REG - 3i Group PLC - Results for the six months to 30 September 2024
14/11/2024 07:00
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RNS Number : 1661M 3i Group PLC 14 November 2024
14 November 2024
3i Group plc announces results for the six months
to 30 September 2024
3i Group delivered good financial performance in the first half of FY2025
• Total return of £2,046 million or 10% on opening shareholders' funds
(September 2023: £1,669 million, 10%). NAV per share of 2,261 pence (31 March
2024: 2,085 pence), including a 48 pence per share loss on foreign exchange
translation (September 2023: 11 pence per share loss), and after the payment
of the 34.50 pence per share second FY2024 dividend in July 2024.
• Our Private Equity business delivered a gross investment return of £2,071
million or 11% (September 2023: £1,826 million, 11%). Action continues to
deliver impressive results, and the majority of our other portfolio companies
are trading resiliently against mixed macroeconomic performance across Europe
and the US and wider geopolitical uncertainty. 94% of our Private Equity
portfolio companies by value grew earnings in the 12 months to 30 June 2024.
• Action generated net sales of €9,567 million (nine reporting periods
ended P9 2023: €7,912 million), operating EBITDA of €1,344 million (nine
reporting periods ended P9 2023: €1,065 million) and like-for-like ("LFL")
sales growth of 9.8% in the nine reporting periods ending on 29 September 2024
("P9"). This strong performance supported value growth of £2,170 million for
Action in the period. Following another successful refinancing and pro-rata
share redemption, 3i received proceeds of £1,164 million from Action in the
period and we reinvested a total of £768 million, increasing our gross equity
stake from 54.8% to 57.9%.
• In the ten reporting periods ending 27 October 2024, Action's net sales
and operating EBITDA were 21% and 26% ahead of the same period last year and
LFL sales growth over the same period was 10.1%. At that date, Action's cash
balance was €830 million.
• Our Private Equity team completed the realisation of nexeye and signed the
realisation of WP in the period. Total proceeds generated of £662 million,
achieving sterling money multiples of 2x or greater. The team also completed a
new investment in Constellation (£98 million) and a further five bolt-on
acquisitions, the majority of which were funded from the portfolio companies'
own balance sheets.
• Our Infrastructure business generated a gross investment return of £43
million, or 3% (September 2023: £31 million, 2%). This was driven primarily
by a 4% increase in 3i Infrastructure plc's ("3iN") share price in the
six-month period to 30 September 2024. 3iN's underlying portfolio continues to
perform well, and exits have been achieved at premiums to the opening 31 March
2024 values, as evidenced by the offer received for Valorem and by the partial
syndication of Future Biogas. We also completed two bolt-on acquisitions for
two investments in our North American Infrastructure Fund.
• We ended the period with liquidity of £1,286 million, net debt of £805
million and gearing of 4%. The first dividend of 30.5 pence per share for
FY2025, set at 50% of the total dividend for FY2024, will be paid in January
2025.
Simon Borrows, 3i's Chief Executive, commented:
"Against an uncertain geopolitical environment and weak growth across much of
Europe, we move into the second half of FY2025 with a portfolio that is well
positioned to build on a solid first half.
Action is the major contributor to our returns and continues to produce
sector-leading growth. With a strong business and financial model and
significant white space to expand into, we believe it will continue to do so
for many years to come. In addition, the leading companies in our portfolio
are performing strongly and a number of the portfolio companies that were
adversely impacted by challenges in 2023 are beginning to turn the corner and
see improved trading.
We have seen good momentum across our investment and realisation activity in
the half and we have a good pipeline of high-quality realisations for the next
12 months. We also have some interesting potential opportunities in our
investment pipeline, which we will continue to review in a disciplined way and
progress those that are most attractive."
Summary financial highlights under the Investment basis
3i prepares its statutory financial statements in accordance with UK adopted
international accounting standards. However, we also report a non-GAAP
"Investment basis", which we believe aids users of our report to assess the
Group's underlying operating performance. The Investment basis (which is
unaudited) is an alternative performance measure ("APM") and is described
later in this document. Total return and net assets are the same under the
Investment basis and IFRS and we provide a reconciliation of our Investment
basis financial statements to the IFRS statements later in this document. The
first page of this document until the end of the Financial review is prepared
on an Investment basis.
Six months to/as Six months to/as 12 months to/as
at 30 September at 30 September at 31 March
Investment basis 2024 2023 2024
Total return1 £2,046m £1,669m £3,839m
Percentage return on opening shareholders' funds 10% 10% 23%
Dividend per ordinary share 30.5p 26.5p 61.0p
Gross investment return2 £2,137m £1,867m £4,168m
As a percentage of opening 3i portfolio value 10% 10% 23%
Cash investment2 £893m £84m £593m
Realisation proceeds £1,553m £19m £888m
3i portfolio value £22,953m £20,255m £21,636m
Gross debt £1,191m £1,208m £1,202m
Net debt2 £805m £1,153m £806m
Gearing2 4% 6% 4%
Liquidity £1,286m £955m £1,296m
Diluted net asset value per ordinary share ("NAV per share") 2,261p 1,886p 2,085p
1 Total return is defined as Total comprehensive income for the year, under
both the Investment basis and the IFRS basis.
2 Financial measure defined as APM. Further information can be found later in
this document.
Disclaimer
These half-year results have been prepared solely to provide information to
shareholders. They should not be relied on by any other party or for any other
purpose. These half-year results may contain statements about the future,
including certain statements about the future outlook for 3i Group plc and its
subsidiaries ("3i" or "the Group"). 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.
Enquiries:
Silvia Santoro, Group Investor Relations Director 020 7975 3258
Kathryn van der Kroft, Communications Director 020 7975 3021
A PDF copy of this release can be downloaded from
www.3i.com/investor-relations (http://www.3i.com/investor-relations)
For further information, including a live webcast of the results presentation
at 10.00am on 14 November 2024, please visit www.3i.com/investor-relations
(http://www.3i.com/investor-relations)
3i Group Half-year report 2024
Chief Executive's review
The Group delivered good financial performance in the first half, generating a
total return of £2,046 million in the six months to 30 September 2024, or 10%
on opening shareholders' funds (September 2023: £1,669 million, 10%). NAV per
share at 30 September 2024 was 2,261 pence (31 March 2024: 2,085 pence),
including a 48 pence per share loss on foreign exchange translation (September
2023: 11 pence per share loss) and after the payment of the 34.50 pence per
share second FY2024 dividend in July 2024.
Action continues to produce impressive results, with sales, EBITDA and cash
generation ahead of our expectations. We received proceeds of £1,164 million
from Action in the period, following another successful refinancing and
pro-rata share redemption, and subsequently completed a significant
reinvestment of £768 million, further increasing our ownership position.
Despite a muted macroeconomic backdrop across Europe and moderate growth in
the US economy, the majority of our other portfolio companies have
demonstrated resilient performance in the period, and we are seeing the
gradual unwind of some of the challenges which weighed on performance in 2023.
Against a difficult realisation market, which is showing some signs of
improvement, we secured two significant Private Equity realisations,
generating total proceeds of £662 million, both at sterling money multiples
of 2x or greater, and one at a good premium to our 31 March 2024 value.
Likewise, our Infrastructure business maintained its track record of
delivering significant uplifts on exit, following the receipt of a binding
offer for an existing portfolio company and a partial syndication of another.
We also deployed capital into a new Private Equity investment and saw good
buy-and-build momentum across both portfolios in the period.
Private Equity
The Private Equity portfolio delivered a gross investment return ("GIR") of
£2,071 million in the period, or 11% on opening value. This includes a £456
million loss on foreign exchange translation, after the impact of foreign
exchange hedging, due to the strengthening of sterling in the period. Action
generated a GIR of £1,827 million in the period, or 13% over its opening
value. In the 12 months to the end of 30 June 2024, 94% of our portfolio
companies by value grew earnings.
Action performance
In the nine reporting periods ending on 29 September 2024 ("P9"), Action
generated net sales of €9,567 million (nine reporting periods ended P9 2023:
€7,912 million) and operating EBITDA of €1,344 million (nine reporting
periods ended P9 2023: €1,065 million), 21% and 26% ahead of the same period
last year. Over the same period, LFL sales growth was 9.8%, driven by strong
growth in customer transactions, outperformance in everyday necessities and a
small negative price effect. LFL sales growth for the same period last year
was 19.2%.
Action's strategy of passing through deflation in purchase prices to customers
and sharing the benefits of increasing buying power continues to resonate well
with Action's customers in what remains a tough cost of living environment.
Action generated an EBITDA margin of 14.0% in the first nine reporting periods
of the year compared to 13.5% in the same period last year and remains focused
on cost discipline against industry-wide upward pressure on, amongst others,
wages and container prices.
Action added 189 stores in the first nine reporting periods of the year (nine
reporting periods ended P9 2023: 153 stores) and is now on track to add
approximately 350 stores this year. Its store roll-out across Italy, Portugal,
Slovakia and Spain, its most recent expansion markets, is ahead of our
expectations.
In July 2024, Action successfully completed a refinancing event, raising
€2.1 billion in total, including a second US dollar term loan of $1.5
billion and a €700 million term loan. It also completed a capital
restructuring with a pro-rata redemption of shares, returning £1,164 million
(€1,374 million) of gross proceeds to 3i. Alongside a number of existing LPs
in the 2020 Co-Investment Programme, 3i took the opportunity to acquire
further shares in Action and, including one small further purchase of an
existing LP stake in Action later in the period, 3i reinvested a total of
£768 million in Action, increasing 3i's gross equity stake from 54.8% to
57.9%.
At 30 September 2024, Action was valued using the last 12 months ("LTM")
run-rate earnings to 29 September 2024 of €2,065 million. This includes our
normal run-rate adjustment to reflect stores opened in the last 12 months. At
that date, Action's valuation net debt, post the refinancing event, comprised
total senior debt of c.€6.6 billion and cash of €733 million, resulting in
a net debt to run-rate EBITDA ratio of 2.9x. Our valuation multiple remains
unchanged at 18.5x net of the liquidity discount, resulting in a valuation of
£15,543 million (31 March 2024: £14,158 million) for 3i's 57.9% equity stake
at 30 September 2024.
Action continues to outperform a broad range of discount competitors, across
all relevant operating KPIs. Its consistent and unrelenting focus on the
customer is what gives us confidence in its ability to continue to execute its
growth opportunity in existing and new countries. Action's excellent growth
meant its valuation at 30 September 2023 of 18.5x LTM run-rate EBITDA
translated to 14.6x of the run-rate EBITDA achieved a year later.
Strong trading momentum has continued into Action's P10 (30 September 2024 to
27 October 2024), generating net sales of €1,166 million and operating
EBITDA of €188 million for that reporting period. Cash at the end of P10 was
€830 million and Action added a further 31 stores in P10, taking the total
number of stores added to 220 in the ten reporting periods to 27 October 2024.
Action has good product availability ahead of the key trading period in the
remainder of the final quarter of the year.
Other Private Equity portfolio performance
The Private Equity portfolio, excluding Action, delivered a GIR of £244
million, or 4% on opening value in the period, or 6% excluding the net loss on
foreign exchange translation. Our portfolio companies operating in the
value-for-money and private label sectors have continued to perform well and
we are also seeing some encouraging developments across some of our industrial
and healthcare assets.
Royal Sanders continued to deliver significant organic growth in the first
half of 2024, with strong volumes across its key customers, supported by
outperformance across its bolt-on acquisitions. The most recent self-funded
acquisition of Karium, a platform of established brands across the hair care,
body care and skin care categories, strengthens the brands division within
Royal Sanders and provides significant growth opportunities. European Bakery
Group ("EBG") traded resiliently in the period, despite pressure on selected
input costs and wage inflation. After a period of strong cash generation, EBG
returned proceeds of £22 million to 3i, within 12 months of 3i's further
investment to support the acquisition of coolback in 2023.
Audley Travel performed strongly across its US and UK markets in the period
and continues to demonstrate an excellent post-Covid recovery. It continues to
gain share in both markets. MPM continues to grow well across all of its
markets, in particular the US, its largest market.
After a challenging 2023, Tato saw a good recovery in sales volumes and
improved profitability in the first half of 2024. While its input costs have
largely stabilised, a tougher competitive dynamic is driving pricing pressure
across its end markets and is expected to persist through the second half of
2024.
Cirtec Medical delivered strong top-line growth and improved margins in the
period, driven by increased demand from customers across its product range and
by operational improvements. The business continues to see a robust pipeline
across its end markets and has a number of new programmes that will launch
into production during late 2024 and the first half of 2025. SaniSure saw
encouraging bookings momentum in the first half of 2024 and, while the
recovery has not been linear, momentum has continued through the second half
of 2024 and the order book development is pointing to a more positive 2025, as
customer destocking ends and normal ordering patterns return. Whilst a broader
recovery across the bioprocessing market has taken longer than expected,
market consensus is for a return to attractive growth in 2025-2026.
MAIT completed two further bolt-on acquisitions in the period and has traded
resiliently, as its focus on mission-critical enterprise resource planning and
product lifecycle management areas has limited the impact of softening
discretionary spending on IT hardware. xSuite is making good progress with its
SaaS transition plan, with recurring sales performing ahead of expectations.
WilsonHCG continues to operate through a weak white-collar recruitment market.
Against this backdrop, the business has maintained its core customer base
through strong service and secured new customer wins, while right sizing its
resourcing and operations for the current lower demand environment. We
invested a further £4 million in WilsonHCG in the period to support the
near-term requirements of the business. Konges Sløjd has seen softer
business-to-business sales across its main geographies but has maintained
stable margins.
Private Equity investment and realisation activity
Despite some signs of improvement, the Private Equity transaction market
remains challenging. Against this backdrop, we have maintained our price
discipline and deployed our capital selectively, whilst continuing our
rigorous focus on asset management. We invested £98 million in Constellation,
an IT managed services provider specialised in hybrid cloud and cyber
security. We have also continued to support the development of ten23 health,
our contract development and manufacturing organisation ("CDMO") platform,
with a further investment of £30 million.
We secured two significant realisations in the period. In July 2024, we
completed the sale of nexeye, a company which we supported financially when
its stores were closed during stages of the pandemic and which doubled its
sales and EBITDA during our period of ownership. This realisation achieved a
small profit over 31 March 2024 value and returned proceeds of £382 million
which, combined with distributions already received during our ownership,
resulted in a sterling money multiple of 2.0x. In July 2024, we also signed an
agreement to sell our stake in WP, in which we initially invested in 2015 and
which has since grown to become a leading provider of innovative plastic
packaging solutions with a strong presence across Europe and Latin America.
This transaction completed in October 2024, at an 18% profit over 31 March
2024 value, delivering proceeds of £280 million including interest income of
£3 million which, combined with the £45 million of proceeds received earlier
in our period of ownership, results in a sterling money multiple of 2.2x.
Infrastructure
In the six months to 30 September 2024, our Infrastructure portfolio generated
a GIR of £43 million, or 3% on opening value.
3iN generated a total return on its opening NAV of 5.1% in the six months to
30 September 2024, resulting in a NAV of 374.7 pence per share, driven by good
underlying portfolio performance. Tampnet performed well in the period,
supported by revenue growth in its fixed units in the North Sea and Gulf of
Mexico and TCR continues to see strong demand for its rental offering. SRL
has, however, seen softer trading across its core rental business as a result
of a wider market downturn.
In the period, 3iN invested £30 million to support Future Biogas's
acquisition of a 51% stake in a portfolio of six anaerobic digestion plants.
At the end of September 2024, 3iN completed the syndication of 23% of its
stake in Future Biogas to an external investor, at a 15% uplift on 31 March
2024 value. At the beginning of October 2024, 3iN received a binding offer for
its stake in Valorem. Subject to acceptance of the offer, the expected net
proceeds of €309 million represent a 15% uplift on 31 March 2024 value and a
money multiple of 3.5x.
3iN's share price increased to 341 pence at 30 September 2024 (31 March 2024:
327 pence). Whilst this increase in the share price largely reflects improved
market sentiment for the infrastructure asset class, 3iN continues to trade at
a discount to its 30 September 2024 NAV, even after several periods of
outperformance from its portfolio and the business delivering another
realisation significantly above carrying value.
We have seen good buy-and-build momentum in our North American Infrastructure
Fund with both Regional Rail and Amwaste completing bolt-on acquisitions in
the period. Smarte Carte commenced cart operations in London Heathrow in June
2024, and steady US and international passenger numbers were reflected in its
volumes across its various offerings in the period.
Scandlines continues to show resilience. The leisure segment had a record peak
summer season, whilst freight remained stable against a benign macroeconomic
backdrop. Cash generation remains strong and 3i received a dividend of £12
million from Scandlines in the period.
Balance sheet, liquidity, foreign exchange and dividend
We ended the period with cash of £386 million (31 March 2024: £396 million)
and total liquidity of £1,286 million (31 March 2024: £1,296 million),
including an undrawn RCF of £900 million. Net debt was £805 million, with
gearing of 4% (31 March 2024: £806 million, 4%). Since the end of the period,
we received proceeds of £280 million from the realisation of WP.
We continued to reduce the carried interest liability associated with Action,
with carry crystallisation payments totalling £283 million in the period,
meaning our equity stake in Action, after the reinvestment in the period and
net of the carried interest liability, has increased to 57.4% (31 March 2024:
53.2%). Going forward, the Buyouts 2010-12 vintage (which relates to our
investment in Action) will accrue net carried interest payable at a rate of
less than 1% (31 March 2024: c.3%) of Action's GIR.
Due to the strengthening of sterling in the period, we recorded a total
foreign exchange translation loss of £466 million (September 2023: £107
million loss), including a gain on foreign exchange hedging.
In line with our dividend policy, we will pay a first FY2025 dividend of 30.5
pence per share, which is half of our FY2024 total dividend. This first FY2025
dividend will be paid to shareholders on 10 January 2025.
Outlook
Against an uncertain geopolitical environment and weak growth across much of
Europe, we move into the second half of FY2025 with a portfolio that is well
positioned to build on a solid first half.
Action is the major contributor to our returns and continues to produce
sector-leading growth. With a strong business and financial model and
significant white space to expand into, we believe it will continue to do so
for many years to come. In addition, the leading companies in our portfolio
are performing strongly and a number of the portfolio companies that were
adversely impacted by challenges in 2023 are beginning to turn the corner and
see improved trading.
We have seen good momentum across our investment and realisation activity in
the half, and we have a good pipeline of high-quality realisations for the
next 12 months. We also have some interesting potential opportunities in our
investment pipeline, which we will continue to review in a disciplined way and
progress those that are most attractive.
Simon Borrows
Chief Executive
13 November 2024
Business and Financial review
Private Equity
Our Private Equity portfolio generated a GIR of £2,071 million (September
2023: £1,826 million), or 11% of the opening portfolio value (September 2023:
11%), including a loss on foreign exchange on investments, after the impact of
foreign exchange hedging, of £456 million (September 2023: £127 million
loss).
Table 1: Gross investment return for the six months to 30 September
2024 2023
Investment basis £m £m
Realised profits over value on the disposal of investments 11 1
Unrealised profits on the revaluation of investments 2,467 1,907
Dividends 5 -
Interest income from investment portfolio 40 40
Fees receivable 4 5
Foreign exchange on investments (555) (146)
Movement in fair value of derivatives 99 19
Gross investment return 2,071 1,826
Gross investment return as a % of opening portfolio value 11% 11%
Investment and realisation activity
In July 2024, Action raised €2.1 billion in a refinancing event and also
completed a capital restructuring with a pro-rata redemption of shares. 3i
received total proceeds £1,164 million from this share redemption. 3i,
alongside a number of existing LPs in the 2020 Co-Investment Programme, took
the opportunity to acquire further shares in Action and, including one small
further purchase of an existing LP stake in Action later in the period, it
reinvested a total of £768 million in Action, increasing 3i's gross equity
stake from 54.8% to 57.9%.
In the period, we invested £98 million to acquire Constellation, a hybrid
cloud and cybersecurity managed services provider, which is well positioned to
be a key consolidator in a fragmented IT services French market. We also
invested a total of £44 million across further and bolt-on investments, of
which £30 million related to a further investment in ten23 health, £5
million to support xSuite's bolt-on acquisition of tangro, and £4 million to
support WilsonHCG through current market headwinds. Following good performance
and cash generation, we received £22 million back from EBG as a return of
funding within 12 months of our investment to support its acquisition of
coolback in 2023.
Our portfolio companies completed four self-funded bolt-on acquisitions,
including two for MAIT and one for Royal Sanders, which continued their
significant buy-and-build growth strategies, and one for AES, which expanded
its product offering in North America.
We secured two significant realisations in the period, crystallising money
multiples of 2x or greater. In July 2024, we completed the sale of nexeye,
which achieved a small profit over 31 March 2024 value and returned proceeds
of £382 million which, combined with distributions already received during
our ownership, resulted in a sterling money multiple of 2.0x. In July 2024, we
also agreed the realisation of WP. This transaction completed in October 2024,
at an 18% profit over 31 March 2024 value, delivering proceeds of £280
million which, combined with the £45 million of proceeds received earlier in
the period of ownership, results in a sterling money multiple of 2.2x.
In total, in the period to 30 September 2024, 3i invested £888 million in
Private Equity (September 2023: £50 million) and generated total proceeds of
£1,548 million (September 2023: £1 million).
Table 2: Private Equity cash investment in the six months to 30 September 2024
Portfolio company Type Business description/ bolt-on description Date £m
Constellation New IT managed services provider July 2024 98
Total new investment 98
Action Reinvestment General merchandise discount retailer various 768
Total reinvestment 768
ten23 health Further Biologics focused CDMO various 30
WilsonHCG Further Global provider of recruitment process outsourcing and other talent solutions September 2024 4
Other Further n/a various 5
Total further investment 39
xSuite Further tangro: Specialist in inbound document management software June 2024 5
Total further investment for bolt-on investment 5
Total Private Equity gross investment 910
European Bakery Group Return of investment Industrial bakery group specialised in home bake-off bread and snack products July 2024 (22)
Total return of investment (22)
Total Private Equity net investment 888
Table 3: Private Equity portfolio bolt-on acquisitions funded by the portfolio
company
in the six months to 30 September 2024
Portfolio company Name of acquisition Business description of bolt-on investment Date
MAIT CAD N'ORG Provider of software and consulting services April 2024
MAIT ISAP Provider of consulting services April 2024
Royal Sanders Karium Platform of established brands across the hair care, body care and skin care June 2024
categories
AES Condition Monitoring Services Reliability service provider August 2024
Table 4: Private Equity realisations in the six months to30 September 2024
Profit on
Calendar 3i realised Profit opening
year first proceeds in the period1 value2 Money
Investment Country invested £m £m % multiple3 IRR
Full realisation
nexeye Netherlands 2017 382 10 3% 2.0x 10%
Refinancing
Action Netherlands 2011 1,164 - -% n/a n/a
Other realisations
Others n/a n/a 2 1 n/a n/a n/a
Total Private Equity realisations 1,548 11 n/a n/a n/a
1 Cash proceeds realised in the period less opening value.
2 Profit in the year over opening value.
3 Cash proceeds over cash invested. Money multiples are quoted on a GBP basis.
Portfolio performance
Table 5: Unrealised profits/(losses) on the revaluation of Private Equity
investments1
in the six months to 30 September
2024 2023
Investment basis £m £m
Earnings based valuations
Action performance 2,170 1,810
Performance increases (excluding Action) 319 353
Performance decreases (excluding Action) (66) (219)
Multiple movements 8 (23)
Other bases
Discounted cash flow (16) (5)
Quoted portfolio 9 (31)
Other movements in unquoted investments (1) 22
Imminent sale 44 -
Total 2,467 1,907
1 More information on our valuation methodology, including definitions and
rationale, is included in our Annual report and accounts 2024 on page 217.
Action performance and valuation
As detailed in the Chief Executive's review, Action performed strongly in the
period.
At 30 September 2024, Action continued to be valued using its LTM run-rate
earnings to the end of P9 2024 of €2,065 million, which included our normal
adjustment to reflect stores opened in the last 12 months. We continue to
value Action at a multiple of 18.5x net of the liquidity discount (31 March
2024: 18.5x). Its performance across key operating KPIs continues to compare
favourably against all peers that we use to benchmark its results. Whilst the
overall average multiple of the peer group reduced marginally in the period,
the top quartile peers within this group continue to outperform and maintain
their premium rating. In addition, recent transactions with 3i and various LPs
in the co-investment vehicles have taken place at a 3i carrying value of
Action, providing further support for our valuation mark.
Action ended P9 2024 with a cash balance of €733 million and a net debt to
LTM run-rate earnings ratio of 2.9x. This result is after the refinancing
event which took place in July 2024.
At 30 September 2024, the valuation of our 57.9% stake in Action was £15,543
million (31 March 2024: 54.8%, £14,158 million). We recognised unrealised
profits from Action of £2,170 million (September 2023: £1,810 million), as
shown in Table 5.
Table 6: Action financial metrics
Last nine months to P9 2024 Last nine months to P9 2023
(29 September 2024) (1 October 2023)
Financial metrics €m €m
Net sales 9,567 7,912
LFL sales growth 9.8% 19.2%
Operating EBITDA 1,344 1,065
Operating EBITDA margin 14.0% 13.5%
Net new stores added 189 153
Last 12 months to P9 2024 Last 12 months to P9 2023
(29 September 2024) (1 October 2023)
€m €m
Net sales 12,979 10,710
Operating EBITDA 1,894 1,530
Operating EBITDA margin 14.6% 14.3%
Run-rate EBITDA 2,065 1,634
Performance (excluding Action)
Excluding Action, the Private Equity portfolio valued on an earnings basis
generated £319 million of value growth from performance increases in the
period (September 2023: £353 million), more than offsetting £66 million of
performance decreases (September 2023: £219 million).
Royal Sanders performed strongly in the period, with continued growth at key
customers and its recent bolt-on acquisitions, including the most recent
self-funded acquisition of Karium. EBG sustained good trading in the period
despite persistent pricing and input cost headwinds, demonstrating the high
quality of the business.
Audley Travel saw impressive UK and US booking volumes in the period and is
expecting a strong end to 2024, with full coverage across its order book
already achieved. MPM continues to grow its presence in the US market, while
continuing to outperform in its more mature markets.
Tato returned to growth in the first half of 2024, as end-market demand has
gradually improved, resulting in increased volumes. Its margins have
benefitted from substantially lower input costs compared to the prior year.
Tato continues to experience intensifying pricing competition, which is
expected to persist through the second half of 2024.
Commercial traction at Cirtec Medical has led to a robust pipeline across all
parts of its business, with demand from new and existing customers
contributing to a positive result in the period. SaniSure saw solid
improvement across all of its key metrics in the first half of 2024 and is
making good progress in strategic initiatives across high value R&D
developments. While the recovery from post-Covid destocking has not been
entirely linear, leading to inconsistent near-term trading, bookings momentum
remains strong and indicative of a return to attractive growth in 2025-2026.
MAIT traded resiliently in the period despite softer IT hardware spend in its
markets. Its recent bolt-on acquisitions position the business well for
further consolidation of a fragmented market and for capitalising on
increasing demand for its services. Operating in a similar market environment,
Evernex has delivered stable top line growth, benefitting from significant
contract wins towards the end of 2023. xSuite's SaaS transition is well
progressed, leading to an increased proportion of recurring revenue. tangro,
its most recent acquisition, is already contributing to the business
positively.
Over the last 18 months, reduced employee turnover and lower new hiring
activity has impacted the US recruitment industry, impacting performance at
WilsonHCG. A recovery to more typical turnover levels remains slow as
employees continue to "stay put", albeit we are beginning to see some initial
encouraging indicators across the US economy. We will continue to support
Wilson through these headwinds. We have seen some softer performance from
Konges Sløjd, which is being impacted by a slowdown in orders following
constrained customer spending, as well as from Dynatect, which has been
impacted by the delayed ramp of a key contract.
Overall, 94%1 of our Private Equity portfolio companies by value grew LTM
adjusted earnings in the 12 months to 30 June 2024.
1 Based on LTM adjusted earnings to June 2024. Includes 29 companies.
Table 7: Portfolio earnings growth of the top 20 Private Equity investments1
3i carrying value
Number of companies at 30 September 2024
at 30 September 2024 £m
<0% 5 1,058
0-9% 5 1,374
10-19% 6 1,147
20-29% 2 15,638
≥30% 2 945
1 Includes top 20 Private Equity companies by value excluding ten23 health and
WP. This represents 96% of the Private Equity portfolio by value (31 March
2024: 96%). LTM adjusted earnings to 30 June 2024 and Action based on LTM
run-rate earnings to P9 2024. P9 2024 runs to 29 September 2024.
Leverage
Our Private Equity portfolio is funded with all senior debt structures, with
long-dated maturity profiles. As at 30 September 2024, 90% of portfolio
company debt was repayable from 2027 to 2031. Average leverage was 3.1x at 30
September 2024 (31 March 2024: 2.7x). Excluding Action, leverage across the
portfolio was 3.7x (31 March 2024: 3.9x). Table 8 shows the ratio of net debt
to adjusted earnings by portfolio value at 30 September 2024.
Table 8: Ratio of net debt to adjusted earnings1
3i carrying value
Number of companies at 30 September 2024
at 30 September 2024 £m
<1x 1 39
1-2x 3 338
2-3x 4 16,045
3-4x 5 1,336
4-5x 2 201
5-6x 4 1,317
>6x 2 2
1 This represents 92% of the Private Equity portfolio by value (31 March 2024:
91%). Quoted holdings, ten23 health, WP and companies with net cash are
excluded from the calculation. Net debt and adjusted earnings as at 30 June
2024. Action based on net debt at P9 2024 and LTM run-rate earnings to P9
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
transactions and exit plans, as well as 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.
Global indices have generally performed well over the period, despite the
geopolitical uncertainty, as inflation has begun to stabilise, leading to
interest rate cuts. We moved one multiple up and one down in the period,
reflecting relative momentum in trading. This resulted in a net
multiple-driven unrealised value gain of £8 million in the period (September
2023: £23 million unrealised value loss).
Action's valuation multiple at 30 September 2024 remained unchanged at 18.5x
net of the liquidity discount. Based on the valuation at that date, a 1x
movement in Action's post-discount multiple would increase or decrease the
valuation of 3i's investment by £994 million.
Quoted portfolio
Basic-Fit is the only quoted investment in our Private Equity portfolio. We
recognised an unrealised value gain of £9 million from Basic-Fit in the
period (September 2023: unrealised value loss of £31 million) as its share
price increased to €23.42 at 30 September 2024 (31 March 2024: €20.68). At
30 September 2024, our residual 5.7% shareholding was valued at £74 million
(31 March 2024: £67 million).
Imminent sale
Following the agreement reached to sell WP in July 2024, we valued the
business on an imminent sale basis as at 30 September 2024, at an 18% profit
over 31 March 2024 value. This transaction completed in October 2024.
Sum of the parts
ten23 health was valued on a sum of the parts basis as at 30 September 2024,
mainly using a discounted cash flow ("DCF") methodology.
Assets under management
The assets under management of the Private Equity business, including
third-party capital, increased to £28.3 billion (31 March 2024: £27.5
billion) principally due to unrealised value movements offset by net
divestment and foreign exchange losses in the period.
Private Equity 3i proprietary capital by vintage
The performance of our vintages (Table 9) is driven by our portfolio
companies. The primary driver of the Other category is Action and Royal
Sanders, both of which have provided strong value contribution in the period.
Table 9: Private Equity 3i proprietary capital
3i proprietary capital value3 Vintage 3i proprietary capital value3 Vintage
30 September 2024 money multiple4 31 March 2024 money multiple4
Vintages1 £m 30 September 2024 £m 31 March 2024
2013-2016 859 2.6x 788 2.5x
2016-2019 985 1.8x 1,363 1.8x
2019-2022 1,738 1.6x 1,743 1.6x
2022-2025 299 0.9x 224 1.0x
Other2 17,049 n/a 15,511 n/a
Total 20,930 19,629
1 Assets included in these vintages are disclosed in the Glossary which can be
found later in this document.
2 Includes Action's value of £15,543 million for a 57.9% stake (31 March
2024: £14,158 million, 54.8% stake) held directly and indirectly via
co-investment vehicles.
3 3i carrying value is the unrealised value for the remaining investments in
each vintage.
4 Vintage money multiple (GBP) includes realised and unrealised value as at
the reporting date for all investments in the vintage.
Table 10: Private Equity assets by sector
3i carrying value
at 30 September 2024
Sector Number of companies £m
Action (Consumer) 1 15,543
Consumer & Private Label 12 2,111
Healthcare 4 1,244
Industrial 6 1,167
Services & Software 13 865
Total 36 20,930
Infrastructure
Our Infrastructure portfolio generated a GIR of £43 million in the period, or
3% on the opening portfolio value (September 2023: £31 million, 2%),
including a loss on foreign exchange translation of investments of £28
million (September 2023: £8 million gain).
Table 11: Gross investment return for the six months to 30 September
2024 2023
Investment basis £m £m
Realised losses over value on the disposal of investments - (3)
Unrealised profits on the revaluation of investments 47 2
Dividends 18 18
Interest income from investment portfolio 6 6
Foreign exchange on investments (28) 8
Gross investment return 43 31
Gross investment return as a % of opening portfolio value 3% 2%
Fund management
3iN
In the six months to 30 September 2024, 3iN generated a total return on
opening NAV of 5.1% (September 2023: 6.3%) and is on track to meet its
dividend target for the year to 31 March 2025 of 12.65 pence per share, up
6.3% year-on-year.
Across 3iN's underlying portfolio, Tampnet performed well in the period,
driven by sustained offshore activity and demand for bandwidth upgrades. The
business continues to expand its fibre network, with new developments across
the Gulf of Mexico. TCR continues to experience strong commercial momentum and
has secured notable new contract wins. 3iN also saw good contributions in the
period from Joulz, Global Cloud Xchange and Infinis. We have seen softer
performance from SRL following a continued reduction in market activity levels
as a result of reduced local authority capital expenditure. DNS:NET is now
tracking more closely to expectations as it continues its fibre rollout across
Germany.
In August 2024, Future Biogas acquired a 51% stake in a portfolio of six
anaerobic digestion facilities for £68 million, of which £30 million was
funded by 3iN. In September 2024, 3iN syndicated 23% of its stake in Future
Biogas for proceeds of £30 million, at a 15% uplift to 31 March 2024 value.
After the period end, 3iN received a binding offer for its 33% stake in
Valorem for anticipated proceeds of €309 million, a 15% uplift on 31 March
2024 value. The transaction is expected to complete in Q1 2025, subject to
acceptance of the offer and regulatory clearances.
As its investment manager, 3i received a management fee from 3iN of £26
million in the period (September 2023: £25 million).
North American Infrastructure Fund
The assets within this Fund delivered resilient trading overall in the period.
EC Waste saw good performance across its collection contracts and transfer
stations and Regional Rail benefitted from higher demand across its railroads.
It continued to expand its network, adding 70 miles of track in Ohio through
the bolt-on acquisition of Cincinnati Eastern Railroad. Amwaste saw mixed
trading in the period and completed a bolt-on with the acquisition of C&C
Sanitation, furthering both collection and post-collection services in
Georgia. In the period, we invested £4 million across the bolt-on
acquisitions in the Fund and received a distribution of £5 million from
Regional Rail. All assets were valued on a DCF basis at 30 September 2024.
Other funds
3i Managed Infrastructure Acquisitions LP performed in line with expectations
in the period.
Assets under management
Infrastructure AUM decreased to £6.2 billion at 30 September 2024 (31 March
2024: £6.7 billion), reflecting the sale of our operational projects
infrastructure fund capability in May 2024. We generated fee income of £31
million from our fund management activities in the period (September 2023:
£34 million).
Table 12: Assets under management as at 30 September 2024
Fee
income
3i Remaining % invested2 earned in
Close Fund commitment/ 3i at September AUM3 the period
Fund/strategy date size share commitment 2024 £m £m
3iN1 Mar-07 n/a £918m n/a n/a 3,145 26
3i Managed Infrastructure Acquisitions LP Jun-17 £698m £35m £5m 87% 1,444 2
3i managed accounts various n/a n/a n/a n/a 758 2
3i North American Infrastructure Fund Dec-234 US$744m US$300m US$78m 76% 531 1
US Infrastructure Nov-17 n/a n/a n/a n/a 283 -
Total 6,161 31
1 AUM based on the share price at 30 September 2024.
2 % invested is the capital deployed into investments against the total Fund
commitment.
3 We completed the sale of our operational projects infrastructure fund
capability in May 2024, which managed the BIIF and 3i European Operational
Projects Funds ("3i EOPF"), with total AUM of £796 million at 31 March 2024.
We have retained our direct proprietary stake in 3i EOPF, which has been
excluded from the table above.
4 First close completed in March 2022. Final close completed in December 2023.
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
funds.
Quoted stake in 3iN
At 30 September 2024, our 29% stake in 3iN was valued at £918 million (31
March 2024: £879 million) as its share price increased by 4% to 341 pence in
the period (31 March 2024: 327 pence). We recognised an unrealised gain of
£39 million (September 2023: unrealised loss of £23 million) and £16
million of dividend income (September 2023: £15 million) in the period.
North America Infrastructure proprietary capital
Smarte Carte performed resiliently in the period as it continues to benefit
from improved contract economics, as well as from ongoing business development
initiatives including expansion of its international airport footprint with
commencement of cart operations at London Heathrow Airport, a new carts
contract win at Sydney International Airport and near completed roll-out of
450 new United States Postal Service lockers. At 30 September 2024, the
business was valued on a DCF basis.
Table 13: Unrealised profits/(losses) on the revaluation of Infrastructure
investments1
in the six months to 30 September
2024 2023
£m £m
Quoted 39 (23)
DCF 5 22
Fund/other 3 3
Total 47 2
1 More information on our valuation methodology, including definitions and
rationale, is included in our Annual report and accounts 2024 on page 217.
Scandlines
Scandlines generated a GIR of £23 million (September 2023: £10 million) or
4% of opening portfolio value in the period (September 2023: 2%).
Table 14: Gross investment return for the six months to 30 September
2024 2023
Investment basis £m £m
Unrealised profit on the revaluation of investments 13 -
Dividends 12 10
Foreign exchange on investments (15) (7)
Movement in fair value of derivatives 13 7
Gross investment return 23 10
Gross investment return as a % of opening portfolio value 4% 2%
Performance
Scandlines performed steadily in the period. The leisure segment had a record
peak summer season, whilst freight continued to deliver stable volumes in a
challenging market environment. Cash generation remains strong and 3i received
a dividend of £12 million in the period. At 30 September 2024, Scandlines was
valued at £519 million (31 March 2024: £519 million) on a DCF basis.
Foreign exchange
We hedge the balance sheet value of our investment in Scandlines for foreign
exchange translation risk. We recognised a loss of £15 million on foreign
exchange translation (September 2023: £7 million loss) offset by a fair value
gain of £13 million (September 2023: £7 million) from derivatives in our
hedging programme.
Overview of financial performance
We generated a total return of £2,046 million, or a profit on opening
shareholders' funds of 10%, in the six months to 30 September 2024 (September
2023: £1,669 million, or 10%). The diluted NAV per share at 30 September 2024
increased to 2,261 pence (31 March 2024: 2,085 pence) including the 48 pence
per share loss on foreign exchange translation in the period (September 2023:
11 pence per share loss), and after the payment of the second FY2024 dividend
of £332 million, or 34.5 pence per share in July 2024 (September 2023: £286
million, 29.75 pence per share).
Table 15: Gross investment return for the six months to 30 September
2024 2023
Investment basis £m £m
Private Equity 2,071 1,826
Infrastructure 43 31
Scandlines 23 10
Gross investment return 2,137 1,867
Gross investment return as a % of opening portfolio value 10% 10%
The GIR was £2,137 million in the period (September 2023: £1,867 million),
and includes a £486 million foreign exchange loss on translation of our
investments (September 2023: £119 million loss), net of the impact of foreign
exchange hedging in the period. Further information on the drivers of GIR can
be found in the Private Equity, Infrastructure and Scandlines business
reviews.
Table 16: Operating cash (loss) / profit for the six months to 30 September
2024 2023
Investment basis £m £m
Cash fees from external funds 33 38
Cash portfolio fees - 6
Cash portfolio dividends and interest 48 44
Cash income 81 88
Cash operating expenses1 (83) (82)
Operating cash (loss)/profit (2) 6
1 Cash operating expenses include operating expenses paid and lease payments.
We generated an operating cash loss of £2 million in the period (September
2023: £6 million profit). Cash income decreased to £81 million (September
2023: £88 million), principally due to the sale of our operational projects
infrastructure fund capability in May 2024. Cash operating expenses incurred
during the period remained broadly in line with the prior period at £83
million (September 2023: £82 million). We expect to end our financial year
with an operating cash profit based on our expected pipeline of cash income
more than offsetting cash operating expenditure in the second half of FY2025.
Net foreign exchange movements
The Group recorded a total foreign exchange translation loss of £466 million
(September 2023: £107 million loss), including the impact of foreign exchange
hedging in the period as a result of sterling strengthening by 3% against the
euro, and by 6% against the US dollar.
At 30 September 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.
Table 17 sets out the sensitivity of net assets to foreign exchange movements
at 30 September 2024 after the hedging programme.
Table 17: Net assets1 and sensitivity by currency at 30 September 2024
Net 1%
assets sensitivity
FX rate £m % £m
Sterling n/a 4,904 22 n/a
Euro2 1.2020 15,619 72 156
US dollar2 1.3414 1,146 5 11
Danish krone 8.9603 197 1 2
Other n/a 28 - n/a
Total 21,894
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 from foreign exchange hedging.
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 and when cash proceeds have
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 Private Equity (excluding Action), we typically accrue net carried interest
payable of c.12% of GIR and for Action the net carried interest payable
accrual is now c.1% (March 2024: c.3%) of Action's GIR, based on the
assumption that all investments are realised at their balance sheet value.
In the period to 30 September 2024, we reduced our carried interest and
performance fees payable balance to £464 million (31 March 2024: £818
million), primarily driven by the crystallisation of the net carried interest
liability in the Buyouts 2010-2012 carry scheme of £283 million, which
relates principally to Action. As a result of these payments and the
reinvestment in Action in the period (see Private Equity section later in this
document for further details), our net holding in Action, after carried
interest, is now 57.4% (31 March 2024: 53.2%).
The strong performance of Action in the Buyouts 2010-2012 vintage and the good
performance of a number of other portfolio companies in our other vintages in
Private Equity led to a £42 million (September 2023: £147 million) carried
interest payable expense in the period.
The carried interest and performance fees cash paid in the period was £381
million (September 2023: £510 million). The total performance fees and
carried interest cash received in the period was £44 million (September 2023:
£37 million), primarily from Infrastructure.
Overall, the effect of the income statement charge of £48 million (September
2023: £176 million), cash payments of £381 million (September 2023: £510
million), as well as currency translation meant that the balance sheet carried
interest and performance fees payable was £464 million (31 March 2024: £818
million).
Table 18: Carried interest and performance fees for the six months to 30
September
2024 2023
Investment basis Statement of comprehensive income £m £m
Carried interest and performance fees receivable
Infrastructure - 21
Total - 21
Carried interest and performance fees payable
Private Equity (42) (147)
Infrastructure (6) (29)
Total (48) (176)
Net carried interest payable (48) (155)
Table 19: Carried interest and performance fees
30 September 31 March
2024 2024
Investment basis Statement of financial position £m £m
Carried interest and performance fees receivable
Private Equity 4 5
Infrastructure - 42
Total 4 47
Carried interest and performance fees payable
Private Equity (456) (803)
Infrastructure (8) (15)
Total (464) (818)
Table 20: Carried interest and performance fees paid for the six months to 30
September
2024 2023
Investment basis cash flow statement £m £m
Carried interest and performance fees paid
Private Equity 370 492
Infrastructure 11 18
Total 381 510
Balance sheet and liquidity
At 30 September 2024, the Group had net debt of £805 million (31 March 2024:
£806 million) and gearing of 4% (31 March 2024: 4%) following the nexeye
realisation and the net inflow from the Action transaction, offsetting the
payment of carried interest and performance fees of £381 million and the
second FY2024 dividend of £332 million. Since the end of the period, we
received total proceeds of £280 million from the realisation of WP.
The Group had liquidity of £1,286 million at 30 September 2024 (31 March
2024: £1,296 million), comprising cash and deposits of £386 million (31
March 2024: £396 million) and an undrawn RCF of £900 million (31 March 2024:
£900 million).
The investment portfolio value increased to £22,953 million at 30 September
2024 (31 March 2024: £21,636 million), mainly driven by unrealised profits of
£2,527 million in the period.
In May 2024, the UK defined benefit pension plan ("the Plan") completed a full
buy-out. As at 30 September 2024, no pension liability or insured assets
remain. The Plan's only remaining assets are those surplus assets that were
not needed to complete the buy-out.
Table 21: Simplified consolidated balance sheet
30 September 31 March
2024 2024
Investment basis Statement of financial position £m £m
Investment portfolio 22,953 21,636
Gross debt (1,191) (1,202)
Cash and deposits 386 396
Net debt (805) (806)
Carried interest and performance fees receivable 4 47
Carried interest and performance fees payable (464) (818)
Other net assets 206 111
Net assets 21,894 20,170
Gearing1 4% 4%
1 Gearing is net debt as a percentage of net assets.
Going concern
The Half-year consolidated financial statements are prepared on a going
concern basis following the assessment by the Directors, taking into account
the Group's current performance and outlook.
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 later in this document. The table below
defines our additional APMs and should be read in conjunction with our Annual
report and accounts 2024.
Gross investment return as a percentage of opening portfolio value
Purpose Calculation Reconciliation to IFRS
A measure of the performance of our proprietary investment portfolio. For It is calculated as the gross investment return, as shown in the Investment The equivalent balances under IFRS and the reconciliation to the Investment
further information, see the Group KPIs in our Annual report and accounts basis consolidated statement of comprehensive income, as a % of the opening basis are shown in the Reconciliation of consolidated statement of
2024. portfolio value. comprehensive income and the Reconciliation of consolidated statement of
financial position respectively.
Cash realisation
Purpose Calculation Reconciliation to IFRS
Cash proceeds from our investments support our returns to shareholders, as The cash received from the disposal of investments in the period as shown in The equivalent balance under IFRS and the reconciliation to the Investment
well as our ability to invest in new opportunities. For further information, the Investment basis consolidated cash flow statement. basis is shown in the Reconciliation of consolidated cash flow statement.
see the Group KPIs in our Annual report and accounts 2024.
Cash investment
Purpose Calculation Reconciliation to IFRS
Identifying new opportunities in which to invest proprietary capital is the The cash paid to acquire investments and recognising syndications in the The equivalent balance under IFRS and the reconciliation to the Investment
primary driver of the Group's ability to deliver attractive returns. For period as shown on the Investment basis consolidated cash flow statement. basis is shown in the Reconciliation of consolidated cash flow statement.
further information, see the Group KPIs in our Annual report and accounts
2024.
Operating cash profit/(loss)
Purpose Calculation Reconciliation to IFRS
By covering the cash cost of running the business with cash income, we reduce The cash income from the portfolio (interest, dividends and fees) together The equivalent balance under IFRS and the reconciliation to the Investment
the potential dilution of capital returns. For further information, see the with fees received from external funds less cash operating expenses and leases basis is shown in the Reconciliation of consolidated cash flow statement.
Group KPIs in our Annual report and accounts 2024. payments as shown on the Investment basis consolidated cash flow statement.
The calculation is shown in Table 16 of the Overview of financial performance.
Net cash/(net debt)
Purpose Calculation Reconciliation to IFRS
A measure of the available cash to invest in the business and an indicator of Cash and cash equivalents plus deposits less loans and borrowings as shown on The equivalent balance under IFRS and the reconciliation to the Investment
the financial risk in the Group's balance sheet. the Investment basis consolidated statement of financial position. basis is shown in the Reconciliation of consolidated statement of financial
position.
Gearing
Purpose Calculation Reconciliation to IFRS
A measure of the financial risk in the Group's balance sheet. Net debt (as defined above) as a % of the Group's net assets under the The equivalent balance under IFRS and the reconciliation to the Investment
Investment basis. It cannot be less than zero. basis is shown in the Reconciliation of consolidated statement of financial
position.
Principal risks and uncertainties
3i's risk appetite statement, approach to risk management and governance
structure are set out in the Risk section of the Annual report and accounts
2024, which can be accessed on the Group's website at www.3i.com
(http://www.3i.com) .
The Half-year report provides an update on 3i's strategy and business
performance, as well as on market conditions, which is relevant to the Group's
overall risk profile and should be viewed in the context of the Group's risk
management framework and principal risks as disclosed in the Annual report and
accounts 2024.
Principal risks
The principal risks to the achievement of the Group's strategic objectives are
reported on pages 89 to 93 of the Annual report and accounts 2024, and
categorised into four main areas:
External - External risks from external factors including political, legal,
regulatory, economic and competitor changes, which affect the Group's
investment portfolio and operations.
Investment - Investment risks in respect of specific asset investment
decisions, the subsequent performance of an investment or exposure
concentrations across business line portfolios.
Operational - Operational risks from inadequate or failed processes, people
and systems or from external factors affecting these.
Capital management - Capital management risks in relation to the management of
capital resources including liquidity risk, currency exposures and leverage
risk.
The principal risks and risk mitigation plans are reviewed quarterly by the
Group Risk Committee and have remained broadly similar over the half-year
period. During the period, the risk of "Government fiscal and economic policy
changes" was promoted from the watchlist to a principal risk due to the
increasing pressure on government deficits across core markets causing likely
changes in fiscal and economic policies and creating uncertainty for
businesses.
The principal risks and uncertainties are expected to be substantially the
same over the remaining six months of the financial year. They continue to be
closely monitored and may be subject to change.
Reconciliation of the Investment basis to IFRS
Background to Investment basis used in the Half-year report
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 investment entity
subsidiaries that were previously consolidated line by line. This fair value
approach, applied at the investment entity subsidiary level, effectively
obscures the performance of our proprietary capital investments and associated
transactions occurring in the investment entity subsidiaries.
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 include a
separate non-GAAP "Investment basis" consolidated statement of comprehensive
income, financial position and cash flow. The Investment basis is an APM and
the Chief Executive's review and the Business and Financial review are
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.
A more detailed explanation of the effect of IFRS 10 is provided in the Annual
report and accounts 2024 on page 75.
Reconciliation between 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 later in this
document.
Reconciliation of consolidated statement of comprehensive income
Six months to 30 September 2024 Six months to 30 September 2023
Investment IFRS IFRS Investment IFRS IFRS
basis adjustments basis basis adjustments basis
(unaudited) (unaudited) (unaudited) (unaudited) (unaudited) (unaudited)
Notes £m £m £m £m £m £m
Realised profits/(losses) over value on the disposal of investments 1,2 11 (6) 5 (2) 3 1
Unrealised profits on the revaluation of investments 1,2 2,527 (598) 1,929 1,909 (715) 1,194
Fair value movements on investment entity subsidiaries 1 - 305 305 - 524 524
Portfolio income
Dividends 1,2 35 (12) 23 28 (11) 17
Interest income from investment portfolio 1,2 46 (31) 15 46 (32) 14
Fees receivable 1,2 4 3 7 5 1 6
Foreign exchange on investments 1,4 (598) 220 (378) (145) 74 (71)
Movement in the fair value of derivatives 112 - 112 26 - 26
Gross investment return 2,137 (119) 2,018 1,867 (156) 1,711
Fees receivable from external funds 33 - 33 36 - 36
Operating expenses 1,3 (75) - (75) (68) - (68)
Interest receivable 1 10 (2) 8 6 (2) 4
Interest payable 1 (34) - (34) (28) - (28)
Exchange movements 1,4 20 75 95 12 8 20
Income from investment entity subsidiaries 1 - 11 11 - 11 11
Other income 2 (2) - - - -
Operating profit before carried interest 2,093 (37) 2,056 1,825 (139) 1,686
Carried interest
Carried interest and performance fees receivable 1,3 - - - 21 - 21
Carried interest and performance fees payable 1,3 (48) 41 (7) (176) 142 (34)
Operating profit before tax 2,045 4 2,049 1,670 3 1,673
Tax charge 1,3 (1) - (1) (1) - (1)
Profit for the period 2,044 4 2,048 1,669 3 1,672
Other comprehensive expense that may be reclassified to the income statement
Exchange differences on translation of foreign operations 1,4 - (4) (4) - (3) (3)
Other comprehensive income that will not be reclassified to the income
statement
Re-measurements of defined benefit plans 2 - 2 - - -
Other comprehensive income/(expense) for the period 2 (4) (2) - (3) (3)
Total comprehensive income for the period ("Total return") 2,046 - 2,046 1,669 - 1,669
Notes:
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 periods. 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 Other items also aggregated into the "Fair value movements on investment
entity subsidiaries" line include operating expenses, carried interest and
performance fees receivable, carried interest and performance fees payable and
tax. Operating expenses, carried interest and performance fees receivable and
tax do not impact fair value movements on investment entity subsidiaries for
the six months to 30 September 2024.
4 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 entity subsidiaries".
Reconciliation of consolidated statement of financial position
As at 30 September 2024 As at 31 March 2024
Investment IFRS IFRS Investment IFRS IFRS
basis adjustments basis basis adjustments basis
(unaudited) (unaudited) (unaudited) (unaudited) (unaudited) (audited)
Notes £m £m £m £m £m £m
Assets
Non-current assets
Investments
Quoted investments 1 992 (74) 918 946 (67) 879
Unquoted investments 1 21,961 (6,787) 15,174 20,690 (6,497) 14,193
Investments in investment entity subsidiaries 1,2 - 6,423 6,423 - 5,804 5,804
Investment portfolio 22,953 (438) 22,515 21,636 (760) 20,876
Carried interest and performance 1 2 - 2 2 1 3
fees receivable
Other non-current assets 1 28 (6) 22 36 (8) 28
Intangible assets 3 - 3 4 - 4
Retirement benefit surplus 62 - 62 61 - 61
Property, plant and equipment 6 - 6 4 - 4
Right of use asset 45 - 45 49 - 49
Derivative financial instruments 97 - 97 83 - 83
Total non-current assets 23,196 (444) 22,752 21,875 (767) 21,108
Current assets
Carried interest and performance 1 2 - 2 45 - 45
fees receivable
Other current assets 1 50 (3) 47 53 (6) 47
Current income taxes 1 - 1 1 - 1
Derivative financial instruments 125 - 125 82 - 82
Cash and cash equivalents 1 386 (17) 369 396 (38) 358
Total current assets 564 (20) 544 577 (44) 533
Total assets 23,760 (464) 23,296 22,452 (811) 21,641
Liabilities
Non-current liabilities
Trade and other payables 1 (40) 36 (4) (50) 45 (5)
Carried interest and performance 1 (297) 267 (30) (280) 250 (30)
fees payable
Loans and borrowings (1,191) - (1,191) (1,202) - (1,202)
Retirement benefit deficit (20) - (20) (21) - (21)
Lease liability (43) - (43) (45) - (45)
Deferred income taxes (1) - (1) (1) - (1)
Provisions (2) (1) (3) (2) - (2)
Total non-current liabilities (1,594) 302 (1,292) (1,601) 295 (1,306)
Current liabilities
Trade and other payables 1 (101) 6 (95) (136) 2 (134)
Carried interest and performance fees payable 1 (167) 156 (11) (538) 514 (24)
Lease liability (3) - (3) (4) - (4)
Current income taxes (1) - (1) (3) - (3)
Total current liabilities (272) 162 (110) (681) 516 (165)
Total liabilities (1,866) 464 (1,402) (2,282) 811 (1,471)
Net assets 21,894 - 21,894 20,170 - 20,170
Equity
Issued capital 719 - 719 719 - 719
Share premium 792 - 792 791 - 791
Other reserves 3 20,464 - 20,464 18,752 - 18,752
Own shares (81) - (81) (92) - (92)
Total equity 21,894 - 21,894 20,170 - 20,170
Notes:
1 Applying IFRS 10 to the Consolidated statement of financial position
aggregates the line items of investment entity subsidiaries 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, i.e., 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 of 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 cash flow statement
Six months to 30 September 2024 Six months to 30 September 2023
Investment IFRS IFRS Investment IFRS IFRS
basis adjustments basis basis adjustments basis
(unaudited) (unaudited) (unaudited) (unaudited) (unaudited) (unaudited)
Notes £m £m £m £m £m £m
Cash flow from operating activities
Purchase of investments 1 (893) 845 (48) (99) 83 (16)
Proceeds from investments 1 1,556 (450) 1,106 1 - 1
Amounts paid to investment entity subsidiaries 1 - (1,266) (1,266) - (430) (430)
Amounts received from investment entity subsidiaries 1 - 535 535 - 157 157
Net cash flow from derivatives 54 - 54 45 - 45
Portfolio interest received 1 7 (1) 6 6 (1) 5
Portfolio dividends received 1 41 (12) 29 38 (11) 27
Portfolio fees received 1 - - - 6 - 6
Fees received from external funds 33 - 33 38 - 38
Carried interest and performance fees received 1 44 - 44 37 - 37
Carried interest and performance fees paid 1 (381) 364 (17) (510) 481 (29)
Operating expenses paid (80) - (80) (80) - (80)
Co-investment loans (paid)/received 1 (6) 4 (2) 1 2 3
Tax paid 1 (3) - (3) - - -
Other cash income 1 1 - 1 43 (43) -
Other cash expenses (8) - (8) - - -
Interest received 1 10 (2) 8 6 (2) 4
Net cash flow from operating activities 375 17 392 (468) 236 (232)
Cash flow from financing activities
Issue of shares 1 - 1 1 - 1
Dividends paid (332) - (332) (286) - (286)
Proceeds from long-term borrowing - - - 422 - 422
Lease payments (3) - (3) (2) - (2)
Interest paid (41) - (41) (21) - (21)
Net cash flow from financing activities (375) - (375) 114 - 114
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 (3) 17 14 (355) 236 (119)
Cash and cash equivalents at the start of period 2 396 (38) 358 412 (250) 162
Effect of exchange rate fluctuations 1 (7) 4 (3) (2) - (2)
Cash and cash equivalents at the end of period 2 386 (17) 369 55 (14) 41
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 consolidated
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.
IFRS Financial statements
Condensed consolidated statement of comprehensive income
Six months to Six months to
30 September 30 September
2024 2023
(unaudited) (unaudited)
Notes £m £m
Realised profits over value on the disposal of investments 2 5 1
Unrealised profits on the revaluation of investments 3 1,929 1,194
Fair value movements on investment entity subsidiaries 8 305 524
Portfolio income
Dividends 23 17
Interest income from investment portfolio 15 14
Fees receivable 4 7 6
Foreign exchange on investments (378) (71)
Movement in the fair value of derivatives 112 26
Gross investment return 2,018 1,711
Fees receivable from external funds 4 33 36
Operating expenses (75) (68)
Interest received 8 4
Interest paid (34) (28)
Exchange movements 95 20
Income from investment entity subsidiaries 11 11
Other income - -
Operating profit before carried interest 2,056 1,686
Carried interest
Carried interest and performance fees receivable 4 - 21
Carried interest and performance fees payable (7) (34)
Operating profit before tax 2,049 1,673
Tax charge (1) (1)
Profit for the period 2,048 1,672
Other comprehensive income that may be reclassified to the income statement
Exchange differences on translation of foreign operations (4) (3)
Other comprehensive expense that will not be reclassified to the income
statement
Re-measurements of defined benefit plans 2 -
Other comprehensive income for the period (2) (3)
Total comprehensive income for the period ("Total return") 2,046 1,669
Earnings per share
Basic (pence) 5 212.2 173.5
Diluted (pence) 5 211.6 173.0
The Notes to the accounts section forms an integral part of these financial
statements.
Condensed consolidated statement of financial position
30 September 31 March
2024 2024
(unaudited) (audited)
Notes £m £m
Assets
Non-current assets
Investments
Quoted investments 7 918 879
Unquoted investments 7 15,174 14,193
Investments in investment entity subsidiaries 8 6,423 5,804
Investment portfolio 22,515 20,876
Carried interest and performance fees receivable 2 3
Other non-current assets 22 28
Intangible assets 3 4
Retirement benefit surplus 62 61
Property, plant and equipment 6 4
Right of use asset 45 49
Derivative financial instruments 97 83
Total non-current assets 22,752 21,108
Current assets
Carried interest and performance fees receivable 2 45
Other current assets 47 47
Current income taxes 1 1
Derivative financial instruments 125 82
Cash and cash equivalents 369 358
Total current assets 544 533
Total assets 23,296 21,641
Liabilities
Non-current liabilities
Trade and other payables (4) (5)
Carried interest and performance fees payable (30) (30)
Loans and borrowings (1,191) (1,202)
Retirement benefit deficit (20) (21)
Lease liability (43) (45)
Deferred income taxes (1) (1)
Provisions (3) (2)
Total non-current liabilities (1,292) (1,306)
Current liabilities
Trade and other payables (95) (134)
Carried interest and performance fees payable (11) (24)
Lease liability (3) (4)
Current income taxes (1) (3)
Total current liabilities (110) (165)
Total liabilities (1,402) (1,471)
Net assets 21,894 20,170
Equity
Issued capital 719 719
Share premium 792 791
Capital redemption reserve 43 43
Share-based payment reserve 30 42
Translation reserve (10) (6)
Capital reserve 19,014 17,154
Revenue reserve 1,387 1,519
Own shares (81) (92)
Total equity 21,894 20,170
The Notes to the accounts section forms an integral part of these financial
statements.
Condensed consolidated statement of changes in equity
For the six months Share-
to 30 September 2024
(unaudited)
Capital based
Share Share redemption payment Translation Capital Revenue Own Total
capital premium reserve reserve reserve reserve1 reserve1 shares equity
£m £m £m £m £m £m £m £m £m
Total equity at the start of the period 719 791 43 42 (6) 17,154 1,519 (92) 20,170
Profit for the period - - - - - 2,001 47 - 2,048
Exchange differences on translation of foreign operations - - - - (4) - - - (4)
Re-measurements of defined benefit plans - - - - - 2 - - 2
Total comprehensive income for the period - - - - (4) 2,003 47 - 2,046
Share-based payments - - - 9 - - - - 9
Release on exercise/forfeiture of share awards - - - (21) - - 21 - -
Exercise of share awards - - - - - (11) - 11 -
Ordinary dividends - - - - - (132) (200) - (332)
Purchase of own shares - - - - - - - - -
Issue of ordinary shares - 1 - - - - - - 1
Total equity at the end of 719 792 43 30 (10) 19,014 1,387 (81) 21,894
the period
1 Refer to the Glossary at the end of this document for the nature of the
capital and revenue reserves.
Share-
For the six months
to 30 September 2023
(unaudited)
Capital based
Share Share redemption payment Translation Capital Revenue Own Total
capital premium reserve reserve reserve reserve1 reserve1 shares equity
£m £m £m £m £m £m £m £m £m
Total equity at the start of the period 719 790 43 31 (2) 14,044 1,327 (108) 16,844
Profit for the period - - - - - 1,582 90 - 1,672
Exchange differences on translation of foreign operations - - - - (3) - - - (3)
Re-measurements of defined benefit plans - - - - - - - - -
Total comprehensive income for the period - - - - (3) 1,582 90 - 1,669
Share-based payments - - - 17 - - - - 17
Release on exercise/forfeiture of share awards - - - (16) - - 16 - -
Exercise of share awards - - - - - (16) - 16 -
Ordinary dividends - - - - - (190) (96) - (286)
Purchase of own shares - - - - - - - - -
Issue of ordinary shares - 1 - - - - - - 1
Total equity at the end of 719 791 43 32 (5) 15,420 1,337 (92) 18,245
the period
1 Refer to the Glossary at the end of this document for the nature of the
capital and revenue reserves.
The Notes to the accounts section forms an integral part of these financial
statements.
Condensed consolidated cash flow statement
Six months to Six months to
30 September 30 September
2024 2023
(unaudited) (unaudited)
Notes £m £m
Cash flow from operating activities
Purchase of investments (48) (16)
Proceeds from investments 1,106 1
Amounts paid to investment entity subsidiaries (1,266) (430)
Amounts received from investment entity subsidiaries 535 157
Net cash flow from derivatives 54 45
Portfolio interest received 6 5
Portfolio dividends received 29 27
Portfolio fees received - 6
Fees received from external funds 33 38
Carried interest and performance fees received 44 37
Carried interest and performance fees paid (17) (29)
Operating expenses paid (80) (80)
Co-investment loans (paid)/received (2) 3
Tax paid (3) -
Other cash income 1 -
Other cash expenses (8) -
Interest received 8 4
Net cash flow from operating activities 392 (232)
Cash flow from financing activities
Issue of shares 1 1
Dividend paid 6 (332) (286)
Proceeds from long-term borrowing - 422
Lease payments (3) (2)
Interest paid (41) (21)
Net cash flow from financing activities (375) 114
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 14 (119)
Cash and cash equivalents at the start of the period 358 162
Effect of exchange rate fluctuations (3) (2)
Cash and cash equivalents at the end of the period 369 41
The Notes to the accounts section forms an integral part of these financial
statements.
Notes to the condensed consolidated financial statements
Basis of preparation and accounting policies
Compliance with International Financial Reporting Standards ("IFRS")
The Half-year condensed consolidated financial statements of 3i Group plc have
been prepared in accordance with the Disclosure Guidance and Transparency
Rules of the Financial Conduct Authority and IAS 34 Interim Financial
Reporting as adopted for use in the UK. The Half-year condensed consolidated
financial statements should be read in conjunction with the Annual report and
accounts 2024 which have been prepared and approved by the Directors in
accordance with international accounting standards in conformity with the
requirements of the Companies Act 2006 and in accordance with UK-adopted
international accounting standards. The Annual report and accounts for the
year ended 31 March 2025 will be prepared in accordance with UK-adopted
international accounting standards.
The Half-year condensed consolidated financial statements are presented to the
nearest million sterling (£m), which is also the functional currency of the
Company. The accounting policies applied by 3i Group plc for the Half-year
condensed consolidated financial statements are consistent with those
described on pages 164 to 202 of the Annual report and accounts 2024. There
was no change in the current period to the critical accounting estimates and
judgements applied in 2024, which are stated on page 166 of the Annual report
and accounts 2024.
The financial information for the year ended 31 March 2024 and for the six
months ended 30 September 2024 contained within this Half-year 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 2024, prepared under
IFRS in conformity with the requirements of the Companies Act 2006, have been
reported on by KPMG 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.
Going concern
These condensed consolidated financial statements are prepared on a going
concern basis. 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.
To support the going concern assessment, the Directors considered an analysis
of the Group's liquidity, solvency and regulatory capital position. The Group
manages and monitors liquidity regularly, ensuring it is adequate and
sufficient and is underpinned by its monitoring of investments, realisations,
operating expenses and receipt of portfolio cash income. At 30 September 2024,
the Group has liquidity of £1,286 million (31 March 2024: £1,296 million).
Liquidity comprised of cash and deposits of £386 million (31 March 2024:
£396 million) and an undrawn facility of £900 million (31 March 2024: £900
million), which has no financial covenants. Since the period end, in October
2024, we received proceeds of £280 million from the realisation of WP,
further strengthening our liquidity.
As a proprietary investor, the Group has a long-term, responsible investment
approach, and is not subject to significant 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.
Having performed the assessment on going concern, the Directors considered it
appropriate to prepare the condensed consolidated financial statements of the
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 macroeconomic and geopolitical environment and can continue operations
for a period of at least 12 months from the date of issue of these financial
statements.
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 and a
reconciliation of the Investment basis to the IFRS financial statements is
provided later in this document. Further detail on the Group's segmental
analysis can be found on pages 168 to 170 of the Annual report and accounts
2024. The remaining Notes are prepared on an IFRS basis.
Investment basis Private Of which is
Equity Action Infrastructure Scandlines Total3
Six months to 30 September 2024 £m £m £m £m £m
Realised profits over value on the disposal of investments 11 - - - 11
Unrealised profits on the revaluation of investments 2,467 2,170 47 13 2,527
Portfolio income
Dividends 5 - 18 12 35
Interest income from investment portfolio 40 - 6 - 46
Fees receivable 4 2 - - 4
Foreign exchange on investments (555) (389) (28) (15) (598)
Movement in the fair value of derivatives 99 44 - 13 112
Gross investment return 2,071 1,827 43 23 2,137
Fees receivable from external funds 2 - 31 - 33
Operating expenses (50) - (24) (1) (75)
Interest received 10
Interest paid (34)
Exchange movements 20
Other income 2
Operating profit before carried interest 2,093
Carried interest
Carried interest and performance fees payable (42) (18) (6) - (48)
Operating profit before tax 2,045
Tax charge (1)
Profit for the period 2,044
Other comprehensive income
Re-measurements of defined benefit plans 2
Total return 2,046
Realisations1 1,548 1,164 5 - 1,553
Cash investment (888) (768) (5) - (893)
Net realisations 660 396 - - 660
Balance sheet
Opening portfolio value at 1 April 2024 19,629 14,158 1,488 519 21,636
Investment2 925 768 5 - 930
Value disposed (1,537) (1,164) (5) - (1,542)
Unrealised value movement 2,467 2,170 47 13 2,527
Other movement (including foreign exchange) (554) (389) (31) (13) (598)
Closing portfolio value at 30 September 2024 20,930 15,543 1,504 519 22,953
1 Realised proceeds may differ from cash proceeds due to timing of receipts.
During the period cash proceeds of £5 million were received in the Private
Equity portfolio, which were recognised as a receivable in the prior year. The
Private Equity portfolio also incurred £2 million of withholding tax on a
distribution received.
2 Includes capitalised interest and non-cash investment.
3 The total is the sum of Private Equity, Infrastructure and Scandlines. "Of
which is 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.
Investment basis Private Of which is
Equity Action Infrastructure Scandlines Total4
Six months to 30 September 2023 £m £m £m £m £m
Realised profits/(losses) over value on the disposal of investments 1 - (3) - (2)
Unrealised profits on the revaluation of investments 1,907 1,810 2 - 1,909
Portfolio income
Dividends - - 18 10 28
Interest income from investment portfolio 40 - 6 - 46
Fees receivable 5 4 - - 5
Foreign exchange on investments (146) (136) 8 (7) (145)
Movement in the fair value of derivatives 19 22 - 7 26
Gross investment return 1,826 1,700 31 10 1,867
Fees receivable from external funds 2 - 34 - 36
Operating expenses (43) - (24) (1) (68)
Interest received 6
Interest paid (28)
Exchange movements 12
Operating profit before carried interest 1,825
Carried interest
Carried interest and performance fees receivable - - 21 - 21
Carried interest and performance fees payable (147) (127) (29) - (176)
Operating profit before tax 1,670
Tax charge (1)
Profit for the period 1,669
Other comprehensive income
Re-measurements of defined benefit plans -
Total return 1,669
Realisations1 1 - 18 - 19
Cash investment2 (50) - (33) (1) (84)
Net investment (49) - (15) (1) (65)
Balance sheet
Opening portfolio value at 1 April 2023 16,425 11,188 1,409 554 18,388
Investment3 92 - 33 1 126
Value disposed - - (21) - (21)
Unrealised value movement 1,907 1,810 2 - 1,909
Other movement (including foreign exchange) (149) (136) 10 (8) (147)
Closing portfolio value at 30 September 2023 18,275 12,862 1,433 547 20,255
1 Realised proceeds may differ from cash proceeds due to timing of receipts.
During the period, Infrastructure recognised realised proceeds of £18
million, which are to be received after the period end.
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 the period and a £5 million syndication in
Infrastructure which was recognised in the period and to be received after the
period end.
3 Includes capitalised interest and non-cash investment.
4 The total is the sum of Private Equity, Infrastructure and Scandlines. "Of
which is Action" is part of Private Equity.
Interest received, interest paid, exchange movements, 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.
2 Realised profits over value on the disposal of investments
Unquoted
investments Total
Six months to 30 September 2024 £m £m
Realisations 1,106 1,106
Valuation of disposed investments (1,101) (1,101)
5 5
Of which:
- profit recognised on realisations 5 5
- losses recognised on realisations - -
5 5
Unquoted
investments Total
Six months to 30 September 2023 £m £m
Realisations 1 1
Valuation of disposed investments - -
1 1
Of which:
- profit recognised on realisations 1 1
- losses recognised on realisations - -
1 1
3 Unrealised profits on the revaluation of investments
Unquoted Quoted
investments investments Total
Six months to 30 September 2024 £m £m £m
1,890 39 1,929
Movement in the fair value of investments
Of which:
- unrealised gains 1,909 39 1,948
- unrealised losses (19) - (19)
1,890 39 1,929
Unquoted Quoted
investments investments Total
Six months to 30 September 2023 £m £m £m
Movement in the fair value of investments 1,217 (23) 1,194
Of which:
- unrealised gains 1,355 - 1,355
- unrealised losses (138) (23) (161)
1,217 (23) 1,194
4 Revenue
Items from the Consolidated statement of comprehensive income which fall
within the scope of IFRS 15 are included in the table below:
Private
Equity Infrastructure Total
Six months to 30 September 2024 £m £m £m
Total revenue by geography1
UK - 29 29
Northern Europe 8 1 9
North America 1 1 2
Other - - -
Total 9 31 40
Revenue by type
Fees receivable2 from portfolio 7 - 7
Fees receivable from external funds 2 31 33
Carried interest and performance fees receivable2 - - -
Total 9 31 40
Private
Equity Infrastructure Total
Six months to 30 September 2023 £m £m £m
Total revenue by geography1
UK 1 30 31
Northern Europe 7 24 31
North America - 1 1
Other - - -
Total 8 55 63
Revenue by type
Fees receivable2 from portfolio 6 - 6
Fees receivable from external funds 2 34 36
Carried interest and performance fees receivable2 - 21 21
Total 8 55 63
1 For fees receivable from external funds and carried interest and performance
fees receivable the geography is based on the domicile of the fund.
2 Fees receivable and carried interest receivable above are different to the
Investment basis figures included in Note 1. This is due to the fact that Note
1 is disclosed on the Investment basis and the table above is shown on the
IFRS basis. For an explanation of the Investment basis and a reconciliation
between Investment basis and IFRS basis earlier in this document.
5 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 period 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.
30 September 31 March
2024 2024
Net assets per share (£)
Basic 22.68 20.92
Diluted 22.61 20.85
Net assets (£m)
Net assets attributable to equity holders of the Company 21,894 20,170
30 September 31 March
2024 2024
Number of shares in issue
Ordinary shares 973,387,299 973,366,445
Own shares (7,979,124) (8,997,664)
965,408,175 964,368,781
Effect of dilutive potential ordinary shares
Share awards 3,036,191 3,104,739
Diluted shares 968,444,366 967,473,520
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 period to 30 September
2024 are 965,017,251 (30 September 2023: 963,658,775). 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 period to 30 September 2024 are 967,767,493
(30 September 2023: 966,205,837).
Six months Six months
to 30 September to 30 September
2024 2023
Earnings per share (pence)
Basic 212.2 173.5
Diluted 211.6 173.0
Earnings (£m)
Profit for the period attributable to equity holders of the Company 2,048 1,672
6 Dividends
Six months to Six months to Six months to Six months to
30 September 30 September 30 September 30 September
2024 2024 2023 2023
pence pence
per share £m per share £m
Declared and paid during the period
Second dividend 34.50 332 29.75 286
34.50 332 29.75 286
Proposed first dividend 30.50 294 26.50 255
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 the statement of changes in
equity for details of reserves.
The distributable reserves of the parent company as at 30 September 2024 were
£10,087 million (31 March 2024: £8,282 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.
7 Investment portfolio
This section should be read in conjunction with Note 11 on page 176 to 177 of
the Annual report and accounts 2024, which provides more detail about initial
recognition and subsequent measurement of investments at fair value.
Six months to Year to
30 September 2024 31 March 2024
Non-current £m £m
Opening fair value 15,072 9,518
Additions 570 3,596
- of which loan notes with nil value (1) (6)
Disposals, repayments and write-offs (1,101) (542)
Fair value movement1 1,929 2,742
Other movements and net cash movements2 (377) (236)
Closing fair value 16,092 15,072
Quoted investments 918 879
Unquoted investments 15,174 14,193
Closing fair value 16,092 15,072
1 All fair value movements relate to assets held at the end of the period and
are recognised in unrealised profits on the revaluation of investments.
2 Other movements includes the impact of foreign exchange and accrued
interest.
3i's investment portfolio is made up of longer-term investments, with average
holding periods greater than one year, and thus is classified as non-current.
The table below reconciles between purchase of investments in the cash flow
statement and additions as disclosed in the table above.
Six months to Year to
30 September 2024 31 March 2024
£m £m
Purchase of investments 48 506
Transfer of portfolio investments from investment entity subsidiaries1 1,108 3,068
Transfer of portfolio investments to investment entity subsidiaries2 (593) -
Investment paid - (2)
Investment 563 3,572
Capitalised interest received by way of loan notes 7 24
Additions 570 3,596
1 £1,108 million (31 March 2024: £2,770 million) related to Action. See Note
8 for further details.
2 £593 million (31 March 2024: nil) related to Action. See Note 8 for further
details.
Included within profit or loss is £15 million (30 September 2023: £14
million) of interest income. Interest income included £3 million (30
September 2023: £3 million) of accrued income capitalised during the period,
£6 million of cash income (30 September 2023: £5 million) and £6 million
(30 September 2023: £6 million) of accrued income remaining uncapitalised at
the period end.
Quoted investments are classified as Level 1 and unquoted investments are
classified as Level 3 in the fair value hierarchy; see Note 9 for details.
8 Investments in investment entity subsidiaries
This section should be read in conjunction with Note 12 on page 177 to 178 of
the Annual report and accounts 2024, which provides more detail about
accounting policies adopted, entities which are typically investment in
investment entities and the determination of fair value.
Level 3 fair value reconciliation - investments in investment entity
subsidiaries
Six months to Year to
30 September 2024 31 March 2024
Non-current £m £m
Opening fair value 5,804 7,844
Amounts paid to investment entity subsidiaries 1,266 674
Amounts received from investment entity subsidiaries (535) (580)
Fair value movement on investment entity subsidiaries 305 861
Transfer of portfolio investments from investment entity subsidiaries (1,108) (3,068)
Transfer of portfolio investments to investment entity subsidiaries 593 -
Transfer of assets to investment entity subsidiaries 98 73
Closing fair value 6,423 5,804
Transfer of portfolio investments from and to investment entity subsidiaries
includes the transfer of investment portfolio between investment entity
subsidiaries and the Company at fair value. The consideration for these
transfers can either be cash or intra-group receivables. During the period the
Company received a transfer of assets of £1,108 million (31 March 2024:
£3,068 million) from partnerships which are classified as investment entity
subsidiaries, of which £1,108 million (31 March 2024: £2,770 million)
related to Action. During the period the Company transferred assets of £593
million (31 March 2024: nil) to partnerships which are classified as
investment entity subsidiaries, of which £593 million (31 March 2024: nil)
related to Action.
Restrictions
3i Group plc, the ultimate parent company, receives dividend income from its
subsidiaries. There are no restrictions on the ability to transfer funds from
these subsidiaries to the Group at 30 September 2024 (31 March 2024: £21
million).
Support
3i Group plc continues to provide, where necessary, ongoing support to its
investment entity subsidiaries for the purchase of portfolio investments.
9 Fair values of assets and liabilities
This section should be read in conjunction with Note 13 on pages 178 to 181 of
the Annual report and accounts 2024, which provides more detail about
accounting policies adopted, the definitions of the three levels of fair value
hierarchy, valuation methods used in calculating fair value and the valuation
framework which governs oversight of valuations. There have been no changes in
the accounting policies adopted or the valuation methodologies used.
Valuation
The fair values of the Group's financial assets and liabilities not held at
fair value are not materially different from their carrying values, with the
exception of loans and borrowings. The fair value of loans and borrowings is
£1,147 million (31 March 2024: £1,166 million), determined with reference to
their published market prices. The carrying value of the loans and borrowings
is £1,191 million (31 March 2024: £1,202 million) and accrued interest
payable (included within trade and other payables) is £18 million (31 March
2024: £29 million).
Valuation hierarchy
The Group classifies financial instruments measured at fair value according to
the following hierarchy:
Level Fair value input description Financial instruments
Level 1 Quoted prices (unadjusted) from active markets Quoted equity instruments
Level 2 Inputs other than quoted prices included in Level 1 that are observable either Derivative financial instruments
directly (i.e., as prices) or indirectly (i.e., derived from prices)
Level 3 Inputs that are not based on observable market data Unquoted investments
The table below shows the classification of financial instruments held at fair
value into the valuation hierarchy at 30 September 2024:
30 September 2024 31 March 2024
Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total
£m £m £m £m £m £m £m £m
Assets
Quoted investments 918 - - 918 879 - - 879
Unquoted investments - - 15,174 15,174 - - 14,193 14,193
Investments in investment entity subsidiaries - - 6,423 6,423 - - 5,804 5,804
Other financial assets - 222 18 240 - 165 17 182
Total 918 222 21,615 22,755 879 165 20,014 21,058
We determine that in the ordinary course of business, the net asset value of
an investment entity subsidiary is considered to be the most appropriate to
determine fair value. The underlying portfolio is valued under the same
methodology as directly held investments, with any other assets or liabilities
within investment entity subsidiaries fair valued in accordance with the
Group's accounting policies. Note 8 details the Directors' considerations
about the fair value of the underlying investment entity subsidiaries.
Level 3 fair value reconciliation - unquoted investments
Six months to Year to
30 September 31 March
2024 2024
£m £m
Opening fair value 14,193 8,677
Additions 570 3,596
- of which loan notes with nil value (1) (6)
Disposals, repayments and write-offs (1,101) (542)
Fair value movement1 1,890 2,704
Other movements and net cash movements2 (377) (236)
Closing fair value 15,174 14,193
1 All fair value movements relate to assets held at the end of the period and
are recognised in unrealised profits on the revaluation of investments.
2 Other movements includes the impact of foreign exchange and accrued
interest.
Unquoted investments valued using Level 3 inputs also had the following impact
on profit or loss: realised profits over value on disposal of investment of
£5 million (30 September 2023: £1 million), dividend income of £7 million
(30 September 2023: £2 million) and foreign exchange losses of £378 million
(30 September 2023: £71 million loss).
Assets move between Level 1 and Level 3 when an unquoted equity investment
lists on a quoted market exchange. There were no transfers in or out of Level
3 during the period. In the six months to 30 September 2024, one asset moved
from an earnings-based valuation to an imminent sale basis valuation. One
asset was acquired in the period and valued in line with its price of recent
investment. Action remains unchanged on an earnings-based valuation. The
changes in valuation methodology in the period reflect our view of the most
appropriate method to determine the fair value of these assets at 30 September
2024. Further information can be found in the Private Equity and
Infrastructure sections of the Business and Financial review earlier in this
document.
The following table summarises the various valuation methodologies used by the
Group to fair value Level 3 instruments, the inputs and the sensitivities
applied and the impact of those sensitivities to the unobservable inputs.
Overall, Action continues to perform strongly and the majority of our
remaining portfolio has performed resiliently in the period. When selecting
multiples to value our portfolio companies, we continue to take a long-term,
through-the-cycle approach. All numbers in the table below are on an
Investment basis.
Level 3 unquoted investments
Fair value
Fair value at impact of
30 September Sensitivity on key sensitivities
Methodology Description Inputs 2024 £m unobservable input £m +5%/-5%
Earnings Most commonly used Private Equity valuation methodology. Used for investments Earnings multiples are applied to the earnings of the company to determine the 20,212 For the assets valued on an earnings basis, we have applied a 5% sensitivity 1,203
which are typically profitable and for which we can determine a set of listed enterprise value
to the earnings multiple
(Private Equity) companies and precedent transactions, where relevant, with similar
(31 March 2024: 18,916)
(31 March 2024: 1,103)
characteristics
Earnings multiples
(1,202)
When selecting earnings multiple, we consider:
(31 March 2024: (1,104))
1.Comparable listed companies' current performance and through-the-cycle Action is our largest asset, and we have included a 5% sensitivity on Action's
averages earnings multiple of 19.5x (equivalent to 18.5x net)
2. Relevant market transaction multiples 919
3. Company performance, organic growth and value-accretive add-ons, if any (31 March 2024: 801)
4. Exit expectations and other company specific factors
(919)
For point 1 and 2 of the above we select companies in the same industry and, (31 March 2024: (801))
where possible, with a similar business model and profile in terms of size,
products, services and customers, growth rates and geographic focus
The pre-discount multiple ranges from 7.5x - 20.0x (31 March 2024: 7.5x -
20.0x)
9 Fair values of assets and liabilities continued
Fair value
Fair value at impact of
30 September Sensitivity on key sensitivities
Methodology Description Inputs 2024 £m unobservable input £m +5%/-5%
Other inputs:
Earnings
Reported earnings are adjusted for non-recurring items, such as restructuring
expenses, for significant corporate actions and, in exceptional cases,
run-rate adjustments to arrive at maintainable earnings
The most common measure is earnings before interest, tax, depreciation and
amortisation ("EBITDA")
Earnings are usually obtained from portfolio company management accounts to
the preceding quarter end, with reference also to forecast earnings and the
maintainable view of earnings
Action, our largest asset, is valued using run-rate earnings
Discounted cash flow Appropriate for businesses with long-term stable cash flows, typically in Long-term cash flows are discounted at a rate which is benchmarked against 1,005 For the assets valued on a DCF basis, we have applied a 5% sensitivity to the (33)
Infrastructure or alternatively businesses where DCF is more appropriate in market data, where possible, or adjusted from the rate at the initial
discount rate
(Private Equity/ Infrastructure/ Scandlines) the short term investment based on changes in the risk profile of the investment (31 March 2024: 1,047) (31 March 2024: (34))
The range of discount rates used in our DCF valuations is 10.5% to 16.9% (31 34
March 2024: 10.5% to 16.9%). An outlier has been excluded from the range
(31 March 2024: 36)
NAV (Infrastructure) Used for investments in unlisted funds Net asset value reported by the fund manager. The valuation of the underlying 105 A 5% increase on closing NAV 5
portfolio is consistent with IFRS
(31 March 2024: 104) (31 March 2024: 5)
Imminent sale Used for assets where a sale has been agreed A 2.5% discount is typically applied to expected proceeds 279 n/a n/a
(Private Equity) (31 March 2024: 377)
Other (Private Equity/Infrastructure) Used where elements of a business are valued on different bases Values of separate elements prepared on or triangulated against one of the 360 A 5% increase in the closing value 18
methodologies listed above
(31 March 2024: 246) (31 March 2024: 12)
10 Related parties
All related party transactions that took place in the six months ending 30
September 2024 are consistent in nature with the disclosures in Note 29 on
pages 197 to 200 of the Annual report and accounts 2024. Related party
transactions which took place in the period and materially affected
performance or the financial position of the Group, together with any material
changes in related party transactions as described in the Annual report and
accounts 2024 that could materially affect the performance, or the financial
position of the Group are detailed below.
Investments
The Group makes investments in the equity of unquoted and quoted investments
where it does not have control but may be able to participate in the financial
and operating policies of that company. IFRS presumes that it is possible to
exert significant influence when the equity holding is greater than 20%. The
Group has taken the investment entity exception as permitted by IFRS 10 and
has not equity accounted for these investments, in accordance with IAS 28, but
they are related parties. The total amounts included for investments where the
Group has significant influence, but not control, are as follows:
Six months to Six months to
30 September 30 September
2024 2023
Consolidated statement of comprehensive income £m £m
Realised profits over value on the disposal of investments - 1
Unrealised profits/(losses) on the revaluation of investments 41 (36)
Portfolio income 5 -
30 September 31 March
2024 2024
Consolidated statement of financial position £m £m
Unquoted investments 795 754
Management arrangements
The Group acted as Investment Manager to 3iN, which is listed on the London
Stock Exchange, for the period to 30 September 2024. The following amounts
have been recognised in respect of the management relationship:
Six months to Six months to
30 September 30 September
2024 2023
Consolidated statement of comprehensive income £m £m
Unrealised profit/(losses) on the revaluation of investments 39 (23)
Dividends 16 15
Fees receivable from external funds 26 25
30 September 31 March
2024 2024
Consolidated statement of financial position £m £m
Quoted equity investments 918 879
Performance fees receivable - 42
Statement of Directors' responsibilities
The Directors, who are required to prepare the financial statements on a going
concern basis unless it is not appropriate, are satisfied that the Group has
the resources to continue in business for the foreseeable future.
In making this assessment, the Directors have considered information relating
to present and future conditions, including future projections of
profitability and cash flows.
The Directors confirm that to the best of their knowledge:
(1) the condensed set of financial statements has been prepared in accordance
with IAS 34 "Interim Financial Reporting" as adopted for use in the UK; and
(2) the Half-year report includes a fair review of the information required
by:
1 DTR 4.2.7R of the Disclosure Guidance and Transparency Rules, being an
indication of important events that have occurred during the first six months
of the financial year ending 31 March 2025 and their impact on the condensed
set of financial statements; and a description of the principal risks and
uncertainties for the remaining six months of the financial year; and
2 DTR 4.2.8R of the Disclosure Guidance and Transparency Rules, being (i)
related party transactions that have taken place in the first six months of
the financial year ending 31 March 2025 which have materially affected the
financial position or performance of 3i Group during that period; and (ii) any
changes in the related party transactions described in the Annual report and
accounts 2024 that could materially affect the financial position or
performance of 3i Group during the first six months of the financial year
ending 31 March 2025.
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, Senior 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
13 November 2024
Registered Office:
16 Palace Street
London
SW1E 5JD
Independent review report to 3i Group plc
Conclusion
We have been engaged by 3i Group plc ("the Company") to review the condensed
set of financial statements in the half-yearly financial report for the six
months ended 30 September 2024 which comprises the condensed consolidated
statement of comprehensive income, the condensed consolidated statement of
financial position, the condensed consolidated statement of changes in equity,
the condensed consolidated cash flow statement and the related explanatory
notes.
Based on our review, nothing has come to our attention that causes us to
believe that the condensed set of financial statements in the half-yearly
financial report for the six months ended 30 September 2024 is not prepared,
in all material respects, in accordance with IAS 34 Interim Financial
Reporting as adopted for use in the UK and the Disclosure Guidance and
Transparency Rules ("the DTR") of the UK's Financial Conduct Authority ("the
UK FCA").
Basis for conclusion
We conducted our review in accordance with International Standard on Review
Engagements (UK) 2410 Review of Interim Financial Information Performed by the
Independent Auditor of the Entity ("ISRE (UK) 2410") issued for use in the UK.
A review of interim financial information consists of making enquiries,
primarily of persons responsible for financial and accounting matters, and
applying analytical and other review procedures. We read the other information
contained in the half-yearly financial report and consider whether it contains
any apparent misstatements or material inconsistencies with the information in
the condensed set of financial statements.
A review is substantially less in scope than an audit conducted in accordance
with International Standards on Auditing (UK) and consequently does not enable
us to obtain assurance that we would become aware of all significant matters
that might be identified in an audit. Accordingly, we do not express an audit
opinion.
Conclusions relating to going concern
Based on our review procedures, which are less extensive than those performed
in an audit as described in the Basis for conclusion section of this report,
nothing has come to our attention that causes us to believe that the directors
have inappropriately adopted the going concern basis of accounting, or that
the directors have identified material uncertainties relating to going concern
that have not been appropriately disclosed.
This conclusion is based on the review procedures performed in accordance with
ISRE (UK) 2410. However, future events or conditions may cause the Group to
cease to continue as a going concern, and the above conclusions are not a
guarantee that the Group will continue in operation.
Directors' responsibilities
The half-yearly financial report is the responsibility of, and has been
approved by, the directors. The directors are responsible for preparing the
half-yearly financial report in accordance with the DTR of the UK FCA.
As disclosed in the 'Basis of preparation and accounting policies' note, the
annual financial statements of the Group are prepared in accordance with
UK-adopted international accounting standards.
The directors are responsible for preparing the condensed set of financial
statements included in the half-yearly financial report in accordance with IAS
34 as adopted for use in the UK.
In preparing the condensed set of financial statements, the directors are
responsible for assessing the Group's ability to continue as a going concern,
disclosing, as applicable, matters related to going concern and using the
going concern basis of accounting unless the directors either intend to
liquidate the Group or to cease operations, or have no realistic alternative
but to do so.
Our responsibility
Our responsibility is to express to the Company a conclusion on the condensed
set of financial statements in the half-yearly financial report based on our
review. Our conclusion, including our conclusions relating to going concern,
are based on procedures that are less extensive than audit procedures, as
described in the Basis for conclusion section of this report.
The purpose of our review work and to whom we owe our responsibilities
This report is made solely to the Company in accordance with the terms of our
engagement to assist the Company in meeting the requirements of the DTR of the
UK FCA. Our review has been undertaken so that we might state to the Company
those matters we are required to state to it in this report and for no other
purpose. To the fullest extent permitted by law, we do not accept or assume
responsibility to anyone other than the Company for our review work, for this
report, or for the conclusions we have reached.
Jonathan Mills
for and on behalf of KPMG LLP
Chartered Accountants
15 Canada Square
Canary Wharf
London
E14 5GL
13 November 2024
Portfolio and other information
20 large investments
The investments listed below are the 20 largest investments by value,
excluding two assets due to commercial sensitivity. These assets account for
94% of the portfolio value at 30 September 2024 (31 March 2024: 95%).
Residual Residual
Business line cost1 cost1 Valuation Valuation
Geography September March September March
Investment First invested in 2024 2024 2024 2024 Relevant transactions
Description of business Valuation basis £m £m £m £m in the period
Action* Private Equity 1,876 1,108 15,543 14,158 £1,164 million of gross
General merchandise discount retailer Netherlands proceeds received.
2011 Reinvestment of
Earnings £768 million
3i Infrastructure plc* Infrastructure 305 305 918 879 £16 million dividend
Quoted investment company investing in infrastructure UK received
2007
Quoted
Royal Sanders* Private Equity 165 165 695 580 Acquisition of Karium
Private label and contract manufacturing producer of personal care products Netherlands in June 2024
2018
Earnings
Cirtec Medical* Private Equity 172 172 583 586
Outsourced medical device manufacturing US
2017
Earnings
Scandlines Scandlines 531 530 519 519 £12 million dividend
Ferry operator between Denmark and Germany Denmark/Germany received
2018
DCF
AES Engineering Private Equity 30 30 407 403 Acquired Condition
Manufacturer of mechanical seals and provider of reliability services UK Monitoring Services
1996 in August 2024
Earnings
Tato Private Equity 2 2 372 335 £5 million dividend
Manufacturer and seller of specialty chemicals UK received
1989
Earnings
Evernex* Private Equity 324 316 329 331
Provider of third-party maintenance services for data centre infrastructure France
2019
Earnings
SaniSure* Private Equity 76 76 312 334
Manufacturer, distributor and integrator of single use bioprocessing systems US
and components
2019
Earnings
Smarte Carte* Infrastructure 191 194 283 306 £6 million distribution
Provider of self-serve vended luggage carts, electronic lockers and concession US received
carts
2017
DCF
WP* Private Equity 247 238 279 234 Sale agreed in July 2024
Global manufacturer of innovative plastic packaging solutions Netherlands Divestment completed in
2015 October 2024
Imminent sale
European Bakery Group* Private Equity 62 84 257 267 Return of funding
Industrial bakery group specialised in home bake-off bread and snack products Netherlands of £22 million
2021
Earnings
Luqom* Private Equity 268 262 215 222
Online lighting specialist retailer Germany
2017
Earnings
ten23 health* Private Equity 159 129 208 192 £30 million further
Biologics focused CDMO Switzerland investment
2021
Other
Q Holding* Private Equity 162 162 141 150
Manufacturer of catheter products serving the medical device market US
2014
Earnings
BoConcept* Private Equity 125 121 141 133
Urban living designer Denmark
2016
Earnings
MAIT* Private Equity 53 53 105 100 Acquired CAD 'N ORG
IT services provider of PLM & ERP software applications and IT Germany and ISAP in April 2024
infrastructure solutions for larger SME clients in the DACH region
2021
Earnings
Dynatect* Private Equity 65 65 105 130
Manufacturer of engineered, mission critical protective equipment US
2014
Earnings
xSuite* Private Equity 98 93 103 98 £5 million invested in the
Accounts payable process automation specialist focused on the SAP ecosystem Germany period to support the
2022 acquisition of tangro
Earnings
Constellation* Private Equity 98 - 96 - Acquired in July 2024
IT managed services provider France
2024
Other
5,009 4,105 21,611 19,957
* Controlled in accordance with IFRS.
1 Residual cost includes cash investment and interest net of cost disposed.
Glossary
3i 2013-2016 vintage includes Audley Travel, Basic-Fit, Dynatect, JMJ, Q
Holding, WP (divested in October 2024). Realised investments include Aspen
Pumps, ATESTEO, Blue Interactive, Christ, Geka, Kinolt, Óticas Carol,
Scandlines further.
3i 2016-2019 vintage includes arrivia, BoConcept, Cirtec Medical, Formel D and
Luqom. Realised investments include Havea, Magnitude Software, nexeye, 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, xSuite and Constellation.
3i Buyouts 2010-2012 vintage includes Action. Realised investments include
Amor, Element, Etanco, Hilite, OneMed and Trescal.
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. 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.
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 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.
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 (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 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.
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 ("LFL") 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 fees 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 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.
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.
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.
Information for shareholders
Note
The first FY2025 dividend is expected to be paid on 10 January 2025 to holders
of ordinary shares on the register on 29 November 2024. The ex-dividend date
will be 28 November 2024.
3i Group plc
Registered office:
16 Palace Street,
London
SW1E 5JD
UK
Registered in England No. 1142830
An investment company as defined by section 833 of the Companies Act 2006.
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