REG - 3i Group PLC - Full year results to 31 March 2016 <Origin Href="QuoteRef">III.L</Origin> - Part 6

3iAnnouncement

19/05/2016 07:10

- Part 6: For the preceding part double click  ID:nRSS6700Ye 

Partial disposal in the           
 European bottler of soft drinks     Benelux                                                      year                              
 and fruit juices for retailers and  2010                                                                                           
 branded customers                   Quoted                                                                                         
 Agent Provocateur*                  Private Equity     53        53        53         42                                           
 Women's lingerie and assorted       UK                                                                                             
 products                            2007                                                                                           
                                     Earnings                                                                                       
 Polyconcept                         Private Equity     48        48        22         37                                           
 Leader in promotional products      UK                                                                                             
 industry                            2005                                                                                           
                                     Earnings                                                                                       
 Etanco*                             Private Equity     87        93        40         36                                           
 Designer, manufacturer and          France                                                                                         
 distributor of fasteners and        2011                                                                                           
 fixing systems                      Earnings                                                                                       
                                                        1,632     2,029     2,647      3,567                                        
                                                                                                                                      
 
 
* Controlled in accordance with IFRS. 
 
1 Residual cost includes capitalised interest 
 
Glossary 
 
Alternative Investment Funds ("AIFs") At 31 March 2016, 3i Investments plc as AIFM, managed five AIFs. These were 3i Group
plc, 3i Growth Capital Fund, 3i Eurofund V, 3i Global Income Fund and the European Middle Market Loan Fund. 
 
Alternative Investment Fund Managers Directive ("AIFMD") became effective from July 2013. As a result, at 31 March 2016, 3i
Investments plc is registered as an Alternative Investment Fund Manager ("AIFM"), which in turn manages five AIFs. 
 
Alternative Investment Fund Manager ("AIFM") is the regulated manager of AIFs. Within 3i, this is 3i Investments plc. 
 
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. 
 
Barclays Infrastructure Fund Management business ("BIFM") Acquired by 3i in November 2013 when it managed two active
unlisted funds that invest in UK and European PPP and energy projects, with assets under management of over £700 million. 
 
Base Erosion and Profit Shifting ("BEPS") Project is an OECD initiative that was launched in 2013, at the request of the
G20 countries, to develop specific, detailed proposals, rules and instruments required to equip governments and tax
authorities to address the BEPS challenge and the proposals were delivered to and approved by the G20 leaders in November
2015. Countries are now in the process of considering and implementing changes to their domestic tax laws and international
tax treaties to give effect to the recommendations made by the BEPS project team. 
 
Board The Board of Directors of the Company. 
 
Capital redemption reserve is established in respect of the redemption of the Company's ordinary shares. 
 
Capital reserve The capital reserve recognises all profits 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 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
or received when the relevant performance hurdles are met and the accrual is discounted to reflect expected payment
periods. 
 
Carried interest receivable is generated on third-party capital over the life of the relevant fund when relevant
performance criteria are met. 
 
We pay carried interest to our investment teams on proprietary capital invested and share a proportion of carried interest
receivable from third-party funds. This total carried interest payable is provided historically by reference to two or
three-year vintages to maximise flexibility in resource planning. 
 
"CLO" - Collateralised Loan Obligation A form of securitisation where payments from multiple loans are pooled together and
passed on to different classes of owners in various tranches. 
 
Common Reporting Standard ("CRS") imposes obligations on financial groups and entities to identify and report details,
relating to the foreign investors investing in such groups and entities, to the local tax authority who then exchanges the
information with the other relevant tax authorities. 
 
Company 3i Group plc. 
 
Country by Country reporting ("CbC Reporting") refers to a requirement for large multinational groups, operating in
different countries, to file an annual report detailing certain information about the activities of the entities in the
Group, on a country by country basis, covering the countries in which the Group entities operate. This new requirement will
apply to the Group for its accounting periods beginning after 1 April 2016. 
 
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. 
 
Dividend income from equity investments and CLO capital is recognised in the Statement of comprehensive income when the
shareholders' rights to receive payment have been established. 
 
Earnings before interest, tax, depreciation and amortisation ("EBITDA") 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. 
 
Executive Committee The Executive Committee is responsible for the day-to-day running of the Group and comprises: the Chief
Executive, Group Finance Director, the Managing Partners of the Private Equity, Infrastructure and Debt Management
businesses and the Group's General Counsel. 
 
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 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. 
 
Fees receivable from external funds are fees received by the Group, from third parties, for the management of private
equity, infrastructure and debt management funds. 
 
Foreign Account Tax Compliance Act ("FATCA") is US tax legislation aimed at preventing offshore tax avoidance by US
persons. The rules impose obligations on non-US financial groups and entities to identify and report details relating to US
investors who have invested in those groups and entities. 
 
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. 
 
Fund Management A segment of the business focused on generating profits from the management of private equity,
infrastructure and debt management funds. 
 
Fund Management Operating profit comprises fee income from third parties as well as a synthetic fee received from the
Proprietary Capital business less operating expenses incurred by the Fund Management business. 
 
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 and foreign exchange movements. GIR is measured as a percentage of the opening portfolio value and is the principal
tool for assessing our Proprietary Capital business. 
 
Income from loans and receivables is recognised as it accrues. When the fair value of an investment is assessed to be below
the principal value of a loan the Group recognises a provision against any interest accrued from the date of the assessment
going forward until the investment is assessed to have recovered in value. 
 
International Financial Reporting Standards ("IFRS") are accounting standards issued by the International Accounting
Standards Board ("IASB"). The Group's consolidated financial statements are required to be prepared in accordance with
IFRS. 
 
Investment basis Accounts prepared assuming that IFRS 10 had not been introduced. Under this basis, we fair value portfolio
companies at the level we believe provides the most 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. 
 
Key Performance Indicators ("KPI") is a measure by reference to which the development, performance or position of the Group
can be measured effectively. 
 
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 Defined as the difference between our cash income (cash fees from managing third-party funds and cash
income from our proprietary capital portfolio) and our operating expenses, excluding restructuring costs. 
 
Operating profit Includes gross investment return, management fee income generated from managing external funds, the costs
of running our business, net interest payable, movements in the fair value of derivatives, other losses and carried
interest. 
 
Portfolio income is that which 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. It is comprised of
dividend income, income from loans and receivables and fee income. 
 
Proprietary Capital A segment of the business focused on generating profits from shareholders' capital which is available
to invest. 
 
Proprietary Capital operating profit Comprises gross investment return, operating expenses, a fee paid to the Fund
Management business and balance sheet funding expenses such as interest payable. 
 
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 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 that are revenue in nature or have been allocated to revenue. 
 
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. 
 
Synthetic fee Internal fee payable to the Fund Management business for managing our proprietary capital. 
 
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. 
 
Underlying fund management profit Calculated as fee income minus operating expenses related to Fund Management activities,
excluding restructuring and amortisation costs. 
 
Unrealised profits or losses on the revaluation of investments 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. 
 
Value weighted earnings growth The growth in last 12 month earnings, when comparing to the preceding 12 months. This
measure is a key driver of our private equity portfolio performance. 
 
This information is provided by RNS
The company news service from the London Stock Exchange