Since being caught badly short in the 2008-09 global financial crisis, Intermediate Capital Group (ICP) has spent the past decade trimming its own relative exposure to the debt instruments in which it now largely invests on behalf of institutional clients. As full-year numbers show, some risks do still remain.
While fund management company profits leapt more than a quarter on the back of €10.2bn (£9.1bn) in new money raised, group-level earnings were hit by a £68.6m loss in ICG’s balance sheet-funded investment arm. That was down from a profit of £39.1m in the previous year and reflected net unrealised losses of £152m in March alone – a figure that erased three-quarters of the investment returns generated in the first 11 months of the financial year.
There was also an ominous – if expected – warning on the shape of the group’s portfolio of collateralised loan-obligations (CLOs), debt instruments invested in leveraged companies with weak credit ratings even before the pandemic struck. The fair values of those assets are derived from assumptions about expected default rates, which have increased from 3 to 8 per cent a year, although management says that current economic uncertainty means it is not possible to determine “the extent of any further unrealised or realised losses”.
Analysts at Canaccord Genuity described the results as “better than expected” and now forecast adjusted earnings of 99.3p per share for the year to March 2021.
|Intermediate Capital (ICP)|
|ORD PRICE:||1,346p||MARKET VALUE:||£3.8bn|
|DIVIDEND YIELD:||3.8%||PE RATIO:||36|
|NET ASSET VALUE:||459p||NET DEBT:||62%|
|Year to 31 Mar||Fee & operating income (£m)||Pre-tax profit (£m)||Earnings per share (p)||Dividend per share (p)|
|Ex Div:||18 Jun|