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3i Group
3i Group (LSE: III), the venture capital company, posted interim numbers for the six months ended September 30. Diluted net asset value per share rose from 847p to 1011p. Total return came in at £1040m, a return of 20.1% on shareholder funds. This compares with a return for the same period last year of £295m or a return of 8.2%. An interim dividend of 4.9p has been declared, an increase of 6.5% over last year.
The Fool Says
Impressive half-time results from the venture capitalist. At a time when Internet incubators buckle under the weight of a falling market, 3i continues to surge forward. A return of 20.1% compares more than favourably with a stock market performance that has seen the FTSE 100 decline 2.7% and the techMARK 100 index worsen 15% over the same period.
3i continued to pump more funds into the UK but a definite sea change in investing strategy looks on the cards as it ventures overseas for more opportunities. Investment in Europe rose 79% to £352m and 3i plans to take its portfolio of investment in Europe to 30% of its total portfolio by 2006.
There was a telling comment in today's announcement in which the company revealed that it was becoming "increasingly difficult to define those which are technology businesses and those whose growth will be driven by application of new technologies."
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New Look
New Look Group (LSE: NEW), the womenswear fashion retailer, this morning reported half time figures for the period ended September 23. Sales improved 8.2% to £225.2m from £208.1m for the same period last year. Pre-tax profit however slipped from £25.8m to £23.8m. Three news stores have been opened, 10 outlets have been relocated and 1 closed in the period. The interim dividend has been hiked by 5% to 2.1p per share.
The Fool Says
Alarm bells should be ringing when turnover goes up but profits fail to follow suit. The company claims to have identified three key ingredients for success, namely: fashion, value and choice. Over the period it has only managed to successfully deliver on one. The company's poor range of fashion clothing for the spring and summer season led to a poor choice for customers.
The fickleness of the fashion market is clearly demonstrated here with New Look's results. The key to success in fashion retailing is to get the product right first time. Failure to do so can be a painful exercise. Although profit margin slipped by two percentage points from 12.4% to 10.5%, New Look was able to redeem the situation by a little by maintaining asset turnover.
The liquid ratio gives me some reason to be concerned since this has fallen from 1.1 to 0.9. This implies that the company only has 90p in near term cash for every £1 of bills due to be paid shortly.
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