The slide in reported profit from Intermediate Capital (ICP) at the half-year stage isn't so worrying. It reflects a 58 per cent fall in profits at the mezzanine finance specialist's investment operation, which benefited from an especially large single realisation in the first half of last year. More importantly, the figures revealed further progress with the strategic shift towards asset management.
Total assets under management rose 6 per cent to €13.7bn (£11bn), and profits from the fund management division soared 60 per cent to £26.7m, mainly thanks to a £10.3m increase in performance fees to £15.8m. Growth in performance fees should be an ongoing trend for the group, reckon analysts at broker Numis Securities, as the business mix continues to shifts towards asset management. The less capital-intensive nature of asset management should also help the group reach its targeted 13 per cent return on equity (from just under 10 per cent now).
Meanwhile, the investment business - essentially a lending operation focused on mid-sized corporates - saw impairments drop to just £21.1m, from £76.3m a year ago. While mainstream banks remain cautious about lending to the niche served by Intermediate, rival specialists are becoming increasingly active. More competition explains why the loan book fell 10 per cent year-on-year to £1.8bn.
Numis expects full-year EPS to fall to 29.8p, from 35.7p in 2014, before rising to 33.8p in 2016.
INTERMEDIATE CAPITAL (ICP) | ||||
|---|---|---|---|---|
| ORD PRICE: | 431p | MARKET VALUE: | £1.70bn | |
| TOUCH: | 430-431p | 12-MONTH HIGH: | 475p | LOW: 362p |
| DIVIDEND YIELD: | 4.9% | PE RATIO: | 20 | |
| NET ASSET VALUE: | 368p | NET DEBT: | 32% | |
| Half-year to 30 Sep | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2013 | 310 | 155 | 32.0 | 6.6 |
| 2014 | 177 | 85 | 18.2 | 6.9 |
| % change | -43 | -45 | -43 | +5 |
Ex-div: 4 Dec Payment: 8 Jan | ||||
