Slide 1: Results for the year to 31 March 2020
Results for the year to 31 March 2020 14 May 2020
Slide 2: Resilient performance despite severe disruption from Covid-19
Resilient performance despite severe disruption from Covid-19 Year to 31 March 2020 Group Private Equity Infrastructure Scandlines Total return Total dividend Proprietary capital Cash income Cash realisations on equity per share invested 3% 35p £1,062m1 £78m £70m NAV per share Net cash Realisation 3
Slide 3: Our approach to Covid-19
Our approach to Covid-19 People and Balance sheet and Portfolio operations liquidity management • Flexible remote • Prudent balance • Teams and working for all sheet management resources focused employees • Net cash of £270m on supporting • Business travel at the end of March existing portfolio canc
Slide 4: Our investment approach provides some resilience to Covid-19
Private Equity Our investment approach provides some resilience to Covid-19 Compliance & Favourable Value-for-money Health & Wellness Big data Safety demographics Lower Bioprocessing Platform Bioprocessing Platform Covid-19 impact Higher 4
Slide 5: Action - EFV transaction closed in January 2020
Private Equity Action - EFV transaction closed in January 2020 • Transaction value of €10.25bn delivered a 31x money multiple and a 73% IRR €10.25bn • 3i re-invested proceeds and excess carry to increase its holding £591m • 3i’s direct holding in Action increased to 52.6% gross and 52.6% gross 46.2%
Slide 6: Action – continued strong growth in 2019
Private Equity Action – continued strong growth in 2019 2019 +21% revenue growth +20% EBITDA growth 1,552 stores 230 new stores Highlights A continued high growth track record A truly pan-European footprint EBITDA (€m) Sales (€m) Number of stores +27% CAGR 1,552 57 1,325 5,114 387 347 +28% CAGR 182
Slide 7: Action – virtually all stores now open
Private Equity Action – virtually all stores now open YTD stores / Stores / DCS Full As at 11th May Comment DCs open assortment Netherlands 389 All open ✓ All stores remained open throughout crisis Belgium 183 All open ✓ All stores reopened on 11 May Luxembourg 9 All open ✓ All stores open Gradual r
Slide 8: Action – consistently strong performance in the Netherlands
Private Equity Action – consistently strong performance in the Netherlands • Year-to-date LfL at end of week 11 was over 7% • Dutch stores (open throughout crisis) continuing to perform well, with LfL at end week 19 of over 7% • Social distancing arrangements in place throughout store network • Very
Slide 9: Action – strong spring back post lockdown
Private Equity Action – strong spring back post lockdown • Q1 2020 finished ahead of prior year on sales and EBITDA • P4 sales were 41% of last year • Strong trading in May as stores re-open across all territories • Restricted footfall compensated by much larger basket size • Selected cost measures
Slide 10: Strong portfolio performance before the outbreak of Covid-19
Private Equity Strong portfolio performance before the outbreak of Covid-19 Good earnings momentum Limited areas of weakness • 93% of portfolio by value grew • Auto sector and some industrials earnings to end December • Strong contribution from bolt-on acquisitions • Consumer and healthcare sectors
Slide 11: Covid-19 has impacted the portfolio asymmetrically
Private Equity Covid-19 has impacted the portfolio asymmetrically Stable to positive Likely temporary impact Likely prolonged impact Healthcare Personal care Essential ingredients Bricks and mortar retail and leisure B2B services Travel Industrials and automotive Online retail 11
Slide 12: Considered approach to valuations to reflect the impact of Covid-19
Private Equity Considered approach to valuations to reflect the impact of Covid-19 (cont.) Largest value increases (>£20m) Largest value declines (>£20m) Value Value at Portfolio Value Value at Key driver of Portfolio Key driver of value decline 31 Mar growth 31 Mar company value movement company mo
Slide 13: Good realisations in the year
Private Equity Good realisations in the year Basic-Fit Aspen Pumps ACR Vintage year 2013 Vintage year 2015 Vintage year 2006 Proceeds £76m Proceeds £205m Proceeds1 £105m Money multiple 4.2x Money multiple 4.1x Money multiple 1.0x IRR 37% IRR 34% IRR - Opportunistic reduction of our Excellent realisa
Slide 14: Disciplined approach to new investment
Private Equity Disciplined approach to new investment Magnitude Software Evernex Bioprocessing Platform £139m new investment £214m new investment £60m new investment • Provider of unified • Provider of third-party • Single-use bioprocessing application data maintenance of critical IT product platfor
Slide 15: Strong progress on buy-and-build assets with bolt-on acquisitions
Private Equity Strong progress on buy-and-build assets with 13 bolt-on acquisitions + + + + TNC Clips + + + + + + + + 15
Slide 16: 3i Infrastructure plc
3i Infrastructure plc Covid-19 has impacted the share price but underlying performance is good 3iN relative share price performance – FY2020 FY2020 highlights (rebased to 3iN, pence per share) 330 Total dividend per share 9.2p 310 290 Investments and £376m 270 commitments 250 Realisations £581m 230
Slide 17: Scandlines
Scandlines Solid 2019 performance; short-term Covid-19 impact since March 2020 • Good performance and solid results for 2019 • Proceeds of £70m and dividend income of £21m from investment grade refinancing • Additional dividend income of £16m in the year • Major short-term Covid-19 impact on car vol
Slide 18: NAV down 1% to 804 pence due to Covid-19 impact on Q4 valuations
NAV down 1% to 804 pence due to Covid-19 impact on Q4 valuations NAV per share (pence) 900 850 23 (38) 9 (18) 13 815 804 800 750 700 1 31-Mar-19 Realised profits Value loss Other FX Dividends 31-Mar-20 1 Other includes portfolio income, third party fee income, operating costs and the fair value move
Slide 19: Group valuation decrease of £172 million
Group valuation decrease of £172 million Value movement by basis (£ million) 733 Action Q1-Q3 1 (272) Action Q4 182 PE increases (677) PE reductions (92) Infrastructure (46) Scandlines 1. At 31 March 2020 Action was valued at fair value of the transaction (EV of €10.25bn). The reduction of £272m rep
Slide 20: Thoughtful and thorough valuations process
Thoughtful and thorough valuations process • Portfolio company review focus on early impact of Covid-19 March • Detailed short-term liquidity and banking analysis • Central guidance issued to all investment teams 31 March • Market multiples known • Regular updates on liquidity, banking and managemen
Slide 21: Action - development of valuation since September 2019
Private Equity Action - development of valuation since 30 September 2019 £ million 591 (272) 353 (387) 8 3,536 3,243 Sept 19 value Q3 value growth Value sold in Reinvestment Q4 value reduction FX Mar 20 value Action transaction Holding in Action increased from 45.3% to 52.6% 21
Slide 22: Action – a considered approach to valuation
Private Equity Action – a considered approach to valuation EV/ run rate EBITDA (post discount) Valuation at March 2020 reduced to level 18.2x 18.0x c17x consistent with EFV transaction, to reflect Enterprise value (post discount) €10.80bn €10.25bn €10.25bn • Covid-19 impact • ongoing uncertainty • i
Slide 23: Action – peers have been affected in a different way
Private Equity Action – peers have been affected in a different way EV / EBITDA (LTM) 35x 30x 25x 21.6x Ollie’s 21.3x Grocery Outlet 20x 19.5x Costco 18.1x Five Below 15x 17.1x Dollarama 13.2x Inditex 10x 11.4x B&M 5x 0x Apr-19 May-19 Jun-19 Jul-19 Aug-19 Sep-19 Oct-19 Nov-19 Dec-19 Jan-20 Feb-20 Ma
Slide 24: Considered approach to valuations to reflect the impact of Covid-19
Private Equity Considered approach to valuations to reflect the impact of Covid-19 No material change to Impact of Covid-19 Impact of Covid-19 valuation approach reflected through earnings reflected through multiple • December LTM • March LTM/ • March LTM maintainable earnings • Modest/no change to
Slide 25: Private Equity: strong performance for the year
Private Equity Strong performance for 11 months of the year Year to 31 March £ million 2020 2019 Gross investment return 352 1,148 % of opening portfolio 6% 20% Realised profit 90 131 Realisations1,2 848 1,235 Cash investment2 1,062 332 Portfolio value 6,552 6,023 1 The 2019 realisations are gross o
Slide 26: Carried interest receivable and payable
Private Equity Carried interest receivable and payable Year to/ended 31 March 2020 2019 £ million Income statement Carried interest receivable 79 128 Carried interest payable (63) (206) Net total return 16 (78) Balance sheet Carried interest receivable 11 609 Carried interest payable (998) (942) Net
Slide 27: Infrastructure
Infrastructure Reassuring performance from 3iN Year to 31 March £ million 2020 2019 3iN (76) 167 Smarte Carte (22) 3 Regional Rail 10 - Other funds (4) (8) Portfolio revaluation (92) 162 Dividend, interest income and FX 53 48 Gross investment return (39) 210 % of opening portfolio (4)% 25% 27
Slide 28: Scandlines
Scandlines Solid performance for 11 months Year to 31 March £ million 2020 2019 Valuation 429 529 Gross investment return 5 49 % of opening portfolio 1% 9% Valuation adjusted to reflect border closure and economic impact 28
Slide 29: Operating cash profit provides resilience
Operating cash profit provides resilience Year to 31 March £ million 2020 2019 Private Equity 45 45 Infrastructure 78 82 Scandlines 37 28 Cash income 160 155 Operating cash expenses1 (120) (109) Operating cash profit 40 46 Objective is to at least break even 1 Operating cash expenses includes leases
Slide 30: Simple balance sheet and conservative capital management
Simple balance sheet and conservative capital management £8,098m • High quality, defensive portfolio £845m • Gross cash held centrally with no material restrictions £575m • 2023 and 2032 bonds with no financial covenants £400m • Undrawn five-year RCF refinanced in March 2020 £1.2bn liquidity at 31 M
Slide 31: Total dividend set at 35 pence per share
Total dividend set at 35 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 FY2020 dividend of 17
Slide 32: Outlook
Outlook Focus on managing existing portfolio Investment and realisations lower than in previous years Prudent management of balance sheet and liquidity Benefit from proprietary capital model No change in return objectives and dividend policy 32
Slide 33: Additional information
Additional information
Slide 34: Our business model
Our business model Delivering sustainable returns over the cycle What we offer Value creation Who benefits ➔ Conservative balance sheet management ➔ Tight grip on operating costs Expertise ➔ Operating cash profit Access to capital BLN 1 Shareholders Invest Active partnership Portfolio Reputation com
Slide 35: The portfolio has defensive underlying exposures
The portfolio has defensive underlying exposures Portfolio value as at 31 March 2020 Examples Value-for-money Action, Hans Anders, Basic-Fit 11% 3iN, Scandlines, Infrastructure 6% Regional Rail, SmarteCarte Cirtec, Q Holding, Bioprocessing 10% Healthcare platform 47% Exposure to consumer 7% WP, Roya
Slide 36: Q4 NAV declined from 877 pence to 804 pence
Q4 NAV declined from 877 pence to 804 pence NAV per share (pence) 900 9 (109) 877 850 37 (18) 804 800 5 3 750 700 31-Dec-19 Realised profits Value loss Other Net carry Fx Dividends Closing value movement 1 Other includes portfolio income, third party fee income, operating costs and the fair value mo
Slide 37: 3i Group large investments
3i Group 20 large investments Investment Business description Valuation Mar 19 Valuation Mar 20 £m £m Action General merchandise discount retailer 2,731 3,536 3i Infrastructure plc Quoted investment company, investing in infrastructure 744 665 Scandlines Ferry operator between Denmark and Germany 52
Slide 38: Group investment portfolio
Group investment portfolio Portfolio value at 31 March 2020 (£m) Portfolio value at 31 March 2019 (£m) 394 429 452 665 3,536 281 1,472 869 Action 2013-2016 Private Equity 2016-2019 Private Equity 2019-2022 Private Equity 3iN Scandlines reinvestment Other Infrastructure Other Note: The 2013 further S
Slide 39: Net asset exposure by currency
Net asset exposure by currency 2% Change Currency Net assets YTD Impact 15% 20% Sterling £1,511m n/a n/a Euro1 £4,904m (2.6)% £142m US dollar1 £1,191m (4.8)% £71m Danish krone £119m (2.6)% £3m 63% Other2 £32m n/a £(1)m Sterling/non-revaluing Euro Total £7,757m £215m US dollar Danish krone 1% movemen
Slide 40: Private Equity portfolio by value
Private Equity portfolio by value By office location (%) By sector (%) By vintage (%) 1% 6% 13% 12% 3% 7% 9% 12% 5% 9% 11% 54% 7% 60% 6% 64% 5% 14% 2% Action (Consumer) Consumer Pre 2014 2014 2015 Benelux France Germany Industrials B&TS* 2016 2017 2018 UK US Others Healthcare 2019 2020 Portfolio of
Slide 41: Increase in portfolio value driven by cash investments
Private Equity Increase in portfolio value driven by cash investments £ million 8,000 260 (759) 1,062 (34) Action 7,000 transaction Action transaction 6,552 6,023 6,000 5,000 ash1 Portfolio value as at Cash investment Value growth FX/Other 1 Divestment value Portfolio value as at 31 March 2019 31 Ma
Slide 42: £34 million value decrease
Private Equity £34 million value decrease Value movement by basis (£ million) 733 Action Q1-Q3 1 (272) Action Q4 2 203 Performance increases (264) Performance decreases 2 (231) Multiples (103) Schlemmer write down (92) Quoted (8) Other Value decrease driven by a combination of performance and multip
Slide 43: Top assets continue to show good earnings growth
Private Equity Top 20 assets continue to show good earnings growth 3i carrying value at 31 March 2020 (£ million) 6 Number of 4,186 companies: 8 1,380 3 3 413 466 < 0% 0 - 9% 10 -19% >20% Last 12 months’ earnings growth1 1 Calculated based on LTM to 31 December 2019 earnings for the top 20 investmen
Slide 44: Portfolio leverage
Private Equity Portfolio leverage Ratio of total net debt to earnings by 3i carrying value at 31 March 20201 (£ million) 4,644 520 205 263 322 24 <1x 1 - 2x 2 - 3x 3 - 4x 4 - 5x >5x 4.1x leverage across the whole portfolio 1 This represents 91% of the Private Equity portfolio by value (31 March 2019
Slide 45: Proprietary capital and external funds
Private Equity Proprietary capital and external funds Vintage1 Proprietary capital value at 31 Mar 2020 Vintage multiple at 31 Mar 2020 Buyouts 2010-2012 £1,623m 9.5x Growth 2010-2012 £20m 2.1x 2013-2016 £869m 2.2x 2016-2019 £1,472m 1.0x 2019-2022 £281m 1.0x Other2 £2,287m n/a Total proprietary capi
Slide 46: Action: Leading KPIs versus comparable set – last five years
Private Equity - Action Leading KPIs versus comparable set – last five years Sales growth (%, 5yr CAGR) Like-for-like sales growth (%, 5yr average) Store growth (%, 5yr CAGR) +13.5% +1.4% +13.9% 6.8% 27.7% 5.7% 24.7% 4.3% 20.8% 22.8% 14.2% 10.9% 2.3% 6.3% 2.2% EBITDA margin (%, 5yr average) Cash flo
Slide 47: Infrastructure: AUM of £4.4 billion at March 2020
Infrastructure AUM of £4.4 billion at 31 March 2020 AUM by fund or strategy (%) 7 5 3i Infrastructure plc US Infrastructure 17 3i India Infrastructure Fund 50 BIIF 3i Managed Infrastructure Acquisitions LP 11 3i European Operational Projects Fund 2 8 3i Managed accounts AUM increased by £243m in the
Slide 48: Infrastructure: Assets under management
Infrastructure Assets under management 3i Remaining 3i % Fee income commitment/ commitment invested at received Close date Fund size share at March 2020 March 2020 AUM1 in the year 3iN1 Mar 07 n/a £665m n/a n/a £2,202m £28m 3i Managed Infrastructure Acquisitions LP Jun 17 £698m £35m £5m 86% £756m £6
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