Intermediate Capital Group PLC : Half-yearly re...
First Half Results.
for the 6 months ended 30 September 2011
Embargoed until 7.00am on Tuesday 22 November 2011
Intermediate Capital Group PLC ("ICG") announces its First Half results for the
six months ended 30 September 2011.
Operational Highlights
* €1.1bn first closing of ICG Europe Fund V, including €500m co-investment
from ICG, with good momentum towards our €2bn target
* £242m final close on Longbow UK Real Estate Debt Investments II, including
£50m commitment from ICG
* Resilient investment portfolio
Financial Highlights
* Group profit before tax(1) of £108.8m compared to £105.1m in the first half
of last year (H1 11)
* £100.6m uplift to reserves following adoption of  fair value accounting for
our equity investments
* Fund Management Company profit of £17.1m compared to £16.9m in H1 11
* Investment Company profit(1) of £91.7m compared to £88.2m in H1 11
* Strong balance sheet with unutilised debt facilities of approximately £615m
* Interim dividend of 6 pence per share, unchanged from last year
Unaudited Unaudited Audited
6 months to 6 months to 12 months to
 30 September 2011 30 September 2010 31 March 2011
--------------------------------------------------------------------------------
Fund Management Company profit
before tax £17.1m £16.9m £35.9m
Investment Company profit/
(loss) before tax(1) £91.7m £88.2m £150.4m
Group profit before tax(1) £108.8m £105.1m £186.3m
Group profit after tax(1) £85.1m £67.5m £128.1m
Earnings per share(1) 21.6p 17.2p 32.6p
Cash core income £63.3m £43.8m £106.7m
Interim dividend per share 6.0p 6.0p 18.0p
Investment portfolio £2,414m £2,630m £2,424m
Third party assets under
management €9,165m €8,718m €9,036m
--------------------------------------------------------------------------------
(1) Including impact of fair value movements on derivatives (H1 12: gain of
£8.1m; H2 11: loss of £12.3m; H1 11: gain of £8.5m)
The definitions for Fund Management Company ("FMC"), Investment Company ("IC"),
Cash core income, Assets under management ("AUM") as well as details of our
equity valuation policy are available in the Financial Review
Commenting on the results, Christophe Evain, CEO, said:
"We are pleased to announce another solid set of results which is evidence of
the strength of our investment portfolio and fund management franchise. Given
the uncertain economic outlook we remain focused on preserving our strong
performance track record.
As the majority of traditional lenders continue to retrench from the credit
market, we also see considerable opportunities emerging to acquire debt at
attractive discounts in a distressed market, to provide finance to existing
buyouts to restructure their overgeared balance sheet and to offer reliable
financing solutions for new transactions, thereby delivering high returns to our
institutional investors. The progress made on fundraising in a difficult
environment is also a testament to our fund management franchise."
Analyst / Investor enquiries:
Christophe Evain, CEO, ICG Â Â Â Â Â +44 (0) 20 3201 7700
Philip Keller, CFO, ICG Â Â Â Â Â +44 (0) 20 3201 7700
Jean-Christophe Rey, Investor Relations, ICG Â Â Â Â Â +44 (0) 20 3201 7768
Media enquiries:
Neil Bennett, Maitland      +44 (0) 20 7379 5151
Rebecca Mitchell, Maitland      +44 (0) 20 7379 5151
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 is a specialist investment firm and asset manager providing
mezzanine finance, leveraged credit and minority equity, managing €12 billion of
assets in proprietary capital and third party funds. ICG has a large and
experienced investment team operating from its head office in London with a
strong local network of 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
The first half of the year marked another period of strong financial performance
for ICG with a profit before tax of £108.8 million, up from £81.2 million in the
second half of last year, and £105.1 million in the first half of last year.
Our fund management business continues to strengthen with significant
developments in the fundraising of our Mezzanine and Real Estate debt funds that
has resulted in AuM increasing by 2% to €12.0 billion. Despite the challenging
fundraising environment we successfully completed the first close of our latest
European mezzanine fund and the final close of Longbow Real Estate Capital's
debt fund.
Our investment portfolio continued to perform well in the reporting period
resulting in a low level of new impairments and further realisations. In
addition, in preparation for the application of IFRS 9 in 2015, we have applied
fair value principles to our equity portfolio. This resulted in an uplift of
£100.6 million in reserves, despite the sharp fall in prices in the public
equity markets since August. The vast majority of our portfolio companies
operate in the strongest European economies, the US, and Asia Pacific. Â We have
very limited exposure to Spain and Italy (less than 10% of our portfolio
companies by value) and no investments in Greece, Ireland or Portugal.
We have also made significant progress in terms of refreshing the funding of our
balance sheet and, taking into account contracted transactions, current undrawn
debt facilities amount to approximately £615 million.
Market Update
Credit Market
As the prospect of a severe sovereign debt crisis in Europe resurfaced over the
summer, the record levels of new high yield bond issuance, which had been a
feature of the market over the last two years, came to an abrupt end. Â Only a
handful of new high yield bond issues have completed since the summer, and these
were primarily from repeat high quality issuers. Consequently, there has been a
significant decrease in the volume of repayments received by Collateralised Loan
Obligation funds ("CLOs") which have therefore had limited or no cash to re-
invest in the loan market.
Moreover, European banks have further retrenched from the corporate lending
market as they respond to additional capital and liquidity constraints. Â As
such, their appetite for leveraged buyout (LBO) financing is extremely limited.
As a result there has been a substantial fall in the amount of debt available to
finance new and existing LBO transactions since the summer and we believe that
this scarcity of debt finance will remain a feature of the European LBO market
for years to come. The price of debt capital has already moved up sharply and we
expect that it will remain at a high level for a long time.
This scarcity of senior debt finance has resulted in a material slowdown of LBO
activity in the past three months. Â We, however, expect activity to gradually
pick up as private equity firms continue to have large amounts of equity capital
to deploy. This resumption of LBO activity will depend on the emergence of
alternative sources of senior debt.
The imbalance between demand and supply of debt will result in higher pricing
and better overall lending terms, giving the asset class very favourable
risk/return profile and thereby attracting capital inflows from institutional
investors in search of yield. Experienced specialist lenders, such as ICG, will
play a leading role in reshaping the senior debt market in the coming years.
While private equity firms have used the temporary liquidity available in the
past eighteen months to finance new transactions, they have failed to take
advantage of this liquidity to extend the maturity of the debt in their
portfolio companies in any material way. Â As a result, the amount of LBO senior
debt falling due between 2013 and 2015 still exceeds £100 billion. It is
unlikely that current lenders will be in a position to extend a large proportion
of this outstanding debt given their constraints. This will generate a
considerable demand for new funds to refinance these businesses.
Fundraising market
There is growing recognition by institutional investors of the opportunities
that are emerging in the credit market as a result of the above structural
changes and there has been a noticeable increase in interest in our specialist
funds. Â However, given the continued economic uncertainty and heightened market
volatility institutional investors' investment decision making process has
noticeably slowed.
Strategic Priorities
Against this backdrop, our strategic priorities remain to:
* grow our Fund Management Company;
* invest selectively; and
* manage our portfolio to maximise value.
Grow our Fund Management Company
AUM has grown to €12.0 billion (£10.3 billion) at 30 September 2011 compared to
€11.8 billion at 31 March 2011 (£10.6 billion).  This includes €9.2 billion
(£7.9 billion) of third party funds, up 1.4%.
We are expanding our marketing and distribution team in order to broaden our
coverage of institutional investors.
Key to increasing the AUM of the Fund Management Company is the performance of
our existing funds so as to attract new third party investors and repeat
business from current investors. All our funds continue to perform well.
Mezzanine Funds
Our mezzanine funds continue to achieve top quartile performance compared to
private equity returns.
ICG Mezzanine Fund 2000 is entirely realised and has returned a net money
multiple of 1.7 times to investors. ICG Mezzanine Fund 2003 added to the string
of successful realisations in the year to March 2011, by exiting its investment
in Souriau in this reporting period. Our European Fund 2006, which is now closed
to new investment, realised Bureau van Dijk, the company information and
business intelligence provider, and one of its largest assets, and Eismann, a
leading frozen food retailer in Germany (subject to approval by the relevant
authorities).
Our fifth European mezzanine fund, ICG Europe V, has successfully completed its
first close having received €1.1billion of commitments, which includes a €500
million co-investment commitment from ICG. Â This constitutes a significant step
towards the target fund size of €2 billion. The fund has received commitments
from both long-term ICG investors and new investors from Europe, North America,
the Middle East and Asia. The fund has already made its first investment having
supported the buyout of Bureau van Dijk. Investor interest in the fund continues
to be strong.
Our Asia Pacific Fund 2008 completed a new investment in Tegel, New Zealand's
leading integrated poultry producer. This transaction also represents an exit
for the Asia Pacific Fund 2005 which retained a minority equity interest from
the original 2006 buyout.
Credit Funds
Our senior loan and high yield portfolios have delivered strong performances in
the period, with default rates remaining at historical lows. Our twelve month
senior loan default rate at 30 September 2011 was 0.65%. This low default rate
has resulted in a further improvement of the performance ratios across our
structured funds and sustained junior fees.
Despite the volatility in capital markets negatively impacting the value of
assets, our dedicated High Yield fund has continued to avoid any defaults and
outperform the market. The fund is building a strong track record.
Whilst we do not expect defaults to increase materially in the short term, we
will continue to position these funds defensively given the uncertain economic
outlook.
Longbow Real Estate Capital
Longbow, in which we own a majority stake, completed the final close of Longbow
UK Real Estate Debt Investments II fund in September, with £242 million of
commitments received from a variety of blue chip institutional investors which
includes a £50 million commitment from ICG. We are delighted by how positively
the fund was received by investors given the difficult fundraising environment.
We believe the success of this fundraising highlights the strong refinancing
opportunities that exist in the commercial real estate debt market. The dynamics
of this market mirror those of the LBO credit market described above. Debt is
scarce as traditional lenders, banks and Commercial Mortgage Backed Securities
(CMBS) vehicles continue to retrench from this market, while demand for
refinancing capital remains acute. As a result refinancing opportunities are
attractive with increasingly favourable pricing.
Invest selectively
Given the uncertain and fragile economic outlook, we remain cautious and highly
selective in deploying capital and have slowed the pace of investment.
We made proprietary investments of £136 million across Europe, Asia Pacific and
the US over the reporting period on behalf of our Investment Company. We made £8
million of co-investments in Tegel and CNIG (our first investment in China)
alongside our Asia Pacific Fund 2008. In the US, the Investment Company invested
£21 million of mezzanine and equity in its 10th US asset alongside AEA
Investors. The transaction involved the acquisition of Cogent Healthcare
byHospitalists Management Group (HMG). HMG and Cogent Healthcare have merged to
form the largest private hospitalist (hospital based general practitioner)
company in the United States, with nearly 1,000 affiliated hospitalists
practising in more than 100 healthcare facilities nationwide. In Europe the
Investment Company re-invested £94 million in the new buyout of Bureau van Dijk,
a portion of which has been warehoused on behalf of ICG Europe V while the fund
is being raised. Based on the €1.5bn target of external commitments for this
fund, the IC's final hold will be circa £32.5 million
Manage our portfolio to maximise value
The performance of the Investment Company's portfolio remains strong. Â At our
latest quarterly portfolio review, in September 2011, 69% of our investments
were performing at or above the prior year level. This compares to 62% at the
end of September 2010 and 74% at the end of March 2011, despite the realisations
of high performing assets in the past twelve months and increasingly strong
prior year comparables. Â Our top 20 assets, which account for 51% of the
portfolio, continue to perform strongly.
As a result, the gross impairment charge taken by our Investment Company against
our mezzanine investments, at £11.6 million, was minimal. In addition there was
an impairment of £28.0 million against the value of shareholder loan
investments, resulting in total gross provisions of £39.6 million compared to
£54.3 million in the first half of last year and £35.5 million in the second
half. We have written back a £8.1 million provision against one previously
impaired asset which now shows significantly improved operating performance and
financial outlook.
While we have not so far seen any significant signs of deterioration in the
performance of the portfolio as a whole, we are fully focussed on managing our
portfolio and will exercise extra vigilance in monitoring our portfolio
companies given the deteriorating economic conditions. We have however been
cautious in writing back the provisions taken in the last recessionary
environment as the recovery witnessed in 2010 remained fragile in our view. Â As
a result we continue to hold substantial provisions against our weaker assets.
We have realised significant value from our portfolio having exited nine
portfolio companies, which generated £10.1 million of realised capital gains,
£188.5million in repayments of principal and the crystallisation of £58.6
million of accrued interest for our Investment Company. Key exits in the period
included Bureau van Dijk and Tegel. Â We also partially exited our investment in
Au Bon Pain after the company refinanced its existing debt and repaid our
mezzanine investment. We remain invested in the equity. Since the end of the
first half we have agreed to exit our stake in Eismann and Raet, which we expect
to complete in the second half. Â These two assets have generated unrealised
capital gains of £12.8 million.
While we remain on track to realise a number of identified investments, the
current market volatility is likely to result in a decline in the rate of
realisations in the near term.
Outlook
Although the global economic outlook remains unstable, we believe that ICG is
uniquely positioned to take advantage of the favourable dynamics in the credit
market. Debt financing is expected to remain scarce as the ability of
traditional providers such as banks and CLOs continues to diminish. Conversely,
demand for debt finance is expected to significantly increase with high levels
of European buyout debt scheduled to mature between 20013 and 2015, and the
significant volume of private equity capital requiring investing.
We believe these dynamics present a number of attractive investment
opportunities to generate high returns for investors: the acquisition of debt at
attractive discounts in a distressed market; the provision of recovery finance
to existing buyouts; and structuring flexible financing solutions for new
transactions. We will continue to work with institutional investors to capture
these investment opportunities.
Given the uncertain outlook for economic environment, however, we will be highly
selective when it comes to new investment. We will use our extensive local
network, deep relationships and existing portfolio to invest in new transactions
where we see the best value.
Financial Review.
ICG's business activities, together with the factors likely to affect its future
development, performance and financial position, its cashflows, liquidity
position and borrowing facilities are described in this financial review.
ICG's principal risks and uncertainties and how they are mitigated are
documented in this statement.
As highlighted in this statement, ICG has had another successful year and our
portfolio, as a whole, is performing satisfactorily.
Going Concern Statement
The directors have a reasonable expectation that the Company has adequate
resources to continue in operational existence for the foreseeable future. Â Thus
they continue to adopt the going concern basis of accounting in preparing the
interim financial statements. Further details are available in note 1.
Definitions
We now report the profit of the Fund Management Company ("FMC") separately from
the profits generated by the Investment Company ("IC") in our segmental
reporting note.
The FMC is an operating vehicle of ICG PLC. It sources and manages investments
on behalf of the IC and third party funds. It bears 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.
The IC is an investment unit of ICG PLC. It coinvests alongside third party
funds, primarily in mezzanine and growth capital assets. It is charged a
management fee of 1% of the carrying value of the investment portfolio by the
FMC. The costs of finance, treasury, and portfolio administration teams as well
as the other 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
this scheme remains operational.
Longbow Real Estate, a UK real estate debt specialist providing mezzanine
finance to the UK commercial property market, in which we own a majority 51%
stake, is fully consolidated into the results for the FMC for the year with the
minority stake deducted.
The Group defines its assets under management ("AUM") as the total cost, less
impairments, of assets owned, managed and advised by the Company plus
commitments to its managed and advised funds, in addition to debt facilities for
the funds.
Return on equity ("ROE") is defined as profit after tax divided by average
shareholder funds for the year.
Cash core income is defined as profit before tax excluding fair value movement
on derivatives less net capital gains, impairments and unrealised rolled up
interest.
Pre incentive cash profit is defined as profit before tax excluding performance
related bonuses and fair value movement on derivatives, less accrued rolled up
interest plus released rolled up interest, less unrealised capital gains.
Valuation of Equity
ICG holds a number of equity investments that present the Group with the
opportunity to enhance returns. Equity investments comprise unlisted shares,
warrants and shareholder loans,
In preparation for the application of IFRS 9 in 2015 and in line with the
industry, we have applied fair value principles to our unquoted equity portfolio
when valuing our equity investment at 30 September 2011.
The value of these investments was £698 million at 30 September 2011,
representing 28% of the value of our investment portfolio.This comprises £398
million of unlisted shares and warrants and £300 million of shareholder loans.
As a result of fair valuing our portfolio of unlisted shares and warrants, we
have booked through the profit and loss account unrealised capital gains of
£27.4 million. In addition there has been uplift to reserves of £100.6 million
relating to unlisted shares.  This was partly offset by £28.0 million
impairments of our shareholder loan assets.
Unlisted shares and warrants
Investments in unquoted equities have generally been classified as an AFS asset.
IAS 39 allowed unquoted equity assets without an observable market price, and
whose fair value could not be reliably measured, to be held at cost. Any
observable valuation resulted in an uplift in the value of the asset, with gains
or losses on derecognition recycled to the P&L.
As these instruments are all held in private companies with no ready market, the
events to crystallise such a valuation include the sale of shares to a third
party by a substantial shareholder or the approach of an exit to the
transaction, either by way of a float or a sale. Therefore, the fair valuing of
such unquoted shares has historically been restricted to those instruments whose
value may be reliably measured, for example by one of the above events. In the
absence of such an event, ICG's policy has been to hold its unquoted equity
assets at cost as we have considered that there were a significant range of
possible fair values estimates for these assets, and the probabilities of the
various estimates could not be reasonably assessed.
The International Accounting Standard Board has issued the new financial
instrument standard, IFRS 9, with a proposed effective date of 1 January 2015.
 IFRS 9, when it is adopted, requires unquoted equity assets to be held at fair
value through the P&L as: (i) the AFS classification will no longer be
available; and (ii) the cost option in IAS 39 will no longer be available. Â As a
consequence of this, and the narrowing range of estimates for these assets
disclosed in our financial statements last year, we have reviewed and enhanced
our valuation methodology and processes. We are performing quarterly valuations
and are now using these valuations to value our unquoted equity under IAS 39 at
fair value. As this represents a change in the valuation technique applied, the
entire uplift has been accounted for in the current period under review.
The total carrying amount of these instruments and warrants (which are
classified as fair value through profit and loss) was £274.4 million at 31 March
2011. As at that date, we estimated that the range of estimates within which the
aggregate fair value was likely to lie was £145.0 million to £165.0 million
higher than the carrying value.
Shareholder Loans
Under IAS 39, shareholder loans are classified as loans and receivables and are
valued at amortised cost using the effective interest method.
Impairments of shareholder loans are driven by ICG Investment Committee's
assessment of the recoverability of the carrying value, based on the valuation
of the equity of the company and its operating performance.
Overview
The profit before tax of the Fund Management Company for the six months to 30
September 2011 was £17.1 million up from £16.9 million in the first half of last
year, mainly due to growth in fee income. Total AUM at 30 September 2011 were
£10,287 million.
Profit before tax for the Investment Company, including fair value movement on
derivatives, was £91.7 million compared to £88.2 million in the first half of
last year.
As a result, Group profit before tax rose to £108.8 million, compared to
£105.1 million in the first half of last year.
In addition there was an uplift to reserves of £100.6 million relating as a
result of fair valuing our investments in unlisted shares.
Shareholders' funds at 30 September 2011 stood at £1,366.3 million compared to
£1,250.4 million at 31 March 2011.
We agreed in September 2011 the extension of the maturity of £117 million debt
facilities which were scheduled to fall due in April 2012 and, as a result, debt
facilities maturing in April 2012 now amount to c. £320 million.
We have also recently signed an additional £75 million facility from a new
lender. We continue to review alternative sources of financing to refresh and
further diversify the balance sheet funding to support long term growth.
At 30 September 2011 our undrawn debt facilities stood at £465 million. Adjusted
for exit proceeds signed but not yet received and the new lending facility,
headroom is approximately £615 million.
Profit and loss account
Fund Management Company
Assets under management
AUM at 30 September 2011 were £10,287 million compared to £10,408 million at 31
March 2011 and £10,126 million at 30 September 2010. The appreciation of
sterling against the Euro has negatively impacted AUM by 3%.
Third party AUM, were £7,872 million compared to £7,984 million at 31 March
2011.
Mezzanine and Minority Equity AUM amounted to £3,274 million compared to £3,058
million at 31 March 2011.
Credit funds AUM were £4,599 million compared to £4,926 million at 31 March
2011 as AUM in our older CLO funds continue to reduce when assets are realised.
Credit Funds AUM include £57.1 million of seed equity provided by ICG Group
compared to £70.8 million at 31 March 2011. The reduction in seed capital was
principally due to a decline in value of the seed capital of our high yield and
loan funds reflecting lower asset prices in the market.
AUM of the Investment Company stood at £2,414 million. A discussion on balance
sheet investments is included below.
Fee income
Fee income for the first half of the year amounted to £42.9 million compared to
£39.1 million in the first half of last year.
Fee income from third parties was £30.3 million compared to £26.1 million in the
first half of last year.
Fee income for our Mezzanine and Minority Equity funds totalled £17.2 million
compared to £16.2 million in the first half of last year. The contribution of
carried interest to fee income was £2.1 million (in relation to ICG Mezzanine
Fund 2003) compared to £1.3 million in the first half of last year (in relation
to ICG Mezzanine Fund 2003).
Fee income for our Credit funds amounted to £13.1 million compared to
£9.9 million in the first half of last year, due to higher junior fees.
Fee income from the Investment Company amounted to £12.6 million compared to
£13.0 million in the first half, due to a slightly lower average investment book
value.
Other income
Other income was £2.2 million for the period, compared to £1.1 million in the
first half of last year.
Operating expenses
Operating expenses were £28.0 million compared £23.3 million in the first half
of last year, mainly due to the further roll out of the new remuneration scheme
as well as the increase in our marketing and distribution headcount. Salaries,
excluding incentive schemes, and administrative expenses were at £18.9 million
compared to £15.9 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
£17.1 million compared to £16.9 million in the first half of last year.
Investment Company
Balance sheet investments
The balance sheet investment portfolio amounted to £2,414 million compared to
£2,424 million at 31 March 2011. This excludes £57.1 million of seed equity in
our Credit funds and £73.2 million of debt held in our Credit funds.
In the six months to 30 September 2011, the balance sheet invested £136.2
million, of which £13.5 million were follow-on investments. This includes £94.3
million in Bureau van Dijk, part of which is warehoused on behalf of ICG Europe
V while the fund is being raised.  Based on the €1.5bn target of external
commitments for this fund, the IC's final hold will be circa £32.5 million.
 Other investments for the period include, CNIG (our first investment in China),
HMG and Tegel.
There were £188.5 million of repayments, which included Aster, Au Bon Pain,
Bureau van Dijk, Dometic, Tegel, Souriau, Veda and V Ships.
The investment portfolio comprises £1,318 million of senior mezzanine and senior
debt (55 per cent), £398 million of junior mezzanine investments (16 per cent),
£698 million of equity investments (29 per cent) (excluding amounts invested in
our credit funds). The equity comprises £300 million of shareholder loans and
£398 million of non-interest bearing equity.
Net interest income
Net interest income, excluding dividend income and fair value movement on
derivatives held for hedging purposes, was £98.5 million compared to
£95.0 million in the first half of last year.
Interest Income was £129.1 million compared to £121.3 million in the first half
of last year. Cash interest income for the period was £46.1 million and rolled
up interest income was £83.0 million.
Interest expense was £30.7 million compared to £26.3 million in the first half
of last year.
Fair value movements of financial instruments held for hedging purposes resulted
in an £8.1 million positive adjustment this year compared to a £8.5 million
positive adjustment for the first half of last year.
Other income
Dividend income from portfolio companies was £1.4 million compared to nil in the
first half of last year. Other income, principally waiver and prepayment fees,
amounted to £0.7 million, compared to £1.4 million in the first half of last
year.
Operating expenses
Operating expenses were £26.2 million compared to £33.0 million in the first
half of last year. The first half of last year included a one-off £5.7 million
cost relating to an onerous lease contract on 20 Old Broad Street following our
move to our new premises. As a consequence our rental costs are reduced by
£0.6 million a year on average for the following ten years. This has no material
impact on a cash basis.
The Medium Term Incentive Scheme ("MTIS") charged on rolled up interest accruals
for the period, amounted to £6.0 million compared to £10.1 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.
The management fee on balance sheet investments for the period was £12.6 million
compared to £13.0 million due to a slightly lower average value of the IC's
portfolio.
Capital gains
Gross capital gains totalled £49.6 million in the first half of the year
compared to £86.8 million in the first half of last year. This includes an
unrealised gain of £32.0 million.  £12.1 million relate to assets realised
during the period but for which proceeds will be received in the second half of
the year and £27.4 million relate to the fair value uplift of warrants.  There
was a £7.5m negative impact of the value of our seed capital as a result of the
drop in asset values during August and September. As a result net capital gains
were £42.1 million.
Impairments
Gross provisions amounted to £39.6 million, including £28.0 million relating to
impairments of shareholder loans and impairments relating to three mezzanine
assets for £10.0 million. This compares to gross provisions of £54.3 million in
the first half of last year.
Recoveries in the period were £11.2 million compared to £1.2 million in the
first half of last year. We wrote back the provisions on one of our investments
which saw a strong operational recovery during the year.
Net impairments for the 6 months to 30 September 2011 were therefore £28.4
million compared to £53.1 million at 30 September 2010.
Profit before tax
Profit before tax for the IC, excluding fair value movement of derivatives held
for hedging purposes, was £83.6 million compared with £79.7 million in the first
half of last year.
Group
Profit after tax, ROE, earnings per share
Group profit after tax is £85.1 million compared with £67.5 million in the first
half of last year.
The Group generated a ROE of 13.0% compared to 12.0% in the first half on last
year.
Earnings per share for the six months to 30 September 2011 were 21.6 pence
compared to 17.2 pence in the first half of last year. The weighted average
number of shares for the period was 394,819,070.
Dividend per share and cash profit measures
Cash core income for the six months to 30 September 2011 was £63.3 million
compared to £43.8 million in the first half of last year. Realised rolled up
interest amounted to £58.6 million over the period and accrued rolled up
interest was £83.0 million. Net of MTIS charges these figures were £48.7 million
and £77.0 million, respectively.
The Board has declared an interim dividend of 6 pence per share, unchanged from
last year. The interim dividend will be paid on 6 January 2012 to shareholders
on the register at 2 December 2011.
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 dividends in shares in lieu of cash. The Board has decided to continue
with this scheme.
Pre-incentive cash profit was £67.8 million compared to £28.6 million in the
first half of last year.
Group cash flow
Operating cash flow
Interest income received during the first half of the year was £102.4 million
compared to £78.8 million in the first half of last year. Over the period,
realisation of rolled up interest was £58.6 million, compared to £31.3 million
in the first half of last year. Interest expense was £25.5 million, compared to
£21.5 million. This resulted in a positive cash spread of £76.9 million,
compared to £57.3 million in the first half of last year. Dividend income was
£3.7 million compared to £1.1 million last year.
Third party fee income received amounted to £29.8 million, compared to
£19.8 million in the first half of the previous year. Operating expenses were
£65.0 million, compared to £37.2 million in the first half of last year.
As a result, operating cash flow for the six months to 30 September 2011 was
£45.4 million, compared to £40.9 million in the six months to 30 September 2010.
Cash flow relating to capital gains
Cash flow relating to capital gains, net of MTIS payments, was a negative
£25.2 million in the first half of this year compared to £23.7 million in the
first half of last year. This is due to the payment during this reporting period
of the MTIS relating to the year to March 2011, when capital gains amounted to
£133.4 million.
Free cash flow
Tax expense paid was £41.5 million compared to a £25.5 million tax refund last
year in respect of prior years.
In addition we purchased £16.9 million of ICG shares in the first half of this
year to hedge the new incentive schemes.
Following repayments, syndication proceeds and recoveries of £161.0 million,
free cash flow prior to investments and dividends, was £139.8 million, compared
to £227.3 million generated in the first half of last year.
Movement in net debt and cash balances
The above cash flow financed investments of £83.2 million, a dividend payment of
£46.4 million and a reduction in net debt of £10.2 million.
Group balance sheet
Capital Position
Shareholders' funds at 31 March 2011 stood at £1,366.3 million, up 9.3% compared
to £1,250.4 million at 31 March 2011, due to the increase in retained earnings
during the year and the £100.6 in reserves due to the uplift in fair value of
our equity investments.
Net debt was £1,301.0 million at 30 September 2011 compared to £1,248.6 million
at 31 March 2011.
Net debt to shareholder funds at 30 September 2011 was therefore 95%, compared
to 100% at the end of last year.
Investment capacity
We have recently agreed the extension of the maturity of £117 million of debt
facilities which were scheduled to fall due in April 2012 and, as a result, debt
facilities maturing in April 2012 now amount to circa £320 million.
Furthermore we have recently signed an additional seven year £75 million debt
facility from a new lender. We continue to review alternative sources of
financing to refresh and further diversify the balance sheet funding to support
long term growth. Â This is not included in the above headroom figure.
At 30 September 2011 our undrawn debt facilities stood at £465 million. Adjusted
for exit proceeds signed but not yet received and the new £75 million debt
facility, headroom is now approximately £615 million.
Financial outlook
We remain confident in the outlook of the business despite the uncertain
economic outlook and heightened market volatility.
The performance of the FMC will benefit from the fee income generated by our new
European mezzanine fund which achieved a first closing in September. The new
compensation schemes are expected to continue to allocate a greater proportion
of our incentive scheme costs to the FMC.
We expect net interest income to be resilient. The volatility in capital markets
and the uncertainty in the economic outlook are likely to result in a lower
level of realisations in the second half but we have a number of ongoing exit
processes which remain on track. Although we have not seen any signs of
deterioration to date, it is likely that the more challenging economic
environment will, in due course, impact our portfolio companies, potentially
resulting in higher impairment charges. Â We have however been cautious in
writing back the provisions taken in the last recessionary environment as the
recovery witnessed in 2010 remained fragile in our view. Â As a result we
continue to hold substantial provisions against our weaker assets.
Philip Keller
CFO
22 November 2011
Corporate Governance.
Board of directors
As at 31 March 2011, the Board comprised three executive directors, an
independent non executive Chairman and four non executive directors of whom all
four are independent.
The Executive Director are as follows:
* Christophe Evain, CEO
* Tom Attwood, Executive Director*
* Philip Keller, CFO
The non executive directors are as follows:
* Justin Dowley was appointed a non executive director in February 2006, and
non executive Chairman in July 2010.
* James Nelson was appointed a non executive director in May 2001. He has been
a non executive director of the Company for over nine-years and, following a
rigorous review in accordance with the UK Corporate Governance Code, the
directors have concluded that he continues to provide effective challenge
both within and outside Board meetings. The Board considers him to be
independent in character and judgement.
* Jean-Daniel Camus was appointed a non executive director in March 2007.
* Kevin Parry was appointed as a non executive director in June 2009.
* Peter Gibbs was appointed as a non executive director in March 2010.
* Tom Attwood has announced his intention to retire at the end of the current
financial year.
Board Diversity
ICG considers candidates to serve on its Board using the criteria of merit,
relevant experience and ability to contribute to the Board's discussions. We
would very much welcome female Board colleagues. Our priority is to ensure that
ICG continues to have the strongest possible leadership to which end we will
select the best qualified candidates whether male or female.
Principal risks and uncertainties.
Risk management is the responsibility of the ICG Board, which has put in place
the following risk management structures:
Committees of Executives
The Executive Committee comprises the three Managing Directors of ICG, who each
have a specific area of responsibility. The Executive Committee has general
responsibility for ICG's resources, implementation of strategy agreed by the
Board of Directors, financial and operational control and managing the business
worldwide.
The Mezzanine and Minority Equity Investment Committee is chaired by Christophe
Evain, CEO and Chief Investment Officer (CIO). The Chairman selects up to seven
members among two pre-defined lists of senior investment professionals including
Managing Directors and senior members of the Mezzanine and Growth Capital
business. One of these members will be nominated as a Sponsor member, to reflect
the specificities of the investment (geography, size, nature of the
transaction). The committee members are responsible for reviewing and approving
all investment proposals presented by investment executives in accordance with
the Investment Policy set by the Board. The approval of the Board is required
for large investments according to pre-set thresholds. The Mezzanine and Growth
Capital Investment Committee also reviews and manages potential and actual
conflicts of interest, reviews quarterly performance reports of our portfolio
companies, and coordinates management plans for individual assets as necessary.
The Credit Funds Investment Committee is chaired by Christophe Evain, CEO and
CIO. The Chairman selects up to five members among two pre-defined lists of
senior investment professionals including Managing Directors and senior members
of the Credit Funds Management team. One of these members will be nominated as
Sponsor member, depending on the specificities of the investment (geography,
size, nature of the transaction). The committee members are responsible for
reviewing and approving all investment proposals presented by credit executives
in accordance with the Investment Policy. The Credit Funds Investment Committee
also reviews and manages potential and actual conflicts of interest, reviews the
quarterly performance reports of our Credit funds' portfolio companies, and
coordinates management plans for individual assets as necessary.
By chairing both investment committees, the CIO ensures the Company's Global
Investment Strategy is applied consistently across the firm.
The Treasury Committee comprises six members including the CFO and Financial
Controller and is responsible for ensuring compliance with the Group's Treasury
Policy, reporting any breach of policy to the Audit Committee, monitoring
external bank debt and bank covenants, approving and monitoring hedging
transactions and approving the Group's list of relationship banks.
Non-Executive Committees
The Audit and Risk Committee comprises four independent Non-Executive Directors.
The Chairman of the Board as well as the members of the Executive Committee are
invited to attend, but are not members of the Committee. The Company's auditors
are also invited to attend and have direct access to Committee members. The
Committee is responsible for the selection, appointment, and review of the
external auditors to the Board; reviewing accounts; the oversight of the
investment portfolio; and monitoring the effectiveness of the internal control
environment and the risk management systems of the Group.
The Remuneration Committee consists of four Non Executive Directors and the
Chairman. Executive Directors are not members of the Remuneration Committee but
are normally invited to attend except when the committee is discussing their
remuneration. The Committee is responsible for the overall remuneration policy
for all ICG staff and ensures that the remuneration arrangements promote sound
and effective risk management and are in line with the long term interests of
the company. The Committee determines the level of remuneration of the Executive
Directors and reviews the remuneration of senior management.
Our key risks, and the ways in which we mitigate them are outlined on the
following pages.
Business Risks
Credit Risk
The performance of the Group's funds and investment portfolio is affected by a
number of factors. The group may experience poor investment performance (both in
absolute terms and relative to the performance of portfolios managed by
competitors and relative to other asset classes) due to the failure of
strategies implemented in managing the portfolio assets.
The amount of assets under management and the performance of the investment
portfolio may also be affected by matters beyond the Group's control, including
conditions in the domestic and global financial markets and the wider economy,
such as the level and volatility of bond prices, interest rates, exchange rates,
liquidity in markets, credit spreads, margin requirements, the availability and
cost of credit and the responses of governments and regulators to these economic
and market conditions. Adverse movements in any of the global conditions
described above could result in losses on investments from the Group's own
balance sheet in the investment portfolio and reduced performance fees received
on third party funds, all of which, individually or taken together, could have a
material adverse effect on the business, financial condition, results of
operations and/or prospects of the Group.
Mitigation: ICG has a disciplined investment policy and all investments are
selected and regularly monitored by the Group's Investment Committees. ICG
limits the extent of credit risk by diversifying its portfolio assets by sector,
size and geography.
The majority of third party funds currently managed by the Group are not marked
to market and, therefore, market valuations have limited immediate impact on the
amount of assets under management.
Fund Raising Risk
The Group may be unable to raise future investment funds from third parties.
This could limit the Group's capacity to grow AUM and could decrease the Group's
income from management, advisory and performance fees and carried interest. The
Groups ability to raise investment funds from third parties depends on a number
of factors, including the appetite of investors, the general availability of
funds in the market and competitor fundraising activity. Certain factors, such
as the performance of financial markets or the asset allocation rules or
regulations to which such third parties are subject, could inhibit or restrict
the ability of certain third parties to provide the Group with investment funds
to manage or invest in the asset classes in which the Group invests. In
addition, if the Group is unable to increase its assets under management, the
level of the Group's return from management, advisory and performance fees and
carried interest may be reduced. Furthermore, loss of investor confidence in the
Group or in the alternative investment sector generally, whether because of
changes in investor risk appetite, investor liquidity requirements, regulatory
and fiscal changes, poor relative or absolute performance of the Group's
investment or alternative investment funds generally, or for any other reason,
could lead to an adverse impact on the Group's performance or financial
position.
Mitigation: ICG has a long track record in developing credit related investment
products for institutional investors. The Group has built a dedicated fund
raising team to grow and diversify its institutional client base by geography
and type.
Liquidity and Funding Risk
Liquidity and funding risk is the risk that ICG will be unable to meet its
financial obligations as they fall due because assets held cannot be realised.
The level of repayments on the Group's loan portfolio and consequently on the
realisation of rolled up interest as well as delays in realising minority
interests could have a negative impact on the Group's investment capacity. In
addition, there can be no assurance that the Group will be able to secure
borrowings or other forms of liquidity in the longer term on commercially
acceptable terms or at all. Failure to secure borrowings or other forms of
liquidity on commercially acceptable terms may adversely affect the Group's
business and returns. The Group's ability to borrow funds or access debt capital
markets in the longer term is dependent on a number of factors including credit
market conditions. Adverse credit market conditions may make it difficult for
the Group to refinance existing credit facilities as and when they mature or to
obtain debt financing for new investments. In addition, the cost and terms of
any new or replacement facilities may be less favourable and may include more
onerous financial covenants. Failure to secure borrowings on commercially
acceptable terms or a default by the Group under its debt agreements may have a
material adverse effect upon the Group's financial condition and results.
Mitigation: The Group maintains a diversified portfolio of investments in order
to minimise the risk that a significant proportion of its assets would face
concurrent adverse conditions for repayments and realisations. In addition the
Group maintains a prudent funding strategy. It is our policy to maintain diverse
sources of medium term finance and to ensure that we always have sufficient
committed but unutilised debt facilities.
Market Risks
Risks relating to the Group and its business
General market conditions
The Group's strategy and business model are based on an analysis of and
assumptions regarding its operating environment. This includes market
evaluations and the identification and assessment of external and internal risk
factors. Significant unexpected changes or outcomes, beyond those factored into
the Group's strategy and business model may occur which could have an adverse
impact on the Group's performance or financial position.
Mitigation: The Executive Committee regularly reviews the likely impact of
potential changes in the operating environment, seeking when appropriate advice
from external experts.
Interest rate risk
The Group and some of the Group's portfolio companies are exposed to
fluctuations in interest rates which could adversely affect the Group's returns.
The Group has a mixture of fixed and floating rate assets, which are funded with
a mixture of equity and borrowings. Â A failure to match borrowings by type or
maturity or the failure or inappropriate use of derivative financial instruments
for the purpose of hedging could have an adverse impact on the Group's returns
and financial condition. In addition, many of the Group's portfolio companies
rely on leverage to finance their business operations and increase the rate of
return on their equity. Investments in highly leveraged entities are inherently
more sensitive to interest rate movements. Therefore, a significant increase in
interest rates could adversely affect the returns and financial condition of the
Group's portfolio companies and may even lead to some of the Group's portfolio
companies breaching financial or operating covenants in their credit agreements
or default on their debt.
Mitigation: The Group seeks to minimise interest rate exposure by matching the
type, maturity and currency of its borrowings to those of a group of assets with
a similar anticipated holding period. The Group's Investment Committees take
into account the ability of each portfolio company to successfully operate under
a different interest rate environment both before validating the investment and
during the life of the investment.
Foreign exchange risk
The Group is exposed to fluctuations in exchange rates which could adversely
affect the Group's returns and financial condition.
The Group reports in Sterling and pays dividends from Sterling profits. The
underlying assets in the Group's portfolio are principally denominated in Euros,
and to a lesser degree in US dollars and other currencies. Therefore, changes in
the rates of exchange of these currencies may have an adverse effect on the
value of the Group's investments and any undrawn amount of the Group's debt
facilities. Â Although the Group has in place measures to mitigate the foreign
exchange risk on its assets and liabilities, to the extent that any structural
currency exposures are unhedged or unmatched, such exposure could adversely
affect the Group's returns and financial condition. Failure by a counterparty to
make payments due under derivative financial investments may reduce the Group's
returns.
Mitigation: The Group seeks to reduce structural currency exposures by matching
loans and investment assets denominated in foreign currency with borrowings or
synthetic borrowings in the same currency. In addition, the Group has used and
continues to use derivative financial instruments and other instruments on a
limited basis, as part of its foreign exchange risk management, to hedge a
proportion of unrealised income recognised on a fair value basis. The Group
spreads its derivative contracts across a number of counterparties and regularly
evaluates the counterparty risk. Â The Group seek to transact only with sound
financial institutions.
Operational Risk
Loss of Staff
If the Group cannot retain and motivate its senior investment professionals and
other key employees, the Group's business could be adversely affected.
The Group's continued success is highly dependent upon the efforts of the
Group's investment professionals and other key employees. The Group's future
success and growth depends to a substantial degree on the Group's ability to
retain and motivate key employees, the market for whom is very competitive. The
Group may be unable to retain such key employees or to continue to motivate
them.
The Group's investment professionals possess substantial experience and
expertise in investing and are responsible for locating, executing and
monitoring the Group's investments. The loss of even a small number of the
Group's investment professionals could jeopardise the Group's ability to source,
execute and manage investments as well as affect recoveries on troubled assets,
which could have a material adverse effect on the Group's business.
Mitigation: The Group attempts to reward its investment professionals and other
key employees in line with market practice. Â In 2009 the Group's Remuneration
Committee commissioned PriceWaterHouseCoopers to review the compensation
structure of ICG and to advise upon appropriate benchmarking against which
remuneration could be set. Â Following this review, new remunerations schemes
were approved by shareholders at last year's AGM. Â These schemes are aligned
with the Groups' strategy and in line with the appropriate benchmark and comply
with the new UK Financial Services Authority ("FSA") remuneration code.
Regulatory risk
Changes to the regulatory frameworks under which the Group operates or a breach
of applicable regulations could damage the Group's reputation and affect the
Group's compliance costs, returns and financial condition
The Group operates in numerous jurisdictions and its business, particularly the
fund management part of the business, is subject to numerous regulatory regimes,
including the United Kingdom, the United States, Hong Kong, Ireland and
Luxembourg. The FSA is the Group's primary regulator. The FSA and other such
regulatory authorities have broad regulatory powers dealing with all aspects of
financial services, including the authority to grant, and in specific
circumstances to vary or cancel, permissions and to regulate marketing and sales
practices, advertising and the maintenance of adequate financial resources.
If the Group were to breach any such laws or regulations it would be exposed to
the risk of investigations, fines, temporary or permanent prohibition from
engaging in certain activities, suspensions of personnel or revocation of their
licenses and suspension or termination of the regulatory permissions to operate.
Mitigation: The Group has a governance structure in place supported by a risk
framework that allows for the identification, control, and mitigation of
material risks faced by the Group. The adequacy of controls in place is
periodically assessed. This includes a tailored risk-based monitoring programme
designed to specifically address regulatory and reputational exposure.
Business Interruption
Operational risks may disrupt the Group's business, result in losses or damage
the Group's reputation
The Group relies heavily on its financial, accounting and other data processing
systems. If any of these systems do not operate properly or are disabled, the
Group could suffer financial loss, disruption of business and damage to its
reputation.
Mitigation: The Group has in place business processes and procedures covering
information security, change management, business continuity and disaster
recovery, aimed at ensuring that its systems can be rebuilt in the event any of
its premises suffer a disaster.
In addition, the Group maintains a system of internal controls designed to
detect, amongst other things, fraud by the Group's employees, agents and
counterparties.
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
22 November 2011
Condensed consolidated income Statement.
for the six months ended 30 September 2011
Six months Six months Year
ended ended ended
30 September 30 September 31 March
2011 2010 2011
(unaudited) (unaudited) (audited)
 £m £m £m
--------------------------------------------------------------------------------
Interest and dividend income 132.8 122.4 242.0
--------------------------------------------------------------------------------
Gains on investments 42.1 86.8 133.4
--------------------------------------------------------------------------------
Fee and other operating income 31.0 27.5 63.3
--------------------------------------------------------------------------------
 205.9 236.7 438.7
--------------------------------------------------------------------------------
Interest payable and other related financing
costs (22.6) (17.8) (59.2)
--------------------------------------------------------------------------------
Provisions for impairment of assets (28.4) (53.1) (70.9)
--------------------------------------------------------------------------------
Administrative expenses (46.1) (60.7) (122.3)
--------------------------------------------------------------------------------
Profit before tax 108.8 105.1 186.3
--------------------------------------------------------------------------------
Tax expense (23.7) (37.6) (58.2)
--------------------------------------------------------------------------------
Profit for the period/year 85.1 67.5 128.1
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Attributable to:
--------------------------------------------------------------------------------
Equity holders of the parent 85.4 67.5 128.2
--------------------------------------------------------------------------------
Non-controlling interests (0.3) - (0.1)
--------------------------------------------------------------------------------
 85.1 67.5 128.1
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Earnings per share 21.6p 17.2p 32.6p
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Diluted earnings per share 21.6p 17.2p 32.5p
--------------------------------------------------------------------------------
All activities represent continuing operations.
Condensed consolidated statement of comprehensive income
for the six months ended 30 September 2011
Six months Six months Year
ended ended ended
30 September 30 September 31 March
2011 2010 2011
(unaudited) (unaudited) (audited)
 £m £m £m
--------------------------------------------------------------------------------
Profit for the period/year 85.4 67.5 128.1
--------------------------------------------------------------------------------
Available for sale financial assets:
--------------------------------------------------------------------------------
Gains arising in the period/year 114.2 45.4 110.1
--------------------------------------------------------------------------------
Less: reclassification adjustment for gains
included in the income statement (15.3) (70.1) (120.6)
--------------------------------------------------------------------------------
Exchange differences on translation of
foreign operations 0.5 (0.8) (1.5)
--------------------------------------------------------------------------------
 99.4 (25.5) (12.0)
--------------------------------------------------------------------------------
Tax on items taken directly to or
transferred from equity (18.8) 7.2 3.6
--------------------------------------------------------------------------------
Other comprehensive income/(expenses) for
the period/year 80.6 (18.3) (8.4)
--------------------------------------------------------------------------------
Total comprehensive income for the
period/year 166.0 49.2 119.7
--------------------------------------------------------------------------------
Condensed consolidated statement
of financial position.
for the six months ended 30 September 2011
30 September 30 September 31 March
2011 2010 2011
(unaudited) (unaudited) (audited)
 £m £m £m
--------------------------------------------------------------------------------
Non current assets
--------------------------------------------------------------------------------
Intangible assets 8.4 - 9.1
--------------------------------------------------------------------------------
Property, plant and equipment 6.1 7.3 7.0
--------------------------------------------------------------------------------
Financial assets: loans and investments and
warrants 2,545.1 2,665.9 2,575.1
--------------------------------------------------------------------------------
Derivative financial instruments 25.5 27.3 12.0
--------------------------------------------------------------------------------
 2,585.1 2,700.5 2,603.2
--------------------------------------------------------------------------------
Current assets
--------------------------------------------------------------------------------
Trade and other receivables 62.4 58.5 51.3
--------------------------------------------------------------------------------
Financial assets: loans and investments 70.8 100.2 39.7
--------------------------------------------------------------------------------
Derivative financial instruments 29.5 4.1 2.3
--------------------------------------------------------------------------------
Cash and cash equivalents 143.9 181.2 140.9
--------------------------------------------------------------------------------
 306.6 344.0 234.2
--------------------------------------------------------------------------------
Total assets 2,891.7 3,044.5 2,837.4
--------------------------------------------------------------------------------
Equity and reserves
--------------------------------------------------------------------------------
Called up share capital 79.9 79.2 79.8
--------------------------------------------------------------------------------
Share premium account 666.7 657.7 665.7
--------------------------------------------------------------------------------
Capital redemption reserve 1.4 1.4 1.4
--------------------------------------------------------------------------------
Own shares reserve (33.0) (16.0) (23.8)
--------------------------------------------------------------------------------
Other reserves 122.0 21.9 36.8
--------------------------------------------------------------------------------
Retained earnings 529.4 453.7 490.3
--------------------------------------------------------------------------------
Equity attributable to owners of the Company 1,366.4 1,197.9 1,250.2
--------------------------------------------------------------------------------
Non-controlling interest (0.1) - 0.2
--------------------------------------------------------------------------------
Total equity 1,366.3 1,197.9 1,250.4
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Non current liabilities
--------------------------------------------------------------------------------
Provisions 4.7 5.7 4.5
--------------------------------------------------------------------------------
Financial liabilities 1,032.0 1,458.4 1,060.7
--------------------------------------------------------------------------------
Derivative financial instruments 5.4 6.2 8.2
--------------------------------------------------------------------------------
Deferred tax liabilities 26.7 25.7 12.7
--------------------------------------------------------------------------------
 1,068.8 1,496.0 1,086.1
--------------------------------------------------------------------------------
Current liabilities
--------------------------------------------------------------------------------
Trade and other payables 134.3 153.5 196.9
--------------------------------------------------------------------------------
Financial liabilities 258.7 72.7 175.2
--------------------------------------------------------------------------------
Liabilities for current tax 57.5 63.1 70.5
--------------------------------------------------------------------------------
Derivative financial instruments 6.1 61.3 58.3
--------------------------------------------------------------------------------
 456.6 350.6 500.9
--------------------------------------------------------------------------------
Total liabilities 1,525.4 1,846.6 1,587.0
--------------------------------------------------------------------------------
Total equity and liabilities 2,891.7 3,044.5 2,837.4
--------------------------------------------------------------------------------
Condensed consolidated statement
of cash flows
for the six months ended 30 September 2011
Six months
ended Six months Year ended
30 September ended 31 March
2011 30 September 2011
(unaudited) 2010 (unaudited) (audited)
 £m £m £m
--------------------------------------------------------------------------------
Operating activities
--------------------------------------------------------------------------------
Interest receipts 102.4 78.8 174.0
--------------------------------------------------------------------------------
Fee receipts 29.8 19.8 77.9
--------------------------------------------------------------------------------
Dividends received 3.7 1.1 5.7
--------------------------------------------------------------------------------
Gain on disposals 11.8 48.3 146.6
--------------------------------------------------------------------------------
Interest payments (25.5) (21.5) (43.9)
--------------------------------------------------------------------------------
Cash payments to suppliers and
employees (101.8) (62.0) (80.9)
--------------------------------------------------------------------------------
Purchase of current financial assets (33.8) (94.5) (20.0)
--------------------------------------------------------------------------------
Purchase of loans and investments (82.7) (127.7) (305.7)
--------------------------------------------------------------------------------
Proceeds from sale of loans and
investments 194.8 150.5 388.6
--------------------------------------------------------------------------------
Cash generated/(used) in operations 98.7 (7.2) 342.3
--------------------------------------------------------------------------------
Taxes (paid)/received (41.5) 25.5 (5.1)
--------------------------------------------------------------------------------
Net cash generated in operating
activities 57.2 18.3 337.2
--------------------------------------------------------------------------------
Investing activities
--------------------------------------------------------------------------------
Purchase of property, plant and
equipment (0.5) (1.1) (2.5)
--------------------------------------------------------------------------------
Purchase of intangible assets - - (5.1)
--------------------------------------------------------------------------------
Acquisition of subsidiary - - (2.6)
--------------------------------------------------------------------------------
Net cash used in investing activities (0.5) (1.1) (10.2)
--------------------------------------------------------------------------------
Financing activities
--------------------------------------------------------------------------------
Dividends paid (46.4) (25.8) (40.6)
--------------------------------------------------------------------------------
Increase/(decrease) in long term
borrowings 57.7 81.5 (223.8)
--------------------------------------------------------------------------------
Net cash (out)/in flow from derivative
contracts (47.6) 40.7 14.6
--------------------------------------------------------------------------------
Purchase of own shares (16.9) (13.2) (16.9)
--------------------------------------------------------------------------------
Proceeds on issue of shares 0.7 - -
--------------------------------------------------------------------------------
Net cash (used in)/from financing
activities (52.5) 83.2 (266.7)
--------------------------------------------------------------------------------
Net increase in cash 4.2 100.4 60.3
--------------------------------------------------------------------------------
Cash and cash equivalents at beginning
of period/year 140.9 83.7 83.7
--------------------------------------------------------------------------------
Effect of foreign exchange rate changes (1.2) (2.9) (3.1)
--------------------------------------------------------------------------------
Cash and cash equivalents at end of
period/year 143.9 181.2 140.9
--------------------------------------------------------------------------------
Condensed consolidated statement
of changes in equity
for the six months ended 30 September 2011
Reserve
Capital for
redemption share Available Non-
Share Share reserve based for sale Own Retained controlling Total
capital premium fund payments reserve shares earnings Total interest equity
 £m £m £m £m £m £m £m £m £m £m
-------------------------------------------------------------------------------------------------------
Balance at 1,250.2 0.2
31 March 2011 79.8 665.7 1.4 13.1 23.7 (23.8) 490.3 1,250.4
-------------------------------------------------------------------------------------------------------
Profit for 85.4 (0.3)
the period - - - - - - 85.4 85.1
-------------------------------------------------------------------------------------------------------
Available for 98.9 -
sale
financial
assets - - - - 98.9 - - 98.9
-------------------------------------------------------------------------------------------------------
Exchange
differences 0.5 -
on
translation
of foreign
operations - - - - - - 0.5 0.5
-------------------------------------------------------------------------------------------------------
Tax relating
to components (18.8) -
of other
comprehensive
income - - - - (18.8) - - (18.8)
-------------------------------------------------------------------------------------------------------
Total
comprehensive 166.0 (0.3)
income/(loss)
for the
period - - - - 80.1 - 85.9 165.7
-------------------------------------------------------------------------------------------------------
Own shares (12.8) -
acquired in
period - - - - - (12.8) - (12.8)
-------------------------------------------------------------------------------------------------------
Share options 0.7 -
exercised 0.1 0.6 - - - - - 0.7
-------------------------------------------------------------------------------------------------------
Vesting of 3.6 -
share schemes - - - - - 3.6 - 3.6
-------------------------------------------------------------------------------------------------------
Net loss on (1.5) -
consideration
paid in the
form of
shares - - - (1.5) - - - (1.5)
-------------------------------------------------------------------------------------------------------
Scrip 0.4 -
dividend - 0.4 - - - - - 0.4
-------------------------------------------------------------------------------------------------------
Credit for 6.6 -
equity
settled share
schemes - - - 6.6 - - - 6.6
-------------------------------------------------------------------------------------------------------
Dividends (46.8) -
paid - - - - - - (46.8) (46.8)
-------------------------------------------------------------------------------------------------------
Balance at 1,366.4 (0.1)
30 September
2011 79.9 666.7 1.4 18.2 103.8 (33.0) 529.4 1,366.3
-------------------------------------------------------------------------------------------------------
Condensed consolidated statement of changes
in equity continued
for the six months ended 30 September 2011 continued
Reserve
Capital for
redemption share Available
Share Share reserve based for sale Own Retained
Six months ended 30 capital premium fund payments reserve shares earnings Total
September 2010 £m £m £m £m £m £m £m £m
------------------------------------------------------------------------------------------
Balance at 31 March
2010 78.0 642.5 1.4 4.6 30.6 (2.8) 429.2 1,183.5
------------------------------------------------------------------------------------------
Profit for the
period - - - - - - 67.5 67.5
------------------------------------------------------------------------------------------
Available for sale
financial assets - - - - (24.7) - - (24.7)
------------------------------------------------------------------------------------------
Exchange differences
on translation
of foreign
operations - - - - - - (0.8) (0.8)
------------------------------------------------------------------------------------------
Tax relating to
components of other
comprehensive income - - - - 7.2 - - 7.2
------------------------------------------------------------------------------------------
Total comprehensive
income/(loss)
for the period - - - - (17.5) - 66.7 49.2
------------------------------------------------------------------------------------------
Own shares acquired
in period - - - - - (13.2) - (13.2)
------------------------------------------------------------------------------------------
Scrip dividend 1.2 15.2 - - - - - 16.4
------------------------------------------------------------------------------------------
Credit for equity
settled share
schemes - - - 4.2 - - - 4.2
------------------------------------------------------------------------------------------
Dividends paid - - - - - - (42.2) (42.2)
------------------------------------------------------------------------------------------
Balance at 30
September 2010 79.2 657.7 1.4 8.8 13.1 (16.0) 453.7 1,197.9
------------------------------------------------------------------------------------------
Reserve
Capital for
redemption share Available Non-
Share Share reserve based for sale Own Retained controlling Total
Year  ended capital premium fund payments reserve shares earnings Total interest Equity
31 March 2011 £m £m £m £m £m £m £m £m £m £m
-------------------------------------------------------------------------------------------------------
Balance at
31 March 2010 78.0 642.5 1.4 4.6 30.6 (2.8) 429.2 1,183.5 - 1,183.5
-------------------------------------------------------------------------------------------------------
Profit for
the year - - - - - - 128.2 128.2 (0.1) 128.1
-------------------------------------------------------------------------------------------------------
AFS financial
assets - - - - (10.5) - - (10.5) - (10.5)
-------------------------------------------------------------------------------------------------------
Exchange
differences
on
translation
of foreign
operations - - - - - - (1.5) (1.5) Â (1.5)
-------------------------------------------------------------------------------------------------------
Tax relating
to components
of other
comprehensive
income - - - - 3.6 - - 3.6 - 3.6
-------------------------------------------------------------------------------------------------------
Total
comprehensive
income/(loss)
for the year - - - - (6.9) - 126.7 119.8 (0.1) 119.7
-------------------------------------------------------------------------------------------------------
Own shares
acquired in
the year - - - - - (21.0) - (21.0) - (21.0)
-------------------------------------------------------------------------------------------------------
Acquisition
of non-
controlling
interest with
a change in
control - - - - - - - - 0.3 0.3
-------------------------------------------------------------------------------------------------------
Scrip
dividend 1.8 23.2 - - - - - 25.0 - 25.0
-------------------------------------------------------------------------------------------------------
Credit for
equity
settled
share schemes - - - 8.5 - - - 8.5 - 8.5
-------------------------------------------------------------------------------------------------------
Dividends
paid - - - - - - (65.6) (65.6) - (65.6)
-------------------------------------------------------------------------------------------------------
Balance at
31 March 2011 79.8 665.7 1.4 13.1 23.7 (23.8) 490.3 1,250.2 0.2 1,250.4
-------------------------------------------------------------------------------------------------------
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 2011. The financial statements have
been prepared on the historical cost basis as modified to include the fair
valuation of certain financial instruments. Â In the interim period under review,
as explained in the financial review, unquoted equity is now held at fair value.
(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 Business review.
The interim management report also includes a summary of the Group's financial
position, its cash flows and borrowing facilities.
The Group actively manages its portfolio of debt liabilities ensuring that
scheduled maturities are met within the funding facilities available. In the
last 6 months, debt facilities have been extended by £117 million.
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. Accordingly they continue to adopt the going concern basis in preparing
the Condensed consolidated financial statements.
2. Business and geographical segments
For management purposes, the Group is currently organised into two distinct
business groups, one of these being the Fund Management Company and the other
being the Investment Company. Segment information about these businesses, as
reviewed by the Chief Executive Officer, is presented below in (i), (ii) and
(iii):
The Group reports 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 and 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% 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, and 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.
(i) Analysis of income and profit before tax
Mezzanine Fund
 Management
--------------------
Six months ended 30 Credit Fund Total
September 2011 (£m) Europe Asia US Management FMC IC Total
--------------------------------------------------------------------------------
External fund management
fee income 13.8 3.4 - 13.1 30.3 - 30.3
--------------------------------------------------------------------------------
Fee income from the
Balance Sheet
(inter segment) 10.6 1.0 0.4 0.6 12.6 - 12.6
--------------------------------------------------------------------------------
Fund management fee income 24.4 4.4 0.4 13.7 42.9 - 42.9
--------------------------------------------------------------------------------
Net interest income* Â Â Â Â - 98.5 98.5
--------------------------------------------------------------------------------
Dividend income     2.2 1.4 3.6
--------------------------------------------------------------------------------
Other fee income     - 0.7 0.7
--------------------------------------------------------------------------------
Staff costs     (18.1) (6.0) (24.1)
--------------------------------------------------------------------------------
Medium Term Incentive
Scheme     - (6.0) (6.0)
--------------------------------------------------------------------------------
Balance Sheet fee income
charge
(inter segment expense)     - (12.6) (12.6)
--------------------------------------------------------------------------------
Administrative costs     (9.9) (1.6) (11.5)
--------------------------------------------------------------------------------
Net gains on investments     - 37.6 37.6
--------------------------------------------------------------------------------
Impairments     - (28.4) (28.4)
--------------------------------------------------------------------------------
Add back net fair value
gain on derivatives held
for hedging purposes*     - 8.1 8.1
--------------------------------------------------------------------------------
Profit before tax     17.1 91.7 108.8
--------------------------------------------------------------------------------
* Â 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 30 Credit Fund Total
September 2010 (£m) Europe Asia US Management FMC IC Total
--------------------------------------------------------------------------------
External fund management
fee income 12.5 3.7 - 9.9 26.1 - 26.1
--------------------------------------------------------------------------------
Fee income from the
Balance Sheet
(inter segment) 10.5 1.2 0.7 0.6 13.0 - 13.0
--------------------------------------------------------------------------------
Fund management fee income 23.0 4.9 0.7 10.5 39.1 - 39.1
--------------------------------------------------------------------------------
Net interest income* Â Â Â Â - 95.0 95.0
--------------------------------------------------------------------------------
Dividend income     1.1 - 1.1
--------------------------------------------------------------------------------
Other fee income     - 1.4 1.4
--------------------------------------------------------------------------------
Staff costs     (14.9) (3.2) (18.1)
--------------------------------------------------------------------------------
Medium Term Incentive
Scheme     - (10.1) (10.1)
--------------------------------------------------------------------------------
Balance Sheet fee income
charge
(inter segment expense)     - (13.0) (13.0)
--------------------------------------------------------------------------------
Administrative costs     (8.4) (6.7) (15.1)
--------------------------------------------------------------------------------
Net gains on investments     - 69.4 69.4
--------------------------------------------------------------------------------
Impairments     - (53.1) (53.1)
--------------------------------------------------------------------------------
Add back net fair value
gain on derivatives held
for hedging purposes*     - 8.5 8.5
--------------------------------------------------------------------------------
Profit before tax     16.9 88.2 105.1
--------------------------------------------------------------------------------
* Â 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
(i) Analysis of income and profit before tax (continued)
Mezzanine Fund
 Management
----------------------
Year ended 31 March Credit Fund
2011 (£m) Europe Asia US Management Total FMC IC Total
--------------------------------------------------------------------------------
External fund
management fee
income 25.1 7.3 - 23.7 56.1 - 56.1
--------------------------------------------------------------------------------
Fee income from
Balance Sheet
(inter segment) 20.7 2.3 1.3 1.4 25.7 - 25.7
--------------------------------------------------------------------------------
Fund management fee
income 45.8 9.6 1.3 25.1 81.8 - 81.8
--------------------------------------------------------------------------------
Net interest income* Â Â Â Â - 179.8 179.8
--------------------------------------------------------------------------------
Dividend income     3.0 3.8 6.8
--------------------------------------------------------------------------------
Other fee income     - 7.2 7.2
--------------------------------------------------------------------------------
Staff costs     (30.8) (9.1) (39.9)
--------------------------------------------------------------------------------
Medium Term
Incentive Scheme     - (22.8) (22.8)
--------------------------------------------------------------------------------
Balance Sheet fee
income charge
(inter segment
expense) Â Â Â Â - (25.7) (25.7)
--------------------------------------------------------------------------------
Administrative costs     (19.2) (9.4) (28.6)
--------------------------------------------------------------------------------
Net gains on
investments     1.1 101.3 102.4
--------------------------------------------------------------------------------
Impairments     - (70.9) (70.9)
--------------------------------------------------------------------------------
Add back net fair
value gain on
derivatives held for
hedging purposes* Â Â Â Â - (3.8) (3.8)
--------------------------------------------------------------------------------
Profit before tax     35.9 150.4 186.3
--------------------------------------------------------------------------------
* Â 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.
(ii) Loan book by sector
Six months Six months Year
ended ended ended
30 September 30 September 31 March
2011 2010 2011
 £m £m £m
-----------------------------------------------------------------
Europe 2,108.3 2,155.9 2,153.1
-----------------------------------------------------------------
Asia 182.9 220.1 190.6
-----------------------------------------------------------------
US 123.6 143.8 89.6
-----------------------------------------------------------------
Credit Fund Management 130.3 146.1 141.8
-----------------------------------------------------------------
 2,545.1 2,665.9 2,575.1
-----------------------------------------------------------------
The accounting policies of the reportable segments are the same as the Group's
accounting policies set out in the statutory accounts of the Group for the
financial year ended 31 March 2011.
(iii) Group revenue by geographical segment from external customers
Six months Six months Year
ended ended ended
30 September 30 September 31 March
2011 2010 2011
 £m £m £m
-------------------------------------------------
Europe 179.5 212.9 390.9
-------------------------------------------------
Asia 20.9 7.9 31.5
-------------------------------------------------
US 5.5 15.9 16.3
-------------------------------------------------
 205.9 236.7 438.7
-------------------------------------------------
2. Business and geographical segments continued
 (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
2011 2010 2011
 £m £m £m
-------------------------------------------------
Europe 5.9 7.0 6.8
-------------------------------------------------
Asia 0.2 0.3 0.2
-------------------------------------------------
 6.1 7.3 7.0
-------------------------------------------------
3 Dividends
The interim dividend of 6p per share (2011: 6p per share) will be paid to
members registered at the close of business on 2 December 2011.
4 Earnings per share
Six months Six months Year
ended ended ended
30 September 30 September 31 March
2011 2010 2011
Earnings £m £m £m
--------------------------------------------------------------------------------
Earnings for the purposes of basic earnings
per share being net profit attributable
to the equity holders of the parent 85.4 67.5 128.2
--------------------------------------------------------------------------------
Number of shares 2011 2010 2011
--------------------------------------------------------------------------------
Weighted average number of ordinary shares
for the purposes of basic earnings
per share 394,819,070 391,562,230 393,785,735
--------------------------------------------------------------------------------
Effect of dilutive potential ordinary shares - 421,821 593,940
--------------------------------------------------------------------------------
Weighted average number of ordinary shares
for the purposes of diluted earnings
per share 394,819,070 391,984,051 394,379,675
--------------------------------------------------------------------------------
5 Valuation of unquoted ordinary shares and warrants
(i) As unquoted ordinary shares are held as AFS financial assets, the uplift on
valuation, along with the realisations during the period/year are recognised in
other comprehensive income.
Gains arising during the period/year comprise the following items:
Six months Six months Year
ended ended ended
30 September 30 September 31 March
2011 2010 2011
 £m £m £m
--------------------------------------------------------------------------------
Realised gains on ordinary shares 16.9 56.1 105.0
--------------------------------------------------------------------------------
Impairments of AFS financial assets recycled
to the income statement (1.6) (8.1) (6.5)
--------------------------------------------------------------------------------
Unrealised gains on AFS financial assets
--------------------------------------------------------------------------------
- Fair value movement on ordinary shares 100.6 - 4.8
--------------------------------------------------------------------------------
- Fair value movement on other assets (1.8) - 9.7
--------------------------------------------------------------------------------
Foreign exchange 0.1 (2.6) (2.9)
--------------------------------------------------------------------------------
Gains arising in the period/year 114.2 45.4 110.1
--------------------------------------------------------------------------------
(ii) The uplift on warrants forms part of gains on investments in the income
statement:
Six months Six months Year
ended ended ended
30 September 30 September 31 March
2011 2010 2011
 £m £m £m
--------------------------------------------------------------------------------
Realised gains on warrants 5.3 30.7 23.6
--------------------------------------------------------------------------------
Realised gains on assets designated as FVTPL - - 4.8
--------------------------------------------------------------------------------
Unrealised gains on assets designated as
FVTPL
--------------------------------------------------------------------------------
- Fair value movement on ordinary shares 1.0 - -
--------------------------------------------------------------------------------
- Fair value movement on warrants 26.4 - -
--------------------------------------------------------------------------------
- Fair value movement on other assets (7.5) - -
--------------------------------------------------------------------------------
Realised gains on AFS financial assets
recycled from AFS equity reserves 16.9 56.1 105.0
--------------------------------------------------------------------------------
Gains on investments 42.1 86.8 133.4
--------------------------------------------------------------------------------
6 Financial liabilities
Private placements
During the period there were repayments of two private placements of US$40
million and £20 million.
Bank facilities
In accordance with the facility agreement the £1,032 million revolving credit
facility was reduced to £688 million during the period. In the period we have
extended an additional £117 million of bank debt reducing the final amortisation
of this facility in April 12 to £321.5 million.
7 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 2011.
8 General
The interim financial statements for the six months to 30 September 2011 were
approved by the Board on · November 2011.
The financial information for the year ended 31 March 2011 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 auditor's 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 2011 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 8. 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, "Review of Interim
Financial Information performed by the Independent Auditor of the Entity",
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 2011 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 Auditor
London, United Kingdom
22 November 2011
Balance Sheet Investments.
Unaudited
At 30 September 2011, the balance sheet investment portfolio amounted to £2,414
million, including £698 million of equity investments.
Top 20 assets at 30 September 2011
The top 20 assets account for 51% of the balance sheet investment portfolio and
are listed below.
Company Country Industry Investment  year £m*
--------------------------------------------------------------------------------
Medi Partenaires France Healthcare 2007 108.9
Elis V France Business services 2007 93.4
Applus+ Spain Business services 2007 81.8
Biffa UK Waste management 2008 78.2
CPA UK Business services 2010 76.9
BAA UK Shipping & transport 2006 75.7
Attendo Sweden Healthcare 2007 75.3
Materis France Building Materials 2006 67.4
Link Market
Services Australia Financial services 2007 60.3
Intelsat North America Telephone networks 2008 59.2
Minimax Germany Electronics 2006 51.1
Eismann Germany Food retailing 2007 49.4
Gerflor France Building Materials 2011 49.2
Allflex UK Business services 1998,2007 47.9
Ethypharm France Pharmaceuticals 2007 46.8
Eos UK Financial services 2010 46.5
SAG Germany Utilities 2008 44.0
Feu Vert France Motors 2007 41.9
Leisure &
Orizonia Spain entertainment 2006 41.7
Leisure &
Lovenplay Germany entertainment 2008 38.0
--------------------------------------------------------------------------------
Total    1,233.6
--------------------------------------------------------------------------------
*carrying value on ICG balance sheet at 30 September 2011. Â Includes equity
stake listed below when relevant.
Top 10 equity assets at 30 September 2011
The top 10 equity positions (included in the above table) account for 14% of the
balance sheet investment portfolio and 49% of our equity portfolio and are
listed below.
Company Country Industry Investment  year £m*
--------------------------------------------------------------------------------
CPA UK Business services 2010 67.9
Intelsat North America Telephone networks 2008 59.2
Allflex France Business services 1998,2007 47.9
Eismann Germany Food retailing 2007 33.5
Gerflor France Building Materials 2011 31.9
Link Market Services Australia Financial services 2007 23.4
TeamSystem Italy Business services 2010 21.3
Van Gansewinkel (ex
AVR) Netherlands Utilities 2007 21.2
Applus+ Spain Business services 2007 18.6
Printing &
Bureau van Dijk Belgium Publishing 2011 16.1
--------------------------------------------------------------------------------
Total    341.4
--------------------------------------------------------------------------------
Company Information.
Timetable
The major timetable dates are as follows:
Ex dividend date 30 November 2011
-------------------------------------------------------------------------
Record date for Financial Year 2012 interim dividend 2 December 2011
-------------------------------------------------------------------------
Payment of interim dividend 6 January 2012
-------------------------------------------------------------------------
Full year results announcement for the
12 months to 31 March 2012 22 May 2012
-------------------------------------------------------------------------
Registrars
The address of the Registrars is:
Computershare Investor Services PLC
PO Box 92
The Pavilions
Bridgwater Road
Bristol
BS99 7NH
Website
The Company's website address is www.icgplc.com.
Copies of the Annual and Interim Reports and other information
about the Company are available on this site.
Company information
Stockbrokers Auditor
JPMorgan Cazenove Deloitte LLP
10 Aldermanbury Chartered Accountants and
London Statutory Auditor
EC2V 7RF London
RBS Hoare Govett Limited Registrars
250 Bishopsgate Computershare Investor
London Services PLC
EC2M 4AA PO Box 92
Bankers The Pavilions
The Royal Bank of Scotland plc Bridgwater Road
135 Bishopsgate Bristol
London BS99 7NH
EC2M 3UR Company Registration Number
Lloyds TSB plc 2234775
25 Gresham Street
London
EC2V 7HN
Registered office
Juxon House
100 St Paul's Churchyard
London
EC4M 8BU
This announcement is distributed by Thomson Reuters on behalf of
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(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
[HUG#1565543]