TIDMIII
RNS Number : 8614S
3i Group PLC
09 November 2023
9 November 2023
3i Group plc announces results for the six months
to 30 September 2023
Good performance against a challenging macroeconomic and
geopolitical backdrop
-- Total return of GBP1,669 million or 10% on opening
shareholders' funds (September 2022: GBP1,765 million, 14%). NAV
per share of 1,886 pence (31 March 2023: 1,745 pence), including an
11 pence per share loss (September 2022: 74 pence per share gain)
on foreign exchange translation, and after the payment of the 29.75
pence per share second FY2023 dividend in July 2023.
-- Our Private Equity business delivered a gross investment
return of GBP1,826 million or 11% (September 2022: GBP1,970
million, 16%). Action continues to perform very well and a number
of our portfolio companies operating in the value-for-money,
private label and healthcare sectors are delivering good organic
growth. We continue to see weaker performance in our portfolio
companies exposed to discretionary consumer spending and more
cyclical end-markets. 89% of our Private Equity portfolio companies
by value grew earnings in the 12 months to 30 June 2023.
-- Action's net sales in the nine months ending on 1 October
2023 ("P9") grew to EUR7.9 billion (nine months ended P9 2022:
EUR6.1 billion) and like-for-like ("LFL") sales growth was very
strong at 19.2%, driven primarily by higher customer footfall. Last
12 months' ("LTM") operating EBITDA to the end of P9 was EUR1,530
million (LTM P9 2022: EUR1,036 million), representing a 48%
increase over the same period last year. Trading momentum has
remained strong at Action, with LFL sales growth in P10 (2 October
to 29 October 2023) of 13.4% (P10 2022: 12.0%). In the ten months
ending 29 October 2023, net sales and operating EBITDA were 30% and
43% ahead of last year, and LFL sales growth over the same period
was 18.5%.
-- In October 2023, Action successfully completed its debut US
dollar term loan issuance in the US leveraged loan market, raising
$1.5 billion. The loan has been fully hedged back to the euro, with
70% of the debt fixed at an all-in cost of 6.3%. Action also
completed a capital restructuring with a pro-rata redemption of
shares. 3i used EUR524 million of the EUR877 million gross proceeds
received to acquire further shares in Action, increasing our gross
equity stake in Action from 52.9% to 54.8%. Action's cash balance
was EUR1,030 million as at 3 November 2023.
-- Our Infrastructure business generated a gross investment
return of GBP31 million, or 2% (September 2022: GBP35 million, 3%).
The return was impacted by a 2.7% decline in 3i Infrastructure
plc's ("3iN") share price, despite the 6.3% total return on 3iN's
opening NAV it achieved in the first half. 3iN agreed to sell its
stake in Attero in the period for proceeds of c.EUR215 million, at
a c.31% uplift on the valuation at 31 March 2023. We completed one
new investment in our North American Infrastructure platform.
-- We further strengthened our liquidity profile through the
successful issue of a six year EUR500 million euro bond in June
2023. Our gearing at 30 September 2023 remained low at 6%. The
first dividend of 26.50 pence per share for FY2024, set at 50% of
the total dividend for FY2023, will be paid in January 2024.
Simon Borrows, 3i's Chief Executive, commented:
"Against a tough macroeconomic environment, we delivered another
good result in the period for 3i. Action continues to perform very
well. Its LFL sales growth, continued new store expansion and
significant free cash flow from operations have once again
underlined what an exceptional business it is. The strong
performance of a number of our other investments in the
value-for-money, private label and healthcare sectors underpins our
confidence that a number of these investments will also become
longer-term compounders over time.
We remain cautious about the investment and realisation market
given the macroeconomic environment in general, the breadth of
geopolitical risk and our belief that the full implications of the
global recalibration of interest rates are still yet to work fully
through the system. We will continue to look for opportunities to
deploy capital into this uncertainty, but we will not change our
patient and disciplined approach. We have a strong balance sheet
and are under no pressure to sell companies if the price or terms
do not properly reflect the prospects of the business."
Summary financial highlights under the Investment basis
3i prepares its statutory financial statements in accordance
with UK adopted international accounting standards. However, we
also report a non-GAAP "Investment basis" which we believe aids
users of our report to assess the Group's underlying operating
performance. The Investment basis (which is unaudited) is an
alternative performance measure ("APM") and is described later in
this document. Total return and net assets are the same under the
Investment basis and IFRS and we provide a reconciliation of our
Investment basis financial statements to the IFRS statements later
in this document. The first page of this document until the end of
the Financial review is prepared on an Investment basis.
Six months to/as Six months to/as 12 months to/as
at 30 September at 30 September at 31 March
Investment basis 2023 2022 2023
============================================================= ================ ================ ===============
Total return 1 GBP1,669m GBP1,765m GBP4,585m
% return on opening shareholders' funds 10% 14% 36%
Dividend per ordinary share 26.50p 23.25p 53.00p
============================================================= ================ ================ ===============
Gross investment return 2 GBP1,867m GBP2,016m GBP5,104m
As a percentage of opening 3i portfolio value 10% 14% 36%
Cash investment 2 GBP84m GBP298m GBP397m
Realisation proceeds GBP19m GBP193m GBP857m
3i portfolio value GBP20,255m GBP16,417m GBP18,388m
Gross debt GBP1,208m GBP1,129m GBP775m
Net debt 2 GBP1,153m GBP1,074m GBP363m
Gearing 2 6% 8% 2%
Liquidity GBP955m GBP801m GBP1,312m
Diluted net asset value per ordinary share ("NAV per share") 1,886p 1,477p 1,745p
============================================================= ================ ================ ===============
1 Total return is defined as Total comprehensive income for the
year, under both the Investment basis and the IFRS basis.
2 Financial measure defined as APM. Further information can be
found later in this document.
Disclaimer
These half-year results have been prepared solely to provide
information to shareholders. They should not be relied on by any
other party or for any other purpose. These half-year results may
contain statements about the future, including certain statements
about the future outlook for 3i Group plc and its subsidiaries
("3i" or "the Group"). These are not guarantees of future
performance and will not be updated. Although we believe our
expectations are based on reasonable assumptions, any statements
about the future outlook may be influenced by factors that could
cause actual outcomes and results to be materially different.
Enquiries:
Silvia Santoro, Group Investor Relations Director 020 7975 3258
Kathryn van der Kroft, Communications Director 020 7975 3021
A PDF copy of this release can be downloaded from
www.3i.com/investor-relations
For further information, including a live webcast of the results
presentation at 10.00am on 9 November 2023, please visit
www.3i.com/investor-relations
3i Group Half-year report 2023
Chief Executive's review
The Group delivered a good result in the first half of its
financial year, generating a total return of GBP1,669 million, or
10% on opening shareholders' funds (September 2022: GBP1,765
million, 14%). NAV per share at 30 September 2023 was 1,886 pence
(31 March 2023: 1,745 pence), including an 11 pence per share loss
(September 2022: 74 pence per share gain) on foreign exchange
translation, and after the payment of the 29.75 pence per share
second FY2023 dividend in July 2023.
The macroeconomic, geopolitical and market backdrop remains
challenging. This has led to a drop in consumer demand and to a
general reduction in transaction activity. Our longer-term
approach, based on permanent capital and active asset management of
our portfolio companies, puts us in a good position to navigate
these market conditions, as does our continuing discipline and
patience in capital deployment and realisations.
Action is again performing very strongly this year. We continue
to see a real divergence in performance across our remaining
Private Equity portfolio, with portfolio companies operating in the
value-for-money, private label and healthcare sectors delivering
good organic growth, offsetting weaker performance in our portfolio
companies exposed to discretionary consumer spending and more
cyclical end-markets.
Private Equity
The Private Equity portfolio delivered a gross investment return
("GIR") of GBP1,826 million, or 11% on opening value in the period,
including a GBP127 million loss on foreign exchange translation,
after the impact of foreign exchange hedging. Action generated a
GIR of GBP1,700 million, or 15%, over its opening value. In the 12
months to the end of 30 June 2023, 89% of our portfolio companies
by value grew earnings, with particularly good performance from a
number of our portfolio companies that have strong market positions
as well as high-performing business models. However, we are not
immune to the persistent macroeconomic headwinds that have so far
defined 2023, and this is reflected in the softer performance that
has continued across our discretionary consumer businesses, as well
as across a number of portfolio companies that are moving through a
more challenging phase of their respective end-market cycles.
Action performance
Action continues to trade very strongly. In the nine months
ending on 1 October 2023 ("P9"), Action generated net sales of
EUR7,912 million (nine months ended P9 2022: EUR6,062 million) and
operating EBITDA of EUR1,065 million (nine months ended P9 2022:
EUR740 million), 31% and 44% ahead of the same period last year.
Over the same period, like-for-like ("LFL") sales growth was 19.2%,
driven primarily by higher customer footfall. The EBITDA margin of
13.5% reflects sales leverage and good cost control.
Action added 153 stores in the first nine months of the year
(nine months ended P9 2022: 150 stores), including 11 stores in
Slovakia, its eleventh country and a new expansion market. The
store roll-out across its more recent expansion markets, Italy and
Spain, continues at a fast pace with encouraging trading results.
Action remains on track to add c.300 stores in 2023. The business
opened two further distribution centres in the period, in France
and Poland, growing its distribution centre network to 13 across
Europe.
At 30 September 2023, Action was valued using the last 12 months
("LTM") run-rate earnings to 1 October 2023 of EUR1,634 million.
This includes our normal run-rate adjustment to reflect stores
opened in the year. Our valuation multiple remains unchanged at
18.5x net of the liquidity discount, resulting in a valuation of
GBP12,862 million (31 March 2023: GBP11,188 million) for 3i's 52.9%
equity stake at 30 September 2023.
In October 2023, Action successfully completed its debut US
dollar term loan issuance in the US leveraged loan market. The
issue was significantly oversubscribed, enabling it to be upsized
in syndication by $500 million to $1.5
billion and to be priced very attractively. The loan has been
fully hedged back to euro, with 70% of the debt fixed at an all-in
cost of 6.3%. This was an outstanding outcome for a debut issue by
a European company in the US private debt markets and reflects
significant enthusiasm amongst US investors for Action's impressive
track record and growth prospects. As part of the transaction,
S&P and Moody's upgraded Action's credit rating to BB Stable /
Ba2 Stable. Action's total senior debt now stands at c.EUR4.5
billion. In October 2023, Action also completed a capital
restructuring with a pro-rata redemption of shares. 3i used EUR524
million of the EUR877 million gross proceeds from the share
redemption to acquire further shares in Action, increasing our
gross equity stake from 52.9% to 54.8%.
Action's strong performance has continued through October 2023,
with net sales increasing to EUR8,848 million and operating EBITDA
to EUR1,212 million in the ten months to 29 October 2023 ("P10").
Action again delivered strong LFL sales growth at 13.4% for the
month and added 32 stores to bring the year's total to P10 to 2,448
stores. After completing the debt issue and capital restructuring,
Action's cash as at 3 November 2023 was EUR1,030 million, meaning
Action's current net debt to P9 2023 LTM run-rate earnings ratio is
c.2.1x.
Private Equity portfolio performance in the period
Royal Sanders continues to deliver strong organic growth from
its key customers and is consistently outgrowing the overall
market. It is an established buy-and-build platform, and its most
recent self-funded acquisition of Lenhart, which completed in April
2023, further strengthened its position in the DACH market. In the
period, we invested GBP38 million to support Dutch Bakery's
combination with coolback, a German bakery group specialised in
bake-off bread, creating the European Bakery Group ("EBG").
Panelto, an Irish bakery group specialised in bake-off artisan
breads, joined EBG later in the period and established a UK and
Ireland platform for the combined group. The newly established
platform is performing ahead of our original investment case with
significant scope for further consolidation in what remains a
highly fragmented market.
AES continues to harness its unique position in the mechanical
seal sector and delivered another period of strong financial,
strategic and operational performance. Recent capital investment,
including its new headquarters factory in Rotherham, will ensure
that it remains at the forefront of precision engineering and
reliability services on a sustainable basis.
Commercial momentum remains strong at Cirtec Medical with
several new contracts ramping up in the year to date, and
additional programmes set to launch in 2024. The integration of key
work streams from the acquisition of Precision Components from Q
Holding is largely complete, with competencies from each business
being leveraged across the Cirtec Medical group. The remaining
business of Q Holding , Q Medical Devices, performed well in the
period, driven by increased sales to key customers across its
vascular unit and new product launches. ten23 health , our
biologics focused contract development and manufacturing
organisation ("CDMO") located in Basel and Visp, Switzerland, has
made good progress in 2023, significantly expanding its commercial
pipeline since the start of the year and growing its manufacturing
operations in Visp and its service offering at its Basel site.
Following two consecutive years of outperformance, SaniSure has
seen sales orders weaken in 2023 as a result of inventory
destocking across the wider bioprocessing industry. The financial
impact has been somewhat mitigated by a strong order book coming
into 2023 and operational efficiencies implemented by management,
ensuring that the business is well positioned as industry demand
recovers. The company continues to launch new programmes and expand
its sales and marketing footprint in new geographies.
MAIT 's earnings continued to grow steadily, driven by a
combination of organic top-line growth and value accretive bolt-on
acquisitions, including the June 2023 acquisition of etagis, a
provider of production planning software for ERP systems, MAIT's
sixth acquisition since our initial investment. MPM generated good
growth across its core regions in the period, as it continues to
expand its operations in the US, which is now its largest
market.
Following a sustained period of significant growth from the
outset of the pandemic to well into 2022, Tato has faced
challenging trading headwinds in 2023. Subdued DIY and construction
end-markets, pressure on input costs driven by inflation and
heightened pricing competition as a result of market consolidation,
have resulted in reduced volumes and margins in Tato's core
business. Importantly, there are some initial signs of trading
conditions moderating in Tato's favour and, as one of the three
leading global biocide businesses, Tato is well positioned for
market recovery. Constraints on consumer discretionary spending
have continued to impact performance in a small number of our
portfolio companies. Luqom 's trading remains impacted by lower
consumer demand and by discounting in the market due to
overstocking, whilst YDEON continues to experience muted demand
across its core geographies. Over the course of 2023, WilsonHCG has
faced a weaker white-collar recruiting market environment, with
existing clients reducing recruiter spend and potential new clients
exhibiting longer sales cycles, given market uncertainty.
Management have taken steps to manage the short-term softness
whilst ensuring that the business can respond quickly and scale
once positive recruitment sentiment returns. Formel D 's recovery
remains challenging, which has been reflected in its performance in
the period.
Infrastructure
The Infrastructure portfolio delivered a GIR of GBP31 million,
or 2% on opening value in the period. 3i Infrastructure plc ("3iN")
generated a total return on its opening NAV of 6.3% in the six
months to 30 September 2023, resulting in a NAV of 351.4 pence per
share. Its underlying portfolio continues to perform ahead of the
expectations set at the beginning of this financial year, with
particularly strong performance from Tampnet and TCR offsetting
softer performance in DNS:NET . Despite the continued robust
returns generated by its underlying portfolio, 3iN's share price
decreased to 304 pence at 30 September 2023 (31 March 2023: 313
pence), reflecting wider market sentiment and weaker demand for the
shares of listed infrastructure investment companies. 3iN agreed to
sell its stake in Attero in the period for proceeds of c.EUR215
million, a c.31% uplift on the valuation at 31 March 2023. This
transaction is expected to complete by the end of 2023.
We continued to develop our North American Infrastructure
platform with a new investment in AmWaste , a provider of
non-hazardous solid waste disposal services in the south eastern
region of the US. Regional Rail continues to scale its platform via
bolt-on acquisitions, acquiring rail assets from the Clinton
Terminal Railroad in North Carolina. Our proprietary capital
investment in Smarte Carte continues to outperform expectations
through positive contract economics, sustained US domestic travel
and improved international traffic.
Scandlines
Scandlines performed steadily in the period. Leisure traffic
volumes were ahead of last year after a strong summer. This offset
the impact of a weaker freight market, as a result of the more
challenging macroeconomic backdrop. Cash generation remains strong
and we received a dividend of GBP10 million from Scandlines in the
period.
Sustainability
We are making good progress on our sustainability agenda. In
particular, our ESG Committee continues to meet frequently to
oversee a number of climate-focused initiatives. We are formulating
our near-term science-based targets to reduce our greenhouse gas
("GHG") emissions and enhancing our portfolio data collection
capabilities, including the collection of portfolio GHG emissions
data. We are also refining our assessment of climate-related risks
and opportunities in our investment and portfolio management
processes through further climate scenario analysis. We will report
in alignment with the TCFD framework by the 2024 deadline set by
the FCA for asset managers such as 3i.
Balance sheet, liquidity, foreign exchange and dividend
During the period, we further strengthened our liquidity profile
through the successful issue of a six year EUR500 million euro bond
at a coupon of 4.875%. We ended the period with cash of GBP55
million (31 March 2023: GBP412 million) following the payment of
the second FY2023 dividend and crystallisation of a portion of
carried interest payable related to Action, including the
completion of the previously announced GBP200 million payment and a
further GBP258 million payment that completed in August 2023.
Total liquidity at 30 September 2023 was GBP955 million (31
March 2023: GBP1,312 million), including an undrawn RCF of GBP900
million. Net debt was GBP1,153 million, with gearing of 6% (31
March 2023: GBP363 million, 2%).
As we move into the second half of our financial year we remain
cautious on realisations but expect to receive good cash inflows
from refinancing proceeds and dividends. Following Action's US debt
issue in October 2023, we received gross proceeds of EUR877 million
of which we retained EUR353 million.
We recorded a total foreign exchange translation loss of GBP107
million (September 2022: GBP711 million gain) in the period,
including a gain on foreign exchange hedging.
In line with our dividend policy, we will pay a first FY2024
dividend of 26.50 pence per share, which is half of our FY2023
total dividend. This first FY2024 dividend will be paid to
shareholders on 12 January 2024.
Valuation
We continue to take a long-term, through-the-cycle view on the
multiples used to value our portfolio companies, consistent with
how we drive value creation in our portfolio and governed by our
robust valuation process, with independent challenge from our
auditors and the Board's Valuations Committee. In our Private
Equity portfolio, we have reflected instances of weaker trading
performance and declines in the relevant valuation peer groups by
reducing four valuation multiples in the period. These reductions
are in addition to the eight reductions made in FY2023. We
increased two valuation multiples in the period, reflecting the
progress of each business against its investment case, including
recent bolt-on activity. Our non-Action portfolio was valued at a
weighted average of 12.9x EBITDA at 30 September 2023 (31 March
2023: 13.1x). The average valuation level is well supported by the
investment cases which underpin our portfolio and by our aim to
generate at least a 2.0x return on their invested cost.
We take the same long-term, through-the-cycle view on Action's
multiple and its current LTM run-rate EBITDA post-discount multiple
of 18.5x remains supported by its continued superior performance
against its North American and
European value-for-money retail peers. Action's excellent growth
meant its valuation at 30 September 2022 of 18.5x LTM run-rate
EBITDA translated to 12.8x the run-rate EBITDA achieved one year
later.
Outlook
Against a tough macroeconomic environment, we delivered another
good result in the period for 3i. Action continues to perform very
well. Its LFL sales growth, continued new store expansion and
significant free cash flow from operations have once again
underlined what an exceptional business it is. The strong
performance of a number of our other investments in the
value-for-money, private label and healthcare sectors underpins our
confidence that a number of these investments will also become
longer-term compounders over time.
We remain cautious about the investment and realisation market
given the macroeconomic environment in general, the breadth of
geopolitical risk and our belief that the full implications of the
global recalibration of interest rates are still yet to work fully
through the system. We will continue to look for opportunities to
deploy capital into this uncertainty, but we will not change our
patient and disciplined approach. We have a strong balance sheet
and are under no pressure to sell companies if the price or terms
do not properly reflect the prospects of the business.
Simon Borrows
Chief Executive
8 November 2023
Business and Financial review
Private Equity
Our Private Equity portfolio generated a GIR of GBP1,826 million
(September 2022: GBP1,970 million), or 11% of the opening portfolio
value (September 2022: 16%), including a loss on foreign exchange
on investments, after the impact of foreign exchange hedging, of
GBP127 million (September 2022: GBP685 million gain).
Table 1: Gross investment return for the six months to 30
September
2023 2022
Investment basis GBPm GBPm
==================================================================== ===== =====
Realised profits/(losses) over value on the disposal of investments 1 (4)
Unrealised profits on the revaluation of investments 1,907 1,244
Interest income from investment portfolio 40 39
Fees receivable 5 6
Foreign exchange on investments (146) 685
Movement in fair value of derivatives 19 -
==================================================================== ===== =====
Gross investment return 1,826 1,970
==================================================================== ===== =====
Gross investment return as a % of opening portfolio value 11% 16%
==================================================================== ===== =====
Investment activity
Table 2: Private Equity cash investment in the six months to 30
September 2023
Portfolio company Type Business description/ bolt-on description Date GBPm
====================== ================== ======================================================== ========== ====
coolback: German bakery group specialised in bake-off
European Bakery Group Further (bolt-on) bread July 2023 38
ten23 health Further Biologics focused CDMO Various 12
====================== ================== ======================================================== ========== ====
Total Private Equity cash investment 50
================================================================================================================ ====
Table 3: Private Equity portfolio bolt-on acquisitions funded by
the portfolio company
in the six months to 30 September 2023
Portfolio company Name of acquisition Business description of bolt-on investment Date
===================== =================== ============================================================= ===========
Royal Sanders Lenhart Manufacturer of private label products for the personal care April 2023
industry
MAIT etagis Provider of production planning software for ERP systems June 2023
AES Triseal Engineering company specialising in design, manufacture and June 2023
application of mechanical seals
and associated rotating equipment
European Bakery Group Panelto Manufacturer of bake-off artisan breads August 2023
===================== =================== ============================================================= ===========
In the period, Dutch Bakery combined with coolback, a German
bakery group specialised in bake-off bread, to create the EBG , a
pan-European bakery platform. We supported this acquisition with a
GBP38 million investment in July 2023. In August 2023, EBG combined
with Panelto, a manufacturer of bake-off artisan breads,
establishing a UK and Ireland platform within the group. This
acquisition was self-funded. We continued to develop ten23 health
with a further investment of GBP12 million in the period.
Within the portfolio we also completed self-funded bolt-on
acquisitions for Royal Sanders with the acquisition of Lenhart, a
manufacturer of private label products for the personal care
industry, as well as for MAIT with the completion of its software
acquisition in etagis, a provider of ERP solutions, software
development and consulting services. AES completed the acquisition
of Triseal, a company specialising in mechanical seals and rotating
equipment.
Portfolio performance
Table 4: Unrealised profits/(losses) on the revaluation of
Private Equity investments 1
in the six months to 30 September
2023 2022
Investment basis GBPm GBPm
========================================== ===== =====
Earnings based valuations
Action performance 1,810 1,156
Performance increases (excluding Action) 353 347
Performance decreases (excluding Action) (219) (205)
Multiple movements (23) (180)
Other bases
Discounted cash flow (5) 4
Quoted portfolio (31) (31)
Other movements in unquoted investments 22 (1)
Imminent sale - 154
========================================= ===== =====
Total 1,907 1,244
========================================== ===== =====
1 More information on our valuation methodology, including
definitions and rationale, is included in our Annual report and
accounts 2023 on page 229.
Action performance and valuation
As detailed in the Chief Executive's review, Action continues to
perform very well. In the 12 months to the end of its P9 2023
(which ended 1 October 2023), Action generated run-rate EBITDA
growth of 44% and very strong cash flow.
At 30 September 2023, Action was valued using its LTM run-rate
earnings to the end of P9 2023 of EUR1,634 million. The LTM
run-rate earnings used included our normal adjustment to reflect
stores opened in the year. We continue to value Action at a
multiple of 18.5x net of the liquidity discount (31 March 2023:
18.5x), supported by Action's superior performance against its peer
group.
Action ended P9 2023 with cash of EUR941 million and a net debt
to LTM run-rate earnings ratio of 1.3x. Further details on Action's
capital restructuring in October 2023 are provided in the Chief
Executive's review.
At 30 September 2023, the valuation of our 52.9% stake in Action
was GBP12,862 million (31 March 2023: GBP11,188 million) and we
recognised unrealised profits from Action of GBP1,810 million
(September 2022: GBP1,156 million), as shown in Table 4.
Table 5: Action financial metrics as at P9
Last nine months to P9 2023 Last nine months to P9 2022
(1 October 2023) (2 October 2022)
Financial metrics EURm EURm
======================== =========================== ===========================
Net sales 7,912 6,062
LFL sales growth 19.2% 15.8%
Operating EBITDA 1,065 740
Operating EBITDA margin 13.5% 12.2%
Net new stores added 153 150
======================== =========================== ===========================
Last 12 months to P9 2023 Last 12 months to P9 2022
(1 October 2023) (2 October 2022)
EURm EURm
======================== =========================== ===========================
Net sales 10,710 8,121
Operating EBITDA 1,530 1,036
Operating EBITDA margin 14.3% 12.8%
Run-rate EBITDA 1,634 1,135
======================== =========================== ===========================
Performance (excluding Action)
Excluding Action, the private equity portfolio generated GBP353
million (September 2022: GBP347 million) of performance-driven
unrealised value growth, which more than offset performance-driven
unrealised value losses of GBP219 million (September 2022: GBP205
million).
As a best-in-class operator in private label and contract
manufacturing of personal care products, Royal Sanders continues to
benefit from operating in a non-cyclical defensive industry with
increased volumes from its key customers delivering growth ahead of
the overall market. Its recent bolt-on acquisitions, including the
acquisition of Lenhart in April 2023, continue to perform ahead of
our expectations, confirming Royal Sanders as a key consolidator in
its market. The newly formed EBG (as detailed under Investment
activity above) is performing ahead of our expectations, as Dutch
Bakery's trading momentum continues, and coolback and Panelto are
both showing good volume growth and integrating well within the
overall group. AES delivered another period of outperformance,
following a stronger than expected increase in sales volumes. AES's
commitment to scaling and investment in the latest manufacturing
technology and reliability services positions the business well for
continued growth in its market. It completed the bolt-on
acquisition of Triseal in the period.
Following steady performance in the first half of 2023, Cirtec
Medical is positioned for a strong end to the year. The integration
of Precision Components, which it acquired from our portfolio
company Q Holding, is largely complete, enabling Cirtec Medical to
penetrate new markets, and recent trading shows a good increase in
orders from existing and new customers. The remaining business of Q
Holding , Q Medical Devices, has seen higher demand from its
vascular unit customers and has benefited from operational
initiatives across its sites which have resulted in better
productivity and improved margins. Since the start of 2023, ten23
health has seen a meaningful scale up of its manufacturing output
across its sites in Basel and Visp, Switzerland. This scaling of
output has helped support the business secure a strong order
pipeline in 2023 from new and existing customers. We will continue
to support the business as it builds on this momentum and expands
its service capability and manufacturing output. An industry-wide
destocking of single-use consumables has resulted in a softer order
book for SaniSure in 2023. SaniSure has somewhat mitigated these
near-term headwinds with a strong order book coming into 2023 and
with the implementation of process improvements and efficiencies.
The medium to long-term outlook for the industry remains very
positive and SaniSure is very well positioned to excel upon the
market recovery.
MAIT has seen good momentum in its performance through a
combination of organic sales growth and strategic M&A,
completing the bolt-on acquisition of etagis in the period. MPM
delivered sales growth across all of its key geographies in the
period. Its now largest market, the US, has seen accelerated
growth, with particularly encouraging sales and profitability from
its online offering.
A small number of our portfolio companies continue to face
challenging trading conditions and weak end-markets. Tato 's
underperformance in 2023 is being driven primarily by weak DIY and
construction end-markets, inflationary cost pressures and
heightened pricing competition from the consolidation of its
competitors. Encouragingly, recent trading is showing some signs of
improvement. Luqom and YDEON continue to face a challenging
discretionary consumer market driven by muted customer demand and
the discounting in the market of excess stock. WilsonHCG has been
impacted by a weaker hiring environment across its core business
functions, and Formel D 's recovery has slowed as its end-markets
remain challenging.
Overall, 89% 1 of our Private Equity portfolio companies by
value grew their earnings in the 12 months to 30 June 2023.
1 Based on LTM adjusted earnings to June 2023. Includes 31
companies.
Table 6: Portfolio earnings growth of the top 20 Private Equity
investments 2
3i carrying value
Number of companies at 30 September 2023
at 30 September 2023 GBPm
====== ==================== ====================
<0% 8 1,858
0-9% 2 894
10-19% 3 559
20-29% 3 1,027
>=30% 4 13,353
====== ==================== ====================
2 Includes top 20 Private Equity companies by value excluding
ten23 health. This represents 97% of the Private Equity portfolio
by value (31 March 2023: 96%). LTM adjusted earnings to 30 June
2023 and Action based on LTM run-rate earnings to P9 2023. P9 2023
runs to 1 October 2023.
Leverage
Our Private Equity portfolio is funded with all senior debt
structures, with long-dated maturity profiles and, as at 30
September 2023, 80% is repayable from 2026 and beyond. Across our
Private Equity portfolio, term debt is well protected against
interest rate rises with over two thirds of total term debt hedged
at a weighted average tenor of more than three years. The average
all-in debt cost across two thirds of the portfolio is 6%. Average
leverage was 2.1x at 30 September 2023 (31 March 2023: 2.5x).
Excluding Action, leverage across the portfolio was 3.8x (31 March
2023: 4.0x). Table 7 shows the ratio of net debt to adjusted
earnings by portfolio value at 30 September 2023.
Table 7: Ratio of net debt to adjusted earnings 1
3i carrying value
Number of companies at 30 September 2023
at 30 September 2023 GBPm
==== ==================== ====================
<1x 1 94
1-2x 4 12,971
2-3x 4 998
3-4x 6 1,599
4-5x 1 88
5-6x 5 1,239
>6x 2 24
==== ==================== ====================
1 This represents 93% of the Private Equity portfolio by value
(31 March 2023: 92%). Quoted holdings and companies with net cash
are excluded from the calculation. Net debt and adjusted earnings
as at 30 June 2023. Action based on net debt at P9 2023 and LTM
run-rate earnings to P9 2023.
Multiple movements
When selecting multiples to value our portfolio companies we
take a long-term, through-the-cycle approach and consider a number
of factors including recent performance, outlook and bolt-on
activity, comparable recent transactions and exit plans, and the
performance of quoted comparable companies. At each reporting date
our valuation multiples are considered as part of a robust
valuation process, which includes independent challenge throughout,
including from our external auditors, culminating in the quarterly
Valuation Committee of the Board. In the period, capital markets
remained relatively volatile due to rising inflation and interest
rates and geopolitical uncertainty. Taking into consideration our
valuation approach and market developments, we adjusted four of our
valuation multiples down and two up, resulting in a net
multiple-driven unrealised value loss of GBP23 million in the
period (September 2022: GBP180 million unrealised value loss).
Action's valuation multiple at 30 September 2023 remained
unchanged at 18.5x net of the liquidity discount. Based on the
valuation at that date, a 1.0x movement in Action's post-discount
multiple would increase or decrease the valuation of 3i's
investment by GBP749 million.
Quoted portfolio
Basic-Fit is the only quoted investment in our Private Equity
portfolio. We recognised an unrealised value loss of GBP31 million
from Basic-Fit in the period (September 2022: unrealised value loss
of GBP31 million) as its share price decreased to EUR26.86 at 30
September 2023 (31 March 2023: EUR36.32). At 30 September 2023, our
residual 5.7% shareholding was valued at GBP88 million (31 March
2023: GBP121 million).
Assets under management
The value of the Private Equity portfolio, including third-party
capital, increased to GBP25.7 billion (31 March 2023: GBP22.9
billion) principally due to unrealised value movements in the
period.
Table 8: Private Equity 3i proprietary capital
3i proprietary capital value 3 Vintage 3i proprietary capital value 3 Vintage
money
30 September 2023 money multiple 4 31 March 2023 multiple 4
Vintages 1 GBPm 30 September 2023 GBPm 31 March 2023
================== ============================== ================= ============================== =============
Buyouts 2010-2012 2,216 15.6x 2,968 15.1x
Growth 2010-2012 24 2.1x 23 2.1x
2013-2016 824 2.5x 814 2.5x
2016-2019 1,954 1.8x 1,872 1.8x
2019-2022 1,653 1.5x 1,524 1.5x
2022-2025 219 1.0x 228 1.0x
Others 2 11,385 n/a 8,996 n/a
================== ============================== ================= ============================== =============
Total 18,275 16,425
================== ============================== ================= ============================== =============
1 Assets included in these vintages are disclosed in the
Glossary at the end of this document.
2 Includes Action value of GBP10,646 million (31 March 2023:
GBP8,220 million) for 3i's direct share and including the stake
held through the 2020 Co-investment vehicles. Overall, including
the Buyouts 2010-12 vintage, 3i's share of Action value is
GBP12,862 million (31 March 2023: GBP11,188 million).
3 3i carrying value is the unrealised value for the remaining
investments in each vintage.
4 Vintage money multiple (GBP) includes realised and unrealised
value as at the reporting date.
Table 9: Private Equity assets by geography
3i carrying value
at 30 September 2023
3i office location Number of companies GBPm
=================== =================== ====================
Netherlands 10 14,391
France 1 315
Germany 7 704
UK 9 1,133
US 9 1,703
Other 3 29
=================== =================== ====================
Total 39 18,275
=================== =================== ====================
Table 10: Private Equity assets by sector
3i carrying value
at 30 September 2023
Sector Number of companies GBPm
====================== =================== ====================
Action (Consumer) 1 12,862
Consumer 13 2,141
Industrial Technology 7 1,135
Healthcare 5 1,249
Services 10 724
Software 3 164
====================== =================== ====================
Total 39 18,275
====================== =================== ====================
Infrastructure
Our Infrastructure portfolio generated a GIR of GBP31 million in
the period, or 2% on the opening portfolio value (September 2022:
GBP35 million, 3%), including a gain on foreign exchange on
investments of GBP8 million (September 2022: GBP58 million).
Table 11: Gross investment return for the six months to 30
September
2023 2022
Investment basis GBPm GBPm
============================================================== ==== ====
Realised losses over value on the disposal of investments (3) -
Unrealised profits/(losses) on the revaluation of investments 2 (47)
Dividends 18 16
Interest income from investment portfolio 6 8
Foreign exchange on investments 8 58
============================================================== ==== ====
Gross investment return 31 35
============================================================== ==== ====
Gross investment return as a % of opening portfolio value 2% 3%
============================================================== ==== ====
Fund management
3iN
In the six months to 30 September 2023, 3iN generated a total
return on opening NAV of 6.3% (September 2022: 9.3%) and is on
track to meet its dividend target for the year to 31 March 2024 of
11.90 pence per share, up 6.7% year-on-year.
3iN's underlying portfolio continues to deliver strong earnings
growth and reinvestment opportunities. There was particularly
strong performance from Tampnet , TCR and Valorem , offsetting
softer performance from DNS:NET which is experiencing a more
challenging fibre sector outlook in Germany, resulting in a delayed
rollout of its network around Berlin. In the period, 3iN announced
the sale of its c.25% stake in Attero for expected net proceeds of
c.EUR215 million, a c.31% uplift from its valuation of EUR164
million at 31 March 2023.
As investment manager, 3i received a management fee from 3iN of
GBP25 million in the period (September 2022: GBP23 million).
North American Infrastructure platform
We continue to develop our North American Infrastructure
platform. In the period, we completed a new investment in AmWaste ,
a provider of non-hazardous solid waste disposal services in the
south eastern region of the US and a further bolt-on acquisition
for Regional Rail , with the acquisition of rail assets from
Clinton Terminal Railroad, which further expanded its presence in
North Carolina. Freight load traffic across Regional Rail's
existing railroads outperformed our March 2023 expectations. EC
Waste saw good performance from its residential collection
contracts, landfill operations and through contract wins for debris
clean ups, offsetting higher expenses. Regional Rail and EC Waste
were valued on a DCF basis at 30 September 2023.
During the period, our North American Infrastructure platform
received further external commitments. This resulted in a pro-rata
rebalancing of existing platform holdings which resulted in
proceeds to 3i of GBP18 million.
Other funds
3i EOPF and the 3i Managed Infrastructure Acquisitions LP both
performed in line with expectations in the period.
Assets under management
Infrastructure AUM was GBP6.6 billion at 30 September 2023 (31
March 2023: GBP6.4 billion) and we generated fee income of GBP34
million from our fund management activities in the period
(September 2022: GBP30 million).
Table 12: Assets under management as at 30 September 2023
Fee
% income
3i Remaining invested 2 earned
Close Fund commitment/ 3i at September AUM in the period
Fund/strategy date size share commitment 2023 GBPm GBPm
===================================== ========= ======= =========== ========== ============ ===== =============
3iN 1 Mar-07 n/a GBP818m n/a n/a 2,804 25
3i Managed Infrastructure
Acquisitions LP Jun-17 GBP698m GBP35m GBP5m 87% 1,317 2
3i managed accounts various n/a n/a n/a n/a 850 3
3i North American Infrastructure
platform Mar-22 3 US$495m US$300m US$85m 72% 518 1
BIIF May-08 GBP680m n/a n/a 91% 452 2
3i European Operational Projects Fund Apr-18 EUR456m EUR40m EUR5m 86% 362 1
Other n/a n/a n/a n/a n/a 316 -
===================================== ========= ======= =========== ========== ============ ===== =============
Total 6,619 34
================================================ ======= =========== ========== ============ ===== =============
1 AUM based on the share price at 30 September 2023.
2 % invested is the capital deployed into investments against
the total Fund commitment.
3 First close completed in March 2022.
3i's proprietary capital infrastructure portfolio
The Group's proprietary capital infrastructure portfolio
consists of its 29% stake in 3iN, its investment in Smarte Carte
and direct stakes in other managed funds.
Quoted stake in 3iN
At 30 September 2023, our 29% stake in 3iN was valued at GBP818
million (31 March 2023: GBP841 million) as a result of a 2.7%
decrease in 3iN's share price to 304 pence in the period (31 March
2023: 313 pence). We recognised an unrealised loss of GBP23 million
(September 2022: unrealised loss of GBP117 million), offset by
GBP15 million of dividend income (September 2022: GBP14
million).
North America Infrastructure proprietary capital
Smarte Carte performed well in the period. Strong US domestic
leisure travel demand and further improvements in international
travel volumes drove better than expected performance across all
lines of business. At 30 September 2023, the business was valued on
a DCF basis.
Table 13: Unrealised profits/(losses) on the revaluation of
Infrastructure investments 1
in the six months to 30 September
2023 2022
GBPm GBPm
=========== ==== =====
Quoted (23) (117)
DCF 22 63
Fund/other 3 7
=========== ==== =====
Total 2 (47)
=========== ==== =====
1 More information on our valuation methodology, including
definitions and rationale, is included in our Annual report and
accounts 2023 on page 229.
Scandlines
Scandlines generated a GIR of GBP10 million (September 2022:
GBP11 million) or 2% of opening portfolio value in the period
(September 2022: 2%).
Table 14: Gross investment return for the six months to 30
September
2023 2022
Investment basis GBPm GBPm
========================================================== ==== ====
Dividends 10 12
Foreign exchange on investments (7) 21
Movement in fair value of derivatives 7 (22)
========================================================== ==== ====
Gross investment return 10 11
========================================================== ==== ====
Gross investment return as a % of opening portfolio value 2% 2%
========================================================== ==== ====
Performance
Scandlines performed steadily in the period, with leisure
volumes ahead of a strong prior year and of pre-pandemic levels.
After back-to-back record years, freight volumes have been impacted
by a more challenging macroeconomic backdrop. Cash generation in
the business remains good and we received a dividend of GBP10
million in the period. At 30 September 2023, Scandlines was valued
at GBP547 million (31 March 2023: GBP554 million) on a DCF
basis.
Foreign exchange
We hedge the balance sheet value of our investment in Scandlines
for foreign exchange translation risk. We recognised a loss of GBP7
million on foreign exchange translation (September 2022: GBP21
million gain) offset by a fair value gain of GBP7 million
(September 2022: GBP22 million loss) from derivatives in our
hedging programme.
Overview of financial performance
We generated a total return of GBP1,669 million, or a profit on
opening shareholders' funds of 10%, in the six months to 30
September 2023 (September 2022: GBP1,765 million, or 14%). The
diluted NAV per share at 30 September 2023 increased to 1,886 pence
(31 March 2023: 1,745 pence) including the 11 pence per share loss
on foreign exchange translation in the period (September 2022: 74
pence per share gain), and after the payment of the second FY2023
dividend of GBP286 million, or 29.75 pence per share in July 2023
(September 2022: GBP262 million, 27.25 pence per share).
Table 15: Gross investment return for the six months to 30 September
2023 2022
Investment basis GBPm GBPm
========================================================== ===== =====
Private Equity 1,826 1,970
Infrastructure 31 35
Scandlines 10 11
========================================================== ===== =====
Gross investment return 1,867 2,016
========================================================== ===== =====
Gross investment return as a % of opening portfolio value 10% 14%
========================================================== ===== =====
The GIR was GBP1,867 million in the period (September 2022:
GBP2,016 million), driven by the very strong performance of Action
and good contributions from a number of our portfolio companies
operating in the value-for-money, private label and healthcare
sectors, offset by weaker performance in our portfolio companies
exposed to discretionary consumer spending and more cyclical
end-markets. The GIR also includes a GBP119 million foreign
exchange loss on translation of our investments, including the
impact of foreign exchange hedging in the period (September 2022:
GBP742 million gain). Further information on the Private Equity,
Infrastructure and Scandlines valuations is included in the
business reviews.
Table 16: Operating cash profit /(loss) for the six months to 30
September
2023 2022
Investment basis GBPm GBPm
====================================== ==== ====
Cash fees from external funds 38 33
Cash portfolio fees 6 1
Cash portfolio dividends and interest 44 33
====================================== ==== ====
Cash income 88 67
====================================== ==== ====
Cash operating expenses 1 (82) (84)
====================================== ==== ====
Operating cash profit/(loss) 6 (17)
====================================== ==== ====
1 Cash operating expenses include operating expenses paid and
lease payments.
We generated an operating cash profit of GBP6 million in the
period (September 2022: GBP17 million loss). Cash income increased
to GBP88 million (September 2022: GBP67 million) principally due to
an increase in dividend income and interest received compared to
the same period last year. Cash operating expenses incurred during
the period remained broadly in line with the prior period at GBP82
million (September 2022: GBP84 million).
Net foreign exchange movements
The Group recorded a total foreign exchange translation loss of
GBP107 million, including the impact of foreign exchange hedging in
the period, (September 2022: GBP711 million gain) as a result of
sterling strengthening by 1% against the euro, which was partially
offset by sterling weakening by 1% against the US dollar.
At 30 September 2023, the notional value of the Group's forward
foreign exchange contracts was EUR2.6 billion and $1.2 billion. The
EUR2.6 billion includes the EUR600 million notional value of the
forward foreign exchange contracts related to the Scandlines
hedging programme.
Table 17 sets out the sensitivity of net assets to foreign
exchange movements at 30 September 2023 and sensitivity after the
hedging programme
Table 17: Net assets and sensitivity by currency at 30 September
2023
Net 1%
assets sensitivity
FX rate GBPm % GBPm
============= ======= ====== === ===========
Sterling n/a 4,634 25% n/a
Euro 1 1.1529 12,104 67% 121
US dollar 1 1.2206 1,258 7% 12
Danish krone 8.5973 218 1% 2
Other n/a 31 -% n/a
============= ======= ====== === ===========
Total 18,245
============= ======= ====== === ===========
1 The sensitivity impact calculated on the net assets position
includes the impact from foreign exchange hedging.
Carried interest and performance fees
We receive carried interest and performance fees from
third-party funds and 3iN. We also pay carried interest and
performance fees to participants in plans relating to returns from
investments. In Private Equity (excluding Action) we typically
accrue net carried interest payable of c.12% of GIR, based on the
assumption that all investments are realised at their balance sheet
value.
In total, we accrued carried interest payable of GBP147 million
(September 2022: GBP157 million) for Private Equity in the period.
This was driven by the continued strong performance of the 2010-12
vintage, which holds Action, as well as by the return generated by
other Private Equity carry vintages.
In Infrastructure, following the agreed sale of Attero by 3iN,
we recognised GBP21 million of performance fees receivable, of
which GBP16 million was recognised as carried interest payable.
Carried interest is paid to participants when cash proceeds have
actually been received following a realisation, refinancing event
or other cash distribution and performance hurdles are passed in
cash terms. Due to the length of time between investment and
realisation, the schemes are usually active for a number of years
and their participants include both current and previous employees
of 3i.
In the period, we completed the previously announced GBP200
million carried interest payment to participants in the Buyouts
2010-12 carry scheme and, in August 2023, we crystallised a further
portion of the carried interest liability related to Action,
resulting in a further payment of GBP258 million to participants in
the same scheme. In total, carried interest and performance fee
cash paid in the period was GBP510 million (September 2022: GBP39
million). The total performance fee cash received in the period was
GBP37 million (September 2022: GBP51 million).
Overall, the effect of the income statement charge, the cash
payments, as well as the currency translation meant that the
balance sheet carried interest and performance fees payable
decreased to GBP985 million at 30 September 2023 (31 March 2023:
GBP1,351 million).
Following Action's capital restructuring in October 2023, as
detailed in the Chief Executive's review, 3i's gross investment in
Action increased from 52.9% to 54.8% and 3i's investment in Action,
net of carry, increased from 50% to 52%. In Private Equity, in
relation to Action, we will accrue net carried interest payable of
c.5% of Action GIR.
Table 18: Carried interest and performance fees for the six
months to 30 September
2023 2022
Investment basis Statement of comprehensive income GBPm GBPm
=================================================== ===== =====
Carried interest and performance fees receivable
Private Equity - 2
Infrastructure 21 -
=================================================== ===== =====
Total 21 2
=================================================== ===== =====
Carried interest and performance fees payable
Private Equity (147) (157)
Infrastructure (29) (5)
=================================================== ===== =====
Total (176) (162)
=================================================== ===== =====
Net carried interest payable (155) (160)
=================================================== ===== =====
Table 19: Carried interest and performance fees
30 September 31 March
2023 2023
Investment basis Statement of financial position GBPm GBPm
================================================= ============ ========
Carried interest and performance fees receivable
Private Equity 5 6
Infrastructure 21 37
================================================= ============ ========
Total 26 43
================================================= ============ ========
Carried interest and performance fees payable
Private Equity (962) (1,325)
Infrastructure (23) (26)
================================================= ============ ========
Total (985) (1,351)
================================================= ============ ========
Balance sheet and liquidity
During the period, we successfully issued a six year EUR500
million euro bond at a coupon of 4.875%, further strengthening our
liquidity profile. At 30 September 2023, the Group had net debt of
GBP1,153 million (31 March 2023: GBP363 million) and gearing of 6%
(31 March 2023: 2%) following the payment of carried interest and
performance fees payable of GBP510 million and the second FY2023
dividend of GBP286 million.
The Group had liquidity of GBP955 million at 30 September 2023
(31 March 2023: GBP1,312 million) comprising cash and deposits of
GBP55 million (31 March 2023: GBP412 million) and an undrawn RCF of
GBP900 million (31 March 2023: GBP900 million). Following Action's
US debt issue in October 2023, we have received gross proceeds of
EUR877 million of which we have retained EUR353 million.
The investment portfolio value increased to GBP20,255 million at
30 September 2023 (31 March 2023: GBP18,388 million) mainly driven
by unrealised profits of GBP1,909 million in the period.
Table 20: Simplified consolidated balance sheet
30 September 31 March
2023 2023
Investment basis Statement of financial position GBPm GBPm
================================================= ============ ========
Investment portfolio 20,255 18,388
Gross debt (1,208) (775)
Cash and deposits 55 412
================================================= ============ ========
Net debt (1,153) (363)
================================================= ============ ========
Carried interest and performance fees receivable 26 43
Carried interest and performance fees payable (985) (1,351)
Other net assets 102 127
================================================= ============ ========
Net assets 18,245 16,844
================================================= ============ ========
Gearing 1 6% 2%
================================================= ============ ========
1 Gearing is net debt as a percentage of net assets.
Going concern
The Half-year consolidated financial statements are prepared on
a going concern basis following the assessment by the Directors,
taking into account the Group's current performance and
outlook.
Alternative Performance Measures ("APMs")
We assess our performance using a variety of measures that are
not specifically defined under IFRS and are therefore termed APMs.
The APMs that we use may not be directly comparable with those used
by other companies. Our Investment basis is itself an APM.
The explanation of and rationale for the Investment basis and
its reconciliation to IFRS is provided later in this document. The
table below defines our additional APMs and should be read in
conjunction with our Annual report and accounts 2023.
Gross investment return as a percentage of opening portfolio value
Purpose Calculation Reconciliation to IFRS
A measure of the performance of our It is calculated as the gross The equivalent balances under IFRS and
investment portfolio. For further investment return, as shown in the the reconciliation to the Investment
information, see the Investment basis Consolidated basis are shown
Group KPIs in our Annual report and statement of comprehensive income, as in the Reconciliation of consolidated
accounts 2023. a % of the opening portfolio value. statement of comprehensive income and
the Reconciliation
of consolidated statement of financial
position respectively.
====================================== ====================================== ======================================
Cash realisation
Purpose Calculation Reconciliation to IFRS
Cash proceeds from our investments The cash received from the disposal of The equivalent balance under IFRS and
support our returns to shareholders, investments in the period as shown in the reconciliation to the Investment
as well as our ability the Investment basis is shown
to invest in new opportunities. For basis Consolidated cash flow in the Reconciliation of consolidated
further information, see the Group statement. cash flow statement.
KPIs in our Annual
report and accounts 2023.
====================================== ====================================== ======================================
Cash investment
Purpose Calculation Reconciliation to IFRS
Identifying new opportunities in which The cash paid to acquire investments The equivalent balance under IFRS and
to invest proprietary capital is the and recognising syndications in the the reconciliation to the Investment
primary driver period as shown on basis is shown
of the Group's ability to deliver the Investment basis Consolidated cash in the Reconciliation of consolidated
attractive returns. For further flow statement. cash flow statement.
information, see the Group
KPIs in our Annual report and accounts
2023.
====================================== ====================================== ======================================
Operating cash profit/(loss)
Purpose Calculation Reconciliation to IFRS
By covering the cash cost of running The cash income from the portfolio The equivalent balance under IFRS and
the business with cash income, we (interest, dividends and fees) the reconciliation to the Investment
reduce the potential together with fees received basis is shown
dilution of capital returns. For from external funds less cash in the Reconciliation of consolidated
further information, see the Group operating expenses and leases payments cash flow statement.
KPIs in our Annual report as shown on the Investment
and accounts 2023. basis Consolidated cash flow
statement. The calculation is shown in
Table 16 of the Overview
of financial performance.
====================================== ====================================== ======================================
Net cash/(net debt)
Purpose Calculation Reconciliation to IFRS
A measure of the available cash to Cash and cash equivalents plus The equivalent balance under IFRS and
invest in the business and an deposits less loans and borrowings as the reconciliation to the Investment
indicator of the financial shown on the Investment basis is shown
risk in the Group's balance sheet. basis Consolidated statement of in the Reconciliation of consolidated
financial position. statement of financial position.
====================================== ====================================== ======================================
Gearing
Purpose Calculation Reconciliation to IFRS
A measure of the financial risk in the Net debt (as defined above) as a % of The equivalent balance under IFRS and
Group's balance sheet. the Group's net assets under the the reconciliation to the Investment
Investment basis. It basis is shown
cannot be less than zero. in the Reconciliation of consolidated
statement of financial position.
====================================== ====================================== ======================================
Principal risks and uncertainties
3i's risk appetite statement, approach to risk management and
governance structure are set out in the Risk section of the Annual
report and accounts 2023, which can be accessed on the Group's
website at www.3i.com .
Notwithstanding the continued global economic uncertainties and
increased geopolitical tensions in the period, the principal risks
to the achievement of the Group's strategic objectives are
unchanged from those reported on pages 87 to 91 of the Annual
report and accounts 2023 and remain broadly stable in terms of
impact and likelihood. The Group's principal risks continue to be
closely monitored and may be subject to change.
Principal risks
External - Risks arising from external factors including
political, legal, regulatory, economic and competitor changes,
which affect the Group's investment portfolio and operations.
Most of the external risk factors are continuations of themes
outlined at the time of the Annual report and accounts 2023. These
include the increased cost of living, higher interest rates and
lower forecast economic growth. These combined headwinds have the
potential to affect trading performance, liquidity and valuations
in varying degrees across 3i's investment portfolio. As outlined
below, 3i has a well-funded balance sheet and carefully constructed
portfolio of international companies operating in a range of
different sectors, which has performed well overall in a
challenging environment.
The Group and our portfolios have no material direct exposure to
the Middle East, although we continue to closely monitor the impact
of the ongoing situation in the region.
Investment - Risks in respect of specific asset investment
decisions, the subsequent performance of an investment or exposure
concentrations across business line portfolios.
The portfolio continues to perform resiliently in the current
market and economic conditions; notably those operating in the
value-for-money, private label and healthcare sectors. However,
some of our portfolio companies are more exposed to the impact of
cost pressures and lower consumer discretionary spend and more
cyclical end-markets, and are being closely monitored. In addition,
an extended period of higher interest rates could impact debt
markets and, in turn, potentially affect investment activity levels
or refinancing plans.
Operational - Risks arising from inadequate or failed processes,
people and systems or from external factors affecting these.
The Group's day-to-day operations are largely unchanged in the
period. This includes the continued resilience and security of the
Group's IT systems and maintenance of robust processes and internal
controls. Staff turnover rates have been stable.
Capital management - Risks in relation to the management of
capital resources including liquidity risk, currency exposures and
leverage risk.
3i's approach to capital management remains conservative, with a
well-funded balance sheet. The Group issued a six year EUR500
million bond at a coupon of 4.875% in June 2023 providing
additional liquidity and euro hedging. The investment and
divestment pipeline and balance of investment and realisation flows
are subject to regular reviews.
The Half-year report provides an update on 3i's strategy and
business performance, as well as on market conditions, which is
relevant to the Group's overall risk profile and should be viewed
in the context of the Group's risk management framework and
principal risks as disclosed in the Annual report and accounts
2023.
Reconciliation of the Investment basis to IFRS
Background to Investment basis numbers used in the Half-year
report
The Group makes investments in portfolio companies directly,
held by 3i Group plc, and indirectly, held through intermediate
holding company and partnership structures ("investment entity
subsidiaries"). It also has other operational subsidiaries which
provide services and other activities such as employment,
regulatory activities, management and advice ("trading
subsidiaries"). The application of IFRS 10 requires us to fair
value a number of investment entity subsidiaries that were
previously consolidated line by line. This fair value approach,
applied at the investment entity subsidiary level, effectively
obscures the performance of our proprietary capital investments and
associated transactions occurring in the investment entity
subsidiaries.
The financial effect of the underlying portfolio companies and
fee income, operating expenses and carried interest transactions
occurring in investment entity subsidiaries are aggregated into a
single value. Other items which were previously eliminated on
consolidation are now included separately.
To maintain transparency and aid understanding of our results,
we include a separate non-GAAP "Investment basis" consolidated
statement of comprehensive income, financial position and cash
flow. The Investment basis is an APM and the Chief Executive's
review and the Business and financial review are prepared using the
Investment basis, as we believe it provides a more understandable
view of our performance. Total return and net assets are equal
under the Investment basis and IFRS; the Investment basis is simply
a "look through" of IFRS 10 to present the underlying
performance.
A more detailed explanation of the effect of IFRS 10 is provided
in the Annual report and accounts 2023 on page 73.
Reconciliation between Investment basis and IFRS
A detailed reconciliation from the Investment basis to IFRS
basis of the Consolidated statement of comprehensive income,
Consolidated statement of financial position and Consolidated cash
flow statement is shown later in this document.
Reconciliation of consolidated statement of comprehensive
income
Six months to 30 September 2023 Six months to 30 September 2022
Investment IFRS IFRS Investment IFRS IFRS
basis adjustments basis basis adjustments basis
(unaudited) (unaudited) (unaudited) (unaudited) (unaudited) (unaudited)
Notes GBPm GBPm GBPm GBPm GBPm GBPm
=============================== ===== =========== =========== =========== =========== =========== ===========
Realised profits/(losses) over
value on the disposal of
investments 1,2 (2) 3 1 (4) 2 (2)
Unrealised profits on the
revaluation of investments 1,2 1,909 (715) 1,194 1,197 (657) 540
Fair value movements on
investment entity subsidiaries 1 - 524 524 - 962 962
Portfolio income
Dividends 1,2 28 (11) 17 28 (12) 16
Interest income from
investment portfolio 1,2 46 (32) 14 47 (32) 15
Fees receivable 1,2 5 1 6 6 - 6
Foreign exchange on investments 1,4 (145) 74 (71) 764 (502) 262
Movement in the fair value of
derivatives 26 - 26 (22) - (22)
=============================== ===== =========== =========== =========== =========== =========== ===========
Gross investment return 1,867 (156) 1,711 2,016 (239) 1,777
=============================== ===== =========== =========== =========== =========== =========== ===========
Fees receivable from external
funds 36 - 36 33 - 33
Operating expenses 1,3 (68) - (68) (67) 1 (66)
Interest receivable 1 6 (2) 4 1 - 1
Interest payable 1 (28) - (28) (27) - (27)
Exchange movements 1,4 12 8 20 (31) 51 20
Income from investment entity
subsidiaries 1 - 11 11 - 28 28
Other income - - - 1 - 1
=============================== ===== =========== =========== =========== =========== =========== ===========
Operating profit before carried
interest 1,825 (139) 1,686 1,926 (159) 1,767
=============================== ===== =========== =========== =========== =========== =========== ===========
Carried interest
Carried interest and
performance fees receivable 1,3 21 - 21 2 - 2
Carried interest and
performance fees payable 1,3 (176) 142 (34) (162) 153 (9)
============================== ===== =========== =========== =========== =========== =========== ===========
Operating profit before tax 1,670 3 1,673 1,766 (6) 1,760
=============================== ===== =========== =========== =========== =========== =========== ===========
Tax charge 1,3 (1) - (1) (1) - (1)
=============================== ===== =========== =========== =========== =========== =========== ===========
Profit for the period 1,669 3 1,672 1,765 (6) 1,759
=============================== ===== =========== =========== =========== =========== =========== ===========
Other comprehensive income that may be
reclassified to
the income statement
Exchange differences on
translation of foreign
operations 1,4 - (3) (3) - 6 6
Other comprehensive expense that will
not be reclassified
to the income statement
Re-measurements of defined - - - - - -
benefit plans
============================== ===== =========== =========== =========== =========== =========== ===========
Other comprehensive
(expense)/income for the
period - (3) (3) - 6 6
=============================== ===== =========== =========== =========== =========== =========== ===========
Total comprehensive income for
the period
("Total return") 1,669 - 1,669 1,765 - 1,765
=============================== ===== =========== =========== =========== =========== =========== ===========
Notes:
1 Applying IFRS 10 to the Consolidated statement of
comprehensive income consolidates the line items of a number of
previously consolidated subsidiaries into a single line item "Fair
value movements on investment entity subsidiaries". In the
Investment basis accounts we have disaggregated these line items to
analyse our total return as if these investment entity subsidiaries
were fully consolidated, consistent with prior periods. The
adjustments simply reclassify the Consolidated statement of
comprehensive income of the Group, and the total return is equal
under the Investment basis and the IFRS basis.
2 Realised profits, unrealised profits and portfolio income
shown in the IFRS accounts only relate to portfolio companies that
are held directly by 3i Group plc and not those portfolio companies
held through investment entity subsidiaries. Realised profits,
unrealised profits and portfolio income in relation to portfolio
companies held through investment entity subsidiaries are
aggregated into the single "Fair value movement on investment
entity subsidiaries" line. This is the most significant reduction
of information in our IFRS accounts.
3 Other items also aggregated into the "Fair value movements on
investment entity subsidiaries" line include operating expenses,
carried interest and performance fees receivable, carried interest
and performance fees payable and tax. Operating expenses, carried
interest and performance fees receivable and tax do not impact fair
value movements on investment entity subsidiaries for the six
months to 30 September 2023.
4 Foreign exchange movements have been reclassified under the
Investment basis as foreign currency asset and liability movements.
Movements within the investment entity subsidiaries are included
within "Fair value movements on investment entity
subsidiaries".
Reconciliation of consolidated statement of financial
position
As at 30 September 2023 As at 31 March 2023
Investment IFRS IFRS Investment IFRS IFRS
basis adjustments basis basis adjustments basis
(unaudited) (unaudited) (unaudited) (unaudited) (unaudited) (audited)
Notes GBPm GBPm GBPm GBPm GBPm GBPm
================================= ===== =========== =========== =========== =========== =========== =========
Assets
Non-current assets
Investments
Quoted investments 1 906 (88) 818 962 (121) 841
Unquoted investments 1 19,349 (8,588) 10,761 17,426 (8,749) 8,677
Investments in investment entity
subsidiaries 1,2 - 7,735 7,735 - 7,844 7,844
================================= ===== =========== =========== =========== =========== =========== =========
Investment portfolio 20,255 (941) 19,314 18,388 (1,026) 17,362
================================= ===== =========== =========== =========== =========== =========== =========
Carried interest and performance
fees receivable 1 2 1 3 3 - 3
Other non-current assets 1 43 (8) 35 33 (3) 30
Intangible assets 4 - 4 5 - 5
Retirement benefit surplus 54 - 54 53 - 53
Property, plant and equipment 3 - 3 3 - 3
Right of use asset 20 - 20 9 - 9
Derivative financial instruments 60 - 60 73 - 73
================================= ===== =========== =========== =========== =========== =========== =========
Total non-current assets 20,441 (948) 19,493 18,567 (1,029) 17,538
================================= ===== =========== =========== =========== =========== =========== =========
Current assets
Carried interest and performance
fees receivable 1 24 - 24 40 - 40
Other current assets 1 53 (6) 47 41 (11) 30
Current income taxes 1 - 1 1 - 1
Derivative financial instruments 42 - 42 48 - 48
Cash and cash equivalents 1 55 (14) 41 412 (250) 162
================================= ===== =========== =========== =========== =========== =========== =========
Total current assets 175 (20) 155 542 (261) 281
================================= ===== =========== =========== =========== =========== =========== =========
Total assets 20,616 (968) 19,648 19,109 (1,290) 17,819
================================= ===== =========== =========== =========== =========== =========== =========
Liabilities
Non-current liabilities
Trade and other payables 1 (54) 50 (4) (11) 7 (4)
Carried interest and performance
fees payable 1 (825) 779 (46) (1,049) 1,006 (43)
Loans and borrowings (1,208) - (1,208) (775) - (775)
Retirement benefit deficit (20) - (20) (20) - (20)
Lease liability (12) - (12) (5) - (5)
Derivative financial instruments (3) - (3) (3) - (3)
Deferred income taxes (1) - (1) (1) - (1)
Provisions (4) - (4) (4) - (4)
================================= ===== =========== =========== =========== =========== =========== =========
Total non-current liabilities (2,127) 829 (1,298) (1,868) 1,013 (855)
================================= ===== =========== =========== =========== =========== =========== =========
Current liabilities
Trade and other payables 1 (71) 1 (70) (85) 9 (76)
Carried interest and performance
fees payable 1 (160) 138 (22) (302) 268 (34)
Lease liability (9) - (9) (5) - (5)
Derivative financial instruments - - - (1) - (1)
Current income taxes (4) - (4) (4) - (4)
================================= ===== =========== =========== =========== =========== =========== =========
Total current liabilities (244) 139 (105) (397) 277 (120)
================================= ===== =========== =========== =========== =========== =========== =========
Total liabilities (2,371) 968 (1,403) (2,265) 1,290 (975)
================================= ===== =========== =========== =========== =========== =========== =========
Net assets 18,245 - 18,245 16,844 - 16,844
================================= ===== =========== =========== =========== =========== =========== =========
Equity
Issued capital 719 - 719 719 - 719
Share premium 791 - 791 790 - 790
Other reserves 3 16,827 - 16,827 15,443 - 15,443
Own shares (92) - (92) (108) - (108)
================================= ===== =========== =========== =========== =========== =========== =========
Total equity 18,245 - 18,245 16,844 - 16,844
================================= ===== =========== =========== =========== =========== =========== =========
Notes:
1 Applying IFRS 10 to the Consolidated statement of financial
position aggregates the line items of investment entity
subsidiaries into the single line item "Investments in investment
entity subsidiaries". In the Investment basis, we have
disaggregated these items to analyse our net assets as if the
investment entity subsidiaries were consolidated. The adjustment
reclassifies items in the Consolidated statement of financial
position. There is no change to the net assets, although for
reasons explained below, gross assets and gross liabilities are
different. The disclosure relating to portfolio companies is
significantly reduced by the aggregation, as the fair value of all
investments held by investment entity subsidiaries is aggregated
into the "Investments in investment entity subsidiaries" line. We
have disaggregated this fair value and disclosed the underlying
portfolio holding in the relevant line item, ie quoted investments
or unquoted investments. Other items which may be aggregated
include carried interest, other assets and other payables, and the
Investment basis presentation again disaggregates these items.
2 Intercompany balances between investment entity subsidiaries
and trading subsidiaries also impact the transparency of our
results under the IFRS basis. If an investment entity subsidiary
has an intercompany balance with a consolidated trading subsidiary
of the Group, then the asset or liability of the investment entity
subsidiary will be aggregated into its fair value, while the asset
or liability of the consolidated trading subsidiary will be
disclosed as an asset or liability in the Consolidated statement of
financial position of the Group.
3 Investment basis financial statements are prepared for
performance measurement and therefore reserves are not analysed
separately under this basis.
Reconciliation of consolidated cash flow statement
Six months to 30 September 2023 Six months to 30 September 2022
Investment IFRS IFRS Investment IFRS IFRS
basis adjustments basis basis adjustments basis
(unaudited) (unaudited) (unaudited) (unaudited) (unaudited) (unaudited)
Notes GBPm GBPm GBPm GBPm GBPm GBPm
================================= ===== =========== =========== =========== =========== =========== ===========
Cash flow from operating activities
Purchase of investments 1 (99) 83 (16) (241) 209 (32)
Proceeds from investments 1 1 - 1 228 (194) 34
Amounts paid to investment entity
subsidiaries 1 - (430) (430) - (233) (233)
Amounts received from investment
entity subsidiaries 1 - 157 157 - 220 220
Net cash flow from derivatives 45 - 45 4 - 4
Portfolio interest received 1 6 (1) 5 2 (2) -
Portfolio dividends received 1 38 (11) 27 31 (12) 19
Portfolio fees received 1 6 - 6 1 - 1
Fees received from external funds 38 - 38 33 - 33
Carried interest and performance
fees received 1 37 - 37 51 - 51
Carried interest and performance
fees paid 1 (510) 481 (29) (39) 11 (28)
Operating expenses paid (80) - (80) (81) - (81)
Co-investment loans received 1 1 2 3 - 1 1
Other cash income 1 43 (43) - - - -
Interest received 1 6 (2) 4 1 - 1
================================= ===== =========== =========== =========== =========== =========== ===========
Net cash flow from operating
activities (468) 236 (232) (10) - (10)
================================= ===== =========== =========== =========== =========== =========== ===========
Cash flow from financing activities
Issue of shares 1 - 1 1 - 1
Purchase of own shares - - - (30) - (30)
Dividends paid (286) - (286) (262) - (262)
Proceeds from long-term borrowing 422 - 422 - - -
Lease payments (2) - (2) (3) - (3)
Interest paid (21) - (21) (20) - (20)
Drawdown of revolving credit
facility - - - 145 - 145
================================= ===== =========== =========== =========== =========== =========== ===========
Net cash flow from financing
activities 114 - 114 (169) - (169)
================================= ===== =========== =========== =========== =========== =========== ===========
Cash flow from investing activities
Purchase of property, plant and
equipment (1) - (1) - - -
================================= ===== =========== =========== =========== =========== =========== ===========
Net cash flow from investing
activities (1) - (1) - - -
================================= ===== =========== =========== =========== =========== =========== ===========
Change in cash and cash
equivalents 2 (355) 236 (119) (179) - (179)
================================= ===== =========== =========== =========== =========== =========== ===========
Cash and cash equivalents at the
start of period 2 412 (250) 162 229 (17) 212
Effect of exchange rate
fluctuations 1 (2) - (2) 5 - 5
================================= ===== =========== =========== =========== =========== =========== ===========
Cash and cash equivalents at the
end of period 2 55 (14) 41 55 (17) 38
================================= ===== =========== =========== =========== =========== =========== ===========
Notes:
1 The Consolidated cash flow statement is impacted by the
application of IFRS 10 as cash flows to and from investment entity
subsidiaries are disclosed, rather than the cash flows to and from
the underlying portfolio. Therefore, in our Investment basis
financial statements, we have disclosed our consolidated cash flow
statement on a "look through" basis, in order to reflect the
underlying sources and uses of cash flows and disclose the
underlying investment activity.
2 There is a difference between the change in cash and cash
equivalents of the Investment basis financial statements and the
IFRS financial statements because there are cash balances held in
investment entity subsidiaries. Cash held within investment entity
subsidiaries will not be shown in the IFRS statements but will be
seen in the Investment basis statements.
IFRS Financial statements
Condensed consolidated statement of comprehensive income
Six months to Six months to
30 September 30 September
2023 2022
(unaudited) (unaudited)
Notes GBPm GBPm
============================================================================== ===== ============= =============
Realised profits/(losses) over value on the disposal of investments 2 1 (2)
Unrealised profits on the revaluation of investments 3 1,194 540
Fair value movements on investment entity subsidiaries 8 524 962
Portfolio income
Dividends 17 16
Interest income from investment portfolio 14 15
Fees receivable 4 6 6
Foreign exchange on investments (71) 262
Movement in the fair value of derivatives 26 (22)
============================================================================== ===== ============= =============
Gross investment return 1,711 1,777
============================================================================== ===== ============= =============
Fees receivable from external funds 4 36 33
Operating expenses (68) (66)
Interest received 4 1
Interest paid (28) (27)
Exchange movements 20 20
Income from investment entity subsidiaries 11 28
Other income - 1
============================================================================== ===== ============= =============
Operating profit before carried interest 1,686 1,767
============================================================================== ===== ============= =============
Carried interest
Carried interest and performance fees receivable 4 21 2
Carried interest and performance fees payable (34) (9)
============================================================================= ===== ============= =============
Operating profit before tax 1,673 1,760
============================================================================== ===== ============= =============
Tax charge (1) (1)
============================================================================== ===== ============= =============
Profit for the period 1,672 1,759
============================================================================== ===== ============= =============
Other comprehensive income that may be reclassified to the income statement
Exchange differences on translation of foreign operations (3) 6
Other comprehensive expense that will not be reclassified to the income statement
Re-measurements of defined benefit plans - -
============================================================================= ===== ============= =============
Other comprehensive income for the period (3) 6
============================================================================== ===== ============= =============
Total comprehensive income for the period ("Total return") 1,669 1,765
============================================================================== ===== ============= =============
Earnings per share
===================================================================================== ============= =============
Basic (pence) 5 173.5 182.7
============================================================================= ===== ============= =============
Diluted (pence) 5 173.0 182.5
============================================================================= ===== ============= =============
The Notes to the accounts section forms an integral part of
these financial statements.
Condensed consolidated statement of financial position
30 September 31 March
2023 2023
(unaudited) (audited)
Notes GBPm GBPm
=================================================== ============ =========
Assets
Non-current assets
Investments
Quoted investments 7 818 841
Unquoted investments 7 10,761 8,677
Investments in investment entity subsidiaries 8 7,735 7,844
================================================== ============ =========
Investment portfolio 19,314 17,362
================================================== ============ =========
Carried interest and performance fees receivable 3 3
Other non-current assets 35 30
Intangible assets 4 5
Retirement benefit surplus 54 53
Property, plant and equipment 3 3
Right of use asset 20 9
Derivative financial instruments 60 73
================================================== ============ =========
Total non-current assets 19,493 17,538
=================================================== ============ =========
Current assets
Carried interest and performance fees receivable 24 40
Other current assets 47 30
Current income taxes 1 1
Derivative financial instruments 42 48
Cash and cash equivalents 41 162
=================================================== ============ =========
Total current assets 155 281
=================================================== ============ =========
Total assets 19,648 17,819
=================================================== ============ =========
Liabilities
Non-current liabilities
Trade and other payables (4) (4)
Carried interest and performance fees payable (46) (43)
Loans and borrowings (1,208) (775)
Retirement benefit deficit (20) (20)
Lease liability (12) (5)
Derivative financial instruments (3) (3)
Deferred income taxes (1) (1)
Provisions (4) (4)
================================================== ============ =========
Total non-current liabilities (1,298) (855)
=================================================== ============ =========
Current liabilities
Trade and other payables (70) (76)
Carried interest and performance fees payable (22) (34)
Lease liability (9) (5)
Derivative financial instruments - (1)
Current income taxes (4) (4)
=================================================== ============ =========
Total current liabilities (105) (120)
=================================================== ============ =========
Total liabilities (1,403) (975)
=================================================== ============ =========
Net assets 18,245 16,844
=================================================== ============ =========
Equity
Issued capital 719 719
Share premium 791 790
Capital redemption reserve 43 43
Share-based payment reserve 32 31
Translation reserve (5) (2)
Capital reserve 15,420 14,044
Revenue reserve 1,337 1,327
Own shares (92) (108)
================================================== ============ =========
Total equity 18,245 16,844
=================================================== ============ =========
The Notes to the accounts section forms an integral part of
these financial statements.
Condensed consolidated statement of changes in equity
Share-
For the six months
to 30 September 2023
(unaudited)
============================
Capital based
============================
Share Share redemption payment Translation Capital Revenue Own Total
capital premium reserve reserve reserve reserve 1 reserve 1 shares equity
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
============================ ======= ======= ========== ======= =========== ========= ========= ====== ======
Total equity at the start of
the period 719 790 43 31 (2) 14,044 1,327 (108) 16,844
Profit for the period - - - - - 1,582 90 - 1,672
Exchange differences on
translation of foreign
operations - - - - (3) - - - (3)
Re-measurements of defined - - - - - - - - -
benefit plans
============================ ======= ======= ========== ======= =========== ========= ========= ====== ======
Total comprehensive income
for the period - - - - (3) 1,582 90 - 1,669
============================ ======= ======= ========== ======= =========== ========= ========= ====== ======
Share-based payments - - - 17 - - - - 17
Release on
exercise/forfeiture of
share awards - - - (16) - - 16 - -
Exercise of share awards - - - - - (16) - 16 -
Ordinary dividends - - - - - (190) (96) - (286)
Purchase of own shares - - - - - - - - -
Issue of ordinary shares - 1 - - - - - - 1
============================ ======= ======= ========== ======= =========== ========= ========= ====== ======
Total equity at the end of
the period 719 791 43 32 (5) 15,420 1,337 (92) 18,245
============================ ======= ======= ========== ======= =========== ========= ========= ====== ======
1 Refer to the Glossary at the end of this document for the
nature of the capital and revenue reserves.
Share-
For the six months
to 30 September 2022
(unaudited)
============================
Capital based
============================
Share Share redemption payment Translation Capital Revenue Own Total
capital premium reserve reserve reserve reserve 1 reserve 1 shares equity
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
============================ ======= ======= ========== ======= =========== ========= ========= ====== ======
Total equity at the start of
the period 719 789 43 33 (6) 10,151 1,125 (100) 12,754
Profit for the period - - - - - 1,686 73 - 1,759
Exchange differences on
translation of foreign
operations - - - - 6 - - - 6
Re-measurements of defined - - - - - - - - -
benefit plans
============================ ======= ======= ========== ======= =========== ========= ========= ====== ======
Total comprehensive income
for the period - - - - 6 1,686 73 - 1,765
============================ ======= ======= ========== ======= =========== ========= ========= ====== ======
Share-based payments - - - 12 - - - - 12
Release on
exercise/forfeiture of
share awards - - - (18) - - 18 - -
Exercise of share awards - - - - - (22) - 22 -
Ordinary dividends - - - - - (158) (104) - (262)
Purchase of own shares - - - - - - - (30) (30)
Issue of ordinary shares - 1 - - - - - - 1
============================ ======= ======= ========== ======= =========== ========= ========= ====== ======
Total equity at the end of
the period 719 790 43 27 - 11,657 1,112 (108) 14,240
============================ ======= ======= ========== ======= =========== ========= ========= ====== ======
1 Refer to the Glossary at the end of this document for the
nature of the capital and revenue reserves.
The Notes to the accounts section forms an integral part of
these financial statements.
Condensed consolidated cash flow statement
Six months to Six months to
30 September 30 September
2023 2022
(unaudited) (unaudited)
Notes GBPm GBPm
===================================================== ===== ============= =============
Cash flow from operating activities
Purchase of investments (16) (32)
Proceeds from investments 1 34
Amounts paid to investment entity subsidiaries (430) (233)
Amounts received from investment entity subsidiaries 157 220
Net cash flow from derivatives 45 4
Portfolio interest received 5 -
Portfolio dividends received 27 19
Portfolio fees received 6 1
Fees received from external funds 38 33
Carried interest and performance fees received 37 51
Carried interest and performance fees paid (29) (28)
Operating expenses paid (80) (81)
Co-investment loans received 3 1
Interest received 4 1
===================================================== ===== ============= =============
Net cash flow from operating activities (232) (10)
===================================================== ===== ============= =============
Cash flow from financing activities
Issue of shares 1 1
Purchase of own shares - (30)
Dividend paid 6 (286) (262)
Proceeds from long-term borrowing 422 -
Lease payments (2) (3)
Interest paid (21) (20)
Drawdown of revolving credit facility - 145
===================================================== ===== ============= =============
Net cash flow from financing activities 114 (169)
===================================================== ===== ============= =============
Cash flow from investing activities
Purchases of property, plant and equipment (1) -
===================================================== ===== ============= =============
Net cash flow from investing activities (1) -
===================================================== ===== ============= =============
Change in cash and cash equivalents (119) (179)
===================================================== ===== ============= =============
Cash and cash equivalents at the start of the period 162 212
Effect of exchange rate fluctuations (2) 5
===================================================== ===== ============= =============
Cash and cash equivalents at the end of the period 41 38
===================================================== ===== ============= =============
The Notes to the accounts section forms an integral part of
these financial statements.
Notes to the condensed consolidated financial statements
Basis of preparation and accounting policies
Compliance with International Financial Reporting Standards
("IFRS")
The Half-year condensed consolidated financial statements of 3i
Group plc have been prepared in accordance with the Disclosure
Guidance and Transparency Rules of the Financial Conduct Authority
and IAS 34 Interim Financial Reporting as adopted for use in the
UK. The Half-year condensed consolidated financial statements
should be read in conjunction with the Annual report and accounts
2023 which have been prepared and approved by the Directors in
accordance with international accounting standards in conformity
with the requirements of the Companies Act 2006 and in accordance
with UK-adopted international accounting standards. The Annual
report and accounts for the year ended 31 March 2024 will be
prepared in accordance with UK-adopted international accounting
standards.
The following standards, amendments and interpretations have
been adopted by the Group for the first time during the period.
These new standards have not had a material impact on the
Group.
Effective for annual periods beginning on or after
======================================================================================
IAS 1 and IFRS Practice Statement 2 Disclosure of Accounting Policies 1 January 2023
IFRS 17 Insurance Contracts 1 January 2023
=================================== ================================= ==============
The Half-year condensed consolidated financial statements are
presented to the nearest million sterling (GBPm), the functional
currency of the Company. The accounting policies applied by 3i
Group plc for the Half-year condensed consolidated financial
statements are consistent with those described on pages 167 to 207
of the Annual report and accounts 2023. There was no change in the
current period to the critical accounting estimates and judgements
applied in 2023, which are stated on page 167 of the Annual report
and accounts 2023.
The financial information for the year ended 31 March 2023 and
for the six months ended 30 September 2023 contained within this
Half-year report does not constitute statutory accounts as defined
in section 434 of the Companies Act 2006. The statutory accounts
for the year to 31 March 2023, prepared under IFRS in conformity
with the requirements of the Companies Act 2006, have been reported
on by KPMG LLP and delivered to the Registrar of Companies. The
report of the Auditor on these statutory accounts was unqualified
and did not contain a statement under section 498(2) or section
498(3) of the Companies Act 2006.
Going concern
These condensed consolidated financial statements are prepared
on a going concern basis. The Directors have made an assessment of
going concern for a period of at least 12 months from the date of
approval of the accounts, taking into account the Group's current
performance, financial position and the principal and emerging
risks facing the business. As detailed in the Chief Executive's
review and Business and Financial review, the Group delivered a
good result in the first half against a challenging macroeconomic
and geopolitical backdrop. We continue to see strong performance
from our portfolio companies operating in the value-for-money,
private label and healthcare sectors offsetting weaker performance
in our portfolio companies exposed to discretionary consumer spend
and more cyclical end-markets.
To support the going concern assessment the Directors considered
an analysis of the Group's liquidity, solvency and regulatory
capital position. The Group manages and monitors liquidity
regularly, ensuring it is adequate and sufficient and is
underpinned by its monitoring of investments, realisations,
operating expenses and receipt of portfolio cash income. At 30
September 2023, the Group has liquidity of GBP955 million (31 March
2023: GBP1,312 million). Liquidity comprised of cash and deposits
of GBP55 million (31 March 2023: GBP412 million) and an undrawn
facility of GBP900 million (31 March 2023: GBP900 million), which
has no financial covenants. During the period, we further
strengthened our liquidity profile through the successful issue of
a six year EUR500 million euro bond at a coupon of 4.875%.
As a proprietary investor, the Group has a long-term,
responsible investment approach, and is not subject to significant
external pressure to realise investments before optimum value can
be achieved. The Board has the ability to take certain actions to
help support the Group in adverse circumstances. Mitigating actions
within management control during extended periods of low liquidity
include, for example, drawing on the existing RCF or temporarily
reducing new investment levels.
Having performed the assessment on going concern, the Directors
considered it appropriate to prepare the condensed consolidated
financial statements of the Group on a going concern basis and have
concluded that the Group has sufficient financial resources, is
well placed to manage business risks in the current macroeconomic
and geopolitical environment and can continue operations for a
period of at least 12 months from the date of issue of these
financial statements.
1 Segmental analysis
The tables below are presented on the Investment basis which is
the basis used by the chief operating decision maker, the Chief
Executive, to monitor the performance of the Group. A description
of the Investment basis and a reconciliation of the Investment
basis to the IFRS financial statements is provided earlier in this
document. Further detail on the Group's segmental analysis can be
found on pages 171 to 173 of the Annual report and accounts 2023.
The remaining Notes are prepared on an IFRS basis.
Investment basis Private Of which is
Equity Action Infrastructure Scandlines Total 4
Six months to 30 September 2023 GBPm GBPm GBPm GBPm GBPm
========================================================= ======= =========== ============== ========== =======
Realised profits/(losses) over value on the disposal of
investments 1 - (3) - (2)
Unrealised profits on the revaluation of investments 1,907 1,810 2 - 1,909
Portfolio income
Dividends - - 18 10 28
Interest income from investment portfolio 40 - 6 - 46
Fees receivable 5 4 - - 5
Foreign exchange on investments (146) (136) 8 (7) (145)
Movement in the fair value of derivatives 19 22 - 7 26
========================================================= ======= =========== ============== ========== =======
Gross investment return 1,826 1,700 31 10 1,867
========================================================= ======= =========== ============== ========== =======
Fees receivable from external funds 2 - 34 - 36
Operating expenses (43) - (24) (1) (68)
Interest received 6
Interest paid (28)
Exchange movements 12
======= =========== ============== ========== =======
Operating profit before carried interest 1,825
========================================================= ======= =========== ============== ========== =======
Carried interest
Carried interest and performance fees receivable - - 21 - 21
Carried interest and performance fees payable (147) (127) (29) - (176)
======================================================== ======= =========== ============== ========== =======
Operating profit before tax 1,670
========================================================= ======= =========== ============== ========== =======
Tax charge (1)
========================================================= ======= =========== ============== ========== =======
Profit for the period 1,669
========================================================= ======= =========== ============== ========== =======
Other comprehensive income
Re-measurements of defined benefit plans -
======================================================== ======= =========== ============== ========== =======
Total return 1,669
========================================================= ======= =========== ============== ========== =======
Realisations 1 1 - 18 - 19
Cash investment 2 (50) - (33) (1) (84)
========================================================= ======= =========== ============== ========== =======
Net investment (49) - (15) (1) (65)
========================================================= ======= =========== ============== ========== =======
Balance sheet
Opening portfolio value at 1 April 2023 16,425 11,188 1,409 554 18,388
Investment 3 92 - 33 1 126
Value disposed - - (21) - (21)
Unrealised value movement 1,907 1,810 2 - 1,909
Other movement (including foreign exchange) (149) (136) 10 (8) (147)
========================================================= ======= =========== ============== ========== =======
Closing portfolio value at 30 September 2023 18,275 12,862 1,433 547 20,255
========================================================= ======= =========== ============== ========== =======
1 Realised proceeds may differ from cash proceeds due to timing
of receipts. During the period, Infrastructure recognised realised
proceeds of GBP18 million, which are to be received after the
period end.
2 Cash investment per the segmental analysis is different to
cash investment per the cash flow due to a GBP10 million investment
in Private Equity which was recognised in FY2023 and paid in the
period and a GBP5 million syndication in Infrastructure which was
recognised in the period and to be received after the period
end.
3 Includes capitalised interest and non-cash investment.
4 The total is the sum of Private Equity, Infrastructure and
Scandlines. "Of which is Action" is part of Private Equity.
Interest received, interest paid, exchange movements, other
income, tax charge and re-measurements of defined benefit plans are
not managed by segment by the chief operating decision maker and
therefore have not been allocated to a specific segment.
Investment basis Private Of which is
Equity Action Infrastructure Scandlines Total 4
Six months to 30 September 2022 GBPm GBPm GBPm GBPm GBPm
========================================================= ======= =========== ============== ========== =======
Realised losses over value on the disposal of investments (4) - - - (4)
Unrealised profits/(losses) on the revaluation of
investments 1,244 1,156 (47) - 1,197
Portfolio income
Dividends - - 16 12 28
Interest income from investment portfolio 39 - 8 - 47
Fees receivable 6 - - - 6
Foreign exchange on investments 685 291 58 21 764
Movement in the fair value of derivatives - - - (22) (22)
========================================================= ======= =========== ============== ========== =======
Gross investment return 1,970 1,447 35 11 2,016
========================================================= ======= =========== ============== ========== =======
Fees receivable from external funds 3 - 30 - 33
Operating expenses (43) - (23) (1) (67)
Interest received 1
Interest paid (27)
Exchange movements (31)
Other income 1
========================================================= ======= =========== ============== ========== =======
Operating profit before carried interest 1,926
========================================================= ======= =========== ============== ========== =======
Carried interest
Carried interest and performance fees receivable 2 - - - 2
Carried interest and performance fees payable (157) (111) (5) - (162)
======================================================== ======= =========== ============== ========== =======
Operating profit before tax 1,766
========================================================= ======= =========== ============== ========== =======
Tax charge (1)
========================================================= ======= =========== ============== ========== =======
Profit for the period 1,765
========================================================= ======= =========== ============== ========== =======
Other comprehensive income
Re-measurements of defined benefit plans -
======================================================== ======= =========== ============== ========== =======
Total return 1,765
========================================================= ======= =========== ============== ========== =======
Realisation 1 193 - - - 193
Cash investment 2 (292) - (6) - (298)
========================================================= ======= =========== ============== ========== =======
Net investment (99) - (6) - (105)
========================================================= ======= =========== ============== ========== =======
Balance sheet
Opening portfolio value at 1 April 2022 12,420 7,165 1,352 533 14,305
Investment 3 326 - 6 - 332
Value disposed (197) - - - (197)
Unrealised value movement 1,244 1,156 (47) - 1,197
Other movement (including foreign exchange) 690 291 69 21 780
========================================================= ======= =========== ============== ========== =======
Closing portfolio value at 30 September 2022 14,483 8,612 1,380 554 16,417
========================================================= ======= =========== ============== ========== =======
1 Realised proceeds may differ from cash proceeds due to timing
of receipts. During the period Private Equity received GBP2 million
of cash proceeds which were recognised as realised proceeds in
FY2022 and Infrastructure received GBP33 million of cash proceeds
which were recognised as realised proceeds in FY2022.
2 Cash investment per the segmental analysis is different to
cash investment per the cash flow due to a GBP57 million
syndication in Infrastructure which was recognised in FY2022.
3 Includes capitalised interest and other non-cash
investment.
4 The total is the sum of Private Equity, Infrastructure and
Scandlines. "Of which is Action" is part of Private Equity.
Interest received, interest paid, exchange movements, tax charge
and re-measurements of defined benefit plans are not managed by
segment by the chief operating decision maker and therefore have
not been allocated to a specific segment.
2 Realised profits over value on the disposal of investments
Unquoted
investments Total
Six months to 30 September 2023 GBPm GBPm
===================================== =========== =====
Realisations 1 1
Valuation of disposed investments - -
===================================== =========== =====
1 1
===================================== =========== =====
Of which:
- profit recognised on realisations 1 1
- losses recognised on realisations - -
==================================== =========== =====
1 1
==================================== =========== =====
Unquoted
investments Total
Six months to 30 September 2022 GBPm GBPm
===================================== =========== =====
Realisations 1 1
Valuation of disposed investments (3) (3)
===================================== =========== =====
(2) (2)
===================================== =========== =====
Of which:
- profit recognised on realisations 1 1
- losses recognised on realisations (3) (3)
==================================== =========== =====
(2) (2)
==================================== =========== =====
3 Unrealised profits on the revaluation of investments
Unquoted Quoted
investments investments Total
Six months to 30 September 2023 GBPm GBPm GBPm
=========================================== =========== =========== =====
1,217 (23) 1,194
========================================== =========== =========== =====
Movement in the fair value of investments
=========================================== =========== =========== =====
Of which:
- unrealised gains 1,355 - 1,355
- unrealised losses (138) (23) (161)
========================================== =========== =========== =====
1,217 (23) 1,194
========================================== =========== =========== =====
Unquoted Quoted
investments investments Total
Six months to 30 September 2022 GBPm GBPm GBPm
=========================================== =========== =========== =====
Movement in the fair value of investments 657 (117) 540
=========================================== =========== =========== =====
Of which:
- unrealised gains 780 - 780
- unrealised losses (123) (117) (240)
========================================== =========== =========== =====
657 (117) 540
========================================== =========== =========== =====
4 Revenue
Items from the Consolidated statement of comprehensive income
which fall within the scope of IFRS 15 are included in the table
below:
Private
Equity Infrastructure Total
Six months to 30 September 2023 GBPm GBPm GBPm
=================================================== ======= ============== =====
Total revenue by geography 1
UK 1 30 31
Northern Europe 7 24 31
North America - 1 1
Other - - -
=================================================== ======= ============== =====
Total 8 55 63
=================================================== ======= ============== =====
Revenue by type
Fees receivable 2 from portfolio 6 - 6
Fees receivable from external funds 2 34 36
Carried interest and performance fees receivable 2 - 21 21
=================================================== ======= ============== =====
Total 8 55 63
=================================================== ======= ============== =====
Private
Equity Infrastructure Total
Six months to 30 September 2022 GBPm GBPm GBPm
=================================================== ======= ============== =====
Total revenue by geography 1
UK 4 27 31
Northern Europe 5 2 7
North America 2 1 3
Other - - -
=================================================== ======= ============== =====
Total 11 30 41
=================================================== ======= ============== =====
Revenue by type
Fees receivable 2 from portfolio 6 - 6
Fees receivable from external funds 3 30 33
Carried interest and performance fees receivable 2 2 - 2
=================================================== ======= ============== =====
Total 11 30 41
=================================================== ======= ============== =====
1 For fees receivable from external funds and carried interest
and performance fees receivable the geography is based on the
domicile of the fund.
2 Fees receivable and carried interest receivable above are
different to the Investment basis figures included in Note 1. This
is due to the fact that Note 1 is disclosed on the Investment basis
and the table above is shown on the IFRS basis. For an explanation
of the Investment basis and a reconciliation between Investment
basis and IFRS basis earlier in this document.
5 Per share information
The calculation of basic net assets per share is based on the
net assets and the number of shares in issue at the period end.
When calculating the diluted net assets per share, the number of
shares in issue is adjusted for the effect of all dilutive share
awards.
30 September 31 March
2023 2023
========================================================= ============ ========
Net assets per share (GBP)
Basic 18.92 17.50
Diluted 18.86 17.45
Net assets (GBPm)
========================================================= ============ ========
Net assets attributable to equity holders of the Company 18,245 16,844
========================================================= ============ ========
30 September 31 March
2023 2023
============================================= ============ ============
Number of shares in issue
Ordinary shares 973,344,328 973,312,950
Own shares (8,996,451) (10,660,078)
============================================= ============ ============
964,347,877 962,652,872
============================================= ============ ============
Effect of dilutive potential ordinary shares
Share awards 3,104,739 2,849,520
============================================= ============ ============
Diluted shares 967,452,616 965,502,392
============================================= ============ ============
The calculation of basic earnings per share is based on the
profit attributable to shareholders and the weighted average number
of shares in issue. The weighted average shares in issue for the
period to 30 September 2023 are 963,658,775 (30 September 2022:
962,660,451). When calculating the diluted earnings per share, the
weighted average number of shares in issue is adjusted for the
effect of all dilutive share awards. The diluted weighted average
shares in issue for the period to 30 September 2023 are 966,205,837
(30 September 2022: 964,057,452).
Six months Six months
to 30 September to 30 September
2023 2022
==================================================================== =============== ===============
Earnings per share (pence)
Basic 173.5 182.7
Diluted 173.0 182.5
Earnings (GBPm)
==================================================================== =============== ===============
Profit for the period attributable to equity holders of the Company 1,672 1,759
==================================================================== =============== ===============
6 Dividends
Six months to Six months to Six months to Six months to
30 September 30 September 30 September 30 September
2023 2023 2022 2022
pence pence
per share GBPm per share GBPm
==================================== ============= ============= ============= =============
Declared and paid during the period
Second dividend 29.75 286 27.25 262
==================================== ============= ============= ============= =============
29.75 286 27.25 262
==================================== ============= ============= ============= =============
Proposed first dividend 26.50 255 23.25 224
==================================== ============= ============= ============= =============
The dividend can be paid out of either the capital reserve or
the revenue reserve subject to the investment trust rules.
The distributable reserves of the parent company as at 30
September 2023 were GBP5,488 million (31 March 2023: GBP4,940
million) and the Board reviews the distributable reserves
bi-annually, including consideration of any material changes since
the most recent audited accounts, ahead of proposing any dividend.
The Board also reviews the proposed dividends in the context of the
requirements of being an approved investment trust. Shareholders
are given the opportunity to approve the total dividend for the
year at the Company's Annual General Meeting. Details of the
Group's continuing viability and going concern can be found in the
Risk management section on pages 78 to 91 of the Annual report and
accounts 2023.
7 Investment portfolio
This section should be read in conjunction with Note 11 on page
179 of the Annual report and accounts 2023, which provides more
detail about initial recognition and subsequent measurement of
investments at fair value.
Six months to Year to
30 September 2023 31 March 2023
Non-current GBPm GBPm
========================================= ================= =============
Opening book value 9,518 6,642
Additions 937 908
- of which loan notes with nil value (2) (6)
Disposals, repayments and write-offs - (129)
Fair value movement 1 1,194 1,897
Other movements and net cash movements 2 (68) 206
========================================= ================= =============
Closing book value 11,579 9,518
========================================= ================= =============
Quoted investments 818 841
Unquoted investments 10,761 8,677
========================================= ================= =============
Closing book value 11,579 9,518
========================================= ================= =============
1 All fair value movements relate to assets held at the end of
the period and are recognised in unrealised profits on the
revaluation of investments.
2 Other movements includes the impact of foreign exchange and
accrued interest.
3i's investment portfolio is made up of longer-term investments,
with average holding periods greater than one year, and thus is
classified as non-current.
The table below reconciles between purchase of investments in
the cash flow statement and additions as disclosed in the table
above.
Six months to Year to
30 September 2023 31 March 2023
GBPm GBPm
======================================================================== ================= =============
Purchase of investments 16 46
Transfer of portfolio investments from investment entity subsidiaries 1 916 781
Syndication - 57
Investment (paid)/payable (2) 2
======================================================================== ================= =============
Investment 930 886
======================================================================== ================= =============
Capitalised interest received by way of loan notes 7 22
======================================================================== ================= =============
Additions 937 908
======================================================================== ================= =============
1 Includes the transfer of GBP916 million (31 March 2023: GBP781
million) from the Buyouts 2010-12 partnerships which are classified
as investment entity subsidiaries, relating to Action.
Included within profit or loss is GBP14 million (30 September
2022: GBP15 million) of interest income. Interest income included
GBP3 million (30 September 2022: GBP2 million) of accrued income
capitalised during the period, GBP5 million of cash income (30
September 2022: nil) and GBP6 million (30 September 2022: GBP13
million) of accrued income remaining uncapitalised at the period
end.
Quoted investments are classified as Level 1 and unquoted
investments are classified as Level 3 in the fair value hierarchy;
see Note 9 for details.
8 Investments in investment entity subsidiaries
This section should be read in conjunction with Note 12 on page
180 of the Annual report and accounts 2023, which provides more
detail about accounting policies adopted, entities which are
typically investment in investment entities and the determination
of fair value.
Level 3 fair value reconciliation - investments in investment
entity subsidiaries
Six months to Year to
30 September 2023 31 March 2023
Non-current GBPm GBPm
======================================================================== ================= =============
Opening fair value 7,844 6,791
Amounts paid to investment entity subsidiaries 430 535
Amounts received from investment entity subsidiaries (157) (841)
Fair value movement on investment entity subsidiaries 524 2,112
Transfer of portfolio investments from investment entity subsidiaries 1 (916) (781)
Transfer of assets to investment entity subsidiaries 10 28
======================================================================== ================= =============
Closing fair value 7,735 7,844
======================================================================== ================= =============
1 Includes the transfer of GBP916 million (31 March 2023: GBP781
million) from the Buyouts 2010-12 partnerships which are classified
as investment entity subsidiaries, relating to Action.
Transfer of portfolio investments from investment entity
subsidiaries includes the transfer of investment portfolio between
investment entity subsidiaries and the Company at fair value. The
consideration for these transfers can either be cash or intra-group
receivables.
Restrictions
3i Group plc, the ultimate parent company, receives dividend
income from its subsidiaries. There are no restrictions on the
ability to transfer funds from these subsidiaries to the Group at
30 September 2023 (31 March 2023: GBP225 million).
Support
3i Group plc continues to provide, where necessary, ongoing
support to its investment entity subsidiaries for the purchase of
portfolio investments.
9 Fair values of assets and liabilities
This section should be read in conjunction with Note 13 on pages
181 to 184 of the Annual report and accounts 2023, which provides
more detail about accounting policies adopted, the definitions of
the three levels of fair value hierarchy, valuation methods used in
calculating fair value and the valuation framework which governs
oversight of valuations. There have been no changes in the
accounting policies adopted or the valuation methodologies
used.
Valuation
The Group classifies financial instruments measured at fair
value according to the following hierarchy:
Level Fair value input description Financial instruments
======= =========================================================================== ================================
Level 1 Quoted prices (unadjusted) from active markets Quoted equity instruments
======= =========================================================================== ================================
Level 2 Inputs other than quoted prices included in Level 1 that are observable Derivative financial instruments
either directly (ie
as prices) or indirectly (ie derived from prices)
======= =========================================================================== ================================
Level 3 Inputs that are not based on observable market data Unquoted investments
======= =========================================================================== ================================
The table below shows the classification of financial
instruments held at fair value into the valuation hierarchy at 30
September 2023:
30 September 2023 31 March 2023
Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
============================================== ======= ======= ======= ====== ======= ======= ======= ======
Assets
Quoted investments 818 - - 818 841 - - 841
Unquoted investments - - 10,761 10,761 - - 8,677 8,677
Investments in investment entity subsidiaries - - 7,735 7,735 - - 7,844 7,844
Other financial assets - 102 23 125 - 121 21 142
Liabilities
Other financial liabilities - (3) - (3) - (4) - (4)
============================================== ======= ======= ======= ====== ======= ======= ======= ======
Total 818 99 18,519 19,436 841 117 16,542 17,500
============================================== ======= ======= ======= ====== ======= ======= ======= ======
We determine that in the ordinary course of business, the net
asset value of an investment entity subsidiary is considered to be
the most appropriate to determine fair value. The underlying
portfolio is valued under the same methodology as directly held
investments, with any other assets or liabilities within investment
entity subsidiaries fair valued in accordance with the Group's
accounting policies. Note 8 details the Directors' considerations
about the fair value of the underlying investment entity
subsidiaries.
The fair values of the Group's financial assets and liabilities
not held at fair value, are not materially different from their
carrying values, with the exception of loans and borrowings. The
fair value of loans and borrowings is GBP1,076 million (31 March
2023: GBP686 million), determined with reference to their published
market prices. The carrying value of the loans and borrowings is
GBP1,208 million (31 March 2023: GBP775 million) and accrued
interest payable (included within trade and other payables) is
GBP18 million (31 March 2023: GBP12 million).
Level 3 fair value reconciliation - unquoted investments
Six months to Year to
30 September 31 March
2023 2023
GBPm GBPm
========================================== ============= ========
Opening fair value 8,677 5,708
Additions 937 908
- of which loan notes with nil value (2) (6)
Disposals, repayments and write-offs - (129)
Fair value movement 1 1,217 1,990
Other movements and net cash movements 2 (68) 206
========================================== ============= ========
Closing fair value 10,761 8,677
========================================== ============= ========
1 All fair value movements relate to assets held at the end of
the period and are recognised in unrealised profits on the
revaluation of investments.
2 Other movements includes the impact of foreign exchange and
accrued interest.
Unquoted investments valued using Level 3 inputs also had the
following impact on profit or loss: realised profits over value on
disposal of investment of GBP1 million (30 September 2022: GBP2
million loss), dividend income of GBP2 million (30 September 2022:
GBP2 million) and foreign exchange losses of GBP71 million (30
September 2022: GBP262 million gain).
Assets move between Level 1 and Level 3 when an unquoted equity
investment lists on a quoted market exchange. There were no
transfers in or out of Level 3 during the period. In the six months
to 30 September 2023, one asset changed basis from Other to a DCF.
One asset was acquired in the period and valued on an Other basis,
in line with its fair value. Action remains unchanged on an
earnings-based valuation. The changes in valuation methodology in
the period reflect our view of the most appropriate method to
determine the fair value of these assets at 30 September 2023.
Further information can be found in the Private Equity and
Infrastructure sections of the Business and Financial review
earlier in this document.
The following table summarises the various valuation
methodologies used by the Group to fair value Level 3 instruments,
the inputs and the sensitivities applied and the impact of those
sensitivities to the unobservable inputs. Overall the portfolio
continues to deliver good performance, despite a challenging
macroeconomic and geopolitical back drop. Action continues to
perform very strongly and we have seen good contributions from a
number of our portfolio companies operating in the value-for-money,
private label and healthcare sectors, offset by weaker performance
in our portfolio companies exposed to discretionary consumer
spending and more cyclical end-markets. When selecting multiples to
value our portfolio companies we continue to take a long-term,
through-the-cycle approach. All numbers in the table below are on
an investment basis.
Level 3 unquoted investments
Fair value
Fair value at impact of
30 September Sensitivity on key sensitivities
Methodology Description Inputs 2023 GBPm unobservable input GBPm +5%/-5%
================= =============================================================================================== ========================================================================================= ========================= ===================================================================== ========================
Earnings Most commonly used Private Equity valuation methodology. Used for investments which are typical Earnings multiples are applied to the earnings of the company to determine the enterprise 17,959 For the assets valued on an earnings basis, we have applied a 5% sen 1,023
ly value sitivity to the earnings
profitable and for which we can determine a set of listed companies and precedent transactions, multiple
where relevant, with similar characteristics
(Private Equity) (31 March 2023: 16,109) (31 March 2023: 928)
Earnings multiples
When selecting earnings multiple, we consider: Action is our largest asset, and we have included a 5% sensitivity (1,017)
on Action's earnings multiple
of 19.5x (equivalent to 18.5x net)
1.Comparable listed companies' current performance and through-the-cycle averages (31 March 2023: (930))
2. Relevant market transaction multiples
3. Company performance, organic growth and value-accretive add-ons, if any 693
4. Exit expectations and other company specific factors (31 March
2023: 618)
For point 1 and 2 of the above we select companies in the same industry and, where possi
ble,
with a similar business model and profile in terms of size, products, services and custo
mers,
growth rates and geographic focus
(693)
The pre-discount multiple ranges from 7.5x - 20.0x (31 March 2023: 6.4x - 20.0x)
(31 March 2023: (619))
================= =============================================================================================== ========================================================================================= ========================= ===================================================================== ========================
Other inputs:
Earnings
Reported earnings are adjusted for non-recurring items, such as restructuring expenses, for
significant corporate actions and, in exceptional cases, run-rate adjustments to arrive at
maintainable earnings
The most common measure is earnings before interest, tax, depreciation and amortisation
("EBITDA")
Earnings are usually obtained from portfolio company management accounts to the preceding
quarter end, with reference also to forecast earnings and the maintainable view of earnings
Action, our largest asset, is valued using run-rate earnings
============================================= ======================================================================== =============================================================================================== ======================= ====================================================== =======================
Discounted cash flow Appropriate for businesses with long-term stable cash flows, typically i Long-term cash flows are discounted at a rate which is benchmarked against market data, where 1,053 For the assets valued on a DCF basis, we have applied (35)
n Infrastructure or possible, or adjusted from the rate at the initial investment based on changes in the risk a 5% sensitivity to the discount rate
alternatively businesses where DCF is more appropriate in the short term profile of the investment
(Private Equity/ Infrastructure/ Scandlines) (31 March 2023: 1,024) (31 March 2023: (37))
The range of discount rates used in our DCF valuations is 10.5% to 48.0% (31 March 2023: 10.5%
to 16.9%)
36
(31 March 2023: 39)
============================================= ======================================================================== =============================================================================================== ======================= ====================================================== =======================
NAV (Infrastructure) Used for investments in unlisted funds Net asset value reported by the fund manager. The valuation of the underlying portfolio is 100 A 5% increase on closing NAV 5
consistent with IFRS
(31 March 2023: 97) (31 March 2023: 5)
============================================= ======================================================================== =============================================================================================== ======================= ====================================================== =======================
Other (Private Equity/Infrastructure) Used where elements of a business are valued on different bases Valued on separate elements based on one of the methodologies listed above or other applicable 237 A 5% increase in the closing value 12
inputs
(31 March 2023: 196) (31 March 2023: 10)
============================================= ======================================================================== =============================================================================================== ======================= ====================================================== =======================
10 Related parties
All related party transactions that took place in the six months
ending 30 September 2023 are consistent in nature with the
disclosures in Note 29 on pages 200 to 203 of the Annual report and
accounts 2023. Related party transactions which took place in the
period and materially affected performance or the financial
position of the Group, together with any material changes in
related party transactions as described in the Annual report and
accounts 2023 that could materially affect the performance or the
financial position of the Group are detailed below.
Investments
The Group makes investments in the equity of unquoted and quoted
investments where it does not have control, but may be able to
participate in the financial and operating policies of that
company. IFRS presumes that it is possible to exert significant
influence when the equity holding is greater than 20%. The Group
has taken the investment entity exception as permitted by IFRS 10
and has not equity accounted for these investments, in accordance
with IAS 28, but they are related parties. The total amounts
included for investments where the Group has significant influence,
but not control, are as follows:
Six months to Six months to
30 September 30 September
2023 2022
Consolidated statement of comprehensive income GBPm GBPm
============================================================== ============= =============
Realised profits over value on the disposal of investments 1 -
Unrealised (losses)/profits on the revaluation of investments (36) 60
============================================================== ============= =============
30 September 31 March
2023 2023
Consolidated statement of financial position GBPm GBPm
============================================= ============ ========
Unquoted investments 738 775
============================================= ============ ========
Management arrangements
The Group acted as Investment Manager to 3i Infrastructure plc
("3iN"), which is listed on the London Stock Exchange, for the
period to 30 September 2023. The following amounts have been
recognised in respect of the management relationship:
Consolidated statement of comprehensive income Six months to Six months to
30 September 30 September
2023 2022
GBPm GBPm
==================================================== ============= =============
Unrealised losses on the revaluation of investments (23) (117)
Dividends 15 14
Fees receivable from external funds 25 23
==================================================== ============= =============
Consolidated statement of financial position 30 September 31 March
2023 2023
GBPm GBPm
============================================= ============ ========
Quoted equity investments 818 841
Performance fees receivable - 35
============================================= ============ ========
Statement of Directors' responsibilities
The Directors, who are required to prepare the financial
statements on a going concern basis unless it is not appropriate,
are satisfied that the Group has the resources to continue in
business for the foreseeable future. In making this assessment, the
Directors have considered information relating to present and
future conditions, including future projections of profitability
and cash flows.
The Directors confirm that to the best of their knowledge:
(1) the condensed set of financial statements has been prepared
in accordance with IAS 34 "Interim Financial Reporting" as adopted
for use in the UK; and
(2) the Half-year report includes a fair review of the
information required by:
1 DTR 4.2.7R of the Disclosure Guidance and Transparency Rules,
being an indication of important events that have occurred during
the first six months of the financial year ending 31 March 2024 and
their impact on the condensed set of financial statements; and a
description of the principal risks and uncertainties for the
remaining six months of the financial year; and
2 DTR 4.2.8R of the Disclosure Guidance and Transparency Rules,
being (i) related party transactions that have taken place in the
first six months of the financial year ending 31 March 2024 which
have materially affected the financial position or performance of
3i Group during that period; and (ii) any changes in the related
party transactions described in the Annual report and accounts 2023
that could materially affect the financial position or performance
of 3i Group during the first six months of the financial year
ending 31 March 2024.
List of Directors and their functions
The Directors of the Company and their functions are listed
below:
David Hutchison, Chairman
Simon Borrows, Chief Executive and Executive Director
James Hatchley, Group Finance Director and Executive
Director
Jasi Halai, Chief Operating Officer and Executive Director
Stephen Daintith, Independent non-executive Director
Lesley Knox, Senior Independent non-executive Director
Coline McConville, Independent non-executive Director
Peter McKellar, Independent non-executive Director
Alexandra Schaapveld, Independent non-executive Director
By order of the Board
K J Dunn
Company Secretary
8 November 2023
Registered Office:
16 Palace Street
London SW1E 5JD
Independent review report to 3i Group plc
Conclusion
We have been engaged by 3i Group plc (the "Company") to review
the condensed set of financial statements in the half-yearly
financial report for the six months ended 30 September 2023, which
comprises: the Condensed consolidated statement of comprehensive
income, the Condensed consolidated statement of financial position,
the Condensed consolidated statement of changes in equity, the
Condensed consolidated cash flow statement and the related
explanatory notes.
Based on our review, nothing has come to our attention that
causes us to believe that the condensed set of financial statements
in the half-yearly financial report for the six months ended 30
September 2023 is not prepared, in all material respects, in
accordance with IAS 34 Interim Financial Reporting as adopted for
use in the UK and the Disclosure Guidance and Transparency Rules
("the DTR") of the UK's Financial Conduct Authority ("the UK
FCA").
Basis for conclusion
We conducted our review in accordance with International
Standard on Review Engagements (UK) 2410 Review of Interim
Financial Information Performed by the Independent Auditor of the
Entity ("ISRE (UK) 2410") issued for use in the UK. A review of
interim financial information consists of making enquiries,
primarily of persons responsible for financial and accounting
matters, and applying analytical and other review procedures. We
read the other information contained in the half-yearly financial
report and consider whether it contains any apparent misstatements
or material inconsistencies with the information in the condensed
set of financial statements.
A review is substantially less in scope than an audit conducted
in accordance with International Standards on Auditing (UK) and
consequently does not enable us to obtain assurance that we would
become aware of all significant matters that might be identified in
an audit. Accordingly, we do not express an audit opinion.
Conclusions relating to going concern
Based on our review procedures, which are less extensive than
those performed in an audit as described in the Basis for
conclusion section of this report, nothing has come to our
attention that causes us to believe that the directors have
inappropriately adopted the going concern basis of accounting, or
that the directors have identified material uncertainties relating
to going concern that have not been appropriately disclosed.
This conclusion is based on the review procedures performed in
accordance with ISRE (UK) 2410. However, future events or
conditions may cause the Group to cease to continue as a going
concern, and the above conclusions are not a guarantee that the
Group will continue in operation.
Directors' responsibilities
The half-yearly financial report is the responsibility of, and
has been approved by, the directors. The directors are responsible
for preparing the half-yearly financial report in accordance with
the DTR of the UK FCA.
As disclosed in 'Basis of preparation and accounting policies',
the annual financial statements of the Group are prepared in
accordance with UK adopted international accounting standards.
The directors are responsible for preparing the condensed set of
financial statements included in the half-yearly financial report
in accordance with IAS 34 as adopted for use in the UK.
In preparing the condensed set of financial statements, the
directors are responsible for assessing the Group's ability to
continue as a going concern, disclosing, as applicable, matters
related to going concern and using the going concern basis of
accounting unless the directors either intend to liquidate the
Group or to cease operations, or have no realistic alternative but
to do so.
Our responsibility
Our responsibility is to express to the Company a conclusion on
the condensed set of financial statements in the half-yearly
financial report based on our review. Our conclusion, including our
conclusions relating to going concern, are based on procedures that
are less extensive than audit procedures, as described in the Basis
for conclusion section of this report.
The purpose of our review work and to whom we owe our
responsibilities
This report is made solely to the Company in accordance with the
terms of our engagement to assist the Company in meeting the
requirements of the DTR of the UK FCA. Our review has been
undertaken so that we might state to the Company those matters we
are required to state to it in this report and for no other
purpose. To the fullest extent permitted by law, we do not accept
or assume responsibility to anyone other than the Company for our
review work, for this report, or for the conclusions we have
reached.
Jonathan Mills
for and on behalf of KPMG LLP
Chartered Accountants
15 Canada Square
Canary Wharf
London
E14 5GL
8 November 2023
Portfolio and other information
20 large investments
The investments listed below are the top 20 largest investments
by value. These assets account for 94% of the portfolio value at 30
September 2023 (31 March 2023: 94%).
Residual Residual
Business cost cost Valuation Valuation
line 1 1
Geography September March September March Relevant
Investment First invested 2023 2023 2023 2023 transactions
in
Description of business Valuation GBPm GBPm GBPm GBPm in the period
basis
========================================= ================ ========= ======== ========= ========= =============
Action* Private Equity 653 653 12,862 11,188
General merchandise discount Netherlands
retailer
2011
Earnings
========================================= ================ ========= ======== ========= ========= =============
GBP15 million
3i Infrastructure plc* Infrastructure 305 305 818 841 cash
Quoted investment company, UK dividend
investing in infrastructure
=========================================
2007 received
=========================================
Quoted
========================================= ================ ========= ======== ========= ========= =============
Cirtec Medical* Private Equity 172 172 579 552
Outsourced medical device US
manufacturing
2017
Earnings
========================================= ================ ========= ======== ========= ========= =============
GBP10 million
Scandlines Scandlines 530 530 547 554 cash
Ferry operator between Denmark Denmark/Germany dividend
and Germany
2018 received
DCF
========================================= ================ ========= ======== ========= ========= =============
Acquisition
Royal Sanders* Private Equity 136 136 486 369 of
Private label and contract Netherlands Lenhart
manufacturing producer of in April
personal care products
=========================================
2018 2023
=========================================
Earnings
========================================= ================ ========= ======== ========= ========= =============
Acquisition
AES Engineering Private Equity 30 30 396 351 of
Manufacturer of mechanical UK Triseal
seals and provision of reliability
services
1996 in June
2023
Earnings
========================================= ================ ========= ======== ========= ========= =============
nexeye* Private Equity 269 269 390 393
Value-for-money optical retailer Netherlands
2017
Earnings
========================================= ================ ========= ======== ========= ========= =============
SaniSure* Private Equity 76 76 375 389
Manufacturer, distributor US
and integrator of single use
bioprocessing systems and
components
=========================================
2019
=========================================
Earnings
Tato Private Equity 2 2 330 411
Manufacturer and seller of UK
specialty chemicals
1989
Earnings
========================================= ================ ========= ======== ========= ========= =============
Smarte Carte* Infrastructure 189 189 316 300
Provider of self-serve vended US
luggage carts, electronic
lockers and concession carts
2017
DCF
Evernex* Private Equity 308 299 315 305
Provider of third-party maintenance France
services for data centre infrastructure
2019
Earnings
WP* Private Equity 267 257 273 274
Global manufacturer of innovative plastic packaging Netherlands
solutions
===================================================
2015
Earnings
=================================================================== ===== ===== ====== ====== ==================
Luqom* Private Equity 254 245 225 271
Online lighting specialist retailer Germany
2017
Earnings
=================================================================== ===== ===== ====== ====== ==================
European Bakery Group* Private Equity 85 46 207 73 EBG formed
Industrial bakery group specialised in home Netherlands following the
bake-off bread and snack products
2021 acquisition of
Earnings coolback in July
2023 (3i further
investment of
GBP38 million) and
Panelto in
August
2023
=================================================================== ===== ===== ====== ====== ==================
MPM* Private Equity 161 153 198 181
An international branded, premium and natural pet UK
food company
===================================================
2020
Earnings
=================================================================== ===== ===== ====== ====== ==================
Audley Travel* Private Equity 271 271 173 162
Provider of experiential tailor-made travel UK
2015
Earnings
=================================================================== ===== ===== ====== ====== ==================
WilsonHCG* Private Equity 83 83 156 196
Global provider of recruitment process outsourcing US
and other talent solutions
===================================================
2021
Earnings
=================================================================== ===== ===== ====== ====== ==================
BoConcept* Private Equity 115 110 155 160
Urban living designer Denmark
===================================================
2016
Earnings
=================================================================== ===== ===== ====== ====== ==================
ten23 health* Private Equity 116 104 149 111 GBP12 million
Biologics focused CDMO Switzerland further
===================================================
2021 investment
Other
=================================================================== ===== ===== ====== ====== ==================
Q Holding* Private Equity 162 162 145 117
Manufacturer of catheter products serving the US
medical device market
===================================================
2014
Earnings
=================================================================== ===== ===== ====== ====== ==================
4,184 4,092 19,095 17,198
=================================================================== ===== ===== ====== ====== ==================
* Controlled in accordance with IFRS.
1 Residual cost includes cash investment and interest net of
cost disposed.
Glossary
3i 2013-2016 vintage includes Aspen Pumps, Audley Travel,
Basic-Fit, Dynatect, Kinolt, ATESTEO, JMJ, Q Holding, WP,
Scandlines further (completed in December 2013), Christ, Geka,
Óticas Carol and Blue Interactive.
3i 2016-2019 vintage includes BoConcept, Cirtec Medical, Formel
D, nexeye, arrivia, Luqom, Havea, Royal Sanders, Magnitude Software
and Schlemmer.
3i 2019-2022 vintage includes Evernex, SaniSure, YDEON, MPM,
WilsonHCG, European Bakery Group, ten23 health, insightsoftware,
MAIT, Mepal and Yanga.
3i 2022-2025 vintage includes xSuite, Digital Barriers, Konges
Sløjd, VakantieDiscounter.
3i Buyouts 2010-2012 vintage includes Action, Amor, Element,
Etanco, Hilite, OneMed and Trescal.
3i Growth 2010-2012 vintage includes Element, Hilite, BVG, Go
Outdoors, Loxam, Touchtunes and WFCI.
Alternative Investment Funds ("AIFs") At 30 September 2023, 3i
Investments plc as AIFM, managed seven AIFs. These were 3i Group
plc, 3i Growth Capital B LP, 3i Growth Capital C LP, 3i
Europartners Va LP, 3i Europartners Vb LP, 3i Managed
Infrastructure Acquisitions LP and 3i Infrastructure plc. 3i
Investments (Luxembourg) SA as AIFM, managed one AIF, 3i European
Operational Projects SCSp.
Alternative Investment Fund Manager ("AIFM") is the regulated
manager of AIFs. Within 3i, these are 3i Investments plc and 3i
Investments (Luxembourg) SA.
APAC The Asia Pacific region.
Approved Investment Trust Company This is a particular UK tax
status maintained by 3i Group plc, the parent company of 3i Group.
An approved Investment Trust company is a UK company which meets
certain conditions set out in the UK tax rules which include a
requirement for the company to undertake portfolio investment
activity that aims to spread investment risk and for the company's
shares to be listed on an approved exchange. The "approved" status
for an investment trust must be agreed by the UK tax authorities
and its benefit is that certain profits of the company, principally
its capital profits, are not taxable in the UK.
Assets under management ("AUM") A measure of the total assets
that 3i has to invest or manages on behalf of shareholders and
third-party investors for which it receives a fee. AUM is measured
at fair value. In the absence of a third-party fund in Private
Equity, it is not a measure of fee generating capability.
B2B Business-to-business.
Board The Board of Directors of the Company.
CAGR is the compound annual growth rate.
Capital redemption reserve is established in respect of the
redemption of the Company's ordinary shares.
Capital reserve recognises all profits and losses that are
capital in nature or have been allocated to capital. Following
changes to the Companies Act, the Company amended its Articles of
Association at the 2012 Annual General Meeting to allow these
profits to be distributable by way of a dividend.
Carried interest payable is accrued on the realised and
unrealised profits generated taking relevant performance hurdles
into consideration, assuming all investments were realised at the
prevailing book value. Carried interest is only actually paid when
the relevant performance hurdles are met and the accrual is
discounted to reflect expected payment periods.
Carried interest receivable The Group earns a share of profits
from funds which it manages on behalf of third parties. These
profits are earned when the funds meet certain performance
conditions and are paid by the fund once these conditions have been
met on a cash basis. The carried interest receivable may be subject
to clawback provisions if the performance of the fund deteriorates
following carried interest being paid.
Company 3i Group plc.
DACH The region covering Austria, Germany and Switzerland.
Discounting The reduction in present value at a given date of a
future cash transaction at an assumed rate, using a discount factor
reflecting the time value of money.
EBITDA is defined as earnings before interest, taxation,
depreciation and amortisation and is used as the typical measure of
portfolio company performance.
EBITDA multiple Calculated as the enterprise value over EBITDA,
it is used to determine the value of a company.
EMEA The region covering Europe, the Middle East and Africa.
Executive Committee The Executive Committee is responsible for
the day-to-day running of the Group (see the Governance section of
our Annual report and accounts 2023).
Fair value movements on investment entity subsidiaries The
movement in the carrying value of Group subsidiaries, classified as
investment entities under IFRS 10, between the start and end of the
accounting period converted into sterling using the exchange rates
at the date of the movement.
Fair value through profit or loss ("FVTPL") is an IFRS
measurement basis permitted for assets and liabilities which meet
certain criteria. Gains and losses on assets and liabilities
measured as FVTPL are recognised directly in the Statement of
comprehensive income.
Fee income (or Fees receivable) is earned for providing services
to 3i's portfolio companies and predominantly falls into one of two
categories. Negotiation and other transaction fees are earned for
providing transaction related services. Monitoring and other
ongoing service fees are earned for providing a range of services
over a period of time.
Fees receivable from external funds are earned for providing
management and advisory services to a variety of fund partnerships
and other entities. Fees are typically calculated as a percentage
of the cost or value of the assets managed during the year and are
paid quarterly, based on the assets under management to date.
Foreign exchange on investments arises on investments made in
currencies that are different from the functional currency of the
Company. Investments are translated at the exchange rate ruling at
the date of the transaction. At each subsequent reporting date
investments are translated to sterling at the exchange rate ruling
at that date.
Gross investment return ("GIR") includes profit and loss on
realisations, increases and decreases in the value of the
investments we hold at the end of a period, any income received
from the investments such as interest, dividends and fee income,
movements in the fair value of derivatives and foreign exchange
movements. GIR is measured as a percentage of the opening portfolio
value.
Interest income from investment portfolio is recognised as it
accrues. When the fair value of an investment is assessed to be
below the principal value of a loan, the Group recognises a
provision against any interest accrued from the date of the
assessment going forward until the investment is assessed to have
recovered in value.
International Financial Reporting Standards ("IFRS") are
accounting standards issued by the International Accounting
Standards Board ("IASB"). The Group's consolidated financial
statements are required to be prepared in accordance with IFRS.
Investment basis Accounts prepared assuming that IFRS 10 had not
been introduced. Under this basis, we fair value portfolio
companies at the level we believe provides useful comprehensive
financial information. The commentary in the Strategic report
refers to this basis as we believe it provides a more
understandable view of our performance.
IRR Internal Rate of Return.
Key Performance Indicator ("KPI") is a measure by reference to
which the development, performance or position of the Group can be
measured effectively.
Like-for-like ("LFL") compare financial results in one period with those for the previous period.
Liquidity includes cash and cash equivalents (as per the
Investment basis Consolidated cash flow statement) and undrawn
RCF.
Money multiple is calculated as the cumulative distributions
plus any residual value divided by paid-in capital.
Net asset value ("NAV") is a measure of the fair value of our
proprietary investments and the net costs of operating the
business.
Operating cash profit is the difference between our cash income
(consisting of portfolio interest received, portfolio dividends
received, portfolio fees received and fees received from external
funds as per the Investment basis Consolidated cash flow statement)
and our operating expenses and lease payments (as per the
Investment basis Consolidated cash flow statement).
Operating profit includes gross investment return, management
fee income generated from managing external funds, the costs of
running our business, net interest payable, exchange movements,
other income, carried interest and tax.
Organic growth is the growth a company achieves by increasing
output and enhancing sales internally.
Performance fee receivable The Group earns a performance fee
from the investment management services it provides to 3i
Infrastructure plc ("3iN") when 3iN's total return for the year
exceeds a specified threshold. This fee is calculated on an annual
basis and paid in cash early in the next financial year.
Portfolio effect is the level of risk based on the diversity of
the investment portfolio.
Portfolio income is that which is directly related to the return
from individual investments. It is comprised of dividend income,
income from loans and receivables and fee income.
Proprietary Capital is shareholders' capital which is available
to invest to generate profits.
Public Private Partnership ("PPP") is a government service or
private business venture which is funded and operated through a
partnership of government and one or more private sector
companies.
Realised profits or losses over value on the disposal of
investments is the difference between the fair value of the
consideration received, less any directly attributable costs, on
the sale of equity and the repayment of loans and receivables and
its carrying value at the start of the accounting period, converted
into sterling using the exchange rates at the date of disposal.
Revenue reserve recognises all profits and losses that are
revenue in nature or have been allocated to revenue.
Revolving credit facility ("RCF") The Group has access to a
credit line which allows us to access funds when required to
improve our liquidity.
Segmental reporting Operating segments are reported in a manner
consistent with the internal reporting provided to the Chief
Executive who is considered to be the Group's chief operating
decision maker. All transactions between business segments are
conducted on an arm's length basis, with intrasegment revenue and
costs being eliminated on consolidation. Income and expenses
directly associated with each segment are included in determining
business segment performance.
Share-based payment reserve is a reserve to recognise those
amounts in retained earnings in respect of share-based
payments.
SORP means the Statement of Recommended Practice: Financial
Statements of Investment Trust Companies and Venture Capital
Trusts.
Syndication is the sale of part of our investment in a portfolio
company to a third-party, usually within 12 months of our initial
investment and for the purposes of facilitating investment by a
co-investor or portfolio company management in line with our
original investment plan. A syndication is treated as a negative
investment rather than a realisation.
Total return comprises operating profit less tax charge less
movement in actuarial valuation of the historic defined benefit
pension scheme.
Total shareholder return ("TSR") is the measure of the overall
return to shareholders and includes the movement in the share price
and any dividends paid, assuming that all dividends are reinvested
on their ex-dividend date.
Translation reserve comprises all exchange differences arising
from the translation of the financial statements of international
operations.
Unrealised profits or losses on the revaluation of investments
is the movement in the carrying value of investments between the
start and end of the accounting period converted into sterling
using the exchange rates at the date of the movement.
Information for shareholders
Note
The first FY2024 dividend is expected to be paid on 12 January
2024 to holders of ordinary shares on the register on 1 December
2023. The ex-dividend date will be 30 November 2023.
3i Group plc
Registered office:
16 Palace Street,
London SW1E 5JD, UK
Registered in England No. 1142830
An investment company as defined by section 833 of the Companies
Act 2006.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
RNS may use your IP address to confirm compliance with the terms
and conditions, to analyse how you engage with the information
contained in this communication, and to share such analysis on an
anonymised basis with others as part of our commercial services.
For further information about how RNS and the London Stock Exchange
use the personal data you provide us, please see our Privacy
Policy.
END
IR UPGUPGUPWPUR
(END) Dow Jones Newswires
November 09, 2023 02:00 ET (07:00 GMT)
3i (LSE:III)
過去 株価チャート
から 4 2024 まで 5 2024
3i (LSE:III)
過去 株価チャート
から 5 2023 まで 5 2024