TIDMIII
RNS Number : 6000O
3i Group PLC
31 January 2019
31 January 2019
3i Group plc
FY2019 Q3 performance update
Another good quarter for 3i despite market volatility
* Increase in NAV per share to 802 pence (30 September
2018: 776 pence) and total return of 13.9% for the
nine months to 31 December 2018 driven by good growth
in the quarter from Action, 3i Infrastructure plc
("3IN"), Aspen Pumps and Audley Travel
* Completed the refinancing of Aspen Pumps which,
together with the distribution from Audley Travel,
returned cash of GBP74 million to 3i. In addition,
announced the sale of OneMed on 18 January 2019, with
expected realisation proceeds of c.GBP100 million
* Announced a EUR56 million further investment in Hans
Anders to support its acquisition of 'eyes+more' and
completed four bolt-on acquisitions in Aspen Pumps,
Cirtec Medical and Royal Sanders
* Strong performance from 3iN continued with a further
6% increase in its share price
Simon Borrows, Chief Executive, commented:
"This was another good quarter for 3i, during a period of
significant market volatility. Our Private Equity portfolio
performed well, with Action, Aspen Pumps and Audley Travel
generating good growth, and 3iN continued its strong run. Our
balance sheet is well funded but we remain cautious about the
pricing of private investments in the current environment and have
continued to focus on bolt-on acquisitions. As we approach the
close to our financial year we remain confident that our
diversified portfolio is well positioned to deliver further good
growth and withstand market turbulence in these uncertain political
and economic times."
Private Equity
Portfolio performance
The Private Equity portfolio generated solid returns in the
quarter. Action finished the year strongly with an excellent
December contributing to revenue growth of 23% and very good
cashflow for the year. With the stabilisation of supply chain
performance in France in the final months of 2018, French
like-for-like sales growth improved significantly in the December
trading period. The new distribution centre at Belleville, near
Lyon, has now opened and is delivering to its first French stores
and the new DC at Peine in Germany will commence operations in late
February. Construction of the new DC at Osla in Poland is well
underway. Action opened 230 net new stores in the year and will
announce its 2018 results in March 2019.
We continue to see good earnings growth across the portfolio
more generally, with assets such as AES, Audley Travel, Aspen
Pumps, Formel D, ICE and Royal Sanders performing well. Our
buy-and-build strategy for assets such as Cirtec Medical and Ponroy
Santé also generated good earnings growth. However WP, our
international supplier of plastic packaging solutions, incurred
higher expenses in the quarter due to increased resin costs and
negative foreign exchange movements.
Equity markets were particularly volatile this quarter, with the
FTSE All-share falling 11% and the STOXX Europe 600 falling 12%.
Our long standing policy of adjusting the multiples we use to value
our unquoted portfolio to take account of longer term sector
averages and other factors has helped to mitigate the impact of
weak markets. Basic-Fit's share price declined by 12% in the
quarter. The combined impact of the decline in Basic-Fit's share
price and the reductions in multiples was c.GBP115 million in the
quarter.
Private Equity investments
We continue to see some interesting investment opportunities but
we remain disciplined on price and continue to focus on
acquisitions for our portfolio companies. In December 2018, we
announced Hans Anders' acquisition of 'eyes + more'. To support
Hans Anders' investment, 3i invested EUR56 million in January 2019.
In addition, and without requiring funding from 3i, Cirtec Medical
completed the acquisitions of Metrigraphics and Cactus
Semiconductor, Aspen Pumps acquired Advanced Engineering and Royal
Sanders completed its acquisition of McBride's European personal
care liquids business.
Private Equity realisations
We generated GBP74 million of cash from Aspen Pumps and Audley
Travel, GBP18 million of which was recognised as cash income and
the remainder as realisation proceeds.
Private Equity Realisation proceeds
GBPm
------------------------------------------------------------------------------------- ---------------------
Aspen Pumps 48
Audley Travel 8
Other 2
------------------------------------------------------------------------------------- ---------------------
Total Q3 FY2019 realised proceeds 58
------------------------------------------------------------------------------------- ---------------------
H1 FY2019 realised proceeds 1,052
------------------------------------------------------------------------------------- ---------------------
Total realised proceeds as at 31 December 2018 1,110
------------------------------------------------------------------------------------- ---------------------
Scandlines reinvestment (529)
------------------------------------------------------------------------------------- ---------------------
Total realised proceeds, net of the Scandlines reinvestment, as at 31 December 2018 581
------------------------------------------------------------------------------------- ---------------------
In January 2019, we announced the sale of OneMed, one of the
last investments in Eurofund V, for proceeds of c.GBP100 million.
At 31 December 2018, OneMed was held on an imminent sales basis and
valued at GBP100 million, compared to its 30 September 2018
valuation of GBP51 million.
Infrastructure
The Infrastructure business had another good quarter. Our
investment in 3iN performed very strongly as its share price
increased by 6% to 258.5 pence due to a strong set of half-year
results and a well positioned portfolio. This generated unrealised
value growth of GBP39 million for 3i, in addition to dividend
income of GBP12 million.
The infrastructure market remains active and our Infrastructure
team is working on a pipeline of interesting investment
opportunities in Europe and North America.
Total return and NAV position
We recognised a GBP57 million gain on foreign exchange in the
quarter, as both the US dollar and euro strengthened against
sterling. Based on the balance sheet at 31 December 2018, a 1%
movement in the euro and US dollar would result in a total return
movement of GBP43 million and GBP11 million respectively. The
diluted NAV per share increased to 802 pence (30 September 2018:
776 pence) or 787 pence after deducting the 15 pence per share
interim FY2019 dividend, which was paid on 9 January 2019.
Top 10 investments by value at 31 December 2018
Valuation Valuation
Valuation Valuation Sep-18 Dec-18
basis currency GBPm GBPm Activity in the quarter
----------- ----------- ---------- ---------- ------------------------------------------------
Action Earnings EUR 2,381 2,540
----------- ----------- ---------- ---------- ------------------------------------------------
3iN Quoted GBP 659 698 Accrued a GBP12 million FY2019 interim dividend
----------- ----------- ---------- ---------- ------------------------------------------------
Scandlines DCF EUR 521 529 Received a GBP6 million dividend
----------- ----------- ---------- ---------- ------------------------------------------------
Audley Travel Earnings GBP 258 261 Distributed GBP25 million of cash to 3i
----------- ----------- ---------- ---------- ------------------------------------------------
Cirtec Medical Earnings USD 239 252 Acquired Cactus Semiconductor and Metrigraphics
----------- ----------- ---------- ---------- ------------------------------------------------
Q Holding Earnings USD 239 242
----------- ----------- ---------- ---------- ------------------------------------------------
WP Earnings EUR 259 241
----------- ----------- ---------- ---------- ------------------------------------------------
Basic-Fit Quoted EUR 256 228
----------- ----------- ---------- ---------- ------------------------------------------------
Hans Anders Earnings EUR 203 198
----------- ----------- ---------- ---------- ------------------------------------------------
Smarte Carte DCF USD 180 186
----------- ----------- ---------- ---------- ------------------------------------------------
The 10 investments in this table comprise 73% (30 September
2018: 73%) of the total Proprietary Capital portfolio value of
GBP7,320 million (30 September 2018: GBP7,119 million).
Balance sheet
At 31 December 2018 net cash was GBP628 million. The 15 pence
FY2019 interim dividend of GBP145 million was paid on 9 January
2019.
- ENDS -
Notes
1. Balance sheet values are stated net of foreign exchange translation. Where applicable, the
GBP equivalents at 31 December 2018 in this update have been calculated at a currency exchange
rate of EUR1.1152:GBP1 and $1.2753:GBP1 respectively. At 31 December 2018, 62% of the Group's
net assets were in euro and 14% were in US dollar.
2. At 31 December 2018 3i had 973 million diluted shares.
3. Action was valued using a post discount run-rate EBITDA multiple of 16.5x based on its run-rate
earnings to 31 December 2018.
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 2018 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 2018 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.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
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Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
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