Slide 1: ICG plc FY11 Results
ICG plc FY11 Results 1 June 2011 Intermediate Capital Group plc and Intermediate Capital Managers Limited are authorised and regulated in the United Kingdom by the Financial Services Authority
Slide 2: Highlights
Highlights Operational Highlights Third party AUM up 9% to €9bn Strong performance across the investment portfolio 13 exits for 1.8x and an 18% IRR £1bn total of investments, £311m on behalf of ICG balance sheet Financial Highlights FMC profits of £36m, up 15% adjusted for £6.9m release IC profits o
Slide 3: Market Update
Market Update Intermediate Capital Group plc
Slide 4: Record High Yield issuance
Record High Yield issuance European High Yield Bond Issuance by Quarter 50,000 45,000 40,000 35,000 30,000 €m 25,000 20,000 15,000 10,000 5,000 0 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Source: S&P Intermediate Capital Group plc 4
Slide 5: Limited issuance of LBO senior debt
Limited issuance of LBO senior debt €160 €140 €120 €100 €bn €80 €60 €40 €20 €0 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Q1 Source: S&P Intermediate Capital Group plc 5
Slide 6: European loan market rally continues
Ja n- 60 65 70 75 80 85 90 95 100 105 0 M 3 ay -0 Source: S&P 3 Se p- 03 Ja n- 0 M 4 ay -0 4 Se p- 04 Ja n- 0 M 5 S&P Leverage Loan Index ay -0 5 Se p- 05 Ja n- 0 M 6 ay -0 6 Se p- 06 Ja n- 0 B M 7 ay -0 7 Se p- BB 07 Ja Intermediate Capital Group plc n- 0 M 8 ay -0 8 Se p- 08 Ja n- 0 European loan
Slide 7: No new CLOs raised
No new CLOs raised 90.0 80.0 70.0 60.0 50.0 $bn 40.0 30.0 ICG 20.0 Eos 10.0 - 2003 2004 2005 2006 2007 2008 2009 2010 2011 US Europe Source: BAML Intermediate Capital Group plc 7
Slide 8: US dealing with issues: Europe significantly lagging
US dealing with issues: Europe significantly lagging Changes in Loan Maturity Profile since January 2009 80 69 60 51 40 17 20 5.7 7 -0.1 0 €bn -20 -2.2 -6.5 -13.2 -9.2 -40 -33 -60 -53 -80 -70 -100 -90 2011 2012 2013 2014 2015 2016 2017 Europe US Source: JPMorgan Intermediate Capital Group plc 8
Slide 9: LBO volume at 2001-2004 levels
LBO volume at 2001-2004 levels 180 160 140 120 100 €b n 80 60 40 20 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Q1 Source: S&P Intermediate Capital Group plc 9
Slide 10: High prices - Lower credit risk
High prices - Lower credit risk Multiple of EBITDA 12.0x 10.0x 9.7x 9.7x 9.2x 8.8x 8.9x 8.2x 8.3x 8.0x 8.0x 7.7x 7.6x 7.3x 7.3x 7.1x 7.0x 6.8x 6.0x 4.0x 2.0x 0.0x 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Q1 Debt/EBITDA Equity/EBITDA Other/EBITDA Source: S&P Intermed
Slide 11: Significant Private Equity dry powder remains
Significant Private Equity dry powder remains Dry powder Funds raised 200 180 160 140 €bn 120 100 80 60 40 20 0 2005 2006 2007 2008 2009 2010 Q1 2011 Source: Preqin Intermediate Capital Group plc 11
Slide 12: ICG creates unique investment opportunities
ICG creates unique investment opportunities 14,000 12,000 10,000 8,000 €m 6,000 1,400 1,200 4,000 1,000 800 2,000 €m 600 - 400 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 200 Q1 European Mezzanine market ICG Investments* - 2010 2011 Q1 Source: ICG/S&P * Investment Company and Mezzani
Slide 13: New Investments
New Investments Intermediate Capital Group plc
Slide 14: Unique investment opportunities
Unique investment opportunities ICG* has invested c. £1bn in FY2011, with a target return of 1.9x Investment Proprietary Sourced Sourcing Investment Size √ PE £110m EOS √ ICG led over £300m √ PE £80m √ ICG led £225m - PE £155m - ICG led £52m - PE £35m * Investment Company and Mezzanine Funds Interme
Slide 15: Deal flow
Deal flow New deal opportunities presented to Investment Committee 102 98 23 2008 2009 2010 Intermediate Capital Group plc 15
Slide 16: Exits
Exits Intermediate Capital Group plc
Slide 17: Strong exits
Strong exits 13 investments exited, £388m of repayments, £82m of PIK and £132m* of capital gains Vintage Companies IRR Cash Year Multiple 2004 Picard, Eurofarad, TeamSystem 17% 1.9x 2005 Geoservices 29% 2.0x Medica, Visma, Loyalty Partners, Pasteur Cerba, 2006 19% 1.8x Sebia, Gerflor 2007 TBC 16% 1.
Slide 18: Portfolio Update
Portfolio Update Intermediate Capital Group plc
Slide 19: Investment portfolio
Investment portfolio Performance vs. prior year Percentage of assets performing at or above prior year 80% 70% 60% 50% 40% 30% 20% 10% 0% Jun-08 Sep-08 Dec-08 Mar-09 Jun-09 Sep-09 Dec-09 Mar-10 Jun-10 Sep-10 Dec-10 Mar-11 Intermediate Capital Group plc 19
Slide 20: Top twenty assets
Top twenty assets Vs Last Business Country Year Private clinic manager France → Electronic publisher of company information Belgium ↑ Textile rental and cleaning France ↑ Airport operator UK ↑ Inspection, certification and technological services Spain ↑ Waste management solutions provider UK ↓ Elder
Slide 21: Top ten equity assets
Top ten equity assets Vs Last Business Country Year Patent & legal services UK ↑ PVC Flooring France ↑ Fixed satellite services USA ↑ Home delivery of frozen foods Germany ↑ Livestock identification systems France ↑ Insurance and roadside assistance UK → Software solutions Italy ↑ Inspection, certif
Slide 22: Trend in provisions for portfolio companies
Trend in provisions for portfolio companies Gross provisions Write-backs 250 200 150 £m 100 50 0 H1 08 H2 08 H1 09 H2 09 H1 10 H2 10 H1 11 H2 11 Intermediate Capital Group plc 22
Slide 23: AUM and Fund Performance
AUM and Fund Performance Intermediate Capital Group plc 23
Slide 24: Third party funds under management
Third party funds under management CFM Funds Mezz Funds 10 9 8 7 6 €bn 5 4 3 2 1 0 FY 00 FY 01 FY 02 FY 03 FY 04 FY 05 FY 06 FY 07 FY08 FY09 FY10 FY11 Intermediate Capital Group plc 24
Slide 25: Top quartile Private Equity performance
Top quartile Private Equity performance 2000 2003 2006 RF 2008 IMP 2008 1998 Fund Fund Fund Fund Fund Fund 2nd Top Top Top Top Top Quartile Quartile Quartile Quartile Quartile Quartile 1.90x 1.7x Net Money Multiple 1.70x 1.6x 1.50x 1.4x 1.3x 1.3x 1.30x 1.2x 1.10x 0.90x 0.70x 1998 2000 2003 2006 2008
Slide 26: Credit Fund Management performance
Credit Fund Management performance Leveraged loans ICG Senior Secured Loan Performance* ICG Loan Default Rate vs. vs. Credit Suisse Western European Loan Index S&P Speculative Grade* Default Rate 135% 16% 130% 14% 125% 120% 12% 115% 110% 10% 105% 100% 8% 95% 90% 6% 85% 4% 80% 75% 2% 70% 65% 0% Jul-0
Slide 27: Credit Fund Management performance
Credit Fund Management performance High Yield ICG High Yield Composite* ICG High Yield Default Rate vs. vs. Merrill Lynch High Yield Index (HEAG) S&P High Yield Default Rate 205% 8% 195% 185% 7% 175% 6% 165% 155% 5% 145% 4% 135% 125% 3% 115% 105% 2% 95% 1% 85% 75% 0% J u l-0 1 J u l-0 2 J u l-0 3 J
Slide 28: Fund management priorities
Fund management priorities Sales team Grow core business ICG Europe V ICG High Yield Bond Fund and European Loan Fund Develop new opportunities Longbow Intermediate Capital Group plc 28
Slide 29: Financial Overview
Financial Overview Intermediate Capital Group plc
Slide 30: Segmental reporting
Segmental reporting £m March 2011 March 2010 March 2009 Fee income 81.8 76.4 80.2 Fund Management Other income 4.1 1.9 6.0 Company Admin expenses (50.0) (40.3) (55.3) FM Profit 35.9 38.0 30.9 Net Interest Income 179.8 209.7 189.9 Div & other income 11.0 3.4 10.0 Admin expenses (67.0) (60.7) (57.5) I
Slide 31: Third party AUM
Third party AUM Third party AUM up due to CFM inflow (Eos Loan Fund 1) 10000 390 9000 1288 16 €bm 170 266 8000 9,036 8,249 7000 Mar-10 New Realisations New CFM Realisations FX Mar-11 Mezzanine Mezzanine CFM Intermediate Capital Group plc 31
Slide 32: Third party fee income
Third party fee income 60 50 40 £m 30 20 10 0 FY 08 FY 09 FY 10 FY 11 Mezzanine Funds CFM Funds Intermediate Capital Group plc 32
Slide 33: Mezzanine and Growth Capital Funds
Mezzanine and Growth Capital Funds Third party fee income ICG European Fund 06 now in realisation phase Mezzanine and minority equity fee income in £m FY11 FY10 Mgmt Carried Mgmt Carried Fee Interest Fee Interest Investing Europe 4.5 0.0 13.7 0.0 Investing Asia 5.4 0.0 5.7 0.0 Realisation 19.4 1.3 1
Slide 34: Credit funds
Credit funds Fee income CFM Fee Income in £m FY11 FY10 Management & senior fees 6.7 7.3 Junior fees relating to the 12.8 6.7 year Junior fees relating to prior 3.8 - periods Other performance fees 0.4 - Total 23.7 14.0 Intermediate Capital Group plc 34
Slide 35: Fund Management Company
Fund Management Company Profit before tax of £35.9m 50 45 40 2.2 35 1.5 5.4 1.3 30 £m 25 35.9 20 15 31.1 10 5 0 FY10* Fee income Other income Incentive Operating Costs FY 11 Schemes Intermediate Capital Group plc 35
Slide 36: Investment Company
Investment Company Profit before tax and fair value adjustments at £154.2m 160 3.9 140 24.2 120 100 150.4 £m 80 90.9 60 29.9 40 7.6 0.5 67.8 6.8 20 0 FY 10 NII Div & other Incentive Operating Impairment Net Capital FV FY 11 income schemes Expenses Gains derivatives Intermediate Capital Group plc 36
Slide 37: Net interest income analysis
Net interest income analysis NII at £180m, 14% lower driven by lower average investment portfolio (£2.6bn vs £2.8bn), last year’s provisions and the exits of large PIK assets (Marken, Medica, Sebia,Visma,TBC) 300 250 200 £m 150 100 50 0 FY 10 FY 11 Interest Income Interest Expense Intermediate Capit
Slide 38: Long terms provisions
Long terms provisions Net provisions (as a % of opening book) back to historical levels 12% 11% 10% 9% 8% 7% 6% 5% Average 4% pre-crisis: 3% 2.4% 2% 1% 0% FY 95 FY 96 FY 97 FY 98 FY 99 FY 00 FY 01 FY 02 FY 03 FY 04 FY 05 FY 06 FY 07 FY 08 FY 09 FY 10 FY 11 Intermediate Capital Group plc 38
Slide 39: Operating costs
Operating costs (Excluding incentive schemes) Operating costs impacted by one off impact of 20 Old Broad St lease 50 45 40 35 30 £m 25 20 15 10 5 0 FY 08 FY 09 FY 10 FY 11 H2 10 H1 11 H2 11 Salaries Administrative costs One off charge re 20 Old Broad St lease Intermediate Capital Group plc 39
Slide 40: P&L impact of FY10 awards
P&L impact of FY10 awards One year’s awards expensed over number of years Aggregate charge is 30% of cash profit 14 12 10 9.6 8 £m 6 4 2 0 FY 10 FY11 FY12 FY13 FY14 FY15 FY 10 Deferred share awards FY 10 Cash Bonus Intermediate Capital Group plc 40
Slide 41: Incentive schemes excluding MTIS on capital gains
Incentive schemes excluding MTIS on capital gains Group Segmental £m FY 11 FM Co Inv Co FY10 Awards 9.6 5.9 3.7 FY11 Awards 10.9 8.7 2.2 Total 20.5 14.6 5.9 FY 11 FM Co Inv Co Old Schemes* 23.3 - 23.3 * MTIS on rolled interest and shares options Intermediate Capital Group plc 41
Slide 42: Balance Sheet
Balance Sheet 31 March 2011 31 March 2010 £m £m Loans & Investments 2,575 2,718 Net current liabilities (76) (30) 2,499 2,678 Shareholders’ Funds 1,251 1,184 Borrowings 1,248 1,494 2,499 2,678 ROE 10.8% 7.2% Gearing Ratio 100% 127% Debt Facilities 2,033 2,223 Headroom at year end 785 729 Headroom at
Slide 43: Debt maturity profile
Debt maturity profile 700 600 500 400 £m 300 200 100 0 H1 12 H2 12 H1 13 H2 13 H1 14 H2 14 2015 2016 2017 2019 2024 Private Placements Revolver £450/295m Facility Securitisation Intermediate Capital Group plc 43
Slide 44: Gearing vs. Equity and PIK as a % of portfolio
Gearing vs. Equity and PIK as a % of portfolio 300% 50% 250% 40% 200% 30% 150% 20% 100% 50% 10% FY 05 FY 06 FY 07 FY 08 FY 09 FY 10 FY 11 Gearing (LHS) Equity and PIK as % of portfolio (RHS) Intermediate Capital Group plc 44
Slide 45: Cash core income
Cash core income 120 Cash Core Income Calculation: Pre tax profit* £195.3m 100 Less Capital Gains** £(101.3)m 80 Plus provisions £70.9m £(126.9)m £m 60 Less Accrued PIK** Plus PIK realised** £68.2m 40 Cash Core Income £106.7m 20 0 FY 08 FY 09 FY 10 FY 11 H2 10 H1 11 H2 11 * adjusted for FV movements
Slide 46: Financial outlook
Financial outlook Stable fee income New funds will compensate for one-off catch up on junior fees in FY11 Further realisations Capital Gains Realisation of PIK Reduction in NII as book contracts slightly and price of debt increases Additional new investments but remain unpredictable Provisions expec
Slide 47: Conclusion
Conclusion Intermediate Capital Group plc
Slide 48: Appendix
Appendix Intermediate Capital Group plc
Slide 49: Refinancing problem lies ahead
Refinancing problem lies ahead European CLOs Funded Amount by End of €60 Reinvestment Period vs. European Maturing LBO Senior Debt €50 €40 Amount (€bn) €30 €20 €10 €0 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Year European CLOs Total Funded Amount by End of Reinvestment Period European Matur
Slide 50: Top ten PIK assets
Top ten PIK assets Vs Last Business Country Year Airport operator UK ↑ Private clinic manager France → Credit Bureau Australia → Share registry and fund administration services Australia ↑ Security services Italy ↑ Electronic publisher of company information Belgium ↑ Cinema owner and operator Austr
Slide 51: Gains on investments
Gains on investments £m FY 11 FY 10 Realised gains 127.2 78.0 Unrealised gains 6.2 20.0 Total gains 133.4 98.0 MTIS (31.0) (21.7) Net gains 102.4 73.6 Intermediate Capital Group plc 51
Slide 52: Impairments
Impairments £m FY 11 FY 10 Mezzanine and equity investment Gross impairment 89.8 180.4 Recoveries (18.9) (18.5) Net impairment 70.9 161.9 Intermediate Capital Group plc 52
Slide 53: Capital account
Capital account Provisions Provision write-backs Capital Gains 300 200 100 £m 0 -100 -200 -300 FY 00 FY 01 FY 02 FY 03 FY 04 FY 05 FY 06 FY 07 FY 08 FY 09 FY10 FY11 Intermediate Capital Group plc 53
Slide 54: New lending vs. repayments
New lending vs. repayments* 1400 New Lending Repayments 1200 1000 800 £m 600 400 200 0 Mar- Jun- Sep- Dec- Mar- Jun- Sep- Dec- Mar- Jun- Sep- Dec- Mar- Jun- Sep- Dec- Mar- Jun- Sep- Dec- Mar- 06 06 06 06 07 07 07 07 08 08 08 08 09 09 09 09 10 10 10 10 11 *6 months moving average Intermediate Capital
Slide 55: Fee income
Fee income £m FY11 FY 10 Mezzanine Fund Management fee income 32.4 34.6 Credit Fund Management fee income 23.7 14.0 Third Party Funds fee income 56.1 48.6 Investment Company fee income 25.7 27.8 Total fee income 81.8 76.4 Intermediate Capital Group plc 55
Slide 56: Mezzanine and Minority Equity Funds
Mezzanine and Minority Equity Funds Fee income Management fees Carried interest 40 35 30 25 £m 20 15 10 5 0 FY 00 FY 01 FY 02 FY 03 FY 04 FY 05 FY 06 FY 07 FY 08 FY 09 FY 10 FY11 Intermediate Capital Group plc 56
Slide 57: Credit Funds
Credit Funds Fee income analysis Senior fees Junior fees Performance fees 25 20 15 £m 10 5 0 FY 00 FY 01 FY 02 FY 03 FY 04 FY 05 FY 06 FY 07 FY 08 FY 09 FY10 FY11 Intermediate Capital Group plc 57
Slide 58: Pre-tax profits, earnings per share & dividends
Pre-tax profits, earnings per share & dividends FY 11 FY 10 Pre tax profit excluding FV £190.1m £105.7m Pre tax profit £186.3m £105.8m Net profit £128.1m £81.7m EPS 32.6p 25.0p DPS 18.0p 17.0p Intermediate Capital Group plc 58
Slide 59: Capacity of mezzanine funds
Capacity of mezzanine funds Fully invested 1800 1600 Investing 1400 1200 1000 €m 800 600 400 200 0 MF 2000 MF 2003 EF 2006 ICAP 2005 IMP 2008 RF 2008 ICAP 2008 Initial Size Current Assets Note: RF 2008 and EF2006 excludes Eos debt Intermediate Capital Group plc 59
Slide 60: Mezzanine and Growth Capital Funds
Mezzanine and Growth Capital Funds Fee structure Funds in investment period End of investment Fund Size Equity % Invested Main fee period ICAP 08 $0.6bn $0.6bn April-2013 26% 1.5% on committed equity RF08 €0.84bn €0.64bn Oct-2011 75% 1.5% on invested Funds in realisation End of investment Fund Size
Slide 61: Segmental reporting
Segmental reporting £m H2 11 H1 11 H2 10 Fee income 42.7 39.1 34.9 Fund Management Other income 3.0 1.1 0.8 Company Admin expenses (26.7) (23.3) (20.5) FM Profit 19.0 16.9 15.2 Net Interest Income 84.8 95.0 107.2 Div & other income 9.7 1.4 2.6 Admin expenses (34.0) (33.0) (28.7) Investment Impairmen
Slide 62: Disclaimer
Disclaimer Important Notice The materials being provided to you are intended only for informational purposes and convenient reference and may not be relied upon for any purpose. This information is not intended to provide, and should not be relied upon, for accounting, legal, tax advice or investmen