Final Results - Part 2

3i Group PLC 17 May 2001 PART 2 Financial Review - Highlights Total return (£m) 2001 2000 Revenue profit before tax 120 119 Net realised capital profits 453 350 Unrealised value growth (676) 1,167 Tax and other (57) (39) Total return for the Group (142) 1,579 Total return by geography (£m) 2001 2000 UK 81 1,302 Continental Europe (145) 221 US (56) 41 Asia Pacific (63) 68 Currency adjustment 41 (53) Total return for the Group (142) 1,579 Realisations 2001 2000 Total net realised profits (£m) 350 453 Equity proceeds (£m) 1,308 822 Uplift over opening equity valuation (%) 63 83 Percentage of opening equity portfolio sold (%) 19 17 Share and loan portfolio (£m) 2001 2000 Listed equity 818 1,103 Secondary market quoted 266 483 Unquoted equity 2,765 2,499 Loan investments 1,522 1,292 Fixed income shares 434 593 Total 5,805 5,970 Investment Unquoted Unquoted funds 3i funds Total 3i 2000 Total 2001 2001 2001 2001 2000 2000 2000 £m £m £m No £m £m £m No UK 786 220 1,006 328 705 189 894 354 Continental 560 210 770 354 306 116 422 218 Europe Asia Pacific 49 13 62 15 31 1 32 11 US 134 - 134 29 28 - 28 10 Total 1,529 443 1,972 726 1,070 306 1,376 593 Michael Queen, Finance Director 16 May 2001 Consolidated statement of total return for the year to 31 March 2001 Revenue Capital Total Revenue Capital Total 2001 2001 2001 2000 2000 2000 £m £m £m £m £m £m Capital profits Net realised profits over opening 453 453 350 350 valuation Net unrealised value movement in (676) (676) 1,167 1,167 the year (223) (223) 1,517 1,517 Total operating income before 358 358 325 325 interest payable Interest payable (117) (4) (121) (104) (1) (105) 241 (227) 14 221 1,516 1,737 Administrative expenses (121) (49) (170) (102) (33) (135) Amortisation of goodwill - (18) (18) - (2) (2) Return before tax and currency 120 (294) (174) 119 1,481 1,600 translation adjustment Tax (4) 19 15 (4) (13) (17) Return for the year before currency translation adjustment 116 (275) (159) 115 1,468 1,583 Currency translation adjustment - 17 17 4 (8) (4) Total return 116 (258) (142) 119 1,460 1,579 Total return per share Basic (pence) 19.1p (42.5)p (23.4)p 19.9p 244.1p 264.0p Diluted (pence) 18.9p (42.0)p (23.1)p 19.7p 241.7p 261.4p Reconciliation of movement in shareholders' funds The Group The Group 2001 2000 £m £m Opening balance 5,174 3,604 Revenue return 116 119 Capital return (258) 1,460 Total return (142) 1,579 Dividends (78) (72) Proceeds of issues of shares 19 63 Movement in the year (201) 1,570 Closing balance 4,973 5,174 Consolidated revenue statement for the year to 31 March 2001 2001 2000 £m £m Interest receivable Interest receivable and similar income arising from debt securities and other fixed income securities held as financial fixed asset investments Interest receivable on loan investments 99 87 Fixed rate dividends 21 34 120 121 Other interest receivable and similar income 43 31 163 152 Interest payable (117) (104) Net interest income 46 48 Dividend income from equity shares 123 117 Share of net losses of joint ventures (2) (1) Fees receivable 72 55 Other operating income 2 2 Total operating income 241 221 Administrative expenses and depreciation (121) (102) Profit on ordinary activities before tax 120 119 Tax on profit on ordinary activities (4) (4) Profit for the year 116 115 Dividends Interim (4.9p per share paid, 2000: 4.6p per share paid) (29) (27) Final (8.1p per share proposed, 2000: 7.6p per share paid) (49) (45) Profit retained for the year 38 43 Earnings per share Basic (pence) 19.2p 19.3p Diluted (pence) 18.9p 19.1p There is no material difference between the reported revenue and the revenue on an unmodified historical cost basis. Consolidated balance sheet as at 31 March 2001 2001 2001 2000 2000 Assets £m £m £m £m Treasury bills and other eligible bills 1 - Loans and advances to banks 890 478 Debt securities held for treasury purposes 201 191 Debt securities and other fixed income securities held as financial fixed asset investments Loan investments 1,522 1,292 Fixed income shares 434 594 1,956 1,886 Equity shares Listed 971 1,304 Unlisted 3,030 2,982 4,001 4,286 5,957 6,172 Interests in joint ventures Share of gross assets 46 122 Share of gross liabilities - - 46 122 Intangible fixed assets Goodwill 74 76 Tangible fixed assets 60 53 Own shares 56 48 Other assets 79 81 Prepayments and accrued income 75 68 Total assets 7,439 7,289 Liabilities Deposits by banks 617 190 Debt securities in issue 1,503 1,613 Other liabilities 58 69 Accruals and deferred income 210 187 Provisions for liabilities and charges Deferred tax 8 23 Subordinated liabilities 70 33 2,466 2,115 Called up share capital 304 302 Share premium account 333 316 Capital redemption reserve 1 1 Capital reserve 4,083 4,341 Revenue reserve 252 214 Equity shareholders' funds 4,973 5,174 Total liabilities 7,439 7,289 Memorandum items Contingent liabilities Guarantees and assets pledged as collateral security 19 16 Commitments 452 350 Approved by the Board Sir George Russell CBE Brian Larcombe Directors 16 May 2001 Consolidated cash flow statement for the year to 31 March 2001 2001 2000 £m £m Operating activities Interest received and similar income arising from debt securities and other fixed income securities held as financial fixed asset investments 103 114 Other interest received and similar income 43 35 Interest paid on borrowings (115) (103) Dividends received from equity shares 121 115 Fees and other net cash receipts 75 54 Operating and administrative costs paid (94) (109) Net cash inflow from operating activities 133 106 Taxation received 12 19 Capital expenditure and financial investment Investment in equity shares, fixed income shares and loans (1,541) (1,278) Sale, repayment or redemption of equity shares, fixed income shares and loan investments 1,586 1,162 Investment administrative expenses (49) (33) Investment interest paid (4) (1) Net divestment of joint ventures 23 7 Disposal of investment properties 2 4 Purchase of tangible fixed assets (11) (11) Sale of tangible fixed assets 2 1 Net cash inflow/(outflow) from capital expenditure and financial investment 8 (149) Acquisitions Acquisition of subsidiary undertakings (11) (78) Equity dividends paid (74) (69) Management of liquid resources (378) (189) Net cash (outflow) before financing (310) (360) Financing Debt due within one year (20) 9 Debt due after more than one year 352 309 Issues of shares 18 64 Net cash inflow from financing 350 382 Increase in cash 40 22 Notes to the financial statements for the year to 31 March 2001 1 Reconciliation of revenue profit before tax to net cash inflow from operating activities 2001 2000 £m £m Revenue profit before tax 120 119 Depreciation of equipment and vehicles 8 6 Increase in other assets associated with operating activities (2) (13) Tax on investment income included within income from overseas companies (2) (2) Increase in prepayments and accrued income associated with operating activities (7) (9) Increase in accruals and deferred income associated with operating activities 14 4 Reversal of losses of joint ventures less distributions received 2 1 Net cash inflow from operating activities 133 106 2 Reconciliation to net debt 2001 2000 £m £m Increase in cash in the year 40 22 Cash outflow from management of liquid resources 378 189 Cash (inflow) from debt financing (296) (309) Cash (inflow) from subordinated liabilities (36) (9) Change in net debt from cash flows 86 (107) Debt acquired with subsidiary undertakings - (23) Foreign exchange movements (17) (2) Movement in net debt in the year 69 (132) Net debt at start of year (1,170) (1,038) Net debt at end of year (1,101) (1,170) 3 Analysis of net debt Other 1 Cash Exchange non-cash 31 April flow movement changes March 2000 2001 £m £m £m £m £m Cash and deposits repayable on demand 42 40 5 - 87 Treasury bills, other loans, advances and 627 378 - - 1,005 treasury debt securities Deposits and debt securities repayable (393) 20 (15) (275) (663) within one year Deposits and debt securities repayable (1,410) (316) (6) 275 (1,457) after one year Subordinated liabilities (33) (36) (1) - (70) Finance leases (3) - - - (3) (1,170) 86 (17) - (1,101) Notes to the preliminary announcement: Note 1 The statutory accounts for the year to 31 March 2001 have not yet been delivered to the Registrar of Companies. The statutory accounts for the year to 31 March 2000 were filed with the Registrar of Companies on 9 October 2000. The auditors' reports on these statutory accounts are unqualified and do not contain any statements under Section 237(2) or (3) of the Companies Act 1985. This announcement does not constitute statutory accounts. Note 2 The final dividend will be payable on 13 July 2001 to holders of shares on the register on 15 June 2001. Note 3 Copies of the Report and accounts 2001 will be distributed to shareholders on or soon after 1 June 2001. Note 4 Investment statistics referred to in this preliminary announcement relate to investments made by 3i Group and third party co-investment funds unless otherwise stated. Ten largest investments Investment First Cost(1) Proportion Directors' Income Net Earnings(2) invested £m of equity valuation(1)received assets(2) £m in shares £m during £m held the year(3) £m Morse plc(4) 1995 Leading technology integrator Equity shares 9 21.9% 108 1 9 108 1 75 13 TeleCity plc(4) 1998 Internet and telecoms engineering services Equity shares 1 30.4% 62 - 1 62 - 99 (14) Beltpacker plc(5) 2000 Manufacture/ marketing of healthcare/ beauty products, footwear and accessories Equity shares 12 35.6% 12 - Loans 38 38 1 50 50 1 - - Weston Medical 1993 Group plc(4) Needle-free medical device manufacture Equity shares 1 20.5% 47 - 1 47 - 38 (10) Mettis Group 1999 Ltd Manufacture and sale of forgings Equity shares 1 40.0% 1 - Loans 41 41 3 42 42 3 (3) (5) General London 2001 Construction Holdings Ltd(5) Regional housebuilder Equity shares 1 41.6% 1 - Loans 41 41 - 42 42 - - - Actelion AG(4) 1998 Research and development of anti-infective drugs Equity shares 1 5.1% 42 - 1 42 - 100 (16) Marlborough 1996 Stirling plc(6) Design and implementation of software Equity shares 15 17.5% 39 1 15 39 1 10 5 Taylor & 1982 Francis Group plc4 Scientific and technical publishing Equity shares 2 7.6% 39 - 2 39 - 63 9 ERM Holdings 2001 Ltd(5) Environmental consultancy Equity shares 1 42.4% 1 - Loans 36 36 - 37 37 - - - Notes to the ten largest investments: 1. The investment information is in respect of 3i's holding and excludes any co-investment by 3i managed funds. 2. Net assets and earnings figures are taken from the most recent audited accounts of the investee business . The figures shown are the total earnings and net assets of each business. Because of the varying rights attaching to the classes of shares held by 3i, it could be misleading to attribute a certain proportion of earnings and net assets to the proportion of equity capital held. Negative earnings and net assets are shown in brackets. 3. Income in the year represents dividends received (exclusive of dividend tax credits at 10%, but inclusive of any overseas withholding tax) and gross interest receivable in the year to 31 March 2001. 4. Quoted company (including secondary markets). 5. These companies were incorporated in the year and no audited accounts are available, consequently no net assets or earnings are disclosed. 6. The proportion of equity held of Marlborough Stirling plc, reflects the position immediately before admission to the London Stock Exchange on 9 April 2001. The net assets and earnings figures are taken from the December 2000 audited accounts and do not reflect the reorganisation of capital prior to admission. New investment analysis 2001 2000 1999 1998 1997 UK 786 705 693 752 561 Continental Europe 560 306 137 62 34 Asia Pacific 49 31 6 6 - US 134 28 1 1 3 Total 1,529 1,070 837 821 598 Investment by geography (including co-investment funds) (£m) UK 1,006 894 899 909 652 Continental Europe 770 422 241 121 87 Asia Pacific 62 32 6 6 - US 134 28 1 1 3 Total 1,972 1,376 1,147 1,037 742 Continental European investment (£m) Austria 19 - - - - Benelux 63 39 3 - - Denmark 4 - - - - Finland 3 - - - - France 117 84 63 45 38 Germany 301 130 83 42 31 Ireland 17 - - - - Italy 64 48 21 16 10 Spain 131 95 68 18 8 Sweden 9 - - - - Switzerland 26 - - - - Other European(1) 16 26 3 - - Total 770 422 241 121 87 1 Other European includes investments in countries where 3i did not have an office at the period end. Investment by product (£m) Start-ups 278 82 57 29 21 Management buy-outs 617 440 365 381 261 Management buy-ins 88 142 241 164 152 Growth capital 852 545 330 298 207 Share purchase 90 132 121 142 86 Recoveries 47 35 33 23 15 Total 1,972 1,376 1,147 1,037 742 Number of investments by product Start-ups 187 104 56 60 43 Management buy-outs 64 60 97 130 119 Management buy-ins 14 32 48 76 73 Growth capital 369 297 324 312 248 Share purchase 34 38 56 72 45 Recoveries 58 62 73 47 44 Total 726 593 654 697 572 New investment analysis (continued) Investment by FTSE industrial classification (£m) 2001 2000 1999 1998 1997 Resources 67 17 69 20 37 Industrials 256 201 376 421 341 Consumer goods 371 167 237 208 99 Services and utilities 482 546 330 346 240 Financials 55 48 41 42 25 Information technology 741 397 94 n/a n/a Total 1,972 1,376 1,147 1,037 742 n/a the current FTSE industrial classifications came into effect on 1 April 1999. Changes made included the introduction of information technology. With the exception of 1999, the classification shown analyses investment and the portfolio by FTSE classification in use at each balance sheet date. Technology investment by sector (£m) Life sciences and healthcare 136 85 70 * * Communications and networking 224 131 75 * * Electronics and other technologies 76 93 31 * * e-Business 185 97 7 * * Software and computer services 485 250 109 * * Total 1,106 656 292 * * *not previously analysed Portfolio analysis Portfolio value by geography (including co-investment funds) (£m) 2001 2000 1999 1998 1997 UK 4,792 5,240 4,565 4,492 3,690 Continental Europe 2,039 1,514 882 538 423 Asia Pacific 98 64 12 6 - US 246 192 14 12 26 Total 7,175 7,010 5,473 5,048 4,139 Portfolio value by geography (3i only - excluding co-investment funds) (£m) UK 4,121 4,668 4,036 4,155 3,516 Continental Europe 1,363 1,049 495 304 254 Asia Pacific 86 63 12 6 - US 235 190 14 12 26 Total 5,805 5,970 4,557 4,477 3,796 Continental European portfolio value (£m) Austria 18 2 - - - Benelux 92 59 2 - - Denmark 10 3 - - - Finland 5 - - - - France 254 203 173 120 83 Germany 456 459 196 135 134 Ireland 45 28 - - - Italy 142 71 44 28 18 Spain 234 135 80 21 19 Sweden 11 3 - - - Switzerland 82 72 - - - Other European 1 14 14 - - - Total 1,363 1,049 495 304 254 1 Other European includes investments in countries where 3i did not have an office at the year end. Portfolio value by FTSE industrial classification (£m) Resources 232 185 176 140 102 Industrials 1,081 1,247 1,258 1,709 1,644 Consumer goods 1,237 1,138 952 779 467 Services and utilities 1,538 1,648 1,559 1,666 1,399 Financials 256 251 196 183 184 Information technology 1,461 1,501 416 n/a n/a Total 5,805 5,970 4,557 4,477 3,796 n/a the current FTSE industrial classifications came into effect on 1 April 1999. Changes made included the introduction of information technology. With the exception of 1999, the classification shown analyses investment and the portfolio by FTSE classification in use at each balance sheet date. Portfolio analysis (continued) Portfolio value by valuation method (£m) 2001 2000 1999 1998 1997 Imminent sale or IPO 106 241 88 59 62 Listed 818 1,103 742 687 583 Secondary market 266 483 75 85 90 Earnings 1,033 1,226 1,192 1,509 1,220 Cost 1,078 626 404 276 182 Net assets 147 144 113 102 98 Other 401 262 120 46 52 Loan investments and fixed 1,956 1,885 1,823 1,713 1,509 income shares Total 5,805 5,970 4,557 4,477 3,796 Technology portfolio value by sector (£m) Life sciences and healthcare 526 434 200 * * Communications and networking 400 457 151 * * Electronics and other technologies 203 286 193 * * e-Business 220 158 12 * * Software and computer services 980 1,044 418 * * Total 2,329 2,379 974 * * *Not previously analysed Technology portfolio value by valuation method (£m) Imminent sale or IPO 44 171 24 * * Listed 475 603 287 * * Secondary market 248 471 42 * * Earnings 69 168 94 * * Cost 841 449 221 * * Further advance 227 143 38 * * Net assets 1 2 3 * * Other 79 28 7 * * Loan investments and fixed income shares 345 344 258 * * Total 2,329 2,379 974 * * *not previously analysed. Funds under management (£m) Third party unquoted 2,131 2,261 1,470 1,345 490 co-investment funds Quoted investment companies(2) 870 818 474 464 379 Total 3,001 3,079 1,944 1,809 869 2 includes the 3i Group Pension Plan Realisations analysis Analysis of the Group's equity realisation proceeds (excluding third party co-investment funds). Total equity realisations proceeds by geography (£m) 2001 2000 1999 1998 1997 UK 1,147 686 448 353 247 Continental Europe 161 135 84 48 58 Asia Pacific - 1 - - - US - - - 11 - Total 1,308 822 532 412 305 Total equity realisations proceeds (£m) On IPO 253 48 75 31 41 Sale of quoted equity 585 351 165 155 117 Trade and other sales 470 423 292 226 147 Total 1,308 822 532 412 305 Total equity realisations proceeds by FTSE industrial classification (£m) Resources 36 4 10 6 5 Industrials 141 120 159 135 145 Consumer goods 230 97 66 49 35 Services and utilities 276 375 289 211 111 Financials 25 4 8 11 9 Information technology 600 222 n/a n/a n/a Total 1,308 822 532 412 305 n/a see previous footnote.

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