Slide 1: Results for the six months to 30 September 2015
Results for the six months to 30 September 2015 12 November 2015
Slide 2: Another solid half year with each business making important progress
Another solid half year with each business making important progress Simon Borrows Chief Executive 2
Slide 3: HY2016 – steady progress in challenging markets
HY2016 – steady progress in challenging markets Group Total return on Total AUM Operating cash equity of 4.4% of £13.5bn profit of £17m NAV of 401p/share Business Private Equity Infrastructure Debt Management lines Realisation Operating cash New AUM proceeds of income of £25m raised of £773m £307m C
Slide 4: The 3i Value Build
The 3i Value Build An attractive, multi-year value proposition Increase the underlying value Grow investment portfolio earnings of our investment portfolio Realise investments at good uplifts to Demonstrate the value of our book value and strong cash-on-cash existing investment portfolio multiples a
Slide 5: Private Equity: a good start to the year
Private Equity: a good start to the year Private Equity Portfolio performing strongly in challenging macroeconomic environment ─ 19% weighted average earnings growth in the period, including the benefit of portfolio acquisitions Continuing to take advantage of market conditions to reshape the po
Slide 6: Re-shaping the Private Equity portfolio
Re-shaping the Private Equity portfolio Private Equity Investment Proceeds Uplift on Money multiple IRR opening value over cost Selected full realisations Azelis £63m 2% 1.1x 1% Labco £42m 17% 0.7x (6)% Touchtunes £38m 3% 2.2x 23% Soyaconcept £17m -% 2.0x 13% Boomerang £11m 57% 0.6x (8)% Inspecta £6
Slide 7: A portfolio weighted towards our better assets
A portfolio weighted towards our better assets Private Equity The buckets Selected examples % of value HY2016 FY2015 Longer-term hold and Action, Element, 1 value creation Basic-Fit, Scandlines c.60% c.60% Strong performers; performing Q-Holdings, Aspen, 2 in line with investment case Euro-Diesel c.
Slide 8: Robust portfolio performance driving value growth in a challenging macro environment
Robust portfolio performance driving value Private Equity growth in a challenging macro environment Largest value increases1 Largest value decreases1 H1 Value at H1 Value at Portfolio Key driver of value Portfolio Key driver of value 30 Sept value 30 Sept company movement company value movement grow
Slide 9: Key drivers of value growth: Action
Key drivers of value growth: Action Private Equity Performance remains strong Store roll-out proceeding well, with over 80 new stores opened in the calendar year to date Continued strong growth in like-for-like sales Third distribution centre in northern France due to open in Q1 2016 Transit
Slide 10: Key drivers of value growth: Scandlines
Key drivers of value growth: Scandlines Private Equity Robust operating performance Earnings growth supported by strong volume growth and shift to higher margin booking classes New vessels expected to be delivered on the Ge-Ro route in early 2016, increasing capacity Valuation approach updated
Slide 11: Portfolio issues: JMJ
Portfolio issues: JMJ Private Equity Challenged end markets Tough trading in core oil & gas market (65% of sales), resulting in project delays and cancellations FX movements affecting earnings Pro-actively addressing issues Comprehensive cost reduction programme undertaken Diversifying busin
Slide 12: Investing for future growth: Weener Plastic Packaging Group
Investing for future growth Private Equity Weener Plastic Packaging Group Producer of caps, closures, roll-on balls, jars and bottles for personal care, food and beverage, and home care markets Clients include Beiersdorf, Colgate-Palmolive, L’Oréal, Nestlé, P&G and Unilever 2,000 employees acr
Slide 13: Infrastructure: good investment momentum
Infrastructure: good investment momentum Infrastructure Good performance at 3iN driving stable returns ─ gross investment return of £23m, or 4% ─ fee income stable at £14m for the period Proceeds of £51m received from 3iN through a special dividend Disciplined approach to investment in competi
Slide 14: Debt Management: continuing to grow AUM
Debt Management: continuing to grow AUM Debt Management Healthy level of CLO issuance in the period, despite market slowdown ─ two new CLOs closed in the period, in Europe and the US, for £0.6bn ─ CLO warehouses in place for further issuance Good progress in new product development ─ launch of G
Slide 15: Continue to improve capital efficiency and allocation
Continue to improve capital efficiency and allocation Average over FY10-FY12 Year to 30 September 2015 Fees and Fees and portfolio portfolio income 27% income 10% 4% 18% 41% 68% 3% 29% Realisations Operating Debt Shareholder Funds to Realisations Operating Debt Shareholder Funds to costs, net repaym
Slide 16: A solid half-year for 3i with each business making important progress
A solid half-year for 3i with each business making important progress Julia Wilson Group Finance Director 17
Slide 17: Financial highlights
Financial highlights 19% weighted value Grow investment portfolio earnings earnings growth1 £167m value growth Realise investments at good uplifts Realisation proceeds £359m to book value and strong cash-on-cash Uplift of 9% on opening value multiples Money multiple of 1.7x Generate a sust
Slide 18: NAV of 401 pence after 14 pence FY15 final dividend
NAV of 401 pence after 14 pence FY15 final dividend NAV per share (pence) 425 9 (4) (14) 415 3 (9) 10 10 405 401 400 396 395 385 375 31-Mar-15 Realised Net carry FX 30-Jun-15 Realised FX Net carry Final FY2015 30-Sep-15 profits and payable and profits and payable and dividend value growth other1 val
Slide 19: Private Equity: solid first-half performance
Solid first-half performance Private Equity Strong earnings growth from 6 months to 30 September £ million 2015 2014 larger assets Gross investment return 246 282 Impact of market volatility moderated by longstanding % of opening portfolio 8% 10% approach to valuations Realised profits1 26 35
Slide 20: Older assets realised at 1.6x money multiple
Older assets realised at 1.6x money multiple Private Equity Valued on imminent Calendar Uplift to Residual sales basis year Cash opening value Money value Investment realised at 31/3/2015 invested proceeds (31/3/2015) multiple1 (30/9/2015) Total full realisations2 £184m Azelis P 2007 £63m 2% 1.1x -
Slide 21: Performance driven by 19% value weighted earnings growth
Performance driven by 19% value weighted Private Equity earnings growth 3i carrying value at 30 September 2015 £ million 1,250 1,000 750 500 995 755 250 87 9 46 292 194 - <(20)% (20)-(11)% (10)-(1)% 0 - 9% 10-19% 20-30% >30% Last 12 months’ earnings growth for 73% of portfolio by value Portfolio acq
Slide 22: Good earnings momentum and performance drive value growth
Good earnings momentum and performance Private Equity drive value growth Value movement by basis (£ million) September March Use of earnings 2015 2015 Performance 1 171 % value at end of the period using 73% 72% earnings Forecast indicates Multiples Multiple (24) negative outlook 5 2 (No.) DCF 28 Se
Slide 23: Carried interest receivable and payable
Carried interest receivable and payable Private Equity 6 months to Carry accrued when 30 September performance hurdles met £ million 2015 2014 assuming all assets sold at current value Receivable (8) 7 Negative carry receivable Payable (36) (36) due to one-off adjustment on the Growth Capital Fu
Slide 24: Contribution to operating cash income
Contribution to operating cash income Private Equity 6 months to 30 September £ million 35 30 Fee income will continue to 30 fall as assets sold from 22 Eurofund IV, Eurofund V and 25 9 Growth Capital Fund 20 5 Expect to contribute good levels of income 15 16 12 10 5 5 5 0 2014 2015 Portfolio fe
Slide 25: Infrastructure: good investment momentum and performance
Good investment momentum and Infrastructure performance 6 months to 3iN a material contributor to 30 September performance £ million 2015 2014 ─ 4% increase in 3iN share price Gross investment results in £19m value growth return 23 22 Ordinary dividends and advisory fees resulted in £25m of cash
Slide 26: Increasing contribution to cash income and AUM
Increasing contribution to cash income Debt Management and AUM 6 months to AUM up 4% to £7.5bn 30 September £ million 2015 2014 Good progress in diversifying portfolio Fee income 17 18 ─ launched $150m Global Income Fund Portfolio income 15 8 ─ Senior Loan Fund AUM now $199m Gross investment ret
Slide 27: Continued progress in operating cash profit
Continued progress in operating cash profit 6 months to 30 September £ million 90 70 50 79 80 30 62 70 £16m £17m £6m 10 (10) £(18)m (30) 64 63 63 80 (50) (70) (90) 2012 2013 2014 2015 Cash income Operating expenses 1 Operating cash profit 1 Operating expenses exclude restructuring costs. Operating e
Slide 28: Strong balance sheet
Strong balance sheet 30 September 31 March Remain well funded for £ million 2015 2015 investments and shareholder Portfolio value 4,037 3,877 distributions Strong liquidity position Gross debt (819) (815) Next debt maturity in 2017 Cash 807 864 – €350m bond Net (debt)/ cash (12) 49 Revolving
Slide 29: Dividends
Dividends Policy is to pay 15-20% of gross cash realisations, provided: – gearing <20% P – gross debt is on target to be <£1bn P Includes base dividend of 8.1 pence 6.0 pence interim dividend (2.7 pence base, 3.3 pence additional) announced today Expect to pay 20% of proceeds in total and at
Slide 30: Additional information
Additional information 33
Slide 31: 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 32: Segmental reporting 6 months to 30 September 2015
Segmental reporting 6 months to 30 September 2015 Proprietary Capital Fund Management activities Total return £ million £ million £ million Realised profits 29 Realised profits 29 Unrealised profits 167 Unrealised profits 167 Portfolio income 69 Portfolio income 69 Foreign exchange movements Foreign
Slide 33: Segmental reporting 6 months to 30 September 2014
Segmental reporting 6 months to 30 September 2014 Proprietary Capital Fund Management activities Total return £ million £ million £ million Realised profits 35 Realised profits 35 Unrealised profits 307 Unrealised profits 307 Portfolio income 53 Portfolio income 53 Foreign exchange movements Foreign
Slide 34: Net asset exposure by currency
Net asset exposure by currency 1% 1% Change Currency in period Impact Euro 1.6% £26m 25% 30% US dollar (2.4)% £(16)m Brazilian Real (21.7)% £(6)m Indian Rupee (7.0)% £(4)m Other n/a £(3)m 43% Total return impact £(3)m Sterling/non-revaluing Euro US dollar Indian rupee Other 1% movement in euro = £20
Slide 35: Proprietary Capital
Proprietary Capital Key metrics, 6 months to 30 September (£ million) 2015 2014 Gross investment return £272m £297m - % of opening portfolio 7.0% 8.3% Net interest payable £22m £25m Realisations £359m £324m Cash investment £(294)m £(199)m Net divestment £65m £125m 38
Slide 36: Fund Management
Fund Management 6 months to 30 September (£ million) 2015 2014 Income 58 63 - of which synthetic fee 21 22 Operating expenses (48) (50) Operating profit before carry 10 13 Implementation and amortisation costs 3 3 Underlying Fund Management profit 13 16 Underlying Fund Management margin 22% 26% 39
Slide 37: Assets under management – Private Equity
Assets under management – Private Equity Gross Fee Remaining 3i % money income commitment1 invested multiple2 received Original Original 3i September September September in the Close date fund size commitment 2015 2015 2015 AUM period 3i Growth Capital Fund Mar 10 €1,192m €800m €346m 53% 1.8x €277m
Slide 38: Private Equity portfolio 30 September 2015
Private Equity portfolio 30 September 2015 By region (%) By sector (%) By vintage (%) 3 6 1 6 11 7 18 9 34 8 3 31 4 24 40 81 1 13 UK & Northern Europe Business Services 2016 2015 North America 2014 2013 Consumer Brazil 2012 2011 Industrials Asia 2010 2009 Other Pre 2009 Southern Europe Note: Analyse
Slide 39: 9 full realisations in the six months to 30 September 2015
9 full realisations in the six months to 30 September 2015 Uplift to opening Money Calendar Realised value multiple over Residual value Investment realised year invested proceeds (31/03/2015) cost1 (30/9/2015) Full Realisations Azelis 2007 £63m 2% 1.1x - Labco 2008 £42m 17% 0.7x - Touchtunes 2011 £3
Slide 40: Assets under management - Infrastructure
Assets under management - Infrastructure Remaining Gross Fee 3i % money income commitment invested multiple1 received Original Original 3i at September September September in the Close date fund size commitment 2015 2015 2015 AUM year 3iN Mar 07 n/a n/a n/a n/a n/a £1,192m2 £8m India Mar 08 US$1,195
Slide 41: 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 multiple2 AUM1 yield3, 4, 5 £m European CLO funds (€m) Harvest CLO XII Aug 15 Aug 19 Aug 29 413 n/a 401
Slide 42: 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 Global Income Fund Jul 15 n/a n/a n/a n/a US$171m n/
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