Slide 1: Intermediate Capital Group PLC Results Presentation
Intermediate Capital Group PLC Results Presentation Tom Attwood, Christophe Evain, Philip Keller 2 June 2009 Authorised and regulated by the Financial Services Authority
Slide 2: Financial Highlights
Financial Highlights ! Pre-tax loss of £67m driven by £273m of provisions ! Core income up 23% to £168m ! £150m of £450m facility extended for 2 years to March 2013 ! £65m reduction ! Positive operating cash flow despite high interest charge ! Total dividend of 41p ! Continue to operate within banki
Slide 3: Investment Portfolio
Investment Portfolio ! Investment portfolio up 27% to £2.9bn £m 3,000 411 84 412 273 2,500 280 141 12 2,000 1,500 2,923 2,487 2,499 2,511 2,306 1,000 500 0 FX 8 s 9 ns s ts d ed -0 er -0 an ue en o ar ar th iv lo si cr m M M O ce vi ew ay ac ro re ep N P st st R re re te te In In Source: ICG 3
Slide 4: Core Income
Core Income ! Core Income up 23% to £168.2m £m 200 28 3 62 150 3 100 168 136 50 0 Mar-08 Interest Interest Fee income Costs Sep-08 income expense Source: ICG 4
Slide 5: Breakdown of Provisions
Breakdown of Provisions £m Gross Provisions/ closing Loan Book (ex CDOs) 350 FY 06: 2.1% FY 07: 2.2% 36 300 FY 08: 2.2% 36 250 FY 09: 9.1% 200 150 266 100 50 22 38 50 0 (29) -50 2006 2007 2008 2009 Mezz Recoveries CDO Source: ICG 5
Slide 6: Balance Sheet
Balance Sheet 31 March 2009 31 March 2008 £m £m Loans and investments 2,922.6 2,360.0 Net current liablities (51.5) (36.0) 2,871.1 2,270.0 Shareholders' funds 775.5 896.2 Borrowings 2,095.6 1,374.0 2,871.1 2,270.2 Gearing ratio 270% 153% Debt facilities £2,403 £2,379 6
Slide 7: Funding
Funding 31 March 2009 Term £m Existing bank facilities 1032 2.6yrs New bank facility 450 2.0yrs Private placement 469 4.5yrs Securitisation 452 15.3yrs 2403 5.4 yrs* Utilised 2091 Headroom 312 * weighted average life 7
Slide 8: Debt Repayment Schedule
Debt Repayment Schedule £m 700 600 500 400 £150m extended for 2 years 300 200 100 0 … H1 10 H2 10 H1 11 H2 11 H1 12 H2 12 H1 13 H2 13 H1 14 H2 14 H2 24 Securitisation Private Placements Revolver £385m Facility 8
Slide 9: Investment Capacity
Investment Capacity ! £312m at 31 March 2009, £247m following maturity extension ! Negatively impacted by weakness of Sterling ! Extremely low levels of repayments: 3.6% of opening portfolio ! Focused on maximising investment capacity ! Driving exits/repayments ! Decoupled Fund and BS investing ! Ex
Slide 10: Covenants
Covenants ! Continued to operate comfortably within covenants ! Minimum Net Worth: Shareholders’ funds of £776m, well above minimum of £380m ! Gearing currently 270% against internal comfort level of 200-300% and well below maximum covenant levels (400%) ! Adjusted Interest Cover > 2.0 vs minimum co
Slide 11: Costs - Driving Further Efficiencies
Costs - Driving Further Efficiencies ! Total operating costs 51% of CI (2008: 61%) ! H2 (pre MTIS) 14% below H1 adjusted for one off severance cost ! Absolute focus on cost ! Network of local offices built ! Infrastructure rolled out driving efficiencies ! 10% headcount reduction at the end of Janua
Slide 12: Breakdown of Operating Costs
Breakdown of Operating Costs £m % 50 100 MTIS in Core Income 40 80 Other Admin 30 60 20 40 Staff Costs 10 20 % of CI (RHS) 0 0 H1 07 H2 07 H1 08 H2 08 H1 09 H2 09 Source: ICG 12
Slide 13: Dividend
Dividend ! Management remains committed to dividend ! Rebased to annual level of 41p ! Interim dividend will be 1/3 of previous year dividend ! Core Income under IFRS is not a good basis for dividend growth ! Dividend will be based on sustainable level of cash flow ! cash core income: Core income –
Slide 14: Financial Outlook
Financial Outlook ! Liquid balance sheet ! Supportive banking group ! Strong underlying earnings ! Limited visibility but, at present, provisions FY10 expected at lower level than FY09 14
Slide 15: The opportunity – A leading fund manager of buyout debt
The opportunity – A leading fund manager of buyout debt Authorised and regulated by the Financial Services Authority
Slide 16: European Market Overview: Large Refinancing Needs in 2012-2016
European Market Overview Large Refinancing Needs in 2012-2016 Maturity profile of European LBO Debt !bn 70 60 50 40 30 20 10 0 2009 2010 2011 2012 2013 2014 2015 2016 Source: Fitch 16
Slide 17: The Opportunity
The Opportunity ! Unusually attractive opportunities in the secondary debt market ! Discounted debt ! Unsyndicated debt held by banks ! Refinancing and restructuring quality buyouts 17
Slide 18: Protecting the value of our portfolio
Protecting the value of our portfolio Authorised and regulated by the Financial Services Authority
Slide 19: Investment Portfolio Performance vs Prior Year and vs Budget
Investment Portfolio Performance vs Prior Year and vs Budget Percentage of assets performing above prior year and above budget 100% Above Prior Year 75% 50% Above Budget 25% 0% Sep-07 Dec-07 Mar-08 Jun-08 Sep-08 Dec-08 Mar-09 Source: ICG 19
Slide 20: Investment Portfolio Diversity
Investment Portfolio Diversity Portfolio by geography* Portfolio by sector* Motors Chemicals & Plastic Hotels & caterer Asia Pacific Insurance Food manufacturing Utilities Pharmaceuticals North America Business Services Food retailing Consumer Products Restaurants Other Europe France Building Materi
Slide 21: Investment Portfolio Top Assets
Investment Portfolio Top 20 Assets INVESTMENT LAST BUSINESS COUNTRY YEAR YEAR BUDGET Private clinic manager France 2007 _ _ Textile rental and cleaning France 2007 _ _ Specialist courier services for the pharmaceutical industry UK 2007 _ _ Electronic publisher of company information Belgium 2007 _ _
Slide 22: Investment Portfolio Provisions
Investment Portfolio Provisions ! £266m of gross provisions for 24 portfolio companies ! List of concern assets broadly stable since December ! £103m for 8 defaulted assets during the financial year / exposure now immaterial ! Default rate of 4.8% ! Assumed very low recovery rates on weaker assets !
Slide 23: Investment Portfolio Managing Weakened Assets
Investment Portfolio Managing Weakened Assets ! Right combination of skills and experience ! Team incentivised and committed to recoveries ! Understanding of local legal environment/ credit regimes ! Ability to inject cash ! Ability to lead and take control 23
Slide 24: Delivering the opportunity
Delivering the opportunity Authorised and regulated by the Financial Services Authority
Slide 25: The European Leverage Gap
The European Leverage Gap ! !360bn leveraged buyout debt ! Over !200bn due for refinancing between 2011 – 2016 ! Solid companies we know with proven management teams, but an inappropriate capital structure ! Secondary buyout debt, at a discount ! Refinancing opportunities 25
Slide 26: The Opportunity - The Skills Required
The Opportunity - The Skills Required ! Origination: depth of information and market knowledge ! Restructuring : make a deal happen ! Behave like owners : exercise influence ! Asset selection: the good from the bad 26
Slide 27: Our Unique Advantage
Our Unique Advantage New York —_ Rix Madria—. x 3 = Frankfurt Ful ~~ Bn P 5 = Hong Kong-. J
Slide 28: Fund Management
Fund Management Authorised and regulated by the Financial Services Authority
Slide 29: Fund Management
Fund Management ! Mezzanine Fund Liquidity ! ICG Mezzanine Fund 1998 £57.5m Closed ! ICG Mezzanine Fund 2000 !387.5m Closed ! ICG Mezzanine Fund 2003 !1.4bn Closed ! Intermediate Capital Asia Pacific Mezzanine Fund 2005 $300m Closed ! ICG European Fund 2006 !2.15bn !1.1bn ! Intermediate Capital Asia
Slide 30: Fund Management Funds raised 2008/09
Fund Management Funds raised 2008/09 ! Intermediate Capital Asia Pacific Fund 2008 $600m ! ICG Minority Partners Fund 2008 !157m ! ICG Recovery Fund 2008 !475m 30
Slide 31: Summary and Priorities
Summary and Priorities ! Objective to become the leading fund manager of buyout debt in Europe ! Our priorities are to manage our portfolio: ! to maximise recoveries, and ! to take advantage of the attractive investment opportunities ! Competitive landscape changing in our favour 31
Slide 32: Appendix
Icg Appendix
Slide 33: Core Income
Core Income Year ended 31 Year ended 31 Increase/ March 2009 March 2008 Decrease Income Interest and dividend income 303.7 236.9 28% Fee and other operating income 59.5 57.0 4% 363.2 293.9 24% Less related expenses Interest payable and other related finance costs (95.5) (38.2) 150% Add back: net los
Slide 34: Net Interest Income
Net Interest Income Year ended 31 Year ended 31 Increase March 2009 March 2008 £m £m Interest Income 303.7 236.9 28% Interest Expenses (103.8) (74.5) 39% Net Interest Income 199.9 162.4 23% 34
Slide 35: Operating Expenses
Operating Expenses Year ended 31 Year ended 31 Increase March 2009 March 2008 £m £m Staff Costs 42.4 43.2 -2% Other admin costs 20.3 19.5 4% 62.7 62.7 0% Medium Term Incentive scheme* 23.4 20.3 15% Operating Expenses 86.1 83.0 4% Expenses as % of core income 51.2% 61.0% -16% * Charge relates to accr
Slide 36: Gains on Investments
Gains on Investments Year ended 31 Year ended 31 Increase March 2009 March 2008 £m £m Realised gains on investments 30.9 133.9 -333% Unrealised gains on investments - 1.3 - Cost of medium term incentive scheme (6.1) (32.3) -430% Net gains on investments 24.8 102.9 -315% 36
Slide 37: Impairments
Impairments Year ended 31 Year ended 31 March 2009 March 2008 £m £m Mezzanine and equity investment Gross Impairment 266.2 50.2 Recoveries (28.7) (14.8) Equity in ICG - managed CDO's Gross Impairment 35.6 10.6 Recoveries - - Impairments net of write backs 273.1 46.0 37
Slide 38: Pre-tax profits / loss
Pre-tax profits / loss Year ended 31 Year ended 31 Increase March 2009 March 2008 £m £m Interest and dividend income 303.7 236.9 22% Gains on investments 30.9 135.2 -338% Fee and other operating income 59.5 57.0 4% 394.1 429.1 -9% Interest payable and other related financing costs (95.5) (38.3) 60%
Slide 39: Pre-tax Profits, Earnings per Share & Dividends
Pre-tax Profits, Earnings per Share & Dividends Year ended 31 Year ended 31 Increase March 2009 March 2008 £m £m Pre-tax (loss) / profit (66.7) 229.5 n.a. Pre-tax (loss) / profit** (75.0) 193.3 n.a. Earnings per share (84.8) 213.4 n.a. Dividend per share 41.0p 65.0p -37% ** Excluding fair value move
Slide 40: Interest Cover Covenant
Interest Cover Covenant ! Level of 2 calculated as follows: PBT (67) + Specific provisions 302 + Interest charges* 98 - PIK (adjusted for MTIS) (139) + others** 3 197 (2x times 98) ! Going forward repayments are the critical factors as they drive capital gains and PIK realisation * Excludes derivati
Slide 41: Net Debt Reconciliation
Net Debt Reconciliation £m 2,500 2,000 438 1,500 1 51 57 416 196 46 1,000 2,095 1,600 1,657 1,374 1,184 500 0 FX x F nd 8 09 ls w ts Ta C -0 sa flo - e en ar ar s id po n M M m iv h ai as is t D lG es D C v ita In g tin ap C ra pe O 41
Slide 42: Disclaimer
Disclaimer The materials being provided to you are intended only for informational purposes and convenient reference. This information is not intended to provide, and should not be relied upon, for accounting, legal, tax advice or investment recommendations. You should consult your tax, legal, accou