REG - 3i Group PLC - Half Yearly Report <Origin Href="QuoteRef">III.L</Origin> - Part 4
12/11/2015 07:02
- Part 4: For the preceding part double click ID:nRSL4327Fc
liabilities
Carried interest and performance 1 (224) 152 (72) (214) 142 (72)
fees payable
Acquisition related earn-out charges payable - - - (10) - (10)
Loans and borrowings (819) - (819) (815) - (815)
Retirement benefit deficit (20) - (20) (19) - (19)
Deferred income taxes (1) 1 - (3) 2 (1)
Provisions 1 (3) - (3) (5) - (5)
Total non-current liabilities (1,067) 153 (914) (1,066) 144 (922)
Current liabilities
Trade and other payables 1 (135) 18 (117) (169) 17 (152)
Carried interest and performance 1 (22) 12 (10) (13) - (13)
fees payable
Acquisition related earn-out charges payable (20) - (20) (17) - (17)
Current income taxes 1 (4) - (4) (2) - (2)
Provisions 1 (5) - (5) (3) - (3)
Total current liabilities (186) 30 (156) (204) 17 (187)
Total liabilities (1,253) 183 (1,070) (1,270) 161 (1,109)
Net assets 3,851 - 3,851 3,806 - 3,806
Equity
Issued capital 719 - 719 719 - 719
Share premium 784 - 784 784 - 784
Other reserves 4 2,401 - 2,401 2,382 - 2,382
Own shares (53) - (53) (79) - (79)
Total equity 3,851 - 3,851 3,806 - 3,806
Notes:
1 Applying IFRS 10 to the Statement of financial position aggregates the line items of a number of previously consolidated subsidiaries into the single line item investments 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, consistent with prior periods. 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 investments or unquoted 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 30 September 2015, £5 million of cash was held in subsidiaries that are now classified as Investment entity subsidiaries and is
therefore included in the investments 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 of 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.
Reconciliation of Cash flow statement
6 months to 30 September 2015 6 months to 30 September 2014
Investment IFRS IFRS Investment IFRS IFRS
basis adjustments basis basis adjustments basis
(unaudited) (unaudited)
(restated)1
Note £m £m £m £m £m £m
Cash flow from operating activities
Purchase of investments 2 (294) 206 (88) (199) 95 (104)
Proceeds from investments 2 359 (180) 179 324 (217) 107
Cash divestment from traded portfolio 2 - - - 7 (7) -
Net cash flow (to)/from Investment entity subsidiaries 2 - (24) (24) - 144 144
Portfolio interest received 2 3 - 3 18 (7) 11
Portfolio dividends received 2 36 (4) 32 20 (5) 15
Portfolio fees received 4 - 4 4 - 4
Fees received from external funds 37 - 37 37 - 37
Carried interest and performance fees received 49 - 49 4 - 4
Carried interest and performance fees paid 2 (18) 1 (17) (11) - (11)
Acquisition related earn-out charges paid (11) - (11) (10) - (10)
Operating expenses 2 (76) - (76) (71) 8 (63)
Interest received 2 - 2 1 - 1
Interest paid (11) - (11) (15) - (15)
Income taxes paid 1 - 1 (3) - (3)
Net cash flow from operating activities 81 (1) 80 106 11 117
Cash flow from financing activities
Purchase of B shares - - - (6) - (6)
Dividend paid (133) - (133) (126) - (126)
Net cash flow from derivatives - - - 2 - 2
Net cash flow from financing activities (133) - (133) (130) - (130)
Cash flow from investing activities
Purchases of property, plant and equipment (1) - (1) - - -
Net cashflow to deposits (140) - (140) - - -
Net cash flow from investing activities (141) - (141) - - -
Change in cash and cash equivalents 3 (193) (1) (194) (24) 11 (13)
Cash and cash equivalents at the start of the period 3 864 (3) 861 697 (23) 674
Effect of exchange rate fluctuations 2 (4) (1) (5) (3) 1 (2)
Cash and cash equivalents at the end of the period 3 667 (5) 662 670 (11) 659
Notes:
1 Restated. See Note 12 of the IFRS financial statements.
2 The 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.
3 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.
IFRS FINANCIAL STATEMENTS
Condensed consolidated statement of comprehensive income
for the six months to 30 September 2015
Six months to Six months to
30 September 30 September
2015 2014
(unaudited) (unaudited)
(restated)1
Notes £m £m
Realised profits over value on the disposal of investments 2 12 6
Unrealised profits on the revaluation of investments 3 1 104
Fair value movements on Investment entity subsidiaries 7 207 219
220 329
Portfolio income
Dividends 32 15
Income from loans and receivables 13 18
Fees receivable 5 3
Foreign exchange on investments (1) (31)
Gross investment return 269 334
Fees receivable from external funds 37 42
Operating expenses (63) (63)
Interest received 2 1
Interest paid (24) (26)
Movement in the fair value of derivatives - (1)
Exchange movements (4) (33)
(Expense)/income from fair value subsidiaries (31) 10
Other income - 1
Carried interest
Carried interest and performance fees receivable (10) 19
Carried interest and performance fees payable (17) (22)
Acquisition related earn-out charges (4) (5)
Operating profit before tax 155 257
Income taxes - (3)
Profit for the period 155 254
Other comprehensive income that may be reclassified to the income statement:
Exchange differences on translation of foreign operations 14 (13)
Other comprehensive income that will not be reclassified to the income statement:
Re-measurements of defined benefit plans (1) (7)
Other comprehensive income for the period 13 (20)
Total comprehensive income for the period ("Total return") 168 234
Earnings per share
Basic (pence) 4 16.3 26.8
Diluted (pence) 4 16.2 26.6
1 Restated. See Note 12.
Condensed consolidated statement of financial position
as at 30 September 2015
30 September 31 March
2015 2015
(unaudited) (audited)
Notes £m £m
Assets
Non-current assets
Investments
Quoted investments 6 319 399
Unquoted investments 6 1,136 1,272
Investments in Investment entities 7 2,417 2,079
Investment portfolio 3,872 3,750
Carried interest and performance fees receivable 28 43
Intangible assets 16 19
Retirement benefit surplus 137 136
Property, plant and equipment 4 4
Deferred income taxes 3 3
Total non-current assets 4,060 3,955
Current assets
Carried interest and performance fees receivable - 45
Other current assets 59 54
Deposits 140 -
Cash and cash equivalents 662 861
Total current assets 861 960
Total assets 4,921 4,915
Liabilities
Non-current liabilities
Carried interest and performance fees payable (72) (72)
Acquisition related earn-out charges payable - (10)
Loans and borrowings 9 (819) (815)
Retirement benefit deficit (20) (19)
Deferred income taxes - (1)
Provisions (3) (5)
Total non-current liabilities (914) (922)
Current liabilities
Trade and other payables (117) (152)
Carried interest and performance fees payable (10) (13)
Acquisition related earn-out charges payable (20) (17)
Current income taxes (4) (2)
Provisions (5) (3)
Total current liabilities (156) (187)
Total liabilities (1,070) (1,109)
Net assets 3,851 3,806
Equity
Issued capital 719 719
Share premium 784 784
Capital redemption reserve 43 43
Share-based payment reserve 27 31
Translation reserve 230 216
Capital reserve 1,518 1,519
Revenue reserve 583 573
Own shares (53) (79)
Total equity 3,851 3,806
Condensed consolidated statement of changes in equity
For the six months to Share-
30 September 2015
(unaudited)
Capital based
Share Share redemption payment Translation Capital Revenue Own Total
capital premium reserve reserve reserve reserve reserve shares Equity
£m £m £m £m £m £m £m £m £m
Total equity at the start of 719 784 43 31 216 1,519 573 (79) 3,806
the period
Profit for the period - - - - - 108 47 - 155
Exchange differences on translation of foreign operations - - - - 14 - - - 14
Re-measurements of defined benefit plans - - - - - (1) - - (1)
Total comprehensive incomefor the period - - - - 14 107 47 - 168
Share-based payments - - - 10 - - - - 10
Release on exercise/forfeiture of share options - - - (14) - - 14 - -
Loss on sale of own shares - - - - - (26) - 26 -
Ordinary dividends - - - - - - (51) - (51)
Additional dividends - - - - - (82) - - (82)
Issue of ordinary shares - - - - - - - - -
Total equity at the end of 719 784 43 27 230 1,518 583 (53) 3,851
the period
For the six months to Share-
30 September 2014
(unaudited)(restated)1
Capital based
Share Share redemption payment Translation Capital Revenue Own Total
capital premium reserve reserve reserve reserve reserve shares Equity
£m £m £m £m £m £m £m £m £m
Total equity at the start of 718 782 43 19 243 1,050 542 (89) 3,308
the period
Profit for the period1 - - - - - 195 59 - 254
Exchange differences on translation of foreign operations1 - - - - (13) - - - (13)
Re-measurements of defined benefit plans - - - - - (7) - - (7)
Total comprehensive incomefor the period - - - - (13) 188 59 - 234
Share-based payments - - - 9 - - - - 9
Release on exercise/forfeiture of share options - - - (4) - - 4 - -
Loss on sale of own shares - - - - - (9) - 9 -
Ordinary dividends - - - - - - (51) - (51)
Additional dividends - - - - - (75) - - (75)
Issue of ordinary shares - 1 - - - - - - 1
Total equity at the end of 718 783 43 24 230 1,154 554 (80) 3,426
the period
1 In accordance with the restatement detailed in Note 12, the capital reserve at 1 April 2014 has been restated from £1,051 million to £1,050 million and the translation reserve has been restated from £242 million to £243 million. We have restated the capital reserve profit for the period from £197 million to £195 million and the exchange differences on translation of foreign operations from £(15) million to £(13) million.
Condensed consolidated cash flow statement
for the six months to 30 September 2015
Six months to Six months to
30 September 30 September
2015 2014
(unaudited) (unaudited)
(restated)1
£m £m
Cash flow from operating activities
Purchase of investments (88) (104)
Proceeds from investments 179 107
Net cash flow (to)/from Investment entity subsidiaries (24) 144
Portfolio interest received 3 11
Portfolio dividends received 32 15
Portfolio fees received 4 4
Fees received from external funds 37 37
Carried interest and performance fees received 49 4
Carried interest and performance fees paid (17) (11)
Acquisition related earn-out charges (11) (10)
Operating expenses (76) (63)
Interest received 2 1
Interest paid (11) (15)
Income taxes paid 1 (3)
Net cash flow from operating activities 80 117
Cash flow from financing activities
Dividend paid (133) (126)
Repurchase of B shares - (6)
Net cash flow from derivatives - 2
Net cash flow from financing activities (133) (130)
Cash flow from investing activities
Purchase of property, plant and equipment (1) -
Net cash flow to deposits (140) -
Net cash flow from investing activities (141) -
Change in cash and cash equivalents (194) (13)
Cash and cash equivalents at the start of the period 861 674
Effect of exchange rate fluctuations (5) (2)
Cash and cash equivalents at the end of the period 662 659
1 Restated. See Note 12.
Notes to the financial statements
BASIS OF PREPARATION AND ACCOUNTING POLICIES
A Compliance with International Financial Reporting Standards ("IFRS")
The Half-yearly condensed consolidated financial statements of 3i Group plc have been prepared in accordance with the
Disclosure Rules and Transparency Rules of the Financial Conduct Authority and IAS 34 'Interim Financial Reporting' as
issued by the International Accounting Standards Board ('IASB') and as endorsed by the EU. These Half-yearly consolidated
financial statements should be read in conjunction with the Annual report and accounts 2015.
Standards applied during the half year to 30 September 2015
There were no new standards applied during the half year to 30 September 2015. During the period, 3i Group plc applied a
number of interpretations and amendments to standards as part of the IFRS lifecycle proposals which had an insignificant
effect on these Half-yearly condensed consolidated financial statements.
The financial information for the year ended 31 March 2015 contained within this Half-yearly report does not constitute
statutory accounts as defined in Section 434 of the Companies Act 2006. The statutory accounts for the year to 31 March
2015, prepared under IFRS, have been reported on by Ernst and Young LLP and delivered to the Registrar of Companies. The
report of the Auditor on these statutory accounts was unqualified and did not contain a statement under section 498(2) or
section 498(3) of the Companies Act 2006.
B Use of estimates and judgements
The preparation of the Half-yearly report requires management to make judgements, estimates and assumptions that affect the
application of policies and reported amounts of assets and liabilities, income and expenses. The estimates and underlying
assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the
estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the
revision affects both current and future periods. The most significant techniques for estimation are described in the
accounting policies on pages 90 to 128 of the Annual report and accounts 2015 and in "Portfolio valuation - an
explanation". There was no change in the current period to the critical accounting estimates and judgements applied in
2015, which are stated on pages 91 to 92 of the Annual report and accounts 2015.
C Composition of Group
There were no material changes in the composition of the 3i Group in the half year to 30 September 2015.
D Future accounting developments
Information on future accounting developments and their potential effect on the financial statements of 3i are provided on
page 90 of the Annual report and accounts 2015.
E Going concern
The financial statements are prepared on a going concern basis.
F Accounting policies
The accounting policies applied by 3i Group for these Half-yearly condensed consolidated financial statements are
consistent with those described on pages 90 to 128 of the Annual report and accounts 2015, as are the methods of
computation. Consistent with prior year, income on the most junior level of CLO capital is recognised as a dividend. £14
million (September 2014: £6 million) was received in the period.
1 Segmental analysis
The tables below are presented on the Investment basis which is the basis used by the chief-operating-decision-maker, the
Chief Executive, to monitor the performance of the Group. A description of the Investment basis is provided in the
Financial review and a reconciliation of the Investment basis to the IFRS financial statements is provided after Principal
risks and uncertainties. Further detail on the Group's segmental analysis can be found on pages 93-95 of the Annual report
and accounts 2015. The remaining Notes are prepared on an IFRS basis.
Investment basis Private Debt Proprietary Fund
Six months to 30 September Equity Infrastructure Management Total Capital Management Total
2015 £m £m £m £m £m £m £m
Realised profits over value on the disposal of investments 26 3 - 29 29 - 29
Unrealised profits/(losses) on the revaluation of investments 174 11 (18) 167 167 - 167
Portfolio income
Dividends 11 11 14 36 36 - 36
Income from loans and receivables 26 - 2 28 28 - 28
Fees receivable/(payable) 6 - (1) 5 5 - 5
Foreign exchange on investments 3 (2) 6 7 7 - 7
Gross investment return 246 23 3 272 272 - 272
Fees receivable from external funds 6 14 17 37 - 37 37
Synthetic fees - - - - (21) 21 -
Operating expenses (31) (14) (18) (63) (15) (48) (63)
Interest receivable 2 2 - 2
Interest payable (24) (24) - (24)
Exchange movements (10) (10) - (10)
Operating profit before carry 214 204 10 214
Carried interest and performance fees
Receivable from external funds (8) - 5 (3) (3)
Payable (36) - (3) (39) (39)
Acquisition related - - (4) (4) (4)
earn-out charges
Operating profit 168 168
Income taxes 1 1
Other comprehensive income
Re-measurements of defined benefit plans (1) (1)
Total return 168 168
Net divestment/
(investment)
Realisations 307 51 1 359 359 359
Cash investment (208) - (86) (294) (294) (294)
99 51 (85) 65 65 65
Balance sheet
Opening portfolio value at 1 April 2015 3,148 553 176 3,877 3,877 3,877
Investment 252 - 86 338 338 338
Value disposed (281) (48) (1) (330) (330) (330)
Unrealised value movement 174 11 (18) 167 167 167
Other movement (18) (3) 6 (15) (15) (15)
Closing portfolio value at 30 September 2015 3,275 513 249 4,037 4,037 4,037
Investment basis Private Debt Proprietary Fund
Six months to 30 September Equity Infrastructure Management Total Capital Management Total
2014 £m £m £m £m £m £m £m
Realised profits over value on the disposal of investments 34 1 - 35 35 - 35
Unrealised profits/(losses) on the revaluation of investments 308 9 (10) 307 307 - 307
Portfolio income
Dividends 5 10 6 21 21 - 21
Income from loans and receivables 27 - 3 30 30 - 30
Fees receivable/(payable) 3 - (1) 2 2 - 2
Foreign exchange on investments (95) 2 (5) (98) (98) - (98)
Gross investment return 282 22 (7) 297 297 - 297
Fees receivable from external funds 9 14 18 41 - 41 41
Synthetic fees - - - - (22) 22 -
Operating expenses (31) (14) (18) (63) (13) (50) (63)
Interest receivable 1 1 - 1
Interest payable (26) (26) - (26)
Movement in the fair value of derivatives (1) (1) - (1)
Exchange movements 25 25 - 25
Other income 1 1 - 1
Operating profit before carry 275 262 13 275
Carried interest and performance fees
Receivable from external funds 7 8 4 19 19
Payable (36) (7) (2) (45) (45)
Acquisition related - - (5) (5) (5)
earn-out charges
Operating profit 244 244
Income taxes (3) (3)
Other comprehensive income
Re-measurements of defined benefit plans (7) (7)
Total return 234 234
Net divestment/
(investment)
Realisations 316 8 - 324 324 324
Cash investment (104) - (95) (199) (199) (199)
212 8 (95) 125 125 125
Balance sheet
Opening portfolio value at 1 April 2014 2,935 487 143 3,565 3,565 3,565
Investment 159 - 95 254 254 254
Value disposed (282) (7) - (289) (289) (289)
Unrealised value movement 308 9 (10) 307 307 307
Other movement (136) 2 (31) (165) (165) (165)
Closing portfolio value at 30 September 2014 2,984 491 197 3,672 3,672 3,672
2 Realised profits over value on the disposal of investments
Six months to 30 September 2015 Unquoted Quoted
investments investments Total
£m £m £m
Realisations 148 31 179
Valuation of disposed investments (138) (29) (167)
10 2 12
Of which:
- - profit recognised on realisations 10 2 12
- losses recognised on realisations - - -
10 2 12
Six months to 30 September 2014 Unquoted Quoted
investments investments Total
(restated) (restated) (restated)
£m £m £m
Realisations 107 - 107
Valuation of disposed investments (101) - (101)
6 - 6
Of which:
- - profit recognised on realisations 7 - 7
- losses recognised on realisations (1) - (1)
6 - 6
3 Unrealised profits/(losses) on the revaluation of investments
Six months to 30 September 2015 Unquoted Quoted
investments investments Total
£m £m £m
Movement in the fair value of investments (14) 15 1
Of which:
- unrealised gains 46 15 61
- unrealised losses (60) - (60)
(14) 15 1
Six months to 30 September 2014 Unquoted Quoted
investments investments Total
(restated) (restated) (restated)
£m £m £m
Movement in the fair value of investments 93 11 104
Of which:
- unrealised gains 142 11 153
- unrealised losses (49) - (49)
93 11 104
4 Per share information
The calculation of basic earnings per share is based on the profit attributable to shareholders and the number of basic
average shares. When calculating the diluted earnings per share, the weighted average number of shares in issue is adjusted
for the effect of all dilutive share options and awards.
6 months 6 months
to 30 September to 30 September
2015 2014
(restated)
Earnings per share (pence)
Basic 16.3 26.8
Diluted 16.2 26.6
Earnings (£m)
Profit for the period attributable to equity holders of the Company 155 254
6 months 6 months
to 30 September to 30 September
2015 2014
Number Number
Weighted average number of shares in issue
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