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ICG: Interim Results Statement for the six months ended 30 September 2021

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16 November 2021

Interim Results Statement for the six months ended 30 September 2021


Record fundraising and multiple drivers of future compounding growth

Highlights

Note: unless otherwise stated the financial results discussed herein are on the basis of Alternative Performance Measures - see page 2

Benoît Durteste

CEO and CIO

This has been a record period for ICG on a number of levels, continuing the strong momentum of H2 FY21 and delivering progress against all three of our strategic priorities encompassing fundraising, deployment and realisations. We anticipated the first half would be strong, and it has exceeded our expectations.

Fundraising has been remarkable: we have raised more in six months than in any full year in the history of ICG. Notably it has been across both established and emerging strategies, evidencing the breadth of our embedded growth opportunities. We have also attracted a substantial number of new clients during the period across a range of established and emerging strategies.

I am delighted that we continue to help lead our industry on sustainability, with our commitment to net zero by 2040 supported by approved and validated science-based targets for reductions in greenhouse gas emissions by 2030.

Looking ahead, activity levels across our business remain high. Our performance demonstrates our multiple drivers of compounding growth, and gives us further confidence in our medium-term guidance. As we raise successor vintages of current strategies and expand our product offering, our visible and long-term third-party fee income on a growing base of AUM is poised to increase meaningfully over the next several years.


PERFORMANCE OVERVIEW

The Board and management monitor the financial performance of the Group on the basis of alternative performance measures (APM), which are non-IFRS measures. An explanation of these measures can be found on page 6 and a reconciliation of the APM to the IFRS measures, along with the IFRS condensed consolidated financial statements and supporting notes, can be found on pages 19 to 46.

The Group’s profit after tax on an IFRS basis was above the prior period at £242.4m (H1 FY21 £192.8m). On the APM basis it was also above the prior period at £240.7m (H1 FY21 £183.9m).

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.

Third-party AUM activity for the period

30 September 2021
(Unaudited)

30 September 2020
(Unaudited)

Change

31 March 2021

Third-party AUM at period end

$65,349m

$51,198m

28

%

$56,152m

Third-party fee-earning AUM at period end

$55,647m

$43,483m

28

%

$46,729m

Third-party AUM additions during period

$14,557m

$2,993m

386

%

$10,624m

Third-party AUM realisations during period

$4,793m

$1,130m

324

%

$4,593m

Third-party AUM deployed during period 1

$8,417m

$2,411m

249

%

$7,221m

1 From direct investment funds

Financial results

Six months ended
30 September 2021
(Unaudited)

Six months ended
30 September 2020
(Unaudited)

Change

12 months ended
31 March 2021
(Audited)

Third-party fee income

£199.0m

£154.2m

29

%

£333.7m

Fund Management Company profit before tax

£120.9m

£89.8m

35

%

£202.3m

Investment Company profit before tax

£143.8m

£103.0m

40

%

£305.4m

Group profit before tax

£264.7m

£192.8m

37

%

£507.7m

Group earnings per share

83.9p

64.6p

30

%

162.3p

Dividend per share

18.7p

17.0p

10

%

56.0p

Balance sheet investment portfolio

£2,732.0m

£2,208.3m

24

%

£2,556.4m

Net asset value per share

609p

488p

25

%

566p

Net gearing

0.63x

0.67x

(0.04)x

0.63x

Last 12 months

12 months ended
30 September 2021
(Unaudited)

12 months ended
30 September 2020
(Unaudited)

Change

12 months ended
31 March 2021
(Audited)

Third-party AUM additions

$22,264m

$9,083m

Third-party AUM realisations

$9,959m

$2,618m

Third-party AUM deployed1

$13,283m

$6,119m

Third-party fee income

£378.5m

£296.4m

28

%

£333.7m

Fund Management Company profit before tax

£233.4m

£187.9m

24

%

£202.3m

1 From direct investment funds

COMPANY PRESENTATION

A presentation for investors and analysts will be held at 09:00 GMT today on our website via the link on Results Centre FY22 (icgam.com).

A recording of the presentation will be available on demand at Results Centre FY22 (icgam.com) later in the day.

ENQUIRIES

Shareholder / analyst enquiries:

Vijay Bharadia, CFOO, ICG: +44(0)20 3545 2000

Chris Hunt, Head of Shareholder Relations, ICG: +44(0)20 3545 2020

Media enquiries:

Fiona Laffan, Global Head of Corporate Affairs, ICG: +44(0)20 3545 1510

This results statement has been prepared solely to provide additional information to shareholders and meets the relevant requirements of the UK Listing Authority’s Disclosure and Transparency Rules. The results statement should not be relied on by any other party or for any other purpose.

This results statement may contain forward looking statements. These statements have been made by the Directors in good faith based on the information available to them up to the time of their approval of this report and should be treated with caution due to the inherent uncertainties, including both economic and business risk factors, underlying such forward looking information.

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 $69bn 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. You can follow ICG on LinkedIn.

CHIEF EXECUTIVE OFFICER’S REVIEW

Our product breadth, global footprint, client relationships and brand strength have enabled ICG to perform very strongly, and the momentum we enjoyed in the second half of FY21 has continued into this period. We have made clear progress across our three strategic objectives encompassing fundraising, deployment and realisations:

  • “Grow AUM”: record $13.8bn third-party AUM raised, bringing total third-party AUM to $65.3bn

  • “Invest”: record $8.4bn third-party AUM deployed from our direct investment funds

  • “Manage and realise”: continued value creation within our portfolio and record realisations of $4.8bn

We are delivering on our growth strategy: during the period we launched our flagship strategy Europe VIII, made seed investments totalling £116m on behalf of strategies that we expect to launch in future, and continued to raise capital in all four of our asset classes. The appeal of our strategies is underlined by the growth of our client base, which grew by 14% during the period, and at 30 September 2021 stood at 542 (31 March 2021: 476). We attracted new clients across both our established and first-time strategies.

As anticipated, fundraising for the year has been front-loaded and the shape of fundraising exemplifies how our platform can grow existing strategies and successfully bring new strategies to market. In absolute terms, fundraising has been driven by Europe VIII, which raised $6.8bn. This vintage is already 42% larger than its predecessor and is continuing to raise capital. First-time strategies have also had an impressive performance: Sale and Leaseback I had its final close at $1.3bn of third-party capital. Infrastructure Equity I now has $0.7bn of third-party commitments and is continuing to fundraise.

At the end of the period we managed $65.3bn of third-party AUM: double the amount we managed at 31 March 2018 and an increase of 28% in the last 12 months.

Our local footprint, ability to source opportunities and provide flexible financing solutions across the capital structure have enabled us to deploy $8.4bn1 of our clients’ capital during the period. We remain disciplined given the macro environment, and during the period we took advantage of strong markets to realise $3.5bn1 of third-party fee-earning AUM. Strong deployment and realisation activities underpin our future fundraising cycles and increased fund sizes.

As well as providing capital and expertise to help companies develop and grow, we have an important role in the areas of sustainability and people. Our initiatives here are integral to our future growth, and in particular the integration of sustainability into our existing and new strategies is fundamental to how we market them to our clients and how they implement their investment objectives. This is true across all our asset classes and we take a nuanced approach reflecting the various degrees of influence we have across our portfolio.

After the end of the period we committed to reach net zero greenhouse gas emissions by 2040 across our operations and relevant investments2. This commitment is supported by ambitious emissions reduction targets which cover 100% of our relevant investments2 and which have been approved and validated by the Science Based Targets initiative. We are part of a small group leading the way in our industry in this field.

These factors have culminated in strong financial performance, with third-party fee income of £199.0m, up 29% compared to H1 FY21 and driving Fund Management Company profit before tax of £120.9m, up 35% compared to H1 FY21. We have declared an interim dividend of 18.7p per share, in line with our policy of paying a third of the prior full year dividend. The continued value creation in our third-party funds also benefits shareholders through the 18.0% net investment return the Investment Company reported for the period.

Looking ahead, we have a broad platform, a powerful client franchise, a strong origination capability and a track record of managing our portfolios to generate value for our clients. These qualities have enabled us to successfully navigate periods of evolving and dynamic market conditions in the past, and I believe we are well positioned to continue to do so. As we raise successor vintages of current strategies and expand our product offering, our highly predictable and long-term third-party fee income on a growing base of AUM is poised to increase meaningfully over the next several years.

Benoît Durteste

SUSTAINABILITY AND PEOPLE

It has been a busy time for our colleagues given the level of activity across the business, and we continue to focus on our employees' physical and mental well-being. The number of Group permanent employees grew by 8% during the period to 508 (31 March 2021: 470). Hiring was broad-based across our investment, marketing and client relations, and corporate and business services teams. The investments we have been making in our people in recent years are meaningful, and our ability to successfully attract new colleagues highlights the appeal of ICG as a place to work and our growing reputation in the market. We will continue to invest selectively in our people across all parts of the business to ensure we are able to execute on our strategy.

We have also continued to make progress against our Diversity and Inclusion (D&I) and broader people objectives. We launched two new employee networks during the period; increased direct engagement with our staff; continued to progress our efforts around inclusion; held insight days into our industry for female students; and welcomed several interns this summer in partnership with the 10,000 Black Interns program and Seize Every Opportunity initiative. As a sponsor of these final two programmes, we will continue to provide opportunities for diverse young talent, and thereby also ensure that we are able to attract, retain and develop the very best people, irrespective of background.

From a responsible investing perspective, Europe VIII launched during the period with an enhanced ESG engagement strategy. The fund is taking a thematic approach, with a particular emphasis on climate change, human capital management and D&I. These topics are consistent with our broader areas of focus, and will feed directly into portfolio company governance, performance tracking and reporting.

Building on the £550m ESG-linked RCF into which we entered during the last financial year, we continued to innovate around ESG financing. We agreed ESG-linked fund facilities for Europe VIII and for Real Estate Partnership Capital VI during the period:

  • For Europe VIII, the price of the fund facility is linked to two metrics: the percentage of eligible portfolio companies that satisfy the climate change KPIs; and the percentage of eligible portfolio companies that satisfy engagement KPIs; and

  • For Real Estate Partnership Capital VI, the fund operates under a green loan framework to the real estate sector to support environmentally sustainable economic activity for developments, major refurbishments and operational investments. The price of the fund facility is linked to achieving annually one of two KPIs: either a) >50% of the AUM falling under the Fund’s green loan framework; or b) >50% of underlying AUM being invested in buildings constructed to an externally-verified green building certification of at least “Very Good” (or equivalent).

Post period-end we committed to reach net zero greenhouse gas emissions by 2040 across our operations and relevant investments. This commitment is supported by two ambitious emissions reduction targets, which have been approved and validated by the Science Based Targets initiative (SBTi):

  • Ensure 100% of relevant investments3 have SBTi-approved targets by 2030, with an interim target of 50% by 2026; and

  • Reduce ICG’s direct (Scope 1 and 2) emissions by 80% by 2030 from a 2020 base year.

We will systematically monitor progress and will report annually against our targets in our Annual Report and on our website. More details on our net zero commitments and how they will be implemented can be found in our Sustainability and People report, which we will publish in due course.

We will be holding a shareholder seminar on Sustainability and People following our Q3 results on 27 January 2022. We invite you to sign-up here.

FINANCE AND OPERATING REVIEW

The Board and management monitor the financial performance of the Group on the basis of Alternative Performance Measures (APM), which are non-IFRS measures. The APM form the basis of the financial results discussed in this review, which the Board believes assists shareholders in assessing their investment and the delivery of the Group’s strategy through its financial performance.

The substantive difference between APM and IFRS is the consolidation of funds and related entities deemed to be controlled by the Group, which are included in the IFRS condensed consolidated financial statements but excluded for the APM.

Under IFRS, 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 condensed consolidated statement of financial position and recognising the related income and expenses of these entities in the condensed consolidated income statement.

The Group’s profit after tax on an IFRS basis was above the prior period at £242.4m (H1 FY21 £192.8m). On the APM basis it was also above the prior period at £240.7m (H1 FY21 £183.9m).

Detail of these adjustments can be found in note 3 to the IFRS condensed consolidated financial statements on pages 19 to 46.

AUM and fund performance

On 8 September 2021 we announced that we were updating our asset classes for the purposes of financial reporting. The new reporting structure more accurately reflects the business and operations of ICG. The presentation of our third-party AUM and third-party fee-earning AUM in this report is on the basis of these new asset classes. Bridges for third-party AUM and third-party fee-earning AUM for H1 FY21 are in the data pack released with this announcement.

Third-party AUM

Third-party AUM grew 16%, or $9.2bn, since 31 March 2021 to $65.3bn. This growth was primarily driven by Structured and Private Equity, which accounted for $7.2bn of the increase.

In aggregate we raised $13.8bn of third-party AUM across 14 strategies during the period. Additions to third-party AUM also include $0.8bn of capital that we have called during the period from vintages of funds that have previously had a step-down and are therefore reflected in third-party AUM on a net invested cost basis. This brings total additions to our third-party AUM during the period to $14.6bn. We realised $4.8bn, and also recognised an AUM reduction of $(0.6)bn through a combination of FX ($(0.8)bn) and other market movements ($0.2bn).

At 30 September 2021 we had $17.8bn of third-party AUM available to deploy in new investments, $9.7bn of which is not yet paying fees but will do so when the capital is invested or enters its investment period.

Third-party AUM ($m)

Structured and Private Equity

Private Debt

Real Assets

Credit

Total third-party AUM

At 1 April 2021

14,548

17,289

6,317

17,998

56,152

Additions

9,104

1,992

853

2,608

14,557

Realisations

(1,643)

(431)

(120)

(2,599)

(4,793)

FX and other

(221)

(290)

(38)

(18)

(567)

At 30 September 2021

21,788

18,560

7,012

17,989

65,349

Change $m

7,240

1,271

695

(9)

9,197

Change %

50

%

7

%

11

%

%

16

%

Change % (constant exchange rate)¹

51

%

9

%

13

%

1

%

18

%

1Please see page 15 for an explanation of constant exchange rate calculation methodology

Structured and Private Equity
Structured and Private Equity third-party AUM increased by 50% since 1 April 2021 to $21.8bn, with $9.1bn of third-party AUM added during the period. Europe VIII was the single largest contributor, attracting $6.8bn (€5.7bn) of third-party AUM and an associated fee-paying continuation vehicle contributing a further $0.8bn. This vintage is already 42% larger than its predecessor and fundraising is continuing. Strategic Equity raised $0.6bn for Strategic Equity IV as well as fee-paying co-investments associated with the Strategic Equity strategy ($0.3bn). Additions also included $0.6bn of capital that we called during the period from vintages of funds that have previously had a step-down. Realisations in the period were largely from Europe V and Europe VI, funds that started their investment periods in September 2011 and March 2015 respectively.

Private Debt
Private Debt third-party AUM increased by 7% since 1 April 2021 to $18.6bn, with $1.9bn of third-party AUM raised. $1.8bn was raised by Senior Debt Partners IV and associated mandates. The co-mingled fund for Senior Debt Partners IV held its final close in April 2021, although the strategy has the ability to raise SMAs on an ongoing basis. The remainder was raised by Australian Senior Loans. Additions also included $0.1bn of capital that we called during the period from vintages of funds that have previously had a step-down. Realisations were limited during the period, and largely from Senior Debt Partners II and Senior Debt Partners III. These funds started their investment periods in March 2015 and December 2017 respectively.

Real Assets
Real Assets’ third-party AUM increased by 11% since 1 April 2021 to $7.0bn, with $834m of third-party AUM raised. Sale and Leaseback I was the single largest contributor, raising $476m during the period. This strategy, which was launched in 2019, had its final close on 28 September 2021, bringing its total third-party AUM to $1.3bn – an exceptional fundraise for a first time fund and closing at a level above its original hard cap. The remainder of the fundraising for this asset class was from Infrastructure Equity I (which raised $185m) and two Real Estate Debt strategies (which together raised a further $173m). The remaining $19m of additions related to capital that we called during the period from vintages of funds that have previously had a step-down. Realisations in the period were limited and occurred within certain of our real estate debt funds whose investment periods started in or before February 2015.

Credit
Credit third-party AUM was flat at $18.0bn. A total of $2.6bn was raised in the asset class, of which $0.4bn was in liquid funds and $2.2bn was in CLOs. Within CLOs, we raised one new European CLO, accounting for $0.4bn of fundraising. We also took advantage of attractive market conditions by amending the terms of five existing CLOs to extend the duration of our management fees and lock-in enhanced future returns; two in Europe and three in the US. These CLO amendments accounted for $1.8bn of fundraising and realisations within Credit, with the remainder of realisations due to a small number of redemptions.

Third-party fee-earning AUM

Third-party fee-earning AUM grew 19%, or $8.9bn, to $55.6bn.

Additions to third-party fee-earning AUM totalled $15.3bn. We realised $6.1bn of investments within our third-party fee-earning AUM during the period: of this, $1.3bn remains committed from our clients and available for ICG to deploy in new opportunities. The net result was that $4.8bn of third-party fee-earning AUM was realised during the period and no longer counted within our third-party AUM. We also recognised an AUM reduction of $(0.3)bn through FX and other movements.

Third-party fee-earning AUM ($m)

Structured and Private Equity



Private Debt

Real Assets

Credit

Total third-party
fee-earning AUM

At 1 April 2021

13,878

10,315

5,331

17,205

46,729

Additions

8,995

2,403

1,333

2,566

15,297

Realisations

(1,704)

(1,558)

(268)

(2,599)

(6,129)

FX and other

(47)

(111)

(127)

35

(250)

At 30 September 2021

21,122

11,049

6,269

17,207

55,647

Change $m

7,244

734

938

2

8,918

Change %

52

%

7

%

18

%

%

19

%

Change % (constant exchange rate)¹

54

%

8

%

20

%

1

%

20

%

1Please see page 15 for an explanation of constant exchange rate calculation methodology

Fund deployment levels of key ICG funds

Deployment levels are lead indicators of our potential fundraising timetable. The deployment rate for funds that charge fees on invested capital also has an impact on our profitability.

During the period we deployed a total of $8.4bn third-party capital on behalf of our direct investment funds (H1 FY21: $2.4bn). We saw strong levels of deployment in both our Structured and Private Equity and Private Debt asset classes.

The table below details the deployment levels for funds whose fundraising cycle is dependent on the deployment level of the current vintage:

$m unless otherwise stated

Third-party AUM at 30 September 2021

Third-party capital deployed during H1 FY22

Total third-party capital deployed at 30 September 2021

%age deployed at 30 September 2021

Fees charged on committed capital

Structured and Private Equity

Europe VIII¹

6,595

1,039

1,039

15%

Asia Pacific IV¹

425

49

196

46%

Europe Mid-Market

1,033

292

522

50%

Strategic Equity IV¹

1,823

1,149

1,149

63%

Real Assets

Infrastructure Equity I¹

723

7

259

37%

Sale and Leaseback I

1,266

348

702

51%

Fees charged on invested capital

Private Debt

North American Private Debt II

1,200

46

658

54

%

Senior Debt Partners IV

5,586

1,202

2,907

50

%

Real Assets

Real Estate Partnership Capital V

1,250

332

963

77

%

Real Estate Partnership Capital VI¹

354

81

81

23

%

1 Fund was continuing to raise third-party AUM at period-end; percentage deployed is shown as a proportion of third-party AUM at 30 September 2021
Note: co-mingled fund, excluding mandates and undrawn commitments for all funds. % deployed calculated in underlying fund currency

In addition to the funds in the table above, $3.9bn was deployed across a range of other vehicles.

Gross MOIC of key ICG funds

Our clients entrust their capital with us to make attractive risk-adjusted returns over the life of the investments, and in line with the strategy of the funds in which they invest. Gross MOIC (Multiple of Invested Capital) is an indication of the returns our funds have made before fees, including both realised and unrealised returns, and therefore the value that we have created. The target MOIC will vary between strategies and within strategies, and newer vintages with more recent investments will typically have a lower MOIC as the investments have not had time to grow in value.

We saw particularly strong value creation in a number of funds within Structured and Private Equity, most notably Strategic Equity III and Asia Pacific III. As expected, our Private Debt strategies and debt strategies within Real Assets show a lower level of movement between periods. Equity funds within Real Assets (Sale and Leaseback I and Infrastructure Equity I) are at early stages of their fund lives and are showing attractive value creation at this point in time. The Gross MOIC of key ICG funds is set out below:

Investment period started

30 September 2021

31 March 2021

Structured and Private Equity

Europe V

September 2011

1.8x

1.8x

Europe VI

March 2015

2.0x

1.9x

Europe VII

April 2018

1.5x

1.5x

Europe Mid-Market I

May 2019

1.2x

1.1x

Asia Pacific III

July 2014

2.0x

1.7x

Asia Pacific IV

February 2020

1.3x

1.2x

Strategic Secondaries II1

March 2016

1.8x

1.8x

Strategic Equity III1

November 2018

1.7x

1.5x

Private Debt

Senior Debt Partners II

March 2015

1.3x

1.2x

Senior Debt Partners III

December 2017

1.2x

1.2x

Senior Debt Partners IV

January 2020

1.1x

1.1x

North America Private Debt I

June 2014

1.4x

1.4x

North America Private Debt II

January 2019

1.2x

1.2x

Real Assets

Real Estate Partnership Capital III

December 2012

1.4x

1.4x

Real Estate Partnership Capital IV

February 2015

1.3x

1.3x

Real Estate Partnership Capital V

April 2018

1.4x

1.4x

Infrastructure Equity I

March 2020

1.2x

1.1x

Sale & Leaseback I

September 2019

1.1x

1.0x

1 Strategic Equity data reported as at 30 June 2021
Note: co-mingled fund, excluding mandates and undrawn commitments for all funds

Overview: Group financial performance

Third-party fee income grew 29% to £199.0m, driving a 32% increase in our Fund Management Company (FMC) revenue to £231.7m. The FMC operating margin was 52.2% (H1 FY21: 51.1%), resulting in FMC profit before tax of £120.9m, an increase of 35% compared to H1 FY21.

Strong performance of our funds led to a significant net investment return (NIR) for the Investment Company (IC) of £237.9m, driven by strong performance in particular within Structured and Private Equity. The increase in NIR compared to H1 FY21 resulted in a significant increase in profit before tax of the IC (£143.8m compared to £103.0m in H1 FY21).

The strong performance of the FMC along with the exceptional performance of the IC resulted in a Group profit before tax of £264.7m (H1 FY21: £192.8m).

Group earnings per share grew by 30% to 83.9p (H1 FY21: 64.6p).

We remain committed to our progressive dividend policy. In line with our stated policy that the interim dividend will equate to a third of the prior-year total, the Board has approved an interim dividend of 18.7p, an increase of 10% on the previous year. We continue to make the dividend reinvestment plan available.

Our balance sheet remains strong and well capitalised, with net gearing of 0.63x, total available liquidity of £703.6m and a net asset value per share of 609p.

£m unless stated

Six months ended 30 September 2021 (Unaudited)

Six months ended 30 September 2020 (Unaudited)

Change
%

Third-party management fees

180.5

138.7

30

%

Third-party performance fees

18.5

15.5

19

%

Third-party fee income

199.0

154.2

29

%

Other income

32.7

21.7

51

%

Fund Management Company revenue

231.7

175.9

32

%

Fund Management Company operating expenses

(110.8)

(86.1)

29

%

Fund Management Company profit before tax

120.9

89.8

35

%

Fund Management Company operating margin

52.2

%

51.1

%

(1

%)

Investment Company revenue

224.1

169.2

32

%

Investment Company operating expenses

(55.4)

(35.8)

55

%

Interest expense

(24.9)

(30.5)

(18

%)

Investment Company profit before tax

143.8

103.0

40

%

Group profit before tax

264.7

192.8

37

%

Tax

(24.0)

(8.9)

(170

%)

Group profit after tax

240.7

183.9

31

%

Earnings per share

83.9p

64.6p

30

%

Dividend per share

18.7p

17.0p

10

%

Net gearing

0.63x

0.67x

(0.04)x

Net asset value per share

609p

488p

25

%

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.

During the period the FMC generated profit before tax of £120.9m (H1 FY21: £89.8m).

Third-party fee income

Third-party fee income grew 29% to £199.0m in the period (H1 FY21: £154.2m), with increases across all asset classes.

Our third-party fee income is largely comprised of management fees, which have a high degree of visibility. Performance fees are a small but integral part of our revenue, and during the five years to 31 March 2021 accounted for an average of 11.6% of our third-party fee income. In this period performance fees totalled £18.5m (H1 FY21: £15.5m) and accounted for 9.3% (H1 FY21: 10.1%) of our third-party fee income. The weighted average fee rate, excluding performance fees, across our third-party fee-earning AUM was broadly in line with FY21.

£m

Six months ended 30 September 2021

Six months ended 30
September 2020

Change
%

Structured and Private Equity – management fees

94.7

69.0

37%

Structured and Private Equity – performance fees

16.7

12.9

29%

Structured and Private Equity

111.4

81.9

36%

Private Debt – management fees

25.7

23.6

9%

Private Debt – performance fees

0.1

1.6

(94)%

Private Debt

25.8

25.2

2%

Real Assets – management fees

27.1

17.0

59%

Real Assets – performance fees

n/m

Real Assets

27.1

17.0

59%

Credit – management fees

33.0

29.1

13%

Credit – performance fees

1.7

1.0

70%

Credit

34.7

30.1

15%

Third-party fee income

199.0

154.2

29

%

Of which management fees

180.5

138.7

30%

Of which performance fees

18.5

15.5

19%

Structured and Private Equity

Structured and Private Equity management fees increased largely due to fundraising for Europe VIII and Strategic Equity IV. Performance fees were largely driven by our flagship Europe strategy and ICG Enterprise Trust.

Private Debt

Private Debt management fees increased largely due to the continued deployment of capital for Senior Debt Partners IV and associated mandates.

Real Assets

Real Assets management fees increased largely due to fundraising for Sale and Leaseback I and Infrastructure Equity I, both of which charge fees on committed capital. Of the increase, £8.2m relate to catch-up fees generated as a result of both these funds holding their first close in FY20. These are not expected to repeat in FY23.

Credit

Within Credit, the increase in management fees was largely due to fundraising for our liquid credit strategies.

Other income

The FMC recorded dividend receipts of £20.2m (H1 FY21: £11.7m) from investments in CLO equity, which have continued to perform strongly in a favourable market environment.

Revenue of £12.5m was recognised in the FMC for managing the IC balance sheet investment portfolio (H1 FY21: £10.0m).

Operating expenses and margin
Operating expenses of the FMC were £110.8m (H1 FY21: £86.1m). The increase was driven by employee-related expenses due to the full year impact of hires made in FY21 and new hires made so far in FY22. We have hired across the business, ensuring that we have the platform to continue to execute on our growth ambitions. The remainder of the increase in operating expenses was predominantly third-party consulting and advisory fees to support the growth of our business and the ongoing enhancement of our support functions.

FMC operating expenses
(£m)

Six months ended 30 September 2021

Six months ended 30 September 2020

Change
%

Salaries

37.6

30.3

24%

Incentive scheme costs

44.6

33.9

32%

Administrative costs

24.6

19.1

29%

Depreciation and amortisation

4.0

2.8

43%

FMC operating expenses

110.8

86.1

29%

FMC operating margin

52.2

%

51.1

%

The FMC therefore recorded a profit before tax of £120.9m (H1 FY21: £89.8m) and an operating margin of 52.2% (H1 FY21: 51.1%).

Investment Company

The IC invests the Group’s proprietary capital to seed and accelerate emerging strategies, and invests alongside the Group’s more established funds to align interests between our clients, 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 (Deal Vintage Bonus, or DVB).

Balance sheet investment portfolio

The balance sheet investment portfolio (excluding warehoused investments) has increased 5% since 31 March 2021 to £2,605.5m at 30 September 2021. This is equivalent to $3,511m, resulting in total AUM for the Group of $68,860m (31 March 2021: $59,586m), of which the balance sheet investment portfolio accounted for 5.1% (31 March 2021: 5.8%).

The increase in the balance sheet investment portfolio (excluding warehoused assets) was due to £206.6m of unrealised gains, driven by the strong value creation in the funds within Structured and Private Equity alongside which the balance sheet is invested. Net investments during the period totalled £(135.7)m, comprising new investments of £429.7m and realisations of £565.4m.

In addition, at 30 September 2021 the balance sheet had £126.5m (31 March 2021: £64.6m) of investments that it is warehousing in anticipation of transferring the investments to a third-party fund once the relevant fund has had a first close. Within the warehoused assets, we made new investments of £149.0m during the period including £115.7m of seed investments on behalf of new strategies. This was partially offset by realisations of £100.5m, as we transferred various warehoused assets into third-party funds.

FX and other movements of £48.0m included £23.0m of accrued interest income, and an increase of £25.0m in the Sterling value of the portfolio as a result of FX movements due to the Euro and US dollar strengthening against Sterling during the period. The balance sheet investment portfolio is 47% Euro denominated, 28% US dollar denominated and 18% Sterling denominated.

The total value of the balance sheet investment portfolio at 30 September 2021 was £2,732.0m (31 March 2021: £2,556.4m).

£m

As at
31 March 2021

New
investments

Realisations

Unrealised gains/
(losses)

FX & Other

As at
30 September 2021

Structured and Private Equity

1,564.6

313.8

(444.1)

193.3

25.5

1,653.1

Private Debt

158.8

10.3

(32.2)

9.4

6.4

152.7

Real Assets

303.6

45.4

(43.9)

(1.8)

1.7

305.0

Credit1

464.8

60.2

(45.2)

5.7

9.2

494.7

Total balance sheet investment portfolio (excluding warehoused investments)

2,491.8

429.7

(565.4)

206.6

42.8

2,605.5

Warehoused investments

64.6

149.0

(100.5)

8.2

5.2

126.5

Total balance sheet investment portfolio (including warehoused investments)

2,556.4

578.7

(665.9)

214.8

48.0

2,732.0

1 Within Credit, at 30 September 2021 £190.7m was invested in liquid strategies, with the remaining £304.0m invested in CLO debt (£124.0m) and equity (£180.0m)

Net Investment Return

NIR of £237.9m (H1 FY21: £186.6m) was primarily driven by Structured and Private Equity, and was split by asset class on an absolute basis as follows:

£m

Six months ended
30 September 2021

Six months ended
30 September 2020

Change
%

Structured and Private Equity

207.7

150.9

38

%

Private Debt

14.0

10.2

37

%

Real Assets

(1.0)

7.6

(113

%)

Credit

7.0

17.9

(61

%)

Total net investment returns
(excluding warehoused investments)

227.7

186.6

22

%

Warehoused investments

10.2

%

Total net investment returns
(including warehoused investments)

237.9

186.6

27

%

This translated into the following NIR as a percentage of the average balance sheet investment portfolio:

£m

Balance sheet
investment
portfolio at 30
September 2021

H1 FY22 average
balance sheet
investment
portfolio

Target return
profile
%

H1 FY22 net
investment returns
%

Structured and Private Equity

1,653.1

1,608.9

~15%

26%

Private Debt

152.7

155.8

~8%

18%

Real Assets

305.0

304.3

~10%

(1)

%

Credit

494.7

479.8

~8%

3%

Total net investment returns
(excluding warehoused investments)

2,605.5

2,548.8

18%

Warehoused investments

126.5

95.6

n/a

21%

Total net investment returns
(including warehoused investments)

2,732.0

2,644.4

18%

Target return profiles by asset class should be viewed on a through-the cycle basis. During the five years to 31 March 2021, NIR has averaged 11.9%, in line with our medium-term guidance.

The NIR we experienced was driven by an exceptionally strong performance in Structured and Private Equity, which reported a 26% NIR in the period. The main contributors to that performance were our European Corporate, Asia Pacific and Strategic Equity strategies. The single largest contributors to the NIR within Structure and Private Equity in the period were either successful realisations or increases in valuations where we have visibility on an exit. As such, we do not expect this performance to recur. Performance across Private Debt, Real Assets and Credit was generally strong. Real Assets was negatively impacted by equalisation payments as we brought new investors into Sale and Leaseback I.

In addition to the NIR, the IC recorded other operating income of £1.9m, paid a fee of £12.5m (H1 FY21: £10.0m) to the FMC and recorded a fair value loss of £(3.2)m (H1 FY21: loss of £7.4m) in movements on derivatives (which are now being reported through the revenue line). This resulted in the IC recording revenues of £224.1m (H1 FY21: £169.2m).

Investment Company expenses

Operating expenses in the IC of £55.4m increased from £35.7m in H1 FY21. The increase is predominantly due to a £14.2m increase in incentive scheme costs, which were higher following the strong performance of certain investments within the balance sheet investment portfolio within the Group that are eligible for the DVB scheme. For more information on this scheme see our FY21 Annual Report. The growth in administrative costs was largely due to increased business development costs and investments in our support functions.

Employee costs for teams who do not yet have a third-party fund are allocated to the IC. Once those funds have a first close the costs of those teams are transferred to the Fund Management Company. For H1 FY22, the directly-attributable costs within the Investment Company for teams that have not had a first close of a third-party fund was £4.1m (H1 FY21: £1.5m).

IC operating expenses
(£m)

Six months ended 30 September 2021

Six months ended 30 September 2020

Change
%

Salaries

8.4

6.3

33%

Incentive scheme costs

38.4

24.2

59%

Administrative costs

7.3

4.1

78%

Depreciation and amortisation

1.3

1.1

18%

IC operating expenses

55.4

35.7

55%

Interest expense of £24.9m (H1 FY21: £30.5m) was £5.6m lower than the prior year due to a decrease in the average level of drawn debt in the period.

The IC therefore recorded a profit before tax of £143.8m (H1 FY21: £103.0m).

Group

Tax

The Group recognised a tax charge of £24.0m (H1 FY21: £8.9m), resulting in an effective tax rate for the period of 9.1% (H1 FY21: 2.5%). The increase in the effective tax rate compared to H1 FY21 is driven by the lower relative mix of IC returns benefiting from tax exemptions.

Net debt and liquidity

At 30 September 2021, the Group had net financial debt of £1,096.9m, total available liquidity of £703.6m, and net gearing of 0.63x.

Net financial debt increased slightly since 31 March 2021, from £1,027.2m to £1,096.9m, with cash reducing from £296.9m to £228.6m:

£m

Cash at 1 April 2021

296.9

Net cash generated by operating activities

62.8

Debt drawdown – RCF

75.0

Debt (repayment) – term debt

(96.0)

Dividend paid

(112.2)

FX and other

2.1

Cash at 30 September 2021

228.6

Available undrawn ESG-linked RCF

475.0

Cash and undrawn debt facilities (total available liquidity)

703.6

1Cash excludes £23.7m held in respect of agency services provided

The Group’s drawn debt is provided through a range of facilities. The weighted-average life of drawn debt at 30 September 2021 was 3.9 years, and the facilities are provided in a range of currencies (the Group hedges certain foreign currency exposures). All facilities, except the ESG-linked RCF, are fixed-rate instruments. Committed debt facilities in place at 30 September 2021 were as follows:

Currency

Drawn
£m

Undrawn
£m

Total
£m

Interest rate

Maturity

ESG-linked RCF

GBP

75.0

475.0

550.0

L + 1.40%

Jan-24 + 2yrs

Eurobond

EUR

429.6

429.6

1.63%

Feb-27

EMTN 2015

GBP

160.0

160.0

5.00%

Mar-23

Total bonds

589.6

589.6

PP2013 – Class B

USD

47.5

47.5

6.25%

May-23

Private Placement 2013

47.5

47.5

PP 2015 – Class B

USD

31.2

31.2

4.95%

May-22

PP 2015 – Class C

USD

59.4

59.4

5.21%

May-25

PP 2015 – Class F

EUR

37.8

37.8

3.38%

May-25

Private Placement 2015

128.3

128.3

PP 2016 – Class B

USD

83.9

83.9

4.66%

Sep-24

PP 2016 – Class C

USD

40.1

40.1

4.96%

Sep-26

PP 2016 – Class D

EUR

18.9

18.9

2.27%

Jan-22

PP 2016 – Class E

EUR

18.9

18.9

3.04%

Jan-27

PP 2016 – Class F

EUR

25.8

25.8

2.74%

Jan-25

Private Placement 2016

187.5

187.5

PP 2019 – Class A

USD

92.8

92.8

4.76%

Apr-24

PP 2019 – Class B

USD

74.2

74.2

4.99%

Mar-26

PP 2019 – Class C

USD

92.7

92.7

5.35%

Mar-29

PP 2019 – Class D

EUR

37.8

37.8

2.02%

Apr-24

Private Placement 2019

297.6

297.6

Total Private Placements

660.9

660.9

Total

1,325.5

475.0

1,800.5

Shareholder equity increased to £1,752.1m (31 March 2021: £1,619.5m) due to the retained profits generated during the period.

The movements in the Group’s cash position, debt facilities and shareholder equity resulted in net gearing remaining flat, standing at 0.63x at 30 September 2021 (31 March 2021: 0.63x).

Net gearing (£m)

As at
30 September 2021

As at
31 March 2021

Change
%

Cash1

228.6

296.9

(23)%

Gross drawn debt

1,325.5

1,324.1

—%

Net financial debt (A)

1,096.9

1,027.2

7%

Shareholder equity (B)

1,752.1

1,619.5

8%

Net gearing (A/B)

0.63

x

0.63

x

—%

1Cash excludes £23.7m held in respect of agency services provided

Net asset value

£m

Pence per
share

At 1 April 2021

1,619.5

566

FMC profit after tax

97.1

32

IC profit after tax

143.6

46

Dividends paid

(112.2)

(36)

FX and other

4.1

1

At 30 September 2021

1,752.1

609

Medium-term guidance

Our medium-term guidance remains unchanged from our FY21 results announcement and is set out below:

Fundraising

Performance fees

FMC Operating margin

Net Investment Return

Net gearing


Foreign exchange rates

The following foreign exchange rates have been used throughout this review:

Six months ended
30 September 2021
Average

Six months ended
30 September 2020
Average

12 months ended
31 March 2021
Average

30 September 2021
Period end

30 September 2020
Period end

31 March 2021
Period end

GBP:EUR

1.1631

1.1166

1.1254

1.1640

1.1025

1.1750

GBP:USD

1.3833

1.2786

1.3173

1.3474

1.2920

1.3783

EUR:USD

1.1893

1.1453

1.1705

1.1576

1.1719

1.1730

At 30 September 2021 our third-party AUM was $65,349m. If GBP:USD had been by 5% higher (1.4148) our reported third-party AUM would have been $457m higher. If EUR:USD had been 5% higher (1.2155) our reported third-party AUM would have been $1,912m higher.

Where noted, this review presents changes in AUM on a constant exchange rate basis. For the purposes of these calculations, FY21 AUM numbers have been translated from their underlying fund currencies to USD at the respective H1 FY22 period end exchange rates. This has then been compared to the H1 FY22 closing AUM to arrive at the change on a constant currency exchange rate basis.

Company timetable

Ex-dividend date: 9 December 2021

Record date: 10 December 2021

Last date to elect for dividend reinvestment: 15 December 2021

Payment of ordinary dividend: 10 January 2022

Q3 trading statement: 27 January 2022

Shareholder seminar on Sustainability and People: 27 January 2022

Full year results announcement: 26 May 2022

PRINCIPAL RISKS AND UNCERTAINTIES

The principal risks and uncertainties to which the Group is exposed for the remainder of the year have been subject to robust assessment by the Directors and remain consistent with those outlined in our annual report for the year ended 31 March 2021.

Careful attention continues to be paid to the ongoing potential impacts of Covid-19 and the resulting impact on our principal risks and the overall risk profile of the Group. There have been no material changes and we will continue to monitor the situation and potential exposures as matters evolve.

RESPONSIBILITY STATEMENT

We confirm to the best of our knowledge:

  • The condensed set of financial statements have been prepared in accordance with UK adopted IAS 34 ‘Interim Financial Reporting’;

  • The interim management report, which is incorporated into the Directors’ report, includes a fair review of the development and performance of the business and the position of the Group and the undertakings included in the consolidation taken as a whole, together with a description of the principal risks and uncertainties that they face; and

  • There have been no material related-party transactions that have an effect on the financial position or performance of the Group in the first six months of the current financial year since that reported in the 31 March 2021 Annual Report.

This responsibility statement was approved by the Board of Directors on 15 November 2021 and is signed on its behalf by:

Benoît Durteste

Vijay Bharadia

CEO

CFOO

INDEPENDENT REVIEW REPORT TO INTERMEDIATE CAPITAL GROUP PLC

Conclusion

We have been engaged by the Intermediate Capital Group plc (the ‘Company’ or the ‘Group’) to review the condensed consolidated financial statements in the Half-year financial report for the six months ended 30 September 2021 which comprises the Condensed consolidated income statement, Condensed consolidated statement of financial position, Condensed consolidated statement of cash flows, Condensed consolidated statement of changes in equity and the related notes 1 to 9 (together the ‘condensed consolidated financial statements’). We have read the other information contained in the Half-year financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed consolidated financial statements.

Based on our review, nothing has come to our attention that causes us to believe that the condensed consolidated financial statements in the Half-year financial report for the six months ended 30 September 2021 is not prepared, in all material respects, in accordance with UK adopted International Accounting Standard 34 and the Disclosure Guidance and Transparency Rules of the United Kingdom’s Financial Conduct Authority.

Basis for Conclusion

We conducted our review in accordance with International Standard on Review Engagements 2410 (UK and Ireland) "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Auditing Practices Board. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

As disclosed in note 1, the annual financial statements of the Group will be prepared in accordance with UK adopted international accounting standards. The condensed consolidated financial statements included in this Half-year financial report has been prepared in accordance with UK adopted International Accounting Standard 34, “Interim Financial Reporting”.

Responsibilities of the directors

The directors are responsible for preparing the Half-year financial report in accordance with the Disclosure Guidance and Transparency Rules of the United Kingdom's Financial Conduct Authority.

Auditor's Responsibilities for the review of the financial information

In reviewing the Half-year financial report, we are responsible for expressing to the Company a conclusion on the condensed consolidated financial statements in the Half-year financial report. Our conclusion is based on procedures that are less extensive than audit procedures, as described in the Basis for Conclusion paragraph of this report

Use of our report
This report is made solely to the company in accordance with guidance contained in International Standard on Review Engagements 2410 (UK and Ireland) "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Auditing Practices Board. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company, for our work, for this report, or for the conclusions we have formed.

Ernst & Young LLP
London
15 November 2021

CONDENSED CONSOLIDATED INCOME STATEMENT

For the six months ended 30 September 2021

Six months ended 30 September 2021
(Unaudited)

Six months ended 30 September 2020
(Unaudited)

Notes

£m

£m

Fee and other operating income

2

193.2

148.1

Finance loss

(0.3)

(10.3)

Net gains on investments

282.5

214.3

Total Revenue

475.4

352.1

Finance costs

(28.2)

(30.5)

Administrative expenses

(180.5)

(124.0)

Share of results of joint ventures accounted for using equity method

(0.3)

0.2

Profit before tax

266.4

197.8

Tax charge

7

(24.0)

(5.0)

Profit after tax

242.4

192.8

Attributable to:

Equity holders of the parent

240.5

190.5

Non-controlling interests

1.9

2.3

242.4

192.8

Earnings per share (pence)

5

83.9

66.9

Diluted earnings per share (pence)

5

82.8

66.0

All activities represent continuing operations.

The accompanying notes are an integral part of these financial statements.

CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

For the six months ended 30 September 2021

Six months ended 30 September 2021
(Unaudited)

Six months ended 30 September 2020
(Restated)
(Unaudited)1

£m

£m

Profit after tax

242.4

192.8

Items that will be reclassified subsequently to profit or loss if specific conditions are met

Exchange differences on translation of foreign operations

6.1

(1.5)

Total comprehensive income for the year

248.5

191.3

Attributable to:

Equity holders of the parent

246.6

189.0

Non controlling interests

1.9

2.3

248.5

191.3

1 Total comprehensive income for the period ended 30 September 2020 has been restated, excluding a tax credit of £3.8m.

The accompanying notes are an integral part of these financial statements.

CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION

As at 30 September 2021

30 September 2021
(Unaudited)

31 March 2021
(Audited)

Notes

£m

£m

Non-current assets

Intangible assets

22.3

21.5

Property, plant and equipment

62.8

67.0

Investment property

1.5

1.8

Investment in Joint Venture accounted for under the equity method

2.6

2.8

Trade and other receivables

46.8

62.8

Financial assets at fair value

4

6,905.3

6,264.5

Derivative financial assets

4

1.9

2.4

Deferred tax asset

0.8

2.9

7,044.0

6,425.7

Current assets

Trade and other receivables

366.1

215.2

Current tax debtor

15.8

4.4

Financial assets at fair value

4

6.7

64.6

Derivative financial assets

4

114.8

109.5

Deferred tax asset

5.2

5.9

Cash and cash equivalents

614.2

581.2

1,122.8

980.8

Disposal groups held for sale

260.5

57.4

Total assets

8,427.3

7,463.9

Equity and reserves

Called up share capital

77.2

77.2

Share premium account

180.3

180.2

Other reserves

5.6

(2.9)

Retained earnings

1,471.6

1,362.7

Equity attributable to owners of the Company

1,734.7

1,617.2

Non controlling interest

38.1

5.0

Total equity

1,772.8

1,622.2

Non current liabilities

Trade and other payables

65.7

41.9

Financial liabilities at fair value

4,8

4,328.7

3,882.9

Financial liabilities at amortised cost

8

1,203.0

1,208.9

Other financial liabilities

8

54.9

55.0

Derivative financial liabilities

4

33.1

31.7

Deferred tax liabilities

3.7

0.8

5,689.1

5,221.2

Current liabilities

Provisions

0.2

0.5

Trade and other payables

669.8

427.3

Current tax creditor

5.9

3.5

Financial liabilities at amortised cost

8

128.3

112.5

Other financial liabilities

8

4.2

3.7

Derivative financial liabilities

4

88.4

68.2

896.8

615.7

Liabilities directly associated with assets classified as held for sale

68.6

4.8

Total liabilities

6,654.5

5,841.7

Total equity and liabilities

8,427.3

7,463.9

The accompanying notes are an integral part of these financial statements.

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

For the six months ended 30 September 2021

Six months ended
30 September 2021
(Unaudited)

Six months ended
30 September 2020
(Restated)
(Unaudited)1

£m

£m

Profit before tax from continuing operations

266.4

197.8

Adjustments for non cash items:

Fee and other operating Income

(193.2)

(148.1)

Net investment returns

(282.5)

(214.3)

Net fair value gains on derivatives

9.2

8.8

Interest expense

28.2

30.5

Depreciation, amortisation and impairment of property, equipment and intangible assets

8.8

8.7

Share based payment expense

15.6

13.4

Unrealised currency translation (gains)/losses

(8.9)

1.5

Working capital changes:

Increase in trade and other receivables

(61.6)

(54.7)

Increase/(Decrease) in trade and other payables

93.1

(52.4)

Cash used in operations

(124.9)

(208.8)

Proceeds from sale of current financial assets and disposal groups held for sale

99.5

6.9

Purchase of current financial assets and disposal groups held for sale

(146.6)

(13.0)

Purchase of investments

(2,732.4)

(894.1)

Proceeds from sales and maturities of investments

2,749.0

1,081.3

Interest and dividend income received

133.8

120.5

Fee and other operating income received

141.0

129.6

Interest paid

(65.8)

(86.3)

Taxes paid

(22.5)

(3.6)

Net cash flows from operating activities

31.1

132.5

Investing activities

Purchase of intangible assets

(3.1)

(2.8)

Purchase of property, plant and equipment

(0.7)

(1.3)

Net cashflow from derivative financial instruments

7.7

6.2

Cashflow as a result of acquisition of subsidiaries

127.3

Net cash flows from investing activities

131.2

2.1

Financing activities

Payment of principal portion of lease liabilities

(2.3)

(5.4)

Proceeds from borrowings

75.0

Repayment of long-term borrowings

(96.0)

(496.3)

Dividends paid to equity holders of the parent

(112.2)

(102.3)

Net cash flows used in financing activities

(135.5)

(604.0)

Net increase/(decrease) in cash and cash equivalents

26.8

(469.4)

Effects of exchange rate differences on cash and cash equivalents

6.2

(15.0)

Cash and cash equivalents at 1 April

581.2

1,086.9

Cash and cash equivalents at 30 September

614.2

602.5

1 The Group has adopted the indirect method for the presentation of the consolidated cash flow statement for the year ended 31 March 2021. The Condensed consolidated cashflow for the period ended 30 September 2021 has been prepared using the indirect method and the prior period has been presented on a consistent basis (see Note 1 for more details).

The Group’s cash and cash equivalents includes £385.6m (31 March 2021: £284.3m) of restricted cash of which £361.9m was held by structured entities and £23.7m was held in respect of agency services provided.

The accompanying notes are an integral part of these financial statements.

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

For the six months ended 30 September 2021

Share
capital

Share
premium

Capital redemption reserve

Share based payments reserve

Own
shares

Foreign currency translation reserve

Retained
earnings

Total

Non-controlling interest

Total
equity

£m

£m

£m

£m

£m

£m

£m

£m

£m

£m

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

240.5

240.5

1.9

242.4

Exchange differences on translation of foreign operations

6.1

6.1

6.1

Total comprehensive income/(expense) for the period

6.1

240.5

246.6

1.9

248.5

Movement in control of subsidiary

(9.8)

(9.8)

31.2

21.4

Options/awards exercised1

0.1

(27.6)

9.8

(9.6)

(27.3)

(27.3)

Tax on options/awards exercised

4.6

4.6

4.6

Credit for equity settled share schemes

15.6

15.6

15.6

Dividends paid

(112.2)

(112.2)

(112.2)

Balance at 30 September 2021

77.2

180.3

5.0

53.1

(72.4)

19.9

1,471.6

1,734.7

38.1

1,772.8

Share
capital

Share
premium

Capital redemption reserve

Share based payments reserve
(Restated)

Own
shares

Foreign currency translation reserve

Retained
earnings

Total

Non-controlling interest

Total
equity

£m

£m

£m

£m

£m

£m

£m

£m

£m

£m

Balance at 1 April 2020

77.2

179.9

5.0

58.4

(114.4)

22.7

1,080.4

1,309.2

1.5

1,310.7

Profit after tax

190.5

190.5

2.3

192.8

Exchange differences on translation of foreign operations

(1.5)

(1.5)

(1.5)

Total comprehensive income/(expense) for the period

(1.5)

190.5

189.0

2.3

191.3

Movement in control of subsidiary

Options/awards exercised

(31.1)

31.9

(23.8)

(23.0)

(23.0)

Tax on options/awards exercised

3.8

3.8

3.8

Credit for equity settled share schemes

13.4

13.4

13.4

Dividends paid

(102.3)

(102.3)

(102.3)

Balance at 30 September 2020

77.2

179.9

5.0

44.5

(82.5)

21.2

1,144.8

1,390.1

3.8

1,393.9

1The 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. 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.

The accompanying notes are an integral part of these financial statements.

NOTES TO THE HALF YEAR REPORT

For the six months ended 30 September 2021

1. General information and basis of preparation

Basis of preparation

The interim condensed consolidated financial statements have been prepared in accordance with IAS 34 Interim Financial Reporting ('IAS 34'), as adopted by the United Kingdom, the Disclosure Guidance and Transparency Rules of the Financial Conduct Authority, and on the basis of the accounting policies and methods of computation set out in the consolidated financial statements of the Group for the year ended 31 March 2021.

While the financial information included in this announcement has been prepared in accordance with the recognition and measurement criteria of UK adopted International Accounting Standards, this announcement does not itself contain sufficient information to comply with UK adopted IAS.

The financial information for the year ended 31 March 2021 contained within this half year financial report does not constitute statutory accounts as defined in section 434 of the Companies Act 2006. The statutory accounts for the year to 31 March 2021 have been reported on by Ernst & Young LLP and delivered to the Registrar of Companies. The report of the auditors was (i) unqualified, (ii) did not include a reference to any matters which the auditors drew attention by way of emphasis without qualifying their report, and (iii) did not contain a statement under section 498 (2) or (3) of the Companies Act 2006.

The consolidated financial statements of the Group as at and for the year ended 31 March 2021 which were prepared in accordance with International Accounting Standards in conformity with the requirements of the Companies Act 2006 and International Financial Reporting Standards adopted pursuant to Regulation (EC) No.1606/2002 as it applies in the European Union are available on the Group’s website, www.icgam.com. The financial statements for the year ended 31 March 2022 will be prepared in accordance with UK adopted IAS.

Going concern

In making this assessment, the Directors have considered a range of information relating to present and future conditions, including future projections of profitability, cash flows and capital resources through the twelve month period to 30 November 2022. The Group has good visibility on future management fees due to the long term and diversified nature of its funds, underpinned by a strong, well capitalised balance sheet and over £0.7bn of liquidity in cash and undrawn facilities at 30 September 2021.

The Directors have concluded based on the above assessment that the preparation of the interim condensed consolidated financial statements on a going concern basis, to 30 November 2022, a period of more than 12 months from the signing of the interim condensed consolidated financial statements, continues to be appropriate.

Related party transactions

There have been no material changes to the nature or size of related party transactions since 31 March 2021.

Changes in significant accounting policies

The accounting policies adopted in the preparation of the interim condensed consolidated financial statements are consistent with those followed in the preparation of the Group’s annual consolidated financial statements for the year then ended 31 March 2021. The Group has not early adopted any standard, interpretation or amendment that has been issued but is not yet effective.

LIBOR cessation

The FCA and the Bank of England have imposed significant interest rate benchmarking reform. As a result, there will be the imminent cessation of LIBOR. LIBOR publication is expected to cease by 31 December 2021. Those instruments within the Group that may have exposure to the cessation of LIBOR will apply the practical expedient as permitted under the transition rules, which became effective for reporting periods commencing on or after 1 January 2021. The rules permit the change to the contractual interest rates, from LIBOR to the newly applied rate, to be treated as a movement in market interest rates rather than as a modification. The impact of this application is not expected to be material to the Group.

Cash flow restatement

The Group adopted the indirect method for the presentation of the cash flow statement for the first time in the preparation of the Group’s annual consolidated financial statements for the year then ended 31 March 2021. The adoption of the indirect method brings the Group in line with the presentation adopted by its peers. The condensed consolidated statement of cash flows for the six months ended 30 September 2021 is presented under the indirect method. The comparative for the six months ended 30 September 2020 is presented on a consistent basis.

In restating the comparative amounts in the cash flow statement for the six months ended 30 September 2020, the Group:

[1] Implemented changes in its accounting policy with respect to the classification of cash flows between Operating, Investing or Financing, and reclassified a number of items where necessary;

[2] Reviewed the components of cash flow within the Operating, Investing and Financing classifications, and re-presented a number of items. This included re-presenting cash flows which had also been reclassified as set out in [1] above; and

[3] In undertaking the reviews and changes described in [1] and [2], certain errors were identified in the Group cash flow statements for the six months ended 30 September 2020. These errors included amounts that were incorrect or mis-presented. These errors are corrected in the restated cash flow for the six months ended 30 September 2020.

The impact of the reclassifications and re-presentations outlined [1] and [2] above are set out in Table 1 and a full analysis of the errors outlined in [3] above is set out in Table 2 below.

There was no impact on the Group closing cash balance as at 30 September 2020 and there was no change to the movement in cash for the year. The changes arising from [1], [2] and [3] noted above relate to the description of the movement in cash during the six month period ended 30 September 2020.

Summary of changes

The table below provides details of the amount of the adjustment for each line item within the cash flow statement affected by the restatements noted above.

Original

Reclassifications and re-presentations [1] and [2]1

Correction of errors [3]2

Restated

Group

£m

£m

£m

£m

Cash and cash equivalents as at 1 April 2020

1,086.9

1,086.9

Operating activities

228.9

(93.8)

(2.6)

132.5

Investing activities

(8.9)

8.7

2.3

2.1

Financing activities

(689.9)

85.1

0.8

(604.0)

Effects of foreign exchange rate changes 3

(14.5)

(0.5)

(15.0)

Total movement in cash and cash equivalents

(484.4)

(484.4)

Cash and cash equivalents as at 30 September 2020

602.5

602.5

1 Detailed in Table 1
2 Table 2 contains details of the impact of the correction on Operating activities, Investing activities and Financing activities
3 ‘Effects of foreign exchange rate changes’ was re-presented as ‘Effects of exchange rate differences on cash and cash equivalents’

Table 1: Cash flows reclassified and re-presented (i), re-presented (ii) or reclassified (iii)

Operating activities

Investing activities

Financing activities

Cash flow impact

Cash flow impact

Cash flow impact

Increase/(decrease)

Increase/(decrease)

Increase/(decrease)

£m

£m

£m

Cash outflows presented as ‘Interest paid’ and ‘Interest paid on lease liabilities’ were reclassified as Operating (from Financing) and re-presented as ‘Interest paid’

(85.1)

85.1

(i) Net restatement arising from reclassification and re-presentation of cash flows

(85.1)

85.1

Cash outflows previously presented as ‘Purchase of non current financial assets’ were re-presented as ‘Purchase of investments’

Cash inflows previously presented as ‘Proceeds from sales of non current financial assets’ were re-presented as ‘Proceeds from sales and maturities of investments’

Cash inflows previously presented as ‘Interest received’ and ‘Dividends received’ were aggregated and re-presented as ‘Interest and dividend income received’

Cash inflows previously presented as ‘Fees received’ were re-presented as ‘Fee and other operating income’

Cash outflows previously presented as ‘Principal paid on lease liabilities’ were re-presented as ‘Payment of principal portion of lease liabilities’

Cash inflows previously presented as ‘Increase in long-term borrowings’ were re-presented as ‘Proceeds from borrowings’

Cash outflows previously presented as ‘Dividends paid’ were re-presented as ‘Dividends paid to equity holders of the parent’

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