Interim results for the six months to 30 September 2002

14 Nov 2002

 

Introduction

3i announces today its interim results for the six months to 30 September 2002.

Summary of results

  • A negative total return of 14.4% on opening shareholders' funds, a significant outperformance of the FTSE 100 and the FTSE All-Share, which both fell by 28%, and the MSCI Europe which fell by 34%
  • Strong realisation proceeds of £619 million, generating net realised profits of £118 million over opening valuation
  • Investment of £393 million (including co-investment funds managed by 3i)
  • Total return of £(570) million, and a diluted net asset value per share of 548p
  • Unchanged interim dividend of 4.9 pence per share

Baroness Hogg, Chairman of 3i Group plc, commenting on the results, said: "A notable feature of these results is the realisations performance, markedly higher than in the preceding half year, resulting in a strong financial position at the period end. 3i is taking advantage of its unique network to generate value and is well placed to invest actively in the future."

Brian Larcombe added: "This is a robust performance in a difficult climate."

Operating review

3i has delivered a strong performance over the period when compared with quoted market benchmark indices. Cash flow was very positive and the balance sheet is strong. 3i is well positioned to take advantage of attractive opportunities for investment.

Substantial progress has been made in developing 3i's business. Sector focus has been sharpened, investment processes strengthened and more value is being delivered from the network.

3i has continued to use the network to generate and select the best investment opportunities and add value to its portfolio. In the six months to 30 September 3i invested £393 million, including unquoted funds under management. This is broadly in line with overall market activity. 3i's market share in Europe continues to be around 10% for buy-outs, growth capital and early stage investments.

The strong level of realisations, together with the structure of our balance sheet and funds under management means that 3i has the financial capacity to invest actively. We expect to be net investors in the second half of the year.

Financial review

3i's total return was a negative 14.4% during the period. This represents an outperformance of the FTSE 100 and the FTSE All-Share which both fell by 28%. Strong realisations of £619 million generated net realised capital profits of £118 million.

Net cash inflow of £274 million reduced gearing to 27% from 30% at 31 March and the balance sheet is strong. Equity realisations have been made at a profit of 49% above valuations at 31 March 2002.

Revenue profit of £47 million was lower than last year largely due to a decline in dividends received on the sale or restructuring of investments and a fall in interest income. These were partly offset by a reduction of £10 million in administrative costs.

The decline in net asset value was 14.4%, before deduction of the interim dividend. The most significant factor contributing to this was the unrealised fall in the valuation of the portfolio, largely due to lower quoted markets, the decline in weighted average price earnings ratio used to value the unquoted portfolio and provisions, which at £141 million were less than the provisions of £252 million for the same period last year.

Summary
3i has significantly outperformed its benchmark indices over the period. Realisations have been strong resulting in a positive cash flow and strengthened balance sheet. The negative total return is mainly the result of stock market movements.

3i's financial performance maintains the long term record of outperformance over 3, 5, 7 and 10 years against the FTSE All-Share index.

For further information, please contact:

 3i Group plc  
 Brian Larcombe, Chief Executive  Tel:  020 7975 3386
 Michael Queen, Finance Director  Tel:  020 7975 3400
 Liz Hewitt, Director Corporate Affairs  Tel:  020 7975 3283
 Issued by The Maitland Consultancy  
 Philip Gawith  Tel:  020 7379 5151

 

Notes to editors

3i brings capital, knowledge and connections to the creation and development of businesses around the world. It invests in a wide range of opportunities from start-ups to buy-outs and buyins, focusing on businesses with high growth potential and strong management. 3i invests in businesses across three continents through local investment teams in Europe, US and Asia Pacific.

The Interim results press release, the presentation and speeches given by Brian Larcombe, Chief Executive and Michael Queen, Finance Director, announcing the Interim results will be published from 10.30am, 14 November 2002 on 3i's website:http://www.3i.com/.