3i Group Plc · LSE:III
3i — Shareholder Meeting (July 2014)
35 slides from 3i's shareholder meeting presentation, Jul 17, 2014
Slide 1: Annual General Meeting
Annual General Meeting 17 July 2014
Slide 2: Sir Adrian Montague, Chairman
Sir Adrian Montague Chairman 2
Slide 3: Today's agenda
Today’s agenda Introductory remarks – Sir Adrian Montague Review of the year – Simon Borrows Q&A – Sir Adrian Montague Formal business including Resolutions – Sir Adrian Montague 3
Slide 4: The Board of Directors and General Counsel
The Board of Directors and General Counsel
Slide 5: A strong performance as we continue implementing our strategic plan
A strong performance as we continue implementing our strategic plan “I am pleased to report a strong performance for the financial year to 31 March 2014. Simon Borrows and his executive team have made excellent headway in accomplishing many of the objectives in the three-year strategic plan we adopt
Slide 6: Strong year benefitting from restructuring
Strong year benefitting from restructuring FY2014 performance highlights Strong total shareholder return 30% total shareholder return 20p proposed total dividend Good flow of 43% uplift to Private Equity realisations opening value Building investment £372m of cash momentum in Private Equity investme
Slide 7: Strong momentum reflected in our share price
Strong momentum reflected in our share price Share price performance since the 2012 AGM (pence per share) Share price performance 103% since 2012 AGM TSR since 2012 AGM 122% Note: all data as of 16 July 2014 7
Slide 8: Distribution
Distribution Proposed final dividend of 13.3p per share brings total dividend for FY14 to 20.0p per share Our enhanced distribution policy Aggregate shareholder distributions to be 15-20% of gross cash proceeds from realisations, provided that: – Gearing < 20% – Gross debt is on target to be <
Slide 9: Simon Borrows, Chief Executive
Simon Borrows Chief Executive 9
Slide 10: A clear vision and strategy
A clear vision and strategy A leading international investment manager of proprietary and third-party capital in: – mid-market Private Equity – Infrastructure – Debt Management 10
Slide 11: Key phases of organisational change and strategic delivery
Key phases of organisational change and strategic delivery FY2013 FY2014 - 15 FY2016+ Transition and Restructuring Strategic goal delivery We have met or exceeded all of our strategic priorities and targets in FY2014 11
Slide 12: Our strategic priorities for FY2014
Our strategic priorities for FY2014 FY2013 FY2014-2015 FY2016+ We have delivered against all of our strategic priorities and targets for FY2014: 1 Deliver further Private Equity realisations to support an enhanced shareholder distribution in FY2014 2 Realise fully the benefits from the Private Equ
Slide 13: Key realisations as part of well constructed exit plans
1 Key realisations as part of well constructed exit plans Notable realisations in FY2014: Uplift to Investment Calendar year Cash opening value Money Residual value realised invested proceeds (31/3/2013) multiple1 (31/3/2014) Xellia 2008 £143m 46% 2.3x Civica 2008 £124m 48% 2.1x Action 2011 £59m 23%
Slide 14: Strong momentum continues
1 Key realisations as part of well constructed exit plans Strong momentum continues We have continued to take advantage of positive market momentum to realise assets in the first quarter of FY2015 – Investment in HILITE sold to a Chinese trade buyer in May, which will generate cash proceeds of c.
Slide 15: Private Equity: clearly defined portfolio segmentation
2 Private Equity: clearly defined portfolio segmentation The buckets: Selected examples: Action, Element, Longer-term hold and value creation Mayborn, Scandlines Strong performers; position for sale over the Civica, Quintiles next few years Azelis, Bestinvest, Manage intensively; potential value ups
Slide 16: Private Equity portfolio: strong momentum
2 Private Equity portfolio: strong momentum (as at 31 March 2014) Investment Business description Country Value Trend Action Non-food discount retailer Benelux £501m Scandlines Ferry operator in the Baltic Sea Germany £193m Element Testing and inspection Benelux £124m Quintiles Clinical resear
Slide 17: Private Equity: selective investment
3 Private Equity: selective investment Selective and measured investment through a combination of proprietary and third-party capital Proprietary + Date of Proprietary Third-party Investment announcement capital capital Comments Scandlines Dec 2013 £77m £138m Purchase of an additional equity stake
Slide 18: Infrastructure – a year of change
4 Infrastructure – a year of change Key contributor to Group’s annual cash income through advisory fees and dividend from 3iN India Fund’s performance challenged due to depreciation of rupee and difficult macro-economic conditions Broadening of Infrastructure platform through strategic acquisi
Slide 19: Debt Management – good growth
4 Debt Management – good growth Our platform Top 10 global CLO manager with AUM of £6.5bn 29 investment professionals based in London, New York and Singapore Our Levered senior loan Unlevered loan funds PE FoF & other products funds 2 PE FoF, 1 mezzanine 13 European and 2 open-ended funds loan fund,
Slide 20: Significantly reduced operating costs
5 Significantly reduced operating costs Run-rate cost savings (like-for-like basis) +17% +28% £40m £51m £60m £70m 31 March 2013 31 March 2014 Run-rate cost savings Cumulative run-rate cost savings Target Actual Achieved £70m of cumulative run-rate cost savings at March 2014, well ahead of £60m targe
Slide 21: Covering operating costs with annual cash income
15 Covering operating costs with annual cash income £m 200 + Reduction in operating 150 costs 100 + Growth in cash income from Infrastructure and 50 Debt Management - (50) ─ Reduction in third- (140) (127) party fee income from (100) (179) (171) (208) Private Equity (150) (200) (250) FY 2010 FY 2011
Slide 22: New compensation arrangements fully implemented
6 New compensation arrangements fully implemented Fair and transparent split of returns Closely aligned with key strategic objectives Focused on creating shareholder value New compensation arrangements provide greater alignment of investing teams with shareholders 22
Slide 23: Transition and delivery: clear priorities in FY2015
Transition and delivery: clear priorities in FY2015 FY2013 FY2014-2015 FY2016+ Strategic priorities: Focus on consistency and discipline of investment processes and asset management Selective new investment utilising our strong balance sheet to generate attractive returns for our shareholders Mainta
Slide 24: Improvement in capital efficiency and allocation
Improvement in capital efficiency and allocation Average over FY10-FY12 FY14 Fees and Fees and portfolio portfolio income 27% income 19% 31% 41% 14% 36% 3% 29% Realisations Operating Debt Shareholder Funds to Realisations Operating Debt Shareholder Funds to costs, net repayment distributions invest
Slide 25: The 3i Value Build
The 3i Value Build An attractive, multi-year value proposition Increase the underlying value of Grow investment portfolio earnings our investment portfolio Realise investments at good uplifts Demonstrate the value of our to book value and strong cash-on- existing investment portfolio and cash multip
Slide 26: The Resolutions
The Resolutions
Slide 27: Resolutions commentary
Resolutions commentary 19 resolutions Normal annual business New resolutions this year: – Approval of the Directors’ remuneration policy for the next three years – Change of the Company’s Investment policy regarding single investment limits 27
Slide 28: Questions
Questions
Slide 29: Poll card
Poll card AGM poll card The Board recommends you vote FOR resolutions 1 to 17 Resolutions Resolutions For Against Abstain 1 To receive and consider the Cormpany’s Accounts for the year 13 To authorise the Board to fix the Auditors’ remuneration oOo Oo o wal March basnd ard the Directors and Auditors
Slide 30: Resolutions 1-4
Resolutions 1-4 1. “That the Company’s Accounts for the year to 31 March 2014 and the Directors’ report, the Auditors’ report and the auditable part of the Directors’ remuneration report be and they are hereby received and considered” 2. “That the Directors’ remuneration report (other than the part
Slide 31: Resolutions 5-8
Resolutions 5-8 5. “That Mr J P Asquith be and he is hereby reappointed as a Director of the Company” 6. “That Mr S A Borrows be and he is hereby reappointed as a Director of the Company” 7. “That Mr A R Cox be and he is hereby reappointed as a Director of the Company” 8. “That Mr D A M Hutchison be
Slide 32: Resolutions 9-12
Resolutions 9-12 9. “That Sir Adrian Montague be and he is hereby reappointed as a Director of the Company” 10. “That Ms M G Verluyten be and she is hereby reappointed as a Director of the Company” 11. “That Mrs J S Wilson be and she is hereby reappointed as a Director of the Company” 12. “That Erns
Slide 33: Resolutions 13-16
Resolutions 14-16 13. “THAT the Board be and it is hereby authorised to fix the Auditors’ remuneration” 14. “THAT the revised Investment policy set out in Appendix 2 to the Notice of Annual General Meeting dated 19 May 2014 be and it is hereby approved and adopted with immediate effect as the invest
Slide 34: Resolutions 17-19
Resolutions 17-19 Special Resolutions 17. To renew the section 561 authority 18. To renew the Company’s authority to purchase its own ordinary shares 19. That a General Meeting other than an Annual General Meeting may be called on not less than 14 clear days’ notice 34
Slide 35: Slide 35