3i Group Plc · LSE:III
3i — H1 2002/03 Earnings Presentation
28 slides from 3i's earnings presentation, Nov 14, 2002
Slide 1: Interim results to 30 September 2002
Interim results to 30 September 2002 1
Slide 2: Interim results to 30 September 2002, 14 November 2002
Interim results to 30 September 2002 14 November 2002 2
Slide 3: Key messages
Interim results to 30 September 2002 Brian Larcombe Key messages • Significant outperformance of benchmark indices • Strong cash flow • Good market position • Continued business development programme ‘A robust performance 3i total return (14.4)% in a difficult climate’ FTSE All-Share (28.4)% FTSE 10
Slide 4: Global investment and fundraising trends
Interim results to 30 September 2002 Brian Larcombe Global investment and fundraising trends US$bn 250 200 150 100 50 0 1997 1998 1999 2000 2001 Investment: compound average growth rate of 14% pa Funds raised: compound average growth rate of 9% pa Source: 3i/PwC Global Private Equity 2002 4
Slide 5: 3i UK Barometer Index - historical series
Interim results to 30 September 2002 Brian Larcombe 3i UK Barometer Index - historical series 200 150 100 50 0 -50 -100 -150 -200 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 19 19 19 19 19 19 19 19 19 19 19 19 20 20 20 5
Slide 6: 10 largest investments made in six months to 30 September 2002
Interim results to 30 September 2002 Brian Larcombe 10 largest investments made in six months to 30 September 2002 6
Slide 7: 10 largest realisations made in six months to 30 September 2002
Interim results to 30 September 2002 Brian Larcombe 10 largest realisations made in six months to 30 September 2002 7
Slide 8: Investment - balanced by product
Interim results to 30 September 2002 Brian Larcombe Investment - balanced by product £m 600 600 Early stage technology Growth capital 500 Buy-outs 271 439 400 393 149 95 300 143 122 115 200 100 186 175 176 0 6 months 6 months 6 months to 30.9.01 to 31.3.02 to 30.9.02 8
Slide 9: Buy-out markets
Interim results to 30 September 2002 Brian Larcombe Buy-out markets • Strong market position across Europe • Proprietary deal flow • Value added emphasis 9
Slide 10: European and US early stage market
Interim results to 30 September 2002 Brian Larcombe European and US early stage market • Difficult times • Upside potential and low value base • Processes strengthened • International sector teams 10 10
Slide 11: Growth capital
Interim results to 30 September 2002 Brian Larcombe Growth capital • Regional business • Traditional sectors • Chris Rowlands appointed to lead product across Europe 11 11
Slide 12: Continuing business improvement
Interim results to 30 September 2002 Brian Larcombe Continuing business improvement • Strategy • Investment and portfolio processes • Board and management • Networking activities 12 12
Slide 13: Portfolio management
Interim results to 30 September 2002 Brian Larcombe Portfolio management • “3i is an investor, not a shareholder” • 3i chairmen • Stringent performance monitoring • Management development • Effective exit management 13 13
Slide 14: Financial review
Michael Queen Financial review 14
Slide 15: Financial highlights
Interim results to 30 September 2002 Michael Queen Financial highlights • Total return on opening shareholders’ funds (14.4)% − outperformance of benchmark indices • Net asset value 548p • Interim dividend 4.9p • Net cash inflow £274m • Strong balance sheet 15 15
Slide 16: Total return
Interim results to 30 September 2002 Michael Queen Total return £m Revenue profit 47 Capital profits - Realised capital profits 118 - Unrealised value movement (701) Costs allocated to capital, tax and currency (34) Total return (570) 16 16
Slide 17: Revenue profit
Interim results to 30 September 2002 Michael Queen Revenue profit 2001/02 2002/03 First half First half £m £m Income from investments 146 108 Fees 32 28 Net interest payable (33) (35) Costs (63) (53) Costs of organisational change (9) - Goodwill (2) - Profit before tax 71 48 Tax (2) (1) Profit after
Slide 18: Realised capital profits
Interim results to 30 September 2002 Michael Queen Realised capital profits 2001/02 2002/03 First half First half £m £m Total proceeds and repayments 456 619 Net realised capital (loss)/profit (5) 118 Equity realisations - proceeds 369 369 - net realised profit 5 122 - equity uplift over value 1% 49
Slide 19: Unrealised value movement
Interim results to 30 September 2002 Michael Queen Unrealised value movement £(701)m £m (192) Quoted portfolio (212) PE movement Earnings growth 38 Provisions (141) Downrounds (130) Other (64) 19 19
Slide 20: Net cash flow
Interim results to 30 September 2002 Michael Queen Net cash flow 2001/02 2002/03 First half First half £m £m Investment (493) (299) Return flow 617 624 Net investment cash flow 124 325 Acquisition of Atle (330) - Other (14) (51) Net cash inflow/(outflow) (220) 274 20 20
Slide 21: Net cash flow - long term trend
Interim results to 30 September 2002 Michael Queen Net cash flow - long term trend £m 2000 Cash inflow Cash outflow 1500 Net cash flow 1000 500 0 -500 -1000 -1500 -2000 6 months 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 to 30.9.02 for year to 31 March 21 21
Slide 22: Balance sheet
Interim results to 30 September 2002 Michael Queen Balance sheet 30.9.01 31.3.02 30.9.02 £m £m £m Investment portfolio 5,044 5,109 4,251 Other net assets 126 23 10 5,170 5,132 4,261 Net borrowings 1,316 1,187 911 Shareholders’ funds 3,854 3,945 3,350 5,170 5,132 4,261 Gearing 34% 30% 27% 22 22
Slide 23: Portfolio analysis
Interim results to 30 September 2002 Michael Queen Portfolio analysis Portfolio by value at 30 September 2002 6% Value No of companies 20% Quoted £251m 106 Early stage £837m 568 43% Growth capital £1,324m 902 Buy-outs £1,839m 798 Total £4,251m 2,374 31% Excludes managed funds 23 23
Slide 24: Third party funds under management
Interim results to 30 September 2002 Michael Queen Third party funds under management 7% 2% 5% 5% Quoted 3i European Technology £41m 9% 3i Smaller Quoted Companies £103m 3i Bioscience £116m 3i Group Pension Plan £197m Unquoted European Buy-out Funds £1,580m Other Unquoted Funds £159m Total £2,196m T
Slide 25: Comparative return
Interim results to 30 September 2002 Michael Queen Comparative return After 3 years - 3.8% - 11.7% - 12.7% - 9.8% After 5 years 3.0% - 3.6% 3i - 4.3% - 2.2% FTSE All-Share FTSE 100 After 7 years FTSE SmallCap (ex IT) 7.0% 3.6% 3.9% 1.8% After 10 years 12.8% 7.6% 7.4% 7.4% 25 25
Slide 26: Financial summary
Interim results to 30 September 2002 Michael Queen Financial summary • Positive cash flow from investment activities • Continued record of longer term outperformance • Strong balance sheet 26 26
Slide 27: Update
Interim results to 30 September 2002 Brian Larcombe Update • New investment pipeline increasing • Likely net investment in second half • Continuing realisations 27 27
Slide 28: Interim results to 30 September 2002
Interim results to 30 September 2002 28 28