Philip Keller on ICG’s results and future growth

This is your first set of year-end results. Take us through the

What these results show is the expanding scale of the business over the last
12 months, on so many different levels. To pick out a few numbers, obviously the
most significant driver of the profit before tax has been the capital gains
increase of £197m, and that compares to £145m, which was for a 14-month period
that ended in March 2006.

The core income, which is the underlying income excluding the capital gains,
increased by 23% over the prior year. That 23% growth, in a period of time when
we’ve invested a huge amount in the business and infrastructure is a really
important result.

So what’s been the impact of declining spreads on your results?

The actual impact on this set of results is limited. This set of results is
mainly impacted by the deals that we’ve done in earlier periods, so we should
see that flow through into the current results.

Costs have increased by over 60%. Why is that?

Costs went up by £39m to just over £100m. And, of course, some of it is just
the scale of the business. We increased headcount from 80 to 102 people, and the
loan book has grown by 17 per cent, so we are just a larger business. We’ve
invested in new offices, as we talked about before, in Tokyo and Sydney. And
also we continue to invest in the infrastructure of the business and we brought
on a number of professionals in the support functions.

The final area where costs have increased is in our legal and professional
fees. We’ve restructured the balance sheet; that had a cost attached. We’ve also
raised funds in the year, and those costs have been largely expensed during the

When you presented the interim results, you mentioned you wanted to look at
the strength and the efficiency of the balance sheet. So what changes have you

We’ve looked at our three major borrowing facilities and all of those have
been amended in some way. From a quantum point of view, all of them are larger,
so we’ve gone from £1.5bn of facilities to £2bn.

We’re taking advantage of the liquid markets and the pricing is more
beneficial for us. We have got more flexibility in terms of the jurisdictions,
geographies, that we can invest in, in terms of the types of investment, where
on the balance sheet we can invest and what grade of debt we can invest in.

What are your priorities for the coming year?

I want to continue a lot of work that we’re doing on the risk management

We’re looking hard at tax and at treasury; particularly on the treasury side.
As I mentioned at the half-year, we changed our treasury policy and we’ve done a
lot of work on making sure that’s much more aligned to the way the business
model has changed and particularly the dynamics of pricing and specifically
roll-up rather than cash paid interest.

The other area which I’m really going to focus on is the infrastructural or
the support functions of the business. I want us to continually evolve those so
that we’re supporting the investment side.

We are really backing up what we think is an exceptionally good investment
team and network around the world, with very good support systems and colleagues
in those functions that can allow the business to over-perform.

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