Investor relations

Key performance indicators

We use a number of key performance indicators (KPIs) to assess progress against our strategic objectives, including both financial and non-financial measures.

These KPIs are helpful in assessing progress but are not exhaustive as management also takes account of a wide range of other measures in assessing performance.

Gross investment return (“GIR”) as % of opening portfolio value

The performance of the proprietary investment portfolio expressed as a percentage of the opening portfolio value.

FY2017 progress and key risks

FY2017 progress

  • Another year of strong performance with a GIR in Private Equity of £1,624 million or 43% and a Group GIR of £1,755 million or 40%
  • Action performed strongly, opening 197 new stores in calendar year 2016 and continuing to show growth in like-for-like sales
  • 2013–16 vintage investments, such as ATESTEO, Audley Travel and Aspen Pumps delivered a GIR of 29%
  • 3iN delivered a TSR of 16% and Infrastructure generated £59 million of cash income to the Group
  • Material devaluation of sterling resulted in a gain on translation of £269 million

Key risks

  • Investment rates or quality of new investments are lower than expected
  • Subdued M&A activity and/or reduced prices in 3i’s core sectors could impact timing of exits and cash returns
  • Operational underperformance in the portfolio companies impacts earnings growth and exit plans
  • Sterling materially strengthens against the euro and US dollar; at 31 March 2017, 71% of the portfolio was denominated in euros or US dollars

  

Cash realisations £m

Cash proceeds from our investments support our returns to shareholders, as well as our ability to invest in new opportunities.

FY2017 progress and key risks

FY2017 progress

  • Private Equity generated proceeds of £982 million from the disposal of nine companies, the refinancing of two assets and the full realisation of three quoted stakes
  • We sold our Debt Management business to Investcorp for cash proceeds of £270 million

Key risks

  • Subdued M&A activity in our core sectors reduces investor appetite for our assets
  • Macro-economic uncertainty limits investor appetite for the Private Equity asset class
  • Debt markets become less supportive of leveraged buyouts

   

Cash investment £m

Identifying new opportunities in which to invest proprietary capital is the primary driver of the Group’s ability to deliver attractive returns. We also invest further capital in existing investments.

FY2017 progress and key risks

FY2017 progress

  • Invested £478 million (2016: £365 million) in three new Private Equity investments and in a further investment in Q Holding to support its acquisition of Degania
  • Supported 3iN’s capital raise in June 2016, investing £131 million (2016: nil) to maintain our 34% stake

Key risks

  • Competition from other private equity investors, as well as trade and other strategic buyers, could make it more challenging to source investments at prices that will meet our return targets
  • Failure to attract, invest in and retain the right investment executives impacts our ability to originate and manage assets
  • Failure to maintain and develop our network of advisers and business leaders reduces the quality of potential deal flow

   

Operating cash profit/(loss) £m

By covering the cash operating cost of running our business with cash income, we reduce the potential dilution of capital returns.

FY2017 progress and key risks

FY2017 progress

  • Continued to benefit from Debt Management’s cash income in the first half of the year
  • Operating cash profit from Private Equity, Infrastructure and the retained Debt Management investments was £5 million
  • Measure redefined in FY2017 to be cash income less cash expenses (previously it was defined as cash income less accrued expenses)

Key risks

  • Portfolio performance, and therefore portfolio income is weak
  • Reduced ability to generate interest and dividend income in a private equity structure
  • Investor appetite in a volatile macro-economic environment
  • New Infrastructure initiatives do not generate sufficient fee income
  • Unplanned increase in the cost base; for example legal, compliance or regulatory costs

   

Net Asset Value (“NAV”) per share pence

The measure of the fair value per share of our proprietary investments after the net cost of operating the business.

FY2017 progress and key risks

FY2017 progress

  • 30% increase in NAV per share to 604 pence (31 March 2016: 463 pence)
  • Excellent GIR from Private Equity
  • Performance is strong with or without the benefit of foreign exchange movements

Key risks

  • Ongoing geo-political uncertainty further dampens investor sentiment
  • Implications of the UK’s decision to leave the EU and further negative implications of the US presidential election
  • Wider G20 political and economic uncertainty impacts 3i’s portfolio companies and valuations

  

Total shareholder return (“TSR”) %

The return to our shareholders through the movement in the share price and dividends paid during the year.

FY2017 progress and key risks

FY2017 progress

  • TSR of 71% as share price increased by 64% in the year, together with the final FY2016 dividend of 16.0 pence and interim FY2017 dividend of 8.0 pence
  • Net divestment, strong balance sheet and closing net cash support a full year dividend of 26.5 pence

Key risks

  • Lower NAV due to investment underperformance or political and economic uncertainty
  • Investor appetite in a volatile macro-economic environment

   

Back to top