TIDM3IN
RNS Number : 7222R
3i Infrastructure PLC
09 November 2021
9 November 2021
Results for the six months to 30 September 2021
A strong first half, driven by excellent performance from our
resilient portfolio. On track to deliver increased FY22 dividend of
10.45 pence per share.
Performance highlights
GBP250m, 10.6% Total return
291.2p
NAV per share Strong first half performance driving growth
in
net asset value ('NAV')
GBP56m
Total income and non-income Good level of income and non-income cash
cash to support the dividend
-----------------------------------------------
GBP253m
Cash balances Well-funded to make new investments
-----------------------------------------------
5.225p
Interim dividend per share On track to deliver the FY22 dividend target,
6.6% higher than FY21
-----------------------------------------------
Richard Laing, Chair of 3i Infrastructure plc (the
'Company')
"It has been a strong first half performance from our resilient
portfolio. We are well positioned for the second half and are on
track to deliver our dividend target, 6.6% higher than last
year."
Performance
The Company generated a total return of 10.6% on opening NAV for
the first half of the year, substantially ahead of our target
return of 8% to 10% per annum to be achieved over the medium term.
The NAV per share increased to 291.2 pence. The portfolio overall
is performing ahead of expectations, both financially and
operationally, with our Investment Manager driving value growth
over the period through active asset management of the portfolio.
We were pleased to complete the acquisition of DNS:NET, a leading
independent telecommunications provider in Germany, during the
period, further improving the diversification of the portfolio.
The Company delivered a Total Shareholder Return ('TSR') of 4.2%
in the period (FTSE 250: 8.4%). Since IPO, the Company's annualised
TSR is 12.4%, comparing favourably with the broader market (FTSE
250: 7.9% annualised over the same period). The Company has
achieved this long-term outperformance with a low correlation to
the broader equity market.
Interim dividend
The Board is announcing an interim dividend of 5.225 pence per
share, scheduled to be paid on 10 January 2022 to holders of
ordinary shares on the register on 26 November 2021. The
ex-dividend date will be 25 November 2021. As an investment trust,
the Company is permitted to designate dividends wholly or partly as
interest distributions for UK tax purposes. The Board is
designating 2.0 pence of the 5.225 pence interim dividend as an
interest distribution.
Corporate governance
The Company's Annual General Meeting was held on 8 July 2021.
All resolutions were approved by shareholders, including the
re-election of the existing Directors to the Board. Robert Jennings
stepped down from the Board on 16 July 2021 and we thank him for
his contribution to the Company.
Richard Laing
Chair
For further information, please contact:
Thomas Fodor, investor enquiries Tel: 020 7975 3469
Kathryn van der Kroft, press enquiries Tel: 020 7975 3021
Notes
This report contains Alternative Performance Measures ('APMs'),
which are financial measures not defined in International Financial
Reporting Standards ('IFRS'). These include Total return on opening
NAV, NAV per share, Total income and non-income cash and Total
portfolio return percentage. More information relating to APMs,
including why we use them and the relevant definitions, can be
found in the Financial review section and in the Company's Annual
report and accounts 2021.
For further information regarding the announcement of the
results for 3i Infrastructure plc, please visit
www.3i-infrastructure.com. The analyst presentation will be made
available on this website.
Notes to editors
3i Infrastructure plc is a Jersey-incorporated, closed-ended
investment company, an approved UK Investment Trust, listed on the
London Stock Exchange and regulated by the Jersey Financial
Services Commission. The Company's purpose is to invest responsibly
in infrastructure, delivering long-term sustainable returns to
shareholders and having a positive impact on our portfolio
companies and their stakeholders.
3i Investments plc, a wholly-owned subsidiary of 3i Group plc,
is authorised and regulated in the UK by the Financial Conduct
Authority and acts as Investment Manager to 3i Infrastructure
plc.
This statement has been prepared solely to provide information
to shareholders. It should not be relied on by any other party or
for any other purpose. It and the Company's Half-yearly report may
contain statements about the future, including certain statements
about the future outlook for 3i Infrastructure plc. These are not
guarantees of future performance and will not be updated. Although
we believe our expectations are based on reas onable assumptions,
any statements about the future outlook may be influenced by
factors that could cause actual outcomes and results to be
materially different.
This press release is not for distribution (directly or
indirectly) in or to the United States, Canada, Australia or Japan
and is not an offer of securities for sale in or into the United
States, Canada, Australia or Japan or in any other jurisdiction.
Securities may not be offered or sold in the United States absent
registration under the U.S. Securities Act of 1933, as amended (the
'Securities Act'), or an exemption from registration under the
Securities Act. Any public offering to be made in the Unite d
States will be made by means of a prospectus that may be obtained
from the issuer or selling security holder and will contain
detailed information about 3i Group plc, 3i Infrastructure plc, 3i
India Infrastructure Fund and the Investment Manager, as
applicable, as well as financial statements. No public offering in
the United States is currently contemplated.
3i Infrastructure plc Half-yearly report 2021
Review from the Managing Partner
Portfolio review
The majority of our portfolio companies have met or exceeded the
expectations we set at March 2021. The Company remains well-funded
and we are progressing several potential investment opportunities
across our target markets.
Oystercatcher had an excellent first half of the year,
outperforming both expectations and prior year, with continued high
levels of utilisation across the portfolio of five terminals. On 23
September 2021, we signed an agreement for the sale of
Oystercatcher's 45% stakes in its four European terminals in
Amsterdam, Terneuzen, Ghent and Malta, together with the 55% stakes
held by Oiltanking GmbH, to Evos Finance B.V.. The transaction
completed on 29 October 2021. The majority of the net proceeds from
the sale were used to prepay all of Oystercatcher's debt. The
balance of the net proceeds to Oystercatcher, EUR55 million, were
distributed to the Company. Oystercatcher continues to own a 45%
stake in Oiltanking Singapore Limited alongside its partner
Oiltanking GmbH. Singapore represented more than half of the
carrying value of Oystercatcher prior to the sale.
Infinis performed ahead of expectations in the period, primarily
due to outperformance in its captured landfill methane business,
higher UK power prices and the frequent power supply system
imbalances in the UK that benefitted its Power Response assets.
Infinis has taken advantage of this higher power price environment
to hedge the majority of its expected generation for the next two
years at attractive prices. However, our longer-term power price
forecasts are now lower than those in the March valuation,
reflecting higher expected growth in renewable power generation in
the UK and lower projected long-term commodity prices. Infinis has
made solid progress on its development pipeline during the period
with a 4MW solar site at Winterton receiving planning consent and a
further 152MW of solar and battery energy storage sites at the
planning or pre-planning stages. In June, Ofgem published its
Significant Code Review 'minded to' decision, bringing greater
clarity to the regulatory outlook and likely to result in reduced
grid connection costs for new developments.
Tampnet demonstrated continued resilience during the period.
North Sea customers continued to upgrade their bandwidth
requirements. Progress with digital pilot projects in partnership
with Microsoft are also showing real promise, highlighting the
opportunity for Tampnet to capitalise on a wave of expected
investment in remote digital operations by its offshore clients. In
the Gulf of Mexico, the business experienced some delays in
installations, primarily due to Covid-19 and severe weather
conditions which also impacted customer operations at times.
Despite those disruptions, recent roaming data usage is at record
levels and the contracted revenue pipeline is growing. Tampnet
appointed a new CEO, Elie Hanna, who joined in September 2021 from
Ericsson. We believe he will bring a structured approach at an
opportune time, particularly in relation to taking the various
digitalisation initiatives to market effectively.
For ESVAGT, the offshore wind market is gathering further
momentum on the back of supportive government policies in both
European countries and the USA. In parallel, the Service Operation
Vessel ('SOV'), for which ESVAGT is market leader, is gaining
acceptance as the preferred solution for offshore turbine
maintenance due to the superior uptime results it underpins. ESVAGT
is therefore ideally positioned to continue its growth in the
offshore wind segment. During the period, ESVAGT successfully
commenced operations with three new SOVs under long term charter
with MHI Vestas, taking its operational wind SOV fleet to eight.
ESVAGT also finalised its US SOV joint venture agreement with
Crowley Maritime Corporation, the largest US Jones Act compliant
operator, and has submitted its first US wind SOV bids through that
joint venture. ESVAGT's Emergency Rescue and Response Vessel
('ERRV') fleet also achieved good results during the period. In
particular, ESVAGT agreed an important contract with its largest
ERRV customer, Total Energies, in Denmark, continuing as the
preferred supplier on the Danish shelf. Fleet utilisation has also
returned to pre-Covid levels, with contract rates strengthening
accordingly. ESVAGT's strategy continues to focus on investment in
new, contract-backed, wind SOV vessels to deliver growth, while
managing its existing ERRV fleet to help fund that investment.
Ionisos performed strongly during the period, particularly in
its pharmaceutical and testing segment. Ionisos is handling this
increase in activity through optimising the product mix and taking
steps to expand existing plants, which will also enable Ionisos to
capture future growth in customer demand. The construction of a new
sterilisation facility in Bautzen, Germany was completed in April
in line with budget and one month ahead of schedule and a further
site in Kleve, Germany is progressing towards completion in 2022.
Further to the announcement in March 2021 that the facilities of
Steril Milano, a subsidiary of Ionisos, had been closed, Steril
Milano was placed into voluntary liquidation during the period.
This was fully provided for in the March 2021 valuation of Ionisos.
Steril Milano represented c.3% of Ionisos's 2020 EBITDA.
TCR performed strongly ahead of our expectations during the
first half of the year as it continued to support its existing
customers and realise cost efficiencies. This provides further
evidence of the resilience of TCR's business model, even in the
face of such a significant challenge to the air travel sector as
Covid-19. During the period TCR successfully concluded new
contracts, including strategic sale and lease back arrangements
with Finnair in Helsinki and Gategroup across its European bases.
European countries continued to roll out their vaccination
programmes, which enabled a partial recovery of the air travel
market over the summer months. We continue to see increased
interest in TCR's full service rental model from customers that
previously owned their own fleets of equipment.
Joulz outperformed in its core businesses of Infrastructure
Services and Metering, with order intake for Infrastructure
Services being especially strong. The solar energy business it
acquired in April 2021 has seen sales of new solar rooftop
installations grow ahead of expectations and the integration with
the broader Joulz business has progressed well, although conversion
of projects into operations has been slow in the period. Joulz's
strategy to develop into a leading integrated energy transition
solutions provider took a further step forward with the signing of
a 'virtual grid' project for a large distribution centre
development near Amsterdam. This project combines products from the
Infrastructure Services, Metering and Solar business units and is
underpinned by a long term contract. This is the first of an
attractive pipeline of similar projects being developed by Joulz
against a general background of grid congestion in the
Netherlands.
The new investment in Berlin-based DNS:NET completed during the
period and operationally has performed broadly in line with
expectations. The current focus is on ramping up construction
capacity and, during the period, DNS:NET signed a framework
agreement with a key construction partner to deliver a substantial
increase in the rate of homes being passed by the company's fibre
network. Its sales pipeline is also growing and we are pleased to
see continuing strong demand for DNS:NET's products on entering new
areas.
Valorem had a good first half of the year, benefitting from
better-than-forecast wind conditions and good turbine availability.
It is progressing well with its construction activity, with a total
of 90MW of wind and solar projects entering into operation during
the period. Valorem continues to develop a large wind and solar
pipeline, with its main focus being the development of Viiatti, a
300MW wind project in Finland expected to close in the first half
of 2022. Its French and Greek pipelines continue to progress,
although some French wind projects have experienced delays in the
permitting process.
Attero performed well in the first half of the year. The waste
supply volumes at its Energy from Waste ('EfW') plants were above
last year and, by the end of the period, had recovered such that
the business was able to run its EfW plants at full capacity
without drawing on the company's waste buffer. Our valuation
reflects a more conservative assumption for future net gate fee
revenues based on recent market developments. The Organics business
benefitted from favourable weather and new contract wins, which
enabled it to fill the recent capacity expansion at the Wijster
facility. The Minerals business is still seeing lower volumes than
pre-Covid due to lower levels of construction activity, however
gate fees for Minerals remain strong.
The availability-based Projects portfolio has performed in line
with expectations. Further progress was made towards realising the
remaining assets in the India Fund, with the completion of the sale
of KMC Roads.
The portfolio is analysed below.
Portfolio - Breakdown by value Portfolio - Breakdown by country
at 30 September 2021 at 30 September 2021
--------------------------------- ==================================
Infinis 14% Netherlands 18%
TCR 12% France 16%
Oystercatcher 12% UK 14%
Tampnet 11% Belgium 12%
Joulz 10% Luxembourg 12%
ESVAGT 10% Norway 11%
Ionisos 10% Denmark 10%
DNS:NET 7% Germany 7%
-------------------------- ------
Valorem 5%
Attero 5%
Projects 4%
-------------------------- -----
Investment activity
In June, we completed the acquisition of a 60% stake in DNS:NET
for GBP157 million. DNS:NET is a leading independent
telecommunications provider in Germany.
During the period we invested GBP12 million in ESVAGT to fund
further growth in the offshore wind segment, including the three
new SOVs for MHI Vestas.
In April, Joulz completed the acquisition of rooftop solar
developer Zonel Energy, a leading provider of solar rooftop
solutions to businesses across the Netherlands, furthering Joulz's
ambition to become the leading provider of integrated energy
transition solutions in the Netherlands.
Sustainability
All our portfolio companies are implementing their
sustainability strategies developed last year and are gathering
greenhouse gas emissions data. We are also addressing other items
identified in Environmental, Social and Governance assessments
across the portfolio and progressing our sustainability-related
objectives for FY22. The sustainability section of our Annual
report and accounts 2022 will include a comprehensive review of our
progress on sustainability, including emissions reporting for our
portfolio companies.
We refinanced our existing GBP300 million revolving credit
facility ('RCF') on 3 November 2021 with a GBP400 million
sustainability-linked RCF, following the Loan Market Association's
Sustainability Linked Loan Principles. The new facility includes
stretching targets across Environmental, Social and Governance
themes aligned with our purpose. Performance against these targets
will adjust the margin for the subsequent year. The term of the new
facility is three years, with two one-year extension options. It
also contains a GBP200 million accordion feature, in line with the
previous facility, and we are pleased with the support received
from our lenders and the terms we achieved.
Outlook
Deal activity in the infrastructure sector has been high,
reflecting resilient performance and significant available dry
powder. The market is more competitive than ever.
Against that backdrop we remain focused on finding opportunities
that enhance the portfolio and where we can add the most value. We
are pursuing several potential new investments, including
opportunities in the communications, transport and utilities
sectors as well as further investments in our platform
businesses.
Our investment in ESVAGT is subject to an ongoing strategic
review and as part of this review, offers have been invited. No
decision to sell has been made and there can be no certainty that
any transaction will result.
The Company delivered a strong return in the first half and we
remain focused on long-term performance.
Phil White
Managing Partner and Head of Infrastructure
3i Investments plc
8 November 2021
Financial review
Portfolio and returns
Total return
The Company generated a total return for the six-month period of
GBP250 million, representing a 10.6% return on opening NAV
(September 2020: GBP84 million, 3.8%). This return was underpinned
by a portfolio return of 14.4% (September 2020: 5.5%), diluted by
the low returns on cash held during the period.
Table 1 summarises the valuation and movements in the portfolio,
as well as the return for each investment, for the period. In
accordance with accounting standards, 'Investments at fair value
through profit or loss' as reported in the Balance sheet include,
in addition to the portfolio asset valuation, the cash and other
net assets held within intermediate unconsolidated holding
companies. These amounts are set out at the foot of the table
below, to provide a reconciliation between the Directors' valuation
of the portfolio assets and 'Investments at fair value through
profit or loss' reported in the Financial statements.
Table 1: Portfolio summary (30 September 2021, GBPm)
Directors' Directors' Allocated Underlying Portfolio
valuation Investment Divestment Accrued Foreign valuation foreign portfolio total
31 March in the in the Value exchange 30 exchange income return
income September in in
Portfolio 2021 period period movement translation 20 21 hedging the period the
assets movement period(1)
================ ========== ========== ========== ======== ======== =========== ========== ========= ========== =========
Infinis 300 -- -- 3 4 -- 307 -- 8 12
TCR 199 -- -- 6 61 1 267 (1) 7 68
Oystercatcher 157 -- -- -- 107 2 266 (2) 9 116
Tampnet 230 -- -- 3 11 2 246 -- 2 15
Joulz 219 3 (2) (1)(3) -- 4 2 227 (2) 3 7
22(2)
ESVAGT 189 (,4) -- 1 14 -- 226 -- 12 26
Ionisos 202 -- -- 4 8 2 216 (1) 4 13
DNS:NET -- 157 -- 2 7 -- 166 -- 2 9
Valorem 107 -- -- -- 4 1 112 (1) 2 6
Attero 105 -- -- -- 1 1 107 (1) 1 2
================ ========== ========== ========== ======== ======== =========== ========== ========= ========== =========
Economic
infrastructure
portfolio 1,708 182 (1) 19 221 11 2,140 (8) 50 274
================ ========== ========== ========== ======== ======== =========== ========== ========= ========== =========
Projects 92 -- -- -- 3 -- 95 -- 3 6
India Fund 2 -- (5) -- 2 1 -- -- -- 3
================ ========== ========== ========== ======== ======== =========== ========== ========= ========== =========
Total portfolio 1,802 182 (6) 19 226 12 2,235 (8) 53 283
================ ========== ========== ========== ======== ======== =========== ========== ========= ========== =========
Adjustments
related to
unconsolidated
subsidiaires(5) 2 -- (2) -- 6 -- 6 -- (6) --
================ ========== ========== ========== ======== ======== =========== ========== ========= ========== =========
Reported
in the
Financial
statements 1,804 182 (8) 19 244 -- 2,241 (8) 47 283
================ ========== ========== ========== ======== ======== =========== ========== ========= ========== =========
1 This comprises the aggregate of value movement, foreign exchange translation, allocated foreign
exchange hedging and underlying portfolio income in the period .
2 Capitalised interest.
3 Shareholder loan repaid.
4 Follow on investment in ESVAGT of GBP12 million.
5 Income statement adjustments explained in Table 6 and Balance sheet adjustments explained
in Table 7.
An analysis of the elements of the total return for the period
is shown in Table 2 below.
Table 2: Summary total return ( six months to 30 September ,
GBPm )
2021 2020
======================================= ==== ====
Capital return (excluding exchange) 226 47
Foreign exchange movement in portfolio 12 29
======================================= ==== ====
Capital return (including exchange) 238 76
Movement in fair value of derivatives (8) (24)
======================================= ==== ====
Net capital return 230 52
Total income (1) 56 46
Costs (36) (14)
Total return 250 84
======================================= ==== ====
1 Includes interest receivable on vendor loan notes and cash balances of GBP3 million (September
2020: GBP6 million).
The Financial statements' classification of these components of
total return includes transactions within unconsolidated
subsidiaries as the Company adopts the Investment Entities
(Amendments to IFRS 10, IFRS 12 and IAS 27) basis for its
reporting. The non-material adjustments required to reconcile this
analysis to the Financial statements are shown in Table 6.
The capital return is the largest element of the total return.
The portfolio generated a value gain of GBP226 million in the
period to 30 September 2021 (September 2020: GBP47 million), driven
principally by the agreed realisation of the European storage
terminals held by Oystercatcher for a price above their opening
valuation and by outperformance from a number of portfolio
companies but particularly TCR and ESVAGT.
Table 3: Portfolio return by asset ( six months to 30 September
2021, not annualised )
Portfolio assets
======================== =======
Infinis 4.0%
TCR 34.2%
Oystercatcher 73.9%
Tampnet 6.5%
Joulz 3.2%
ESVAGT 13.0%
Ionisos 6.4%
DNS:NET 5.7%
Valorem 5.6%
Attero 1.9%
Projects 6.5%
India Fund 150.0%
======================== =======
Total portfolio return 14.4%
======================== =======
The GBP107 million value increase in Oystercatcher reflects: the
uplift achieved from the sale of the European terminals; the
prepayment of Oystercatcher's debt; and a reduced discount rate to
reflect higher quality cash flows from Singapore and low
leverage.
The value increase in TCR of GBP61 million reflects: the
outperformance of the business during the period; cost savings
delivered and expected from its cost optimisation programme; and a
reduction in the discount rate to remove the Covid-19 premium
applied in March. This increased valuation is further supported by
increased interest in TCR's full service rental model and our
greater confidence in the long-term value of its asset base and
market opportunity.
ESVAGT increased in value by GBP14 million, driven by a small
reduction in the discount rate which reflects the reduction in risk
in delivering the planned cash flows following the signing of
significant new contracts and the completion of the newbuild
programme for three new MHI Vestas SOVs.
The low return from Attero reflects a more conservative forecast
of future net gate fee revenues, offset by good performance across
all business units and the benefit of higher Dutch power prices in
the period.
The weighted average discount rate used in the valuation of the
portfolio remained unchanged at 10.8% at September 2021 (March
2021: 10.8%). The addition of DNS:NET to the portfolio at a higher
than average discount rate was offset by the reduction in the
discount rate for Oystercatcher, ESVAGT, TCR, Valorem and the
Projects portfolio.
The movement in foreign exchange rates generated a GBP12 million
gain in the period (September 2020: GBP29 million). This was
partially offset by a loss on the movement in the value of
derivatives of GBP8 million (September 2020: loss of GBP24
million). The foreign exchange hedging programme supports our
objective to deliver steady NAV growth for shareholders by reducing
our exposure to fluctuations in the foreign exchange markets.
Total income was GBP56 million, comprising portfolio income of
GBP53 million and interest receivable on vendor loan notes and cash
balances of GBP3 million. The income by portfolio company is shown
in Table 1 above. The dividend to shareholders is supported by this
income, together with non-income cash receipts of less than GBP0.5
million during the period ( September 2020: GBP2 million ). These
non-income cash receipts reflect distributions from underlying
portfolio companies, which would usually be income to the Company,
but that are instead distributed as a repayment of investment for a
variety of reasons. Whilst non-income cash does not form part of
the total return shown in Table 2,
it is included when considering dividend coverage. Total income
and non-income cash is shown in Table 8 below.
Costs
Management and performance fees
During the period to 30 September 2021, the Company incurred
management fees of GBP16 million (September 2020: GBP12 million),
including a one-off GBP2 million transaction fee relating to the
new investment in DNS:NET (September 2020: nil). The year-on-year
increase also reflects the higher average value of the portfolio in
the period.
The annual performance hurdle of 8% was exceeded in the first
half of the year, resulting in an accrual for a performance fee
payable of GBP15 million (September 2020: nil).
Fees payable
Fees payable on investment activities include costs for
transactions that did not reach, or have yet to reach, completion
and the reversal of costs that have successfully reached completion
and were subsequently borne by the portfolio company. For the
period to 30 September 2021, fees payable totalled GBP2 million
(September 2020: less than GBP1 million).
Other operating and finance costs
Operating expenses, comprising Directors' fees, service provider
costs and other professional fees, totalled GBP2 million in the
period (September 2020: GBP1 million).
Finance costs of GBP1 million in the period (September 2020:
GBP1 million) comprised arrangement and commitment fees for the
Company's GBP300 million RCF. The RCF was refinanced after the
period end.
Ongoing charges ratio
The ongoing charges ratio measures annual operating costs, as
disclosed in Table 4 below, against the average NAV over the
reporting period.
The Company's ongoing charges ratio is calculated in accordance
with the Association of Investment Companies ('AIC') recommended
methodology and was 1.28% for the period to 30 September 2021
(September 2020: 1.16%).
The AIC methodology does not include performance fees or finance
costs. However, the AIC recommends that the impact of performance
fees on the ongoing charges ratio is noted, where performance fees
are payable. The cost items that contributed to the ongoing charges
ratio are shown below. The ratio including the performance fee
accrual was 1.90% (September 2020: 1.16%).
Table 4: Ongoing charges ( six months to 30 September ,
annualised GBPm )
2021 2020
============================= ===== =====
Investment Manager's fee 28.6 23.5
Auditor's fee 0.5 0.4
Directors' fees and expenses 0.4 0.5
Other ongoing costs 2.3 2.2
============================= ===== =====
Total ongoing charges 31.8 26.6
============================= ===== =====
Ongoing charges ratio 1.28% 1.16%
============================= ===== =====
Balance sheet
The NAV at 30 September 2021 was GBP2,596 million (March 2021:
GBP2,390 million). The principal components of the NAV are the
portfolio assets, cash holdings, the vendor loan notes from the
sale of WIG, the fair value of derivative financial instruments and
other net assets and liabilities. A summary balance sheet is shown
in Table 5.
The accounting standards require cash or other net assets and
liabilities held within intermediate holding companies to be
presented as part of the fair value of the investments. The
Directors consider that it is helpful for users of the accounts to
be able to consider the valuation of the Company's portfolio assets
and total aggregate cash and net assets/liabilities within the
Company and its unconsolidated subsidiaries. The non-material
adjustments required to provide this analysis are shown in Table
7.
Table 5: Summary balance sheet (GBPm)
As at 30 September 2021 As at 31 March 2021
=============================================================== ======================= ===================
Portfolio assets 2,235 1,802
Cash balances 253 463
Derivative financial instruments 22 37
Other net assets (including vendor loan notes) and liabilities 86 88
=============================================================== ======================= ===================
NAV 2,596 2,390
--------------------------------------------------------------- ----------------------- -------------------
Cash is principally held in AAA-rated money market funds. The
Company had a GBP300 million RCF in order to maintain a good level
of liquidity for further investment whilst minimising returns
dilution from holding excess cash balances. At 30 September 2021
the full GBP300 million facility was available. Since the period
end, the RCF was refinanced as a three-year, GBP400 million
sustainability-linked RCF with a maturity date of November
2024.
Derivative financial instruments reflects the foreign exchange
hedging programme described above.
Other net assets and liabilities predominantly comprise the
vendor loan notes received from the WIG sale of GBP109 million
including interest and a performance fee accrual of GBP26 million,
including amounts relating to prior year fees. The movement from
March 2021 is due to accrued interest on these vendor loan notes
offset by an increase in the performance fee payable.
NAV per share
The total NAV per share at 30 September 2021 was 291.2 pence
(March 2021: 268.1 pence). This reduces to 286.0 pence (March 2021:
263.2 pence) after the payment of the interim dividend of 5.225
pence (March 2021: final dividend of 4.9 pence).
Dividend
The Board has announced an interim dividend for the period of
5.225 pence per share, or GBP47 million in aggregate (September
2020: 4.9 pence; GBP44 million). This is half of the Company's
target full year dividend for FY22 of 10.45 pence per share. The
Board is designating 2.0 pence of the 5.225 pence interim dividend
payable as an interest distribution.
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. The table below defines our APMs and should be
read in conjunction with the Annual report and accounts 2021.
APM Purpose Calculation Reconciliation to IFRS
Total return on opening NAV A measure of the overall It is calculated as the The calculation uses IFRS
financial performance of total return of GBP250 measures.
the Company. million, as shown in the
Statement of comprehensive
income, as a percentage of
the opening NAV of GBP2,390
million net of the final
dividend for
the previous year of GBP44
million.
============================ ============================ ============================
NAV per share A measure of the NAV per It is calculated as the NAV The calculation uses IFRS
share in the Company. of GBP2,596 million divided measures and is set out in
by the total number of Note 7 to the accounts.
shares in issue
at the balance sheet date
of 891.4 million.
============================ ============================ ============================
Total income and non-income A measure of the income and It is calculated as the The reconciliation of Total
cash other cash receipts by the total income from the income to IFRS is shown in
Company which support the underlying portfolio and Table 6.
payment of other assets plus
expenses and dividends. non-income The proceeds from partial
cash realisations of investments
being the repayment of are shown in the Cash flow
shareholder loans statement.
not resulting from the The realisation proceeds
disposal of an underlying which result from a partial
portfolio asset. This is sale of an underlying
shown in Table portfolio asset
8. are not included within
non-income cash.
============================ ============================ ============================
Investment A measure of the size of It is calculated as the The calculation uses
value including the investment portfolio portfolio asset value plus portfolio assets shown in
commitments including the value of the amount of the the reconciliation in Table
further contracted contracted commitment. 7, together with
future investments the value of future
committed by the Company. commitments, which at 30
September 2021 were nil.
Undrawn loan commitments
to the India Fund are not
included as these are not
expected to be drawn.
============================ ============================ ============================
Total portfolio return A measure of the financial It is calculated as the The calculation uses
percentage performance of the total portfolio return in capital return (including
portfolio. the period of GBP283 exchange), movement in fair
million, as shown in value of derivatives,
Table 1, as a percentage of underlying portfolio
the sum of the opening income, opening portfolio
value of the portfolio and value and investment in the
investments period. The reconciliation
in the year (excluding of all these items to IFRS
capitalised interest) of is shown in Table 1.
GBP1,971 million.
============================ ============================ ============================
In addition to the APMs, the Half-yearly report shows portfolio
information including cash and other net assets held within
intermediate unconsolidated holding companies. Tables 6 and 7 show
a reconciliation of this portfolio information to the information
presented in the Financial statements. The calculation of 'Total
income and non-income cash' is shown in Table 8.
Table 6: Reconciliation of summary total return (six months to
30 September 2021, GBPm)
Adjustments for
Underlying portfolio transactions in
asset aggregate unconsolidated Financial
returns and costs subsidiaries statements
====================================================== ==================== =============== ==========
Capital return (including exchange) 238 6 244
Movement in fair value of derivatives (8) -- (8)
====================================================== ==================== =============== ==========
Net capital return 230 6 236
Total income 56 (6)(1) 50
Costs (36) -- (36)
Other net income/(costs) including exchange movements -- -- --
====================================================== ==================== =============== ==========
Total return 250 -- 250
====================================================== ==================== =============== ==========
1 Dividend income, received by unconsolidated subsidiaries from portfolio assets but paid up
to the Company as repayment of loan principal and previously accrued interest. This is reflected
in capital return as it has reduced the carrying value of these subsidiaries.
Table 7: Reconciliation of summary balance sheet (as at 30
September 2021, GBPm)
Adjustments for
Underlying portfolio transactions in
asset aggregate unconsolidated Financial
returns and costs subsidiaries(1) statements
================================= ==================== =============== ==========
Portfolio assets 2,235 6 2,241(2)
Cash balances 253 (1)(3) 252
Derivative financial instruments 22 -- 22
Other net assets 86 (5) 81
================================= ==================== =============== ==========
Net asset value 2,596 -- 2,596
================================= ==================== =============== ==========
1 'Investments at fair value through profit or loss' in the Financial statements includes GBP1
million of unrestricted cash balances and a GBP5 million receivable relating to proceeds from
the sale of KMC Roads in the India Fund. The adjustments reclassify these balances to show
the underlying value of the portfolio assets, the total cash holdings and other net assets/(liabilities)
positions, as monitored by the Board.
2 Described as 'Investments at fair value through profit or loss' in the Financial statements.
3 Cash balances held in unconsolidated subsidiaries totalled GBP1 million.
Table 8: Total income and non-income cash ( six months to 30
September, GBPm )
2021 2020
================ ==== ====
Total income 56 46
Non-income cash -- 2
================ ==== ====
Total 56 48
================ ==== ====
Risk review
Review of principal risks and uncertainties
The Company's approach to risk governance, the risk review
process and risk appetite is set out in the Risk report in the
Annual report and accounts 2021, which can be found on our website
www.3i-infrastructure.com .
The principal risks to the achievement of the Company's
objectives are unchanged from those reported on pages 68 to 69 of
the Annual report and accounts 2021. Developments in relation to
these principal risks during the period are outlined below.
External risks - market and competition
The European economic infrastructure market continued its
recovery in the first half of this year, with strong demand for new
investments. Competition continued to increase as the
infrastructure sector has demonstrated its resilience during the
pandemic and investors seek steady, predictable income with some
inflation protection. This has benefitted the Company's existing
portfolio but continues to make it challenging to make new
investments that can deliver attractive and sustainable
risk-adjusted returns for the Company's shareholders.
Inflation in the UK and Europe has risen sharply in the period,
driven by rising energy costs, supply chain bottlenecks, labour
shortages and the reopening of economies from pandemic-related
lockdowns. The increase in inflation positively affects assets with
inflation-linked revenues, but this is partially offset for assets
with inflation-linked costs. All of our portfolio companies have
revenues, to some extent, positively correlated to inflation.
Interest rates remained low during the period but interest rates
may rise to dampen inflation. This would increase debt financing
costs for our portfolio companies and could also lead to increases
in required rates of return on equity, both of which would decrease
portfolio company valuations. Long-term fixed rate debt is in place
across the majority of our portfolio which mitigates the risk from
interest rate changes in the shorter term.
The Company is exposed to movements in sterling exchange rates
against a number of currencies, most significantly the euro.
Towards the end of the period, sterling depreciated against the
euro, primarily driven by the economic challenges resulting from
supply chain blockages. The Company operates a hedging programme
which substantially offsets any foreign exchange movements.
Near-term power prices have increased considerably since March
driven by gas supply concerns, record carbon prices, low wind
levels, higher commodity prices (particularly for gas) and the
expectation of an economic rebound post Covid-19. The increase in
spot power prices benefitted our portfolio companies that generate
electricity: Infinis, Attero and Valorem. The valuation of those
businesses is affected by the evolution of long-term power price
forecasts which have fallen since March.
The recovery during the summer in air travel has been hampered
by the spread of the Covid-19 Delta variant but the long term
expectation that recovery to pre-pandemic levels will take until
2024 remains unchanged.
Investment risks
The Company has ample liquidity to pursue new investment
opportunities but shareholder returns are diluted to the extent
that this liquidity is in the form of cash balances.
Statement of comprehensive income
for the six months to 30 September
Six months to Six months to
30 September 2021 30 September 2020
Notes (unaudited) (unaudited)
GBPm GBPm
----------------------------------------------------------------- ------ ------------------ ------------------
Net gains on investments 4 244 73
Investment income 47 43
Fees payable on investment activities (2) -
Interest receivable 3 6
================================================================= ====== ================== ==================
Investment return 292 122
================================================================= ====== ================== ==================
Movement in the fair value of derivative financial instruments (8) (24)
Management and performance fees payable 2 (31) (12)
Operating expenses (2) (1)
Finance costs (1) (1)
================================================================= ====== ================== ==================
Profit before tax 250 84
----------------------------------------------------------------- ------ ------------------ ------------------
Income taxes 3 - -
----------------------------------------------------------------- ------ ------------------ ------------------
Profit after tax and profit for the period 250 84
----------------------------------------------------------------- ------ ------------------ ------------------
Total comprehensive income for the period 250 84
----------------------------------------------------------------- ------ ------------------ ------------------
Earnings per share
Basic and diluted (pence) 7 28.0 9.4
---------------------------------------------------------------- ------ ------------------ ------------------
Statement of changes in equity
for the six months to 30 September
Stated Total
capital Retained Capital Revenue shareholders'
For the six months to 30 September 2021 account reserves reserve reserve equity
(unaudited) Notes GBPm GBPm GBPm GBPm GBPm
===================================================== ====== ======== ========= ======== ======== ==============
Opening balance at 1 April 2021 779 1,282 330 (1) 2,390
Total comprehensive income for the period - - 219 31 250
Dividends paid to shareholders of the Company during
the period 8 - - (14) (30) (44)
===================================================== ====== ======== ========= ======== ======== ==============
Closing balance at 30 September 2021 779 1,282 535 - 2,596
===================================================== ====== ======== ========= ======== ======== ==============
Stated Total
capital Retained Capital Revenue shareholders'
For the six months to 30 September 2020 account reserves reserve reserve equity
(unaudited) Notes GBPm GBPm GBPm GBPm GBPm
===================================================== ====== ======== ========= ======== ======== ==============
Opening balance at 1 April 2020 779 1,282 196 12 2,269
Total comprehensive income for the period - - 49 35 84
Dividends paid to shareholders of the Company during
the period 8 - - - (41) (41)
===================================================== ====== ======== ========= ======== ======== ==============
Closing balance at 30 September 2020 779 1,282 245 6 2,312
===================================================== ====== ======== ========= ======== ======== ==============
Balance sheet
as at 30 September
30 September 2021 31 March 2021
(unaudited) (audited)
Notes GBPm GBPm
=================================================== ====== ================== ==============
Assets
Non-current assets
Investments at fair value through profit or loss 4 2,241 1,804
Derivative financial instruments 4 10 18
--------------------------------------------------- ------ ------------------ --------------
Total non-current assets 2,251 1,822
=================================================== ====== ================== ==============
Current assets
Derivative financial instruments 4 18 25
Trade and other receivables 109 106
Cash and cash equivalents 252 462
=================================================== ====== ================== ==============
Total current assets 379 593
=================================================== ====== ================== ==============
Total assets 2,630 2,415
--------------------------------------------------- ------ ------------------ --------------
Liabilities
Non-current liabilities
Derivative financial instruments 4 (2) (2)
Trade and other payables (13) (10)
--------------------------------------------------- ------ ------------------ --------------
Total non-current liabilities (15) (12)
=================================================== ====== ================== ==============
Current liabilities
Derivative financial instruments 4 (4) (4)
Trade and other payables (15) (9)
=================================================== ====== ================== ==============
Total current liabilities (19) (13)
=================================================== ====== ================== ==============
Total liabilities (34) (25)
=================================================== ====== ================== ==============
Net assets 2,596 2,390
=================================================== ====== ================== ==============
Equity
Stated capital account 6 779 779
Retained reserves 1,282 1,282
Capital reserve 535 330
Revenue reserve - (1)
=================================================== ====== ================== ==============
Total equity 2,596 2,390
=================================================== ====== ================== ==============
Net asset value per share
Basic and diluted (pence) 7 291.2 268.1
================================================== ====== ================== ==============
The Financial statements and related Notes were approved and
authorised for issue by the Board of Directors on 8 November 2021
and signed on its behalf by:
Richard Laing
Chair
Cash flow statement
for the six months to 30 September
Six months to Six months to
30 September 2021 30 September 2020
(unaudited) (unaudited)
GBPm GBPm
============================================================ ================== ==================
Cash flow from operating activities
Purchase of investments (169) (15)
Proceeds from partial realisations of investments 8 2
Proceeds from full realisation of investments - 1
Investment income(1) 15 12
Fees paid on investment activities (1) -
Operating expenses paid (1) (1)
Management and performance fees paid (23) (16)
Amounts received on the settlement of derivative contracts 6 1
============================================================ ================== ==================
Net cash flow from operations (165) (16)
============================================================ ================== ==================
Cash flow from financing activities
Fees and interest paid on financing activities (1) (1)
Dividends paid (44) (41)
============================================================ ================== ==================
Net cash flow from financing activities (45) (42)
============================================================ ================== ==================
Change in cash and cash equivalents (210) (58)
Cash and cash equivalents at the beginning of the period 462 413
============================================================ ================== ==================
Cash and cash equivalents at the end of the period 252 355
============================================================ ================== ==================
1 Investment income includes dividends of GBP2 million (September 2020: GBP1 million) and interest
of GBP13 million (September 2020: GBP11 million) received from portfolio assets held directly
by the Company.
Accounting policies
Basis of preparation
These financial statements are the unaudited Half-yearly
condensed financial statements (the 'Half-yearly Financial
Statements') of 3i Infrastructure plc (the 'Company'), a company
incorporated and registered in Jersey for the six-month period
ended 30 September 2021.
The Half-yearly Financial Statements have been prepared in
accordance with International Accounting Standard 34 Interim
Financial Reporting ('IAS 34'). The accounting policies are
consistent with those set out in the Annual report and accounts
2021 and those which we expect to adopt for the Annual report and
accounts 2022, which will be prepared in accordance with United
Kingdom adopted international accounting standards. They should be
read in conjunction with the financial statements for the year to
31 March 2021, as they provide an update of previously reported
information. The financial statements are prepared on a going
concern basis, as the Directors are satisfied that the Company has
the resources to continue in business for the foreseeable future.
In making this assessment, the Directors have considered a wide
range of information relating to present and future conditions,
including future projections of profitability and cash flows. The
key factors likely to affect the Company's ability to continue as a
going concern were set out in the Annual report and Accounts 2021.
The Company is in a strong position in relation to its ability to
continue to operate and the Company has ample resources to meet its
ongoing needs. At 30 September 2021, the Company's liquidity
totalled GBP553 million (March 2021: GBP763 million). Liquidity
comprised cash and deposits of GBP253 million (March 2021: GBP463
million) and undrawn facilities of GBP300 million (March 2021:
GBP300 million). In addition, the Company received EUR55 million
proceeds from the sale of Oystercatcher's four European terminals
on 29 October 2021, extended the undrawn facilities to GBP400
million on 3 November 2021 and is due to receive deferred
consideration from the realisation of WIG of GBP98 million plus
interest of GBP12 million in December 2021. The Company has a
strong investment portfolio providing a predictable income yield
and an expectation of medium-term capital growth. Whilst a
significant amount of income is expected to be received from the
portfolio investments during the year, the Company has sufficient
liquidity to meet its financial commitments even if no income were
received and has sufficient resources to make equity investments in
new and existing portfolio companies where required.
The Half-yearly Financial Statements were authorised for issue
by the Directors on 8 November 2021.
The Half-yearly Financial Statements do not constitute statutory
accounts. The statutory accounts for the year to 31 March 2021,
prepared under IFRS as adopted by the European Union, and on which
the auditors issued a report, which was unqualified, have been
filed with the Jersey Financial Services Commission.
Key judgements and sources of estimation uncertainties
The preparation of the Half-yearly Financial Statements in
conformity with IFRS requires the Board to make judgements,
estimates and assumptions that affect the application of policies
and reported amounts of assets and liabilities, income and
expenses. The estimates and associated assumptions are based on
historical experience and other factors that are believed to be
reasonable under the circumstances, the results of which form the
basis of making the judgements about the carrying values of assets
and liabilities that are not readily apparent from other sources.
Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an
ongoing basis. Revisions to accounting estimates are recognised in
the period in which the estimate is revised if the revision affects
only that period or in the period of the revision and future
periods if the revision affects both current and future periods.
All judgements used in the preparation of the Half-yearly Financial
Statements are consistent with those stated in the Annual report
and accounts 2021.
The key area where estimates are significant to the Half-yearly
Financial Statements and have a significant risk of causing a
material adjustment to the carrying amounts of assets and
liabilities in future periods is in the valuation of the investment
portfolio. The majority of assets in the investment portfolio are
valued on a discounted cash flow basis which requires assumptions
to be made regarding future cash flows and the discount rate to be
applied to these cash flows. The portfolio is well diversified by
sector, geography and underlying risk exposures. The valuation of
each asset has significant estimation in relation to asset specific
items and the potential impact of macroeconomic factors such as
near term power price expectations, inflation and supply shortages.
The key risks to the portfolio are discussed in further detail in
the Risk review section. A key estimation uncertainty described in
the Annual report and accounts 2021 related to the duration and
long-term effect of the Covid-19 pandemic. This uncertainty has
reduced in the period as vaccine programmes were rolled out in
developed countries and Covid-related restrictions were eased.
Other key estimation uncertainties related to the recovery in the
aviation industry and its impact on TCR, and the effect of the
closure of Steril Milano on Ionisis. Developments in relation to
these matters are described in the Portfolio review section.
Notes to the accounts
1 Operating segments
The Directors review information on a regular basis that is
analysed by portfolio segment: being Economic Infrastructure
businesses, the Projects portfolio and the India fund, and by
geography. These segments are reviewed for the purpose of resource
allocation and the assessment of their performance. In accordance
with IFRS 8, the segmental information provided below uses these
segments for the analysis of results as it is the most closely
aligned with IFRS reporting requirements. The Company is an
investment holding company and does not consider itself to have any
customers.
The following is an analysis of the Company's investment return,
profit before tax, assets, liabilities and net assets by portfolio
segment for the six months to 30 September 2021:
Economic
Infrastructure Projects India
For the six months to 30 September 2021 businesses portfolio Fund Unallocated (1) Total
(unaudited) GBPm GBPm GBPm GBPm GBPm
========================================= =============== ========== ====== ================ ======
Investment return 280 6 3 3 292
========================================= =============== ========== ====== ================ ======
Profit/(loss) before tax 272 6 3 (31) 250
========================================= =============== ========== ====== ================ ======
Economic
Infrastructure Projects India
For the six months to 30 September 2020 businesses portfolio Fund Unallocated (1) Total
(unaudited) GBPm GBPm GBPm GBPm GBPm
========================================= =============== ========== ====== ================ ======
Investment return 104 7 5 6 122
========================================= =============== ========== ====== ================ ======
Profit/(loss) before tax 81 6 5 (8) 84
========================================= =============== ========== ====== ================ ======
As at 30 September 2021
(unaudited)
=============================================
Assets 2,172 97 - 361 2,630
============= ====== === ===== ======
Liabilities (7) - - (27) (34)
============= ====== === ===== ======
Net assets 2,165 97 - 334 2,596
============= ====== === ===== ======
As at 31 March 2021 (audited)
=============================================
Assets 1,748 96 3 568 2,415
============= ====== === ===== ======
Liabilities (6) - - (19) (25)
============= ====== === ===== ======
Net assets 1,742 96 3 549 2,390
============= ====== === ===== ======
1 Unallocated includes cash, management and performance fees payable and other payables and
receivables (including vendor loan notes) which are not directly attributable to the investment
portfolio.
The following is an analysis of the Company's investment return,
profit before tax, assets, liabilities and net assets by geography
for the six months to 30 September 2021:
For the six months to 30 September 2021 UK and Ireland(1) Europe(2) Asia Total
(unaudited) GBPm GBPm GBPm GBPm
========================================= ================== ========== ===== ======
Investment return 15 274 3 292
========================================== ================== ========== ===== ======
Profit/(loss) before tax (19) 266 3 250
========================================== ================== ========== ===== ======
For the six months to 30 September 2020 UK and Ireland(1) Europe(2) Asia Total
(unaudited) GBPm GBPm GBPm GBPm
========================================= ================== ========== ===== ======
Investment return 13 104 5 122
========================================== ================== ========== ===== ======
Profit/(loss) before tax (1) 80 5 84
========================================== ================== ========== ===== ======
As at 30 September 2021
(unaudited)
========================= ===== ====== ======
Assets 668 1,962 - 2,630
========================== ===== ====== ======
Liabilities (28) (6) - (34)
========================== ===== ====== ======
Net assets 640 1,956 - 2,596
========================== ===== ====== ======
As at 31 March 2021 (audited)
------------------------------- ----- ------ ------
Assets 868 1,544 3 2,415
================================ ===== ====== ======
Liabilities (19) (6) - (25)
================================ ===== ====== ======
Net assets 849 1,538 3 2,390
================================ ===== ====== ======
1 Including Channel Islands. All centrally incurred costs have been deemed to be incurred in
the UK and Ireland while recognising these costs support allocations across geographies.
2 Continental Europe includes all returns generated from, and investment portfolio value relating
to, the Company's investment in Oystercatcher, including those derived from its underlying
business in Singapore.
The Company generated 5% (September 2020: 11%) of its investment
return in the period from investments held in the UK and Ireland,
94% (September 2020: 85%) from investments held in continental
Europe and 1% from investments held in India (September 2020: 4%).
During the period, the Company generated 97% (September 2020: 90%)
of its investment return from investments in Economic
Infrastructure businesses, 2% (September 2020: 6%) from investments
in Projects and 1% (September 2020: 4%) from its investment in the
India Fund. Given the nature of the Company's operations, the
Company is not considered to be exposed to any operational
seasonality or cyclicality that would impact the financial results
of the Company during the period or the financial position of the
Company at 30 September 2021.
2 Management and performance fees payable
Six months to Six months to
30 September 2021 30 September 2020
(unaudited) (unaudited)
GBPm GBPm
================= ================== ==================
Management fee 16 12
Performance fee 15 -
================= ================== ==================
31 12
================= ================== ==================
Total management and performance fees payable by the Company for
the period to 30 September 2021 were GBP31 million (September 2020:
GBP12 million). Note 9 provides further details on the calculation
of the management fee and performance fee.
3 Income taxes
Six months to Six months to
30 September 2021 30 September 2020
(unaudited) (unaudited)
GBPm GBPm
================================================================= ================== ==================
Current taxes
Current year - -
================================================================= ================== ==================
Total income tax charge in the Statement of comprehensive income - -
================================================================= ================== ==================
Reconciliation of income taxes in the Statement of comprehensive
income
The Company is a UK tax resident approved investment trust. The
tax charge for the period is different from the standard rate of
corporation tax in the UK, currently 19% (2020: 19%), and the
differences are explained below:
Six months to Six months to
30 September 30 September
2021 2020
GBPm GBPm
==================================================================================== ============== ==============
Profit before tax 250 84
Profit before tax multiplied by rate of corporation tax in the UK of 19% (2020:
19%) 47 16
Effects of:
Non-taxable capital profits due to UK approved investment trust company status (44) (9)
Non-taxable dividend income - -
Dividends designated as interest distribution (3) (7)
=================================================================================== ============== ==============
Total income tax charge in the Statement of comprehensive income - -
==================================================================================== ============== ==============
The Company's affairs are directed so as to allow it to meet the
requisite conditions to continue to operate as an approved
investment trust company for UK tax purposes. The approved
investment trust status allows certain capital profits of the
Company to be exempt from tax in the UK and also permits the
Company to designate the dividends it pays, wholly or partly, as
interest distributions. These features enable approved investment
trust companies to ensure that their investors do not ultimately
suffer double taxation of their investment returns, ie. once at the
level of the investment fund vehicle and then again in the hands of
the investors.
4 Investments at fair value through profit or loss and financial
instruments
All financial instruments for which fair value is recognised or
disclosed are categorised within the fair value hierarchy,
described as follows, based on the lowest level input that is
significant to the fair value measurement as a whole:
Level Fair value input description Financial instruments
======== ================================================================= =========================================
Level 1 Quoted prices (unadjusted and in active markets) Quoted equity investments
Level 2 Inputs other than quoted prices included in Level 1 that are Derivative financial instruments held at
observable in the market either fair value
directly (ie . as prices) or indirectly (ie. derived from
prices)
Level 3 Inputs that are not based on observable market data Unquoted investments and unlisted funds
======== ================================================================= =========================================
For assets and liabilities that are recognised in the financial
statements on a recurring basis, the Company determines whether
transfers have occurred between levels in the hierarchy by
reassessing the categorisation (based on the lowest level input
that is significant to the fair value measurement as a whole) for
each reporting period.
The table below shows the classification of financial
instruments held at fair value into the fair value hierarchy at 30
September 2021. For all other assets and liabilities, their
carrying value approximates to fair value. During the period ended
30 September 2021, there were no transfers of financial instruments
between levels of the fair value hierarchy (March 2021: none).
Trade and other receivables on the Balance sheet includes less
than GBP1 million of deferred finance costs relating to the
arrangement fee for the revolving credit facility (March 2021: GBP1
million). This has been excluded from the table below as it is not
categorised as a financial instrument.
Financial instruments classification
As at 30 September 2021
(unaudited)
-------------------------------------------------- -------------------------------------
Level 1 Level 2 Level 3 Total
GBPm GBPm GBPm GBPm
-------------------------------------------------- --------- -------- -------- ------
Financial assets
Investments at fair value through profit or loss - - 2,241 2,241
Trade and other receivables - 109 - 109
Derivative financial instruments - 28 - 28
-------------------------------------------------- --------- -------- -------- ------
137 2,241 2,378
------------------------------------------------------------ -------- -------- ------
Financial liabilities
Derivative financial instruments - (6) - (6)
-------------------------------------------------- --------- -------- -------- ------
- (6) - (6)
------------------------------------------------------------ -------- -------- ------
As at 31 March 2021
(audited)
-------------------------------------------------- -------------------------------------
Level 1 Level 2 Level 3 Total
GBPm GBPm GBPm GBPm
-------------------------------------------------- --------- -------- -------- ------
Financial assets
Investments at fair value through profit or loss - - 1,804 1,804
Trade and other receivables - 105 - 105
Derivative financial instruments - 43 - 43
-------------------------------------------------- --------- -------- -------- ------
148 1,804 1,952
------------------------------------------------------------ -------- -------- ------
Financial liabilities
Derivative financial instruments - (6) - (6)
-------------------------------------------------- --------- -------- -------- ------
- (6) - (6)
------------------------------------------------------------ -------- -------- ------
Reconciliation of financial instruments categorised within Level
3 of fair value hierarchy
As at 30 September 2021
(unaudited)
Level 3 fair value reconciliation GBPm
==================================================== ========================
Opening fair value 1,804
Additions 182
Disposal proceeds and repayment (8)
Movement in accrued income 19
Fair value movement (including exchange movements) 244
==================================================== ========================
Closing fair value 2,241
==================================================== ========================
As at 31 March 2021
(audited)
Level 3 fair value reconciliation GBPm
==================================================== ====================
Opening fair value 1,652
Additions 91
Disposal proceeds and repayment (48)
Movement in accrued income (9)
Fair value movement (including exchange movements) 118
==================================================== ====================
Closing fair value 1,804
==================================================== ====================
All unrealised movements on investments and foreign exchange
movements are recognised in profit or loss in the Statement of
comprehensive income during the period and are attributable to
investments held at the end of the period.
The holding period of the investments in the portfolio is
expected to be greater than one year. Therefore, investments are
classified as non-current unless there is an agreement to dispose
of the investment within one year and all relevant regulatory
approvals have been received. It is not possible to identify with
certainty where any investments may be sold within one year.
Investment income of GBP47 million (September 2020: GBP43
million) comprises dividend income of GBP2 million (September 2020:
GBP1 million), interest of GBP45 million (September 2020: GBP41
million) and distributions of nil (September 2020: GBP1 million)
from unconsolidated subsidiaries.
Unquoted investments
The Company invests in private companies which are not quoted on
an active market. These are measured in accordance with the
International Private Equity Valuation guidelines with reference to
the most appropriate information available at the time of
measurement. Further information regarding the valuation of
unquoted investments can be found in the Portfolio valuation
methodology section.
The Company's policy is to fair value both the equity and
shareholder debt investments in infrastructure assets together
where they will be managed and valued as a single investment, were
invested at the same time and cannot be realised separately. The
Directors consider that equity and debt share the same
characteristics and risks and they are therefore treated as a
single unit of account for valuation purposes and a single class
for disclosure purposes. As at 30 September 2021, the fair value of
unquoted investments was GBP2,235 million (March 2021: GBP1,802
million). Individual portfolio asset valuations are shown in Table
1 in the Financial review section.
The majority of the assets held within Level 3 are valued on a
discounted cash flow basis; hence, the valuations are sensitive to
the discount rate assumed in the valuation of each asset. Other
significant unobservable inputs include the long-term inflation
rate assumption, the interest rates assumption used to project the
future cash flows and the forecast cash flows themselves.
The fair value of the investments is sensitive to changes in the
macroeconomic assumptions used as part of the portfolio valuation
process. As part of its analysis, the Board has considered the
potential impact of a change in a number of the macroeconomic
assumptions used in the valuation process. By considering these
potential scenarios, the Board is well positioned to assess how the
Company is likely to perform if affected by variables and events
that are inherently outside of the control of the Board and the
Investment Manager.
Increasing the discount rate used in the valuation of each asset
by 1% would reduce the value of the portfolio by GBP199 million
(March 2021: GBP152 million). Decreasing the discount rate used in
the valuation of each asset by 1% would increase the value of the
portfolio by GBP229 million (March 2021: GBP176 million).
The majority of assets held within Level 3 have revenues that
are linked, partially linked or in some way correlated to
inflation. The long-term CPI assumption for the country of domicile
of the investments in the portfolio is 2.0% (March 2021: 2.0%). The
long-term RPI assumption for UK assets is 2.5% (March 2021: 2.5%).
Changing the inflation rate assumption may result in consequential
changes to other assumptions used in the valuation of each asset.
The impact of increasing the inflation rate assumption by 1% for
the next two years would be to increase the value of the portfolio
by GBP29 million (March 2021: GBP25 million). Decreasing the
inflation rate assumption used in the valuation of each asset by 1%
for the next two years would decrease the value of the portfolio by
GBP27 million (March 2021: GBP25 million).
The valuations are sensitive to changes in interest rates, which
may result from: (i) unhedged existing borrowings within portfolio
companies; (ii) interest rates on uncommitted future borrowings
assumed within the asset valuations; and (iii) cash deposits held
by portfolio companies. These comprise a wide range of interest
rates from short-term deposit rates to longer-term borrowing rates
across a broad range of debt products. Increasing the cost of
borrowing assumption for unhedged borrowings and any future
uncommitted borrowing and the cash deposit rates used in the
valuation of each asset by 1% would reduce the value of the
portfolio by GBP105 million (March 2021: GBP88 million). Decreasing
the interest rate assumption used in the valuation of each asset by
1% would increase the value of the portfolio by GBP95 million
(March 2021: GBP82 million). This calculation does not take account
of any offsetting variances which may be expected to prevail if
interest rates changed, including the impact of inflation discussed
above.
Intermediate holding companies
The Company invests in a number of intermediate holding
companies that are used to hold the unquoted investments, valued as
referred to above. All other assets and liabilities of the
intermediate holding companies are held either at fair value or at
a reasonable approximation to fair value. The fair value of these
intermediate holding companies therefore approximates to their NAV
and the Company classifies the fair value as Level 3. As at 30
September 2021, the fair value of the other assets and liabilities
within these intermediate holding companies was GBP6 million (March
2021: GBP2 million).
Over-the-counter derivatives
The Company uses over-the-counter foreign currency derivatives
to hedge foreign currency movements. The derivatives are held at
fair value which represents the price that would be received to
sell or transfer the instruments at the balance sheet date. The
valuation technique incorporates various inputs including foreign
exchange spot and forward rates and uses present value
calculations. For these financial instruments, significant inputs
into models are market observable and are included within Level
2.
Valuation process for Level 3 valuations
The valuations on the Balance sheet are the responsibility of
the Board of Directors of the Company. The Investment Manager
provides a valuation of unquoted investments, debt and unlisted
funds held by the Company on a half-yearly basis. This is performed
by the valuation team of the Investment Manager and reviewed by the
valuation committee of the Investment Manager. The valuations are
also subject to quality assurance procedures performed within the
valuation team. The valuation team verifies the major inputs
applied in the latest valuation by agreeing the information in the
valuation computation to relevant documents and market information.
The valuation committee of the Investment Manager considers the
appropriateness of the valuation methods and inputs, and may
request that alternative valuation methods are applied to support
the valuation arising from the method chosen. On a half-yearly
basis, the Investment Manager presents the valuations to the Board.
This includes a discussion of the major assumptions used in the
valuations, with an emphasis on the more significant investments
and investments with significant fair value changes. Any changes in
valuation methods are discussed and agreed with the Audit and Risk
Committee before the valuations on the Balance sheet are approved
by the Board.
5 Loans and borrowings
The Company had a GBP300 million revolving credit facility
('RCF') at the Balance sheet date. On 3 November 2021, the Company
refinanced this facility as a new GBP400 million
sustainability-linked RCF with a maturity date of November 2024 and
two one-year extension options. The Company has the right to
increase the size of the new RCF by up to a further GBP200 million,
provided that existing lenders have a right of first refusal.
The new RCF is secured by a floating charge over the bank
accounts of the Company. Interest is payable at SONIA plus a fixed
margin on the drawn amount. As at 30 September 2021, the Company
had no drawings under the RCF (March 2021: nil). The new RCF has
certain loan covenants, including a loan to value ratio.
There was no change in total financing liabilities for the
Company during the period as the cash flows relating to the
financing liabilities were equal to the income statement expense.
Accordingly, no reconciliation between the movement in financing
liabilities and the cash flow statement has been presented.
6 Issued capital
As at 30 September 2021 As at 31 March 2021
(unaudited) (audited)
Number GBPm Number GBPm
================= ================ ======== ============== ======
Authorised, issued and fully paid
Opening balance 891,434,010 1,496 891,434,010 1,496
================= ================ ======== ============== ======
Closing balance 891,434,010 1,496 891,434,010 1,496
================= ================ ======== ============== ======
Aggregate issue costs of GBP24 million arising from IPO and
subsequent share issues have been offset against the stated capital
account in previous years. In addition, the stated capital account
was reduced by Court order on 20 December 2007 with an amount of
GBP693 million transferred to a new, distributable reserve which
has been combined with retained reserves in these accounts.
Therefore, as at 30 September 2021, the residual value on the
stated capital account was GBP779 million.
7 Per share information
The earnings and net assets per share attributable to the equity
holders of the Company are based on the following data:
Six months to Six months to
30 September 2021 30 September 2020
(unaudited) (unaudited)
============================================ ================== ==================
Earnings per share (pence)
Basic and diluted 28.0 9.4
============================================ ================== ==================
Earnings (GBPm)
Profit after tax for the period 250 84
============================================ ================== ==================
Number of shares (million)
Weighted average number of shares in issue 891.4 891.4
============================================ ================== ==================
As at As at
30 September 31 March
2021 2021
(unaudited) (audited)
============================== ============= ==========
Net assets per share (pence)
Basic and diluted 291.2 268.1
Net assets (GBPm)
Net assets 2,596 2,390
============================== ============= ==========
8 Dividends
As at 30 September 2021 As at 30 September 2020
(unaudited) (unaudited)
=================================================== ========================== ==========================
Declared and paid during the period pence per share GBPm pence per share GBPm
--------------------------------------------------- ------------------- ----- ------------------- -----
Prior year final dividend paid on ordinary shares 4.9 44 4.6 41
=================================================== =================== ===== =================== =====
The Company proposes paying an interim dividend of 5.225 pence
per share (September 2020: 4.9 pence) which will be payable to
those shareholders that are on the register on 26 November 2021. On
the basis of the shares in issue at 30 September 2021, this would
equate to a total interim dividend of GBP47 million (September
2020: GBP44 million). The designation of a portion of the dividend
as an interest distribution is described in the Information for
shareholders section.
9 Related parties
Transactions between the Company and 3i Group
3i Group plc ('3i Group') holds 30.2% (March 2021: 30.2%) of the
ordinary shares of the Company. This classifies 3i Group as a
'substantial shareholder' of the Company as defined by the Listing
Rules. During the period, 3i Group received dividends of GBP13
million (September 2020: GBP12 million) from the Company.
In 2007 the Company committed US$250 million to the 3i India
Infrastructure Fund (the 'India Fund') to invest in the Indian
infrastructure market. 3i Group also committed US$250 million to
the India Fund. No commitments were drawn down by the India Fund
from the Company during the period (September 2020: nil). In total,
commitments of US$184 million or GBP136 million re-translated had
been drawn down at 30 September 2021 (March 2021: US$184 million or
GBP133 million) by the India Fund from the Company. As the India
Fund has reached the end of its investment period, the Company's
outstanding commitment to the India Fund is limited to 15% of the
original US$250 million commitment. At 30 September 2021, the
outstanding commitment was US$38 million, or GBP28 million
re-translated (March 2021: US$38 million or GBP27 million).
3i Investments plc, a subsidiary of 3i Group, is the Company's
Alternative Investment Fund Manager and provides its services under
an Investment Management Agreement ('IMA'). 3i Investments plc also
acts as the investment manager of the India Fund. 3i plc, another
subsidiary of 3i Group, together with 3i Investments plc, provides
support services to the Company (which are ancillary and related to
the investment management service) which it is doing pursuant to
the terms of the IMA.
Fees under the IMA consist of a tiered management fee and time
weighting of the management fee calculation and a one-off
transaction fee of 1.2% payable in respect of new investments. The
applicable tiered rates are shown in the table below. The
management fee is payable quarterly in advance.
Gross investment value Applicable tier rate
======================== =====================
Up to GBP1.25bn 1.4%
GBP1.25bn to GBP2.25bn 1.3%
Above GBP2.25bn 1.2%
======================== =====================
For the period to 30 September 2021, GBP16 million (September
2020: GBP12 million) was payable and advance payments of GBP15
million were made resulting in an amount due to 3i plc of less than
GBP1 million at 30 September 2021 (March 2021: less than GBP1
million due from 3i plc). In consideration of the provision of
support services under the IMA, the Company pays the Investment
Manager an annual fee of GBP1 million. The cost for the support
services incurred for the period to 30 September 2021 was GBP0.5
million (September 2020: GBP0.5 million). The outstanding balance
payable as at 30 September 2021 was nil (March 2021: nil).
Under the IMA, a performance fee is payable to the Investment
Manager equal to 20% of the Company's total return in excess of 8%,
payable in three equal annual instalments. The second and third
instalments will only be payable if either (a) the Company's
performance in the year in which that instalment is paid also
triggers payment of a performance fee in respect of that year, or
(b) if the Company's performance over the three years starting with
the year in which the performance fee is earned exceeds the 8%
hurdle on an annual basis.
The performance hurdle requirement was exceeded for the period
to 30 September 2021 and therefore a performance fee accrual of
GBP15 million was recognised (September 2020: GBPnil). The
outstanding balance payable as at 30 September 2021 was GBP26
million (March 2021: GBP18 million), which includes the second and
third instalments of the FY21 fee and the third instalment of the
FY20 fee.
Year Performance fee Outstanding balance Payable in FY22
(GBPm) at 30 September (GBPm)
2021 (GBPm)
====== ================ ==================== ================
FY22 15 15 5
FY21 7 5 2
FY20 17 6 6
====== ================ ==================== ================
Under the IMA, the Investment Manager's appointment may be
terminated by either the Company or the Investment Manager giving
the other not less than 12 months' notice in writing, but subject
to a minimum term of four years from 15 October 2018, unless 3i
Investments plc has previously ceased to be a member of 3i Group,
or with immediate effect by either party giving the other written
notice in the event of insolvency or material or persistent breach
by the other party. The Investment Manager may also terminate the
agreement on two months' notice given within two months of a change
of control of the Company.
Independent review report to 3i Infrastructure plc
Introduction
We have been engaged by 3i Infrastructure plc ('the Company') to
review the condensed set of financial statements in the Half-yearly
financial report for the six months ended 30 September 2021 which
comprises the Statement of comprehensive income, the Statement of
changes in equity, the Balance sheet, the Cash flow statement, the
accounting policies section and related notes 1 to 9 to the
accounts. We have read the other information contained in the
Half-yearly financial report and considered whether it contains any
apparent misstatements or material inconsistencies with the
information in the condensed set of financial statements.
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 Disclosure Guidance and Transparency Rules of the United
Kingdom's Financial Conduct Authority.
As disclosed in the accounting policies, the annual financial
statements of the Company will be prepared in accordance with
United Kingdom adopted international accounting standards. The
condensed set of financial statements included in this Half-yearly
financial report has been prepared in accordance with United
Kingdom adopted International Accounting Standard 34 'Interim
Financial Reporting'.
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.
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 Financial Reporting Council for use in
the United Kingdom. A review of interim financial information
consists of making inquiries, primarily of persons responsible for
financial and accounting matters, and applying analytical and other
review procedures. 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.
Conclusion
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 2021 is not prepared, in all material respects, in
accordance with United Kingdom adopted International Accounting
Standard 34 and the Disclosure Guidance and Transparency Rules of
the United Kingdom's Financial Conduct Authority.
Use of our report
This report is made solely to the Company 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 Financial
Reporting Council. Our work has been undertaken so that we might
state to the Company those matters we are required to state to it
in an independent review 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 formed.
Deloitte LLP
Statutory Auditor
London, United Kingdom
Date: 8 November 2021
Notes
1 The maintenance and integrity of the 3i Infrastructure plc website is the responsibility of
the Directors; the work carried out by the auditors does not involve consideration of these
matters and, accordingly, the auditors accept no responsibility for any changes that may have
occurred to the condensed financial statements since they were initially presented on the
website.
2 Legislation in Jersey governing the preparation and dissemination of condensed financial statements
may differ from legislation in other jurisdictions.
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 Company has the resources to continue in
business for the foreseeable future and that the financial
statements continue to be prepared on a going concern basis.
The Directors confirm to the best of their knowledge that:
-- the condensed set of financial statements have been prepared
in accordance with IAS 34 'Interim Financial Reporting' as adopted
by the European Union;
-- the Half-yearly report, taken as a whole, is fair, balanced
and understandable and provides the information necessary for
shareholders to assess the Company's performance ; and
-- the Half-yearly report includes a fair review of the
information required by the FCA's Disclosure and Transparency Rules
(4.2.7 R and 4.2.8 R).
The Directors of 3i Infrastructure plc and their functions are
listed below.
By order of the Board
Richard Laing
Chair
8 November 2021
Board of Directors and their functions
Richard Laing
Non-executive Chair and chair of the Nomination Committee, Disclosure Committee and the Management
Engagement Committee.
Doug Bannister
Independent Non-executive Director.
Wendy Dorman
Independent Non-executive Director and chair of the Audit and Risk Committee.
Samantha Hoe-Richardson
Independent Non-executive Director.
Ian Lobley
Non-executive Director.
Paul Masterton
Senior Independent Director and chair of the Remuneration Committee.
Investment policy
The Company aims to build a diversified portfolio of equity
investments in entities owning infrastructure businesses and
assets. The Company seeks investment opportunities globally, but
with a focus on Europe, North America and Asia.
The Company's equity investments will often comprise share
capital and related shareholder loans (or other financial
instruments that are not shares but that, in combination with
shares, are similar in substance). The Company may also invest in
junior or mezzanine debt in infrastructure businesses or
assets.
Most of the Company's investments are in unquoted companies.
However, the Company may also invest in entities owning
infrastructure businesses and assets whose shares or other
instruments are listed on any stock exchange, irrespective of
whether they cease to be listed after completion of the investment,
if the Directors judge that such an investment is consistent with
the Company's investment objectives. The Company will, in any case,
invest no more than 15% of its total gross assets in other
investment companies or investment trusts which are listed on the
Official List.
The Company may also consider investing in other fund structures
(in the event that it considers, on receipt of advice from the
Investment Manager, that that is the most appropriate and effective
means of investing), which may be advised or managed either by the
Investment Manager or a third party. If the Company invests in
another fund advised or managed by 3i Group, the relevant
proportion of any advisory or management fees payable by the
investee fund to 3i plc will be deducted from the annual management
fee payable under the Investment Management Agreement and the
relevant proportion of any performance fee will be deducted from
the annual performance fee, if payable, under the Investment
Management Agreement. For the avoidance of doubt, there will be no
similar set-off arrangement where any such fund is advised or
managed by a third party.
For most investments, the Company seeks to obtain representation
on the board of directors of the investee company (or equivalent
governing body) and in cases where it acquires a majority equity
interest in a business, that interest may also be a controlling
interest.
No investment made by the Company will represent more than 25%
of the Company's gross assets, including cash holdings, at the time
of the making of the investment. It is expected that most
individual investments will exceed GBP50 million. In some cases,
the total amount required for an individual transaction may exceed
the maximum amount that the Company is permitted to commit to a
single investment. In such circumstances, the Company may consider
entering into co-investment arrangements with 3i Group (or other
investors who may also be significant shareholders), pursuant to
which 3i Group and its subsidiaries (or such other investors) may
co-invest on the same financial and economic terms as the Company.
The suitability of any such co-investment arrangements will be
assessed on a transaction-by-transaction basis. Depending on the
size of the relevant investment and the identity of the relevant
co-investor, such a co-investment arrangement may be subject to the
related party transaction provisions contained in the Listing Rules
and may therefore require shareholder consent.
The Company's Articles require its outstanding borrowings,
including any financial guarantees to support subsequent
obligations, to be limited to 50% of the gross assets of the
Company (valuing investments on the basis included in the Company's
accounts).
In accordance with Listing Rules requirements, the Company will
only make a material change to its investment policy with the
approval of shareholders.
Portfolio valuation methodology
A description of the methodology used to value the investment
portfolio of the Company is set out below in order to provide more
detailed information than is included within the accounting
policies and the Financial review for the valuation of the
portfolio. The methodology complies in all material aspects with
the 'International Private Equity and Venture Capital valuation
guidelines' which are endorsed by the British Private Equity and
Venture Capital Association and Invest Europe.
Basis of valuation
Investments are reported at the Directors' estimate of fair
value at the reporting date in compliance with IFRS 13 Fair Value
Measurement. Fair value is defined as 'the price that would be
received to sell an asset or paid to transfer a liability in an
orderly transaction between market participants at the measurement
date'.
General
In estimating fair value, the Directors seek to use a
methodology that is appropriate in light of the nature, facts and
circumstances of the investment and its materiality in the context
of the overall portfolio. The methodology that is the most
appropriate may consequently include adjustments based on informed
and experience-based judgements and will also consider the nature
of the industry and market practice. Methodologies are applied
consistently from period to period except where a change would
result in a better estimation of fair value. Given the
uncertainties inherent in estimating fair value, a degree of
caution is applied in exercising judgements and making necessary
estimates.
Investments may include portfolio assets and other net
assets/liabilities balances. The methodology for valuing portfolio
assets is set out below. Any net assets/liabilities within
intermediate holding companies are valued in line with the Company
accounting policy and held at fair value or approximate to fair
value.
Quoted investments
Quoted equity investments are valued at the closing bid price at
the reporting date. In accordance with International Financial
Reporting Standards, no discount is applied for liquidity of the
stock or any dealing restrictions. Quoted debt investments will be
valued using quoted prices provided by third-party broker
information where reliable or will be held at cost less fair value
adjustments.
Unquoted investments
Unquoted investments are valued using one of the following
methodologies:
- Discounted Cash Flow ('DCF')
- Proportionate share of net assets
- Sales basis
- Cost less any fair value adjustments required
DCF
DCF is the primary basis for valuation. In using the DCF basis,
fair value is estimated by deriving the present value of the
investment using reasonable assumptions and estimation of expected
future cash flows, including contracted and uncontracted revenues,
expenses, capital expenditure, financing and taxation, and the
terminal value and date, and the appropriate risk-adjusted discount
rate that quantifies the risk inherent to the investment. The
terminal value attributes a residual value to the investee company
at the end of the projected discrete cash flow period. The discount
rate will be estimated for each investment derived from the market
risk-free rate, a risk-adjusted premium and information specific to
the investment or market sector.
Proportionate share of net assets
Where the Company has made investments into other infrastructure
funds, the value of the investment will be derived from the
Company's share of net assets of the fund based on the most recent
reliable financial information available from the fund. Where the
underlying investments within a fund are valued on a DCF basis, the
discount rate applied may be adjusted by the Company to reflect its
assessment of the most appropriate discount rate for the nature of
assets held in the fund. In measuring the fair value, the net asset
value of the fund is adjusted, as necessary, to reflect
restrictions on redemptions, future commitments, illiquid nature of
the investments and other specific factors of the fund.
Sales basis
The expected sale proceeds will be used to assign a fair value
to an asset in cases where offers have been received as part of an
investment sales process. This may either support the value derived
from another methodology or may be used as the primary valuation
basis. A marketability discount is applied to the expected sale
proceeds to derive the valuation where appropriate.
Cost less fair value adjustment
Any investment in a company that has failed or, in the view of
the Board, is expected to fail within the next 12 months, has the
equity shares valued at nil and the fixed income shares and loan
instruments valued at the lower of cost and net recoverable
amount.
Information for shareholders
Financial calendar
Ex-dividend date for interim dividend 25 November 2021
===================================== ================
Record date for interim dividend 26 November 2021
===================================== ================
Interim dividend expected to be paid 10 January 2022
===================================== ================
Full year results expected date May 2022
===================================== ================
Designation of dividends as interest distributions
As an approved investment trust, the Company is permitted to
designate dividends wholly or partly as interest distributions for
UK tax purposes. Dividends designated as interest in this way are
taxed as interest income in the hands of shareholders and are
treated as tax deductible interest payments made by the Company.
The Company expects to make such dividend designations in periods
in which it is able to use the resultant tax deduction to reduce
the UK corporation tax it would otherwise pay on the interest
income it earns from its investments. The Board is designating 2.0
pence of the 5.225 pence interim dividend payable in respect of the
period as an interest distribution.
Registrars
For shareholder services, including notifying changes of
address, the Registrars' details are as follows:
Link Market Services (Jersey) Limited
PO Box 532
St. Helier
Jersey JE4 5UW
Channel Islands
Shareholder helpline: 0371 664 0300
Calls are charged at the standard geographic rate and will vary
by provider. Calls outside the United Kingdom will be charged at
the applicable international rate. Lines are open between 09:00 -
17:30, Monday to Friday excluding public holidays in England and
Wales. Please note that calls may be monitored or recorded for
training and quality purposes.
Email: shareholderenquiries@linkgroup.co.uk
Investor relations and general enquiries
For all investor relations and general enquiries about 3i
Infrastructure plc, please contact:
Thomas Fodor
Investor Relations
3i Infrastructure plc
16 Palace Street
London, SW1E 5JD
email: thomas.fodor@3i.com
Telephone +44 (0)20 7975 3469
or for full up-to-date investor relations information including
the latest share price, recent reports, results presentations and
financial news, please visit our investor relations website
www.3i-infrastructure.com
If you would prefer to receive shareholder communications
electronically, including your annual reports and notices of
meetings, please go to
www.3i-infrastructure.com/investors/shareholder-centre for details
of how to register.
Frequently used Registrars' forms can be found on our website
at
www.3i-infrastructure.com/investors/shareholder-centre
3i Infrastructure plc
Registered office
12 Castle Street
St. Helier
Jersey JE2 3RT
Channel Islands
www.3i-infrastructure.com
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END
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