TIDMIII

RNS Number : 0557F

3i Group PLC

12 November 2020

12 November 2020

3i Group plc announces results for the six months to

30 September 2020

Strong results driven by resilient performance

-- Total return of GBP1,142 million or 15% on opening shareholders' funds (September 2019: GBP767 million, 10%) and NAV per share of 905 pence (March 2020: 804 pence) after paying a dividend of 17.5 pence per share in the period and a 12 pence per share negative accounting impact from the further de-risking of the UK defined benefit pension plan.

-- Our Private Equity business delivered a gross investment return of GBP1,245 million or 19% (September 2019: GBP666 million, 11%), supported by continued good earnings growth and cash generation in portfolio companies operating in the consumer, e-commerce, healthcare and business services sectors and a sustained recovery in our retail investments following the lifting of Covid-related trading restrictions through the summer. Our investments in the travel and automotive sectors continue to experience challenging conditions.

-- Action's performance through the Covid-19 pandemic has exceeded our expectations, with strong like-for-like sales, EBITDA and cash flow growth. This supported an increase in value of our stake in Action of GBP644 million in the period. At 30 September 2020, we valued our 52.6% stake in Action at GBP4,269 million, based on a multiple of 18x Action's September 2020 run-rate earnings.

-- In challenging markets, the Private Equity business maintained its selective approach to capital deployment, making one new investment in GartenHaus whilst focusing on growing the existing portfolio. We funded the transformational acquisitions of Technogroup by Evernex and of SaniTech West by our bioprocessing platform, which we have now rebranded as SaniSure. Private Equity realisations totalled GBP82 million in the period.

-- Our Infrastructure business delivered a gross investment return of GBP134 million, or 12% (September 2019: GBP88 million, 9%), driven by resilient performance across all portfolios. Our 30% stake in 3i Infrastructure plc ("3iN) contributed particularly strongly to this return through a 17% share price increase since 31 March 2020. The Infrastructure business continues to contribute materially to our operating cash profit, with fee income across the business of GBP19 million and dividend income from 3iN of GBP12 million in the period.

   --      First dividend for FY2021 set at 17.5 pence, in line with our dividend policy. 

Simon Borrows, 3i's Chief Executive , commented:

" In the six months to 30 September 2020, our Private Equity portfolio delivered a gross investment return ("GIR") of 19%, demonstrating its resilience in a difficult macroeconomic environment. Our thorough portfolio management processes enabled us to respond quickly and effectively to the challenges that arose as a result of the pandemic, including, more recently, decisive measures to address increases in infection rates across much of Europe. Encouragingly, most of our portfolio companies outperformed our rebased Covid-19 full-year outlook during the period. In this environment, we will remain disciplined in our investment approach and focused on enhancing the value of our portfolio through organic growth and value-accretive add-ons."

Summary financial highlights under the Investment basis

3i prepares its statutory financial statements in accordance with International Financial Reporting Standards as adopted by the European Union ("IFRS"). However, we also report a non-GAAP "Investment basis" which we believe aids users of our report to assess the Group's underlying operating performance. The Investment basis (which is unaudited) is an alternative performance measure ("APM") and is described in the Alternative Performance Measures section later in this document. Total return and net assets are the same under the Investment basis and IFRS and we provide a reconciliation of our Investment basis financial statements to the IFRS statements later in this document. Numbers are prepared on an Investment basis from the beginning of this document up to the Alternative Performance Measures section.

 
                                                                 Six months to/as   Six months to/as   12 months to/as 
                                                                  at 30 September    at 30 September       at 31 March 
 Investment basis                                                            2020               2019              2020 
--------------------------------------------------------------  -----------------  -----------------  ---------------- 
 Total return(1)                                                        GBP1,142m            GBP767m           GBP253m 
 % return on opening shareholders' funds                                      15%                10%                3% 
 Dividend per ordinary share                                                17.5p              17.5p             35.0p 
==============================================================  =================  =================  ================ 
 
 Gross investment return(2)                                             GBP1,394m            GBP798m           GBP318m 
 As a percentage of opening 3i portfolio value                                17%                11%                4% 
 
 Cash investment(2)                                                       GBP233m            GBP312m         GBP1,248m 
 Realisation proceeds                                                      GBP82m             GBP71m           GBP918m 
 3i portfolio value                                                     GBP9,578m          GBP8,551m         GBP8,098m 
 Gross debt                                                               GBP975m            GBP575m           GBP575m 
 Net (debt)/cash (2)                                                    GBP(288)m             GBP50m           GBP270m 
 Gearing(2)                                                                    3%                nil               nil 
 Liquidity                                                              GBP1,087m            GBP975m         GBP1,245m 
 Diluted net asset value per ordinary share ("NAV per share")                905p               873p              804p 
==============================================================  =================  =================  ================ 
 
 
1  Total return is defined as Total comprehensive income for the year, under both the Investment 
    basis and the IFRS basis. 
2  Financial measure defined as APM. Further information in the Alternative Performance Measures 
    section. 
 
 
 Disclaimer 
  These half-year results have been prepared solely to provide information to shareholders. 
  They should not be relied on by any other party or for any other purpose. These half-year 
  results may contain statements about the future, including certain statements about the future 
  outlook for 3i Group plc and its subsidiaries ("3i" or "the Group"). These are not guarantees 
  of future performance and will not be updated. Although we believe our expectations are based 
  on reasonable assumptions, any statements about the future outlook may be influenced by factors 
  that could cause actual outcomes and results to be materially different. 
 
 
 Enquiries: 
 Silvia Santoro, Group Investor Relations Director    020 7975 3258 
 
 Kathryn van der Kroft, Communications Director       020 7975 3021 
 
 
  A PDF copy of this release can be downloaded from www.3i.com/investor-relations 
 
  For further information, including a live webcast of the results presentation at 10.00am on 
   12 November 2020, please visit www.3i.com/investor-relations 
 

3i Group Half-year report 2020

Chief Executive's review

3i delivered a strong set of results for the first half of the year, generating a total return of GBP1,142 million, or 15% on opening shareholders' funds (September 2019: GBP767 million, or 10%) . The NAV per share at 30 September 2020 was 905 pence (March 2020: 804 pence), after the payment of the 17.5 pence second FY2020 dividend in July 2020 and the 12 pence one-off negative accounting impact from the further de-risking of the UK defined benefit pension plan.

These results were underpinned by resilient performance across our portfolio up to the end of September. We completed our first new Private Equity investment for this year in September 2020 and focused on growing our existing portfolio with the completion of two transformational bolt-on acquisitions in our Private Equity portfolio and two bolt-on acquisitions in the 3i Infrastructure plc ("3iN") portfolio.

Private Equity

In the six months to 30 September 2020, our Private Equity portfolio delivered a gross investment return ("GIR") of 19%, demonstrating its resilience in a difficult macroeconomic environment. Our thorough portfolio management processes enabled us to respond quickly and effectively to the challenges that arose as a result of the pandemic, including, more recently, decisive measures to address increases in infection rates across much of Europe. Encouragingly, most of our portfolio companies outperformed our rebased Covid-19 full-year outlook during the period.

Action

Action's performance through the pandemic has exceeded our expectations. Trading in the first two and a half months of 2020 was strong with sales, like-for-like ("LFL") growth, EBITDA and cash flows ahead of budget. As the outbreak of Covid-19 intensified across Europe in late March, Action was impacted by government-enforced temporary closures of its stores in France, Belgium and Austria and partial closures in Germany and Poland. Stores in the Netherlands remained open. After the reopening of all stores in May 2020, Action experienced robust trading with strong LFL performance across all markets. Action delivered LTM EBITDA of EUR579 million in September 2020 (September 2019: EUR506 million). October 2020 was another strong month for Action with LTM EBITDA increasing to EUR608 million (October 2019: EUR519 million). At the end of October, national lockdowns were re-imposed in France, Germany and Belgium, three of Action's largest markets. Action's stores in Germany have remained open, selling the entire range but with enhanced social distancing measures. In France and Belgium all stores are open, selling a reduced range of essentials, representing about 60% of items in France and about 50% of items in Belgium.

Store openings in April and May were limited and the roll-out programme resumed at pace only after the lifting of lockdowns. In the 10 months to October 2020, Action had opened 115 stores, including its first five stores in the Czech Republic. The opening of pilot stores in Italy, initially planned for Autumn 2020, has been deferred to H1 2021.

Other portfolio performance and activity

We continue to see strong momentum in earnings growth and cash generation for portfolio companies operating in the consumer, e-commerce, healthcare and business services sectors. The increased demand for hygiene products continues to benefit Royal Sanders. The strong performance and cash flow generation since our investment in 2018 allowed the company to make a dividend distribution to 3i of GBP38 million in July 2020. Lampenwelt, now rebranded Luqom, has been supported by the structural shift of consumer demand towards e-commerce and the increased importance of the home and living category as consumers spend more time at home. Cirtec Medical delivered significant year-on-year growth in the first half, driven by sales to high growth customers and the successful implementation of several margin optimisation initiatives. Tato has benefited from increased demand for products used in disinfectants and hygiene products and returned a GBP5 million dividend to 3i in July 2020.

We have also seen an encouraging recovery across our retail investments. In April 2020, we completed a GBP20 million equity injection into Hans Anders, to support the business through government-enforced temporary store closures across the countries in which it operates. Since reopening its stores in May 2020, Hans Anders has experienced a strong recovery in order intake across all markets, with higher conversion rates in the stores. The business has shifted its emphasis from walk-ins to online bookings, leveraging the substantial investments in its omni-channel proposition since our investment in 2017. Similarly, BoConcept has recovered well since the easing of lockdowns, with trading levels above those of the prior year.

Our portfolio companies exposed to the travel and automotive sectors continue to operate in more challenging conditions. As expected, Audley Travel's revenues have been under significant pressure, with departures severely restricted since April 2020. In early November 2020 we invested a further c.GBP50 million of capital to support the business through this difficult trading period. We believe Audley Travel will be well positioned to benefit when international leisure travel recovers due to its client proposition, destination diversity and asset-light model. The performance of ICE, now rebranded Arrivia, has been relatively resilient, with the recurring revenue nature of its membership business and material reductions to expenses and capex offsetting an extended period of no cruise sailings and a low level of resort vacations. Since passing the peak of the temporary plant shutdowns in April 2020 in response to Covid-19, Formel D has remained cash generative. Whilst its output recovery has been steady, it has been slower than expected, against a backdrop of a very challenging automotive sector. Q Holding continued to experience softer trading in its Quality Synthetic Rubber ("QSR") business, which has exposure to the automotive sector. Performance has since begun to stabilise, and the business is positioned well to recover as the automotive cycle improves. Its healthcare business continues to perform well.

We continue our focus on buy-and-build opportunities for our platform assets. In July 2020, we supported Evernex's transformational acquisition of Technogroup, the leading third-party data centre maintenance provider in Germany, Austria and Switzerland, contributing GBP41 million of funding . Having established a bioprocessing platform through the merger of Cellon, Silicone Altimex and TBL Performance Plastics in January 2020, we achieved a significant milestone in the growth and internationalisation of this platform through the acquisition of Sani-Tech West, Inc in July 2020. The total 3i investment in this platform, now rebranded as SaniSure, is GBP135 million. In August 2020, SaniSure completed the acquisition of Biofluidfocus.

In September 2020, we completed the GBP64 million investment in GartenHaus, an online leader in the retail of garden buildings, sheds, saunas, and related products in Germany, Austria, Switzerland and the Netherlands. In June 2020, we invested GBP17 million in Basic-Fit to provide expansion capital and, in September 2020, we repurchased an equity stake in Havea for GBP23 million. At the start of November 2020, we signed a c.GBP125 million investment in MPM, an international leader in branded premium natural pet food.

In the period, we completed the disposal of Kinolt and received total proceeds of GBP81 million. As a proprietary capital investor, and with the benefit of a strong balance sheet, we are not under pressure to exit investments when market conditions are unfavourable or when we believe a longer-term hold may yield greater returns for shareholders. Over 61% of our portfolio by value, excluding Action, was acquired within the last four years, and is still being managed actively as we build value organically and, in a number of cases, through bolt-on acquisitions. In light of the Covid-19 related market uncertainty, we are not currently planning to realise further material assets for the remainder of the year.

Infrastructure

Our Infrastructure business performed well in the first half of the year, achieving a GIR of 12%. The 3iN portfolio continues to demonstrate its resilience, generating a total return on opening NAV of 4% in the six months to 30 September 2020 (September 2019: 6%). 3iN is on track to deliver its dividend target, which is up 6.5% on last year. The team completed two bolt-on acquisitions in the period. 3iN's share price reflected the portfolio's good operational performance, increasing by 17% and closing at 289 pence on 30 September 2020 (31 March 2020: 247 pence).

Both of our US infrastructure assets are deemed to be providers of essential services and have continued to operate throughout the pandemic. The seven freight rail lines of our investment in Regional Rail have performed ahead of our investment case despite some softness in freight volumes in Northeast America. Smarte Carte has benefited from the diversity of its product offering and the locations in which it operates, as well as a moderate recovery in US air traffic levels. However, we remain cautious in light of the short and medium-term prospects for the travel industry.

In the period, we established a new 3i-managed vehicle which will co-invest alongside 3iN in certain transactions, with a commitment of EUR400 million from Industriens Pension of Denmark.

Scandlines

Scandlines delivered a solid performance in the period with freight volumes remaining close to 2019 levels. The lifting of travel restrictions in the summer months allowed car volumes to also show good momentum. Scandlines continues to be well positioned to manage the further uncertainty developing in Northern Europe due to the pandemic.

Balance sheet and dividend

In June 2020, we took advantage of favourable corporate debt market conditions to strengthen our balance sheet further, issuing a 20-year GBP400 million bond at a coupon of 3.75%. At 30 September 2020, our balance sheet remained well funded with GBP687 million of cash. Net debt was GBP288 million, resulting in gearing of 3%.

In line with our dividend policy, we have decided to pay a first FY2021 dividend of 17.5 pence, which is half of our FY2020 total dividend. This first FY2021 dividend will be paid to shareholders on 13 January 2021.

Covid-19 update

Throughout this pandemic, our focus has been first and foremost on protecting the wellbeing of our own employees, as well as those of our portfolio companies and the communities in which we collectively operate. We continue to follow local government guidance closely.

At the start of May 2020, we used employee carry and performance fee reserves to establish a GBP5 million Covid-19 Charitable Fund, with the aim of supporting charities and communities affected by the pandemic in the countries in which we operate. This money will be allocated to both immediate relief and longer-term rebuilding activities. By the end of October, we had made donations totalling c.GBP1.6 million to over 20 charities focused on immediate relief work across our markets. The overarching theme of the fund is the alleviation of poverty and its consequences. The fund has focused its donations on areas such as food provision, education, domestic violence, the advancement of minorities and disadvantaged groups, community development, homelessness, elderly people and mental health.

Brexit

As we approach the end of the transition period on 1 January 2021, we do not expect a significant disruption to our business from Brexit. Our Brexit planning has been based on worst-case scenario assumptions and we implemented an alternative regulatory structure in Luxembourg, which enables us to continue activities in Europe, regardless of the form of Brexit. The direct impact of Brexit on our investment portfolio is not expected to be material.

Outlook

The environment remains challenging as a result of the economic and social disruption resulting from the Covid-19 pandemic. Investor confidence continues to be undermined by the limited visibility on the longer-term impact of the pandemic and the political response to it across the world. In this environment, we will remain disciplined in our investment approach and focused on enhancing the value of our portfolio through organic growth and value-accretive add-ons. To date, our portfolio has been resilient to the shocks caused by the pandemic and while we continue to monitor developments closely, we have entered the second half of the year with good momentum across the Group. We will continue to navigate the challenges from the pandemic from a strong position with our resilient investment portfolio and a clear and proven strategy supported by rigorous asset management policies.

Simon Borrows

Chief Executive

Business and Financial review

Private Equity

Our Private Equity business performed strongly in the first half, generating a gross investment return of GBP1,245 million (September 2019: GBP666 million), or 19% of the opening portfolio value (September 2019: 11%), including a gain on foreign exchange on investments of GBP97 million (September 2019: GBP176 million).

Table 1: Gross investment return for the six months to 30 September

 
                                                                2020   2019 
 Investment basis                                               GBPm   GBPm 
============================================================  ======  ===== 
 Realised profits over value on the disposal of investments        3      - 
 Unrealised profits on the revaluation of investments          1,071    429 
 Dividends                                                        43      5 
 Interest income from investment portfolio                        25     52 
 Fees receivable                                                   6      4 
 Foreign exchange on investments                                  97    176 
 Gross investment return                                       1,245    666 
============================================================  ======  ===== 
 Gross investment return as a % of opening portfolio value       19%    11% 
============================================================  ======  ===== 
 

Investment

Table 2: Private Equity cash investment in the six months to 30 September 2020

 
                                                                                                           Proprietary 
                                                                                                               capital 
                                                                                                            investment 
Investment      Type                Business description/bolt on description              Date                    GBPm 
==============  ==================  ====================================================  ===============  =========== 
                                    Online leader in retail of garden buildings, sheds, 
                                     saunas and related products in Germany, 
GartenHaus(1)   New                  Austria, Switzerland and Netherlands                 September 2020            64 
                                    Manufacturer of natural healthcare and cosmetics 
Havea           Further              products                                             September 2020            23 
Hans Anders     Further             Value-for-money optical retailer                      April 2020                20 
Basic-Fit       Further             Discount gyms operator                                June 2020                 17 
Luqom           Return of funding   Online lighting specialist retailer                   July 2020                (8) 
Total Private Equity new cash, further investment and return of funding                                            116 
---------------------------------------------------------------------------------------------------------  ----------- 
Total Private Equity bolt-on investments from 3i balance sheet                                                     115 
---------------------------------------------------------------------------------------------------------  ----------- 
Total Private Equity cash investment                                                                               231 
=========================================================================================================  =========== 
 
 
1  Post 30 September 2020, GartenHaus returned GBP3 million of overfunding, reducing 3i's proprietary 
    capital investment to GBP61 million. 
 

During the first half of the year, our Private Equity business made net investment of GBP231 million (September 2019: GBP221 million), comprising GBP116 million of new and further investment and return of funding and GBP115 million of bolt-on investments.

A description of the new and bolt-on investments is provided in the Chief Executive's review. We have also used our capital to support the existing portfolio through the Covid-19 pandemic. In April 2020, we completed the GBP20 million equity injection in Hans Anders to provide liquidity support and in June 2020, we invested GBP17 million in Basic-Fit to provide expansion capital. In September 2020, we repurchased an equity stake in Havea for GBP23 million, following a reorganisation of shareholding. In July 2020, Luqom returned GBP8 million of overfunding that we had provided for the bolt-on acquisition of QLF in FY2020.

At the start of November 2020, we signed a c.GBP125 million investment in MPM, an international leader in branded premium natural pet food.

Realisations

In the period, we realised proceeds of GBP82 million (September 2019: GBP1 million). We completed the sale of Kinolt, generating proceeds of GBP81 million, of which GBP76 million was recognised as capital and the remainder as income. We also received further proceeds from the disposal of ACR, a legacy investment.

Table 3: Private Equity realisations in the six months to 30 September 2020

 
                                           31 March                                Uplift 
                                                                                       on 
                               Calendar        2020          3i   Profit/(loss)   opening   Residual 
                                                       realised 
                               year           value    proceeds          in the     value      value      Money 
                                                                       year (1)       (1) 
 Investment       Country      invested        GBPm        GBPm            GBPm         %       GBPm   multiple    IRR 
                                                                                                            (2) 
===============  ===========  ==========  =========  ==========  ==============  ========  =========  =========  ===== 
 Full 
 realisations 
 Kinolt           Belgium      2015              80          76             (3)      (3)%          -       1.6x    10% 
===============  ===========  ==========  =========  ==========  ==============  ========  =========  =========  ===== 
 Deferred 
 consideration 
 ACR              Singapore    2006               -           5               5         -          -        n/a    n/a 
===============  ===========  ==========  =========  ==========  ==============  ========  =========  =========  ===== 
 Other            n/a          n/a                -           1               1         -          -        n/a    n/a 
===============  ===========  ==========  =========  ==========  ==============  ========  =========  =========  ===== 
 Total Private 
  Equity realisations                            80          82               3       n/a          -        n/a    n/a 
========================================  =========  ==========  ==============  ========  =========  =========  ===== 
 
 
1  Cash proceeds realised in the period over opening value. 
2  Cash proceeds over cash invested. For partial realisations and refinancings, 
    valuations of any remaining investment are included in the multiple. 
    Money multiples are quoted on a GBP basis. 
 

Portfolio performance

The Covid-19 pandemic continues to drive uncertainty for the 2020 outlook. Since the valuation point at 31 March 2020 (see pages 22 and 23 of the FY2020 Annual report and accounts detailing our valuation approach at that date), our Private Equity portfolio has shown resilience and most of our portfolio companies outperformed our rebased Covid-19 full-year outlook during the period. Therefore, for most of our portfolio, we reverted to our usual valuation process for 30 September 2020. For the more challenged investments, particularly those in the travel and automotive sectors, we sought to gather a broader range of inputs, considered different methodologies and applied further judgement.

Table 4: Unrealised profits/(losses) on the revaluation of Private Equity investments(1) in the six months to 30 September

 
                                                   2020   2019 
                                                   GBPm   GBPm 
===============================================  ======  ===== 
 Action 
  Performance                                       644    381 
 Earnings based valuations (excluding Action) 
  Performance                                       238     90 
  Multiple movements                                211   (19) 
 Other bases 
  Discounted cash flow ("DCF")                     (60)      - 
  Other movements in unquoted investments           (1)   (11) 
  Imminent sale                                      11      - 
  Quoted portfolio                                   28   (12) 
 ==============================================  ======  ===== 
 Total                                            1,071    429 
===============================================  ======  ===== 
 
 
1  More information on our valuation methodology, including definitions and rationale, is included 
    in our Annual report and accounts 2020 on pages 177 to 178. 
 

Action valuation and performance

Following the reopening of all stores in May 2020, Action has experienced robust trading with an increase in the average basket size more than outweighing a decrease in footfall resulting from the implementation of social distancing measures. Strong earnings recovery and cash generation resulted in GBP644 million (September 2019: GBP381 million) of value growth, as shown in Table 4.

At 30 September 2020, Action was valued using its run-rate earnings to 30 September and a multiple of 18.0x net of the liquidity discount (31 March 2020: Fair value). This approach was consistent with the approach used at 30 June 2020. This resulted in a valuation of our 52.6% stake in Action of GBP4,269 million (31 March 2020: GBP3,536 million).

Performance (excluding Action)

We continue to see strong performance from our portfolio companies operating in the consumer, e-commerce, healthcare and business services sectors.

Royal Sanders has been able to capture a share of the surge in demand for handwash and hand gels, with all its factories remaining operational throughout the year. Additionally, the acquisition of the McBride sites in 2018 has created significant value. As a result, the business has generated strong earnings growth and cash since our investment in 2018, allowing the company to return GBP38 million of dividends to 3i.

Luqom has been supported by the structural shift of consumer demand towards e-commerce, coupled with an increasing demand and relevance of the home and living category, resulting in significant sales growth in the first half. E-commerce demand for lighting products has remained high even as economies have reopened.

Cirtec Medical delivered strong year-on-year growth in the first half. The neuromodulation and structural heart end markets recovered quickly from the deferral of procedures in late March and early April. Additionally, Cirtec Medical has benefited from platform-specific tailwinds, with a number of customers ramping up their purchases. The business also realised several margin optimisation initiatives, all of which have driven earnings growth.

Tato has seen increased demand for chemicals used in disinfectants and hygiene products and returned a GBP5 million dividend to 3i in July 2020.

Evernex's third-party IT equipment maintenance ("TPM") model has performed resiliently so far, with monthly subscriptions accounting for around two-thirds of total sales and with the benefit of variable operating costs. In addition, the acquisition of Technogroup in July 2020 secured its European leadership in the TPM sector.

Our retail businesses have recovered well from government-enforced temporary store closures across Europe at the beginning of FY2021. Since reopening its stores in May 2020, Hans Anders has experienced a strong recovery in order intake across all markets, with higher conversion rates in the stores. The business has shifted its emphasis from walk-ins to online bookings, leveraging the substantial investments in its omni-channel proposition since 3i's investment in 2017. Similarly, BoConcept has shown good performance with trading levels above those of the prior year and very limited store closures.

Our portfolio companies exposed to the travel sector continue to operate in more challenging conditions. Arrivia experienced an extended period of no cruise sailings and low level of resort vacations. Despite this, Arrivia's business model has proven resilient, due to the strength of its membership business that forms a significant part of its revenue. Audley Travel's trading has been acutely impacted by Covid-19, with minimal departure revenue since April 2020 . Further details can be found under 'Discounted Cash Flow ("DCF")' below.

With the on-set of the Covid-19 pandemic, the automotive market, which had already been under pressure, has been further negatively affected on both the supply and demand side, resulting in a reduction in volumes across Europe and the US in the period. Since passing the peak of the enforced temporary plant shutdowns in April 2020, Formel D's output recovery has been steady but slower than expected. Covid-19 has had a commercial impact on the automotive side of Q Holding's business whilst creating some operational disruption to its medical sites. However, these impacts are partially offset by an increase in demand for non-discretionary medical products.

Overall, 85% of the top 20 assets by value in our Private Equity portfolio grew their earnings in the 12 months to 30 June 2020 (September 2019: 91%) . Nine companies experienced negative earnings growth in the 12 months to 30 June 2020 . These include companies exposed to the challenging travel and automotive sectors and companies which experienced temporary interruptions in activity during April and May.

Table 5: Portfolio earnings growth of the top 20 Private Equity investments(1)

 
                                                             3i carrying value 
                                    Number of companies   at 30 September 2020 
 Last 12 months' earnings growth   at 30 September 2020                   GBPm 
================================  =====================  ===================== 
 <0%                                                  9                  1,204 
 0 - 9%                                               2                    401 
 10 - 19%                                             3                  4,818 
 20 - 40%                                             3                    785 
 >40%                                                 3                    584 
================================  =====================  ===================== 
 
 
1  This represents 99% of the Private Equity portfolio by value (31 March 2020: 98%). 
 

Across the portfolio leverage was 4.0x at 30 September 2020 (31 March 2020: 4.1x). Excluding Action, leverage across the portfolio at 30 September 2020 was 4.3x (31 March 2020: 3.7x). Table 6 shows the ratio of net debt to earnings by portfolio value at 30 September 2020.

Table 6: Ratio of net debt to earnings(1)

 
                                                           3i carrying value 
                                  Number of companies   at 30 September 2020 
 Ratio of net debt to earnings   at 30 September 2020                   GBPm 
==============================  =====================  ===================== 
 <1x                                                1                    228 
 1 - 2x                                             1                    130 
 2 - 3x                                             2                    317 
 3 - 4x                                             2                  4,643 
 4 - 5x                                             4                    839 
 5 - 6x                                             7                    898 
==============================  =====================  ===================== 
 
 
1  This represents 89% of the Private Equity portfolio by value (31 March 2020: 91%). Quoted 
    holdings, deferred consideration and companies with net cash are excluded from the calculation. 
 

Multiple movements

In setting or changing a multiple, we consider a number of factors such as relative performance, investment size, comparable recent transactions and exit plans, and monitor external equity markets. Where appropriate, we adjust the multiples for the impact of the applicable lease accounting standards.

In valuing the portfolio at 30 September 2020, we adjusted a small number of multiples to reflect the strong performance in the medical sector and took account of the recent transformational acquisitions in the multiples of Evernex and SaniSure. We have also taken some recovery in multiples for businesses that we believe are experiencing a short-term impact on earnings driven by the pandemic, but in general, we have not assumed that exceptional performance as a result of changed behavior in the pandemic should also be reflected in a rerating of the business.

The multiple of run-rate earnings used to value Action at 30 September 2020 was 18.0x net of the liquidity discount . As at 30 September 2020, a 1.0x movement in Action's post-discount multiple would have increased or decreased the valuation of 3i's investment by GBP299 million.

DCF

In the period, we moved Audley Travel's valuation basis from earnings to DCF and reflected the deterioration in travel market sentiment and broader market outlook in the short to medium term in the valuation. In early November 2020, we invested a further c.GBP50 million of capital to support the business through this difficult trading period.

Imminent sale

At 30 September 2020, we moved Navayuga, an Asian legacy asset, to an imminent sale valuation basis following the completion of a commercial settlement. We received proceeds of GBP17 million from this sale in October 2020.

Quoted portfolio

Basic-Fit is the only quoted asset in the Private Equity portfolio. In June 2020, we invested GBP17 million in the business to provide expansion capital. We recognised an unrealised value gain of GBP28 million from Basic-Fit in the period (September 2019: GBP12 million loss) as its share price increased to EUR20.30 at 30 September 2020 (31 March 2020: EUR15.20). At 30 September 2020, our residual 12.8% shareholding was valued at GBP141 million (31 March 2020: 12.7% shareholding valued at GBP93 million).

Private Equity proprietary capital

At 30 September 2020, the portfolio consisted of 32 assets (31 March 2020: 32 assets). The value of 3i's Private Equity proprietary capital increased to GBP7.9 billion (31 March 2020: GBP6.6 billion) due to value growth, net investment

and gains from foreign exchange translation on investment in the period.

Table 7: Private Equity proprietary capital

 
                      Proprietary capital value              Vintage   Proprietary capital value              Vintage 
                              30 September 2020   money multiple (3)               31 March 2020   money multiple (3) 
 Vintages (1)                              GBPm    30 September 2020                        GBPm        31 March 2020 
===================  ==========================  ===================  ==========================  =================== 
 Buyouts 2010-2012                        1,470                10.0x                       1,623                 9.5x 
 Growth 2010-2012                            19                 2.1x                          20                 2.1x 
 2013-2016                                  776                 2.2x                         869                 2.2x 
 2016-2019                                1,850                 1.3x                       1,472                 1.0x 
 2019-2022                                  523                 1.2x                         281                 1.0x 
 Other(2)                                 3,252                  n/a                       2,287                  n/a 
===================  ==========================  ===================  ==========================  =================== 
 Total                                    7,890                                            6,552 
===================  ==========================  ===================  ==========================  =================== 
 
 
1  Assets included in these vintages are disclosed in the glossary towards the end of this document. 
2  Includes value of GBP2,799 million (31 March 2020: GBP1,913 million) held in Action through 
    the 2020 Co-investment vehicles and 3i. 
3  Vintage money multiple includes unrealised value. 
 

The value of the Private Equity portfolio including third-party capital increased to EUR11.6 billion (31 March 2020: EUR9.9 billion) due to the increase in the valuation of Action, strong performance from our more recent vintages, net investment and favourable foreign exchange gains.

Table 8: Private Equity proprietary capital by 3i office location

 
                                                3i carrying value 
                                             at 30 September 2020 
 3i office location    Number of companies                   GBPm 
====================  ====================  ===================== 
 Netherlands                             5                  5,106 
 France                                  2                    549 
 Germany                                 6                    689 
 UK                                      8                    503 
 US                                      7                  1,004 
 Other                                   4                     39 
====================  ====================  ===================== 
 Total                                  32                  7,890 
====================  ====================  ===================== 
 

Infrastructure

Our Infrastructure business performed well and generated a gross investment return of GBP134 million, or 12% on the opening portfolio value in the period (September 2019: GBP88 million, 9%). This was driven by the recovery of 3iN's share price and by dividend income.

Table 9: Gross investment return for the six months to 30 September

 
                                                              2020   2019 
 Investment basis                                             GBPm   GBPm 
===========================================================  =====  ===== 
 Unrealised profits on the revaluation of investments          127     59 
 Dividends                                                      14     12 
 Interest income from investment portfolio                       5      5 
 Foreign exchange on investments                              (16)     17 
 Movement in the fair value of derivatives                       4    (5) 
===========================================================  =====  ===== 
 Gross investment return                                       134     88 
===========================================================  =====  ===== 
 Gross investment return as a % of opening portfolio value     12%     9% 
===========================================================  =====  ===== 
 

3iN performance

The 3iN portfolio continues to demonstrate its resilience to the effects of the Covid-19 pandemic, generating a total return on opening NAV of 4% in the six months to 30 September 2020 (September 2019: 6%). 3iN is on track to deliver its dividend target which is up 6.5% on last year. In the first half, Infinis completed the acquisition of the development rights for a 6MW solar PV project at the Ling Hall landfill and Tampnet agreed to purchase a 1,200km offshore fibre cable system in the Gulf of Mexico. Furthermore, 3iN committed additional capital to ESVAGT to fund further growth in its offshore wind servicing segment.

As 3iN's investment manager, we received a management fee of GBP12 million for the six-month period to 30 September 2020 (September 2019: GBP15 million).

Performance of 3i's proprietary capital Infrastructure portfolio

Table 10: Unrealised profits on the revaluation of Infrastructure investments(1) in the six months to 30 September

 
                  2020   2019 
                  GBPm   GBPm 
===============  =====  ===== 
 Quoted            113     53 
 DCF                 7      4 
 Fund                1      2 
 Imminent sale       6      - 
===============  =====  ===== 
 Total             127     59 
===============  =====  ===== 
 
 
1  More information on our valuation methodology, including definitions and rationale, is included 
    in our Annual report and accounts 2020 on pages 177 to 178. 
 

Quoted stake in 3iN

3iN's share price increased by 17% in the first half of the year and closed at 289 pence on 30 September 2020 (31 March 2020: 247 pence). We recognised GBP113 million of unrealised value growth on our 3iN investment and GBP12 million of dividend income (September 2019: GBP53 million of unrealised value growth and GBP12 million of dividend income). At 30 September 2020, our investment in 3iN was valued at GBP778 million (31 March 2020: GBP665 million).

US Infrastructure

Our US infrastructure portfolio has been relatively resilient throughout the pandemic, as both assets have been deemed to provide essential services. Regional Rail has continued to perform well. The business benefited from opportunistic growth in offerings like car storage and better than expected operational efficiency at its newly acquired Carolina Coastal Railway line. It also added new customers on its Florida lines, offsetting some freight softness in Northeast America. Smarte Carte's operations have been relatively resilient despite the reduction in air travel across the US, benefiting from a diverse offering and broad penetration across the country. However, the business continues to operate in very challenging market conditions. Whilst US air traffic has marginally recovered, the Company benefits from leisure travel that is recovering faster than business travel.

Imminent sale

At 30 September 2020, we valued Krishnapatnam Port , the largest asset remaining in our 3i India Infrastructure Fund, on an imminent sale valuation basis following completion of a commercial settlement. We received proceeds of GBP30 million from this sale in October 2020.

Fund management

The 3i European Operational Projects Fund completed the acquisition of a portfolio of eight operational projects in France. The Fund has now deployed c.60% of its total commitments and has a good pipeline of potential investments. The Fund is outperforming its yield objective.

We established a new 3i-managed vehicle in the period that will co-invest alongside 3iN in certain transactions, with a commitment of EUR400 million from Industriens Pension of Denmark.

Infrastructure AUM increased to GBP4.9 billion (31 March 2020: GBP4.4 billion) and we generated fee income of GBP19 million from our fund management activities in the period (September 2019: GBP22 million).

Table 11: Assets under management as at 30 September 2020

 
                                                                                                                   Fee 
                                                                                                                income 
                                                                                    % invested at            earned in 
                             Close                  3i commitment/   Remaining 3i       September     AUM   the period 
 Fund/strategy               date       Fund size   share            commitment              2020    GBPm         GBPm 
==========================  =========  ==========  ===============  =============  ==============  ======  =========== 
 3iN(1)                      Mar 07     n/a         GBP778m          n/a                      n/a   2,576           12 
 3i Managed Infrastructure 
  Acquisitions LP             Jun 17     GBP698m     GBP35m           GBP5m                   86%     784            3 
 3i European Operational 
  Projects Fund              Apr 18     EUR456m     EUR40m           EUR16m                   59%     244            1 
 BIIF                        May 08     GBP680m     n/a              n/a                      90%     477            2 
 3i India Infrastructure 
  Fund                       Mar 08     US$1,195m   US$250m          US$35m                   73%     119            - 
 3i managed accounts         various    n/a         n/a              n/a                      n/a     326            1 
 US Infrastructure           various    n/a         n/a              n/a                      n/a     367            - 
==========================  =========  ==========  ===============  =============  ==============  ======  =========== 
 Total                                                                                              4,893           19 
=====================================  ==========  ===============  =============  ==============  ======  =========== 
 
 
 1   AUM based on the share price at 30 September 2020. 
 

Scandlines

Scandlines generated a gross investment return of GBP15 million (September 2019: GBP44 million) or 3% of opening portfolio value (September 2019: 8%).

Table 12: Gross investment return for the six months to 30 September

 
                                                              2020   2019 
 Investment basis                                             GBPm   GBPm 
===========================================================  =====  ===== 
 Unrealised profit on the revaluation of investments            12     10 
 Dividends                                                       -     27 
 Foreign exchange on investments                                11     16 
 Movement in the fair value of derivatives                     (8)    (9) 
===========================================================  =====  ===== 
 Gross investment return                                        15     44 
===========================================================  =====  ===== 
 Gross investment return as a % of opening portfolio value      3%     8% 
===========================================================  =====  ===== 
 

Performance

Scandlines delivered a solid performance. Its strategic importance to supply chains between Denmark, Germany and Scandinavia remains evident, with freight volumes at over 90% in the nine months to September compared to the prior comparable period. Car volumes continue to be impacted on a month-by-month basis by regional and national travel and quarantine restrictions, although they demonstrated good momentum following the removal of travel restrictions in the summer. The company continues to be well positioned to manage the further uncertainty developing in Northern Europe due to the pandemic. As indicated previously, we do not expect to receive any dividends from Scandlines in FY2021. At 30 September 2020, Scandlines was valued at GBP452 million (31 March 2020: GBP429 million) on a DCF basis.

Foreign exchange

We hedge our investment in Scandlines for foreign exchange translation risk. We recognised a GBP3 million net gain on foreign exchange translation (September 2019: GBP7 million) including an GBP8 million fair value loss (September 2019: GBP9 million) from derivatives in our hedging programme.

Overview of financial performance

3i generated a total return of GBP1,142 million, or a profit on opening shareholders' funds of 15%, in the six months to 30 September 2020 (September 2019: GBP767 million, or 10%). The diluted NAV per share at 30 September 2020 increased to 905 pence (31 March 2020: 804 pence) after the payment of the second FY2020 dividend of GBP169 million, or 17.5 pence per share (September 2019: GBP194 million, 20 pence per share) and the 12 pence one-off negative accounting impact of the pension buy-in transaction.

Table 13: Gross investment return for the six months to 30 September

 
                                                               2020   2019 
 Investment basis                                              GBPm   GBPm 
===========================================================  ======  ===== 
 Private Equity                                               1,245    666 
 Infrastructure                                                 134     88 
 Scandlines                                                      15     44 
 Gross investment return                                      1,394    798 
===========================================================  ======  ===== 
 Gross investment return as a % of opening portfolio value      17%    11% 
-----------------------------------------------------------  ------  ----- 
 
 Total comprehensive income ("Total return")                  1,142    767 
===========================================================  ======  ===== 
 Total return on opening shareholders' funds                    15%    10% 
===========================================================  ======  ===== 
 

Gross investment return was GBP1,394 million in the period (September 2019: GBP798 million) driven by the strong performance of Action and several other portfolio companies, as well as good dividend income from the portfolio. The GIR also includes a GBP88 million net foreign currency gain on translation of our investments (September 2019: GBP195 million gain). Further information on the Private Equity, Infrastructure and Scandlines valuations is included in their respective sections of this Business and Financial review.

Operating cash profit

Table 14: Operating cash profit/(loss) for the six months to 30 September

 
                                          2020   2019 
                                          GBPm   GBPm 
=======================================  =====  ===== 
 Cash fees from external funds              19     19 
 Cash portfolio fees                         2      3 
 Cash portfolio dividends and interest      62     55 
=======================================  =====  ===== 
 Cash income                                83     77 
 Cash operating expenses(1)               (69)   (79) 
=======================================  =====  ===== 
 Operating cash profit/(loss)               14    (2) 
=======================================  =====  ===== 
 
 
 1   Cash operating expenses include operating expenses paid and lease payments. 
 

3i generated an operating cash profit of GBP14 million in the period (September 2019: GBP2 million loss). Cash income increased to GBP83 million (September 2019: GBP77 million) principally due to good dividend income. Cash operating expenses incurred during the period decreased to GBP69 million (September 2019: GBP79 million) driven principally by lower variable compensation costs and a reduction in travel as a result of the Covid-19 travel restrictions.

Foreign exchange

At 30 September 2020, 83% of the Group's assets were denominated in euros or US dollars (31 March 2020: 78%). Following the weakening of sterling against the euro and strengthening of sterling against the US dollar, the Group recorded a total foreign exchange gain of GBP80 million net of derivatives during the period (September 2019: GBP196 million).

Table 15: Net assets and sensitivity by currency at 30 September 2020

 
                              Net                 1% 
                           assets        sensitivity 
                 FX rate     GBPm    %          GBPm 
==============  ========  =======  ===  ============ 
 Sterling        n/a        1,268   15           n/a 
 Euro(1)         1.1027     5,954   68            59 
 US dollar(1)    1.2932     1,347   15            13 
 Danish krone    8.2091       130    2             1 
 Other           n/a           42    -           n/a 
==============  ========  =======  ===  ============ 
 Total                      8,741 
==============  ========  =======  ===  ============ 
 
 
 1   Sensitivity impact is net of derivatives. 
 

Carried interest and performance fees payable and receivable

We pay carried interest to participants in plans relating to our proprietary capital invested. We also receive performance fees from third-party funds and pay a portion of that carry received to participants in our carry plans. Carried interest at 30 September 2020 was calculated assuming that remaining assets in the portfolio were realised at their fair value at that date.

Table 16: Carried interest and performance fees for the six months to 30 September

 
 Consolidated statement of comprehensive income      2020   2019 
                                                     GBPm   GBPm 
==================================================  =====  ===== 
 Carried interest and performance fees receivable 
 Private Equity                                       (2)     81 
==================================================  =====  ===== 
 Total                                                (2)     81 
==================================================  =====  ===== 
 Carried interest and performance fees payable 
 Private Equity                                      (61)   (63) 
 Infrastructure                                       (2)    (5) 
==================================================  =====  ===== 
 Total                                               (63)   (68) 
==================================================  =====  ===== 
 Net carried interest (payable)/receivable           (65)     13 
==================================================  =====  ===== 
 

Table 17: Carried interest and performance fees

 
 Consolidated statement of financial position        30 September   31 March 
                                                             2020       2020 
                                                             GBPm       GBPm 
==================================================  =============  ========= 
 Carried interest and performance fees receivable 
 Private Equity                                                 9         11 
 Infrastructure                                                 -          6 
 Total                                                          9         17 
==================================================  =============  ========= 
 Carried interest and performance fees payable 
 Private Equity                                             (564)      (998) 
 Infrastructure                                              (24)       (40) 
==================================================  =============  ========= 
 Total                                                      (588)    (1,038) 
==================================================  =============  ========= 
 

Carried interest and performance fees receivable

Following the disposal of its stake in Action by Eurofund V ("EFV") in FY2020, the only material carried interest and performance fees receivable will be generated from our management of 3iN's portfolio.

Carried interest and performance fees payable

In Private Equity, we typically accrue net carried interest payable at between 10% and 13% of gross investment return. We accrued carried interest payable of GBP61 million (September 2019: GBP63 million) for Private Equity in the period. At 30 September 2020, we were not accruing carried interest payable on the 2016-19 or 2019-22 vintage.

Carried interest is paid to participants when the performance hurdles are passed in cash terms following cash proceeds received from a realisation, refinancing event or other cash distribution. Due to the time between investment and realisation, the schemes are usually active for a number of years and their participants are both current and previous employees of 3i. In FY2020, we crystallised carried interest due on the EFV share of Action, along with the carried interest due on 3i's share of the refinancing proceeds from Action in the Buyouts 2010-12 scheme. As a result, GBP502 million was paid to participants in the Buyouts 2010-12 scheme, of which GBP109 million was previously held in escrow.

Overall, the effect of the income statement charge, cash payments, as well as the currency translation meant that the balance sheet carried interest and performance fees payable decreased to GBP588 million (31 March 2020: GBP1,038 million). During the period, we crystallised further carried interest in the Buyouts 2010-12 scheme relating to Action, which is expected to result in a c.GBP112 million carried interest payment to participants in the Buyouts 2010-12 scheme in November 2020.

Balance sheet and NAV

Table 18: Simplified consolidated balance sheet

 
                                                     30 September   31 March 
                                                             2020       2020 
 Investment basis                                            GBPm       GBPm 
==================================================  =============  ========= 
 Investment portfolio                                       9,578      8,098 
 Gross debt                                                 (975)      (575) 
 Cash and deposits                                            687        845 
==================================================  =============  ========= 
 Net (debt)/cash                                            (288)        270 
==================================================  =============  ========= 
 Carried interest and performance fees receivable               9         17 
 Carried interest and performance fees payable              (588)    (1,038) 
 Other net assets                                              30        410 
==================================================  =============  ========= 
 Net assets                                                 8,741      7,757 
==================================================  =============  ========= 
 Gearing(1)                                                  3.3%        nil 
==================================================  =============  ========= 
 
 
 1   Gearing is net debt as a percentage of net assets. 
 

The investment portfolio value increased to GBP9,578 million at 30 September 2020 (31 March 2020: GBP8,098 million) driven by unrealised value growth of GBP1,210 million, net investment and gains on foreign exchange translation.

At 30 September 2020 the Group had net debt of GBP288 million (31 March 2020: GBP270 million net cash) after a GBP400 million carried interest payment, net cash investment of GBP15 million and the payment of the second FY2020 dividend of GBP169 million.

Going concern and liquidity

The Half-year consolidated financial statements are prepared on a going concern basis. The Directors made an assessment of going concern, taking into account the Group's current performance and the outlook, and performed additional analysis to support the going concern assessment considering the ongoing impact of the Covid-19 pandemic on the portfolio.

Liquidity reduced to GBP1,087 million at 30 September 2020 (31 March 2020: GBP1,245 million) and comprised cash and deposits of GBP687 million (31 March 2020: GBP845 million) and undrawn facility of GBP400 million (31 March 2020: GBP400 million). In June we successfully issued a 20-year GBP400 million bond at a coupon of 3.75%, providing further liquidity to the Group.

Pension

During the period, the 3i Group Pension Plan Trustees completed a GBP650 million buy-in transaction with Legal & General. This transaction was completed without additional contributions from 3i. The 3i Group Pension Plan benefits are now fully insured through buy-in policies which are held as assets of the Plan. This means that 3i is no longer exposed to any material longevity, interest or inflation risk in the plan and therefore any financing requirements. As a result of the transaction we have reduced the IAS 19 plan surplus to reflect this commercial outcome. Consequently, at 30 September 2020, the IAS 19 Plan surplus was GBP57 million (31 March 2020: GBP173 million) which included a total re-measurement loss recognised in other comprehensive income of GBP118 million (September 2019: GBP6 million gain) and interest income recognised in the Consolidated statement of comprehensive income of GBP2 million (September 2019: GBP2 million).

Alternative Performance Measures ("APMs")

We assess our performance using a variety of measures that are not specifically defined under IFRS and are therefore termed APMs. The APMs that we use may not be directly comparable with those used by other companies. Our Investment basis is itself an APM.

The explanation of and rationale for the Investment basis and its reconciliation to IFRS is provided in the Reconciliation of the Investment basis to IFRS section below. The table below defines our additional APMs and should be read in conjunction with the Annual report and accounts 2020.

 
APM                      Purpose                           Calculation                  Reconciliation to 
                                                                                         IFRS 
Gross investment         A measure of the performance      It is calculated             The equivalent balances 
 return as a percentage   of our proprietary                as the gross investment      under IFRS and the 
 of opening portfolio     investment portfolio.             return, as shown             reconciliation to 
 value                    For further information,          in the Investment            the Investment basis 
                          see the Group KPIs                basis Consolidated           are shown in the 
                          in our Annual report              statement of comprehensive   Reconciliation of 
                          and accounts 2020.                income, as a % of            consolidated statement 
                                                            the opening portfolio        of comprehensive 
                                                            value.                       income and the Reconciliation 
                                                                                         of consolidated 
                                                                                         statement of financial 
                                                                                         position respectively. 
                         ================================  ===========================  ============================== 
Cash realisations        Cash proceeds from                The cash received            The equivalent balance 
                          our investments support           from the disposal            under IFRS and the 
                          our returns to shareholders,      of investments in            reconciliation to 
                          as well as our ability            the period as shown          the Investment basis 
                          to invest in new opportunities.   in the Investment            is shown in the 
                          For further information,          basis Consolidated           Reconciliation of 
                          see the Group KPIs                cash flow statement.         consolidated cash 
                          in our Annual report                                           flow statement. 
                          and accounts 2020. 
                         ================================  ===========================  ============================== 
Cash investment          Identifying new opportunities     The cash paid to             The equivalent balance 
                          in which to invest                acquire investments          under IFRS and the 
                          proprietary capital               in the period as             reconciliation to 
                          is the primary driver             shown on the Investment      the Investment basis 
                          of the Group's ability            basis Consolidated           is shown in the 
                          to deliver attractive             cash flow statement.         Reconciliation of 
                          returns. For further                                           consolidated cash 
                          information, see the                                           flow statement. 
                          Group KPIs in our Annual 
                          report and accounts 
                          2020. 
                         ================================  ===========================  ============================== 
Operating cash           By covering the cash              The cash income              The equivalent balance 
 profit/(loss)            cost of running the               from the portfolio           under IFRS and the 
                          business with cash                (interest, dividends         reconciliation to 
                          income, we reduce the             and fees) together           the Investment basis 
                          potential dilution                with fees received           is shown in the 
                          of capital returns.               from external funds          Reconciliation of 
                          For further information,          less cash operating          consolidated cash 
                          see the Group KPIs                expenses and leases          flow statement. 
                          in our Annual report              payments as shown 
                          and accounts 2020.                on the Investment 
                                                            basis Consolidated 
                                                            cash flow statement. 
                                                            The calculation 
                                                            is shown in Table 
                                                            14 of the Overview 
                                                            of financial performance. 
                         ================================  ===========================  ============================== 
Net cash/(net            A measure of the available        Cash and cash equivalents    The equivalent balance 
 debt)                    cash to invest in the             plus deposits less           under IFRS and the 
                          business and an indicator         loans and borrowings         reconciliation to 
                          of the financial risk             as shown on the              the Investment basis 
                          in the Group's balance            Investment basis             is shown in the 
                          sheet.                            Consolidated statement       Reconciliation of 
                                                            of financial position.       consolidated statement 
                                                                                         of financial position. 
                         ================================  ===========================  ============================== 
Gearing                  A measure of the financial        Net debt (as defined         The equivalent balance 
                          risk in the Group's               above) as a % of             under IFRS and the 
                          balance sheet.                    the Group's net              reconciliation to 
                                                            assets under the             the Investment basis 
                                                            Investment basis.            is shown in the 
                                                            It cannot be less            Reconciliation of 
                                                            than zero.                   consolidated statement 
                                                                                         of financial position. 
                         ================================  ===========================  ============================== 
 

Principal risks and uncertainties

3i's risk appetite statement, approach to risk management and governance structure are set out in the Risk section of the Annual report and accounts 2020, which can be accessed on the Group's website at www.3i.com .

The principal risks to the achievement of the Group's strategic objectives for the remaining six months of its financial year are unchanged from those reported on pages 55 to 59 of the Annual report and accounts 2020. There have been no material changes to the impact and likelihood of the Group's principal risks in the period, which are outlined below.

Covid-19

The restrictions to combat the Covid-19 pandemic have resulted in a significant contraction of economic activity across the G20 countries and downgrading of global economic growth forecasts. The outlook remains very uncertain. These economic headwinds have the potential to affect trading, liquidity and valuations in varying degrees across the portfolio. As outlined below, 3i has a well-funded balance sheet and the impact on the investment portfolio, which is now clearer, has been concentrated on a small number of assets in the most exposed sectors.

Principal risks

External - Risks arising from external factors including political, legal, regulatory, economic and competitor changes, which affect the Group's investment portfolio and operations. There is significant continuing uncertainty in the outlook for the global economy and the potential for periods of increased market volatility, both of which will be influenced by the extent of Covid-19 related restrictions, their economic impact and government economic policies. 3i is not immune to these wider market conditions; however, our balance sheet is well funded with low holding company debt and we have a diverse portfolio of international companies.

Whilst the outcome of UK / EU trade negotiations remains unclear, we have in place the necessary regulatory and investment structures to ensure continuity of our EU based activities based on a range of reasonably foreseeable scenarios. The exposure of the portfolio to possible disruption to UK / EU trade flows is very limited.

Investment - Risks in respect of specific asset investment decisions, the subsequent performance of an investment or exposure concentrations across business line portfolios. Although the extension of Covid-19 restrictions continues to affect a limited number of portfolio assets in the most exposed sectors e.g. travel, the majority of the portfolio continues to show a resilient performance.

Operational - Risks arising from inadequate or failed processes, people and systems or from external factors affecting these. The Group's day-to-day operations have been largely unaffected by the impact of Covid-19 related restrictions and remote working arrangements. This includes the resilience and security of the Group's IT systems; maintaining robust processes and internal controls; and providing appropriate levels of support for our staff.

The Half-year report provides an update on 3i's strategy and business performance, as well as on market conditions, which is relevant to the Group's overall risk profile and should be viewed in the context of the Group's risk management framework and principal risks as disclosed in the Annual report and accounts 2020.

Reconciliation of the Investment basis to IFRS

Background to Investment basis numbers used in the Half-year report

The Group makes investments in portfolio companies directly, held by 3i Group plc, and indirectly, held through intermediate holding company and partnership structures ("investment entity subsidiaries"). It also has other operational subsidiaries, which provide services and other activities such as employment, regulatory activities, management and advice ("trading subsidiaries"). The application of IFRS 10 requires the Group to fair value a number of investment entity subsidiaries. This fair value approach, applied at the investment entity subsidiary level, effectively obscures the performance of our proprietary capital investments and associated transactions occurring in the investment entity subsidiaries. The financial effect of the underlying portfolio companies and fee income, operating expenses and carried interest transactions occurring in investment entity subsidiaries are aggregated into a single value.

To aid understanding of our results, we include a separate non-GAAP "Investment basis" consolidated statement of comprehensive income, financial position and cash flow. The Investment basis is an APM and the Chief Executive's review and the Business and financial review are prepared using the Investment basis, as we believe it provides a more understandable view of our performance. Total return and net assets are equal under the Investment basis and IFRS; the Investment basis is simply a "look through" of IFRS 10 to present the underlying performance.

A more detailed explanation of the effect of IFRS 10 is provided in the Annual report and accounts 2020 on page 43.

Reconciliation between Investment basis and IFRS

A detailed reconciliation from the Investment basis to IFRS basis of the consolidated statement of comprehensive income, consolidated statement of financial position and consolidated cash flow statement is shown below.

Reconciliation of consolidated statement of comprehensive income

 
                                 Six months to 30 September 2020             Six months to 30 September 2019 
                              Investment          IFRS          IFRS      Investment          IFRS            IFRS 
                                   basis   adjustments         basis           basis   adjustments           basis 
                                                         (unaudited)                                   (unaudited) 
                      Notes         GBPm          GBPm          GBPm            GBPm          GBPm            GBPm 
===================  ======  ===========  ============  ============  ==============  ============  ============== 
 Realised profits 
  over value 
  on the disposal 
  of investments        1,2            3             2             5               -             -               - 
 Unrealised profits 
  on the 
  revaluation of 
  investments           1,2        1,210         (605)           605             498         (436)              62 
 Fair value 
  movements 
  on investment 
  entity 
  subsidiaries            1            -           634           634               -           602             602 
 Portfolio income 
  Dividends             1,2           57          (27)            30              44          (31)              13 
  Interest income 
   from investment 
   portfolio            1,2           30          (20)            10              57          (39)              18 
  Fees receivable       1,2            6             1             7               4             1               5 
 Foreign exchange 
  on investments        1,4           92          (78)            14             209         (168)              41 
 Movement in the 
  fair value of 
  derivatives                        (4)             -           (4)            (14)             -            (14) 
===================  ======  ===========  ============  ============  ==============  ============  ============== 
 Gross investment 
  return                           1,394          (93)         1,301             798          (71)             727 
===================  ======  ===========  ============  ============  ==============  ============  ============== 
 Fees receivable 
  from external 
  funds                               21             -            21              23             -              23 
 Operating expenses     1,3         (58)             1          (57)            (60)             -            (60) 
 Interest received                   (1)             1             -               2             -               2 
 Interest paid                      (23)             -          (23)            (18)             -            (18) 
 Exchange movements     1,4          (8)             5           (3)               1            19              20 
 Income from 
  investment entity 
  subsidiaries            1            -            12            12               -            10              10 
 Other income                          -             -             -               3           (1)               2 
 Operating profit 
  before carried 
  interest                         1,325          (74)         1,251             749          (43)             706 
===================  ======  ===========  ============  ============  ==============  ============  ============== 
 Carried interest 
  Carried interest 
   and performance 
   fees receivable      1,3          (2)             -           (2)              81          (18)              63 
  Carried interest 
   and performance 
   fees payable         1,3         (63)            68             5            (68)            59             (9) 
 ==================  ======  ===========  ============  ============  ==============  ============  ============== 
 Operating profit 
  before tax                       1,260           (6)         1,254             762           (2)             760 
===================  ======  ===========  ============  ============  ==============  ============  ============== 
 Income taxes           1,3            -             -             -             (1)             -             (1) 
===================  ======  ===========  ============  ============  ==============  ============  ============== 
 Profit for the 
  period                           1,260           (6)         1,254             761           (2)             759 
===================  ======  ===========  ============  ============  ==============  ============  ============== 
 Other comprehensive income 
 that may be reclassified 
 to the income statement 
  Exchange 
   differences 
   on translation 
   of foreign 
   operations           1,4            -             6             6               -             2               2 
 Other 
 comprehensive 
 income that will 
 not be 
 reclassified to 
 the income 
 statement 
  Re-measurement of 
   defined 
   benefit plans                   (118)             -         (118)               6             -               6 
 ==================  ======  ===========  ============  ============  ==============  ============  ============== 
 Other 
  comprehensive 
  (expense)/ income 
  for the period                   (118)             6         (112)               6             2               8 
===================  ======  ===========  ============  ============  ==============  ============  ============== 
 Total 
  comprehensive 
  income for 
  the period 
  ("Total return")                 1,142             -         1,142             767             -             767 
===================  ======  ===========  ============  ============  ==============  ============  ============== 
 
 

Notes:

 
 1   Applying IFRS 10 to the consolidated statement of comprehensive income consolidates the line 
      items of a number of previously consolidated subsidiaries into a single line item "Fair value 
      movements on investment entity subsidiaries". In the Investment basis accounts we have disaggregated 
      these line items to analyse our total return as if these investment entity subsidiaries were 
      fully consolidated, consistent with prior periods. The adjustments simply reclassify the consolidated 
      statement of comprehensive income of the Group, and the total return is equal under the Investment 
      basis and the IFRS basis. 
 2   Realised profits, unrealised profits and portfolio income shown in the IFRS accounts only 
      relate to portfolio companies that are held directly by 3i Group plc and not those portfolio 
      companies held through investment entity subsidiaries. Realised profits, unrealised profits 
      and portfolio income in relation to portfolio companies held through investment entity subsidiaries 
      are aggregated into the single "Fair value movement on investment entity subsidiaries" line. 
      This is the most significant reduction of information in our IFRS accounts. 
 3   Other items also aggregated into the "Fair value movements on investment entity subsidiaries" 
      line include fees receivable from external funds, audit fees, administration expenses, carried 
      interest and tax. 
 4   Foreign exchange movements have been reclassified under the Investment basis as foreign currency 
      asset and liability movements. Movements within the investment entity subsidiaries are included 
      within "Fair value movements on investment entity subsidiaries". 
 

Reconciliation of consolidated statement of financial position

 
                                                As at 30 September 2020                   As at 31 March 2020 
                                         Investment          IFRS          IFRS   Investment          IFRS        IFRS 
                                              basis   adjustments         basis        basis   adjustments       basis 
                                                                    (unaudited)                              (audited) 
                                 Notes         GBPm          GBPm          GBPm         GBPm          GBPm        GBPm 
====  ================================  ===========  ============  ============  ===========  ============  ========== 
 Assets 
 Non-current assets 
 Investments 
  Quoted investments                 1          919         (430)           489          758         (340)         418 
  Unquoted investments               1        8,659       (4,838)         3,821        7,340       (4,304)       3,036 
 Investments in investment 
  entity subsidiaries              1,2            -         4,871         4,871            -         3,936       3,936 
================================  ====  ===========  ============  ============  ===========  ============  ========== 
 Investment portfolio                         9,578         (397)         9,181        8,098         (708)       7,390 
================================  ====  ===========  ============  ============  ===========  ============  ========== 
 Carried interest and 
  performance 
  fees receivable                    1            9             1            10           11             -          11 
 Other non-current assets            1           34           (1)            33           26           (3)          23 
 Intangible assets                                8             -             8            9             -           9 
 Retirement benefit surplus                      57             -            57          173             -         173 
 Property, plant and equipment                    5             -             5            5             -           5 
 Right of use asset                              17             -            17           19             -          19 
 Derivative financial 
  instruments                                     2             -             2            7             -           7 
 Deferred income taxes                            1             -             1            -             -           - 
 Total non-current assets                     9,711         (397)         9,314        8,348         (711)       7,637 
================================  ====  ===========  ============  ============  ===========  ============  ========== 
 Current assets 
 Carried interest and 
  performance 
  fees receivable                    1            -             -             -            6             1           7 
 Other current assets                1           29           (2)            27          296         (152)         144 
 Current income taxes                             2             -             2            2             -           2 
 Derivative financial 
  instruments                                     3             -             3            6             -           6 
 Cash and cash equivalents           1          687         (126)           561          845          (74)         771 
================================  ====  ===========  ============  ============  ===========  ============  ========== 
 Total current assets                           721         (128)           593        1,155         (225)         930 
================================  ====  ===========  ============  ============  ===========  ============  ========== 
 Total assets                                10,432         (525)         9,907        9,503         (936)       8,567 
================================  ====  ===========  ============  ============  ===========  ============  ========== 
 Liabilities 
 Non-current liabilities 
 Trade and other payables            1          (8)             8             -          (5)             5           - 
 Carried interest and 
  performance 
  fees payable                       1        (469)           410          (59)        (505)           439        (66) 
 Loans and borrowings                         (975)             -         (975)        (575)             -       (575) 
 Derivative financial 
  instruments                                   (3)             -           (3)          (2)             -         (2) 
 Lease liability                               (13)             -          (13)         (16)             -        (16) 
 Retirement benefit deficit                    (26)             -          (26)         (25)             -        (25) 
 Deferred income taxes                          (1)             -           (1)          (1)             -         (1) 
 Provisions                                     (3)             -           (3)          (3)             -         (3) 
================================  ====  ===========  ============  ============  ===========  ============  ========== 
 Total non-current liabilities              (1,498)           418       (1,080)      (1,132)           444       (688) 
================================  ====  ===========  ============  ============  ===========  ============  ========== 
 Current liabilities 
 Trade and other payables            1         (68)           (2)          (70)         (73)             -        (73) 
 Carried interest and 
  performance 
  fees payable                       1        (119)           109          (10)        (533)           492        (41) 
 Derivative financial 
  instruments                                   (1)             -           (1)          (2)             -         (2) 
 Lease liability                                (4)             -           (4)          (4)             -         (4) 
 Current income taxes                           (1)             -           (1)          (2)             -         (2) 
 Total current liabilities                    (193)           107          (86)        (614)           492       (122) 
================================  ====  ===========  ============  ============  ===========  ============  ========== 
 Total liabilities                          (1,691)           525       (1,166)      (1,746)           936       (810) 
================================  ====  ===========  ============  ============  ===========  ============  ========== 
 Net assets                                   8,741             -         8,741        7,757             -       7,757 
================================  ====  ===========  ============  ============  ===========  ============  ========== 
 Equity 
 Issued capital                                 719             -           719          719             -         719 
 Share premium                                  788             -           788          788             -         788 
 Other reserves                      3        7,301             -         7,301        6,328             -       6,328 
 Own shares                                    (67)             -          (67)         (78)             -        (78) 
================================  ====  ===========  ============  ============  ===========  ============  ========== 
 Total equity                                 8,741             -         8,741        7,757             -       7,757 
================================  ====  ===========  ============  ============  ===========  ============  ========== 
 
 

Notes:

 
 1   Applying IFRS 10 to the consolidated statement of financial position 
      aggregates the line items of investment entity subsidiaries into the 
      single line item "Investments in investment entity subsidiaries". 
      In the Investment basis, we have disaggregated these items to analyse 
      our net assets as if the investment entity subsidiaries were consolidated. 
      The adjustment reclassifies items in the consolidated statement of 
      financial position. There is no change to the net assets, although 
      for reasons explained below, gross assets and gross liabilities are 
      different. 
 
      The disclosure relating to portfolio companies is significantly reduced 
      by the aggregation, as the fair value of all investments held by investment 
      entity subsidiaries is aggregated into the "Investments in investment 
      entity subsidiaries" line. We have disaggregated this fair value and 
      disclosed the underlying portfolio holding in the relevant line item, 
      ie quoted investments or unquoted investments. 
 
      Other items which may be aggregated include carried interest and 
      other payables, and the Investment basis presentation again disaggregates 
      these items. 
 2   Intercompany balances between investment entity subsidiaries and trading 
      subsidiaries also impact the transparency of our results under the 
      IFRS basis. If an investment entity subsidiary has an intercompany 
      balance with a consolidated trading subsidiary of the Group, then 
      the asset or liability of the investment entity subsidiary will be 
      aggregated into its fair value, while the asset or liability of the 
      consolidated trading subsidiary will be disclosed as an asset or liability 
      in the consolidated statement of financial position of the Group. 
 3   Investment basis financial statements are prepared for performance 
      measurement and therefore reserves are not analysed separately under 
      this basis. 
 

Reconciliation of consolidated cash flow statement

 
                                 Six months to 30 September 2020               Six months to 30 September 2019 
                              Investment          IFRS          IFRS   Investment            IFRS                 IFRS 
                                   basis   adjustments         basis        basis     adjustments                basis 
                                                         (unaudited)                (restated)(1)          (unaudited) 
                                                                                                         (restated)(1) 
                      Notes         GBPm          GBPm          GBPm         GBPm            GBPm                 GBPm 
===================  ======  ===========  ============  ============  ===========  ==============  =================== 
 Cash flow from operating 
 activities 
 Purchase of 
  investments             1        (202)           141          (61)        (312)             158                (154) 
 Proceeds from 
  investments             1          187          (79)           108           71            (71)                    - 
 Drawdowns paid to 
  investment entity 
  subsidiaries            1            -         (647)         (647)            -           (148)                (148) 
 Distributions 
  received from 
  investment entity 
  subsidiaries            1            -           192           192            -             117                  117 
 Net cash flow from 
  derivatives                          3             -             3            1               -                    1 
 Portfolio interest 
  received                1            5           (5)             -            9             (3)                    6 
 Portfolio 
  dividends 
  received                1           57          (27)            30           46            (31)                   15 
 Portfolio fees 
  received                1            2             -             2            3               1                    4 
 Fees received from 
  external funds                      19             -            19           19               -                   19 
 Carried interest 
  and performance 
  fees received           1            6             -             6           53            (19)                   34 
 Carried interest 
  and performance 
  fees paid               1        (400)           374          (26)         (40)              14                 (26) 
 Carried interest 
  held in 
  non-current 
  assets                  1            -             -             -         (11)              11                    - 
 Operating expenses 
  paid                              (67)             -          (67)         (77)               -                 (77) 
 Co-investment 
  loans received          1           13             -            13            -               -                    - 
 Income taxes 
  received                             -             -             -           10               -                   10 
 Other cash income                     -             -             -            2               -                    2 
-------------------  ------  -----------  ------------  ------------  -----------  --------------  ------------------- 
 Net cash flow from 
  operating 
  activities                       (377)          (51)         (428)        (226)              29                (197) 
===================  ======  ===========  ============  ============  ===========  ==============  =================== 
 Cash flow from 
 financing 
 activities 
 Purchase of own 
  shares                               -             -             -         (18)               -                 (18) 
 Dividend paid                     (169)             -         (169)        (194)               -                (194) 
 Proceeds from 
  long-term 
  borrowing                          395             -           395            -               -                    - 
 Lease payments                      (2)             -           (2)          (2)               -                  (2) 
 Interest received        1          (1)             1             -            1               1                    2 
 Interest paid                      (12)             -          (12)         (12)               -                 (12) 
 Net cash flow from 
  financing 
  activities                         211             1           212        (225)               1                (224) 
===================  ======  ===========  ============  ============  ===========  ==============  =================== 
 Cash flow from investing 
 activities 
 Purchase of 
  property, plant 
  and equipment                        -             -             -          (1)               -                  (1) 
 Net cash flow from 
  investing 
  activities                           -             -             -          (1)               -                  (1) 
===================  ======  ===========  ============  ============  ===========  ==============  =================== 
 Change in cash and 
  cash equivalents        2        (166)          (50)         (216)        (452)              30                (422) 
===================  ======  ===========  ============  ============  ===========  ==============  =================== 
 Cash and cash 
  equivalents at 
  the start of the 
  period                  2          845          (74)           771        1,020            (37)                  983 
 Effect of exchange 
  rate fluctuations       1            8           (2)             6            7             (3)                    4 
 Cash and cash 
  equivalents at 
  the end of the 
  period                  2          687         (126)           561          575            (10)                  565 
===================  ======  ===========  ============  ============  ===========  ==============  =================== 
 
 
 1   Refer to the basis of preparation and accounting policies section 
      further on in this document. 
 

Notes:

 
 1   The consolidated cash flow statement is impacted by the application 
      of IFRS 10 as cash flows to and from investment entity subsidiaries 
      are disclosed, rather than the cash flows to and from the underlying 
      portfolio. 
 
      Therefore, in our Investment basis financial statements, we have disclosed 
      our consolidated cash flow statement on a "look through" basis, in 
      order to reflect the underlying sources and uses of cash flows and 
      disclose the underlying investment activity. 
 2   There is a difference between the change in cash and cash equivalents 
      of the Investment basis financial statements and the IFRS financial 
      statements because there are cash balances held in investment entity 
      subsidiaries. Cash held within investment entity subsidiaries will 
      not be shown in the IFRS statements but will be seen in the Investment 
      basis statements. 
 

IFRS Financial statements

Condensed consolidated statement of comprehensive income

 
                                                                                       Six months to   Six months to 
                                                                                        30 September    30 September 
                                                                                                2020            2019 
                                                                                         (unaudited)     (unaudited) 
                                                                               Notes            GBPm            GBPm 
===========================================================================  =======  ==============  ============== 
 Realised profits over value on the disposal of investments                        2               5               - 
 Unrealised profits on the revaluation of investments                              3             605              62 
 Fair value movements on investment entity subsidiaries                            8             634             602 
===========================================================================  =======  ==============  ============== 
 Portfolio income 
  Dividends                                                                                       30              13 
  Interest income from investment portfolio                                                       10              18 
  Fees receivable                                                                  4               7               5 
 Foreign exchange on investments                                                                  14              41 
 Movement in the fair value of derivatives                                                       (4)            (14) 
===========================================================================  =======  ==============  ============== 
 Gross investment return                                                                       1,301             727 
 Fees receivable from external funds                                               4              21              23 
 Operating expenses                                                                             (57)            (60) 
 Interest received                                                                                 -               2 
 Interest paid                                                                                  (23)            (18) 
 Exchange movements                                                                              (3)              20 
 Income from investment entity subsidiaries                                                       12              10 
 Other income                                                                                      -               2 
 Carried interest 
  Carried interest and performance fees receivable                                 4             (2)              63 
  Carried interest and performance fees payable                                                    5             (9) 
 ==========================================================================  =======  ==============  ============== 
 Operating profit before tax                                                                   1,254             760 
 Income taxes                                                                                      -             (1) 
===========================================================================  =======  ==============  ============== 
 Profit for the period                                                                         1,254             759 
===========================================================================  =======  ==============  ============== 
 Other comprehensive income that may be reclassified to the income statement 
  Exchange differences on translation of foreign operations                                        6               2 
 Other comprehensive income that will not be reclassified to the income statement 
  Re-measurements of defined benefit plans                                        12           (118)               6 
 ==========================================================================  =======  ==============  ============== 
 Other comprehensive (expense)/income for the period                                           (112)               8 
===========================================================================  =======  ==============  ============== 
 Total comprehensive income for the period ("Total return")                                    1,142             767 
===========================================================================  =======  ==============  ============== 
 
 Earnings per share 
  Basic (pence)                                                                    5           130.1            78.4 
  Diluted (pence)                                                                  5           130.0            78.2 
 ==========================================================================  =======  ==============  ============== 
 

The Notes to the accounts section forms an integral part of these financial statements.

Condensed consolidated statement of financial position

 
                                                          30 September    31 March 
                                                                  2020        2020 
                                                           (unaudited)   (audited) 
                                                  Notes           GBPm        GBPm 
=======================================================  =============  ========== 
 Assets 
 Non-current assets 
 Investments 
  Quoted investments                                  7            489         418 
  Unquoted investments                                7          3,821       3,036 
 Investments in investment entity subsidiaries        8          4,871       3,936 
===================================================      =============  ========== 
 Investment portfolio                                            9,181       7,390 
===================================================      =============  ========== 
 Carried interest and performance fees receivable                   10          11 
 Other non-current assets                                           33          23 
 Intangible assets                                                   8           9 
 Retirement benefit surplus                                         57         173 
 Property, plant and equipment                                       5           5 
 Right of use asset                                                 17          19 
 Derivative financial instruments                                    2           7 
 Deferred income taxes                                               1           - 
 Total non-current assets                                        9,314       7,637 
=======================================================  =============  ========== 
 Current assets 
 Carried interest and performance fees receivable                    -           7 
 Other current assets                                               27         144 
 Current income taxes                                                2           2 
 Derivative financial instruments                                    3           6 
 Cash and cash equivalents                                         561         771 
=======================================================  =============  ========== 
 Total current assets                                              593         930 
=======================================================  =============  ========== 
 Total assets                                                    9,907       8,567 
=======================================================  =============  ========== 
 Liabilities 
 Non-current liabilities 
 Carried interest and performance fees payable                    (59)        (66) 
 Loans and borrowings                                            (975)       (575) 
 Retirement benefit deficit                                       (26)        (25) 
 Lease liability                                                  (13)        (16) 
 Derivative financial instruments                                  (3)         (2) 
 Deferred income taxes                                             (1)         (1) 
 Provisions                                                        (3)         (3) 
===================================================      =============  ========== 
 Total non-current liabilities                                 (1,080)       (688) 
=======================================================  =============  ========== 
 Current liabilities 
 Trade and other payables                                         (70)        (73) 
 Carried interest and performance fees payable                    (10)        (41) 
 Lease liability                                                   (4)         (4) 
 Derivative financial instruments                                  (1)         (2) 
 Current income taxes                                              (1)         (2) 
 Total current liabilities                                        (86)       (122) 
=======================================================  =============  ========== 
 Total liabilities                                             (1,166)       (810) 
=======================================================  =============  ========== 
 Net assets                                                      8,741       7,757 
=======================================================  =============  ========== 
 Equity 
 Issued capital                                                    719         719 
 Share premium                                                     788         788 
 Capital redemption reserve                                         43          43 
 Share-based payment reserve                                        27          33 
 Translation reserve                                                 4         (2) 
 Capital reserve                                                 6,298       5,432 
 Revenue reserve                                                   929         822 
 Own shares                                                       (67)        (78) 
===================================================      =============  ========== 
 Total equity                                                    8,741       7,757 
-------------------------------------------------------  -------------  ---------- 
 

The Notes to the accounts section forms an integral part of these financial statements.

Condensed consolidated statement of changes in equity

 
 For the six months                                       Share- 
 to 
 30 September 2020 
 (unaudited) 
===================== 
                                               Capital     based 
===================== 
                          Share     Share   redemption   payment   Translation      Capital      Revenue      Own    Total 
                        capital   premium      reserve   reserve       reserve   reserve(1)   reserve(1)   shares   equity 
                           GBPm      GBPm         GBPm      GBPm          GBPm         GBPm         GBPm     GBPm     GBPm 
=====================  ========  ========  ===========  ========  ============  ===========  ===========  =======  ======= 
 Total equity at the 
  start of 
  the period                719       788           43        33           (2)        5,432          822     (78)    7,757 
 Profit for the 
  period                      -         -            -         -             -        1,164           90        -    1,254 
 Exchange differences 
  on translation of 
  foreign operations          -         -            -         -             6            -            -        -        6 
 Re-measurements of 
  defined benefit 
  plans                       -         -            -         -             -        (118)            -        -    (118) 
 Total comprehensive 
  income for the 
  period                      -         -            -         -             6        1,046           90        -    1,142 
=====================  ========  ========  ===========  ========  ============  ===========  ===========  =======  ======= 
 Share-based payments         -         -            -        11             -            -            -        -       11 
 Release on 
  exercise/forfeiture 
  of share awards             -         -            -      (17)             -            -           17        -        - 
 Exercise of share 
  awards                      -         -            -         -             -         (11)            -       11        - 
 Ordinary dividends           -         -            -         -             -        (169)            -        -    (169) 
 Purchase of own              -         -            -         -             -            -            -        -        - 
 shares 
 Total equity at the 
  end of 
  the period                719       788           43        27             4        6,298          929     (67)    8,741 
=====================  ========  ========  ===========  ========  ============  ===========  ===========  =======  ======= 
 
 
 1   Refer to the glossary towards the end of this document for the nature 
      of the capital and revenue reserves. 
 
 
 For the six months                                       Share- 
 to 
 30 September 2019 
 (unaudited) 
===================== 
                                               Capital     based 
===================== 
                          Share     Share   redemption   payment   Translation      Capital      Revenue      Own    Total 
                        capital   premium      reserve   reserve       reserve   reserve(2)   reserve(2)   shares   equity 
                           GBPm      GBPm         GBPm      GBPm          GBPm         GBPm         GBPm     GBPm     GBPm 
=====================  ========  ========  ===========  ========  ============  ===========  ===========  =======  ======= 
 Total equity at the 
  start of 
  the period(1)             719       787           43        36           (3)        5,590          779     (42)    7,909 
 Profit for the 
  period                      -         -            -         -             -          665           94        -      759 
 Exchange differences 
  on translation of 
  foreign operations          -         -            -         -             2            -            -        -        2 
 Re-measurements of 
  defined benefit 
  plans                       -         -            -         -             -            6            -        -        6 
 Total comprehensive 
  income for the 
  period                      -         -            -         -             2          671           94        -      767 
=====================  ========  ========  ===========  ========  ============  ===========  ===========  =======  ======= 
 Share-based payments         -         -            -        11             -            -            -        -       11 
 Release on 
  exercise/forfeiture 
  of share awards             -         -            -      (16)             -            -           16        -        - 
 Exercise of share 
  awards                      -         -            -         -             -         (23)            -       23        - 
 Ordinary dividends           -         -            -         -             -        (194)            -        -    (194) 
 Purchase of own 
  shares                      -         -            -         -             -            -            -     (18)     (18) 
 Total equity at the 
  end of 
  the period                719       787           43        31           (1)        6,044          889     (37)    8,475 
=====================  ========  ========  ===========  ========  ============  ===========  ===========  =======  ======= 
 
 
 1   The adoption of IFRS 16 on 1 April 2019 resulted in the recognition 
      of a right of use asset of GBP23 million and lease liability of GBP23 
      million, with nil impact on retained earnings. 
 2   Refer to the glossary towards the end of this document for the nature 
      of the capital and revenue reserves. 
 

The Notes to the accounts section forms an integral part of these financial statements.

Condensed consolidated cash flow statement

 
                                                               Six months to     Six months to 
                                                                30 September      30 September 
                                                                        2020              2019 
                                                                 (unaudited)       (unaudited) 
                                                                                 (restated)(1) 
                                                                        GBPm              GBPm 
============================================================  ==============  ================ 
 Cash flow from operating activities 
 Purchase of investments                                                (61)             (154) 
 Proceeds from investments                                               108                 - 
 Drawdowns paid to investment entity subsidiaries                      (647)             (148) 
 Distributions received from investment entity subsidiaries              192               117 
 Net cash flow from derivatives                                            3                 1 
 Portfolio interest received                                               -                 6 
 Portfolio dividends received                                             30                15 
 Portfolio fees received                                                   2                 4 
 Fees received from external funds                                        19                19 
 Carried interest and performance fees received                            6                34 
 Carried interest and performance fees paid                             (26)              (26) 
 Operating expenses paid                                                (67)              (77) 
 Co-investment loans received                                             13                 - 
 Income taxes received                                                     -                10 
 Other cash income                                                         -                 2 
============================================================  ==============  ================ 
 Net cash flow from operating activities                               (428)             (197) 
============================================================  ==============  ================ 
 
 Cash flow from financing activities 
 Purchase of own shares                                                    -              (18) 
 Dividend paid                                                         (169)             (194) 
 Proceeds from long-term borrowing                                       395                 - 
 Lease payments                                                          (2)               (2) 
 Interest received                                                         -                 2 
 Interest paid                                                          (12)              (12) 
 Net cash flow from financing activities                                 212             (224) 
============================================================  ==============  ================ 
 
 Cash flow from investing activities 
 Purchase of property, plant and equipment                                 -               (1) 
 Net cash flow from investing activities                                   -               (1) 
============================================================  ==============  ================ 
 
 Change in cash and cash equivalents                                   (216)             (422) 
============================================================  ==============  ================ 
 Cash and cash equivalents at the start of the period                    771               983 
 Effect of exchange rate fluctuations                                      6                 4 
 Cash and cash equivalents at the end of the period                      561               565 
============================================================  ==============  ================ 
 
 
 1   Refer to the basis of preparation and accounting policies below. 
 

The Notes to the accounts section forms an integral part of these financial statements.

Notes to the condensed consolidated financial statements

Basis of preparation and accounting policies

Compliance with International Financial Reporting Standards ("IFRS")

The Half-year condensed consolidated financial statements of 3i Group plc have been prepared in accordance with the Disclosure Rules and Transparency Rules of the Financial Conduct Authority and IAS 34 Interim Financial Reporting as issued by the International Accounting Standards Board ('IASB') and as endorsed by the European Union. The Half-year condensed consolidated financial statements should be read in conjunction with the Annual report and accounts 2020. The accounting policies applied by 3i Group plc for the Half-year condensed consolidated financial statements are consistent with those described on pages 126 to 164 of the Annual report and accounts 2020. There was no change in the current period to the critical accounting estimates and judgements applied in 2020, which are stated on page 128 of the Annual report and accounts 2020.

The financial information for the year ended 31 March 2020 contained within this Half-year report does not constitute statutory accounts as defined in section 434 of the Companies Act 2006. The statutory accounts for the year to 31 March 2020, prepared under IFRS as endorsed by the EU, have been reported on by Ernst & Young LLP and delivered to the Registrar of Companies. The report of the Auditor on these statutory accounts was unqualified and did not contain a statement under section 498(2) or section 498(3) of the Companies Act 2006. At the 2020 AGM held on 25 June 2020 shareholders appointed KPMG LLP as the Company's new external auditor for the year ending 31 March 2021, in succession to Ernst & Young LLP.

In this Half year report, we have changed the presentation of the Condensed consolidated cash flow statement

to present net cash flows from investment entity subsidiaries on a gross basis in two line items; Drawdowns paid to investment entity subsidiaries and Distributions received from investment entity subsidiaries. Presentation of the six months to September 2019 have been changed to reflect this split.

Going concern

The Half-year condensed consolidated financial statements are prepared on a going concern basis and presented to the nearest million sterling (GBPm), the functional currency of the Group.

The Directors have made an assessment of going concern, taking into account the Group's current performance, and outlook, and performed additional analysis to support the going concern assessment considering the ongoing impact of the Covid-19 pandemic on the Group portfolio. The Group has maintained a conservative balance sheet structure for the past eight years, positioning the Group well to navigate the current uncertain business environment. As part of this assessment the Directors considered:

-- an analysis of the Group's liquidity, solvency and regulatory capital position. The Group manages and monitors liquidity regularly, ensuring it is adequate and sufficient and is underpinned by its monitoring of investments, realisations, operating expenses and receipt of portfolio cash income. The Group successfully issued a bond of GBP400 million in June 2020. At 30 September 2020, liquidity remained strong at GBP1,087 million (31 March 2020: GBP1,245 million). Liquidity comprised of cash and deposits of GBP687 million (31 March 2020: GBP845 million) and undrawn facility of GBP400 million (31 March 2020: GBP400 million);

-- the business review reflects that to date, our portfolio has been resilient to the effects of the pandemic, but we continue to monitor developments closely particularly in the travel and automotive sectors. The approach to valuations was consistent with the normal valuation process and where needed we continue to apply judgement. At 30 September 2020 our portfolio companies exposed to the travel and automotive industries have been most negatively impacted by the Covid-19 pandemic and where required, we have assessed their ability to generate earnings and cash flows, and also the longer-term view of their ability to recover; and

-- the operational resilience of the Group's critical functions includes the wellbeing of 3i's staff and the resilience of IT systems. Covid-19 has emphasised the importance of 3i and its portfolio companies' focus on keeping employees safe, motivated and able to continue to fulfil their roles effectively.

Having performed an assessment on going concern, the Directors consider it appropriate for the going concern basis to be adopted in preparing the Half-year report and condensed consolidated financial statements.

1 Segmental analysis

The tables below are presented on the Investment basis which is the basis used by the chief operating decision maker, the Chief Executive, to monitor the performance of the Group. A description of the Investment basis and a reconciliation of the Investment basis to the IFRS financial statements is provided in the Reconciliation of the Investment basis to IFRS section above. Further detail on the Group's segmental analysis can be found on pages 130 to 132 of the Annual report and accounts 2020. The remaining Notes are prepared on an IFRS basis.

 
 Investment basis 
                                                      Private   Of which is 
                                                       Equity        Action   Infrastructure   Scandlines   Total(4) 
 Six months to 30 September 2020                         GBPm          GBPm             GBPm         GBPm       GBPm 
===================================================  ========  ============  ===============  ===========  ========= 
 Realised profits over value on the disposal 
  of investments                                            3             -                -            -          3 
 Unrealised profits on the revaluation 
  of investments                                        1,071           644              127           12      1,210 
 Portfolio income 
  Dividends                                                43             -               14            -         57 
  Interest income from investment portfolio                25             -                5            -         30 
  Fees receivable                                           6             -                -            -          6 
 Foreign exchange on investments                           97            89             (16)           11         92 
 Movement in the fair value of derivatives                  -             -                4          (8)        (4) 
===================================================  ========  ============  ===============  ===========  ========= 
 Gross investment return                                1,245           733              134           15      1,394 
===================================================  ========  ============  ===============  ===========  ========= 
 Fees receivable from external funds                        2                             19            -         21 
 Operating expenses                                      (36)                           (20)          (2)       (58) 
 Interest received                                                                                               (1) 
 Interest paid                                                                                                  (23) 
 Exchange movements                                                                                              (8) 
 Operating profit before carried interest                                                                      1,325 
===================================================  ========  ============  ===============  ===========  ========= 
 Carried interest 
  Carried interest and performance fees receivable        (2)                              -            -        (2) 
  Carried interest and performance fees payable          (61)                            (2)            -       (63) 
 ==================================================  ========  ============  ===============  ===========  ========= 
 Operating profit                                                                                              1,260 
===================================================  ========  ============  ===============  ===========  ========= 
 Income taxes                                                                                                      - 
 Other comprehensive income 
  Re-measurements of defined benefit plans                                                                     (118) 
 ==================================================  ========  ============  ===============  ===========  ========= 
 Total return                                                                                                  1,142 
===================================================  ========  ============  ===============  ===========  ========= 
 Net divestment/(investment) 
 Realisations(1)                                           82             -                -            -         82 
 Cash investment(2)                                     (231)             -              (2)            -      (233) 
===================================================  ========  ============  ===============  ===========  ========= 
                                                        (149)             -              (2)            -      (151) 
===================================================  ========  ============  ===============  ===========  ========= 
 Balance sheet 
 Opening portfolio value at 1 April 2020                6,552         3,536            1,117          429      8,098 
 Investment(3)                                            300             -                2            -        302 
 Value disposed                                          (80)             -                -            -       (80) 
 Unrealised value movement                              1,071           644              127           12      1,210 
 Other movement (including foreign exchange)               47            89             (10)           11         48 
===================================================  ========  ============  ===============  ===========  ========= 
 Closing portfolio value at 30 September 2020           7,890         4,269            1,236          452      9,578 
===================================================  ========  ============  ===============  ===========  ========= 
 
 
 1   Realised proceeds may differ from cash proceeds due to timing of receipts. 
      During the period Private Equity received GBP105 million of cash proceeds 
      which were recognised as realised proceeds in FY2020. 
 2   Investment per the segmental analysis is different to cash investment 
      per the cashflow due to GBP31 million of syndication in Private Equity 
      which was recognised in FY2020 and received in FY2021. 
 3   Includes capitalised interest and other non-cash investment. 
 4   The total is the sum of Private Equity, Infrastructure and Scandlines. 
      "Of which is Action" is part of Private Equity. 
 
 
 Investment basis 
                                                   Private   Of which is 
                                                    Equity        Action   Infrastructure   Scandlines(2)   Total(3) 
 Six months to 30 September 2019                      GBPm          GBPm             GBPm            GBPm       GBPm 
================================================  ========  ============  ===============  ==============  ========= 
 Realised profits over value on the disposal 
  of investments                                         -             -                -               -          - 
 Unrealised profits on the revaluation 
  of investments                                       429           381               59              10        498 
 Portfolio income 
  Dividends                                              5             -               12              27         44 
  Interest income from investment portfolio             52             -                5               -         57 
  Fees receivable                                        4             -                -               -          4 
 Foreign exchange on investments                       176            71               17              16        209 
 Movement in the fair value of derivatives               -             -              (5)             (9)       (14) 
================================================  ========  ============  ===============  ==============  ========= 
 Gross investment return                               666           452               88              44        798 
================================================  ========  ============  ===============  ==============  ========= 
 Fees receivable from external funds                     1                             22               -         23 
 Operating expenses                                   (38)                           (21)             (1)       (60) 
 Interest received                                                                                                 2 
 Interest paid                                                                                                  (18) 
 Exchange movements                                                                                                1 
 Other income                                                                                                      3 
================================================  ========  ============  ===============  ==============  ========= 
 Operating profit before carried interest                                                                        749 
================================================  ========  ============  ===============  ==============  ========= 
 Carried interest 
  Carried interest and performance fees 
   receivable                                           81                              -               -         81 
  Carried interest and performance fees payable       (63)                            (5)               -       (68) 
 ===============================================  ========  ============  ===============  ==============  ========= 
 Operating profit                                                                                                762 
================================================  ========  ============  ===============  ==============  ========= 
 Income taxes                                                                                                    (1) 
 Other comprehensive income 
  Re-measurements of defined benefit plans                                                                         6 
 ===============================================  ========  ============  ===============  ==============  ========= 
 Total return                                                                                                    767 
================================================  ========  ============  ===============  ==============  ========= 
 Net divestment/(investment) 
 Realisations                                            1             -                -              70         71 
 Cash investment                                     (221)          (60)             (91)               -      (312) 
================================================  ========  ============  ===============  ==============  ========= 
                                                     (220)          (60)             (91)              70      (241) 
================================================  ========  ============  ===============  ==============  ========= 
 Balance sheet 
 Opening portfolio value at 1 April 2019             6,023         2,731            1,001             529      7,553 
 Investment(1)                                         289            60               91               -        380 
 Value disposed                                        (1)             -                -            (70)       (71) 
 Unrealised value movement                             429           381               59              10        498 
 Other movement (including foreign exchange)           163            71               12              16        191 
================================================  ========  ============  ===============  ==============  ========= 
 Closing portfolio value at 30 September 2019        6,903         3,243            1,163             485      8,551 
================================================  ========  ============  ===============  ==============  ========= 
 
 
 1   Includes capitalised interest and other non-cash investment. GBP60 
      million investment in Action relates to the purchase of LP stakes 
      in EFV. 
 2   During FY2020 Corporate Assets was renamed Scandlines, which is the 
      only asset in that segment. 
 3   The total is the sum of Private Equity, Infrastructure and Scandlines. 
      "Of which is Action" is part of Private Equity. 
 

2 Realised profits over value on the disposal of investments

 
 Six months to 30 September 2020             Unquoted 
                                          investments   Total 
                                                 GBPm    GBPm 
======================================   ============  ====== 
 Realisations                                       5       5 
 Valuation of disposed investments                  -       - 
======================================   ============  ====== 
                                                    5       5 
======================================   ============  ====== 
 Of which: 
  - profit recognised on realisations               5       5 
  - losses recognised on realisations               -       - 
 =====================================   ============  ====== 
                                                    5       5 
  =====================================  ============  ====== 
 
 
 Six months to 30 September 2019              Unquoted 
                                           investments   Total 
                                                  GBPm    GBPm 
======================================    ============  ====== 
 Realisations                                        -       - 
 Valuation of disposed investments                   -       - 
======================================    ============  ====== 
                                                     -       - 
======================================    ============  ====== 
 Of which: 
   - profit recognised on realisations               -       - 
   - losses recognised on realisations               -       - 
  ====================================    ============  ====== 
                                                     -       - 
  ====================================    ============  ====== 
 

3 Unrealised profits/(losses) on the revaluation of investments

 
 Six months to 30 September 2020                  Unquoted        Quoted 
                                               investments   investments   Total 
                                                      GBPm          GBPm    GBPm 
============================================  ============  ============  ====== 
 Movement in the fair value of investments             534            71     605 
============================================  ============  ============  ====== 
 Of which: 
  - unrealised gains                                   549            71     620 
  - unrealised losses                                 (15)             -    (15) 
 ===========================================  ============  ============  ====== 
                                                       534            71     605 
 ===========================================  ============  ============  ====== 
 
 
 Six months to 30 September 2019                  Unquoted        Quoted 
                                               investments   investments   Total 
                                                      GBPm          GBPm    GBPm 
============================================  ============  ============  ====== 
 Movement in the fair value of investments              29            33      62 
============================================  ============  ============  ====== 
 Of which: 
  - unrealised gains                                    60            33      93 
  - unrealised losses                                 (31)             -    (31) 
 ===========================================  ============  ============  ====== 
                                                        29            33      62 
 -------------------------------------------  ------------  ------------  ------ 
 

4 Revenue

Items from the Consolidated statement of comprehensive income which fall within the scope of IFRS 15 are included in the table below:

 
                                                        Private 
                                                         Equity   Infrastructure   Total 
 Six months to 30 September 2020                           GBPm             GBPm    GBPm 
=====================================================  ========  ===============  ====== 
 Total revenue by geography (1) 
 UK                                                         (1)               17      16 
 Northern Europe                                              3                2       5 
 North America                                                2                -       2 
 Other                                                        3                -       3 
 Total                                                        7               19      26 
=====================================================  ========  ===============  ====== 
 Revenue by type 
 Fees receivable(2) from portfolio                            7                -       7 
 Fees receivable from external funds                          2               19      21 
 Carried interest and performance fees receivable(2)        (2)                -     (2) 
 Total                                                        7               19      26 
=====================================================  ========  ===============  ====== 
 
 
                                                        Private 
                                                         Equity   Infrastructure   Total 
 Six months to 30 September 2019                           GBPm             GBPm    GBPm 
=====================================================  ========  ===============  ====== 
 Total revenue by geography (1) 
 UK                                                          64               21      85 
 Northern Europe                                              2                1       3 
 North America                                                3                -       3 
 Total                                                       69               22      91 
=====================================================  ========  ===============  ====== 
 Revenue by type 
 Fees receivable(2) from portfolio                            5                -       5 
 Fees receivable from external funds                          1               22      23 
 Carried interest and performance fees receivable(2)         63                -      63 
 Total                                                       69               22      91 
=====================================================  ========  ===============  ====== 
 
 
 1   For fees receivable from external funds and carried interest and performance fees receivable 
      the geography is based on the domicile of the fund. 
 2   Fees receivable and carried interest receivable above are different to the Investment basis 
      figures included in Note 1. This is due to the fact that Note 1 is disclosed on the Investment 
      basis and the table above is shown on the IFRS basis. For an explanation of the Investment 
      basis and a reconciliation between Investment basis and IFRS basis see the Reconciliation 
      of the Investment basis to IFRS section above. 
 

5 Per share information

The calculation of basic net assets per share is based on the net assets and the number of shares in issue. When calculating the diluted net assets per share, the number of shares in issue is adjusted for the effect of all dilutive share awards.

 
                                                             30 September   31 March 
                                                                     2020       2020 
==========================================================  =============  ========= 
 Net assets per share (GBP) 
 Basic                                                               9.07       8.06 
 Diluted                                                             9.05       8.04 
 Net assets (GBPm) 
 Net assets attributable to equity holders of the Company           8,741      7,757 
==========================================================  =============  ========= 
 
 
                                                 30 September       31 March 
                                                         2020           2020 
==============================================  =============  ============= 
 Number of shares in issue 
 Ordinary shares                                  973,129,833    973,074,585 
 Own shares                                       (9,028,495)   (10,398,032) 
==============================================  =============  ============= 
                                                  964,101,338    962,676,553 
==============================================  =============  ============= 
 Effect of dilutive potential ordinary shares 
 Share awards                                       1,823,955      1,649,348 
==============================================  =============  ============= 
 Diluted shares                                   965,925,293    964,325,901 
==============================================  =============  ============= 
 

The calculation of basic earnings per share is based on the profit attributable to shareholders and the weighted average number of shares in issue. When calculating the diluted earnings per share, the weighted average number of shares in issue is adjusted for the effect of all dilutive share awards.

 
                                                                               6 months          6 months 
                                                                        to 30 September   to 30 September 
                                                                                   2020              2019 
=====================================================================  ================  ================ 
 Earnings per share (pence) 
 Basic                                                                            130.1              78.4 
 Diluted                                                                          130.0              78.2 
 Earnings (GBPm) 
 Profit for the period attributable to equity holders of the Company              1,254               759 
=====================================================================  ================  ================ 
 

Basic earnings per share is calculated on weighted average shares in issue of 963,542,371 for the period to 30 September 2020 (2019: 968,015,436). Diluted earnings per share is calculated on diluted weighted average shares of 964,863,213 for the period to 30 September 2020 (2019: 970,176,172).

6 Dividends

 
                                         6 months to    6 months to    6 months to      6 months to 
                                        30 September   30 September   30 September     30 September 
                                                2020           2020           2019             2019 
                                               pence                         pence 
                                           per share           GBPm      per share             GBPm 
=====================================  =============  =============  =============  =============== 
 Declared and paid during the period 
 Second dividend                                17.5            169           20.0            194 
=====================================  =============  =============  =============  ============= 
                                                17.5            169           20.0            194 
=====================================  =============  =============  =============  ============= 
 Proposed first dividend                        17.5            169           17.5            169 
=====================================  =============  =============  =============  ============= 
 
 

The dividend can be paid out of either the capital reserve or the revenue reserve subject to the investment trust rules.

The distributable reserves of the parent company as at 31 March 2020 were GBP3,863 million (31 March 2019: GBP2,226 million) and the Board reviews the distributable reserves bi-annually, including consideration of any material changes since the most recent audited accounts, ahead of proposing any dividend. The Board also reviews the proposed dividends in the context of the requirements of being an approved investment trust. Shareholders are given the opportunity to approve the total dividend for the year at the Company's Annual General Meeting. Details of the Group's continuing viability and going concern can be found in the Risk management section on pages 48 to 59 of the Annual report and accounts 2020.

7 Investment portfolio

This section should be read in conjunction with Note 11 on page 139 of the Annual report and accounts 2020, which provides more detail about initial recognition and subsequent measurement of investments at fair value.

 
                                                     6 months to        Year to 
                                               30 September 2020  31 March 2020 
  Non-current                                               GBPm           GBPm 
=============================================  =================  ============= 
  Opening book value                                       3,454          1,662 
=============================================  =================  ============= 
  Additions                                                  504          1,929 
   - of which loan notes with nil value                     (20)            (6) 
  Disposals, repayments and write offs(1)                  (258)          (142) 
  Fair value movement(2)                                     605           (28) 
  Other movements and net cash movements(3)                   25             39 
  Closing book value                                       4,310          3,454 
=============================================  =================  ============= 
  Quoted investments                                         489            418 
  Unquoted investments                                     3,821          3,036 
=============================================  =================  ============= 
  Closing book value                                       4,310          3,454 
=============================================  =================  ============= 
 
 
 
 1   Represents an intercompany transfer to investment entity subsidiaries 
      for the six months to 30 September 2020. 
 2   All fair value movements relate to assets held at the end of the period. 
 3   Other movements includes the impact of foreign exchange. 
 

The holding period of 3i's investment portfolio is on average greater than one year. For this reason, the portfolio is classified as non-current. It is not possible to identify with certainty investments that will be sold within one year.

Additions include cash investment of GBP61 million (31 March 2020: GBP650 million) and the transfer of assets of GBP423 million (31 March 2020: GBP1,251 million) from the Buyouts 10-12 partnerships which are classified as investment entity subsidiaries related to Action, and GBP20 million (31 March 2020: GBP28 million) in capitalised interest received by way of loan notes, of which GBP20 million (31 March 2020: GBP6 million) was written down in the period to nil.

Included within the Consolidated statement of comprehensive income is GBP10 million (31 March 2020: GBP37 million) of interest income. This comprised of nil capitalised interest as noted above (31 March 2020: GBP22 million), nil cash income (31 March 2020: GBP10 million) and the capitalisation of prior year accrued income and non-capitalised income of GBP10 million (31 March 2020: GBP5 million).

Quoted investments are classified as Level 1 in the fair value hierarchy and unquoted investments are classified as Level 3 in the fair value hierarchy; see Note 9 for details.

8 Investments in investment entity subsidiaries

Investments in investment entity subsidiaries are accounted for as financial instruments at fair value through profit and loss in accordance with IFRS 9. We determine that in the ordinary course of business, the net asset value of investment entity subsidiaries is considered to be the most appropriate to determine fair value. At each reporting period, we consider whether any additional fair value adjustments need to be made to the net asset value of the investment entity subsidiaries. These adjustments may be required to reflect market participants' considerations about fair value that may include, but are not limited to, liquidity and the portfolio effect of holding multiple investments within the investment entity subsidiary. There was no particular circumstance to indicate that a fair value adjustment was required and, after due consideration, we concluded that the net asset values were the most appropriate reflection of fair value at 30 September 2020.

Level 3 fair value reconciliation - investments in investment entity subsidiaries

 
                                                                               6 months to         Year to 
                                                                         30 September 2020   31 March 2020 
 Non-current                                                                          GBPm            GBPm 
======================================================================  ==================  ============== 
 Opening fair value                                                                  3,936           5,159 
 Drawdowns and distributions to/(from) investment entity subsidiaries                  455           (186) 
 Fair value movement on investment entity subsidiaries                                 634             191 
 Transfer of assets from investment entity subsidiaries(1)                           (154)         (1,228) 
======================================================================  ==================  ============== 
 Closing fair value                                                                  4,871           3,936 
======================================================================  ==================  ============== 
 
 
 1   During the period the Company received a transfer of assets of GBP165 
      million (31 March 2020: GBP1,251 million) from investment entity subsidiaries 
      relating to Action. 
 

All investment entity subsidiaries are classified as Level 3 in the fair value hierarchy, see Note 9 for details.

A 5% movement in the closing fair value of investments in investment entity subsidiaries would have an impact of GBP244 million (31 March 2020: GBP197 million).

Restrictions

3i Group plc, the ultimate parent company, receives dividend income from its subsidiaries. There are no restrictions

on the ability to transfer funds from these subsidiaries to the Group at 30 September 2020. At 31 March 2020 a cash balance of GBP109 million was held in escrow in investment entity subsidiaries for carry payable paid in June 2020.

Support

3i Group plc provides, where necessary, ongoing support to its investment entity subsidiaries for the purchase of portfolio investments.

9 Fair values of assets and liabilities

This section should be read in conjunction with Note 13 on pages 141 to 143 of the Annual report and accounts 2020 which provides more detail about accounting policies adopted, the definitions of the three levels of fair value hierarchy, valuation methods used in calculating fair value, and the valuation framework which governs oversight of valuations. There have been no changes in the accounting policies adopted or the valuation methodologies used.

Valuation

The Group classifies financial instruments measured at fair value according to the following hierarchy:

 
Level      Fair value input description                               Financial instruments 
=======  ==========================================================  ================================================= 
Level 1    Quoted prices (unadjusted) from active markets             Quoted equity instruments 
=======  ==========================================================  ================================================= 
Level 2    Inputs other than quoted prices included in Level 1 that   Derivative financial instruments 
           are observable either directly (ie 
           as prices) or indirectly (ie derived from prices) 
=======  ==========================================================  ================================================= 
Level 3    Inputs that are not based on observable market data        Unquoted equity instruments and loan instruments 
=======  ==========================================================  ================================================= 
 

9 Fair values of assets and liabilities continued

The table below shows the classification of financial instruments held at fair value into the valuation hierarchy at

30 September 2020:

 
                                    As at 30 September 2020             As at 31 March 2020 
                                Level   Level    Level    Total   Level   Level    Level    Total 
                                    1       2        3                1       2        3 
                                 GBPm    GBPm     GBPm     GBPm    GBPm    GBPm     GBPm     GBPm 
=============================  ======  ======  =======  =======  ======  ======  =======  ======= 
 Assets 
 Quoted investments               489       -        -      489     418       -        -      418 
 Unquoted investments               -       -    3,821    3,821       -       -    3,036    3,036 
 Investments in investment 
  entity 
  subsidiaries                      -       -    4,871    4,871       -       -    3,936    3,936 
 Other financial assets             -       5       33       38       -      13       44       57 
 Liabilities 
 Other financial liabilities        -     (4)        -      (4)       -     (4)        -      (4) 
 Total                            489       1    8,725    9,215     418       9    7,016    7,443 
=============================  ======  ======  =======  =======  ======  ======  =======  ======= 
 

We determine that in the ordinary course of business, the net asset value of an investment entity subsidiary is considered to be the most appropriate to determine fair value. The underlying portfolio is valued under the same methodology as directly held investments, with any other assets or liabilities within investment entity subsidiaries held at their carrying value considered to be their fair value. Note 8 details the Directors' considerations about the fair value of the investment entity subsidiaries.

The fair values of the Group's financial assets and liabilities not held at fair value, are not materially different from their carrying values, with the exception of loans and borrowings. The fair value of loans and borrowings is GBP1,152 million (31 March 2020: GBP671 million), determined with reference to their published market prices. The carrying value of the loans and borrowings is GBP975 million (31 March 2020: GBP575 million) and accrued interest payable (included within trade and other payables) is GBP20 million (31 March 2020: GBP8 million).

Level 3 fair value reconciliation - unquoted investments

 
                                                Six months to   Year to 
                                                 30 September  31 March 
                                                         2020      2020 
                                                         GBPm      GBPm 
==============================================  =============  ======== 
  Opening fair value                                    3,036     1,193 
  Additions                                               504     1,929 
   - of which loan notes with nil value                  (20)       (6) 
  Disposals and repayments and write-offs(1)            (258)     (142) 
  Fair value movement(2)                                  534        20 
  Other movements and net cash movements(3)                25        42 
Closing fair value                                      3,821     3,036 
==============================================  =============  ======== 
 
 
 
 1   Represents an intercompany transfer to investment entity subsidiaries 
      for the six months to 30 September 2020. 
 2   All fair value movements relate to assets held at the end of the period. 
 3   Other movements includes the impact of foreign exchange and accrued 
      interest. 
 

Unquoted investments valued using Level 3 inputs also had the following impact on the Consolidated statement of comprehensive income: realised profits over value on disposal of investment of GBP5 million (September 2019: nil), dividend income of GBP22 million (September 2019: GBP6 million) and foreign exchange gains of GBP19 million (September 2019: GBP42 million).

Level 3 inputs are sensitive to assumptions made when ascertaining fair value as described in the 'Portfolio valuation - an explanation' section on pages 177 to 178 of the Annual report and accounts 2020. On an IFRS basis, of the unquoted assets held at 30 September 2020 classified as Level 3, 90% (31 March 2020: 33%) were valued using

a multiple of earnings and the remaining 10% (31 March 2020: 67%) were valued using alternative valuation methodologies. Of the underlying portfolio held by investment entity subsidiaries, 85% (31 March 2020: 41%) were valued using a multiple of earnings and the remaining 15% (31 March 2020: 59%) were valued using alternative valuation methodologies.

Assets move between Level 1 and Level 3 when an unquoted equity investment lists on a quoted market exchange. There were no transfers into or out of Level 3 in the period. In the six months to 30 September 2020, four assets changed valuation basis, two moving to an imminent sales basis, one moving from an earnings-based valuation to a DCF and one moving from fair value to an earnings-based valuation. The changes in valuation methodology in the period reflect our view of the most appropriate method to determine the fair value of the four assets at 30 September 2020. Further information can be found in the Private Equity and Infrastructure sections of the Business and Financial review.

Earnings multiple is the main assumption applied to an earnings-based valuation. The multiple is derived from comparable listed companies or relevant market transaction multiples. Companies in the same industry and geography and, where possible, with a similar business model and profile are selected and multiples are then adjusted for factors including liquidity risk, growth potential and relative performance. They are also adjusted to represent our longer-term view of performance through the cycle or our exit assumptions. This continues to be an important exercise given the market volatility we have seen as a result of the Covid-19 pandemic in the six months to 30 September 2020.

The pre-discount multiple used to value the portfolio ranged between 9.0x and 18.95x (31 March 2020: 8.0x and 14.5x).

If the multiple used to value each unquoted investment valued on an earnings multiple basis as at 30 September 2020 decreased by 5%, the investment portfolio value would decrease by GBP221 million (31 March 2020: GBP68 million) or 5% (31 March 2020: 2%). If the same sensitivity was applied to the underlying portfolio held by investment entity subsidiaries, this would have a negative value impact of GBP292 million (31 March 2020: GBP148 million) or 6% (31 March 2020: 3%).

If the multiple increased by 5% then the investment portfolio value would increase by GBP215 million (31 March 2020: GBP68 million) or 5% (31 March 2020: 2%). If the same sensitivity was applied to the underlying portfolio held by investment entity subsidiaries, this would have a positive value impact of GBP281 million (31 March 2020: GBP148 million) or 5% (31 March 2020: 3%).

Earnings - Earnings multiples are applied to the earnings of a portfolio company to determine the enterprise value. Earnings are usually obtained from the management accounts of the portfolio company and where necessary, are adjusted for non-recurring items such as restructuring expenses or significant corporate actions, and, in exceptional cases, run rate adjustments to arrive at maintainable earnings. At 30 September 2020, for most of the portfolio we used the last twelve months earnings to 30 June 2020 or forecast earnings. In a small number of assets we used maintainable earnings reflecting the impact of Covid-19. Action was valued on run-rate earnings.

Alternative valuation methodologies - There are a number of alternative investment valuation methodologies used by the Group, for reasons specific to individual assets. The details of such valuation methodologies, and inputs that are used, are given in the Portfolio valuation - an explanation section on pages 177 to 178 of the Annual report and accounts 2020.

Each methodology is used for a proportion of assets by value, and at 30 September 2020 the following techniques were used under an IFRS basis: nil transaction value (31 March 2020: 55%), 8% DCF (31 March 2020: 10%) and 2% other (31 March 2020: 2%).

If the value of all of the investments valued under alternative methodologies moved by 5%, this would have an impact on the investment portfolio value of GBP19 million (31 March 2020: GBP101 million) or 1% (31 March 2020: 3%). If the same sensitivity was applied to the underlying portfolio held by investment entity subsidiaries, this would have a value impact of GBP36 million (31 March 2020: GBP126 million) or 1% (31 March 2020: 3%).

10 Contingent liabilities

The Company has provided a guarantee to the Trustees of the 3i Group Pension Plan in respect of liabilities of 3i plc to the Plan. 3i plc is the sponsor of the 3i Group Pension Plan. On 4 April 2012 the Company transferred eligible assets (GBP150 million of ordinary shares in 3i Infrastructure plc) as defined by the agreement to a wholly owned subsidiary of the Group. The Company will retain all income and capital rights in relation to the 3i Infrastructure plc shares, as eligible assets, unless the Company becomes insolvent or fails to comply with material obligations in relation to the agreement with the Trustees, all of which are under its control. The fair value of eligible assets held by this subsidiary at 30 September 2020 was GBP289 million (31 March 2020: GBP247 million).

At 30 September 2020, there was no material litigation outstanding against the Company or any of its subsidiary undertakings.

11 Related parties

All related party transactions that took place in the six months ending 30 September 2020 are consistent in nature with the disclosures in Note 29 on pages 158 to 160 of the Annual report and accounts 2020. Related party transactions which took place in the period and materially affected performance or the financial position of the Group, together with any material changes in related party transactions as described in the Annual report and accounts 2020 that could materially affect the performance or the financial position of the Group are detailed below.

Investments

The Group makes investments in the equity of unquoted and quoted investments where it does not have control but may be able to participate in the financial and operating policies of that company. IFRS presumes that it is possible to exert significant influence when the equity holding is greater than 20%. The Group has taken the investment entity exception as permitted by IFRS 10 and has not equity accounted for these investments, in accordance with IAS 28, but they are related parties. The total amounts included for investments where the Group has significant influence but not control are as follows:

 
 Consolidated statement of comprehensive income                 Six months to   Six months to 
                                                                 30 September    30 September 
                                                                         2020            2019 
                                                                         GBPm            GBPm 
=============================================================  ==============  ============== 
  Realised profits over value on the disposal of investments                5               - 
  Unrealised profits on the revaluation of investments                     67              18 
  Portfolio income                                                          9               5 
=============================================================  ==============  ============== 
 
 
 Consolidated statement of financial position    30 September   31 March 
                                                         2020       2020 
                                                         GBPm       GBPm 
==============================================  =============  ========= 
  Unquoted investments                                    421        354 
----------------------------------------------  -------------  --------- 
 

Management arrangements

The Group acted as Investment Manager to 3i Infrastructure plc ("3iN"), which is listed on the London Stock Exchange, for the period to 30 September 2020. The following amounts have been recognised in respect of the management and advisory relationship:

 
Consolidated statement of comprehensive income          Six months to    Six months 
                                                                                 to 
                                                         30 September  30 September 
                                                                 2020          2019 
                                                                 GBPm          GBPm 
 Unrealised profits on the revaluation of investments              71              33 
 Dividends                                                          8               7 
 Fees receivable from external funds                               12              16 
 
 
 
Consolidated statement of financial position   30 September  31 March 
                                                       2020      2020 
                                                       GBPm      GBPm 
 Quoted equity investments                              489       418 
 Performance fees receivable                              -         6 
 

12 Retirement benefits

The Group operates a final salary defined benefit plan for qualifying employees of its subsidiaries in the UK ("the Plan"). The Plan is approved by HMRC for tax purposes and is operated separately from the Group and managed by an independent set of Trustees, whose appointment and powers are determined by the Plan's documentation.

During the period, the Plan's Trustees completed a GBP650 million buy-in transaction with Legal & General. This insurance policy, alongside previous bulk annuity contracts entered into with Pension Insurance Corporation and Legal & General in March 2017 and February 2019 respectively, means that the Plan benefits are now fully insured through buy-in policies. The Plan's Trustees have yet to conclude on the timeframe for any potential buyout. Consequently, for the purposes of IAS19, the buy-in transaction is not considered to be a settlement, and the purchase of this further insurance policy is treated as an investment decision by the Plan's Trustees. Accordingly, at 30 September 2020, the IAS 19 Plan surplus was GBP57 million (31 March 2020: GBP173 million) which included a total re-measurement loss recognised in other comprehensive income of GBP118 million (September 2019: GBP6 million gain) and interest income recognised in the Consolidated statement of comprehensive income of GBP2 million (September 2019: GBP2 million).

Independent review report to 3i Group plc

Conclusion

We have been engaged by the company to review the condensed set of financial statements in the half-yearly financial report for the six months ended 30 September 2020 which comprises the Condensed consolidated statement of comprehensive income, the Condensed consolidated statement of financial position, the Condensed consolidated statement of changes in equity, the Condensed consolidated cash flow statement and the related explanatory notes.

Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the six months ended 30 September 2020 is not prepared, in all material respects, in accordance with IAS 34 Interim Financial Reporting as adopted by the EU and the Disclosure Guidance and Transparency Rules ("the DTR") of the UK's Financial Conduct Authority ("the UK FCA").

Scope of review

We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410 Review of Interim Financial Information Performed by the Independent Auditor of the Entity issued by the Auditing Practices Board for use in the UK. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. We read the other information contained in the half-yearly financial report and consider whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.

A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Directors' Responsibilities

The half-yearly financial report is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the half-yearly financial report in accordance with the DTR of the UK FCA.

As disclosed in 'Basis of preparation and accounting policies', the annual financial statements of the group are prepared in accordance with International Financial Reporting Standards as adopted by the EU. The directors are responsible for preparing the condensed set of financial statements included in the half-yearly financial report in accordance with IAS 34 as adopted by the EU.

Our Responsibility

Our responsibility is to express to the company a conclusion on the condensed set of financial statements in the half-yearly financial report based on our review.

The purpose of our review work and to whom we owe our responsibilities

This report is made solely to the company in accordance with the terms of our engagement to assist the company in meeting the requirements of the DTR of the UK FCA. Our review has been undertaken so that we might state to the company those matters we are required to state to it in this report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company for our review work, for this report, or for the conclusions we have reached.

Jonathan Mills

For and on behalf of KPMG LLP

Chartered Accountants

15 Canada Square

London

E14 5GL

11 November 2020

Statement of Directors' responsibilities

The Directors, who are required to prepare the financial statements on a going concern basis unless it is not appropriate, are satisfied that the Group has the resources to continue in business for the foreseeable future.

In making this assessment, the Directors have considered information relating to present and future conditions, including future projections of profitability and cash flows .

The Directors confirm that to the best of their knowledge:

a) the condensed set of financial statements has been prepared in accordance with IAS 34 "Interim Financial Reporting" as adopted by the EU; and

b) the Half-year report includes a fair review of the information required by:

 
i)   DTR 4.2.7R of the Disclosure Rules and Transparency Rules, being 
      an indication of important events that have occurred during the 
      first six months of the financial year ending 31 March 2021 and 
      their impact on the condensed set of financial statements; and 
      a description of the principal risks and uncertainties for the 
      remaining six months of the financial year; and 
ii)  DTR 4.2.8R of the Disclosure Rules and Transparency Rules, being 
      (i) related party transactions that have taken place in the first 
      six months of the financial year ending 31 March 2021 which have 
      materially affected the financial position or performance of 
      3i Group during that period; and (ii) any changes in the related 
      party transactions described in the Annual report and accounts 
      2020 that could materially affect the financial position or performance 
      of 3i Group during the first six months of the financial year 
      ending 31 March 2021. 
 

The Directors of 3i Group plc and their functions are listed below.

The report is authorised for issue by order of the Board.

K J Dunn , Secretary

11 November 2020

List of Directors and their functions

The Directors of the Company and their functions are listed below:

Simon Thompson, Chairman and Chairman of the Nominations Committee

Simon Borrows, Chief Executive and Executive Director

Julia Wilson, Group Finance Director and Executive Director

Jonathan Asquith, Deputy Chairman and non-executive Director

Caroline Banszky, non-executive Director and Chairman of the Audit and Compliance Committee

Stephen Daintith, non-executive Director

Peter Grosch, non-executive Director

David Hutchison, non-executive Director, Senior Independent Director and Chairman of the Valuations Committee

Coline McConville, non-executive Director and Chairman of the Remuneration Committee

Alexandra Schaapveld, non-executive Director

Portfolio and other information

20 large investments

The 20 investments listed below account for 95 % of the portfolio value at 30 September 2020 (31 March 2020: 95%).

 
                                                    Residual  Residual 
                               Business line         cost(1)   cost(1)  Valuation  Valuation 
                               Geography           September     March  September      March 
Investment                     First invested in        2020      2020       2020       2020  Relevant transactions 
Description of business        Valuation basis          GBPm      GBPm       GBPm       GBPm  in the period 
Action*                        Private Equity            614       614      4,269      3,536 
General merchandise            Netherlands 
discount retailer              2011/2020 
                               Earnings 
3i Infrastructure plc*         Infrastructure            305       305        778        665 
Quoted investment              UK 
company, investing             2007 
in infrastructure              Quoted 
Scandlines                     Scandlines                529       529        452        429 
Ferry operator between         Denmark/Germany 
Denmark and Germany            2018 
                               DCF 
Cirtec Medical*                Private Equity            172       172        374        302 
Outsourced medical             US 
device manufacturing           2017 
                               Earnings 
Evernex*                       Private Equity            265       219        296        217  Acquisition of 
Provider of third-party        France                                                         Technogroup in 
maintenance services for       2019                                                           July 2020 
data centre infrastructure     Earnings 
Royal Sanders*                 Private Equity            135       135        294        198  GBP38 million dividend 
Private label and contract     Netherlands                                                    received in July 2020 
manufacturing producer of       2018 
personal care products         Earnings 
Hans Anders*                   Private Equity            265       221        272        196  Further investment 
Value-for-money optical        Netherlands                                                    of GBP20 million in 
retailer                       2017                                                           April 2020 
                               Earnings 
WP*                            Private Equity            214       206        260        244 
Supplier of plastic            Netherlands 
packaging solutions            2015 
                               Earnings 
Havea*                         Private Equity            183       155        253        182  Further investment 
Manufacturer of natural        France                                                         of GBP23 million in 
healthcare and cosmetics       2017                                                           September 2020 
products                       Earnings 
Tato                           Private Equity              2         2        247        196  GBP5 million dividend 
Manufacturer and seller of     UK                                                             received in July 
speciality chemicals           1989                                                           2020 
                               Earnings 
Luqom*                         Private Equity                                                 Return of funding 
 (formerly Lampenwelt)          Germany                  108       113        228        144   of GBP8 million in July 
Online lighting                2017                                                           2020 
specialist retailer            Earnings 
Q Holding*                     Private Equity            162       162        203        222 
Manufacturer of precision      US 
engineered elastomeric         2014 
components                     Earnings 
Regional Rail*                 Infrastructure            175       175        199        195 
Owns and operates              US 
short-line freight railroads   2019 
and rail-related businesses    DCF 
AES Engineering                Private Equity             30        30        175        158 
Manufacturer of mechanical     UK 
seals and support systems      1996 
                               Earnings 
SaniSure*                      Private Equity            135        60        165         64  Acquisition of 
(formerly Bioprocessing        US                                                             Sani-Tech West in 
platform)                       2019                                                           July 2020 
Manufacturer, distributor and  Earnings 
integrator of single-use 
bioprocessing systems and 
components 
Smarte Carte*                  Infrastructure            172       167        165        172 
Provider of self-serve         US 
vended luggage carts,          2017 
electronic lockers and         DCF 
 concession carts 
Basic-Fit                      Private Equity             23         6        141         93  Further investment 
Discount gyms operator         Netherlands                                                    of GBP17 million in 
                               2013                                                           June 2020 
                               Quoted 
BoConcept*                     Private Equity            165       149        130        119 
Urban living designer          Denmark 
                               2016 
                               Earnings 
Magnitude Software*            Private Equity            139       139        116        121 
Leading provider of unified    US 
application data               2019 
management solutions           Earnings 
Formel D*                      Private Equity            154       154        110        141 
Quality assurance provider     Germany 
for the automotive             2017 
industry                       Earnings 
                                                       3,947     3,713      9,127      7,594 
 

* Controlled in accordance with IFRS.

1 Residual cost includes capitalised interest.

Glossary

2013-2016 vintage includes Aspen Pumps, Audley Travel, Basic-Fit, Dynatect, Kinolt, ATESTEO, JMJ, Q Holding, WP, Scandlines further (completed in December 2013), Christ, Geka, Óticas Carol and Blue Interactive.

2016-2019 vintage includes BoConcept, Cirtec Medical, Formel D, Hans Anders, Arrivia, Luqom, Magnitude Software, Havea, Royal Sanders and Schlemmer.

2019-2022 vintage includes Evernex, SaniSure and GartenHaus.

Approved Investment Trust Company This is a particular UK tax status maintained by 3i Group plc, the parent company of 3i Group. An approved Investment Trust company is a UK company which meets certain conditions set out in the UK tax rules which include a requirement for the company to undertake portfolio investment activity that aims to spread investment risk and for the company's shares to be listed on an approved exchange. The "approved" status for an investment trust must be agreed by the UK tax authorities and its benefit is that certain profits of the company, principally its capital profits, are not taxable in the UK.

Assets under management ("AUM") A measure of the total assets that 3i has to invest or manages on behalf of shareholders and third-party investors for which it receives a fee. AUM is measured at fair value. In the absence of a third-party fund in Private Equity, it is not a measure of fee generating capability.

Buyouts 2010-2012 vintage includes Action, Amor, Element, Etanco, Hilite, OneMed and Trescal.

Capital redemption reserve is established in respect of the redemption of the Company's ordinary shares.

Capital reserve recognises all profits that are capital in nature or have been allocated to capital. Following changes to the Companies Act, the Company amended its Articles of Association at the 2012 Annual General Meeting to allow these profits to be distributable by way of a dividend.

Carried interest payable is accrued on the realised and unrealised profits generated taking relevant performance hurdles into consideration, assuming all investments were realised at the prevailing book value. Carried interest is only actually paid when the relevant performance hurdles are met and the accrual is discounted to reflect expected payment periods.

Carried interest receivable The Group earns a share of profits from funds which it manages on behalf of third parties. These profits are earned when the funds meet certain performance conditions and are paid by the fund once these conditions have been met on a cash basis. The carried interest receivable may be subject to clawback provisions if the performance of the fund deteriorates following carried interest being paid.

Company 3i Group plc.

Discounting The reduction in present value at a given date of a future cash transaction at an assumed rate, using a discount factor reflecting the time value of money.

EBITDA is defined as earnings before interest, taxation, depreciation and amortisation and is used as the typical measure of portfolio company performance.

EBITDA multiple Calculated as the enterprise value over EBITDA, it is used to determine the value of a company.

Fair value movements on investment entity subsidiaries The movement in the carrying value of Group subsidiaries, classified as investment entities under IFRS 10, between the start and end of the accounting period converted into sterling using the exchange rates at the date of the movement.

Fee income (or Fees receivable) is earned for providing services to 3i's portfolio companies and predominantly falls into one of two categories. Negotiation and other transaction fees are earned for providing transaction related services. Monitoring and other ongoing service fees are earned for providing a range of services over a period of time.

Fees receivable from external funds Fees receivable from external funds are earned for providing management and advisory services to a variety of fund partnerships and other entities. Fees are typically calculated as a percentage of the cost or value of the assets managed during the year and are paid quarterly, based on the assets under management to date.

Foreign exchange on investments arises on investments made in currencies that are different from the functional currency of the Group entity. Investments are translated at the exchange rate ruling at the date of the transaction. At each subsequent reporting date investments are translated to sterling at the exchange rate ruling at that date.

Gross investment return ("GIR") includes profit and loss on realisations, increases and decreases in the value of the investments we hold at the end of a period, any income received from the investments such as interest, dividends and fee income, movements in the fair value of derivatives and foreign exchange movements. GIR is measured as a percentage of the opening portfolio value.

Growth 2010-2012 vintage includes Element, Hilite, BVG, Go Outdoors, Loxam, Touchtunes and WFCI.

Interest income from investment portfolio is recognised as it accrues. When the fair value of an investment is assessed to be below the principal value of a loan, the Group recognises a provision against any interest accrued from the date of the assessment going forward until the investment is assessed to have recovered in value.

Investment basis Accounts prepared assuming that IFRS 10 had not been introduced. Under this basis, we fair value portfolio companies at the level we believe provides the most comprehensive financial information.

IRR Internal Rate of Return

Like-for-like figures compare financial results in one period with those for the previous period

Money multiple is calculated as the cumulative distributions plus any residual value divided by paid-in capital.

Net asset value ("NAV") is a measure of the fair value of our proprietary investments and the net costs of operating the business.

Operating cash profit / loss is the difference between our cash income (consisting of portfolio interest received, portfolio dividends received, portfolio fees received and fees received from external funds as per the Investment basis Consolidated cash flow statement) and our operating expenses and lease payments (as per the Investment basis Consolidated cash flow statement).

Operating profit includes gross investment return, management fee income generated from managing external funds, the costs of running our business, net interest payable, other losses and carried interest.

Organic growth is the growth a company achieves by increasing output and enhancing sales internally.

Performance fee receivable The Group earns a performance fee from the investment management services it provides to 3i Infrastructure plc ("3iN") when 3iN's total return for the year exceeds a specified threshold. This fee is calculated on an annual basis and paid in cash early in the next financial year.

Portfolio income is that which is directly related to the return from individual investments. It is comprised of dividend income, income from loans and receivables and fee income.

Proprietary Capital Shareholders' capital which is available to invest to generate profits.

Realised profits or losses over value on the disposal of investments The difference between the fair value of the consideration received, less any directly attributable costs, on the sale of equity and the repayment of loans and receivables and its carrying value at the start of the accounting period, converted into sterling using the exchange rates at the date of disposal.

Revenue reserve recognises all profits that are revenue in nature or have been allocated to revenue.

Segmental reporting Operating segments are reported in a manner consistent with the internal reporting provided to the Chief Executive who is considered to be the Group's chief operating decision maker. All transactions between business segments are conducted on an arm's length basis, with intrasegment revenue and costs being eliminated on consolidation. Income and expenses directly associated with each segment are included in determining business segment performance.

Total return comprises of operating profit less tax charge less movement in actuarial valuation of the historic defined benefit pension scheme.

Total shareholder return ("TSR") is the measure of the overall return to shareholders and includes the movement in the share price and any dividends paid, assuming that all dividends are reinvested on their ex -- dividend date.

Translation reserve comprises all exchange differences arising from the translation of the financial statements of international operations.

Unrealised profits or losses on the revaluation of investments The movement in the carrying value of investments between the start and end of the accounting period converted into sterling using the exchange rates at the date of the movement.

Information for shareholders

Note

The first FY2021 dividend is expected to be paid on 13 January 2021 to holders of ordinary shares on the register on 4 December 2020. The ex-dividend date will be 3 December 2020.

3i Group plc

Registered office:

16 Palace Street,

London SW1E 5JD, UK

Registered in England No. 1142830

An investment company as defined by section 833 of the Companies Act 2006.

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END

IR GPGAUGUPUPPG

(END) Dow Jones Newswires

November 12, 2020 02:00 ET (07:00 GMT)

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