Interim Results 23 November 2000
Brian Larcombe Operating Review www.3i.com/investor
Highlights % Return on opening shareholders funds Total Return 1.0bn - 3.7 MSCI Pan Euro Index Return on opening shareholders funds 20% - 2.7 FTSE 100 Index - 15.0 TechMARK 100 Index Interim Dividend 4.9p + 6.5% 20.1 3i Investment 0.9bn + 70% -15-10 -5 0 5 10 15 20
Economy and quoted markets Economy! Conflicting views! UK and continental European Barometers " lower business confidence " companies more optimistic about own prospects Quoted markets! Main indices " negative returns! Technology markets " volatile in period " falls since 30 September
Venture capital markets! Global private equity survey Funds raised US $bn 150 100 Investment! Move to early stage investment 50! New entrants 0 1995 1996 1997 1998 1999 Source: 3i Global Private Equity Review 2000
UK Objective: maintain leadership Total invested year Total invested six months m No of investments No 1000 950 900 850! Investment " 511m + 56% " 239 investments! 12 IPOs 800 700 600 500 400 300 200 100 750 650 550 450 350 250 150 50 0 1996 1997 1998 1999 2000 Year to 31 March Includes unquoted funds 30-Sep-99 30-Sep-00-50
Continental Europe Objective: 20% of portfolio! Growth by acquisitions and organic Total invested year Total invested six months No of investments m No 450 250 400 200 350 300 150 250! Investment " 352m + 79% " 185 investments 200 150 100 50 100 50 0 0! 21% of portfolio 1996 1997 1998 1999 2000 Year to 31 March 30-Sep-99 30-Sep-00 Includes unquoted funds
Technology investment Objective: 30% + of portfolio Total invested year Total invested six months No of investments m No 700 450! Investment " 559m + 113% " 313 investments 600 500 400 300 400 350 300 250 200! 49% of portfolio 200 100 150 100 50! 24 IPOs 0 1996 1997 1998 1999 2000 Year to 31 March 30-Sep-99 30-Sep-00 0 Includes unquoted funds
International development Objective: Develop significant businesses in USA and Asia Pacific USA! Leading venture capital market! 3i exceeding targets! Co-investing with toptier US venture capital firms Asia Pacific! Continued development in Singapore " Focus on fast growth companies! Japanese restructuring " Buy-out opportunities! Global network benefits
Funds under management Objective: Build unquoted funds in line with investment assets Unquoted funds under management Quoted funds under management bn 2.3 2.3 bn 1.3 1.3 1.5 0.5 0.5 0.4 0.4 0.5 0.5 0.8 1996 1997 1998 1999 As at 31 March 2000 30-Sep-00 1996 1997 1998 1999 As at 31 March 2000 30-Sep-00
Acquisitions update! Technologieholding " Successful integration! SFK Finance " Leading Finnish venture capital firm " Re-branded as 3i Finland! Bank Austria TFV " Austrian specialist high tech venture capital investor " Re-branded as 3i Austria
Michael Queen Financial Review www.3i.com/investor
Financial highlights Total Return 1.0bn Return on opening shareholders funds 20% Unrealised value growth 712m Net realised profits 302m + 421% Revenue profit after tax 69m -1% Net asset value 1011p + 19% Investment 902m + 70% Interim dividend 4.9p + 6.5%
Total return Return by sector m Technology 1,102 investments Other investments (62) Return by region m UK 909 Continental 174 Europe Rest of World (56) Foreign Exchange 13 1,040 1,040
Total return Revenue profit after tax Capital Profits " Realised capital profits " Unrealised value growth Other Total return m 302 712 m 69 1,014 (43) 1,040
Revenue profit Income from investments Fees received Net treasury interest payable Costs Profit before tax Tax Profit after tax Period ended 30 September 1999 2000 m m 127 127 24 35 (37) (39) (42) (52) 72 71 (2) (2) 70 69
Capital profits 1200 1000 800 600 m Realised capital profits Unrealised value growth 1014 712 400 200 0 243 185 302 58 1999 2000
Unrealised value growth m 900 800 700 600 500 400 300 200 100 0-100 -200 Quoted portfolio IPOs & takeovers Unquoted equity Joint ventures & other Loans & prefs 780 212-98 -57-125
Investment assets 5% 22% 25% 6.9bn 21% 19% 8% Quoted technology equity Unquoted technology equity Technology loans & prefs Quoted non-technology equity Unquoted non-technology equity Non-technology loans & prefs
Valuations: Quoted tech market impact 110 100 TECHMARK ALL-SHARE NEUER MARKT 90 80 70 60 50 APR MAY JUN JUL AUG SEP OCT NOV Source: DATASTREAM
Equity realisations m Sales proceeds Profit over cost Profit over opening value 400% 713 280 290% 208 39% 78 570 79% 314 1999 2000 Six months to 30 September
Strong record of realisations 90 80 70 60 50 40 30 20 10 0 % Uplift over valuation on sale of equity investments 83 61 53 41 42 39 1996 1997 1998 1999 2000 Year to 31 March 30-Sep-99 79 30-Sep-00
Investment m 800 700 600 500 400 300 200 100 0 3i Third party unquoted funds 201 132 701 400 1999 2000 Six months to 30 September
Investment - net cash flow m 450 350 250 362 150 50-50 -150 162 30 170-250 UK Continental Other Europe International 3i Group Excludes unquoted funds
Balance sheet m Shareholders' funds m Investment assets Net borrowings Other net assets 5,174 + 20% 6,197 6,301 + 14% 7,153 1,167 1,043 40 87 31-Mar-00 30-Sep-00 31-Mar-00 30-Sep-00
Comparative return After 5 Years 23.6% After 7 Years 15.9% 15.3% 14.9% 14.7% 14.2% 24.8% After 10 Years 13.2% 16.4% 20.6% 3i FTSE 100 FTSE AllShare FTSE SmallCap
Dividends per share Pence Interim Final 4.4 5.0 5.7 6.4 7.0 7.8 2.8 3.1 3.5 3.9 4.3 4.6 4.9 1995 1996 1997 1998 1999 2000 30-Sep-00
Financial highlights! Strong total return! Good growth in quoted technology investments! Strong realised profits! Strong balance sheet to fund future growth
Brian Larcombe Strategic Update www.3i.com/investor
International growth update Good progress 50% of offices outside UK 50% of investment staff outside UK 50% of new investment outside UK 50% of investment assets outside UK 2000
International growth update Good progress 50% of offices outside UK 50% of investment staff outside UK 50% of new investment outside UK 50% of investment assets outside UK 2000
International growth update Good progress 50% of offices outside UK 50% of investment staff outside UK 50% of new investment outside UK 50% of investment assets outside UK 2000
International growth update Good progress 50% of offices outside UK 50% of investment staff outside UK 50% of new investment outside UK 50% of investment assets outside UK 2000 2003
International growth update Good progress 50% of offices outside UK 50% of investment staff outside UK 50% of new investment outside UK 50% of investment assets outside UK 2000 2003 2006
International network across 3 continents Operating from 12 countries Europe USA Asia Pacific Aberdeen, Amsterdam, Barcelona, Berlin, Birmingham, Bologna, Boston, Bristol, Cambridge, Dusseldorf, Edinburgh, Frankfurt, Glasgow, Hamburg, Helsinki, Leeds, Leipzig, Liverpool, London, Lyon, Madrid, Manchester. Milan, Munich, Nantes, Newcastle, Nottingham, Padua, Palo Alto, Paris, Reading, Singapore, Stuttgart, Tokyo, Vienna, Watford, Zurich
Strategic objectives! To achieve a leading position in each of the major venture capital markets " Europe " USA # UK - maintain leading market position # Continent - build to 30% + of portfolio by 2006 # Build to 10% + of portfolio by 2006 " Asia Pacific # Build to 5% + of portfolio by 2006
Key messages! Strong financial results! Continue to grow business! Clear strategic focus
Moving to the stock markets, we have seen a sharp correction in the technology sector over the last two months and, as we all know, significant mark downs earlier this week. A correction in the markets is not something new to 3i and it will take away some of the excesses we were seeing in our market at the start of the year. In this respect, the correction is a healthy change for us. It will not dampen our enthusiasm for investing in technology companies because these will continue to provide the highest growth potential. That has not changed. And neither will our general approach to investment where we look to back strong management teams and a clear business strategy.
Moving to the stock markets, we have seen a sharp correction in the technology sector over the last two months and, as we all know, significant mark downs earlier this week. A correction in the markets is not something new to 3i and it will take away some of the excesses we were seeing in our market at the start of the year. In this respect, the correction is a healthy change for us. It will not dampen our enthusiasm for investing in technology companies because these will continue to provide the highest growth potential. That has not changed. And neither will our general approach to investment where we look to back strong management teams and a clear business strategy. 25 May 2000
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www.3i.com/investor 3i Group plc is an authorised institution under the Banking Act 1987 and is regulated in the conduct of investment business by the FSA 23 November 2000