Intermediate Capital Group PLC Half Year Results...

Authorised and regulated by the Financial Services Authority

Intermediate Capital Group PLCHalf Year Results Presentation

24 November 2009

Authorised and regulated by the Financial Services AuthorityAuthorised and regulated by the Financial Services Authority

Summary: Strategy and Market

3Authorised and regulated by the Financial Services Authority

Financial Highlights

Pre-tax profit of £8.1m*

Core income up 11% to £94.1m

Provisions £97.1m versus £230.3m in the previous six months

Interim dividend of 6p per share

*including £7.6m positive impact of fair value movements on derivatives held for hedging purposes


Summary

Greater optimism in capital markets Increased primary deal flow Bond and equity market liquidity returns Continued refinancing opportunities in the local mid market

Improved confidence in exits and repayments

Resilient portfolio

Mezzanine consistently delivers superior risk adjusted returns that are not correlated with other asset classes


The Market Opportunity in European LBO debtEurope is inefficient

60

65

70

75

80

85

90

95

100

105

Jan-0

4Mar

-04May

-04Ju

l-04

Sep-0

4Nov

-04

Jan-0

5Mar

-05May

-05Ju

l-05

Sep-0

5Nov

-05

Jan-0

6Mar

-06May

-06Ju

l-06

Sep-0

6Nov

-06

Jan-0

7Mar

-07May

-07Ju

l-07

Sep-0

7Nov

-07

Jan-0

8Mar

-08May

-08Ju

l-08

Sep-0

8Nov

-08

Jan-0

9Mar

-09May

-09Ju

l-09

Average Bid Flow Names

54.00

58.00

62.00

66.00

70.00

74.00

78.00

82.00

86.00

90.00

94.00

98.00

102.00

Dec-0

4Fe

b-05

Apr-05

Jun-0

5Aug

-05

Oct-05

Dec-0

5Fe

b-06

Apr-06

Jun-0

6Aug

-06

Oct-06

Dec-0

6Fe

b-07

Apr-07

Jun-0

7Aug

-07

Oct-07

Dec-0

7Fe

b-08

Apr-08

Jun-0

8Aug

-08

Oct-08

Dec-0

8Fe

b-09

Apr-09

Jun-0

9Aug

-09

Avg Bid Flow Names

European Market2004 – August 2009

Source: LCD European Weekly Secondary Report, August 2009

US Market2004 – August 2009

Source: LCD and S&P/LSTA Leveraged Loan Index


The Market Opportunity in European Debt Wave of refinancing to come

Source: Fitch

Maturity Profile of Fitch European Loans

Debt maturing

Forecast total leverage

€0bn

€10bn

€20bn

€30bn

€40bn

€50bn

€60bn

€70bn

2009 2010 2011 2012 2013 2014 2015 2016 2017 20180.0x

1.0x

2.0x

3.0x

4.0x

5.0x

6.0x

7.0x

8.0x


4.5

69.3

152.3

110.0

79.370.0

69.1

82.9

92.9

58.8

39.935.1

19.212.7

164.5

–

20

40

60

80

100

120

140

160

180

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 H12009

Leve

rage

d B

uyou

t Vol

ume

(€bn

)

Reflects total sources of funding of initial or secondary buyout by a private equity firm (excludes recaps, refinancings, etc)

European Market OverviewLBO volume

Source: S&P


Deal Pipeline

Recovery Buy and build / bolt-ons Restructure Balance sheet

Primary Market Minority Partners Asia Pacific North America


Target Investment Returns

Cash Pay

Stable

Single Known Bank

Low Gearing

Syndicate

PIK

Low Operating Gearing

High Gearing

Cyclical

High Operating Gearing

Strong PE Investor

Syndicate

1.6x 2.0x 2.4x


Portfolio


Investment PortfolioPerformance vs Prior Year and vs Budget

0%

25%

50%

75%

100%

Sep-07 Dec-07 Mar-08 Jun-08 Sep-08 Dec-08 Mar-09 Jun-09 Sep-09

Above Prior Year

Above Budget

Percentage of assets performing above prior year and above budget


Investment Portfolio Top 20 assets

→→↑↑UKBusiness management software and outsourcing services

→→↑↑FranceNursing and elderly care homes

→→↑↑SwedenElderly care homes

→→↑↑SpainInspection, certification and technological services

↑↑↓↓UKWaste management solutions provider

→→↑↑UKAirport operator

↑↑↑↑BelgiumElectronic publisher of company information

↑↑↑↑UKSpecialist courier services for the pharmaceutical industry

↓↓→→GermanyProvider of services and technical solutions for utilities

↓↓↑↑GermanyPublishing group.

↑↑↓↓FranceManufactures speciality chemicals for the construction industry

↓↓↓↓FranceDrug development and manufacturer

→→↑↑TaiwanCable operator

↓↓↓↓GermanySupplier of fire protection systems and services

→→→→FrancePrivate clinical and routine laboratories

↑↑↑↑USAProvider of correctional products and services

↓↓↓↓SpainTour operator

↑↑↑↑FranceManufacturer of medical diagnosis equipment

→→→→FranceTextile rental and cleaning

↓↓↑↑FrancePrivate clinic manager

BUDGETLAST YEARCOUNTRYBUSINESS


Investment Portfolio Top 10 equity assets

↑↑↓↓UKWaste management solutions provider

→→↓↓UKInsurance and roadside assistance

→→↑↑SpainInspection, certification and technological services


↑↑↑↑FranceManufacturer of medical diagnosis equipment

↑↑↑↑GermanyHome delivery of frozen foods

→→↓↓NetherlandsWaste and environmental management

↑↑↓↓FranceLivestock identification systems

→→↑↑TaiwanCable operator

↑↑↑↑USAFixed satellite service operator

BUDGETLASTYEARCOUNTRYBUSINESS


Investment Portfolio Top 10 Junior Mezzanine (PIK) assets

↓↓↓↓FranceDrug development and manufacturer

↑↑↑↑AustraliaCredit bureau

→→→→FrancePrivate clinical and routine laboratories

↑↑↑↑BelgiumElectronic publisher of company information

↑↑↑↑AustraliaCinema owner and operator

↓↓↓↓USAShare registry and corporate administration

→→↑↑SwedenElderly care homes

→→↑↑UKBusiness management software and outsourcing services


↓↓↑↑FrancePrivate clinic manager

BUDGETLASTYEARCOUNTRYBUSINESS


0

50

100

150

200

250

H1 08 H2 08 H1 09 H2 09 H1 100

5

10

15

20

25

Gross Provisions (LHS) Number of companies (RHS)

Investment Portfolio Trend in Gross Provisions for Portfolio Companies

Gross Provisions in £m Number of companies


Investment Portfolio Example of Restructuring: Q-Matic

Strongly impacted by economic downturn due to exposure to banking and retail sectors

ICG’s position protected through early actions of Restructuring Team Proactive role: led negotiations resulting in consensual solution

Equity injection by sponsor (junior to ICG capital) Junior Mezzanine converted into Equity Senior Mezzanine converted into Junior Mezzanine

Supported appointment of new management team with turnaround credentials who are already delivering value

EBITDA recovered, now above last year; Good prospect for recovery of impairments and potential capital gains in medium term


Financial Review


18

Core Income

Core Income up 11% to £94.1m

84.694.1

4.2

6.9

14.4 1.36.3

0

25

50

75

100

Sep-08 Interest income

Dividendincome

Interestexpense

Fee income Costs Sep-09

£m


Interest Expense

Interest expense down 30% to £33.5m (H1 09: £47.9m)

Impact of lower interest rates circa £25m

But higher net debt over the period, FX impact and higher fees partly offset

above impact

Interest expense will be higher in H2 due to:

Front end fees on extended facilities

New investments will drive increase in borrowing

Partly offset by Rights Issue proceeds available for full period (received mid

August)


Fee income from Mezzanine and Related Funds

Fee income up 50% to £20.4m (H1 09: £13.6m)

Carry from European 2000 Fund of £1.7m vs £0.7m in H1 09

Recovery Fund contributed for the first time

Asia Pacific 08 contributed in full (H1 09 still impacted by placement fees) at 1.75% on committed

Positive currency impact (Euro and US Dollar funds)

Fee income will be lower in H2 due to:

No Carry expected

Recovery Fund fee impacted by placement agent fee on additional commitments

European Fund 06 (€1.25bn of equity) and Asia Pacific 08 ($600m) negatively affected by 25bps

reduction in management fees agreed to lower co investment commitment


Fee income from CFM Funds

Fee income down 38% to £6.9m (H1 09: £11.1m) due to lower level of junior fees and the absence of performance fee

H2 Fee income expected to be broadly in line with H1

H1 09 H1 10 H1 09 H1 10

Senior Fees All funds All CDOs & Others except Opps 3.6 3.6

Junior Fees (CDOs only) 10 out of 10 4 out of 10 6.3 3.3

Performance Fees 9 out of 10 4 out of 10 1.2 0

11.1 6.9

Fee incomeBackground


Breakdown of Operating Costs (Excluding MTIS)

0

10

20

30

40

H1 07 H2 07 H1 08 H2 08 H1 09 H2 09 H1 100

25

50

75

100

Other Admin

Staff Costs

% of CI (RHS)

£m %


23

Balance Sheet

30 Sept 2009£m

31 March 2009£m

31 March 2008£m

Loans and investments 2,851 2,923 2,360

Net current liabilities -72 -52 -90

2,779 2,871 2,270

Shareholders' funds 1,112 776 896

Borrowings 1,667 2,096 1,374

2,779 2,871 2,270

Gearing ratio 150% 270% 148%Debt facilities 2,233 2,403 2,379

Headroom 566 312 1,005


Covenants

Continued to operate comfortably within covenants

Minimum Net Worth: Shareholders’ funds of £1,112m, well above minimum of £654m

Gearing currently 150% against internal comfort level of 200%-300% and well below maximum covenant levels (375%)

Adjusted Interest Cover of over 2 times vs minimum covenant level of 1.6


Cash Core Income

0

20

40

60

80

100

FY 06 FY 07 FY 08 H1 09 H2 09 H1 10

Cash core income calculation:

Core income: £94.1m

Less accrued PIK £(66.6)m

Plus PIK realised £10.2m

Cash core income £37.7m

Cash core income in £m


Financial Outlook

Core income for FY 10 expected to be above FY 09 level; lower core income in H2 primarily due to higher interest expense and lower mezzanine fee income

On track to realise 15% of portfolio by June 2011

We will be disappointed if provisions in H2 are as high as in H1


Future Communication

Investor Day on 16 March 2010

Fund management strategy

New reporting structure


Fund Management


Third party funds under management

€0bn

€1bn

€2bn

€3bn

€4bn

€5bn

€6bn

€7bn

€8bn

€9bn

€10bn

FY 00 FY 01 FY 02 FY 03 FY 04 FY 05 FY 06 FY 07 FY 08 FY 09 H1 10

CFM Funds Mezzanine Funds


5-year Vintage

10-yearVintage

20-yearHistory

19%

1.6x

25%

1.6x

19%

1.7x

£0.4bn £1.6bn £2.4bn

27 112 222

IRR

Cash Multiple

Investment Cost

Realised Investments

ICG Mezzanine Track Record Mezzanine Performance by Vintage


Conclusion


Conclusion

Investments will resume in H2

Portfolio continues to show resilience

Greater optimism about exits and repayments

New fund raising difficult but good momentum

“We aim to be a leading alternative asset manager specialisingin mezzanine capital, buyout debt and related asset classes”


Appendix


34

Extended Debt Repayment Schedule

£m

0

100

200

300

400

500

600

700

H1 10 H2 10 H1 11 H2 11 H1 12 H2 12 H1 13 H2 13 H1 14 H2 14 H2 24

Securitisation Private Placements Revolver £450/338m Facility

…

£m

0

100

200

300

400

500

600

700

H1 10 H2 10 H1 11 H2 11 H1 12 H2 12 H1 13 H2 13 H1 14 H2 14 H2 24…

Initial Maturity Schedule - pre extensions

Extended Maturity Schedule


Core Income

H1 10£m

H2 09£m

H1 09£m

H2 08£m

H1 08£m

H1 10vs

H1 09

Income

Interest income 136.0 153.5 140.2 127.6 103.2 -3%

Dividend income 1.1 2.6 7.4 3.3 2.8 -85%Fee and other operating income 28.1 30.1 29.4 26.7 30.3 -4%

165.2 186.2 177 157.6 136.3 -7%

Less related expensesInterest payable and other related finance costs (25.9) (29.6) (65.9) (12.9) (25.4) -61%

Add back: net losses on derivateves held for hedging purposes (7.6) (26.3) 18.0 (27.1) (9.1) -142%

Deduct: additional income recognised on interest bearing equity - (5.1) - - - -

Administrative & operating expenses (37.6) (41.6) (44.5) (46.5) (36.5) -16%

Core Income 94.1 83.6 84.6 71.1 65.3 11%

Core Income per share* 22.3p 27.4p 27.6p 26.9p 24.1p -19%

* restated for Rights Issue completed in July 2009


Net Interest Income

H1 10£m

H2 09£m

H1 09£m

H2 08£m

H1 08£m

H1 10vs

H1 09

Interest Income 136.0 153.5 140.2 127.6 103.2 -3%

Interest Expenses (33.5) (55.9) (47.9) (40.0) (34.5) -30%

Net Interest Income 102.5 97.6 92.3 87.6 68.7 11%


Fee Income

H1 10£m

H2 09£m

H1 09£m

H2 08£m

H1 08£m

H1 10vs

H1 09

Transaction Fees 0.8 1.3 4.7 3.3 3.9 -83%

Mezzanine Fund Management fees 20.4 18.2 13.6 14.2 17.0 50%

Credit Fund Management fees 6.9 10.6 11.1 9.2 9.4 -38%

28.1 30.1 29.4 26.7 30.3 -4%


Operating Expenses

* Charge relates to accrual of rolled up interest

H1 10£m

H2 09£m

H1 09£m

H2 08£m

H1 08£m

H1 10vs

H1 09

Staff Costs 13.2 19.0 23.4 23.5 19.7 -44%

Other admin costs 8.9 11.4 8.9 11.1 8.4 0%

22.1 30.4 32.3 34.6 28.1 -32%

Medium Term Incentive scheme* 15.5 11.2 12.2 11.9 8.4 27%

Operating Expenses 37.6 41.6 44.5 46.5 36.5 -16%

Expenses as % of core income 40.0% 49.8% 52.6% 65.4% 55.9%


Gains on Investments

H1 10£m

H2 09£m

H1 09£m

H2 08£m

H1 08£m

H1 10vs

H1 09

Realised gains on investments 1.1 12.4 18.5 43.3 90.6 -94%

Unrealised gains on investments 3.3 (1.4) 1.4 (5.2) 6.5 136%

Cost of medium term incentive scheme (0.9) (2.2) (3.9) (12.1) (20.2) -77%

Net gains on investments 3.5 8.8 16.0 26.0 76.9 -78%


Impairments

H1 10£m

FY 09 £m

H2 09£m

H1 09£m

H2 08£m

H1 08£m

H1 10vs

H1 09

Mezzanine and equity investment Gross Impairment 99.4 266.3 212.1 54.2 33.8 16.4 83% Recoveries (2.3) (28.7) (3.1) (25.6) (4.2) (10.6) -91%

Equity in ICG - managed CDO's Gross Impairment - 35.6 21.4 14.2 7.1 3.5 -100% Recoveries - - - - - - -

Impairments net of write backs 97.1 273.2 230.4 42.8 36.7 9.3 127%


22 38 50

266

99

-50

0

50

100

150

200

250

300

350

Mar-06 Mar-07 Mar-08 Mar-09 H1 2010

Mezz Recoveries CDO

Breakdown of Provisions

£m Gross Provisions/ Closing Loan Book (ex CDOs)

FY 06: 2.1%

FY 07: 2.2%

FY 08: 2.2%

FY 09: 9.1%

H1 10: 3.6%

36

(29)


Pre-tax profits / loss

H1 10£m

H2 09£m

H1 09£m

H2 08£m

H1 08£m

H1 10vs

H1 09

Interest income 136.0 153.5 140.2 127.6 103.2 -3%

Dividend income 1.1 2.6 7.4 3.3 2.8 -85%

Gains on investments 4.4 11.0 19.9 38.1 97.1 -78%

Fee and other operating income 28.1 30.1 29.4 26.7 30.3 -4%

169.6 197.2 196.9 195.7 233.4 -14%

Interest payable and other related financing costs (33.5) (55.9) (47.9) (40.0) (34.5) -30%

Impairment of assets (97.1) (230.3) (42.8) (36.7) (9.3) 127%

Administrative expenses (38.5) (43.8) (48.4) (58.6) (56.7) -20%

Profit before tax* 0.5 (132.8) 57.8 60.4 132.9 -99%

Fair value movements 7.6 26.3 (18.0) 27.1 9.1 -142%

Profit before tax 8.1 (106.5) 39.8 87.5 142.0 -80%


Pre-tax Profits, Earnings per Share & Dividends

H1 10£m

H2 09£m

H1 09£m

H2 08£m

H1 08£m

H1 10vs

H1 09

Pre-tax profit* 0.5 (132.8) 57.8 60.4 132.9 -99%

Pre-tax profit 8.1 (106.5) 39.8 87.5 142.0 -80%

Earning per share** 0.6p (47.4)p 12.3p 36.3p 52.0p -95%

Dividend per share** 6.0p 8.5p 8.5p 18.8p 7.7p -29%

* Restated for Rights Issue completed in July 2009

** Excluding fair value movements in derivatives held for accounting purposes


Cash Core Income

H1 10£m

H2 09£m

H1 09£m

H2 08£m

H1 08£m

H1 10vs

H1 09

Core Income 94.1 83.6 84.6 71.1 65.3 11%

Rolled Up Interest net of MTIS (66.6) (66.9) (61.7) (40.6) (61.3) 8%PIK realised net of MTIS 10.2 4.4 9.4 10.6 39.6 9%

Cash Core Income 37.7 21.1 32.3 41.1 43.6 17%


Discount element inherent in the 7 for 2 Rights Issue at 121p per share Rights Issue

Share price on last day cum rights was 490.5p per share

The theoretical ex-rights price is:

The price adjustment/rebasing factor is:

The rebased dividend is therefore:

Dividend Adjustment Due to July 2009 Rights Issue

11.2039

5.49021217

pp 98.1641*41409.0

41409.05.49011.203


Disclaimer

The materials being provided to you are intended only for informational purposes and convenient reference.

This information is not intended to provide, and should not be relied upon, for accounting, legal, tax advice or investment recommendations. You should consult your tax, legal, accounting or other advisors about the issues discussed herein. The descriptions contained herein are summaries and are not intended to be complete.

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

Neither Intermediate Capital Group PLC (“ICG”) or any of its affiliates makes any representation or warranty, express or implied as to the accuracy or completeness of the information contained herein, and nothing contained herein shall be relied upon as a promise or representation whether as to past or future performance.

Distribution of this material to any person other than the person to whom this information was originally delivered and to such person’s advisors is unauthorised and any reproduction of these materials, in whole or in part, or the disclosure of any of their contents, without the prior consent of ICG or its affiliates is prohibited.

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

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

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