3i Group plc · LSE:III
3i — H1 2003/04 Earnings Presentation
31 slides from 3i's earnings presentation, Nov 6, 2003
Slide 1: Interim results to 30 September 2003
Interim results to 30 September 2003 1
Slide 2: Interim results, 6 November 2003
Interim results to 30 September 2003 6 November 2003
Slide 3: Key messages
Interim results to 30 September 2003 Brian Larcombe Key messages · A positive total return of £359m · Strong realisations of £503m · Significant reduction in provisions · New investment of £273m · Good pipeline going forward 3
Slide 4: Financial highlights
Interim results to 30 September 2003 Brian Larcombe Financial highlights · Total return on opening shareholders’ funds 12.2% · Net asset value per share 534p · Realised profits on disposal £129m · Unrealised value movement £215m · New investment including co-investment funds £273m · Net cash inflow
Slide 5: Total return by investment product
Interim results to 30 September 2003 Brian Larcombe Total return by investment product 2003/04 2002/03 First half Full year %* %* Early stage technology (2)% (51)% Growth capital 13% (10)% Smaller buy-outs 15% (16)% Mid-market buy-outs 8% 5% * % return on opening portfolio 5
Slide 6: 3i/PwC Global Private Equity Survey
Interim results to 30 September 2003 Brian Larcombe 3i/PwC Global Private Equity Survey 6
Slide 7: Global M&A volumes excluding the US
Interim results to 30 September 2003 Brian Larcombe Global M&A volumes excluding the US $bn No 700 7500 7000 600 6500 500 6000 Value of deals 400 5500 Number of deals 300 5000 4500 200 4000 100 3500 0 3000 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 1997 1998 199
Slide 8: 3i European Barometer Index
Interim results to 30 September 2003 Brian Larcombe 3i European Barometer Index compared with EU 15 real GDP annual growth rate for equivalent quarter Index % 100 4.5 80 4 60 3.5 40 3 20 Index 0 2.5 GDP growth -20 2 -40 1.5 -60 1 -80 -100 0.5 -120 0 Q2 Q4 Q2 Q4 Q2 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3
Slide 9: A selection of investments made in six months to September 2003
Interim results to 30 September 2003 Brian Larcombe A selection of investments made in six months to 30 September 2003 9
Slide 10: A selection of realisations made in six months to September 2003
Interim results to 30 September 2003 Brian Larcombe A selection of realisations made in six months to 30 September 2003 10 10
Slide 11: Strategy
Interim results to 30 September 2003 Brian Larcombe Strategy · Developing the business internationally · Building a balanced investment business · Using the network as our key competitive advantage · Investing in growth companies 11 11
Slide 12: Portfolio analysis
Interim results to 30 September 2003 Brian Larcombe Portfolio analysis Portfolio by value at 30 September 2003 Value 5% Buy-outs £2,055m 14% Growth capital £1,191m Early stage technology £544m Quoted £216m Total £4,006m 51% 30% Excludes co-investment funds 12 12
Slide 13: Financial review
Michael Queen Financial review
Slide 14: Financial highlights
Interim results to 30 September 2003 Michael Queen Financial highlights · Total return on opening shareholders’ funds 12.2% · Net asset value 534p · Interim dividend 5.1p · Net cash inflow £225m · Strong realisation proceeds at good uplifts £503m · New investment including co-investment funds £273m
Slide 15: Total return
Interim results to 30 September 2003 Michael Queen 2003/04 2002/03 Total return First half First half £m £m Realised capital profits 129 118 Operating income 113 136 Costs: - Net interest payable (33) (38) - Management expenses (70) (76) (103) (114) Operating return 139 140 Unrealised value movement
Slide 16: Buy-outs – performance six months to September 2003
Interim results to 30 September 2003 Michael Queen Buy-outs – performance six months to 30 September 2003 Mid-market Smaller buy-outs buy-outs Total return* 7.6% 15.4% Realisation proceeds £78m £151m Annualised income yield 3.3% 6.2% Investment** £125m £16m Portfolio (excluding funds) £1,302m £829m
Slide 17: Early stage technology – performance six months to September 2003
Interim results to 30 September 2003 Michael Queen Early stage technology – performance six months to 30 September 2003 Total return* (1.6)% Realisation proceeds £77m Annualised income yield 2.3% Investment** £56m Portfolio (excluding funds) £544m * Total return on opening portfolio ** Includes co-i
Slide 18: Growth capital – performance six months to September 2003
Interim results to 30 September 2003 Michael Queen Growth capital – performance six months to 30 September 2003 Total return* 13.3% Realisation proceeds £197m Annualised income yield 6.4% Investment** £76m Portfolio (excluding funds) £1,331m * Total return on opening portfolio ** Includes co-investm
Slide 19: Realised profits on disposal
Interim results to 30 September 2003 Michael Queen Realised profits on disposal 2003/04 2002/03 First half First half £m £m Total proceeds and repayments 503 619 Net realised profit 129 118 Equity realisations - proceeds 371 369 - net realised profit 141 122 - equity uplift over value 61% 49% Loan/f
Slide 20: Operating income
Interim results to 30 September 2003 Michael Queen Operating income 2003/04 First half 47 45 21 £113m 2002/03 First half 58 50 28 £136m £m 0 50 100 150 Loan interest and fixed rate dividend Equity dividends Fee income 20 20
Slide 21: Operating costs
Interim results to 30 September 2003 Michael Queen Operating costs 2003/04 First half 33 70 £103m 2002/03 First half 38 76 £114m £m 0 50 100 150 Net interest payable Management expenses 21 21
Slide 22: Unrealised value movement
Interim results to 30 September 2003 Michael Queen Unrealised value movement £215m £m 44 235 8 59 Quoted portfolio -65 PE movement Earnings growth -68 First time valuation uplift from cost Provisions 2 Down rounds and restructuring Other 22 22
Slide 23: Balance sheet
Interim results to 30 September 2003 Michael Queen Balance sheet As at As at As at 30.9.03 31.3.03 30.9.02 £m £m £m Investment assets 4,006 3,939 4,251 Other net assets/(liabilities) 71 10 10 4,077 3,949 4,261 Net borrowings 807 1,013 911 Shareholders’ funds 3,270 2,936 3,350 4,077 3,949 4,261 Geari
Slide 24: Gearing
Interim results to 30 September 2003 Michael Queen Gearing £m 6,000 125% 5,000 100% 4,000 75% 3,000 50% 2,000 25% 1,000 0 0% 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 30.9.03 Closing net debt Closing equity shareholders' funds Gearing ratio - net borrowing/shareholders' funds 24 24
Slide 25: Net cash flow
Interim results to 30 September 2003 Michael Queen Net cash flow 2003/04 2002/03 First half First half £m £m Cash invested (194) (299) Net realisation proceeds 501 624 Net investment cash flow 307 325 Other (82) (51) Net cash inflow 225 274 25 25
Slide 26: Net cash flow - long term trend
Interim results to 30 September 2003 Michael Queen Net cash flow - long term trend £m 2000 Cash inflow 1500 Cash outflow Net cash flow 1000 500 0 -500 -1000 -1500 -2000 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 30.9.03 for year to 31 March 26 26
Slide 27: Comparative return
Interim results to 30 September 2003 Michael Queen Comparative return After 10 years 10.2% 6.4% 6.5% 6.2% After 7 years 4.4% 3.5% 3.3% 3i return (NAV + dividend) 4.3% 1.3% FTSE All-Share FTSE 100 After 5 years 2.3% FTSE SmallCap (ex IT) -0.2% FTSE techMARK 100 -1.5% 6.7% -4.7% After 3 years -17.7% -
Slide 28: Financial summary
Interim results to 30 September 2003 Michael Queen Financial summary · Positive total return · Strong balance sheet · Good platform for new investment · Increased dividend 28 28
Slide 29: Closing remarks
Brian Larcombe Closing remarks
Slide 30: Closing remarks
Interim results to 30 September 2003 Brian Larcombe Closing remarks ‘On the back of positive returns and a strong balance sheet, 3i is moving forward.’ 30 30
Slide 31: Interim results to 30 September 2003
Interim results to 30 September 2003 31 31