3i Group plc · LSE:III
3i — 3i Smaller Quoted Companies Trust — FY2002 Earnings Presentation
26 slides from 3i's earnings presentation, Apr 25, 2002
Slide 1: 3i Smaller Quoted Companies Trust Preliminary results to 28 February 2002
3i Smaller Quoted Companies Trust Preliminary results to 28 February 2002 1
Slide 2: Preliminary results year to 28 February 2002
3i Smaller Quoted Companies Trust plc Preliminary results year to 28 February 2002 Henrietta Marsh 25 April 2002 2
Slide 3: Year to 28 February 2002: Investment objective and strategy
3i Smaller Quoted Companies Trust Preliminary results to 28 February 2002 Year to 28 February 2002 • Investment objective − to achieve long term capital growth above the benchmark − the benchmark is FTSE SmallCap Index excluding Investment Companies • Strategy − low portfolio risk against benchmark
Slide 4: Highlights
3i Smaller Quoted Companies Trust Preliminary results to 28 February 2002 Highlights • NAV per share − 3i SQC -25.2% − benchmark -22.5% • Underperformance due primarily to gearing • New issues purchased rose 7% on average • Relative performance improved during year • Earnings 4.68p, dividend maintai
Slide 5: Attribution analysis
3i Smaller Quoted Companies Trust Preliminary results to 28 February 2002 Attribution analysis (1) % Benchmark (22.5) % Outperformance at portfolio level 0.8 Sector allocation (3.2) Portfolio performance (2) (21.7) Stock selection 3.7 Effect of gearing (3) (2.3) Intra month 0.3 Expenses (4) (0.6) ad
Slide 6: Gearing
3i Smaller Quoted Companies Trust Preliminary results to 28 February 2002 Gearing %/£m Revised policy 16 • £10m gearing when view on market 14 neutral (was 10%) 12 Objective 10 • reduce the trading driven by 8 volatile market conditions 6 Facilities 4 • £15m 7.75% debenture due 2022 2 • overdraft fa
Slide 7: Strategy for adding value
3i Smaller Quoted Companies Trust Preliminary results to 28 February 2002 Strategy for adding value “Playing to 3i’s strengths” • Companies well known to 3i − 45% of portfolio current/former* 3i Group investments • Early stage growth − overweight sub £100m market capitalisation − benchmark 22%**, po
Slide 8: Portfolio performance
3i Smaller Quoted Companies Trust Preliminary results to 28 February 2002 Portfolio performance • Good stock selection in “growth” sectors* − underweight loss makers • Themes − purchases - domestic bias, government spending, cheap cyclicals − sales - capital spending • Sector impact * Media, Support
Slide 9: Sector allocation - best and worst decisions
3i Smaller Quoted Companies Trust Preliminary results to 28 February 2002 Sector allocation - best and worst decisions Insurance Aerospace & defence Transport Media IT hardware General Retailers -40 -30 -20 -10 0 10 20 30 40 Underweight/underperform % Overweight/outperform FTSE SmallCap ex ICs secto
Slide 10: Stock selection - best and worst sectors
3i Smaller Quoted Companies Trust Preliminary results to 28 February 2002 Stock selection - best and worst sectors % 20 10 0 -10 -20 -30 -40 -50 -60 -70 services General Software & Insurance Construction photography retailers Support computer services & building materials Media & Benchmark weight at
Slide 11: Key sales and purchases during the period
3i Smaller Quoted Companies Trust Preliminary results to 28 February 2002 Key sales and purchases during the period Examples over Purchases Sales Abbot Group £1m Alfred McAlpine Autologic Autologic Bovis Homes iSOFT Group Castings Mothercare T Clarke Compco PHS* Druck Regent Inns Headlam UNITE Group
Slide 12: Initial public offerings
3i Smaller Quoted Companies Trust Preliminary results to 28 February 2002 Initial public offerings • 1.4%* of portfolio (2001 - 7.3%*) • 3 IPOs taken − PHS, Integrated Dental Holdings, Murgitroyd − increased 7% on average • Outlook improving • 3i advantages * As % of average investment assets 12
Slide 13: Takeovers
3i Smaller Quoted Companies Trust Preliminary results to 28 February 2002 Takovers • Low activity in market as a whole, smaller companies similar • Portfolio activity 1.3%* (2001 - 6.1%*) • Meconic, WT Foods, Novara - increased 48% on average • Possibly improving - Brake Bros, Dixon Motors * As % of
Slide 14: Relative performance drivers of smallcaps
3i Smaller Quoted Companies Trust Preliminary results to 28 February 2002 Relative performance drivers of smallcaps • Sector composition • Risk appetite of markets • Valuation differentials • M&A activity • Presence of strategic investors Issues • Risk - when to buy the loss makers? • Yield 14
Slide 15: Market risk appetite
3i Smaller Quoted Companies Trust Preliminary results to 28 February 2002 Market risk appetite Corporate risk appetite (AAA credit spread) and UK smaller companies -1.3 30 6m change in AAA credit spread (LHS) 20 -0.8 10 -0.3 0 0.2 -10 0.7 6m rel change in FTSE small- -20 cap companies (RHS) 1.2 -30
Slide 16: Positioning
3i Smaller Quoted Companies Trust Preliminary results to 28 February 2002 Positioning • Use 3i’s knowledge base and network • Well placed for initial public offerings • Moderate gearing • Manage risks against benchmark • Cautiously optimistic outlook 16
Slide 17: Long term record vs FTSE SmallCap ex ICs
3i Smaller Quoted Companies Trust Preliminary results to 28 February 2002 Long term record vs FTSE SmallCap ex ICs Capital performance 200 150 100 50 Feb-97 Feb-98 Feb-99 Feb-00 Feb-01 Feb-02 Jun-97 Jun-98 Jun-99 Jun-00 Jun-01 Oct-97 Oct-98 Oct-99 Oct-00 Oct-01 3iSQC FTSE SmallCap (ex ICs) Source: F
Slide 18: Appendices
Appendices 18
Slide 19: Market capitalisation profile of the portfolio compared with the benchmark
3i Smaller Quoted Companies Trust Preliminary results to 28 February 2002 Market capitalisation profile of the portfolio compared with the benchmark index % 50 45 40 35 30 25 20 15 10 5 0 £0-100m £500m+ £100- £200- £300- £400- 200m 300m 400m 500m 3i SQC FTSE SmallCap (ex ICs) As at 31 March 2002 Sou
Slide 20: Largest sector positions compared with benchmark
3i Smaller Quoted Companies Trust Preliminary results to 28 February 2002 Largest sector positions compared with benchmark Support services Aerospace & Defence Speciality & other finance Health Food producers & processors Pharmaceuticals Real Estate Insurance Engineering & machinery General retailer
Slide 21: 20 largest holdings at 28 February 2002
3i Smaller Quoted Companies Trust Preliminary results to 28 February 2002 20 largest holdings at 28 February 2002 Investment Market value % of total PE ratio at Business activity (£’000) portfolio 31/03/02* W hitehead Mann 3,571 2.8 13.3 Management consultancy services Group W estbury 3,238 2.5 7.0
Slide 22: 20 largest holdings at 28 February 2002 cont'd
3i Smaller Quoted Companies Trust Preliminary results to 28 February 2002 20 largest holdings at 28 February 2002 cont’d Investment Market value % of total PE ratio at Business activity (£’000) portfolio 31/03/02* Expro International 2,345 1.8 19.3 Provider of services to the oil industry Group Firs
Slide 23: Shareholder analysis
3i Smaller Quoted Companies Trust Preliminary results to 28 February 2002 Shareholder analysis % shareholding Insurance companies 22.5 Pension funds 25 Institutionally managed private clients 12 Charities 8 Individuals 9 Other institutional 5 Investment/Unit trusts 16.5 Other nominees 2 As at 28 Feb
Slide 24: Board
3i Smaller Quoted Companies Trust Preliminary results to 28 February 2002 Board William Govett (64) Non-executive Chairman Non-executive director of Clerical Medical Investment Management Limited and Govett European Enhanced Investment Trust plc. Richard Brewster, FCA (56) Non-executive director Chi
Slide 25: Disclaimer
3i Smaller Quoted Companies Trust Preliminary results to 28 February 2002 Disclaimer This document contains details of the 3i Smaller Quoted Companies Trust (“3i SQC”) for the period ended 28 February 2002 and is a summary of an oral presentation (“Presentation”) of those results by executives of 3i
Slide 26: Thank you
thank you Other information, www.3i.com 26
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