Final Results - Year Ended 31 March 2000, Part 2

3i Group PLC 25 May 2000 PART 2 Summary 3i has achieved a strong financial performance and made good progress towards its strategic objectives. Total return (£m) 2000 1999 Revenue profit before tax 119 109 Net realised capital profits 350 180 Unrealised value growth 1,167 (90) Tax and other (57) (22) --------- --------- Total return for the Group 1,579 177 --------- --------- Total return by geography (£m) UK 1,302 52 Continental Europe 221 105 US and Asia Pacific 109 - Currency adjustment (53) 20 --------- --------- Total return for the Group 1,579 177 --------- --------- Realisations 2000 1999 Total net realised profits (£m) 350 180 Equity proceeds (£m) 822 532 Uplift over opening equity valuation (%) 83 61 Percentage of opening equity portfolio sold (%) 17 12 Share and loan portfolio (£m) 2000 1999 Listed equity 1,103 742 Secondary market quoted 483 75 Unquoted equity 2,499 1,917 Loan investments 1,292 1,094 Fixed income investments 593 729 --------- --------- Total 5,970 4,557 --------- --------- The above excludes £201 million (1999: £nil) invested in FTSE 350 companies. Investment 2000 3i Unquoted Total funds (£m) (£m) (£m) No. UK 705 189 894 354 Continental Europe 306 116 422 218 Asia Pacific 31 1 32 11 US 28 - 28 10 -------- -------- -------- -------- Total 1,070 306 1,376 593 -------- -------- -------- -------- 1999 3i Unquoted Total funds (£m) (£m) (£m) No. UK 693 206 899 495 Continental Europe 137 104 241 152 Asia Pacific 6 - 6 5 US 1 - 1 2 -------- -------- -------- -------- Total 837 310 1,147 654 -------- -------- -------- -------- In addition, investments amounting to £208 million were made during the year (1999: £nil) in FTSE 350 companies. Michael Queen Finance Director 24 May 2000 Consolidated statement of total return For the year to 31 March 2000 Revenue Capital Total 2000 2000 2000 £m £m £m ------------------------------ ---------- ---------- ---------- Capital profits Net realised profits over opening valuation 350.2 350.2 Net unrealised value growth in the year 1,167.0 1,167.0 ------------------------------ ---------- ---------- ---------- 1,517.2 1,517.2 Total operating income before interest payable 324.8 324.8 Interest payable (104.4) (0.7) (105.1) ------------------------------ ---------- ---------- ---------- 220.4 1,516.5 1,736.9 Administrative expenses (101.9) (33.1) (135.0) Amortisation of goodwill - (2.6) (2.6) ------------------------------ ---------- ---------- ---------- Return before tax and currency translation adjustment 118.5 1,480.8 1,599.3 Tax (3.4) (13.0) (16.4) ------------------------------ ---------- ---------- ---------- Return for the year before currency translation adjustment 115.1 1,467.8 1,582.9 Currency translation adjustment 3.7 (8.1) (4.4) ------------------------------ ---------- ---------- ---------- Total return 118.8 1,459.7 1,578.5 ------------------------------ ---------- ---------- ---------- Total return per share Basic (pence) 19.9p 244.1p 264.0p Diluted (pence) 19.7p 241.7p 261.4p Reconciliation of movement in shareholders' funds 2000 £m ------------------------------ ---------- Opening balance 3,603.9 ------------------------------ ---------- Revenue return 118.8 Capital return 1,459.7 ------------------------------ ---------- Total return 1,578.5 Dividends (72.2) Proceeds of issues of shares 63.3 ------------------------------ ---------- Movement in the year 1,569.6 ------------------------------ ---------- Closing balance 5,173.5 ------------------------------ ---------- Consolidated statement of total return For the year to 31 March 1999 ------------------------------ ---------- ---------- ---------- Revenue Capital Total 1999 1999 1999 as restated as restated £m £m £m ------------------------------ ---------- ---------- ---------- Capital profits Net realised profits over opening valuation 180.1 180.1 Net unrealised value growth in the year (90.0) (90.0) ------------------------------ ---------- ---------- ---------- 90.1 90.1 Total operating income before interest payable 307.9 307.9 Interest payable (109.7) - (109.7) ------------------------------ ---------- ---------- ---------- 198.2 90.1 288.3 Administrative expenses (90.1) (21.2) (111.3) Amortisation of goodwill - - - ------------------------------ ---------- ---------- ---------- Return before tax and currency translation adjustment 108.1 68.9 177.0 Tax 2.2 (5.4) (3.2) ------------------------------ ---------- ---------- ---------- Return for the year before currency translation adjustment 110.3 63.5 173.8 Currency translation adjustment (1.7) 5.0 3.3 ------------------------------ ---------- ---------- ---------- Total return 108.6 68.5 177.1 ------------------------------ ---------- ---------- ---------- Total return per share Basic (pence) 18.3p 11.5p 29.8p Diluted (pence) 18.2p 11.5p 29.7p ---------- ---------- ---------- Reconciliation of movement in shareholders' funds 1999 £m Opening balance 3,488.9 ------------------------------ ---------- Revenue return 108.6 Capital return 68.5 ------------------------------ ---------- Total return 177.1 Dividends (66.3) Proceeds of issues of shares 4.2 ------------------------------ ---------- Movement in the year 115.0 ------------------------------ ---------- Closing balance 3,603.9 ---------- In accordance with Financial Reporting Standard 16 - Current Tax, dividends receivable have been recognised at an amount that excludes attributable tax credits. This represents a change in accounting policy from previous years, when dividends included attributable tax credits. This change in accounting policy has been reflected by restating the revenue column for the year to 31 March 1999. No change in the brought forward reserves results from this change in accounting policy. Consolidated revenue statement For the year to 31 March 2000 ------------------------------ ---------- ---------- 2000 1999 as restated £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 87.1 92.0 Fixed rate dividends 34.2 41.5 ------------------------------ ---------- ---------- 121.3 133.5 Other interest receivable and similar income 31.4 37.8 ------------------------------ ---------- ---------- 152.7 171.3 Interest payable (104.4) (109.7) ------------------------------ ---------- ---------- Net interest income 48.3 61.6 Dividend income from equity shares 116.7 82.9 Income from joint ventures (1.0) (1.2) Fees receivable 54.4 53.5 Other operating income 2.0 1.4 ------------------------------ ---------- ---------- Total operating income 220.4 198.2 Administrative expenses and depreciation (101.9) (90.1) ------------------------------ ---------- ---------- Profit on ordinary activities before tax 118.5 108.1 Tax on profit on ordinary activities (3.4) 2.2 ------------------------------ ---------- ---------- Profit for the year 115.1 110.3 Dividends Interim(4.6p per share paid,1999 4.3p paid) (27.0) (25.2) Final(7.6p per share proposed,1999 7.0p paid) (45.2) (41.1) ------------------------------ ---------- ---------- Profit retained for the year 42.9 44.0 ------------------------------ ---------- ---------- Earnings per share Basic (pence) 19.3p 18.5p Diluted (pence) 19.1p 18.5p ------------------------------ ---------- ---------- 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 2000 2000 2000 1999 1999 Assets £m £m £m £m -------------------------- --------- -------- -------- -------- Treasury bills and other eligible bills - 15.5 Loans and advances to banks 478.6 270.8 Loans and advances to customers 0.4 0.8 Debt securities held for treasury purposes 190.7 173.8 Debt securities and other fixed income securities held as financial fixed asset investments -------------------------- -------- -------- -------- -------- Loan investments 1,291.6 1,094.3 Fixed income shares 593.7 729.5 -------------------------- -------- -------- -------- -------- 1,885.3 1,823.8 Equity shares -------------------------- -------- -------- -------- -------- Listed 1,304.0 742.1 Unlisted 2,982.2 1,991.4 -------------------------- -------- -------- -------- -------- 4,286.2 2,733.5 6,171.5 4,557.3 Interests in joint ventures -------------------------- -------- -------- -------- -------- Share of gross assets 122.1 44.0 Share of gross liabilities - - -------------------------- -------- -------- -------- -------- 122.1 44.0 Intangible fixed assets Goodwill 75.5 - Tangible fixed assets 53.3 48.2 Other assets 121.0 138.1 Prepayments and accrued income 67.9 58.8 -------------------------- -------- -------- -------- -------- Total assets 7,281.0 5,307.3 -------------------------- -------- -------- -------- -------- Liabilities -------------------------- -------- -------- -------- -------- Deposits by banks 190.4 68.8 Debt securities in issue 1,613.3 1,425.9 Other liabilities 69.1 50.3 Accruals and deferred income 179.3 142.6 Provisions for liabilities and charges Deferred tax 22.8 15.8 Subordinated liabilities 32.6 - -------------------------- -------- -------- -------- -------- 2,107.5 1,703.4 -------------------------- -------- -------- -------- -------- Called up share capital 301.8 297.7 Share premium account 315.7 256.5 Capital redemption reserve 1.3 1.3 Capital reserve 4,340.7 2,881.0 Revenue reserve 214.0 167.4 -------------------------- -------- -------- -------- -------- Equity shareholders' funds 5,173.5 3,603.9 -------------------------- -------- -------- -------- -------- Total liabilities 7,281.0 5,307.3 -------------------------- -------- -------- -------- -------- Memorandum items Contingent liabilities Guarantees and assets pledged as collateral security 15.9 23.2 Commitments 350.5 359.9 -------------------------- -------- -------- -------- -------- Approved by the Board Sir George Russell CBE Brian Larcombe Directors 24 May 2000 Consolidated cash flow statement For the year to 31 March 2000 2000 1999 £m £m ----------------------------- -------- -------- Operating activities Interest received and similar income arising from debt securities and other fixed income securities held as financial fixed asset investments 114.2 126.6 Other interest received and similar income 34.6 37.5 Interest paid on borrowings (102.6) (113.2) Dividends received from equity shares 115.1 82.8 Fees and other net cash receipts 54.3 51.9 Operating and administrative costs paid (109.5) (81.3) ----------------------------- -------- -------- Net cash inflow from operating activities 106.1 104.3 ----------------------------- -------- -------- Taxation received 18.6 9.4 ----------------------------- -------- -------- Capital expenditure and financial investment Investment in equity shares, fixed income shares and loans (1,277.7) (836.9) Sale, repayment or redemption of equity shares, fixed income shares and loan investments 1,162.0 872.7 Repayment of loans and advances to customers 0.4 0.4 Investment administrative expenses (33.1) (21.2) Investment interest paid (0.7) - Net divestment of joint ventures 6.6 11.9 Disposal of investment properties and leases 3.7 6.8 Purchase of tangible fixed assets (11.3) (9.3) Sale of tangible fixed assets 1.2 1.4 ----------------------------- -------- -------- Net cash (outflow)/inflow from capital expenditure and financial investment (148.9) 25.8 ----------------------------- -------- -------- Acquisitions Acquisition of subsidiary undertakings (78.2) - ----------------------------- -------- -------- Equity dividends paid (68.1) (62.8) ----------------------------- -------- -------- Management of liquid resources (189.3) (20.5) ----------------------------- -------- -------- Net cash (outflow)/inflow before financing (359.8) 56.2 ----------------------------- -------- -------- Financing Debt due within one year 9.3 (15.5) Debt due after more than one year 309.0 (42.4) Issue of shares 63.3 4.2 ----------------------------- -------- -------- Net cash inflow/(outflow) from financing 381.6 (53.7) ----------------------------- -------- -------- Increase in cash 21.8 2.5 ----------------------------- -------- -------- Notes to the financial statements For the year to 31 March 2000 1 Reconciliation of revenue profit before tax to net cash inflow from operating activities 2000 1999 £m £m ----------------------------- --------- --------- Revenue profit before tax 118.5 108.1 Depreciation of equipment and vehicles 6.3 5.7 Increase in other assets associated with operating activities (12.9) (19.0) Tax on investment income included within income from overseas companies (1.7) - Increase in prepayments and accrued income associated with operating activities (9.1) (6.5) Increase in accruals and deferred income associated with operating activities 4.4 16.1 Reversal of losses of joint ventures less distributions received 1.0 0.5 Profit on sale of tangible fixed assets (0.4) (0.6) ----------------------------- --------- --------- Net cash inflow from operating activities 106.1 104.3 ----------------------------- --------- --------- 2 Reconciliation to net debt 2000 1999 £m £m ----------------------------- --------- --------- Increase in cash in the year 21.8 2.5 Cash outflow from management of liquid 189.3 20.5 resources Cash (inflow)/outflow from debt financing (308.9) 57.9 Cash (inflow) from subordinated liabilities (9.4) - ----------------------------- --------- --------- Change in net debt from cash flows (107.2) 80.9 Debt acquired with subsidiary undertakings (23.2) - Foreign exchange movements (2.0) (1.4) New finance leases and other non-cash changes (0.1) 0.2 ----------------------------- --------- --------- Movement in net debt in the year (132.5) 79.7 ----------------------------- --------- --------- Net debt at start of year (1,037.5) (1,117.2) ----------------------------- --------- --------- Net debt at end of year (1,170.0) (1,037.5) ----------------------------- --------- --------- 3 Analysis of net debt 1 April Cash flow Acquisition 1999 £m £m £m ----------------------------- --------- --------- --------- Cash and deposits repayable on demand 22.0 21.8 - Treasury bills, other loans, advances and treasury debt securities 438.1 189.3 - Deposits and debt securities repayable within one year (281.6) (9.3) - Deposits and debt securities repayable after one year (1,213.1) (299.6) - Subordinated liabilities - (9.4) (23.2) Finance leases (2.9) - - ----------------------------- --------- --------- --------- (1,037.5) (107.2) (23.2) ----------------------------- --------- --------- --------- 3 Analysis of net debt (continued) Other Exchange Non-cash 31 March movement Changes 2000 £m £m £m ----------------------------- --------- --------- --------- Cash and deposits repayable on demand (1.9) - 41.9 Treasury bills, other loans, advances and treasury debt securities - - 627.4 Deposits and debt securities repayable within one year (0.1) (102.7) (393.7) Deposits and debt securities repayable after one year - 102.7 (1,410.0) Subordinated liabilities - - (32.6) Finance leases - (0.1) (3.0) ----------------------------- --------- --------- --------- (2.0) (0.1) (1,170.0) ----------------------------- --------- --------- --------- Note 1 The statutory accounts for the year to 31 March 2000 have not yet been delivered to the Registrar of Companies. The statutory accounts for the year to 31 March 1999 were filed with the Registrar of Companies on 27 July 1999. 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 21 July 2000 to holders of shares on the register on 9 June 2000. Note 3 Copies of the Report and Accounts will be distributed to shareholders on 12 June 2000. 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.

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