ICG plc FY11 Results - Intermediate Capital Group/media/Files/I/ICGAM/results... · 2018-05-29 · Intermediate Capital Group plc 2 Highlights Operational Highlights Third party AUM

Intermediate Capital Group plc and Intermediate Capital Managers Limited are authorised and regulated in the United Kingdom by the Financial Services Authority

ICG plcFY11 Results1 June 2011

Intermediate Capital Group plc 2

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 of £154m*, up 126%, due to lower provisions and higher capital gains

� Profit-before tax of £190m*, up 79%

� Proposed final dividend of 12p (18p for the full year)

* Excluding negative impact of fair value movements of derivatives of £4m

Intermediate Capital Group plc

Market Update


Record High Yield issuance

European High Yield Bond Issuance by Quarter

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

45,000

50,0001

99

6

19

97

19

98

19

99

20

00

20

01

20

02

20

03

20

04

20

05

20

06

20

07

20

08

20

09

20

10

€m

Source: S&P


Limited issuance of LBO senior debt

€0

€20

€40

€60

€80

€100

€120

€140

€160

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011Q1

€bn

Source: S&P


European loan market rally continues

S&P Leverage Loan Index

60

65

70

75

80

85

90

95

100

105

Jan-

03M

ay-0

3Sep

-03

Jan-

04M

ay-0

4Sep

-04

Jan-

05M

ay-0

5Sep

-05

Jan-

06M

ay-0

6Sep

-06

Jan-

07M

ay-0

7Sep

-07

Jan-

08M

ay-0

8Sep

-08

Jan-

09M

ay-0

9Sep

-09

Jan-

10M

ay-1

0Sep

-10

Jan-

11

B BBSource: S&P

Mar

-11


No new CLOs raised

-

10.0

20.0

30.0

40.0

50.0

60.0

70.0

80.0

90.0

2003 2004 2005 2006 2007 2008 2009 2010 2011

$bn

US Europe

Source: BAML

ICG

Eos


US dealing with issues: Europe significantly lagging

Changes in Loan Maturity Profile since January 2009

5.7 7

-33

-53

-90

-70

17

69

51

-2.2-9.2 -6.5

-0.1

-13.2

-100

-80

-60

-40

-20

0

20

40

60

80

2011 2012 2013 2014 2015 2016 2017

€b

n

Europe US

Source: JPMorgan


LBO volume at 2001-2004 levels

0

20

40

60

80

100

120

140

160

180

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Q1

€b

n

Source: S&P


7.3x

8.2x7.7x

7.3x 7.1x 7.0x 6.8x

7.6x

8.3x8.8x

9.7x 9.7x

8.9x9.2x

8.0x

0.0x

2.0x

4.0x

6.0x

8.0x

10.0x

12.0x

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011Q1

Debt/EBITDA Equity/EBITDA Other/EBITDA

High prices - Lower credit risk

Source: S&P

Multiple of EBITDA


Significant Private Equity dry powder remains

Source: Preqin

0

20

40

60

80

100

120

140

160

180

200

2005 2006 2007 2008 2009 2010 Q1 2011

Dry powder Funds raised

€bn


ICG creates unique investment opportunities

-

200

400

600

800

1,000

1,200

1,400

2010 2011

€m

Source: ICG/S&P

* Investment Company and Mezzanine Funds

Q1

Q1

-

2,000

4,000

6,000

8,000

10,000

12,000

14,000

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

€m

European Mezzanine market ICG Investments*


New Investments


Unique investment opportunities

� ICG* has invested c. £1bn in FY2011, with a target return of 1.9x

£52mICG led-

£35m

£155m

£225m

£80m

over £300m

£110m

Investment Size

PE

PE

ICG led

PE

ICG led

PE

Sourcing

-

-

√

√

√

√

Proprietary SourcedInvestment

EOS

* Investment Company and Mezzanine Funds


Deal flow

2008 2009 2010

102

� New deal opportunities presented to Investment Committee

23

98


Exits

Intermediate Capital Group plc 17Intermediate Capital Group plc 17Intermediate Capital Group plc 17

Strong exits

1.5x16%TBC2007

Vintage

Year

Companies IRR Cash

Multiple

2004 Picard, Eurofarad, TeamSystem 17% 1.9x

2005 Geoservices 29% 2.0x

2006Medica, Visma, Loyalty Partners, Pasteur Cerba, Sebia, Gerflor

19% 1.8x

2008 BI, Labco** 16% 1.4x

Blended Returns 18% 1.8x

* Excludes £1m capital gains on Resource Europe CLO equity ** Partial exit

� 13 investments exited, £388m of repayments, £82m of PIK and £132m* of capital gains


Portfolio Update


Investment portfolioPerformance vs. prior year

Percentage of assets performing at or above prior year

0%

10%

20%

30%

40%

50%

60%

70%

80%

Jun-08 Sep-08 Dec-08 Mar-09 Jun-09 Sep-09 Dec-09 Mar-10 Jun-10 Sep-10 Dec-10 Mar-11


Top twenty assets

↑ItalySoftware solutions

↑GermanyHome delivery of frozen foods

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 ↓

Elderly care homes Sweden ↑

Speciality chemicals for the construction industry France ↑

Credit Bureau Australia →

Patent & legal services UK ↑

Share registry and fund administration services Australia ↑

Supplier of fire protection systems and services Germany →

PVC Flooring France ↑

Drug development and manufacturer France ↑

Provider of services and technical solutions for utilities Germany ↑

Diversified fund of senior loans Europe n/a

Auto Equipment France →

Tour operator Spain ↓

Business CountryVs Last

Year


Top ten equity assets

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, certification and technological services Spain ↑

Food manufacturing France ↓



Year


Trend in provisions for portfolio companies

0

50

100

150

200

250

H1 08 H2 08 H1 09 H2 09 H1 10 H2 10 H1 11 H2 11

£m

Gross provisions Write-backs

Intermediate Capital Group plc 23Intermediate Capital Group plc

AUM and Fund Performance


Third party funds under management

0

1

2

3

4

5

6

7

8

9

10

FY 00 FY 01 FY 02 FY 03 FY 04 FY 05 FY 06 FY 07 FY08 FY09 FY10 FY11

€b

n

CFM Funds Mezz Funds


Top quartile Private Equity performance

Net Money MultipleSource: ICG/Venture Economics/ThompsonOne as of 31 December 2010

1998 Fund2nd

Quartile

2000 FundTop

Quartile

2003 FundTop

Quartile

2006 FundTop

Quartile

IMP 2008 FundTop

Quartile

RF 2008 FundTop

Quartile

1.3x

1.7x1.6x

1.2x1.3x

1.4x

0.70x

0.90x

1.10x

1.30x

1.50x

1.70x

1.90x

1998 2000 2003 2006 2008 2008

Net

Mon

ey M

ultip

le

ICG Top Quartile PE


Credit Fund Management performance Leveraged loans

ICG Senior Secured Loan Performance* vs.

Credit Suisse Western European Loan Index

* Composite of all discretionary market value funds managed by ICG

ICG Loan Default Ratevs.

S&P Speculative Grade* Default Rate

Source: ICG, S&P, last update as at December 2010Source: ICG per 31 March 2011

65%

70%

75%

80%

85%

90%

95%

100%

105%

110%

115%

120%

125%

130%

135%

Nov-05

Mar-06

Jul-06

Nov-06

Mar-07

Jul-07

Nov-07

Mar-08

Jul-08

Nov-08

Mar-09

Jul-09

Nov-09

Mar-10

Jul-10

Nov-10

Mar-11

ICG Marketvalue Loan Composite CS Western European Loan Index

0%

2%

4%

6%

8%

10%

12%

14%

16%

2003 2004 2005 2006 2007 2008 2009 2010 LTM31/03/11

ICG Loans default rate S&P Loan default rate


Credit Fund Management performance High Yield

0%

1%

2%

3%

4%

5%

6%

7%

8%

2003 2004 2005 2006 2007 2008 2009 2010 LTM31/03/11

S&P HY default rate ICG Bonds default rate

ICG High Yield Composite* vs.

Merrill Lynch High Yield Index (HEAG)

ICG High Yield Default Ratevs.

S&P High Yield Default Rate

Source: ICG, S&PSource: ICG per 31 March 2011

75%

85%

95%

105%

115%

125%

135%

145%

155%

165%

175%

185%

195%

205%

Nov-0

0

Mar-01

Jul-01

Nov-0

1

Mar-02

Jul-02

Nov-0

2

Mar-03

Jul-03

Nov-0

3

Mar-04

Jul-04

Nov-0

4

Mar-05

Jul-05

Nov-0

5

Mar-06

Jul-06

Nov-0

6

Mar-07

Jul-07

Nov-0

7

Mar-08

Jul-08

Nov-0

8

Mar-09

Jul-09

Nov-0

9

Mar-10

Jul-10

Nov-1

0

Mar-11

ML High Yield Index ICG High Yield Composite

* Represents high yield assets managed across all relevant funds


Fund management priorities

� Sales team

� Grow core business

� ICG Europe V

� ICG High Yield Bond Fund and European Loan Fund

� Develop new opportunities

� Longbow


Financial Overview


Segmental reporting

(105.9)67.7154.2IC Profit*

(66.7)

8.3

24.8

(273.1)

(57.5)

10.0

189.9

30.9

(55.3)

6.0

80.2

105.8186.3Profit before tax

0.1

77.1

(161.8)

(60.7)

3.4

209.7

38.0

(40.3)

1.9

76.4

(3.8)

101.3

(70.9)

(67.0)

11.0

179.8

35.9

(50.0)

4.1

81.8

FVM derivatives

Admin expenses

Impairments

Net capital gains

Div & other income

Net Interest Income

Admin expenses

Other income

FM Profit

Fee incomeFund

Management

Company

Investment

Company

Group

March 2011 March 2010 March 2009£m

* Excluding FMV Derivatives


9,036

8,249

266

16

390

1288

170

7000

8000

9000

10000

Mar-10 NewMezzanine

RealisationsMezzanine

New CFM RealisationsCFM

FX Mar-11

€b

m

Third party AUM

� Third party AUM up due to CFM inflow (Eos Loan Fund 1)


Third party fee income

0

10

20

30

40

50

60

FY 08 FY 09 FY 10 FY 11

£m

Mezzanine Funds CFM Funds


Mezzanine and Growth Capital FundsThird party fee income

FY11 FY10

Mgmt

Fee

Carried

Interest

Mgmt

Fee

Carried

Interest

Investing Europe 4.5 0.0 13.7 0.0

Investing Asia 5.4 0.0 5.7 0.0

Realisation

Europe19.4 1.3 10.2 2.7

Realisation Asia 1.8 0.0 2.3 0.0

Total 31.1 1.3 31.9 2.7

� ICG European Fund 06 now in realisation phase

Mezzanine and minority equity fee income

in £m


Credit fundsFee income

-3.8Junior fees relating to prior

periods

6.712.8Junior fees relating to the

year

Management & senior fees 6.7 7.3

Other performance fees 0.4 -

Total 23.7 14.0

CFM Fee Income

in £m

FY10FY11


31.1

35.9

2.2

5.4 1.51.3

0

5

10

15

20

25

30

35

40

45

50

FY10* Fee income Other income IncentiveSchemes

Operating Costs FY 11

£m

Fund Management Company

� Profit before tax of £35.9m


� Profit before tax and fair value adjustments at £154.2m

Investment Company

6.87.6

24.2

29.9

0.5

90.9

67.8

3.9

150.4

0

20

40

60

80

100

120

140

160

FY 10 NII Div & otherincome

Incentiveschemes

OperatingExpenses

Impairment Net CapitalGains

FVderivatives

FY 11

£m


Net interest income analysis

0

50

100

150

200

250

300

FY 10 FY 11

£m

Interest Income Interest Expense

� 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)


Long terms provisions

0%

1%

2%

3%

4%

5%

6%

7%

8%

9%

10%

11%

12%

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

� Net provisions (as a % of opening book) back to historical levels

Average pre-crisis: 2.4%


Operating costs (Excluding incentive schemes)

0

5

10

15

20

25

30

35

40

45

50

FY 08 FY 09 FY 10 FY 11 H2 10 H1 11 H2 11

£m

Salaries Administrative costs One off charge re 20 Old Broad St lease

� Operating costs impacted by one off impact of 20 Old Broad St lease


P&L impact of FY10 awards

0

2

4

6

8

10

12

14

FY 10 FY11 FY12 FY13 FY14 FY15

£m

FY 10 Deferred share awards FY 10 Cash Bonus

9.6

� One year’s awards expensed over number of years

� Aggregate charge is 30% of cash profit


Incentive schemes excluding MTIS on capital gains

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

SegmentalGroup

Old Schemes* 23.3 - 23.3

FY 11 FM Co Inv Co

£m

* MTIS on rolled interest and shares options


Balance Sheet

31 March 2010

£m

729785Headroom at year end

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 30/04/11 506

31 March 2011

£m


Debt maturity profile

SecuritisationPrivate Placements Revolver £450/295m Facility

0

100

200

300

400

500

600

700

H1 12 H2 12 H1 13 H2 13 H1 14 H2 14 2015 2016 2017 2019 2024

£m


Gearing vs. Equity and PIK as a % of portfolio

50%

100%

150%

200%

250%

300%

FY 05 FY 06 FY 07 FY 08 FY 09 FY 10 FY 11

10%

20%

30%

40%

50%

Gearing (LHS) Equity and PIK as % of portfolio (RHS)


Cash core income

* adjusted for FV movements of derivatives held for hedging and £5.7m negative impact of Old Broad Street lease ** Net of MTIS

0

20

40

60

80

100

120

FY 08 FY 09 FY 10 FY 11 H2 10 H1 11 H2 11

£m

Cash Core Income Calculation:

Pre tax profit* £195.3m

Less Capital Gains** £(101.3)m

Plus provisions £70.9m

Less Accrued PIK** £(126.9)m

Plus PIK realised** £68.2m

Cash Core Income £106.7m


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 expected to trend down further on a year on year basis


Conclusion


Appendix


Refinancing problem lies ahead

€0

€10

€20

€30

€40

€50

€60

2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Year

Amount (€bn)

European CLOs Total Funded Amount by End of Reinvestment Period European Maturing LBO Senior Debt

Source: JPMorgan Structured Finance Research, INTEX, S&P European Leveraged Loan Index (ELLI), 30 September 2010

European CLOs Funded Amount by End of Reinvestment Period vs. European Maturing LBO Senior Debt


Top ten PIK assets

Airport operator UK ↑

Private clinic manager France →

Credit Bureau Australia →


Security services Italy ↑

Electronic publisher of company information Belgium ↑

Cinema owner and operator Australia ↑

Catering Services UK ↑

Drug development and manufacturer France ↑

Elderly care homes Sweden ↑


Year


Gains on investments

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

FY 11 FY 10£m


Impairments

Mezzanine and equity investment

Gross impairment 89.8 180.4

Recoveries (18.9) (18.5)

Net impairment 70.9 161.9

FY 11 FY 10£m


Capital account

-300

-200

-100

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

£m

Provisions Provision write-backs Capital Gains


New lending vs. repayments*

*6 months moving average

0

200

400

600

800

1000

1200

1400

Mar-06

Jun-06

Sep-06

Dec-06

Mar-07

Jun-07

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

New Lending Repayments

£m


Fee income

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

FY11 FY 10£m


Mezzanine and Minority Equity FundsFee income

0

5

10

15

20

25

30

35

40

FY 00 FY 01 FY 02 FY 03 FY 04 FY 05 FY 06 FY 07 FY 08 FY 09 FY 10 FY11

£m

Management fees Carried interest


Credit Funds Fee income analysis

0

5

10

15

20

25

FY 00 FY 01 FY 02 FY 03 FY 04 FY 05 FY 06 FY 07 FY 08 FY 09 FY10 FY11

£m

Senior fees Junior fees Performance fees


Pre-tax profits, earnings per share & dividends

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

FY 11 FY 10


Capacity of mezzanine funds

0

200

400

600

800

1000

1200

1400

1600

1800

MF 2000 MF 2003 EF 2006 ICAP 2005 IMP 2008 RF 2008 ICAP 2008

€m

Initial Size Current Assets

Fully invested

Investing

Note: RF 2008 and EF2006 excludes Eos debt


Mezzanine and Growth Capital Funds Fee structure

Funds in investment period

20 % of 20

over 8

1.25% on

invested92%Nov-2011€1.25bn€1.75bnEF06

25 % of 20

over 8

2.0% on

invested83%Apr-2008$0.3bn$0.3bnICAP 05

100%

100%

84%

% Invested

1.5% on

invested

1.5% on

invested

1.5% on

invested

Main fee

40 % of 20

over 8

28% of 20

over 8

20 % of 20

over 8

Carry

Sep-2003€0.31bn€0.39bnEF00

Sep-2006€0.67bn€1.42bnEF03

Feb-2010€0.13bn€0.13bnIMP08

End of investment

periodEquitySizeFund

Funds in realisation

75%

26%

% Invested

1.5% on invested

1.5% on committed equity

Main fee

Oct-2011€0.64bn€0.84bnRF08

April-2013$0.6bn$0.6bnICAP 08

End of investment

periodEquitySizeFund


Segmental reporting

90.079.774.6IC Profit*

97.7

(7.5)

73.6

(64.7)

(28.7)

2.6

107.2

15.2

(20.5)

0.8

34.9

105.181.2Profit before tax

8.5

69.4

(53.1)

(33.0)

1.4

95.0

16.9

(23.3)

1.1

39.1

(12.3)

31.9

(17.8)

(34.0)

9.7

84.8

19.0

(26.7)

3.0

42.7

FVM derivatives

Admin expenses

Impairments

Net capital gains

Div & other income

Net Interest Income

Admin expenses

Other income

FM Profit

Fee incomeFund

Management

Company

Investment

Company

Group

H2 11 H1 11 H2 10£m

* Excluding FMV Derivatives


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 investment recommendations. You should consult your tax, legal, accounting or other advisors about the issues discussed herein. Although information has been obtained from and is based upon sources that Intermediate Capital Group plc ("ICG plc") considers reliable, we do not guarantee its accuracy and it may be incomplete or condensed. All opinions, projections and estimates constitute the judgement of the authors as of the date of the document and are subject to change without notice. ICG plc excludes all liability and therefore accepts no responsibility for any loss (whether direct or indirect) arising for any action taken or not taken by anyone using the information contained therein.

These materials are not intended as an offer or solicitation with respect to the purchase or sale of any security or investment interest and may not be relied upon in evaluating the merits of investing in these securities or investment interests. These materials are not intended for distribution to, or use by any person or entity in any jurisdiction or country where such distribution or use would be contrary to local law or regulation.

Neither ICG plc or any of its affiliates makes any representation or warranty, express or implied as to the accuracy or completeness of the information contained herein, and nothing contained herein shall be relied upon as a promise or representation whether as to past or future performance.

These materials (including their contents) are confidential, being for use only by the persons to whom they are issued. Distribution of these materials to any person other than the person to whom this information was originally delivered and to such person’s advisors is unauthorised and any reproduction of these materials, in whole or in part, or the disclosure of any of their contents, without the prior consent of ICG plc or its affiliates is prohibited.

This communication is limited to and directed to those persons invited to the presentation. It is therefore only directed at professional clients, as defined by the Financial Services Authority. Any other persons should not seek to rely upon the information contained herein. Collective investment schemes referred to herein are not regulated for the purposes of the UK’s Financial Services and Markets Act 2000 and are not available to members of the general public.

ICG plc is authorised and regulated in the United Kingdom by the Financial Services Authority. Intermediate Capital Managers Limited is a wholly-owned subsidiary of ICG plc and is also authorised and regulated in the United Kingdom by the Financial Services Authority.

Documents

ICG plc FY11 Results - Intermediate Capital Group/media/Files/I/ICGAM/results... · 2018-05-29 · Intermediate Capital Group plc 2 Highlights Operational Highlights Third party AUM