3i Group Plc · LSE:III
3i — FY2020 Earnings Presentation
28 slides from 3i's earnings presentation, Jun 25, 2020
Slide 1: Review of FY2020
Review of FY2020 oT 25 June 2020
Slide 2: Simon Thompson, Chairman
Simon Thompson Chairman
Slide 3: Today's agenda
Today’s agenda Introductory remarks – Simon Thompson Review of the year – Simon Borrows Q&A – Simon Thompson 3
Slide 4: Our priority is to support our employees and portfolio companies
Our priority is to support our employees and our portfolio companies, while continuing to deliver superior returns for our shareholders. 4
Slide 5: Resilient performance despite severe disruption from Covid-19
Resilient performance despite severe disruption from Covid-19 Year to 31 March 2020 Group Private Equity Infrastructure Scandlines Total return Total dividend Proprietary capital Cash income Cash realisations on equity per share invested 3% 35p £1,062m1 £78m £70m NAV per share Net cash Realisation 3
Slide 6: Total dividend set at 35 pence per share
Total dividend set at 35 pence per share Our dividend policy aims to maintain or grow the dividend year-on-year subject to: • maintaining our conservative balance sheet strategy • careful consideration of the outlook for investments and realisations and market conditions Second FY2020 dividend of 17
Slide 7: AGM resolutions
AGM resolutions All resolutions passed on a poll at the AGM held earlier today 7
Slide 8: Simon Borrows, Review of the year
Simon Borrows Review of the year
Slide 9: Our approach to Covid-19
Our approach to Covid-19 People and Balance sheet and Portfolio operations liquidity management • Flexible remote • Prudent balance • Teams and working for all sheet management resources focused employees • Net cash of £270m on supporting • Business travel at the end of March existing portfolio canc
Slide 10: Our investment approach provides some resilience to Covid-19
Private Equity Our investment approach provides some resilience to Covid-19 Compliance & Favourable Value-for-money Health & Wellness Big data Safety demographics Lower Bioprocessing Platform Bioprocessing Platform Covid-19 impact Higher 10
Slide 11: Action - EFV transaction closed in January 2020
Private Equity Action - EFV transaction closed in January 2020 • Transaction value of €10.25bn delivered a 31x money multiple and a 73% IRR €10.25bn • 3i re-invested proceeds and excess carry to increase its holding £591m • 3i’s direct holding in Action increased to 52.6% gross and 52.6% gross 46.2%
Slide 12: Action – continued strong growth in 2019
Private Equity Action – continued strong growth in 2019 2019 +21% revenue growth +20% EBITDA growth 1,552 stores 230 new stores Highlights A continued high growth track record A truly pan-European footprint EBITDA (€m) Sales (€m) Number of stores +27% CAGR 1,552 57 1,325 5,114 387 347 +28% CAGR 182
Slide 13: Action – consistently strong performance in the Netherlands
Private Equity Action – consistently strong performance in the Netherlands • Year-to-date LfL at end of week 11 was over 7% • Dutch stores (open throughout crisis) continuing to perform well, with LfL currently running at over 8% • Social distancing arrangements in place throughout store network • V
Slide 14: Action – strong spring back post lockdown
Private Equity Action – strong spring back post lockdown • Q1 2020 finished ahead of prior year on sales and EBITDA • P4 sales were 41% of last year • Strong trading in May as stores re-open across all territories • Restricted footfall compensated by much larger basket size • Selected cost measures
Slide 15: Action – a considered approach to valuation
Private Equity Action – a considered approach to valuation EV/ run rate EBITDA (post discount) Valuation at March 2020 reduced to level 18.2x 18.0x c17x consistent with EFV transaction, to reflect Enterprise value (post discount) €10.80bn €10.25bn €10.25bn • Covid-19 impact • ongoing uncertainty • i
Slide 16: Strong portfolio performance before the outbreak of Covid-19
Private Equity Strong portfolio performance before the outbreak of Covid-19 Good earnings momentum Limited areas of weakness • 93% of portfolio by value grew • Auto sector and some industrials earnings to end December • Strong contribution from bolt-on acquisitions • Consumer and healthcare sectors
Slide 17: Covid-19 has impacted the portfolio asymmetrically
Private Equity Covid-19 has impacted the portfolio asymmetrically Stable to positive Likely temporary impact Likely prolonged impact Healthcare Personal care Essential ingredients Bricks and mortar retail and leisure B2B services Travel Industrials and automotive Online retail 17
Slide 18: Considered approach to valuations to reflect the impact of Covid-19
Private Equity Considered approach to valuations to reflect the impact of Covid-19 No material change to Impact of Covid-19 Impact of Covid-19 valuation approach reflected through earnings reflected through multiple Generally: Generally: Generally: • No material change to • No material change to • M
Slide 19: Good realisations in the year
Private Equity Good realisations in the year Basic-Fit Aspen Pumps ACR Vintage year 2013 Vintage year 2015 Vintage year 2006 Proceeds £76m Proceeds £205m Proceeds1 £105m Money multiple 4.2x Money multiple 4.1x Money multiple 1.0x IRR 37% IRR 34% IRR - Opportunistic reduction of our Excellent realisa
Slide 20: Disciplined approach to new investment
Private Equity Disciplined approach to new investment Magnitude Software Evernex Bioprocessing Platform £139m new investment £214m new investment £60m new investment • Provider of unified • Provider of third-party • Single-use bioprocessing application data maintenance of critical IT product platfor
Slide 21: Strong progress on buy-and-build assets with bolt-on acquisitions
Private Equity Strong progress on buy-and-build assets with 13 bolt-on acquisitions + + + + TNC Clips + + + + + + + + 21
Slide 22: 3i Infrastructure plc
3i Infrastructure plc Covid-19 has impacted the share price but underlying performance is good 3iN relative share price performance – FY2020 FY2020 highlights (rebased to 3iN, pence per share) 330 Total dividend per share 9.2p 310 290 Investments and £376m 270 commitments 250 Realisations £581m 230
Slide 23: Scandlines
Scandlines Solid 2019 performance; short-term Covid-19 impact since March 2020 • Good performance and solid results for 2019 • Proceeds of £70m and dividend income of £21m from investment grade refinancing • Additional dividend income of £16m in the year • Major short-term Covid-19 impact on car vol
Slide 24: Simple balance sheet and conservative capital management
Simple balance sheet and conservative capital management 31 March 2020 £8,098m • High quality, defensive portfolio £845m • Gross cash held centrally with no material restrictions £575m • 2023 and 2032 bonds with no financial covenants £400m • Undrawn five-year revolving credit facility refinanced in
Slide 25: Outlook
Outlook Focus on managing existing portfolio Investment and realisations lower than in previous years Prudent management of balance sheet and liquidity Benefit from proprietary capital model No change in return objectives and dividend policy 25
Slide 26: Simon Thompson, Chairman
Simon Thompson Chairman
Slide 27: Questions
Questions
Slide 28: Slide 28