TIDMIII
RNS Number : 7699Z
3i Group PLC
27 January 2022
27 January 2022
3i Group plc
FY2022 Q3 performance update
Continued good performance across the Group
* Increase in NAV per share to 1,235 pence (30
September 2021:1,153 pence) despite the negative
translation effect of sterling strengthening in the
quarter (21 pence)
* Total return of 32.6% for the nine months to 31
December 2021, with continued good performance across
both investment portfolios
* Strong sales, EBITDA and cash generation from Action
notwithstanding significant Covid-19 and supply chain
disruption
* Private Equity business completed GBP310 million of
investment in the quarter including new investments
in Dutch Bakery and Mepal, a co-investment in
insightsoftware and two transformational bolt-on
acquisitions for GartenHaus and ten23 health. In
addition, five bolt-on acquisitions were completed
across the portfolio, with no additional funding from
3i and a further two bolt-on acquisitions were signed
* Strong cash generation from the Private Equity
portfolio with combined realised proceeds of GBP491
million from the divestment of Magnitude Software and
partial divestment of Basic-Fit
Simon Borrows, Chief Executive, commented:
" We saw continued, resilient performance from both our
investment portfolios as well as a good level of cash realisations.
There was also further bolt-on activity and several new investments
in the quarter. Action continues to perform very well and delivered
impressive results given the Covid-19 related challenges in 2021.
3i is well set for a strong close to our financial year end in
March."
Private Equity
Portfolio performance and valuation at 31 December 2021
In the 12 months to 2 January 2022, Action generated net sales
growth of 23% (52 week comparison) and added 267 stores, taking its
total to 1,983 stores across nine countries. Provisional 2021
EBITDA, which is still subject to audit, was EUR828 million, 36%
ahead of 2020 (52 week comparison). Net sales (EUR6,834 million)
and EBITDA were 34% and 53% ahead of 2019. Covid-19 restrictions
and store closures affected the group in six out of twelve months
in 2021 with Action experiencing significant closures and
restrictions in the Netherlands, Austria and Germany in the first
quarter of 2021 and in December 2021. Action paid an interim
dividend of EUR325 million in December 2021, and finished the year
with a cash balance of EUR759 million. Action opened its 2,000th
store in Prague last week and all stores are currently open with
trading well ahead of the same period last year.
The broader Private Equity portfolio traded resiliently
notwithstanding ongoing Covid-19 related restrictions, supply chain
challenges and increasing cost inflation. In the quarter we saw
good performance from SaniSure, which is capitalising on a robust
bioprocessing market, WilsonHCG which delivered good performance
driven by continued strength of the US labour market and BoConcept,
which continues to see strong demand despite restrictions remaining
in some of its key markets. Other notable contributions to our
return include WP and AES. We continue to carefully manage and
support our travel companies and following very recent Omicron
developments we are becoming more optimistic about their prospects
in 2022.
Private Equity investments
Private Equity Investment
investment Type Business description Date GBPm
----------------- ------------------- ------------------------------------------------ --------------- -----------
ten23 health Further Pharmaceutical product CDMO October 2021 61
Digital platform for garden and house projects
GartenHaus Further across Europe October 2021 45
Industrial bakery group specialised in home
Dutch Bakery New bake-off bread and snack products October 2021 46
Audley Travel Further Provider of experiential tailor-made travel October 2021 25
Provider of financial reporting and enterprise
New performance management software for the Office
insightsoftware co-investment of the CFO November 2021 37
Christ Further German retailer of jewellery and watches November 2021 12
Dutch lifestyle consumer brand known for
Mepal New storing and serving food and drinks December 2021 87
----------------- ------------------- ------------------------------------------------ --------------- -----------
Total Q3 FY2022 new and further investment 313
---------------------------------------------------------------------------------------- --------------- -----------
Provider of digital solutions in the DACH
MAIT Return of funding region October 2021 (3)
----------------- ------------------- ------------------------------------------------ --------------- -----------
Total Q3 FY2022 return of funding (3)
---------------------------------------------------------------------------------------- --------------- -----------
Total Q3 FY2022 investment 310
---------------------------------------------------------------------------------------- --------------- -----------
H1 FY2022 investment 58
-------------------------------------- ---------------------------------------------------------------- -----------
Total investment as at 31 December 2021 368
---------------------------------------------------------------------------------------- --------------- -----------
In the period, we completed new investments in Mepal (GBP87
million) and Dutch Bakery (GBP46 million). We also completed
transformational bolt-on acquisitions for ten23 health, investing
GBP61 million of our proprietary capital to support growth
initiatives including the scale up and expansion of the Basel
formulation and drug development operations, as well as and the
acquisition of Swissfillon, a drug product fill and finish CDMO,
and GBP45 million in GartenHaus to support the acquisition of
Outdoor Toys, a UK-based online retailer of outdoor garden toys.
After the period end, we invested in Yanga Sports Water to support
its international growth and expansion into North America.
Several of our portfolio companies completed bolt-on
acquisitions in the quarter funded by the portfolio company's
balance sheet. Evernex completed its acquisition of Emcon-IT, a US
leading player in the third-party hardware maintenance industry,
and Dutch Bakery acquired GoodLife Foods Deurne in an asset
transaction, representing a strategic acquisition for Dutch Bakery
in the Benelux market. AES acquired JAtech Services, a Canada-based
asset condition monitoring specialist, Hans Anders acquired the
Belgian franchisee for eyes+more and SaniSure acquired GL
Engineering, a manufacturer of single-use filling needles for use
in the fill & finish stage of production . Also in the quarter,
Royal Sanders agreed to acquire Otto Cosmetics, a leading German
manufacturer of private label and contract manufacturing products
for the personal care industry and MAIT agreed to acquire
Infolutions, a Swiss-based managed services provider with a focus
on infrastructure monitoring.
In the period, we completed a GBP37 million co-investment in
insightsoftware, the company that acquired Magnitude Software,
invested a further GBP25 million in Audley Travel to support its
recovery from the pandemic, and GBP12 million in Christ as part of
its debt refinancing and extension of facilities.
Private Equity realisations
Private Equity Realisation proceeds
Realisations GBPm
------------------------------------------------ ---------------------
Magnitude Software 345
Basic-Fit 146
Total Q3 FY2022 realised proceeds 491
H1 FY2022 realised proceeds 118
------------------------------------------------ ---------------------
Total realised proceeds as at 31 December 2021 609
------------------------------------------------ ---------------------
In the period, we recognised total realised proceeds of GBP491
million. We received GBP345 million from the full divestment of
Magnitude Software, achieving a sterling money multiple of 2.5x and
an IRR of 44%. We also received GBP146 million from a partial sale
of Basic-Fit shares. We retain a 5.7% holding in the business
valued at GBP133 million at 31 December 2021.
Infrastructure
3iN's underlying portfolio continues to perform well, generating
a good level of portfolio income, and 3iN's share price performed
strongly in the quarter, closing up 16% at 354 pence at 31 December
2021 (30 September 2021: 304 pence), valuing 3i's 30% stake at
GBP953 million (30 September 2021: GBP817 million). We also
recognised GBP14 million of dividend income from 3iN in the
period.
In the period, our US infrastructure team completed a GBP146
million investment in EC Waste, the largest vertically integrated
provider of federally compliant solid waste services in Puerto
Rico, representing the third platform investment for our US
infrastructure portfolio and, including portfolio company bolt-ons,
our seventh US infrastructure investment.
Scandlines
Scandlines performed well in the period, with strong freight
volumes ahead of 2019 levels. Leisure has also continued to recover
however volumes were impacted by the emergence of the Omicron
variant and so remained below 2019 levels in the period. As a
result of good cash management throughout the pandemic, Scandlines
was able to resume its cash distributions in December 2021, and 3i
recognised GBP13 million of dividend income in the quarter.
Top 10 investments by value at 31 December 2021
Valuation Valuation
Valuation Valuation Sep-21 Dec-21
basis currency GBPm GBPm Activity in the quarter
---------------- ----------- ----------- ---------- ---------- --------------------------------------------------
Action Earnings EUR 6,100 6,542 Received a cash dividend of GBP144 million in
December 2021
----------- ----------- ---------- ---------- --------------------------------------------------
3iN Quoted GBP 817 953 Recognised a dividend of GBP14 million in
November 2021
----------- ----------- ---------- ---------- --------------------------------------------------
Cirtec Medical Earnings USD 488 489
----------- ----------- ---------- ---------- --------------------------------------------------
Scandlines DCF EUR 469 471 Received a cash dividend of GBP13 million in
December 2021
----------- ----------- ---------- ---------- --------------------------------------------------
Luqom Earnings EUR 453 440
----------- ----------- ---------- ---------- --------------------------------------------------
Tato Earnings GBP 412 406 Received a cash dividend of GBP4 million in
October 2021
----------- ----------- ---------- ---------- --------------------------------------------------
Hans Anders Earnings EUR 323 316
----------- ----------- ---------- ---------- --------------------------------------------------
Royal Sanders Earnings EUR 295 289
----------- ----------- ---------- ---------- --------------------------------------------------
Evernex Earnings EUR 283 287
----------- ----------- ---------- ---------- --------------------------------------------------
WP Earnings EUR 265 281
----------- ----------- ---------- ---------- --------------------------------------------------
The 10 investments in the table above comprise 78% (30 September
2021: 78%) of the total Proprietary Capital portfolio value of
GBP13,413 million (30 September 2021: GBP12,784 million).
Total return and NAV position
We recognised a GBP201 million loss on foreign exchange, net of
hedging, in the quarter, as sterling strengthened against the euro
and US dollar. As at 31 December 2021, 71% of the Group's net
assets were in euro and 15% were in US dollar. Based on that, a 1%
movement in the euro and US dollar would result in a net total
return movement of GBP84 million and GBP18 million respectively.
The diluted NAV per share increased to 1,235 pence (30 September
2021: 1,153 pence) or 1,215.75 pence after deducting the 19.25
pence per share first FY2022 dividend, which was paid on 12 January
2022.
Balance sheet
At 31 December 2021, gross debt was GBP975 million (30 September
2021: GBP975 million), net debt was GBP709 million and gearing
5.9%. The first FY2022 dividend of GBP186 million (or 19.25 pence
per share) was paid on 12 January 2022. Liquidity, including our
undrawn RCF, was GBP766 million at 31 December 2021.
- ENDS -
Notes
1. Balance sheet values are stated net of foreign exchange translation. Where applicable, the
GBP equivalents at 31 December 2021 in this update have been calculated at a currency exchange
rate of EUR1.1913: GBP1 and $1.3546: GBP1 respectively.
2. At 31 December 2021 3i had 969 million diluted shares.
3. Action was valued using a post discount run-rate EBITDA multiple of 18.5x based on its LTM
run-rate earnings to 2 January 2022 of EUR921 million. The LTM run-rate earnings used include
our normal adjustment to reflect stores opened in the year, as well as the add back of EUR10
million of exceptional Covid-19 related costs incurred in Action's first quarter of 2021.
For further information, please contact:
Silvia Santoro
Group Investor Relations Director
Tel: 020 7975 3258
Kathryn van der Kroft
Communications Director
Tel: 020 7975 3021
About 3i Group
3i is a leading international investment manager focused on
mid-market Private Equity and Infrastructure. Our core investment
markets are northern Europe and North America. For further
information, please visit: www.3i.com .
All statements in this performance update relate to the
three-month period ended 31 December 2021 unless otherwise stated.
The financial information is unaudited and is presented on 3i's
non-GAAP Investment basis in order to provide users with the most
appropriate description of the drivers of 3i's performance. Net
asset value ("NAV") and total return are the same on the Investment
basis and on an IFRS basis. Details of the differences between 3i's
consolidated financial statements prepared on an IFRS basis and
under the Investment basis are provided in the 2021 Annual report
and accounts. There have been no material changes to the financial
position of 3i from the end of this quarter to the date of this
announcement.
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END
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