Total revenue 457.6 (6.4) 148.8 600.0
------------------------------------------------------- ------------------- ------------------------------------------ -------------------------------- --------------------
- Interest expense (56.6) - (104.2) (160.8)
- Net fair value (loss)/gain on derivatives (6.5) - 0.9 (5.6)
Finance costs (63.1) - (103.3) (166.4)
Impairment (25.2) 6.4 - (18.8)
- Staff costs (53.2) - 2.1 (51.1)
- Incentive scheme costs (104.8) - - (104.8)
- Other administrative expenses (43.0) - (17.1) (60.1)
Administrative expenses (201.0) - (15.0) (216.0)
Share of results of joint venture accounted for using
equity method - - 0.3 0.3
Profit before tax 168.3 - 30.8 199.1
------------------------------------------------------- ------------------- ------------------------------------------ -------------------------------- --------------------
Tax credit/(charge) 55.7 - (4.0) 51.7
------------------------------------------------------- ------------------- ------------------------------------------ -------------------------------- --------------------
Profit after tax 224.0 - 26.8 250.8
------------------------------------------------------- ------------------- ------------------------------------------ -------------------------------- --------------------
Glossary
Items denoted with a (1) throughout this document have been identified
as non IFRS GAAP alternative performance measures. These are defined
below:
Term
Short form
Definition
Adjusted earnings per share
Adjusted EPS
Adjusted profit after tax (annualised when reporting a six month
period's results) divided by the weighted average number of ordinary
shares as detailed in note 4.
Adjusted Group profit before tax
Group profit before tax adjusted for the impact of the consolidated
structured entities and the presentation of Questus Energy Pty Limited.
As at 31 March, this is calculated as follows:
2019 2018
Profit before tax GBP182.9m GBP199.1m
Less consolidated structured entities GBP95.4m (GBP30.8m)
Adjusted group profit before tax GBP278.3m GBP168.3m
Adjusted Investment Company profit before tax
Investment Company profit adjusted for the impact of the consolidated
structured entities and the presentation of Questus Energy Pty Limited.
As at 31 March, this is calculated as follows:
2019 2018
Investment Company profit before tax GBP39.1m GBP103.8m
Less consolidated structured entities GBP95.4m (GBP30.8m)
Adjusted Investment Company profit before tax GBP134.5m GBP73.0m
Adjusted return on equity
Adjusted profit after tax (annualised when reporting a six month
period's results) divided by average shareholders' funds for the period.
As at 31 March, this is calculated as follows:
2019 2018
Adjusted profit after tax GBP269.3m GBP224.0m
Average shareholders' funds GBP1,343.8m GBP1,173.5m
Adjusted return on equity 20.0% 19.1%
Assets under management
AUM
Value of all funds and assets managed by the FMC. During the investment
period third party (external) AUM is measured on the basis of committed
capital. Once outside the investment period third party AUM is measured
on the basis of cost of investment. AUM is presented in Euros, with
non-Euro denominated at the period end closing rate.
Balance sheet investment portfolio
The balance sheet investment portfolio represents non-current financial
assets from the Statement of Financial Position, adjusted for the impact
of the consolidated structured entities. See note 2 for a full
reconciliation.
Cash profit
PICP
Cash profit is defined as internally reported profit before tax and
incentive schemes, adjusted for non-cash items.
2019 2018
Adjusted profit before tax GBP278.3m GBP168.3m
Add back incentive schemes GBP110.9m GBP104.8m
Other adjustments (GBP52.6m) (GBP18.2m)
Cash profit GBP336.6m GBP254.9m
Dividend income
Dividend income represents distributions received from equity
investments. Dividend income reported on an internal basis excludes the
impact of the consolidated structured entities. See note 2 for a full
reconciliation.
Earnings per share
Profit after tax (annualised when reporting a six month period's
results) divided by the weighted average number of ordinary shares as
detailed in note 4.
Gearing
Gearing is used by management as a measure of balance sheet efficiency.
Gross borrowings, excluding the consolidated structured entities,
divided by closing shareholders' funds. Gross borrowings represent the
cash amount repayable to debt providers. As at 31 March, this is
calculated as follows:
2019 2018
Gross borrowings GBP4,633m GBP4,333m
Less consolidated structured entities (GBP3,449m) (GBP3,312m)
------------------------------------- ----------- -----------
Adjusted gross borrowings GBP1,184m GBP1,021m
Shareholders' funds GBP1,383m GBP1,318m
Gearing 0.86x 0.77x
Interest expense
Interest expense excludes the cost of financing associated with the
consolidated structured entities.
Net asset value per share
Total equity from the Statement of Financial Position divided by the
closing number of ordinary shares. As at 31 March, this is calculated as
follows:
2019 2018
Total equity GBP1,394m GBP1,318m
Closing number of ordinary shares 282,866,066 282,699,662
Net asset value per share 493p 466p
Net current assets
The total of cash, plus current financial assets, plus other current
assets, less current liabilities as internally reported. This excludes
the consolidated structured entities and the presentation of Questus
Energy Pty Limited. As at 31 March, this is calculated as follows:
2019 2018
Cash GBP163.2m GBP248.0m
Current financial assets GBP110.7m GBP107.2m
Other current assets GBP215.7m GBP244.7m
Current financial liabilities - (GBP183.7m)
Other current liabilities (GBP161.5m) (GBP188.1m)
----------- -----------
Net current assets GBP328.1m GBP228.1m
On an IFRS GAAP basis net current assets are as follows:
2019 2018
Cash GBP354.0m GBP520.7m
Current financial assets GBP77.3m GBP107.2m
Other current assets GBP287.1m GBP405.5m
Disposal groups held for sale GBP107.1m -
Current financial liabilities - (GBP183.7m)
Other current liabilities (GBP367.7m) (GBP568.1m)
Liabilities directly associated with disposal groups (GBP76.9m) -
held for sale
------------ -----------
Net current assets GBP380.9m GBP281.6m
Net debt
Net debt, along with gearing, is used by management as a measure of
balance sheet efficiency. Net debt includes unencumbered cash whereas
gearing uses gross borrowings and is therefore not impacted by movements
in cash balances.
Total drawn debt less unencumbered cash of the Group, excluding the
consolidated structured entities and the presentation of Questus Energy
Pty Limited. As at 31 March, this is calculated as follows:
2019 2018
Adjusted gross borrowings GBP1,184.3m GBP1,021.1m
Less unencumbered cash (GBP162.7m) (GBP247.6m)
Net debt GBP1,021.6m GBP773.5m
Net investment returns
Net investment returns is the total of interest income, capital gains,
dividend and other income less asset impairments.
Operating cashflow
Operating cashflow represents the cash generated from operating
activities from the Statement of Cash Flows, adjusted for the impact of
the consolidated structured entities. See note 2 for a full
reconciliation.
Operating expenses of the Investment Company
Investment Company operating expenses are adjusted for the impact of the
consolidated structured entities, the presentation of Questus Energy Pty
Limited. See note 2 for a full reconciliation.
Operating profit margin
Fund Management Company profit divided by Fund Management Company total
revenue. As at 31 March this is calculated as follows:
2019 2018
Fund Management Company Profit GBP143.8m GBP95.3m
Fund Management Company Total Revenue GBP274.7m GBP210.1m
Operating profit margin 52.3% 45.4%
Return on equity
ROE
Profit after tax (annualised when reporting a six month period's
results) divided by average shareholders' funds for the period.
Third party fee income
Fees generated on fund management activities as reported in the Fund
Management Company including fees generated on consolidated structured
entities which are excluded from the IFRS consolidation position. See
note 2 for a full reconciliation.
Weighted average fee rate
An average fee rate across all strategies based on fee earning AUM in
which the fees earned are weighted based on the relative AUM.
Other definitions which have not been identified as non IFRS GAAP
alternative performance measures are as follows:
Term Short Definition
form
-------------- --------- ----------------------------------------------------------
AIFMD The EU Alternative Investment Fund Managers Directive.
-------------- --------- ----------------------------------------------------------
Catch up fees Fees charged to investors who commit to a fund after
its first close. This has the impact of backdating
their commitment thereby aligning all investors in
the fund.
-------------- --------- ----------------------------------------------------------
Closed end A fund where investor's commitments are fixed for
fund the duration of the fund and the fund has a defined
investment period.
-------------- --------- ----------------------------------------------------------
Co-investment Co-invest A direct investment made alongside or in a fund taking
a pro-rata share of all instruments.
-------------- --------- ----------------------------------------------------------
Collateralised CDO Investment grade security backed by a pool of non-mortgage
Debt based bonds, loans and other assets.
Obligation
-------------- --------- ----------------------------------------------------------
Collateralised CLO CLO is a type of CDO, which is backed by a portfolio
Loan of loans.
Obligation
-------------- --------- ----------------------------------------------------------
Close A stage in fundraising whereby a fund is able to release
or draw down the capital contractually committed at
that date.
-------------- --------- ----------------------------------------------------------
Core Plus Core+ Assets which have infrastructure characteristics (physical
assets, protected and predictable cash flows) with
a slightly higher risk/return profile than Core assets.
-------------- --------- ----------------------------------------------------------
Direct Funds which invest in self-originated transactions
investment for which there is a low volume, inactive secondary
funds market.
-------------- --------- ----------------------------------------------------------
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 The UK's independent regulator responsible for promoting
Reporting high quality corporate governance and reporting.
Council
-------------- --------- ----------------------------------------------------------
Fund FMC The Group's fund management business, which sources
Management and manages investments on behalf of the IC and third
Company party funds.
-------------- --------- ----------------------------------------------------------
HMRC HM Revenue & Customs, the UK tax authority.
-------------- --------- ----------------------------------------------------------
IAS International Accounting Standards.
-------------- --------- ----------------------------------------------------------
IFRS International Financial Reporting Standards as adopted
by the European Union.
-------------- --------- ----------------------------------------------------------
Illiquid Asset classes which are not actively traded.
assets
-------------- --------- ----------------------------------------------------------
Internal ICAAP The ICAAP allows companies to assess the level of
Capital capital that adequately supports all relevant current
Adequacy and future risks in their business.
Assessment
Process
-------------- --------- ----------------------------------------------------------
Investment IC The Investment Company invests the Group's capital
Company in support of third party fundraising and funds the
development of new strategies.
-------------- --------- ----------------------------------------------------------
Internal Rate IRR The annualised return received by an investor in a
of Return fund. It is calculated from cash drawn from and returned
to the investor together with the residual value of
the asset.
-------------- --------- ----------------------------------------------------------
Key Man Certain funds have designated Key Men. The departure
of a Key Man without adequate replacement triggers
a contractual right for investors to cancel their
commitments.
-------------- --------- ----------------------------------------------------------
Key KPI A business metric used to evaluate factors that are
performance crucial to the success of an organisation.
indicator
-------------- --------- ----------------------------------------------------------
Key risk KRI A measure used to indicate how risky an activity is.
indicator It is an indicator of the possibility of future adverse
impact.
-------------- --------- ----------------------------------------------------------
Liquid assets Asset classes with an active, established market in
which assets may be readily bought and sold.
-------------- --------- ----------------------------------------------------------
Open ended A fund which remains open to new commitments and where
fund an investor's commitment may be redeemed with appropriate
notice.
-------------- --------- ----------------------------------------------------------
Payment in PIK Also known as rolled up interest. PIK is the interest
kind accruing on a loan until maturity or refinancing,
without any cash flows until that time.
-------------- --------- ----------------------------------------------------------
Performance Carry Share of profits that the fund manager is due once
fees it has returned the cost of investment and agreed
preferred return to investors.
-------------- --------- ----------------------------------------------------------
Realisation The return of invested capital in the form of principal,
rolled up interest and/or capital gain.
-------------- --------- ----------------------------------------------------------
Securitisation A form of financial structuring whereby a pool of
assets is used as security (collateral) for the issue
of new financial instruments.
-------------- --------- ----------------------------------------------------------
Senior debt Senior debt ranks above mezzanine and equity.
-------------- --------- ----------------------------------------------------------
Structured Entities which are classified investment funds, CLO's
entities or CDO's and are deemed to be controlled by the Group,
though its interest in either an investment, loan,
fee receivable, guarantee or commitment. These entities
can also be interchangeably referred to as credit
funds.
-------------- --------- ----------------------------------------------------------
Total AUM The aggregate of the third party external AUM and
the Investment Company's balance sheet.
-------------- --------- ----------------------------------------------------------
UK Corporate The Code Sets out standards of good practice in relation to
Governance board leadership and effectiveness, remuneration,
Code accountability and relations with shareholders.
-------------- --------- ----------------------------------------------------------
UNPRI UN Principles for Responsible Investing.
-------------- --------- ----------------------------------------------------------
Weighted An average in which each quantity to be averaged is
average assigned a weight. These weightings determine the
relative importance of each quantity on the average.
-------------- --------- ----------------------------------------------------------
Company timetable
Ex-dividend date 13 June 2019
Record date 14 June 2019
Last date for dividend reinvestment election 16 July 2019
AGM and Trading statement 25 July 2019
Payment of ordinary dividend 6 August 2019
Half year results announcement 20 November 2019
(END) Dow Jones Newswires
May 22, 2019 02:01 ET (06:01 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.
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