Half-yearly report
First Half results.
for the 6 months ended 30 September 2010.
Embargoed until 7.00am on Tuesday 23 November 2010
Intermediate Capital Group PLC ("ICG") announces its First Half results for the
six months ended 30 September 2010.
Operational Highlights
* AUM at €11,671m compared to €11,190m at 31 March 2010
* Investment Company* portfolio of £2,630m (€2,953m) compared to £2,684m
(€2,942m) at 31 March 2010
* Portfolio companies benefitting from improved economic environment
* Strong market for realisations; capital gains of £87m in the first half
* New investments of £437m for Investment Company and ICG Mezzanine Funds
* €1.4bn Loan portfolio acquired at a discount to par value
* Investment capacity of €1.5bn between Investment Company and ICG Mezzanine
Funds
Financial Highlights
* Group profit before tax** of £105.1m compared to £97.7m in the second half
of last year (H2 10)
* Fund Management Company* profit of £16.9m compared to £15.2m in H2 10
* Investment Company profit of £88.2m compared to £82.5m in H2 10
* Interim dividend of 6 pence per share, unchanged from last year
+----------------------------+-----------------+-------------+-----------------+
| | 6 months to| 6 months to| 6 months to|
| |30 September 2010|31 March 2010|30 September 2009|
+----------------------------+-----------------+-------------+-----------------+
|Fund Management Company* | £16.9m| £15.2m| £22.8m|
|profit before tax | | | |
+----------------------------+-----------------+-------------+-----------------+
|Investment Company* profit**| £88.2m| £82.5m| £(14.7)m|
|/ (loss) before tax | | | |
+----------------------------+-----------------+-------------+-----------------+
|Group profit before tax** | £105.1m| £97.7m| £8.1m|
+----------------------------+-----------------+-------------+-----------------+
|Earnings per share** | 17.2p| 24.4p| 0.6p|
+----------------------------+-----------------+-------------+-----------------+
|Cash core income*** | £43.8m| £77.4m| £37.7m|
+----------------------------+-----------------+-------------+-----------------+
|Interim dividend per share | 6.0p| n/a| 6.0p|
+----------------------------+-----------------+-------------+-----------------+
|Investment portfolio | £2,630| £2,684| £2,828m|
+----------------------------+-----------------+-------------+-----------------+
|Third party assets under | €8,718m| €8,249m| €8,523m|
|management**** | | | |
+----------------------------+-----------------+-------------+-----------------+
* The definitions for Fund Management Company ("FMC") and Investment Company
("IC") can be found in note 2 of this statement
** Including impact of fair value movements on derivatives (H1 11: gain of
£8.5m; H2 10: loss of £7.5m; H1 10: gain of £7.6m)
*** Cash core income is defined as profit before tax less net capital gains,
impairments and net unrealised rolled up interest.
**** Assets under management ("AUM") is defined in the Financial Review
Commenting on the results, Christophe Evain, CEO, said:
"We are pleased to announce another solid set of results, building on the
positive momentum of the second half of last year. Continuing high levels of
realisations and lower impairment charges have benefitted the results of our
Investment Company and the performance of our funds. We are also making progress
towards the expansion of our fund management franchise and believe we can
continue delivering growth in AUM and stronger profits."
Analyst / Investor enquiries:
Christophe Evain, CEO, ICG +44 (0) 20 3201 7700
Philip Keller, Finance Director, ICG +44 (0) 20 3201 7700
Jean-Christophe Rey, Investor Relations, ICG +44 (0) 20 3201 7768
Media enquiries:
Mark Lunn, Corporate Communications, ICG +44 (0) 20 3201 7769
Charlotte Kirkham, Tim Draper, M:Communications +44 (0) 20 7920 2331
This Half Year Results statement has been prepared solely to provide additional
information to shareholders and meets the relevant requirements of the UK
Listing Authority's Disclosure and Transparency Rules. The Half Year Results
statement should not be relied on by any other party or for any other purpose.
This Half Year Results statement may contain forward looking statements. These
statements have been made by the Directors in good faith based on the
information available to them up to the time of their approval of this report
and should be treated with caution due to the inherent uncertainties, including
both economic and business risk factors, underlying such forward looking
information.
These written materials are not an offer of securities for sale in the United
States. Securities may not be offered or sold in the United States absent
registration under the US Securities Act of 1933, as amended, or an exemption
there from. The issuer has not and does not intend to register any securities
under the US Securities Act of 1933, as amended, and does not intend to offer
any securities to the public in the United States. No money, securities or other
consideration from any person inside the United States is being solicited and,
if sent in response to the information contained in these written materials,
will not be accepted.
About ICG
Founded in 1989, ICG provides mezzanine finance, leveraged credit and minority
equity. With approximately €12 billion under management in proprietary capital
and third party funds, it is a leading player in this industry. ICG has a large
and experienced investment team operating from its head office in London and
offices in Paris, Madrid, Stockholm, Frankfurt, Amsterdam, Hong Kong, Sydney and
New York. Its stock (ticker symbol: ICP) is listed on the London Stock Exchange.
Further information is available at: www.icgplc.com.
Business Review.
Overview
Thanks to a stronger investment portfolio and a growing fund management
franchise we have generated a profit before tax of £105.1 million. This is up
from £8.1 million in the first half of last year and £97.7 million in the second
half.
After two years of the worst financial and economic crisis in decades, ICG is in
a strong competitive and financial position. Although liquidity may distort
asset values and financial returns in the short term, attractive opportunities
are starting to emerge for investment firms and asset managers with a strong
brand and reputation.
Market Update
The recovery in deal activity has gained pace in the past few months.
Credit markets have seen a marked increase in liquidity fuelled by quantitative
easing programmes. Low interest rates are pushing yield seeking investors
towards the High Yield bond market. Larger companies within the leveraged buyout
("LBO") universe are taking advantage of this strong influx of capital to
refinance their existing debt by issuing High Yield bonds. Collateralised Loan
Obligation funds ("CLOs"), which own a meaningful proportion of the existing
stock of loans, are keen to recycle any proceeds from the resulting repayments
to maintain their fee income stream, and are therefore supporting new loan
issuances.
The significant amount of equity raised by private equity sponsors prior to
2008, with close to €1 trillion of unspent equity commitments globally, is
adding to this supply of debt capital.
Credit discipline has been maintained by market participants and leverage
multiples have not expanded significantly. Nevertheless this excess liquidity
relative to the current size of the market has led to a marked increase in
valuation levels for LBO assets.
Given the finite life of both debt and equity vehicles, liquidity will decrease
over time, leading to attractive investment opportunities for well capitalised
investors. The ability of CLOs to reinvest proceeds will reduce materially from
2012 onwards.
Strategic Priorities
Against this backdrop, our strategic priorities remain to:
* manage our portfolio to maximise value;
* invest selectively; and
* grow our Fund Management Company.
Manage our portfolio to maximise value
Our portfolio companies are benefitting from the improvement in the economic
environment. At our latest quarterly portfolio review, in September 2010, 62 per
cent of our investments were performing at or above the prior year level. This
compares to 53 per cent at the end of September 2009 and 59 per cent at the end
of March 2010, despite the realisations of high performing assets in the past
twelve months. The encouraging signs of top line growth, which we described in
June, have gained further momentum since.
As a result, the impairment charge taken by our Investment Company was £53.1
million, compared to £97.1 million in the first half of last year and £64.7
million in the second half.
Market activity has concentrated on assets which have performed well throughout
the turbulent economic conditions of the past two years. For these assets
competition is fierce amongst private equity sponsors and trade buyers, leading
to high valuations. We have realised a number of quality assets to take
advantage of this buoyant market activity. In the first half of the year, we
exited from five portfolio companies, generating capital gains of £86.8 million,
repayments of principal of £150.1 million and the crystallisation of £31.3
million of accrued interest for our Investment Company.
As we have regularly reported during the crisis, we have also been focused on
protecting our underperforming investments, especially those where a recovery
could be envisaged when the economic environment improved. We continue to
actively manage these assets and are encouraged by early signs of improving
trends in operating performance. In due course, we expect realisations to extend
to those companies which have fared less well during the recent period of
economic turmoil but are now well positioned to grow again.
Invest selectively
Given the current high valuations of assets and the uncertain outlook for
Western economies, we are particularly selective when deploying capital. We
believe that when the current over supply of capital reduces, investment
opportunities will materially increase. In the meantime we can identify
attractive pockets of value through our local investment network.
We made proprietary investments of £128 million over the period on behalf of our
Investment Company. This includes two LBO transactions: TeamSystem in Europe and
Fort Dearborn in the US, and follow-on investments in existing portfolio
companies. It also comprises our stake in Eos Loan Fund 1, the acquisition
vehicle for a portfolio of mostly senior secured loans of European companies
purchased from the Royal Bank of Scotland, at a discount to the €1.4 billion par
value. Following syndication to our funds and third party investors, the
Investment Company retained a €48.5 million stake in Eos Loan Fund 1.
Our investment pipeline is increasing and we are confident that the positive
momentum in our investment pace will be sustained. Completing transactions,
however, is now more complex and takes longer than it used to take.
In Europe, our current focus remains on minority equity investments, recovery
transactions and the acquisition of portfolios where we perceive returns to be
more attractive at present. As banks de-lever further and dispose of non-core
assets, we believe that further opportunities will emerge to acquire similar
loan portfolios.
We will also invest in traditional European mid-market buyouts, reflecting our
strength in local markets, but will be cautious given current valuations and the
uncertain economic outlook. Our local network of investment professionals and
the strong relationships we have built with sponsors, management teams and
banks, over our 21 year history, gives us a real competitive advantage when
sourcing attractive investments.
We will also continue to benefit from our international network in the Asia
Pacific region and North America where the pipeline is strong.
The buyout market in the Asia Pacific region remains dynamic. The marked
emergence of a secondary market, reflecting the growth of buyout transactions in
the past decade, is also supplementing a robust primary market. Strong economic
performance in key Asia Pacific economies, in contrast with Western economies,
is attracting increased interest for the region. Local bank liquidity is also
stimulating activity.
The North American buyout market has recovered faster than in Europe. We are
making inroads in this market and, in the first half, have completed our ninth
transaction in the region. North America now accounts for 8 per cent of our
investment portfolio.
Grow our Fund Management Company
I am pleased to report that we are making progress towards growing our Fund
Management activity. In March 2010 we identified three growth areas for our Fund
Management Company: continuing to grow our existing Mezzanine and Credit Fund
Management operations; taking advantage of the shift in the market to acquire
portfolios of assets at attractive prices; and expanding cautiously into
adjacent asset classes.
Our mezzanine funds have benefitted from the same positive trends as our
Investment Company. ICG Mezzanine Fund 2003 has now almost fully repaid its debt
facility and will accelerate the return of capital to equity investors. The fund
has met its hurdle rate in a number of currencies and we have therefore accrued
£1.3 million of carried interest in the first half of the year. As a result of
new investments in the period, the ICG Recovery Fund 2008 and the ICG European
Fund 2006 are now 58 per cent and 79 per cent invested, respectively. We
therefore expect to launch our next European mezzanine fund in the first half of
the 2011 calendar year. Our Asia Pacific Mezzanine Fund 2008 is 28 per cent
invested and is performing well.
Our credit funds have also benefitted from improved sentiment and operating
performances of their underlying portfolio companies. Our twelve month senior
loan default rate at 30 September 2010 was 0.31 per cent, compared to 5.3 per
cent for the market. These funds have also benefitted from the wave of exits in
the LBO market as a change of ownership triggers the repayment of outstanding
loans at par. These factors have resulted in improving performance ratios across
our structured funds and a recovery in junior fees.
Our dedicated High Yield fund, which was launched in December 2009, has
outperformed the index since inception and is building a strong track record. We
are expecting to open the High Yield fund to third party investors in the course
of 2011 and view High Yield as a growth area for ICG over the medium term.
In addition, Eos Loan Fund 1 generated strong interest from both existing and
new institutional investors. As the first and only structured transaction
completed in Europe since 2008, it attests to the quality of our Credit Fund
Management franchise. This fund has added €902 million of AUM and is already
showing a strong performance.
We are seeing opportunities to grow our Credit Fund Management operations by
acquiring portfolios of assets. As banks continue to de-lever and dispose of non
core assets, we believe that further opportunities will emerge. We are also in
advanced discussions to acquire the management contract of a European CLO. The
European LBO debt fund management industry is highly fragmented and as one of
the main players in this asset class, we are well placed to participate in
future consolidation. Our broad local knowledge of the European LBO middle
market enables us to identify value in this asset class and our reputation and
scale provide us with unique access to deal flow of proprietary transactions.
We also believe that our skills can be successfully applied to adjacent asset
classes. From our origins in mezzanine finance, we have successfully expanded
into leveraged loans, high yield bonds, minority equity investments and more
recently recovery assets. We will continue to seek new areas where we can expand
our product offering and create value for our shareholders by capitalising on
our investment discipline, relationships and infrastructure.
Outlook
Although the economic environment remains full of uncertainty, we do not
anticipate market conditions to change materially in the second half. We
therefore expect to continue to benefit from a strong market for realisations.
The conditions are also now set for ICG to grow its asset management franchise,
both organically and through measured inorganic expansion.
We will use our extensive local network, deep relationships and existing
portfolio to selectively invest in new transactions where we see real value.
Although caution is warranted due to the current excess liquidity in the
financial system and levels of asset valuation, we believe that opportunities
will increase materially in the medium term. With €1.5 billion of capital to
deploy for our Investment Company and third party funds, we are well placed to
take advantage of these opportunities as they arise.
We will launch our next European mezzanine fund in the first half of calendar
year 2011 and we will continue to explore opportunities to further expand our
fund management franchise. The trends in the alternative fund management
industry will benefit strong players with experience, a well established brand
and a long track record. ICG is well positioned to benefit from these trends and
resume its growth.
Dividend
The Board has approved an interim dividend of 6 pence per share, unchanged from
last year. The interim dividend will be paid on 7 January 2011 to shareholders
on the register at 3 December 2010.
Christophe Evain
CEO
23 November 2010
Financial Review.
Overview
The profit before tax of the Fund Management Company ("FMC") for the six months
to 30 September 2010 was £16.9 million up from £15.2 million in the second half
of last year, mainly dues to higher fee income. It was lower, however, than in
the first half of last year (profit of £22.8m), principally due to lower fee
income and the impact of the release of the accrued cost for the shadow share
scheme last year. Excluding the impact of the incentive schemes, the profit of
the FMC was £24.3 million, compared to £16.7 million in the second half of
last year and £27.0 million in the first half of last year.
Profit before tax for the Investment Company ("IC"), including fair value
movement on derivatives, was £88.2 million compared to £82.5 million in the
second half and a loss of £14.7 million in the first half of last year, which
had been negatively impacted by materially lower capital gains and a higher
impairment charge.
As a result, Group profit before tax rose to £105.1million, compared to £97.7
million in the second half of last year and £8.1 million in the first half.
Shareholders' funds at 30 September 2010 stood at £1,198 million compared to
£1,184 million at 31 March 2010. The balance sheet is strong with gearing of
1.3 and undrawn debt facilities of £619 million.
Going concern statement
ICG's business activities, together with the factors likely to affect its future
development, performance and financial position are set out in the Managing
Directors' review. The risk profile and the related uncertainty of ICG increased
during the global recession which impacted our borrowers' ability to meet their
obligations. Our portfolio as a whole is performing satisfactorily in light of
the economic conditions. The capital position of ICG is reviewed below. Having
reviewed ICG's budget and business plans and, taking into account reasonable
downside sensitivity, the Directors believe that ICG has adequate financial
resources to continue in operational existence for the foreseeable future and
accordingly they continue to adopt the going concern basis in preparing the
financial statements.
Profit and loss account
Fund Management Company
Assets under management
The Group defines its assets under management ("AUM") as the total cost of
assets owned, managed and advised by the ICG plus commitments to its managed and
advised funds, in addition to debt facilities for the funds.
AUM at 30 September 2010 were €11,671 million compared to €11,190 million at 31
March 2010 and €11,540 million at 30 September 2009. This increase was due to
the establishment of the Eos Loan Fund 1 which added €902 million of AUM.
Mezzanine and Minority Equity AUM amounted to €3,417 million compared to
€3,572 million at 31 March 2010, primarily due to realisations in ICG European
Fund 2003.
Credit Funds AUM were €5,301 million, up from €4,677 million at 31 March 2010,
due the contribution of the Eos Loan Fund 1.
AUM of the Investment Company stood at €2,953 million. A discussion on balance
sheet investments is included below.
Fee income
Fee income for the first half of the year amounted to £39.1 million compared to
£41.5 million in the first half of last year.
Fee income from third parties was £26.1 million compared to £27.3 million in the
first half of last year. Foreign exchange movements, and in particular the
strengthening of Sterling over the period compared to the first half
of last year, negatively impacted third party fee income by £0.8 million.
Fee income for our Mezzanine and Minority Equity funds totalled £16.2 million
compared to £14.1 million in the second half of last year and £20.5 million in
the first half. This decline is principally due to the reduction of 25 basis
points in the management fee as agreed with investors in our ICG European Fund
2006 and Intermediate Capital Asia Pacific Fund 2008 in September 2009 in
exchange for a lower co-investment ratio for ICG's balance sheet which will
support the acceleration of AUM growth. In addition, fee income from funds in
realisation mode was lower following the strong string of exits which reduced
AUM.
The contribution of carried interest to fee income was £1.3 million (in relation
to ICG Mezzanine Fund 2003) compared to £1.7 million in the first half of last
year (in relation to ICG Mezzanine Fund 2000).
Fee income for our Credit funds amounted to £9.9 million compared to
£6.8 million in the first half of last year. One of our CDOs which stopped
paying junior fees last year, has caught up with all unpaid fees during this
half year. This has contributed £1.0 million of junior fee corresponding to the
six months to 30 September 2010 and a catch up payment of £2.0 million for FY
10. There are now only two of our eleven CDOs where we are not accruing junior
fees. If market and trading conditions remain favourable further recoveries of
junior fees may occur in the next twelve months.
Fee income from the Investment Company amounted to £13.0 million compared to
£13.6 million in the second half of last year and £14.2 million in the first
half, due to a lower average investment book value.
Other income
As a result of the improved trading conditions for our Credit funds, three of
our eleven CDOs funds paid a dividend in the period. In addition there was a
£0.3 million dividend from our High Yield fund. Other income was therefore
£1.1 million for the period.
Operating expenses
Operating expenses were £23.3 million compared £19.8 million in the first half
of last year, mainly due to the impact of the release of the accrued cost for
the shadow share scheme last year (£2.8 million in H1 and £4.1 million in H2).
Salaries, excluding incentive schemes, and administrative expenses were at
£15.9 million compared to £18.9 million in the second half of last year and
£15.6 million in the first half of last year.
Profit before tax
As a result of the above movements, profit before tax for the FMC was
£16.9 million compared to £15.2 million in the second half of last year and
£22.8 million in the first half of last year.
Investment Company
Balance sheet investments
The balance sheet investment portfolio amounted to £2,630 million, broadly flat
compared to £2,684 million at 31 March 2010. This excludes £36 million of seed
equity in our Credit funds (£34 million at 31 March 2010).
In the six month period to 30 September 2010, the balance sheet invested
£222.2 million of which £94.5 million was held for syndication. Repayments of
principal for the period amounted to £150.1 million (excluding capital gains.)
In addition, the Sterling value of our portfolio was negatively impacted by the
appreciation of Sterling versus the Euro as 65 per cent of the portfolio is Euro
denominated. Sterling denominated assets only account for 12 per cent of the
portfolio.
The investment portfolio comprises £1,455 million of senior mezzanine and senior
debt (55 per cent), £532 million of junior mezzanine investments (20 per cent),
£575 million of equity investments (22 per cent) with the remaining £68 million
being debt to our third party funds.
Net interest income
Net interest income ("NII"), excluding fair value movement on derivatives held
for hedging purposes, was £95.0 million compared to £102.5 million in the first
half of last year.
Interest Income was lower at £121.3 million compared to £136.0 million in the
first half of last year due to a lower average investment book and a lower
EURIBOR over the period. Average EURIBOR in the first half was 0.783 per cent
compared to 1.083 per cent in the six months to 30 September 2009. In addition,
there was a negative foreign exchange impact of £0.6 million due to the
appreciation of Sterling versus the Euro.
Cash interest income for the period was £43.1 million and rolled up interest
income was £78.2 million. Cash interest income is received on both the base rate
and a fixed cash interest spread and was therefore negatively affected by the
lower levels of EURIBOR.
Interest expense was £26.3 million compared to £33.5 million in the first half
of last year, due to lower net debt following the cash raised by the Rights
Issue and lower EURIBOR over the period, partially offset by higher interest
margins on the extended bank debt.
Other income
Other income, principally waiver and prepayment fees, amounted to £1.4 million.
Operating expenses
Operating expenses were £33.0 million compared to £32.0 million in the first
half of last year.
The Medium Term Incentive Scheme ("MTIS") charged on rolled up interest accruals
for the period, amounted to £10.1 million compared to £15.5 million in the first
half of last year. This scheme is closing in March 2012, therefore the amount
expected to be paid out before the scheme closes is reducing.
Salaries, excluding incentive schemes, and operating expenses were £21.0 million
compared to £16.5 million in the first half of last year. The first half of this
year included a £5.7 million cost relating to the lease on 20 Old Broad Street
following our move to new premises. As a consequence our rental costs will be
reduced by £0.6 million a year on average for the next ten years. This has no
material impact on a cash basis. Incentives schemes were £1.9m in the first half
of this year.
Capital gains
Capital gains totalled £86.8 million of which £57.8 million were unrealised at
30 September 2010. These unrealised capital gains relate principally to our
investments in Picard and Visma which are expected to be realised in the third
quarter. This compares to capital gains of £4.4 million in the first half of
last year.
Impairments
Gross provisions for impairments of portfolio companies were £54.3 million in
the first half, compared to £80.9 million in the second half of last year and
£99.4 million in the first half of last year. Recoveries in the period were
£1.2 million compared to £2.3 million in the first half of last year.
Profit before tax
Profit before tax for the IC, including fair value movement of derivatives held
for hedging purposes, was £88.2 million up from a loss of £14.7 million in the
first half of last year.
Group
Profit before tax
Group profit before tax rose to £105.1 million, compared to £8.1 million in the
first half of last year.
Earnings per share
Earnings per share for the six months to 30 September 2010 were 17.2 pence
compared to 0.6 pence in the first half of last year.
Cash core income
Cash core income is defined as profit before tax less net capital gains,
impairments and net unrealised rolled up interest.
Cash core income for the six months to 30 September 2010 was £43.8 million
compared to £37.7 million in the first half of last year.
Realised rolled up interest amounted to £31.3 million over the period and
accrued rolled up interest was £78.2 million. Net of MTIS charges these figures
were £26.0 million and £68.1 million, respectively.
Dividend per share
The Board has declared an interim dividend of 6 pence per share, unchanged from
last year.
In order to give shareholders greater flexibility, the Board introduced a scrip
dividend scheme in June 2009. This scheme allows shareholders to elect to
receive future dividends in shares as opposed to cash.
Group cash flow
Operating cash flow
Interest income received during the first half of the year was £78.8 million
compared to £61.6 million in the first half of last year, as the lower level of
cash interest income was more than offset by a higher level of rolled up
interest realisations. Over the period, realisation of rolled up interest was
£31.3 million, compared to £14.0 million in the first half of last year.
Interest expense was materially lower at £21.5 million, compared to
£53.3 million due to a lower level of average net debt and lower base rates. In
addition the first half of last year included a one off payment for the
extension of our debt facilities. This resulted in a positive cash spread
of £57.3 million, materially higher than in the first half of last year.
Dividend income was broadly flat at £1.1 million.
Fee income received amounted to £19.8 million, compared to £27.2 million in the
first half of the previous year. Operating expenses were £37.2 million, compared
to £25.8 million in the first half of last year which did not include any
payment of MTIS.
As a result, operating cash flow for the six months to 30 September 2010 was
£40.9 million, compared to £11.0 million in the six months to 30 September 2009.
Cash flow relating to capital gains
Cash flow relating to capital gains, net of MTIS payments, was £23.7 million in
the first half of this year compared to £1.1 million in the first half of last
year.
Free cash flow
During the period we received a £25.5 million tax refund in respect of prior
years. This compares to £8.0 million tax payment in the first half of last year.
In addition we purchased £13.2 million of ICG shares in the first half of this
year to hedge the new incentive schemes.
Following repayments, syndication proceeds and recoveries of £150.5 million,
free cash flow prior to investments and dividends, was £227.3 million,
materially higher than the £17.2 million generated in the first half of last
year.
Movement in net debt and cash balances
The above cash flow movements, together with an increase in drawn debt
facilities of £21.8 million, financed investments of £223.3 million and
dividends of £25.8 million.
Group balance sheet
The balance sheet is strong and liquid. Shareholders' funds at 30 September
2010 stood at £1,198 million compared to £1,184 million at 31 March 2010.
Net debt was £1,520 million and net debt to shareholders' funds was 127 per
cent, both broadly in line with year end levels.
Investment capacity
Total debt facilities stood at £2,102 million at 30 September 2010, including
undrawn debt facilities of £619 million, including £75 million of cash in
transit. This £619 million does not include the proceeds from the realisations
of our stakes in Picard and Visma nor the proceeds on the syndicated tranche of
Eos Loan fund 1 which are expected in the third quarter of the financial year.
Financial outlook
We do not anticipate the second half performance of the FMC to be materially
different than the first half.
For the Investment Company, we expect NII to continue to decline slightly
reflecting the repayments versus new investments dynamic. Capital gains are
expected to continue in the second half and impairments to trend further down.
Cash core income is expected to continue to benefit from realisations.
Principal risk and uncertainties
The principal risks and uncertainties faced by ICG are set out in the Business
Review of our Annual Report and Accounts 2010. The main categories addressed
were: Operational risks, Market risks and Business risks. Specifically for the
second half of this financial year, the principal risk remains the lack of
visibility on the sustainability of the recent improvement in economic outlook
and related market sentiment. Managing our investments in that context remains a
high corporate priority.
Philip Keller
CFO
23 November 2010
Responsibility Statement.
We confirm that to the best of our knowledge:
(a) the condensed set of financial statements has been prepared in accordance
with IAS 34 "Interim Financial Reporting";
(b) the interim management report includes a fair review of the information
required by DTR 4.2.7R (indication of important events during the first six
months and description of principal risks and uncertainties for the remaining
six months of the year); and;
(c) the interim management report includes a fair review of the information
required by DTR 4.2.8R (disclosure of related parties' transactions and changes
therein).
By order of the Board,
Justin Dowley
Chairman
Philip Keller
CFO
23 November 2010
Condensed Consolidated Income Statement.
for the six months ended 30 September 2010.
+------------------------------------------+------------+------------+---------+
| | Six months| Six months| Year|
| | ended| ended| ended|
| |30 September|30 September| 31 March|
| | 2010| 2009| 2010|
| | (unaudited)| (unaudited)|(audited)|
| | £m| £m| £m|
+------------------------------------------+------------+------------+---------+
|Interest and dividend income | 122.4| 137.1| 274.1|
+------------------------------------------+------------+------------+---------+
|Gains on investments | 86.8| 4.4| 98.8|
+------------------------------------------+------------+------------+---------+
|Fee and other operating income | 27.5| 28.1| 52.0|
+------------------------------------------+------------+------------+---------+
| | 236.7| 169.6| 424.9|
+------------------------------------------+------------+------------+---------+
|Interest payable and other related | (17.8)| (25.9)| (62.4)|
|financing costs | | | |
+------------------------------------------+------------+------------+---------+
|Provisions for impairment of assets | (53.1)| (97.1)| (161.8)|
+------------------------------------------+------------+------------+---------+
|Administrative expenses | (60.7)| (38.5)| (94.9)|
+------------------------------------------+------------+------------+---------+
|Profit before tax | 105.1| 8.1| 105.8|
+------------------------------------------+------------+------------+---------+
|Tax expense | (37.6)| (6.4)| (24.1)|
+------------------------------------------+------------+------------+---------+
|Profit for the period/year attributable to| 67.5| 1.7| 81.7|
|equity holders of the parent | | | |
+------------------------------------------+------------+------------+---------+
|Earnings per share | 17.2p| 0.6p| 25.0p|
+------------------------------------------+------------+------------+---------+
|Diluted earnings per share | 17.2p| 0.6p| 25.0p|
+------------------------------------------+------------+------------+---------+
All activities represent continuing operations.
Condensed Consolidated Statement of Comprehensive Income.
for the six months ended 30 September 2010.
+------------------------------------------+------------+------------+---------+
| | Six months| Six months| Year|
| | ended| ended| ended|
| |30 September|30 September| 31 March|
| | 2010| 2009| 2010|
| | (unaudited)| (unaudited)|(audited)|
| | £m| £m| £m|
+------------------------------------------+------------+------------+---------+
|Profit for the period/year | 67.5| 1.7| 81.7|
+------------------------------------------+------------+------------+---------+
|Available for sale financial assets: | | | |
+------------------------------------------+------------+------------+---------+
|Gains/(losses) arising in the period/year | 45.4| (10.5)| 87.4|
+------------------------------------------+------------+------------+---------+
|Less: reclassification adjustment for | | | |
|gains/(losses) included in the income | (70.1)| 10.5| (64.6)|
|statement | | | |
+------------------------------------------+------------+------------+---------+
|Exchange differences on translation of | (0.8)| -| (1.7)|
|foreign operations | | | |
+------------------------------------------+------------+------------+---------+
| | (25.5)| -| 21.1|
+------------------------------------------+------------+------------+---------+
|Tax on items taken directly to or | 7.2| 0.6| (6.3)|
|transferred from equity | | | |
+------------------------------------------+------------+------------+---------+
|Other comprehensive income/(expense) for | (18.3)| 0.6| 14.8|
|the period/year | | | |
+------------------------------------------+------------+------------+---------+
|Total comprehensive income for the | 49.2| 2.3| 96.5|
|period/year | | | |
+------------------------------------------+------------+------------+---------+
Condensed Consolidated Statement of Financial Position.
as at 30 September 2010.
+------------------------------------------+------------+------------+---------+
| |30 September|30 September| 31 March|
| | 2010| 2009| 2010|
| | (unaudited)| (unaudited)|(audited)|
| | £m| £m| £m|
+------------------------------------------+------------+------------+---------+
|Non current assets | | | |
+------------------------------------------+------------+------------+---------+
|Property, plant and equipment | 7.3| 8.9| 7.6|
+------------------------------------------+------------+------------+---------+
|Financial assets: loans and investments | 2,665.9| 2,850.6| 2,718.1|
|and warrants | | | |
+------------------------------------------+------------+------------+---------+
|Derivative financial instruments | 27.3| 13.7| 21.4|
+------------------------------------------+------------+------------+---------+
| | 2,700.5| 2,873.2| 2,747.1|
+------------------------------------------+------------+------------+---------+
|Current assets | | | |
+------------------------------------------+------------+------------+---------+
|Trade and other receivables | 58.5| 46.5| 56.0|
+------------------------------------------+------------+------------+---------+
|Financial assets: loans and investments | 100.2| 22.8| 8.9|
+------------------------------------------+------------+------------+---------+
|Derivative financial instruments | 4.1| 3.3| 9.8|
+------------------------------------------+------------+------------+---------+
|Cash and cash equivalents | 181.2| 26.8| 83.7|
+------------------------------------------+------------+------------+---------+
| | 344.0| 99.4| 158.4|
+------------------------------------------+------------+------------+---------+
|Total assets | 3,044.5| 2,972.6| 2,905.5|
+------------------------------------------+------------+------------+---------+
|Equity and reserves | | | |
+------------------------------------------+------------+------------+---------+
|Called up share capital | 79.2| 78.0| 78.0|
+------------------------------------------+------------+------------+---------+
|Share premium account | 657.7| 642.4| 642.5|
+------------------------------------------+------------+------------+---------+
|Capital redemption reserve | 1.4| 1.4| 1.4|
+------------------------------------------+------------+------------+---------+
|Own shares reserve | (16.0)| -| (2.8)|
+------------------------------------------+------------+------------+---------+
|Other reserves | 21.9| 23.7| 35.2|
+------------------------------------------+------------+------------+---------+
|Retained earnings | 453.7| 366.3| 429.2|
+------------------------------------------+------------+------------+---------+
|Shareholders' funds | 1,197.9| 1,111.8| 1,183.5|
+------------------------------------------+------------+------------+---------+
|Non current liabilities | | | |
+------------------------------------------+------------+------------+---------+
|Trade and other payables | 5.7| -| -|
+------------------------------------------+------------+------------+---------+
|Financial liabilities | 1,458.4| 1,595.3| 1,409.0|
+------------------------------------------+------------+------------+---------+
|Derivative financial instruments | 6.2| 29.8| 22.4|
+------------------------------------------+------------+------------+---------+
|Deferred tax liabilities | 25.7| 8.1| 32.3|
+------------------------------------------+------------+------------+---------+
| | 1,496.0| 1,633.2| 1,463.7|
+------------------------------------------+------------+------------+---------+
|Current liabilities | | | |
+------------------------------------------+------------+------------+---------+
|Trade and other payables | 153.5| 128.5| 166.5|
+------------------------------------------+------------+------------+---------+
|Financial liabilities | 72.7| 40.7| 66.4|
+------------------------------------------+------------+------------+---------+
|Liabilities for current tax | 63.1| 6.4| 0.5|
+------------------------------------------+------------+------------+---------+
|Derivative financial instruments | 61.3| 52.0| 24.9|
+------------------------------------------+------------+------------+---------+
| | 350.6| 227.6| 258.3|
+------------------------------------------+------------+------------+---------+
|Total liabilities | 1,846.6| 1,860.8| 1,722.0|
+------------------------------------------+------------+------------+---------+
|Total equity and liabilities | 3,044.5| 2,972.6| 2,905.5|
+------------------------------------------+------------+------------+---------+
Condensed Consolidated Statement of Cash Flows.
for the six months ended 30 September 2010.
+-----------------------------------------+------------+------------+----------+
| | Six months| Six months|Year ended|
| | ended| ended| 31 March|
| |30 September|30 September| 2010|
| | 2010| 2009| (audited)|
| | (unaudited)| (unaudited)| £m|
| | £m| £m| |
+-----------------------------------------+------------+------------+----------+
|Net cash from operating activities | | | |
+-----------------------------------------+------------+------------+----------+
|Interest receipts | 78.8| 61.6| 168.3|
+-----------------------------------------+------------+------------+----------+
|Fee receipts | 19.8| 27.2| 52.4|
+-----------------------------------------+------------+------------+----------+
|Dividends received | 1.1| 1.1| 1.9|
+-----------------------------------------+------------+------------+----------+
|Gain on disposals | 48.3| 1.1| 79.3|
+-----------------------------------------+------------+------------+----------+
|Interest payments | (21.5)| (53.3)| (81.0)|
+-----------------------------------------+------------+------------+----------+
|Cash payments to suppliers and employees | (62.0)| (25.8)| (51.0)|
+-----------------------------------------+------------+------------+----------+
|Purchase of current financial assets | (94.5)| -| (18.6)|
+-----------------------------------------+------------+------------+----------+
|Purchase of loans and investments | (127.7)| (16.1)| (96.7)|
+-----------------------------------------+------------+------------+----------+
|Proceeds from sale of loans and | 150.5| 13.5| 235.9|
|investments | | | |
+-----------------------------------------+------------+------------+----------+
|Cash (used)/generated in operations | (7.2)| 9.3| 290.5|
+-----------------------------------------+------------+------------+----------+
|Taxes received/(paid) | 25.5| (8.0)| (14.5)|
+-----------------------------------------+------------+------------+----------+
|Net cash generated in operating | 18.3| 1.3| 276.0|
|activities | | | |
+-----------------------------------------+------------+------------+----------+
|Investing activities | | | |
+-----------------------------------------+------------+------------+----------+
|Purchase of property, plant and equipment| (1.1)| (0.8)| (1.5)|
+-----------------------------------------+------------+------------+----------+
|Net cash used in investing activities | (1.1)| (0.8)| (1.5)|
+-----------------------------------------+------------+------------+----------+
|Financing activities | | | |
+-----------------------------------------+------------+------------+----------+
|Dividends paid | (25.8)| (14.6)| (37.8)|
+-----------------------------------------+------------+------------+----------+
|Increase/(decrease) in long term | 78.6| (352.2)| (502.7)|
|borrowings | | | |
+-----------------------------------------+------------+------------+----------+
|Net cashflow from derivative contracts | 40.7| 18.0| (25.4)|
+-----------------------------------------+------------+------------+----------+
|Purchase of own shares | (13.2)| -| -|
+-----------------------------------------+------------+------------+----------+
|Proceeds on issue of shares | -| 351.4| 351.4|
+-----------------------------------------+------------+------------+----------+
|Net cash from/(used in) financing | 80.3| 2.6| (214.5)|
|activities | | | |
+-----------------------------------------+------------+------------+----------+
|Net increase in cash | 97.5| 3.1| 60.0|
+-----------------------------------------+------------+------------+----------+
|Cash and cash equivalents at beginning of| 83.7| 23.7| 23.7|
|period /year | | | |
+-----------------------------------------+------------+------------+----------+
|Cash and cash equivalents at end of | 181.2| 26.8| 83.7|
|period /year | | | |
+-----------------------------------------+------------+------------+----------+
Condensed Consolidated Statement of Changes in Equity.
for the six months ended 30 September 2010.
+-------------+-------+-------+----------+--------+---------+------+--------+-------+
| | | | Capital| Reserve|Available| | | |
| | Share| Share|redemption| for| for sale| Own|Retained| |
| |capital|premium| reserve| share| or|shares|earnings| Total|
| | £m| £m| fund| based| reserve| £m| £m| £m|
| | | | £m|payments| £m| | | |
| | | | | £m| | | | |
+-------------+-------+-------+----------+--------+---------+------+--------+-------+
|Balance at | 78.0| 642.5| 1.4| 4.6| 30.6| (2.8)| 429.2|1,183.5|
|31 March 2010| | | | | | | | |
+-------------+-------+-------+----------+--------+---------+------+--------+-------+
|Profit for | -| -| -| -| -| -| | |
|the period | | | | | | | 67.5| 67.5|
+-------------+-------+-------+----------+--------+---------+------+--------+-------+
|Available for| | | | | | | | |
|sale | -| -| -| -| (24.7)| -| -| (24.7)|
|financial | | | | | | | | |
|assets | | | | | | | | |
+-------------+-------+-------+----------+--------+---------+------+--------+-------+
|Exchange | | | | | | | | |
|differences | | | | | | | | |
|on | -| -| -| -| -| -| (0.8)| (0.8)|
|translation | | | | | | | | |
|of foreign | | | | | | | | |
|operations | | | | | | | | |
+-------------+-------+-------+----------+--------+---------+------+--------+-------+
|Tax relating | | | | | | | | |
|to components| | | | | | | | |
|of other | -| -| -| -| 7.2| -| -| 7.2|
|comprehensive| | | | | | | | |
|income | | | | | | | | |
+-------------+-------+-------+----------+--------+---------+------+--------+-------+
|Total | | | | | | | | |
|comprehensive| | | | | | | | |
|(loss)/income| -| -| -| -| (17.5)| -| 66.7| 49.2|
|for the | | | | | | | | |
|period | | | | | | | | |
+-------------+-------+-------+----------+--------+---------+------+--------+-------+
|Own shares | | | | | | | | |
|acquired in | -| -| -| -| -|(13.2)| -| (13.2)|
|period | | | | | | | | |
+-------------+-------+-------+----------+--------+---------+------+--------+-------+
|Scrip | 1.2| 15.2| -| -| -| -| -| 16.4|
|dividend | | | | | | | | |
+-------------+-------+-------+----------+--------+---------+------+--------+-------+
|Credit for | | | | | | | | |
|equity | -| -| -| 4.2| -| -| -| 4.2|
|settled share| | | | | | | | |
|schemes | | | | | | | | |
+-------------+-------+-------+----------+--------+---------+------+--------+-------+
|Dividends | -| -| -| -| -| -| (42.2)| (42.2)|
|paid | | | | | | | | |
+-------------+-------+-------+----------+--------+---------+------+--------+-------+
| Balance at| | | | | | | | |
| 30 September| 79.2| 657.7| 1.4| 8.8| 13.1|(16.0)| 453.7|1,197.9|
| 2010| | | | | | | | |
+-------------+-------+-------+----------+--------+---------+------+--------+-------+
+-------------+-------+-------+----------+--------+---------+------+--------+-------+
| | | | Capital| Reserve|Available| | | |
|Six months | Share| Share|redemption| for| for sale| Own|Retained| |
|ended 30 |capital|premium| reserve| share| or|shares|earnings| Total|
|September | £m| £m| fund| based| reserve| £m| £m| £m|
|2009 | | | £m|payments| £m| | | |
| | | | | £m| | | | |
+-------------+-------+-------+----------+--------+---------+------+--------+-------+
|Balance at | 17.3| 348.5| 1.4| 9.6| 14.1| -| 384.6| 775.5|
|31 March 2009| | | | | | | | |
+-------------+-------+-------+----------+--------+---------+------+--------+-------+
|Profit for | -| -| -| -| -| -| 1.7| 1.7|
|the period | | | | | | | | |
+-------------+-------+-------+----------+--------+---------+------+--------+-------+
|Exchange | | | | | | | | |
|differences | | | | | | | | |
|on | -| -| -| -| (2.1)| -| (2.3)| (4.4)|
|translation | | | | | | | | |
|of foreign | | | | | | | | |
|operations | | | | | | | | |
+-------------+-------+-------+----------+--------+---------+------+--------+-------+
|Tax relating | | | | | | | | |
|to components| | | | | | | | |
|of other | -| -| -| -| 0.6| -| -| 0.6|
|comprehensive| | | | | | | | |
|income | | | | | | | | |
+-------------+-------+-------+----------+--------+---------+------+--------+-------+
|Total | | | | | | | | |
|comprehensive| -| -| -| -| (1.5)| -| (0.6)| (2.1)|
|(loss) for | | | | | | | | |
|the period | | | | | | | | |
+-------------+-------+-------+----------+--------+---------+------+--------+-------+
|Proceeds from| 60.4| 291.1| -| -| -| -| -| 351.5|
|rights issue | | | | | | | | |
+-------------+-------+-------+----------+--------+---------+------+--------+-------+
|Scrip | 0.3| 2.8| -| -| -| -| -| 3.1|
|dividend | | | | | | | | |
+-------------+-------+-------+----------+--------+---------+------+--------+-------+
|Credit for | | | | | | | | |
|equity | -| -| -| 1.5| -| -| -| 1.5|
|settled share| | | | | | | | |
|schemes | | | | | | | | |
+-------------+-------+-------+----------+--------+---------+------+--------+-------+
|Dividends | -| -| -| -| -| -| (17.7)| (17.7)|
|paid | | | | | | | | |
+-------------+-------+-------+----------+--------+---------+------+--------+-------+
|Balance at | | | | | | | | |
|30 September | 78.0| 642.4| 1.4| 11.1| 12.6| -| 366.3|1,111.8|
|2009 | | | | | | | | |
+-------------+-------+-------+----------+--------+---------+------+--------+-------+
+-------------+-------+-------+----------+--------+---------+------+--------+-------+
| | | | Capital| Reserve|Available| | | |
| | Share| Share|redemption| for| for sale| Own|Retained| |
|Year ended |capital|premium| reserve| share| or|shares|earnings| Total|
|31 March 2010| £m| £m| fund| based| reserve| £m| £m| £m|
| | | | £m|payments| £m| | | |
| | | | | £m| | | | |
+-------------+-------+-------+----------+--------+---------+------+--------+-------+
|Balance at | 17.3| 348.5| 1.4| 9.6| 14.1| -| 384.6| 775.5|
|31 March 2009| | | | | | | | |
+-------------+-------+-------+----------+--------+---------+------+--------+-------+
|Profit for | -| -| -| -| -| -| 81.7| 81.7|
|the year | | | | | | | | |
+-------------+-------+-------+----------+--------+---------+------+--------+-------+
|Available for| | | | | | | | |
|sale | -| -| -| -| 22.8| -| -| 22.8|
|financial | | | | | | | | |
|assets | | | | | | | | |
+-------------+-------+-------+----------+--------+---------+------+--------+-------+
|Exchange | | | | | | | | |
|differences | | | | | | | | |
|on | -| -| -| -| -| -| (1.7)| (1.7)|
|translation | | | | | | | | |
|of foreign | | | | | | | | |
|operations | | | | | | | | |
+-------------+-------+-------+----------+--------+---------+------+--------+-------+
|Tax relating | | | | | | | | |
|to components| | | | | | | | |
|of other | -| -| -| -| (6.3)| -| -| (6.3)|
|comprehensive| | | | | | | | |
|income | | | | | | | | |
+-------------+-------+-------+----------+--------+---------+------+--------+-------+
|Total | | | | | | | | |
|comprehensive| -| -| -| -| 16.5| -| 80.0| 96.5|
|income for | | | | | | | | |
|the year | | | | | | | | |
+-------------+-------+-------+----------+--------+---------+------+--------+-------+
|Proceeds from| 60.4| 291.0| -| -| -| -| -| 351.4|
|rights issue | | | | | | | | |
+-------------+-------+-------+----------+--------+---------+------+--------+-------+
|Own shares | | | | | | | | |
|acquired in | -| -| -| -| -| (2.8)| -| (2.8)|
|year | | | | | | | | |
+-------------+-------+-------+----------+--------+---------+------+--------+-------+
|Scrip | 0.3| 3.0| -| -| -| -| -| 3.3|
|dividend | | | | | | | | |
+-------------+-------+-------+----------+--------+---------+------+--------+-------+
|Credit for | | | | | | | | |
|equity | -| -| -| 0.7| -| -| -| 0.7|
|settled share| | | | | | | | |
|schemes | | | | | | | | |
+-------------+-------+-------+----------+--------+---------+------+--------+-------+
|Amortisation | | | | | | | | |
|of lapsed | -| -| -| (5.7)| -| -| 5.7| -|
|options | | | | | | | | |
+-------------+-------+-------+----------+--------+---------+------+--------+-------+
|Dividends | -| -| -| -| -| -| (41.1)| (41.1)|
|paid | | | | | | | | |
+-------------+-------+-------+----------+--------+---------+------+--------+-------+
|Balance at | 78.0| 642.5| 1.4| 4.6| 30.6| (2.8)| 429.2|1,183.5|
|31 March 2010| | | | | | | | |
+-------------+-------+-------+----------+--------+---------+------+--------+-------+
Notes.
1 Basis of accounting
(i) General information
The annual financial statements are prepared under International Financial
Reporting Standards (IFRS) as adopted by the European Union. The condensed set
of financial statements included in this half yearly financial report has been
prepared in accordance with International Accounting Standard (IAS) 34 Interim
Financial Reporting as adopted by the European Union, and on the basis of the
accounting policies and methods of computation set out in the statutory accounts
of the Group for the year ended 31 March 2010.
(ii) Going concern
The Group's business activities, together with the factors likely to affect its
future development, performance and position are set out in the interim
management report on pages 1 to 9. The interim management report also includes a
summary of the Group's financial position, its cash flows and borrowing
facilities.
The Group's principal committed financing facilities are not due for renewal
within the next two years.
Having reviewed the Group's budget and business plans, and taking into account
reasonable downside sensitivity, the Directors believe that ICG has adequate
financial resources to continue in operational existence for the foreseeable
future despite the uncertain economic climate. Accordingly they continue to
adopt the going concern basis in preparing the Condensed Consolidated Financial
Statements.
2. Business and geographical segments
During the previous financial year, the Group changed the presentation of
internal management reporting information from two distinct business groups, one
of these being the provision of mezzanine finance and the other being fund
management as per the half-yearly report, to report the profit of the Fund
Management Company ("FMC"), separately from the profits generated by the
Investment Company ("IC"). The FMC is defined as the operating unit and as such
carries the bulk of the Group's costs, including the cost of the investment
network, i.e. the investment executives and the local offices, as well as the
cost of most support functions, primarily Information technology, human
resources and marketing. Previously only the direct costs of the Fund Management
business were attributed to that sector.
The IC is charged a management fee of 1 per cent of the carrying value of the
investment portfolio by the FMC and this is shown below as Fee income from the
Balance Sheet. The costs of finance, treasury, portfolio administration teams
and the costs related to being a listed entity are allocated to the IC. The cost
of the Medium Term Incentive Scheme, ("MTIS") is charged to the IC, while the
scheme remains operational. The remuneration of the Managing Directors
(excluding MTIS) is allocated equally to the FMC and the IC.
Previously both income and expenses of the IC were reported by geographical
segment. Under the new format, only the mezzanine fund management fee income of
the FMC is reported by geographical segment. Amounts reported for the prior
full year and half year have been restated to conform to the requirements of
IFRS 8.
(i) Analysis of income and profit before tax
+-------------------+-------------------+--------------+---------+------+------+
| | Mezzanine Fund| | | | |
| | Management| | | | |
+-------------------+------+----+-------+--------------+---------+------+------+
|Six months ended | | | | Credit Fund| | | |
|30 September 2010 |Europe|Asia| US| Management|Total FMC| IC| Total|
|(£m) | | | | | | | |
+-------------------+------+----+-------+--------------+---------+------+------+
|External fund | | | | | | | |
|management fee | 12.5| 3.7| -| 9.9| 26.1| -| 26.1|
|income | | | | | | | |
+-------------------+------+----+-------+--------------+---------+------+------+
|Fee income from the| | | | | | | |
|Balance Sheet | 10.5| 1.2| 0.7| 0.6| 13.0| -| 13.0|
|(inter segment) | | | | | | | |
+-------------------+------+----+-------+--------------+---------+------+------+
|Fund management fee| 23.0| 4.9| 0.7| 10.5| 39.1| -| 39.1|
|income | | | | | | | |
+-------------------+------+----+-------+--------------+---------+------+------+
|Net interest | | | | | -| 95.0| 95.0|
|income* | | | | | | | |
+-------------------+------+----+-------+--------------+---------+------+------+
|Dividend income | | | | | 1.1| -| 1.1|
+-------------------+------+----+-------+--------------+---------+------+------+
|Other fee income | | | | | -| 1.4| 1.4|
+-------------------+------+----+-------+--------------+---------+------+------+
|Staff costs | | | | | (14.9)| (3.2)|(18.1)|
+-------------------+------+----+-------+--------------+---------+------+------+
|Medium Term | | | | | -|(10.1)|(10.1)|
|Incentive Scheme | | | | | | | |
+-------------------+------+----+-------+--------------+---------+------+------+
|Balance Sheet fee | | | | | | | |
|income charge | | | | | -|(13.0)|(13.0)|
|(inter segment | | | | | | | |
|expense) | | | | | | | |
+-------------------+------+----+-------+--------------+---------+------+------+
|Administrative | | | | | (8.4)| (6.7)|(15.1)|
|costs | | | | | | | |
+-------------------+------+----+-------+--------------+---------+------+------+
|Net gains on | | | | | -| 69.4| 69.4|
|investments | | | | | | | |
+-------------------+------+----+-------+--------------+---------+------+------+
|Impairments | | | | | -|(53.1)|(53.1)|
+-------------------+------+----+-------+--------------+---------+------+------+
|Add back net fair | | | | | | | |
|value gain on | | | | | | | |
|derivatives | | | | | -| 8.5| 8.5|
|held for hedging | | | | | | | |
|purposes* | | | | | | | |
+-------------------+------+----+-------+--------------+---------+------+------+
|Profit before tax | | | | | 16.9| 88.2| 105.1|
+-------------------+------+----+-------+--------------+---------+------+------+
* Net gain relating to movements in the fair value of derivatives used to hedge
certain liabilities of the Group, excluding any interest accruals and spot F/X
translation movements on these derivatives, are not considered part of net
interest income for segmental reporting.
+-------------------+-------------------+--------------+---------+------+------+
| | Mezzanine Fund| | | | |
| | Management| | | | |
+-------------------+------+----+-------+--------------+---------+------+------+
|Six months ended | | | | Credit Fund| | | |
|30 September 2009 |Europe|Asia| US| Management|Total FMC| IC| Total|
|(£m) | | | | | | | |
+-------------------+------+----+-------+--------------+---------+------+------+
|External fund | | | | | | | |
|management fee | 16.3| 4.2| -| 6.8| 27.3| -| 27.3|
|income | | | | | | | |
+-------------------+------+----+-------+--------------+---------+------+------+
|Fee income from the| | | | | | | |
|Balance Sheet | 11.9| 1.1| 0.7| 0.5| 14.2| -| 14.2|
|(inter segment) | | | | | | | |
+-------------------+------+----+-------+--------------+---------+------+------+
|Fund management fee| 28.2| 5.3| 0.7| 7.3| 41.5| -| 41.5|
|income | | | | | | | |
+-------------------+------+----+-------+--------------+---------+------+------+
|Net interest | | | | | -| 102.5| 102.5|
|income* | | | | | | | |
+-------------------+------+----+-------+--------------+---------+------+------+
|Dividend income | | | | | 1.1| -| 1.1|
+-------------------+------+----+-------+--------------+---------+------+------+
|Other fee income | | | | | -| 0.8| 0.8|
+-------------------+------+----+-------+--------------+---------+------+------+
|Staff costs | | | | | (12.0)| (1.2)|(13.2)|
+-------------------+------+----+-------+--------------+---------+------+------+
|Medium Term | | | | | -|(15.5)|(15.5)|
|Incentive Scheme | | | | | | | |
+-------------------+------+----+-------+--------------+---------+------+------+
|Balance Sheet fee | | | | | | | |
|income charge | | | | | -|(14.2)|(14.2)|
|(inter segment | | | | | | | |
|expense) | | | | | | | |
+-------------------+------+----+-------+--------------+---------+------+------+
|Administrative | | | | | (7.8)| (1.1)| (8.9)|
|costs | | | | | | | |
+-------------------+------+----+-------+--------------+---------+------+------+
|Net gains on | | | | | -| 3.5| 3.5|
|investments | | | | | | | |
+-------------------+------+----+-------+--------------+---------+------+------+
|Impairments | | | | | -|(97.1)|(97.1)|
+-------------------+------+----+-------+--------------+---------+------+------+
|Add back net fair | | | | | | | |
|value gain on | | | | | | | |
|derivatives | | | | | -| 7.6| 7.6|
|held for hedging | | | | | | | |
|purposes* | | | | | | | |
+-------------------+------+----+-------+--------------+---------+------+------+
|Profit/(loss) | | | | | 22.8|(14.7)| 8.1|
|before tax | | | | | | | |
+-------------------+------+----+-------+--------------+---------+------+------+
* Net gain relating to movements in the fair value of derivatives used to hedge
certain liabilities of the Group, excluding any interest accruals and spot F/X
translation movements on these derivatives, are not considered part of net
interest income for segmental reporting.
+------------------+-------------------+-------------+---------+-------+-------+
| | Mezzanine Fund| | | | |
| | Management| | | | |
+------------------+------+----+-------+-------------+---------+-------+-------+
|Year ended 31 |Europe|Asia| US| Credit Fund|Total FMC| IC| Total|
|March 2010 (£m) | | | | Management| | | |
+------------------+------+----+-------+-------------+---------+-------+-------+
|External fund | | | | | | | |
|management fee | 26.6| 8.0| -| 14.0| 48.6| -| 48.6|
|income | | | | | | | |
+------------------+------+----+-------+-------------+---------+-------+-------+
|Fee income from | | | | | | | |
|the Balance Sheet | 23.4| 2.2| 1.3| 0.9| 27.8| -| 27.8|
|(inter segment) | | | | | | | |
+------------------+------+----+-------+-------------+---------+-------+-------+
|Fund management | 50.0|10.2| 1.3| 14.9| 76.4| -| 76.4|
|fee income | | | | | | | |
+------------------+------+----+-------+-------------+---------+-------+-------+
|Net interest | | | | | -| 209.7| 209.7|
|income* | | | | | | | |
+------------------+------+----+-------+-------------+---------+-------+-------+
|Dividend income | | | | | 1.9| -| 1.9|
+------------------+------+----+-------+-------------+---------+-------+-------+
|Other fee income | | | | | -| 3.4| 3.4|
+------------------+------+----+-------+-------------+---------+-------+-------+
|Staff costs | | | | | (22.4)| (2.3)| (24.7)|
+------------------+------+----+-------+-------------+---------+-------+-------+
|Medium Term | | | | | -| (28.9)| (28.9)|
|Incentive Scheme | | | | | | | |
+------------------+------+----+-------+-------------+---------+-------+-------+
|Balance Sheet fee | | | | | | | |
|income charge | | | | | -| (27.8)| (27.8)|
|(inter segment | | | | | | | |
|expense) | | | | | | | |
+------------------+------+----+-------+-------------+---------+-------+-------+
|Administrative | | | | | (17.9)| (1.7)| (19.6)|
|costs | | | | | | | |
+------------------+------+----+-------+-------------+---------+-------+-------+
|Net gains on | | | | | -| 77.1| 77.1|
|investments | | | | | | | |
+------------------+------+----+-------+-------------+---------+-------+-------+
|Impairments | | | | | -|(161.8)|(161.8)|
+------------------+------+----+-------+-------------+---------+-------+-------+
|Add back net fair | | | | | | | |
|value gain on | | | | | | | |
|derivatives | | | | | -| 0.1| 0.1|
|held for hedging | | | | | | | |
|purposes* | | | | | | | |
+------------------+------+----+-------+-------------+---------+-------+-------+
|Profit before tax | | | | | 38.0| 67.8| 105.8|
+------------------+------+----+-------+-------------+---------+-------+-------+
* Net gain relating to movements in the fair value of derivatives used to hedge
certain liabilities of the Group, excluding any interest accruals and spot F/X
translation movements on these derivatives, are not considered part of net
interest income for segmental reporting.
2. Business and geographical segments (continued)
(ii) Loan book by sector
+------------------------+--------------+---------------+-----------+
| | Six months | Six months | Year |
| | ended | ended | ended |
| | 30 September | 30 September | 31 March |
| | 2010 | 2009 | 2010 |
| | £m | £m | £m |
+------------------------+--------------+---------------+-----------+
| Europe | 2,155.9 | 2,369.5 | 2,215.1 |
+------------------------+--------------+---------------+-----------+
| Asia | 220.1 | 181.5 | 266.5 |
+------------------------+--------------+---------------+-----------+
| US | 143.8 | 205.5 | 135.1 |
+------------------------+--------------+---------------+-----------+
| Credit Fund Management | 146.1 | 94.1 | 101.4 |
+------------------------+--------------+---------------+-----------+
| | 2,665.9 | 2,850.6 | 2,718.1 |
+------------------------+--------------+---------------+-----------+
The accounting policies of the reportable segments are the same as the Group's
accounting policies policies set out in the statutory accounts of the Group for
the financial year ended 31 March 2010.
(iii) Group revenue by geographical segment from external customers
+--------+--------------+---------------+-----------+
| | Six months | Six months | Year |
| | ended | ended | ended |
| | 30 September | 30 September | 31 March |
| | 2010 | 2009 | 2010 |
| | £m | £m | £m |
+--------+--------------+---------------+-----------+
| Europe | 212.9 | 130.6 | 370.4 |
+--------+--------------+---------------+-----------+
| Asia | 7.9 | 28.6 | 37.1 |
+--------+--------------+---------------+-----------+
| US | 15.9 | 10.4 | 17.4 |
+--------+--------------+---------------+-----------+
| | 236.7 | 169.6 | 424.9 |
+--------+--------------+---------------+-----------+
(iv) Property, plant and equipment by geographical segment
Information about the Group's non current assets, excluding financial
instruments and deferred tax assets, is detailed below by geographical location.
+--------+--------------+---------------+-----------+
| | Six months | Six months | Year |
| | ended | ended | ended |
| | 30 September | 30 September | 31 March |
| | 2010 | 2009 | 2010 |
| | £m | £m | £m |
+--------+--------------+---------------+-----------+
| Europe | 7.0 | 8.5 | 7.2 |
+--------+--------------+---------------+-----------+
| Asia | 0.3 | 0.3 | 0.3 |
+--------+--------------+---------------+-----------+
| US | - | 0.1 | 0.1 |
+--------+--------------+---------------+-----------+
| | 7.3 | 8.9 | 7.6 |
+--------+--------------+---------------+-----------+
3 Dividends
The interim dividend of 6p per share will be paid in January 2011 to members
registered at the close of business on 3 December 2010.
4 Earnings per share
+-----------------------------------------+------------+-------------+---------+
| | Six months| Six months | Year |
| | ended| ended | ended |
|Earnings |30 September|30 September |31 March |
| | 2010| 2009| 2010|
| | £m| £m | £m |
+-----------------------------------------+------------+-------------+---------+
|Earnings for the purposes of basic | | | |
|earnings per share being net profit | 67.5| 1.7Â | 81.7|
|attributable to the equity holders of the| | | |
|parent | | | |
+-----------------------------------------+------------+-------------+---------+
+------------------------------------------+-----------+-----------+-----------+
|Number of shares | 2010| 2009Â | 2010Â |
+------------------------------------------+-----------+-----------+-----------+
|Weighted average number of ordinary shares| | | |
|for the purposes of basic earnings per |391,562,230|284,312,070|326,563,481|
|share | | | |
+------------------------------------------+-----------+-----------+-----------+
|Effect of dilutive potential ordinary | 421,821| -| -|
|shares | | | |
+------------------------------------------+-----------+-----------+-----------+
|Weighted average number of ordinary shares| | | |
|for the purposes of diluted earnings per |391,984,051|284,312,070|326,563,481|
|share | | | |
+------------------------------------------+-----------+-----------+-----------+
5 Financial liabilities
Private placements
During the period there were repayments of two private placements of
US$20 million and £25 million.
Bank facilities
In accordance with the facility agreement the £1,032 million revolving credit
facility was reduced to £971 million during the period. In May 2010, we extended
an additional £67 million of bank debt to June 2013 bringing the total extension
due in June 2013 to £612 million.
6 Related party transactions
There have been no material changes to the related party transactions as
disclosed in the Annual Report and Accounts for the year ended 31 March 2010.
7 General
The interim financial statements for the six months to 30 September 2010 were
approved by the Board on 16 November 2010.
The financial information for the year ended 31 March 2010 does not constitute
statutory accounts under section 435 of the Companies Act 2006. A copy of the
statutory accounts for that year has been delivered to the Registrar of
Companies. The auditors' report on those statements was unqualified, did not
draw attention to any matter by way of emphasis and did not include a statement
under section 498 (2) or (3) of the Companies Act 2006.
Copies of this statement are available on our website www.icgplc.com.
Independent Review Report to Intermediate Capital Group PLC.
We have been engaged by the Company to review the condensed set of financial
statements in the half-yearly financial report for the six months ended 30
September 2010 which comprises the condensed consolidated income statement,
condensed consolidated statement of comprehensive income, the condensed
consolidated statement of financial position, the condensed consolidated
statement of cash flows, condensed consolidated statement of changes in equity
and related notes 1 to 7. We have read the other information contained in the
half-yearly financial report and considered whether it contains any
apparent misstatements or material inconsistencies with the information in the
condensed set of financial statements.
This report is made solely to the Company in accordance with International
Standard on Review Engagements (UK and Ireland) 2410 issued by the Auditing
Practices Board. Our work has been undertaken so that we might state to the
Company those matters we are required to state to them in an independent review
report and for no other purpose. To the fullest extent permitted by law, we do
not accept or assume responsibility to anyone other than the Company, for our
review work, for this report, or for the conclusions we have formed.
Directors' responsibilities
The half-yearly financial report is the responsibility of, and has been approved
by, the Directors. The Directors are responsible for preparing the half-yearly
financial report in accordance with the Disclosure and Transparency Rules of the
United Kingdom's Financial Services Authority.
As disclosed in note 1, the annual financial statements of the Group are
prepared in accordance with IFRSs as adopted by the European Union. The
condensed set of financial statements included in this half-yearly financial
report has been prepared in accordance with International Accounting Standard
34, "Interim Financial Reporting," as adopted by the European Union.
Our responsibility
Our responsibility is to express to the Company a conclusion on the condensed
set of financial statements in the half-yearly financial report based on our
review.
Scope of review
We conducted our review in accordance with International Standard on Review
Engagements (UK and Ireland) 2410, "Review of Interim Financial Information
Performed by the Independent Auditor of the Entity" issued by the Auditing
Practices Board for use in the United Kingdom. A review of interim financial
information consists of making inquiries, primarily of persons responsible for
financial and accounting matters, and applying analytical and other review
procedures. A review is substantially less in scope than an audit conducted in
accordance with International Standards on Auditing (UK and Ireland) and
consequently does not enable us to obtain assurance that we would become aware
of all significant matters that might be identified in an audit. Accordingly, we
do not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that causes us to believe
that the condensed set of financial statements in the half-yearly report for the
six months ended 30 September 2010 is not prepared, in all material respects, in
accordance with International Accounting Standard 34 as adopted by the European
Union and the Disclosure and Transparency Rules of the United Kingdom's
Financial Services Authority.
Deloitte LLP
Chartered Accountants and Statutory Auditors, UK
London, United Kingdom
23 November 2010
New Investments for the period
In the 6 month period to 30 September 2010 ICG and funds managed by ICG invested
in the following companies:
Europe
TeamSystem is the leading Italian provider of accounting, payroll and business
software for SMEs and professionals. In September 2010 ICG arranged a mezzanine
loan of €56m and a PIK loan of €38m to support the tertiary buyout by Hg. ICG
also invested €26m in the equity.
Eos Loan Fund 1 is the acquisition vehicle for a portfolio of mostly senior
secured loans of European companies purchased from the Royal Bank of Scotland at
a discount to the €1.4 billion par value. Following syndication to our funds and
third party investors, the Investment Company retained a €48.5 million stake in
Eos Loan Fund 1.
North America
Fort Dearborn is a U.S. company that produces labels for the US prime label end
markets of food, non-beer beverage, household/personal care and other products.
In August 2010 ICG invested US$50m in the mezzanine facility provided to support
the secondary buyout. ICG also invested US$5m in the equity.
Other
ICG also provided additional funding for investee companies.
Top 20 assets at 30 September 2010
+---------------------+---------+----------------------+---------------+-------+
|Company |Country |Industry |Investment year| £m |
+---------------------+---------+----------------------+---------------+-------+
|Medi Partenaires |France |Healthcare | 2007 | 101.8 |
+---------------------+---------+----------------------+---------------+-------+
|Visma |Norway |Business services | 2006 | 101.3 |
+---------------------+---------+----------------------+---------------+-------+
| | |Publishing and | | 95.5 |
|Bureau Van Dijk |Belgium |printing | 2007 | |
+---------------------+---------+----------------------+---------------+-------+
|Elis |France |Business services | 2007 | 90.2 |
+---------------------+---------+----------------------+---------------+-------+
| | |Shipping and | | 87.7 |
|BAA |UK |transportation | 2006 | |
+---------------------+---------+----------------------+---------------+-------+
|Biffa |UK |Waste management | 2008 | 78.4 |
+---------------------+---------+----------------------+---------------+-------+
|Applus+ |Spain |Business services | 2007 | 74.2 |
+---------------------+---------+----------------------+---------------+-------+
|Attendo |Sweden |Healthcare | 2007 | 70.5 |
+---------------------+---------+----------------------+---------------+-------+
|Materis |France |Building materials | 2006 | 60.6 |
+---------------------+---------+----------------------+---------------+-------+
|LabCo |France |Healthcare | 2008 | 55.3 |
+---------------------+---------+----------------------+---------------+-------+
|Veda Advantage |Australia|Financial Services | 2008 | 53.8 |
+---------------------+---------+----------------------+---------------+-------+
|Behavioral | | | | 51.9 |
|Interventions |US |Business services | 2008 | |
+---------------------+---------+----------------------+---------------+-------+
|CPA Global |Jersey |Business services | 2010 | 48.7 |
+---------------------+---------+----------------------+---------------+-------+
|Minimax |Germany |Electronics | 2006 | 48.2 |
+---------------------+---------+----------------------+---------------+-------+
|Link/AAS |Australia|Business services | 2007 | 47.1 |
+---------------------+---------+----------------------+---------------+-------+
|SAG |Germany |Utilities | 2008 | 42.9 |
+---------------------+---------+----------------------+---------------+-------+
|Eos Loan Fund 1 |Europe |Loan Portfolio | 2010 | 42.3 |
+---------------------+---------+----------------------+---------------+-------+
| | |Leisure and | | 41.7 |
|Orizonia |Spain |entertainment | 2006 | |
+---------------------+---------+----------------------+---------------+-------+
|Ethypharm |France |Pharmaceutical | 2007 | 40.7 |
+---------------------+---------+----------------------+---------------+-------+
|TeamSystem |Italy |Business services | 2010 | 40.1 |
+---------------------+---------+----------------------+---------------+-------+
|Total assets |Â |Â | |1,272.9|
+---------------------+---------+----------------------+---------------+-------+
Top 10 equity assets at 30 September 2010
+-----------------------------+-------+------------------+---------------+-----+
|Company |Country|Industry |Investment year| £m* |
+-----------------------------+-------+------------------+---------------+-----+
|Visma |Norway |Business services | 2006 |64.1 |
+-----------------------------+-------+------------------+---------------+-----+
|Eos Loan Fund 1 |Europe |Loan portfolio | 2010 |42.3 |
+-----------------------------+-------+------------------+---------------+-----+
|CPA |Jersey |Business services | 2010 |40.5 |
+-----------------------------+-------+------------------+---------------+-----+
|Intelsat |USA |Telephone networks| 2008 |32.5 |
+-----------------------------+-------+------------------+---------------+-----+
|Taiwan Broadcasting |Taiwan |Telephone networks| 2007 |29.7 |
|Communications (TBC) | | | | |
+-----------------------------+-------+------------------+---------------+-----+
|Team ystem |Italy |Business services | 2010 |25.1 |
+-----------------------------+-------+------------------+---------------+-----+
|All Flex |UK |Business services | 1998 |24.0 |
+-----------------------------+-------+------------------+---------------+-----+
|Eismann |Germany|Food retailing | 2007 |23.2 |
+-----------------------------+-------+------------------+---------------+-----+
|Picard |France |Food retailing | 2004 |22.1 |
+-----------------------------+-------+------------------+---------------+-----+
|Acromas Holdings Ltd | | | |21.4 |
|(AA/SAGA) |UK |Financial services| 2007 | |
+-----------------------------+-------+------------------+---------------+-----+
|Total assets | | | |324.9|
+-----------------------------+-------+------------------+---------------+-----+
* carrying value on ICG balance sheet at 30 September 2010
Shareholder Information.
Timetable
+--------------------------------------------------------------+---------------+
|The major timetable dates are as follows: | |
+--------------------------------------------------------------+---------------+
|Ex dividend date |1 December 2010|
+--------------------------------------------------------------+---------------+
|Record date for Financial Year 2011 interim dividend |3 December 2010|
+--------------------------------------------------------------+---------------+
|Payment of interim dividend | 7 January 2011|
+--------------------------------------------------------------+---------------+
|Full year results announcement for the 12 months to 31 March | 1 June 2011|
|2011 | |
+--------------------------------------------------------------+---------------+
Registrars
The address of the Registrars is:
Computershare Investor Services PLC
PO Box 92
The Pavilions
Bridgwater Road
Bristol
BS99 7NH
Internet website
The Company's website address is www.icgplc.com. Copies of the Annual and Half
Year Reports and other information about the Company are available on this site.
Company Information.
Stockbrokers
JP Morgan Cazenove
20 Moorgate
London
EC2R 6DA
RBS Hoare Govett Limited
250 Bishopsgate
London
EC2M 4AA
Bankers
The Royal Bank of Scotland plc
135 Bishopsgate
London
EC2M 3URD
Lloyds TSB plc
25 Gresham Street
London
EC2V 7HN
Registered office
Juxon House
100 St Paul's Churchyard
London
EC4M 8BU
Auditors
Deloitte LLP
Chartered Accountants and
Statutory Auditors
London
Registrars
Computershare Investor
Services PLC
PO Box 92
The Pavillions
Bridgwater Road
Bristol
BS99 7NH
Company Registration Number
2234775
[HUG#1464643]
This announcement is distributed by Thomson Reuters on behalf of
Thomson Reuters clients. The owner of this announcement warrants that:
(i) the releases contained herein are protected by copyright and
other applicable laws; and
(ii) they are solely responsible for the content, accuracy and
originality of the information contained therein.
Source: Intermediate Capital Group PLC via Thomson Reuters ONE
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