3i Group Plc · LSE:III
3i — FY2001 Earnings Presentation
38 slides from 3i's earnings presentation, May 17, 2001
Slide 1: Results for year ended 31 March 2001
Results for year ended 31 March 2001 11
Slide 2: Preliminary results year ended 31 March 2001
Preliminary results year ended 31 March 2001 17 May 2001 2
Slide 3: Key messages
Results for year ended 31 March 2001 Key messages • Good progress in building the business • Clear and unchanged strategic focus • Tougher market conditions • Outperformed all indices • Record investment • Positive cash flow and a strong balance sheet 33
Slide 4: Highlights
Results for year ended 31 March 2001 Highlights £(142)m Total return £116m Revenue profit after tax £453m Net realised profit over value £911m Net realised profit over cost £(676)m Unrealised value movement £2.0bn Investment 8.1p Final dividend 815p Net asset value 44
Slide 5: 3i outperforms indices
Results for year ended 31 March 2001 3i outperforms indices % - 2.7 3i - 10.8 FTSE All-Share - 11.8 FTSE 100 - 19.6 MSCI Pan Euro - 55.5 TechMARK 100 - 74.6 Neuer Markt -80 -70 -60 -50 -40 -30 -20 -10 0 Indices for year to 31 March 2001 55
Slide 6: Economy and quoted markets
Results for year ended 31 March 2001 Economy and quoted markets Economy Quoted markets • Effect of US downturn • Main indices − negative returns • UK and continental European Barometers • Technology markets − slowing business − volatile in period confidence − falls since 30 September • Technology ma
Slide 7: Effect of market changes
Results for year ended 31 March 2001 Effect of market changes Private equity (buy-outs) • Lots of money • Pricing little changed Venture capital (technology) • Fewer risk takers • Focus on portfolios • Shake out of new entrants 77
Slide 8: 3i response to market change
Results for year ended 31 March 2001 3i response to market change • Investment policy largely unchanged • Funding companies through to profit and cash generation • Supporting the stars • Further portfolio management resource But • Stronger market position and • Better pricing 88
Slide 9: A balanced business by sector
Results for year ended 31 March 2001 A balanced business by sector Portfolio at 31 March 2001 4% 25% 19% Resources £232m Industrials £1,081m Consumer goods £1,237m 4% Services and utilities £1,538m Financials £256m 21% Information technology £1,461m 27% Total £5,805m Total number 2,759 Excludes mana
Slide 10: A balanced technology portfolio
Results for year ended 31 March 2001 A balanced technology portfolio Portfolio at 31 March 2001 23% Life sciences and healthcare £526m Communications and networking £400m 42% Electronics and other technologies £203m E-business £220m Software and computer services £980m 17% Total £2,329m Total number
Slide 11: A balanced business by product source
Results for year ended 31 March 2001 A balanced business by product source Portfolio at 31 March 2001 27% 33% Technology £1,912m Buy-outs* £2,338m Growth capital £1,555m Total £5,805m Total number 2,759 40% Excludes managed funds *includes technology buy-outs 11 11
Slide 12: An increasingly diversified business by geography
Results for year ended 31 March 2001 An increasingly diversified business by geography Portfolio at 31 March 2001 1% 4% 23% UK £4,121m Continental Europe £1,363m Asia Pacific £86m US £235m Total £5,805m 72% Total number 2,759 Excludes managed funds 12 12
Slide 13: Strategic objectives
Results for year ended 31 March 2001 Strategic objectives To achieve a leading position in each of the major venture capital markets • Europe − UK - maintain leading market position − Continent - build to 30% + of portfolio • US − Build to 10% + of portfolio by 2006 • Asia Pacific − Build to about 5
Slide 14: UK investment
Results for year ended 31 March 2001 UK investment Objective: maintain leadership Total invested £m No of investments No 1100 600 • Investment 1000 900 500 − £1,006m +13% 800 400 − 328 investments 700 600 300 • 17 IPOs 500 400 200 300 • 111 trade sales 200 100 100 0 0 1997 1998 1999 2000 2001 Year t
Slide 15: UK management
Results for year ended 31 March 2001 UK management • Portfolio management model • Sector based teams • Strength of Independent Directors’ Programme • 3 offices closed • Expanded services in regional centres 15 15
Slide 16: Continental Europe
Results for year ended 31 March 2001 Continental Europe Objective: build to 30% + of portfolio Total invested £m No of investments No 800 400 • Investment 700 350 − £770m + 82% 600 300 − 354 investments 500 250 400 200 • 21 IPOs 300 150 • 36 trade sales 200 100 100 50 0 0 1997 1998 1999 2000 2001 Ye
Slide 17: Continental Europe
Results for year ended 31 March 2001 Continental Europe • Network growth • Organic growth − Zurich − Copenhagen • Acquisitions − Technologieholding − SFK − Bank Austria TFV − Atle 17 17
Slide 18: Acquisition of Atle
Results for year ended 31 March 2001 Acquisition of Atle • Purchase for £360m • Key step in our Nordic business • Rapid growth in venture capital • Nordic portfolio value of £400m in 150 companies 18 18
Slide 19: US
Results for year ended 31 March 2001 US Objective: build to 10% + of portfolio • Good progress • Investment − £125m − 24 companies • Organic growth • International network brings competitive advantage 19 19
Slide 20: Asia Pacific
Results for year ended 31 March 2001 Asia Pacific Objective: build to about 5% of portfolio • Development of Asia from Singapore office • First Japanese MBO − economic difficulties create opportunities and change • Hong Kong office opening - August 2001 20 20
Slide 21: Brand review
Results for year ended 31 March 2001 Brand review 21 21
Slide 22: Michael Queen Financial review
Michael Queen Financial review 22
Slide 23: Financial highlights
Results for year ended 31 March 2001 Financial highlights Total return £(142)m Revenue profit after tax £116m Net realised profit over value £453m Net realised profit over cost £911m Unrealised value movement £(676)m Investment £2.0bn Final dividend 8.1p Net asset value 815p 23 23
Slide 24: Total return
Results for year ended 31 March 2001 Total return £m £m Revenue profit after tax 116 Capital profits - Realised capital profits 453 - Unrealised value movement (676) (223) Other (35) Total return (142) 24 24
Slide 25: Revenue profit
Results for year ended 31 March 2001 Revenue profit Year ended 31 March 2000 2001 £m £m Income from investments 239 243 Fees 55 72 Net interest payable (73) (74) Costs (102) (121) Profit before tax 119 120 Tax (4) (4) Profit after tax 115 116 25 25
Slide 26: Capital profits
Results for year ended 31 March 2001 Capital profits £m 1500 1300 1100 900 1,167 700 Unrealised value 500 growth/deficit 300 453 Realised capital profits 350 100 -100 -300 - 676 -500 -700 March March 2000 2001 26 26
Slide 27: Unrealised value movement
Results for year ended 31 March 2001 Unrealised value movement £m 200 196 0 - 75 - 56 - 163 -200 Quoted portfolio IPOs & takeovers -400 Loans & preference shares - 578 Unquoted equity -600 Joint ventures & other 27 27
Slide 28: Equity realisations
Results for year ended 31 March 2001 Equity realisations £m £m 1,308 361% 1,034 342% 822 63% 643 83% 509 377 Sales Profit over Profit over Sales Profit over Profit over proceeds cost value proceeds cost value 2000 Year ended 31 March 2001 28 28
Slide 29: Strong record of realisations
Results for year ended 31 March 2001 Strong record of realisations Uplift over valuation on sale of equity investments % 100 80 83 60 61 63 53 40 42 20 0 1997 1998 1999 2000 2001 29 29
Slide 30: Investment
Results for year ended 31 March 2001 Investment £m 2000 1,972 1600 866 1,376 1200 720 800 1,106 400 656 0 2000 2001 Year ended 31 March Technology investment Non-technology investment 30 30
Slide 31: Investment - net cash flow
Results for year ended 31 March 2001 Investment - net cash flow £m 566 350 87 0 - 139 - 340 -350 UK Continental Other 3i Europe International Group 31 31
Slide 32: Balance sheet
Results for year ended 31 March 2001 Balance sheet Year ended 31 March 2000 2001 £m £m Investment assets 6,301 6,010 Other net assets 40 61 6,341 6,071 Net borrowings 1,167 1,098 Shareholders’ funds 5,174 4,973 6,341 6,071 Gearing 23% 22% 32 32
Slide 33: Investment assets
Results for year ended 31 March 2001 Investment assets As at March 2000 March 2001 £6.0bn £5.8bn Quoted technology equity Unquoted technology equity Technology loans & preference shares Quoted non-technology equity Unquoted non-technology equity Non-technology loans & preference shares 33 33
Slide 34: Funds under management
Results for year ended 31 March 2001 Funds under management Unquoted funds under management Quoted funds under management £bn £bn 2.3 2.1 1.5 1.3 0.9 0.8 0.5 0.5 0.5 0.4 1997 1998 1999 2000 2001 1997 1998 1999 2000 2001 as at 31 March as at 31 March 34 34
Slide 35: Comparative return
Results for year ended 31 March 2001 Comparative return After 3 years 13.9% 1.6% 0.6% 6.0% After 5 years 16.1% 3i 11.1% 11.9% FTSE All-Share 9.9% FTSE 100 FTSE SmallCap (ex IT) After 7 years 17.0% 11.8% 12.6% After 10 years 17.1% 12.6% 35 35
Slide 36: Dividends per share
Results for year ended 31 March 2001 Dividends per share pence 7.6 8.1 7.0 5.7 6.4 3.9 4.3 4.6 4.9 3.5 1997 1998 1999 2000 2001 Interim Final 36 36
Slide 37: Summary
Results for year ended 31 March 2001 Summary • Clear strategy • Progress in building the business • Outperformed all indices • Positive cash flow and a strong balance sheet 37 37
Slide 38: Results for year ended 31 March 2001
Results for year ended 31 March 2001 38 38