Slide 1: Results for the year to 31 March 2015
Results for the year to 31 March 2015 14 May 2015
Slide 2: Stronger, more resilient, and able to generate sustainable returns
Stronger, more resilient, and able to generate sustainable returns Simon Borrows Chief Executive 2
Slide 3: FY 2015 – stronger and more resilient with good momentum across the group
FY 2015 – stronger and more resilient with good momentum across the group Group Total return on AUM of £13.5bn £28m operating equity of 20% cash profit NAV of 396p/share Up 4% from Up from £5m (2014: 348p) last year last year Business Private Equity Infrastructure Debt Management lines £831m realisa
Slide 4: Our journey since the announcement of the strategic restructuring in June 2012
Our journey since the announcement of the strategic restructuring in June 2012 FY2013 FY2014 - 15 FY2016+ Transition and Restructuring Strategic goal delivery We have completed all key phases of our transformation 4
Slide 5: We delivered against all our strategic priorities
We delivered against all our strategic priorities 1 2 3 4 5 Create a leaner Improve Re-focus and re- Grow third-party Materially organisation with consistency and shape the AUM and reduce gross a cost base discipline of Private Equity income debt and funding more aligned investment and business cost
Slide 6: Progress reflected in materially stronger financial performance
Progress reflected in materially stronger financial performance Year to Year to Year to Year to 31 Mar 2015 31 Mar 2014 31 Mar 2013 31 Mar 2012 Total return £659m £478m £373m £(656)m % over opening net asset value 19.9% 16.3% 14.2% (19.5)% Dividend per share (base/add) 8.1p / 11.9p 8.1/11.9p 8.1p 8.
Slide 7: How do we progress from here? Our business model
How do we progress from here? Our business model Private Equity Infrastructure Debt Management Proprietary Capital portfolio value Fund Management fee income Employs the majority Increasingly a third- Primary driver of of 3i’s proprietary party fund third-party fund capital management management bus
Slide 8: 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 Demonstrate the value of our Realise investments at good uplifts to book existing investment portfolio and value and strong cash-on-cash multipl
Slide 9: Private equity – summary of activity
Private equity – summary of activity Private Equity Taking advantage of market conditions to realise assets at good uplifts ─ gross investment return of £719m, or 24% of opening portfolio ─ proceeds of £831m ─ realised uplift of £144m, or 27% over opening book (excluding refinancings) ─ portfolio
Slide 10: Reshaping our PE portfolio
Reshaping our PE portfolio Private Equity The buckets Selected examples % of value FY2015 FY2014 Longer-term hold and value Action, Element, 1 creation Basic-Fit, Scandlines c. 60% c. 42% Strong performers; position for Hilite, Vedici, 2 sale over the next few years LHI, Dynatect c. 15% c. 30% Manag
Slide 11: Reshaping our PE portfolio
Reshaping our PE portfolio Private Equity 19 full realisations (mostly buckets 3 and 4) £831m proceeds from realisations and refinancings 27% uplift over opening value (excluding refinancings) 2.0x money multiple over cost 65 portfolio companies at the end of the year 4 further realisations announce
Slide 12: Investing for future growth
Investing for future growth Private Equity Leveraging network and capabilities to find attractive investment opportunities in challenging markets Proprietary capital of £369m deployed Four new investments in FY2015 Average entry multiple of 9.7x EBITDA 12
Slide 13: Infrastructure – summary of activity
Infrastructure – summary of activity Strong performance at 3iN driving gross investment return of 20% ─ 25% total shareholder return from 3iN (£77m unrealised value growth; £20m dividend) ─ market returns compression underpinning value growth ─ performance fee of £45m driven by 3iN’s strong NAV gr
Slide 14: 3iN – developments since the year end
3iN – developments since the year end Updated return objective ─ target of 8% to 10% to be achieved over the medium term (from 10% annual target) Set a new, progressive dividend policy ─ de-linking annual dividend from opening NAV Managing liquidity: maintaining flexibility to invest while min
Slide 15: Debt Management – summary of activity
Debt Management – summary of activity Debt Management CLO “engine” working well: six new CLOs issued in the year, in Europe and the US, raising £2.2bn in AUM Successfully diversifying product offering ─ first close of European Mid Market Loan Fund at €250m ─ doubled AUM in US Senior Loan Fund to
Slide 16: Continue to improve capital efficiency and allocation
Continue to improve capital efficiency and allocation Average over FY10-FY12 Year to 31 March 15 Fees and Fees and portfolio portfolio income 27% income 14% 5% 18% 41% 63% 3% 29% Realisations Operating Debt Shareholder Funds to Realisations Operating Debt Shareholder Funds to costs, net repayment di
Slide 17: Clear strategic priorities for FY2016
Clear strategic priorities for FY2016 Continue to improve capital allocation, focusing on enhanced shareholder distributions and reinvestment in the business Continue to invest our proprietary capital selectively in mid-market Private Equity Generate attractive returns through a relentless focus on
Slide 18: All three businesses contributing to improved performance
All three businesses contributing to improved performance Julia Wilson Group Finance Director 18
Slide 19: Financial highlights – 3i Value Build
Financial highlights – 3i Value Build 19% earnings growth Grow investment portfolio earnings £684m value growth Realisation proceeds £841m Realise investments at good uplifts to book Uplift of 27% on opening value value and strong cash-on-cash multiples Money multiple of 2.0x £28m operat
Slide 20: NAV up 14% to 396 pence
NAV up 14% to 396 pence NAV per share (pence) 450 (3) 72 (7) (12) 425 (19) 396 400 375 17 348 350 325 300 31-Mar-14 Realised profits Value growth Other1 Net carry FX Dividends 31-Mar-15 Note: payable 1 Other includes fee income, operating expenses and interest paid etc 20
Slide 21: Refocus generating strong returns
Refocus generating strong returns Private Equity Returns underpinned by earnings £ million 2015 2014 growth and realisations Gross investment 719 647 return Excellent Europe and North Realised profits1 144 190 America return Uplift over book value1 27% 45% ─ 89% of total portfolio value Money mu
Slide 22: Realisations at 2.0x money multiple and 27% uplift
Realisations at 2.0x money multiple and 27% uplift Private Equity Calendar year Uplift to opening value Residual value Investment realised invested Cash proceeds (31/3/2014) Money multiple1 (31/03/2015) Total full realisations3 £456m3 £4m Hilite 2011 £151m 20% 2.1x - Phibro 2009 £122m 28% 1.7x - Ved
Slide 23: Value driven by strong earnings growth
Value driven by strong earnings growth Private Equity 3i carrying value at 31 March 2015 (£m) 1,000 750 500 868 753 250 387 32 - 131 88 - <(20)% (20)-(11)% (10)-(1)% 0 - 9% 10-19% 20-30% >30% Last 12 months’ earnings growth 19% value weighted earnings growth 1 Includes all companies valued on an ear
Slide 24: Performance momentum driving value growth
Performance momentum driving value growth Private Equity Value movement by basis (£m) Use of earnings 2015 2014 1 Performance 417 % value at end of the 72% 79% period using earnings Multiples 64 Forecast indicates 2 4 negative outlook (No.) DCF 89 Multiples 2015 2014 FTSE 250 14.6x 13.3x Other 3 3i
Slide 25: Good portfolio momentum
Good portfolio momentum Private Equity Investment Business description Country Value at Trend 31 March 2015 Action Non-food discount retailer Benelux £592m Scandlines Ferry operator between Denmark and Germany DK/Germany £262m Amor / Christ Distributor and retailer of affordable jewellery German
Slide 26: Carry receivable and payable a function of good performance
Carry receivable and payable a function of good Private Equity performance £ million 2015 2014 Significant improvement in carry receivable Receivable 28 (1) – Growth Capital Fund 1.7x – Eurofund V 1.4x Payable (103) (82) Total return charge (75) (83) Majority of schemes now accruing carry payabl
Slide 27: Strong momentum in investment performance
Strong momentum in investment performance £ million 2015 2014 GIR of £96m (20%) Gross investment return 96 2 3iN a material contributor to AUM and performance Fee income 30 24 ─ 19% increase in 3iN share price to 160 pence Performance fees 45 - ─ £45m performance fee following receivable Eversho
Slide 28: Material contributor to cash profit
Material contributor to cash profit Debt Management AUM up 12% to £7.2bn £ million 2015 2014 ─ closed 6 CLOs in Europe and US ─ raised £2.4bn of AUM Fee income 34 32 ─ invested £105m of Proprietary Capital Portfolio income 21 12 AUM 7,239 6,485 Good progress in diversifying portfolio ─ closed a
Slide 29: Operating cash profit
Operating cash profit 160 28 5 (8) 140 158 120 140 132 132 130 127 100 2013 2014 2015 1 Cash income Operating expenses Note 1 Operating expenses exclude restructuring costs Operating expenses stable at 1.0% of AUM 29
Slide 30: Strong balance sheet
Strong balance sheet £ million 2015 2014 Well funded for investments and Portfolio value 3,877 3,565 shareholder distributions Gross debt (815) (857) Strong liquidity position Cash 864 697 – Increased cash from divestment Net cash / (debt) 49 (160) and operating cash income Other net liabilities
Slide 31: FY2015 dividend equal to 23% of realisation proceeds
FY2015 dividend equal to 23% of realisation proceeds Total Interim Final 1. £841m proceeds, 23% £190m / 20.0p £57m / 6.0p £133m / 14.0p distributed 2. Allocate to base dividend £77m / 8.1p £26m / 2.7p £51m / 5.4p first 3. Distribute excess as £113m / 11.9p £31m / 3.3p £82m / 8.6p additional dividend
Slide 32: Q&A
Q&A 32
Slide 33: Additional information
Additional information 33
Slide 34: Segmental reporting – FY 2015
Segmental reporting – FY 2015 Proprietary capital Fund Management activities Total return Realised profits 162 - Realised profits 162 Unrealised profits 684 - Unrealised profits 684 Portfolio income 113 - Portfolio income 113 Foreign exchange movements on Foreign exchange movements on investments (1
Slide 35: Segmental reporting – FY 2014
Segmental reporting – FY 2014 Proprietary capital Fund Management activities Total return (£m) (£m) (£m) Realised profits 202 - Realised profits 202 Unrealised profits 475 - Unrealised profits 475 Portfolio income 98 Portfolio income 3 Portfolio income 101 Foreign exchange movements on Foreign excha
Slide 36: Net asset exposure by currency
Net asset exposure by currency 4% 1% Change Currency in year Impact 33% Euro (12.5)% £(175)m 26% US dollar 12.4% £76m Swedish krona (15.7)% £(13)m Other n/a £(2)m Total return impact £(114)m 36% Sterling/non-revaluing Euro US dollar Swedish krona Other 1% movement in euro = £16m, 1% in dollar = £8m
Slide 37: Proprietary Capital
Proprietary Capital Key metrics (£ million) 2015 2014 Gross investment return £805m £665m1 - % of opening portfolio 23% 20% Interest payable £49m £54m Realisations £841m £677m Cash investment £(474)m £(337)m Net divestment £367m £340m Note: 1 Includes £3m of portfolio fees receivable allocated to Fu
Slide 38: Fund Management
Fund Management £ million 2015 2014 Income 125 127 - of which synthetic fee 45 51 Operating expenses (99) (108) Operating profit before carry 26 19 Implementation and amortisation costs 7 14 Underlying Fund Management profit 33 33 Underlying Fund Management margin 26% 26% 38
Slide 39: Assets under management – Private Equity
Assets under management – Private Equity Gross Fee Remaining 3i % money income commitment invested multiple1 received Original Original 3i at March at March at March in the Close date fund size commitment 2015 2015 2015 AUM year 3i Growth March €1,192m €800m €376m 53% 1.7x €472m £2m Capital Fund 201
Slide 40: Private Equity portfolio
Private Equity portfolio By region (%) By sector (%) By vintage (%) 3 4 8 1 7 19 22 7 13 3 29 22 23 76 7 38 51 12 UK & Northern Europe Business & Financial Services 2015 2014 North America Consumer 2013 2012 Brazil Healthcare 2011 2010 Asia Industrials & Energy 2009 2008 Southern Europe TMT Pre 2008
Slide 41: Refinancings, partial realisations and deferred consideration
Refinancings, partial realisations and deferred consideration Uplift to opening Calendar Cash value Residual value Investment realised year invested proceeds (31/3/2014) Money multiple1 (31/03/2015) Refinancings Action 2011 £113m 19% 7.1x £592m Element 2010 £23m 5% 3.0x £145m Amor2 2010 £19m (10)% 1
Slide 42: Assets under management - Infrastructure
Assets under management - Infrastructure Remaining Gross Fee 3i % money income commitment invested multiple1 received Original Original 3i at March at March at March in the Close date fund size commitment 2015 2015 2015 AUM year 3iN March 2007 n/a n/a n/a n/a n/a £1,289m £17m India Fund March 2008 U
Slide 43: Assets under management - Debt Management CLOs
Assets under management - Debt Management CLOs Par Realised Fees value of equity Annualised received Closing Reinvestment Maturity fund at money equity cash in the year date period end date launch 1 multiple2 AUM yield3, 4, 5 £m European CLO funds Harvest CLO XI Mar-15 Mar-19 Mar-29 €525m n/a €400m
Slide 44: Assets under management - Debt Management other funds
Assets under management - Debt Management other funds Par Realised Fees value of equity Annualised received Closing Reinvestment Maturity fund at money equity cash in the year date period end date launch 1 multiple2 AUM yield3, 4, 5 £m Other funds EMMF Nov-15 Nov-17 Nov-23 n/a n/a €250m n/a 0.1 Vint
Slide 45: 3i Infrastructure plc Sale of Eversholt Rail Group
3i Infrastructure plc Sale of Eversholt Rail Group Key investment metrics: Investment cost £151m September 2014 valuation1 £242m Total net cash proceeds from sale £365m % uplift from September 2014 valuation2 57% IRR during 4 year ownership >40% Money multiple against investment cost 3.4x 1 Includes