Slide 1: ICG plc 2012 interim results
ICG plc 2012 interim results 21 November 2012 Intermediate Capital Group plc
Slide 2: Highlights
Highlights Operational Performance AUM up 6% to €12.1bn; third party AUM up 5% to €9.1bn thanks to the highly successful fundraising of ICG Europe Fund V Positive momentum in new products Portfolio broadly resilient in difficult economic environment but weaker assets are underperforming IC n
Slide 3: Market update
Market update Intermediate Capital Group plc 2
Slide 4: Investment market update
Investment market update ICG offer adapted to sharp regional contrasts Europe: Opportunistic US: Dynamic Asia Pacific: Attractive Long recovery; low inflation Slow but secure recovery China’s policy driving strong and interest rates regional growth Greater diversity of lenders, Lack of deb
Slide 5: Fundraising market update
Fundraising market update Quest for yield favours established debt managers Drivers Manager Selection Uncertainty over economic growth/currencies Consolidation of relationships Investment upside difficult to ascertain Track record is paramount Equity might be cheap but is it borne out by
Slide 6: Fund Management
Fund Management Intermediate Capital Group plc 5
Slide 7: Priorities for FY13
Priorities for FY 13 Good progress towards objectives in H1 FY13 Priorities Update Mezzanine Final close in H2 – already above target with Final close on ICG Europe Fund V €2.3bn of commitments Launch of Asia Pacific successor fund FY14 Launch of ICG Longbow successor fund First close expected
Slide 8: Fund management – mezzanine
Fund management – mezzanine ICG Europe Fund is a success Received €1.8bn of third party commitments (and €500m from ICG) – of which €995m is included in the September AUM number Final close in H2 €300m above target already despite difficult fund raising environment Third party commitments 50
Slide 9: Fund management – mezzanine: investor base by geography
Fund management – mezzanine Well balanced investor base by geography Geographically balanced LP base Investment in Asian and US distribution delivered early results Strong base for future US and Asian funds ICG European Fund 2006: Geography ICG Europe Fund V : Geography Europe / North Middle E
Slide 10: Fund management – mezzanine: investor base by type
Fund management – mezzanine Well balanced investor base by investor type Replaced banks with more long-term investors: pension funds, sovereign wealth funds Maintained insurance base More “sustainable” LP base Strong investor base for other credit products ICG European Fund 2006: Type ICG Eu
Slide 11: ICG Europe Fund V – strong pipeline
Fund management – mezzanine ICG Europe Fund V – strong pipeline Investment strategy has evolved to reflect changes in market – Sponsored mezzanine – Sponsorless transactions – Stressed sellers Pricing highly favourable Fund 17% invested in 4 transactions with strong pipeline Investment Country
Slide 12: Transaction description, investment rationale, ICG's value added
Transaction description Investment rationale A leading global producer of pigments for the ceramic tile Leading position in every segment. Leader in design, innovation, industry technical support and customer service. Strong, experienced and Headquartered in Spain but a truly global business w
Slide 13: Update on other funds
Fund management – mezzanine Update on other funds US Hired new Head of the US Strengthening team Launch of Fund I expected in Q4 FY13 Asia Pacific Funds I and II continue to perform strongly Fund II is 61% invested following the SCF transaction with a strong pipeline Launch of Fund III e
Slide 14: Fund management – credit funds
Fund management – credit funds Managed accounts inflows drive AUM growth CFM third party AUM up 3% as CLO run off of €130m in H1 more than offset by inflows in new products, particularly in managed accounts 4 managed accounts with €342m of AUM, up by €186m in H1 Encouraging pipeline for managed ac
Slide 15: Investment company
Investment company Intermediate Capital Group plc 14
Slide 16: Investment Company
Investment Company Positive net new lending New Investments 5 transactions in the period – 3 in Europe alongside ICG Europe Fund V – SCF in Asia Pacific, Convergint in US New lending of £157m (£122m in FY12) Deep pipeline across geographies Exits Slowdown in exits due to economic environment
Slide 17: IC portfolio
IC portfolio Performance vs. prior year shows resilience % 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 Jun Sep 08 08 08 09 09 09 09 10 10 10 10 11 11 11 11 12 12 12 Low of 52% in June due to strong H
Slide 18: Investment portfolio leverage
Investment portfolio leverage Significant de-risking since crisis £1,200m Assets £1,000m without provisions £800m £600m £400m £200m Assets with provisions £0m <4x 4-6x >6x Dec 2008 Sep 2012 Significant de-risking of the portfolio since 2008 Average leverage reduced from 5.8x to 4.7x between 2008
Slide 19: Financial Review
Financial Review Intermediate Capital Group plc 18
Slide 20: Financial highlights
Financial highlights H1 negatively impacted by single names impairments Pre-tax profit* of £39.6m vs £108.8m in H1 12 – FMC Profit before tax: £17.2m vs £17.1m in H1 12 – IC Profit before tax*: £22.4m vs £91.7m in H1 12 Third Party AUM of €9,127m vs €8,679m at 31/03/12 Investment portfolio £2,
Slide 21: Segmental reporting
Segmental reporting Investment £m H1 2013 H2 2012 H1 2012 Fund Fee income 44.8 48.3 42.9 Management Company Other income 0.3 0.7 2.2 Admin expenses (27.9) (28.4) (28.0) FM profit 17.2 20.6 17.1 Investment Net interest income 80.0 85.0 98.5 Company Div & other income 0.8 5.5 2.1 Admin expenses (24.1)
Slide 22: Third party AUM
Third party AUM Good momentum in fundraising outstripping run-off Third party AUM up 5% to €9.1bn due to ICG European Fund V investment and credit private mandates €9,500m 258 88 34 9,127 410 €9,000m 19 130 8,679 193 €8,500m €8,000m €7,500m €7,000m Mar 12 New Realisations New Realisations New Realis
Slide 23: Third party fee income
Third party fee income Continued growth in underlying management fees £80m £70m £60m £50m £40m £30m £20m £10m £0m FY 10 FY 11 FY 12 H1 11 H2 11 H1 12 H2 12 H1 13 Mezzanine Funds CFM Funds Performance Fees Catch-up fees (Mezz and CDO) H1 13 Mezzanine Funds fee income is higher than H1 12 due to fee
Slide 24: Mezzanine & Growth Capital Funds
Mezzanine & Growth Capital Funds ICG Fund V drives fee income growth H1 13 H2 12 H1 12 £m Mgmt Fee Carried Interest Mgmt Fee Carried Interest Mgmt Fee Carried Interest ICG European Fund V 8.4 - 3.3 - 0.5 - ICAP Mezzanine Fund 2008 2.7 - 2.7 - 2.6 - Funds in Realisation * 12.0 0.3 13.6 4.9 12.9 2.1 L
Slide 25: Fund Management Company
Fund Management Company Growth in management fee offset by prior year one-offs Profit before tax of £17.2m in line with prior year £25m £20m 1.9 17.1 0.1 17.2 1.9 £15m £10m £5m £0m H1 12 Fee income Other income Operating Costs H1 13 H1 13 fee income is higher than H1 12 due to catch up fees on Fun
Slide 26: Net interest Income
Net interest Income Decrease in NII driven by decrease in book size £3,000m €300m £2,500m €250m £2,000m €200m £1,500m €150m £1,000m €100m £500m €50m £0m €0m FY 10 FY 11 FY 12 H1 10 H2 10 H1 11 H2 11 H1 12 H2 12 H1 13 Average Interest bearing book (lhs) Net Interest Income (rhs) Interest income (rhs)
Slide 27: Long terms provisions
Long terms provisions Net provisions impacted by single name impairments 12% 10% 8% 6% 4% 2.5% 2% 0% 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 FY 12 H1 FY 13 * * LTM to 30/09/2012 Average pre-crisis Gross provisions of £86.1m, of which £70.2m relatin
Slide 28: Gains on Investments
Gains on Investments Low level of realisations in slow market £m H1 2013 H2 2012 H1 2012 Realised gains 10.7 63.7 10.1 Unrealised gains 21.3 12.2 32.0 Total gains 32.0 75.9 42.1 Unrealised gains Fair value increase on unrealised equity investments: £22.5m Fair value decrease on unrealised equity
Slide 29: Investment Company
Investment Company H1 Profit decrease driven by impairments and NII Profit before tax and fair value adjustments at £22.4m £100m 91.7 £90m £80m 6.0 £70m 18.5 3.9 1.3 £60m £50m £40m 36.4 £30m 5.6 22.4 £20m 9.6 £10m £0m H1 12 NII Div & other MTIS Operating Impairment Net Capital FV derivatives H1 13 i
Slide 30: Group operating costs
Group operating costs Operating costs broadly flat vs H1 12 £140m £120m £100m £80m £60m £40m £20m £0m FY 09 FY 10 FY 11* FY 12** H1 11* H2 11 H1 12 H2 12** H1 13 Administrative costs Salaries Current year Rem Scheme Prior year Rem Scheme Total costs including MTIS Changing dynamics following new i
Slide 31: Balance Sheet
Balance Sheet 30 September 2012 – £m 31 March 2012 – £m Loans & Investments 2,462 2,352 Net current assets 145 78 2,607 2,430 Shareholders’ Funds 1,467 1,451 Borrowings 1,140 979 2,607 2,430 LTM ROE 9.1% 9.9% Gearing Ratio 76% 66% Debt Facilities 1,582 1,806 Headroom at year end 442 827 Intermediate
Slide 32: Debt Summary
Debt Summary Balance Sheet debt refinanced and further diversified £700m £600m £500m Bank facilities extended £400m £300m £200m New £80m retail bond £100m £0m H2 '13 H1 '14 H2 '14 H1 '15 H2 '15 H1 '16 H2 '16 H1 '17 H2 '17 H1 '18 H2 '18 H1 '19 H2 '19 H1 '22 FY25 Securitisation Private placements Reta
Slide 33: Cash Core Income
Cash Core Income Solid dividend coverage £250m £200m £150m £100m £50m £0m 'March 10 'March 11 'March 12 Sept 12* Cash Core Income Cash from Capital Gains (net of MTIS) Dividends paid Cash core income of £15.2m; affected by low level of exits (PIK realisations of £10m in H1 13 compared to £54.2m in
Slide 34: Financial outlook
Financial outlook Positive momentum into H2 Fund Management Increase in fees from Fund V in H2 following additional commitments since the end of September of €800m (and catch up fees) IC Reduced visibility in current environment Realisation expected to remain slow but some processes ongoing
Slide 35: Conclusion and Q&A
Conclusion and Q&A Intermediate Capital Group plc 34
Slide 36: Appendix
Appendix Intermediate Capital Group plc 35
Slide 37: Fee Income
Fee Income £m H1 2013 H2 2012 H1 2012 Mezzanine Fund Management fee income 24.6 25.4 18.1 Credit Fund Management fee income 9.0 11.0 12.2 Third Party Funds fee income 33.6 36.4 30.3 Investment Company fee income 11.2 11.9 12.6 Total fee income 44.8 48.3 42.9 Intermediate Capital Group plc 36
Slide 38: Credit Funds
Credit Funds Fee Income H1 2013 H2 2012 H1 2012 £m AUM Fees AUM Fees AUM Fees CDOs 3,296 6.7 3,964 7.6 3,543 7.9 Managed Accounts & Pooled 755 2.3 635 2.4 594 2.0 Funds Performance and Catch up Fees - 1.0 2.3 Total 4,051 9.0 4,599 11.0 4,137 12.2 Intermediate Capital Group plc 37
Slide 39: Fair Value Accounting
Fair Value Accounting Top AFS and FVTPL assets AFS assets Value at Value at Company Business Country 30/09/2012 31/03/2012 Allflex Livestock identification systems UK £79.8m £65.4m Intelsat Fixed satellite services USA £47.9m £45.6m AAS Link Share registry and fund administration services Australia
Slide 40: Incentive Schemes Excluding MTIS on gains
Incentive Schemes Excluding MTIS on gains Group Segmental £m H1 2013 FM Co Inv Co FY 10 Awards 1.4 0.9 0.5 FY 11 Awards 4.9 1.9 3.0 FY 12 Awards 4.0 2.6 1.4 FY 13 Accruals 5.8 1.8 4.0 Total 16.1 7.2 8.9 H1 2013 FM Co Inv Co Old Schemes 0.5 - 0.5 Intermediate Capital Group plc 39
Slide 41: Long term P&L impact of incentive schemes
Long term P&L impact of incentive schemes (excluding balance sheet carry) £30m Based on FY10 and FY11 £25m and FY12 actual awards, £20m and constant FY12 awards £15m for future years £10m Roll-out driven growth until £5m FY15 included, but £0m immaterial in FY14 & FY15 FY 10 FY 11 FY 12 FY 13 FY
Slide 42: Cash Flow Analysis
Cash Flow Analysis £m H1 2013 H1 2012 H1 2011 Operating cash flow (8.9) 45.6 40.7 Cash flow relating to Capital Gains (7.0) (25.2) 23.8 Repayments & recoveries 66.0 161.0 56.0 Tax & others (29.9) (41.5) 25.5 Free Cash flow 20.2 139.9 146.0 New investments 197.7 83.2 128.8 Dividend 50.5 46.4 25.8 Net
Slide 43: 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 FY11 Gerflor FY11 Courtepaille FY11 Tegel FY12 BvD FY12 Ventura Motors FY12 HMG FY12 Citic FY12 Riverland FY13 Symingtons FY13 SCF FY13 Es
Slide 44: Impairments
Impairments £m H1 2013 H2 2012 H1 2012 Mezzanine and equity investment Gross impairment 86.1 43.9 39.6 Recoveries (21.3) (1.7) (11.2) Net impairment 64.8 42.2 28.4 Intermediate Capital Group plc 43
Slide 45: Pre-tax Profits, Earnings Per Share & Dividends
Pre-tax Profits, Earnings Per Share & Dividends H1 2013 H2 2012 H1 2012 Pre tax profit excluding FV £41.1m £143.1m £100.7m Pre tax profit £39.6m £135.0m £108.8m Net profit £39.5m £102.5m £85.1m EPS 10.3p 26.1p 21.6p DPS 6.3p 13.0p 6.0p Intermediate Capital Group plc 44
Slide 46: Cash Core Income
Cash Core Income Cash Core Income Calculation Pre tax profit excluding FV £41.1m Less Capital Gains £(32.0)m Plus provisions £64.8m Less Accrued PIK £(68.7)m Plus PIK realised £10.0m Cash Core Income £15.2m Intermediate Capital Group plc 45
Slide 47: 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