3i Group Plc · LSE:III
3i — FY2004 Earnings Presentation
48 slides from 3i's earnings presentation, May 13, 2004
Slide 1: Results for year ended 31 March 2004
Results for year ended 31 March 2004 1
Slide 2: Preliminary results year ended 31 March 2004
Preliminary results year ended 31 March 2004 13 May 2004 2
Slide 3: Welcome
Welcome Baroness Hogg Chairman 3
Slide 4: Agenda
Results for year ended 31 March 2004 Baroness Hogg Agenda Chief Executive’s overview Brian Larcombe Financial review Michael Queen Venture capital Rod Perry Growth capital Chris Rowlands Buy-outs Jonathan Russell Closing remarks Brian Larcombe 4
Slide 5: Overview
Overview Brian Larcombe Chief Executive 5
Slide 6: Key messages
Results for year ended 31 March 2004 Brian Larcombe Key messages • Strategy delivering • Significant pick up in investment activity • Good flow of realisation profits • An overall return of 18.1% 6
Slide 7: Financial highlights
Results for year ended 31 March 2004 Brian Larcombe Financial highlights • Total return on opening shareholders’ funds 18.1% • Net asset value per share 553p • Final dividend 8.9p • Realised profits on disposal £228m • New investment* £979m * New investment includes co-investment funds 7
Slide 8: Total return by investment product
Results for year ended 31 March 2004 Brian Larcombe Total return by investment product 2004 %* Mid-market buy-outs 22.6% Smaller buy-outs 22.1% Growth capital 26.8% Venture capital (6.0)% * % total return on opening shareholders’ funds attributed to each product 8
Slide 9: The market – investment made
Results for year ended 31 March 2004 Brian Larcombe The market – investment made $bn €bn 12 10 10 8 US VC ($bn) 8 European VC (€bn) 6 European mid-market MBOs (€bn) 6 4 4 2 2 0 0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2001 2002 2003 Source: Venture One & Initiative Europe 9
Slide 10: 3i European Barometer Index
Results for year ended 31 March 2004 Brian Larcombe 3i European Barometer 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 Q4 Q1 Q2 1998 1999 2000 2001 2002 2003 2004 10
Slide 11: Investments and realisations
Results for year ended 31 March 2004 Brian Larcombe Investments and realisations 11
Slide 12: Investing in 3i - our people
Results for year ended 31 March 2004 Brian Larcombe Investing in 3i - our people 12
Slide 13: Investing in 3i - our network
Results for year ended 31 March 2004 Brian Larcombe Investing in 3i - our network • Preferred deal flow • Investment assessment • Added value • Enhanced exits Aberdeen, Amsterdam, Barcelona, Birmingham, Boston, Bristol, Cambridge, Copenhagen, Dusseldorf, Frankfurt, Glasgow, Helsinki, Hong Kong, Leed
Slide 14: Investing in 3i - our network
Results for year ended 31 March 2004 Brian Larcombe Investing in 3i - our network 3i Oil & Gas Conference 25-26 March 2004, Prague 14
Slide 15: Investing in 3i - corporate responsibility
Results for year ended 31 March 2004 Brian Larcombe Investing in 3i - corporate responsibility “3i is clearly positioned among the best in the financial services industry.” “It is a real achievement to be one of the Companies that Count.” 15
Slide 16: Strategy
Results for year ended 31 March 2004 Brian Larcombe Strategy • Developing the business internationally • Building a balanced investment business • Using the network as our key competitive advantage • Investing in growth companies 16
Slide 17: Directories
Results for year ended 31 March 2004 Brian Larcombe Directories 17
Slide 18: Yellow Brick Road
Results for year ended 31 March 2004 Brian Larcombe Yellow Brick Road 44% of company with Yellow EBITDA of €150m Brick Road Debt €1bn Cash back Mediatel €31m to 3i and €224m funds De Telefoongids €65m Fonecta €44m 18
Slide 19: Implementation
Results for year ended 31 March 2004 Brian Larcombe Implementation • Investment focus • Sector initiatives • Improved productivity 19
Slide 20: Portfolio analysis
Results for year ended 31 March 2004 Brian Larcombe Portfolio analysis Portfolio by value at 31 March 2004 6% Value 12% Buy-outs £2,201m Growth capital £1,338m Venture capital £533m Quoted £254m 51% Total £4,326m 31% Excludes co-investment funds 20
Slide 21: Michael Queen Finance Director
Michael Queen Finance Director 21
Slide 22: Total return
Results for year ended 31 March 2004 Michael Queen Total return 2003 2004 £m £m Realised capital profits 190 228 Unrealised value movement (1,159) 336 Carried interest and investment performance plans (12) (40) (981) 524 Income 274 234 Costs (239) (223) Other – tax and realised currency 11 (4) Total
Slide 23: Realised profits on disposal
Results for year ended 31 March 2004 Michael Queen Realised profits on disposal 2003 2004 £m £m Total proceeds and repayments 976 923 Net realised profit 190 228 Equity realisations - proceeds 640 657 - net realised profit 164 240 - equity uplift over value 34% 58% Loan/fixed income share repayments
Slide 24: Unrealised value movement
Results for year ended 31 March 2004 Michael Queen Unrealised value movement £336m £m 60 287 71 238 (37) Quoted portfolio Earnings multiple movement (143) First time uplift (70) Earnings (64) Provisions Down rounds & restructuring 7 65 Unrealised currency Other 24
Slide 25: Total return
Results for year ended 31 March 2004 Michael Queen Total return 2003 2004 £m £m Realised capital profits 190 228 Unrealised value movement (1,159) 336 Carried interest and investment performance plans (12) (40) (981) 524 Income 274 234 Costs (239) (223) Other – tax and realised currency 11 (4) Total
Slide 26: Income
Results for year ended 31 March 2004 Michael Queen Income 2003 -1 113 106 56 £274m 2004 92 94 48 £234m £m -50 0 50 100 150 200 250 300 Loan interest and fixed rate dividend Equity dividends Fee income Joint venture and other income 26
Slide 27: Costs
Results for year ended 31 March 2004 Michael Queen Costs 2003 76 163 £239m 2004 60 163 £223m £m 0 50 100 150 200 250 Net interest payable Management expenses and organisational change costs 27
Slide 28: Balance sheet
Results for year ended 31 March 2004 Michael Queen Balance sheet 2003 2004 £m £m Investment assets 3,939 4,326 Other net assets 10 5 3,949 4,331 Net borrowings 1,013 936 Shareholders’ funds 2,936 3,395 3,949 4,331 Gearing 35% 28% 28
Slide 29: Gearing
Results for year ended 31 March 2004 Michael Queen Gearing £m 6,000 100% 5,000 75% 4,000 3,000 50% 2,000 25% 1,000 0 0% 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 Closing net debt Closing equity shareholders' funds Gearing ratio - net borrowing/shareholders' funds 29
Slide 30: Net cash flow - long term trend
Results for year ended 31 March 2004 Michael Queen Net cash flow - long term trend £m 2,000 Cash inflow 1,500 Cash outflow Net cash flow 1,000 500 0 -500 -1,000 -1,500 -2,000 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 for year to 31 March 30
Slide 31: Third party funds under management
Results for year ended 31 March 2004 Michael Queen Third party funds under management 24% Unquoted European buy-out funds £1,775m Other unquoted funds £100m Quoted funds under management £600m 4% Total £2,475m 72% 31
Slide 32: Dividend history
Results for year ended 31 March 2004 Michael Queen Dividend history pence 16 14.0 14 13.0 13.0 13.5 12.2 12 11.3 10.3 10 9.2 8.1 8 7.2 6 4 2 0 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 Interim Final 32
Slide 33: Financial summary
Results for year ended 31 March 2004 Michael Queen Financial summary • Significant improvement in total return • Net investor in the second half • Strong balance sheet • Excellent liquidity 33
Slide 34: Venture capital
Rod Perry Venture capital 34
Slide 35: Venture capital
Results for year ended 31 March 2004 Rod Perry Venture capital Healthcare Software Communications Electronics, semiconductors, advanced technologies 35
Slide 36: Venture capital – performance 2003/04
Results for year ended 31 March 2004 Rod Perry Venture capital – performance 2003/04 Total return* (6.0)% Income yield 1.7% Realisation proceeds £120m Realised profits £35m Investment** £174m Portfolio (excluding funds) £533m * Total return on opening shareholders’ funds attributed to this product *
Slide 37: High potential assets
Results for year ended 31 March 2004 Rod Perry High potential assets 37
Slide 38: Growth capital
Chris Rowlands Growth capital 38
Slide 39: Investments
Results for year ended 31 March 2004 Chris Rowlands Investments 39
Slide 40: Growth capital - performance 2003/04
Results for year ended 31 March 2004 Chris Rowlands Growth capital - performance 2003/04 Total return* 26.8% Income yield 6.8% Realised profits £70m Investment** £313m Portfolio (excluding funds) £1,487m * Total return on opening shareholders’ funds attributed to this product ** Includes co-investme
Slide 41: Growth capital – a growth business
Results for year ended 31 March 2004 Chris Rowlands Growth capital – a growth business • Return to growth agendas • Internationalisation • Sector consolidation “Getting there is about being there” 41
Slide 42: Buy-outs
Jonathan Russell Buy-outs 42
Slide 43: Buy-outs
Results for year ended 31 March 2004 Jonathan Russell Buy-outs • A pan European business • Deal range up to €800m • Market leader in Europe 43
Slide 44: Buy-outs - performance 2003/04
Results for year ended 31 March 2004 Jonathan Russell Buy-outs - performance 2003/04 Mid-market Smaller buy-outs buy-outs Total return* 22.6% 22.1% Income yield 4.0% 6.5% Realised profits £62m £61m Investment** £442m £50m Portfolio (excluding funds) £1,515m £791m * Total return on opening shareholde
Slide 45: Portfolio delivering
Results for year ended 31 March 2004 Jonathan Russell Portfolio delivering 45
Slide 46: Closing remarks
Closing remarks Brian Larcombe Chief Executive 46
Slide 47: Closing remarks
Results for year ended 31 March 2004 Brian Larcombe Closing remarks “3i is in great shape and is strongly positioned to grow value significantly in the years ahead.” 47
Slide 48: Results for year ended 31 March 2004
Results for year ended 31 March 2004 48