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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
Delivering growth through cycles
Highlights
-- Total AUM of $80.2bn1 and fee-earning AUM of
$62.8bn1, up 14% and 10% respectively compared to
FY22 on a constant-currency basis, annualised growth
of fee-earning AUM over the last five years of 20%2
-- Fundraising in line with guidance at $10.2bn; $32.8bn
raised since 31 March 2021 and on track to meet
accelerated fundraising target of at least $40bn
cumulatively between FY22 - FY24
-- Sustained investment activity across our business,
notable deployment in Private Debt and Strategic
Equity
-- Delivering for clients, strong fund returns across
Structured and Private Equity, Private Debt and
Infrastructure
-- Fee income of GBP501.0m, an increase of 12% compared
to FY22 with management fees up 23%
-- Record Fund Management Company profit before tax of
GBP310.7m, an increase of 9% compared to FY22
-- Balance sheet investment portfolio generated NIR of
4% (five year average: 11.2%)
-- Group profit before tax of GBP258.1m (FY22:
GBP568.8m) and Group EPS of 80.3p (FY22: 187.6p)
-- NAV per share of 694p (31 March 2022: 696p)
-- Total dividends for FY23 of 77.5p per share, a
year-on-year increase of 2.0% and the thirteenth
consecutive annual increase in ordinary dividend per
share; 21% annualised growth in dividend per share
over the last five years
(1) Includes impact of policy change in FY23 which
increased Total AUM and third-party AUM by $3.1bn
and fee-earning AUM by $0.5bn
(2) Five year AUM growth on reported basis. Unless
otherwise stated the financial results discussed herein
are on the basis of APM - see page 2 and page 8
William Rucker Benoît Durteste
Chairman CEO and CIO
The results ICG is reporting are a testament to our ICG has performed strongly over the last twelve months
long-term focus on building and broadening the ICG on both a strategic and financial level.
platform. We have sustained business momentum across fundraising
Successfully fundraising, growing AUM, and increasing and investing activities, and have continued to focus
profits from our fund management activities -- all on delivering value for our clients and portfolio
delivered against a challenging backdrop -- underline companies. Rising interest rates and a more uncertain
the powerful economic characteristics that underpin economic outlook are particularly suited to our substantial
ICG's resilient business model today. structured equity and private debt offerings -- an
Looking ahead, we are well positioned to navigate important strategic benefit of our scale and breadth,
an exciting future, with many opportunities likely which enables us to operate successfully across market
to arise as the economic landscape continues to evolve. cycles.
I am delighted to have joined ICG as Chairman, and Our fund management company has delivered year-on-year
look forward to working with the management team, growth in fee-earning AUM, fee income and profits.
our shareholders and wider stakeholders in the coming At the same time, the balance sheet has performed
years. in line with our expectations during a period of volatile
market conditions.
We take a long-term view on investing for future growth,
hiring selectively across the firm and investing balance
sheet capital in seed assets for a number of strategies.
As ICG continues to grow up and grow out, the strategic
and economic benefits of our multiple levers of compounding
growth will continue to become increasingly visible.
PERFORMANCE OVERVIEW
Historical performance
The Board and management monitor the financial performance of the Group on the basis of alternative performance measures (APM), which are non-UK-adopted IAS measures. An explanation can be found on page 8 and a reconciliation of the APM to the UK-adopted IAS measures on page 43, along with the UK-adopted IAS consolidated financial statements and supporting notes, can be found on pages 34 to 92.
The Group's profit after tax on an UK-adopted IAS basis was below the prior period at GBP278.4m (FY22: GBP525.1m). On the APM basis it was below the prior period at GBP229.3m (FY22: GBP538.0m).
Unless stated otherwise, the financial results discussed herein are on the basis of APM, which the Board believes assists shareholders in assessing the financial performance of the Group.
Long-term growth
Last five years CAGR(1)
------------------------------------------ -----------------------
Third-party AUM(2) 19 %
Fee-earning AUM(2) 20 %
Third-party fee income 25 %
Fund Management Company profit before tax 27 %
Net Investment Return (five year average) 11 %
NAV per share 10 %
Dividend per share 21%
------------------------------------------ -----------------------
(1) FY18 - FY23. Dividend per share includes proposed FY23 final dividend.
(2) Includes impact of AUM policy change in FY23 which increased Total AUM and third-party AUM by $3.1bn and fee-earning AUM by $0.5bn - see page 8
AUM
31 March 2023 31 March 2022 Change(1)
------------------------------ -------------- -------------- --------------
Total AUM(2) $80.2bn $72.1bn 14 %
Third-party AUM(2) $77.0bn $68.5bn 15 %
Fee-earning AUM(2) $62.8bn $58.3bn 10 %
Fundraising during period $10.2bn $22.5bn (55) %
Realisations during
period(3,4) $5.3bn $6.4bn (17) %
Deployment during period(4) $10.5bn $15.0bn (30) %
------------------------------ -------------- -------------- --------------
(1) On a constant currency basis
(2) Includes impact of policy change in FY23 which increased Total AUM and third-party AUM by $3.1bn and fee-earning AUM by $0.5bn - see page 8
(3) Realisations of third-party fee-earning AUM; (4) From direct investment funds
Financial
31 March 2023 31 March 2022 Change
----------------------------- -------------- -------------- ---------------
Third-party fee income GBP501.0 m GBP448.7 m 12 %
Fund Management Company
profit before tax GBP310.7 m GBP286.2 m 9 %
Investment Company
profit/(loss) before tax GBP(52.6)m GBP282.6 m (119) %
Group profit before tax GBP258.1 m GBP568.8 m (55) %
Group earnings per share 80.3 p 187.6 p (57) %
Dividend per share 77.5p 76.0 p 2 %
----------------------------- -------------- -------------- ---------------
31 March 2023 31 March 2022 Change
----------------------------- -------------- -------------- ---------------
Balance sheet investment
portfolio GBP2,902 m GBP2,822 m 3 %
Net asset value per share 694 p 696 p (0.3) %
Net gearing 0.50 x 0.45 x 0.05x
----------------------------- -------------- -------------- ---------------
Medium-term guidance
Our medium-term guidance remains unchanged and is set out below:
Fundraising Performance fees FMC operating margin Net Investment Returns
------------------------------------------------------- ----------------------------------------------------------- ---------------------- -------------------------------------------------
-- At least $40bn fundraising in aggregate between 1 -- Performance fees to represent 10 - 15% of third-party -- In excess of 50% -- Low double-digit percentage points over the
April 2021 and 31 March 2024 fee income over medium-term medium-term
COMPANY PRESENTATION
A presentation for investors and analysts will be held at 09:00 BST today: sign up via the link on our https://www.globenewswire.com/Tracker?data=lGMjhWNKQlc-291L_wNtaZrbtQGNRG_AwSqZCurCf_8SLLmW0x0Sjn078lH2SuxCxteXCF_Ycb04aevdiKx77eUX2mBoquJnzcvjv7PeI1NoWUhO49h0e0zJZ66hlT7y website.
A recording and transcript of the presentation will be available on demand from the same location in the coming days.
COMPANY TIMETABLE
Ex-dividend date 15 June 2023 Record date 16 June 2023 Last date to elect for dividend reinvestment 14 July 2023 AGM and Q1 trading statement 20 July 2023 Payment of ordinary dividend 4 August 2023 Half year results announcement 15 November 2023
ENQUIRIES
Shareholders / analysts: Chris Hunt, Head of Shareholder Relations, ICG +44(0)20 3545 2020 Media: Fiona Laffan, Global Head of Corporate Affairs, ICG +44(0)20 3545 1510
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.
ABOUT ICG
ICG provides flexible capital solutions to help companies develop and grow. We are a global alternative asset manager with over 30 years' history, managing $80bn of assets and investing across the capital structure. We operate across four asset classes: Structured and Private Equity, Private Debt, Real Assets, and Credit.
We develop long-term relationships with our business partners to deliver value for shareholders, clients and employees, and use our position of influence to benefit the environment and society. We are committed to being a net zero asset manager across our operations and relevant investments by 2040.
ICG is listed on the London Stock Exchange (ticker symbol: ICP). Further details are available at www.icgam.com.
LETTER FROM THE CHAIRMAN
To my fellow shareholders,
It is a pleasure to write to you as Chairman of ICG, a role I am honoured to have taken on in January 2023. I would like to start by expressing my gratitude on behalf of the Board to Andrew Sykes, who fulfilled the duties of Interim Chairman while the search for a permanent Chairman was undertaken. I look forward to his continued insight and guidance around the Board table in his role as Senior Independent Director.
Since Andrew's letter last year, geopolitical and economic uncertainty has continued to rise. The economic landscape has become increasingly complex, with inflation reaching multi-year highs in a number of countries, which has in turn forced central banks to raise interest rates at a time when many economies are slowing down. Today, the outlook remains nuanced. Certain countries and sectors are more vulnerable, while others are demonstrating significant resilience.
Elevated levels of uncertainty present difficulties for Boards. Many businesses, ICG included, can react tactically in the short term as opportunities present themselves. However, to create long-term value, they are required to make strategic decisions around allocating economic and intellectual capital, and then to pursue these vigorously and consistently over a number of years. An unclear outlook and an increasing cost of capital make these decisions more challenging, and we have seen some of the implications of this during the last twelve months in elevated volatility within public markets, a transfer of value from equity to debt, reduced valuations in many sectors, and a slowdown in M&A activity globally.
Against this background, I am comforted that private markets have shown a remarkable ability to adapt and innovate across economic cycles. Indeed, ICG's business model today is the result of a strategic decision taken over a decade ago to pivot to being a third-party asset manager -- a transition that was pursued with determination and to great effect. There have been a number of periods of economic uncertainty during that time since the Global Financial Crisis, including the Euro crisis, Brexit, and of course Covid-19 pandemic. Throughout all of these we have focused on executing a clear strategy of expanding our product offering, client base, and AUM. This has been delivered consistently and successfully, and in doing so we have grown and diversified the sources and robustness of our fee income.
There is always the risk that long-term ambitions get forgotten during periods of short-term challenge. Concerted efforts to reduce our environmental impact and to enhance diversity, equity and inclusion in the workplace must not be seen as optional and "only for the good times". I am proud to Chair in ICG an organisation that is action-orientated in these areas, being amongst the first group of alternative asset managers to commit to net zero (by 2040) and exceeding its commitment made under the UK Women in Finance Charter two years earlier than planned. Of course, many other initiatives in these areas continue and I am pleased with the progress we have made over the last 12 months.
As a direct result of these decisions and actions, ICG today is better positioned -- strategically, financially, operationally and culturally -- than at any time in our history. We manage our clients' assets across a broad range of products, spanning the entire capital structure from common equity to senior debt. From the perspective of our portfolio companies, we are a partner who can provide the most appropriate form of capital to meet their needs. For our clients, this diversification allows us to help them achieve their investment objectives in their alternative asset allocations -- whether in Structured and Private Equity, Private Debt, Real Assets, or Credit. For shareholders, the diversity of our business is a powerful driver of resilience and growth, providing multiple avenues to increase our AUM and thereby develop further long-term streams of management fee income.
A consequence of our business and financial model is that we are able to sustain business activity across economic cycles, and this is visible in the results we report for FY23. We continued to deploy and realise our clients' capital, and recorded year-on-year growth across AUM, fee income, FMC PBT and the distributions made to our shareholders(1) .
Our confidence in the long-term and through-cycle prospects of ICG is underlined by our simplification of the dividend policy to being progressive. We are also stating the we intend over the long-term to increase the dividend per share by at least mid-single digit percentage points on an annualised basis. The breadth and scale of ICG today allows us to have this dividend policy as an integral part of our approach to capital allocation, running alongside commitments to our funds and using our balance sheet to seed new strategies.
None of this is instant. Building and scaling a platform that generates compounding growth over the long-term takes time, and that is precisely what we are doing at ICG. In recent months, Andrew Sykes and I have had a number of discussions with shareholders in a variety of forums. We have both been encouraged by the level of engagement around ICG; the clear understanding our shareholders have of the business; and the thoughtful, long-term view with which they approach ICG's strategy and our potential to generate long-term equity value. I look forward to more discussions with shareholders and our broader stakeholders in the coming months.
Post year-end there were two changes to the Board. Kathryn Purves stepped down after nine years as a Non-Executive Director, during which time she made a wide-ranging contribution including chairing the Risk Committee and more recently serving as Senior Independent Director. We also announced the appointment of David Bicarregui, who joined ICG in April and who will take up the role of CFO in July, replacing Vijay Bharadia. I would like to pass on my and the Board's thanks to Kathryn and to Vijay for their significant contributions to ICG.
The last twelve months have demonstrated the strategic and financial benefits of our scale and diversification. Notwithstanding our strong historical growth, I believe the investments we have made give us substantial runway to continue to grow in the coming years, and that in many respects ICG is still at the beginning of its journey. Mindful of the uncertainty and volatility we may face in the future, we are well positioned to navigate complex markets for the benefit of our clients, portfolio companies and shareholders.
Over a number of decades I have watched and admired ICG's growth and development from afar. I am excited at the prospect of being actively involved in its future, and look forward to working with the ICG team, our shareholders and other stakeholders in the years to come.
William Rucker
Chairman
CHIEF EXECUTIVE OFFICER'S REVIEW
The last twelve months have been a busy and successful period for ICG. Our scale and breadth have enabled us to capture opportunities in a dynamic market environment. The investment landscape and client appetite have shifted towards our areas of particular expertise such as structured transactions, private debt and infrastructure. We have continued to execute successfully on our strategy of growing up and growing out, and have invested selectively across the organisation to augment our investment teams, marketing and client relations offering, and to enhance our operating platform. By investing today, we are positioning ourselves to benefit from what could be a rapid and significant rebound in private markets activity when conditions become less volatile, and when the market could continue to further concentrate around scaled, broad managers.
Over the last year we have developed opportunities that embed further long-term growth potential. The single largest contributor to fundraising this year was our direct lending strategy, Senior Debt Partners, which raised $3.3bn during the financial year ended 31 March 2023 (FY23) and which is continuing to fundraise -- an already-successful strategy that became incrementally attractive both to clients and portfolio companies given its exposure to floating rate debt and its ability to provide debt financing when many other sources were not available. The year saw the final closes of three funds (all at or above their original hard-caps) which in aggregate account for $13.2bn of third-party AUM(2) at 31 March 2023, including Europe VIII closing with almost twice as much capital committed from clients as the previous vintage. We launched second vintages of Infrastructure, Europe Mid-Market and Sale and Leaseback; marketed a number of first-time funds; hired new teams for future strategies, including Infrastructure Asia and Real Estate Asia; and invested GBP214m of our balance sheet capital to seed a number of future strategies.
The financial results we are reporting today reflect this strong strategic performance. Third-party fee income for the year was GBP501.0m, up 12% compared to FY22 (with management fees up 23%), and record Fund Management Company (FMC) profit before tax was GBP310.7m, up 9% compared to FY22. Our diversified and robust balance sheet is performing in line with our expectations, generating NIR of 4% over the twelve months. At 31 March 2023 the balance sheet had net gearing of 0.50x and total available liquidity of GBP1.1bn. The Board has declared a final dividend of 52.2p per share, bringing total dividends for the year to 77.5p per share, an increase of 2% compared to FY22. Over the last five years, ordinary dividends per share have grown at an annualised rate of 21%, and the Board is reaffirming its commitment to a progressive dividend policy.
The nature of our business is that we generate growth and value over the long-term, and in recent years we have successfully scaled and broadened our product offering and client franchise. We have raised a total of $33bn so far in this fundraising cycle since the beginning of FY22, and are on track to meet our accelerated fundraising guidance of at least $40bn cumulatively from FY22 to FY24. We now manage $77bn of client capital, up 15%(3) in the year and 19%(2) on an annualised basis over the last five years. Over the same period our third-party fee income has grown at an annualised rate of 25% and our FMC profit before tax at 27%. Our balance sheet has delivered long-term value for our shareholders, generating a five-year average net investment return of 11.2% and a NAV per share annualised growth rate of 9.7% over the same period.
ICG's business model today therefore provides a high degree of stability and visibility, which is particularly powerful during periods of volatility such as we have experienced over the last twelve months. At 31 March 2023 we had $62.8bn of fee-earning AUM, with an indicative annualised management fee generation potential of GBP459m, and a further $14.7bn of AUM that is not yet fee-earning which, when deployed, has the indicative potential to generate GBP116m of annualised management fees.
Our ability to deliver attractive returns for our clients underpins our future success. Our portfolio companies are generally continuing to show strong operational performance, with those in our European Corporate strategy for example showing LTM EBITDA growth of 13% and those in direct lending (SDP) showing LTM EBITDA growth of 20%. We are reporting increases in fund valuations across many of our strategies for the period; very low loss ratios with historically high returns in debt strategies; and attractive life-to-date IRRs, MOICs and DPIs in strategies with equity exposure. During the year we realised $6.9bn of third-party fee-earning AUM at a realised annualised return of 18.7%(3) , further anchoring the performance of our funds. The track records we are developing today are important components of marketing future vintages, and we continue to pay very close attention to portfolio management to reinforce our track record.
Successful execution of our strategies around Sustainability and Diversity, Equity and Inclusion (DE&I) are important components of our ability to generate value for our clients and portfolio companies. In January we published our latest Sustainability and People Report, detailing our achievements over the last twelve months and our areas of future focus. I was delighted to welcome a new Global Head of Sustainability and ESG in an enhanced role during FY23, and we are rapidly building on an already-strong position. At the first anniversary of ICG's commitment to be net zero by 2040, nine portfolio companies have set science-based greenhouse gas (GHG) emissions reduction targets: 15% of relevant investments in our first year alone. Furthermore, many other portfolio companies have advanced their target-setting plans, placing us on track to achieve our interim target of 50% of relevant investments having such targets by 2026. Our achievements in the areas of Sustainability and ESG are recognised in our public ESG ratings, and for the first time ICG became a member of DJSI Europe as a result of our assessment by S&P Global CSA. In the related area of DE&I, we were delighted to be top-ranked for Private Equity globally in the Honordex, measuring DE&I efforts and outcomes. This sits alongside extensive work around enhancing DE&I not just for ICG but across our industry, including through a comprehensive charity framework designed to increase career access to our industry for underprivileged groups.
Looking to FY24 and beyond, I remain excited by our prospects. We reiterate our fundraising target of at least $40bn cumulatively from FY22 to FY24, and we will be marketing a number of first-time and follow-on vintages in the coming year. We will invest for the future, across our product offering, client franchise and operating platform.
We are well placed to deploy capital in dynamic market conditions, with $20.9bn of dry powder at 31 March 2023 and local origination teams with exceptional market access, supported by a disciplined investment process. We have hundreds of companies across our portfolio, giving us access to a large number of datapoints on the performance of businesses across geographies and sectors, enabling us to spot trends early and understand more holistically how investment opportunities might perform. In the near-term, transaction volumes might remain slower in the broader market. ICG is well positioned to execute on opportunities that are particularly attractive today, including in structured transactions, private debt and real assets.
Longer-term, I expect the structural demand for private markets to remain intact, and it was good to welcome many of you to our shareholder seminar in January on fundraising and client strategy. For portfolio companies, the attractions of private capital are largely unimpacted by the broader macroeconomic context: bilateral bespoke agreements; being capitalised by investors with substantial dry powder to support future growth; and an ability to focus on longer-term value creation. For clients, lower volatility, higher returns, longer duration, and investments in parts of the economy that cannot be accessed through public markets continue to make allocations to private markets an important component of a long-term asset allocation strategy. Our strategy of "growing up" and "growing out" has enabled us to capture a growing breadth of the market and has generated significant value for shareholders, accelerated by our strong balance sheet. I see ample runway for many years of profitable growth by continuing to execute successfully on our strategy.
I believe there will be substantial rewards for the winners emerging from this era of higher interest rates, inflation and macro uncertainty. To be amongst that group, private markets managers will need sufficient scale to be relevant, a broad product offering, a differentiated origination capability, a track record of managing portfolios to generate value through cycles, and a sophisticated client strategy and operating platform.
ICG possesses all of those qualities. Today we are larger, broader, more financially resilient, and the FMC more profitable than at any point in our history, and I believe we are well positioned to navigate the future for the benefit of our clients, portfolio companies and shareholders.
Benoît Durteste
FINANCIAL REVIEW
The Board and management monitor the financial performance of the Group on the basis of Alternative Performance Measures (APM), which are non-UK-adopted IAS measures. The APM form the basis of the financial results discussed in this review, which the Board believes assist shareholders in assessing their investment and the delivery of the Group's strategy through its financial performance.
The substantive difference between APM and UK-adopted IAS is the consolidation of funds and related entities deemed to be controlled by the Group, which are included in the UK-adopted IAS consolidated financial statements but excluded for the APM.
Under IFRS 10, the Group is deemed to control (and therefore consolidate) entities where it can make significant decisions that can substantially affect the variable returns of investors. This has the impact of including the assets and liabilities of these entities in the consolidated statement of financial position and recognising the related income and expenses of these entities in the consolidated income statement.
The Group's profit before tax on an UK-adopted IAS basis was below the prior period at GBP251.0m (FY22: GBP565.4m). On the APM basis it was below the prior period at GBP258.1m (FY22: GBP568.8m).
Detail of these adjustments can be found in note 4 to the UK-adopted IAS consolidated financial statements on pages 34 to 92.
AUM
Refer to the https://www.globenewswire.com/Tracker?data=KT2dJVxDMfsKbdZIdl5S4MW5t9pMu_fl90ZuOXLKb39DmcQPFnRq4pzPtEIEkQ76PsCAZXVtgGlIZktSudAh8NHH4SBkqMVzcCmMOuUx5agKXACcembMEHJbNWJ_odko Datapack issued with this announcement for further detail on AUM (including fundraising, realisations and deployment).
Total AUM
During the period, total AUM grew 14% on a constant currency basis (up 11% on a reported basis) and at 31 March 2023 was $80.2bn (31 March 2022: $72.1bn). The balance sheet investment portfolio accounted for 4.1% of the Total AUM (31 March 2022: 5.0%).
Third-party AUM and fee-earning AUM
Third-party AUM grew 15% on a constant currency basis during the period, and stood at $77.0bn at 31 March 2023 (31 March 2022: $68.5bn).
Fee-earning AUM grew 10% on a constant currency basis during the period, and stood at $62.8bn at 31 March 2023 (31 March 2022: $58.3bn).
At 31 March 2023 we had $20.9bn of third-party AUM available to deploy in new investments (dry powder), $14.7bn of which is not-yet-fee-earning, but will be when the capital is invested or enters its investment period.
With effect from 31 March 2023, the methodology for calculating third-party AUM was updated in line with industry practice to include i) all uncalled capital commitments until they are legally expired (previously, uncalled capital commitments were removed from third-party AUM as a 'step-down' despite the fund being legally able to call such capital); and ii) permanent fund-level leverage where such leverage has been signed with the leverage provider and where we charge fees on the leverage. The aggregate impact of these changes is to increase third-party AUM by $3.1bn and fee-earning AUM by $0.5bn.
At 31 March 2023 56% of our fee-earning AUM was in euros; 31% in dollars; 12% in sterling; and 1% in other currencies. Our funds pay fees in their fund currency. Third-party AUM reduced by $1.6bn during the period due to FX movements, partially offset by positive market moves of $0.7bn impacting funds that charge fees on NAV. For more details on the impact of FX rates on our reported financials, see page 20.
Structured
Third-party AUM and Private
($m) Equity Private Debt Real Assets Credit Total
------------------- ------------ ------------ ------------- ------------- ------------
At 1 April 2022 22,507 19,806 8,028 18,127 68,468
Additions(1) 3,747 3,864 1,064 1,895 10,570
Realisations (1,513) (391) (439) (1,928) (4,271)
Policy change 2,381 712 (7) 42 3,128
FX and other 606 (350) (783) (381) (908)
------------------- ------------ ------------ ------------- ------------- ------------
At 31 March 2023 27,728 23,641 7,863 17,755 76,987
------------------- ------------ ------------ ------------- ------------- ------------
Change $m 5,221 3,835 (165) (372) 8,519
Change % 23 % 19 % (2) % (2) % 12 %
Change % (constant
exchange rate)(2) 26 % 20 % 3 % (1) % 15 %
------------------- ------------ ------------ ------------- ------------- ------------
1. Includes $0.3bn of steps-up;
2. See page 20 for an explanation of constant exchange rate calculation
Structured
Fee-earning AUM and Private
($m) Equity Private Debt Real Assets Credit Total
------------------- ------------ ------------ ------------ ----------- ------------
At 1 April 2022 22,100 11,953 6,873 17,409 58,335
Funds raised:
fees on
committed
capital 3,367 -- 414 422 4,203
Deployment of
funds: fees on
invested
capital 436 4,451 928 1,411 7,226
Total additions 3,803 4,451 1,342 1,833 11,429
Policy change (38) (10) (11) 534 475
Realisations (2,327) (1,937) (1,005) (1,654) (6,923)
FX and other 302 (208) (337) (224) (467)
------------------- ------------ ------------ ------------ ----------- ------------
At 31 March 2023 23,840 14,249 6,862 17,898 62,849
------------------- ------------ ------------ ------------ ----------- ------------
Change $m 1,740 2,296 (11) 489 4,514
Change % 8 % 19 % -- % 3 % 8 %
Change % (constant
exchange rate)(1) 10 % 22 % 5 % 4 % 10 %
------------------- ------------ ------------ ------------ ----------- ------------
1. See page 20 for an explanation of constant exchange rate calculation
Business activity
Fundraising Deployment(1) Realisations(1,2)
------------------------- ------------- ---------------
$bn FY23 FY22 FY23 FY22 FY23 FY22
------------------------- ------ ----- ------- ------ --------- --------
Structured and Private
Equity 3.5 10.4 4.3 8.0 2.3 2.6
Private Debt 3.8 4.1 4.5 4.9 2.0 2.8
Real Assets 1.0 3.0 1.7 2.1 1.0 1.0
Credit 1.9 5.0 n/a n/a n/a n/a
------------------------- ------ ----- ------- ------ --------- --------
Total 10.2 22.5 10.5 15.0 5.3 6.4
------------------------- ------ ----- ------- ------ --------- --------
1. Direct investment funds;
2. Realisations of third-party fee-earning AUM
Fundraising
-- We attracted $10.2bn of new money during the period, in line with our
guidance and bringing the total raised since 31 March 2021 to $32.8bn, on
track to meet accelerated fundraising target of at least $40bn
cumulatively between FY22 - FY24
-- Structured and Private Equity attracted $3.5bn of capital. Within this,
Strategic Equity IV raised $1.3bn, Europe VIII raised $1.2bn and Asia
Pacific IV raised $450m. All three of these funds had final closes during
the period at or above their original hard caps. During the year, we also
raised for Strategic Equity V, LP Secondaries I and Europe Mid-Market II
-- Private Debt was the largest contributor to fundraising during the period
amongst our asset classes, attracting a total of $3.8bn, $3.3bn of which
was in SDP V and SDP SMAs. During the period we launched North America
Credit Partners III and had closed $427m of third-party commitments at 31
March 2023
-- Real Assets raised $1.1bn, with the majority ($591m) coming from Real
Estate Debt strategies. In addition we raised $414m for Sale and
Leaseback II
-- Credit raised $1.9bn, of which $1.2bn was from new CLOs (two in Europe
and one in the US) and the remainder was within our liquid credit funds
-- At 31 March 2023 funds that were actively fundraising included: SDP V and
SDP SMAs; Strategic Equity V; North America Credit Partners III; Europe
Mid-Market II; Infrastructure II; Sale and Leaseback II; LP Secondaries
I; Life Sciences I; and various credit strategies. The timings of closes
for those funds depends on a number of factors, including the prevailing
market conditions
Deployment
-- During the period we deployed a total of $10.5bn of AUM on behalf of our
direct investment funds
-- Within Structured and Private Equity, Strategic Equity saw strong
activity, deploying $2.6bn (FY22: $2.5bn), with the remainder across
European Corporate including Europe Mid-Market I and various other
strategies
-- Within Private Debt, deployment was driven by our direct lending strategy,
Senior Debt Partners, which deployed $3.9bn. The Australia Senior Loan
fund deployed $0.3bn and North American Private Debt $0.2bn
-- Within Real Assets, real estate debt strategies deployed $0.9bn,
Infrastructure Equity I deployed $0.5bn and Sale and Leaseback deployed
$0.3bn
Realisations
-- Despite the slowdown in transaction activity across the market, we
continued to realise investments, with $5.3bn fee-earning AUM realised
from our direct investment funds (FY22: $6.4bn)
-- Structured and Private Equity accounted for $2.3bn of realisations within
fee-earning AUM, with the majority of activity coming from Europe VI and
Europe VII (2015 and 2018 vintages' respectively)
-- Realisations of fee-earning AUM in Private Debt were $2.0bn, with the
vast majority ($1.7bn) being within direct lending (Senior Debt Partners)
-- Real assets accounted for $1.0bn of realisations within fee-earning AUM,
almost all of which was across a range of real estate debt strategies
Performance of key funds
Refer to the https://www.globenewswire.com/Tracker?data=KT2dJVxDMfsKbdZIdl5S4Hbg_CnE66ibR8vrxVPtNtMaQHnUNKEGMFj2_4hLYzzjmW7jCUOkQgQ_UToj-AIgDgctdwEuyfbCp5ePbTcZHjCPyeVJCPBPIanG-qQ9Omgw Datapack issued with this announcement for further detail on fund performance.
A summary of selected ICG drawdown funds that have had a final close at 31 March 2023 is set out below:
Total
fund size Gross MOIC Gross MOIC DPI
Vintage (3) % deployed(2) 31 March 2023 31 March 2022 31 March 2023
------------------- -------- --------- ------------- -------------- -------------- --------------
Structured and
Private Equity
Europe V 2011 EUR2.5bn 1.8x 1.8x 151%
Europe VI 2015 EUR3.0bn 2.2x 2.1x 171%
Europe VII 2018 EUR4.5bn 1.8x 1.7x 42%
Europe VIII 2021 EUR8.1bn 43% 1.1x 1.1x --%
Europe
Mid-Market I 2019 EUR1.0bn 78% 1.4x 1.2x --%
Asia Pacific
III 2014 $0.7bn 2.1x 2.1x 103%
Asia Pacific IV 2020 $1.0bn 43% 1.4x 1.4x --%
Strategic
Secondaries
II 2016 $1.1bn 2.9x 2.8x 136%
Strategic
Equity III 2018 $1.9bn 2.3x 2.2x 28%
Strategic
Equity IV 2021 $4.2bn 95% 1.6x 1.3x 5%
Private Debt
Senior Debt
Partners II 2015 EUR1.5bn 1.3x 1.3x 75%
Senior Debt
Partners III 2017 EUR2.6bn 1.2x 1.2x 43%
Senior Debt
Partners IV 2020 EUR5.0bn 100% 1.1x 1.1x 9%
North American
Private Debt
I 2014 $0.8bn 1.5x 1.4x 128%
North American
Private Debt
II 2019 $1.4bn 92% 1.3x 1.2x 19%
Real Assets
Real Estate
Partnership
Capital IV(1) 2015 GBP1.0bn 1.3x 1.3x 82%
Real Estate
Partnership
Capital V(1) 2018 GBP1.0bn 1.2x 1.2x 16%
Infrastructure
Equity I 2020 EUR1.5bn 90% 1.3x 1.2x 1%
Sale &
Leaseback I 2019 EUR1.2bn 99% 1.3x 1.3x 7%
------------------- -------- --------- ------------- -------------- -------------- --------------
Note co-mingled funds only. Where there are funds with multiple currencies, FX rates at 31 March 2023 used to convert
1. Gross MOIC as at 31 March 2023
2. For current vintages only
3. Third-party AUM plus ICG plc commitment at point of final close. MOICs
and DPI for SDP III and SDP IV shown for EUR sleeves
Overview: Group financial performance
Fund Management Company (FMC) revenue was GBP539.9m (FY22: GBP512.8m) and FMC profit before tax was GBP310.7m (FY22: GBP286.2m), an increase of 9% compared to FY22, resulting in an FMC operating margin of 57.5% (FY22: 55.8%).
Net investment returns (NIR) for the Investment Company (IC) of 4%, or GBP102.3m, and over the last five years have averaged 11%. The IC as a whole recorded a (loss) of GBP(52.6)m (FY22: profit of GBP282.6m).
The Group generated a Group profit before tax of GBP258.1m (FY22: GBP568.8m) and Group earnings per share were 80.3p (FY22: 187.6p).
ICG has a progressive dividend policy, and the proposed final dividend of 52.2p per share brings the total dividend per share to 77.5p for FY23, an increase of 2% compared to FY22. Over the last five years the dividend per share has grown at an annualised rate of 21%.
Our balance sheet remains strong and well capitalised, with net gearing of 0.50x, total available liquidity of GBP1.1bn and a net asset value per share of 694p.
Our medium-term financial guidance, set out on page 3, remains unchanged from 31 March 2022.
GBPm unless stated 31 March 2023 31 March 2022 Change %
----------------------------- -------------- -------------- ---------------
Third-party management fees 481.4 392.7 23%
Third-party performance
fees 19.6 56.0 (65%)
Third-party fee income 501.0 448.7 12%
Movement in FV of derivative (26.8) (0.4) n/m
Other income 65.7 64.5 2%
----------------------------- -------------- -------------- ---------------
Fund Management Company
revenue 539.9 512.8 5 %
----------------------------- -------------- -------------- ---------------
Fund Management Company
operating expenses (229.2) (226.6) 1%
----------------------------- -------------- -------------- ---------------
Fund Management Company
profit before tax 310.7 286.2 9 %
----------------------------- -------------- -------------- ---------------
Fund Management Company
operating margin 57.5 % 55.8 % 3%
----------------------------- -------------- -------------- ---------------
Investment Company revenue 98.4 451.7 (78%)
Investment Company operating
expenses (103.1) (118.6) (13%)
Interest income 13.9 -- >100%
Interest expense (61.8) (50.5) 22%
----------------------------- -------------- -------------- ---------------
Investment Company (loss) /
profit before tax (52.6) 282.6 (119) %
----------------------------- -------------- -------------- ---------------
Group profit before tax 258.1 568.8 (55) %
----------------------------- -------------- -------------- ---------------
Tax (28.8) (30.8) (6%)
----------------------------- -------------- -------------- ---------------
Group profit after tax 229.3 538.0 (57) %
----------------------------- -------------- -------------- ---------------
Earnings per share 80.3 p 187.6p (57%)
Dividend per share 77.5p 76.0p 2 %
31 March 2023 31 March 2022 Change %
-------------------------- -------------- -------------- -------------
Liquidity GBP1.1bn GBP1.3bn (16%)
Net gearing 0.50x 0.45x 0.05x
Net asset value per share 694p 696p --%
-------------------------- -------------- -------------- -------------
Fund Management Company
The FMC is the Group's principal driver of long-term profit growth. It manages our third-party AUM, which it invests on behalf of the Group's clients.
Third-party fee income
Third-party fee income grew to GBP501.0m in FY23 (FY22: GBP448.7m), a year-on-year increase of 12% (an increase of 7% on a constant currency basis).
Year ended Year ended Change
GBPm 31 March 2023 31 March 2022 %
-------------------------------- -------------- -------------- ------------
Structured and Private
Equity -- management fees 283.1 206.2 37%
Structured and Private
Equity -- performance fees 13.4 47.3 (72)%
Structured and Private Equity 296.5 253.5 17%
Private Debt -- management
fees 83.7 66.5 26%
Private Debt -- performance
fees 6.3 6.1 3%
Private Debt 90.0 72.6 24%
Real Assets -- management
fees 48.9 61.4 (20)%
Real Assets -- performance
fees (0.1) 0.1 n/m
Real Assets 48.8 61.5 (21)%
Credit -- management fees 65.7 58.6 12%
Credit -- performance fees -- 2.5 n/m
Credit 65.7 61.1 8%
-------------------------------- -------------- -------------- ------------
Third-party fee income 501.0 448.7 12 %
-------------------------------- -------------- -------------- ------------
Of which management fees 481.4 392.7 23%
Of which performance fees 19.6 56.0 (65)%
Our third-party fee income is largely comprised of management fees, which have a high degree of visibility and are directly linked to our fee-earning AUM.
The increase in management fees during FY23 was due to a number of factors including fundraising for Europe VIII and Strategic Equity IV (both of which charge fees on committed capital); net deployment within Private Debt (which charges fees on invested capital); and changes in foreign exchange rates. The GBP12.7m reduction in fee income for Real Assets was due to the prior period including GBP14.3m of catch-up fees (largely for Infrastructure Equity I and Sale and Leaseback I), which are non-recurring. Excluding those catch-up fees, third-party fee income for Real Assets is up approximately 3.4%.
Management fees during FY23 include a total of GBP30.6m catch-up fees (FY22: GBP14.3m). We do not expect significant catch-up fees for FY24 given the funds we have in market and the potential timing of first closes.
The effective management fee rate on our fee-earning AUM at the period end was 0.90% (FY22: 0.88%). The increase was due to the fundraising within Structured and Private Equity in strategies with higher fee rates charging fees on committed capital as well as a positive mix effect in other asset classes. The fee rate is split between asset classes as follows:
31 March 2023 31 March 2022
------------------------------ -------------- --------------
Structured and Private Equity 1.26 % 1.24 %
Private Debt 0.82 % 0.83 %
Real Assets 0.91 % 0.87 %
Credit 0.49 % 0.47 %
------------------------------ -------------- --------------
Group 0.90 % 0.88 %
------------------------------ -------------- --------------
Performance fees are a relatively small part of our revenue, and during the five years to 31 March 2023 have accounted for an average of 10.2% of our third-party fee income. With lower transaction activity in the broader market, timing expectations for various exits within our funds have been extended. This has resulted in a lower level of performance fees being recognised in this period, although does not impact the absolute level of performance fees we expect to receive if our funds perform in line with expectations. At 31 March 2023 the Group had an asset of GBP37.5m of accrued performance fees on its balance sheet (FY22: GBP91.0m):
GBPm ------------------------------------------ ------ Accrued performance fees at 1 April 2022 91.0 Accruals during period 19.4 (Received) during period (74.9) FX and other movements 2.0 ------------------------------------------ ------ Accrued performance fees at 31 March 2023 37.5 ------------------------------------------ ------
Our funds charge fees in the fund currency, and third-party fee income for the period was 56% in euros, 32% in US dollars, 11% in sterling and 1% in other currencies. On a constant currency basis our third-party fee income grew by 7% compared to FY22.
Movements in Fair value of derivatives and other income
During the year the Group changed its policy regarding hedging of non-sterling fee income. Previously the Group's policy was to hedge non-sterling fee income to the extent that it was not matched by costs and was predictable (transaction hedges). For FY23 FMC revenue included a negative impact of GBP(26.8)m due to changes in the fair value of these transaction hedges (FY22: GBP(0.4)m). During the financial year the Group decided to no longer enter into transaction hedges as a matter of course (although it may still do so on an ad hoc basis), and economically closed out all outstanding transaction hedges. Further detail on our hedging policy and sensitivities can be found on page 20.
Other income includes recorded dividend receipts of GBP40.2m (FY22: GBP38.0m) from investments in CLO equity, which are continuing to be received in line with historical experiences. The FMC also recognised GBP25.0m of revenue for managing the IC balance sheet investment portfolio (FY22: GBP24.8m), as well as other income of GBP0.5m (FY22: GBP1.7m).
Operating expenses and margin
During the year we remained focussed on managing costs, resulting in operating expenses increasing by only 1% compared to FY22 and totalling GBP229.2m (FY22: GBP226.6m). Salaries increased broadly in line with headcount (which grew 11%), while incentive scheme costs grew by only 6%. Both administrative costs and depreciation and amortisation recorded absolute reductions compared to FY22. Administrative costs reduced due to lower professional and consulting costs, lower placement agent fees and lower recruitment costs given the lower hiring in FY23 compared to FY22.
Operating expenses for the period were 70% in sterling, 9% in euros, 14% in US dollars and 7% in other currencies.
Year ended Year ended Change
GBPm 31 March 2023 31 March 2022 %
------------------------------ -------------- -------------- --------------
Salaries 85.0 76.0 12 %
Incentive scheme costs 92.2 87.2 6 %
Administrative costs 45.7 55.1 (17 %)
Depreciation and
amortisation 6.3 8.3 (24 %)
------------------------------ -------------- -------------- --------------
FMC operating expenses 229.2 226.6 1 %
FMC operating margin 57.5 % 55.8 % 2 %
------------------------------ -------------- -------------- --------------
The FMC recorded a profit before tax of GBP310.7m (FY22: GBP286.2m), a year-on-year increase of 9% and an increase of 14% on a constant currency basis (excluding the change in fair value of derivatives).
The FMC operating margin of 57.5% (FY22: 55.8%) was above our medium-term guidance of above 50%, driven in part by a combination of catch-up fees and a strong focus on cost control.
Investment Company
The Investment Company (IC) invests the Group's proprietary capital to seed and accelerate emerging strategies, and invests alongside the Group's more established strategies to align interests between our shareholders, clients and employees. It also supports a number of costs, including for certain central functions, a part of the Executive Directors' compensation, and the portion of the investment teams' compensation linked to the returns of the balance sheet investment portfolio (Deal Vintage Bonus, or DVB).
Balance sheet investment portfolio
The balance sheet investment portfolio grew 3% in absolute terms during the year and was valued at GBP2.9bn at 31 March 2023 (31 March 2022: GBP2.8bn). It experienced net realisations during the period of GBP128m (FY22: GBP253m), being new investments of GBP666m (FY22: GBP952m) and realisations of GBP794m (FY22: GBP1,205m). Realisations in FY23 include GBP101m of proceeds received when we sold down a portion of the balance sheet's exposure to ICG's liquid credit funds.
We made a number of new seed investments totalling GBP214m, including on behalf of Life Sciences, LP Secondaries, US Mid-Market and Real Estate Opportunistic Equity Europe. These investments are held in anticipation of being transferred to a third-party fund. At 31 March 2023 the balance sheet held GBP330m of seed investments (31 March 2022: GBP178m).
At 31 March 2023 the balance sheet investment portfolio was 45% euro denominated, 27% US dollar denominated, 21% sterling denominated and 7% in other currencies.
As at 31 New Gains/ (losses) FX & As at 31
GBPm March 2022 investments Realisations in valuation other March 2023
--------------- ----------- ------------ ------------ --------------- ----- -----------
Structured and
Private
Equity 1,826 260 (513) 112 66 1,751
Private Debt 149 31 (33) 14 8 169
Real Assets 222 130 (88) 20 5 289
Credit(1) 447 31 (109) (30) 24 363
Seed
Investments(2) 178 214 (51) (16) 5 330
--------------- ----------- ------------ ------------ --------------- ----- -----------
Total Balance
Sheet
Investment
Portfolio 2,822 666 (794) 100 108 2,902
--------------- ----------- ------------ ------------ --------------- ----- -----------
1. Within Credit, at 31 March 2023 GBP65m was invested in liquid strategies,
with the remaining GBP298m invested in CLO debt (GBP106m) and equity
(GBP192m)
2. Formerly referred to as Warehouse investments. Adjusted to include three
assets previously reported with Real Assets, with a combined value of
GBP83m at 31 March 2022
Net Investment Returns
For the five years to 31 March 2023, Net Investment Returns (NIR) have been in line with our medium-term guidance, averaging 11.2%. For the twelve months to 31 March 2023, NIR were GBP102.3m (FY22: GBP485.7m), or 4% (FY22: 18%).
NIR was comprised of interest of GBP113.2m from interest-bearing investments (FY22: GBP76.8m), unrealised losses of GBP(13.2)m (FY22: gain of GBP404.0m) and other income of GBP2.3m. NIR were split between asset classes as follows:
Twelve months to 31 March
2023 Twelve months to 31 March 2022
----------------------------- ------------------------------
GBPm NIR (GBPm) NIR (%) NIR (GBPm) NIR (%)
--------------- -------------- ------------- -------------- --------------
Structured and
Private
Equity 112.9 6% 457.7 27 %
Private Debt 14.4 9% 24.9 16 %
Real Assets 20.7 8% 9.7 5 %
Credit (30.1) (7%) (0.5) -- %
Seed
Investments(1) (15.6) (6%) (6.1) (4) %
--------------- -------------- ------------- -------------- --------------
Total net
investment
returns 102.3 4 % 485.7 18 %
--------------- -------------- ------------- -------------- --------------
1. FY22 NIR adjusted to reflect three assets with Seed Investments that were
previously included within Real Assets
-- Structured and Private Equity, which accounted for 60% of the
total balance sheet investment portfolio at 31 March 2023, saw a
positive NIR driven by European Corporate and Strategic Equity
-- Within Private Debt, SDP is performing resiliently and a strong
performance during year within North America Credit Partners2
driving the majority of the positive NIR
-- Real Assets - which as noted above now excludes three investments
that have been moved to Seed investments - saw a strong return
within Infrastructure, offsetting valuation reductions within Sale
and Leaseback. The Real Estate debt strategies have continued to
perform well, recording positive NIR during the year
-- Credit NIR of GBP(30.1)m includes a reduction of GBP(40.2)m in the
value of the balance sheet's holdings of CLO equity to reflect CLO
dividend receipts recorded in the FMC and a reduction of GBP(6.3)m
in respect of changes in the value of CLO debt and co-investments
in our liquid credit funds. This is partially offset by a GBP16.4m
valuation gain on CLO equity, driven by gains arising from actual
defaults being lower than projections as well as by the passage of
time increasing the current value of discounted future cashflows
2. Formerly North America Private Debt
In addition to the NIR, the IC recorded other revenue as follows:
Year ended Year ended Change
GBPm 31 March 2023 31 March 2022 %
-------------------------------- -------------- -------------- ------------
Changes in fair value of
derivatives 16.8 (11.8) n/m
Fee paid to FMC (25.0) (24.8) 1 %
Other 4.3 2.6 65 %
-------------------------------- -------------- -------------- ------------
Other IC revenue (3.9) (34.0) n/m
-------------------------------- -------------- -------------- ------------
As a result, the IC recorded total revenues of GBP98.4m (FY22 revenue: GBP451.7m).
Investment Company expenses
Operating expenses in the IC of GBP103.1m decreased by 13% compared to FY22 (GBP118.6m), which was largely due to a GBP22.9m reduction in incentive scheme costs:
Year ended Year ended Change
GBPm 31 March 2023 31 March 2022 %
------------------------------ -------------- -------------- --------------
Salaries 20.0 16.7 20 %
Incentive scheme costs 59.6 82.5 (28 %)
Administrative costs 20.7 16.0 29 %
Depreciation and
amortisation 2.8 3.4 (18 %)
------------------------------ -------------- -------------- --------------
IC operating expenses 103.1 118.6 (13 %)
------------------------------ -------------- -------------- --------------
Lower incentive scheme costs were predominantly the result of lower accrual of DVB during the period: GBP36.6m compared to GBP66.5m in FY22. DVB, which is linked to the performance of certain investments within the balance sheet investment portfolio, only pays out upon cash realisations.
Employee costs for teams who do not yet have a third-party fund are allocated to the IC. For FY23, the directly-attributable costs within the Investment Company for teams that have not had a first close of a third-party fund was GBP24.4m (FY22: GBP15.4m). When those funds have a first close, the costs of those teams are transferred to the Fund Management Company.
Interest expense was GBP61.8m (FY22: GBP50.5m) and interest earned on cash balances was GBP13.9m (FY22: nil).
The IC therefore recorded a (loss) before tax of GBP(52.6)m (FY22: profit before tax GBP282.6m).
Group
Tax
The Group recognised a tax charge of GBP(28.8)m (FY22: tax charge of GBP(30.8)m), resulting in an effective tax rate for the period of 11.2% (FY22: 5.4%). The increase compared to the prior year is due to the change in composition of our earnings and the lower NIR in FY23 compared to FY22.
As detailed in note 14, the Group has a structurally lower effective tax rate than the statutory UK rate. This is largely driven by the Investment Company, where certain forms of income benefit from tax exemptions. The effective tax rate will vary depending on the income mix.
Dividend
The Board of ICG is simplifying our dividend policy and reaffirming it as a progressive dividend policy, demonstrating our confidence in the long-term growth prospects of the business. Over the long-term, the Board intends to increase the dividend per share by at least mid-single digit percentage points on an annualised basis. The dividend will continue to be paid in two instalments, with the interim dividend being one third of the prior year's total dividend.
For FY23, in addition to the 25.3p per share interim dividend, the Board is proposing a 52.2p per share final dividend. This would result in a total dividend of 77.5p per share being paid for the year, an increase of 2.0% compared to FY22 (76.0p). Over the last five years, ordinary dividends per share have increased at an annualised rate of 21%. We continue to make the dividend reinvestment plan available.
Balance sheet
Balance sheet strategy
Delivering our strategy and maximising shareholder value requires a clear approach to managing our balance sheet. We have a robust, diversified balance sheet and a strong liquidity position that allows us to invest in the business through economic cycles. This provides us with significant strategic and financial flexibility, enabling us to take advantage of opportunities to generate future incremental fee income.
Our approach to managing our balance sheet is structured around three priorities. These ensure we have the financial and operational flexibility to successfully execute our strategic objectives:
Align the Group's interests with its clients:
-- co-invest in our strategies alongside our clients, whilst seeking to
reduce the Group's commitments over time where appropriate
Grow third-party fee income in the FMC:
-- fund and warehouse seed investments to launch new strategies that will be
a source of future incremental management fees in the FMC
Maintain robust capitalisation:
-- retain strong liquidity -- long-term objective of zero net gearing
Liquidity and net debt
At 31 March 2023 the Group had total available liquidity of GBP1,100m (FY22: GBP1,312m), net financial debt of GBP988m (FY22: GBP893m) and net gearing of 0.50x (FY22: 0.45x).
During the period cash reduced by GBP212m from GBP762m to GBP550m, including the repayment of GBP195m of borrowings that matured.
The table below sets out movements in cash, including certain APM metrics, which management believes will help shareholders understand where cash is being generated and used within the Company. The Glossary sets out the reconciliations from the APM cash measures in the table below to the UK-adopted IAS measures of Net cash flows from/(used in) operations; Net cash flows from/(used in) investing activities; and Net cash flows from/(used in) financing activities.
GBPm FY23 FY22
---------------------------------------------------------- ----- -----
Opening cash 762 297
Operating activities
Fee and other operating income 573 388
Net cashflows from investment activities and investment
income(1) 176 292
Expenses and working capital (322) (242)
Tax paid (32) (44)
----- -----
Group cashflows from operating activities - APM(2) 395 394
Financing activities
Interest paid (64) (56)
Purchase of own shares (39) (21)
Dividends paid (236) (166)
Net (repayment of) / proceeds from borrowings (195) 302
----- -----
Group cashflows from financing activities - APM(2) 534 59
Other cashflow(3) (77) 7
FX and other movement 4 5
---------------------------------------------------------- ----- -----
Closing cash 550 762
---------------------------------------------------------- ----- -----
Available undrawn ESG-linked RCF 550 550
---------------------------------------------------------- ----- -----
Cash and undrawn debt facilities (total available
liquidity) 1,100 1,312
---------------------------------------------------------- ----- -----
1. The aggregate cash (used)/received from balance sheet investment
portfolio (additions), realisations, and cash proceeds received from
assets within the balance sheet investment portfolio
2. Interest paid, which is classified as an Operating cash flow under
UK-adopted IAS, is reported within Group cashflows from financing
activities - APM
3. Investing cashflows (UK-adopted IAS) in respect of purchase of intangible
assets, purchase of property, plant and equipment and net cashflow from
derivative financial instruments ("Net cash flows used in financing
activities" per Note 4) and "Payment of principal portion of lease
liabilities" (see Note 4)
At 31 March 2023, the Group had drawn debt of GBP1,538m (31 March 2022: GBP1,655m). The change is due to the repayment of certain facilities as they matured, along with changes in FX rates impacting the translation value:
GBPm
--------------------------------- -----
Drawn debt at 31 March 2022 1,655
Debt (repayment) / issuance (195)
Impact of foreign exchange rates 78
--------------------------------- -----
Drawn debt at 31 March 2023 1,538
--------------------------------- -----
Net financial debt therefore increased to GBP988m (31 March 2022: GBP893m):
GBPm 31 March 2023 31 March 2022 ------------------- ------------- ------------- Drawn debt 1,538 1,655 Cash 550 762 ------------------- ------------- ------------- Net financial debt 988 893 ------------------- ------------- -------------
During the period the Group's credit rating provided by S&P was upgraded to BBB, and at 31 March 2023 the Group had credit ratings of BBB (stable outlook) / BBB (stable outlook) from Fitch and S&P, respectively.
The Group's drawn debt is provided through a range of facilities. All facilities except the ESG-linked RCF are fixed-rate instruments. The weighted average cost of drawn debt at 31 March 2023 was 3.17% (31 March 2022: 3.29%). The weighted-average life of drawn debt at 31 March 2023 was 4.1 years (31 March 2022 4.6 years). The maturity profile of our term debt is set out below:
GBPm FY24 FY25 FY26 FY27 FY28 FY29 FY30 ------------------- ---- ---- ---- ---- ---- ---- ---- Term debt maturing 51 258 185 503 -- 101 440
For further details of our debt facilities see Other Information (page 93).
Net asset value
Shareholder equity increased to GBP1,977m at 31 March 2023 (31 March 2022: GBP1,995m), equating to 694p per share (31 March 2022: 696p):
GBPm 31 March 2023 31 March 2022 ----------------------------------- ------------- ------------- Balance sheet investment portfolio 2,902 2,822 Cash and cash equivalents 550 762 Other assets 424 419 ----------------------------------- ------------- ------------- Total assets 3,876 4,003 Financial debt (1,538) (1,655) Other liabilities (361) (353) Total liabilities (1,899) (2,008) ----------------------------------- ------------- ------------- Net asset value 1,977 1,995 ----------------------------------- ------------- ------------- Net asset value per share 694p 696p ----------------------------------- ------------- -------------
Net gearing
The movements in the Group's cash position, debt facilities and shareholder equity resulted in net gearing increasing to 0.50x at 31 March 2023 (31 March 2022: 0.45x). We maintain our long-term objective of having zero net gearing.
GBPm 31 March 2023 31 March 2022 Change % ----------------------- -------------- ------------- -------- Net financial debt (A) 988 893 11% Shareholder equity (B) 1,977 1,995 (1)% ----------------------- -------------- ------------- -------- Net gearing (A/B) 0.50 x 0.45 x 0.05x ----------------------- -------------- ------------- --------
Foreign exchange rates
The following foreign exchange rates have been used throughout this review:
Average rate Average rate 31 March 2023 31 March 2022
for FY23 for FY22 year end year end
-------- ------------ ------------ ------------- -------------
GBP:EUR 1.1560 1.1755 1.1375 1.1876
GBP:USD 1.2051 1.3626 1.2337 1.3138
EUR:USD 1.0426 1.1595 1.0846 1.1063
-------- ------------ ------------ ------------- -------------
We report our AUM in dollars: 56.1% of our fee-earning AUM at 31 March 2023 was in euros; 30.6% in dollars; 11.5% in sterling; and 1.8% in other currencies.
At 31 March 2023 our third-party AUM was $77.0bn, based on FX rates at 31 March 2023. If GBP:USD had been 5% higher (1.2954) our reported third-party AUM would have been $0.5bn higher. If EUR:USD had been 5% higher (1.1388) our reported third-party AUM would have been $2.2bn higher.
Where noted, this review presents changes in AUM, third-party fee income and FMC PBT on a constant exchange rate basis. For the purposes of these calculations, prior period numbers have been translated from their underlying fund currencies to the reporting currencies at the respective FY23 period end exchange rates. This has then been compared to the FY23 numbers to arrive at the change on a constant currency exchange rate basis.
During the year the Group changed its policy regarding hedging of non-sterling net fee income. Previously the Group's policy was to hedge non-sterling fee income to the extent that it was not matched by costs and was predictable (transaction hedges). For FY23 FMC revenue included a negative impact of GBP(26.8)m due to changes in the fair value of these transaction hedges (FY22: GBP(0.4)m). During the financial year the Group decided to no longer enter into transaction hedges as a matter of course (although it may still do so on an ad hoc basis), and economically closed out all outstanding transaction hedges.
The table below sets out the indicative impact on our reported management fees, FMC PBT and NAV per share had sterling been 5% weaker or stronger against the euro and the dollar in the period (excluding the impact of any legacy hedges):
Impact on FY23 Impact on FY23 NAV per share at 31
management fees(1) FMC PBT(1) March 2023(2)
-------------------- ------------------- -------------- -------------------
Sterling 5% weaker
against euro and
dollar +22.5m +GBP22.7m +15p
Sterling 5% stronger
against euro and
dollar -(20.3)m -GBP(20.5)m -(14)p
-------------------- ------------------- -------------- -------------------
1. Impact assessed by sensitising the average FY23 FX rates. Excluding
impact of legacy hedges
2. NAV / NAV per share reflects the total indicative impact as a result of a
change in FMC PBT and net currency assets
3.
RISK MANAGEMENT
Managing risk
Effective risk management is a core competence underpinned by a strong control culture.
Our approach
The Board is accountable for the overall stewardship of ICG's Risk Management Framework (RMF), internal control assurance, and for determining the nature and extent of the risks it is willing to take in achieving the Group's strategic objectives. In so doing the Board sets a preference for risk within a strong control environment to generate a return for investors and shareholders and protect their interests.
The risk appetite is reviewed by the Risk Committee, on behalf of the Board, and covers the principal risks that the Group seeks to take in delivering the Group's strategic objectives.
The Risk Committee is provided with management information regularly and monitors performance against set thresholds and limits to support the achievement of the Group's strategic objectives, within the boundaries of the agreed risk appetite. The Board also seeks to promote a strong risk management culture by encouraging acceptable behaviours, decisions, and attitudes toward taking and managing risk throughout the Group.
Managing risk
Risk management is embedded across the Group through ICG's RMF, which ensures that current and emerging risks are identified, assessed, monitored, controlled, and appropriately governed based on a common risk taxonomy and methodology. The RMF is designed to protect the interests of stakeholders and meet our responsibilities as a UK listed company and the parent company of a number of regulated entities.
The Board's oversight of risk management is proactive, ongoing and integrated into the Group's governance processes. The Board receive regular reports on the Group's risk management and internal control systems. These reports set out any significant risks facing the Group, and changes made to the systems. Evaluating risk events and corrective actions supports the Board's assessment of the Group's effectiveness at mitigating event impacts. The Board also meet regularly with the internal and external auditors to discuss their findings and recommendations, which helps it gain insight into areas that require improvement. The Board reviews the Risk Management Framework regularly, and it forms the basis on which the Board reaches its conclusions on the effectiveness of the Group's system of internal controls.
Taking risk opens up opportunities to innovate and further enhance our business, for example new investment strategies or new approaches to managing our client relationships. Therefore, we maintain a risk culture that provides entrepreneurial leadership within a framework of prudent and effective controls to enable effective risk management.
Taking responsibility and managing risk is one of our key values that drive our success.
Lines of defence
We operate a risk framework consistent with the principles of the 'three lines of defence' model. This ensures clarity over responsibility for risk management and segregation of duties between those who take on risk and manage risk, those who oversee risk and those who provide assurance.
-- The first line of defence is the business functions and their respective
line managers, who own and manage risk and controls across the processes
they operate.
-- The second line of defence is made up of the control and oversight
functions who provide assurance that risk management policies and
procedures are operating effectively.
-- The third line of defence is Internal Audit who provide independent
assurance over the design and operation of controls established by the
first and second lines to manage risk.
Assessing risk
The Group adopts both a top-down and a bottom-up approach to risk assessment:
-- The Risk Committee undertakes a top-down review of the external
environment and the strategic planning process to identify the most
consequential and significant risks to the Group's businesses. These are
referred to as the principal risks.
-- The business undertakes a bottom-up review which involves a comprehensive
risk assessment process designed to facilitate the identification and
assessment of key risks and controls related to each business function's
most important objectives and processes. This is primarily achieved
through the risk and control self-assessment process (RCSA).
The risk assessment process is supported by the Group's Risk Taxonomy which is a top-down comprehensive set of risk categories designed to encourage those involved in risk identification to consider all types of risks that could affect the Group's strategic objectives.
Key developments in FY23
During the year the Group undertook its first Internal Capital Adequacy and Risk Assessment (ICARA) under the requirements of the UK Investment Firm's Prudential Regulation (IFPR). The new regime sets new capital and liquidity requirements, revised remuneration and governance standards and requires ICG to complete an ICARA for our relevant UK entities. The Group is now identifying, assessing, and managing risk of harm to clients, markets, and the Group itself.
Other key initiatives included:
-- Monitoring the Russia-Ukraine crisis for potential risks to people,
assets, operations, and supply chains in the region and globally.
-- Monitoring the macro-economic environment -- the inflationary pressure,
rising interest rates and ongoing disruption to international supply
chains -- and adapting our approach as appropriate.
-- Supporting the Audit Committee in its oversight of the Group's plans to
implement the UK Government's audit reform proposals and strengthening
internal controls.
-- Monitoring risks associated with the Group's transformation agenda,
recognising the challenges of implementation and successful delivery.
-- Enhancing the combined assurance process to provide an integrated and
coordinated approach to align the Group's assurance activities across the
Group.
-- Monitoring the Group's technology and resiliency requirements to ensure
that the management of cyber risk remains appropriate to mitigate the
continued and changing nature of the threat and to support the growth of
the business.
-- Further embedding ESG into the Risk Management Framework.
-- Improving the use of risk information and incorporating risk connectivity
into the Group's Risk Management Framework to allow for more proactive
management of risk.
Principal risks and uncertainties
The Group's principal risks are individual risks, or a combination of risks, that can seriously affect the performance, future prospects or reputation of the Group. These include those risks that would threaten the Group's business model, future performance, solvency, or liquidity. The Group considers its principal risks across three categories:
1. Strategic and business risks
The risk of failing to respond to developments in our industry sector, client demand or the competitive environment, impacting the successful delivery of our strategic objectives.
1. Financial risks
The risk of an adverse impact on the Group due to market fluctuations, counterparty failure or having insufficient resources to meet financial obligations.
1. Operational risks
The risk of loss resulting from inadequate or failed internal processes, people or systems and external events.
Reputational risk is not in itself one of the principal risks. However, it is an important consideration and is actively managed and mitigated as part of the wider risk management framework.
We use a principal and emerging risks process to provide a forward-looking view of the potential risks that can threaten the execution of the Group's strategy or operations over the medium to long term. We proactively assess the internal and external risk environment, as well as review the themes identified across our global businesses for any risks that may require escalation, updating our principal and emerging risks as necessary. The Board, Risk Committee and Executive Directors continue to monitor relevant impacts on the business which are considered further below.
Within the three categories noted above, the Group's RMF identifies eight principal risks which are accompanied by the associated responsibilities and expectations around risk management and control. Each of the principal risks is overseen by an accountable Executive Director, who is responsible for the framework, policies and standards that detail the related requirements.
The Directors confirm that they have undertaken a robust assessment of the principal risks in line with the requirements of the UK Corporate Governance Code, and that no significant failings or weaknesses in internal controls has been identified. In making this assessment the Directors consider the likelihood of each risk materialising, in the short and long term. This is supported by an annual Material Controls assessment and Fraud Risk Assessment, facilitated by the Group Risk Function, which provides the Directors with a detailed assessment of related internal controls. Additionally, Internal Audit findings, Compliance Monitoring findings, and risk events reported during the period are reviewed to assess whether any deficiency has been identified which is a significant failing or weakness.
External environment risk
Risk appetite: Moderate
Executive Director Responsible: Benoît Durteste
Risk Description Key Controls and Mitigation Trend and Outlook Geopolitical and macroeconomic concerns and other The Group's business model is predominantly based Inflationary pressure, rising interest rates and ongoing global events such as pandemics and natural disasters on illiquid funds which are closed-ended and long-term disruption to international supply chains means the that are outside the Group's control could adversely in nature. Therefore, to a large extent the Group's macro-economic environment remains dynamic and the affect the environment in which we, and our fund portfolio fee streams are 'locked in'. This provides some mitigation outlook unclear. The Group has proven expertise in companies, operate, and we may not be able to manage in relation to profitability and cashflows against navigating complex and uncertain market conditions, our exposure to these conditions and/or events. In market downturn. with our business model providing a high degree of particular, these events have contributed, and may Additionally, given the nature of closed-end funds, stability. We have substantial dry powder across a continue to contribute, to volatility in financial they are not subject to redemptions. range of strategies following our strong fundraising markets which can adversely affect our business in A range of complementary approaches are used to inform in the last 24 months. We have stable and visible many ways, including by reducing the value or performance strategic planning and risk mitigation, including management fee income, are not under pressure to deploy of the investments made by our funds, making it more active management of the Group's fund portfolios, or realise, and can capitalise on opportunities that
difficult to find opportunities for our funds to exit profitability and balance sheet scenario planning emerge across our asset classes.
and realise value from existing investments and to and stress testing to ensure resilience across a range We are actively supporting our portfolio companies
find suitable investments for our funds to effectively of outcomes. as they seek to take advantage of the current market
deploy capital. This could in turn affect our ability The Board, the Risk Committee and the Risk function dislocation by growing organically and inorganically,
to raise new funds and materially reduce our profitability. monitor emerging risks, trends, and changes in the as well as ensuring that they have the people, systems,
likelihood of impact. This assessment informs the and capital structures in place to navigate a period
universe of principal risks faced by the Group. of potentially protracted uncertainty, including to
ensure they are appropriately hedged against interest
rate risks. Our portfolios remain fundamentally well
positioned, with robust operational performance and
reasonable leverage.
We remain alert to the current macroeconomic and geopolitical
uncertainty and continue to monitor the potential
impact on our investment strategies, clients, and
portfolio companies, as well as the broader markets.
While the uncertainty remains elevated, we do not
see an increased risk to our operations, strategy,
performance, or client demand as a result.
Fund performance risk
Risk appetite: Moderate
Executive Director Responsible: Benoît Durteste
Risk Description Key Controls and Mitigation Trend and Outlook
Current and potential clients continually assess our A robust and disciplined investment process is in Against a fast-moving global economic backdrop, we
investment fund performance. There is a risk that place where investments are selected and regularly have continued to successfully manage our clients'
our funds may not meet their investment objectives, monitored by the Investment Committees for fund performance, assets. As expected, given our focus on downside protection,
that there is a failure to deliver consistent performance, delivery of investment objectives, and asset performance our funds are showing attractive performance through
or that prolonged fund underperformance could erode All proposed investments are subject to a thorough a period of volatility. In particular, our debt strategies
our track record. Consequently, existing investors due diligence and approval process during which all are generating historically high returns for clients.
in our funds might decline to invest in funds we raise key aspects of the transaction are discussed and assessed. Fund valuations have remained stable during the period,
in future and might withdraw their investments in Regular monitoring of investment and divestment pipelines with strong underlying performance of our portfolio
our open-ended strategies. Poor fund performance may is undertaken on an ongoing basis companies and income from our interest-bearing investments
also impact our ability to raise subsequent vintages Monitoring of all portfolio investments is undertaken largely offsetting reductions in valuation multiples
or new strategies impacting our ability to compete on a quarterly basis focusing on the operating performance or increasing costs of capital. Despite the slowdown
effectively. This could in turn materially affect and liquidity of the portfolio in transaction activity across the market, we have
our profitability and impact our plans for growth. Material ESG and climate-related risks are assessed continued to anchor the performance of key vintages
for each potential investment opportunity and presented through a disciplined approach to realisations.
to, and considered by, the Investment Committees of The Group saw continued and significant client demand
all investment strategies. Further analysis is conducted for our established and new strategies. We have held
for opportunities identified as having a higher exposure final closes for Europe VIII, Strategic Equity IV,
to climate related risks. and Asia Pacific IV, all above target size; launched
the fifth vintage of our flagship direct lending strategy
(SDP) and the second vintage of Sale and Leaseback
launched the marketing of Europe Mid-Market II, Infrastructure
II and Life Sciences I - a new strategy. We have seeded
investments for - amongst others -- Real Estate Opportunistic
Equity Europe and Life Sciences. Our closed-end-funds
model also provides visibility of future long term
fee income and therefore Fund Management Company profits.
Looking ahead the outlook remains very positive. We
continue to hire selectively to help drive future
growth within our investment teams, and within Marketing
and Client Relations, focussed on product and end-client
expertise. We have a powerful local sourcing network
and a diversified product offering of successful investment
strategies that enable us to navigate dynamic market
conditions, which helps to mitigate this risk.
Financial Risk
Risk appetite: Low to moderate
Executive Director Responsible: Vijay Bharadia
Risk Description Key Controls and Mitigation Trend and Outlook
The Group is exposed to liquidity and market risks. Debt funding for the Group is obtained from diversified Global markets remain susceptible to volatility from
Liquidity risks refer to the risk that the Group may sources and the repayment profile is managed to minimise a number of macro-economic and geopolitical factors.
not have sufficient financial resources to meet its material repayment events. The profile of the debt We continue to implement measures to mitigate the
financial obligations when they fall due. Market risk facilities available to the Group is reviewed frequently impact of market volatility and interest rate fluctuations
refers to the possibility that the Group may suffer by the Treasury Committee. in line with Group policy, and we will respond to
a loss resulting from the fluctuations in the values Hedging of non-sterling net exposure of income and the prevailing market environment where appropriate.
of, or income from, proprietary assets and liabilities. expenditure, and net assets is undertaken to minimise Our balance sheet remains strong and well capitalised,
The Group does not deliberately seek exposure to market short-term volatility in the financial results of with net gearing of 0.50x, and with GBP1.1bn available
risks to generate profit; however, on an ancillary the Group. cash and unutilised bank lines as of 31 March 2023.
basis we will co-invest alongside clients into our Market and liquidity exposures are reported monthly In addition, the Group has significant headroom to
funds, seed assets in preparation for new fund launches and reviewed by the Group's Treasury Committee. its debt covenants. All of the Group's debt is fixed
or hold investments in Collateralised Loan Obligations Long-term forecasts and stress tests are prepared rate, with the exception of the RCF, which was undrawn
(CLOs) in accordance with regulatory requirements. to assess the Group's future liquidity as well as as of 31 March 2023 and which is only intended to
Consequently, the Group is exposed to having insufficient compliance with the regulatory capital requirements. provide short-term working capital for the Group if
liquidity to meet its financial obligations, including Investment Company (IC) commitments are reviewed and required. Additionally, Standard & Poor carried out
its commitments to its fund co-investments. In addition, approved by the CEO and the CFOO on a case-by-case their year-end assessment of the Group's financial
adverse market conditions could impact the carrying basis assessing the risks and return on capital. status and upgraded ICG to BBB (Stable), aligning
value of the Group's investments resulting in losses Valuation of the balance sheet investment portfolio them to Fitch at the BBB Stable level.
on the Group's balance sheet. is monitored quarterly by the Group Valuation Committee,
which includes assessing the assumptions used in valuations
of underlying investments.
Key Personnel Risk
Risk appetite: Low to moderate
Executive Director Responsible: Antje Hensel-Roth
Risk Description Key Controls and Mitigation Trend and Outlook
The Group depends upon the experience, skill and reputation An active and broad-based approach to attracting, Attracting and retaining key people remains a significant
of our senior executives and investment professionals. retaining, and developing talent, supported by a range operational priority. Strategic hiring across the
The continued service of these individuals, who are of complementary approaches including a well-defined organisation has continued during the period to ensure
not obligated to remain employed with us, is uniquely recruitment process, succession planning, a competitive we have the breadth and depth of expertise to execute
valuable and a significant factor in our success. and long-term approach to compensation and incentives, on the long-term opportunities ahead. Building on
Additionally, a breach of the governing agreements and a focus on development through the appraisal process the investments we made in FY22, we have continued
of our funds in relation to 'Key Person' provisions and mentoring programmes which is supported by a dedicated to welcome a number of senior hires within the organisation
could result in the Group having to stop making investments Learning and Development team. across our investment and ESG and Sustainability teams,
for the relevant fund or impair the ability of the Continued focus on the Group's culture by developing helping to future-proof ICG as we continue to market
Group to raise new funds if not resolved in a timely and delivering initiatives that reinforce appropriate and invest in a larger range of products.
manner. behaviours to generate the best possible long-term Within our marketing and client relations teams a
As such, the loss of key personnel could have a material outcomes for our employees, clients, and shareholders. number of key positions have recently been filled,
adverse effect on our long-term prospects, revenues, Promotion of a diverse and inclusive workforce with including a new Head of Client Relations and marketing
profitability and cashflows and could impair our ability active support across a wide range of health and wellbeing specialists for insurance clients and real estate.
to maintain or grow assets under management in existing activities. These are notable hires as we continue to evolve our
funds or raise additional funds in the future. Regular reviews of resourcing and key person exposures fundraising team, moving beyond our historical geographic
are undertaken as part of business line reviews and organisation towards a more nuanced structure incorporating
the fund and portfolio company review processes. product specialisms where appropriate.
The Remuneration Committee oversees the Directors' Staff turnover continues to be somewhat elevated in
Remuneration Policy and its application to senior certain areas of finance and operations, where the
employees, and reviews and approves incentive arrangements hiring market remains particularly candidate driven.
to ensure they are appropriate and in line with market Against this backdrop we are still able to hire at
practice. the levels of experience and calibre required for
ICG, and are meeting our recruitment objectives. We
expect the candidate-driven dynamic to shift in the
coming months as the financial industry adapts to
a more challenging period.
Legal, Regulatory and Tax Risk
Risk appetite: Low
Executive Director Responsible: Vijay Bharadia
Risk Description Key Controls and Mitigation Trend and Outlook Regulation defines the overall framework for the marketing Compliance and Legal functions are dedicated to understanding ICG operates in highly regulated markets, and as the and investment management and distribution of the and fulfilling regulatory and legal expectations on nature and focus of regulation and laws evolve, the Group's strategies and supporting our business operations. behalf of the Group, including interactions with our complexity of regulatory compliance continues to increase The failure of the Group to comply with the relevant regulators and relevant industry bodies. The functions and represents a challenge for our global business. rules of professional conduct and laws and regulations provide guidance to, and oversight of, the business Regulatory engagement through 2022 has focused on could expose the Group to regulatory censure, penalties in relation to regulatory and legal obligations the Group's implementation of the IFPR, strategic
or legal or enforcement action. Compliance undertakes routine monitoring and deep-dive transformation and regulatory initiatives. Proactive
Additionally, the increase in demand for tax-related activities to assess compliance with relevant regulations engagement on emerging focus areas has helped the
transparency means that tax rules are continuing to and legislation regulatory risk profile remain broadly stable.
be designed and implemented globally in a more comprehensive The Tax function has close involvement with significant Legal risk continues to be impacted by the evolving
manner. This raises a complex mix of tax implications Group transactions, fund structuring and business UK legal and regulatory landscape due to the UK's
for the Group, in particular for our transfer pricing, activities, both to proactively plan the most tax exit from the EU and other changing regulatory standards
permanent establishment and fund structuring processes. efficient strategy and to manage the impact of business as well as uncertainty arising from the current and
The tax authorities could challenge our interpretation transactions on previously taken tax positions. future litigation landscape.
of these tax rules, resulting in additional tax liabilities. Regulatory, legislative and tax developments are continually In December 2022 the Organisation for Economic Co-operation
Changes in the legal and regulatory and tax framework monitored to ensure we engage early in any areas of and Development published an implementation package
applicable to our business may also disrupt the markets potential change in respect of the Pillar Two Model rules (also referred
in which we operate and affect the way we conduct to as the 'Anti Global Base Erosion' or 'GloBE' rules),
our business. This could in turn increase our cost which are expected to come into force for the financial
base, lessen our competitiveness, reduce our future year commencing 1 April 2024. The Group's trading
revenues and profitability, or require us to hold activities within the FMC are subject to tax at the
more regulatory capital. relevant statutory rates in the jurisdictions in which
income is earned. Pillar One is not expected to apply
for the Group based the worldwide revenue threshold.
The Group has performed an impact analysis on the
Pillar Two proposals for a global minimum tax rate
of 15% and does not expect the implementation to be
significant.
The Group remains responsive to a wide range of developing
regulatory areas and the increase in regulatory scrutiny
around private markets more generally, and continues
to invest in our Legal, Compliance and Tax teams to
recruit specialist roles that optimise our coverage
and enhance our monitoring and oversight capabilities.
Operational Resilience Risk
Risk appetite: Low to moderate
Executive Director Responsible: Vijay Bharadia
Risk Description Key Controls and Mitigation Trend and Outlook
The Group is exposed to a wide range of threats which Operational resilience, in particular cyber security, The Group continually seeks to increase operational
can impact our operational resilience. Natural disasters, is top of the Group's Board and Leadership agenda, resilience through adaptation, planning, preparation
cyber threats, terrorism, environmental issues, and and the adequacy of the Group's response is reviewed and Testing of contingency plans, and our ability
pandemics have the potential to cause significant on an ongoing basis. to respond effectively to disruptive incidents and
disruption to our operations and change our working Business Continuity and Disaster Recovery plans are significant global events like the Covid-19 pandemic
environment. Our disaster recovery and business continuity reviewed and approved on at least an annual basis and Russia's invasion of Ukraine. We actively manage
plans may not be sufficient to mitigate the damage by designated plan owners, and preparedness exercises relationships with key strategic technology suppliers
that may result from such a disaster or disruption. are complemented by an automated Business Continuity to avoid any disruption to service provision that
Additionally, the failure of the Group to deliver Planning tool. could adversely affect the Group's businesses. Business
an appropriate information security platform could Providing laptops for all employees globally removes continuity and contingency planning processes are
result in unauthorised access by malicious third parties, the physical dependency on the office and allows employees regularly reviewed and tested.
breaching the confidentiality, integrity and availability to work securely from home. The Group continues to strengthen its robust information
of our data and systems. Regardless of the source, The Group's technology environment is continually security management framework and progress our programme
any critical system failure or material loss of service maintained and subject to regular testing, such as to enhance and maintain levels of cyber hygiene. We
availability could negatively impact the Group's reputation penetration testing, vulnerability scans and patch implement ongoing training, phishing campaigns and
and our ability to maintain continuity of operations management. Technology processes and controls are disaster recovery exercises, aligned with threat intelligence,
and provide services to our clients. also upgraded where appropriate to ensure ongoing to support data privacy and operational resilience.
technology performance and resilience. We maintain heightened vigilance for cyber intrusion.
An externally managed security operations centre supplies The Group's technology and resiliency requirements
the Group with skilled security experts and technology will continue to be kept under review to ensure that
to proactively detect and prevent potential threats the management of our cyber risk provides appropriate
and to recover from security incidents, including mitigation and supports the growth of the business.
cyber attacks
Third-Party Provider Risk
Risk appetite: Moderate
Executive Director Responsible: Vijay Bharadia
Risk Description Key Controls and Mitigation Trend and Outlook The Group outsources a number of functions to Third-Party The TPP oversight framework consists of policies, The Group has continued to embed the TPP Governance Service Providers (TPP) as part of our business model, procedures, and tools to govern the oversight of key and Oversight Framework during the course of the year, as well as managing outsourcing arrangements on behalf suppliers, including our approach to selection, contracting which has increased the resilience of our outsourced of our funds. The risk that the Group's key TPPs fail and on-boarding, management and monitoring, and termination arrangements. The regular monitoring coordinated by to deliver services in accordance with their contractual and exit. In particular, we undertake initial and the TPP Oversight Team has provided tangible measurement obligations could compromise our operations and impair ongoing due diligence of our TPPs to identify and of performance to ICG's operational management and our ability to respond in a way which meets client effectively manage the business risks related to the has allowed the correct focus to be applied to improve and stakeholder expectations and requirements. Any delegation or outsourcing of our key functions. the day to day activities provided by our TPPs. The future over reliance on one or a very limited number Ongoing monitoring of the services delivered by our KPI reporting has provided an improved understanding of TPPs in a specific and important business area TPPs is delivered through regular oversight interactions of the performance themes across our TPPs and allowed could also expose the Group to heightened levels of where service levels are compared to the expected us to benchmark the quality of services from across risk, particularly if the service is not easily substitutable. standards documented in service agreements and agreed-upon the supplier base. The Group will continue to embed Additionally, the failure of the Group to maintain standards. the framework and gather further performance reporting sufficient knowledge, understanding and oversight ahead of potential rationalisation of the portfolio of the controls and processes in place to proactively to those TPPs providing the most consistent services manage our TPPs could damage the quality and reliability to the Group. of these TPP relationships.
Key Business Process Risk
Risk appetite: Low to moderate
Executive Director Responsible: Vijay Bharadia
Risk Description Key Controls and Mitigation Trend and Outlook
All operational activities at the Group follow defined Key business processes are regularly reviewed, and Our Operational Risk Framework defines our approach
business processes. We face the risk of errors in the risks and controls are assessed through the RCSA to the identification, assessment, management and
existing processes, or from new processes as a result process. reporting of operational risks and associated controls
of the growth of the business and ongoing change activity A 'three lines of defence' model is in place, which across the business. There were no significant changes
which inherently increases the profile of operational ensures clarity over individual and collective responsibility to the Group's RMF's overall approach to risk governance
risks across our business. The Group operates within for process risk management and to ensure policies, or its operation in the period.
a system of internal controls that provides oversight procedures and activities have been established and We monitor underlying causes of errors to identify
of business processes, which enables our business are operating as intended. areas for action, promoting a culture of accountability
to be transacted and strategies and decision making Regular reporting and ongoing monitoring of underlying and continuously improving how we address issues.
to be implemented effectively. The risk of failure causes of operational risk events, to identify enhancements We also continue to enhance the Risk Management Framework.
of significant business processes and controls could that require action. Against the backdrop of macroeconomic uncertainty,
compromise our operations and disadvantage our clients, A well-established incident management processes for and growth of the business, the operational risk profile
or expose the Group to unanticipated financial loss, dealing with system outages that impact important has remained broadly stable with operational losses
regulatory censure, or damage to our reputation. This business processes. in line with previous years.
could in turn materially reduce our profitability. An annual review of the Group's material controls Investment Operations, Fund Accounting and Finance
is undertaken by senior management and Executive Directors. continue to be the most material operational risk
areas.
The Group continues to make progress on improving
the scalability of our operations platform by implementing
systems and enhancing infrastructure to manage our
growth plans more effectively. Transformation and
project activity, including workflow automation, is
yielding more efficient and automated processes and
a reduction in operational risk.
Climate Risk
The Group's risk management framework defines how climate risk, and broader ESG risks, are assessed for their proximity and significance to the Group. Climate risk is considered a cross-cutting risk type that manifests through all of ICG's established principal risks. While our direct operations have very limited exposure to climate-related risk, it is integrated into the Group-wide operational risk management framework through existing policies, processes, and controls. We consider the climate-related risks and opportunities surrounding our third-party funds and our fund management activities as a key part of our business. Climate-related risk for both our own operations and our fund management activity are addressed in greater detail in ICG's TCFD disclosures.
Please refer to note 1 of the financial statements on page 39 which sets out how this risk has been considered in the basis of preparation.
Emerging risks
Emerging risks are thematic risks with potentially material unknown components that may form and crystallise beyond a one-year time horizon. If an emerging risk were to materialise, it could have a material effect on the Group's long-term strategy, profitability, and reputation. Existing mitigation plans are likely to be minimal, reflecting the uncertain nature of these risks at this stage.
Emerging risks are identified through conversations and workshops with stakeholders throughout the business, attending industry events, and other horizon scanning by Group Risk and Compliance. The purpose of monitoring and reporting emerging risks is to give assurance that the Group is prioritising our response to emerging risks appropriately in our strategy, which is the primary risk management tool for longer-term strategic risks.
Examples of emerging risks which have been considered during the year include; current and developing macro challenges, including the elevated levels of inflation and interest rate rises that could impact the Group and our fund investments; ongoing risks related to the transformation programmes underway to deliver our strategy for growth; implications of IFPR; and the increased importance of diversity and other social issues.
Risk appetite for the principal risks
Risk appetite is defined as the level of risk which the Group is prepared to accept in the conduct of our activities. It sets the 'tone from the top' and provides a basis for ongoing dialogue between management, Executive Directors, and the Board with respect to the Group's current and evolving risk profile, allowing strategic and financial decisions to be made on an informed basis. The risk appetite framework is implemented through the Group's operational policies and procedures and internal controls and supported by limits to control exposures and activities that have material risk implications.
RESPONSIBILITY STATEMENT
The responsibility statement below has been prepared in connection with the Company's full annual report for the year ending 31 March 2023. Certain parts thereof are not included within this announcement.
We confirm to the best of our knowledge:
-- the financial statements, prepared in accordance with UK-adopted
international accounting standards, 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 24 May 2023 and is signed on its behalf by:
Benoît Durteste Vijay Bharadia CEO CFOO
CONSOLIDATED INCOME STATEMENT
For the year ended 31 March 2023
Year ended Year ended
31 March 2023 31 March 2022
GBPm GBPm
------------------------------------------------------- --------------- ---------------
Fee and other operating income 483.6 434.0
Finance loss (17.1) (7.4)
Net gains on investments 172.5 555.5
------------------------------------------------------- --------------- ---------------
Total Revenue 639.0 982.1
------------------------------------------------------- --------------- ---------------
Other income 15.5 --
Finance costs (64.6) (53.1)
Administrative expenses (343.3) (363.1)
Share of results of joint ventures accounted for using
the equity method 4.4 (0.5)
------------------------------------------------------- --------------- ---------------
Profit before tax and discontinued operations 251.0 565.4
------------------------------------------------------- --------------- ---------------
Tax charge (29.4) (31.1)
------------------------------------------------------- --------------- ---------------
Profit after tax before discontinued operations 221.6 534.3
------------------------------------------------------- --------------- ---------------
Profit/ (loss) after tax on discontinued operations 56.8 (9.2)
------------------------------------------------------- --------------- ---------------
Profit for the year after discontinued operations 278.4 525.1
------------------------------------------------------- --------------- ---------------
Attributable to:
Equity holders of the parent 280.6 526.8
Non-controlling interests (2.2) (1.7)
------------------------------------------------------- --------------- ---------------
278.4 525.1
------------------------------------------------------- --------------- ---------------
Earnings per share (pence) 98.2p 183.7p
------------------------------------------------------- --------------- ---------------
Diluted earnings per share (pence) 97.0p 181.1p
------------------------------------------------------- --------------- ---------------
Other than for amounts reported as discontinued operations, all activities represent continuing operations.
The accompanying notes 1 to 34 are an integral part of these financial statements.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the year ended 31 March 2023
Year ended Year ended
31 March 2023 31 March 2022
Group GBPm GBPm
------------------------------------------------------ -------------- --------------
Profit after tax 278.4 525.1
Items that may be subsequently reclassified to profit
of loss if specific conditions are met
------------------------------------------------------ -------------- --------------
Exchange differences on translation of foreign
operations 19.5 6.9
Deferred tax on equity investments translation 3.9 --
------------------------------------------------------ -------------- --------------
Total comprehensive income for the year 301.8 532.0
------------------------------------------------------ -------------- --------------
Attributable to:
Equity holders of the parent 304.0 533.7
Non controlling interests (2.2) (1.7)
------------------------------------------------------ -------------- --------------
301.8 532.0
------------------------------------------------------ -------------- --------------
The accompanying notes 1 to 34 are an integral part of these financial statements.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 31 March 2022
31 March 31 March 2022
2023 (Restated)(1)
GBPm GBPm
---------------------------------------------------- -------- --------------
Non-current assets
Intangible assets 14.9 17.1
Property, plant and equipment 88.2 60.4
Investment property 0.8 1.5
Investment in Joint Venture accounted for under the
equity method 5.8 2.2
Trade and other receivables 37.1 91.1
Financial assets at fair value 7,036.6 6,973.1
Derivative financial assets 8.4 1.3
Deferred tax asset 17.6 25.0
---------------------------------------------------- -------- --------------
7,209.4 7,171.7
---------------------------------------------------- -------- --------------
Current assets
Trade and other receivables 232.0 283.1
Current tax debtor 57.0 31.9
Financial assets at fair value 4.7 --
Derivative financial assets 13.6 137.3
Cash and cash equivalents 957.5 991.8
---------------------------------------------------- -------- --------------
1,264.8 1,444.1
---------------------------------------------------- -------- --------------
Assets of disposal groups held for sale 578.3 256.7
---------------------------------------------------- -------- --------------
Total assets 9,052.5 8,872.5
---------------------------------------------------- -------- --------------
Non-current liabilities
Trade and other payables 71.1 76.4
Financial liabilities at fair value 4,572.7 4,364.7
Financial liabilities at amortised cost 1,478.2 1,452.3
Other financial liabilities 79.6 52.2
Derivative financial liabilities 0.9 2.9
Deferred tax liabilities 35.5 15.1
---------------------------------------------------- -------- --------------
6,238.0 5,963.6
---------------------------------------------------- -------- --------------
Current liabilities
Trade and other payables 471.4 434.4
Current tax creditor 14.8 14.5
Financial liabilities at amortised cost 58.5 201.1
Other financial liabilities 5.8 6.5
Derivative financial liabilities 14.8 153.4
---------------------------------------------------- -------- --------------
565.3 809.9
---------------------------------------------------- -------- --------------
Liabilities of disposal groups held for sale 204.0 97.2
---------------------------------------------------- -------- --------------
Total liabilities 7,007.3 6,870.7
---------------------------------------------------- -------- --------------
Equity and reserves
Called up share capital 77.3 77.3
Share premium account 180.9 180.3
Other reserves 19.0 0.2
Retained earnings 1,742.6 1,714.0
---------------------------------------------------- -------- --------------
Equity attributable to owners of the Company 2,019.8 1,971.8
---------------------------------------------------- -------- --------------
Non-controlling interest 25.4 30.0
---------------------------------------------------- -------- --------------
Total equity 2,045.2 2,001.8
---------------------------------------------------- -------- --------------
Total equity and liabilities 9,052.5 8,872.5
---------------------------------------------------- -------- --------------
1. Retained earnings and Non-controlling interest have been restated. See
Note 2 for more details.
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the year ended 31 March 2022
Year ended Year ended
31 March 2023 31 March 2022
GBPm GBPm
------------------------------------------------------ -------------- --------------
Cash flows generated from operations 324.0 287.3
Taxes paid (32.4) (43.9)
------------------------------------------------------ -------------- --------------
Net cash flows from operating activities 291.6 243.4
Investing activities
Purchase of intangible assets (4.7) (4.3)
Purchase of property, plant and equipment (6.5) (3.5)
Net cashflow from derivative financial instruments (58.8) 22.4
Cashflow as a result of change in control of
subsidiary 200.8 30.9
------------------------------------------------------ -------------- --------------
Net cash flows from investing activities 130.8 45.5
------------------------------------------------------ -------------- --------------
Financing activities
Purchase of own Shares (38.9) (20.9)
Payment of principal portion of lease liabilities (6.8) (4.1)
Proceeds from borrowings -- 413.5
Repayment of long-term borrowings (194.6) (111.5)
Dividends paid to equity holders of the parent (236.4) (165.7)
------------------------------------------------------ -------------- --------------
Net cash flows (used in)/generated from financing
activities (476.7) 111.3
------------------------------------------------------ -------------- --------------
Net (decrease)/increase in cash and cash equivalents (54.3) 400.2
Effects of exchange rate differences on cash and cash
equivalents 20.0 10.4
Cash and cash equivalents at 1 April 991.8 581.2
------------------------------------------------------ -------------- --------------
Cash and cash equivalents at 31 March 957.5 991.8
------------------------------------------------------ -------------- --------------
The Group's cash and cash equivalents include GBP407.5m (2022: GBP230.3m) of restricted cash held principally by structured entities controlled by the Group (see note 6).
The presentation of the consolidated statement of cash flows have been updated to improve the presentation of this information. The reconciliation of cash generated from/used in operations to profit before tax from continuing operations is now disclosed in note 32.
The accompanying notes 1 to 34 are an integral part of these financial statements.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the year ended 31 March 2022
Share Share Capital redemption Share based payments reserve Own Foreign currency Retained Non-controlling Total
capital premium reserve(1) (note 25) shares(3) translation reserve(2) earnings Total interest equity
Group GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
--------------------------------------------------- ------------ ------------- ------------------ ---------------------------- --------------- ----------------------- --------------- --------------- --------------- ---------------
Balance at 1 April 2022 77.3 180.3 5.0 67.5 (93.0) 20.7 1,688.9 1,946.7 55.1 2,001.8
Prior year adjustment(5) -- -- -- -- -- -- 25.1 25.1 (25.1) --
--------------------------------------------------- ------------ ------------- ------------------ ---------------------------- --------------- ----------------------- --------------- --------------- --------------- ---------------
Balance at 1 April 2022 (as restated) 77.3 180.3 5.0 67.5 (93.0) 20.7 1,714.0 1,971.8 30.0 2,001.8
Profit after tax -- -- -- -- -- -- 280.6 280.6 (2.2) 278.4
Exchange differences on translation of foreign
operations -- -- -- -- -- 19.5 -- 19.5 -- 19.5
Deferred tax on equity investments translation -- -- -- -- -- 3.9 -- 3.9 -- 3.9
--------------------------------------------------- ------------ ------------- ------------------ ---------------------------- --------------- ----------------------- --------------- --------------- --------------- ---------------
Total comprehensive income/(expense) for the year -- -- -- -- -- 23.4 280.6 304.0 (2.2) 301.8
--------------------------------------------------- ------------ ------------- ------------------ ---------------------------- --------------- ----------------------- --------------- --------------- --------------- ---------------
Adjustment of non-controlling interest on disposal
of subsidiary -- -- -- -- -- -- (1.3) (1.3) (31.1) (32.4)
Acquisition of non-controlling interest -- -- -- -- -- -- -- -- 28.7 28.7
Issue of share capital 0.0 -- -- -- -- -- -- 0.0 -- 0.0
Own shares acquired in the year -- -- -- -- (38.9) -- -- (38.9) -- (38.9)
Options/awards exercised(4) -- 0.6 -- (31.3) 28.5 -- (14.3) (16.5) -- (16.5)
Tax on options/awards exercised -- -- -- (2.4) -- -- -- (2.4) -- (2.4)
Credit for equity settled share schemes -- -- -- 39.5 -- -- -- 39.5 -- 39.5
Dividends paid -- -- -- -- -- -- (236.4) (236.4) -- (236.4)
--------------------------------------------------- ------------ ------------- ------------------ ---------------------------- --------------- ----------------------- --------------- --------------- --------------- ---------------
Balance at 31 March 2023 77.3 180.9 5.0 73.3 (103.4) 44.1 1,742.6 2,019.8 25.4 2,045.2
--------------------------------------------------- ------------ ------------- ------------------ ---------------------------- --------------- ----------------------- --------------- --------------- --------------- ---------------
Share Foreign
Capital based currency
Share Share redemption payments Own translation Retained Non-controlling Total
capital premium reserve(1) reserve shares(3) reserve(2) earnings Total interest equity
Group GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
----------------- -------- -------- ---------- -------- ---------- ----------- --------- ------- --------------- -------
Balance at 1
April 2021 77.2 180.2 5.0 60.5 (82.2) 13.8 1,362.7 1,617.2 5.0 1,622.2
----------------- -------- -------- ---------- -------- ---------- ----------- --------- ------- --------------- -------
Profit after tax -- -- -- -- -- -- 526.8 526.8 (1.7) 525.1
Exchange
differences on
translation of
foreign
operations -- -- -- -- -- 6.9 -- 6.9 -- 6.9
----------------- -------- -------- ---------- -------- ---------- ----------- --------- ------- --------------- -------
Total
comprehensive
income/(expense)
for the year -- -- -- -- -- 6.9 526.8 533.7 (1.7) 532.0
----------------- -------- -------- ---------- -------- ---------- ----------- --------- ------- --------------- -------
Issue of share
capital 0.1 -- -- -- -- -- -- 0.1 -- 0.1
Movement in
control of
subsidiary(5) -- -- -- -- -- -- -- -- 26.7 26.7
Own shares
acquired in the
year -- -- -- -- (20.9) -- -- (20.9) -- (20.9)
Options/awards
exercised(4) -- 0.1 -- (27.8) 10.1 -- (9.8) (27.4) -- (27.4)
Tax on
options/awards
exercised -- -- -- 5.2 -- -- -- 5.2 -- 5.2
Credit for equity
settled share
schemes -- -- -- 29.6 -- -- -- 29.6 -- 29.6
Dividends paid -- -- -- -- -- -- (165.7) (165.7) -- (165.7)
----------------- -------- -------- ---------- -------- ---------- ----------- --------- ------- --------------- -------
Balance at 31
March 2022 77.3 180.3 5.0 67.5 (93.0) 20.7 1,714.0 1,971.8 30.0 2,001.8
----------------- -------- -------- ---------- -------- ---------- ----------- --------- ------- --------------- -------
1. The capital redemption reserve is a reserve created when a company buys
its own shares which reduces its share capital. GBP1.4m of the balance
relates to the conversion of ordinary shares and convertible shares into
ordinary shares in 1994. The remaining GBP3.6m relates to the
cancellation of treasury shares in 2015.
2. Other comprehensive income/(expense) reported in the foreign currency
translation reserve represents foreign exchange gains and losses on the
translation of subsidiaries reporting in currencies other than sterling.
3. The movement in the Group Own shares reserve in respect of Options/awards
exercised, represents the employee shares vesting net of personal taxes
and social security.
4. The associated personal taxes and social security liabilities are settled
by the Group with the equivalent value of shares retained in the Own
shares reserve.
5. Retained earnings and Non-controlling interest brought forward as at 1
April 2022 have been restated. See Note 2 for more details.
The accompanying notes 1 to 34 are an integral part of these financial statements.
NOTES TO THE FINANCIAL STATEMENTS
1. General information and basis of preparation
General information
Intermediate Capital Group plc (the 'Parent Company', 'Company' or 'ICG plc') is a public company limited by shares, incorporated, domiciled and registered in England and Wales under the Companies Act, with the company registration number 02234775. The registered office is Procession House, 55 Ludgate Hill, New Bridge Street, London EC4M 7JW.
The consolidated financial statements for the year to 31 March 2023 comprise the financial statements of the Parent Company and its consolidated subsidiaries (collectively, the 'Group'). The nature of the Group's operations and its principal activities are detailed in the Strategic Report.
Basis of preparation
The consolidated financial statements of the Group and Company are prepared in accordance with UK-adopted international accounting standards ('UK-adopted IAS') and, as regards the Parent Company financial statements, as applied in accordance with the provisions of the Companies Act 2006. The Company has taken advantage of section 408 of the Companies Act 2006 not to present the Parent Company profit and loss account.
The financial statements have been prepared on a going concern basis and under the historical cost convention, except for financial instruments that are measured at fair value through profit and loss at the end of the reporting period, as detailed in note 5, and certain investments in associates and joint ventures held for venture capital purposes, as detailed in note 30.
In the application of the Group's accounting policies, the Directors are required to make judgements, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
The judgements, estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods. Details of the critical judgements made, and key sources of estimation uncertainty, are included in note 1 and in the note to which the critical judgement or source of estimation uncertainty relates.
In preparing the financial statements, the Directors have considered the impact of climate change, particularly in the context of the climate change risks identified in the TCFD Report. The Directors' considerations included the medium and longer-term cash flow impacts of climate change on a number of key estimates within the financial statements, including:
-- the valuation of financial assets; and
-- the application of the Group's revenue recognition policy, primarily the
impact on the net asset value ('NAV') of funds on which
performance-related fees are generated.
These considerations did not have a material impact on the financial reporting judgements and estimates in the current year. This reflects the conclusion that climate change is not expected to have a significant impact on the Group's short-term cash flows including those considered in the going concern and viability assessments.
The accounting policies as set out in the notes to the accounts have been applied consistently to all periods presented in these consolidated financial statements.
Basis of consolidation
The Group's financial statements consolidate the results of Intermediate Capital Group plc and entities controlled by the Company for the period to 31 March each year. Control is achieved when the Company has power over the relevant activities, exposure to variable returns from the investee, and the ability to affect those returns through its power over the investee.
The assessment of control is based on all relevant facts and circumstances and the Group reassesses its conclusion if there is an indication that there are changes in facts and circumstances. Subsidiaries are included in the consolidated financial statements from the date that control commences, until the date that control ceases. See note 28 which lists the Group's subsidiaries and controlled structured entities.
Each component of other comprehensive income and profit or loss is attributed to the owners of the Company and to the non-controlling interests.
Adjustments are made where required to the financial statements of subsidiaries for consistency with the accounting policies of the Group. All intra-group transactions, balances, unrealised income and expenses are eliminated on consolidation.
1. General information and basis of preparation continued
Critical judgements in the application of accounting policies and key sources of estimation uncertainty
Critical judgement
In preparing the financial statements, apart from those involving estimations, two critical judgements have been made by the Directors in the application of the Group's accounting policies:
-- The Group's assessment as to whether it controls certain investee
entities, including third-party funds and carried interest partnerships,
and is therefore required to consolidate the investee, as detailed above.
The Group's assessment of this critical judgement is discussed further in
note 28.
-- The application of the Group's revenue recognition policy in respect of
the performance fee component of management fees. Judgement is primarily
applied in considering the timings of when expected performance
conditions will be met and the appropriate constraint to be applied. The
Group's assessment of this critical judgement is discussed further in
note 3.
Key sources of estimation uncertainty
The key sources of estimation uncertainty at the reporting date, that may have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, results from the Group's assessment of fair value of its financial assets and liabilities (discussed further in note 5 and note 7) and the impact of this assessment on trade and other payables related to the Deal Vintage Bonus ('DVB') - see notes 13 and 21.
Critical judgements and key sources of estimation uncertainty are reviewed by the Audit Committee during the year.
Foreign currencies
The functional currency of the Company is sterling as the Company's shares are denominated in sterling and the Company's costs are primarily incurred in sterling. The Group has determined the presentational currency of the Group is the functional currency of the Company. Information is presented to the nearest million (GBPm).
Transactions denominated in foreign currencies are translated using the exchange rates prevailing at the date of the transactions. At each reporting date, monetary assets and liabilities denominated in a foreign currency are retranslated at the rates prevailing at the reporting date. Non-monetary assets and liabilities denominated in foreign currencies that are measured at fair value are translated at the rate prevailing at the date the fair value was determined. Non-monetary items that are measured at historical cost are translated using rates prevailing at the date of the transaction.
The assets and liabilities of the Group's foreign operations are translated using the exchange rates prevailing at the reporting date. Income and expense items are translated using the average exchange rates during the year. Exchange differences arising from the translation of foreign operations are taken directly to the foreign currency translation reserve. On disposal of a foreign operation, exchange differences previously recognised in other comprehensive income are reclassified to the income statement.
Going concern
The Directors have, at the time of approving the financial statements, a reasonable expectation that the Company and the Group have adequate resources to continue in operational existence for the foreseeable future. Therefore, they continue to adopt the going concern basis of preparing the financial statements.
In assessing the Group's ability to continue in its capacity as a going concern, the Board and the Executive Directors of the Group considered:
-- The impact of conflict in Ukraine and the macro-inflationary backdrop on
investment performance
-- The impact on the Group's fee income. Specifically, performance-related
revenue, as part of this assessment the Group performed additional
sensitivity analysis around performance fees and the impact this would
have on overall fee income. This is discussed in note 3
-- The adequacy of the Group's capital and liquidity and potential
shortfalls in access to capital. As at 31 March 2023 the Group has
available liquidity of GBP1.1bn, including GBP550m of undrawn debt
facilities. The macro-economic stress scenarios were in line with those
used in the Internal Capital Adequacy and Risk Assessment ('ICARA')
stress test
-- The operational resilience of the Group's critical functions and key
service providers to maintain risk management and compliance, including
IT, finance, treasury and operations
-- The regulatory and legal environment and any potential conduct risks
which could arise
-- The appropriateness of valuation techniques applied to determine the fair
value of investments that are not quoted in an active market. This is
discussed further in note 5
1. General information and basis of preparation continued
-- Those entities which are not controlled by the Group but where the Group
has a joint venture relationship or has significant influence over an
associate and whether they have the ability to continue as a going
concern. These risks have been captured in the Group's overall fair value
assessments of the underlying assets described in note 5
The Directors have concluded based on the above assessment that the preparation of the financial statements on a going concern basis, to 30 November 2024, a 18 month from the date of signing of the financial statements, continues to be appropriate.
2. Changes in accounting policies and disclosures
New and amended standards and interpretations
The new and amended standards and interpretations that are issued, but not yet effective, up to the date of issuance of the Group's financial statements are disclosed below. The Group intends to adopt these standards, if applicable, when they become effective. These new standards are not expected to have a material impact on the Group.
IFRS/IAS Accounting
periods
commencing
on or
after
IAS 8 Definition of Accounting Estimates 1 January
2023
---------- ------------------------------------------------------ ----------
IAS 1 and Disclosure of Accounting Policies 1 January
IFRS 2023
Practice
Statement
2
---------- ------------------------------------------------------ ----------
IAS 12 Deferred Tax related to Assets and Liabilities arising 1 January
from a Single Transaction 2023
---------- ------------------------------------------------------ ----------
IAS 1 Classification of Liabilities as Current or 1 January
Non-current 2024
---------- ------------------------------------------------------ ----------
IFRS 16 Lease Liability in a Sale and Leaseback 1 January
2024
---------- ------------------------------------------------------ ----------
Changes in significant accounting policies
No changes to significant accounting policies were implemented.
Group restatements
The Group has restated the Consolidated Statement of Financial Position and Consolidated Statement of Changes in Equity as a result of the reversal of an allocation of retained earnings to non-controlling interest. As a result of the reversal the following has been restated:
1. Retained Earnings increased by GBP25.1m from GBP1,688.9m to GBP1,714.0m;
and
2. Non-controlling interest reduced by GBP25.1m from GBP55.1m to GBP30.0m
3. Revenue
Revenue and its related cash flows, within the scope of IFRS 15 'Revenue from Contracts with Customers', are derived from the Group's fund management company activities and are presented net of any consideration payable to a customer in the form of rebates. The significant components of the Group's fund management revenues are as follows:
Year ended Year ended
31 March 2023 31 March 2022
Type of contract/service GBPm GBPm
------------------------------- -------------- --------------
Management fees(1) 481.6 429.4
Other income 2.0 4.6
------------------------------- -------------- --------------
Fee and other operating income 483.6 434.0
------------------------------- -------------- --------------
(4) Included within management fees is GBP22.4m (2022: GBP57.5m) of performance related fees.
Management fees
The Group earns management fees from its investment management services. Management fees are charged on third-party capital managed by the Group and are based on an agreed percentage of either committed capital, invested capital or NAV, dependent on the fund. Management fees comprise both non-performance and performance-related fee elements related to one contract obligation . Non-performance-related management fees for the year of GBP459.2m (2022: GBP371.9m) are charged in arrears and are recognised in the period services are performed.
Performance-related management fees (performance fees) are recognised only to the extent it is highly probable that there will not be a significant reversal of the revenue recognised in the future. This is generally towards the end of the contract period or upon early liquidation of a fund. The estimate of performance fees is made with reference to the liquidation profile of the fund, which factors in portfolio exits and timeframes. For certain funds the estimate of performance fees is made with reference to specific requirements. A constraint is applied to the estimate to reflect uncertainty of future fund performance. Performance fees of GBP22.4m (2022: GBP57.5m) have been recognised in the year. Performance fees will only be crystallised and received in cash when the relevant fund performance hurdle is met.
There are no other individually significant components of revenue from contracts with customers.
Critical judgement
A critical judgement for the Group is whether performance fees will meet their expected performance conditions within the expected timeframes. The Group bases its assessment on the best available information pertaining to the funds and the activity of the underlying assets within that fund. The valuation of the underlying assets within a fund will be subject to fluctuations in the future, including the impact of macroeconomic factors outside the Group's control. The information on which this judgement is based is the liquidation NAV of the relevant funds (which are subject to annual audit).
The Directors base their projected views on a 24-month look-forward basis, the 'forecast period', from the year end. The Directors believe they have a reasonable basis on which to judge expected exits and value within a 24-month horizon, but not beyond that.
Within this forecast period, the Directors will consider funds that have either reached their hurdle rate or are expected to reach the hurdle rate in the forecast period. In determining whether a fund is expected to reach the hurdle rate, the key inputs are the latest expected repayment dates of the underlying assets and expected proceeds on realisation, as approved by the Fund Investment Committees.
Where the hurdle date is expected to be reached within 24 months of the year end but performance fees are not yet paid, a constraint will be applied within the determination of the performance fee receivable. Application of the constraint limits the revenue recognised. This is assessed by on a case-by-case basis.
The weighted-average constraint at the reporting date is 43% (2022: 46%). If the average constraint were to increase by 10 percentage points to 53% (2022: 56%) this would result in a reduction in revenue of GBP1.13m (2022: GBP0.62m). Conversely, a 10% decrease in constraint would result in an increase in revenue of GBP1.13m (2022: GBP0.55m) being recognised in the income statement. In certain limited circumstances performance fees received may be subject to clawback provisions if the performance of the fund deteriorates materially following the receipt of performance fees.
4. Segmental reporting
For management purposes, the Group is organised into two operating segments, the Fund Management Company ('FMC') and the Investment Company ('IC') which are also reportable segments. In identifying the Group's reportable segments, management considered the basis of organisation of the Group's activities, the economic characteristics of the operating segments, and the type of products and services from which each reportable segment derives its revenues. Total reportable segment figures are alternative performance measures ('APM').
The Executive Directors, the chief operating decision makers, monitor the operating results of the FMC and the IC for the purpose of making decisions about resource allocation and performance assessment. The Group does not aggregate the FMC and IC as those segments do not have similar economic characteristics. Information about these segments is presented below.
The FMC earns fee income for the provision of investment management services and recognises the fair value movement on any associated hedging derivatives and incurs the majority of the Group's costs in delivering these services, including the cost of the investment teams and the cost of support functions, primarily marketing, operations, information technology and human resources.
The IC is charged a management fee of 1% of the carrying value of the average balance sheet investment portfolio by the FMC and this is shown below as the Inter-segmental fee. It recognises the fair value movement on any associated hedging derivatives. The costs of finance, treasury and legal teams, and other Group costs primarily related to being a listed entity, are allocated to the IC. The remuneration of the Executive Directors is allocated equally to the FMC and the IC.
The amounts reported for management purposes in the tables below are reconciled to the UK-adopted IAS reported amounts on the following pages.
Year ended 31 March 2023 Year ended 31 March 2022
----------------------------------------------- -----------------------------------------------
Reportable Reportable
FMC IC segments Total FMC IC segments Total
GBPm GBPm GBPm GBPm GBPm GBPm
---------------- -------------- -------------- --------------- -------------- -------------- ---------------
External fee
income 501.0 2.6 503.6 448.7 0.5 449.2
Inter-segmental
fee 25.0 (25.0) -- 24.8 (24.8) --
Other operating
income 0.5 1.7 2.2 1.7 2.1 3.8
---------------- -------------- -------------- --------------- -------------- -------------- ---------------
Fund management
fee income 526.5 (20.7) 505.8 475.2 (22.2) 453.0
---------------- -------------- -------------- --------------- -------------- -------------- ---------------
Net investment
returns -- 102.3 102.3 -- 485.7 485.7
Dividend income 40.2 -- 40.2 38.0 -- 38.0
Net fair value
loss on
derivatives (26.8) 16.8 (10.0) (0.4) (11.8) (12.2)
---------------- -------------- -------------- --------------- -------------- -------------- ---------------
Total revenue 539.9 98.4 638.3 512.8 451.7 964.5
---------------- -------------- -------------- --------------- -------------- -------------- ---------------
Interest income -- 13.9 13.9 -- -- --
Interest expense (2.2) (61.8) (64.0) (1.7) (50.5) (52.2)
Staff costs (85.0) (20.0) (105.0) (76.0) (16.7) (92.7)
Incentive scheme
costs (92.2) (59.6) (151.8) (87.2) (82.5) (169.7)
Other
administrative
expenses (49.8) (23.5) (73.3) (61.7) (19.4) (81.1)
---------------- -------------- -------------- --------------- -------------- -------------- ---------------
Profit before
tax and
discontinued
operations 310.7 (52.6) 258.1 286.2 282.6 568.8
---------------- -------------- -------------- --------------- -------------- -------------- ---------------
Reconciliation of APM amounts reported for management purposes to the financial statements reported under UK-adopted IAS
Included in the following tables are statutory adjustments made to the following:
-- All income generated from the balance sheet investment portfolio is
presented as net investment returns for reportable segments purposes,
whereas under UK-adopted IAS it is presented within gains on investments
and other operating income.
-- The structured entities controlled by the Group are presented as fair
value investments for reportable segments (APM), whereas the statutory
financial statements present these entities on a consolidated basis under
UK-adopted IAS. The impact of this consolidation on profit before tax is
shown in the table on the following page.
-- The warehouse funds, their investments and other current assets within
controlled entities are presented as fair value investments for
reportable segments (APM), whereas the statutory financial statement
present these entities on a consolidated basis under UK-adopted IAS. The
impact of this consolidation is disclosed within 'Gain/(loss) after tax
from discontinued operations' on the following page with further detail
in note 29.
4. Segmental reporting continued
Consolidated income statement
Reportable Consolidated Financial
segments entities statements
Year ended 31 March 2023 GBPm GBPm GBPm
------------------------------------------------------- --------------- -------------- ---------------
Fund management fee income 503.6 (22.0) 481.6
Other operating income 2.2 (0.2) 2.0
Fee and other income 505.8 (22.2) 483.6
Dividend income 40.2 (40.2) --
Net fair value loss on derivatives (10.0) (7.1) (17.1)
Finance income/(loss) 30.2 (47.3) (17.1)
Net investment returns/gains on investments 102.3 70.2 172.5
------------------------------------------------------- --------------- -------------- ---------------
Total revenue 638.3 0.7 639.0
------------------------------------------------------- --------------- -------------- ---------------
Other income 13.9 1.6 15.5
Finance costs (64.0) (0.6) (64.6)
Staff costs (105.0) (0.1) (105.1)
Incentive scheme costs (151.8) 0.2 (151.6)
Other administrative expenses (73.3) (13.3) (86.6)
Administrative expenses (330.1) (13.2) (343.3)
Share of results of joint ventures accounted for using
equity method -- 4.4 4.4
------------------------------------------------------- --------------- -------------- ---------------
Profit before tax and discontinued operations 258.1 (7.1) 251.0
------------------------------------------------------- --------------- -------------- ---------------
Tax charge (28.8) (0.6) (29.4)
Profit after tax from discontinued operations -- 56.8 56.8
------------------------------------------------------- --------------- -------------- ---------------
Profit after tax and discontinued operations 229.3 49.1 278.4
------------------------------------------------------- --------------- -------------- ---------------
Reportable Consolidated Financial
segments entities statements
Year ended 31 March 2022 GBPm GBPm GBPm
------------------------------------------------------- --------------- -------------- ---------------
Fund management fee income 449.2 (19.8) 429.4
Other operating income 3.8 0.8 4.6
Fee and other income 453.0 (19.0) 434.0
Dividend income 38.0 (38.0) --
Net fair value gain/(loss) on derivatives (12.2) 4.8 (7.4)
Finance income/(loss) 25.8 (33.2) (7.4)
Net investment returns/gains on investments 485.7 69.8 555.5
------------------------------------------------------- --------------- -------------- ---------------
Total revenue 964.5 17.6 982.1
------------------------------------------------------- --------------- -------------- ---------------
Finance costs (52.2) (0.9) (53.1)
Staff costs (92.7) 0.3 (92.4)
Incentive scheme costs (169.7) -- (169.7)
Other administrative expenses (81.1) (19.9) (101.0)
Administrative expenses (343.5) (19.6) (363.1)
Share of results of joint ventures accounted for using
equity method -- (0.5) (0.5)
------------------------------------------------------- --------------- -------------- ---------------
Profit before tax and discontinued operations 568.8 (3.4) 565.4
------------------------------------------------------- --------------- -------------- ---------------
Tax charge (30.8) (0.3) (31.1)
------------------------------------------------------- --------------- -------------- ---------------
Loss after tax from discontinued operations -- (9.2) (9.2)
------------------------------------------------------- --------------- -------------- ---------------
Profit after tax and discontinued operations 538.0 (12.9) 525.1
------------------------------------------------------- --------------- -------------- ---------------
4. Segmental reporting continued
Consolidated statement of financial position
2023
----------------------------------------------------------
Reportable Consolidated Financial
segments entities statements
Year ended 31
March 2023 GBPm GBPm GBPm
------------------ ------------------ ------------------ ------------------
Non-current
financial assets 2,642.2 4,402.8 7,045.0
Other non-current
assets 158.4 6.0 164.4
Cash 550.0 407.5 957.5
Current financial
assets 282.4 (264.1) 18.3
Other current
assets 243.7 623.6 867.3
------------------ ------------------ ------------------ ------------------
Total assets 3,876.7 5,175.8 9,052.5
------------------ ------------------ ------------------ ------------------
Non-current
financial
liabilities 1,558.0 4,573.4 6,131.4
Other non-current
liabilities 104.5 2.1 106.6
Current financial
liabilities 79.1 -- 79.1
Other current
liabilities 157.7 532.5 690.2
------------------ ------------------ ------------------ ------------------
Total liabilities 1,899.3 5,108.0 7,007.3
------------------ ------------------ ------------------ ------------------
Equity 1,977.4 67.8 2,045.2
------------------ ------------------ ------------------ ------------------
Total equity and
liabilities 3,876.7 5,175.8 9,052.5
------------------ ------------------ ------------------ ------------------
2022
----------------------------------------------------------
Reportable Consolidated Financial
segments entities statements
Year ended 31
March 2022 GBPm GBPm GBPm
------------------ ------------------ ------------------ ------------------
Non-current
financial assets 2,728.4 4,246.0 6,974.4
Other non-current
assets 193.3 4.0 197.3
Cash 761.5 230.3 991.8
Current financial
assets 126.4 10.9 137.3
Other current
assets 193.2 378.5 571.7
------------------ ------------------ ------------------ ------------------
Total assets 4,002.8 4,869.7 8,872.5
------------------ ------------------ ------------------ ------------------
Non-current
financial
liabilities 1,507.4 4,364.7 5,872.1
Other non-current
liabilities 91.2 0.3 91.5
Current financial
liabilities 256.4 104.6 361.0
Other current
liabilities 152.8 393.3 546.1
------------------ ------------------ ------------------ ------------------
Total liabilities 2,007.8 4,862.9 6,870.7 ------------------ ------------------ ------------------ ------------------ Equity 1,995.0 6.8 2,001.8 ------------------ ------------------ ------------------ ------------------ Total equity and liabilities 4,002.8 4,869.7 8,872.5 ------------------ ------------------ ------------------ ------------------
4. Segmental reporting continued
Consolidated statement of cash flows
2023
---------------------------------------------------
Consolidated
Reportable structured Financial
segments entities Statements
GBPm GBPm GBPm
------------------------------------------------------- --------------- --------------- -----------------
Profit/(loss) before tax from continuing operations 258.1 (7.1) 251.0
------------------------------------------------------- --------------- --------------- -----------------
Adjustments for non cash items:
Fee and other operating (income)/expense (505.8) 22.2 (483.6)
Net investment returns (102.3) (70.2) (172.5)
Net fair value loss on derivatives 34.9 -- 34.9
Impact of movement in foreign exchange rates (24.9) 7.1 (17.8)
Interest income (13.9) (1.6) (15.5)
Interest expense 64.0 0.6 64.6
Depreciation, amortisation and impairment of property,
equipment and intangible assets 18.2 -- 18.2
Share-based payment expense 39.5 -- 39.5
Working capital changes:
(Increase)/Decrease in trade receivables (48.3) 36.3 (12.0)
Decrease in trade and other payables (41.3) (155.6) (196.9)
Change in disposal groups held for sale -- (8.8) (8.8)
------------------------------------------------------- --------------- --------------- -----------------
(321.8) (177.1) (498.9)
------------------------------------------------------- --------------- --------------- -----------------
Proceeds from sale of current financial assets and
disposal groups held for sale 45.5 -- 45.5
Purchase of current financial assets and disposal
groups held for sale (211.9) -- (211.9)
Purchase of investments (453.8) (966.4) (1,420.2)
Proceeds from sales and maturities of investments 689.4 1,032.8 1,722.2
Interest and dividend income received 106.8 256.0 362.8
Fee and other operating income received 573.3 14.6 587.9
Interest paid (63.5) (199.9) (263.4)
------------------------------------------------------- --------------- --------------- -----------------
Cash flow generated from/(used in) operations 363.9 (39.9) 324.0
------------------------------------------------------- --------------- --------------- -----------------
Taxes paid (32.4) -- (32.4)
------------------------------------------------------- --------------- --------------- -----------------
Net cash flows from/(used in) operating activities 331.5 (39.9) 291.6
------------------------------------------------------- --------------- --------------- -----------------
Investing activities
Purchase of intangible assets (4.7) -- (4.7)
Purchase of property, plant and equipment (6.5) -- (6.5)
Net cashflow from derivative financial instruments (58.8) -- (58.8)
Cashflow as a result of acquisition of subsidiaries -- 200.8 200.8
------------------------------------------------------- --------------- --------------- -----------------
Net cash flows (used in)/from investing activities (70.0) 200.8 130.8
------------------------------------------------------- --------------- --------------- -----------------
Financing activities
Purchase of Own Shares (38.9) -- (38.9)
Payment of principal portion of lease liabilities (6.8) -- (6.8)
Repayment of long-term borrowings (194.6) -- (194.6)
Dividends paid to equity holders of the parent (236.4) -- (236.4)
------------------------------------------------------- --------------- --------------- -----------------
Net cash flows used in financing activities (476.7) -- (476.7)
------------------------------------------------------- --------------- --------------- -----------------
Net (decrease)/increase in cash and cash equivalents (215.2) 160.9 (54.3)
Effects of exchange rate differences on cash and cash
equivalents 3.7 16.3 20.0
Cash and cash equivalents at 1 April 761.5 230.3 991.8
------------------------------------------------------- --------------- --------------- -----------------
Cash and cash equivalents at 31 March 550.0 407.5 957.5
------------------------------------------------------- --------------- --------------- -----------------
4. Segmental reporting continued
2022
-------------------------------------------------
Consolidated
Reportable structured Financial
segments entities Statements
--------------- --------------- ---------------
GBPm GBPm GBPm
------------------------------------------------------- --------------- --------------- ---------------
Profit/(loss) before tax from continuing operations 568.8 (3.4) 565.4
------------------------------------------------------- --------------- --------------- ---------------
Adjustments for non cash items:
Fee and other operating (income)/expense (453.0) 19.0 (434.0)
Net investment returns (485.7) (69.8) (555.5)
Net fair value loss/(gains) on derivatives 12.1 (4.8) 7.3
Impact of movement in foreign exchange rates 0.1 -- 0.1
Interest expense 52.2 0.9 53.1
Depreciation, amortisation and impairment of property,
equipment and intangible assets 19.5 -- 19.5
Share-based payment expense 29.6 0 29.6
Working capital changes:
Increase in trade receivables (21.5) (11.0) (32.5)
Increase/(Decrease) in trade and other payables 35.5 (62.9) (27.4)
------------------------------------------------------- --------------- --------------- ---------------
(242.4) (132.0) (374.4)
------------------------------------------------------- --------------- --------------- ---------------
Proceeds from sale of current financial assets and
disposal groups held for sale 185.2 -- 185.2
Purchase of current financial assets and disposal
groups held for sale (204.0) -- (204.0)
Purchase of investments (748.3) (2,784.5) (3,532.8)
Proceeds from sales and maturities of investments 958.8 2,785.0 3,743.8
Interest and dividend income received 100.3 159.5 259.8 Fee and other operating income received 387.8 5.2 393.0 Interest paid (55.7) (127.6) (183.3) ------------------------------------------------------- --------------- --------------- --------------- Cash flow generated from/(used in) operations 381.8 (94.5) 287.3 ------------------------------------------------------- --------------- --------------- --------------- Taxes paid (43.9) -- (43.9) ------------------------------------------------------- --------------- --------------- --------------- Net cash flows from/(used in) operating activities 337.9 (94.5) 243.4 ------------------------------------------------------- --------------- --------------- --------------- Investing activities Purchase of intangible assets (4.3) -- (4.3) Purchase of property, plant and equipment (3.5) -- (3.5) Net cashflow from derivative financial instruments 17.3 5.1 22.4 Cashflow as a result of acquisition of subsidiaries 1.6 29.3 30.9 ------------------------------------------------------- --------------- --------------- --------------- Net cash flows from investing activities 11.1 34.4 45.5 ------------------------------------------------------- --------------- --------------- --------------- Financing activities Purchase of Own Shares (20.9) -- (20.9) Payment of principal portion of lease liabilities (4.1) -- (4.1) Proceeds from borrowings 413.5 -- 413.5 Repayment of long-term borrowings (111.5) -- (111.5) Dividends paid to equity holders of the parent (165.7) -- (165.7) ------------------------------------------------------- --------------- --------------- --------------- Net cash flows from financing activities 111.3 -- 111.3 ------------------------------------------------------- --------------- --------------- --------------- Net increase/(decrease) in cash and cash equivalents 460.2 (60.0) 400.2 Effects of exchange rate differences on cash and cash equivalents 4.4 6.0 10.4 Cash and cash equivalents at 1 April 296.9 284.3 581.2 ------------------------------------------------------- --------------- --------------- --------------- Cash and cash equivalents at 31 March 761.5 230.3 991.8 ------------------------------------------------------- --------------- --------------- ---------------
4. Segmental reporting continued
Geographical analysis of non-current financial assets at fair value
Year ended Year ended
31 March 2023 31 March 2022
Asset Analysis by Geography GBPm GBPm
--------------- ---------------
Europe 3,730.3 3,613.8
Asia Pacific 247.2 244.0
North America 3,059.1 3,115.3
---------------------------- --------------- ---------------
Total 7,036.6 6,973.1
---------------------------- --------------- ---------------
Geographical analysis of Group revenue
Year ended Year ended
31 March 2023 31 March 2022
Income Analysis by Geography GBPm GBPm
-------------- --------------
Europe 415.3 693.3
Asia Pacific 58.6 84.0
North America 165.1 204.8
----------------------------- -------------- --------------
Total 639.0 982.1
----------------------------- -------------- --------------
5. Financial assets and liabilities
Accounting policy
Financial assets
Financial assets can be classified into the following
categories: Amortised Cost, Fair Value Through Profit
and Loss ('FVTPL') and Fair Value Through Other Comprehensive
Income ('FVOCI'). The Group has classified all invested
financial assets as FVTPL.
Financial assets at FVTPL are initially recognised
and subsequently measured at fair value. A valuation
assessment is performed on a recurring basis with
gains or losses arising from changes in fair value
recognised through net gains on investments in the
consolidated income statement. Dividends or interest
earned on the financial assets are also included in
the net gains on investments.
Where the Group holds investments in a number of financial
instruments such as debt and equity in a portfolio
company, the Group views their entire investment as
a unit of account for valuation purposes. Industry
standard valuation guidelines such as the International
Private Equity and Venture Capital ('IPEV') Valuation
Guidelines - December 2022, allow for a level of aggregation
where there are a number of financial instruments
held within a portfolio company.
Recognition of financial assets
When the Group invests in the capital structure of
a portfolio company, these assets are initially recognised
and subsequently measured at fair value, and transaction
costs are recognised in the consolidated income statement
immediately.
Derecognition of financial assets
The Group derecognises a financial asset when the
contractual rights to the cash flows from the asset
expire, or when substantially all the risks and rewards
of ownership of the asset are transferred to another
party. On derecognition of a financial asset in its
entirety, the difference between the asset's carrying
value amount and the sum of the consideration received
and receivable, is recognised in profit or loss.
Key sources of estimation uncertainty on financial
assets
Fair value is the amount for which an asset could
be exchanged, or liability settled, between knowledgeable,
willing parties in an arm's length transaction at
the reporting date. The fair value of investments
is based on quoted prices, where available. Where
quoted prices are not available, the fair value is
estimated in line with IFRS and industry standard
valuation guidelines such as IPEV for direct investments
in portfolio companies, and the Royal Institute of
Chartered Surveyors Valuation -- Global Standards
2020 for investment property. These valuation techniques
can be subjective and include assumptions which are
not supportable by observable data. Details of the
valuation techniques and the associated sensitivities
are further disclosed in this note on page 54.
Given the subjectivity of investments in private companies,
senior and subordinated notes of Collateralised Loan
Obligation vehicles and investments in investment
property, these are key sources of estimation uncertainty,
and as such the valuations are approved by the relevant
Fund Investment Committees and Group Valuation Committee.
The unobservable inputs relative to these investments
are further detailed below.
--------------------------------------------------------------
5. Financial assets and liabilities continued
Fair value measurements recognised in the statement of financial position
The information set out below provides information about how the Group and Company determines fair values of various financial assets and financial liabilities, grouped into Levels 1 to 3 based on the degree to which the fair value is observable.
-- Level 1 fair value measurements are those derived from quoted prices
(unadjusted) in active markets for identical assets or liabilities
-- Level 2 fair value measurements are those derived from inputs other than
quoted prices included within Level 1 that are observable for the asset
or liability, either directly (i.e. as prices) or indirectly (i.e.
derived from prices)
-- Level 3 fair value measurements are those derived from valuation
techniques that include inputs for the asset or liability that are not
based on observable market data (i.e. unobservable inputs)
The following table summarises the valuation of the Group's financial assets and liabilities by fair value hierarchy:
As at 31 March 2023 As at 31 March 2022
----------------------------------------------------- ------------------------------------ ------------------------------------
Level Level
1 Level 2 Level 3 Total 1 Level 2 Level 3 Total
Group GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
----------------------------------------------------- ----- --------- ------- --------- ----- --------- ------- ---------
Financial Assets
Investment in or alongside managed funds(1) 7.2 1.8 2,144.3 2,153.3 9.8 -- 2,112.9 2,122.7
Investments in loans held within structured entities
controlled by the Group -- 4,101.4 567.7 4,669.1 -- 4,467.4 145.2 4,612.6
Derivative assets -- 22.0 -- 22.0 -- 138.6 -- 138.6
Investment in private companies(2) -- -- 100.4 100.4 -- -- 122.7 122.7
Investment in public companies 5.1 -- -- 5.1 0.4 -- -- 0.4
Senior and subordinated notes of CLO vehicles -- 105.8 7.5 113.3 -- 105.6 9.1 114.7
Disposal groups held for sale -- -- 163.2 163.2 12.7 -- 89.2 101.9
----------------------------------------------------- ----- --------- ------- --------- ----- --------- ------- ---------
Total assets 12.3 4,231.0 2,983.1 7,226.4 22.9 4,711.6 2,479.1 7,213.6
----------------------------------------------------- ----- --------- ------- --------- ----- --------- ------- ---------
Financial Liabilities
Liabilities of consolidated credit funds -- (4,508.0) (64.7) (4,572.7) -- (4,130.1) (234.6) (4,364.7)
Derivative liabilities -- (15.7) -- (15.7) -- (156.3) -- (156.3)
Disposal groups held for sale -- -- -- -- -- -- (5.0) (5.0)
----------------------------------------------------- ----- --------- ------- --------- ----- --------- ------- ---------
Total liabilities -- (4,523.7) (64.7) (4,588.4) -- (4,286.4) (239.6) (4,526.0)
----------------------------------------------------- ----- --------- ------- --------- ----- --------- ------- ---------
1. Level 3 Investments in or alongside managed funds includes GBP47.8m
senior debt (2022: GBP41.1m), GBP1,319.8m subordinated debt and equity
(2022: GBP1,487.7m), GBP284.5m of real estate assets (2022: GBP215.1m),
and GBP492.2m private equity secondaries (2022: GBP369.0m).
2. Level 3 Investment in private companies includes GBP91.3m subordinated
debt and equity (2022: GBP96.2m) and GBP9.1m of real estate assets (2022:
GBP26.5m).
5. Financial assets and liabilities continued
Valuations
Valuation process
The Group Valuation Committee ('GVC') oversees the valuation processes and provides independent review of the methodologies, models and assumptions used to value the Level 3 assets and liabilities, in accordance with the principles and guidelines set out in the Group Valuation Policy, and to assess the reasonableness of the resulting fair value measurement. The GVC reviewed valuations on a quarterly basis and reports to the Audit Committee semi-annually. The GVC is independent of the boards of directors of the funds and no member of the GVC is a member of either the Group's investment teams or Investment Committees ('IC's).
Valuation methodologies are identified for each category of Level 3 assets, based on the specific characteristics of each asset and liability and considering factors such as the nature, complexity, and risk profile of the investment. Each asset is attributable to a fund or investment strategy managed by the Group.
The IC of that fund or strategy is responsible for the review, challenge, and approval of the related funds' valuations of the assets managed by that strategy investment team. Sources of the valuation include the ICG investment team, third-party valuation services and third-party fund administrators. The IC provides those valuations to the Group, as an investor in the fund assets.
The IC is also responsible for escalating significant events regarding the valuation to the Group (as an investor in the fund assets), e.g. change in valuation methodologies, potential impairment events, material judgements etc.
The table in page 54 outlines in more detail the range of valuation techniques, as well as the key unobservable inputs for each category of Level 3 assets and liabilities.
Investment in or alongside managed funds
When fair values of publicly traded closed-ended funds and open-ended funds are based on quoted market prices in an active market for identical assets without any adjustments, the instruments are included within Level 1 of the hierarchy. The Group values these investments at bid price for long positions and ask price for short positions.
The Group also co-invests with funds, including credit and private equity secondary funds, which are not quoted in an active market. The Group considers the valuation techniques and inputs used by these funds to ensure they are reasonable, appropriate and consistent with the principles of fair value. The latest available NAV of these funds are generally used as an input into measuring their fair value. The NAV of the funds are adjusted, as necessary, to reflect restrictions on redemptions, and other specific factors relevant to the funds. In measuring fair value, consideration is also given to any transactions in the interests of the funds. The Group classifies these funds as Level 3.
Investment in private companies
The Group takes debt and equity stakes in private companies that are, other than on very rare occasions, not quoted in an active market and uses either a market-based valuation technique or a discounted cash flow technique to value these positions.
The Group's investments in private companies are held at fair value using the most appropriate valuation technique based on the nature, facts and circumstances of the private company. The first of two principal valuation techniques is a market comparable companies technique. The enterprise value ('EV') of the portfolio company is determined by applying an earnings multiple, taken from comparable companies, to the profits of the portfolio company. The Group determines comparable private and public companies, based on industry, size, location, leverage and strategy, and calculates an appropriate multiple for each comparable company identified. The second principal valuation technique is a discounted cashflow ('DCF') approach. Fair value is determined by discounting the expected future cashflows of the portfolio company to the present value. Various assumptions are utilised as inputs, such as terminal value and the appropriate discount rate to apply. Typically, the DCF is then calibrated alongside a market comparable companies approach. Alternate valuation techniques may be used where there is a recent offer or a recent comparable market transaction, which may provide an observable market price and an approximation to fair value of the private company. The Group classified these assets as Level 3.
Investment in public companies
Quoted investments are held at the last traded bid price on the reporting date. When a purchase or sale is made under contract, the terms of which require delivery within the timeframe of the relevant market, the contract is reflected on the trade date.
5. Financial assets and liabilities continued
Investment in loans held in consolidated structured entities
The loan asset portfolios of the consolidated structured entities are valued using observable inputs such as recently executed transaction prices in securities of the issuer or comparable issuers and from independent loan pricing sources. To the extent that the significant inputs are observable the Group classifies these assets as Level 2 and other assets are classified as Level 3. Level 3 assets are valued using a discounted cashflow technique and the key inputs under this approach are detailed on page 54.
Derivative assets and liabilities
The Group uses market-standard valuation models for determining fair values of over-the-counter interest rate swaps, currency swaps and forward foreign exchange contracts. The most frequently applied valuation techniques include forward pricing and swap models, using present value calculations. The models incorporate various inputs including both credit and debit valuation adjustments for counterparty and own credit risk, foreign exchange spot and forward rates and interest rate curves. For these financial instruments, significant inputs into models are market observable and are included within Level 2.
Senior and subordinated notes of CLO vehicles
The Group holds investments in the senior and subordinated notes of the CLOs it manages, predominately driven by European Union risk-retention requirements. The Group employs DCF analysis to fair value these investments, using several inputs including constant annual default rates, prepayments rates, reinvestment rates, recovery rates and discount rates.
The DCF analysis at the reporting date shows that the senior notes are typically expected to recover all contractual cashflows, including under stressed scenarios, over the life of the CLOs. Unobservable inputs are used in determining the fair value of subordinated notes, which are therefore classified as Level 3 instruments. Observable inputs are used in determining the fair value of senior notes and these instruments are therefore classified as Level 2.
Liabilities of consolidated credit funds
Rated debt liabilities of consolidated CLOs are generally valued at par plus accrued interest, which we assess as fair value, as evidenced by the general availability of market prices and discounting spreads for rated debt liabilities of CLOs. This is consistent with the valuation approach of the rated debt assets held in the unconsolidated CLOs. As a result we deem these liabilities as Level 2.
Unrated/subordinated debt liabilities of consolidated CLOs are valued directly in line with the fair value of the CLOs' underlying loan asset portfolios. These underlying assets comprise observable loan securities traded in active markets. The underlying assets are reported in both Level 2 and Level 3. As a result of this methodology deriving the valuation of unrated/subordinated debt liabilities from a combination of Level 2 and Level 3 asset values, we deem these liabilities to be Level 3.
Real estate assets
To the extent that the Group invests in real estate assets, whether through an investment in a managed fund or an investment in a private company, the underlying assets may be a debt instrument or property classified as investment property in accordance with IAS 40 'Investment Property'. The fair values of the directly held investment properties have been recorded based on independent valuations prepared by third-party real estate valuation specialists in line with the Royal Institution of Chartered Surveyors Valuation -- Global Standards 2020. At the end of each reporting period, the Group reviews its assessment of the fair value of each property, taking into account the most recent independent valuations. The Directors determine a property value within a range of reasonable fair value estimates, based on information provided.
All resulting fair value estimates for properties are included in Level 3.
5. Financial assets and liabilities continued
Investment Investment
in or in loans Senior and Disposal
alongside held in Investment subordinated groups
managed consolidated in private notes of CLO held for
funds entities companies vehicles sale Total
Group GBPm GBPm GBPm GBPm GBPm GBPm
At 1 April
2022 2,112.9 145.2 122.7 9.1 89.2 2,479.1
Total gains
or losses
in the
income
statement
-- Net
investment
return(2) 172.9 (9.6) (21.2) (1.3) (7.1) 133.7
---------- ------------
- Foreign
exchange 67.4 15.5 13.2 0.5 5.8 102.4
Purchases 416.2 60.2 6.7 -- 158.7 641.8
Exit
proceeds (625.1) (100.7) (21.0) (0.8) (23.8) (771.4)
Transfer
between
levels(1) -- 457.1 -- -- (59.6) 397.5
----------- ---------- ------------ ---------- ------------ -------- -------
At 31 March
2023 2,144.3 567.7 100.4 7.5 163.2 2,983.1
----------- ---------- ------------ ---------- ------------ -------- -------
1. During the year certain assets in Investments in loans held in consolidated entities were reassessed as Level 3 (from Level 2) and these changes are reported as a transfer in the year. Transfers out of Disposal groups held for sale represented the re-designation of an asset as Investment Property (see note 29)
2. Included within net investment returns are GBP141.8m of unrealised gains (which includes accrued interest).
Investment Investment
in or in loans Senior and Disposal
alongside held in Investment subordinated groups
managed consolidated in private notes of CLO held for
funds entities companies vehicles sale Total
Group GBPm GBPm GBPm GBPm GBPm GBPm
At 1 April
2021 1,802.1 168.6 234.6 27.2 57.4 2,289.9
Total gains
or losses
in the
income
statement
-- Net
investment
return(2) 455.9 (10.8) 17.7 (5.2) 6.3 463.9
---------- ------------
- Foreign
exchange 2.7 -- 4.5 0.5 0.7 8.4
Purchases 680.4 54.8 0.4 13.2 106.9 855.7
Exit
proceeds (824.2) (37.6) (134.5) (26.6) (82.1) (1,105.0)
Transfer
between
levels (4.0) (29.8) -- -- -- (33.8)
----------- ---------- ------------ ---------- ------------ -------- ---------
At 31 March
2022 2,112.9 145.2 122.7 9.1 89.2 2,479.1
----------- ---------- ------------ ---------- ------------ -------- ---------
1. During the year certain assets in Investments in or alongside managed fund and Investments in loans held in consolidated entities were reassessed from Level 3 and these changes are reported as a transfer in the year
2. Included within net investment returns are GBP439.7m of unrealised gains (which includes accrued interest)
.
Reconciliation of Level 3 fair value measurements of financial liabilities
The following tables sets out the movements in reoccurring financial liabilities valued using the Level 3 basis of measurement in aggregate. Within the income statement, realised gains and fair value movements are included within gains on investments, and foreign exchange gains/(losses) are included within finance costs.
During the year ended 31 March 2023 changes in the fair value of the assets of consolidated credit funds resulted in a reduction in the fair value of the financial liabilities of those consolidated credit funds, reported as a 'fair value gain' in the table below.
2023 2022
Financial liabilities Financial liabilities
designated as FVTPL designated as FVTPL
Group GBPm GBPm
------------------------- ------------------------ -------------------------
At 1 April 239.6 268.2
Total gains or losses in
the income statement
-- Fair value gains (178.2) (31.8)
-- Foreign exchange
losses 12.8 --
Purchases 23.8 25.9
Disposal groups held for
sale (5.0) 5.0
Transfer between levels (28.3) (27.7)
------------------------- ------------------------ -------------------------
At 31 March 64.7 239.6
------------------------- ------------------------ -------------------------
Transfers in and out of Level 3 financial liabilities were due to changes to the observability of inputs used in the valuation of these liabilities.
5. Financial assets and liabilities continued
Valuation inputs and sensitivity analysis
The following table summarises the inputs and estimates used for items categorised in Level 3 of the fair value hierarchy together with a quantitative sensitivity analysis:
Fair Value Fair Value
------------------------------ ---------------- -------------- ----------------------------------- ----------------
As at As at Effect on Fair Value(4)
31 March 2023 31 March 2022 31 March 2023
Key Unobservable Sensitivity/
Group Assets GBPm GBPm Primary Valuation Technique(1) Inputs Range Weighted Average/ Fair Value Inputs Scenarios GBPm
------------------------------------------------- -------------- --------------- ------------------------------ ---------------- -------------- ----------------------------------- ---------------- -----------------------
Earnings '+10% Earnings
Corporate - subordinated debt and equity(2) 1,574.4 1,598.4 Market comparable companies multiple 5.0x -- 29.0x 15.1x multiple(2) 192.5
------------------------------------------------- -------------- --------------- ------------------------------ ---------------- -------------- -----------------------------------
'-10% Earnings
Discounted cash flow Discount rate 7.5% - 26.4% 10.4 % multiple(2) (192.7)
------------------------------------------------- -------------- --------------- ------------------------------ ---------------- -------------- -----------------------------------
Earnings
multiple 6.6x -- 19.8x 12.4x
------------------------------------------------- -------------- --------------- ------------------------------ ---------------- -------------- ----------------------------------- ---------------- -----------------------
+10% Third-party
Real Assets 293.6 316.3 Third-party valuation N/A N/A N/A valuation 29.4
------------------------------------------------- -------------- --------------- ------------------------------ ---------------- -------------- -----------------------------------
-10% Third-party
LTV-based impairment model N/A N/A N/A valuation (29.4)
------------------------------------------------- -------------- --------------- ------------------------------
Private Equity +10% Third-party
Secondaries 492.1 369.0 Third-party valuation N/A N/A N/A valuation 49.2
------------------------------------------------- -------------- ---------------
-10% Third-party
valuation (49.2)
Corporate - Probability of
Senior debt 47.8 41.1 Discounted cash flow default 2.0%-5.4% 2.4 % Upside case 0.1
------------------------------------------------- -------------- --------------- ------------------------------ ---------------- -------------- -----------------------------------
Loss given
default 25.4 % 25.4 % Downside case (0.8)
------------------------------------------------- -------------- --------------- ------------------------------ ---------------- -------------- -----------------------------------
Maturity of loan 3 years 3 years
------------------------------ ---------------- -------------- -----------------------------------
Effective
interest rate 8.7%-9.5% 8.7 %
------------------------------------------------- -------------- --------------- ------------------------------ ---------------- -------------- ----------------------------------- ---------------- -----------------------
Subordinated notes of CLO vehicles(3) 7.5 9.1 Discounted cash flow Discount rate 13.0% - 14.0% 13.5 %
------------------------------------------------- -------------- --------------- ------------------------------ ---------------- -------------- -----------------------------------
Default rate 3% - 4.5% 3.4 % Upside case(3) 21.6
------------------------------------------------- -------------- --------------- -------------- -----------------------------------
Downside case(3) (23.0)
-------------- -----------------------------------
Prepayment rate
% 15% -20% 18.9 %
---------------- -------------- -----------------------------------
Recovery rate % 75.0 % 75.0 %
---------------- -------------- -----------------------------------
Reinvestment
price 99.5 % 99.5 %
------------------------------------------------- -------------- --------------- ------------------------------ ---------------- -------------- ----------------------------------- ---------------- -----------------------
+10% Third-party
Investments in loans held in structured entities 567.7 145.2 Third-party valuation N/A N/A N/A valuation 56.8
------------------------------------------------- -------------- --------------- ------------------------------ ---------------- -------------- -----------------------------------
-10% Third-party
valuation (56.8)
------------------------------------------------- -------------- --------------- ------------------------------ ---------------- -------------- ----------------------------------- ---------------- -----------------------
Total assets 2,983.1 2,479.1
------------------------------------------------- -------------- --------------- ------------------------------ ---------------- -------------- ----------------------------------- ---------------- -----------------------
+10% Third-party
Liabilities of consolidated credit funds (64.7) (234.6) Third-party valuation N/A N/A N/A valuation (6.5)
------------------------------------------------- --------------- ------------------------------ ---------------- -------------- -----------------------------------
-10% Third-party
valuation 6.5
------------------------------------------------- -------------- --------------- ------------------------------ ---------------- -------------- ----------------------------------- ---------------- -----------------------
Disposal group held for sale -- (5.0)
------------------------------------------------- -------------- --------------- ------------------------------ ---------------- -------------- ----------------------------------- ---------------- -----------------------
Total liabilities (64.7) (239.6)
------------------------------------------------- -------------- --------------- ------------------------------ ---------------- -------------- ----------------------------------- ---------------- -----------------------
1. Where the Group has co-invested with its managed funds, it is the type of
the underlying investment, and the valuation techniques used for these
underlying investments, that is set out here.
2. For investments valued using a DCF methodology (including Infrastructure
investments) the imputed earnings multiple is used for this sensitivity
analysis.
3. The sensitivity analysis is performed on the entire portfolio of
subordinated notes of CLO vehicles that the Group has invested in with
total value of GBP182.8m (2022: GBP174.2m). This value includes
investments in CLOs that are not consolidated (2023: GBP7.5m (2022:
GBP9.1m)) and investments in CLOs which are consolidated (2023: GBP175.3m
(2022: GBP165.3m)). The upside case is based on the default rate being
lowered to 2.5% p.a. for the next 24 months, keeping all other parameters
consistent. The downside case is based on the default rate being
increased over the next 24 months to 6.5% p.a., keeping all other
parameters consistent.
4. The effect of fair value across the entire investment portfolio ranges
from -GBP345.4m (downside case) to +GBP343.0m (upside case) (2022:
-GBP281.0m (downside case) to +GBP279.3m (upside case).
5. Financial assets and liabilities continued
Derivative financial instruments
Accounting policy
Derivative financial instruments for economic hedging
The Group holds derivative financial instruments to
hedge foreign currency and interest rate exposures.
Derivatives are recognised at fair value determined
using independent third-party valuations or quoted
market prices. Changes in fair values of derivatives
are recognised immediately in Finance loss in the
Income Statement.
A derivative with a positive fair value is recognised
as a financial asset while a derivative with a negative
fair value is recognised as a financial liability.
A derivative is presented as a non-current asset or
non-current liability if the remaining maturity of
the instrument is more than 12 months from the reporting
date, otherwise a derivative will be presented as
a current asset or current liability.
---------------------------------------------------------
2023 2022
--------------------------------------------------------------------- -----------------------------------------------------------------------
Fair values Fair values
---------------------------- ------------------------------
Contract or underlying principal amount Asset Liability Contract or underlying principal amount Asset Liability
Group GBPm GBPm GBPm GBPm GBPm GBPm
Cross currency swaps 121.6 7.5 (8.5) 306.1 28.4 (30.1)
Forward foreign exchange contracts (excl those held
in consolidated credit funds) 1,365.1 14.5 (7.2) 1,113.6 4.7 (22.5)
Forward foreign exchange contracts held in consolidated
credit funds -- -- -- 102.6 105.5 (103.7)
-------------------------------------------------------- --------------------------------------- ------------ -------------- --------------------------------------- ------------- ---------------
Total 1,486.7 22.0 (15.7) 1,522.3 138.6 (156.3)
-------------------------------------------------------- --------------------------------------- ------------ -------------- --------------------------------------- ------------- ---------------
The Group holds GBP8.5m of cash pledged as collateral by its counterparties as at 31 March 2023. As at 31 March 2022 the value of cash held in margin accounts and therefore pledged as collateral by the Group was GBP27.0m. The counterparties were: Citigroup Global Markets Limited, Citibank NA, Lloyds Bank Corporate Markets Plc and ANZ. All the Credit Support Annexes that have been agreed with our counterparties are fully compliant with European Market Infrastructure Regulation 'EMIR'.
There was no change in fair value related to credit risk, in relation to derivatives as at 31 March 2023 (31 March 2022: GBPnil).
Under the relevant International Swaps and Derivatives Association ('ISDA') Master Agreements in place with our counterparties, the close-out netting provision would result in all obligations under a contract with a defaulting party being terminated and there would be a subsequent combining of positive and negative replacement values into a single net payable or receivable. This reduces the credit exposure from gross to net.
6. Cash and cash equivalents
Group
2023 2022
GBPm GBPm
Cash and cash equivalents
Cash at bank and in hand 957.5 991.8
-------------------------- ------------- -------------
Cash and cash equivalents comprise cash and short-term bank deposits with an original maturity of three months or less. The carrying amount of these assets approximates to their fair value. Cash and cash equivalents at the end of the reporting period as shown in the consolidated statement of cash flows can be reconciled to the related items in the consolidated statement of financial position as shown above.
The Group's cash and cash equivalents include GBP407.5m (2022 : GBP230.3m) of restricted cash, held principally by structured entities controlled by the Group. The Group does not have legal recourse to these balances as their sole purpose is to service the interests of the investors in these structured entities.
In the current year GBP5.5m cash and cash equivalents were included in disposal groups held for sale (2022: GBP11.1m) (note 29).
7. Financial liabilities
Accounting policy Financial liabilities, which include borrowings and listed notes and bonds (with the exception of financial liabilities designated as FVTPL), are initially recognised at fair value net of transaction costs and subsequently measured at amortised cost using the effective interest rate method. Included within financial liabilities held at amortised cost is the Group's present value of its future lease payments. Lease liabilities are initially measured at the present value of all the future lease payments. The present value at the inception of the lease is determined by discounting all future lease payments at the Group's centrally determined incremental borrowing rate at the date of inception of the lease. In calculating the present value of lease payments, the Group uses its incremental borrowing rate because the interest rate implicit in the lease is not readily determinable. After the commencement date, the amount of lease liabilities is increased to reflect the accretion of interest and reduced for the lease payments made. In addition, the carrying amount of lease liabilities is remeasured if there is a modification, a change in the lease term, a change in the lease payments or a change in the assessment of an option to purchase the underlying asset. Financial liabilities at FVTPL are initially recognised and subsequently measured at fair value on a recurring basis with gains or losses arising from changes in fair value and interest paid on the financial instruments recognised through gains on investments in the income
statement. Interest paid on the financial instruments is included within net gains on investments. A financial instrument is designated as FVTPL if it is a derivative that is not designated and effective as a hedging instrument, or the designation eliminates or significantly reduces a measurement or recognition inconsistency that would otherwise arise. Included within financial liabilities at FVTPL are derivative liabilities and other financial liabilities designated as FVTPL within structured entities controlled by the Group. The Group derecognises financial liabilities when, and only when, the Group's obligations are discharged, cancelled or expire.
7. Financial liabilities continued
2023 2022
------------- --------------- ---------- ------------- --------------- ------------- ---------------
Interest rate
Interest rate Maturity Current Non-current Current Non-current
Group GBPm GBPm GBPm GBPm
------------- --------------- ---------- ------------- --------------- ------------- ---------------
Liabilities
held at
amortised
cost
- Private 2023 -
placement 2.02% - 6.25% 2029 56.8 604.8 39.2 617.2
- Listed
notes and 2027 -
bonds 1.63% - 2.5% 2030 2.5 874.9 162.9 836.8
- Unsecured
bank
debt(1) SONIA +1.40% 2026 (0.8) (1.5) (1.0) (1.7)
------------- --------------- ---------- ------------- --------------- ------------- ---------------
Total Liabilities held at amortised cost 58.5 1,478.2 201.1 1,452.3
Other
financial 2023 -
liabilities2 2.85% - 7.09% 2034 5.8 79.6 6.5 52.2
Liabilities
held at
FVTPL:
- Derivative financial liabilities 14.8 0.9 153.4 2.9
- Structured
entities
controlled
by the
Group 0.6% - 9.93% 2030-2036 -- 4,572.7 -- 4,364.7
------------- --------------- ---------- ------------- --------------- ------------- ---------------
79.1 6,131.4 361.0 5,872.1
---------------------------------------- ------------- --------------- ------------- ---------------
(1) Unsecured bank debt represents the value of associated fees which are amortised over the life of the facility.
1. Financial liabilities held at amortised cost within Disposal Groups Held
for Sale are disclosed in Note 29.
Other financial liabilities are lease liabilities. Details of the cash outflows related to leases are in the Consolidated statement of cash flows, interest expenses associated with lease liabilities are in note 11, the Right of Use ('ROU') assets and the income from subleasing ROU assets are in note 18.
The fair value of the Listed notes and bonds, being the market price of the outstanding bonds, is GBP613.1m (2022: GBP956.4m) . Private placements and unsecured bank debt is held at amortised cost which the Group has determined to be the fair value of these liabilities.
Movement in financial liabilities arising from financing activities
The following tables sets out the movements in total liabilities held at amortised cost arising from financing activities undertaken during the year.
Group
--------------------------------
2023 2022
GBPm GBPm
At 1 April 1,712.1 1,380.1
Proceeds from borrowings -- 413.5
Repayment of long term borrowings (194.6) (111.5)
Payment of principal portion of lease
liabilities (6.8) (4.1)
Establishment of lease liability 33.0 2.1
Net interest movement 1.0 6.2
Foreign exchange movement 77.4 25.8
-------------------------------------------- --------------- ---------------
At 31 March 1,622.1 1,712.1
-------------------------------------------- --------------- ---------------
8. Finance loss
Accounting policy
Changes in the fair value of derivatives used for
economic hedging are recognised as finance income/loss
(as appropriate) in the income statement as incurred.
2023 2022
GBPm GBPm
Fair value movements on derivatives (17.1) (7.4)
------------------------------------ ------ -----
(17.1) (7.4)
------------------------------------ ------ -----
9. Other income
Accounting policy
The Group earns interest on its bank deposits. These
amounts are recognised as income on receipt.
2023 2022
GBPm GBPm
Interest income on bank deposits 15.5 --
-------------------------------- ---- ----
15.5 --
-------------------------------- ---- ----
10. Net gains on investments
Accounting policy
The Group recognises net gains and losses on investments
comprising realised and unrealised gains and losses
from disposals and revaluations of financial assets
and financial liabilities measured at fair value.
2023 2022
GBPm GBPm
--------------------------------------------------------- ----------- --------------
Financial assets
Change in fair value of financial instruments designated
at FVTPL 167.6 643.1
Financial liabilities
Change in fair value of financial instruments designated
at FVTPL 4.9 (87.6)
Net gains arising on investments 172.5 555.5
--------------------------------------------------------- ----------- --------------
11. Finance costs
Accounting policy
Interest expense on the Group's debt, excluding financial
liabilities within structured entities controlled
by the Group, is recognised using the effective interest
rate method based on the expected future cash flows
of the liabilities over their expected life. Arrangement
and commitment fees amortised here are included within
the carrying value of financial liabilities. Financial
liabilities within structured entities controlled
by the Group are accounted for within Net gains and
losses arising on investment (see note 10).
Interest expense associated with lease obligations
represents the unwinding of the lease liability discount,
accounted for in accordance with IFRS 16 (see note
18).
Finance costs 2023 2022
GBPm GBPm
----------------------------------------------------- ---- ------------
Interest expense recognised on financial liabilities
held at amortised cost 57.3 45.4
Arrangement and commitment fees 4.7 5.7
Interest expense associated with lease obligations 2.6 2.0
----------------------------------------------------- ---- ------------
64.6 53.1
----------------------------------------------------- ---- ------------
12. Expenses
Further detail in respect of material administrative expenses reported on the income statement is set out below:
2023 2022
GBPm GBPm
------------------------------ ----- -----
Staff costs 256.7 262.1
Amortisation and depreciation 18.2 18.1
Operating lease expenses 2.8 3.8
Auditor's remuneration 2.3 2.1
------------------------------ ----- -----
12. Expenses continued
Auditor's remuneration includes fees for audit and non-audit services payable to the Group's auditor, Ernst and Young LLP, and are analysed as below.
2023 2022
GBPm GBPm
--------------------------------------------------- ---- -----------
ICG Group
Audit fees
Group audit of the annual accounts 1.5 1.3
The audit of subsidiaries' annual accounts 0.4 0.5
--------------------------------------------------- ---- -----------
Total audit fees 1.9 1.8
--------------------------------------------------- ---- -----------
Non audit fees
Non audit fees in capacity as auditor 0.3 0.2
Other non audit fees 0.1 --
--------------------------------------------------- ---- -----------
Total non audit fees 0.4 0.2
--------------------------------------------------- ---- -----------
Total auditor's remuneration incurred by the Group 2.3 2.0
--------------------------------------------------- ---- -----------
13. Employees and Directors
Accounting policy
The Deal Vintage Bonus ('DVB') scheme forms part of
the Group's Remuneration Policy for investment executives.
DVB is reported within Wages and salaries.
Payments of DVB are made in respect of plan years,
which are aligned to the Group's financial year. Payments
of DVB are made only when the performance threshold
for the plan year has been achieved on a cash basis
and proceeds are received by the Group. An estimate
of the DVB liability for a plan year is developed
based on the following inputs: expected realisation
proceeds; expected timing of realisations; and allocations
of DVB to qualifying investment professionals. The
Group accrues the estimated DVB cost associated with
that plan year evenly over five years, reflecting
the average holding period for the underlying investments.
Payments of DVB are not subject to clawback.
2023 2022
GBPm GBPm
--------------------------------------------------- ------------- -------------
Directors' emoluments 4.9 4.8
Employee costs during the year including Directors:
Wages and salaries 228.7 229.9
Social security costs 20.5 26.2
Pension costs 7.5 6.0
--------------------------------------------------- ------------- -------------
Total employee costs (note 12) 256.7 262.1
--------------------------------------------------- ------------- -------------
The monthly average number of employees (including
Executive Directors) was:
Investment Executives 268 244
Marketing and support functions 293 260
Executive Directors 3 3
--------------------------------------------------- ------------- -------------
564 507
--------------------------------------------------- ------------- -------------
13. Employees and Directors continued
ICG plc, the Company, does not have any employees but relies on the expertise and knowledge of employees of ICG FMC Limited, Intermediate Capital Group Inc., Intermediate Capital Group SAS, Intermediate Capital Asia Pacific Limited and Intermediate Capital Group Polska Sp. z.o.o, subsidiaries of ICG plc.
Contributions to the Group's defined contribution pension schemes are charged to the consolidated income statement as incurred.
The performance related element included in employee costs is GBP151.6m (2022: GBP169.7m) which represents the annual bonus scheme, Omnibus Scheme, the Growth Incentive Scheme and the DVB Scheme.
In addition, during the year, third-party funds have paid GBP46.0m (2022: GBP62.0m) to former employees and GBP93.4m (2022: GBP123.2m) to current employees, including Executive Directors, relating to distributions from investments in carried interest partnerships made by these employees in prior periods. Such amounts become due over time if, and when, specified performance targets are ultimately realised in cash by the funds and paid by the carried interest partnerships ('CIPs') of the funds (see note 28). As these funds and CIPs are not consolidated, these amounts are not included in the Group's consolidated income statement.
14. Tax expense
Accounting policy
The tax expense comprises current and deferred tax.
Current tax assets and liabilities comprise those
obligations to, or claims from, tax authorities relating
to the current or prior reporting periods, that are
unpaid at the reporting date.
Deferred tax is provided in respect of temporary differences
between the carrying amounts of assets and liabilities
and their tax bases. Deferred tax liabilities are
recognised for all taxable temporary differences.
Deferred tax assets are recognised to the extent that
it is probable that future taxable profits will be
available against which the deferred tax assets can
be utilised.
Deferred tax is not recognised if the temporary difference
arises from the initial recognition of goodwill or
from the initial recognition of other assets and liabilities
in a transaction, other than a business combination,
that affects neither the tax nor the accounting profit.
Deferred tax assets and liabilities are calculated
at the tax rates that are expected to be applied to
their respective period of realisation, provided they
are enacted or substantively enacted at the reporting
date.
Deferred tax assets and liabilities are offset when
there is a legally enforceable right of set off, when
they relate to income taxes levied by the same tax
authority and the Group intends to settle on a net
basis.
Changes in deferred tax assets or liabilities are
recognised as a component of tax expense in the income
statement, except where they relate to items that
are charged or credited directly to equity, in which
case the related deferred tax is also charged or credited
directly to equity.
2023 2022
GBPm GBPm
------------- -------------
Current tax:
Current year 16.9 37.5
Prior year adjustment (9.7) (3.5)
------------- -------------
7.2 34.0
Deferred tax:
Current year 14.1 1.9
Prior year adjustments 8.1 (4.8)
------------------------------------- ------------- -------------
22.2 (2.9)
------------------------------------- ------------- -------------
Tax on profit on ordinary activities 29.4 31.1
------------------------------------- ------------- -------------
14. Tax expense continued
The Group is an international business and operates across many different tax jurisdictions. Income and expenses are allocated to these jurisdictions based on transfer pricing methodologies set out both (i) in the laws of the jurisdictions in which the Group operates, and (ii) under guidelines set out by the Organisation for Economic Co-operation and Development ('OECD').
The effective tax rate reported by the Group for the period ended 31 March 2023 of 11.7% (2022: 5.5%) is lower than the statutory UK corporation tax rate of 19%.
The FMC activities are subject to tax at the relevant statutory rates ruling in the jurisdictions in which the income is earned. The lower effective tax rate compared to the statutory UK rate is largely driven by the IC activities. The IC benefits from statutory UK tax exemptions on certain forms of income arising from both foreign dividend receipts and gains from assets qualifying for the substantial shareholdings exemption. The effect of these exemptions means that the effective tax rate of the Group is highly sensitive to the relative mix of IC income, and composition of such income, in any one period.
Due to the application of tax law requiring a degree of judgement, the accounting thereon involves a level of estimation uncertainty which tax authorities may ultimately dispute. Tax liabilities are recognised based on the best estimates of probable outcomes and with regard to external advice where appropriate. The principal factors which may influence the Group's future tax rate are changes in tax legislation in the territories in which the Group operates, the relative mix of FMC and IC income, the mix of income and expenses earned and incurred by jurisdiction and the timing of recognition of available deferred tax assets and liabilities. The Group accounts for future legislative change, to the extent that is enacted at the reporting date, in its recognition of deferred tax.
A reconciliation between the statutory UK corporation tax rate applied to the Group's profit before tax and the reported effective tax rate is provided below.
2023 2022
GBPm GBPm
-------------------------------------------------- -------------- --------------
Profit on ordinary activities before tax 251.0 565.4
Tax at 19% thereon 47.7 107.4
Effects of
Prior year adjustment to current tax (9.6) (3.5)
Prior year adjustment to deferred tax 8.1 (4.8)
-------------------------------------------------- -------------- --------------
46.2 99.1
Non-taxable and non-deductible items (0.3) (2.5)
Non-taxable investment company income (22.5) (69.6)
Trading income generated by overseas subsidiaries
subject to different tax rates 4.0 1.0
Effect of changes in statutory rate changes 2.0 6.4
Release of Luxembourg tax provision -- (3.3)
-------------------------------------------------- -------------- --------------
Tax charge for the period 29.4 31.1
-------------------------------------------------- -------------- --------------
14. Tax expense continued
Deferred tax
Other
Deferred tax Share based payments and compensation deductible as temporary
(asset)/liability Investments paid Derivatives differences Total
Group GBPm GBPm GBPm GBPm GBPm
------------------ ------------ --------------------------------------------------- ------------- ------------- -------------
As at 31 March
2021 11.9 (24.8) 1.2 3.7 (8.0)
Prior year
adjustment 5.1 (0.5) -- (9.4) (4.8)
Impact of changes
to statutory tax
rates 8.7 (3.7) (0.2) 1.6 6.4
Charge / (Credit)
to equity -- 1.4 -- -- 1.4
Charge / (Credit)
to income 10.4 (10.5) (1.8) (2.6) (4.5)
Movement in
Foreign Exchange
on retranslation -- -- -- (0.4) (0.4)
------------------ ------------ --------------------------------------------------- ------------- ------------- -------------
As at 31 March
2022 36.1 (38.1) (0.8) (7.1) (9.9)
------------------ ------------ --------------------------------------------------- ------------- ------------- -------------
Prior year
adjustment 2.0 0.2 -- 7.4 9.6
Impact of changes
to statutory tax
rates 0.3 (1.1) 0.4 1.0 0.6
Charge / (Credit)
to equity 2.2 3.4 -- 5.6
Charge / (Credit)
to income 5.2 (0.7) 1.6 8.0 14.1
Movement in
foreign exchange
on retranslation -- -- -- (0.4) (0.4)
Reclassification
to current tax -- -- -- (1.7) (1.7)
------------------ ------------ --------------------------------------------------- ------------- ------------- -------------
As at 31 March
2023 45.8 (36.3) 1.2 7.2 17.9
------------------ ------------ --------------------------------------------------- ------------- ------------- -------------
During the year deferred tax assets that reversed, due to timing differences, were mainly due to the utilisation of tax losses and unpaid interest expense in the Group's US business. As set out in the table above in column 'Share based payments and compensation deductible as paid', deferred tax assets at the reporting date were solely due to employee remuneration schemes in the UK and US.
The Group has undertaken a review of the level of recognition of deferred tax assets and is satisfied they are recoverable and therefore have been recognised in full.
Deferred tax (assets)/liabilities have been accounted for at the applicable tax rates enacted or substantively enacted, in the relevant jurisdictions at the reporting dated. There are no deferred tax assets recognised on the basis of losses.
In its March 2021 Budget, the UK Government announced that the UK rate of corporation tax would increase from 19% to 25% from 1 April 2023 . This legislative change has been substantively enacted, and has been considered when calculating the closing deferred tax balances at the reporting date.
The OECD Pillar II proposals for a global minimum tax rate of 15% are due to be implemented from 1 April 2024 (financial year ending 31 March 2025). The Group has performed an impact analysis and does not expect the implementation to be significant. It is expected that the IASB will treat any impact as a 'permanent in-the-year"difference for financial year ending 31 March 2025 onwards.
15. Dividends
Accounting policy
Dividends are distributions of profit to holders of Intermediate Capital Group plc's share capital and as a result are recognised as a deduction in equity. Final dividends are announced with the Annual Report and Accounts and are recognised when they have been approved by shareholders. Interim dividends are announced with the Half Year Results and are recognised when they are paid.
2023 2022
Per share pence GBPm Per share pence GBPm
--------------- ----- --------------- -----
Ordinary dividends paid
Final 57.3 164.4 39 112.1
Interim 25.3 72 18.7 53.6
------------------------ --------------- ----- --------------- -----
82.6 236.4 57.7 165.7
------------------------ --------------- ----- --------------- -----
Proposed final dividend 52.2 148.8 57.3 162.0
------------------------ --------------- ----- --------------- -----
Of the GBP236.4m (2022: GBP165.7m) of ordinary dividends paid during the year, GBP4.3m (2022: GBP6.0m) were reinvested under the dividend reinvestment plan offered to shareholders.
16. Earnings per share
Year ended Year ended
31 March 2023 31 March 2022
-------------------------------------------------------- -------------- --------------
Earnings GBPm GBPm
-------------------------------------------------------- -------------- --------------
Earnings for the purposes of basic and diluted earnings
per share being net profit attributable to equity
holders of the Parent 280.6 526.8
-------------------------------------------------------- -------------- --------------
Number of shares
Weighted average number of ordinary shares for the
purposes of basic earnings per share 285,613,961 286,759,806
Effect of dilutive potential ordinary share options 3,698,954 4,194,481
-------------------------------------------------------- -------------- --------------
Weighted average number of ordinary shares for the
purposes of diluted earnings per share 289,312,915 290,954,286
-------------------------------------------------------- -------------- --------------
Earnings per share (pence) 98.2p 183.7p
Diluted earnings per share (pence) 97.0p 181.1p
-------------------------------------------------------- -------------- --------------
17. Intangible assets
Accounting policy
Business combinations
Business combinations are accounted for using the
acquisition method. The acquisition method involves
the recognition of all assets, liabilities and contingent
liabilities of the acquired business at their fair
value at the acquisition date.
The excess of the fair value at the date of acquisition
of the cost of investments in subsidiaries over the
fair value of the net assets acquired which is not
allocated to individual assets and liabilities is
determined to be goodwill. Goodwill is reviewed at
least annually for impairment.
Investment management contracts
Intangible assets with finite useful lives that are
acquired separately, including investment management
contracts, are carried at cost less accumulated depreciation
and impairment losses. These are measured at cost
and are amortised on a straight line basis over the
expected life of the contract.
Computer software
Research costs associated with computer software are
expensed as they are incurred.
Other expenditure incurred in developing computer
software is capitalised only if all of the following
criteria are demonstrated:
-- An asset is created that can be separately
identified;
-- It is probable that the asset created will generate
future economic benefits; and
-- The development cost of the asset can be measured
reliably.
Following the initial recognition of development expenditure,
the cost is amortised over the estimated useful life
of the asset created, which is determined as three
years. Amortisation commences on the date that the
asset is brought into use. Work-in-progress assets
are not amortised until they are brought into use
and transferred to the appropriate category of intangible
assets. Amortisation of intangible assets is included
in administrative expenses in the income statement
and detailed in note 12.
--------------------------------------------------------------
Impairment of non-financial assets and goodwill
The Group assesses, at each reporting date, whether there is an indication that an asset may be impaired. If any indication exists, or when annual impairment testing for an asset is required, the Group estimates the asset's recoverable amount. An asset's recoverable amount is the higher of an asset's fair value less costs of disposal and its value in use. The recoverable amount is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets. When the carrying amount of an asset exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount.
Investment
Computer software Goodwill(1) management Total
---------------------------- ----------------- ------------------- ----------------------------
2023 2022 2023 2022 2023 2022 2023 2022
Group GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
---------------- ------------- ------------- ---------- ----- ---------- ------- ------------- -------------
Cost
At 1 April 20.5 20.8 4.3 4.3 26.3 25.5 51.1 50.6
Reclassified(2) -- -- -- -- -- (0.3) -- (0.3)
Additions 4.7 3.4 -- 2.5 -- 1.1 4.7 7.0
Derecognised3 (0.3) (3.8) -- (2.4) (7.1) -- (7.4) (6.2)
Exchange
differences 0.1 0.1 -- (0.1) (0.1) -- -- --
At 31 March 25.0 20.5 4.3 4.3 19.1 26.3 48.4 51.1
Amortisation
At 1 April 12.4 10.1 -- -- 21.6 19.0 34.0 29.1
Charge for the
year 4.0 6.1 -- -- 2.7 2.6 6.7 8.7
Derecognised -- (3.8) -- -- (7.2) -- (7.2) (3.8)
At 31 March 16.4 12.4 -- -- 17.1 21.6 33.5 34.0
---------------- ------------- ------------- ---------- ----- ---------- ------- ------------- -------------
Net book value 8.6 8.1 4.3 4.3 2.0 4.7 14.9 17.1
---------------- ------------- ------------- ---------- ----- ---------- ------- ------------- -------------
1. Goodwill was acquired in the ICG-Longbow Real Estate Capital LLP business
combination and represents a single cash generating unit. The recoverable
amount of the real estate cash generating unit is based on fair value
less costs to sell where the fair value equates to a multiple of adjusted
net income, in line with the original consideration methodology. The
significant headroom on the recoverable amount is not sensitive to any
individual assumption.
2. During the prior year the Group carried out a review of its intangible
assets relating to investment management contracts. GBP0.3m was
reclassified from intangible assets to financial assets.
3. Investment management contracts derecognised represented fully amortised
balances.
17. Intangible assets continued
During the financial year ended 31 March 2023, the Group recognised an expense of GBP0.5m (2022: GBP0.6m) in respect of research and development expenditure.
18. Property, plant and equipment
Accounting policy
The Group's property, plant and equipment provide
the infrastructure to enable the Group to operate.
Assets are initially stated at cost, which includes
expenditure associated with acquisition. The cost
of the asset is recognised in the income statement
as an amortisation charge on a straight line basis
over the estimated useful life, determined as three
years for furniture and equipment and five years for
short leasehold premises. Right of Use ('ROU') assets
are amortised over the full contractual lease term.
Group as a lessee
Included within the Group's property, plant and equipment
are its ROU assets. ROU assets are the present value
of the Group's global leases and comprise all future
lease payments, and all expenditure associated with
acquiring the lease. The Group's leases are primarily
made up of its global offices. The Group has elected
to capitalise initial costs associated with acquiring
a lease before commencement as a ROU asset. The cost
of the ROU asset is recognised in the income statement
as an amortisation charge on a straight line basis
over the life of the lease term.
Short-term leases and leases of low value assets
The Group applies the short-term lease recognition
exemption to its leasehold improvements and short-term
leases (those that have a lease term of 12 months
or less from the commencement date which do not contain
a purchase option). The Group also applies the recognition
exemption to leases that are considered to be low
value. Leasehold improvements are amortised on a straight
line basis over the lease term. Lease payments on
short-term leases and leases of low-value assets are
recognised as expense on a straight line basis over
the lease term.
Furniture and Leasehold
equipment ROU asset improvements Total
------------------ --------------------- ------------------ ---------------------
2023 2022 2023 2022 2023 2022 2023 2022
Group GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
------------- ----- ----------- ------ ------------- ---- ------------ ------ -------------
Cost
At 1 April 4.5 3.8 67.7 73.0 11.3 10.6 83.5 87.4
Additions 3.1 0.6 33.8 2.4 3.4 0.7 40.3 3.7
Disposals (0.4) -- (11.7) (7.7) -- -- (12.1) (7.7)
Exchange
differences 0.3 0.1 0.2 -- -- -- 0.5 0.1
------------- ----- ----------- ------ ------------- ---- ------------ ------ -------------
At 31 March 7.5 4.5 90.0 67.7 14.7 11.3 112.2 83.5
------------- ----- ----------- ------ ------------- ---- ------------ ------ -------------
Depreciation
At 1 April 2.9 1.6 18.2 17.7 2.0 1.1 23.1 20.4
Charge for
the year 1.4 1.2 9.1 7.3 1.0 0.9 11.5 9.4
Disposals (0.1) 0.1 (10.5) (6.8) -- -- (10.6) (6.7)
At 31 March 4.2 2.9 16.8 18.2 3.0 2.0 24.0 23.1
------------- ----- ----------- ------ ------------- ---- ------------ ------ -------------
Net book
value 3.3 1.6 73.2 49.5 11.7 9.3 88.2 60.4
------------- ----- ----------- ------ ------------- ---- ------------ ------ -------------
Group as Lessor
Accounting policy Leases in which the Group does not transfer substantially all the risks and rewards incidental to ownership of an asset are classified as operating leases. Rental income arising is accounted for on a straight-line basis over the lease term and is included in other income in the consolidated income statement due to its operating nature. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and amortised over the lease term on the same basis as rental income. Contingent rents are recognised as revenue in the period in which they are earned. The Group has entered into sub-lease agreements of certain office buildings (see Note 18 above). These leases have terms of between two and five years. Rental income recognised by the Group during the year was GBP0.4m (2022: GBP0.3m). Future minimum rentals receivable under non-cancellable operating leases as at 31 March are as follows
18. Property, plant and equipment continued
2023 2022
Group GBPm GBPm
-------------------------------------------- ---- ----
Within one year 0.4 0.4
After one year but not more than five years 0.8 1.1
-------------------------------------------- ---- ----
At 31 March 1.2 1.5
-------------------------------------------- ---- ----
1. The prior year figures have been re-presented to GBP0.4m receivable
within one year, GBP1.1m receivable from one to five years.
19. Investment property
Accounting policy
The Group holds investment property for the development
of the Group's long-term real assets strategy. Properties
are being held with a purpose to earn rental income
and/or for capital appreciation and are not occupied
by the Group. IAS 40 Investment Property requires
that the property be measured initially at cost, including
transaction costs, and subsequently measured at fair
value. The fair value of the investment properties
has been recorded based on independent valuations
prepared by third-party real estate valuation specialists
in line with the Royal Institution of Chartered Surveyors
Valuation -- Global Standards 2020. A market and income
approach was performed to estimate the fair value
of the Group's investments. These valuation techniques
can be subjective and include assumptions which are
not supportable by observable data. Details of the
valuation techniques and the associated sensitivities
are further disclosed in note 5.
2023 2022
Group GBPm GBPm
---------------------------------- ------------- -----
Investment property at fair value
At 1 April 1.5 1.8
Fair value loss (0.7) (0.3)
---------------------------------- ------------- -----
At 31 March 0.8 1.5
---------------------------------- ------------- -----
During the year, the Group held GBP284.0m (2022: GBP59.3m) of investment property within disposal groups held for sale (see note 29).
20. Trade and other receivables
Accounting policy Trade and other receivables represent amounts the Group is due to receive in the normal course of business and are held at amortised cost. Trade and other receivables excluding structured entities controlled by the Group include performance fees, which are considered contract assets under IFRS 15 and will only be received after realisation of the underlying assets, see note 3. Trade and other receivables within structured entities controlled by the Group relate principally to unsettled trades on the sale of financial assets. Amounts owed by Group companies are non-interest bearing and repayable on demand. Trade and other receivables from Group entities are considered related party transactions as stated in note 27. The carrying value of trade and other receivables reported within current assets approximates fair value as these are short-term and do not contain any significant financing components. The carrying value of trade and other receivables reported within non-current assets approximates fair value as these do not contain any significant financing components. The Company has adopted the simplified approach to measuring the loss allowance as lifetime Expected Credit Loss (ECL), as permitted under IFRS 9. The ECL of trade and other receivables arising from transactions with Group entities or its affiliates are expected to be nil or close to nil. The assets do not contain any significant financing components, therefore the simplified approach is deemed most appropriate.
20. Trade and other receivables continued
Group
------------
2023 2022
GBPm GBPm
---------------------------------------------------------- ----- -----
Trade and other receivables within structured entities
controlled by the Group 43.7 125.3
Trade and other receivables excluding structured entities
controlled by the Group 178.3 155.0
Amount owed by Group companies -- --
Prepayments 10.0 2.8
---------------------------------------------------------- ----- -----
Total current trade and other receivables 232.0 283.1
---------------------------------------------------------- ----- -----
Non-current assets
Trade and other receivables excluding structured entities
controlled by the Group 37.1 91.1
Amounts owed by Group companies -- --
---------------------------------------------------------- ----- -----
Total non-current trade and other receivables 37.1 91.1
---------------------------------------------------------- ----- -----
Non-current trade and other receivables excluding structured entities controlled by the Group comprises performance-related fees (see note 3).
21. Trade and other payables
Accounting policy
Trade and other payables are held at amortised cost
and represent amounts the Group is due to pay in the
normal course of business. Other payables in the table
below relate principally to unsettled trades on the
purchase of financial assets within structured entities
controlled by the Group. Accruals represent costs,
including remuneration, that are not yet billed or
due for payment, but for which the goods or services
have been received. Amounts owed to Group companies
are non-interest bearing and repayable on demand.
The carrying value of trade and other payables approximates
fair value as these are short-term and do not contain
any significant financing components.
Trade and other payables from Group entities are considered
related party transactions as stated in note 27.
Key sources of estimation uncertainty on trade and
other payables excluding structured entities controlled
by the Group.
Payables related to the DVB scheme (see note 13 )
are critical estimates based on the expected realisation
proceeds; expected timing of realisations; and allocations
of DVB to executives.
Group
------------
2023 2022
GBPm GBPm
------------------------------------------------------- ----- -----
Trade and other payables within structured entities
controlled by the Group 328.1 293.4
Trade and other payables excluding structured entities
controlled by the Group 140.2 138.7
Amounts owed to Group companies -- --
Social security tax 3.1 2.3
------------------------------------------------------- ----- -----
Total current trade and other payables 471.4 434.4
------------------------------------------------------- ----- -----
Non-current liabilities
Trade and other payables excluding structured entities
controlled by the Group 71.1 76.4
------------------------------------------------------- ----- -----
Total non-current trade and other payables 71.1 76.4
------------------------------------------------------- ----- -----
Current trade and other payables excluding structured entities controlled by the Group includes GBP31.4m (2022: GBP69.4m) in respect of DVB, (see note 13) and non-current Trade and other payables excluding structured entities controlled by the Group is entirely comprised of amounts payable in respect of DVB
22. Financial risk management
The Group has identified financial risk, comprising market and liquidity risk, as a principal risk. Further details are set out on page 26. The Group has exposure to market risk (including exposure to interest rates and foreign currency), liquidity risk and credit risk arising from financial instruments.
Interest rate risk
The Group's assets include both fixed and floating rate loans and non-interest-bearing equity investments.
The Group's operations are financed with a combination of its shareholders' funds, bank borrowings, private placement notes, public bonds, and fixed and floating rate notes. The Group manages its exposure to market interest rate movements by matching, to the extent possible, the interest rate profiles of assets and liabilities and by using derivative financial instruments.
The sensitivity of floating rate financial assets to a 100 basis points interest rate increase is GBP56.5m (2022: GBP55.5m) and to a decrease is GBP(56.5)m (2022: GBP(55.5)m). The sensitivity of financial liabilities to a 100 basis point interest rate increase is GBP47.1m (2022: GBP46.0m) and to a decrease is GBP(47.1)m (2022: GBP(46.0)m). These amounts would be reported within Net gains on investments. There is an indirect exposure to interest rate risk through the impact on the performance of the portfolio companies of the funds that the Group has invested in, and therefore the fair valuations. There is no interest rate risk exposure on fixed rate financial assets or liabilities.
Exposure to interest rate risk
2023 2022
------------------------------------------------------- -------------------------------------------------------
Floating Fixed Total Floating1 Fixed1 Total
Group GBPm GBPm GBPm GBPm GBPm GBPm
------------------------------------------------------ ----------------- ----------------- ----------------- ----------------- ----------------- -----------------
Financial assets (excl investments in loans held in
consolidated entities) 744.4 3,049.1 3,793.5 995.2 2,719.1 3,714.3
Investments in loans held in consolidated entities 4,901.1 253.9 5,155.0 4,599.7 479.5 5,079.2
Financial liabilities (excl borrowings and loans held
in consolidated entities) -- (1,929.2) (1,929.2) -- (1,892.1) (1,892.1)
Borrowings and loans held in consolidated entities (4,706.6) (371.5) (5,078.1) (4,604.1) (374.5) (4,978.6)
------------------------------------------------------ ----------------- ----------------- ----------------- ----------------- ----------------- -----------------
938.9 1,002.3 1,941.2 990.8 932.0 1,922.8
------------------------------------------------------ ----------------- ----------------- ----------------- ----------------- ----------------- -----------------
Foreign exchange risk
The Group is exposed to currency risk in relation to non-sterling currency transactions and the translation of non-sterling net assets. The Group's most significant exposures are to the euro and the US dollar. Exposure to market currency risk is managed by matching assets with liabilities to the extent possible and through the use of derivative instruments.
The Group regards its interest in overseas subsidiaries as long-term investments. Consequently, it does not normally hedge the translation effect of exchange rate movements on the financial statements of these businesses.
The Group is also exposed to currency risk arising on the translation of fund management fee income receipts, which are primarily denominated in euro and US dollar.
The effect of fluctuations in other currencies is considered by the Directors to be insignificant in the current and prior year. The net assets/(liabilities) by currency and the sensitivity of the balances to a strengthening of foreign currencies against sterling are shown below:
22. Financial risk management continued
2023
------------------------------------ -------------------------------------------------------------
Net
statement
of
financial Forward Sensitivity Increase
Position exchange Net to in net
exposure contracts exposure strengthening assets
Market risk - Foreign exchange risk GBPm GBPm GBPm % GBPm
------------------------------------ --------- --------------- -------- ------------- --------
Sterling 726.8 772.7 1,499.5 --
Euro 552.0 (259.3) 292.7 15 % 43.9
US dollar 564.5 (324.9) 239.6 20 % 47.9
Other currencies 195.6 (182.2) 13.4 10-25% --
------------------------------------ --------- --------------- -------- ------------- --------
2,038.9 6.3 2,045.2 -- 91.8
------------------------------------ --------- --------------- -------- ------------- --------
2022
-------------------------------------------------------------
Net
statement
of
financial Forward Sensitivity Increase
Position exchange Net to in net
exposure contracts exposure strengthening assets
GBPm GBPm GBPm % GBPm
------------------------------------ --------- --------------- -------- ------------- --------
Sterling 688.1 1,057.9 1,746.0 -- --
Euro 718.1 (624.3) 93.8 15 % 14.1
US dollar 326.9 (251.0) 75.9 20 % 15.2
Other currencies 207.4 (200.3) 7.1 10-25% --
------------------------------------ --------- --------------- -------- ------------- --------
1,940.5 (17.7) 1,922.8 -- 29.3
------------------------------------ --------- --------------- -------- ------------- --------
The weakening of the above currencies would have resulted in an equal but opposite impact, being a decrease in net assets.
Liquidity risk
The Group makes commitments to its managed funds in advance of that capital being invested. These commitments are typically drawn over a five-year investment period (see note 26 for outstanding commitments). Funds typically have a 10-year contractual life. The Group manages its liquidity risk by maintaining headroom on its financing facilities, particularly its bank facilities.
The table below shows the liquidity profile of the Group's financial liabilities, based on contractual repayment dates of principal and interest payments. Future interest and principal cash flows have been calculated based on exchange rates and floating rate interest rates as at 31 March 2023. It is assumed that Group borrowings under its senior debt facilities remain at the same level as at 31 March 2023 until contractual maturity. Included in financial liabilities are contractual interest payments. All financial liabilities, excluding structured entities controlled by the Group, are held by the Company.
Liquidity profile
Contractual maturity analysis
----------------------------------------------------------------
Less than One to two Two to five More than
one year years years five years Total
As at 31
March 2023 GBPm GBPm GBPm GBPm GBPm
------------ ------------ ------------- ------------- ----------- -------
Financial
liabilities
Private
placements 78.2 273.5 282.2 106.7 740.6
Listed notes
and bonds 18.1 18.1 486.8 461.5 984.5
Debt issued
by
controlled
structured
entities 176.3 204.6 2,430.4 3,748.0 6,559.3
Derivative
financial
instruments (1.6) (3.1) (4.4) 0.0 (9.1)
Other
financial
liabilities 8.5 11.3 32.0 46.1 97.9
------------ ------------- ------------- ----------- -------
279.5 504.4 3,227.0 4,362.3 8,373.2
------------ ------------ ------------- ------------- ----------- -------
Other financial liabilities are lease liabilities.
As at 31 March 2023 the Group has liquidity of GBP1,099.9m (2022: GBP1,311.5m) which consists of undrawn debt facility of GBP550m (2022: GBP550m) and GBP549.9m (2022: GBP761.5m) of unencumbered cash. Unencumbered cash excludes GBP407.6m (2022: GBP230.3m) of restricted cash held principally by structured entities controlled by the Group.
22. Financial risk management continued
Contractual maturity analysis
-------------------------------------------------------------
Less than One to two Two to five More than
one year years years five years Total
As at 31 March
2022 GBPm GBPm GBPm GBPm GBPm
--------------- ------------ ------------ ----------- ----------- -------
Financial
liabilities
Private
placements 59.1 76.1 519.2 105.3 759.8
Listed notes
and bonds 185.4 17.4 473.1 452.6 1,128.4
Debt issued by
controlled
structured
entities 499.9 79.7 239.2 4,656.5 5,475.3
Derivative
financial
instruments 22.1 (2.5) (4.7) 0.0 14.9
Other financial
liabilities(1) 8.4 7.8 21.4 28.9 66.5
--------------- ------------ ------------ ----------- ----------- -------
774.9 178.5 1,248.2 5,243.3 7,445.0
--------------- ------------ ------------ ----------- ----------- -------
(1) Disclosure now includes liquidity profile of Other Financial Liabilities and the prior year has been re-presented accordingly.
The Group's policy is to maintain continuity of funding. Due to the long-term nature of the Group's assets, the Group seeks to ensure that the maturity of its debt instruments is matched to the expected maturity of its assets.
Credit risk
Credit risk is the risk of financial loss to the Group as a result of a counterparty failing to meet its contractual obligations. This risk is principally in connection with the Group's investments.
This risk is mitigated by the disciplined credit procedures that the relevant Fund Investment Committees have in place prior to making an investment and the ongoing monitoring of investments throughout the ownership period. In addition, the risk of significant credit loss is further mitigated by the Group's policy to diversify its investment portfolio in terms of geography and industry sector and to limit the amount invested in any single company.
The Group is exposed to credit risk through its financial assets (see note 5) and investment in joint ventures reported at fair value.
Exposure to credit risk
Group Company
-------------------------------------------- ---------------- ------------
2023 2022 2023 2022
GBPm GBPm GBPm GBPm
-------------------------------------------- ------- ------- ----- -----
Investment in private companies 267.3 225.0 86.1 171.6
Investment in managed funds 2,153.4 2,122.7 178.8 271.4
Senior and subordinated notes of CLO
vehicles 113.3 114.7 23.8 0.2
Investments in loans held within
consolidated entities 4,669.1 4,612.6 -- --
Derivatives assets 22.0 138.6 22.0 40.0
Investment in joint venture 5.8 2.2 -- --
-------------------------------------------- ------- ------- ----- -----
7,230.9 7,215.8 310.7 483.2
-------------------------------------------- ------- ------- ----- -----
22. Financial risk management continued
The Group manages its operational cash balance by the regular forecasting of cashflow requirements, debt management and cash pooling arrangements. Credit risk exposure on cash and derivative instruments is managed in accordance with the Group's treasury policy which provides limits on exposures with any single financial institution. The majority of the Group's surplus cash is held in AAA-rated Money Market funds. Other credit exposures arise from outstanding derivatives with financial institutions rated from BBB to AA-.
The Group is exposed to credit risk as a result of financing guarantees provided. The maximum exposure to guarantees is GBP7.9m (2022: GBP7.4m). No liability has been recognised in respect of these guarantees.
The Directors consider the Group's credit exposure to trade and other receivables and current assets held for sale to be low and as such no further analysis has been presented. The Directors consider the credit risk of the investments within the structured entities controlled by the Group to be low.
The Group's investments in CLOs and loans held within structured entities controlled by the Group principally comprise senior loans. The Group's exposure to the credit risk of this collateral, in these consolidated entities, is limited to its investment into these entities, which at 31 March 2023 was GBP339.4m (2022: GBP426.0m).
The carrying amount of financial assets represents the Directors' assessment of the maximum credit risk exposure of the Group and Company at the balance sheet date. Decreases in fair value during the year reflect the decline in prices on individual assets, as a result either of company specific or of general macroeconomic conditions.
Other than the Group investments in CLOs and loans held within structured entities controlled by the Group, the Group has no direct exposure to defaulted and past due financial assets.
Capital management
Managing capital is the ongoing process of determining and maintaining the quantity and quality of capital appropriate for the Group and ensuring capital is deployed in a manner consistent with the expectations of our stakeholders. The primary objectives of the Group's capital management are (i) align the Group's interests with its clients, (ii) grow third-party fee income in the FMC and (iii) maintain robust capitalisation, including ensuring that the Group complies with externally imposed capital requirements by the Financial Conduct Authority (the FCA). The Group's strategy has remained unchanged from the year ended 31 March 2022.
(i) Regulatory capital requirements
The Group is required to hold capital resources to cover its regulatory capital requirements. The Group's capital for regulatory purposes comprises the capital and reserves of the Company, comprising called up share capital, reserves and retained earnings as disclosed in the Statement of Changes in Equity (see page 38). The full Pillar 3 disclosures are available on the Group's website: www.icgam.com.
(ii) Capital and risk management policies
The formal procedures for identifying and assessing risks that could affect the capital position of the Group are described in Risk Management on page 21. The capital structure of the Group under UK-adopted IAS consists of cash and cash equivalents, GBP957.5m (2022: GBP991.8m) (see note 6); debt, which includes borrowings, GBP1,536.7m, (2022: GBP1,653.4m) (see note 7) and the capital and reserves of the Company, comprising called up share capital, reserves and retained earnings as disclosed in the Statement of Changes in Equity, GBP825.8m (2022 : GBP943.9m). Details of the Reportable segment capital structure are set out in note 4.
23. Called up share capital and share premium
Share capital represents the number of issued ordinary shares in Intermediate Capital Group plc multiplied by their nominal value of 26 1/4 p each.
Under the Company's Articles of Association, any share in the Company may be issued with such rights or restrictions, whether in regard to dividend, voting, transfer, return of capital or otherwise as the Company may from time to time by ordinary resolution determine or, in the absence of any such determination, as the Board may determine. All shares currently in issue are ordinary shares of 26 1/4 p each carrying equal rights. The Articles of Association of the Company cannot be amended without shareholder approval.
The Directors may refuse to register any transfer of any share which is not a fully paid share, although such discretion may not be exercised in a way which the Financial Conduct Authority regards as preventing dealings in the shares of the relevant class or classes from taking place on an open and proper basis. The Directors may likewise refuse to register any transfer of a share in favour of more than four persons jointly.
The Company is not aware of any other restrictions on the transfer of ordinary shares in the Company other than:
-- Certain restrictions that may from time to time be imposed by laws and
regulations (for example, insider trading laws or the UK Takeover Code)
-- Pursuant to the Listing Rules of the Financial Conduct Authority whereby
certain employees of the Company require approval of the Company to deal
in the Company's shares
The Company has the authority limited by shareholder resolution to issue, buy back, or cancel ordinary shares in issue (including those held in trust, described below). New shares are issued when share options are exercised by employees. The Company has 294,332,182 authorised shares (2022: 294,285,804)
Number of ordinary
shares of 26 1/4 p allotted, Share Capital Share Premium
Group and Company called up and fully paid GBPm GBPm
----------------- ----------------------------- ------------- -------------
1 April 2022 294,285,804 77.3 180.3
Shares issued 46,378.0 -- 0.6
----------------- ----------------------------- ------------- -------------
31 March 2023 294,332,182 77.3 180.9
----------------- ----------------------------- ------------- -------------
Number of ordinary
shares of 26 1/4 p allotted, Share Capital Share Premium
Group and Company called up and fully paid GBPm GBPm
----------------- ----------------------------- ------------- -------------
1 April 2021 294,276,532 77.2 180.2
Shares issued 9,272 0.1 0.1
----------------- ----------------------------- ------------- -------------
31 March 2022 294,285,804 77.3 180.3
----------------- ----------------------------- ------------- -------------
24. Own shares reserve
Accounting policy
Own shares are recorded by the Group when ordinary
shares are purchased in the market by ICG plc or through
the ICG Employee Benefit Trust 2015 ('EBT').
The EBT is a special purpose vehicle, with the purpose
of purchasing and holding shares of the Company for
the hedging of future liabilities arising as a result
of the employee share-based compensation schemes,
(see note 25) in a way that does not dilute the percentage
holdings of existing shareholders.
Own shares are held at cost and their purchase reduces
the Group's net assets by the amount spent. When shares
vest or are cancelled, they are transferred from own
shares to the retained earnings reserve at their weighted
average cost. No gain or loss is recognised on the
purchase, sale, issue or cancellation of the Company's
own shares.
The movement in the year is as follows:
24. Own shares reserve continued
2023 2022 2023 2022
GBPm GBPm Number Number
----------------- -------------- -------------- ------------------- -------------------
1 April 93 82.2 7,734,849 8,389,246
Purchased
(ordinary shares
of 26 1/4 p) 38.9 20.9 3,000,000 1,000,000
Options/awards
exercised (28.5) (10.1) (1,484,954) (1,654,397)
----------------- -------------- -------------- ------------------- -------------------
As at 31 March 103.4 93 9,249,895 7,734,849
----------------- -------------- -------------- ------------------- -------------------
Of the total shares held by the Group, 3,733,333 shares were held by the Company in the Own Share Reserve at 31 March 2023 and 31 March 2022 at a cost of GBP21.3m. These shares were purchased through a share buy back programme in prior years.
The number of shares held by the Group at the balance sheet date represented 3.1% (2022: 2.6%) of the Parent Company's allotted, called up and fully paid share capital.
25. Share-based payments
Accounting policy The Group issues compensation to its employees under equity-settled share-based payment plans. Equity-settled share-based payments are measured at the fair value of the awards at grant date. The fair value includes the effect of non-market based vesting conditions. The fair value determined at the date of grant is expensed on a straight line basis over the vesting period. At each reporting date, the Group revises its estimate of the number of equity instruments expected to vest as a result of non-market based vesting conditions. The impact of the revision of the original estimates, if any, is recognised in the income statement with a corresponding adjustment to equity.
The total charge to the income statement for the year was GBP39.5m (2022: GBP29.6m) and this was credited to the share-based payments reserve. Details of the different types of awards are as follows:
Intermediate Capital Group plc Omnibus Plan
The Omnibus Plan provides for three different award types: Deferred Share Awards, PLC Equity Awards and Special Recognition Awards.
Deferred Share Awards
Awards are made after the end of the financial year (and in a small number of cases during the year) to reward employees for delivering cash profits, managing the cost base, and employing sound risk and business management. These share awards typically vest one-third at the end of the first, second and third years following the year of grant, unless the individual leaves for cause or to join a competitor. Dividend equivalents accrue to participants during the vesting period and are paid at the vesting date. Awards are based on performance against the individual's objectives. There are no further performance conditions.
PLC Equity Awards
Awards are made after the end of the financial year to reward employees, including Executive Directors, for increasing long-term shareholder value. These share awards typically vest one-third at the end of the third, fourth and fifth years following the year of grant, unless the individual leaves for cause or to join a competitor. Dividend equivalents accrue to participants during the vesting period and are paid at the vesting date. Awards are based on performance against the individual's objectives. There are no further performance conditions.
Special Recognition Awards
Awards are made after the end of the financial year to reward employees for delivering cash profits, managing the cost base, and employing sound risk and business management. These share awards vest at the end of the first year following the year of grant, unless the individual leaves for cause or to join a competitor. Dividend equivalents accrue to participants during the vesting period and are paid at the vesting date. Awards are based on performance against the individual's objectives. There are no further performance conditions.
25. Share-based payments continued
Share awards outstanding under the Omnibus Plan were as follows:
Weighted
average fair
Number value
---------------------- ---------------------------------------- ---------------
Deferred share awards 2023 2022 2023 2022
---------------------- ------------------- ------------------- ----- --------
Outstanding at 1 April 2,470,280 2,958,483 16.52 12.47
Granted 1,811,061 1,048,813 14.27 21.63
Vested (1,316,825) (1,537,016) 15.00 12.21
---------------------- ------------------- ------------------- ----- --------
Outstanding as at 31
March 2,964,516 2,470,280 15.75 16.52
---------------------- ------------------- ------------------- ----- --------
Weighted average fair
Number value
------------------------------------ --------------------------
PLC Equity
awards 2023 2022 2023 2022
------------ ----------------- ----------------- ------------ ------------
Outstanding
at 1 April 2,139,210 2,680,734 10.33 10.22
Granted 777,577 374,477 14.27 21.63
Vested (774,535) (916,001) 9.84 8.12
------------ ----------------- ----------------- ------------ ------------
Outstanding
as at 31
March 2,142,252 2,139,210 12.21 10.33
------------ ----------------- ----------------- ------------ ------------
Number Weighted average fair value
---------------------- -----------------------------
Special Recognition
Awards 2023 2022 2023 2022
----------------------- ---------- ---------- --------------- ------------
Outstanding as at 1
April -- 0 -- --
Granted 46,154 -- 14.27 --
Vesting -- -- -- --
----------------------- ---------- ---------- --------------- ------------
Outstanding as at 31
March 46,154 -- 14.27 --
----------------------- ---------- ---------- --------------- ------------
The fair values of awards granted under the ICG plc Omnibus Plan are determined by the average share price for the five business days prior to grant.
Intermediate Capital Group plc Buy Out Awards
Buy Out Awards are shares awarded to new employees in lieu of prior awards forfeited. These share awards shall vest or be forfeited according to the schedule and terms of the forfeited awards, and any performance conditions detailed in the individual's employment contract. Buy Out Awards may be cash settled.
Buy Out Awards outstanding were as follows:
Weighted average fair
Number value
--------------- ------------------------------------ -----------------------
Buy Out Awards 2023 2022 2023 2022
--------------- ----------------- ----------------- ---------- -----------
Outstanding as
at 1 April 155,940 245,423 12.85 12.06
Granted 1,294,801 33,965 12.68 13.85
Vesting (366,768) (123,448) 13.35 10.67
--------------- ----------------- ----------------- ---------- -----------
Outstanding as
at 31 March 1,083,973 155,940 12.96 12.85
--------------- ----------------- ----------------- ---------- -----------
The fair values of the Buy Out Awards granted are determined by the average share price for the five business days prior to grant.
Save As You Earn
The Group offers a Sharesave Scheme ('SAYE') to its UK employees. Options are granted at a 20% discount to the prevailing market price at the date of issue. Options to this equity-settled scheme are exercisable at the end of a three year savings contract. Participants are not entitled to dividends prior to the exercise of the options. The maximum amount that can be saved by a participant in this way is GBP6,000 in any tax year.
Fair value is measured using the Black--Scholes valuation model, which considers the current share price of the Group, the risk-free interest rate and the expected volatility of the share price over the life of the award. The expected volatility was calculated by analysing three years of historic share price data of the Group.
The total amount to be expensed over the vesting period is determined by reference to the fair value of the share awards and options at grant date, which is remeasured at each reporting date. The total amount to be expensed during the year is GBP210,031 (2022: GBP187,660).
25. Share-based payments continued
Weighted average fair
Number value
----------------- ---------------------------------- -----------------------
Save As You Earn 2023 2022 2023 2022
----------------- ---------------- ---------------- ---------- -----------
Outstanding as at
1 April 199,737 137,395 4.54 3.19
Granted -- 96,136 -- 5.95
Vesting (46,378) (9,272) 3.26 2.27
Forfeited (49,541) (24,522) 4.30 3.35
----------------- ---------------- ---------------- ---------- -----------
Outstanding as at
31 March 103,818 199,737 5.00 4.54
----------------- ---------------- ---------------- ---------- -----------
Growth Incentive Award
The Growth Incentive Award ('GIA') is a market-value share option. Grants of options are made following the end of the financial year to reward employees for performance and to enhance alignment of interests. The GIA is a right to acquire shares during the exercise period (seven years following the vesting date) for a price equal to the market value of those shares on the grant date. These options vest at the end of the third year following the year of grant, unless the individual leaves for cause or to join a competitor. Awards are based on performance against the individual's objectives. .
Number Weighted average fair value
----------------------- ---------------------- -----------------------------
Growth Incentive Award 2023 2022 2023 2022
----------------------- ---------- ---------- -------------- -------------
Outstanding as at 1
April -- -- -- --
Granted 463,000 -- 3.13 --
Vesting -- -- -- --
Forfeited -- -- -- --
----------------------- ---------- ---------- -------------- -------------
Outstanding as at 31
March 463,000 -- 3.13 --
----------------------- ---------- ---------- -------------- -------------
26. Financial commitments
As described in the Strategic Report, the Group invests balance sheet capital alongside the funds it manages to grow the business and create long-term shareholder value. Commitments are made at the time of a fund's launch and are drawn down with the fund as it invests (typically over five years). Commitments may increase where distributions made are recallable. Commitments are irrevocable. At the balance sheet date the Group had undrawn commitments, which can be called on over the commitment period, as follows:
26. Financial commitments continued
2023 2022
GBPm GBPm
--------------------------------------------------- ------- -----
ICG Europe Fund V 29.9 27.8
ICG Europe Fund VI 82.0 95.5
ICG Europe Fund VII 111.7 44.8
ICG Europe Fund VIII 185.5 191.6
ICG Mid-Market Fund 25.1 34.6
Intermediate Capital Asia Pacific Fund III 45.4 42.6
ICG Asia Pacific Fund IV 93.5 31.2
Nomura ICG Investment Business Limited Partnership
A -- 18.8
ICG Strategic Secondaries Fund II 33.1 12.9
ICG Strategic Equity Fund III 72.3 28.2
ICG Strategic Equity Fund IV 38.8 91.3
ICG Recovery Fund II 34.3 58.4
LP Secondaries 47.4 --
ICG Senior Debt Partners II 3.8 5.4
ICG Senior Debt Partners III 5.8 5.5
ICG Senior Debt Partners IV 7.3 15.3
Senior Debt Partners V 42.3 --
ICG North American Private Debt Fund 27.5 30.4
ICG North American Private Debt Fund II 27.9 46.3
ICG North American Credit Partners III 38.1 --
ICG-Longbow UK Real Estate Debt Investments V 0.2 6.0
ICG-Longbow UK Real Estate Debt Investments VI 13.9 6.0
ICG-Longbow Development Fund 6.8 4.6
ICG Living 21.8 --
ICG Infrastructure Equity Fund I 59.8 128.8
ICG Private Markets Pooling - Sale and Leaseback 35.9 22.7
ICG Sale & Leaseback II 17.0 --
--------------------------------------------------- ------- -----
1,107.1 948.7
--------------------------------------------------- ------- -----
27. Related party transactions
Subsidiaries
The Group is not deemed to be controlled or jointly controlled by any party directly or through intermediaries. The Group consists of the Parent Company, Intermediate Capital Group plc, incorporated in the UK, and its subsidiaries listed in note 28. All entities meeting the definition of a controlled entity as set out in IFRS 10 are consolidated within the results of the Group. All transactions between the Parent Company and its subsidiary undertakings are classified as related party transactions for the Parent Company financial statements and are eliminated on consolidation. Significant transactions with subsidiary undertakings relate to dividends received, the aggregate amount received during the year is GBP386.6m (2022: GBP163.0m) and recharge of costs to a subsidiary of GBP168.5m (2022: GBP166.7m)
Associates and joint ventures
An associate is an entity over which the Group has significant influence, but not control, over the financial and operating policy decisions of the entity. As the investments in associates are held for venture capital purposes they are designated at fair value through profit or loss. A joint venture is an arrangement whereby the parties have joint control over the arrangements, see note 30. Where the investment is held for venture capital purposes they are designated as fair value through profit. These entities are related parties and the significant transactions with associates and joint ventures are as follows:
27. Related party transactions continued
2023 2022
GBPm GBPm
-------------------------- -------------- --------------
Income statement
Net losses on investments (17.2) (15.8)
-------------------------- -------------- --------------
(17.2) (15.8)
-------------------------- -------------- --------------
2023 2022
GBPm GBPm
-------------------------------- -------------- --------------
Statement of financial position
Trade and other receivables 66.8 119.5
Trade and other payables (52.3) (60.4)
-------------------------------- -------------- --------------
14.5 59.1
-------------------------------- -------------- --------------
Unconsolidated structured entities
The Group has determined that, where the Group holds an investment, loan, fee receivable, guarantee or commitment with an investment fund, carried interest partnership or CLO, this represents an interest in a structured entity in accordance with IFRS 12 Disclosure of Interest in Other Entities (see note 31). The Group provides investment management services and receives management fees (including performance-related fees) and dividend income from these structured entities, which are related parties. Amounts receivable and payable from these structured entities arising in the normal course of business remain outstanding. At 31 March 2023, the Group's interest in and exposure to unconsolidated structured entities are as follows:
2023 2022
GBPm GBPm
-------------------------------- ------------- -----------
Income statement
Management fees 473.5 382.2
Performance fees 19.4 55.4
Dividend income 0.1 3.4
-------------------------------- ------------- -----------
493.0 441.0
-------------------------------- ------------- -----------
2023 2022
GBPm GBPm
-------------------------------- -----------
Statement of financial position
Performance fees receivable 37.5 91.0
Trade and other receivables 781.9 680.6
Trade and other payables (718.3) (621.1)
-------------------------------- ------------- -----------
101.1 150.5
-------------------------------- ------------- -----------
Key management personnel
Key management personnel are defined as the Executive Directors. The Executive Directors of the Group are Vijay Bharadia, Benoît Durteste and Antje Hensel-Roth.
The compensation of key management personnel during the year was as follows:
2023 2022
GBPm GBPm
----------- ----
Short-term employee benefits 3.7 3.5
Post-employment benefits 0.1 0.1
Other long-term benefits 0.9 1.5
Share-based payment benefits 7.0 6.9
----------------------------- ----------- ----
11.7 12.0
----------------------------- ----------- ----
Fees paid to Non-Executive Directors were as follows:
27. Related party transactions continued
2023 2022
GBP000 GBP000
------------------------ ------ ------
Andrew Sykes 290.5 132.3
Amy Schioldager 125.0 121.6
Kathryn Purves 134.5 113.8
Lord Davies of Abersoch -- 302.9
Matthew Lester 116.5 101.1
Rosemary Leith 113.9 101.1
Rusty Nelligan 108.5 113.8
Stephen Welton 90.5 88.8
Virginia Holmes 120.5 113.8
William Rucker 63.9 --
------------------------ ------ ------
The remuneration of Directors and key executives and Non-Executive Directors is determined by the Remuneration Committee having regard to the performance of individuals and market rates.
28. Subsidiaries
Accounting policy
Investment in subsidiaries
The Group consists of the Parent Company, Intermediate
Capital Group plc, and its subsidiaries, described
collectively herein as 'ICG' or the 'Group'. Investments
in subsidiaries in the Parent Company statement of
financial position are recorded at cost less provision
for impairments or at fair value through profit or
loss.
Critical judgement
A critical judgement for the Group is whether the
Group controls an investee or fund and is required
to consolidate the investee or fund into the results
of the Group. Control is determined by the Directors'
assessment of decision making authority, rights held
by other parties, remuneration and exposure to returns.
When assessing whether the Group controls any fund
it manages (or any entity associated with a fund)
it is necessary to determine whether the Group acts
in the capacity of principal or agent for the third-party
investor. An agent is a party primarily engaged to
act on behalf and for the benefit of another party
or parties, whereas a principal is primarily engaged
to act for its own benefit.
A critical judgement when determining that the Group
acts in the capacity of principal or agent is the
kick-out rights of the third-party fund investors.
We have reviewed these kick-out rights, across each
of the entities where the Group has an interest. Where
fund investors have substantive rights to remove the
Group as the investment manager it has been concluded
that the Group is an agent to the fund and thus the
fund does not require consolidation into the Group.
We consider if the Group has significant influence
over these entities and, where we conclude it does,
we recognise them as associates. Where the conclusion
is that the Group acts in the capacity of principal
the fund has been consolidated into the Group's results.
Where the Group has Trust entities in investment deals
or fund structures, a key judgement is whether the
Trust is acting on behalf of the Group or another
third party. Where the Trust is considered to act
as an agent of the Group, the Trust and its related
subsidiaries have been consolidated into the Group.
As a fund manager ICG participates in carried interest
partnerships (CIPs), the participants of which are
the Group, certain of the Group's employees and others
connected to the underlying fund. These vehicles have
two purposes: 1) to facilitate payments of carried
interest from the fund to carried interest participants,
and 2) to facilitate individual co-investment into
the funds. The Directors have undertaken a control
assessment of each CIP in accordance with IFRS10 and
have considered whether the CIP participants were
providing a service for the benefit of the Group.
In undertaking this assessment the Directors took
account of the following key considerations:
-- the Group's exposure to the variable returns of the
CIP is limited to the amounts allocated to the Group
(see page 201). Such allocations are typically 20% or
less of total returns realised by the CIP with the
balance attributable to other participants
-- CIPs are used to facilitate substantial co-investment
by individuals in the underlying funds. These
individuals are exposed to the risk of personal
financial loss
-- fund investors can, in certain conditions, veto
changes in the key persons managing the fund
The Directors have assessed that certain CIPs are
controlled, and they are included within the list
of controlled structured entities below. The Directors
conclude that other CIPs are not controlled by the
Group.
28. Subsidiaries continued
The Group consists of a Parent Company, Intermediate Capital Group plc, incorporated in the UK, and a number of subsidiaries held directly or indirectly by ICG plc, which operate and are incorporated around the world. The subsidiary undertakings of the Group are shown below. All are wholly owned, and the Group's holding is in the ordinary share class, except where stated. The Companies Act 2006 requires disclosure of certain information about the Group's related undertakings. Related undertakings are subsidiaries, joint ventures and associates.
The registered office of all related undertakings at 31 March 2023 was Procession House, 55 Ludgate Hill, New Bridge Street, London EC4M 7JW, unless otherwise stated.
The financial year end of all related undertakings is 31 March, unless otherwise stated.
All entities are consolidated as at 31 March
Directly held subsidiaries
Country of Principal % Voting
Name Ref incorporation activity Share class rights held
------------- --- ------------- ------------ ------------- --------------
ICG Carbon
Funding England & Investment Ordinary
Limited Wales company shares 100 %
ICG Debt
Advisors
(Cayman) Cayman Advisory Ordinary
Ltd 4 Islands company shares 100 %
ICG FMC England & Holding Ordinary
Limited Wales company shares 100 %
ICG Global
Investment England & Holding Ordinary
UK Limited Wales company shares 100 %
ICG IC Holdco England & Holding Ordinary
Limited Wales company shares 100 %
ICG Japan
(Funding 2) England & Holding Ordinary
Limited Wales company shares 100 %
ICG Longbow
Development
(Brighton) England & Holding Ordinary
Limited Wales company shares 100 %
ICG Longbow
Richmond England & Holding Ordinary
Limited Wales company shares 100 %
ICG Longbow
Senior Debt
I GP England & General Ordinary
Limited Wales partner shares 100 %
ICG Re
Holding Special
(Germany) purpose Ordinary
GmbH 11 Germany vehicle shares 100 %
ICG Watch
Jersey GP General Ordinary
Limited 19 Jersey partner shares 100 %
ICG-Longbow England & Holding Ordinary
BTR Limited Wales company shares 100 %
Intermediate
Capital
Group Espana Advisory Ordinary
SL 33 Spain company shares 100 %
Intermediate
Capital
Investments England & Investment Ordinary
Limited Wales company shares 100 %
Intermediate
Capital
Nominees England & Nominee Ordinary
Limited Wales company shares 100 %
Intermediate
Investments
Jersey Investment Ordinary
Limited 19 Jersey company shares 100 %
LREC Partners
Investments
No. 2 England & Investment Ordinary
Limited Wales company shares 54.8 %
------------- --- ------------- ------------ ------------- --------------
28. Subsidiaries continued
Indirectly held subsidiaries
Country of Principal Share % Voting
Name Ref incorporation activity class rights held
---------------------------------------------------------- --- ------------- ---------- -------- -------------
Special
England and purpose Ordinary
Avanton Richmond Developments Limited 7 Wales vehicle shares 70 %
General Ordinary
ICG - Longbow Fund V GP S.à r.l. 26 Luxembourg Partner shares 100 %
United Arab Service Ordinary
ICG (DIFC) Limited 35 Emirates company shares 100 %
Cayman General Ordinary
ICG Alternative Credit (Cayman) GP Limited 5 Islands Partner shares 100 %
General Ordinary
ICG Alternative Credit (Jersey) GP Limited 19 Jersey Partner shares 100 %
General Ordinary
ICG Alternative Credit (Luxembourg) GP S.A. 25 Luxembourg Partner shares 100 %
Advisory Ordinary
ICG Alternative Credit LLC 38 United States company shares 100 %
General Ordinary
ICG Alternative Credit Warehouse Fund I GP, 38 United States Partner shares 100 %
Advisory Ordinary
ICG Alternative Investment (Netherlands) B.V. 30 Netherlands company shares 100 %
England and Advisory Ordinary
ICG Alternative Investment Limited Wales company shares 100 %
General Ordinary
ICG Asia Pacific Fund III GP Limited 19 Jersey Partner shares 100 %
Limited
ICG Asia Pacific Fund III GP LP 19 Jersey Partner N/A -- %
Limited
ICG Asia Pacific Fund IV GP LP SCSp 27 Luxembourg Partner N/A -- %
General Ordinary
ICG Asia Pacific Fund IV GP S.à r.l. 27 Luxembourg Partner shares 100 %
General Ordinary
ICG Augusta Associates LLC 37 United States Partner shares 100 %
Cayman Limited
ICG Augusta GP LP 5 Islands Partner N/A -- %
Cayman General Ordinary
ICG Australian Senior Debt GP Limited 5 Islands Partner shares 100 %
General Ordinary
ICG Centre Street Partnership GP Limited 18 Jersey Partner shares 100 %
Service Ordinary
ICG Debt Administration LLC 38 United States company shares 100 %
Investment Ordinary
ICG Debt Advisors LLC -- Holdings Series 38 United States company shares 100 %
Advisory Ordinary
ICG Debt Advisors LLC - Manager Series 38 United States company shares 100 %
England and General Ordinary
ICG EFV MLP GP LIMITED Wales Partner shares 100 %
General Ordinary
ICG EFV MLP Limited 18 Jersey Partner shares 100 %
Ordinary
ICG Employee Benefit Trust 2015 12 Guernsey N/A shares 100 %
General Ordinary
ICG Enterprise Carry GP Limited 19 Jersey Partner shares 100 %
England and General Ordinary
ICG Enterprise Co-Investment GP Limited Wales Partner shares 100 %
General Ordinary
ICG Europe Fund V GP Limited 18 Jersey Partner shares 100 %
Limited
ICG Europe Fund V GP LP 18 Jersey Partner N/A --
General Ordinary
ICG Europe Fund VI GP Limited 18 Jersey Partner shares 100 %
Limited
ICG Europe Fund VI GP Limited Partnership 18 Jersey Partner N/A --
General Ordinary
ICG Europe Fund VI Lux GP S.à r.l. 20 Luxembourg Partner shares 100 %
Limited
ICG Europe Fund VII GP LP SCSp 28 Luxembourg Partner N/A --
General Ordinary
ICG Europe Fund VII GP S.à r.l. 28 Luxembourg Partner shares 100 %
Limited
ICG Europe Fund VIII GP LP SCSp 29 Luxembourg Partner N/A --
General Ordinary
ICG Europe Fund VIII GP S.à r.l. 29 Luxembourg Partner shares 100 %
Limited
ICG Europe Mid-Market Fund GP LP SCSp 28 Luxembourg Partner N/A -- %
General Ordinary
ICG Europe Mid-Market Fund GP S.à r.l. 28 Luxembourg Partner shares 100 %
General Ordinary
ICG Europe Mid-Market Fund II GP S.à r.l. 29 Luxembourg Partner shares 100 %
Advisory Ordinary
ICG Europe S.à r.l. 23 Luxembourg company shares 100 %
Limited
ICG European Credit Mandate GP LP SCSp 28 Luxembourg Partner N/A --
General Ordinary
ICG European Credit Mandate GP S.à r.l. 28 Luxembourg Partner shares 100 %
General Ordinary
ICG European Fund 2006 B GP Limited 19 Jersey Partner shares 100 %
Limited
ICG EXCELSIOR GP LP SCSp 29 Luxembourg Partner N/A -- %
General Ordinary
ICG Excelsior GP S.à r.l. 29 Luxembourg Partner shares 100 %
Service Ordinary
ICG Executive Financing Limited 19 Jersey company shares 100 %
Advisory Ordinary
ICG Fund Advisors LLC 38 United States company shares 100 %
Investment Ordinary
ICG Global Investment Jersey Limited 18 Jersey company shares 100 %
Special
purpose Ordinary
ICG Global Nominee Jersey 2 Limited 18 Jersey vehicle shares 100 %
Special
purpose Ordinary
ICG Global Nominee Jersey Limited 18 Jersey vehicle shares 100 %
Limited
ICG Infrastructure Equity Fund I GP LP SCSp 29 Luxembourg Partner N/A --
General Ordinary
ICG Infrastructure Equity Fund I GP S.a.r.l 29 Luxembourg Partner shares 100 %
General Ordinary
ICG Infrastructure Fund II GP S.à r.l 29 Luxembourg Partner shares 100 %
Cayman General Ordinary
ICG Japan Cayman Performance GP Limited 5 Islands Partner shares 100 %
Advisory Ordinary
ICG Japan KK 16 Japan company shares 100 %
Limited
ICG Life Sciences GP LP SCSp 27 Luxembourg Partner N/A -- %
General Ordinary
ICG Life Sciences GP S.à r.l. 27 Luxembourg Partner shares 100 %
General Ordinary
ICG Living GP S.a r.l. 22 Luxembourg Partner shares 100 %
England and Investment Ordinary
ICG Longbow Development Debt Limited Wales company shares 100 %
General Ordinary
ICG LP Secondaries Associates I LLC 37 United States Partner shares 100 %
General Ordinary
ICG LP Secondaries Fund Associates I S.a. r.l. 29 Luxembourg Partner shares 100 %
Limited
ICG LP Secondaries I GP LP SCSp 29 Luxembourg Partner N/A -- %
England and General Ordinary
ICG MF 2003 No. 3 EGP 1 Limited Wales Partner shares 100 %
England and General Ordinary
ICG MF 2003 No.1 EGP 1 Limited Wales Partner shares 100 %
England and General Ordinary
ICG MF 2003 No.1 EGP 2 Limited Wales Partner shares 100 %
England and General Ordinary
ICG MF 2003 No.3 EGP 2 Limited Wales Partner shares 100 %
England and Investment Ordinary
ICG NA Debt Co-Invest Limited Wales company shares 100 %
Advisory Ordinary
ICG Nordic AB 34 Sweden company shares 100 %
General Ordinary
ICG North America Associates II LLC 38 United States Partner shares 100 %
General Ordinary
ICG North America Associates III LLC 38 United States Partner shares 100 %
General Ordinary
ICG North America Associates LLC 38 United States Partner shares 100 %
ICG North American Private Debt (Offshore) GP Limited Cayman Limited
Partnership 5 Islands Partner N/A -- %
Limited
ICG North American Private Debt Fund GP LP 38 United States Partner N/A -- %
Cayman Limited
ICG North American Private Debt II (Offshore) GP LP 5 Islands Partner N/A -- %
Limited
ICG North American Private Debt II GP LP 38 United States Partner N/A -- %
Limited
ICG North American Private Equity I GP LP 36 United States Partner N/A -- %
General Ordinary
ICG Private Credit GP S.à r.l. 28 Luxembourg Partner shares 100 %
General
ICG Private Markets General Partner SCSp 27 Luxembourg Partner N/A -- %
General Ordinary
ICG Private Markets GP S.à r.l. 27 Luxembourg Partner shares 100 %
Service Ordinary
ICG RE AUSTRALIA GROUP PTY LTD 3 Australia company shares 100 %
Advisory Ordinary
ICG RE CAPITAL PARTNERS AUSTRALIA PTY LTD 3 Australia company shares 100 %
Service Ordinary
ICG RE CORPORATE AUSTRALIA PTY LTD 3 Australia company shares 100 %
Service Ordinary
ICG RE FUNDS MANAGEMENT AUSTRALIA PTY LTD 3 Australia company shares 100 %
Limited
ICG Real Estate Debt VI GP LP SCSp 22 Luxembourg Partner N/A -- %
General Ordinary
ICG Real Estate Debt VI GP S.à r.l. 22 Luxembourg Partner shares 100 %
General Ordinary
ICG REO GP S.à r.l. 22 Luxembourg Partner shares 100 %
General Ordinary
ICG Real Estate Senior Debt V GP S.à r.l. 27 Luxembourg Partner shares 100 %
General Ordinary
ICG Recovery Fund 2008 B GP Limited 19 Jersey Partner shares 100 %
Limited
ICG Recovery Fund II GP LP SCSp 29 Luxembourg Partner N/A -- %
General Ordinary
ICG Recovery Fund II GP S.à r.l. 29 Luxembourg Partner shares 100 %
General Ordinary
ICG SDP LG 28 Luxembourg Partner shares 100 %
General Ordinary
ICG Senior Debt Partners 28 Luxembourg Partner shares 100 %
General Ordinary
ICG Senior Debt Partners GP S.à r.l. 21 Luxembourg Partner shares 100 %
General Ordinary
ICG Senior Debt Partners Performance GP Limited 19 Jersey Partner shares 100 %
England and General Ordinary
ICG Senior Debt Partners UK GP Limited Wales Partner shares 100 %
General Ordinary
ICG SLB GP II S.À R.L 22 Luxembourg Partner shares 100 %
Advisory Ordinary
ICG Strategic Equity Advisors LLC 38 United States company shares 100 %
General Ordinary
ICG Strategic Equity Associates II LLC 37 United States Partner shares 100 %
General Ordinary
ICG Strategic Equity Associates III LLC 37 United States Partner shares 100 %
General Ordinary
ICG STRATEGIC EQUITY ASSOCIATES IV LLC 37 United States Partner shares 100 %
General Ordinary
ICG Strategic Equity Associates IV S.à r.l 29 Luxembourg Partner shares 100 %
Cayman Limited
ICG Strategic Equity III (Offshore) GP LP 5 Islands Partner N/A --
Limited
ICG Strategic Equity III GP LP 37 United States Partner N/A --
Limited
ICG Strategic Equity IV GP LP 37 United States Partner N/A --
Limited
ICG Strategic Equity IV GP LP SCSp 29 Luxembourg Partner N/A --
Limited
ICG Strategic Equity Side Car (Onshore) GP LP 37 United States Partner N/A --
Cayman Limited
ICG Strategic Equity Side Car GP LP 5 Islands Partner N/A --
Limited
ICG Strategic Equity Side Car II (Onshore) GP LP 37 United States Partner N/A --
Cayman Limited
ICG Strategic Equity Side Car II GP LP 5 Islands Partner N/A --
Cayman Limited
ICG Strategic Secondaries Carbon (Offshore) GP LP 5 Islands Partner N/A -- %
General Ordinary
ICG Strategic Secondaries Carbon Associates LLC 38 United States Partner shares 100 %
Cayman Limited
ICG Strategic Secondaries II (Offshore) GP LP 5 Islands Partner N/A -- %
Limited
ICG Strategic Secondaries II GP LP 37 United States Partner N/A -- %
Cayman General Ordinary
ICG Structured Special Opportunities GP Limited 5 Islands Partner shares 100 %
General Ordinary
ICG Total Credit (Global) GP, S.à r.l. 24 Luxembourg Partner shares 100 %
Cayman General Ordinary
ICG US Senior Loan Fund GP Ltd 5 Islands Partner shares 100 %
Cayman Limited
ICG Velocity Co-Investor (Offshore) GP LP 5 Islands Partner N/A -- %
General Ordinary
ICG Velocity Co-Investor Associates LLC 37 United States Partner shares 100 %
Limited
ICG Velocity Co-Investor GP LP 37 United States Partner N/A -- %
Limited
ICG Velocity GP LP 37 United States Partner N/A -- %
England and Investment
ICG-Longbow B Investments L.P. Wales company N/A 50 %
England and General
ICG-Longbow Development GP LLP Wales Partner N/A -- %
Special
England and purpose
ICG-Longbow Investment 3 LLP Wales vehicle N/A -- %
General Ordinary
ICG-Longbow IV GP S.à r.l. 20 Luxembourg Partner shares 100 %
England and General
ICG-LONGBOW SENIOR GP LLP Wales Partner N/A -- %
General Ordinary
Intermediate Capital Asia Pacific 2008 GP Limited 19 Jersey Partner shares 100 %
Advisory Ordinary
Intermediate Capital Asia Pacific Limited 13 Hong Kong company shares 100 %
Intermediate Capital Asia Pacific Mezzanine 2005 GP General Ordinary
Limited 19 Jersey Partner shares 100 %
Intermediate Capital Asia Pacific Mezzanine Opportunities General Ordinary
2005 GP Limited 19 Jersey Partner shares 100 %
Advisory Ordinary
Intermediate Capital Australia PTY Limited 1 Australia company shares 100 %
General Ordinary
Intermediate Capital GP 2003 Limited 19 Jersey Partner shares 100 %
General Ordinary
Intermediate Capital GP 2003 No.1 Limited 19 Jersey Partner shares 100 %
Advisory Ordinary
Intermediate Capital Group (Italy) S.r.l 15 Italy company shares 100 %
Advisory Ordinary
Intermediate Capital Group (Singapore) Pte. Limited 32 Singapore company shares 100 %
Advisory Ordinary
Intermediate Capital Group Benelux B.V. 30 Netherlands company shares 100 %
Advisory Ordinary
Intermediate Capital Group Beratungsgesellschaft GmbH 11 Germany company shares 100 %
Intermediate Capital Group Dienstleistungsgesellschaft Service Ordinary
mbH 11 Germany company shares 100 %
Advisory Ordinary
Intermediate Capital Group Inc. 38 United States company shares 100 %
Service Ordinary
Intermediate Capital Group Polska Sp. z.o.o 31 Poland company shares 100 %
Advisory Ordinary
Intermediate Capital Group SAS 9 France company shares 100 %
Ordinary
Intermediate Capital Inc 38 United States Dormant shares 100 %
Advisory Ordinary
Intermediate Capital Managers (Australia) PTY Limited 2 Australia company shares 100 %
England and Advisory Ordinary
Intermediate Capital Managers Limited Wales company shares 100 %
England and Advisory
Longbow Real Estate Capital LLP Wales company N/A -- %
Special
England and purpose Ordinary
Wise Living Homes Limited 6 Wales vehicle shares 83 %
Special
England and purpose Ordinary
Wise Limited Amber Langley Mill Limited 6 Wales vehicle shares 83 %
General Ordinary
ICG Strategic Equity GP V Sarl 29 Luxembourg Partner shares 100 %
Special
purpose Ordinary
ICG Life Sciences Debt Limited 19 Jersey vehicle shares 100 %
Special
purpose
ICG Life Sciences Feeder SCSp 27 Luxembourg vehicle N/A -- %
Limited
ICG Life Sciences SCSp 27 Luxembourg Partner N/A -- %
General Ordinary
ICG North American Private Equity Associates I LLC 36 United States Partner shares 100 %
Special
purpose Ordinary
ICG North American Private Equity Debt Limited 19 Jersey vehicle shares 100 %
Special
purpose
ICG North American Private Equity Fund I LP 36 United States vehicle N/A -- %
Special
purpose Ordinary
Seaway Buyer, LLC 38 United States vehicle shares 73 %
Special
purpose Ordinary
Seaway Parent, LLC 38 United States vehicle shares 73 %
Special
purpose Ordinary
Seaway Plastics Engineering, LLC 38 United States vehicle shares 73 %
Special
purpose Ordinary
Seaway Plastics Holdings, LLC 38 United States vehicle shares 73 %
Special
purpose
Seaway Topco, LP 38 United States vehicle N/A -- %
Special
purpose Ordinary
Seaway, Guarantor, LLC 38 United States vehicle shares 73 %
Special
purpose Ordinary
Sertic Deal Co S.à.r.l. 22 Luxembourg vehicle shares 100 %
Special
purpose Ordinary
Sertic Mezz Co S.à.r.l. 22 Luxembourg vehicle shares 100 %
Portfolio Ordinary
Wright Engineered Plastics LLC 38 United States Company shares 73 %
Portfolio Ordinary
Wright Plastics Holdings, Inc. 38 United States Company shares 73 %
Special
purpose
ICG REO (EUR) SCSp 22 Luxembourg vehicle N/A -- %
Special
England and purpose Ordinary
AG Thames Investment Limited 8 Wales vehicle shares 100 %
Special
purpose Ordinary
Chessington Propco Limited 17 Jersey vehicle shares 100 %
Special
purpose Ordinary
Crayford Holdco Limited 17 Jersey vehicle shares 100 %
Special
purpose Ordinary
Crayford Limited 17 Jersey vehicle shares 100 %
Special
purpose Ordinary
Harlow Holdco Limited 17 Jersey vehicle shares 100 %
Special
purpose Ordinary
Harlow Propco Limited 17 Jersey vehicle shares 100 %
Special
purpose
ICG Metropolitan Co-invest SCSp 22 Luxembourg vehicle N/A -- %
Special
purpose Ordinary
ICG Metropolitan Last Mile Management Limited 17 Jersey vehicle shares 100 %
Special
purpose Ordinary
ICG Real Estate E Debt Limited 19 Jersey vehicle shares 100 %
Special
purpose Ordinary
Metropolitan Investment S.à r.l. 22 Luxembourg vehicle shares 100 %
Special
purpose
Metropolitan SCSp 22 Luxembourg vehicle N/A -- %
Portfolio Ordinary
MME Group International IC-DISC, Inc. 38 United States Company shares 73 %
Portfolio Ordinary
MME Group LLC 38 United States Company shares 73 %
Special
purpose Ordinary
New Orbit Holdco Sarl 22 Luxembourg vehicle shares 80 %
Special
purpose Ordinary
New Orbit JVCo Sarl 22 Luxembourg vehicle shares 80 %
Special
purpose Ordinary
New Orbit PropCo 1 Sarl 22 Luxembourg vehicle shares 80 %
Special
purpose Ordinary
New Orbit PropCo 2 Sarl 22 Luxembourg vehicle shares 80 %
Special
purpose Ordinary
Sertic Agen SCI 10 France vehicle shares 100 %
Special
purpose Ordinary
Sertic Alfortville SCI 10 France vehicle shares 100 %
Special
purpose Ordinary
Sertic Auray SCI 10 France vehicle shares 100 %
Special
purpose Ordinary
Sertic Cestas SCI 10 France vehicle shares 100 %
Special
purpose Ordinary
Sertic Coignieres SCI 10 France vehicle shares 100 %
Special
purpose Ordinary
Sertic Corbas SCI 10 France vehicle shares 100 %
Special
purpose Ordinary
Sertic Croissy SCI 10 France vehicle shares 100 %
Special
purpose Ordinary
Sertic Démouville SCI 10 France vehicle shares 100 %
Special
purpose Ordinary
Sertic Drancy SCI 10 France vehicle shares 100 %
Special
purpose Ordinary
Sertic Fleury SCI 10 France vehicle shares 100 %
Special
purpose Ordinary
Sertic French Mid Co 1 SNC 10 France vehicle shares 100 %
Special
purpose Ordinary
Sertic French Mid Co II SNC 10 France vehicle shares 100 %
Special
purpose Ordinary
Sertic French Mid Co III SNC 10 France vehicle shares 100 %
Special
purpose Ordinary
Sertic La Chapelle SCI 10 France vehicle shares 100 %
Special
purpose Ordinary
Sertic Lanester SCI 10 France vehicle shares 100 %
Special
purpose Ordinary
Sertic Le Meux SCI 10 France vehicle shares 100 %
Special
purpose Ordinary
Sertic Le Rheu SCI 10 France vehicle shares 100 %
Special
purpose Ordinary
Sertic Lisses SCI 10 France vehicle shares 100 %
Special
purpose Ordinary
Sertic Osny SCI 10 France vehicle shares 100 %
Special
purpose Ordinary
Sertic Perpignan SCI 10 France vehicle shares 100 %
Special
purpose Ordinary
Sertic Pontault Combault SCI 10 France vehicle shares 100 %
Special
purpose Ordinary
Sertic Raismes SCI 10 France vehicle shares 100 %
Special
purpose Ordinary
Sertic Saint Laurent SCI 10 France vehicle shares 100 %
Special
purpose Ordinary
Sertic Saint Pierre SCI 10 France vehicle shares 100 %
Special
purpose Ordinary
Sertic Saint-Mitre SCI 10 France vehicle shares 100 %
Special
purpose Ordinary
Sertic Scherwiller SCI 10 France vehicle shares 100 %
Special
purpose Ordinary
Sertic Valenton SCI 10 France vehicle shares 100 %
Special
purpose Ordinary
Sertic Vemars SCI 10 France vehicle shares 100 %
Special
purpose Ordinary
ICG Seed Asset Founder LP Limited 19 Jersey vehicle shares 100 %
28. Subsidiaries continued
Registered offices
-----------------------------------------------------------
1 Level 18, 88 Phillip Street, Sydney, NSW 2000, Australia
2 Level 31, 88 Phillip Street, Sydney, NSW 2000, Australia
3 Level 9, 88 Phillip Street, Sydney, NSW 2000, Australia
4 75 Fort Street, Clifton House, c/o Estera Trust (Cayman)
Limited, PO Box 1350, Grand Cayman, KY1-1108, Cayman
Islands
5 PO Box 309, Ugland House, C/o Maples Corporate Services
Limited, Grand Cayman, KY1-1104, Cayman Islands
6 17 Regan Way, Chetwynd Business Park, Chilwell, Nottingham,
NG9 6RZ, England & Wales
7 Ground Floor Office South, 51 Welbeck St, London,
W1G 9HL, England, United Kingdom
8 6th Floor 140 London Wall, London, England, EC2Y 5DN
9 1 rue de la Paix, Paris, 75002, France
10 36 rue Scheffer 75116 Paris 16 France
11 12th Floor, An der Welle 5, Frankfurt, 60322, Germany
12 c/o Zedra Trust Company (Guernsey) Limited, 3rd Floor,
Cambridge House, Le Truchot, St Peter Port, GY1 1WD,
Guernsey
13 Suites 1301-02, 13/F, AIA Central, 1 Connaught Road
Central, Hong Kong
14 6th Floor South Bank House, Barrow Street, Dublin
4, Ireland
15 Corso Giacomo Matteotti 3, Milan, 20121, Italy
16 Level 23, Otemachi Nomura Building, 2-1-1 Otemachi,
Chiyoda-ku, Tokyo, 100-0004, Japan
17 12 Castle Street, St. Helier, JE2 3RT, Jersey
18 IFC 1, The Esplanade, St. Helier, JE1 4BP, Jersey
19 Ogier House,44 The Esplanade, St. Helier, JE4 9WG,
Jersey
20 12E, rue Guillaume Kroll, L - 1882 Luxembourg
21 2-4 Rue Eugène Ruppert, Grand Duchy of Luxembourg,
L-2453, Luxembourg
22 3, rue Gabriel Lippmann, L - 5365 Munsbach, Luxembourg
23 32-36, boulevard d'Avranches L - 1160 Luxembourg,
1160, Luxembourg
24 49 Avenue John F. Kennedy, Luxembourg, L-1855, Luxembourg
25 5 Allée Scheffer, Luxembourg, L-2520, Luxembourg
26 5, Heienhaff, L - 1736 Senningerberg, Luxembourg
27 6, rue Eugene Ruppert, Luxembourg, L-2453, Luxembourg
28 60, Avenue J.F. Kennedy, Luxembourg, L-1855, Luxembourg
29 6H Route de Trèves, Senningerberg, L-2633, Luxembourg
30 Paulus Potterstraat 20, 2hg., Amsterdam, 1071 DA,
Netherlands
31 Spark B, Aleja Solidarności 171, Warsaw, 00-877,
Poland
32 #21-01, 20 Collyer Quay, 049319, Singapore
33 Serrano 30-3 , 28001 Madrid, Spain
34 David Bagares Gata 3, 111 38 Stockholm
35 Index Tower, Floor 4, Unit 404, Dubai International
Financial Centre, Dubai, United Arab Emirates
36 c/o Intertrust Corporate Services Delaware LTD, Suite
210, 200 Bellevue Parkway, Wilmington, DE, 19809,
United States
37 c/o Maples Fiduciary Services (Delaware) Inc., Suite
302, 4001 Kennett Pike, Wilmington, DE, 19807, United
States
38 c/o The Corporation Trust Company, 1209 Orange Street,
Wilmington, DE, 19801, United States
28. Subsidiaries continued
The table below shows details of structured entities that the Group is deemed to control:
Name of subsidiary Country of incorporation --------------------------------- ------------------------- ---- ICG Newground RE Finance Trust 1 Australia 100% ICG US CLO 2014-1, Ltd. Cayman Islands 50% ICG US CLO 2014-2, Ltd. Cayman Islands 72% ICG US CLO 2014-3, Ltd. Cayman Islands 51% ICG US CLO 2015-1, Ltd. Cayman Islands 50% ICG US CLO 2015-2R, Ltd. Cayman Islands 83% ICG US CLO 2016-1, Ltd. Cayman Islands 63% ICG US CLO 2017-1, Ltd. Cayman Islands 60% ICG US CLO 2020-1, Ltd. Cayman Islands 52% ICG US Senior Loan Fund Cayman Islands 100% ICG Euro CLO 2021-1 DAC Ireland 67% ICG Euro CLO 2023-1 DAC Ireland 100% ICG High Yield Bond Fund Ireland 100% St. Paul's CLO II DAC Ireland 85% St. Paul's CLO III-R DAC Ireland 62% St. Paul's CLO VI DAC Ireland 53% St. Paul's CLO VIII DAC Ireland 53% St. Paul's CLO XI DAC Ireland 57% ICG Enterprise Carry (1) LP Jersey 100% ICG Enterprise Carry (2) LP Jersey 50% ICG Total Credit (Global) SCA Luxembourg 100% --------------------------------- ------------------------- ----
The structured entities controlled by the Group include GBP5,160.8m (2022: GBP5,057.2m) of assets and GBP5,109.2m (2022: GBP4,992.8m) of liabilities within 21 funds listed above. These assets are restricted in their use to being the sole means by which the related fund liabilities can be settled. All other assets can be accessed or used to settle the other liabilities of the Group without significant restrictions.
The Group has not provided contractual or non-contractual financial or other support to a consolidated structured entity during the period. It is not the current intention to provide such support, including the intention to assist the structured entity in obtaining financial support
Subsidiary audit exemption
For the period ended 31 March 2023, the following companies were entitled to exemption from audit under section 479A of the Companies Act 2006 relating to subsidiary companies. The member(s)(1) of the following companies have not required them to obtain an audit of their financial statements for the period ended 31 March 2023.
Company Registered number Member(s)
ICG FMC Limited 7266173 Intermediate Capital Group
plc
ICG Global Investment UK 7647419 Intermediate Capital Group
Limited plc
ICG Japan (Funding 2) Limited 9125779 Intermediate Capital Group
plc
ICG Longbow Development 8802752 Intermediate Capital Group
(Brighton) Limited plc
ICG Longbow Richmond Limited 11210259 Intermediate Capital Group
plc
ICG Longbow BTR Limited 11177993 Intermediate Capital Group
plc
ICG Longbow Senior Debt I GP 2276839 Intermediate Capital Group
Limited plc
Intermediate Capital 2327070 Intermediate Capital Group
Investments Limited plc
LREC Partners Investments No. 7428335 Intermediate Capital Group
2 Limited plc
ICG Longbow Development Debt 9907841 ICG-Longbow Development GP
Limited LLP
Longbow Real Estate Capital OC328457 Intermediate Capital Group
LLP plc, ICG FMC Limited
ICG IC Holdco Limited 14542130 Intermediate Capital Group
plc
ICG NA Debt Co-invest Limited 10091367 ICG Carbon Funding Limited
ICG-Longbow Development GP OC396833 Intermediate Capital Group
LLP plc, ICG FMC Limited
ICG-Longbow Investment 3 LLP OC395389 ICG FMC Limited,
Intermediate Capital
Managers Limited
ICG-Longbow Senior GP LLP OC427634 Intermediate Capital Group
plc, ICG FMC Limited
1 Shareholders or Partners, as appropriate
29. Disposal groups held for sale and discontinued operations
Accounting policy Non-current financial assets held for sale and disposal groups The Group may make an investment and hold the asset on its balance sheet prior to it being transferred into a fund or sold to third-party investors. The assets are expected to be held for a period for up to a year, during which the asset will be classified as held for sale. Where the investment is held through a controlled investee the investee entity is classified as a disposal group held for sale. The conditions for disposal groups held for sale are regarded as met only when the asset is available for immediate sale, the Directors are committed to the sale, and the sale is expected to be completed within one year from the date of classification. Disposal groups held for sale are recognised at the lower of fair value less cost to sell and their carrying amount as required by IFRS 5 Non-Current Assets Held for Sale and Discontinued Operations, except where the asset is a financial instrument or investment property. The measurement of these assets is determined by IFRS 9 Financial Instruments and IAS 40 Investment
Property respectively. The Group's measurement of
these assets is detailed in note 5.
The Group holds interests in various disposal groups
held for sale assets ("Warehouse Funds"), of which
some have subsidiaries which are expected to be sold.
These subsidiaries are therefore assessed as discontinued
operations.
------------------------------------------------------------
Financial year ended 31 March 2023
During the year the Group has acquired interests in
disposal groups held for sale assets and discontinued
operations. Other than as described below, all interests
have been acquired at fair value and therefore no
loss or gain has been recognised on acquisition.
Management have assessed that it is highly probably
that all investments reported within disposal groups
held for sale and discontinued operations will be
realised within 12 months.
During the year, one of the Group's Warehouse Funds,
the US Mid-Market ("USMM") Warehouse Fund, ceased
to control its subsidiary Ambient Enterprises LLC
("Ambient" -- formerly Gil-bar Parent LLC) and subsequently
retained a financial asset in respect of its investment
in Ambient. The Group recognised a profit of GBP3.5m
relating to Ambient over the period of control. Ambient
was deemed a discontinued operation until the USMM
Warehouse Fund ceased control.
As part of the cessation of control, the USMM Warehouse
Fund has valued its investment in Ambient in accordance
with IFRS 9, applying IPEV guidelines, and this has
resulted in the Group recognising a post-tax gain
of GBP64m, comprising GBP3.5m gain on disposal and
GBP60.5m net fair value gain, which is recorded in
the Consolidated entities segments of our Consolidated
income statement, within 'Profit after tax on discontinued
operations' (see note 4).
In the next 12 months, Management intends to sell
the Group's interest in the USMM Warehouse Fund to
third-party investors investing into the fund. The
Group has a debt interest in the USMM Warehouse Fund
and expects to sell its interest in the fund at cost
plus an interest charge, where cost represents the
original cost of the USMM Warehouse Funds' investments.
As a result, the Group expects to receive less than
the current fair value of Ambient recognised in the
USMM Warehouse Fund and consequently, under APM, the
Group has not recognised the fair value gain reported
under UK-adopted IAS. This is therefore not included
within the Group's Reportable segment (see note 4).
------------------------------------------------------------
The assets and liabilities of the discontinued operations and disposal groups held for sale together with their contribution to the Group's profit after tax are as follows:
29. Disposal groups held for sale and discontinued operations continued
The non-current assets and liabilities of the disposal groups held for sale are as follows:
2023 2022
-------------- --------------------------------------------- ------------------------------
Discontinued Disposal Discontinued Disposal
Operations Groups Total Operations Groups Total
Group GBPm GBPm GBPm GBPm GBPm GBPm
-------------- -------------- ------------- -------------- ------------ -------- ------
Non-current
assets
Intangible
assets 92.4 -- 92.4 101.0 -- 101.0
Property,
plant and
equipment 7.2 -- 7.2 0.3 -- 0.3
Investment
property 284.0 -- 284.0 -- 59.3 59.3
Financial
assets at
fair value 0.9 162.3 163.2 -- 36.9 36.9
Other debtors 0.3 -- 0.3 -- -- --
-------------- -------------- ------------- -------------- ------------ -------- ------
384.8 162.3 547.1 101.3 96.2 197.5
-------------- -------------- ------------- -------------- ------------ -------- ------
Current assets
Inventory 12.3 -- 12.3 0.8 -- 0.8
Cash 5.5 -- 5.5 5.4 5.7 11.1
Trade and
other
receivables 12.2 -- 12.2 47.1 -- 47.1
Other debtors 1.2 -- 1.2 0.2 -- 0.2
-------------- -------------- ------------- -------------- ------------ -------- ------
31.2 -- 31.2 53.5 5.7 59.2
-------------- -------------- ------------- -------------- ------------ -------- ------
Non-current
liabilities
Financial
liabilities
at amortised 174.8 -- 174.8 65.8 5.0 70.8
Deferred tax
liability -- 14.0 14.0 -- -- --
Other
financial
liabilities 3.0 -- 3.0 (9.7) -- (9.7)
-------------- -------------- ------------- -------------- ------------ -------- ------
177.8 14.0 191.8 56.1 5.0 61.1
-------------- -------------- ------------- -------------- ------------ -------- ------
Current
liabilities
Trade and
other
payables 6.1 -- 6.1 35.8 0.2 36.0
Other
financial
liabilities 6.1 -- 6.1 -- 0.1 0.1
-------------- -------------- ------------- -------------- ------------ -------- ------
12.2 -- 12.2 35.8 0.3 36.1
-------------- -------------- ------------- -------------- ------------ -------- ------
Statement of
comprehensive
Sales 69.2 -- 69.2 122.8 -- 122.8
Cost of sales (55.6) -- (55.6) (88.2) -- (88.2)
-------------- ------------- -------------- ------------ -------- ------
Gross profit 13.6 -- 13.6 34.6 -- 34.6
-------------- ------------- -------------- ------------ -------- ------
Net gains on
investments 78.0 -- 78.0 -- -- --
Operating
expenses (8.6) -- (8.6) (22.9) -- (22.9)
Depreciation
and
amortisation -- -- -- (6.6) -- (6.6)
Other expenses (12.2) -- (12.2) (10.5) -- (10.5)
Transaction
costs -- -- -- (3.8) -- (3.8)
-------------- ------------- -------------- ------------ -------- ------
Gain / (loss)
before tax 70.8 -- 70.8 (9.2) -- (9.2)
-------------- -------------- ------------- -------------- ------------ -------- ------
Tax expense (14.0) -- (14.0) -- -- --
-------------- -------------- ------------- -------------- ------------ -------- ------
Gain / (loss)
after tax 56.8 -- 56.8 (9.2) -- (9.2)
-------------- -------------- ------------- -------------- ------------ -------- ------
30. Associates and joint ventures
Accounting policy
Investment in associates
An associate is an entity over which the Group has significant influence, but no control, over the financial and operating policy decisions of the entity. As the investments in associates are held for venture capital purposes they are designated at fair value through profit or loss.
Investment in joint ventures
A joint venture is a joint arrangement whereby the parties that have joint control over the arrangement have rights to the net assets of the arrangements. The results and assets and liabilities of joint ventures are incorporated in these financial statements using the equity method of accounting from the date on which the investee becomes a joint venture, except when the investment is held for venture capital purposes in which case they are designated as fair value through profit and loss. Under the equity method, an investment in a joint venture is initially recognised in the consolidated statement of financial position at cost, and adjusted thereafter to recognise the Group's share of the joint venture's profit or loss.
The nature of some of the activities of the Group associates and joint ventures are investment related which are seen as complementing the Group's operations and contributing to achieving the Group's overall strategy. The remaining associates and joint ventures are portfolio companies not involved in investment activities.
Details of associates and joint ventures
Details of each of the Group's associates at the end of the reporting period are as follows:
Income Income
distributions distributions
Proportion of ownership interest/voting rights held received from Proportion of ownership interest/voting rights held received from
by the Group associate by the Group associate
------------------ ------------------- -------------------------
Name of associate Principal activity Country of incorporation 2023 2023 2022 2022
------------------ ------------------- ------------------------- --------------------------------------------------- ------------- --------------------------------------------------- -------------
ICG Europe Fund V
Jersey
Limited(1) Investment company Jersey 20% 11 20% 58.6
ICG Europe Fund VI
Jersey
Limited(1) Investment company Jersey 17% 24.7 17% 114.2
ICG North American
Private Debt
Fund(2) Investment company United States of America 20% 5.5 20% 5.4
ICG Asia Pacific
Fund III
Singapore Pte.
Limited(3) Investment company Singapore 20% (1.2) 20% 32.1
Ambient Investment company United States of America 50% -- --% --
Enterprises
LLC(4)
KIK Equity Investment company United States of America 25% -- --% --
Co-invest LLC(4)
------------------ ------------------- ------------------------- --------------------------------------------------- ------------- --------------------------------------------------- -------------
During the year the Group's investments in Ambient Enterprises LLC (see note 29) and KIK Equity Co-invest LLC were assessed as associates. All associates are accounted for at fair value.
1. The registered address for this entity is IFC 1 -- The Esplanade, St
Helier, Jersey JE1 4BP.
2. The registered address for this entity is 600, Lexington Avenue, 24th
Floor, New York, NY 10022, United States of America.
3. The registered address for this entity is #13-01 One Raffles Place,
Singapore, 048616.
4. The registered address for this entity is c/o The Corporation Trust
Company, 1209 Orange Street, Wilmington, DE, 19801, United States.
The Group has a shareholding in each of ICG Europe Fund V Jersey Limited, ICG Europe Fund VI Jersey Limited, ICG North American Private Debt Fund, ICG Asia Pacific Fund III Singapore Pte. Limited and KIK Equity Co-invest LLC arising from its co-investment with a fund. The Group appoints the General Partner (GP) to each of these fund. The investors have substantive rights to remove the GP without cause. The Funds also each have an Advisory Council, nominated by the investors, whose function is to ensure that the GP is acting in the interest of investors. As the Group has a 17%--25% holding, and therefore significant influence in each entity, they have been considered as associates
Details of each of the Group's joint ventures at the end of the reporting period are as follows:
30. Associates and joint ventures continued
Name of Principal Country of Proportion of voting rights held by the Group Proportion of voting rights held by the Group associate activity incorporation 2023 2022 ---------- ----------- -------------- --------------------------------------------- --------------------------------------------- Nomura ICG Advisory KK company Japan 50 % 50 % Brighton Marina Investment Group Company United Kingdom 70 % 50 % ---------- ----------- -------------- --------------------------------------------- ---------------------------------------------
Nomura ICG KK is equity accounted as a joint venture in accordance with IFRS 11. Nomura ICG KK is not a portfolio company and was established to operate the Group's core business of fund management activities in Japan. Management therefore considers it more appropriate to equity account for this entity in the financial statements.
Brighton Marina Group Limited is accounted for at fair value in accordance with IAS28 and IFRS9 and the Group's accounting policy in note 5 to the financial statements.
The Group holds 70% of the ordinary shares of Brighton Marina Group Limited and the management of this entity is jointly controlled with a third party who the Group does not control and therefore the Group is unable to execute decisions without the consent of the third party.
Significant restriction
There are no significant restrictions on the ability of associates and joint ventures to transfer funds to the Group other than having sufficient distributable reserves.
Summarised financial information for associates material to the reporting entity
The Group's only material associates are ICG Europe Fund V Jersey Limited and ICG Europe Fund VI Jersey Limited which are associates measured at fair value through profit and loss. The information below is derived from the IFRS financial statements of the entities. Materiality has been determined by the carrying value of the associate as a percentage of total Group assets.
The entities allow the Group to co-invest with ICG Europe Fund V and ICG Europe Fund VI respectively, aligning interests with other investors. In addition to the returns on its co-investment the Group receives performance-related fee income from the funds (see note 3). This is industry standard and is in line with other funds in the industry.
ICG Fund VI Jersey Limited ICG Fund V Jersey Limited
-------------------------------- ----------------------------
2023 2022 2023 2022
GBPm GBPm GBPm GBPm
-------------- --------------- --------------- ------------- -------------
Current assets 8.1 24.9 3.8 6.1
Non-current
assets 1,023.9 1,910.0 129.8 122.5
Current
liabilities (55.8) (49.7) (1.5) (1.6)
-------------- --------------- --------------- ------------- -------------
976.2 1,885.2 132.1 127.0
-------------- --------------- --------------- ------------- -------------
Revenue 47.3 685.8 (2.0) 27.3
Profit from
continuing
operations 23.2 667.0 (3.6) 26.4
-------------- --------------- --------------- ------------- -------------
Total
comprehensive
income 23.2 667.0 (3.6) 26.4
-------------- --------------- --------------- ------------- -------------
Summarised financial information for equity accounted joint ventures
Nomura ICG KK made a profit from continuing operations and total comprehensive income of GBP8.8m for the year ended 31 March 2023 (2022: GBP1.0m), of which the Group's share of results accounted for using the equity method is GBP4.4m for the year ended 31 March 2023 (2022: GBP0.5m).
31. Unconsolidated structured entities
A structured entity is an entity that has been designed so that voting or similar rights are not the dominant factor in deciding who controls the entity, such as when any voting rights relate to administrative tasks only and the relevant activities are directed by means of contractual arrangements. The Group has determined that it has an interest in a structured entity where the Group holds an investment, loan, fee receivable or commitment with an investment fund or CLO. Where the Group does not hold an investment in the structured entity, management has determined that the characteristics of control, in accordance with IFRS 10, are not met.
The Group, as fund manager, acts in accordance with the pre-defined parameters set out in various agreements. The decision-making authority of the Group and the rights of third parties are documented. These agreements include management fees that are commensurate with the services provided and performance fee arrangements that are industry standard. As such, the Group is acting as agent on behalf of these investors and therefore these entities are not consolidated into the Group's results. Consolidated structured entities are detailed in note 28.
At 31 March 2023, the Group's interest in and exposure to unconsolidated structured entities including outstanding management and performance fees are detailed in the table below, and recognised within financial assets at FVTPL and trade and other receivables in the statement of financial position:
2023
-----------------------------------------------------------------------------------------------------------------
Management Performance Maximum
Investment fees Management fees exposure
in Fund receivable fee rates receivable Performance fee rates to loss
------------
Funds GBPm GBPm % GBPm % GBPm
------------ ---------- ---------- ---------- ----------- ------------------------------------------------------ --------
0.19% to
CLOs 298.3 4.1 0.50% -- 0.05% to 0.20% 302.4
0.29% to 20% of returns in excess of 0% for Alternative Credit
Credit Funds 65.9 8.6 1.50% (0.3) Fund only 74.2
Corporate
Investment 0.43% to 20%--25% of total performance fee of 20% of profit
Funds 1,341.5 55.9 1.50% 37.6 over the threshold 1,435.0
Real Asset 0.30% to
Funds 288.5 12.0 1.24% -- 20% of returns in excess of 9% IRR 300.5
Secondaries 0..75% to 10%--20% of total performance fee of 8%--20% of profit
Funds 441.1 20.2 1.37% 0.2 over the threshold 461.5
------------ ---------- ---------- ---------- ----------- ------------------------------------------------------ --------
Total 2,435.3 100.8 37.5 2,573.6
------------ ---------- ---------- ---------- ----------- ------------------------------------------------------ --------
2022
-----------------------------------------------------------------------------------------------------------------
Management Performance Maximum
Investment fees Management fees exposure
in Fund receivable fee rates receivable Performance fee rates to loss
------------
Funds GBPm GBPm % GBPm GBPm
------------ ---------- ---------- ---------- ----------- ------------------------------------------------------ --------
0.35% to
CLOs 285.5 3.6 0.65% -- 0.05% to 0.20% 289.1
0.40% to 20% of returns in excess of 0% for Alternative Credit
Credit Funds 162.0 9.7 1.50% -- Fund only 171.7
Corporate
Investment 0.60% to 20%--25% of total performance fee of 20% of profit
Funds 1,505.5 54.7 2.0% 86.1 over the threshold 1,646.3
Real Asset 0.38% to
Funds 203.1 14.3 1.50% 0.1 20% of returns in excess of 9% IRR 217.5
Secondaries 1.25% to 10%--20% of total performance fee of 8%--20% of profit
Funds 341.7 26.0 1.50% 4.9 over the threshold 372.6
------------ ---------- ---------- ---------- ----------- ------------------------------------------------------ --------
Total 2,497.8 108.3 91.0 2,697.2
------------ ---------- ---------- ---------- ----------- ------------------------------------------------------ --------
The Group's maximum exposure to loss is equal to the value of any investments held and unpaid management fees and performance fees.
The Group has not provided non-contractual financial or other support to the unconsolidated structured entities during the year. It is not the current intention to provide such support, including the intention to assist the structured entity in obtaining financial support.
32. Net cash flows from operating activities
Year ended Year ended
31 March 2023 31 March 2022
Group Group
GBPm GBPm
------------------------------------------------------- -------------- --------------
Profit before tax from continuing operations 251.0 565.4
------------------------------------------------------- -------------- --------------
Adjustments for non cash items:
Fee and other operating income (483.6) (434.0)
Net investment returns (172.5) (555.5)
Interest income (15.5) --
Net fair value loss on derivatives 34.9 7.3
Impact of movement in foreign exchange rates (17.8) 0.1
Interest expense 64.6 53.1
Depreciation, amortisation and impairment of property,
equipment and intangible assets 18.2 19.5
Share-based payment expense 39.5 29.6
Working capital changes:
Increase in trade and other receivables (12.0) (32.5)
Decrease in trade and other payables (196.9) (27.4)
Change in disposal groups held for sale (8.8) --
------------------------------------------------------- -------------- --------------
(498.9) (374.4)
Proceeds from sale of current financial assets and
disposal groups held for sale 45.5 185.2
Purchase of current financial assets and disposal
groups held for sale (211.9) (204.0)
Purchase of investments (1,420.2) (3,532.8)
Proceeds from sales and maturities of investments 1,722.2 3,743.8
Interest and dividend income received(1) 362.8 259.8
Fee and other operating income received 587.9 393.0
Interest paid (263.4) (183.3)
------------------------------------------------------- -------------- --------------
Cash flows generated from operations 324.0 287.3
Taxes paid (32.4) (43.9)
------------------------------------------------------- -------------- --------------
Net cash flows from operating activities 291.6 243.4
(1) Comprises Interest income received of GBP322.6m (2022: GBP221.8m) and Dividend income received of GBP40.2m (2022: GBP38.0m).
33. Contingent liabilities
The Parent Company and its subsidiaries may be party to legal claims arising in the course of business. The Directors do not anticipate that the outcome of any such potential proceedings and claims will have a material adverse effect on the Group's financial position and at present there are no such claims where their financial impact can be reasonably estimated. The Parent Company and its subsidiaries may be able to recover any monies paid out in settlement of claims from third parties.
There are no other material contingent liabilities.
34. Post balance sheet events
There have been no material events since the balance sheet date.
Other information
Outstanding debt facilities
Drawn Undrawn Total Interest
Currency GBPm GBPm GBPm rate Maturity
------------- --------- ------- ------- ------- ----------- ------------
ESG-linked SONIA
RCF GBP -- 550.0 550.0 +1.375% January-26
Eurobond
2020 EUR 440.0 -- 440.0 1.60% February-27
ESG
Linked
Bond EUR 440.0 -- 440.0 2.50% January-30
Total bonds 880.0 -- 880.0
------------------------ ------- ------- ------- ----------- ------------
PP2013 --
Class B USD 51.0 -- 51.0 6.30% May-23
Private Placement 2013 51.0 -- 51.0
PP 2015
-- Class
C USD 64.9 -- 64.9 5.20% May-25
PP 2015
-- Class
F EUR 38.7 -- 38.7 3.40% May-25
Private Placement 2015 103.5 -- 103.5
PP 2016
-- Class
B USD 91.6 -- 91.6 4.70% September-24
PP 2016
-- Class
C USD 43.8 -- 43.8 5.00% September-26
PP 2016
-- Class
E EUR 19.3 -- 19.3 3.00% January-27
PP 2016
-- Class
F EUR 26.4 -- 26.4 2.70% January-25
Private Placement 2016 181.1 -- 181.1
PP 2019
-- Class
A USD 101.3 -- 101.3 4.80% April-24
PP 2019
-- Class
B USD 81.1 -- 81.1 5.00% March-26
PP 2019
-- Class
C USD 101.3 -- 101.3 5.40% March-29
PP 2019
-- Class
D EUR 38.7 -- 38.7 2.00% April-24
Private Placement 2019 322.4 -- 322.4
------------------------ ------- ------- ------- ----------- ------------
Total Private Placements 658.0 -- 658.0
------------------------ ------- ------- ------- ----------- ------------
Total 1,538.0 550.0 2,088.0
------------------------ ------- ------- ------- ----------- ------------
Glossary
Non-IFRS alternative performance measures (APM) are defined below:
Short
Term Form Definition
------------------------------------------------ ------ --------------------------------------------------------------------------------------------
APM 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
APM earnings per share EPS 16.
------------------------------------------------ ------ --------------------------------------------------------------------------------------------
Group profit before tax adjusted for the impact of
the consolidated structured entities. As at 31 March,
APM Group profit before tax this is calculated as follows:
------------------------------------------------ ------
2023 2022
------------------------------------------------ ------ ----------------------------------------------------- ----- -------------- --------------
Profit before tax GBP251.0m GBP565.4m
Plus/Less consolidated structured entities GBP7.1m GBP3.4m
----------------------------------------------------- ----- -------------- --------------
APM Group profit/(loss) before tax GBP258.1m GBP568.8m
------------------------------------------------ ------ ----------------------------------------------------- ----- -------------- --------------
Investment Company profit adjusted for the impact
of the consolidated structured entities. As at 31
APM Investment Company profit before tax March, this is calculated as follows:
------------------------------------------------ ------
2023 2022
------------------------------------------------ ------ ----------------------------------------------------- ----- -------------- --------------
Investment Company profit before tax (GBP69.7m) GBP279.2m
Plus/Less consolidated structured entities GBP7.1m GBP3.4m
----------------------------------------------------- ----- -------------- --------------
APM Investment Company profit/(loss) before tax (GBP52.6m) GBP282.6m
------------------------------------------------ ------ ----------------------------------------------------- ----- -------------- --------------
APM 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
APM return on equity ROE as follows:
------------------------------------------------ ------
2023 2022
------------------------------------------------ ------ ----------------------------------------------------- ----- -------------- --------------
APM profit after tax GBP229.3m GBP538.0m
Average shareholders' funds GBP1,911.3m GBP1,745.9m
----------------------------------------------------- ----- -------------- --------------
APM return on equity 12.0 % 30.8 %
------------------------------------------------------------ ------------------------------------------------------ -------------- --------------
Value of all funds and assets managed by the FMC.
During the investment period third-party AUM is measured
on the basis of committed capital. Once outside the
investment period third-party AUM is measured on the
basis of invested cost. AUM is presented in US dollars,
with non-US dollar denominated converted at the period
Assets under management AUM end closing rate.
------------------------------------------------ ------ --------------------------------------------------------------------------------------------
The balance sheet investment portfolio represents
financial assets from the statement of financial position,
adjusted for the impact of the consolidated structured
entities and excluding derivatives and other financial
Balance sheet investment portfolio assets.
------------------------------------------------ ------ --------------------------------------------------------------------------------------------
2023 2022
------------------------------------------------ ------ -------------- --------------
Note
Total non current and current financial assets 4 GBP2,924.6m GBP2,854.8m
Derivative (assets) (GBP22.6m) (GBP32.8m)
----------------------------------------------------- ----- -------------- --------------
Total balance sheet investment portfolio GBP2,902m GBP2,822m
------------------------------------------------ ------ ----------------------------------------------------- ----- -------------- --------------
Cash profit is defined as internally reported profit
before tax and incentive schemes, adjusted for non-cash
Cash profit PICP items
------------------------------------------------ ------ --------------------------------------------------------------------------------------------
2023 2022
------------------------------------------------ ------ ----------------------------------------------------- ----- -------------- --------------
APM profit before tax GBP258.1m GBP568.8m
----------------------------------------------------- ----- -------------- --------------
Add back incentive schemes GBP151.8m GBP169.7m
----------------------------------------------------- ----- -------------- --------------
Other adjustments GBP121.9m (GBP172.4m)
----------------------------------------------------- ----- -------------- --------------
Cash profit GBP531.8m GBP566.1m
------------------------------------------------ ------ ----------------------------------------------------- ----- -------------- --------------
Dividend income represents distributions received
from equity investments. Dividend income reported
on an internal basis excludes the impact of the consolidated
structured entities.
Dividend income See note 4 for a full reconciliation.
------------------------------------------------ ------ --------------------------------------------------------------------------------------------
Profit after tax (annualised when reporting a six-month
period's results) divided by the weighted average
Earnings per share EPS number of ordinary shares as detailed in note 16.
------------------------------------------------ ------ --------------------------------------------------------------------------------------------
EBITDA Earnings before interest, tax, depreciation and amortisation.
------------------------------------------------ ------ --------------------------------------------------------------------------------------------
When new third-party clients subscribe to a closed-end
fund after the first close, they pay a pre-agreed
return to clients who subscribed to the fund at an
earlier close. This compensates those clients for
their capital being tied up for longer. This is referred
to as 'equalisation' and can result in gain or loss
for earlier investors compared to the latest fund
Equalisation valuation.
--------------------------------------------------------------------------------------------
Group cashflows from operating activities -- APM is
net cash flows from operating activities adjusted
Group cashflows from operating activities- APM for interest paid
------------------------------------------------ ------
2023 2022
------------------------------------------------ ------ -------------- --------------
Group cashflows from operating activities- APM GBP395.0m GBP393.6
Interest paid (GBP63.5)m (GBP55.7)m
----------------------------------------------------- ----- -------------- --------------
Note
Net cash flows from/(used in) operating activities 4 GBP331.5m GBP337.9m
------------------------------------------------ ------ ----------------------------------------------------- ----- -------------- --------------
Short
Term Form Definition
--------------------------------------------------------------------------------------------
Group cashflows from financing activities -- APM is
net cash flows from financing activities adjusted
for interest paid and the payment of principal portion
Group cashflows from financing activities - APM of lease liabilities
2023 2022
-------------- --------------
Group cashflows from financing activities - APM (GBP533.4)m GBP59.3m
Interest paid GBP63.5m GBP55.7m
Payment of principal portion of lease liabilities (GBP6.8)m (GBP4.1)m
----------------------------------------------------- ----- -------------- --------------
Note
Net cash flows from/(used in) financing activities 4 (GBP476.7)m GBP110.9m
----------------------------------------------------- ----- -------------- --------------
Other operating cashflows is net cash flows from investing
activities adjusted for the payment of principal portion
Net cash flows used in investing activities of lease liabilities
------------------------------------------------ ------
2023 2022
------------------------------------------------ ------ -------------- --------------
Net cash flows used in investing activities (GBP70.0)m GBP11.3m
Payment of principal portion of lease liabilities (GBP6.8)m (GBP4.1)m
----------------------------------------------------- ----- -------------- --------------
Other operating cashflows (GBP76.8)m GBP7.1m
------------------------------------------------ ------ ----------------------------------------------------- ----- -------------- --------------
Interest expense excludes the cost of financing associated
with the consolidated structured entities. See note
Interest expense 11 for a full reconciliation.
------------------------------------------------ ------ --------------------------------------------------------------------------------------------
Total equity from the statement of financial position
adjusted for the impact of the consolidated structured
entities divided by the closing number of ordinary
APM net asset value per share shares. As at 31 March, this is calculated as follows:
------------------------------------------------ ------
2023 2022
------------------------------------------------ ----------------------------------------------------- ----- -------------- --------------
Total equity GBP1,977.4m GBP1,995.0m
Closing number of ordinary shares 285,082,287 286,550,955
------------------------------------------------------------ ------------------------------------------------------ -------------- --------------
Net asset value per share 694p 696p
------------------------------------------------ ------ ----------------------------------------------------- ----- -------------- --------------
The total of cash, plus current financial assets,
plus other current assets, less current liabilities
as internally reported. This excludes the consolidated
structured entities. As at 31 March, this is calculated
Net current assets as follows:
------------------------------------------------ ------
2023 2022
------------------------------------------------ ----------------------------------------------------- ----- -------------- --------------
Cash GBP550.0m GBP761.5m
Current financial assets GBP282.4m GBP126.1m
Other current assets GBP243.7m GBP193.2m
Current financial liabilities (GBP79.1m) (GBP256.4m)
Other current liabilities (GBP157.7)m (GBP152.8m)
----------------------------------------------------- ----- -------------- --------------
Net current assets GBP839.3m GBP671.6m
----------------------------------------------------- ----- -------------- --------------
On an IFRS basis net current assets are as follows:
----------------------------------------------------- ----- -------------- --------------
2023 2022
----------------------------------------------------- ----- -------------- --------------
Cash GBP957.5m GBP991.8m
Current financial assets -- --
Other current assets GBP307.3m GBP452m
Disposal groups held for sale GBP578.3m GBP256.7m
Current financial liabilities (GBP64.3m) (GBP207.6m)
Other current liabilities (GBP501.0m) (GBP602.3m)
Liabilities directly associated with disposal groups
held for sale (GBP204.0m) (GBP97.2m)
----------------------------------------------------- ----- -------------- --------------
Net current assets GBP1,073.8m GBP793.4m
------------------------------------------------ ------ ----------------------------------------------------- ----- -------------- --------------
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.
Gross drawn debt less unencumbered cash of the Group,
Net financial debt as at 31 March is calculated as follows:
------------------------------------------------ ------
2023 2022
------------------------------------------------ ----------------------------------------------------- ----- -------------- --------------
Total liabilities held at unamortised cost GBP1,536.7m GBP1,653.4m
Impact of upfront fees/unamortised discount GBP1.3m GBP1.6m
----------------------------------------------------- ----- -------------- --------------
Gross drawn debt (see page 18) GBP1,538.0m GBP1,655.0m
Less unencumbered cash (GBP550.0m) (GBP761.5m)
----------------------------------------------------- ----- -------------- --------------
Net debt GBP988.0m GBP893.5m
------------------------------------------------ ------ ----------------------------------------------------- ----- -------------- --------------
Short
Term Form Definition
--------------------------------------------------------------------------------------------
Net gearing is used by management as a measure of
balance sheet efficiency. Net debt, excluding the
consolidated structured entities, divided by total
equity from the statement of financial position adjusted
for the impact of the consolidated structured entities.
Net gearing As at 31 March, this is calculated as follows:
------------------------------------------------ ------
2023 2022
------------------------------------------------ ------ ----------------------------------------------------- ----- -------------- --------------
Net debt GBP988.0m GBP893.5m
Shareholders' equity GBP1,977.4m GBP1,995.0m
----------------------------------------------------- ----- -------------- --------------
Net gearing 0.50x 0.45x
------------------------------------------------ ------ ----------------------------------------------------- ----- -------------- --------------
Net Investment Returns is the total of interest income,
capital gains, dividend and other income less asset
Net Investment Returns impairments.
------------------------------------------------ ------ --------------------------------------------------------------------------------------------
Operating cashflow represents the cash generated from
operating activities from the statement of cashflows,
adjusted for the impact of the consolidated structured
Operating cashflow entities. See note 4 for a full reconciliation.
------------------------------------------------ ------ --------------------------------------------------------------------------------------------
Investment Company operating expenses are adjusted
for the impact of the consolidated structured entities.
Operating expenses of the Investment Company See note 4 for a full reconciliation.
------------------------------------------------ ------ --------------------------------------------------------------------------------------------
Fund Management Company profit before tax divided
by Fund Management Company total revenue. As at 31
Operating profit margin March this is calculated as follows:
------------------------------------------------ ------
2023 2022
------------------------------------------------ ------ ----------------------------------------------------- ----- -------------- --------------
Fund Management Company profit before tax GBP310.7m GBP286.2m
Fund Management Company total revenue GBP539.9m GBP512.8m
----------------------------------------------------- ----- -------------- --------------
Operating profit margin 57.5 % 55.8 %
------------------------------------------------------------ ------------------------------------------------------ -------------- --------------
Third Party AUM Value of all funds and assets managed by the Group
(including both invested and uninvested capital) on
which the Group earns, or has the potential to earn,
fees. During the investment period third-party AUM
is measured on the basis of committed capital. Once
outside the investment period, it is measured on the
basis of invested cost.
---------------------------------------------------------- -----------------------------------------------------------------------------------------
Third Party Fee Income Fees generated on fund management activities as reported
in the Fund Management Company including fees generated
by consolidated structured entities which are excluded
from the IFRS consolidation position. See note 4 for
a full reconciliation.
---------------------------------------------------------- -----------------------------------------------------------------------------------------
Total AUM Total AUM is calculated by adding Third Party AUM
and the value of the Balance Sheet Investment Portfolio,
excluding seed investments:
---------------------------------------------------------- -----------------------------------------------------------------------------------------
2023 2022
------------------------------------------------------------------------------------------------------------------- -------------- --------------
Third Party AUM $77.0bn $68.5bn
Balance Sheet Investment Portfolio (excluding seed $3.2bn $3.6bn
investments)
------------------------------------------------------------ ------------------------------------------------------ -------------- --------------
Total AUM $80.2bn $72.1bn
------------------------------------------------------------ ------------------------------------------------------ -------------- --------------
Total available liquidity Total available liquidity comprises unencumbered cash
and available undrawn debt facilities.
---------------------------------------------------------- -----------------------------------------------------------------------------------------
Total fund size Total fund size is the sum of third-party AUM and
ICG plc's commitment to that fund. The aggregate of
all total fund sizes is equal to Total AUM
---------------------------------------------------------- -----------------------------------------------------------------------------------------
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
Additions (of AUM) Within third-party AUM: the aggregate of new commitments
of capital by clients, and calls of capital from funds
that have previously had a step-down and are therefore
reflected in third-party AUM on a net invested capital
basis. Within third-party fee-earning AUM: the aggregate
of new commitments of capital by clients that pay
fees on committed capital, and deployment of capital
that charges fees on invested capital (including calls
of capital from funds that have previously had a step-down
and therefore charge fees on a net invested capital
basis).
---------------------- --------- ---------------------------------------------------------------
AIFMD The EU Alternative Investment Fund Managers Directive.
---------------------- --------- ---------------------------------------------------------------
Alternative APM These are non-IFRS financial measures.
performance measure
---------------------- --------- ---------------------------------------------------------------
CAGR Compound Annual Growth Rate
---------------------- --------- ---------------------------------------------------------------
Term Short Definition
Form
---------------------- --------- ---------------------------------------------------------------
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.
---------------------- --------- ---------------------------------------------------------------
Client base Client base includes all direct investment fund and
liquid credit fund investors.
Closed-end fund A fund where investor's commitments are fixed for
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 Loan CLO CLO is a type of investment grade security backed
Obligation by a pool of loans .
---------------------- --------- ---------------------------------------------------------------
Close A stage in fundraising whereby a fund is able to release
or draw down the capital contractually committed at
that date.
---------------------- --------- ---------------------------------------------------------------
Default An 'event of default' is defined as:
A company fails to make timely payment of principal
and/or interest under the contractual terms of any
financial obligation by the required payment date
A restructuring of the company's obligations as a
result of distressed circumstances
A company enters into bankruptcy or receivership
---------------------- --------- ---------------------------------------------------------------
Deal Vintage Bonus DVB awards are a long-term employee incentive, enabling
certain investment teams, excluding Executive Directors,
to share in the future realised profits from certain
investments within the Group's balance sheet portfolio.
---------------------- --------- ---------------------------------------------------------------
Direct investment Funds which invest in self-originated transactions
funds for which there is a low volume, illiquid secondary
market.
---------------------- --------- ---------------------------------------------------------------
DPI Distribution to Paid- In Capital
---------------------- --------- ---------------------------------------------------------------
Employee Benefit Trust EBT Special purpose vehicle used to purchase ICG plc shares
which are used to satisfy share options and awards
granted under the Group's employee share schemes.
---------------------- --------- ---------------------------------------------------------------
Environmental, Social ESG Environmental, social and governance (ESG) criteria
and Governance are a set of standards for a company's operations
criteria that socially conscious investors use to screen potential
investments.
---------------------- --------- ---------------------------------------------------------------
Financial Conduct FCA Regulates conduct by both retail and wholesale financial
Authority service companies in provision of services to consumers.
---------------------- --------- ---------------------------------------------------------------
Financial Reporting FRC The UK's independent regulator responsible for promoting
Council high quality corporate governance and reporting.
---------------------- --------- ---------------------------------------------------------------
Fund A pool of third-party capital allocated to a specific
investment strategy or strategies, managed by ICG
plc or its affiliates.
---------------------- --------- ---------------------------------------------------------------
Fund Management FMC The Group's fund management business, which sources
Company and manages investments on behalf of the IC and third-party
funds.
Fund level leverage Debt facilities utilised by funds to finance assets.
---------------------- --------- ---------------------------------------------------------------
Gross money on Gross Total realised and unrealised value of investments
invested capital MOIC (before deduction of any fees), divided by the total
invested cost.
---------------------- --------- ---------------------------------------------------------------
HMRC HM Revenue & Customs, the UK tax authority.
---------------------- --------- ---------------------------------------------------------------
IAS International Accounting Standards.
---------------------- --------- ---------------------------------------------------------------
IFRS International Financial Reporting Standards as adopted
by the United Kingdom.
---------------------- --------- ---------------------------------------------------------------
Illiquid assets Asset classes which are not actively traded.
Investment Company IC The Investment Company invests the Group's balance
sheet to seed and accelerate emerging strategies,
and invests alongside the Group's more established
funds to align interests between the Group's client,
employees and shareholders. It also supports a number
of costs including for certain central functions,
a part of the Executive Directors' compensation and
the portion of the investment teams' compensation
linked to the returns of the balance sheet investment
portfolio.
---------------------- --------- ---------------------------------------------------------------
Internal Rate of IRR The annualised return received by an investor in a
Return fund. It is calculated from cash drawn from and returned
to the investor together with the residual value of
the asset.
---------------------- --------- ---------------------------------------------------------------
LTM EBITDA Last twelve month's earning before interest, tax,
depreciation and amortisation
---------------------- --------- ---------------------------------------------------------------
Key Person Certain funds have a designated Key Person. The departure
of a Key Person without adequate replacement triggers
a contractual right for investors to cancel their
commitments or kick-out of the Group as fund manager.
----------------------
Key performance KPI A business metric used to evaluate factors that are
indicator crucial to the success of an organisation.
---------------------- --------- ---------------------------------------------------------------
Key risk indicator KRI A measure used to indicate how risky an activity is.
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.
---------------------- --------- ---------------------------------------------------------------
Money multiple MOIC or Cumulative returns divided by original capital invested.
MM
Term Short Definition
Form
---------------------- --------- ---------------------------------------------------------------
Net currency assets Net assets excluding certain items including; trade
and other receivables, trade and other payables, property
plant and equipment, cash balances held by the Group's
fund management entities, derivative financial assets
and liabilities on management fee FX hedges, and current
and deferred tax assets and liabilities.
---------------------- --------- ---------------------------------------------------------------
Open-ended fund A fund which remains open to new commitments and where
an investor's commitment may be redeemed with appropriate
notice.
---------------------- --------- ---------------------------------------------------------------
Payment in kind PIK Also known as rolled-up interest. PIK is the interest
accruing on a loan until maturity or refinancing,
without any cashflows until that time.
---------------------- --------- ---------------------------------------------------------------
Performance fees Carried Share of profits that the fund manager is due once
interest it has returned the cost of investment and agreed
or Carry preferred return to investors.
---------------------- --------- ---------------------------------------------------------------
Realisation The return of invested capital in the form of principal,
rolled-up interest and/or capital gain.
---------------------- --------- ---------------------------------------------------------------
Realisations (of AUM) Reductions in AUM due to capital being returned to
investors and / or no longer able to be called by
the fund, and the reduction in AUM due to step-downs.
Recycle (of AUM) Where the fund is able to re-invest capital that has
previously been invested and then realised. This is
typically only within a defined period during the
fund's investment period and is generally subject
to certain requirements.
---------------------- --------- ---------------------------------------------------------------
Relevant investments Relevant investment includes all investments within
Structured and Private Equity and Real Assets where
ICG has significant influence.
RCF Revolving credit facility
---------------------- --------- ---------------------------------------------------------------
Step-down/ Step-up A reduction in AUM resulting from the end of the investment
period in an existing fund or when a subsequent fund
starts to invest. Funds that charge fees on committed
capital during the investment period will normally
shift to charging fees on net invested capital post
step-down. There is generally the ability to continue
to call further capital from funds that have had a
step-down in certain circumstances. In this instance,
fees will be earned on that invested capital and it
will be added to AUM through Additions and this is
termed as step-up.
---------------------- --------- ---------------------------------------------------------------
Sustainable Accounting SASB The Sustainability Accounting Standards Board is an
Standards Board independent non-profit organisation that sets standards
to guide the disclosure of financially material sustainability
information by companies to their investors.
---------------------- --------- ---------------------------------------------------------------
Securitisation A form of financial structuring whereby a pool of
assets is used as security (collateral) for the issue
of new financial instruments.
---------------------- --------- ---------------------------------------------------------------
SFDR Sustainable Finance Disclosure Regulation
---------------------- --------- ---------------------------------------------------------------
Separately Managed SMA Third-party capital committed by a single investor
Account allocated to a specific investment strategy or strategies,
managed by ICG plc or its affiliates.
---------------------- --------- ---------------------------------------------------------------
Science Based Targets SBTi The Science Based Targets initiative helps drives
initiative climate action in the private sector by approving
and validating companies' science-based emissions
reduction targets (SBT).
---------------------- --------- ---------------------------------------------------------------
Structured entities Entities which are classified as investment funds,
credit funds or CLOs and are deemed to be controlled
by the Group, through its interests in either an investment,
loan, fee receivable, guarantee or commitment. These
entities can also be interchangeably referred to as
credit funds.
---------------------- --------- ---------------------------------------------------------------
TCFD Task Force on Climate-related Financial Disclosures
---------------------- --------- ---------------------------------------------------------------
Term Short Definition
Form
---------------------- --------- ---------------------------------------------------------------
Total AUM The aggregate of the Third Party AUM and the Balance
Sheet investment portfolio.
---------------------- --------- ---------------------------------------------------------------
UK Corporate The Code Sets out standards of good practice in relation to
Governance Code board leadership and effectiveness, remuneration,
accountability and relations with shareholders.
---------------------- --------- ---------------------------------------------------------------
UNPRI UN Principles for Responsible Investing.
---------------------- --------- ---------------------------------------------------------------
Weighted average An average in which each quantity to be averaged is
assigned a weight. These weightings determine the
relative importance of each quantity on the average.
---------------------- --------- ---------------------------------------------------------------
Seed investments Investments within the balance sheet investment portfolio
(previously warehoused that the Group anticipates transferring to a fund
investments) in due course, typically made where the Group is seeding
new strategies in anticipation of raising a fund.
---------------------- --------- ---------------------------------------------------------------
(1) Including the proposed final dividend of 52.2p for the year ending 31 March 2023
(2) Europe VIII ($8.3bn), Asia Pacific IV ($0.9bn), Strategic Equity IV ($4.0bn)
(3) Includes the impact of a policy change in FY23 which increased third-party AUM by $3.1bn and fee-earning AUM by $0.5bn - see page 8
(3) Return achieved on full realisations, weighted on original invested cost
(4)
(END) Dow Jones Newswires
May 25, 2023 02:00 ET (06:00 GMT)
Copyright (c) 2023 Dow Jones & Company, Inc.
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