TIDMIII
RNS Number : 0517G
3i Group PLC
22 July 2021
22 July 2021
3i Group plc
FY2022 Q1 performance update
A strong start to FY2022
* Increase in NAV per share to 1,063 pence (31 March
2021: 947 pence) and total return of 12.2% for the
three months to 30 June 2021
* Another strong quarter from the Private Equity
portfolio with notable contributions from Action, AES,
Basic-Fit, BoConcept, GartenHaus, Luqom, Q Holding,
Royal Sanders, SaniSure and Tato
* A powerful performance from Action in the quarter
with very good sales and EBITDA growth. EBITDA for
the quarter was EUR205 million, 107% above 2020 and
67% above 2019. Sales for the quarter were EUR1,688
million, 52% above 2020 and 39% above 2019
* Received GBP84 million of refinancing proceeds from
Royal Sanders and completed one bolt-on acquisition
for Luqom with no further investment from 3i
* 3i Infrastructure plc ("3iN") completed its
investment in DNS:NET and a bolt-on acquisition for
Joulz, an existing portfolio company
* Both investment divisions remain active with a
healthy pipeline of new investment opportunities,
bolt-ons and refinancing and realisation transactions
Simon Borrows, Chief Executive, commented:
"3i has made a strong start to its new financial year. Our
investment portfolios in Private Equity and Infrastructure are well
positioned for another year of good progress. Action's impressive
performance continues, and the group is trading very well now that
all stores have fully reopened. We are working on a number of
investment and realisation opportunities across the investment
teams, but we remain highly selective when deploying new capital in
the current environment."
Private Equity
Portfolio performance and valuation at 30 June 2021
The Private Equity portfolio generated a strong return for the
quarter, including a marked step-up in Action's performance. Sales
of EUR1,688 million in the quarter were up 31% from Q1 2021, while
EBITDA increased by 151% over the same period. At the start of
2021, Action was impacted by widespread store closures and
restrictions. However, the business executed an impressive trading
recovery through the end of its Q1 2021 and in Q2 2021.
Like-for-like ("LFL") sales comparisons between 2020 and 2021 are
difficult due to differing store closures and restrictions over the
two periods. However, June (P6) is the one period with all stores
substantially open in both years: P6, 2020 delivered 11% LFL
growth; P6, 2021 delivered 14.7% LFL growth. Action opened 63 new
stores in the quarter and continues to target c.300 new stores in
2021. Cash flow has been strong with the group's cash balance now
over EUR700 million.
At 30 June 2021, Action was valued using the last twelve months'
("LTM") run-rate earnings to 30 June 2021 (EUR783 million) and an
unchanged multiple of 18.5x net of the liquidity discount,
resulting in a valuation of GBP5,512 million (31 March 2021:
GBP4,566 million) for 3i's 52.7% equity stake.
The remainder of the Private Equity portfolio generated good
returns in the quarter, with good momentum across most of our top
20 assets. Our portfolio is well positioned to benefit from a
number of structural growth trends which have continued to support
strong performance in a number of our investments, and particularly
in assets operating in markets such as biologics (SaniSure),
e-commerce (Luqom and GartenHaus), or with exposure to the
value-for-money theme (Royal Sanders, Hans Anders). BoConcept and Q
Holding are also trading significantly ahead of last year. Of our
top 20 portfolio companies, 94% by value grew their LTM adjusted
earnings to March 2021.
Private Equity investments and realisations
In April 2021, Luqom funded and completed the bolt-on
acquisition of Lampemesteren, an online retailer of premium
lighting products in the Nordic region.
In June 2021, we received proceeds of GBP84 million, of which
GBP4 million was recognised as income, from the refinancing of
Royal Sanders.
Infrastructure
3iN's share price was stable in the three months to 30 June 2021
closing at 298 pence (31 March 2021: 296 pence), valuing 3i's 30%
stake at GBP801 million (31 March 2021: GBP797 million). We also
recognised dividend income of GBP13 million from 3iN in the
quarter. In the period, 3iN completed the acquisition of a 60%
stake in DNS:NET, an independent telecommunications provider in
Germany for EUR182 million, and Joulz, one of 3iN's existing
portfolio companies, completed the acquisition of Zonel Energy, a
provider of solar rooftop solutions to businesses across the
Netherlands.
Scandlines
Scandlines continued to be impacted by travel restrictions in
the three months to 30 June 2021. However, freight continued to
perform strongly with volumes ahead of the prior year YTD. Leisure
volumes started to pick up towards the end of the period. Our core
DCF valuation assumptions remain consistent with the March 2021
valuation.
Top 10 investments by value at 30 June 2021
Valuation Valuation
Valuation Valuation Mar-21 Jun-21
basis currency GBPm GBPm Activity in the quarter
---------------- ----------- ----------- ---------- ---------- --------------------------------------------------
Action Earnings EUR 4,566 5,512
----------- ----------- ---------- ---------- --------------------------------------------------
3iN Quoted GBP 797 801
----------- ----------- ---------- ---------- --------------------------------------------------
Cirtec Medical Earnings USD 444 450
----------- ----------- ---------- ---------- --------------------------------------------------
Scandlines DCF EUR 435 449
----------- ----------- ---------- ---------- --------------------------------------------------
Tato Earnings GBP 368 386
----------- ----------- ---------- ---------- --------------------------------------------------
Luqom Earnings EUR 307 359 Completed the bolt-on acquisition of
Lampemesteren in April 2021.
----------- ----------- ---------- ---------- --------------------------------------------------
Royal Sanders Earnings EUR 364 291 Returned GBP84 million of proceeds to 3i.
----------- ----------- ---------- ---------- --------------------------------------------------
Evernex Earnings EUR 281 278
----------- ----------- ---------- ---------- --------------------------------------------------
Hans Anders Earnings EUR 262 270
----------- ----------- ---------- ---------- --------------------------------------------------
WP Earnings EUR 259 263
----------- ----------- ---------- ---------- --------------------------------------------------
The 10 investments in this table comprise 78% (31 March 2021:
78%) of the total Proprietary Capital portfolio value of GBP11,558
million (31 March 2021: GBP10,408 million).
Total return and NAV position
We recognised a net gain on foreign exchange of GBP47 million in
the quarter, as sterling weakened against the euro. Based on the
balance sheet at 30 June 2021 , 6 9% of the Group's net assets were
denominated in euro and 15% in US dollar. A 1% movement in the euro
and US dollar would result in a total return movement of GBP70
million and GBP15 million respectively, net of any hedging. The
diluted NAV per share increased to 1,063 pence (31 March 2021: 947
pence) or 1,042 pence after deducting the 21 pence per share second
FY2021 dividend , which will be paid on 23 July 2021 .
Balance sheet
At 30 June 2021, cash was GBP286 million (31 March 2021: GBP225
million), and including our undrawn GBP500 million revolving credit
facility liquidity was GBP786 million (31 March 2021: GBP725
million). Net debt was GBP689 million and gearing 6.7% (31 March
2021: GBP750 million and 8.2%). The 21 pence per share second
FY2021 dividend, totaling GBP203 million, will be paid on 23 July
2021.
-S -
Notes
1. Balance sheet values are stated net of foreign exchange translation. Where applicable, the
GBP equivalents at 30 June 2021 in this update have been calculated at a currency exchange
rate of EUR 1.1652: GBP1 and $1.3812: GBP1 respectively.
2. At 30 June 2021 3i had 969 million diluted shares.
3. Action was valued using a post discount run-rate EBITDA multiple of 18.5x based on its run-rate
earnings to 30 June 2021.
For further information, please contact:
Silvia Santoro
Investor Relations Director
Tel: 020 7975 3258
Kathryn van der Kroft
Communications Director
Tel: 020 7975 3021
About 3i Group
3i is a leading international investment manager focused on
mid-market Private Equity and Infrastructure. Our core investment
markets are northern Europe and North America. For further
information, please visit: www.3i.com .
All statements in this performance update relate to the
three-month period ended 30 June 2021 unless otherwise stated. The
financial information is unaudited and is presented on 3i's
non-GAAP Investment basis in order to provide users with the most
appropriate description of the drivers of 3i's performance. Net
asset value ("NAV") and total return are the same on the Investment
basis and on an IFRS basis. Details of the differences between 3i's
consolidated financial statements prepared on an IFRS basis and
under the Investment basis are provided in the 2021 Annual report
and accounts. There have been no material changes to the financial
position of 3i from the end of this quarter to the date of this
announcement.
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