3i Group plc · LSE:III
3i — FY2005 Earnings Presentation
38 slides from 3i's earnings presentation, May 12, 2005
Slide 1: Results for year ended 31 March 2005
Results for year ended 31 March 2005 1
Slide 2: Preliminary results year ended 31 March 2005
Preliminary results year ended 31 March 2005 12 May 2005 2
Slide 3: Welcome
Welcome Baroness Hogg Chairman 3
Slide 4: Overview
Overview Philip Yea Chief Executive 4
Slide 5: Agenda
Results for year ended 31 March 2005 Philip Yea Agenda Chief Executive’s overview Philip Yea Financial review Simon Ball Closing remarks Philip Yea Q&A The team 5
Slide 6: The team
Results for year ended 31 March 2005 Philip Yea The team Jonathan Russell Michael Queen Jo Taylor Paul Waller Chris Rowlands Rod Perry Simon Ball Denise Collis Tony Brierley 6
Slide 7: Key messages
Results for year ended 31 March 2005 Philip Yea Key messages • Strong performance in the year with excellent realisations • Strategic progress • Return of capital to shareholders 7
Slide 8: Performance highlights
Results for year ended 31 March 2005 Philip Yea Performance highlights • A total return of £512m − 15.9% on opening shareholders’ funds • Realisations of £1.3bn − £1.7bn including co-investment funds • Investment of £755m − £962m including co-investment funds • International business now 56% of new
Slide 9: Portfolio value and gross returns by business line
Results for year ended 31 March 2005 Philip Yea Portfolio value and gross returns by business line Portfolio by value £4,301m* 2005 2004 Buyouts 36% Buyouts 22% 25% Growth Capital 24% 23% Venture Capital 11% 5% Growth Capital 29% SMI 7% 17% Venture Capital 17% Gross portfolio return 18% 19% SMI 18%
Slide 10: Trend in total portfolio number
Results for year ended 31 March 2005 Philip Yea Trend in total portfolio number No 3000 2874 2759 2606 2500 2162 2000 1878 SMI 1502 1500 SMI 807 1000 500 695 0 2000 2001 2002 2003 2004 2005 Year to 31 March 10
Slide 11: Buyouts
Results for year ended 31 March 2005 Philip Yea Buyouts • The market • 3i • Strategy 11
Slide 12: Growth Capital
Results for year ended 31 March 2005 Philip Yea Growth Capital • The market • 3i • Strategy 12
Slide 13: Venture Capital
Results for year ended 31 March 2005 Philip Yea Venture Capital • The market • 3i • Strategy 13
Slide 14: Short term outlook
Results for year ended 31 March 2005 Philip Yea Short term outlook • Good start to 2005/2006 • Healthy forward pipeline 14
Slide 15: Vision
Results for year ended 31 March 2005 Philip Yea Vision 3i shall be the private equity firm of choice • Operating on a world-wide scale • Producing consistent market beating returns • Acknowledged for our partnership style • Winning through our unparalleled resources 15
Slide 16: World-wide scale
Results for year ended 31 March 2005 Philip Yea World-wide scale Trend in international portfolio value Asian development % • China (Shanghai opening) 50 48% 42% • India (MD recruited) 40 37% 34% 29% • Japan 30 22% • Direct and through 20 relationships 10 0 2000 2001 2002 2003 2004 2005 Year to 31 M
Slide 17: Consistent market beating returns
Results for year ended 31 March 2005 Philip Yea Consistent market beating returns Gross portfolio return £762m Return as % of opening portfolio 18% Net portfolio return £554m Return as % of opening portfolio 13% Total return £512m Return as % of opening shareholders’ funds 15.9% 17
Slide 18: Partnership style
Results for year ended 31 March 2005 Philip Yea Partnership style • Partnership models − In every business line − Reinforced by carry • Partnership behaviours − New Group HR Director • Evidence − Key recruitments (Germany, India, Marketing) 18
Slide 19: Winning through our resources
Results for year ended 31 March 2005 Philip Yea Winning through our resources • Group Markets − Sector group resources strengthened − UK market realignment − German market realignment • Strategic − Growth Capital − Infrastructure − Venture 19
Slide 20: Simon Ball, Finance Director
Simon Ball Finance Director 20
Slide 21: Financial performance highlights
Results for year ended 31 March 2005 Simon Ball Financial performance highlights • Total return £512m • Total return on opening shareholders’ funds 15.9% • Final dividend 9.3p • Net asset value per share 603p • Realisation proceeds £1.3bn − Including co-investment funds £1.7bn • Realised profits on
Slide 22: Total return
Results for year ended 31 March 2005 Simon Ball 2004 Total return 2005 (as restated) £m £m Realised profits on disposal of investments 260 228 Unrealised profits on revaluation of investments 270 336 Portfolio income 232 199 Gross portfolio return 762 18% 763 19% Fund management fee income 30 35 Car
Slide 23: Investment
Results for year ended 31 March 2005 Simon Ball Investment • 67 new investments UK 44% Buyouts 45% • 56% outside UK • Top 10 investments account for 33% Growth 35% Continental Europe 45% Capital • Average new completed investment size − Buyouts £18m* Venture 19% Capital − Growth Capital £7m US 7% As
Slide 24: Realisations
Results for year ended 31 March 2005 Simon Ball Realisations UK 69% Buyouts 39% • 443 realisations • 12 IPOs from six different markets Growth • Top 10 account for 39% of 34% Capital proceeds Continental 28% • Equity uplift over value 40% Venture 12% Europe Capital • Portfolio turn by value 24% SMI
Slide 25: Buyouts - performance
Results for year ended 31 March 2005 Simon Ball Buyouts - performance 2005 2004 Gross portfolio return 22% 25% Income yield 3.8% 3.5% Realisation proceeds £505m £205m Investment* £338m £282m Portfolio £1,570m £1,480m *Investment including co-investment funds was £532m in 2005 and £438m in 2004 25
Slide 26: Growth Capital - performance
Results for year ended 31 March 2005 Simon Ball Growth Capital - performance 2005 2004 Gross portfolio return 24% 23% Income yield 5.1% 4.0% Realisation proceeds £443m £391m Investment £263m £319m Portfolio £1,226m £1,214m 26
Slide 27: Venture Capital – performance
Results for year ended 31 March 2005 Simon Ball Venture Capital – performance 2005 2004 Gross portfolio return 11% 5% Income yield 0.3% 1.4% Realisation proceeds £156m £91m Investment £143m £156m Portfolio £743m £672m* *Restated to include all assets managed by Venture Capital business line 27
Slide 28: SMI – performance
Results for year ended 31 March 2005 Simon Ball SMI – performance 2005 2004 Gross portfolio return 7% 17% Income yield 9.7% 8.3% Realisation proceeds £198m £236m Investment £11m £27m Portfolio £762m £960m 28
Slide 29: Unrealised value movement
Results for year ended 31 March 2005 Simon Ball Unrealised value movement £270m £m 149 58 (66) First time uplift Other (including uplift to sale) 36 Provisions 40 Up/(down) rounds 20 Earnings multiple movement Earnings growth 21 Unrealised currency 12 Quoted portfolio 29
Slide 30: Income
Results for year ended 31 March 2005 Simon Ball Income £m 300 £262m 250 27 £234m 30 13 200 35 Negotiation and arrangement fees Fund management fee income 150 104 94 Equity dividends Loan interest and fixed rate dividend 100 50 101 92 0 2005 2004 30
Slide 31: Net cash flow
Results for year ended 31 March 2005 Simon Ball Net cash flow 2005 2004 £m £m Cash invested (719) (756) Net realisation proceeds 1,287 913 Net investment cash flow 568 157 Other (135) (112) Net cash inflow 433 45 31
Slide 32: Balance sheet
Results for year ended 31 March 2005 Simon Ball Balance sheet 2004 2005 (as restated) £m £m Investment assets 4,301 4,326 Other net assets/(liabilities) (138) (160) 4,163 4,166 Net borrowings 526 936 Shareholders’ funds 3,637 3,230 4,163 4,166 Gearing 14% 29% 32
Slide 33: Return of capital to shareholders
Results for year ended 31 March 2005 Simon Ball Return of capital to shareholders • Intention to return £500m to shareholders • Through: − A special dividend of approximately £250m (40.7p per share) − An on-market share buyback programme of £250m • Resolutions relating to these proposals will be put
Slide 34: Communications
Results for year ended 31 March 2005 Simon Ball Communications • Operating and financial review (OFR) • Investor relations workshops • International Financial Reporting Standards (IFRS) 34
Slide 35: Financial summary
Results for year ended 31 March 2005 Simon Ball Financial summary A business that: • Has delivered gross returns over 20% for the second year in Buyouts and Growth Capital • Has improved Venture Capital returns (11%) • Is seeing the benefits of a more focused approach • Has generated positive cash f
Slide 36: Closing remarks
Closing remarks Philip Yea Chief Executive 36
Slide 37: Closing remarks
Results for year ended 31 March 2005 Philip Yea Closing remarks • A strong set of results • Good progress in the acceleration of 3i’s development as a truly international private equity firm • Pipeline going forward is at a good level 37
Slide 38: Results for year ended 31 March 2005
Results for year ended 31 March 2005 38