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July 6, 1993

3I WEATHERS RECESSION, HAS MIGHTY WAR CHEST, BUT PROPOSALS ARE DISAPPOINTING

By CBR Staff Writer

The dominant British venture capital organisation, 3i Group Plc, still owned by the Bank of England and the major UK clearing banks in various proportions after putting off its flotation on the Stock Exchange sine die, yesterday reported that in the year to March 31, net assets per share rose 4.6% to 563 pence. Pre-tax profit was up 19% at UKP48m, and earnings per share rose 16% to 15.8 pence, and the banks, for whom the company has been a superb investment, get a 5.5% uplift in their dividend to 11.5 pence. Commenting on the figures, 3i’s chief executive Ewen Macpherson said he believed Britain had come through the worst of the recession. Recovery will continue to be fragile, but business confidence appears to be remaining at the higher levels first reported in the spring of this year, and we are seeing deal flow pick up and provisions and failures fall, he said. The 3i Enterprise Barometer shows confidence returning in the UK and the most recent survey showed the highest level of business confidence since the onset of recession in September 1988. Noting that traditionally, smaller companies are the hardest hit in recessionary times but also tend to outperform as the economy improves, he said sustained recovery can be expected to enhance the profitability of portfolio companies and in turn 3i. Provisions rose to UKP171m. The company, which has written off entire involvement in the ludicrous financial engineering and debt manipulation that laid the Gateway supermarket group low, says it has almost UKP1,000m looking for a home or 50, but is seeing a shortage of proposals.

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