Slide 1: Results for the year to 31 March 2023
Results for the year to 31 March 2023 11 May 2023
Slide 2: Business review
Business review Simon Borrows Chief Executive
Slide 3: Resilient performance in a challenging market
Resilient performance in a challenging market Year to 31 March 2023 Group Private Equity Infrastructure Total return NAV Gross investment return Gross investment return on equity per share 40% 6% 36% 1,745p Proprietary capital invested Cash income Gearing Total dividend per share £381m £107m Realisa
Slide 4: Thematic origination
Thematic origination We back businesses that benefit from long-term growth trends Value-for-money Demographic and Energy transition, Digitalisation, and discount social change energy security and automation resource scarcity and big data 4
Slide 5: Careful portfolio construction
Careful portfolio construction Our portfolio is positioned to offer resilience across the economic cycle Portfolio at 31 March 2023 Value-for-money, Private Label, Infrastructure and Healthcare represent 83% of portfolio 5
Slide 6: Advancing our sustainability agenda
Advancing our sustainability agenda Climate Resources and skills Investing in our people • Performed initial top-down climate • Embedded dedicated sustainability • Initiatives to improve DE&I performance scenario analysis, currently refining resource in investment teams and – Leading with impact pro
Slide 7: Private Equity
Private Equity Portfolio well positioned in current environment and exposed to sustainable long-term megatrends Exceptional performance at Action, resilient performance across rest of portfolio • 40% gross investment return • 90%1 of portfolio growing earnings in the 12 months to December 2022 • Mul
Slide 8: Strong earnings growth across the portfolio
Private Equity Strong earnings growth across the portfolio Portfolio earnings growth of top 20 PE investments (96% of PE portfolio by value)1 ≥ 30% £12,055m 5 companies 20 - 29% £596m 3 companies 10 - 19% £350m 3 companies 0 - 9% £1,341m 4 companies <0% £1,495m 5 companies 1 Includes top 20 Private
Slide 9: Private Equity: most themes contributed
Private Equity Most themes contributed; softer trading from our online retailers and discretionary consumer investments + ‒ Value-for-money and private label Online retail & discretionary consumer Healthcare Industrial technology Business & technology services Travel 9
Slide 10: Valuations reflect challenging conditions for some assets
Private Equity Valuations reflect challenging conditions for some assets Largest value increases (>£20m) Largest value declines (>£20m) Portfolio Value growth Value at Driver of value Portfolio Value Value at Driver of value company (excl FX) 31 Mar movement company decline 31 Mar movement 2023 (exc
Slide 11: Action – strong 2022 performance
Private Equity Action – strong 2022 performance +30% +46% +18% 78% 280 2,263 Sales growth EBITDA growth LFL growth Cash conversion Net new stores Total stores An unbroken high growth track record Expansion across Europe continues1 Netherlands Poland EBITDA (€m) 408 stores, 256 stores, Sales (€m) 2 D
Slide 12: Action – strong start to the year
Private Equity Action – strong start to the year • Q1 2023 trading: net sales of €2.5bn (36% increase since Q1 2022), 24% LFL sales growth, LTM EBITDA of €1,328m • Q2 2023 trading: strong P4 to start Q2 • Store openings: 52 stores added in the year to date (vs 44 at the same time last year) • Bankin
Slide 13: Action - consistently strong business performance
Private Equity Action - consistently strong business performance • 11 countries and significant white space • Everyday low prices • 14 categories and flexible SKUs • Focus on quality and sustainability Poland • Variable sourcing mix and routes • Scale benefits shared with customers Most loved non-fo
Slide 14: Compounding value | Cirtec (2017)
Private Equity Compounding value | Cirtec (2017) £552m Significant scale and depth built since initial investment • Nine bolt-on acquisitions to add product diversification and vertical integration • Build-out of international operations £172m in Europe and Costa Rica Positioned for significant grow
Slide 15: Compounding value | Royal Sanders (2018)
Private Equity Compounding value | Royal Sanders (2018) £490m Leading consolidator in its industry • Five bolt-on acquisitions completed since investment • Consistent and strong track record of organic growth £136m Well positioned to continue to grow organically and Cost Value and distributions at 3
Slide 16: We made four new investments in the year
Private Equity We made four new investments in the year… Accounts payable process automation specialist Premium brand offering apparel and accessories focused on the SAP ecosystem for babies and children £94m proprietary capital investment £60m proprietary capital investment Online travel agency in
Slide 17: Continued to build platforms through targeted bolt-ons
Private Equity …and continued to build existing platforms through targeted bolt-ons + + + + + Nittmann & Pekoll £34m proprietary £23m proprietary £6m proprietary capital investment capital investment Self funded Self funded capital investment + + + + + Q’s Precision Q’s Twinsburg site Components Sel
Slide 18: Realisations and cash income evidence quality of the portfolio
Private Equity Realisations and cash income evidence quality of the portfolio • £471m proceeds • 50% uplift on opening value • 3.1x MM Full realisation • 24% IRR • £47m proceeds £857m Realised proceeds • 45% uplift on opening value • 1x MM (including investment in Amor) Full realisation • Last asset
Slide 19: Infrastructure
Infrastructure Portfolios performing strongly with positive correlation to inflation Portfolios continue to perform well, but GIR impacted by 3iN’s share price volatility • 6% gross investment return, impacted by share price decline for 3iN • 3iN generated total return of 14.7% (ahead of target) and
Slide 20: Compounding value | Smarte Carte (2017)
Infrastructure Compounding value | Smarte Carte (2017) Strong growth in the period of ownership £344m • Entrenched market footprint, including 50 of the top 50 US airports £177m • Revenue growth of 12%, through development of ancillary services • Improved margin profile through technology upgrades C
Slide 21: Financial review
Financial review James Hatchley Group Finance Director
Slide 22: Total return on equity of 36% for the financial year
Total return on equity of 36% for the financial year NAV per share (pence) 1,850 41 390 65 1,745 1,750 (51) 1,650 (39) 1,550 1,450 18 1,350 1,321 1,250 1,150 31-Mar-22 Realised profit Value growth Net carry payable Fx1 Other 2 Dividends 31-Mar-23 NAV per share up 32% to 1,745 pence 1 FX net of deriv
Slide 23: Strong value growth despite challenging macroeconomic climate
Strong value growth despite challenging macroeconomic climate £3.8bn value increase driven by Action's performance Value movement by basis excluding FX (£ million) 3,708 Action 520 PE performance increases1 (310) PE performance decreases1 (167) Multiples (106) Quoted 106 DCF 18 Other Portfolio value
Slide 24: Action valuation basis unchanged
Private Equity Action valuation basis unchanged • LTM Operating EBITDA to P3 2023 of €1,328m €26.6bn • LTM run-rate EBITDA earnings of €1,439m €21.0bn €18.7bn • Net debt of €2,545m at 31 March 2023 €15.6bn • 18.5x (Mar 22:18.5x) multiple post discount • 3i equity stake increased to 52.9% (Mar 22: 52
Slide 25: Action continues to outperform the peers
Private Equity Action continues to outperform the peers whilst sharing scale benefits with customers Performance over the last five years LfL growth average Revenue CAGR EBITDA CAGR +2% +8% +13% 7% 21% 26% 5% 13% 13% Peers average Peers average Peers average Strong performance over a five-year perio
Slide 26: Action – peer group multiples support 18.5x run-rate EBITDA multiple
Private Equity Action – peer group multiples support 18.5x run-rate EBITDA multiple for Action EV/LTM EBITDA EV/NTM EBITDA 30x 30x 25x 25x Five Below, 23.8x Dollarama, 21.1x Costco, 20.8x 20x 20x Five Below, 19.9x Costco, 19.0x Ollie’s, 18.2x Dollarama, 17.3x Avg, 16.3x 15x 15x Avg, 14.1x Grocery Ou
Slide 27: Valuation multiples compare favourably to peer set averages
Private Equity Valuation multiples continue to compare favourably to average multiples for peer sets1 Only three companies have valuation marks above their peer set averages All multiples are within peer set ranges 1 Valuation multiples used for assets valued on an earnings basis compared to a peer
Slide 28: Strong portfolio performance
Private Equity Strong portfolio performance Year to 31 March 2023 2022 £ million Gross investment return 4,966 4,172 of which foreign exchange1 622 (11) GIR % of opening portfolio 40% 47% Realisations 857 684 Cash investment 381 457 31 March 31 March £ million 2023 2022 Portfolio Value 16,425 12,420
Slide 29: Portfolio leverage is moderate with senior-only capital structures
Private Equity Portfolio leverage is moderate with senior-only capital structures Ratio of total net debt to earnings1 - 31 March 2023 Debt maturity (% of gross debt) - 31 March 2023 Action Excluding Action 4.6x 58% 4.1x 4.0x 2.5x 2.0x 27% 1.8x 12% 3% 0% Mar 22 Sep 22 Mar 23 2023 2024 2025 2026 Dec
Slide 30: c.£200m crystallisation of carried interest agreed in the year
Private Equity c.£200m crystallisation of carried interest agreed in the year Year to 31 March 2023 2022 £ million Income statement Carried interest receivable 4 3 Carried interest payable (392) (416) Net total expense (388) (413) £ million 2023 2022 Balance sheet Carried interest receivable 6 8 Car
Slide 31: Infrastructure and Scandlines
Infrastructure and Scandlines Good performance in the period Year to 31 March 2023 2022 £ million Infrastructure gross investment return 86 241 Realised profits over value — 10 Unrealised profit on revaluations1 23 178 Dividend and interest income from the portfolio 47 43 Fees receivable — (3) Forei
Slide 32: Operating cash position
Operating cash position Objective to at least break even Year to 31 March 2023 2022 £ million Private Equity 351 346 of which Action dividend 325 284 Infrastructure 107 91 Scandlines 39 13 Cash income 497 450 Operating cash expenses1 (133) (110) Operating cash profit 364 340 1 Operating cash expense
Slide 33: Simple balance sheet and conservative capital management
Simple balance sheet and conservative capital management • Portfolio value £18,388m • High quality, well constructed portfolio • Gross cash, with good counterparty diversification £412m • c.91% held in AAA-rated money market funds £775m • Gross fixed term debt made up of bonds expiring 2032 and 2040
Slide 34: Total FY2023 dividend of 53 pence per share
Total FY2023 dividend of 53 pence per share • Our dividend policy aims to maintain or grow the dividend year-on-year subject to: ‒ maintaining our conservative balance sheet strategy ‒ careful consideration of the outlook for investments and realisations and market conditions • Second FY2023 dividen
Slide 35: Closing remarks
Closing remarks Simon Borrows Chief Executive
Slide 36: Action has been an extraordinary investment
Action has been an extraordinary investment… Action – 3i carrying value, £m1 +4,023 11,188 +2,599 7,165 +1,030 +805 4,566 3,536 2,731 FY19 FY202 FY21 FY22 FY23 Step change in carrying value growth over recent years as compounding starting to manifest Over £600m distributions to 3i in the last 18 mon
Slide 37: All of 3i's segments have generated strong returns
… but all of 3i’s segments have generated strong returns Action PE ex Action Infrastructure F 23 61% F 23 12% F 23 9% F 22 63% F 22 30% F 22 23% F 21 29% F 21 30% F 21 16% F 20 20% F 20 6% F 20 5% F 19 32% F 19 13% F 19 2 % F 18 38% F 18 25% F 18 28% F 1 110% F 1 22% F 1 16% F 16 81% F 16 21% F 16 9
Slide 38: 3i has significant long-term potential
3i has significant long-term potential Permanent capital. Long-term, sustainable approach Thematic approach to investment with exposure to long-term secular growth trends Proven model, underpinned by robust processes, patience and price discipline Active management of portfolio companies with signif
Slide 39: Additional information
Additional information
Slide 40: Q4 NAV increased from 1,649 pence to 1,745 pence
Q4 NAV increased from 1,649 pence to 1,745 pence NAV per share (pence) 1,900 1,800 119 19 1,745 (8) ( 12 ) 1,700 1,649 (23) 1 1,600 1,500 1,400 1,300 1,200 31-Dec-22 Realised profit Value growth Net carry payable Fx 1 Other 2 Dividends 31-Mar-23 1 FX net of derivatives. 2 Other includes portfolio in
Slide 41: 3i Group large investments
3i Group 20 large investments Valuation Valuation Investment Business description March 2023 March 2022 (£m) (£m) Action General merchandise discount retailer 11,188 7,165 3i Infrastructure plc Quoted investment company, investing in infrastructure 841 934 Scandlines Ferry operator between Denmark a
Slide 42: Private Equity portfolio by value
Private Equity portfolio by value Portfolio of 39 investments (31 March 2022: 37) 42
Slide 43: Our purpose
Our purpose We generate attractive returns for our shareholders and co-investors by investing in private equity and infrastructure assets. As proprietary capital investors we have a long-term, responsible approach. We aim to compound value through thoughtful origination, disciplined investment and a