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.

FY2019 progress and key risks

FY2019 progress

  • Good performance across our portfolio with a GIR in Private Equity of £1,148 million, or 20% and a Group GIR of £1,407 million, or 21%
  • Action had another good year, opening 230 net new stores in calendar year 2018 and generating LFL sales growth of 3.2%, with significant investment in the supply chain
  • Good progress with our 2013-16 and 2016-19 vintages
  • 3iN delivered a TSR of 33% (2018: 12%)

Key risks

  • Investment rates or quality of new investments are lower than expected
  • Operational underperformance in the portfolio companies impacts earnings growth and exit plans
  • Sterling materially strengthens against the euro and US dollar; at 31 March 2019, 79% of the portfolio was denominated in euros or US dollars

  

Cash realisations £m

Support our returns to shareholders, as well as our ability to invest in new opportunities.

FY2019 progress and key risks

FY2019 progress

  • The Group generated cash proceeds of £1,261 million or £732 million net of the £529 million reinvestment in Scandlines
  • Private Equity generated total gross realised proceeds of £1,235 million, which includes the disposal of five companies, the partial exit of our quoted holding in Basic-Fit and the refinancing of one asset

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 and infrastructure asset classes
  • Debt markets become less supportive of leveraged buyouts or refinancings

   

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.

FY2019 progress and key risks

FY2019 progress

  • Invested £245 million in two new Private Equity investments and £69 million in two further investments in Hans Anders and ICE to support the acquisition of eyes + more and merger with SOR respectively
  • Reinvested £529 million to acquire a 35% stake in Scandlines alongside First State Investments and Hermes Investment Management
  • Announced a new investment in Magnitude Software Inc in March 2019. This investment of c.£139 million completed at the start of May 2019

Key risks

  • Competition from other private equity and infrastructure investors, as well as trade and other financial buyers, makes it more challenging to source investments at prices that will allow us to 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.

FY2019 progress and key risks

FY2019 progress

  • Infrastructure generated cash income of £82 million (2018: £78 million)
  • Scandlines generated cash dividend income of £28 million (2018: nil)
  • Strong, but non-recurring cash income from Private Equity, including £17 million of cash income from Audley Travel
  • Remained disciplined over cash operating expenses, which declined to £109 million (2018: £115 million)

Key risks

  • Portfolio performance, and therefore portfolio income, is weak
  • Reduced ability to generate interest and dividend income in a private equity structure
  • 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.

FY2019 progress and key risks

FY2019 progress

  • 13% increase in NAV per share to 815 pence (31 March 2018: 724 pence), after payment of 37 pence dividend per share
  • Strong GIR from Private Equity and Infrastructure

Key risks

  • Ongoing geo-political uncertainty further dampens investor sentiment
  • 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.

FY2019 progress and key risks

FY2019 progress

  • TSR of 19% driven by a share price increase of 15% in the year, together with the second FY2018 dividend of 22.0 pence and first FY2019 dividend of 15.0 pence
  • Net divestment, strong balance sheet and closing net cash support a total FY2019 dividend of 35.0 pence per share

Key risks

  • Lower NAV due to investment underperformance or political and economic uncertainty
  • Investor appetite for 3i shares could reduce in a volatile macroeconomic environment
  • Implications of the UK’s decision to leave the EU and the current UK political uncertainty could limit the attractiveness of UK plc
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