Icg Plc · LSE:ICG
Icg — Intermediate Capital Group — H1 2010 Earnings Presentation
46 slides from Icg's earnings presentation, Nov 24, 2009
Slide 1: Half Year Results Presentation
Intermediate Capital Group PLC Half Year Results Presentation 24 November 2009 Authorised and regulated by the Financial Services Authority
Slide 2: Summary: Strategy and Market
Summary: Strategy and Market Authorised and regulated by the Financial Services Authority
Slide 3: Financial Highlights
Financial Highlights Pre-tax profit of £8.1m* Core income up 11% to £94.1m Provisions £97.1m versus £230.3m in the previous six months Interim dividend of 6p per share *including £7.6m positive impact of fair value movements on derivatives held for hedging purposes 3 Authorised and regulated
Slide 4: Summary
Summary Greater optimism in capital markets Increased primary deal flow Bond and equity market liquidity returns Continued refinancing opportunities in the local mid market Improved confidence in exits and repayments Resilient portfolio Mezzanine consistently delivers superior risk adjus
Slide 5: The Market Opportunity in European LBO debt
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Slide 6: The Market Opportunity in European Debt
The Market Opportunity in European Debt Wave of refinancing to come Maturity Profile of Fitch European Loans €70bn 8.0x Forecast total €60bn leverage 7.0x 6.0x €50bn 5.0x €40bn 4.0x €30bn 3.0x €20bn 2.0x Debt maturing €10bn 1.0x €0bn 0.0x 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Source: Fit
Slide 7: European Market Overview: Leveraged Buyout Volume
European Market Overview LBO volume 180 164.5 160 152.3 140 Leveraged Buyout Volume (€bn) 120 110.0 92.9 100 82.9 79.3 70.0 80 69.1 69.3 58.8 60 39.9 35.1 40 19.2 12.7 20 4.5 – 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 H1 2009 Reflects total sources of funding of initial
Slide 8: Deal Pipeline
Deal Pipeline Recovery Buy and build / bolt-ons Restructure Balance sheet Primary Market Minority Partners Asia Pacific North America 8 Authorised and regulated by the Financial Services Authority
Slide 9: Target Investment Returns
Target Investment Returns Cash Pay PIK Stable Cyclical Strong PE Investor Syndicate Single Known Bank Syndicate Low Gearing High Gearing Low Operating Gearing High Operating Gearing 1.6x 2.0x 2.4x 9 Authorised and regulated by the Financial Services Authority
Slide 10: Portfolio
Portfolio Authorised and regulated by the Financial Services Authority
Slide 11: 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 Jun-09 Sep-09 11 Authorised and regulated by the Financial Services Author
Slide 12: Investment Portfolio Top Assets
Investment Portfolio Top 20 assets LAST BUSINESS COUNTRY YEAR BUDGET Private clinic manager France ↑ ↓ Specialist courier services for the pharmaceutical industry UK ↑ ↑ Electronic publisher of company information Belgium ↑ ↑ Textile rental and cleaning France → → Inspection, certification and techn
Slide 13: Investment Portfolio Top Equity Assets
Investment Portfolio Top 10 equity assets LAST BUSINESS COUNTRY YEAR BUDGET Fixed satellite service operator USA ↑ ↑ Cable operator Taiwan ↑ → Livestock identification systems France ↓ ↑ Home delivery of frozen foods Germany ↑ ↑ Specialist courier services for the pharmaceutical industry UK ↑ ↑ Insp
Slide 14: Top Junior Mezzanine (PIK) Assets
Investment Portfolio Top 10 Junior Mezzanine (PIK) assets LAST BUSINESS COUNTRY YEAR BUDGET Private clinic manager France ↑ ↓ Specialist courier services for the pharmaceutical industry UK ↑ ↑ Business management software and outsourcing services UK ↑ → Share registry and corporate administration US
Slide 15: Trend in Gross Provisions for Portfolio Companies
Investment Portfolio Trend in Gross Provisions for Portfolio Companies Gross Provisions in £m Number of companies 250 25 200 20 150 15 100 10 50 5 0 0 H1 08 H2 08 H1 09 H2 09 H1 10 Gross Provisions (LHS) Number of companies (RHS) 15 Authorised and regulated by the Financial Services Authority
Slide 16: Example of Restructuring: Q-Matic
Investment Portfolio Example of Restructuring: Q-Matic Strongly impacted by economic downturn due to exposure to banking and retail sectors ICG’s position protected through early actions of Restructuring Team Proactive role: led negotiations resulting in consensual solution Equity injection
Slide 17: Financial Review
Financial Review Authorised and regulated by the Financial Services Authority
Slide 18: Core Income
Core Income Core Income up 11% to £94.1m £m 100 6.9 14.4 1.3 75 4.2 6.3 50 94.1 84.6 25 0 Sep-08 Interest Dividend Interest Fee incom e Costs Sep-09 incom e incom e expense 18 Authorised and regulated by the Financial Services Authority
Slide 19: Interest Expense
Interest Expense Interest expense down 30% to £33.5m (H1 09: £47.9m) Impact of lower interest rates circa £25m But higher net debt over the period, FX impact and higher fees partly offset above impact Interest expense will be higher in H2 due to: Front end fees on extended facilities New
Slide 20: Fee income from Mezzanine and Related Funds
Fee income from Mezzanine and Related Funds Fee income up 50% to £20.4m (H1 09: £13.6m) Carry from European 2000 Fund of £1.7m vs £0.7m in H1 09 Recovery Fund contributed for the first time Asia Pacific 08 contributed in full (H1 09 still impacted by placement fees) at 1.75% on committed P
Slide 21: Fee income from CFM Funds
Fee income from CFM Funds Fee income down 38% to £6.9m (H1 09: £11.1m) due to lower level of junior fees and the absence of performance fee Background Fee income H1 09 H1 10 H1 09 H1 10 Senior Fees All funds All CDOs & Others except Opps 3.6 3.6 Junior Fees (CDOs only) 10 out of 10 4 out of 10 6.3
Slide 22: Breakdown of Operating Costs (Excluding MTIS)
Breakdown of Operating Costs (Excluding MTIS) £m % 40 100 Other Admin 30 75 20 50 Staff Costs 10 25 % of CI (RHS) 0 0 H1 07 H2 07 H1 08 H2 08 H1 09 H2 09 H1 10 22 Authorised and regulated by the Financial Services Authority
Slide 23: Balance Sheet
Balance Sheet 30 Sept 2009 31 M arch 2009 31 M arch 2008 £m £m £m Loans and investments 2,851 2,923 2,360 Net current liabilities -72 -52 -90 2,779 2,871 2,270 Shareholders' funds 1,112 776 896 Borrowings 1,667 2,096 1,374 2,779 2,871 2,270 Gearing ratio 150% 270% 148% Debt facilities 2,233 2,403 2,
Slide 24: Covenants
Covenants Continued to operate comfortably within covenants Minimum Net Worth: Shareholders’ funds of £1,112m, well above minimum of £654m Gearing currently 150% against internal comfort level of 200%- 300% and well below maximum covenant levels (375%) Adjusted Interest Cover of over 2 times
Slide 25: Cash Core Income
Cash Core Income Cash core income calculation: Cash core income in £m Core income: £94.1m Less accrued PIK £(66.6)m 100 Plus PIK realised £10.2m Cash core income £37.7m 80 60 40 20 0 FY 06 FY 07 FY 08 H1 09 H2 09 H1 10 25 Authorised and regulated by the Financial Services Authority
Slide 26: Financial Outlook
Financial Outlook Core income for FY 10 expected to be above FY 09 level; lower core income in H2 primarily due to higher interest expense and lower mezzanine fee income On track to realise 15% of portfolio by June 2011 We will be disappointed if provisions in H2 are as high as in H1 26 Author
Slide 27: Future Communication
Future Communication Investor Day on 16 March 2010 Fund management strategy New reporting structure 27 Authorised and regulated by the Financial Services Authority
Slide 28: Fund Management
Fund Management Authorised and regulated by the Financial Services Authority
Slide 29: Third party funds under management
Third party funds under management €10bn €9bn €8bn €7bn €6bn €5bn €4bn €3bn €2bn €1bn €0bn FY 00 FY 01 FY 02 FY 03 FY 04 FY 05 FY 06 FY 07 FY 08 FY 09 H1 10 CFM Funds Mezzanine Funds 29 Authorised and regulated by the Financial Services Authority
Slide 30: ICG Mezzanine Track Record
ICG Mezzanine Track Record Mezzanine Performance by Vintage 5-year 10-year 20-year Vintage Vintage History IRR 25% 19% 19% Cash Multiple 1.6x 1.6x 1.7x Investment Cost £0.4bn £1.6bn £2.4bn Realised Investments 27 112 222 30 Authorised and regulated by the Financial Services Authority
Slide 31: Conclusion
Conclusion Authorised and regulated by the Financial Services Authority
Slide 32: Conclusion
Conclusion Investments will resume in H2 Portfolio continues to show resilience Greater optimism about exits and repayments New fund raising difficult but good momentum “We aim to be a leading alternative asset manager specialising in mezzanine capital, buyout debt and related asset classes”
Slide 33: Appendix
Appendix Authorised and regulated by the Financial Services Authority
Slide 34: Extended Debt Repayment Schedule
Extended Debt Repayment Schedule £m Initial Maturity Schedule - pre extensions 700 600 500 400 300 200 100 0 … H1 10 H2 10 H1 11 H2 11 H1 12 H2 12 H1 13 H2 13 H1 14 H2 14 H2 24 £m Extended Maturity Schedule 700 600 500 400 300 200 100 0 … H1 10 H2 10 H1 11 H2 11 H1 12 H2 12 H1 13 H2 13 H1 14 H2 14 H
Slide 35: Core Income
Core Income H1 10 H2 09 H1 09 H2 08 H1 08 H1 10 £m £m £m £m £m vs H1 09 Income Interest income 136.0 153.5 140.2 127.6 103.2 -3% Dividend income 1.1 2.6 7.4 3.3 2.8 -85% Fee and other operating income 28.1 30.1 29.4 26.7 30.3 -4% 165.2 186.2 177 157.6 136.3 -7% Less related expenses Interest payable
Slide 36: Net Interest Income
Net Interest Income H1 10 H2 09 H1 09 H2 08 H1 08 H1 10 £m £m £m £m £m vs H1 09 Interest Income 136.0 153.5 140.2 127.6 103.2 -3% Interest Expenses (33.5) (55.9) (47.9) (40.0) (34.5) -30% Net Interest Income 102.5 97.6 92.3 87.6 68.7 11% 36 Authorised and regulated by the Financial Services Authorit
Slide 37: Fee Income
Fee Income H1 10 H2 09 H1 09 H2 08 H1 08 H1 10 £m £m £m £m £m vs H1 09 Transaction Fees 0.8 1.3 4.7 3.3 3.9 -83% Mezzanine Fund Management fees 20.4 18.2 13.6 14.2 17.0 50% Credit Fund Management fees 6.9 10.6 11.1 9.2 9.4 -38% 28.1 30.1 29.4 26.7 30.3 -4% 37 Authorised and regulated by the Financia
Slide 38: Operating Expenses
Operating Expenses H1 10 H2 09 H1 09 H2 08 H1 08 H1 10 £m £m £m £m £m vs H1 09 Staff Costs 13.2 19.0 23.4 23.5 19.7 -44% Other admin costs 8.9 11.4 8.9 11.1 8.4 0% 22.1 30.4 32.3 34.6 28.1 -32% Medium Term Incentive scheme* 15.5 11.2 12.2 11.9 8.4 27% Operating Expenses 37.6 41.6 44.5 46.5 36.5 -16%
Slide 39: Gains on Investments
Gains on Investments H1 10 H2 09 H1 09 H2 08 H1 08 H1 10 £m £m £m £m £m vs H1 09 Realised gains on investments 1.1 12.4 18.5 43.3 90.6 -94% Unrealised gains on investments 3.3 (1.4) 1.4 (5.2) 6.5 136% Cost of medium term incentive scheme (0.9) (2.2) (3.9) (12.1) (20.2) -77% Net gains on investments
Slide 40: Impairments
Impairments H1 10 FY 09 H2 09 H1 09 H2 08 H1 08 H1 10 £m £m £m £m £m £m vs H1 09 Mezzanine and equity investment Gross Impairment 99.4 266.3 212.1 54.2 33.8 16.4 83% Recoveries (2.3) (28.7) (3.1) (25.6) (4.2) (10.6) -91% Equity in ICG - managed CDO's Gross Impairment - 35.6 21.4 14.2 7.1 3.5 -100% R
Slide 41: Breakdown of Provisions
Breakdown of Provisions £m Gross Provisions/ Closing Loan Book (ex CDOs) 350 FY 06: 2.1% FY 07: 2.2% 300 FY 08: 2.2% 36 250 FY 09: 9.1% 200 H1 10: 3.6% 150 266 100 50 99 22 38 50 0 (29) -50 Mar-06 Mar-07 Mar-08 Mar-09 H1 2010 Mezz Recoveries CDO 41 Authorised and regulated by the Financial Services
Slide 42: Pre-tax profits / loss
Pre-tax profits / loss H1 10 H2 09 H1 09 H2 08 H1 08 H1 10 £m £m £m £m £m vs H1 09 Interest income 136.0 153.5 140.2 127.6 103.2 -3% Dividend income 1.1 2.6 7.4 3.3 2.8 -85% Gains on investments 4.4 11.0 19.9 38.1 97.1 -78% Fee and other operating income 28.1 30.1 29.4 26.7 30.3 -4% 169.6 197.2 196.
Slide 43: Pre-tax Profits, Earnings per Share & Dividends
Pre-tax Profits, Earnings per Share & Dividends H1 10 H2 09 H1 09 H2 08 H1 08 H1 10 £m £m £m £m £m vs H1 09 Pre-tax profit* 0.5 (132.8) 57.8 60.4 132.9 -99% Pre-tax profit 8.1 (106.5) 39.8 87.5 142.0 -80% Earning per share** 0.6p (47.4)p 12.3p 36.3p 52.0p -95% Dividend per share** 6.0p 8.5p 8.5p 18.
Slide 44: Cash Core Income
Cash Core Income H1 10 H2 09 H1 09 H2 08 H1 08 H1 10 £m £m £m £m £m vs H1 09 Core Income 94.1 83.6 84.6 71.1 65.3 11% Rolled Up Interest net of MTIS (66.6) (66.9) (61.7) (40.6) (61.3) 8% PIK realised net of MTIS 10.2 4.4 9.4 10.6 39.6 9% Cash Core Income 37.7 21.1 32.3 41.1 43.6 17% 44 Authorised an
Slide 45: Dividend Adjustment Due to July 2009 Rights Issue
Dividend Adjustment Due to July 2009 Rights Issue Discount element inherent in the 7 for 2 Rights Issue at 121p per share Rights Issue Share price on last day cum rights was 490.5p per share 7 121 2 490.5 203.11 The theoretical ex-rights price is: 9 203.11 The price adjustment/rebasing fa
Slide 46: 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
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