Slide 1: ICG plc FY12 Results
ICG plc FY12 Results 22 May 2012 Intermediate Capital Group plc “ICG” and Intermediate Capital Managers Limited are authorised and regulated in the United Kingdom by the Financial Services Authority
Slide 2: Highlights
Highlights Operational highlights Progress on fund management platform: products and distribution in place AUM of €11.4bn Down 3% due to CLO runoff, credit fund raising impacted by sovereign crisis Mezzanine AUM up 7% (Fund V, Longbow) Portfolio companies showing resilience 8 exits at
Slide 3: Market Update
Market Update Intermediate Capital Group plc
Slide 4: Marked Slowdown in Europe in H2
Marked Slowdown in Europe in H2 Rapid deterioration of economic outlook and uncertainty over the Euro Sovereign crisis put a stop to 18 months of renewed activity in Europe Limited short term visibility due to volatility Intermediate Capital Group plc 4
Slide 5: Long term trends remain favourable
Long term trends remain favourable European LBO Market: Withdrawals of European banks European CLOs capacity reduces by €26 billion over the next two years PE Dry Powder still unchanged at €175 billion US LBO market Transaction volumes recovering Highly competitive while volumes remain
Slide 6: Portfolio Update
Portfolio Update Intermediate Capital Group plc
Slide 7: Exits
Exits Continued flow Slowdown in exits due to market volatility and less liquidity to support new transactions 8 investments exited (and one partial exit), £365m of repayments, £113m of PIK and £74m of capital gains Average Returns of 22% Cash Multiple 1.9x Intermediate Capital Group plc 7 7
Slide 8: New Investments
New Investments Slowdown in H2 due to environment £122m of new investments Reinvestment in Tegel and BvD New investment in HMG, Ventura and 2 investments in China Low volumes in Europe in H2 coupled with extremely cautious approach to investments given economic uncertainty Good momentum si
Slide 9: Investment portfolio
Investment portfolio Performance vs. prior year shows resilience Percentage of assets performing at or above prior year 80% 70% 60% 50% 40% 30% 20% 10% 0% Jun- Sep- Dec- Mar- Jun- Sep- Dec- Mar- Jun- Sep- Dec- Mar- Jun- Sep- Dec- Mar- 08 08 08 09 09 09 09 10 10 10 10 11 11 11 11 12 Intermediate Capi
Slide 10: Top twenty assets
Top twenty assets Strong performance continues Vs Last Business Country Year Private clinic manager France ↓ Textile rental and cleaning France ↑ Inspection, certification and technological services Spain ↑ Elderly care homes Sweden ↑ Share registry and fund administration services Australia ↑ Speci
Slide 11: Provisions for Portfolio Companies
Provisions for Portfolio Companies Positive underlying trend in difficult environment Gross Provisions Loan Stocks Write-backs 300 250 200 £m 150 100 50 0 FY 08 FY 09 FY 10 FY 11 FY 12 Intermediate Capital Group plc 11
Slide 12: Fund Management
Fund Management Intermediate Capital Group plc 12
Slide 13: Third party funds under management
Third party funds under management AUM of €11.4 bn Down 3% due to CLO runoff, credit fundraising impacted by sovereign crisis Mezzanine AUM up 7% (ICG Europe Fund V, ICG Longbow) 14,000 12,000 10,000 8,000 6,000 4,000 2,000 - FY 00 FY 01 FY 02 FY 03 FY 04 FY 05 FY 06 FY 07 FY08 FY09 FY10 FY11
Slide 14: Fund Management Company Growth
Fund Management Company Growth Long term trend support our ambitions Institutions are increasingly drawn to alternative yield Uncertainty makes cash distributions attractive Regulatory frameworks makes equity a capital intensive asset class Traditional fixed income asset classes generate low
Slide 15: Investor Management Group
Investor Management Group Strengthened distribution team 2 full time staff March 2010 Focus on servicing existing investors 14 full time staff 5 Distribution Executives with global reach March 2012 8 sales support & client services Recruited new Head of Distribution Andreas Mondovits
Slide 16: Delivering Alternative Yield
Delivering Alternative Yield We offer attractive yield solutions to institutional investors Product Net Yield German Government 0.9% Traditional Bonds Fixed Corporate Bonds 2.3% Income Leveraged Loans 6–10% High Yield Bonds 12% Alternative Yield Real Estate Mezzanine 14% Corporate Mezzanine 16% Inte
Slide 17: ICG Products
ICG Products Broadened offering Product Summary Target Yield • ICG’s latest European mezzanine fund ICG Europe Fund V 16% • Targeting final close of €2bn in July 2012 • Direct lending to European corporates Senior Debt Partners 10% • Launch imminent European Loan • Liquid European Senior Leveraged L
Slide 18: Delivering Alternative Yield
Delivering Alternative Yield Organic growth through geographic expansion Product Net Yield Europe Asia US Leveraged Loans 6–10% High Yield Bonds 12% Real Estate Mezzanine 14% UK Corporate Mezzanine 16% IC only Intermediate Capital Group plc 18
Slide 19: Delivering Alternative Yield
Delivering Alternative Yield Expansion into adjacent asset classes Real Estate Senior Debt Longbow acquired in December 2010 – delivering ahead of expectations Look at opportunities beyond UK mezzanine Asset-backed Securities Infrastructure Secondaries Intermediate Capital Group plc 19
Slide 20: Priorities for Growth in FY13
Priorities for Growth in FY 13 Mezzanine Final close on ICG Europe Fund V Launch of Asia Pacific successor fund Launch of ICG Longbow successor fund CFM Launch Senior Debt Partners fund Market segregated mandates and open ended funds US strategy Good momentum since year end but vis
Slide 21: Financial Overview
Financial Overview Intermediate Capital Group plc
Slide 22: Financial Highlights
Financial Highlights Pre-tax profit* of £198.8m vs £190.1m in FY11 FMC Profit before tax: £37.7m vs £35.9m in FY11 IC Profit before tax*: £161.1m vs £154.2m in FY11 £227m of debt extension and agreed with our key banks, subject to documentation, to roll 2013 maturities to June 2016, current
Slide 23: Segmental Reporting
Segmental Reporting Strong underlying growth £m March 2012 March 2011 March 2010 Fee income 91.2 81.8 76.4 Fund Management Other income 2.9 4.1 1.9 Company Admin expenses (56.4) (50.0) (40.3) FM Profit 37.7 35.9 38.0 Net Interest Income 183.5 179.8 209.7 Div & other income 7.6 11.0 3.4 Admin expense
Slide 24: Third party AUM
Third party AUM Good momentum in mezzanine funds Third party AUM down 3% to €8.7bn due to older CLOs runoff, mezzanine AUM up 7% 10000 416 668 13 9000 622 €m 8000 9,036 8,679 7000 Mar-11 New Realisations New CFM Realisations Mar-12 Mezzanine Mezzanine CFM Intermediate Capital Group plc 24
Slide 25: Third party fee income
Third party fee income Growth in high margin funds drives fee income 70 60 50 40 £m 30 20 10 0 FY 08 FY 09 FY 10 FY 11 FY 12 Mezzanine Funds CFM Funds Intermediate Capital Group plc 25
Slide 26: Fund Management Company
Fund Management Company Increase in fee income drives FMC profit Profit before tax of £37.7m, up 5% 50 45 1.2 40 9.4 1.8 4.6 35 30 £m 25 20 37.7 35.9 15 10 5 0 FY11 Fee income Other income Staff costs Operating costs FY12 Intermediate Capital Group plc 26
Slide 27: Net interest income analysis
Net interest income analysis NII stable despite lower IC portfolio NII at £183.5m, up 2% 300 250 200 £m 150 100 50 0 FY 10 FY 11 FY 12 Interest Income Interest Expense Intermediate Capital Group plc 27
Slide 28: Long terms provisions
Long terms provisions Net provisions remains at historical average level 12% 11% 10% 9% 8% 7% 6% 5% Average 4% pre-crisis: 3% 2.4% 2% 1% 0% FY 95FY 96 FY 97FY 98FY 99FY 00FY 01 FY 02FY 03 FY 04FY 05FY 06 FY 07FY 08 FY 09FY 10FY 11FY 12 Intermediate Capital Group plc 28
Slide 29: Gains on Investments
Gains on Investments High level of net gains maintained despite difficult market £m FY12 FY11 Realised gains 73.8 127.2 Unrealised gains 44.2 6.2 Total gains 118.0 133.4 MTIS (14.7) (31.0) Net gains 103.3 102.4* Unrealised gains Fair value increase on unrealised equity investments: £45.1m Fair
Slide 30: Top AFS and FVTPL assets
Top AFS and FVTPL assets Resilient equity portfolio AFS assets Value Value Value Company Business Country at 31/03/12 at 30/09/11 at 31/03/11 Allflex Livestock identification systems UK £65.4m £47.9m £24.2m Intelsat Fixed satellite services USA £45.6m £59.2m £32.7m AAS Link Share registry and fund
Slide 31: Investment Company
Investment Company Profit before tax of £161.1m 170 2.1 160 3.7 4.2 0.3 3.4 150 140 £m 161.1 130 154.2 120 110 100 FY 11 NII Div & other Costs Impairment Net Capital FY 12 income Gains Intermediate Capital Group plc 31
Slide 32: Operating costs excluding incentive schemes
Operating costs excluding incentive schemes Salaries increase reflects growth of distribution group 60 50 40 £m 30 20 10 0 FY 08 FY 09 FY 10 FY 11 FY12 Salaries Administrative costs Onerous Lease Intermediate Capital Group plc 32
Slide 33: Incentive Schemes Excluding MTIS on gains
Incentive Schemes Excluding MTIS on gains £m FY12 FY11 H2 11 H1 11 FY10 FY10 Awards 4.3 9.6 12.6 FY11 Awards 12.6 10.9 - FY 12 Accruals 14.6 - - New Schemes 31.5 20.5 12.6 Old Schemes 11.5 23.3 29.5 Total 43.0 43.8 42.1 Intermediate Capital Group plc 33
Slide 34: Long term P&L impact of incentive schemes
Long term P&L impact of incentive schemes (excluding balance sheet carry) Based on FY10 and FY11 and FY12 actual awards, and constant FY12 awards for future years Roll-out driven growth until FY15 included, but immaterial in FY14 & FY15 30 25 FY15 awards 20 £m FY14 awards 15 FY13 awards FY12 awa
Slide 35: Balance Sheet
Balance Sheet 31 March 2012 31 March 2011 £m £m Loans & Investments 2,352 2,575 Net current assets/(liabilities) 78 (76) 2,430 2,499 Shareholders’ Funds 1,451 1,250 Borrowings 979 1,249 2,430 2,499 ROE* 11.5% 10.8% Gearing Ratio 66% 100% Debt Facilities 1,806 2,033 Headroom at year end 827 785 Curre
Slide 36: Debt maturity profile
Debt maturity profile Agreed subject to documentation 900 800 700 600 500 £m 400 300 200 100 0 H1 '13 H2 '13 H1 '14 H2 '14 FY15 FY16 FY17 FY18 FY19 --- FY25 Private placements Retail bond Bank facilities Securitisation Intermediate Capital Group plc 36
Slide 37: Cash Flow Analysis
Cash Flow Analysis Strong cash generation £m FY12 FY 11 FY 10 Operating cash flow 138.2 157.5 90.6 Cash flow relating to Capital Gains 41.7 121.9 79.3 Repayments & recoveries 368.6 368.6 217.3 Tax & others (66.6) (5.1) (14.5) Free Cash flow 481.9 642.9 372.7 New investments 123.3 315.9 98.2 Dividend
Slide 38: Financial outlook
Financial outlook FMC Higher fee income driven by ICG Europe Fund V and new funds Increase in costs as we continue to strengthen distribution team IC Reduction in NII as price of debt increases Good momentum in new investments but environment remains unpredictable Further capital gains
Slide 39: Highlights
Highlights Operational highlights Progress on fund management platform: products and distribution in place AUM of €11.4bn Down 3% due to CLO runoff, credit fund raising impacted by sovereign crisis Mezzanine AUM up 7% (Fund V, Longbow) Portfolio companies showing resilience 8 exits at
Slide 40: Appendix
Appendix Intermediate Capital Group plc
Slide 41: Market Update
Market Update Intermediate Capital Group plc
Slide 42: Refinancing opportunities lie ahead
Refinancing opportunities lie ahead European CLOs funded amount by reinvestment period expiry vs. European maturing leveraged loans 60 50 40 30 €bn 20 10 0 2012 2013 2014 2015 2016 2017 2018 European CLOs Total Funded Amount by Reinvestment Period Expiry Maturing Leveraged Loans Source: JPMorgan Str
Slide 43: LBO Market
LBO Market Slowdown in High Yield issuance 50 Europe High Yield Issuance 45 40 35 30 US$bn 25 20 15 10 5 0 Source: S&P Intermediate Capital Group plc 43
Slide 44: European LBO Volume
European LBO Volume Slowdown so far has prevailed into 2012 Primary LBOs 180 160 140 120 100 €bn 80 60 40 20 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Q1 Source: S&P Intermediate Capital Group plc 44
Slide 45: Price of loans attractive again
De c- 102 54 58 62 66 70 74 78 82 86 90 94 98 M 02 ar - Ju 03 n- Se 0 3 p- De 0 3 c- M 03 ar - Ju 04 n- Se 0 4 p- De 0 4 c- M 04 ar - Ju 05 n- Se 0 5 p- De 0 5 c- M 05 Market ar - Ju 06 n- Se 0 6 p- De 0 6 c- M 06 ar Source: S&P, European Secondary Pricing Source: Markit Loans - Ju 07 n- Se 0 7 p- D
Slide 46: LBO Market
LBO Market European Significant Private Equity dry powder remains 200 180 160 140 120 €bn 100 80 60 40 20 0 2005 2006 2007 2008 2009 2010 2011 2012 Q1 Dry powder Number of funds raised Source: Preqin Intermediate Capital Group plc 46
Slide 47: LBO Market
LBO Market European leveraged loans and HY bonds maturity profile €60 €50 €40 €bn €30 €20 €10 €0 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 or later Year High Yield Bonds Leverage Loan Source: S&P European Leveraged Loan Index (ELLI); Bank of America Merrill Lynch European High-Yield Bond Ind
Slide 48: LBO Market
LBO Market European banks need to degear Total European Bank Assets / GDP 250% 200% 150% 100% 50% 0% 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Source: ECB, December 2011 Intermediate Capital Group plc 48
Slide 49: Real Estate Market
Real Estate Market European Debt Funding Gap 2012-13 € bn 20 10 0 Source: DTZ, May 2012 Intermediate Capital Group plc 49
Slide 50: Portfolio
Portfolio Intermediate Capital Group plc
Slide 51: New Lending vs Repayments
New Lending vs Repayments* 1400 New Lending Repayments 1200 1000 800 £m 600 400 200 0 Sep-07 Dec-07 Mar-08 Jun-08 Sep-08 Dec-08 Mar-09 Jun-09 Sep-09 Dec-09 Mar-10 Jun-10 Sep-10 Dec-10 Mar-11 Jun-11 Sep-11 Dec-11 Mar-12 *6 months moving average Intermediate Capital Group plc 51
Slide 52: Top ten equity assets
Top ten equity assets Business Country Vs Last Year Livestock identification system UK ↑ Fixed satellite services US ↑ PVC Flooring France ↑ Share registry and fund administration services Australia ↑ Software solutions Italy ↑ Utilities Netherlands ↓ Business services Belgium ↑ Inspection, certific
Slide 53: Top ten PIK assets
Top ten PIK assets Business Country Vs Last Year Healthcare France ↓ Transport UK ↑ Financial services Australia ↑ Financial services Australia ↑ Entertainment & Leisure Australia ↑ Business Services Italy ↑ Cinema owner and operator Australia ↓ Catering UK ↑ Pharmaceuticals & Chemicals France ↑ Hea
Slide 54: Funds
Funds Intermediate Capital Group plc
Slide 55: 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 45% 1.5% on committed equity RF08 €0.84bn €0.64bn Oct-2011 78% 1.5% on invested EF V €1.1bn TBC Sep-2016 12% 1.5% on committed Fu
Slide 56: ICG Mezzanine Fund 2003
ICG Mezzanine Fund 2003 Highlights Levered Capital €1.34bn Summary Invested 100% Investments 80 Portfolio Invested Capital €1.67bn Assets 60 Cost Invested €1.2bn Exits Money Multiples/IRR 1.5x / 17% Distribution €833m Gross IRR 14% Money Multiple 1.4x Performance Average Life 50 months Net IRR 14% N
Slide 57: ICG European Fund 2006
ICG European Fund 2006 Highlights Capital €1.75bn Summary Invested 93% Investments 47 Portfolio Invested Capital €1.6bn Assets 8 Cost Invested €357m Exits Money Multiples/ IRR 1.9x / 26% LP Distribution €275m Gross IRR 11% Gross Money Multiple 1.4x Performance Average Life 44 months Net IRR 9% Net M
Slide 58: ICG Recovery Fund 2008
ICG Recovery Fund 2008 Highlights Capital €1.16bn Summary 78% Invested Investments 9 Portfolio Invested Capital €901m Assets 1 Value Invested €4.3m Exits Money Multiples/IRR 2.9x/52% Distribution €38m Gross IRR 18% Money Multiples 1.3x Performance Average Life 16 months Net IRR 11% Net MM 1.2x Sourc
Slide 59: ICG Minority Partners Fund 2008
ICG Minority Partners Fund 2008 Highlights Capital €115m Summary 96% Invested Investments 4 Portfolio Invested Capital €121m Assets 3 Value Invested €101m Exits Money Multiples/IRR 2.2x / 48% Distribution €205m Gross IRR 37% Money Multiples 2.0x Performance Average Life 33 months Net IRR 27% Net MM
Slide 60: Intermediate Capital Asia Pacific Mezzanine Fund 2005
Intermediate Capital Asia Pacific Mezzanine Fund 2005 Highlights Capital $300m Summary 91% Invested Investments 8 Portfolio Invested Capital $277.4m Assets 4 Value Invested $129.4m Exits Money Multiples/IRR 1.3x / 16% Distribution $168.8m Gross IRR 14% Money Multiples 1.5x Performance Average Life 4
Slide 61: Intermediate Capital Asia Pacific Fund 2008
Intermediate Capital Asia Pacific Fund 2008 Highlights Capital $600m Summary 45% Invested Investments 7 Portfolio Invested Capital $286m Assets 1 Value Invested $21.7m Exits Money Multiples/IRR 1.4x / 16% Distribution $94.2m Gross IRR 7% Money Multiples 1.1x Performance Average Life 20 months Net IR
Slide 62: New Funds
New Funds Intermediate Capital Group plc
Slide 63: Product Overview: Senior Debt Partners & European Loan Fund
Product Overview Senior Debt Partners & European Loan Fund Senior Debt Partners European Loan Fund Exploiting market opportunity for Dublin-listed unit trust direct lending in Europe Invests primarily in Euro Targeting buy-and-hold senior denominated senior leveraged loans ICG arranged Q
Slide 64: Product Overview: Total Credit & High Yield Bond Fund
Product Overview Total Credit & High Yield Bond Fund Total Credit High Yield Bond Fund Investment solution to allow smaller UCITS fund offering daily liquidity investors to access a portfolio of Investing in European High Yield Bonds combined loans, bonds & structured credit Track record sin
Slide 65: Product Overview: Segregated Mandates
Product Overview ICG Europe Fund V & Senior Debt Partners Segregated Mandates Manage a number of segregated mandates since 2006. Currently AUM for segregated mandates of €600 million Flexibility across asset classes (individual or combined) Deployed ICG Investor Extranet to allow enhanced repo
Slide 66: Financial information
Financial information Intermediate Capital Group plc
Slide 67: Fee income
Fee income £m FY12 FY 11 Mezzanine Fund Management fee income 43.5 32.4 Credit Fund Management fee income 23.2 23.7 Third Party Funds fee income 66.7 56.1 Investment Company fee income 24.5 25.7 Total fee income 91.2 81.8 Intermediate Capital Group plc 67
Slide 68: Mezzanine and Growth Capital Funds
Mezzanine and Growth Capital Funds Third party fee income Mezzanine and minority equity fee income in £m FY12 FY11 Mgmt Carried Mgmt Carried Fee Interest Fee Interest Investing Europe 24.7 0.0 4.5 0.0 Investing Asia 5.3 0.0 5.4 0.0 Realisation 5.0 7.0 19.4 1.3 Europe Realisation Asia 1.5 0.0 1.8 0.0
Slide 69: Credit funds
Credit funds Fee income CFM Fee Income in £m FY12 FY11 Management & senior fees 7.5 6.7 Junior fees relating to the year 12.3 12.8 Junior fees relating to prior 1.9 3.8 periods Other performance fees 1.5 0.4 Total 23.2 23.7 Intermediate Capital Group plc 69
Slide 70: Incentive schemes excluding MTIS on capital gains
Incentive schemes excluding MTIS on capital gains Group Segmental £m FY 12 FM Co Inv Co New Schemes 31.5 13.4 18.1 Old Schemes* 11.5 - 11.5 Total 43.0 13.4 29.6 * MTIS on rolled interest and shares options Intermediate Capital Group plc 70
Slide 71: Remuneration Schemes – future year impacts
Remuneration Schemes – future year impacts Future P&L impact of FY10, FY11 and FY12 awards – Excluding Balance Sheet Carry FY13 FY14 FY15 FY16 FY17 £m 13.7 7.5 3.6 1.1 0.7 BSC: Charge given percentage to interest income FY13: 4%; FY15: 5% Intermediate Capital Group plc 71
Slide 72: Remuneration Schemes
Remuneration Schemes Assets in BSC Scheme Portfolio companies Year of investment EOS FY11 Fort Dearborn FY11 Team System FY11 Quorn FY11 Westbury Street Holdings (ex Baxter Storey) EOS I - Hold FY11 Fort Dearborn Team System Gerflor FY11 Quorn Baxter Courtepaille Gerflor FY11 Counterpaille. Tegel AA
Slide 73: Impairments
Impairments £m FY 12 FY 11 FY 10 Mezzanine and equity investment Gross impairment 83.5 89.8 180.4 Recoveries (12.9) (18.9) (18.5) Net impairment 70.6 70.9 161.9 Intermediate Capital Group plc 73
Slide 74: Pre-tax Profits, Earnings Per Share & Dividends
Pre-tax Profits, Earnings Per Share & Dividends FY12 FY11 Adjusted pre tax profit* £198.8.m £190.1m Pre tax profit £243.8m £186.3m Net profit £187.6m £128.1m EPS 47.7p 32.6p Adjusted EPS* 39.2p 33.2p DPS 19.0p 18.0p * Adjusted for £45m one off release of previously accrued costs relating to MTIS and
Slide 75: Cash core income
Cash core income Cash Core Income Calculation: Pre tax profit* £198.8m Less Capital Gains** £(103.3)m Plus provisions £70.6m Less Accrued PIK** £(146.5)m Plus PIK realised** £93.9m Cash Core Income £113.5m * Adjusted for £45m one off release of previously accrued costs ** Net of MTIS Intermediate Ca
Slide 76: 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