Intermediate Capital Group plc: Interim Results for the six months ended 30 September 2024

PERFORMANCE OVERVIEW

Unless stated otherwise, the financial results discussed herein are on the basis of alternative performance measures (APM), which the Board believes assists shareholders in assessing the financial performance of the Group. See page 6 for further information.

Financial performance

¹ AUM on constant currency basis.
² AUM and per share calculations based on 30 September 2019 to 30 September 2024, all other items LTM 30 September 2019 to LTM 30 September 2024. Dividend includes H1 FY25 declared dividend.
³ Five year average.
⁴ AUM comparative for September 2023 has been updated to include seed investments $459m (£375m), in line with current AUM policy.
⁵ Reported AUM as of 30 September 2024 includes the fee-exempt AUM that ICG manage, in line with our policy change effective 31 March 2024.
⁶ The number of shares used to calculate NAV per share include shares held in the EBT, to reflect how the Group uses the EBT to neutralise the impact of share based payments (a different basis to Group earnings per share). Prior period NAV per share figures have been adjusted to reflect this methodology.

Business activity

¹ Direct investment funds.
² Realisations of third-party fee-earning AUM.

¹Assuming fundraising environment normalises in FY26.

COMPANY PRESENTATION

A presentation for shareholders, debtholders and analysts will be held at 09:00 GMT today: join via the link on our website. Alternatively, you can dial in using the following numbers and ask to be connected to the ICG meeting:

• All callers: +44 333 300 1418
• United Kingdom (Toll-Free): 0808 143 3720

A recording and transcript of the presentation will be available on demand from the same location in the coming days.

COMPANY TIMETABLE

ENQUIRIES

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. Founded in 1989, today we are a global alternative asset manager operating 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. 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: ICG). Further details are available at www.icgam.com.

FINANCIAL REVIEW

AUM and FY25 fundraising
Refer to the Datapack issued with this announcement for further detail on AUM.

At 30 September 2024, AUM stood at $106bn and fee-earning AUM at $73bn. The bridge between AUM and fee-earning AUM is as follows:

At 30 September 2024 we had $29bn of AUM available to deploy in new investments ("dry powder"), of which $19bn was not yet earning fees.

AUM

Fee-earning AUM

¹ See page 17 for FX exposure of fee-earning AUM, fee income, FMC expenses and Balance sheet investment portfolio.

FY25 fundraising

At 30 September 2024, closed-end funds that were actively fundraising included Strategic Equity V; Europe Mid-Market II; European Infrastructure II; and various Real Estate strategies. We anticipate having a first close for Europe IX and final closes for Strategic Equity V and Europe Mid-Market II before the end of FY25, although the size and timing of such closes remains dependent on market conditions.
Group financial 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. 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, including seeded strategies, and related entities deemed to be controlled by the Group, the assets of which are included in the UK-adopted IAS consolidated financial statements at fair value but excluded for the APM in which the Group’s economic exposure to the assets is reported.

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 prior period at £182.8m (H1 FY24: £259.9m). On the APM basis it was below the prior period at £198.4m (H1 FY24: £241.9m).

Detail of these adjustments can be found in note 3 to the UK-adopted IAS condensed consolidated financial statements on pages 28 to 29.

1 The number of shares used to calculate NAV per share has been adjusted to include shares held in the EBT, to reflect how the Group uses the EBT to neutralise the impact of share based payments (a different basis to Group earnings per share). See page 14 for details. Prior period NAV per share figures have been adjusted to reflect this methodology.
Structured and Private Equity

Overview

¹ AUM on constant currency basis.
² AUM calculation based on 30 September 2019 to 30 September 2024, all other items LTM 30 September 2019 to LTM 30 September 2024.
³ Five year average.
⁴ Reported AUM as of 30 September 2024 includes the fee-exempt AUM that ICG manage, in line with our policy change effective 31 March 2024.
⁵ Growth calculations are performed using whole numbers for all metrics to ensure an accurate representation of the movements.

Performance of key funds

Refer to the ^Datapack issued with this announcement for further detail on fund performance

Note: fund performance is based on the latest practically available information, and may not relate to the same period as the financial statements within this report. Fund size relates to co-mingled funds.
Key drivers

Private Debt

Overview

¹ AUM on constant currency basis.
² AUM calculation based on 30 September 2019 to 30 September 2024, all other items LTM 30 September 2019 to LTM 30 September 2024.
³ Five year average.
⁴ Reported AUM as of 30 September 2024 includes the fee-exempt AUM that ICG manage, in line with our policy change effective 31 March 2024.
⁵ Growth calculations are performed using whole numbers for all metrics to ensure an accurate representation of the movements.

Performance of key funds

Refer to the ^Datapack issued with this announcement for further detail on fund performance

¹ €7.2bn includes pooled-funds and respective leverage only; SMA capital and respective leverage and co-investments totalled €5.2bn; rest of the total SDP V fundraising from SMA's recycling and evergreen renewal.
Note: fund performance is based on the latest practically available information, and may not relate to the same period as the financial statements within this report. Fund size relates to co-mingled funds.

Key drivers

Real Assets

Overview

¹ AUM on constant currency basis.
² AUM calculation based on 30 September 2019 to 30 September 2024, all other items LTM 30 September 2019 to LTM 30 September 2024.
³ Five year average.
⁴ Reported AUM as of 30 September 2024 includes the fee-exempt AUM that ICG manage, in line with our policy change effective 31 March 2024.
⁵ Growth calculations are performed using whole numbers for all metrics to ensure an accurate representation of the movements.

Performance of key funds

Refer to the ^Datapack issued with this announcement for further detail on fund performance

Note: fund performance is based on the latest practically available information, and may not relate to the same period as the financial statements within this report.

Key drivers

Credit

Overview

¹ AUM on constant currency basis.
² AUM calculation based on 30 September 2019 to 30 September 2024, all other items LTM 30 September 2019 to LTM 30 September 2024.
³ Five year average.
⁴ Reported AUM as of 30 September 2024 includes the fee-exempt AUM that ICG manage, in line with our policy change effective 31 March 2024.
⁵ Growth calculations are performed using whole numbers for all metrics to ensure an accurate representation of the movements.

Key drivers

Fund Management Company

The Fund Management Company (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.

Management fees
Management fees for the period totalled £286.6m (H1 FY24: £233.9m), a year-on-year increase of 23% (11% excluding the impact of catch-up fees of £27.4m in H1 FY25 and nil in H1 FY24). On a constant currency basis management fees increased 25% year-on-year.

The effective management fee rate on our fee-earning AUM at the period end was 0.94% (FY24: 0.92%).

Performance fees

Performance fees of £31.8m were recognised during the period (H1 FY24: £29.3m). The year-on-year increase was largely due to additional revenue accrued for Europe VII as it moved closer to its hurdle date and to the inaugural recognition for Europe Mid-Market I. During the period the Group received realised performance fees of £40.0m and at 30 September 2024 had an asset of £72.6m of accrued performance fees on its balance sheet (31 March 2024: £83.7m):

Other income
Other income comprises dividend receipts of £23.0m (H1 FY24: £20.3m) from investments in CLO equity; an intercompany fee of £12.5m for managing the IC balance sheet investment portfolio (H1 FY24: £12.3m); and other income of £1.1m (H1 FY24: £0.2m).

Operating expenses and margin

FMC operating expenses totalled £158.6m, an increase of 10% compared to H2 FY24 (£144.2m) and an increase of 19% compared to H1 FY24 (£133.3m).

Compared to H1 FY24, salaries increased ahead of headcount, largely due to annualisation of prior year hires and a number of senior hires. Other expenses grew due to timing of expenses compared to the prior year, a number of senior hires with higher incentives compared to salary, and ongoing investment in our operating platform.

The FMC recorded a profit before tax of £196.4m (H1 FY24: £162.7m), a year-on-year increase of 21% on a reported basis and an increase of 24% on a constant currency basis.

Investment Company

The Investment Company (IC) invests the Group’s balance sheet to seed new strategies, and invests alongside the Group’s scaling and established strategies to align interests between our shareholders, clients and employees. It also supports a number of costs, including teams that have not yet had a first close on a first third-party fund, 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 was valued at £3.0bn at 30 September 2024 (31 March 2024: £3.1bn). During the period, it generated net realisations and cash interest receipts of £66m (H1 FY24: £27m).

We made seed investments totalling £104m, including on behalf of Real Estate Asia and Core Private Equity.

  
¹ Within Credit, at 30 September 2024 £21m was invested in liquid strategies, with the remaining £298m invested in CLO debt (£103m) and equity (£195m).
² See page 17 for FX exposure of fee-earning AUM, fee income, FMC expenses and Balance sheet investment portfolio.

Net Investment Returns

For the five years to 30 September 2024, Net Investment Returns (NIR) have been in line with our medium-term guidance, averaging 11.4%. For the six months to 30 September 2024, NIR were £47.8m (H1 FY24: £159.4m), equating to an annualised rate of 3% (H1 FY24: 11%).

NIR were comprised of interest of £67.1m from interest-bearing investments (H1 FY24: £59.2m), unrealised loss of £20.1m (H1 FY24: unrealised gain of £99.0m) and other income of £0.8m (H1 FY24: £1.1m). NIR were split between asset classes as follows:

For further discussion on balance sheet investment performance by asset class, refer to pages 7 - 10 of this announcement.

In addition to the NIR, the other adjustments to IC revenue were as follows:

¹See page 17 for FX exposure of fee-earning AUM, fee income, FMC expenses and Balance sheet investment portfolio.

As a result, the IC recorded total revenues of £50.2m (H1 FY24: £141.8m).
Investment Company expenses

Operating expenses in the IC of £38.0m decreased by 22% compared to H1 FY24 (£48.6m), with increases in salaries and administrative costs being more than offset by a decrease in incentive scheme costs:

Incentive scheme costs included DVB accrual of £0.2m (H1 FY24: £15.4m). The reduction compared to H1 FY24 was due to a change in the anticipated timing of when DVB is likely to be realised.

The directly-attributable costs within the IC for teams that have not had a first close of a third-party fund during the period were £6.9m (H1 FY24: £12.2m). During the period no costs have been transferred to the FMC.

Interest expense was £20.5m (H1 FY24: £24.0m) and interest earned on cash balances was £10.3m (H1 FY24: £10.0m).

The IC recorded a profit before tax of £2.0m (H1 FY24: £79.2m).

Group

Operating expenses

The Group's operating expenses in aggregate were £196.6m, flat compared to H2 FY24 and an 8% increase compared to H1 FY24 (£181.9m). For more detailed commentary on the changes in the operating expenses, see pages 11 and 13 of this announcement.

Incentive scheme costs include £27.0m relating to stock-based compensation (H1 FY24: £24.4m).

Tax

The Group recognised a tax charge of £32.8m (H1 FY24: tax charge of £37.5m), resulting in an effective tax rate for the period of 16.5% (H1 FY24: 15.5%).

As detailed in note 7, 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 and share count

ICG has a progressive dividend policy, and 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. In line with our policy of paying an interim dividend equal to one third of the prior year's total dividend, the Board is declaring an interim dividend of 26.3p per share (H1 FY24: 25.8p). We continue to make the dividend reinvestment plan available.

At 30 September 2024 the Group had 290,631,993 shares outstanding (31 March 2024: 290,631,993), including shares held by an Employee Benefit Trust ('EBT'). The Group has a policy of neutralising the dilutive impact of stock-based compensation through the purchase of shares by the EBT.

Balance sheet and cash flow

We use our balance sheet’s asset base to grow our fee-earning AUM, principally through two routes:

• investing alongside clients in our existing strategies to align interests; and
• making investments to seed new strategies.

During the year we made investments of £266m alongside clients in existing strategies and £104m in seed investments.

At 30 September 2024 our balance sheet investment portfolio was valued at £2,957m (see page 12 for more information on the performance of our balance sheet investment portfolio during the period). To support this asset base, we maintain a robust capitalisation and a strong liquidity position.

¹ The number of shares used to calculate NAV per share include shares held in the EBT, to reflect how the Group uses the EBT to neutralise the impact of share based payments (a different basis to Group earnings per share). Prior period NAV per share figures have been adjusted to reflect this methodology.

Liquidity and net debt

At 30 September 2024 the Group had total available liquidity of £932m (31 March 2024: £1,124m), net financial debt of £799m (31 March 2024: £874m) and net gearing of 0.35x (31 March 2024: 0.38x).

During the period available cash reduced by £192m from £574m to £382m, including the repayment of £223m of borrowings that matured.

The table below sets out movements in cash:

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 cash flows from financing activities - APM.
³ Per note 9 of the Financial Statements, Operating cash flows under UK-adopted IAS of £128.2m (FY24: £255.9m) include consolidated credit funds. This difference to the APM measure is driven by cash consumption within consolidated credit funds as a result of their investing activities during the period.
⁴ Cash flows in respect of purchase of intangible assets, purchase of property, plant and equipment and net cash flow from derivative financial instruments.

At 30 September 2024, the Group had drawn debt of £1,181m (31 March 2024: £1,448m). The change is due to the repayment of certain facilities as they matured, along with changes in FX rates impacting the translation value:

Net financial debt therefore decreased by £75m to £799m (31 March 2024: £874m):

At 30 September 2024 the Group had credit ratings of BBB (positive outlook) / BBB (positive outlook) from Fitch and S&P, respectively.

The Group’s debt is provided through a range of facilities. All facilities except the RCF are fixed-rate instruments. The weighted-average pre-tax cost of drawn debt at 30 September 2024 was 2.89% (31 March 2024: 3.07%). The weighted-average life of drawn debt at 30 September 2024 was 3.3 years (31 March 2024: 3.3 years). The maturity profile of our term debt is set out below:

After the period end, the Group entered into a new Revolving Credit Facility (RCF), replacing the previous facility. The RCF, which matures in October 2027, remains at £550m and is on substantially similar economic terms as the previous facility.

For further details of our debt facilities see Other Information (page 40).

Net gearing

The movements in the Group’s balance sheet investment portfolio, cash balance, debt facilities and shareholder equity resulted in net gearing decreasing to 0.35x at 30 September 2024 (31 March 2024: 0.38x).

Board evolution

Sonia Baxendale has been appointed as a Non-Executive Director of the Company. She will join the Board on 1 January 2025 and will also serve on the Risk and Audit Committees.

Sonia currently holds a number of roles, including serving as the President and CEO of the Global Risk Institute in Canada. She spent most of her executive career at CIBC and has extensive experience as an executive and non-executive in the financial services industry in North America and the UK.

Foreign exchange rates

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

The table below sets out the currency exposure for certain reported items:

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):

¹ Impact assessed by sensitising the average H1 FY25 FX rates.
² NAV per share reflects the total indicative impact as a result of a change in FMC PBT and net currency assets.

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 H1 FY25 period end exchange rates. This has then been compared to the H1 FY25 numbers to arrive at the change on a constant currency exchange rate basis.

The Group does not hedge its net currency income as a matter of course, although this is kept under review. The Group does hedge its net balance sheet currency exposure, with the intention of broadly insulating the NAV from FX movements. Changes in the fair value of the balance sheet hedges are reported within the IC.

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 2024.

Careful attention continues to be paid to the elevated levels of geopolitical and economic uncertainty 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’ and the Disclosure Guidance and Transparency Rules of the Financial Conduct Authority;
• 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 2024 Annual Report.
  
  

This responsibility statement was approved by the Board of Directors on 12 November 2024 and is signed on its behalf by:

INDEPENDENT REVIEW REPORT TO INTERMEDIATE CAPITAL GROUP PLC

Conclusion

We have been engaged by Intermediate Capital Group plc (‘the Group’) to review the condensed consolidated financial statements in the Interim results statement for the six months ended 30 September 2024 which comprises the condensed consolidated income statement, condensed consolidated statement of comprehensive income, condensed consolidated statement of financial position, condensed consolidated statement of cash flows, condensed consolidated statement of changes in equity and the related explanatory notes 1 to 10 (together the ‘condensed consolidated financial statements’). We have read the other information contained in the Interim results statement 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 Interim results statement for the six months ended 30 September 2024 is not prepared, in all material respects, in accordance with UK-adopted International Accounting Standard 34, ‘Interim Financial Reporting’, 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 the International Standard for Review Engagements (UK) 2410 (‘ISRE (UK) 2410’) issued by the Financial Reporting Council. 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 are prepared in accordance with UK-adopted international accounting standards. The condensed consolidated financial statements included in the Interim results statement have been prepared in accordance with UK-adopted International Accounting Standard 34, ‘Interim Financial Reporting’.

Conclusions Relating to Going Concern

Based on our review procedures, which are less extensive than those performed in an audit as described in the Basis for Conclusion section of this report, nothing has come to our attention to suggest that management have inappropriately adopted the going concern basis of accounting or that management have identified material uncertainties relating to going concern that are not appropriately disclosed.

This conclusion is based on the review procedures performed in accordance with ISRE (UK) 2410, however future events or conditions may cause the entity to cease to continue as a going concern.

Responsibilities of the directors

The directors are responsible for preparing the Interim results statement in accordance with the Disclosure Guidance and Transparency Rules of the United Kingdom's Financial Conduct Authority.

In preparing the Interim results statement, the directors are responsible for assessing the Group’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the Group or to cease operations, or have no realistic alternative but to do so.

Auditor's Responsibilities for the review of the financial information

In reviewing the Interim results statement, we are responsible for expressing to the Group a conclusion on the condensed consolidated financial statements in the Interim results statement. Our conclusion, including our ‘Conclusions Relating to Going Concern’, are 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 Group in accordance with guidance contained in ISRE (UK) 2410 issued by the Financial Reporting Council. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Group, for our work, for this report, or for the conclusions we have formed.

Ernst & Young LLP
London
12 November 2024

CONDENSED CONSOLIDATED INCOME STATEMENT

For the period ended 30 September 2024

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

CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

For the period ended 30 September 2024

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

CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION

As at 30 September 2024

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

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

For the period ended 30 September 2024

1. During the period two CLO funds (structured entities) were assessed as controlled. On consolidation the Group recognised £50.9m of cash within these entities. Financial assets at fair value of £672.6m and financial liabilities at fair value of £669.0m were also recognised. No consideration was paid.
   
   

The Group’s cash and cash equivalents include £345.4m (30 September 2023: £224.2m) of restricted cash held principally by structured entities controlled by the Group.

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

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

For the period ended 30 September 2024

1. The capital redemption reserve is a reserve created when a company buys its own shares which reduces its share capital. £1.4m of the balance relates to the conversion of ordinary shares and convertible shares into ordinary shares in 1994. The remaining £3.6m 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.

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

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the period ended 30 September 2024

1. General information and basis of preparation

Basis of preparation

The interim condensed consolidated financial statements have been prepared in accordance with UK-adopted IAS 34 Interim Financial Reporting (IAS 34), 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 2024.

The interim financial statements are unaudited and do not constitute statutory accounts within the meaning of section 434 of the Companies Act 2006. Within the notes to the interim financial statements, all current and comparative data covering period to (or as at) 30 September 2024 is unaudited. Data given in respect of 31 March 2024 is audited. The statutory accounts for the year to 31 March 2024 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 2024 which were prepared in accordance with UK-adopted International Accounting Standards (UK-adopted IAS) are available on the Group’s website, www.icgam.com.

Going concern

The interim condensed consolidated financial statements are prepared on a going concern basis, as the Board is satisfied that the Group has the resources to continue in business for a period of at least 12 months from approval of the interim condensed consolidated financial statements.

In assessing the Group’s ability to continue in its capacity as a going concern, the Board considered a wide range of information relating to present and future projections of profitability and liquidity. The assessment also incorporates internally generated stress tests, including reverse stress testing, on key areas including fund performance risk and external environmental risk. The stress tests used were based upon an assessment of reasonably possible downside economic scenarios that the Group could be exposed to.

The review showed the Group has sufficient liquidity in place to support its business operations for the foreseeable future. Accordingly, the Directors have a reasonable expectation the Group has resources to continue as a going concern to 30 November 2025, a 12 month period from the date of approval of the interim condensed consolidated financial statements.

Related party transactions

There have been no material changes to the nature or size of related-party transactions since 31 March 2024.

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 ended 31 March 2024. The Group has not early adopted any standard, interpretation or amendment that has been issued but is not yet effective.

Critical judgements in the application of accounting policies and key sources of estimation uncertainty

The critical judgements made by the Directors in the application of the Group's accounting policies, and the key sources of estimation uncertainty at the reporting date, are the same as those disclosed in the Group's annual consolidated financial statements for the year ended 31 March 2024.

Changes in the composition of the Group

The Group ceased to control four subsidiaries on liquidation that were previously reported as consolidated entities with no impact on net assets.

The Group acquired interests in two controlled subsidiaries of warehouse funds, nine other subsidiaries and two controlled structured entities that are consolidated within the Group with no material impact on net assets.

2. 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:

1. Included within management fees is £32.8m (H1 FY24: £30.6m) 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 net asset value, 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 period of £274.8m (H1 FY24: £222.1m) 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 in the future of the revenue recognised. 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 £32.8m (H1 FY24: £30.6m) have been recognised in the period. 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.

3. 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 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 also 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.

Reconciliation of APM amounts reported for management purposes to the financial statements reported under UK-adopted IAS

Included in the following tables within Consolidated entities are statutory adjustments made to the following. The impact of these adjustments on profit before tax is shown in the table on the following page:

• All income generated from the balance sheet investment portfolio is presented as net investment returns for Reportable segments purposes, under UK-adopted IAS it is presented within gains on investments and other operating income.
• Structured entities controlled by the Group are presented as fair value investments for Reportable segments, these entities are consolidated under UK-adopted IAS within Consolidate entities.
• Seed investments are presented as other current assets for Reportable segments, these assets are presented under UK-adopted IAS as current financial assets. non-current financial assets or investment property within Consolidated entities.
  
  

3. Segmental reporting continued

Consolidated income statement

4. Financial assets and liabilities

4. 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 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:

1. Level 3 investments in or alongside managed funds includes £1,236.4m Corporate Investments & US Mid Market (31 March 2024: £1,212.3m), £460.2m Strategic Equity, LP Secondaries, Recovery Fund & Life Sciences (31 March 2024: £517.9m), £49.8m Senior Debt Partners (31 March 2024: £58.2m), £63.9m North American Credit Partners (31 March 2024: £82.1m), £348.0m real estate funds (31 March 2024: £399.6m) , and £29.8m credit funds (31 March 2024: £16.8m).
2. Level 3 Investment in private companies includes £313.0m subordinated debt and equity (31 March 2024: £359.9m) and £41.2m of real estate assets (31 March 2024: £41.8m).
3. Total financial assets correspond to the sum of non-current and current financial assets at fair value and the sum of non-current and current financial derivatives as reported in the Statement of Financial Position (see page 23).
   
   

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Valuations

Valuation process

The Group Valuation Committee ('GVC') is responsible for reviewing and concluding on the fair value of the Group's balance sheet investment positions in accordance with the Group Valuation Policy. This includes consideration of the valuations received from the underlying funds. The GVC reviews its fair values 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 fund Investment Committees ('IC’s').

The ICs are responsible for the review, challenge, and approval of the underlying funds’ valuations of their assets. Sources of the valuation reviewed by the ICs include the ICG investment team, third-party valuation services and third-party fund administrators, as appropriate. 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), for example change in valuation methodologies, potential impairment events or material judgements.

The table in page 36 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 cash flow ('DCF') approach. Fair value is determined by discounting the expected future cash flows 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.

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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 cash flow technique and the key inputs under this approach are detailed on page 36.

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 cash flows, including under stressed scenarios, over the life of the CLOs. Observable inputs are used in determining the fair value of senior notes and these instruments are therefore classified as Level 2. Unobservable inputs are used in determining the fair value of subordinated notes, which are therefore classified as Level 3 instruments.

Liabilities of consolidated CLO vehicles

Rated debt liabilities of consolidated CLOs are generally valued at par plus accrued interest, which we assess as fair value. Observable inputs are used in determining the fair value of these instruments, including the valuation of the CLO loan asset portfolio. As a result these liabilities are classified as Level 2.

Unrated/subordinated debt liabilities of consolidated CLOs are valued directly in line with the fair value of the CLO loan asset portfolio. These underlying assets mostly 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 of deriving the valuation of unrated/subordinated debt liabilities from a combination of Level 2 and Level 3 asset values, we classified these liabilities as 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 classified as either a financial asset or investment property in accordance with IAS 40 ‘Investment Property’. The fair values of the directly held material 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 2022. 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.

4. Financial assets and liabilities continued

Reconciliation of Level 3 fair value measurement of financial assets

The following tables set out the movements in recurring financial assets 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 gain/(loss). Transfers between levels take place when there are changes to the observability of inputs used in the valuation of these assets. This is determined based on the closing valuation and transfers therefore take place at the end of the reporting period.

1. During the period certain assets in Investments in loans held in consolidated entities were reassessed as Level 3 (from Level 2) or Level 2 (from Level 3) and these changes are reported as a transfers in or transfers out in the year.
2. Included within net investment returns are £54.2m of unrealised gains (which includes accrued interest).

1. During the period certain assets in Investments in loans held in consolidated entities were reassessed as Level 3 (from Level 2) or Level 2 (from Level 3) and these changes are reported as a transfers in or transfers out in the year.
   
   

2. Included within net investment returns are £345.1m of unrealised gains (which includes accrued interest).
3. During the year the group reclassified all its financial assets previously included in disposal groups held for sale into investments in private companies.

Reconciliation of Level 3 fair value measurement 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. 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.

During the period ended 30 September 2024 changes in the fair value of the assets of subordinated notes of CLO vehicles resulted in an increase in the fair value of the financial liabilities of those consolidated credit funds, reported as a ‘fair value loss’ in the table below.

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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:

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. Investments in the following strategies are sensitised using the actual or implied earnings multiple to provide a consistent, comparable basis for this analysis: Corporate Investments, US Mid- Market, North America Credit Partners.
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 £183.1m 30 September 2024 (Unaudited) (31 March 2024: £187.7m). The default rate was set at 4.5% until 2025, reducing by 0.5% semi-annually during 2025 and reverting to 3% in 2026. The upside case is based on the default rate being lowered to 2.5% p.a. for the next 3 months, then to 2.0% p.a. for the following 6 months, 1.5% p.a. for the following 6 months and reverting to 1% p.a. for the following 9 months, keeping all other parameters consistent. The downside case is based on the default rate being increased over the next 3 months to 6.5%, then to 6.0% for the following 6 months, 5.5% p.a. for the following 6 months and reverting to 5% p.a. for the following 9 months, keeping all other parameters consistent.

5. Earnings per share

The total number of shares issued during the period to 30 September 2024 was nil (H1 FY24: 32,379).

6. Dividends

Dividends on ordinary shares of 53.2p per share, £153.3m (H1 FY24 52.2p, £149.5m) were paid during the period to 30 September 2024.

The Board has approved an interim dividend of 26.3p per share (H1 FY24: 25.8p).

7. Tax expense

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 30 September 2024 of 16.6% (H1 FY24: 16.3%) is lower than the statutory UK corporation tax rate of 25%.

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

7. Tax expense continued

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.

The mandatory IAS12 temporary exception from the recognition and disclosure of deferred taxes arising from implementation of the OECD’s Pillar Two model rules has been applied. The OECD's Pillar II model rules, establish a global minimum tax rate of 15%, and apply for financial years beginning on or after 31 December 2023. Therefore, for the Group it will be FY25 (financial year ending 31 March 2025) that is the first period to which the rules are applied. The Group has performed an impact assessment, and continues to monitor the development of the regulations. The Group recognised a current tax expense of £nil related to top-up tax in the six months ended 30 September 2024 (H1 FY24: £nil).

8. Financial liabilities

Financial liabilities are £6,229.0m (31 March 2024: £6,167.0m), including £1,187.8m (31 March 2024: £1,447.4m) of financial liabilities at amortised cost. This is an increase of £62.0m in the period since 31 March 2024 and is driven by increase in long term debt at fair value in the consolidated structured entities £286.9m partially offset by repayment of long term debt at amortised cost in operating segments £223.0m.

9. Net cash flows from operating activities

Cash flows arising from the acquisition and disposal of assets to seed new investment strategies are classified as operating, as this activity is undertaken to establish new sources of fund management fee income, growing the operating activities of the Group.

There were no cash flows arising on a change of control included within amounts included within Proceeds from sale of current financial assets in respect of disposals of controlled subsidiaries in the period (H1FY24: £113.9m).

Purchase of current financial assets includes £61.7m (H1 FY24: £90.1m) of financial assets held by controlled subsidiaries.

10. Post balance sheet events

There have been no material events since the balance sheet date.

Other information

Outstanding debt facilities at 30 September 2024

Note: after the end of the period covered in this report the Group entered into a new RCF, replacing the previous ESG-linked RCF.

Glossary

Non-IFRS alternative performance measures (APM) are defined below:

Other definitions which have not been identified as non-IFRS GAAP alternative performance measures are as follows: