REG - 3i Group PLC - Full year results to 31 March 2016 <Origin Href="QuoteRef">III.L</Origin> - Part 4
19/05/2016 07:10
- Part 4: For the preceding part double click ID:nRSS6700Yc
adjustments basis basis adjustments basis
2016 2016 2016 2015 2015 2015
Notes £m £m £m £m £m £m
Assets
Non-current assets
Investments
Quoted investments 1 658 (361) 297 763 (364) 399
Unquoted investments 1 3,839 (2,596) 1,243 3,114 (1,842) 1,272
Investments in investment entity subsidiaries 1,3 - 2,680 2,680 - 2,079 2,079
Investment portfolio 4,497 (277) 4,220 3,877 (127) 3,750
Carried interest and performance 1 94 (5) 89 43 - 43
fees receivable
Other non-current assets 37 - 37 21 - 21
Intangible assets 12 - 12 19 - 19
Retirement benefit surplus 132 - 132 136 - 136
Property, plant and equipment 5 - 5 4 - 4
Deferred income taxes 3 - 3 3 - 3
Total non-current assets 4,780 (282) 4,498 4,103 (127) 3,976
Current assets
Carried interest and performance 28 - 28 45 - 45
fees receivable
Other current assets 1 53 (22) 31 64 (31) 33
Deposits 40 - 40 - - -
Cash and cash equivalents 1,2 962 (5) 957 864 (3) 861
Total current assets 1,083 (27) 1,056 973 (34) 939
Total assets 5,863 (309) 5,554 5,076 (161) 4,915
Liabilities
Non-current liabilities
Trade and other payables (27) - (27) (25) - (25)
Carried interest and performance fees payable 1 (290) 205 (85) (214) 142 (72)
Acquisition related earn-out charges payable - - - (10) - (10)
Loans and borrowings (575) - (575) (815) - (815)
Retirement benefit deficit (20) - (20) (19) - (19)
Deferred income taxes 1 (2) 2 - (3) 2 (1)
Provisions (1) - (1) (5) - (5)
Total non-current liabilities (915) 207 (708) (1,091) 144 (947)
Current liabilities
Trade and other payables 1 (107) 8 (99) (144) 17 (127)
Carried interest and performance fees payable 1 (114) 94 (20) (13) - (13)
Acquisition related earn-out charges (1) - (1) (17) - (17)
payable
Loans and borrowings (262) - (262) - - -
Current income taxes (2) - (2) (2) - (2)
Provisions (7) - (7) (3) - (3)
Total current liabilities (493) 102 (391) (179) 17 (162)
Total liabilities (1,408) 309 (1,099) (1,270) 161 (1,109)
Net assets 4,455 - 4,455 3,806 - 3,806
Equity
Issued capital 719 - 719 719 - 719
Share premium 784 - 784 784 - 784
Other reserves 4 3,006 - 3,006 2,382 - 2,382
Own shares (54) - (54) (79) - (79)
Total equity 4,455 - 4,455 3,806 - 3,806
Notes:
1 Applying IFRS 10 to the Statement of financial position aggregates the line items into the single line item "Investment in investment entities".
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 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 entities" line. We have disaggregated this fair value and disclosed the underlying portfolio holding in the relevant line item, ie, quoted equity investments or unquoted equity investments. Other items
which may be aggregated are carried interest and other payables, and the Investment basis presentation again disaggregates
these items.
2 Cash balances held in Investment entity subsidiaries are also aggregated into the "Investment in investment entities" line. At 31 March 2016
£5 million (2015: £3 million) of cash was held in subsidiaries that are now classified as Investment entity subsidiaries and is therefore included in the "Investment in investment entities" line.
3 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 Statement of financial
position for the Group. Prior to the adoption of IFRS 10, these balances would have been eliminated on consolidation.
4 Investment basis financial statements are prepared for performance measurement and therefore reserves are not analysed separately under this basis.
5 The IFRS basis is audited and the Investment basis is unaudited.
Reconciliation of consolidated cash flow statement
Investment IFRS IFRS Investment IFRS IFRS
basis adjustments basis basis adjustments basis
2016 2016 2016 2015 2015 2015
Notes £m £m £m £m £m £m
Cash flow from operating activities
Purchase of investments 1 (449) 362 (87) (474) 358 (116)
Proceeds from investments 1 771 (535) 236 841 (571) 270
Cash divestment from traded portfolio 1 - - - 21 (21) -
Cash inflow from investment entity subsidiaries 1 - 206 206 - 272 272
Net cash flow from derivatives (14) - (14) 9 - 9
Portfolio interest received 1 15 (10) 5 26 (12) 14
Portfolio dividends received 1 71 (13) 58 44 (9) 35
Portfolio fees received 7 - 7 10 - 10
Fees received from external funds 1 78 - 78 78 (1) 77
Carried interest and performance 52 - 52 6 - 6
fees received
Carried interest and performance 1 (15) 2 (13) (13) (1) (14)
fees paid
Acquisition related earn-out charges paid (30) - (30) (10) - (10)
Operating expenses 1 (134) - (134) (117) 1 (116)
Income taxes paid - - - (5) - (5)
Net cash flow from operating 352 12 364 416 16 432
activities
Cash flow from financing
activities
Dividend paid (190) - (190) (183) - (183)
Issue of shares - - - 3 - 3
Repurchase of B shares - - - (6) - (6)
Interest received 4 - 4 3 - 3
Interest paid (51) - (51) (54) - (54)
Net cash flow from financing (237) - (237) (237) - (237)
activities
Cash flow from investing
activities
Purchase of property, plant and equipment 1 (1) - (1) - - -
Net cash flow from deposits (40) - (40) - - -
Net cash flow from investing (41) - (41) - - -
activities
Change in cash and cash 2 74 12 86 179 16 195
equivalents
Cash and cash equivalents at the 2 864 (3) 861 697 (23) 674
start of year
Effect of exchange rate 1 24 (14) 10 (12) 4 (8)
fluctuations
Cash and cash equivalents at 2 962 (5) 957 864 (3) 861
the end of year
Notes:
1 The Consolidated cash flow statement is impacted by the application of IFRS 10 as cash flows to and from Investment entity subsidiaries are disclosed, rather than the cash flows to and from the underlying portfolio. Therefore in our Investment basis financial statements, we have disclosed our 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 subsidiary vehicles. Cash held within Investment entity subsidiaries will not be shown in the IFRS statements but will be seen in the Investment basis statements.
3 The IFRS basis is audited and the Investment basis is unaudited.
List of Directors and their functions
The Directors of the Company and their functions are listed below:
Simon Thompson, Chairman and Chairman of the Nominations Committee
Simon Borrows, Chief Executive and Executive Director
Julia Wilson, Group Finance Director and Executive Director
Jonathan Asquith, non-executive Director, Deputy Chairman and Chairman of the Remuneration Committee
Caroline Banszky, non-executive Director and Chairman of the Audit and Compliance Committee
Peter Grosch, non-executive Director
David Hutchison, non-executive Director and Chairman of the Valuations Committee
Martine Verluyten, non-executive Director
By order of the Board
K J Dunn
Company Secretary
18 May 2016
Registered Office: 16 Palace Street, London SW1E 5JD
Audited financial statements
Consolidated statement of comprehensive income
for the year to 31 March
2016 2015
Notes £m £m
Realised profits over value on the disposal of investments 2 11 54
Unrealised profits on the revaluation of investments 3 92 236
Fair value movements on investment entity subsidiaries 591 530
Portfolio income
Dividends 58 36
Income from loans and receivables 26 38
Fees receivable 8 6
Foreign exchange on investments 41 (49)
Gross investment return 827 851
Fees receivable from external funds 79 80
Operating expenses (132) (122)
Interest received 4 3
Interest paid (47) (49)
Movement in the fair value of derivatives - (1)
Exchange movements 65 (61)
(Expense)/income from investment entity subsidiaries (10) 1
Carried interest
Carried interest and performance fees receivable 78 80
Carried interest and performance fees payable (40) (72)
Acquisition related earn-out charges (5) (8)
Operating profit before tax 819 702
Income taxes 4 (2) (2)
Profit for the year 817 700
Other comprehensive income/(expense) that may be reclassified to the income statement
Exchange differences on translation of foreign operations 13 (27)
Other comprehensive expense that will not be reclassified to the income statement
Re-measurements of defined benefit plans (6) (14)
Other comprehensive income for the year 7 (41)
Total comprehensive income for the year ("Total return") 824 659
Earnings per share
Basic (pence) 5 85.6 73.9
Diluted (pence) 5 85.2 72.9
Dividend per share
Interim dividend per share paid (pence) 6 6.0 6.0
Final dividend per share (pence) 6 16.0 14.0
Consolidated statement of financial position
as at 31 March
2016 2015
Notes £m £m
Assets
Non-current assets
Investments
Quoted investments 297 399
Unquoted investments 1,243 1,272
Investments in investment entity subsidiaries 2,680 2,079
Investment portfolio 4,220 3,750
Carried interest and performance fees receivable 89 43
Other non-current assets 37 21
Intangible assets 12 19
Retirement benefit surplus 132 136
Property, plant and equipment 5 4
Deferred income taxes 4 3 3
Total non-current assets 4,498 3,976
Current assets
Carried interest and performance fees receivable 28 45
Other current assets 31 33
Deposits 40 -
Cash and cash equivalents 957 861
Total current assets 1,056 939
Total assets 5,554 4,915
Liabilities
Non-current liabilities
Trade and other payables (27) (25)
Carried interest and performance fees payable (85) (72)
Acquisition related earn-out charges payable - (10)
Loans and borrowings 7 (575) (815)
Retirement benefit deficit (20) (19)
Deferred income taxes 4 - (1)
Provisions (1) (5)
Total non-current liabilities (708) (947)
Current liabilities
Trade and other payables (99) (127)
Carried interest and performance fees payable (20) (13)
Acquisition related earn-out charges payable (1) (17)
Loans and borrowings 7 (262) -
Current income taxes (2) (2)
Provisions (7) (3)
Total current liabilities (391) (162)
Total liabilities (1,099) (1,109)
Net assets 4,455 3,806
Equity
Issued capital 719 719
Share premium 784 784
Capital redemption reserve 43 43
Share-based payment reserve 32 31
Translation reserve 229 216
Capital reserve 2,080 1,519
Revenue reserve 622 573
Own shares (54) (79)
Total equity 4,455 3,806
Simon Thompson
Chairman
18 May 2016
Consolidated statement of changes in equity
for the year to 31 March
Share-
Capital based
Share Share redemption payment Translation Capital Revenue Own Total
capital premium reserve reserve reserve reserve reserve shares equity
2016 £m £m £m £m £m £m £m £m £m
Total equity at the 719 784 43 31 216 1,519 573 (79) 3,806
start of the year
Profit for the year 705 112 817
Exchange differences 13 13
on translation of
foreign operations
Re-measurements of (6) (6)
defined benefit plans
Total comprehensive - - - - 13 699 112 - 824
income for the year
Share-based 15 15
payments
Release on forfeiture (14) 14 -
of share options
Exercise of share (25) 25 -
awards
Ordinary dividends (77) (77)
Additional dividends (113) (113)
Total equity at the 719 784 43 32 229 2,080 622 (54) 4,455
end of the year
Share-
Capital based
Share Share redemption payment Translation Capital Revenue Own Total
capital premium reserve reserve reserve reserve reserve shares equity
2015 £m £m £m £m £m £m £m £m £m
Total equity at the 718 782 43 19 243 1,050 542 (89) 3,308
start of the year
Profit for the year 599 101 700
Exchange differences (27) (27)
on translation of
foreign operations
Re-measurements of (14) (14)
defined benefit plans
Total comprehensive - - - - (27) 585 101 - 659
income for the year
Share-based 19 19
payments
Release on forfeiture (7) 7 -
of share options
Exercise of share (10) 10 -
awards
Ordinary dividends (77) (77)
Additional dividends (106) (106)
Issue of ordinary 1 2 3
shares
Total equity at the 719 784 43 31 216 1,519 573 (79) 3,806
end of the year
Consolidated cash flow statement
for the year to 31 March
2016 2015
£m £m
Cash flow from operating activities
Purchase of investments (87) (116)
Proceeds from investments 236 270
Cash inflow from investment entity subsidiaries 206 272
Net cash flow from derivatives (14) 9
Portfolio interest received 5 14
Portfolio dividends received 58 35
Portfolio fees received 7 10
Fees received from external funds 78 77
Carried interest and performance fees received 52 6
Carried interest and performance fees paid (13) (14)
Acquisition related earn-out charges paid (30) (10)
Operating expenses (134) (116)
Income taxes paid - (5)
Net cash flow from operating activities 364 432
Cash flow from financing activities
Issue of shares - 3
Repurchase of B shares - (6)
Dividend paid (190) (183)
Interest received 4 3
Interest paid (51) (54)
Net cash flow from financing activities (237) (237)
Cash flow from investing activities
Purchases of property, plant and equipment (1) -
Net cash flow from deposits (40) -
Net cash flow from investing activities (41) -
Change in cash and cash equivalents 86 195
Cash and cash equivalents at the start of year 861 674
Effect of exchange rate fluctuations 10 (8)
Cash and cash equivalents at the end of year 957 861
Significant 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 2016 comprise 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 number of key accounting policies are disclosed below, but where possible, accounting policies have been shown as part of
the Note to which they specifically relate in order to assist the reader's understanding.
A Compliance with International Financial Reporting Standards ("IFRS")
The Group and Company accounts have been prepared and approved by the Directors in accordance with all relevant IFRSs as
issued by the International Accounting Standards Board ("IASB"), and interpretations issued by the IFRS Interpretations
Committee, endorsed by the European Union ("EU").
The following standards, amendments and interpretations have been issued with implementation dates, subject to EU
endorsement in some cases, which do not impact on these financial statements:
Effective for annual periods beginning on or after
IFRS Annual improvements 2012 to 2014 1 January 2016
IAS 7 Disclosure initiative (amendments to IAS 7 - Statement of Cash Flows) 1 January 2017
IFRS 9 Financial instruments 1 January 2018
IFRS 15 Revenue from contracts with customers 1 January 2018
IFRS 16 Leases 1 January 2019
The impact of future standards and amendments on the financial statements is being assessed by the Group and the Company.
B Basis of preparation
The financial statements are prepared on a going concern basis as disclosed in the Directors' report.
C Basis of consolidation
(i) Subsidiaries
Subsidiaries are entities controlled by the Group. Control, as defined by IFRS 10, is achieved when the Group is exposed,
or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns
through its power over the investee. Subsidiaries are fully consolidated from the date on which the Group effectively
obtains control. They are de-consolidated from the date that control ceases.
3i Group plc is an investment entity and, as such, does not consolidate the investment entities it controls. Most of the
Group's interests in subsidiaries are recognised at fair value through profit or loss. Those subsidiaries which provide
investment related services, such as advisory, management or employment services, are not classified at fair value through
profit and loss and continue to be consolidated unless they are deemed investment entities, in which case they are fair
valued.
The acquisition method of accounting is used to account for the acquisition of subsidiaries. Under the acquisition method
of accounting, with some limited exceptions, the assets, liabilities and contingent liabilities of a subsidiary are
measured at their fair values at the date of acquisition. Any non-controlling interest is measured either at fair value or
at the non-controlling interest's proportion of the net assets acquired. Acquisition related costs are accounted for as
expenses when incurred. Any excess of the cost of acquisition over net assets is capitalised as goodwill. All intra-group
balances, transactions, income and expenses are eliminated upon consolidation.
(ii) Associates
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 statement of
financial position at fair value even though the Group may have significant influence over those companies.
(iii) Composition of the Group
The Group comprises several different types of subsidiaries. The Group re-assesses the function performed by each type of
subsidiary to determine its treatment under the IFRS 10 exception from consolidation on an annual basis. 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.
Investment managers/advisers which also hold investments - Consolidated
These entities provide investment related services through the provision of investment management or advice and also hold
investments in managed assets, typically due to regulatory reasons or investor expectations. The primary purpose of these
entities is to provide investment related services and therefore they are not classified as investment entities.
Holding companies of investment managers/advisers - Consolidated
These entities provide investment related services through their subsidiaries. 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 meet the definition of an investment entity and are classified at fair value
through profit and loss.
Portfolio investments - Fair valued
Under IFRS 10, the test for accounting subsidiaries has been altered to take wider factors of control as well as actual
equity ownership into account. At 31 March 2016, the Group had 26 investments which were classified as accounting
subsidiaries. In accordance with the investment entity exception, these entities have been held at fair value with
movements in fair value being recognised in the Consolidated statement of comprehensive income. With one exception (Palace
Street I Limited) none of these subsidiaries are UK Companies Act subsidiaries.
Structured entities - Fair valued
The Group has interests in a number of unconsolidated structured entities, their current carrying value and a description
of their activities is included in Note 8.
D Critical accounting estimates and judgements
The reported results of the Group are sensitive to the accounting policies, assumptions and estimates that underlie 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.
The judgements, assumptions and estimates involved in the Group's accounting policies that are considered by the Board to
be the most important to the portrayal of its financial condition are the fair valuation of the investment and the
assessment regarding investment entities. The investment portfolio is held at fair value. 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 is included in the Governance section of the
Annual report.
Further detail on the assessment as an investment entity is as follows:
(a) Assessment as an investment entity
Entities that meet the definition of an investment entity within IFRS 10 are required to account for most investments in
controlled entities, as well as investments in associates and joint ventures, at fair value through profit and loss.
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.
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. Further detail on our review of our application of IFRS 10 can be found in
the Reconciliation of Investment basis to IFRS section.
(b) Valuation of the defined benefit schemes
The Group also considers the valuation of the defined benefit schemes in accordance with IAS 19 to be a significant
estimate. The Group reviews its assumptions annually with its independent actuaries.
E Other accounting policies
(a) Revenue recognition
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. Investment income is analysed into the following components:
i. Realised profits or losses over value on the disposal of investments are 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
in force at the date of disposal.
ii. Unrealised profits or losses on the revaluation of investments are the movement in the carrying value of investments
between the start and end of the accounting period converted into sterling using the exchange rates in force at the date of
the movement.
iii. Fair value movements on investment entity subsidiaries are the movements in the carrying 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.
iv. 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 the Consolidated statement of comprehensive income when the
shareholders' rights to receive payment have been established. Income received on the investment in the most junior ranked
level of CLO capital is recognised as a dividend. £31 million was received in the year (2015: £16 million).
- Income from loans and receivables is recognised as it accrues by reference to the principal outstanding and the
effective interest rate applicable, which is the rate that exactly discounts the estimated future cash flows through the
expected life of the financial asset to the asset's carrying value. 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. Income received on the instruments in
the most junior level of CLO capital is recognised as a dividend as detailed above. £31 million was received in the year
(2015: £16 million).
- Fee income is earned directly from investee companies when an investment is first made and through the life of the
investment. Fees that are earned on a financing arrangement are considered to relate to a financial asset measured at fair
value through profit or loss and are recognised when that investment is made. Fees that are earned on the basis of
providing an ongoing service to the investee company are recognised as that service is provided.
v. Foreign exchange on investments arises on investments made in currencies that are different from the functional currency
of the Group entity. 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.
(b) Foreign currency translation
For the Company and those subsidiaries whose balance sheets are denominated in sterling, which is the Company's functional
and presentational currency, monetary assets and liabilities 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 the Consolidated statement of
comprehensive income.
The balance sheets of subsidiaries and associates 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 the Consolidated statement of comprehensive income in the period in which the subsidiary or associate is disposed of.
Exchange movements in relation to forward foreign exchange contracts are included within exchange movements in the
Consolidated statement of comprehensive income. During the year, a £14 million loss (2015: £12 million gain) was recognised
in exchange movements in relation to forward foreign exchange contracts.
(c) Treasury assets and liabilities
Short-term treasury assets and short and long-term treasury liabilities are used in order to manage cash flows and minimise
the overall costs of borrowing.
Cash and cash equivalents comprise cash at bank, short-term deposits 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. De-recognition 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 two bases throughout
the year. Firstly, as business divisions determined with reference to market focus, geographic focus, investment funding
model and the Group's management hierarchy. Secondly, he considers separate Proprietary Capital and Fund Management
businesses focused on investment returns and Fund Management profits respectively. A description of the activities,
including products and services offered 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.
The segmental information that follows is presented on the Investment basis which is the basis used by the Chief Executive
to monitor the performance of the Group. The remaining Notes are prepared on the IFRS basis.
Private Debt Proprietary Fund
Equity Infrastructure Management Total Capital Management Total
Year to 31 March 2016 £m £m £m £m £m £m £m
Realised profits over value on the disposal 69 3 - 72 72 - 72
of investments
Unrealised profits/(losses) on the 690 22 (43) 669 669 - 669
revaluation of investments
Portfolio income
Dividends 18 21 32 71 71 - 71
Income from loans and receivables 59 - 4 63 63 - 63
Fees receivable/(payable) 7 - (1) 6 6 - 6
Foreign exchange on investments 168 1 19 188 188 - 188
Gross investment return 1,011 47 11 1,069 1,069 - 1,069
Fees receivable from external funds 13 28 38 79 - 79 79
Synthetic fees - - - - (44) 44 -
Operating expenses1 (66) (29) (39) (134) (31) (103) (134)
Interest receivable 4 4 - 4
Interest payable (47) (47) - (47)
Exchange movements (31) (31) - (31)
Operating profit before carry 940 920 20 940
Carried interest
Carried interest and performance 58 20 5 83 83
fees receivable
Carried interest and performance (171) (15) (2) (188) (188)
fees payable
Acquisition related earn-out charges - - (5) (5) (5)
Operating profit 830 830
Income taxes - -
Other comprehensive income
Re-measurements of defined benefit (6) (6)
plans
Total return 824 824
Net divestment/(investment)
Realisations2 743 51 2 796 796 796
Cash investment3 (365) - (88) (453) (453) (453)
378 51 (86) 343 343 343
Balance sheet
Opening portfolio value at 1 April 2015 3,148 553 176 3,877 3,877 3,877
Investment4 464 - 88 552 552 552
Value disposed (674) (48) (2) (724) (724) (724)
Unrealised value movement 690 22 (43) 669
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