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
31 March
2024
|
Year
to/as at
31 March
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
|
Gearing1
|
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
£m
|
2023
£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
|
|
38
|
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
company
|
Name of
acquisition
|
Business description of bolt-on investment
|
Date
|
Private Equity portfolio bolt-on acquisitions funded from the
portfolio company balance sheets
|
Royal Sanders
|
Lenhart
|
Manufacturer of private label
products for the personal care industry
|
April
2023
|
MAIT
|
etagis
|
Provider of production planning
software for ERP systems
|
June
2023
|
AES
|
Triseal
|
Engineering company specialising
in design, manufacture and application of mechanical seals and
associated rotating equipment
|
June
2023
|
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
company
|
Type
|
Business description
|
Date
|
3i realised
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
(31 December 2023) €m
|
Last 12
months to P12 2022
(1 January 2023) €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
(31 March 2024) €m
|
Last 3
months to P3 2023
(2 April 2023) €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
(31 March 2024) €m
|
Last 12
months to P3 2023
(2 April 2023) €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 investments1 in the year to 31
March
|
2024
£m
|
2023
£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
investments2
|
(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
Equity1 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
earnings1
|
|
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
|
companies1
|
£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
value3
|
money
|
capital
value3
|
money
|
|
2024
|
multiple4
|
2023
|
multiple4
|
Vintages
|
£m
|
2024
|
£m
|
2023
|
Buyouts
2010-20121
|
1,389
|
16.0x
|
2,968
|
15.1x
|
Growth
2010-20121
|
22
|
2.1x
|
23
|
2.1x
|
2013-20161
|
788
|
2.5x
|
814
|
2.5x
|
2016-20191
|
1,363
|
1.8x
|
1,872
|
1.8x
|
2019-20221
|
1,743
|
1.6x
|
1,524
|
1.5x
|
2022-20251
|
224
|
1.0x
|
228
|
1.0x
|
Other2
|
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
£m
|
2023
£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
|
|
invested3
|
|
earned in
|
|
Close
|
Fund
|
commitment/
|
Remaining
|
at
31 March
|
AUM
|
2024
|
Fund/strategy
|
date
|
size
|
share
|
3i
commitment
|
2024
|
£m
|
£m
|
3iN1
|
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
|
BIIF4
|
May-08
|
£680m
|
n/a
|
n/a
|
91%
|
437
|
3
|
3i North American Infrastructure
Fund
|
Dec-232
|
US$739m
|
US$300m
|
US$85m
|
75%
|
541
|
3
|
3i European Operational Projects
Fund4
|
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
|
movements1
|
2024
|
Investment
|
Valuation
|
£m
|
£m
|
£m
|
£m
|
£m
|
£m
|
3iN
|
Quoted
|
841
|
-
|
-
|
38
|
-
|
879
|
Smarte Carte
|
DCF
|
300
|
-
|
-
|
7
|
(1)
|
306
|
North American Infrastructure
Fund2
|
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
£m
|
2023
£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 (2023: £5,104m)
|
£4,077m (2023: £4,956m)
|
£3,839m (2023: £4,585m)
|
Total return on opening shareholders' funds
|
Diluted NAV per share at 31 March 2024
|
Total dividend
|
23% (2023: 36%)
|
2,085p (31 March 2023: 1,745p)
|
61.0p (31 March 2023: 53.0p)
|
Table 12: Total return for the year to 31
March
Investment basis
|
2024
£m
|
2023
£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
£m
|
2023
£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
£m
|
2023
£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
expenses1
|
(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
£m
|
2023
£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
£m
|
2023
£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
£m
|
2023
£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 assets1 and sensitivity by currency
at 31 March
|
|
|
|
1%
|
|
|
|
|
sensitivity
|
|
FX
rate
|
£m
|
%
|
£m
|
Sterling
|
n/a
|
4,817
|
24
|
n/a
|
Euro2
|
1.1695
|
13,947
|
69
|
140
|
US dollar2
|
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
£m
|
2023
£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
|
Gearing1
|
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
£m
|
2023
£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
£m
|
2023
£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
£m
|
2023
£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 on the
disposal of investments
|
1,2
|
(4)
|
5
|
1
|
169
|
(105)
|
64
|
Unrealised profits on the
revaluation of investments
|
1,2
|
3,926
|
(1,184)
|
2,742
|
3,769
|
(1,872)
|
1,897
|
Fair value movements on
investment entity subsidiaries
|
1
|
-
|
861
|
861
|
-
|
2,112
|
2,112
|
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
of foreign operations
|
1,3
|
-
|
(4)
|
(4)
|
-
|
4
|
4
|
|
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
for the year
("Total return")
|
|
3,839
|
-
|
3,839
|
4,585
|
-
|
4,585
|
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
A measure of the performance of our proprietary
investment portfolio.
|
Calculation
It is calculated as the gross investment return, as
shown in the Investment basis Consolidated statement of
comprehensive income, as a % of the opening portfolio value.
|
Reconciliation
to IFRS
The equivalent balances under IFRS and the
reconciliation to the Investment basis are shown
in the Reconciliation of the consolidated statement
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
Cash proceeds from our investments support our returns
to shareholders, as well as our ability to invest in new
opportunities.
|
Calculation
The cash received from the disposal
of investments in the year as shown
in the Investment basis Consolidated cash flow
statement.
|
Reconciliation to
IFRS
The equivalent balance under IFRS and the
reconciliation to the Investment 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
investment1
|
|
Purpose
Identifying new opportunities in which to invest
proprietary capital is the primary driver of the Group's
ability to deliver attractive returns.
|
Calculation
The cash paid to acquire investments
in the year as shown on the Investment
basis Consolidated cash flow statement.
|
Reconciliation to
IFRS
The equivalent balance under IFRS and the
reconciliation to the Investment 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
By covering the cash cost of running the business
with cash income, we reduce the potential dilution
of capital returns.
|
Calculation
The cash income from the portfolio
(interest, dividends and fees) together with fees
received from external funds less cash operating expenses and
leases payments as shown on the Investment
basis Consolidated cash flow statement. The calculation
is shown in Table 14 of the Financial review.
|
Reconciliation to
IFRS
The equivalent balance under IFRS and the
reconciliation to the Investment 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.
|
|
Net
(debt)/cash
|
|
Purpose
A measure of the available cash to invest in the
business and an indicator of the financial risk
in the Group's balance sheet.
|
Calculation
Cash and cash equivalents plus deposits less loans and
borrowings as shown on the Investment basis Consolidated
statement of financial position.
|
Reconciliation to
IFRS
The equivalent balance under IFRS and the
reconciliation to the Investment basis is shown
in the Reconciliation of the consolidated statement
of financial position.
|
|
Gearing
|
|
Purpose
A measure of the financial risk
in the Group's balance sheet.
|
Calculation
Net debt (as defined above) as a % of the Group's net
assets under the Investment basis. It cannot be less than zero.
|
Reconciliation to
IFRS
The equivalent balance under IFRS and the
reconciliation to the Investment 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
£m
|
2023
£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
£m
|
2023
£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
|
reserve1
|
reserve1
|
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
|
reserve1
|
reserve1
|
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
£m
|
2023
£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
|
Total4
|
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
|
Realisations1
|
866
|
762
|
22
|
-
|
888
|
Cash
investment2
|
(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
|
Investment3
|
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
|
Total4
|
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
|
Realisations1
|
857
|
-
|
-
|
-
|
857
|
Cash
investment2
|
(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
|
Investment3
|
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
|
Europe1
|
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
|
Europe1
|
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
pence per
share
|
2024
£m
|
2023
pence per
share
|
2023
£m
|
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
|
cost1
|
cost1
|
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 and
components
|
US
|
|
|
|
|
|
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 carts
|
US
|
|
|
|
|
received
|
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.