3i Group Plc · LSE:III
3i — 3i Smaller Quoted Companies Trust — H1 2002 Earnings Presentation
24 slides from 3i's earnings presentation, Oct 10, 2002
Slide 1: 3i Smaller Quoted Companies Trust Interim results to 31 August 2002
3i Smaller Quoted Companies Trust Interim results to 31 August 2002 1
Slide 2: Interim results 6 months to 31 August 2002
3i Smaller Quoted Companies Trust plc Interim results 6 months to 31 August 2002 Mike Prentis 10 October 2002 2
Slide 3: Investment objective and strategy
3i Smaller Quoted Companies Trust Interim results to 31 August 2002 Investment objective and strategy • Investment objective − to achieve long term capital growth above the benchmark − the benchmark is FTSE SmallCap Index excluding Investment Companies • Strategy − focus on stockpicking, combined wi
Slide 4: Highlights
3i Smaller Quoted Companies Trust Interim results to 31 August 2002 Highlights • Markets have been highly volatile • NAV per share − 3i SQC -16.5% − benchmark -16.7% • 3i new issues purchased outperformed by 28% (weighted average) • Earnings 2.59p (2.85p including special dividend), same period last
Slide 5: Attribution analysis
3i Smaller Quoted Companies Trust Interim results to 31 August 2002 Attribution analysis (1) % Benchmark (16.7) % Outperformance at portfolio level 1.9 Sector allocation (0.9) Portfolio performance (2) (14.8) Stock selection 3.7 Effect of gearing (3) (1.3) Intra month (0.9) Expenses (4) (0.3) adjust
Slide 6: Portfolio performance
3i Smaller Quoted Companies Trust Interim results to 31 August 2002 Portfolio performance • 3i IPOs - weighted average outperformance 28% • M&A activity - weighted average gain 36% • Good stock selection in long term “growth” sectors* − underweight loss makers • Sector impact - insurance, informatio
Slide 7: Initial public offerings
3i Smaller Quoted Companies Trust Interim results to 31 August 2002 Initial public offerings • 1.4%* of portfolio (2002 - 1.4%*) • 4 IPOs taken − Corin**, Parkdean Holidays**, Property Fund Management**, Mouchel − strong performances from Corin (since sold) and PFM − average increase 7%, outperforma
Slide 8: Takeovers
3i Smaller Quoted Companies Trust Interim results to 31 August 2002 Takeovers • More activity in smaller companies than larger companies • Portfolio activity 7.5%* (2002 - 1.3%*) • Dixon Motors, jazz fm, Brake Brothers, Saville Gordon − increased 36% on average • Continuing? - Grantchester * As % of
Slide 9: Stock selection - best and worst sectors
3i Smaller Quoted Companies Trust Interim results to 31 August 2002 Stock selection - best and worst sectors % 10 0 -10 -20 -30 -40 -50 -60 Speciality & Chemicals Construction Electronic & restaurants IT hardware equipment & building electrical hotels & Leisure, materials finance other Benchmark wei
Slide 10: Stockpicking
3i Smaller Quoted Companies Trust Interim results to 31 August 2002 Stockpicking • Purchases: amongst the things we look for are − attractively valuations; P/E,PEG − good yields − positive cash flow, good cash returns − domestic bias − benefiting from government spending − market growth, good market
Slide 11: Sector allocation - best and worst decisions
3i Smaller Quoted Companies Trust Interim results to 31 August 2002 Sector allocation - best and worst decisions Telecom services Aerospace & defence Pharmaceuticals Health Software & computer services Insurance -40 -30 -20 -10 0 10 20 30 40 Underweight/underperform % Overweight/outperform FTSE Smal
Slide 12: Gearing
3i Smaller Quoted Companies Trust Interim results to 31 August 2002 Gearing %/£m Policy 10 • £10m net borrowing when view on 9 market neutral (was 10% gearing) 8 7 Current objective 6 • keep below the neutral net borrowing 5 level 4 Average gearing over the period 3 • 5.4% 2 1 Facilities 0 • £15m 7.
Slide 13: Strategy for adding value
3i Smaller Quoted Companies Trust Interim results to 31 August 2002 Strategy for adding value “Playing to 3i’s strengths” • Use the 3i network • Companies well known to 3i − 43.5% of portfolio current/ former* 3i Group investments • Invest in initial public offerings • Early stage growth - aim to id
Slide 14: Largest sector positions compared with benchmark
3i Smaller Quoted Companies Trust Interim results to 31 August 2002 Largest sector positions compared with benchmark Speciality & other finance Aerospace & defence Support services Construction & building materials Transport Insurance Engineering & machinery Automobiles General retailers Real estate
Slide 15: Outlook
3i Smaller Quoted Companies Trust Interim results to 31 August 2002 Outlook • Uncertainties − weak GDP growth − conflict in Iraq • Smaller companies offer good medium term value − UK economy relatively healthy, and many small caps are domestically focussed − valuations reasonable − medium term growt
Slide 16: Positioning for the future
3i Smaller Quoted Companies Trust Interim results to 31 August 2002 Positioning for the future • Looking for capital growth, but also providing a reasonable yield to shareholders • Use 3i’s knowledge base and network • Manage risks against benchmark • Well placed for initial public offerings • Moder
Slide 17: Appendices
Appendices 17
Slide 18: Market capitalisation profile of the portfolio compared with the benchmark index
3i Smaller Quoted Companies Trust Interim results to 31 August 2002 Market capitalisation profile of the portfolio compared with the benchmark index % 60 50 40 30 20 10 0 200m 300m 400m 500m £0-100m £100- £200- £300- £400- £500m+ 3i SQC FTSE SmallCap (ex ICs) As at 30 September 2002 Source: Deutsche
Slide 19: 20 largest holdings at 31 August 2002
3i Smaller Quoted Companies Trust Interim results to 31 August 2002 20 largest holdings at 31 August 2002 Investment Market value % of total PE ratio at Business activity (£’000) portfolio 31/08/02* Ultra Electronics 2,903 2.7 14.2 Manufacturer of defence electronics Holdings Taylor & Francis 2,835
Slide 20: 20 largest holdings at 31 August 2002 cont'd
3i Smaller Quoted Companies Trust Interim results to 31 August 2002 20 largest holdings at 31 August 2002 cont’d Investment Market value % of total PE ratio at Business activity (£’000) portfolio 31/08/02* Expro International 2,123 2.0 16.0 Provider of services to the oil industry Group BSS Group 1,
Slide 21: Shareholder analysis
3i Smaller Quoted Companies Trust Interim results to 31 August 2002 Shareholder analysis % shareholding Insurance companies 23 Pension funds 26 Institutionally managed private clients 12 Investment/Unit trusts 14 Charities 8 Individuals 6 Other institutional 4 Market makers 7 As at 31 August 2002 So
Slide 22: Board
3i Smaller Quoted Companies Trust Interim results to 31 August 2002 Board William Govett (65) Non-executive Chairman Non-executive director of Clerical Medical Investment Management Limited and Govett European Enhanced Investment Trust plc. Richard Brewster, FCA (56) Non-executive director Chief exe
Slide 23: Disclaimer
3i Smaller Quoted Companies Trust Interim results to 31 August 2002 Disclaimer This document contains details of the 3i Smaller Quoted Companies Trust (“3i SQC”) for the period ended 31 August 2002 and is a summary of an oral presentation (“Presentation”) of those results by executives of 3i Investm
Slide 24: thank you
thank you Other information, www.3i.com 24
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