Slide 1: Annual General Meeting
Annual General Meeting 29 June 2012
Slide 2: Safety announcement
Safety announcement In the event of an emergency, a two-tone fire alarm will commence An announcement over the public address system will follow; it will ask you to listen for further instructions Take a look now for your nearest fire escape sign Should an evacuation become necessary, instru
Slide 3: Annual General Meeting
Annual General Meeting 29 June 2012
Slide 4: Sir Adrian Montague, Chairman
Sir Adrian Montague Chairman 4
Slide 5: The Board of Directors and General Counsel
The Board of Directors and General Counsel
Slide 6: Martine Verluyten
Martine Verluyten 6
Slide 7: Alistair Cox
Alistair Cox 7
Slide 8: Richard Meddings
Richard Meddings 8
Slide 9: Kevin Dunn
Kevin Dunn 9
Slide 10: Simon Borrows
Simon Borrows 10
Slide 11: Julia Wilson
Julia Wilson 11
Slide 12: Jonathan Asquith
Jonathan Asquith 12
Slide 13: Willem Mesdag
Willem Mesdag 13
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Slide 15: Board's strategic mandate
Board’s strategic mandate Core strategy – affirm diversification strategy into Infrastructure and Debt Management Resourcing – determine both scale and skill set of investment teams Costs – ensure that costs are aligned with the market opportunity Balance sheet – define its size and an appro
Slide 16: Appointment of new CEO
Appointment of new CEO Process to identify a successor launched at end of March Identified skills required to execute Board’s strategic mandate Announced appointment of Simon Borrows at the time of the Annual results in May 16
Slide 17: Simon Borrows, Chief Executive
Simon Borrows Chief Executive 17
Slide 18: My strategy and vision for 3i
My strategy and vision for 3i The investment proposition An international investor with three strong investment platforms: – focused mid-market Private Equity business – class-leading Infrastructure investor – growing Debt Management business Clear vision and strategy 18
Slide 19: Key challenges
Key challenges To achieve 3i’s vision of being a leading international investor in private equity, infrastructure and debt management, it is critical for 3i to meet the following key challenges: get its ‘house in order’ re-build its reputation through delivering top quartile cash investment retu
Slide 20: 3i – shape of the business as at March 2012
3i – shape of the business as at 31 March 2012 3i Group AUM £10.5bn(1) Private Equity Infrastructure Debt Management AUM £5.3bn AUM £1.7bn AUM £3.4bn Fee income £32m Fee income £25m Fee income £32m Portfolio value £2,531m Portfolio value £528m Portfolio value £42m 90 portfolio companies 11 portfolio
Slide 21: Demonstrating 3i's capabilities – recent new investments
Demonstrating 3i’s capabilities – recent new investments Size of Investment investment Business description Selected comments made by 3i GEKA GmbH Value not German-based manufacturer of Announced in disclosed brushes, applicators and February 2012 comprehensive packaging systems Majority stake
Slide 22: My assessment of 3i – reasons for underperformance
My assessment of 3i – reasons for underperformance International network too thinly spread Decentralised and Examples of inconsistency in investment and unfocused asset management processes Lack of central control Portfolio not actively managed enough Behaviour and Over-investment at peak
Slide 23: No formal mechanism to prevent over-investment
No formal mechanism to prevent over-investment 3i own balance sheet cash investment by financial year ended 31 March £m 2,500 2,000 1,500 1,000 Average of FY2002-06 500 - 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 23
Slide 24: Operating costs not currently aligned with cash income
Operating costs not currently aligned with cash income Illustrative analysis 31 March financial year-end Aggregate FY2009 FY2010 FY2011 FY2012 Figures in £ millions FY09-12 Total cash fees and portfolio income(1) 151 129 119 151(2) 550 Reported operating expenses(1) (250) (221) (181) (180) (832) Imp
Slide 25: My priorities
My priorities Control Consistency and Fitter and and focus discipline more efficient New Chief Executive with strategic mandate to pursue clear and concrete set of measures to maximise shareholder value 25
Slide 26: My strategic mandate
My strategic mandate
Slide 27: Private Equity – investment strategy
Private Equity – investment strategy Focus on our clear strengths Re-balancing and enhancing the capabilities of our investment teams 27
Slide 28: Private Equity – portfolio by sector
Private Equity – portfolio by sector % of Private Equity Sector Selected comments direct portfolio value(1) Industrials 30% June 2011 investment in Hilite (German-based automotive components), followed by sale of emissions control business in April 2012 Recent large realisations include: Ålö, Hy
Slide 29: Private Equity – FY2011-12 buyouts
Private Equity – FY2011-12 buyouts Company(1) Date Value EBITDA invested multiple(2) 2011 vs. 2010 Action Sep 2011 1.2x Hilite June 2011 1.2x Element Dec 2010 1.4x 3i only residual cost: Etanco Oct 2011 0.9x £563m Amor Dec 2010 1.2x 3i only value OneMed Mar 2011 0.5x at 31 March 2012: £599m Vedici M
Slide 30: Private Equity – portfolio by geography
Private Equity – portfolio by geography % of Private Portfolio 3i region Equity direct Selected comments (1) status portfolio value Low near-term market growth outlook. Portfolio comprises a number of UK 22% international assets Exits of MWM (November 2011) and Norma (April 2011), investment Germany
Slide 31: Private Equity – refining our international network
Private Equity – refining our international network Combined Developed and Developing Private Equity Single Private Investing in buyouts and growth capital Equity business Continue to ensure delivery of existing fund mandates New investment primarily focused on Northern Europe and Brazil Tig
Slide 32: Infrastructure and Debt Management – investment strategy
Infrastructure and Debt Management – investment strategy Class-leading business Long-term, stable and cash-generative investments Infrastructure Continued strong performance in Europe Focus on continuing to grow and develop the Infrastructure business Successful acquisition of MIM in Febru
Slide 33: Asset management – overview
Asset management – overview Ensure a consistent and disciplined approach to new investment New investments considered in the context of the most appropriate capital allocation across the Group Strengthen – liquidity and working capital investment – debt reduction and refinancing processes – shar
Slide 34: Asset management – overview
Asset management – overview Rigorous investment review processes, including: – governance; management and Board assessment – monitoring and performance tracking of investments Particular focus on intensively managing the Private Equity investments made in FY2007-09 to preserve Intensive asset an
Slide 35: Key improvement initiatives
Key improvement initiatives Six key improvement initiatives: 1. Investment review process 2. People: governance and resourcing 3. Operational capabilities, knowledge management & networks 4. Monitoring and performance tracking 5. Valuation process and exit strategy & planning 6. Systems upgrade and
Slide 36: Operating costs – progress to March 2012
Operating costs – progress to 31 March 2012 Actual reported operating costs Actual operating costs (£m) Addition of Debt Management business and Brazil Private Equity team (£m) The chart shows financial years ended 31 March. Considerable progress has been made, but significantly more to do to bring
Slide 37: Operating costs – review process
Operating costs – review process
Slide 38: Operating costs – actions being taken
Operating costs – actions being taken 435 employees at 31 March 2012 Reduction of over 160 employees by 31 March Reduce staff 2013 – reduction comprising 1/3 investment professionals and 2/3 support staff Office closures: Barcelona, Birmingham, Consolidate office Copenhagen, Hong Kong, Milan a
Slide 39: Operating costs – targets
Operating costs – targets £45m targeted annualised run-rate cost savings by 31 March 2014 Base-line operating costs Targeted annualised run- One-off implementation rate cost savings costs £5m £180m £185m £40m Up to £30m FY12 actual Annualised run By 31 March 2013 By 31 March 2014 During FY13 and F
Slide 40: Balance sheet - priorities
Balance sheet - priorities £m Gross debt 2,500 2,000 1,500 1,000 500 0 2006 2007 2008 2009 2010 2011 2012 As at 31 March £m Debt repayment profile at 28 June 2012 400 350 300 250 200 150 100 50 0 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2033 Financial year to 31 March Seeking to s
Slide 41: Capital allocation - strategy
Capital allocation - strategy Average over last three years Target shape (illustrative) Fees and Fees and portfolio portfolio income 27% income 20-25% 5-10% 41% 15-20% 50-55% 3% 29% Realisations Operating Debt Shareholder Funds to Realisations Operating Debt Shareholder Funds to (1) (1) cash flows r
Slide 42: Capital distribution policy
Capital distribution policy Rebased dividend in November 2011 to 8.1p (3.6p last year) Defined basis of aggregate shareholder distributions as 15-20% of gross cash proceeds from realisations, provided that: – gearing < 20% – gross debt is on target to be < £1bn by June 2013 Flexible mechanism
Slide 43: Delivering the strategic mandate
Delivering the strategic mandate Annual results - 16 May 2013 Update on progress against KPIs HY results – 15 November 2012 Update on progress and set out key performance indicators (KPIs) IMS – 27 July 2012 Update on progress implementing new strategy. Quarterly NAV reported for first time Investor
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Slide 45: The Resolutions
The Resolutions
Slide 46: Resolutions commentary
Resolutions commentary 22 resolutions Normal annual business Purchase of ordinary and B shares Directors submitting themselves for reappointment Laxey resolutions 46
Slide 47: Questions
Questions
Slide 48: Poll card
Poll card The Board recommends you vote FOR resolutions 1 to 20 Resolutions For Against Abstain Resolutions For Against Abstain 1 To receive and consider the Company's Accounts for the year to 31 March 2012 and the Directors’ and Auditors’ reports. oO Oo 14 To renew the authority to incur political
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Slide 50: Resolutions 1-3
Resolutions 1-3 1. “That the Company’s Accounts for the year to 31 March 2012 and the Directors’ report, the Auditors’ report and the auditable part of the Directors’ remuneration report be and they are hereby received and considered” Proxy votes lodged for this Resolution 97.57% For, 0.09% Discreti
Slide 51: Resolutions 4-6
Resolutions 4-6 4. “That Mr J P Asquith be and he is hereby reappointed as a Director of the Company” Proxy votes lodged for this Resolution 98.76% For, 0.17% Discretionary, 1.07% Against and 2.41% Abstain 5. “That Mr S A Borrows be and he is hereby reappointed as a Director of the Company” Proxy vo
Slide 52: Resolutions 7-9
Resolutions 7-9 7. “That Mr R H Meddings be and he is hereby reappointed as a Director of the Company” Proxy votes lodged for this Resolution 99.33% For, 0.17% Discretionary, 0.50% Against and 2.41% Abstain 8. “That Mr W Mesdag be and he is hereby reappointed as a Director of the Company” Proxy vote
Slide 53: Resolutions 10-12
Resolutions 10-12 10. “That Ms M G Verluyten be and she is hereby reappointed as a Director of the Company” Proxy votes lodged for this Resolution 99.34% For, 0.17% Discretionary, 0.49% Against and 0.04% Abstain 11. “That Mrs J S Wilson be and she is hereby reappointed as a Director of the Company”
Slide 54: Resolutions 13-15
Resolutions 13-15 13. “That the Board be and it is hereby authorised to fix the Auditors’ remuneration” Proxy votes lodged for this Resolution 98.68% For, 0.22% Discretionary, 1.10% Against and 3.87% Abstain 14. To renew the authority to incur political expenditure Proxy votes lodged for this Resolu
Slide 55: Resolutions 16-18
Resolutions 16-18 Special Resolutions 16. To authorise amendments to the Company’s Articles of Association Proxy votes lodged for this Resolution 99.46% For, 0.17% Discretionary, 0.37% Against and 0.03% Abstain 17. To renew the section 561 authority Proxy votes lodged for this Resolution 99.45% For,
Slide 56: Resolutions 19-20
Resolutions 19-20 19. To renew the Company’s authority to purchase its own B shares Proxy votes lodged for this Resolution 99.55% For, 0.09% Discretionary, 0.36% Against and 0.02% Abstain 20. That a General Meeting other than an Annual General Meeting may be called on not less than 14 clear days’ no
Slide 57: Resolutions 21-22
Resolutions 21-22 Requisitioned Resolutions 21. To change the Company’s investment policy while the Company’s shares are trading at a discount to net asset value Proxy votes lodged for this Resolution 1.49% For, 0.09% Discretionary, 98.42% Against and 6.03% Abstain 22. To resolve that the Company br
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