3i Group plc · LSE:III
3i — Shareholder Meeting (July 2007)
74 slides from 3i's shareholder meeting presentation, Jul 11, 2007
Slide 1: Annual General Meeting
Annual General Meeting 11 July 2007 1
Slide 2: Baroness Hogg, Chairman
Baroness Hogg Chairman 2
Slide 3: 3i accountability
3i accountability To: • 28,000 shareholders of 3i Group plc – 73% held by UK pension funds, savings institutions and retail investors (31 March 2007) • 62 limited partners in Eurofund V 88 in predecessor co-investment funds – all of whom are managing pensions and savings funds • 3i Infrastructure Li
Slide 4: Share price since flotation
Share price since flotation 1800 1600 3i Group FTSE All Share 1400 1200 1000 800 600 400 200 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 4
Slide 5: Annual report and accounts 2007
Annual report and accounts 2007 5
Slide 6: 3i disclosure
3i disclosure Further information on: • Our portfolio by business line • Our key performance indicators • Our approach to corporate social responsibility • The way in which “carried interest” works for 3i and its employees; and • Our approach to the evaluation of the Board 6
Slide 7: Reporting on the wider world
Reporting on the wider world Financial Times, 26 May 2007 “3i’s Annual report continues to set the pace for clarity in private equity.” Investor Relations Society 2007 award for best Corporate Responsibility Report in the FTSE 100 John McFall, Chairman Treasury Select Committee, 20 June 2007, on 3i’
Slide 8: Global induction day
Global induction day How? Communications – the basics With a wide range of groups • About – our motives – the value we bring economically – the value we bring socially – how we do what we do • How? – clearly – openly – in a straightforward manner – consistently 8
Slide 9: Corporate responsibility
Corporate responsibility As a corporate As an investor • Core values • Investment policies and procedures • Group standards and controls – environmental • Responsible employer – ethical • Behaviour – social • Whistle blowing • Two key phases • Training and awareness – pre-investment – portfolio mana
Slide 10: Corporate responsibility
Corporate responsibility “3i is proud to be one of the BitC’s ‘Top 100 Companies that Count’ and its 25 year association.” “3i founded this charity 30 years ago to inspire youngsters to become involved in business and has supported it every year since.” David Millar, CEO, Enterprise Education Trust
Slide 11: 3i governance
3i governance • Combined Code – full compliance • Membership of BVCA/Walker Review • Majority of independent directors 11
Slide 12: The Board of Directors
The Board of Directors 12
Slide 13: Danny Rosenkranz
Danny Rosenkranz 13
Slide 14: Fred Steingraber
Fred Steingraber 14
Slide 15: Robert Swannell
Robert Swannell 15
Slide 16: Oliver Stocken
Oliver Stocken 16
Slide 17: Simon Ball
Simon Ball 17
Slide 18: Philip Yea
Philip Yea 18
Slide 19: Tony Brierley
Tony Brierley 19
Slide 20: Sir Robert Smith
Si Sir Robert Smith y I
Slide 21: Michael Queen
Si Michael Queen _
Slide 22: Christine Morin-Postel
Christine Morin-Postel 22
Slide 23: Willem Mesdag
Willem Mesdag 23
Slide 24: Formal business for today
Formal business for today • Annual General Meeting – regular business of the company • Extraordinary General Meeting – proposals for return of capital 24
Slide 25: Proposed return of capital
Proposed return of capital • Strong cash flow despite growth in new investment of 42% • Zero gearing at the year end • £800m return of capital to shareholders to increase capital efficiency and returns • Bonus issue of listed B shares accompanied by a share consolidation • Subject to shareholder app
Slide 26: Quote on an exceptional year
“This has quote Detailed beentitle an exceptional year for 3i. The Group has delivered a high return on Quote name/source here shareholders’ funds and a strong cash flow and, most importantly of all, has taken steps to develop the business for the longer term.” 26
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Slide 28: Philip Yea, Chief Executive
Philip Yea Chief Executive 28
Slide 29: Chief Executive's review
Chief Executive’s review • Strategy • Progress • Outlook 29
Slide 30: Our purpose
Our purpose “To provide quoted access to private equity returns.” 30
Slide 31: Advantages of private equity
Advantages of private equity • Fully informed shareholders • Clear value creation plan • Alignment of interests – shareholders – board – management • Time-bound milestones • Financial efficiency 31
Slide 32: Sources of value creation: fully-realised buyouts
Sources of value creation: fully-realised buyouts* 100% 10% 27% 63% Realised money multiple 2.7x Cost Earnings Multiple Debt Realised growth expansion reduction value *Figures represent total equity for 28 fully-realised Eurofund III and Eurofund IV buyouts 32
Slide 33: An example - SR Technics
An example - SR Technics When we invested in December 2002 • Subsidiary of failed state enterprise • Dependent upon one customer • Low profile • Employed 2,900 people At realisation in October 2006 • Vibrant independent business • Broad customer base • Significant organic growth • International expa
Slide 34: Growth Capital vintage returns
Growth Capital vintage returns Gross portfolio return to the financial year ended 31 March 2007 48% 2006 26% 2005 23% 2004 23% 34
Slide 35: Our vision
Our vision To 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 35
Slide 36: Strategy
Strategy • Invest in high-return assets • Grow our assets and those we manage on behalf of third parties • Extend our international reach, directly and through investing in funds • Use our balance sheet and resources to develop existing and new business lines • Continue to build our strong culture o
Slide 37: Strategic delivery – 3 year record
Strategic delivery – 3 year record • Average gross portfolio return of 25% • £1.6bn of investment for 2007 • Assets outside UK now 59% of total – Asia now up to 9% (2006: 4%) • 3i Infrastructure Limited (£700m) • 3i Quoted Private Equity Limited (£400m) launched • People engagement high 37
Slide 38: Investment
Investment £1,576m UK Buyouts £1,110m £784m £755m £716m Growth Capital Venture Capital US 2003 2004 2005 2006 2007 Growth Capital Venture Capital SMI QPE Buyouts Infrastructure 38
Slide 39: Shareholder returns
Shareholder returns Net asset value growth pence 1,000 932p Over last three years: 900 • Net asset value growth 71% before 800 739p dividends and dilution 700 614p • Total shareholder return of 27% pa 600 546p • 41% of capitalisation returned 500 480p as cash 400 300 200 100 0 2003 2004 2005 2006 20
Slide 40: Interim management statement - 11 July 2007
Interim management statement -11 July 2007 • Investment to 30 June 2007 £591m • Realisations to 30 June 2007 £605m • Returns objectives – a positive start • 3i Quoted Private Equity Limited launch at £400m • Return of capital 40
Slide 41: Simon Ball, Finance Director
Simon Ball Finance Director 41
Slide 42: Results for year to March 2007
Results for year to 31 March 2007 • Total return of £1,075m (2006: £831m) • Return on equity of 26.8% (2006: 22.5%) • Investment up by £466m to £1,576m • Realisations of £2,438m at a 52% uplift • Growth in assets under management 25% • Closing NAV per ordinary share 932p (2006: 739p) • Full year div
Slide 43: Financial performance - total return analysis
Financial performance - total return analysis 2007 2006 £m £m Gross portfolio return 1,406 34.0% 1,053 24.4% Fees from external funds 37 24 Net carried interest (61) 15 Operating expenses (255) (211) Net portfolio return 1,127 27.2% 881 20.4% Net interest payable (9) (17) Movement in the fair value
Slide 44: Financial performance - gross portfolio return
Financial performance - gross portfolio return 2007 2006 £m £m Realised profits 830 576 Unrealised profits 323 245 Portfolio income 253 232 Gross portfolio return 1,406 1,053 Gross portfolio return % 34.0% 24.4% 44
Slide 45: Financial performance - total return analysis
Financial performance - total return analysis 2007 2006 £m £m Gross portfolio return 1,406 34.0% 1,053 24.4% Fees from external funds 37 24 Net carried interest (61) 15 Operating expenses (255) (211) Net portfolio return 1,127 27.2% 881 20.4% Net interest payable (9) (17) Movement in the fair value
Slide 46: 5 year view – investment and realisation proceeds
5 year view – investment and realisation proceeds £m 2,500 2,438 2,207 2,000 1,576 1,500 1,302 1,110 1,000 976 923 784 755 716 500 0 2003 2004 2005 2006 2007 Investment Realisation proceeds 46
Slide 47: Balance sheet
Balance sheet March March 2007 2006 £m £m Investment assets 4,362 4,139 Other net liabilities (114) (77) 4,248 4,062 Net borrowings/(surplus) (1) 56 Equity 4,249 4,006 4,248 4,062 Gearing 0% 1% 47
Slide 48: Proposed return of capital – key facts
Proposed return of capital – key facts • Target gearing ratio of 30% to 40% across the cycle • Quantum – £807m • Method – bonus issue of listed B shares, accompanying purchase offers and share consolidation • Subject to shareholder approval at EGM 48
Slide 49: Proposed return of capital – key dates
Proposed return of capital – key dates • 13 July 2007 – record date for entitlement to new B shares – forms of election to be received by registrars – last day of dealing for existing ordinary shares • 16 July 2007 – dealings commence in consolidated ordinary shares and new B shares • 26 July 2007 –
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Slide 51: Roger Perkin, Ernst & Young
Roger Perkin Ernst & Young 51
Slide 52: The Resolutions
The Resolutions 52
Slide 53: Resolutions commentary
Resolutions commentary • AGM – 15 resolutions on regular annual business – political donations – on-market purchases of shares • EGM – return of capital 53
Slide 54: Questions
Questions 54
Slide 55: Two poll cards
Two poll cards Annual General Meeting Poll Card Resolutions For Against Abstain 1 To receive and consider the Company's Accounts for the year to 31 March 2007 and the Directors’ and Auditors’ reports. 2 To approve the Directors’ remuneration report for the year to 31 March 2007. To declare a dividen
Slide 56: Resolution 1
Resolution 1 Proxy votes lodged for this Resolution: 99.12% For, 0.41% Discretionary, 0.14% Abstain and 0.33% Against “THAT the Company’s Accounts for the year to 31 March 2007 and the Directors’ report, the Auditors’ report and the auditable part of the Directors’ remuneration report be and they ar
Slide 57: Resolution 2
Resolution 2 Proxy votes lodged for this Resolution: 95.60% For, 0.42% Discretionary, 3.19% Abstain and 0.79% Against “THAT the Directors’ remuneration report for the year to 31 March 2007 be and it is hereby approved” 57
Slide 58: Resolution 3
Resolution 3 Proxy votes lodged for this Resolution: 99.57% For, 0.41% Discretionary, 0.02% Abstain and 0.00% Against “THAT a final dividend of 10.3 pence per share be and it is hereby declared, payable to those shareholders whose names appeared on the Register of Members at close of business on 22
Slide 59: Resolution 4
Resolution 4 Proxy votes lodged for this Resolution: 99.48% For, 0.43% Discretionary, 0.04% Abstain and 0.05% Against “THAT Mr R W A Swannell be and he is hereby reappointed as a Director of the Company” 59
Slide 60: Resolution 5
Resolution 5 Proxy votes lodged for this Resolution: 99.04% For, 0.42% Discretionary, 0.04% Abstain and 0.50% Against “THAT Baroness Hogg be and she is hereby reappointed as a Director of the Company” 60
Slide 61: Resolution 6
Resolution 6 Proxy votes lodged for this Resolution: 99.36% For, 0.42% Discretionary, 0.04% Abstain and 0.18% Against “THAT Mr F G Steingraber be and he is hereby reappointed as a Director of the Company” 61
Slide 62: Resolution 7
Resolution 7 Proxy votes lodged for this Resolution: 98.80% For, 0.43% Discretionary, 0.04% Abstain and 0.73% Against “THAT Mr P E Yea be and he is hereby reappointed as a Director of the Company” 62
Slide 63: Resolution 8
Resolution 8 Proxy votes lodged for this Resolution: 99.08% For, 0.42% Discretionary, 0.03% Abstain and 0.47% Against “THAT Ernst & Young LLP be and they are hereby reappointed as Auditors of the Company to hold office until the conclusion of the next General Meeting at which Accounts are laid befor
Slide 64: Resolution 9
Resolution 9 Proxy votes lodged for this Resolution: 99.09% For, 0.42% Discretionary, 0.03% Abstain and 0.46% Against “THAT the Board be and it is hereby authorised to fix the Auditors’ remuneration” 64
Slide 65: Resolution 10
Resolution 10 Proxy votes lodged for this Resolution: 97.31% For, 0.42% Discretionary, 0.09% Abstain and 2.18% Against To renew the Company’s authority to incur political expenditure (The full text of this Resolution is set out in the Notice of AGM) 65
Slide 66: Resolution 11
Resolution 11 Proxy votes lodged for this Resolution: 97.28% For, 0.42% Discretionary, 0.11% Abstain and 2.19% Against To renew the authority of 3i plc to incur political expenditure (The full text of this Resolution is set out in the Notice of AGM) 66
Slide 67: Resolution 12
Resolution 12 Proxy votes lodged for this Resolution: 98.40% For, 0.42% Discretionary, 0.04% Abstain and 1.14% Against To renew the Directors' authority to allot shares (The full text of this Resolution is set out in the Notice of AGM) 67
Slide 68: Resolution 13
Resolution 13 Proxy votes lodged for this Resolution: 99.45% For, 0.43% Discretionary, 0.06% Abstain and 0.06% Against Special Resolution To renew the Directors' authority to allot shares for cash (The full text of this Resolution is set out in the Notice of AGM) 68
Slide 69: Resolution 14
Resolution 14 Proxy votes lodged for this Resolution: 99.52% For, 0.41% Discretionary, 0.03% Abstain and 0.04% Against Special Resolution To renew the Company's authority to purchase its own ordinary shares (The full text of this Resolution is set out in the Notice of AGM) 69
Slide 70: Resolution 15
Resolution 15 Proxy votes lodged for this Resolution: 99.34% For, 0.42% Discretionary, 0.03% Abstain and 0.21% Against Special Resolution To renew the Company's authority to purchase its own B Shares (The full text of this Resolution is set out in the Notice of AGM) 70
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Slide 72: Commencement of Extraordinary General Meeting
Commencement of Extraordinary General Meeting 72
Slide 73: Special Resolution: Further B Share issue and consolidation
Proxy votes lodged for this Resolution: 99.43% For, 0.42% Discretionary, 0.03% Abstain and 0.12% Against Special Resolution Further B Share issue, share capital consolidation, and authority for market purchases of B Shares. (The full text of this Resolution is set out in the Notice of EGM) 73
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