REG - 3i Group PLC - Results for the year to 31 March 2024
09/05/2024 07:00
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RNS Number : 6995N 3i Group PLC 09 May 2024
9 May 2024
3i Group plc announces results for the year
to 31 March 2024
Strong result supported by resilient growth in our portfolio companies
• Total return of £3,839 million or 23% on opening shareholders'
funds (2023: £4,585 million, 36%) and NAV per share of 2,085 pence (31 March
2023: 1,745 pence). This includes a 33 pence per share loss on foreign
exchange translation (FY2023: 65 pence per share gain).
• Our Private Equity business delivered a gross investment return of
£4,059 million or 25% (2023: £4,966 million, 40%). This result was driven
primarily by Action's very strong performance in FY2024. We continued to see
strong growth from a number of our portfolio companies operating in the
value-for-money and private label, and healthcare sectors. This more than
offset softer performance from a number of portfolio companies operating in
the discretionary consumer sector or in sectors that are working through
adverse phases of their market cycles.
• Action generated a gross investment return of £3,718 million, or
33%. It delivered annual revenue growth of 28%, like-for-like sales growth of
16.7% and EBITDA growth of 34% in 2023. Performance in the first quarter of
2024 was strong, with net sales of €3,004 million (Q1 2023: €2,485
million), operating EBITDA of €397 million (Q1 2023: €309 million) and
like-for-like sales growth of 9.8%. The LTM run-rate EBITDA to P3 2024, which
ended on 31 March 2024 totalled €1,848 million (LTM run-rate EBITDA to 2
April 2023: €1,439 million), representing a 28% increase over the same
period last year. This strong performance supported value growth of £3,609
million for Action in FY2024, in addition to dividends to 3i of £375 million.
3i also received proceeds of £762 million from Action via a pro-rata share
redemption.
• At the end of week 18 (5 May 2024) Action's year-to-date
like-for-like sales growth was maintained at 9.8% and 62 new stores had been
opened. At that date, Action's cash balance was €663 million.
• The Private Equity team invested £556 million in the year,
principally in a further stake in Action, and in smaller further investments
in Royal Sanders and ten23 health, as well as in European Bakery Group to
support the acquisition of coolback. In addition, our Private Equity portfolio
companies completed a further six bolt-on acquisitions funded through their
own balance sheets.
• Our Infrastructure business generated a gross investment return of
£99 million, or 7% (2023: £86 million, 6%). This return reflects the modest
share price gains for 3i Infrastructure plc ("3iN"), which continued to lag
the strong performance of the underlying portfolio and NAV return. Our US
Infrastructure portfolio continued to perform well.
• In total across the Group, we received over £1.4 billion of cash
from the portfolio. During the year, we issued a six-year €500 million bond
and extended the tenor of the £400 million tranche of our £900 million
revolving credit facility to November 2026, with both transactions further
strengthening our liquidity profile. We ended the year with liquidity of
£1,296 million, net debt of £806 million and gearing of 4%.
• Total dividend of 61 pence per share for FY2024, with a second
FY2024 dividend of 34.5 pence per share to be paid in July 2024 subject to
shareholder approval.
Simon Borrows, 3i's Chief Executive, commented:
"The shape of today's portfolio has served us well in this challenging year
and reflects investment decisions taken over the last 12 years. Action's
compelling growth story continues to be a major driver of the Group's return,
with overall resilient performance across the remaining portfolio. We expect
that the current macro-economic conditions and geopolitical uncertainty will
persist in the near term and that this will continue to impact confidence and
pricing expectations in the wider mid-cap M&A market. Our rigorous and
disciplined approach to capital allocation remains unchanged. We have been
building resilient portfolio companies that are capable of navigating through
these challenging trading conditions."
Financial highlights
Year to/as at Year to/as at
31 March
31 March
2024
2023
Group
Total return £3,839m £4,585m
Operating expenses £(147)m £(138)m
Operating cash profit £467m £364m
Realised proceeds £888m £857m
Gross investment return £4,168m £5,104m
- As a percentage of opening 3i portfolio value 23% 36%
Cash investment £593m £397m
3i portfolio value £21,636m £18,388m
Gross debt £1,202m £775m
Net debt £(806)m £(363)m
Gearing(1) 4% 2%
Liquidity £1,296m £1,312m
Net asset value £20,170m £16,844m
Diluted net asset value per ordinary share 2,085p 1,745p
Total dividend per share 61p 53.0p
1 Gearing is net debt as a percentage of net assets.
ENDS
For further information, please contact:
Silvia Santoro
Group Investor Relations Director Tel: 020 7975 3258
Kathryn van der Kroft Tel: 020 7975 3021
Communications Director
For further information regarding the announcement of 3i's annual results to
31 March 2024, including a live webcast of the results presentation at
10.00am, please visit www.3i.com.
Notes to editors
3i is a leading international investment manager focused on mid-market Private
Equity and Infrastructure. Our core investment markets are Europe and North
America. For further information, please visit: www.3i.com.
Notes to the announcement of the results
Note 1
All of the financial data in this announcement is taken from the Investment
basis financial statements. The statutory accounts are prepared under IFRS for
the year to 31 March 2024 and have not yet been delivered to the Registrar of
Companies. The statutory accounts for the year to 31 March 2023 have been
delivered to the Registrar of Companies. The auditor's reports on the
statutory accounts for these years are unqualified and do not contain any
matters to which the auditor drew attention by way of emphasis or any
statements under section 498(2) or (3) of the Companies Act 2006. This
announcement does not constitute statutory accounts.
Note 2
Copies of the Annual report and accounts 2024 will be posted to shareholders
on or soon after 22 May 2024.
Note 3
This announcement may contain statements about the future including certain
statements about the future outlook for 3i Group plc and its subsidiaries
("3i"). 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.
Note 4
Subject to shareholder approval, the proposed second dividend is expected to
be paid on Friday 26 July 2024 to holders of ordinary shares on the register
on Friday 21 June 2024. The ex-dividend date will be Thursday 20 June 2024.
Chair's statement
"Our strong result in FY2024 reflects another year of thoughtful and careful
allocation of capital and active asset management of our portfolio companies".
3i delivered a strong result in FY2024, underpinned by another year of
excellent performance from Action and overall resilient performance from the
wider portfolio,
which continues to operate well through a challenging macro-economic
environment and geopolitical uncertainty.
Performance
I am pleased to report that 3i delivered a strong set of results in the
financial year to 31 March 2024 ("FY2024"), with a total return of £3,839
million (2023: £4,585 million). Net asset value ("NAV") increased to 2,085
pence per share (31 March 2023: 1,745 pence per share) and our total return
on opening shareholders' funds was 23% (2023: 36%). Action delivered another
year of strong performance and was the major driver of the Group's FY2024
result. The remaining portfolio saw bifurcated performance, with a number of
our portfolio companies delivering a strong contribution, more than offsetting
those that saw weaker performance.
Market environment
The global economy saw a very modest recovery in 2023, as the macro-economic
environment and geopolitical landscape remained fragile. Whilst inflation has
started to moderate, consumer sentiment remains quite strained, with a
continued focus on affordability. These trends have supported growth from our
value-for-money and private label portfolio companies in the year. Action's
remarkable growth story continued in 2023, as the business once again
generated sector-leading results across its key performance indicators and
increased its store presence across Europe. We increased our exposure to these
returns, through the allocation of further 3i capital into Action in FY2024.
We have also seen an encouraging recovery in the healthcare market and our
Infrastructure portfolio continued to trade robustly overall, generating
strong recurring yields. Our discretionary consumer businesses remained under
pressure and some of our more cyclical businesses continued to experience
weaker end-markets.
The global M&A market was subdued in 2023, impacted by unfavourable
financing conditions and pricing misalignment between vendors and buyers.
Against this backdrop, we have continued to assess new investments and explore
potential exits but have remained disciplined in deploying or realising
capital where we believe valuations are not reflective of intrinsic business
value. As a result, our activity in the year focused primarily on reinvesting
our capital into some of our existing portfolio companies, and refinancing
some of our existing portfolio companies at attractive terms. We also
continued to accelerate growth in some of our portfolio companies by
acquisition.
Dividend
Our dividend policy is to maintain or grow the dividend year on year, subject
to the strength of our balance sheet and the outlook for investments and
realisations. Cash generation remains strong and in FY2024, we generated cash
inflows of £1.4 billion from our portfolio companies. During the year, we
successfully issued a six-year €500 million bond at a coupon of 4.875%,
further strengthening our liquidity profile.
In line with the Group's policy and in recognition of the Group's financial
performance, the Board recommends a second FY2024 dividend of 34.5 pence
(2023: 29.75 pence), subject to shareholder approval, which will take the
total dividend to 61.0 pence (2023: 53.0 pence). Based on this recommended
dividend and expected payment in July 2024, we will have returned £3.8
billion to shareholders in dividends since our restructuring was announced in
June 2012, growing our total dividend by an average compound annual growth
rate of 18% over this period.
Board and people
As announced last year, Caroline Banszky retired from our Board after our 2023
Annual General Meeting ("AGM") and was succeeded by Stephen Daintith as Audit
and Compliance Committee Chair. Stephen, who is CFO of Ocado Group plc, has a
wealth of financial and operating experience, and knowledge that he brings to
the role.
Environmental, Social, and Governance ("ESG")
We made good progress across our ESG agenda in FY2024, and particularly on our
climate change approach and strategy. We are reporting for the first time in
alignment with the Task Force for Climate-related Financial Disclosures
("TCFD") recommendations, in compliance with FCA requirements, including
aggregate portfolio emissions. We are also pleased to announce that our
near-term science-based emissions reduction targets ("science-based targets")
were approved by the Science Based Targets initiative ("SBTi") in March 2024
and our teams have now started to work to meet these targets over the coming
years.
Outlook
In the near term, we expect our investment and realisation activity to reflect
our cautious view on the M&A market and wider macro-economic environment.
We will only deploy capital and realise assets when we feel we are achieving
optimal value for our shareholders.
Trading momentum at the start of FY2025 remains strong at Action, whilst a
number of our other assets are well positioned to continue to grow despite the
uncertain macro-economic outlook.
David Hutchison
Chair
8 May 2024
Chief Executive's statement
"The power of Action's compounding growth coupled with several other strongly
performing portfolio companies underpins both our FY2024 result, and our
conviction in allocating capital into our existing "winners"."
3i delivered another strong result in FY2024, against a backdrop of persistent
global macro-economic headwinds and geopolitical uncertainty.
The shape of today's 3i portfolio has served us well in this challenging year
and reflects investment decisions taken over the last 12 years.
Action's compelling growth story continues to be a major driver of the
Group's return, with overall resilient performance across the remaining
portfolio.
Amidst more difficult markets to match buyers and sellers, we have remained
disciplined in capital deployment, prioritising reinvestment in our existing
portfolio either directly or through buy-and-build acquisitions, whilst
receiving good proceeds and income from some of our other high-quality
portfolio companies.
In FY2024, we generated a total return on shareholders' funds of £3,839
million, or 23% (2023: £4,585 million, or 36%), ending the year with a NAV
per share of 2,085 pence (31 March 2023: 1,745 pence per share), including a
33 pence per share loss (31 March 2023: 65 pence per share gain) on foreign
exchange translation. Action remains a major driver of our overall result,
following another very strong year of earnings growth, cash generation and the
achievement of a number of important expansion milestones. We also increased
our exposure to Action's returns in the year by acquiring further equity in
the business and continuing to reduce the associated carried interest
liability.
We have seen resilient performance across the remaining portfolio. A number of
assets operating in the value-for-money and private label consumer and
healthcare sectors delivered strong growth and some are exhibiting
characteristics which could allow them to compound growth over the longer
term. An example of this is Royal Sanders, which we have now designated as a
longer-term hold asset, following consistent delivery of organic and
acquisitive growth since acquisition (see further details below). Our stronger
performing assets more than offset softer performance from a number of
portfolio companies operating in the discretionary consumer sector or in
sectors that are working through adverse phases of their market cycles.
Our permanent capital, strong balance sheet and disciplined approach to
capital allocation mean that we are under no pressure to invest or realise
when market conditions are unfavourable and there is misalignment on pricing.
This is particularly important in the current environment of subdued global
private equity deal activity, characterised by a persisting dislocation
between private and public market valuations.
Whilst we continued to build our origination pipeline in FY2024, we have
remained extremely disciplined in considering new investment, primarily in
response to unrealistic vendor expectations. Instead we focused our capital
deployment into some of our most successful portfolio companies. Our Private
Equity portfolio companies remained acquisitive, completing seven bolt-on
acquisitions, whilst in Infrastructure, 3i Infrastructure plc ("3iN")
completed further investments in three portfolio companies and our North
American Infrastructure Fund completed three bolt-on acquisitions.
We generated total realised proceeds and portfolio income of £1.4 billion
across our portfolios in FY2024, and in April 2024, we agreed the sale of
nexeye, generating expected exit proceeds of c.€452 million. These exit
proceeds, combined with distributions already received, result in a 2.0x money
multiple.
Private Equity performance
In the year to 31 March 2024, our Private Equity portfolio, including Action,
generated a GIR of £4,059 million or 25% on opening value (2023: £4,966
million, or 40%). Action generated a GIR of £3,718 million, or 33%, on its
opening value. In the last 12 months ("LTM") to the end of 31 December 2023,
93% of our portfolio companies by value grew earnings.
Action
Action, the fastest growing non-food discount retailer in Europe and our
largest portfolio company, delivered another step up in performance in 2023,
confirming the relevance of its winning formula to its customers. Action's
continued focus on ensuring customers benefit from the lowest prices, as a
result of its buying power and flexibility in its category assortment, saw the
business reduce prices across 42% of its product catalogue in 2023, increasing
the price gap against its competitors.
In the 12 months to 31 December 2023, Action generated net sales of €11,324
million, 28% ahead of 2022 and like-for-like ("LFL") sales growth of 16.7%,
mainly as result of an increase in footfall and transaction volumes. Operating
EBITDA was €1,615 million in 2023, 34% ahead of 2022. Action's improved
EBITDA margin of 14.3% compared to 13.6% in the previous year, reflected its
scale benefits and continuous focus on cost control.
Action achieved a number of milestones in its store expansion roadmap in 2023.
In total, the business added 303 stores in the year, another store opening
record, and surpassed 750 stores in France, 500 in Germany, 300 in Poland, 100
in Austria and 50 in Italy. Action also entered Slovakia, its eleventh country
and a new expansion market, with 15 new stores at the end of 2023. Action's
youngest roll-out markets, Poland and the Czech Republic, and newly entered
markets Italy, Spain and Slovakia, are all showing strong trading, providing
sizable expansion opportunities. Action's expertise in store roll-outs,
efficient operations and dedicated resourcing means it can accelerate its
ability to grow a significant store network after the pilot phase. In February
2024, Action entered Portugal, its twelfth country, with three stores opened
to the end of March 2024. At the end of Action's P3 2024 (which ended on
31 March 2024), Action had 2,608 stores across 12 countries. Action's
estimate of additional white space potential in existing and identified,
in-scope countries is c.4,700 stores, and includes extending to Switzerland
and Romania in 2025.
Action continues to optimise its storage and distribution channels to ensure
it can serve its vast and rapidly growing store network. In 2023, the business
opened two further distribution centres, in France and Poland, growing its
distribution centre network to 13 across Europe.
Action continues to make good progress in delivering its Sustainability
Programme, which is focused on the four pillars of people, planet, product and
partnerships. It has continued to develop its employees, to improve the
sustainability of its products and supply chain, to reduce its Scope 1 and 2
emissions and to expand its community partnerships. Importantly, it has
measured its Scope 3 emissions and has committed to set science-based targets.
Further details on Action's sustainability progress can be found in the
Sustainability section of our Annual report and accounts 2024.
Action's conversion of EBITDA to free cashflow is very strong, achieving 104%
in 2023, as a result of particularly strong sales in the last quarter of 2023,
and contributing to significant deleveraging over the course of the year.
This, coupled with its remarkable growth, positioned the business well for its
debut US dollar term loan issuance in the US leveraged loan market in October
2023. The issue was oversubscribed, with Action raising $1.5 billion at very
attractive pricing. In October 2023, Action also completed a capital
restructuring with a pro-rata redemption of shares. 3i used £455 million of
the £762 million gross proceeds from the share redemption to acquire further
shares in Action, increasing our gross equity stake from 52.9% to 54.8%.
In addition, Action made two dividend distributions to all shareholders, in
December 2023 and March 2024, returning £375 million to 3i. This means that
3i received over £1.1 billion of cash from Action in FY2024. Cumulatively,
since we first invested in 2011, Action has returned over £2.9 billion to 3i,
and the potential for future distributions is considerable. After paying the
dividends, Action had a cash balance of €558 million as at 31 March 2024
and a net debt to run-rate earnings ratio of 2.2x.
At 31 March 2024, we valued our 54.8% stake in Action at £14,158 million.
This valuation reflects the continued strong growth in Action's LTM run-rate
EBITDA, its low leverage and an unchanged LTM run-rate EBITDA valuation
multiple of 18.5x, net of the liquidity discount. We benchmark our long-term,
through-the-cycle view on Action's multiple against a broad peer group of
discounters, with a higher weighting towards the top quartile subset of North
American value-for-money retailers, noting Action's operating KPIs continue to
remain superior to this peer group.
Action had strong trading momentum in the first three periods of 2024,
delivering sales of €3,004 million and operating EBITDA of €397 million,
21% and 29% ahead of the same period last year, primarily driven by the
increased volume of transactions. Action delivered LFL sales growth of 9.8%
and added 42 stores in the three-month period.
Longer-term hold assets
Action is a truly unique business and, since our initial investment in 2011,
has benefitted from our rigorous active management, strong governance model
and ambitious long-term expansion strategy. We have been clear for some time
that we are going to hold Action for the long term, enabling us to benefit
from its compounding growth and returns. Across the remaining portfolio, a
number of other companies are also starting to demonstrate significant
compounding potential, with impressive earnings growth and cash generation.
For example, since our initial investment in 2018, we have supported Royal
Sanders' successful international expansion strategy, organically and by
accessing new markets, with six bolt-on acquisitions, which have contributed
strongly to earnings growth. The business is now a best-in-class operator in
its sector and is cash generative, returning a total of £231 million in
distributions to 3i over the six-year period, including £109 million from a
successful refinancing in FY2024. Recognising this consistent performance, we
have now designated Royal Sanders as a longer-term hold asset.
Healthcare portfolio companies
As one of the most differentiated and attractive businesses in the medical
device outsourcing market, Cirtec Medical continues to demonstrate its
commercial momentum, leveraging the capabilities and offerings of its nine
acquisitions since our initial investment in 2017. The business delivered good
top-line growth in 2023, driven by outperformance at a number of its sites,
and is well positioned for another year of growth in 2024. ten23 health, our
biologics-focused contract development and manufacturing organisation
("CDMO"), had another important year as it continued to execute against key
operational and capability expansion initiatives. The business saw good
customer uptake at its Visp and Basel sites and enters 2024 with a strong
development and manufacturing pipeline. The remaining business of Q Holding, Q
Medical Devices, performed well, largely driven by growth with new and
existing customers. Since our investment in 2019, SaniSure saw a period of
rapid expansion through the majority of 2022, reflecting strong growth in its
bioprocessing end market and elevated demand during the pandemic. Over the
past 18 months, however, the industry has been rebalancing stock levels,
impacting demand for SaniSure's products. SaniSure somewhat mitigated the
impact of this destocking with a strong order book coming into 2023 and
through operational efficiencies, but its sales were softer through the
majority of the year. Bookings across the industry are expected to further
normalise from the middle of 2024 and SaniSure is very well positioned to
capitalise on a full market recovery, as one of the market leaders in this
space.
Other consumer portfolio companies
Following the transformational acquisitions of coolback and Panelto in 2023,
supported with a 3i investment of £38 million, European Bakery Group ("EBG",
formerly Dutch Bakery) has established itself as a key consolidator in its
market, with a good pipeline of further potential M&A. Strong volume
growth was an important driver of EBG's top-line growth in 2023. MPM continues
to deliver good performance across all of its key markets, including the US,
now its largest. Its online channel has strong momentum and the business has
significant headroom for growth across its channels. Audley Travel's strong
post-pandemic recovery has continued, driven by growth in booking numbers, and
it ended 2023 with bookings ahead of 2019 pre-pandemic levels. Despite
macro-economic uncertainty impacting consumer sentiment, Audley Travel saw
strong performance in the US and the UK in the first quarter of 2024.
In April 2024, we agreed the sale of nexeye, the value-for-money optical
platform in which we first invested in 2017. During our ownership we have
supported the business in its market expansion and customer proposition. We
expect to complete the sale in H1 FY2025, returning exit proceeds of c.€452
million to 3i. These exit proceeds, combined with distributions already
received, result in a 2.0x money multiple.
We have continued to see challenging performance across the majority of our
online retail and discretionary consumer businesses. Luqom's trading in 2023
remained impacted by lower consumer demand and discounting in the market due
to overstocking. Encouragingly, there are initial green shoots of trading
recovery in early 2024 and the business continues to expand its international
footprint with the roll-out of webshops in further countries.
Whilst we have seen some improvements in trading at the start of 2024, the
outlook for YDEON remains more challenged. Muted consumer demand continues to
impact the furniture market and, whilst BoConcept largely outperformed its
peers in 2023, softer order intake persisted, particularly across China and
North America, coinciding with a slowdown in their real estate markets.
Industrial Technology portfolio companies
AES traded well in 2023, with strong financial, strategic and operational
performance. Its new factory in Rotherham became operational in the year and
is equipped with state-of-the-art automation in production and storage,
resulting in increased capacity and efficiency. WP delivered good volume
growth in 2023, outperforming the wider market. This was driven by its
diversified geographic presence, new contract wins and the ramp-up of new
projects. The business distributed £42 million to 3i in the year, including
proceeds from a successful amend and extend of its funding facilities
completed in December 2023.
Tato experienced pressure on volumes across all of its regions in 2023, in
line with the wider specialty chemicals and biocides industry, as a result of
inflation and supply driven pressure on input costs, subdued end-market demand
and heightened pricing competition. Encouragingly, performance at the start of
2024 is showing signs of improvement.
Services portfolio companies
Evernex delivered a number of third-party maintenance contract wins in 2023,
including a new significant client in the US, progressing its North American
expansion strategy. As a global consolidation platform in its sector, the
business completed its sixth acquisition since our initial investment in 2019,
acquiring Maminfo in Brazil, and doubling the group's presence in this region.
MAIT has also seen good momentum in its performance in 2023, through a
combination of organic sales growth and strategic M&A, completing the
bolt-on acquisitions of etagis and Quadrix in the year.
The market for white collar recruitment faced significant headwinds in 2023,
following reduced hiring demand and lower voluntary employee turnover. As a
result of these challenging trading conditions, WilsonHCG has seen pressure on
recruiter spend across the majority of its end-markets resulting in a top-line
decline against 2022. New customer wins and optimisation of resource have
somewhat mitigated the short-term softness, and have positioned the business
well for a wider market recovery, albeit the timing of this rebound remains
uncertain. arrivia exhibited favourable performance in 2023, driven by strong
recovery within its core travel markets. However, the loss of a significant
client will impact bookings going forward.
Infrastructure performance
In the year to 31 March 2024, our Infrastructure portfolio generated a GIR of
£99 million, or 7% on opening value (2023: £86 million, or 6%).
3iN generated a total return on opening NAV of 11.4% in FY2024, again
exceeding its 8-10% return objective, and delivered its dividend target of
11.9 pence, a 6.7% increase on last year. Its underlying portfolio continues
to perform robustly, delivering income growth and capital returns throughout
the economic cycle, with particularly strong performance from TCR, Tampnet and
Valorem. The demand for high-quality infrastructure assets was reflected in
the successful realisation of Attero for proceeds of €214 million, a 31%
uplift on opening value. Whilst 3iN continues to perform well, its muted share
price performance, with an increase of only 4% in the year to 327 pence at 31
March 2024, was reflective of weak demand across the market for shares of
listed infrastructure investment companies and a lack of liquidity in the FTSE
250 index.
Our proprietary capital investment in Smarte Carte performed well in 2023, as
a result of sustained US and international travel volumes and positive
contract economics. The addition of a long-term contract with London's
Heathrow Airport provides Smarte Carte with a foothold for further expansion
into the European market. Our North American Infrastructure Fund had its final
close in December 2023. The Fund completed a new investment in Amwaste, a
provider of non-hazardous solid waste disposal services in the southeastern
region of the US. Regional Rail and EC Waste, two existing investments in the
Fund, completed a total of three bolt-on acquisitions, as they continue to
execute their scaling strategies.
We have agreed to sell our operational projects infrastructure fund capability
to certain members of 3i's Infrastructure team. The transfer will comprise the
mandates for the management of the BIIF and 3i European Operational Projects
Funds ("3i EOPF"). The rationale for the sale is to simplify 3i's
Infrastructure business and to facilitate its focus on core-plus
infrastructure. This sale is expected to complete shortly and its impact will
not be material to the Group.
Scandlines performance
Scandlines delivered a steady performance during the year. Leisure traffic
volumes were ahead of last year after a strong summer. This offset a reduction
in freight volumes which was disproportionately felt across its Scandinavian
and German markets, as a result of the more challenging macro-economic
backdrop. Cash generation remains strong and we received dividends totalling
£25 million from Scandlines in the year.
Sustainability
During the year, we continued to advance our sustainability agenda. Our main
focus stayed on climate change. We achieved progress across several
initiatives, including:
• Climate transition and targets - we are pleased to announce that our
science-based targets were validated by the SBTi on 22 March 2024. Our targets
cover our direct Scope 1 and 2 emissions, as well as the Scope 3 emissions
associated with our portfolio. Our targets are described in the Sustainability
section of our Annual report and accounts 2024.
• Climate strategy and risk management - we completed a second phase of
climate change scenario analysis. The results provided further insights into
climate change physical and transition risks and opportunities across our
portfolio, and were used to enhance the climate element of our ESG investment
assessment framework.
• Data and disclosures - we further improved our portfolio greenhouse gas
("GHG") emissions data coverage and enhanced the quality and consistency of
this data through the roll-out of a dedicated portfolio ESG data collection
software. This has allowed us to make aggregate portfolio emissions data
disclosures for the first time, in compliance with TCFD-aligned disclosure
requirements for asset managers. Our TCFD disclosures can be found in the
Sustainability section of our Annual report and accounts 2024.
We have also begun to address other important areas that impact the
sustainability of our portfolio, including biodiversity and human rights.
3i is keen to support charities which relieve poverty, promote education and
support elderly and disabled people. Our charitable giving for the year
totalled £1.05 million. This included supporting our nine charity partners,
matching staff fundraising, making a number of one-off donations and promoting
the give-as-you-earn scheme in the UK, through which we matched c.£55,000 of
staff donations. Our portfolio companies also supported a variety of charities
relevant to them and their operations, with donations totalling c.£4.7
million.
Balance sheet and foreign exchange management
Our proprietary capital model and conservative balance sheet strategy are a
clear advantage in challenging macro-economic conditions. We are under no
pressure to invest or accelerate the realisation of investments in order to
protect shareholder value over the longer term. We ended the year as net
divestors, and continued to reduce the carried interest liability related to
Action, with total payments of £735 million in the year. As a result of these
payments and the further investment in Action increasing our gross equity
stake from 52.9% to 54.8%, our net holding in Action, after carried interest,
is now 53.2% (31 March 2023: 48.9%). Over the last five years, we have
increased 3i's net ownership of Action from 33% to 53.2%, through stake
purchases and carry buy-back transactions.
We also further strengthened our balance sheet and liquidity position with the
successful issue of a six-year €500 million bond at a coupon of 4.875% and
successfully extended the tenor of the £400 million tranche of our £900
million Revolving Credit Facility ("RCF") to November 2026. We ended FY2024
with net debt of £806 million and 4% gearing, after returning £541 million
of cash dividends to shareholders in the year and with liquidity, including
our undrawn RCF, of £1,296 million, meaning we are well funded when suitable
investment opportunities arise. We remain disciplined on costs and generated
an operating cash profit of £467 million in the year, or £92 million
excluding dividends received from Action.
In FY2024, we generated an unrealised gain of £116 million from our foreign
exchange hedging. In total, including the gain on hedging, we recorded a total
foreign exchange loss of £316 million in the year, as sterling strengthened
against the euro and US dollar.
Outlook
We expect that the current macro-economic conditions and geopolitical
uncertainty will persist in the near term and that this will continue to
impact confidence and pricing expectations in the wider mid-cap M&A
market. Against this backdrop, our rigorous and disciplined approach to
capital allocation remains unchanged; we are long-term thematic investors,
with the aim of compounding value via organic and acquisition growth, and our
active asset management means we are on the front foot, building resilient
portfolio companies that are capable of navigating through these challenging
trading conditions.
Over the last financial year, 3i has delivered a very strong total shareholder
return of 71%, the majority of which relates to our share price performance.
Indeed, 3i's share price has come a long way since the restructuring of the
Group in June 2012. Whilst Action continues to power ahead, some of our other
significant portfolio companies are also showing strong growth and longer-term
compounding characteristics. Together with Action, these other portfolio
companies should support strong future returns for our shareholders.
I would like to close by thanking the team at 3i and the teams in our
portfolio companies for another good performance in challenging trading
conditions.
Simon Borrows
Chief Executive
8 May 2024
Private Equity
At a glance
Gross investment return
£4,059m
or 25%
(2023: £4,966m or 40%)
Cash investment
£556m
(2023: £381m)
Realised proceeds
£866m
(2023: £857m)
Portfolio dividend income
£439m
(2023: £345m)
Portfolio growing earnings
93%(¹)
(2023: 90%)
Portfolio value
£19,629m
(2023: £16,425m)
1 LTM adjusted earnings to 31 December 2023. Includes 29 portfolio
companies.
We invest in mid-market businesses headquartered in Europe and North America.
Once invested, we work closely with our portfolio companies to deliver
ambitious growth plans, and to realise strong cash returns for 3i shareholders
and other investors.
In the year to 31 March 2024, our Private Equity portfolio delivered a GIR of
£4,059 million, or 25%, on the opening portfolio value (2023: £4,966 million
or 40%), after a £341 million foreign exchange loss, including the impact of
foreign exchange hedging.
Action delivered another year of very strong earnings growth and cash
generation, and accounted for the majority of the Private Equity GIR in
FY2024. In the year, we also received significant realised proceeds from
Action and completed a further reinvestment in the business. Across the
remaining portfolio, we saw strong growth from portfolio companies operating
in the value-for-money and private label and healthcare sectors, more than
offsetting softer performance from portfolio companies exposed to the
discretionary consumer sector or operating in cyclically impacted end-markets.
We designated Royal Sanders as a longer-term hold asset in the Private Equity
portfolio, following its consistent performance since acquisition and due to
its compounding growth characteristics.
Low levels of global private equity transaction activity persisted through
FY2024. We remained very disciplined on price given the difficulties to match
buyers' and vendors' expectations, prioritising reinvestment into some of our
existing portfolio companies and continuing our buy-and-build momentum. We
also generated proceeds from some of our existing portfolio from refinancing
activities and portfolio income.
Overall, the Private Equity portfolio value increased to £19,629 million
(31 March 2023: £16,425 million). The contribution of Action to the Private
Equity performance is detailed in Note 1 of the financial statements.
Table 1: Gross investment return for the year to 31 March
Investment basis 2024 2023
£m
£m
Realised profits over value on the disposal of investments - 169
Unrealised profits on the revaluation of investments 3,874 3,746
Dividends 439 345
Interest income from investment portfolio 80 77
Fees receivable 7 7
Foreign exchange on investments (437) 493
Movement in fair value of derivatives 96 129
Gross investment return 4,059 4,966
Gross investment return as a % of opening portfolio value 25% 40%
Investment and realisation activity
Transaction activity at Action was the main driver of Private Equity
investment and realisations in FY2024. In October 2023, Action successfully
completed its debut US dollar term loan issuance in the US leveraged loan
market, raising $1.5 billion at very attractive pricing. In October 2023,
Action also completed a capital restructuring with a pro-rata redemption of
shares. We reinvested £455 million of the £762 million of proceeds from the
share redemption to acquire further shares in Action, increasing our gross
equity stake from 52.9% to 54.8%.
We typically refinance our most cash generative assets where appropriate for
the business and where market conditions allow. In December 2023, Royal
Sanders completed an all-senior debt refinancing, upsizing its debt facilities
and returning £109 million to 3i, of which £48 million was recognised as
income. We also completed a £29 million purchase of an incremental stake in
the business.
Our buy-and-build strategy remains an integral part of our approach to value
creation and in FY2024, our portfolio companies completed seven bolt-on
acquisitions. This included Dutch Bakery's combination with coolback, a German
bakery group specialised in bake-off bread, to create the European Bakery
Group ("EBG"), a pan-European bakery platform. We supported this acquisition
with a £38 million investment in July 2023. In August 2023, EBG completed the
self-funded acquisition of Panelto, a manufacturer of bake-off artisan breads,
establishing a UK and Ireland platform within the group. Further details of
selected portfolio bolt-on acquisitions are in the Private Equity business
review of our Annual report and accounts 2024.
We continued to develop ten23 health with further investment totalling £25
million and provided £12 million of capital to support Luqom, YDEON and
Digital Barriers through challenging trading conditions.
WP returned cash of £42 million to 3i in the year, of which £2 million was
recognised as income, primarily from a successful amend and extend of its debt
facilities.
In total, in the year to 31 March 2024, our Private Equity team invested £556
million (2023: £381 million) and generated total proceeds of £866 million
(2023: £857 million).
In April 2024, we agreed the sale of nexeye, generating expected exit proceeds
of c.€452 million. These exit proceeds, combined with distributions already
received, result in a 2.0x money multiple. The transaction is expected to
complete in H1 FY2025.
Investments
Proprietary
capital
Portfolio investment
company Business description Date £m
Reinvestment Action General merchandise discount retailer November 2023 455
Royal Sanders Private label and contract manufacturing producer of personal care products Various 29
Total reinvestment 484
Further investment to finance portfolio bolt-on acquisitions European Bakery Group coolback: German bakery group specialising in bake-off bread July 2023 38
Total further investment to finance portfolio bolt-on acquisitions 3
8
Further investment to support portfolio companies Luqom Online specialist lighting retailer Various 6
Digital Barriers Video technology provider January 2024 4
YDEON Online retailer of garden buildings, sheds, saunas and related products January 2024 2
Total further investment to support portfolio companies 12
Other further investment ten23 health Biologics focused CDMO Various 25
Other Various Various 2
Total other further investment 27
FY2024 Private Equity gross investment 561
Return of investment Konges Sløjd Premium brand offering apparel and accessories for babies and children September 2023 (5)
Total return of investment (5)
FY2024 Private Equity net investment 556
Portfolio Name of Business description of bolt-on investment Date
company
acquisition
Private Equity portfolio bolt-on acquisitions funded from the portfolio Royal Sanders Lenhart Manufacturer of private label products for the personal care industry April 2023
company balance sheets
MAIT etagis Provider of production planning software for ERP systems June 2023
AES Triseal Engineering company specialising in design, manufacture and application of June 2023
mechanical seals and associated rotating equipment
European Bakery Group Panelto Manufacturer of bake-off artisan breads August 2023
MAIT Quadrix Product lifecycle management software provider October 2023
Evernex Maminfo Brazilian provider of third-party maintenance services January 2024
Realisations
Portfolio Type Business description Date 3i realised
company
proceeds
£m
Realisations Action Capital restructuring proceeds General merchandise discount retailer November 2023 762
Royal Sanders Refinancing Private label and contract manufacturing producer of personal care products December 2023 61
WP Refinancing & other Global manufacturer of innovative plastic packaging solutions March 2024 40
Other Various Various Various 3
FY2024 Private Equity realisations 866
Action performance and valuation
As detailed in the Chief Executive's statement, Action delivered another year
of very strong performance in 2023, and we reflected this in our valuation of
Action at 31 March 2024.
At 31 March 2024, Action was valued using its LTM run-rate EBITDA to the end
of P3 2024 of €1,848 million, which includes the usual adjustment to reflect
stores opened in the last 12 months and one-off expenses of €18.5 million,
the majority of which related to a specific net payment to each full-time
Action employee in December 2023 to mark Action's 30-year trading anniversary.
Action continues to outperform the peers we use to benchmark its performance
across its most important KPIs, supporting our valuation multiple of 18.5x net
of the liquidity discount (31 March 2023: 18.5x).
Action ended P3 2024 with cash of €558 million and a net debt to run-rate
earnings ratio of 2.2x after paying two dividend distributions in FY2024, of
which 3i received £375 million.
At 31 March 2024, the valuation of our 54.8% stake in Action
was £14,158 million (31 March 2023: 52.9%, £11,188 million) and
we recognised unrealised profits from Action of £3,609 million
(March 2023: £3,708 million) as shown in Table 3.
Table 2: Action financial metrics
Last 12 months to P12 2023 Last 12 months to P12 2022
(31 December 2023)
(1 January 2023)
€m €m
Net sales 11,324 8,859
LFL sales growth 16.7% 18.1%
Operating EBITDA 1,615 1,205
Operating EBITDA margin 14.3% 13.6%
Net new stores added 303 280
Last 3 months to P3 2024 Last 3 months to P3 2023
(31 March 2024)
(2 April 2023)
€m €m
Net sales 3,004 2,485
LFL sales growth 9.8% 24.3%
Operating EBITDA 397 309
Operating EBITDA margin 13.2% 12.4%
Net new stores added 42 34
Last 12 months to P3 2024 Last 12 months to P3 2023
(31 March 2024)
(2 April 2023)
€m €m
Run-rate EBITDA 1,848 1,439
Performance (excluding Action)
Excluding Action, the Private Equity portfolio valued on an earnings basis
generated £689 million (March 2023: £520 million) of value growth from
performance increases, offsetting £368million of performance decreases (March
2023: £310 million).
Royal Sanders, which operates in the private label and contract manufacturing
market for personal care products, was the largest contributor to our Private
Equity performance increases (excluding Action) in FY2024. A combination of
continued growth of key customers and the benefits of its previous bolt-on
acquisitions beginning to manifest resulted in the business delivering strong
top-line and earnings growth and cash generation in the year, underscoring its
good track record since we invested in 2018. As a result, we have now
designated Royal Sanders as a longer-term hold asset, as we continue to
support the compounding growth potential of the business. Also operating in
the private label space, EBG was another standout performer in FY2024.
Following the formation of the combined EBG platform earlier in the year (as
shown in investments and realisations activity above), the business is
benefitting from an expanded footprint in new geographies and product
categories.
MPM saw good top-line growth in 2023, driven primarily by increased volumes
across its key markets. The US, now its largest market, continues to see
encouraging sales development and there is significant headroom to scale it
further, including through the online channel. Audley Travel's reputable brand
and customer loyalty continues to support its strong recovery post the
pandemic.
Low consumer confidence impacted the home and living category in Luqom's core
DACH and Nordic regions in 2023, resulting in financial underperformance. In
response, the business has focused on an operational transformation to ensure
it is well positioned for improved market conditions. Encouragingly, it has
started 2024 with more positive trading. YDEON faced a sustained deterioration
of consumer confidence in its markets in 2023, particularly in its core German
market. There are some signs of improving performance for YDEON at the start
of 2024, albeit the wider market environment remains challenging. Whilst
largely outperforming the general furniture market, BoConcept saw softer order
intake across most of its regions in 2023. This was partially offset by
stabilising input and shipping costs.
Across our healthcare portfolio, Cirtec Medical saw strong commercial traction
with new wins in 2023, including both production and product development
programmes, and has a strong pipeline moving into 2024 that is expected to
support continued growth.
Since our initial investment in 2021, we have invested our capital in
developing the infrastructure, commercial activities and team expertise of
ten23 health. In 2023, the business continued to develop the production and
development services capabilities of its Basel and Visp sites, and grew a good
pipeline of customer programmes.
Q Medical Devices (Q Holding) performed well in 2023, with strong demand from
most of its customers across its business units, and also benefitted from a
number of operational initiatives.
Demand for single-use bioprocessing products remained muted across the
industry in 2023, as destocking persisted for longer than expected, impacting
SaniSure as a participant in this market. Over this period, SaniSure has
focused on driving further improvements in its business and processes to
position itself for a recovery in demand. Whilst it is difficult to predict
when ordering patterns may normalise, we have seen positive momentum in its
order book in the first quarter of 2024. SaniSure is well positioned to be an
outsized beneficiary of the return to normalised market growth.
AES delivered another year of strong performance in 2023, driven by order
volume growth across its global end-markets. The business continued to
progress reliability, automation and capacity and completed the bolt-on
acquisition of Tri-Seal, an Australian sealing technology provider.
A combination of good demand in personal care products and new customers drove
good volume growth in WP in 2023. Weak end-market demand across the consumer
DIY and construction markets resulted in soft trading performance for Tato in
2023. The business has, however, benefitted from selling down highly-priced
inventory over the year and is now delivering improved margin performance.
Tato remains highly cash generative and returned £7 million of dividend
income to 3i in the year.
Evernex saw good financial performance in 2023, driven primarily by
third-party maintenance sales growth, particularly in southern Europe, North
America, the Middle East, Africa and Brazil. The business also secured a
significant contract in the US as part of its North American expansion
strategy. In January 2024, Evernex completed the bolt-on acquisition of
Maminfo in Brazil, enabling the business to deliver its capabilities across
all Brazilian states. Also operating in the IT services market, MAIT continues
to grow its revenues through a combination of organic growth and M&A. The
business completed the acquisitions of etagis and Quadrix in the year,
achieving further progress in its buy-and-build strategy.
WilsonHCG continues to operate in a challenging white collar recruitment
market, resulting in softer performance across the majority of its
end-markets. The business has carefully optimised its resources ensuring that
it can service new customer wins in the year, and is ready to scale quickly
when market demand returns. arrivia's encouraging post-pandemic recovery and
performance in 2023, was somewhat offset by the loss of a significant client
at the end of the year. This is expected to impact bookings going forward.
Table 3: Unrealised profits on the revaluation of Private Equity
investments(1) in the year to 31 March
2024 2023
£m
£m
Earnings based valuations
Action performance 3,609 3,708
Performance increases (excluding Action) 689 520
Performance decreases (excluding Action) (368) (310)
Multiple increases 68 38
Multiple decreases (107) (205)
Other bases
Sum of the parts 60 -
Discounted cash flow (13) 4
Other movements on unquoted investments(2) (14) 4
Quoted portfolio (50) (13)
Total 3,874 3,746
1 Further information on our valuation methodology, including definitions and
rationale, is included in the Portfolio valuation - an explanation section in
our Annual report and accounts 2024.
2 FY2024 includes nexeye valued on an imminent sale basis.
Overall, 93% of the portfolio by value grew LTM adjusted earnings in the year
(31 March 2023: 90%). Table 4 shows the earnings growth of our top 20 Private
Equity investments.
Table 4: Portfolio earnings growth of the top 20 Private Equity(1) investments
3i value at
Number of 31 March 2024
companies £m
<0% 6 1,276
0-9% 5 1,187
10-19% 3 871
20-29% 2 14,225
≥30% 4 1,190
1 Includes top 20 Private Equity companies by value excluding ten23 health and
nexeye. This represents 96% of the Private Equity portfolio by value
(31 March 2023: 96%). Last 12 months' adjusted earnings to 31 December 2023
and Action based on LTM run-rate earnings to the end of P3 2024.
Leverage
Our Private Equity portfolio is funded with all-senior debt structures, with
long-dated maturity profiles. As at 31 March 2024, 85% of portfolio company
debt was repayable from 2027 and beyond.
Across our Private Equity portfolio, term debt is well protected against
interest rate rises, with over 70% of total term debt hedged at a weighted
average tenor of more than three years. The average all-in debt cost on the
total hedged term debt is less than 6.5%.
Average leverage across the portfolio was 2.7x (31 March 2023: 2.5x).
Excluding Action, leverage across the portfolio was 3.9x (31 March 2023:
4.0x).
Table 5 shows the ratio of net debt to adjusted earnings by portfolio value.
Table 5: Ratio of net debt to adjusted earnings(1)
3i value
Number of at 31 March 2024
companies £m
1-2x 4 206
2-3x 5 15,009
3-4x 5 1,120
4-5x 2 527
5-6x 3 963
>6x 3 124
1 This represents 91% of the Private Equity portfolio by value (31 March 2023:
92%). Quoted holdings, nexeye, ten23 health, and companies with net cash are
excluded from the calculation. Net debt and adjusted earnings at 31 December
2023 and Action based on LTM run-rate earnings to the end of P3 2024.
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 market
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
Valuations Committee of the Board.
Whilst public equity markets generally recovered in the year to the end of
March 2024, we have remained cautious in reflecting this recovery in the
valuation multiples we use for our portfolio companies, given the persisting
dislocation between quoted equity market multiples and the valuations of
private market transactions.
We increased the multiples for three of our portfolio companies in the year to
reflect their performance against their respective investment cases and the
scaling or professionalising of these businesses, and we adjusted four
multiples downwards to reflect private market transaction dynamics, and in
some instances, soft performance. In total, we recognised a net £39 million
unrealised value reduction from multiple movements in the year (March 2023:
£167 million).
We have made no changes to our approach for the valuation of Action. Action's
performance and KPIs continue to compare very favourably in relation to its
peer group, which consists of North American and European value-for-money
retailers. This supports our post-discount valuation multiple of 18.5x, which
is unchanged from the prior year. We take comfort from the fact that Action's
continued growth meant that its valuation at 31 March 2023 translated to only
14.4x the run-rate EBITDA achieved one year later.
Based on the valuation at 31 March 2024, a 1.0x movement in Action's post
discount multiple would increase or decrease the valuation of 3i's investment
by £866 million.
Quoted portfolio
Basic-Fit is the only quoted investment in our Private Equity portfolio. In
2023, the business saw 13% growth in its membership numbers and added 202
clubs to its network.
In the 12 months to 31 March 2024, its share price decreased by 43.1% to
€20.68 (31 March 2023: €36.32). This price values our 5.7% shareholding in
Basic-Fit at £67 million (31 March 2023: £121 million).
Imminent sale
Given the advanced stage of the sale process, we valued nexeye on an imminent
sale basis at 31 March 2024, and we agreed the sale of the portfolio company
in April 2024.
Sum of the parts
At 31 March 2024, ten23 health was valued on a sum of the parts basis, mainly
using a discounted cash flow ("DCF") methodology.
Assets under management
The assets under management of the Private Equity portfolio, including
third-party capital, increased to £27.5 billion (31 March 2023: £22.9
billion), primarily due to unrealised value movements in the year.
Private Equity 3i proprietary capital by vintage
The performance of our vintages (Table 7) is driven by our portfolio
companies. Action, the only remaining asset in the Buyouts 10-12 Vintage and
the primary driver of 'Other' category continues to perform very strongly. In
the year, we designated Royal Sanders as a longer-term hold Private Equity
asset, crystallising the return from Royal Sanders to date within its previous
2016-19 vintage, at a 5.3x sterling money multiple. Royal Sanders now sits in
the 'Other' category.
Table 6: Private Equity assets by sector as at 31 March 2024
3i carrying
value
Number of 2024
Sector companies(1) £m
Action (Consumer) 1 14,158
Consumer 13 2,292
Healthcare 4 1,262
Industrial Technology 6 1,107
Services 9 644
Software 3 166
Total 36 19,629
1 The case count excludes legacy insolvent assets.
Table 7: Private Equity 3i proprietary capital as at 31 March
3i proprietary Vintage 3i proprietary Vintage
capital value(3) money capital value(3) money
2024 multiple(4) 2023 multiple(4)
Vintages £m 2024 £m 2023
Buyouts 2010-2012(1) 1,389 16.0x 2,968 15.1x
Growth 2010-2012(1) 22 2.1x 23 2.1x
2013-2016(1) 788 2.5x 814 2.5x
2016-2019(1) 1,363 1.8x 1,872 1.8x
2019-2022(1) 1,743 1.6x 1,524 1.5x
2022-2025(1) 224 1.0x 228 1.0x
Other(2) 14,100 n/a 8,996 n/a
Total 19,629 16,425
1 Assets included in these vintages are disclosed in the Glossary.
2 Includes value of £12,769 million (31 March 2023: £8,220 million) held in
Action through the 2020 and 2023 Co-investment vehicles and 3i.
3 3i proprietary capital is the unrealised value for the remaining investments
in each vintage.
4 Vintage money multiple (GBP) includes realised value and unrealised value as
at the reporting date.
Infrastructure
At a glance
Gross investment return
£99m
or 7%
(2023: £86m or 6%)
AUM
£6.7bn
(2023: £6.4bn)
Cash income
£113m
(2023: £107m)
We manage a range of funds investing principally in mid-market economic
infrastructure and operational projects in Europe and North America.
Infrastructure is a defensive asset class that provides a good source of
income and fund management fees for the Group, enhancing the returns on our
proprietary capital.
Our Infrastructure portfolio generated a GIR of £99 million or 7% on the
opening portfolio value (2023: £86 million, 6%), driven primarily by an
increase in the share price of our quoted stake in 3iN, good value growth from
our US infrastructure portfolio and dividend income. 3iN's underlying
portfolio continues to perform strongly, and it completed follow-on
investments in three portfolio companies, two self-funded bolt-on acquisitions
and disposed of one asset in the year.
We completed the final close of our North American Infrastructure Fund, and
the Fund made one new investment and three bolt-on acquisitions for its
existing portfolio companies in the year.
Table 8: Gross investment return for the year to 31 March
Investment basis 2024 2023
£m
£m
Realised losses over value on the disposal of investments (4) -
Unrealised profits on the revaluation of investments 72 23
Dividends 35 33
Interest income from investment portfolio 11 14
Fees payable (6) -
Foreign exchange on investments (9) 16
Gross investment return 99 86
Gross investment return as a % of opening portfolio value 7% 6%
Fund management
3iN
3iN generated a total return on opening NAV of 11.4% for the year to 31 March
2024, exceeding its total return target of 8% to 10% per annum, and delivered
its dividend target of 11.9 pence per share, a 6.7% increase on last year.
This result was underpinned by the strong performance of 3iN's portfolio
companies, as they continued to benefit from long-term sustainable growth
trends. TCR outperformed our expectations for the year due to a number of
contract wins, further increasing its global presence and strong utilisation
rates of its fleet as air traffic levels continue to grow post the pandemic.
Tampnet traded well in the year, driven by the outperformance of its fixed and
mobile units and by the delivery of new installations across the North Sea and
the Gulf of Mexico. Valorem saw revenues from electricity generation ahead of
expectations driven by favourable wind conditions. Other notable contributors
include Infinis, Joulz, ESVAGT and Global Cloud Xchange. DNS:NET continues to
face challenges with its fibre network roll out in Germany resulting in weaker
performance in the year.
During the year, 3iN completed the realisation of Attero for proceeds of
€214 million, a 31% uplift on opening value. 3iN also completed follow on
investments in Future Biogas, DNS:NET and Ionisos and a bolt-on acquisition
for both TCR and Tampnet, both of which required no further investment.
As investment manager to 3iN, in FY2024, we recognised a management
and support services fee of £51 million (2023: £49 million) and
a NAV-based performance fee of £41 million (2023: £35 million). This
performance fee comprised a third of the potential performance fee for each
of FY2024, FY2023 and FY2022, after the performance hurdle was met in each
year. In addition, we received a performance fee of £21 million on the
realisation of Attero from managed funds that invested alongside 3iN.
North American Infrastructure Fund
Our North American Infrastructure Fund completed its final close in December
2023, with final commitments of $739 million. As part of this process, we
received further external commitments during the year, which resulted in a
pro-rata rebalancing of existing fund holdings, resulting in proceeds to 3i of
£22 million.
The Fund completed a £32 million new investment in Amwaste, a provider of
non-hazardous solid waste disposal services in the southeastern region of the
US. Regional Rail continued its growth via new customer additions and bolt-on
activity, with the acquisitions of Indiana Eastern Railroad, Ohio South
Central Railroad and Clinton Terminal Railroad, adding over 100 miles of
freight rail to the platform. Freight load traffic across Regional Rail's
existing railroads continued to grow. EC Waste saw good performance from its
landfill and transfer stations and, the business completed the acquisition of
a further landfill site in Puerto Rico in the year.
Assets under management
Infrastructure AUM increased to £6.7 billion (2023: £6.4 billion),
principally due to an increase in the share price of 3iN and good performance
across our US infrastructure portfolio and 3i Managed Infrastructure
Acquisitions Fund ("3i MIA").
During the year, we agreed to sell our operational projects infrastructure
fund capability, comprising the management of the BIIF and 3i EOPF funds, to
certain members of the 3i Infrastructure team, with the aim of simplifying
3i's Infrastructure business and facilitating its focus on core-plus
infrastructure. At 31 March 2024, this represented total AUM of £796 million.
The sale is expected to complete shortly. There is no material impact to 3i
Group's net assets or return from this transaction.
Table 9: Assets under management as at 31 March 2024
Fee
% income
3i invested(3) earned in
Close Fund commitment/ Remaining at 31 March AUM 2024
Fund/strategy date size share 3i commitment 2024 £m £m
3iN(1) Mar-07 n/a £879m n/a n/a 3,011 51
3i Managed Infrastructure Acquisitions LP Jun-17 £698m £35m £5m 87% 1,399 4
3i managed accounts various n/a n/a n/a n/a 689 4
BIIF(4) May-08 £680m n/a n/a 91% 437 3
3i North American Infrastructure Fund Dec-23(2) US$739m US$300m US$85m 75% 541 3
3i European Operational Projects Fund(4) Apr-18 €456m €40m €4m 87% 359 3
US Infrastructure Nov-17 n/a n/a n/a n/a 306 -
3i India Infrastructure Fund Mar-08 US$1,195m US$250m n/a 73% - -
Total 6,742 68
1 AUM based on the share price at 31 March 2024.
2 First close completed in March 2022. Final close completed in December 2023.
3 % invested is the capital deployed into investments against the total Fund
commitment.
4 Fee income earned is non-recurring.
3i's proprietary capital infrastructure portfolio
The Group's proprietary capital infrastructure portfolio consists of its 29%
quoted stake in 3iN, its investment in Smarte Carte and direct stakes in
other managed funds.
Quoted stake in 3iN
Our 29% stake in 3iN (31 March 2023: 29%) was valued at £879 million (31
March 2023: £841 million) at 31 March 2024, as its share price increased by
4% year-on-year to 327 pence (31 March 2023: 313 pence). As a result, we
recognised an unrealised gain of £38 million (2023: unrealised loss of £93
million) and £31 million of dividend income (2023: £29 million).
North American Infrastructure proprietary capital
Smarte Carte traded well in 2023 across most of its business lines, supported
by favourable economics and new contract wins. The business continues to grow
its international presence, recently signing a new carts contract at London
Heathrow Airport, one of the largest cart operations in the world with over
14,000 trolleys. At 31 March 2024, Smarte Carte was valued at £306 million
on a DCF basis (31 March 2023: £300 million).
Table 10: Infrastructure portfolio movement for the year to 31 March 2024
Closing
Opening Disposals value at
value at at opening Unrealised Other 31 March
1 April 2023 Investment book value profit movements(1) 2024
Investment Valuation £m £m £m £m £m £m
3iN Quoted 841 - - 38 - 879
Smarte Carte DCF 300 - - 7 (1) 306
North American Infrastructure Fund(2) DCF 171 36 (26) 20 (2) 199
3i MIA Fund 65 - - 6 - 71
3i EOPF Fund 32 - - 1 - 33
Total 1,409 36 (26) 72 (3) 1,488
1 Other movements include foreign exchange.
2 Includes Regional Rail, EC Waste and Amwaste.
Scandlines
At a glance
Gross investment return
£10m
or 2%
(2023: £52m or 10%)
Dividend income
£25m
(2023: £38m)
Scandlines is held for its ability to deliver long-term capital returns,
whilst generating cash dividends.
Performance
Scandlines' performance was stable in the year, and it generated a GIR of
£10 million, or 2% of opening portfolio value (2023: £52 million, 10%).
Leisure volumes continued to grow, following a strong peak over the summer.
Freight volumes were softer compared to record levels in 2022, as a result of
normalising demand, and a weaker macro-economic environment particularly in
Scandinavia and Germany. The business remained cash generative in the year,
resulting in the receipt of £25 million of dividend income in FY2024 (2023:
£38 million).
Scandlines continues to invest in upgrading its fleet and reducing its
emissions. A new freight ferry for the Rødby-Puttgarden route, which will be
capable of sailing without direct emissions when fully operating on
electricity, is in the later stages of construction.
We continue to value Scandlines on a DCF basis and, at 31 March 2024,
its value of £519 million (31 March 2023: £554 million) reflected the
dividends received in the year and a degree of caution on the outlook.
Foreign exchange
We hedge the balance sheet value of our investment in Scandlines. We
recognised a £15 million loss on foreign exchange translation (March 2023:
gain of £21 million) offset by a £20 million fair value gain (March 2023:
loss of £7 million) from derivatives in our hedging programme.
Table 11: Gross investment return for the year to 31 March
Investment basis 2024 2023
£m
£m
Unrealised losses on the revaluation of investments (20) -
Dividends 25 38
Foreign exchange on investments (15) 21
Movement in fair value of derivatives 20 (7)
Gross investment return 10 52
Gross investment return as a % of opening portfolio value 2% 10%
Financial review
Strong financial performance
Highlights - Investment basis
Gross investment return Operating profit before carried interest Total return
£4,168m £4,077m £3,839m
(2023: £5,104m) (2023: £4,956m) (2023: £4,585m)
Total return on opening shareholders' funds Diluted NAV per share at 31 March 2024 Total dividend
23% 2,085p 61.0p
(2023: 36%) (31 March 2023: 1,745p) (31 March 2023: 53.0p)
Table 12: Total return for the year to 31 March
Investment basis 2024 2023
£m
£m
Realised (losses)/profits over value on the disposal of investments (4) 169
Unrealised profits on the revaluation of investments 3,926 3,769
Portfolio income
Dividends 499 416
Interest income from investment portfolio 91 91
Fees receivable 1 7
Foreign exchange on investments (461) 530
Movement in the fair value of derivatives 116 122
Gross investment return 4,168 5,104
Fees receivable from external funds 72 70
Operating expenses (147) (138)
Interest receivable 13 4
Interest payable (61) (54)
Exchange movements 29 (29)
Other income/(expense) 3 (1)
Operating profit before carried interest 4,077 4,956
Carried interest
Carried interest and performance fees receivable 62 41
Carried interest and performance fees payable (305) (418)
Operating profit before tax 3,834 4,579
Tax charge (2) (2)
Profit for the year 3,832 4,577
Re-measurements of defined benefit plans 7 8
Total comprehensive income for the year ("Total return") 3,839 4,585
Total return on opening shareholders' funds 23% 36%
Investment basis and Alternative Performance Measures ("APMs")
In our Strategic report, we report our financial performance using our
Investment basis. We do not consolidate our portfolio companies as private
equity and infrastructure investments are not operating subsidiaries. IFRS 10
sets out an exception to consolidation and requires us to fair value other
companies in the Group (primarily intermediate holding companies and
partnerships). As explained in the Investment basis, Reconciliation of
Investment basis and IFRS sections below, the total comprehensive income and
net assets are the same under our audited IFRS financial statements and our
Investment basis. The Investment basis is simply a "look through" of IFRS 10
to present the underlying performance and we believe it is more transparent to
readers of our Annual report and accounts.
In October 2015, the European Securities and Markets Authority ("ESMA")
published guidelines about the use of APMs. These are financial measures such
as KPIs that are not defined under IFRS. Our Investment basis is itself an
APM, and we use a number of other measures which, on account of being derived
from the Investment basis, are also APMs.
Further information about our use of APMs, including the applicable
reconciliations to the IFRS equivalent where appropriate, is provided at the
end of the Financial review and should be read alongside the Investment basis
to IFRS reconciliation. Our APMs are gross investment return as a percentage
of the opening investment portfolio value, cash realisations, cash investment,
operating cash profit, net cash/(debt) and gearing.
Realised losses/profits
In the year, we recognised a small realised loss of £4 million (2023: profit
of £169 million) relating to Infrastructure. We generated total realised
proceeds of £888 million (2023: £857 million) primarily from Action's
capital restructuring.
Unrealised value movements
We recognised an unrealised profit of £3,926 million (2023:
£3,769 million). Action's continued strong performance contributed £3,609
million (2023: £3,708 million). We also saw good contributions from a number
of our other Private Equity investments including Royal Sanders, EBG, AES,
Cirtec Medical, Q Holding, MPM, ten23 health, MAIT and Audley Travel,
offsetting negative contributions from arrivia, Tato, WilsonHCG, Luqom,
SaniSure and Basic-Fit. Our infrastructure portfolio delivered a good return,
driven by the increase in the share price of our quoted investment in 3iN.
Further information on the Private Equity, Infrastructure and Scandlines
valuations is included in the business reviews.
Table 13: Unrealised value movements on the revaluation of investments for the
year to 31 March
Investment basis 2024 2023
£m
£m
Private Equity 3,874 3,746
Infrastructure 72 23
Scandlines (20) -
Total 3,926 3,769
Portfolio income
Portfolio income increased to £591 million for the year (2023:
£514 million), primarily due to dividend income of £499 million (2023:
£416 million), particularly from Action and Royal Sanders and interest income
from portfolio companies, the majority of which is non-cash.
Fees receivable from external funds
Fees received from external funds increased to £72 million (2023:
£70 million). 3i receives a fund management fee from 3iN, which amounted to
£51 million in FY2024 (2023: £49 million).
The remaining fee income received in the year of £21 million (2023: £21
million) includes fees from 3i MIA, our management of the 3i 2020
Co-investment Programme related to Action and other funds.
Operating expenses
Operating expenses increased in the year to £147 million (2023: £138
million) driven by a higher share-based payment charge reflecting the strong
performance of 3i's share price during the year which was offset by delayed
staff recruitment.
Interest payable
The Group recognised interest payable of £61 million (2023: £54 million).
Interest payable predominantly includes interest on the Group's loans and
borrowings and amortisation of capitalised fees.
Operating cash profit
We generated an operating cash profit of £467 million in the year (2023:
£364 million). Cash income increased to £594 million (2023: £497 million),
principally due to an increase in dividend income, which included £375
million of cash dividends from Action (2023: £325 million). We also
received cash dividends from Royal Sanders, 3iN, Scandlines, Tato and AES, as
well as cash fees from our external funds. Excluding the dividends received
from Action, the operating cash profit was £92 million.
Cash operating expenses of £127 million (2023: £133 million), decreased in
the year due to the timing of payments. Cash operating expenses are lower than
the £147 million (2023: £138 million) of operating expenses recognised in
the Consolidated statement of comprehensive income as a result of share-based
payments and other non-cash expenses.
Table 14: Operating cash profit for the year to 31 March
Investment basis 2024 2023
£m
£m
Cash fees from external funds 74 67
Cash portfolio fees 12 5
Cash portfolio dividends and interest 508 425
Cash income 594 497
Cash operating expenses(1) (127) (133)
Operating cash profit 467 364
1 Cash operating expenses include operating expenses paid and lease payments.
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. These are received and/or paid
subject to meeting certain performance conditions. In Private Equity
(excluding Action), we typically accrue net carried interest payable of c.12%
of GIR and for Action carried interest payable of c.3% of Action's GIR, based
on the assumption that all investments are realised at their balance sheet
value. 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 year to 31 March 2024, we reduced our carried interest and performance
fees payable balance to £818 million (2023: £1,351 million), primarily
driven by £735 million paid in relation to Action, as a result of
crystallising a further portion of the carried interest liability in the
Buyouts 2010-12 carry scheme. As a result of these payments and the further
investment in Action in the year, our net holding in Action, after carried
interest, is now 53.2% (31 March 2023: 48.9%).
The strong performance of Action in the Buyouts 2010-12 vintage and good
performance of a number of portfolio companies in our other vintages in
Private Equity led to a £262 million increase in carried interest payable in
FY2024.
In Infrastructure, 3iN pays a performance fee based on its NAV on an annual
basis, subject to a hurdle rate of return. The continued strong performance of
the assets held by 3iN and the sale of Attero, resulted in the recognition of
£62 million (2023: £35 million) of performance fees receivable. £43 million
(2023: £25 million) was recognised as carried interest and performance fees
payable. During the year, we received £58 million of performance fees and
paid £33 million to the Infrastructure team.
Overall, the effect of the income statement charge of £305 million (2023:
£418 million), cash payments of £778 million (2023: £51 million), as well
as currency translation meant that the balance sheet carried interest and
performance fees payable was £818 million (31 March 2023: £1,351 million).
Table 15: Carried interest and performance fees for the year to 31 March
Investment basis Statement of comprehensive income 2024 2023
£m
£m
Carried interest and performance fees receivable
Private Equity - 4
Infrastructure 62 37
Total 62 41
Carried interest and performance fees payable
Private Equity (262) (392)
Infrastructure (43) (26)
Total (305) (418)
Net carried interest payable (243) (377)
Table 16: Carried interest and performance fees at 31 March
Investment basis Statement of financial position 2024 2023
£m
£m
Carried interest and performance fees receivable
Private Equity 5 6
Infrastructure 42 37
Total 47 43
Carried interest and performance fees payable
Private Equity (803) (1,325)
Infrastructure (15) (26)
Total (818) (1,351)
Table 17: Carried interest and performance fees paid in the year to 31 March
Investment basis cash flow statement 2024 2023
£m
£m
Carried interest and performance fees cash paid
Private Equity 745 24
Infrastructure 33 27
Total 778 51
Net foreign exchange movements
The Group recorded a total foreign exchange translation loss
of £316 million including the impact of foreign exchange hedging in the
year (March 2023: £623 million gain), as a result of sterling strengthening
by 3% against the euro and by 2% against the US dollar.
At 31 March 2024, the notional value of the Group's forward foreign exchange
contracts was €2.6 billion and $1.2 billion. The €2.6 billion includes the
€600 million notional value of the forward foreign exchange contracts
related to the Scandlines hedging programme.
Including the impact from foreign exchange hedging, 75% of the Group's net
assets are denominated in euros or US dollars. Based on the Group's net assets
at 31 March 2024, including the impact from foreign exchange hedging, a 1%
movement in euro and US dollar foreign exchange rates would impact total
return by £140 million and £12 million, as shown in Table 18 below.
Table 18: Net assets(1) and sensitivity by currency at 31 March
1%
sensitivity
FX rate £m % £m
Sterling n/a 4,817 24 n/a
Euro(2) 1.1695 13,947 69 140
US dollar(2) 1.2633 1,180 6 12
Danish krone 8.7236 200 1 2
Other n/a 26 - n/a
1 The Group's foreign exchange hedging is treated as a sterling asset within the
above table.
2 The sensitivity impact calculated on the net assets position includes the
impact of foreign exchange hedging.
Pension
The Group's UK defined benefit plan ("the Plan") is fully insured following
previous buy-in policies with Legal & General in May 2020 and February
2019 and Pension Insurance Corporation in March 2017. These polices provide
long-term security for the Plan members and 3i is no longer exposed to any
material longevity, interest or inflation risk in the Plan or any ongoing
requirement to fund the Plan. The Trustees of the Plan wrote to members on 18
March 2024 to confirm that they were proceeding with their plan to buy out
members' benefits and to distribute the surplus to the Company. This
transaction is expected to complete in FY2025.
During the year the Group recognised a £7 million re-measurement gain on the
Plan, following a reduction in the tax rate used to restrict the surplus to
25% (31 March 2023: 35%), following a legislative change made by the
government effective from 6 April 2024. There was no re-measurement gain
(2023: £8 million) on the German defined benefit plan.
Tax
The Group's parent company continues to operate in the UK as an approved
investment trust company. An approved investment trust is a UK investment
company, which is required to meet certain conditions set out in the UK tax
rules to obtain and maintain its tax status. This approval allows certain
investment profits of the Company, broadly its capital profits, to be exempt
from tax in the UK. The Group's tax charge for the year was £2 million (2023:
£2 million).
The Group's overall UK tax position for the financial year is dependent on the
finalisation of tax returns of the various corporate and partnership entities
in the UK group.
Balance sheet and liquidity
During the year, we successfully issued a six-year €500 million bond at a
coupon of 4.875% and extended the tenor of the £400 million tranche of our
£900 million RCF to November 2026, with both transactions further
strengthening our liquidity profile.
At 31 March 2024, the Group had net debt of £806 million (31 March 2023:
£363 million) and gearing of 4% after the receipt of strong cash income of
£594 million and net cash proceeds of £280 million, offsetting the payment
of carried interest and performance fees of £778 million and Group dividend
payments of £541 million.
The Group had liquidity of £1,296 million as at 31 March 2024 (31 March 2023:
£1,312 million), comprising cash and deposits of £396 million (31 March
2023: £412 million) and an undrawn RCF of £900 million.
The investment portfolio value increased to £21,636 million at 31 March 2024
(31 March 2023: £18,388 million), mainly driven by unrealised profits of
£3,926 million in the year.
Further information on investments and realisations is included
in the Private Equity, Infrastructure and Scandlines business reviews.
Table 19: Simplified consolidated balance sheet at 31 March
Investment basis Statement of financial position 2024 2023
£m
£m
Investment portfolio 21,636 18,388
Gross debt (1,202) (775)
Cash and deposits 396 412
Net debt (806) (363)
Carried interest and performance fees receivable 47 43
Carried interest and performance fees payable (818) (1,351)
Other net assets 111 127
Net assets 20,170 16,844
Gearing(1) 4% 2%
1. Gearing is net debt as a percentage of net assets.
Going concern
The Annual report and accounts 2024 are prepared on a going concern basis. The
Directors made an assessment of going concern, taking into account the Group's
current performance and the outlook, and performed additional analysis to
support the going concern assessment. Further details on going concern can be
found in the Resilience statement in our Annual report and account 2024.
Dividend
The Board has recommended a second FY2024 dividend of 34.5 pence per share
(2023: 29.75 pence), taking the total dividend for the year to 61.0 pence per
share (2023: 53.0 pence).Subject to shareholder approval, the dividend will
be paid to shareholders in July 2024.
Key accounting judgments and estimates
A key judgement is the assessment required to determine the degree of control
or influence the Group exercises and the form of any control to ensure that
the financial treatment of investment entities is accurate. The introduction
of IFRS 10 resulted in a number of intermediate holding companies being
presented at fair value, which has led to reduced transparency of the
underlying investment performance. As a result, the Group continues to present
a non-GAAP Investment basis set of financial statements to ensure that the
commentary in the Strategic report remains fair, balanced and understandable.
The reconciliation of the Investment basis to IFRS is shown further on in
this document.
In preparing these accounts, the key accounting estimates are the carrying
value of our investment assets, which is stated at fair value, and the
calculation of carried interest payable.
Given the importance of the valuation of investments, the Board has a separate
Valuations Committee to review the valuation policy, process and application
to individual investments. However, asset valuations for unquoted investments
are inherently subjective, as they are made on the basis of assumptions which
may not prove to be accurate. At 31 March 2024, 96% by value of the
investment assets were unquoted (31 March 2023: 95%)
The valuation of the proprietary capital portfolio is a primary input into the
carried interest payable and receivable balances, which are determined by
reference to the valuation at 31 March 2024 and the underlying investment
management agreements.
Investment basis
Consolidated statement of comprehensive income
for the year to 31 March
2024 2023
£m
£m
Realised (losses)/profits over value on the disposal of investments (4) 169
Unrealised profits on the revaluation of investments 3,926 3,769
Portfolio income
Dividends 499 416
Interest income from investment portfolio 91 91
Fees receivable 1 7
Foreign exchange on investments (461) 530
Movement in the fair value of derivatives 116 122
Gross investment return 4,168 5,104
Fees receivable from external funds 72 70
Operating expenses (147) (138)
Interest receivable 13 4
Interest payable (61) (54)
Exchange movements 29 (29)
Other income/(expense) 3 (1)
Operating profit before carried interest 4,077 4,956
Carried interest
Carried interest and performance fees receivable 62 41
Carried interest and performance fees payable (305) (418)
Operating profit before tax 3,834 4,579
Tax charge (2) (2)
Profit for the year 3,832 4,577
Other comprehensive income
Re-measurements of defined benefit plans 7 8
Total comprehensive income for the year ("Total return") 3,839 4,585
Consolidated statement of financial position
as at 31 March
2024 2023
£m
£m
Assets
Non-current assets
Investments
Quoted investments 946 962
Unquoted investments 20,690 17,426
Investment portfolio 21,636 18,388
Carried interest and performance fees receivable 2 3
Other non-current assets 36 33
Intangible assets 4 5
Retirement benefit surplus 61 53
Property, plant and equipment 4 3
Right of use asset 49 9
Derivative financial instruments 83 73
Total non-current assets 21,875 18,567
Current assets
Carried interest and performance fees receivable 45 40
Other current assets 53 41
Current income taxes 1 1
Derivative financial instruments 82 48
Cash and cash equivalents 396 412
Total current assets 577 542
Total assets 22,452 19,109
Liabilities
Non-current liabilities
Trade and other payables (50) (11)
Carried interest and performance fees payable (280) (1,049)
Loans and borrowings (1,202) (775)
Derivative financial instruments - (3)
Retirement benefit deficit (21) (20)
Lease liability (45) (5)
Deferred income taxes (1) (1)
Provisions (2) (4)
Total non-current liabilities (1,601) (1,868)
Current liabilities
Trade and other payables (136) (85)
Carried interest and performance fees payable (538) (302)
Derivative financial instruments - (1)
Lease liability (4) (5)
Current income taxes (3) (4)
Total current liabilities (681) (397)
Total liabilities (2,282) (2,265)
Net assets 20,170 16,844
Equity
Issued capital 719 719
Share premium 791 790
Other reserves 18,752 15,443
Own shares (92) (108)
Total equity 20,170 16,844
Consolidated cash flow statement
for the year to 31 March
2024 2023
£m
£m
Cash flow from operating activities
Purchase of investments (603) (330)
Proceeds from investments 883 885
Net cash flow from derivatives 69 23
Portfolio interest received 8 19
Portfolio dividends received 500 406
Portfolio fees received 12 5
Fees received from external funds 74 67
Carried interest and performance fees received 58 58
Carried interest and performance fees paid (778) (51)
Operating expenses paid (121) (128)
Co-investment loans received 42 3
Tax paid (3) -
Other cash income 3 -
Interest received 13 4
Net cash flow from operating activities 157 961
Cash flow from financing activities
Issue of shares 1 1
Purchase of own shares - (30)
Dividends paid (541) (485)
Repayment of long-term borrowing - (200)
Proceeds from long-term borrowing 422 -
Lease payments (6) (5)
Interest paid (40) (54)
Net cash flow from financing activities (164) (773)
Cash flow from investing activities
Purchase of property, plant and equipment (3) (1)
Net cash flow from investing activities (3) (1)
Change in cash and cash equivalents (10) 187
Cash and cash equivalents at the start of year 412 229
Effect of exchange rate fluctuations (6) (4)
Cash and cash equivalents at the end of year 396 412
Background to Investment basis financial statements
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 intermediate
holding companies that were previously consolidated line by line. This fair
value approach, applied at the intermediate holding company level, effectively
obscures the performance of our proprietary capital investments and associated
transactions occurring in the intermediate holding companies.
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 in our report and aid understanding we introduced
separate non-GAAP "Investment basis" Statements of comprehensive income,
financial position and cash flow in our 2014 Annual report and accounts. The
Investment basis is an APM and the Strategic report is 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.
Reconciliation of 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 on the
following pages.
Reconciliation of Investment basis and IFRS
Reconciliation of consolidated statement of comprehensive income
for the year to 31 March
Investment IFRS Investment IFRS
basis adjustments IFRS basis basis adjustments IFRS basis
2024 2024 2024 2023 2023 2023
Notes £m £m £m £m £m £m
Realised (losses)/profits over value 1,2 (4) 5 1 169 (105) 64
on the disposal of investments
Unrealised profits on the revaluation 1,2 3,926 (1,184) 2,742 3,769 (1,872) 1,897
of investments
Fair value movements on investment 1 - 861 861 - 2,112 2,112
entity subsidiaries
Portfolio income
Dividends 1,2 499 (136) 363 416 (187) 229
Interest income from investment portfolio 1,2 91 (62) 29 91 (62) 29
Fees receivable 1,2 1 2 3 7 3 10
Foreign exchange on investments 1,3 (461) 223 (238) 530 (327) 203
Movement in the fair value of derivatives 116 - 116 122 - 122
Gross investment return 4,168 (291) 3,877 5,104 (438) 4,666
Fees receivable from external funds 72 - 72 70 - 70
Operating expenses 4 (147) 1 (146) (138) 1 (137)
Interest receivable 1 13 (4) 9 4 - 4
Interest payable (61) - (61) (54) - (54)
Exchange movements 1,3 29 23 52 (29) 23 (6)
Income from investment entity subsidiaries 1 - 21 21 - 30 30
Other income/(expense) 3 - 3 (1) - (1)
Operating profit before carried interest 4,077 (250) 3,827 4,956 (384) 4,572
Carried interest
Carried interest and performance fees receivable 1,4 62 - 62 41 - 41
Carried interest and performance fees payable 1,4 (305) 254 (51) (418) 380 (38)
Operating profit before tax 3,834 4 3,838 4,579 (4) 4,575
Tax charge 1,4 (2) - (2) (2) - (2)
Profit for the year 3,832 4 3,836 4,577 (4) 4,573
Other comprehensive income
Exchange differences on translation 1,3 - (4) (4) - 4 4
of foreign operations
Re-measurements of defined benefit plans 7 - 7 8 - 8
Other comprehensive income for the year 7 (4) 3 8 4 12
Total comprehensive income 3,839 - 3,839 4,585 - 4,585
for the year ("Total return")
The IFRS basis is audited and the Investment basis is unaudited.
Notes to the Reconciliation of consolidated statement of comprehensive income
above:
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 years. 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 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 entities".
4 Other items also aggregated into the "Fair value movements on investment
entity subsidiaries" line include fees receivable from external funds, audit
fees, administration expenses, carried interest and tax.
Notes to the Reconciliation of consolidated statement of financial position on
the next page
1 Applying IFRS 10 to the Consolidated statement of financial position
aggregates the line items 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 for 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 statement of financial position
as at 31 March
Investment IFRS Investment IFRS
basis adjustments IFRS basis basis adjustments IFRS basis
2024 2024 2024 2023 2023 2023
Notes £m £m £m £m £m £m
Assets
Non-current assets
Investments
Quoted investments 1 946 (67) 879 962 (121) 841
Unquoted investments 1 20,690 (6,497) 14,193 17,426 (8,749) 8,677
Investments in investment entity subsidiaries 1,2 - 5,804 5,804 - 7,844 7,844
Investment portfolio 21,636 (760) 20,876 18,388 (1,026) 17,362
Carried interest and performance fees receivable 1 2 1 3 3 - 3
Other non-current assets 1 36 (8) 28 33 (3) 30
Intangible assets 4 - 4 5 - 5
Retirement benefit surplus 61 - 61 53 - 53
Property, plant and equipment 4 - 4 3 - 3
Right of use asset 49 - 49 9 - 9
Derivative financial instruments 83 - 83 73 - 73
Total non-current assets 21,875 (767) 21,108 18,567 (1,029) 17,538
Current assets
Carried interest and performance fees receivable 1 45 - 45 40 - 40
Other current assets 1 53 (6) 47 41 (11) 30
Current income taxes 1 - 1 1 - 1
Derivative financial instruments 82 - 82 48 - 48
Cash and cash equivalents 1 396 (38) 358 412 (250) 162
Total current assets 577 (44) 533 542 (261) 281
Total assets 22,452 (811) 21,641 19,109 (1,290) 17,819
Liabilities
Non-current liabilities
Trade and other payables 1 (50) 45 (5) (11) 7 (4)
Carried interest and performance fees payable 1 (280) 250 (30) (1,049) 1,006 (43)
Loans and borrowings (1,202) - (1,202) (775) - (775)
Derivative financial instruments - - - (3) - (3)
Retirement benefit deficit (21) - (21) (20) - (20)
Lease liability (45) - (45) (5) - (5)
Deferred income taxes (1) - (1) (1) - (1)
Provisions (2) - (2) (4) - (4)
Total non-current liabilities (1,601) 295 (1,306) (1,868) 1,013 (855)
Current liabilities
Trade and other payables 1 (136) 2 (134) (85) 9 (76)
Carried interest and performance fees payable 1 (538) 514 (24) (302) 268 (34)
Derivative financial instruments - - - (1) - (1)
Lease liability (4) - (4) (5) - (5)
Current income taxes (3) - (3) (4) - (4)
Total current liabilities (681) 516 (165) (397) 277 (120)
Total liabilities (2,282) 811 (1,471) (2,265) 1,290 (975)
Net assets 20,170 - 20,170 16,844 - 16,844
Equity
Issued capital 719 - 719 719 - 719
Share premium 791 - 791 790 - 790
Other reserves 3 18,752 - 18,752 15,443 - 15,443
Own shares (92) - (92) (108) - (108)
Total equity 20,170 - 20,170 16,844 - 16,844
The IFRS basis is audited and the Investment basis is unaudited. Notes: see
page before.
Reconciliation of consolidated cash flow statement
for the year to 31 March
Investment IFRS Investment IFRS IFRS
basis adjustments IFRS basis basis adjustments IFRS basis
2024 2024 2024 2023 2023 2023
Notes £m £m £m £m £m £m
Cash flow from operating activities
Purchase of investments 1 (603) 97 (506) (330) 284 (46)
Proceeds from investments 1 883 (340) 543 885 (658) 227
Amounts paid to investment entity subsidiaries 1 - (674) (674) - (535) (535)
Amounts received from investment entity subsidiaries 1 - 580 580 - 841 841
Net cash flow from derivatives 69 - 69 23 - 23
Portfolio interest received 1 8 (3) 5 19 (7) 12
Portfolio dividends received 1 500 (134) 366 406 (183) 223
Portfolio fees received 1 12 - 12 5 - 5
Fees received from external funds 74 - 74 67 - 67
Carried interest and performance fees received 1 58 - 58 58 - 58
Carried interest and performance fees paid 1 (778) 725 (53) (51) 22 (29)
Operating expenses paid 1 (121) - (121) (128) - (128)
Co-investment loans received 1 42 (37) 5 3 2 5
Tax paid 1 (3) - (3) - - -
Other cash income 1 3 (1) 2 - - -
Interest received 1 13 (4) 9 4 - 4
Net cash flow from operating activities 157 209 366 961 (234) 727
Cash flow from financing activities
Issue of shares 1 - 1 1 - 1
Purchase of own shares - - - (30) - (30)
Dividends paid (541) - (541) (485) - (485)
Repayment of long-term borrowing - - - (200) - (200)
Proceeds from long-term borrowing 422 - 422 - - -
Lease payments (6) - (6) (5) - (5)
Interest paid (40) - (40) (54) - (54)
Net cash flow from financing activities (164) - (164) (773) - (773)
Cash flow from investing activities
Purchase of property, plant and equipment (3) - (3) (1) - (1)
Net cash flow from investing activities (3) - (3) (1) - (1)
Change in cash and cash equivalents 2 (10) 209 199 187 (234) (47)
Cash and cash equivalents at the start of year 2 412 (250) 162 229 (17) 212
Effect of exchange rate fluctuations 1 (6) 3 (3) (4) 1 (3)
Cash and cash equivalents at the end of year 2 396 (38) 358 412 (250) 162
The IFRS basis is audited and the Investment basis is unaudited.
Notes to the Reconciliation of consolidated cash flow statement above:
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 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.
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 above. The table
below defines our additional APMs.
Gross investment return as a percentage of opening portfolio value
Purpose Calculation Reconciliation to IFRS
A measure of the performance of our proprietary investment portfolio. It is calculated as the gross investment return, as shown in the Investment The equivalent balances under IFRS and the reconciliation to the Investment
basis Consolidated statement of comprehensive income, as a % of the opening basis are shown in the Reconciliation of the consolidated statement
portfolio value. of comprehensive income and the Reconciliation of the consolidated statement
of financial position respectively.
For further information see the Group KPIs in our Annual report and accounts
2024.
Cash realisations
Purpose Calculation Reconciliation to IFRS
Cash proceeds from our investments support our returns to shareholders, The cash received from the disposal of investments in the year as shown The equivalent balance under IFRS and the reconciliation to the Investment
as well as our ability to invest in new opportunities. in the Investment basis Consolidated cash flow statement. basis is shown in the Reconciliation of the consolidated cash flow statement.
For further information see the Group KPIs in our Annual report and accounts
2024.
Cash investment(1)
Purpose Calculation Reconciliation to IFRS
Identifying new opportunities in which to invest proprietary capital is the The cash paid to acquire investments in the year as shown on the Investment The equivalent balance under IFRS and the reconciliation to the Investment
primary driver of the Group's ability to deliver attractive returns. basis Consolidated cash flow statement. basis is shown in the Reconciliation of the consolidated cash flow
statement.
For further information see the Group KPIs in our Annual report and accounts
2024.
Operating cash profit
Purpose Calculation Reconciliation to IFRS
By covering the cash cost of running the business with cash income, The cash income from the portfolio (interest, dividends and fees) together The equivalent balance under IFRS and the reconciliation to the Investment
we reduce the potential dilution of capital returns. with fees received from external funds less cash operating expenses and basis is shown in the Reconciliation of the consolidated cash flow
leases payments as shown on the Investment basis Consolidated cash flow statement.
statement. The calculation is shown in Table 14 of the Financial review.
For further information see the Group KPIs in our Annual report and accounts
2024.
Net (debt)/cash
Purpose Calculation Reconciliation to IFRS
A measure of the available cash to invest in the business and an indicator Cash and cash equivalents plus deposits less loans and borrowings as shown The equivalent balance under IFRS and the reconciliation to the Investment
of the financial risk in the Group's balance sheet. on the Investment basis Consolidated statement of financial position. basis is shown in the Reconciliation of the consolidated statement
of financial position.
Gearing
Purpose Calculation Reconciliation to IFRS
A measure of the financial risk in the Group's balance sheet. Net debt (as defined above) as a % of the Group's net assets under the The equivalent balance under IFRS and the reconciliation to the Investment
Investment basis. It cannot be less than zero. basis is shown in the Reconciliation of the consolidated statement of
financial position.
1 Cash investment of £593 million is different to cash investment per the cash
flow of £603 million due to a £10 million investment in Private Equity
which was recognised in FY2023 and paid in FY2024.
Audited financial statements
Consolidated statement of comprehensive income
for the year to 31 March
Notes 2024 2023
£m
£m
Realised profits over value on the disposal of investments 1 64
Unrealised profits on the revaluation of investments 2,742 1,897
Fair value movements on investment entity subsidiaries 861 2,112
Portfolio income
Dividends 363 229
Interest income from investment portfolio 29 29
Fees receivable 3 10
Foreign exchange on investments (238) 203
Movement in the fair value of derivatives 116 122
Gross investment return 3,877 4,666
Fees receivable from external funds 72 70
Operating expenses (146) (137)
Interest receivable 9 4
Interest payable (61) (54)
Exchange movements 52 (6)
Income from investment entity subsidiaries 21 30
Other income/(expense) 3 (1)
Operating profit before carried interest 3,827 4,572
Carried interest
Carried interest and performance fees receivable 62 41
Carried interest and performance fees payable (51) (38)
Operating profit before tax 3,838 4,575
Tax charge (2) (2)
Profit for the year 3,836 4,573
Other comprehensive income that may be reclassified to the income statement
Exchange differences on translation of foreign operations (4) 4
Other comprehensive income that will not be reclassified to the income
statement
Re-measurements of defined benefit plans 7 8
Other comprehensive income for the year 3 12
Total comprehensive income for the year 3,839 4,585
Earnings per share
Basic (pence) 2 397.9 475.0
Diluted (pence) 2 396.7 473.8
The Notes to the accounts section forms an integral part of these financial
statements.
Consolidated statement of financial position
as at 31 March
2024 2023
£m
£m
Assets
Non-current assets
Investments
Quoted investments 879 841
Unquoted investments 14,193 8,677
Investments in investment entity subsidiaries 5,804 7,844
Investment portfolio 20,876 17,362
Carried interest and performance fees receivable 3 3
Other non-current assets 28 30
Intangible assets 4 5
Retirement benefit surplus 61 53
Property, plant and equipment 4 3
Right of use asset 49 9
Derivative financial instruments 83 73
Total non-current assets 21,108 17,538
Current assets
Carried interest and performance fees receivable 45 40
Other current assets 47 30
Current income taxes 1 1
Derivative financial instruments 82 48
Cash and cash equivalents 358 162
Total current assets 533 281
Total assets 21,641 17,819
Liabilities
Non-current liabilities
Trade and other payables (5) (4)
Carried interest and performance fees payable (30) (43)
Loans and borrowings (1,202) (775)
Derivative financial instruments - (3)
Retirement benefit deficit (21) (20)
Lease liability (45) (5)
Deferred income taxes (1) (1)
Provisions (2) (4)
Total non-current liabilities (1,306) (855)
Current liabilities
Trade and other payables (134) (76)
Carried interest and performance fees payable (24) (34)
Derivative financial instruments - (1)
Lease liability (4) (5)
Current income taxes (3) (4)
Total current liabilities (165) (120)
Total liabilities (1,471) (975)
Net assets 20,170 16,844
Equity
Issued capital 719 719
Share premium 791 790
Capital redemption reserve 43 43
Share-based payment reserve 42 31
Translation reserve (6) (2)
Capital reserve 17,154 14,044
Revenue reserve 1,519 1,327
Own shares (92) (108)
Total equity 20,170 16,844
The Notes to the accounts section forms an integral part of these financial
statements.
David Hutchison
Chair
8 May 2024
Consolidated statement of changes in equity
for the year to 31 March
Share-
Capital based
Share Share redemption payment Translation Capital Revenue Own Total
capital premium reserve reserve reserve reserve(1) reserve(1) shares equity
2024 £m £m £m £m £m £m £m £m £m
Total equity at the start of the year 719 790 43 31 (2) 14,044 1,327 (108) 16,844
Profit for the year - - - - - 3,309 527 - 3,836
Exchange differences on translation of foreign operations - - - - (4) - - - (4)
Re-measurements of defined benefit plans - - - - - 7 - - 7
Total comprehensive income for the year - - - - (4) 3,316 527 - 3,839
Share-based payments - - - 27 - - - - 27
Release on exercise/forfeiture of share awards - - - (16) - - 16 - -
Exercise of share awards - - - - (16) - 16 -
Ordinary dividends - - - - - (190) (351) - (541)
Purchase of own shares - - - - - - - - -
Issue of ordinary shares - 1 - - - - - - 1
Total equity at the end of the year 719 791 43 42 (6) 17,154 1,519 (92) 20,170
1 Refer to Note 20 in our Annual report and accounts 2024 for the nature of
the capital and revenue reserves.
Share-
Capital based
Share Share redemption payment Translation Capital Revenue Own Total
capital premium reserve reserve reserve reserve(1) reserve(1) shares equity
2023 £m £m £m £m £m £m £m £m £m
Total equity at the start of the year 719 789 43 33 (6) 10,151 1,125 (100) 12,754
Profit for the year - - - - - 4,064 509 - 4,573
Exchange differences on translation of foreign operations - - - - 4 - - - 4
Re-measurements of defined benefit plans - - - - - 8 - - 8
Total comprehensive income for the year - - - - 4 4,072 509 - 4,585
Share-based payments - - - 19 - - - - 19
Release on exercise/forfeiture of share awards - - - (21) - - 21 - -
Exercise of share awards - - - - - (22) - 22 -
Ordinary dividends - - - - - (157) (328) - (485)
Purchase of own shares - - - - - - - (30) (30)
Issue of ordinary shares - 1 - - - - - - 1
Total equity at the end of the year 719 790 43 31 (2) 14,044 1,327 (108) 16,844
1 Refer to Note 20 in our Annual report and accounts 2024 for the nature of
the capital and revenue reserves.
The Notes to the accounts section forms an integral part of these financial
statements.
Consolidated cash flow statement
for the year to 31 March
Notes 2024 2023
£m
£m
Cash flow from operating activities
Purchase of investments (506) (46)
Proceeds from investments 543 227
Amounts paid to investment entity subsidiaries (674) (535)
Amounts received from investment entity subsidiaries 580 841
Net cash flow from derivatives 69 23
Portfolio interest received 5 12
Portfolio dividends received 366 223
Portfolio fees received 12 5
Fees received from external funds 74 67
Carried interest and performance fees received 58 58
Carried interest and performance fees paid (53) (29)
Operating expenses paid (121) (128)
Co-investment loans received 5 5
Tax paid (3) -
Other cash income 2 -
Interest received 9 4
Net cash flow from operating activities 366 727
Cash flow from financing activities
Issue of shares 1 1
Purchase of own shares - (30)
Dividends paid 3 (541) (485)
Repayment of long-term borrowing - (200)
Proceeds from long-term borrowing 422 -
Lease payments (6) (5)
Interest paid (40) (54)
Net cash flow from financing activities (164) (773)
Cash flow from investing activities
Purchases of property, plant and equipment (3) (1)
Net cash flow from investing activities (3) (1)
Change in cash and cash equivalents 199 (47)
Cash and cash equivalents at the start of the year 162 212
Effect of exchange rate fluctuations (3) (3)
Cash and cash equivalents at the end of the year 358 162
The Notes to the accounts section forms an integral part of these financial
statements.
Material accounting policies
Reporting entity
3i Group plc (the "Company") is a public limited company incorporated and
domiciled in England and Wales. The consolidated financial statements ("the
Group accounts") for the year to 31 March 2024 comprise of the financial
statements of the Company and its consolidated subsidiaries (collectively,
"the Group").
The Group accounts have been prepared and approved by the Directors in
accordance with section 395 of the Companies Act 2006 and the Large and
Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008. The
Company has taken advantage of the exemption in section 408 of the Companies
Act 2006 not to present its Company statement of comprehensive income and
related Notes.
A Basis of preparation
The Group and Company accounts have been prepared and approved by the
Directors in accordance with UK-adopted international accounting standards.
The financial statements are presented to the nearest million sterling (£m),
the functional currency of the Company.
The following standards, amendments and interpretations have been adopted by
the Group for the first time during the year. 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 principal accounting policies applied in the preparation of the Group
accounts are disclosed below, but where possible, they have been shown as part
of the Note to which they specifically relate in order to assist the reader's
understanding. These policies have been consistently applied and apply to all
years presented, except for in relation to the adoption of new accounting
standards.
Going concern
These financial statements have been prepared on a going concern basis as
disclosed in the Directors' report. 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.
The Directors' assessment of going concern, which takes into account the
business model (further detail in our Annual report and accounts 2024) and the
Group's liquidity of £1,296 million, indicates that the Group and parent
company will have sufficient funds to continue as a going concern, for at
least the next 12 months from the date of approval of the accounts. As
detailed within the Financial review earlier in this document, on the
Investment basis the Group covers its cash operating costs, £127 million at
31 March 2024, with cash income generated by our Private Equity and
Infrastructure businesses and Scandlines, £594 million at 31 March 2024. The
Group's liquidity comprises cash and deposits of £396 million (31 March
2023: £412 million) and an undrawn multi-currency facility of £900 million
(31 March 2023: £900 million), which has no financial covenants. During the
year the Group further strengthened its liquidity profile through the
successful issue of a six-year €500 million bond at a coupon of 4.875% and
successfully extended the tenor of the £400 million tranche of our £900
million RCF to November 2026. Post the year end in April 2024, we agreed the
sale of nexeye, generating expected exit proceeds of c.€452 million. These
exit proceeds, combined with distributions already received, result in a 2.0x
money multiple. The transaction is expected to complete in H1 FY2025.
As a proprietary investor, the Group has a long-term, responsible investment
approach, and is not subject to 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. The Group manages liquidity with the aim of ensuring it is
adequate and sufficient, by regular monitoring of investments, realisations,
operating expenses and portfolio cash income and there have been no post
balance sheet changes that would be materially detrimental to liquidity. The
Directors are of the opinion that the Group's cash flow forecast is sufficient
to support the Group given the current market, economic conditions and
outlook.
Having performed the assessment on going concern, the Directors considered it
appropriate to prepare the financial statements of the Company and 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
economic environment, and can continue operations for a period of at least 12
months from the date of issue of these financial statements.
B Basis of consolidation
In accordance with IFRS 10, the Company meets the criteria as an investment
entity and therefore is required to recognise subsidiaries that also qualify
as investment entities at fair value through profit or loss. It does not
consolidate the investment entities it controls. Subsidiaries that provide
investment-related services, such as advisory, management or employment
services, are not accounted for at fair value through profit and loss and
continue to be consolidated unless those subsidiaries qualify as investment
entities, in which case they are recognised at fair value. Subsidiaries are
entities controlled by the Group. Control, as defined by IFRS 10, is achieved
when the Group has all of the following:
• power over the relevant activities of the investee;
• exposure, or rights, to variable returns from its involvement with the
investee; and
• the ability to affect those returns through its power over the investee.
The Group is required to determine the degree of control or influence the
Group exercises and the form of any control to ensure that the financial
treatment is accurate.
Subsidiaries are fully consolidated from the date on which the Group
effectively obtains control. All intragroup balances and transactions
with subsidiaries are eliminated upon consolidation. Subsidiaries are
de-consolidated from the date that control ceases.
The Group comprises several different types of subsidiaries. For a new
subsidiary, the Group assesses whether it qualifies as an investment entity
under IFRS 10, based on the function the entity performs within the Group. For
existing subsidiaries, the Group annually reassesses the function performed by
each type of subsidiary to determine if the treatment under IFRS 10 exception
from consolidation is still appropriate. The types of subsidiaries and their
treatment under IFRS 10 are as follows:
General Partners ("GPs") - Consolidated
General Partners provide investment management services and do not hold any
direct investments in portfolio assets. These entities are not investment
entities.
Investment managers/advisers - Consolidated
These entities provide investment-related services through the provision of
investment management or advice. They do not hold any direct investments in
portfolio assets. These entities are not investment entities.
Holding companies of investment managers/advisers - Consolidated
These entities provide investment related services through their subsidiaries.
Typically they do not hold any direct investment in portfolio assets and these
entities are not investment entities.
Limited partnerships and other intermediate investment holding structures -
Fair valued
The Group makes investments in portfolio assets through its ultimate parent
company as well as through other limited partnerships and corporate
subsidiaries which the Group has created to align the interests of the
investment teams with the performance of the assets through the use of various
carried interest schemes. The purpose of these limited partnerships and
corporate holding vehicles, many of which also provide investment related
services, is to invest for investment income and capital appreciation. These
partnerships and corporate subsidiaries meet the definition of an investment
entity and are accounted for at fair value through profit and loss.
Portfolio investments - Fair valued
Under IFRS 10, the test for accounting subsidiaries takes wider factors of
control as well as actual equity ownership into account. In accordance with
the investment entity exception, these entities have been held at fair value
with movements in fair value being recognised in profit or loss.
Associates - Fair valued
Associates are those entities in which the Group has significant influence,
but not control, over the financial and operating policies. Investments that
are held as part of the Group's investment portfolio are carried in the
Consolidated statement of financial position at fair value even though the
Group may have significant influence over those companies.
Further detail on our application of IFRS 10 can be found in the
Reconciliation of Investment basis to IFRS section.
C Critical accounting judgements and estimates
The reported results of the Group are sensitive to the accounting policies,
assumptions and estimates that underpin the preparation of its financial
statements. UK company law and IFRS require the Directors, in preparing the
Group's financial statements, to select suitable accounting policies, apply
them consistently and make judgements and estimates that are reasonable and
prudent. The Group's estimates and assumptions are based on historical
experience and expectation of future events and are reviewed periodically. The
actual outcome may be materially different from that anticipated.
(a) Critical judgements
In the course of preparing the financial statements, one judgement has been
made in the process of applying the Group's accounting policies, other than
those involving estimations, that has had a significant effect on the amounts
recognised in the financial statements as follows:
I. Assessment as an investment entity
The Board has concluded that the Company continues to meet the definition of
an investment entity, as its strategic objective of investing in portfolio
investments and providing investment management services to investors for the
purpose of generating returns in the form of investment income and capital
appreciation remains unchanged.
(b) Critical estimates
In addition to these significant judgements the Directors have made two
estimates, which they deem to have a significant risk of resulting in a
material adjustment to the amounts recognised in the financial statements
within the next financial year. The details of these estimates are as
follows:
I. Fair valuation of the investment portfolio
The investment portfolio, a material group of assets of the Group, is held at
fair value. Details of valuation methodologies used and the associated
sensitivities are disclosed in Note 13 Fair values of assets and liabilities
in our Annual report and accounts 2024. Given the importance of this area,
the Board has a separate Valuations Committee to review the valuations
policies, process and application to individual investments. A report on the
activities of the Valuations Committee (including a review of the assumptions
made) is included in our Annual report and accounts 2024.
II. Carried interest payable
Carried interest payable is calculated based on the underlying agreements, and
assuming all portfolio investments are sold at their fair values at the
balance sheet date. The actual amounts of carried interest paid will depend on
the cash realisations of these portfolio investments and valuations may
change significantly in the next financial year. The fair valuation of the
investment portfolio is itself a critical estimate, as detailed above. The
sensitivity of carried interest payable to movements in the investment
portfolio is disclosed in Note 15 in our Annual report and accounts 2024.
D Other accounting policies
(a) Gross investment return
Gross investment return is equivalent to "revenue" for the purposes of IAS 1.
It represents the overall increase in net assets from the investment
portfolio net of deal-related costs and includes foreign exchange movements in
respect of the investment portfolio. The substantial majority is investment
income and outside the scope of IFRS 15. It is analysed into the following
components with the relevant standard shown where appropriate:
i. Realised profits or losses over value on the disposal of investments are
the difference between the fair value of the consideration
received in accordance with IFRS 13 less any directly attributable costs, on
the sale of equity and the repayment of interest income from the investment
portfolio, and its carrying value at the start of the accounting period,
converted into sterling using the exchange rates in force at the date of
disposal. See Note 2 in our Annual report and accounts 2024 for more details.
i. Unrealised profits or losses on the revaluation of investments are the
movement in the fair value of investments in accordance with IFRS 13 between
the start and end of the accounting period converted into sterling using the
exchange rates in force at the date of fair value assessment. See Note 3 in
our Annual report and accounts 2024 for more details.
ii. Fair value movements on investment entity subsidiaries are the movements
in the fair value of Group subsidiaries which are classified as investment
entities under IFRS 10. The Group makes investments in portfolio assets
through these entities which are usually limited partnerships or corporate
subsidiaries. See Note 12 in our Annual report and accounts 2024 for more
details.
iii. Portfolio income is that portion of income that is
directly related to the return from individual investments. It is recognised
to the extent that it is probable that there will be economic benefit and the
income can be reliably measured. The following specific recognition criteria
must be met before the income is recognised:
• Dividends from equity investments are recognised in profit or loss
when the shareholders' rights to receive payment have been established;
• Interest income from the 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; and
• The accounting policy for fee income is included in Note 4 in our
Annual report and accounts 2024.
iv. Foreign exchange on investments arises on
investments made in currencies that are different from the functional currency
of the Company, being sterling. Investments are translated at the exchange
rate ruling at the date of the transaction in accordance with IAS 21. At each
subsequent reporting date, investments are translated to sterling at the
exchange rate ruling at that date.
v. Movement in the fair value of derivatives relates to the change in fair
value of forward foreign exchange contracts which have been used to minimise
foreign currency risk in the investment portfolio. See Note 18 in our Annual
report and accounts 2024 for more details.
(b) Foreign currency translation
For the Company and those subsidiaries and associates whose balance sheets are
denominated in sterling, which is the Company's functional and presentational
currency, monetary assets and liabilities and non-monetary assets held at fair
value denominated in foreign currencies are translated into sterling at the
closing rates of exchange at the balance sheet date. Foreign currency
transactions are translated into sterling at the average rates of exchange
over the year and exchange differences arising are taken to profit or loss.
The statements of financial position of subsidiaries, which are not held at
fair value, denominated in foreign currencies are translated into sterling at
the closing rates. The statements of comprehensive income for these
subsidiaries and associates are translated at the average rates and exchange
differences arising are taken to other comprehensive income. Such exchange
differences are reclassified to profit or loss in the period in which the
subsidiary or associate is disposed of.
(c) Treasury assets and liabilities
Short-term treasury assets, and short and long-term treasury liabilities are
used in order to manage cash flows.
Cash and cash equivalents comprise cash at bank and amounts held in money
market funds which are readily convertible into cash and there is an
insignificant risk of changes in value. Financial assets and liabilities are
recognised in the balance sheet when the relevant Group entity becomes a party
to the contractual provisions of the instrument. Derecognition occurs when
rights to cash flows from a financial asset expire, or when a liability is
extinguished.
Notes to the accounts
1 Segmental analysis
Operating segments are the components of the Group whose results are regularly
reviewed by the Group's chief operating decision maker to make decisions
about resources to be allocated to the segment and assess its performance.
The Chief Executive, who is considered to be the chief operating decision
maker, managed the Group on the basis of business divisions determined with
reference to market focus, geographic focus, investment funding model and the
Group's management hierarchy. A description of the activities, including
returns generated by these divisions and the allocation of resources, is given
in the Strategic report. For the geographical segmental split, revenue
information is based on the locations of the assets held. To aid the readers'
understanding we have split out Action, Private Equity's largest asset, into
a separate column. Action is not regarded as a reported segment as the chief
operating decision maker reviews performance, makes decisions and allocates
resources to the Private Equity segment, which includes Action.
The segmental information that follows is presented on the basis used by the
Chief Executive to monitor the performance of the Group. The reported
segments are Private Equity, Infrastructure and Scandlines.
The segmental analysis is prepared on the Investment basis. The Investment
basis is an APM and we believe it provides a more understandable view of
performance. For more information on the Investment basis and a reconciliation
between the Investment basis and IFRS section earlier in this document.
Private Of which
Investment basis Equity Action Infrastructure Scandlines Total(4)
Year to 31 March 2024 £m £m £m £m £m
Realised losses over value on the disposal of investments - - (4) - (4)
Unrealised profits/(losses) on the revaluation of investments 3,874 3,609 72 (20) 3,926
Portfolio income
Dividends 439 377 35 25 499
Interest income from investment portfolio 80 - 11 - 91
Fees receivable 7 6 (6) - 1
Foreign exchange on investments (437) (332) (9) (15) (461)
Movement in the fair value of derivatives 96 58 - 20 116
Gross investment return 4,059 3,718 99 10 4,168
Fees receivable from external funds 4 68 - 72
Operating expenses (92) (52) (3) (147)
Interest receivable 13
Interest payable (61)
Exchange movements 29
Other income 3
Operating profit before carried interest 4,077
Carried interest
Carried interest and performance fees receivable - 62 - 62
Carried interest and performance fees payable (262) (43) - (305)
Operating profit before tax 3,834
Tax charge (2)
Profit for the year 3,832
Other comprehensive income
Re-measurements of defined benefit plans 7
Total return 3,839
Realisations(1) 866 762 22 - 888
Cash investment(2) (556) (455) (36) (1) (593)
Net divestment/(investment) 310 307 (14) (1) 295
Balance sheet
Opening portfolio value at 1 April 2023 16,425 11,188 1,409 554 18,388
Investment(3) 683 455 36 1 720
Value disposed (866) (762) (26) - (892)
Unrealised value movement 3,874 3,609 72 (20) 3,926
Foreign exchange (including other movements) (487) (332) (3) (16) (506)
Closing portfolio value at 31 March 2024 19,629 14,158 1,488 519 21,636
1 Realised proceeds may differ from cash proceeds due to timing of cash
receipts. During the year, Private Equity recognised £866 million of realised
proceeds, of which £5 million relates to WHT.
2 Cash investment per the segmental analysis is different to cash investment per
the cash flow due to a £10 million investment in Private Equity which was
recognised in FY2023 and paid in FY2024.
3 Includes capitalised interest and other non-cash investment.
4 The total is the sum of Private Equity, Infrastructure and Scandlines, "Of
which Action" is part of Private Equity.
Interest receivable, interest payable, 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.
Private Of which
Investment basis Equity Action Infrastructure Scandlines Total(4)
Year to 31 March 2023 £m £m £m £m £m
Realised profits over value on the disposal of investments 169 - - - 169
Unrealised profits on the revaluation of investments 3,746 3,708 23 - 3,769
Portfolio income
Dividends 345 328 33 38 416
Interest income from investment portfolio 77 - 14 - 91
Fees receivable 7 1 - - 7
Foreign exchange on investments 493 285 16 21 530
Movement in the fair value of derivatives 129 22 - (7) 122
Gross investment return 4,966 4,344 86 52 5,104
Fees receivable from external funds 4 66 - 70
Operating expenses (88) (48) (2) (138)
Interest receivable 4
Interest payable (54)
Exchange movements (29)
Other income (1)
Operating profit before carried interest 4,956
Carried interest
Carried interest and performance fees receivable 4 37 - 41
Carried interest and performance fees payable (392) (26) - (418)
Operating profit before tax 4,579
Tax charge (2)
Profit for the year 4,577
Other comprehensive income
Re-measurements of defined benefit plans 8
Total return 4,585
Realisations(1) 857 - - - 857
Cash investment(2) (381) (30) (16) - (397)
Net divestment/(investment) 476 (30) (16) - 460
Balance sheet
Opening portfolio value at 1 April 2022 12,420 7,165 1,352 533 14,305
Investment(3) 496 30 16 - 512
Value disposed (688) - - - (688)
Unrealised value movement 3,746 3,708 23 - 3,769
Foreign exchange (including other movements) 451 285 18 21 490
Closing portfolio value at 31 March 2023 16,425 11,188 1,409 554 18,388
1 Realised proceeds may differ from cash proceeds due to timing of cash
receipts. During the year, Private Equity received £1 million and
Infrastructure received £33 million of cash proceeds which were recognised as
realised proceeds in FY2022. Private Equity recognised £6 million of realised
proceeds which are to be received in FY2024.
2 Cash investment per the segmental analysis is different to cash investment per
the cash flow due to a £57 million syndication in Infrastructure which was
recognised in FY2022 and received in FY2023 and a £10 million investment
in Private Equity which was recognised in FY2023 and is to be paid in FY2024.
3 Includes capitalised interest and other non-cash investment.
4 The total is the sum of Private Equity, Infrastructure and Scandlines, "Of
which 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.
North
Investment basis Europe(1) America Other Total
Year to 31 March 2024 £m £m £m £m
Realised losses over value on the disposal of investments (1) (3) - (4)
Unrealised profits on the revaluation of investments 3,919 7 - 3,926
Portfolio income 579 12 - 591
Foreign exchange on investments (416) (44) (1) (461)
Movement in the fair value of derivatives 88 28 - 116
Gross investment return 4,169 - (1) 4,168
Realisation 865 22 1 888
Cash investment (532) (61) - (593)
Net (investment)/divestment 333 (39) 1 295
Balance sheet
Closing portfolio value at 31 March 2024 19,485 2,124 27 21,636
North
Investment basis Europe(1) America Other Total
Year to 31 March 2023 £m £m £m £m
Realised profits over value on the disposal of investments 169 - - 169
Unrealised profits on the revaluation of investments 3,445 317 7 3,769
Portfolio income 498 16 - 514
Foreign exchange on investments 418 113 (1) 530
Movement in the fair value of derivatives 22 100 - 122
Gross investment return 4,552 546 6 5,104
Realisation 525 332 - 857
Cash investment (323) (74) - (397)
Net (investment)/divestment 202 258 - 460
Balance sheet
Closing portfolio value at 31 March 2023 16,239 2,122 27 18,388
1 Includes UK.
2 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 year 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. Dilutive share awards are equity awards with
performance conditions attached see Note 27 in our Annual report and accounts
2024 for further details.
2024 2023
Net assets per share (£)
Basic 20.92 17.50
Diluted 20.85 17.45
Net assets (£m)
Net assets attributable to equity holders of the Company 20,170 16,844
2024 2023
Number of shares in issue
Ordinary shares 973,366,445 973,312,950
Own shares (8,997,664) (10,660,078)
964,368,781 962,652,872
Effect of dilutive potential ordinary shares
Share awards 3,104,739 2,849,520
Diluted shares 967,473,520 965,502,392
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 year to 31 March 2024
are 964,007,876 (2023: 962,674,183). 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 year to 31 March 2024 are 966,901,059 (2023: 965,273,696).
2024 2023
Earnings per share (pence)
Basic 397.9 475.0
Diluted 396.7 473.8
Earnings (£m)
Profit for the year attributable to equity holders of the Company 3,836 4,573
3 Dividends
2024 2024 2023 2023
pence per
£m
pence per
£m
share
share
Declared and paid during the year
Ordinary shares
Second dividend 29.75 286 27.25 262
First dividend 26.50 255 23.25 223
56.25 541 50.50 485
Proposed dividend 34.50 332 29.75 285
The Group introduced a simplified dividend policy in May 2018. In accordance
with this policy, subject to maintaining a conservative balance sheet
approach, the Group aims to maintain or grow the dividend each year. The first
dividend has been set at 50% of the prior year's total dividend.
The dividend can be paid out of either the capital reserve or the revenue
reserve subject to the investment trust rules, see Note 20 in our Annual
report and accounts 2024 and the statement of changes in equity on previous
pages for details of reserves.
The distributable reserves of the Company are £8,282 million (31 March 2023:
£4,940 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 of our Annual report and accounts 2024.
20 large investments
The 20 investments listed below account for 95% of the portfolio at 31 March
2024 (31 March 2023: 94%). All investments have been assessed to establish
whether they classify as accounting subsidiaries under IFRS and/or
subsidiaries under the UK Companies Act. This assessment forms the basis of
our disclosure of accounting subsidiaries in the financial statements.
The UK Companies Act defines a subsidiary based on voting rights, with a
greater than 50% majority of voting rights resulting in an entity being
classified as a subsidiary. IFRS 10 applies a wider test and, if a Group is
exposed, or has rights to variable returns from its involvement with the
investee and has the ability to affect these returns through its power over
the investee then it has control, and hence the investee is deemed an
accounting subsidiary. Controlled subsidiaries under IFRS are noted below.
None of these investments are UK Companies Act subsidiaries.
In accordance with Part 5 of The Alternative Investment Fund Managers
Regulations 2013 ("the Regulations"), 3i Investments plc, as AIFM, requires
all controlled portfolio companies to make available to employees an annual
report which meets the disclosure requirements of the Regulations. These are
available either on the portfolio company's website or through filing with the
relevant local authorities.
Residual Residual
Business line cost(1) cost(1) Valuation Valuation
Geography March March March March
Investment First invested in 2024 2023 2024 2023 Relevant transactions
Description of business Valuation basis £m £m £m £m in the year
Action* Private Equity 1,108 653 14,158 11,188 £762 million of capital
General merchandise discount retailer Netherlands restructuring proceeds
2011/2020/2024 and a £375 million cash
Earnings dividend received.
Completed a £455 million
reinvestment
3i Infrastructure plc* Infrastructure 305 305 879 841 £31 million dividend
Quoted investment company, investing in infrastructure UK received
2007
Quoted
Cirtec Medical* Private Equity 172 172 586 552
Outsourced medical device manufacturing US
2017
Earnings
Royal Sanders* Private Equity 165 136 580 369 £109 million received
Private label and contract manufacturing producer of personal care products Netherlands from the refinancing, of
2018 which £48 million is a dividend
Earnings Completed £29
million of further
investment and acquired
Lenhart in April 2023
Scandlines Scandlines 530 530 519 554 £25 million dividend
Ferry operator between Denmark and Germany Denmark/Germany received
2018
DCF
AES Engineering Private Equity 30 30 403 351 £6 million dividend
Manufacturer of mechanical seals and provision of reliability services UK recorded. Acquisition of
1996 Triseal in June 2023
Earnings
nexeye* Private Equity 270 269 377 393 Sale agreed in
Value-for-money optical retailer Netherlands April 2024.
2017
Imminent sale
Tato Private Equity 2 2 335 411 £7 million dividend
Manufacturer and seller of specialty chemicals UK recorded
1989
Earnings
SaniSure* Private Equity 76 76 334 389
Manufacturer, distributor and integrator of single-use bioprocessing systems US
and components
2019
Earnings
Evernex* Private Equity 316 299 331 305 Acquisition of Maminfo in
Provider of third-party maintenance services for data centre infrastructure France January 2024
2019
Earnings
Smarte Carte* Infrastructure 194 189 306 300 £5 million distribution
Provider of self-serve vended luggage carts, electronic lockers and concession US received
carts
2017
DCF
European Bakery Group* Private Equity 84 46 267 73 EBG formed following the
Industrial bakery group specialised in home bake-off bread and snack products Netherlands acquisition of coolback in
2021 July 2023 (3i further
Earnings investment of £38 million)
and Panelto in August 2023
WP* Private Equity 238 257 234 274 £42 million distribution
Global manufacturer of innovative plastic packaging solutions Netherlands received
2015
Earnings
MPM* Private Equity 169 153 233 181
An international branded, premium and natural pet food company UK
2020
Earnings
Luqom* Private Equity 262 245 222 271 £6 million further
Online lighting specialist retailer Germany investment
2017
Earnings
ten23 health* Private Equity 129 104 192 111 £25 million further
Biologics focused CDMO Switzerland investment
2021
Other
Audley Travel* Private Equity 303 271 192 162
Provider of experiential tailor-made travel UK
2015
Earnings
Q Holding* Private Equity 162 162 150 117
Manufacturer of catheter products serving the medical device market US
2014
Earnings
BoConcept* Private Equity 121 110 133 160
Urban living designer Denmark
2016
Earnings
Dynatect* Private Equity 65 65 130 128
Manufacturer of engineered, mission critical protective equipment US
2014
Earnings
4,701 4,074 20,561 17,130
*Controlled in accordance with IFRS.
1 Residual cost includes cash investment and interest, net of cost disposed.
List of Directors and their functions
The Directors of the Company and their functions are listed below:
David Hutchison, Chair
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, 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 May 2024
Registered Office: 16 Palace Street, London SW1E 5JD
Glossary
3i 2013-2016 vintage includes Audley Travel, Basic-Fit, Dynatect, JMJ, Q
Holding and WP. Realised investments include Aspen Pumps, ATESTEO, Blue
Interactive, Christ, Geka, Kinolt, Óticas Carol and Scandlines further.
3i 2016-2019 vintage includes arrivia, BoConcept, Cirtec Medical, Formel D,
Luqom and nexeye. Realised investments include Havea, Magnitude Software,
Royal Sanders (transferred out of the vintage in March 2024) and Schlemmer.
3i 2019-2022 vintage includes European Bakery Group, Evernex, insightsoftware,
MAIT, Mepal, MPM, ten23 health, SaniSure, WilsonHCG, Yanga and YDEON.
3i 2022-2025 vintage includes Digital Barriers, Konges Sløjd,
VakantieDiscounter and xSuite.
3i Buyouts 2010-2012 vintage includes Action. Realised investments include
Amor, Element, Etanco, Hilite, OneMed and Trescal.
3i Growth 2010-2012 vintage includes BVG. Realised investments include
Element, Hilite, Go Outdoors, Loxam, Touchtunes and WFCI.
Alternative Investment Funds ("AIFs") At 31 March 2024, 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 2024).
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.
International Financial Reporting Standards ("IFRS") are accounting standards
issued by the International Accounting Standards Board ("IASB"). The Group's
consolidated financial statements are prepared in accordance with UK adopted
international accounting standards.
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 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.
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