3i Group Plc · LSE:III
3i — Shareholder Meeting (June 2023)
52 slides from 3i's shareholder meeting presentation, Jun 29, 2023
Slide 1: Annual General Meeting
Annual General Meeting 29 June 2023
Slide 2: Introduction
Introduction David Hutchison Chairman
Slide 3: Today's agenda
Today’s agenda Introductory remarks David Hutchison Review of the year Simon Borrows Outlook Simon Borrows Q&A David Hutchison Formal business including Resolutions David Hutchison 5
Slide 4: The Board of Directors and General Counsel
The Board of Directors and General Counsel 6
Slide 5: Peter McKellar
Peter McKellar
Slide 6: Alexandra Schaapveld
Alexandra Schaapveld ai
Slide 7: Coline McConville
Coline McConville
Slide 8: Caroline Banszky
Caroline Banszky
Slide 9: Kevin Dunn
Kevin Dunn
Slide 10: Simon Borrows
Simon Borrows
Slide 11: James Hatchley
James Hatchley
Slide 12: Jasi Halai
Jasi Halai
Slide 13: Stephen Daintith
Stephen Daintith
Slide 14: Lesley Knox
Lesley Knox
Slide 15: 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 16: Clear strategy, consistent execution and investment discipline
We continue to benefit from our clear strategy, consistent execution and investment discipline. While we are not immune from the impacts of the current macroeconomic uncertainty, the Group’s financial strength and quality portfolio put us in a good position to continue to deliver attractive returns
Slide 17: Our purpose
Our purpose We generate attractive returns for our shareholders and co-investors by investing Long-term stewardship in private equity and infrastructure assets. As proprietary capital investors we have a Thematic origination long-term, responsible approach. We aim to compound value through Careful p
Slide 18: 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
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Slide 20: Review of the year
Review of the year Simon Borrows Chief Executive
Slide 21: 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 23
Slide 22: 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 24
Slide 23: 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 24: 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 Selective investment; realisations and cash income evidence quality of the p
Slide 25: 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 26: 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 27: 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 28: Action – strong start to the year
Private Equity Action – strong start to the year • Strong Q1 2023 trading, with net sales of €2.5bn (36% increase since Q1 2022), 24% LFL sales growth, LTM EBITDA of €1,328m • Like-for-like sales growth at 22% year to date up to week 25 • 84 net new stores added in the year to date (vs 75 at the sam
Slide 29: 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 30: Compounding value | Cirtec and Royal Sanders
Private Equity Compounding value | Cirtec and Royal Sanders 32
Slide 31: 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 32: 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 33: We made four new investments in the year
Private Equity We made four new investments in the year… 35
Slide 34: Continued to build existing platforms through targeted bolt-ons
Private Equity …and continued to build existing platforms through targeted bolt-ons + + + + + Nittmann & Pekoll + + + + + Q’s Precision Q’s Twinsburg site Components 36
Slide 35: Realisations and cash income evidence quality of the portfolio
Private Equity Realisations and cash income evidence quality of the portfolio • 50% uplift on opening value • 3.1x MM Full realisation • 24% IRR £857m • 45% uplift on opening value Realised proceeds • 1x MM (including investment in Amor) Full realisation • Last asset in EuroFund V £351m Cash income
Slide 36: 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 total return of 14.7% (ahead of target) Good contribut
Slide 37: 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 38: Outlook
Outlook Simon Borrows Chief Executive
Slide 39: 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 40: 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 41: 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
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Slide 43: The Resolutions
The Resolutions David Hutchison Chairman
Slide 44: Resolutions commentary
Resolutions commentary • 18 ordinary resolutions • 4 special resolutions • Normal annual business 4646
Slide 45: Questions
Questions
Slide 46: Poll card
Poll card AGM poll card The Board recommends you vote FOR resolutions 1 to 22 Signature Resolutions For Against Abstain Resolutions For Against Abstain 1 To receive and ¢ sonsicer the Company Accounts forthe year oOo oF Oo 13 To reappoint Mr P A McKellar as a Director. oOo oO oO 2. Toapprove the Dir
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Slide 48: Resolutions 1-5
Resolutions 1 - 5 1. That the Company’s accounts and the reports of the Directors and the Auditor for the year to 31 March 2023 be and are hereby approved 2. That the Directors’ remuneration report for the year to 31 March 2023 be and is hereby approved 3. That the Directors’ remuneration policy be
Slide 49: Resolutions 6-10
Resolutions 6 - 10 6. That Mr S A Borrows be and he is hereby reappointed as a Director of the Company 7. That Mr S W Daintith and he is hereby reappointed as a Director of the Company 8. That Ms J H Halai be and she is hereby reappointed as a Director of the Company 9. That Mr J G Hatchley be and h
Slide 50: Resolutions 11-16
Resolutions 11 - 16 11. That Ms L M S Knox be and she is hereby reappointed as a Director of the Company 12. That Ms C L McConville be and she is hereby reappointed as a Director of the Company 13. That Mr P A McKellar be and he is hereby reappointed as a Director of the Company 14. That Ms A Schaap
Slide 51: Resolutions 17-22
Resolutions 17 - 22 17. To authorise the Company to make political donations (other than to political parties) or incur political expenditure not exceeding £20,000 during the period until the end of next year’s Annual General Meeting 18. To renew the Directors’ authority to allot shares 19. To renew
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