3I Group PLC Annual Report 2018 PDF

3i Group plc
Overview Governance
Introduction01 Chairman’s introduction 58
Performance highlights 02 Board of Directors and Executive Committee 60
Chairman’s statement 02 Nominations Committee report 65
Chief Executive’s statement 04 Audit and Compliance Committee report 66
Action 08 Valuations Committee report 70
Directors’ remuneration report 73
Our business Relations with shareholders 83
Our business at a glance 10 Additional statutory and corporate
governance information 84
Our business model 12
Our strategic objectives 14
Key performance indicators 16
Audited financial statements
Private Equity 18 Consolidated statement of
comprehensive income 92
Infrastructure25
Consolidated statement of financial position 93
Consolidated statement of changes in equity 94
Performance, risk and sustainability
Consolidated cash flow statement 95
Financial review 29
Company statement of financial position 96
Investment basis 35
Company statement of changes in equity 97
Reconciliation of Investment basis and IFRS 39
Company cash flow statement 98
Alternative Performance Measures 43
Significant accounting policies 99
Risk management 44
Notes to the accounts 104
Principal risks and mitigations 47
Independent Auditor’s report 139
Sustainability52
Portfolio and other information

20 Large investments 148
Strategic report: Portfolio valuation – an explanation 150
pages 2 to 56. Information for shareholders 152
Glossary 154
Directors’ report: pages
58 to 72 and 83 to 90.
For definitions of our financial terms,
used throughout this report, please see
Directors’ remuneration our glossary on pages 154 to 156.
report: pages 73 to 82.
Consistent with our approach since the introduction of IFRS 10 in 2014, the financial data
presented in the Overview and Strategic report is taken from the Investment basis financial
statements. The Investment basis (which is unaudited) is an alternative performance
measure (“APM”) and is described on page 38 and the differences from, and the
reconciliation to, the IFRS Audited financial statements are detailed on pages 39 to 42.
Disclaimer
The Annual report and accounts have been prepared solely to provide information to shareholders.
They should not be relied on by any other party or for any other purpose.
The Strategic report on pages 2 to 56, the Directors’ report on pages 58 to 72 and 83 to 90, and the
Directors’ remuneration report on pages 73 to 82 have been drawn up and presented in accordance with
For more information on 3i’s business, its and in reliance upon English company law and the liabilities of the Directors in connection with those
portfolio and the latest news, please visit reports shall be subject to the limitations and restrictions provided by that law. This Annual report may
contain statements about the future, including certain statements about the future outlook for 3i Group
www.3i.com plc and its subsidiaries (“3i” or “the Group”). These are not guarantees of future performance and will
not be updated. Although we believe our expectations are based on reasonable assumptions, any
statements about the future outlook may be influenced by factors that could cause actual outcomes
and results to be materially different.
Starting with capital of £15 million in
1945, today 3i is a leading international
investment company focusing on private
equity and infrastructure.
We provide our shareholders with access
to the higher growth potential of mid-market
unquoted companies. We use our strong
balance sheet and our expertise in specific
sectors and geographies to realise this
potential and aim to generate mid to high
teens returns for our shareholders.
Overview
What we do Business model and strategy
3i is an investment company with two We have a diverse investment portfolio
complementary businesses, Private and disciplined investment processes.
Equity and Infrastructure, specialising This, together with our clear and
in core investment markets in northern consistent strategy, underpins our
Europe and North America. competitive advantage.
10 For more
information
Grow investment
portfolio earnings
Realise investments with

good cash-to-cash returns
Maintain an operating
cash profit
Use our strong

balance sheet
Increase shareholder
distributions
12 For more
information
3i Group Annual report and accounts 2018 01

Overview
Performance highlights
for the year to 31 March 2018
724p 24% FY2018 was another successful year

for 3i. Our two divisions generated
strong returns and we maintained
NAV per share Total return our excellent track record of
realisations, generating proceeds
(31 March 2017: 604p)
on equity of £1,323 million (2017: £1,275
(2017: 36%)
million). Importantly, we completed
or announced over £700 million
of investment in Private Equity.
30.0p £11m In addition, we completed our

first Infrastructure investment in
North America and launched two
Dividend Operating Infrastructure funds in Europe to
per share cash profit complement our mandate for 3iN.
(2017: 26.5p) (2017: £5m1 )
Market environment
FY2018 was a year dominated by global
£1,323m £587m politics and increasing tensions across

the world stage. This, coupled with the
expectation of interest rate rises in the US,
Realised Private Equity led to an increase in volatility across
capital markets, even though the broad
proceeds cash invested macro-economic picture remained strong.
Financing markets remained relatively robust
(2017: £1,275m2 ) (2017: £478m) throughout the year, more closely reflecting
the healthy macro-economic outlook.
The Group used this strong back-drop to sell
£1.1bn a number of significant investments across

both divisions, which delivered outstanding
investment returns for shareholders. At the
Advised 3i same time, the Group’s investment teams in
key geographies originated attractive new
Infrastructure plc investments while remaining focused on
price discipline.
(“3iN”) on the
disposals of Elenia
and Anglian Water
Group (“AWG”)
(2017: nil)
1 Operating cash profit in 2017 is on a continuing basis.

2 Includes proceeds of £270 million from the sale of Debt Management.
Certain financial measures used in our Annual Report, such as operating cash profit, are not defined
under IFRS and are therefore termed APMs. Further details on APMs are included on page 43.
02 3i Group Annual report and accounts 2018

Performance and dividend Our policy of paying a base and additional Board and management
dividend was introduced in May 2012. It has
The Group’s total return for the year was After last year’s changes, this year the
worked well as we reshaped the Group’s
£1,425 million (2017: £1,592 million). Net asset composition of the Board was stable. I would
strategy and simplified our business model.
value increased to 724 pence per share like to thank the Board, the management
Six years of successful strategic delivery
(31 March 2017: 604 pence) and our return team and all of our employees for their
since then have supported an increase in
on opening shareholders’ funds was 24% contribution to this year’s excellent results.
the total dividend from 8.1 pence in FY2013
(2017: 36%). We remained net divestors in
to 30.0 pence in FY2018.
FY2018, ending the year with net cash of Outlook
£479 million and liquidity of £1,404 million In light of the Group’s continued progress
in executing its strategy, we now propose We enter FY2019 with a high-performing
(31 March 2017: net cash of £419 million and
to replace our base and additional dividend portfolio of investments in both of our
liquidity of £1,323 million). Immediately after
policy with a simpler policy. The Board will divisions and a strong balance sheet.
the year end, on 3 April 2018, we completed
maintain its conservative balance sheet Competition in both private equity and
the £135 million investment in Royal Sanders
strategy, which excludes structural gearing infrastructure remains intense, with high
announced in February 2018.
at the Group level, and will carefully consider asset prices demanding a disciplined
In recognition of the Group’s financial approach to investment. But I remain
the outlook for investments and realisations
performance in FY2018 and the strength confident that the Group will be agile and
and market conditions. Subject to that,
of its balance sheet, the Board has opportunistic as we navigate what looks
the Board will aim to maintain or grow the
recommended a dividend of 22.0 pence likely to be another year of significant
dividend each year, from the 30.0 pence
(2017: 18.5 pence). This is made up of the economic and geo-political uncertainty.
this year. We will continue to pay an interim
balance of the base dividend (8 pence
dividend, which we expect to set at 50% of
per share, after the 8 pence paid in January
the prior year’s total dividend, subject to the
Overview
2018) and an additional dividend of 14.0
same considerations.
pence. Subject to shareholder approval,
the dividend will be paid to shareholders in Simon Thompson
July 2018 and makes a total dividend for the Chairman
year of 30.0 pence (2017: 26.5 pence).
Chairman’s
statement

Overview
3i delivered another strong all-round

performance in FY2018, with NAV per share
increasing by 20% to 724 pence (31 March 2017:
604 pence). Unlike FY2017, which included
a £297 million gain on currency translation,
our total return of £1,425 million (2017: £1,592
million) was after a £16 million loss on currency.
This return was 24% of opening shareholders’
funds, marking the fourth consecutive year of
greater than 20% returns. This was a profitable
year for realisations; we received £1.3 billion of
cash and announced a further c.£350 million of
proceeds which will complete by summer 2018.
It was also a good year for new investment,
with £827 million invested, including in five
new companies. So FY2018 was a very active
year and further confirmation of the Group’s
Chief
strategy and return potential.
Executive’s
statement

A strong portfolio The newer DCs will help support Action’s Our other long-term hold asset, Scandlines,
expansion and reduce costs in the future, had a significant year. 3i, together with
in Private Equity
as those stores that are a long distance from Eurofund V (“EFV”), initially invested
In Private Equity, we have a quality a DC incur materially higher transport costs. €81 million (3i only: £31 million) to acquire
investment portfolio, which is performing Growth on this scale is very challenging to a 40% stake in Scandlines in 2007.
strongly overall. Earnings increased in manage and Action encountered its share We purchased a further 10% stake for
91% of the portfolio by value in the year of issues in logistics and distribution and €43 million (3i only: £21 million) in 2010
(2017: 93%) and generated attractive within certain product categories in 2017. before acquiring the final 50% stake for
returns for shareholders. These challenges, together with building €165 million (3i only: £77 million) in 2013.
a pan-European infrastructure to cope with Scandlines now has two highly efficient
Longer-term hold assets the medium-term ambition of €10 billion ferry routes linking Continental Europe to
Our largest Private Equity investment, of revenues, will have a dampening effect Scandinavia and as a result of investing in
Action, had another strong year. Action’s on the rate of profit growth expected its ferry capacity, increasing the frequency
expansion continued at an impressive this year, as they did in 2017. But Action is of crossings and investing in its border
rate, with 243 net new stores opened an exceptional business, it is still likely to shops, generates significant and stable cash
in calendar year 2017. Revenue grew by generate sector-leading sales and profit flows. This characteristic meant that, in July
28% to €3.4 billion, like-for-like sales by growth in 2018 and this ongoing investment 2017, Scandlines completed an €862 million
5.3% and EBITDA by 25% to €387 million in logistics and infrastructure will facilitate its infrastructure debt refinancing, which
(2017: €2.7 billion, 6.9% and €310 million). considerable medium-term growth potential. substantially reduced its long-term cost
Action now has over 1,100 stores and intends of debt.
Notwithstanding the above, Action remains
to open more stores in 2018 than 2017.
very cash generative due to its asset-light Together, these initiatives enabled us to
New Action stores become profitable in
model and structurally negative working announce the sale of Scandlines to funds
Overview
one year on average and the rapid expansion
capital, and the company completed its fifth managed by First State Investments and
programme led to another year of strong
refinancing in March 2018. The proceeds Hermes Investment Management for an
value growth.
of the €2.4 billion refinancing supported equity value of €1.7 billion in March 2018.
Action’s straightforward business model, a return of capital to shareholders, of This represents a 7.4x money multiple on
built on a consistent, one-store format and which 3i received £307 million, taking total our total investment, and a 5.8x multiple
good quality but inexpensive products, has distributions to 3i since investment to on our further investment in 2013. 3i remains
been proven to work in seven countries so £834 million, a 7.1x cash return to date. committed to the business and will
far. However, growth at this pace requires reinvest c.€600 million to hold a 35% stake,
very significant investment in logistics, alongside First State Investments and
supply chain, IT, risk management and HR. Hermes Investment Management, as we
To manage the enormous volume of goods, expect to generate attractive returns and
Action opened a further two distribution receive regular cash dividends over the
centres (“DCs”) in 2018 and commenced medium term. This will provide an important
building two more. contribution to the Group’s operating
cash position.
£307m
proceeds from
7.4x
money multiple on
Action refinancing upcoming Scandlines
transaction

Overview
Chief Executive’s
statement
continued
Portfolio performance This in turn means that returns can be An outstanding year
modest in the early years of our ownership
The portfolio of investments put together for Infrastructure
but then accelerate rapidly towards exit.
between 2013 and 2016 is creating significant We have two broad priorities in
Schlemmer, Formel D and BoConcept
value with notable increases from Basic-Fit, Infrastructure. First, we are focused on
are good examples of investments
Scandlines, Audley Travel and Weener Plastic our advisory relationship with 3iN and the
which are undergoing this type of radical
(“WP”). In addition, we sold ATESTEO for delivery of good returns from its portfolio.
change programme.
a money multiple of 4.8x in February 2018. Second, our expertise in the sector is
As at 31 March 2018, our 2013-2016 vintage Our proprietary capital model means allowing us to develop complementary fund
had already achieved a money multiple of that we do not have the same pressure management initiatives in Europe and North
2.1x (31 March 2017: 1.7x). to invest capital for the sake of generating America in order to build the Group’s fund
fees. Our teams have the time to seek management income and contribute to our
It is inevitable that there will be some
out interesting companies and build operating cash position.
challenges in any Private Equity portfolio
relationships with management teams
and our German high street jeweller, Our Infrastructure team had a very strong
long before any auction process starts.
Christ, continues to suffer from structural year. It advised 3iN on its disposals of
changes in the retail sector such as the FY2018 was a good year for investment. Elenia and AWG, 3iN’s last investments in
heavily discounted Black Friday weekend We invested £587 million in four companies regulated utilities, generating proceeds of
and the relentless shift to online. Christ saw at sensible prices: Hans Anders, Lampenwelt, £1.1 billion and returns of 4.5x and 3.3x cost
the largest decline in value of the year Formel D and Cirtec Medical (including respectively. The value uplifts from these
at £53 million and we are working with a follow-on investment to support its sales were returned to 3iN shareholders via
management to develop a medium-term acquisition of Vascotube). Our £135 million a £425 million special dividend in March 2018,
plan to help protect its strong brand as it investment in Royal Sanders, announced of which 3i received £143 million. In addition,
meets these headwinds. in February 2018, completed in April 2018. we advised 3iN on six investments in mid-
We also announced our c.$150 million market economic infrastructure businesses
We have been active investors over the
investment in ICE (International Cruise totalling £525 million. Our main priority
last two years and, because of the
& Excursions), a leading provider of loyalty this year will be to ensure that these recent
competitive environment, we have
and travel solutions in April 2018, which is investments deliver good performance.
specifically targeted primary buy-out
expected to complete by June 2018. The 3i team, together with the 3iN Board,
or family company investments, as well
as companies that require a degree of We have invested in a number of companies has done an outstanding job in repositioning
operational improvement. Our agenda in recent years, such as WP, Cirtec Medical 3iN’s portfolio away from an increasing level
on buying these companies can be very (“Cirtec”), Ponroy Santé and Q Holding, of regulatory risk. The realisations of Elenia
intensive in terms of reshaping the business, which are platform assets that can pursue and AWG produced excellent financial
restructuring finances, improving operational growth through bolt-on acquisitions or returns and reinforced 3i’s reputation as
efficiency, investing for growth and strategic M&A. All of these companies are one of the leading infrastructure investment
changing or professionalising management. in sectors with high growth potential where teams in Europe.
These situations often involve significant there is significant opportunity to scale up
early cash investment, as well as being and build value. Recent acquisitions in our
operationally disruptive. portfolio ranged from smaller add-ons for
WP to Cirtec‘s transformative acquisition of
Vascotube and Ponroy Santé’s acquisition
of Aragan.
2.1x
money multiple on
Four
new Private Equity
the 2013-2016 portfolio investments
of investments (2017: 3)
(31 March 2017: 1.7x)

3iN’s total return for the year was 29%, Proprietary capital model Outlook
the highest since its IPO in 2007 and, for
underpinned by our strong We enter FY2019 with a good level of
those shareholders who invested in 3iN’s
£385 million capital raise in June 2016 balance sheet momentum across the Group and, while
We ended the year with net cash of the wider geo-political environment
(including 3i Group), the 31% return on
£479 million (31 March 2017: £419 million). remains challenging, we are confident in our
their investment is impressive.
FY2018 was an outstanding year for ability to deliver continued strong growth
During the year, we raised two new funds, realisations but generally we expect to hold for shareholders together with healthy
the £700 million 3i Managed Infrastructure high levels of cash and liquidity to ensure dividends. We will stay focused on the mid
Acquisitions LP and the 3i European that we can continue to invest without market, maintain our discipline on pricing for
Operational Projects Fund (“EOPF”). having to accelerate realisations ahead new investments and use the rigour of our
There was strong investor demand for EOPF, of their full potential. investment processes to manage our two
which had its final close in April 2018 with portfolios actively.
€456 million of commitments, ahead of its Our proprietary capital is the cornerstone
of the 3i business model, supported by I would like to thank the 3i team for their
€400 million target. The team is focused on
a complementary fund management good work and contribution to yet another
sourcing assets for the fund and has invested
platform in Infrastructure, which ensures strong year for the Group. These excellent
or committed to invest €85 million of that
our shareholders benefit from access to results are a further demonstration that 3i’s
capital so far.
our Private Equity investment returns with strategy is capable of delivering consistently
Our new US Infrastructure team completed minimal dilution from the costs of running good returns. Our fund management
its first investment in Smarte Carte in our business. 3i aims to be the investor initiatives, together with our reinvestment
November 2017 as a seed for the North of choice in its core sectors of Business into Scandlines, will generate important cash
America fund management strategy. and Technology Services, Consumer and income for the Group while our proprietary
Overview
We made a further investment in January Industrial. Our long history of investing in capital portfolio remains well positioned to
2018 to support Smarte Carte’s acquisition the mid-market with a consistent, local, on generate top tier capital returns.
of Aviation Mobility, and the team completed the ground, presence in northern Europe
a $225 million refinancing of Smarte Carte and North America gives us a sustainable
in March 2018. Over the last 12 months, we origination advantage. Our ungeared
have recruited selectively to build a team balance sheet allows us to be competitive
in the US and they are now busy with an Simon Borrows
and move fast for the right businesses.
interesting pipeline of opportunities. Chief Executive
To ensure that our proprietary capital
Our Infrastructure platform is an important model is as efficient as possible, we remain
source of fund management fee income. disciplined on firm costs. We closed our
As a result of the increase in investment Madrid office this year following the sale
activity, we generated £50 million of fee of Mémora, our last significant Private
income (2017: £36 million), a performance Equity asset in Spain. Operating cash profit
fee of £90 million from 3iN (2017: £4 million) increased to £11 million (2017: £5 million)
and closed the year with assets under as advisory income from Infrastructure
management of £3.4 billion (31 March improved and cash operating expenses
2017: £2.9 billion). declined marginally to £115 million
(2017: £116 million).
Six
advised 3iN
£50m
of fee income
on six investments from Infrastructure
(2017: 6) (2017: £36 million)

Overview
Action
Action is the fastest growing major Action can buy large volumes due to its scale In December 2017, Action generated more
non-food discount retailer in Europe and this, together with a very low cost base, revenue in France than in the Netherlands
with stores in seven countries. It now has means that the savings are passed onto its for the first time. In Germany, Action opened
more than 1,100 stores that are visited customers and its prices are kept low. its 200th store at the end of November
by over six million customers a week and 2017. With over 700 stores outside the
In 2017, Action added 243 net new stores
offers a surprising, ever changing range Netherlands, the company that started in
in seven countries, opened its milestone
of products at incredibly low prices. 1993 with one small store in Enkhuizen, the
1,000th store and opened two DCs in
Netherlands, is now a pan-European retailer.
Action has a very straightforward business France and Germany. Action entered the
model. Each store is simple in design and Polish market, another important step in its To support this growth, Action employed a
offers over 6,000 products in 14 categories. geographic expansion, and intends to open further 6,000 people in 2017, taking its total
Only one-third of these products are part more stores in Poland in 2018. In France, headcount to 41,000. Action has invested
of a standard range, the other two-thirds Action passed the 300th store mark within heavily in new DCs and hired new managers
change constantly. five years of opening its first store in 2012. with particular supply chain expertise. It also
implemented a new warehouse system
in its new DCs to enable a fast roll-out to
new warehouses and lay the foundation
for future expansion.
Store expansion Key financial

at 31 December figures €3,418m
€387m
at 31 December
1,095 stores
243
added since 2016
€2,675m
€310m
852
10
€1,995m
€226m
stores
€1,506m
relocated €166m
3
€1,155m
€129m
enlarged
2016 2017
14
refurbished 2013 2014 2015 2016 2017
Sales EBITDA
Geographical spread of stores

and DCs at 31 December 2017 People
6 stores
367 stores and 2 DCs
41,000
Employees
153 stores
6,000
216 stores and 1 DC
18 stores
335 stores and 2 DCs New employees hired

Our
business
A summary of our business,
how we create value and
the strategy that drives
our performance

Our business
Our business
at a glance
1%
5% 15%
Private Equity rth

Nor ther
Other Europe
n
No erica
£5,825m
Am
3% 83% Action
6%
44%
Proprietary capital value UK
8%
Scandlines
17%
Activity
£8.3bn Assets under
• Investment and asset management Management
to generate capital returns
• Investing in companies typically
with an enterprise value of
€100 million–€500 million at acquisition
in our core investment markets of
northern Europe and North America
• Focused on three sectors: Business
and Technology Services, Consumer 18%
and Industrial
• Invested in Action and Scandlines for
the medium term to generate capital
returns and cash income
• Portfolio of 35 unquoted assets and AUM breakdown by sector
one quoted stake
Consumer Industrial Business and Technology Services Other
18 Read more about
Private Equity
Highlights
MKM ATESTEO
Cash money multiple on exit Cash money multiple on exit
5.9x
(May 2017)
4.8x
(February 2018)

2% 52%
Infrastructure rth Other

Europe
No erica
£832m
Am
4% 91%
5%
Proprietary capital value
21%
Activity
£3.4bn Assets under
Our business
• Investment and asset management to Management
generate cash income and capital returns
• Investment Adviser to 3iN, which focuses
on economic infrastructure and greenfield
project investments in developed
economies, principally in Europe
• Manage three European Infrastructure
funds and one India Infrastructure fund 16%
• Set up a North American 4%
Infrastructure team
5%
25 Read more about
Infrastructure
AUM breakdown by fund

• 3i Infrastructure plc
• US infrastructure
• 3i India Infrastructure Fund
• BIIF Fund
• 3i Managed Infrastructure Acquisitions LP
• 3i European Operational Projects Fund
Smarte Carte 3iN

Investment Special dividend
£177m
(November 2017)
£143m
(March 2018)

Our business
Our
business Our expertise and strong balance
sheet differentiate our investment
model proposition and underpin our

capability to deliver growth and
returns to shareholders.
Key resources How we create value
Expert people
Our business is built on the skills of
Disciplined approach
our people and the deep knowledge Our institutional investment
they have in their core markets and platform ensures a consistent
sectors. Where possible, we train our approach to making investment
people in-house and our graduate and divestment decisions.
programme is designed to develop
Fund and portfolio income, together
world-class investment professionals
with discipline on costs, avoids
and business leaders.
dilution of returns.
Network
Our well-developed external
network of advisers and business
leaders assists us to identify
and access opportunities, Investing in
carry out due diligence and opportunities in
provide invaluable resources line with our
to our portfolio companies. risk appetite
Reputation
As an investment company established
for over 70 years, listed on the London Active management
Stock Exchange and a member of the
Our monthly portfolio monitoring
FTSE 100, we have developed a strong
meetings and semi-annual
brand and reputation.
investment reviews enable us to
pursue opportunities for growth as
Strong balance sheet well as to identify issues promptly.
Our strong balance sheet allows us the
flexibility and speed to invest in Private
Equity and Infrastructure opportunities.
We reinvest
a proportion
of our returns
to fund new
investments

Value created
Realisations,
fees and
portfolio
income
Net
operating
expense
Balance sheet strategy to
generate good distributions
for shareholders and funds
to invest for future growth
£1,425m
24% total return
Net carried
interest
payable Net interest
Our business
30.0p
costs Shareholder
distributions
dividend per share

Funds
to invest
Generate
returns for our
shareholders
£1,323m
realised proceeds
Capable of generating mid to high

teens returns through the cycle

Our business
Grow
investment
portfolio
earnings
Realise
investments
Our
with good
cash‑to‑cash
returns
strategic Maintain an
objectives operating
cash profit
We focus on opportunities
where our sector and investment Use our
expertise, combined with our strong balance
international presence and sheet
strong capital position, can
create material value for our
stakeholders.
I ncrease
shareholder
distributions

FY2018 progress FY2019 outlook
91% • Action’s growth is expected to continue as it 18 For further

information
plans to open more stores in 2018 than in 2017 see the Private
Equity section
of Private Equity • Strong performance from 2013-16 vintage and
portfolio companies1 good potential in the 2016-19 vintage
(by value) grew earnings • Close monitoring of potential impact of
in FY2018 geo-political and macro-economic uncertainty
£1,002m • Scandlines disposal and partial re-investment 18 For further

information
(net proceeds of c.€350 million) expected to see the Private
Equity section
Private Equity proceeds complete in the summer of 2018
• Expect realisations to be at least £750 million,
subject to market conditions
£143m 25 For further

information
see the
Infrastructure
Our business
Special dividend from 3iN section
£11m • Increasing cash income expected from 29 For further

information
Infrastructure and Scandlines see the
Financial review
Operating cash profit2 • Continue to focus on generating income where
appropriate from the remainder of the Private
Equity portfolio
• Cost discipline will be maintained
£587m • Plan to invest up to £750 million pa of proprietary 29 For further

information
capital in four to seven Private Equity investments, see the
Financial review
Invested in Private Equity whilst maintaining discipline on entry prices
• Advise 3iN on its recent investments to deliver good
returns and source further investment opportunities
£217m
Invested in Infrastructure
• Support Infrastructure’s fund management initiatives
in Europe and North America with new funds
30.0p • The dividend will be subject to the level of 2 For further

information
investment, realisations and balance sheet strength see the Chairman’s
statement
Dividend per share • Aim to maintain or grow the dividend year-on-year
• Expect interim FY2019 dividend to be 50%
of FY2018’s total dividend of 30.0 pence
1 Includes 21 companies valued on an earnings basis, as well as Basic-Fit and Scandlines.

2 Operating cash profit is an APM. Further details are included on page 43.
Further information on how these strategic objectives are factored into decisions concerning the
Executive Directors’ remuneration is included in the Directors’ remuneration report on page 73.

Our business
Key performance
indicators
KPI Link to strategic objectives
Gross investment The performance of the Grow investment

portfolio earnings
proprietary investment portfolio
return (“GIR”)1,2
expressed as a percentage of
as % of opening the opening portfolio value.
portfolio value 40%
29% 27%
24%
20%
2014 2015 2016 2017 2018
£1,308m £1,277m
Cash realisations1,2 Support our returns to
£270m £152m
shareholders, as well as £1,038m £1,125m
our ability to invest in Increase shareholder
new opportunities. £841m distributions
£671m £718m
Cash realisations
Proceeds from the sale
of Debt Management/residual
Debt Management assets
2014 2015 2016 2017 2018
Cash investment1,2 Identifying new opportunities Grow investment

portfolio earnings
in which to invest proprietary £827m
capital is the primary driver of £638m Use our strong
the Group’s ability to deliver £433m balance sheet
attractive returns. We also £369m
£276m
invest further capital in Increase shareholder
distributions
existing investments.
2014 2015 2016 2017 2018
Operating cash By covering the cash operating £45m

cash profit
cost of running our business
profit1,2,3 £37m
with cash income, we reduce Increase shareholder
the potential dilution of distributions
capital returns. £11m £11m
£5m
2014 2015 2016 2017 2018
NAV The measure of the fair value 724p Grow investment

portfolio earnings
per share of our proprietary
per share 604p
investments and other assets 463p Realise investments with
396p
after the net cost of operating 348p good cash-to-cash returns
the business.
cash profit
2014 2015 2016 2017 2018
71%
Total shareholder The return to our shareholders 7% Increase shareholder
distributions
through the movement in the 64%
return (“TSR”)
share price and dividends paid
30% 27%
during the year. 4% 18%
5%
26% 22% 3%
Dividends (2)%
Share price 4% 15%
(6)%
2014 2015 2016 2017 2018

FY2018 progress Key risks
• Another year of strong performance with a GIR in Private Equity • Investment rates or quality of new investments are
of £1,438 million, or 30% and a Group GIR of £1,552 million, or 27% lower than expected
• Action performed strongly, opening 243 net new stores in calendar year • Subdued M&A activity and/or reduced prices in 3i’s core
2017 and generating like-for-like sales growth of 5.3% sectors could impact timing of exits and cash returns
• Significant uplifts recognised as a result of the highly competitive • Operational underperformance in the portfolio companies
process for Scandlines and the sale of ATESTEO to a strategic buyer impacts earnings growth and exit plans
• 2013–16 vintage of investments delivered a GIR of 29% (2017: 29%) • Sterling materially strengthens against the euro and
• 3iN delivered a TSR of 12% (2017: 16%) US dollar; at 31 March 2018, 78% of the portfolio was
denominated in euros or US dollars
• GIR includes an £11 million gain from foreign exchange
(2017: £269 million gain)
• Private Equity generated proceeds of £1,002 million from the • Subdued M&A activity in our core sectors reduces
disposal of eight companies and the refinancing of three assets investor appetite for our assets
• Received a £143 million special dividend from 3iN following the • Macro-economic uncertainty limits investor appetite
divestments of its holdings in Elenia and AWG for the private equity and infrastructure asset classes
• Received proceeds of £152 million from the sale of the residual • Debt markets become less supportive of leveraged
Debt Management investments buyouts or refinancings
• Total proceeds of £1,323 million include £46 million of cash in transit
Our business
at 31 March 2018
• Invested £587 million (2017: £478 million) in four new Private Equity • Competition from other private equity and infrastructure
investments and two important further investments in Cirtec and Ponroy investors, as well as trade and other financial buyers, could
Santé to support their acquisitions of Vascotube and Aragan respectively make it more challenging to source investments at prices
• Invested £177 million in our first North American infrastructure investment, that will meet our return targets
Smarte Carte, and supported the launch of two new European Infrastructure • Failure to attract, invest in and retain the right investment
funds by investing £40 million executives impacts our ability to originate and manage assets
• Failure to maintain and develop our network of advisers and
business leaders reduces the quality of potential deal flow
• Increasing cash income from Infrastructure replaced cash income • Portfolio performance, and therefore portfolio income,
previously generated by the Debt Management business is weak
• Decision to reinvest in Scandlines to generate cash dividend income • Reduced ability to generate interest and dividend income
for the Group in a private equity structure
• Remain disciplined over operating cash expenses, which declined • Infrastructure initiatives do not generate sufficient fee income
marginally to £115 million (2017: £116 million) • Unplanned increase in the cost base; for example legal,
compliance or regulatory costs
• 20% increase in NAV per share to 724 pence (31 March 2017: 604 pence) • Implications of the UK’s decision to leave the EU and
• Very strong GIR from Private Equity the current UK political uncertainty could limit the
attractiveness of UK plc
• Ongoing geo-political uncertainty further dampens
investor sentiment
• Wider G20 political and economic uncertainty impacts
3i’s portfolio companies and valuations
• TSR of 18% driven by a share price increase of 15% in the year, together with the • Lower NAV due to investment underperformance
final FY2017 dividend of 18.5 pence and interim FY2018 dividend of 8.0 pence or political and economic uncertainty
• Net divestment, strong balance sheet and closing net cash support • Investor appetite for 3i shares could reduce in a volatile
a dividend of 30.0 pence per share macro-economic environment
1 A number of our KPIs are calculated using financial information which is not defined under IFRS and therefore they are classified as APMs.
Further details on these APMs are included in our Financial review on page 43.
2 Further information on how these KPIs are factored into decisions concerning the Executive Directors’ remuneration is included in the Directors’ remuneration report on page 73.
3 Operating cash profit balances up to 2016 include the contribution of the Debt Management business, sold to Investcorp in March 2017.

Our business
Private Equity Consumer
Hans Anders
Founded in 1982 and headquartered We have extensive experience of
in the Netherlands, Hans Anders is investing in the value-for-money
a market leading, value-for-money segment through Action and
optical retailer. The company offers Basic-Fit and we think there are
a range of private label and branded significant opportunities for growth
spectacles, as well as hearing aids, in the highly fragmented European
contact lenses and sunglasses through optical retail market.
a network of over 400 stores.
Hans Anders represents an attractive
opportunity, is consistent with our
consumer strategy and will benefit
£172m
3i investment
from long-term growth dynamics
including an aging population, and an For more information, visit
increasing focus by consumers on the www.hansanders.nl
value-for-money segment.
Investments
in the year
Industrial
Formel D
Formel D is a service provider to the Along with our investment partners,
automotive and component supply we are working with management to
industry, headquartered in Germany roll out Formel D’s existing services
and founded in 1993. Through its range to clients in other geographies,
of testing and inspection services expand its client base in Asia and
for individual parts, systems and increase its higher value add services
vehicles, Formel D is an important such as vehicle test specification
player in the automotive value chain. and virtual testing.
Formel D’s customers include premium
£132m
automotive OEMs with whom it has
long standing relationships. It has over
7,000 employees and operates more
than 80 facilities in 19 countries. 3i investment
For more information, visit
www.formeld.com/en

Industrial
Cirtec Medical
Cirtec is a leading provider of The medical device outsourcing
outsourced medical device design, (“MDO”) market is expected to grow at
engineering and manufacturing. a high single digit to low double digit
Cirtec is headquartered in Minnesota rate over the next five years, as medical
with three facilities across the US device manufacturers increasingly focus
and one in Germany. The business on core competencies of research and
has been in operation for over 25 development and commercial initiatives.
years and has over 500 employees. Cirtec is strategically positioned to serve
In December 2017, Cirtec completed attractive end markets that are set to
a transformational acquisition grow at a rate beyond the broader
of Vascotube, a market leading MDO industry.
manufacturer of precision engineered
We are supporting Cirtec to execute
tubing based in Germany.
its strategy through internal investment
Cirtec specialises in outsourced and targeted acquisitions (such
solutions for active implantables as Vascotube) within the highly
and minimally invasive devices in fragmented MDO market. Utilising our
the areas of neuromodulation, drug sector experience and international
delivery, structural heart, interventional network, we are working with Cirtec to
cardiovascular and neurovascular and establish a low cost footprint, expand
other fast growing, minimally invasive its development and manufacturing
interventional therapeutics. capabilities and support the team’s
growth as the organisation scales.
Consumer
Lampenwelt £172m
Our business
Founded in 2004, Lampenwelt is We had been following Lampenwelt
3i investment
the leading specialist online retailer for some time and during 2016 For more information, visit
of lighting products in Europe. approached the company to discuss www.cirtecmed.com
The company is headquartered in a potential investment in the business.
Germany from where it distributes We undertook due diligence outside a
own-brand and third-party products formal sales process, with full access to
to customers in 15 countries the business and senior management.
across Europe. Lampenwelt’s growth plans fit well with
our strategy of supporting mid-sized
Lampenwelt differentiates itself from
companies to grow internationally.
its competitors through an extensive
£95m
range of over 45,000 own and
branded products, in-depth product
knowledge, excellent customer
service and high product availability.
3i investment
www.lampenwelt.de
www.lights.co.uk

Our business
Private Equity
Business review
Our Private Equity business generated very strong returns in

FY2018 with a GIR of £1,438 million, or 30% on the opening portfolio
(2017: £1,624 million, 43%), and realisations of £1,002 million
(2017: £982 million). Despite continued political uncertainty and
highly competitive markets, assets including Action, Audley Travel
and Basic-Fit performed well. The team made investments of
£587 million and delivered very strong returns from the realisation
of ATESTEO and the upcoming exit of Scandlines.
Investment activity An important component of our In addition to the £587 million investment
investment strategy is our ability to completed in the year to 31 March 2018, our
We had a very busy year, completing four
facilitate transformative M&A in our £135 million investment in Royal Sanders, a
new investments and a number of further
portfolio companies. In November 2017, leading European private label and contract
acquisitions. We invested £95 million
we completed a further investment manufacturing producer of personal care
in Lampenwelt, the largest European
in Cirtec to support its acquisition of products, completed on 3 April 2018.
online specialist retailer in the lighting
Vascotube, an outsourced medical
space and £172 million in Hans Anders, In April 2018, we also announced a
device manufacturer based in Germany.
a value-for-money optical retailer based in c.$150 million investment in International
This transaction represented an
the Netherlands. We invested £132 million Cruises and Excursions, a global travel and
attractive opportunity to add a European
in Formel D, a service provider to the loyalty company that connects leading
manufacturer whose product is used in
automotive and component supply industry brands, travel suppliers and end consumers.
the fast-growing minimally invasive sector
based in Germany, bringing in CITIC Capital The acquisition is expected to complete
that Cirtec specialises in. We also invested
as a co-investor to facilitate Formel D’s by June 2018.
£10 million in Ponroy Santé to support
expansion in China and £103 million in
its acquisition of Aragan, a designer and
Cirtec, a leading provider of outsourced
distributor of premium pharmaceutical
medical device design, engineering and
food supplements. Finally, together with
manufacturing, headquartered in the US.
EFV, 3i acquired £11 million of Action
shares from other shareholders.
Table 1: Private Equity cash investment in the year to 31 March 2018

Proprietary
Total capital
investment investment
Investment Type Business description Date £m £m
Lampenwelt New Online lighting specialist retailer May 2017 96 95
Hans Anders New Value-for-money optical retailer May 2017 173 172
Formel D New Quality assurance service provider for the automotive industry July 2017 150 132
BoConcept Over-funding Urban living designer July 2017 (11) (11)
Cirtec New/Further Outsourced medical device manufacturing August/November 2017 173 172
Ponroy Santé Further (M&A) Manufacturer of natural healthcare and cosmetics products November 2017 11 10
Action Further Non-food discount retailer March 2018 19 11
Other n/a n/a n/a 8 6
Total Private Equity investment 619 587

Realisations activity Where appropriate, we refinance our In aggregate, we generated total proceeds
strongest assets when market conditions of £1,002 million (2017: £982 million) and
Market conditions remained favourable,
and trading performance allow. In July realised profits of £199 million in the year
resulting in some highly competitive exit
2017, Scandlines completed an €862 million (2017: £38 million).
processes. As a result, we generated
refinancing, which resulted in £50 million
proceeds of £603 million from the sale of As at 31 March 2018, the portfolio comprised
of proceeds for 3i. In November 2017,
eight companies, realising an average money 35 assets and one quoted stake (31 March
we completed the second refinancing of
multiple of 2.4x (2017: £621 million, 1.8x). 2017: 37 assets and three quoted stakes).
ATESTEO, which generated proceeds of
The sale of ATESTEO generated proceeds
£30 million. Action’s strong growth and In March 2018, we announced the sale of
of £278 million and a money multiple on
cash flow generation enabled it to de-lever Scandlines and our partial reinvestment
our investment of 4.8x. This is an excellent
rapidly during 2017, allowing a €2.4 billion together with funds managed by First
result from one of our 2013-2016 vintage
refinancing in March 2018, which resulted State Investments and Hermes Investment
investments. In addition, we completed
in a £307 million distribution to 3i. Since our Management. The effect of these
the sale of some of our older investments,
investment in 2011, Action has returned transactions will be accounted for when
such as Mémora and MKM, as well as Óticas
£834 million of refinancing proceeds to 3i, the transaction completes, expected to be
Carol, our last remaining investment in Brazil.
a 7.1x cash return on our investment to date. in the summer of 2018.
We sold all of our remaining quoted stakes
in Dphone and Refresco Gerber.
Our business
Table 2: Private Equity realisations in the year to 31 March 2018
31 March Profit/(loss) Uplift on
Calendar 2017 3i realised in the opening Residual
year value1 proceeds year2 value2 value Money
Investment Country invested £m £m £m % £m multiple3 IRR
Full realisations
ATESTEO Germany 2013 130 278 139 100% – 4.8x 51%
Mémora Spain 2008 86 119 32 37% – 1.4x 4%
MKM UK 2006 68 70 2 3% – 5.9x 19%
Refresco Gerber Netherlands 2010 32 43 10 30% – 2.0x 13%
Foster and Partners UK 2007 34 33 (1) (3)% – 1.8x 9%
Óticas Carol Brazil 2013 19 27 9 50% – 1.9x 15%
Dphone Hong Kong 2006 21 26 6 30% – 2.2x 7%
Hobbs UK 2004 9 7 (2) (22)% – 0.2x (14)%
Total realisations 399 603 195 48% – 2.4x n/a
Refinancings3
Action Netherlands 2011 307 307 – – 2,064 24.5x 79%
Scandlines Denmark/ 2007/2013 50 50 – – 803 7.4x 34%
Germany
ATESTEO Germany 2013 30 30 – – – n/a n/a
Total refinancings 387 387 – – 2,867 n/a n/a
Partial realisations1,3
Other n/a n/a 4 6 – – 36 n/a n/a
Deferred consideration
Other n/a n/a 1 6 4 n/a – n/a n/a
Total Private Equity realisations 791 1,002 199 25% 2,903 n/a n/a
1 For partial realisations, 31 March 2017 value represents value of stake sold.
2 Cash proceeds realised in the period over opening value.
3 Cash proceeds over cash invested. For partial realisations and refinancings, valuations of any remaining investment are included in the multiple.

Our business
Private Equity
Business review
continued
Portfolio valuation A number of investments in our 2013–2016 The good performance of our strongest
vintage such as Audley Travel, Aspen assets was partially offset by specific
The strong performance of the portfolio
Pumps, Q Holding and WP are delivering weaknesses in a small number of portfolio
resulted in unrealised value growth of
good earnings growth, and therefore we companies which are either exposed to the
£1,080 million (2017: £1,274 million).
recognised good value uplifts on these high street retail sector or are undergoing
assets in the year. a change programme. Christ, our German
Performance jewellery retailer, saw the largest decline in
Audley Travel is a provider of luxury, tailor-
The strong performance of the investments value in the year (£53 million). Consistent with
made, holidays to over 80 destinations
valued on an earnings basis resulted other retailers, Christ is subject to structural
worldwide, and serves clients principally in
in an increase in value of £541 million changes in the market such as the increasing
the UK and the US. Since our investment
(2017: £827 million) with the most significant shift to online shopping. Although Christ is
in December 2015, Audley has seen two
contribution coming from Action. maintaining market share, these changes
successive years of strong revenue growth in
At 31 March 2018, Action was valued using have impacted earnings.
the UK and US and has continued to invest
run-rate earnings at 31 March 2018. Action’s in order to further scale the business. As a Schlemmer has undertaken a significant
post discount run-rate multiple increased result, our £156 million investment was valued operational reorganisation of its activities
to 16.5x (31 March 2017: 16.0x) resulting at £233 million at 31 March 2018. 3i invested in Germany and the US, which have
in a value of £2,064 million (31 March in WP, an innovative plastic packaging impacted earnings and liquidity this year.
2017: £1,708 million) after the receipt of manufacturer, in August 2015. The business BoConcept was acquired in the knowledge
£307 million from its refinancing. As the performed well in 2017, increasing market that its organisational and retail structure
largest Private Equity investment by value, share. It completed one small acquisition would need careful review and good
it represented 35% of the Private Equity in 2017, as well as two further acquisitions progress is being made to address this.
portfolio (31 March 2017: 35%). in early 2018. Our investment was valued Finally, Euro-Diesel’s growth was lower than
at £244 million at 31 March 2018 (31 March expected this year. Notwithstanding this,
2017: £200 million). the company has a strong customer base
and a full pipeline of orders for 2018.
Table 3: Unrealised profits/(losses) on the revaluation of Private Equity investments1 in the year to 31 March
2018 2017
£m £m
Earnings based valuations
Performance 541 827
Multiple movements 144 239
Other bases
Uplift to imminent sale 3 8
Scandlines transaction value 302 –
Discounted cash flow 3 158
Other movements on unquoted investments 6 (1)
Quoted portfolio 81 43
Total 1,080 1,274
1 Further information on our valuation methodology, including definitions and rationale, is included in the Portfolio valuation – an explanation section on pages 150 to 151.

Overall, 91% of the assets in the portfolio Multiple movements Excluding Action, the weighted average
valued on an earnings basis, together with EBITDA multiple increased to 11.7x before
The increase in value due to multiple
Scandlines and Basic-Fit, grew their earnings liquidity discount (31 March 2017: 10.6x)
movements was £144 million (2017: £239
in the year (2017: 93%). One investment was and was 11.0x after liquidity discount
million increase). The run-rate multiple used
valued using forecast earnings at 31 March (31 March 2017: 9.9x). The increase in the
to value Action increased to 16.5x post
2018 (31 March 2017: one), representing 1% weighted average multiple reflects in part
liquidity discount at 31 March 2018 (31 March
of the portfolio by value (31 March 2017: 2%). the recent investment in companies in
2017: 16.0x) to reflect its continued strong
Chart 1 shows the earnings growth of our higher rated sectors, such as Cirtec and
performance and potential for further growth
top 20 assets. Lampenwelt, and the sale of assets held
in the seven countries it operates in. Based
at lower multiples.
Overall, net debt across the portfolio on the valuation at 31 March 2018, a net 1x
increased to 4.0x earnings (31 March movement in Action’s post discount multiple The pre-discount multiples used to value
2017: 3.3x) principally due to the refinancing would increase or decrease the valuation the portfolio ranged between 8.5x and 17.4x
of Action and Scandlines. Excluding Action of 3i’s investment by £176 million (31 March (31 March 2017: 5.0x to 16.8x) and the post
and Scandlines, the ratio was 3.3x (31 March 2017: £142 million). discount multiples ranged between 6.3x
2017: 2.9x). Chart 2 shows the ratio of net and 16.5x (31 March 2017: 4.8x to 16.0x).
Across the remainder of the portfolio, we
debt to earnings by portfolio value at
increased multiples for a number of assets
31 March 2018.
where their performance or the strength
of their sector merited a review. Generally,
we consider a number of factors such as
relative performance, investment size,
comparable recent transactions and exit
Our business
plans. We also consider the current strength
of equity markets and, as a result, we
selected multiples that were lower than the
comparable set in 14 out of the 21 companies
valued on an earnings basis (31 March 2017:
14 out of 22).
Chart 1: Portfolio earnings growth of

the top 20 Private Equity1 investments Chart 2: Ratio of net debt to earnings1
2,064
803
2,590
714
1,599
870
452 615
489 395
29
<0% 0 – 9% 10 – 19% >20% <1x 1 – 2x 2 – 3x 3 – 4x 4 – 5x >5x
5 6 5 4 1 4 4 3 8 –
Number of companies Number of companies
3i carrying value at 31 March 2018 (£m) Action

Scandlines
1 Includes top 20 Private Equity companies by value. 3i carrying value at 31 March 2018 (£m)
This represents 95% of the Private Equity portfolio
by value (31 March 2017: 91%). 1 This represents 88% of the Private Equity portfolio
by value (31 March 2017: 87%). Quoted holdings, deferred
consideration and companies with net cash are excluded
from the calculation.

Our business
Private Equity
Business review
continued
Scandlines transaction value Quoted portfolio Assets under management
In March 2018, we announced the sale Basic-Fit generated strong growth in its 2017 The value of 3i’s proprietary capital
of Scandlines for a total equity value of financial year with revenue and profit up by increased to £5.8 billion in the year
€1.7 billion (31 March 2017 value: €1.1 billion). 26% and 25% respectively. The business (31 March 2017: £4.8 billion).
3i valued its stake at £803 million at 31 March ended the year with 521 clubs and 1.5 million
The value of the portfolio including
2018 (31 March 2017: £538 million) and members. This strong performance was
third-party capital increased to €9.5 billion
we recognised unrealised value growth reflected in the share price increasing to
(31 March 2017: €8.1 billion).
of £302 million to reflect the value of the €23.35 at 31 March 2018 (31 March 2017:
transaction, less a 2.5% discount. €16.27) and resulted in an unrealised value
gain of £81 million in the year. 3i’s stake was
At the completion of the sale, 3i will reinvest
valued at £270 million at 31 March 2018
to hold a 35% stake.
(31 March 2017: £184 million).
Our quoted holdings in Dphone and
Refresco Gerber were sold during the year.
Table 4: Quoted portfolio value movement for the year to 31 March 2018
Closing
Opening Disposals Unrealised value at
value at at opening value Other 31 March
1 April 2017 book value movement movements1 2018
Investment IPO date £m £m £m £m £m
Dphone July 2014 21 (21) – – –
Refresco Gerber March 2015 32 (33) – 1 –
Basic-Fit June 2016 184 – 81 5 270
Total 237 (54) 81 6 270
1 Other movements include foreign exchange.
Table 5: Private Equity assets by geography as at 31 March

3i carrying
value
Number 2018
3i office location of companies £m
Benelux 6 2,789
France 2 211
Germany 6 1,493
UK 11 632
US 4 497
Other 7 203
Total 36 5,825
Table 6: Proprietary capital as at 31 March

Proprietary Proprietary
capital capital
value value
2018 Multiple 2017 Multiple
Vintages £m 2018 £m 2017
Buyouts 2010–2012 2,139 7.2x 1,779 5.9x
Growth 2010–2012 33 2.2x 33 2.2x
2013–20161 1,695 2.1x 1,607 1.7x
2016–20191 1,057 1.1x 422 1.0x
Other 901 n/a 990 n/a
Total 5,825 4,831
1 Assets included in these vintages are disclosed in the glossary on page 154.

Infrastructure
Smarte Carte
Headquartered in White Bear Lake, 3i invested in Smarte Carte in November
Minnesota, Smarte Carte is a leading 2017. Smarte Carte completed its first
concessionaire of essential infrastructure add-on acquisition under 3i’s ownership in
equipment in the airport and leisure January 2018 with the purchase of Aviation
industries. The company owns and Mobility LLC, the only pure-play provider
manages baggage carts as the sole of legally mandated wheelchairs for the US
provider in 125 locations (including commercial aviation sector with a fleet of
49 of the top 50 airports in the US) under c.15,000. The team completed a $225 million
long-term contracts. The company also refinancing of Smarte Carte in March 2018.
owns and manages lockers and other
3i intends to partner with management to
consumer-rental equipment in amusement
grow Smarte Carte’s footprint, especially
parks, fitness clubs, shopping malls
in Europe through the established track
and ski resorts, in over 2,500 locations
record of its Infrastructure business.
across seven countries.
£177m
Total investment funded by 3i
Investments
Our business
www.smartecarte.com
in the year
Infinis
Further investment in Alkane Energy
Infinis is the largest generator of electricity The merger of Alkane with Infinis
from landfill gas (“LFG”) in the UK, with will create a business with significant
a portfolio of 121 landfill sites and total scale, offer operational improvement
installed capacity of over 300MW. opportunities and the potential to
further elevate Alkane’s generation
3iN invested an additional £125 million to
performance and growth potential.
fund Infinis’ acquisition of Alkane Energy,
£125m
an independent power generator from both
coal mine methane (“CMM”) and reserve
power operations and the largest generator
from CMM in the UK. Alkane performs
a vital environmental service, extracting
Investment
methane from abandoned coal mines funded by 3iN
that would otherwise be released into the For more information, visit
atmosphere. In addition, by using the CMM www.infinis.com
to generate electricity, Alkane supplies
distribution networks with a reliable source
of baseload power.
25
Our business
Infrastructure
Business review
Infrastructure contributed a gross investment return of £113 million,

or 16% on the opening portfolio (2017: £87 million, 17%). This was
driven by 3iN’s strong share price appreciation together with good
levels of dividend and fee income from both 3iN and the other
funds managed by the team.
Investment adviser to 3iN In March 2018, £425 million of the Infrastructure portfolio
proceeds were returned to shareholders
In its capacity as 3iN’s investment adviser, performance
as a special dividend, representing
3i advised on six new investments, including
the £186 million further investment to acquire
substantially all of the value uplift recorded Quoted
on Elenia and AWG during the year. As a
a majority position in Wireless Infrastructure The most significant component of the
34% shareholder, 3i received £143 million
Group and the £125 million follow-on Group’s infrastructure portfolio is its 34%
of the special dividend.
investment in Infinis to support its acquisition quoted stake in 3iN.
of Alkane Energy. We also advised 3iN on its Overall, the 3iN portfolio continues to
3iN’s shares performed well in the year
€201 million investment in Attero, announced perform well and the company generated
and the share price closed at 214 pence on
at the end of March 2018. In total, we advised an excellent total return of 29% in the year
31 March 2018 (31 March 2017: 189 pence).
3iN on investments and commitments of (2017: 9%).
3iN generated £27 million (2017: £23 million)
£525 million in 2018 (2017: £479 million).
Under the terms of the investment advisory of dividend income as well as a special
We advised 3iN on the realisation of its agreement, 3iN paid an advisory fee of dividend of £143 million (2017: nil) for 3i.
holdings in Elenia and AWG, generating £34 million to 3i (2017: £25 million), with the
proceeds of £1,137 million. Elenia, the increase attributable to new investment Discounted cash flow
owner and operator of the second largest activity, and a NAV-based performance As at 31 March 2018, 3i‘s largest Infrastructure
electricity distribution business in Finland fee of £90 million (2017: £4 million). Of this, investment valued on a DCF basis was
and a complementary district heating £67 million is expected to be payable to the investment in Smarte Carte, valued at
business, was acquired by 3iN in January the Infrastructure team, with £9 million £167 million (31 March 2017: nil). Following
2012 as part of a consortium. In December recognised during the year and the balance the initial investment in November 2017
2017, the consortium partners agreed to sell deferred and expensed over a number as a seed for the North America fund
the business, which resulted in proceeds of years. management strategy, 3i supported Smarte
of £738 million for 3iN. Carte’s acquisition of Aviation Mobility in
3iN agreed to sell its stake in AWG, the January 2018. In March 2018, we completed a
supplier of water and water recycling services $225 million refinancing of Smarte Carte.
to the east of England and Hartlepool, 3i also has an investment in the 3i India
in December 2017, having held its stake Infrastructure Fund, which the team
since its IPO in 2007. It received proceeds continues to manage to maximise value
of £399 million from the transaction in for fund investors.
February 2018.
In total, the Infrastructure portfolio
generated unrealised value growth
of £83 million (2017: £59 million).
Table 7: Unrealised profits/(losses) on the revaluation of Infrastructure investments1 in the year to 31 March
2018 2017
£m £m
Quoted 67 63
Discounted cash flow 8 (4)
Fund NAV 8 –
Total 83 59
1 Further information on our valuation methodology, including definitions and rationale, is included in the Portfolio valuation – an explanation section on pages 150 to 151.

Fund Management In April 2018, we announced the final close of Assets under management
the 3i European Operational Projects Fund
We launched two funds in the year to and advisory agreement
with commitments of €456 million, including
complement our 3iN mandate and Infrastructure AUM increased to £3.4 billion
a €40 million commitment from 3i. This fund
generate increased cash income for (31 March 2017: £2.9 billion) principally due
purchased the majority of the PPP assets
3i in the medium term. to the new fund management initiatives
held by 3i’s existing BEIF II fund. The fund
In June 2017, we closed the c.£700 million has invested and committed to invest launched in the year, as well as to 3iN’s share
3i Managed Infrastructure Acquisitions approximately €85 million in operational PPP price increase.
LP and invested £30 million into the fund projects across Europe.
alongside two pension funds, ATP and APG.
The fund holds investments in East Surrey
Pipelines, Belfast City Airport, HerAmbiente
and a number of discrete PPP projects.
Our business
Table 8: Infrastructure portfolio value movement in the year to 31 March 2018
Closing
Opening Disposals Unrealised value at
value at at opening value Other 31 March
1 April 2017 Investment book value1 movement movements2 2018
Investment Valuation £m £m £m £m £m £m
3iN Quoted 655 – (137) 67 (4) 581
Smarte Carte DCF – 177 (11) 7 (6) 167
3i Managed Infrastructure Acquisitions LP NAV – 30 (1) 7 – 36
3i European Operational Projects Fund NAV – 10 – 1 (1) 10
3i India Infrastructure Fund DCF 41 – (1) 1 (3) 38
Other DCF 10 – (10) – – –
Total 706 217 (160) 83 (14) 832
1 For Smarte Carte, the disposal is shown at investment value.
2 Other movements include foreign exchange.
Table 9: Assets under management and advisory agreement as at 31 March 2018

Fee income
3i % invested at earned in
commitment Remaining 3i 31 March AUM 2018
Fund Close date Fund size /share commitment 2018 £m £m
3iN1 Mar 07 n/a £581m n/a n/a 1,731 34
3i Managed Infrastructure Acquisitions LP Jun 17 £698m £35m £5m 85% 707 5
3i European Operational Projects Fund2 Nov 17 €251m €40m €29m 27% 65 –
BIIF May 08 £680m n/a n/a 90% 551 5
3i India Infrastructure Fund Mar 08 US$1,195m US$250m US$35m 73% 139 4
Other various various various n/a n/a 167 2
Total 3,360 50
1 AUM based on the share price at 31 March 2018.
2 The final close of the 3i European Operational Projects Fund took place on 10 April 2018 with commitments of €456 million. At 10 April 2018, the percentage invested was 15%.

Performance,
risk and
sustainability
An analysis of our financial
performance, the principal risks
impacting our business and our
responsible approach to investing

Financial review
Strong financial performance The Group recognised a loss of £16 million on foreign exchange
translation (2017: £297 million gain).
FY2018 was another year of strong financial performance.
We generated a gross investment return of £1,552 million We generated a total return of £1,425 million or a profit on
(2017: £1,755 million) and operating profit before carried opening shareholders’ funds of 24% (2017: £1,592 million or 36%).
interest of £1,428 million (2017: £1,675 million). As a result of the strong performance in the year, the diluted
NAV per share at 31 March 2018 increased by 20% to 724 pence
The performance was driven by strong unrealised value growth
(31 March 2017: 604 pence).
from Action, Scandlines and Basic-Fit, and the material uplifts
from the disposals of ATESTEO and Mémora in the year.
Table 10: Total return for the year to 31 March

2018 2017
Investment basis £m £m
Realised profits over value on the disposal of investments 207 38
Unrealised profits on the revaluation of investments 1,163 1,342
Portfolio income
Dividends 41 50
Interest income from investment portfolio 116 50
Fees receivable 14 6
Foreign exchange on investments 11 269
and sustainability
Performance, risk
Gross investment return 1,552 1,755
Fees receivable from external funds 57 46
Operating expenses (121) (117)
Interest received 2 2
Interest paid (37) (49)
Exchange movements (27) 28
Other income 2 10
Operating profit before carried interest 1,428 1,675
Carried interest
Carried interest and performance fees receivable 228 279
Carried interest and performance fees payable (205) (434)
Operating profit from continuing operations 1,451 1,520
Income taxes (26) 3
Re-measurements of defined benefit plans – (22)
Total comprehensive income: continuing operations
(“Total return from continued operations”) 1,425 1,501
Total comprehensive income from discontinued operations, net of tax1
(“Total return from discontinued operations”) – 91
Total comprehensive income (“Total return”) 1,425 1,592
Total return on opening shareholders’ funds 24% 36%
1 Discontinued operations included the results from 3i’s Debt Management business, sold to Investcorp in March 2017.
Alternative performance measures (“APMs”)

In October 2015, the European Securities and Markets Authority (“ESMA”) published guidelines about the use of APMs.
These are financial measures such as KPIs that are not defined under IFRS. In our Strategic report we describe our financial
performance under our Investment basis, which is itself an APM, and use a number of other measures which, on account of
being derived from the Investment basis, are also APMs. Further information about our use of APMs, including the applicable
reconciliations to the IFRS equivalent where appropriate, is provided at the end of the Financial review and should be read
alongside our Investment basis to IFRS reconciliation. Our APMs are gross investment return as a percentage of the opening
investment portfolio value, cash realisations, cash investment, operating cash profit, net cash/(debt) and gearing.

Financial review
continued
Realised profits Fees receivable from external funds

We generated total proceeds of £1,323 million (2017: £1,005 million) Fees receivable increased to £57 million (2017: £46 million) due to
and a profit on disposal of £207 million (2017: £38 million). The majority increased advisory fee income from 3iN. 3i, as investment adviser,
of the realisations and uplift over opening value were from the receives a fee for sourcing and completing new investments for 3iN.
Private Equity portfolio, which contributed £1,002 million of proceeds We advised 3iN on six investments with commitments of £525 million,
(2017: £982 million). Private Equity realisations included the sales of including the further investments in Wireless Infrastructure Group
ATESTEO (£278 million, 100% uplift over opening value) and Mémora and Infinis (2017: six investments and £479 million). In addition, we
(£119 million, 37% uplift over opening value) together with refinancing started to generate fee income from the 3i Managed Infrastructure
proceeds of £387 million from Action, Scandlines and ATESTEO. Acquisitions LP, which closed in June 2017.
Unrealised value movements Operating expenses

We recognised an unrealised value movement of £1,163 million Operating expenses increased to £121 million (2017: £117 million),
(2017: £1,342 million). Action’s continued strong performance principally due to a planned increase in staff costs as we invest to
contributed £610 million (2017: £911 million) to value growth. support our origination and asset management capability, as well as
Following the announcement of our agreement to sell Scandlines an increase in the Infrastructure team’s share of the 3iN advisory fee
at the end of March 2018, we recognised an unrealised value gain income referred to above.
of £302 million (2017: £155 million). The majority of the portfolio
continued to perform well, notably Basic-Fit, Audley Travel, Operating cash profit
Q Holding, WP and AES.
3i generated an operating cash profit of £11 million in the
Further information on the Private Equity and Infrastructure year (2017: £5 million). Cash income increased to £126 million
valuations is included in the respective Business reviews. (2017: £121 million) principally due to the increase in third-party
capital fees in Infrastructure to £47 million (2017: £37 million).
Portfolio income
Portfolio income grew to £171 million during the year (2017: £106 million) Net interest payable
principally as a result of an increase in loan interest income receivable Gross interest payable reduced to £37 million (2017: £49 million),
following the material increase in investment activity over the last two following the repayment of the €331 million bond in March 2017.
years. The majority of this interest income is non-cash. We recognised Interest receivable on cash balances was £2 million (2017: £2 million).
£14 million of fee income (2017: £6 million) due to transaction fees
generated from our investment activity and to a reduction in abort
costs incurred on prospective transactions. Dividend income
reduced to £41 million (2017: £50 million) following the disposal of the
remaining Debt Management investments in the year.
Table 11: Unrealised profits on revaluation of investments (continuing operations) for the year to 31 March
2018 2017
£m £m
Private Equity 1,080 1,274
Infrastructure 83 59
Other (residual Debt Management) – 9
Total 1,163 1,342
Table 12: Operating cash profit for the year to 31 March

2018 2017
£m £m
Third-party capital fees 55 47
Cash portfolio fees 13 12
Cash portfolio dividends and interest 58 62
Cash income from continuing operations 126 121
Operating expenses from continuing operations (115) (116)
Operating cash profit: continuing operations 11 5
Operating cash profit: discontinued operations – 28
Operating cash profit 11 33

Carried interest and performance fees 3iN pays a performance fee based on 3iN’s NAV on an annual
basis, subject to a hurdle rate of return and a high watermark.
The continued good performance of Action and the announcement
The continued strong performance of the assets held by 3iN,
of the sale of Scandlines, the largest investments in our Private Equity
including the significant uplifts achieved on the sales of Elenia and
fund EFV, led to a £136 million increase in carried interest receivable
AWG, resulted in the recognition of £90 million (2017: £4 million) of
from EFV (2017: £272 million). This was calculated assuming that the
performance fees receivable. The Infrastructure team receives a
portfolio was realised at the 31 March 2018 valuation. The fund’s
share of the performance fee received from 3iN, with the majority of
gross multiple was 2.5x at 31 March 2018 (31 March 2017: 2.2x).
payments deferred and expensed over a number of years. £9 million
In Private Equity, we typically accrue carried interest payable at (2017: £3 million) was accrued as payable to the Infrastructure team
between 10% and 15% of gross investment return. The majority of during the year out of a total potential payable of £67 million.
assets by value are now held in schemes that would have met their
Overall, the effect of the income statement charge, the cash
performance hurdles, assuming that the portfolio was realised at
movement, as well as the currency translation meant that the balance
the 31 March 2018 valuation. We accrued carried interest payable of
sheet carried interest and performance fees payable increased
£196 million (2017: £431 million) for Private Equity, of which £77 million
to £870 million (31 March 2017: £685 million) and the receivable
relates to the Private Equity team’s share of carried interest receivable
increased to £596 million (31 March 2017: £366 million).
from EFV (2017: £202 million).
Carried interest is paid to participants when the performance hurdles
are passed in cash terms and then only when the cash proceeds are
actually received following a realisation, refinancing event or other
cash distribution. Due to the length of time between investment and
realisation, the schemes are usually active for a number of years and
their participants are both current and previous employees of 3i.
and sustainability
Performance, risk
During the period, £43 million was paid to participants in the Private
Equity plans (2017: £127 million).
Table 13: Carried interest and performance fees for the year to 31 March
2018 2017
Statement of comprehensive income £m £m
Carried interest and performance fees receivable
Private Equity 138 275
Infrastructure 90 4
Total 228 279
Carried interest and performance fees payable
Private Equity (196) (431)
Infrastructure (9) (3)
Total (205) (434)
Net carried interest receivable/(payable) 23 (155)
Table 14: Carried interest and performance fees at 31 March

2018 2017
Statement of financial position £m £m
Carried interest and performance fees receivable
Private Equity 505 359
Infrastructure 90 4
Other 1 3
Total 596 366
Carried interest and performance fees payable
Private Equity (839) (650)
Infrastructure (31) (35)
Total (870) (685)

Financial review
continued
Impact of IFRS 15 As at 31 March 2018, the carried interest receivable accrued on 3i’s
balance sheet from EFV was £484 million (2017: £340 million), with a
Carried interest receivable is within the scope of the new revenue
corresponding £334 million (31 March 2017: £251 million) accrued as
accounting standard, IFRS 15, which 3i will adopt from 1 April 2018.
payable to the carry plan participants. The overall net impact from
IFRS 15 introduces the concept that variable revenue can only be
EFV carried interest is £150 million (31 March 2017: £89 million) or
recognised to the extent that it is highly probable that a significant
15 pence per share (2017: 9 pence per share).
reversal will not occur. Our calculation of carried interest, being the
amount expected if all of the underlying investments were realised As the Group has no plans to raise a third-party fund in Private Equity
at their fair values at the balance sheet date, will remain unchanged. in the medium term, the Group is not expected to receive material
IFRS 15 requires us to then consider if there are any specific amounts of carried interest receivable after the closure of EFV.
constraints to our income recognition. The factors that 3i intends
to consider when applying its accounting policy for carried interest Net foreign exchange movements
receivable will include the remaining duration of the fund, the current
position in relation to the cash hurdle, the remaining assets in the At 31 March 2018, 77% of the Group’s net assets were denominated
fund and the potential for clawback. in euros or US dollars. Following the strengthening of sterling against
the US dollar, the Group recorded a total net foreign exchange loss of
The substantial majority of 3i’s carried interest receivable is due from £16 million (2017: £297 million gain) in the year.
EFV which went through its performance hurdle on an accounting
basis in FY2017. EFV has been extended to November 2019, when we The Group is a long-term investor and does not hedge its foreign
expect the fund to be closed. Following the announcement of the currency denominated portfolio. Where possible, flows from currency
sale of Scandlines on 26 March 2018, there are only four remaining realisations are matched with currency investments. Short-term
investments in the fund: Action, Christ, Etanco and OneMed. derivative contracts are used occasionally.
Carried interest is only payable by the fund when proceeds are The net foreign exchange loss also reflects the translation of non-
received and the cash hurdle is met. portfolio net assets, including non-sterling cash held at the balance
At 31 March 2018, EFV investments had generated proceeds of sheet date.
€3.5 billion, including the proceeds from the upcoming sale of
Scandlines, and the fund was over 75% of the way towards its
cash hurdle. However, given the relative size and performance
of Christ, Etanco and OneMed, the actual payment of carried
interest receivable is dependent on the fund’s realisation of Action.
At 31 March 2018, the EFV investment in Action was valued at
€1,815 million (31 March 2017: €1,540 million). Given the strong
performance of Action, and its forecast growth profile, and consistent
with our investment strategy for and valuation of the asset, our
current assessment is that we do not expect the adoption of IFRS
15 to have a material impact on our recognition of carry receivable
from EFV.
Table 15: Net assets and sensitivity by currency at 31 March 2018

1%
sensitivity
FX rate £m % £m
Sterling n/a 1,390 20% n/a
Euro 1.1409 4,542 65% 45
US dollar 1.4031 862 12% 9
Danish krona 8.5047 137 2% 1
Other n/a 93 1% n/a

Pension Tax
The latest triennial valuation for the Group’s UK defined benefit The Group’s parent company has operated in the UK as an approved
scheme was completed on 25 September 2017, based on the investment trust company since its listing on the London Stock
scheme’s position at 30 June 2016. The outcome was an actuarial Exchange in 1994. An approved investment trust is a UK investment
deficit of £50 million but it was agreed with the trustees that it was company which is required to meet certain conditions set out in the
not necessary for the Group to make any immediate contributions UK tax rules to obtain and maintain its tax status. This approval allows
to the plan, taking into account the volatile market conditions certain investment profits of the Company, broadly its capital profits,
at the valuation date (immediately after the UK’s referendum to to be exempt from tax in the UK.
leave the EU), and improvements in market conditions and liability
The Group recognised a corporate tax expense of £26 million for
management actions implemented since then. As part of this
the year (2017: £3 million credit). This is higher than in previous years
valuation, the Group has agreed to pay up to £50 million to the
due to increased levels of taxable income from portfolio companies,
scheme if its gearing increases above 20%, gross debt exceeds
reduced interest expenditure following the repayment of a bond in
£1 billion, or net assets fall below £2 billion.
March 2017 and a £90 million performance fee from 3iN. Finally,
The scheme also benefits from a contingent asset arrangement, the use of brought forward losses has been restricted with effect
details of which are provided in Note 25 of the Financial Statements. from 1 April 2017.
If the gearing, net debt or net asset thresholds noted are crossed,
the Group may be required to increase the potential cover provided Other assets
by the contingent arrangement until the gearing, gross debt or net In March 2017, we sold our Debt Management business to Investcorp.
assets improve. As part of the agreement we retained certain investments, which
are detailed in Table 16. We redeemed all of our holdings by
On an IAS 19 basis, there was a £1 million re-measurement gain
31 December 2017, generating proceeds of £152 million.
on the Group’s UK pension scheme during the year (March
and sustainability
Performance, risk
2017: £22 million loss) and the pension scheme remains in a surplus
of £125 million (31 March 2017: £121 million).
The triennial valuation uses assumptions set at 30 June 2016.
It considers expected future returns on the Plan’s assets against
the expected liabilities using a generally more prudent set of
assumptions. The IAS 19 accounting valuation compares the
31 March 2018 fair value of plan assets and liabilities, with the
liabilities calculated based on the expected future payments
discounted using AA corporate bond yields.
Table 16: Other assets for the year to 31 March 2018

Opening Closing
value at value at
1 April Other 31 March
2017 Investment Divestment movement1 2018
Consolidated statement of financial position Currency £m £m £m £m £m
CLO warehouses repaid € 1 – (1) – –
CLO equity retained €/US$ 50 – (46) (4) –
Global Income Fund US$ 79 23 (97) (5) –
Senior Loan Fund US$ 8 – (8) – –
Total 138 23 (152) (9) –
1 Other movements include realised losses and foreign exchange.

Financial review
continued
Balance sheet In light of the Group’s continued progress in executing its strategy,
we propose to replace our base and additional dividend policy with a
Net cash increased to £479 million (31 March 2017: £419 million)
simpler policy. The Board will maintain its conservative balance sheet
as the Group remained a net divestor in FY2018. The investment
strategy, which excludes structural gearing at the Group level, and
portfolio value increased to £6,657 million at 31 March 2018
will carefully consider the outlook for investments and realisations,
(31 March 2017: £5,675 million) as unrealised value growth of
and market conditions. Subject to that, the Board will aim to maintain
£1,163 million and cash investment offset the value of realisations
or grow the dividend each year. We will continue to pay an interim
in the year. Further information on investments and realisations is
dividend, which we expect to set at 50% of the prior year’s total
included in the Private Equity and Infrastructure business reviews.
dividend, subject to the same considerations.
Liquidity With net cash of £479 million and liquidity of over £1 billion at
31 March 2018, the Group is well positioned to fund the 22.0 pence
Liquidity remained strong at £1,404 million (31 March dividend. We expect to hold high levels of liquidity to ensure that
2017: £1,323 million). Liquidity comprised cash and deposits of we can fund new investments without having to either accelerate
£1,054 million (31 March 2017: £994 million) and undrawn facilities realisations ahead of plan or dispose of investments when market
of £350 million (31 March 2017: £329 million). conditions are not supportive. However, there may be occasions in
the future when the cash we hold materially exceeds this need. If that
Dividend is the case, the Board may consider other methods of shareholder
The Board has recommended a dividend of 22.0 pence (2017: 18.5 distributions and returns at that time.
pence). This is made up of the balance of the base dividend (8 pence
per share, after the 8 pence paid in January 2018) and an additional
dividend of 14.0 pence. Subject to shareholder approval, the
dividend will be paid to shareholders in July 2018 and takes the total
dividend for the year to 30.0 pence (2017: 26.5 pence).
Table 17: Simplified consolidated balance sheet at 31 March

2018 2017
£m £m
Investment portfolio 6,657 5,675
Gross debt (575) (575)
Cash 1,054 994
Net cash 479 419
Other net assets 162 61
Net assets 7,024 5,836
Gearing1 nil nil
1 Gearing is net debt as a percentage of net assets.
Key accounting judgements and estimates

A key judgement is the assessment required to determine the degree of control or influence the Group exercises and
the form of any control to ensure that the financial treatment of investment entities is accurate. The introduction of IFRS
10 resulted in a number of intermediate holding companies being presented at fair value, which has led to reduced
transparency of the underlying investment performance. As a result, the Group continues to present a non-GAAP
Investment basis set of financial statements to ensure that the commentary in the Strategic report remains fair, balanced
and understandable. The reconciliation of the Investment basis to IFRS is shown on pages 39 to 42.
In preparing these accounts, the key accounting estimates are the carrying value of our investment assets, which are
stated at fair value, and the calculation of carried interest receivable and payable.
Given the importance of the valuation of investments, the Board has a separate Valuations Committee to review the
valuation policy, process and application to individual investments. However, asset valuations for unquoted investments
are inherently subjective, as they are made on the basis of assumptions which may not prove to be accurate. At 31 March
2018, 87% by value of the investment assets were unquoted (31 March 2017: 84%).
The valuation of the proprietary capital portfolio is a primary input into the carried interest payable and receivable
balances, which are determined by reference to the valuation at 31 March 2018 and the underlying investment
management agreements.

Investment basis
Consolidated statement of comprehensive income

for the year to 31 March
2018 2017
£m £m
Realised profits over value on the disposal of investments 207 38
Unrealised profits on the revaluation of investments 1,163 1,342
Portfolio income
Dividends 41 50
Foreign exchange gain on investments 11 269
Operating expenses (121) (117)
Interest receivable 2 2
Interest payable (37) (49)
Exchange movements (27) 28
Other income 2 10
and sustainability
Performance, risk
Operating profit before carried interest 1,428 1,675
Carried interest
Operating profit from continuing operations 1,451 1,520
Income taxes (26) 3
Profit for the year from continuing operations 1,425 1,523
Profit for the year from discontinued operations, net of tax – 91
Profit for the year 1,425 1,614
Other comprehensive income
Re-measurements of defined benefit plans – (22)
Total comprehensive income for the year (“Total return”) 1,425 1,592

Investment basis
continued
Consolidated statement of financial position

as at 31 March
2018 2017
£m £m
Assets
Non-current assets
Investments
Quoted investments 851 893
Unquoted investments 5,806 4,782
Other non-current assets 113 106
Intangible assets 12 –
Retirement benefit surplus 125 121
Property, plant and equipment 4 5
Total non-current assets 7,414 6,266
Current assets
Other current assets 60 10
Current income taxes 3 2
Deposits – 40
Cash and cash equivalents 1,054 954
Total current assets 1,210 1,013
Total assets 8,624 7,279
Liabilities
Non-current liabilities
Trade and other payables (14) (29)
Loans and borrowings (575) (575)
Retirement benefit deficit (23) (22)
Deferred income taxes (3) (1)
Provisions (1) (2)
Total non-current liabilities (1,380) (1,273)
Current liabilities
Trade and other payables (101) (125)
Current income taxes (12) –
Provisions (1) (4)
Total current liabilities (220) (170)
Total liabilities (1,600) (1,443)
Equity
Issued capital 719 719
Share premium 786 785
Other reserves 5,545 4,370
Own shares (26) (38)
Total equity 7,024 5,836

Consolidated cash flow statement
2018 2017
£m £m
Cash flow from operating activities
Purchase of investments (827) (692)
Proceeds from investments 1,277 1,063
Net cash flow from derivatives (10) –
Portfolio interest received 17 16
Portfolio dividends received 41 66
Portfolio fees received 13 11
Fees received from external funds 55 71
Carried interest and performance fees received 6 39
Carried interest and performance fees paid (48) (131)
Carried interest held in non-current assets (27) (56)
Acquisition related earn-out charges paid – (1)
Operating expenses paid (115) (131)
Co-investment loans 3 1
and sustainability
Performance, risk
Income taxes paid (12) (2)
Other cash income – 2
Net cash flow from operating activities 373 256
Cash flow from financing activities
Issue of shares 1 1
Dividends paid (255) (230)
Repayment of short-term borrowings – (264)
Repurchase of short-term borrowings – (17)
Net cash flow from financing activities (288) (559)
Cash flow from investing activities
Purchase of property, plant and equipment (2) (1)
Purchase of intangible assets (13) –
Proceeds from sale of Debt Management business – 232
Cash held in sold subsidiaries – (4)
Net cash flow from deposits 41 –
Net cash flow from investing activities 26 227
Change in cash and cash equivalents 111 (76)
Cash and cash equivalents at the start of year 954 962
Effect of exchange rate fluctuations (11) 68
Cash and cash equivalents at the end of year 1,054 954

Investment basis
continued
Background to Investment Investment basis of consolidation

basis financial statements
The Group makes investments in portfolio companies directly, The Group
3i Group plc
held by 3i Group plc, and indirectly, held through intermediate
holding company and partnership structures (“Investment
entity subsidiaries“). It also has other operational subsidiaries Investment Trading
which provide services and other activities such as employment, entity Inter-company subsidiaries
subsidiaries balance eliminated (regulated
regulatory activities, management and advice (“Trading
on consolidation investment
subsidiaries”). The application of IFRS 10 requires us to fair
value a number of intermediate holding companies that were advisers,
Portfolio Portfolio employment
previously consolidated line by line. This fair value approach, companies companies entities, etc.)
applied at the intermediate holding company level, effectively (held directly by
obscures the performance of our proprietary capital investments 3i Group plc)
and associated transactions occurring in the intermediate
holding companies.
Consolidated
The financial effect of the underlying portfolio companies and
fee income, operating expenses and carried interest transactions Fair valued
occurring in Investment entity subsidiaries are aggregated into
a single value. Other items which were previously eliminated on
consolidation are now included separately.
To maintain transparency in our report and aid understanding we IFRS 10 basis of consolidation
introduced separate non-GAAP “Investment basis” Statements
of comprehensive income, financial position and cash flow in
our 2014 Annual report and accounts. The Investment basis is an 3i Group plc The Group
APM and the Strategic report is prepared using the Investment
basis as we believe it provides a more understandable view of
our performance. Total return and net assets are equal under Investment Trading
entity Inter-company subsidiaries
the Investment basis and IFRS; the Investment basis is simply a
subsidiaries balance (regulated
“look through” of IFRS 10 to present the underlying performance.
investment
advisers,
Reconciliation of Investment basis and IFRS Portfolio Portfolio employment
companies companies entities, etc.)
A detailed reconciliation from the Investment basis to IFRS
(held directly by
basis of the Consolidated statement of comprehensive income, 3i Group plc)
Consolidated statement of financial position and Consolidated
cash flow statement is shown on pages 39 to 42.
Consolidated
Fair valued
Portfolio company included in fair
value of Investment entity subsidiaries

Reconciliation of
Investment basis and IFRS
Reconciliation of consolidated statement of comprehensive income
Investment IFRS IFRS Investment IFRS IFRS
basis adjustments basis basis adjustments basis
2018 2018 2018 2017 2017 2017
Notes £m £m £m £m £m £m
Realised profits/(losses) over value
on the disposal of investments 1, 2 207 (189) 18 38 (63) (25)
Unrealised profits on the
revaluation of investments 1, 2 1,163 (777) 386 1,342 (1,080) 262
Fair value movements on
investment entity subsidiaries 1 – 848 848 – 1,041 1,041
Portfolio income
Dividends 1, 2 41 (12) 29 50 (12) 38
Interest income from investment portfolio 1, 2 116 (90) 26 50 (40) 10
Fees receivable 1, 2 14 3 17 6 3 9
Foreign exchange on investments 1, 3 11 (23) (12) 269 (205) 64
Gross investment return 1,552 (240) 1,312 1,755 (356) 1,399
Fees receivable from external funds 57 – 57 46 – 46
Operating expenses 1, 4 (121) 1 (120) (117) 1 (116)
Interest receivable 2 – 2 2 – 2
and sustainability
Performance, risk
Interest payable (37) – (37) (49) – (49)
Exchange movements 1, 3 (27) 84 57 28 14 42
Other income 2 – 2 10 – 10
Income from investment entity subsidiaries 1 – 19 19 – 18 18
Operating profit before carried interest 1,428 (136) 1,292 1,675 (323) 1,352
Carried interest
Carried interest and performance
fees receivable 1, 4 228 – 228 279 1 280
fees payable 1, 4 (205) 173 (32) (434) 326 (108)
Operating profit from continuing operations 1,451 37 1,488 1,520 4 1,524
Income taxes 1, 4 (26) 1 (25) 3 – 3
Profit for the year from continuing operations 1,425 38 1,463 1,523 4 1,527
Profit for the year from discontinued operations – – – 91 7 98
Profit for the year 1,425 38 1,463 1,614 11 1,625
Exchange differences on
translation of foreign operations 1, 3 – (38) (38) – (4) (4)
Re-measurements of defined benefit plans – – – (22) – (22)
Other comprehensive expense for the year
from continuing operations – (38) (38) (22) (4) (26)
Other comprehensive expense for the year
from discontinued operations – – – – (7) (7)
Total comprehensive income
for the year (“Total return”) 1,425 – 1,425 1,592 – 1,592
The IFRS basis is audited and the Investment basis is unaudited.
Notes:
1 Applying IFRS 10 to the Consolidated statement of comprehensive income consolidates the 3 Foreign exchange movements have been reclassified under the Investment basis as
line items of a number of previously consolidated subsidiaries into a single line item “Fair foreign currency asset and liability movements. Movements within the Investment
value movements on investment entity subsidiaries”. In the “Investment basis” accounts we entity subsidiaries are included within “Fair value movements on investment entities”.
have disaggregated these line items to analyse our total return as if these Investment entity 4 Other items also aggregated into the “Fair value movements on investment
subsidiaries were fully consolidated, consistent with prior years. The adjustments simply entity subsidiaries” line include fees receivable from external funds, audit fees,
reclassify the Consolidated statement of comprehensive income of the Group, and the total administration expenses, carried interest and tax.
return is equal under the Investment basis and the IFRS basis.
2 Realised profits, unrealised profits, and portfolio income shown in the IFRS accounts
only relate to portfolio companies that are held directly by 3i Group plc and not those
portfolio companies held through Investment entity subsidiaries. Realised profits,
unrealised profits, and portfolio income in relation to portfolio companies held through
Investment entity subsidiaries are aggregated into the single “Fair value movement on
investment entity subsidiaries” line. This is the most significant reduction of information
in our IFRS accounts.

Reconciliation of
continued
Reconciliation of consolidated statement of financial position
as at 31 March
2018 2018 2018 2017 2017 2017
Assets
Non-current assets
Investments
Quoted investments 1 851 (506) 345 893 (503) 390
Unquoted investments 1 5,806 (4,055) 1,751 4,782 (3,466) 1,316
Investments in investment entity subsidiaries 1, 2 – 4,034 4,034 – 3,483 3,483
Investment portfolio 6,657 (527) 6,130 5,675 (486) 5,189
fees receivable 1 503 (5) 498 359 (5) 354
Other non-current assets 1 113 (85) 28 106 (56) 50
Intangible assets 12 – 12 – – –
Retirement benefit surplus 125 – 125 121 – 121
Property, plant and equipment 4 – 4 5 – 5
Total non-current assets 7,414 (617) 6,797 6,266 (547) 5,719
Current assets
fees receivable 1 93 – 93 7 2 9
Other current assets 1 60 (26) 34 10 2 12
Current income taxes 3 – 3 2 – 2
Deposits – – – 40 – 40
Cash and cash equivalents 1 1,054 (82) 972 954 (23) 931
Total current assets 1,210 (108) 1,102 1,013 (19) 994
Total assets 8,624 (725) 7,899 7,279 (566) 6,713
Liabilities
Trade and other payables 1 (14) 13 (1) (29) 5 (24)
Carried interest and performance fees payable 1 (764) 659 (105) (644) 520 (124)
Loans and borrowings (575) – (575) (575) – (575)
Retirement benefit deficit (23) – (23) (22) – (22)
Deferred income taxes (3) – (3) (1) 1 –
Provisions (1) – (1) (2) – (2)
Total non-current liabilities (1,380) 672 (708) (1,273) 526 (747)
Current liabilities
Trade and other payables 1 (101) 1 (100) (125) 22 (103)
Carried interest and performance fees payable 1 (106) 51 (55) (41) 18 (23)
Current income taxes 1 (12) 1 (11) – – –
Provisions (1) – (1) (4) – (4)
Total current liabilities (220) 53 (167) (170) 40 (130)
Total liabilities (1,600) 725 (875) (1,443) 566 (877)
Net assets 7,024 – 7,024 5,836 – 5,836
Equity
Issued capital 719 – 719 719 – 719
Share premium 786 – 786 785 – 785
Other reserves 3 5,545 – 5,545 4,370 – 4,370
Own shares (26) – (26) (38) – (38)
Total equity 7,024 – 7,024 5,836 – 5,836

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

Reconciliation of
continued
Reconciliation of consolidated cash flow statement
2018 2018 2018 2017 2017 2017
Purchase of investments 1 (827) 357 (470) (692) 358 (334)
Proceeds from investments 1 1,277 (863) 414 1,063 (753) 310
Cash inflow from investment entity subsidiaries 1 – 430 430 – 246 246
Net cash flow from derivatives (10) – (10) – – –
Portfolio interest received 1 17 (13) 4 16 (9) 7
Portfolio dividends received 1 41 (12) 29 66 (12) 54
Portfolio fees received 1 13 – 13 11 (2) 9
Fees received from external funds 55 – 55 71 – 71
Carried interest and performance fees received 6 – 6 39 – 39
Carried interest and performance fees paid 1 (48) 8 (40) (131) 104 (27)
Carried interest held in non-current assets 1 (27) 27 – (56) 56 –
Acquisition related earn-out charges paid – – – (1) – (1)
Operating expenses paid 1 (115) 1 (114) (131) – (131)
Co-investment loans 1 3 2 5 1 1 2
Income taxes paid 1 (12) 2 (10) (2) – (2)
Other cash income – – – 2 – 2
Net cash flow from operating activities 373 (61) 312 256 (11) 245
Issue of shares 1 – 1 1 – 1
Dividends paid (255) – (255) (230) – (230)
Interest received 2 – 2 2 – 2
Interest paid (36) – (36) (51) – (51)
Repayment of short-term borrowings – – – (264) – (264)
Repurchase of short-term borrowings – – – (17) – (17)
Net cash flow from financing activities (288) – (288) (559) – (559)
Purchase of property, plant and equipment (2) – (2) (1) – (1)
Purchase of intangible assets (13) – (13) – – –
Proceeds from sale of Debt
Management business – – – 232 – 232
Cash held in sold subsidiaries – – – (4) – (4)
Net cash flow from deposits 41 – 41 – – –
Net cash flow from investing activities 26 – 26 227 – 227
Change in cash and cash equivalents 2 111 (61) 50 (76) (11) (87)
Cash and cash equivalents at the start of year 2 954 (23) 931 962 (5) 957
Effect of exchange rate fluctuations 1 (11) 2 (9) 68 (7) 61
Cash and cash equivalents at the end of year 2 1,054 (82) 972 954 (23) 931
Notes:
1 The Consolidated cash flow statement is impacted by the application of IFRS 10 as cash 2 There is a difference between the change in cash and cash equivalents of the
flows to and from Investment entity subsidiaries are disclosed, rather than the cash flows to Investment basis financial statements and the IFRS financial statements because
and from the underlying portfolio. there are cash balances held in Investment entity subsidiaries. Cash held
Therefore in our Investment basis financial statements, we have disclosed our cash flow within Investment entity subsidiaries will not be shown in the IFRS statements
statement on a “look through” basis, in order to reflect the underlying sources and uses of but will be seen in the Investment basis statements.
cash flows and disclose the underlying investment activity.

Alternative Performance
Measures (“APMs”)
We assess our performance using a variety of measures that are
not specifically defined under IFRS and are therefore termed APMs.
The APMs that we use may not be directly comparable with those
used by other companies. Our Investment basis is itself an APM.
The explanation of and rationale for the Investment basis and
its reconciliation to IFRS is provided on page 38 to 42.
The table below defines our additional APMs.
APM Purpose Calculation Reconciliation to IFRS
Gross investment return A measure of the performance It is calculated as the gross The equivalent balances under
as a percentage of opening of our proprietary investment return, as shown IFRS and the reconciliation to the
portfolio value investment portfolio. in the Investment basis Investment basis are shown in the
Consolidated statement of Reconciliation of the consolidated
For further information see the comprehensive income, as a % statement of comprehensive
Group KPIs on page 16. of the opening portfolio value. income and the Reconciliation
of the consolidated statement of
financial position respectively.
Cash realisations Cash proceeds from our The cash received from the The equivalent balance under
investments support our disposal of investments in the IFRS and the reconciliation to the
and sustainability
Performance, risk
returns to shareholders, as year as shown in the Investment Investment basis is shown in the
well as our ability to invest in basis Consolidated cash Reconciliation of the consolidated
new opportunities. flow statement. cash flow statement.
For further information see the

Group KPIs on page 16.
Cash investment Identifying new opportunities in The cash paid to acquire The equivalent balance under
which to invest proprietary capital investments in the year as IFRS and the reconciliation to the
is the primary driver of the shown on the Investment basis Investment basis is shown in the
Group’s ability to deliver Consolidated cash Reconciliation of the consolidated
attractive returns. flow statement. cash flow statement.
For further information see the

Group KPIs on page 16.
Operating cash profit By covering the cash cost of The cash income from the The equivalent balance under
running the business with cash portfolio (interest, dividends IFRS and the reconciliation to the
income, we reduce the potential and fees) together with fees Investment basis is shown in the
dilution of capital returns. received from external funds Reconciliation of the consolidated
less cash operating expenses cash flow statement.
as shown on the Investment
basis Consolidated cash flow
statement. The calculation
is shown in Table 12 of the
Financial review.
Net cash/net debt A measure of the available cash Cash and cash equivalents plus The equivalent balance under
to invest in the business and an deposits less loans and IFRS and the reconciliation to the
indicator of the financial risk in borrowings as shown on the Investment basis is shown in the
the Group’s balance sheet. Investment basis Consolidated Reconciliation of the consolidated
statement of financial position. statement of financial position.
Gearing A measure of the financial risk Net debt (as defined above) as a The equivalent balance under
in the Group’s balance sheet. % of the Group’s net assets under IFRS and the reconciliation to the
the Investment basis. It cannot be Investment basis is shown in the
less than zero. Reconciliation of the consolidated
statement of financial position.

Risk management
Effective risk management underpins the

successful delivery of our strategy. Integrity, Risk appetite
Our risk appetite is defined by our strategic
rigour and accountability are central to our objectives. We invest capital in businesses that
values and culture at 3i and are embedded will deliver capital returns and portfolio and fund
management cash income to cover our costs,
in our approach to risk management. and increase returns to our investors.
Investment risk
Understanding our risk The following sections explain how we
control and manage the risks in our business. The substantial majority of the Group’s capital
appetite and culture is invested in Private Equity. Before the Group
They outline the key risks, our assessment
As both an investor and asset manager, of their potential impact on our business in commits to an investment, we assess the Private
3i is in the business of taking risk in order the context of the current environment and Equity opportunity using the following criteria:
to seek to achieve its targeted returns for how we seek to mitigate them.
fund investors and shareholders. The Board • return objective: individually assessed and
approves the strategic objectives that subject to a minimum target of 2x money
determine the level and types of risk that 3i
Approach to risk governance multiple over four to five years;
is prepared to accept. The Board reviews The Board is responsible for risk assessment, • geographic focus: core markets of northern
3i’s strategic objectives and risk appetite at the risk management process and for Europe and North America;
least annually. The Group’s risk management the protection of the Group’s reputation
framework is designed to support the and brand integrity. It considers the most • sector expertise: focus on Business and
delivery of the Group’s strategic objectives. significant risks facing the Group and uses Technology Services, Consumer and Industrial;
quantitative analyses, such as the vintage and
3i’s risk appetite policy, which is consistent control which considers the portfolio
with previous years, is built on rigorous and • vintage: invest up to £750 million per annum in
concentration by geography and sector, four to seven new investments in companies
comprehensive investment procedures and liquidity reporting, where appropriate.
and conservative capital management. with an enterprise value range of €100 million
Non-executive oversight is also exercised to €500 million at investment.
through the Audit and Compliance
Culture Investments made by 3iN need to be consistent
Committee which focuses on upholding with 3iN’s overall return target of 8% to 10%
Integrity, rigour and accountability are standards of integrity, financial reporting, over the medium term and generate a mix of
central to our values and culture and risk management, going concern and capital and income returns. Other Infrastructure
are embedded in our approach to risk internal control. The Audit and Compliance investments made by the Group should be
management. Our Investment Committee, Committee’s activities are discussed further capable of delivering capital growth and fund
which has oversight of the investment on pages 66 to 69. management fees which together generate
pipeline development and approves new
The Board has delegated the responsibility mid-teens returns.
investments, significant portfolio changes
and divestments, is integral to ensuring a for risk oversight to the Chief Executive.
consistent approach across the business. He is assisted by the Group Risk Committee Capital management
It ensures compliance with 3i’s financial (“GRC”) in managing this responsibility, and 3i adopts a conservative approach to managing
and strategic requirements, cultural values guided by the Board’s appetite for risk and its capital resources as follows:
and appropriate investment behaviours. any specific limits set. The GRC maintains
Members of the Executive Committee the Group risk review, which summarises the • there is no appetite for structural gearing
have responsibility for their own business Group’s principal risks, associated mitigating at the Group level, but short-term tactical
or functional areas and the Group expects actions and key risk indicators, and identifies gearing will be used;
individual behaviours to meet its high any changes to the Group’s risk profile. • the Group does not hedge its currency
standards of conduct. All employees share The risk review is updated quarterly, with exposure but it does match currency
the responsibility for upholding 3i’s strong the last review in May 2018, and the Chief realisations with investments where possible
control culture and supporting effective risk Executive provides quarterly updates to each and takes out short-term hedges occasionally
management. Senior managers, typically Audit and Compliance Committee meeting. to hedge investments and realisations
those who report to Executive Committee Investment Committee ensures a consistent between signing and completion; and
members, are required to confirm their approach to investment processes across the • we have limited appetite for the dilution
individual and business area compliance business as described on page 46. of capital returns as a result of operating
annually. In addition, all staff are assessed In addition to the above, a number of other and interest expenses. Both Private Equity
on how they have demonstrated 3i’s values Board and Executive committees contribute and Infrastructure generate cash income to
as part of their annual appraisal. Finally, our to the Group’s overall risk governance mitigate this risk.
Remuneration Committee is responsible for structure, as set out opposite. 3i Group’s Pillar 3 document
ensuring the Group‘s remuneration culture can be found at www.3i.com
is weighted towards variable compensation
where reward is strictly dependant
on performance.

Risk governance structure Committees of the Board
Committees of the Chief Executive
Independent Committees
Board
• Approves the Group’s risk appetite

and strategy
• Responsible for ensuring an effective
risk management and oversight process
across the Group
Audit and Compliance Committee • Assisted by four Board Committees Remuneration Committee
with specific responsibility for key risk
• Responsible for managing financial management areas • Responsible for ensuring a remuneration
reporting risk and internal control and culture which is weighted towards
• Delegates management of the Group
the relationship with the external Auditor variable reward and strictly dependent
to the Chief Executive
• Reviews and challenges risk management on performance
reports from Group Finance, Tax, • Approves variable compensation
Internal Audit and Compliance schemes for our investment professionals
• Chief Executive updates the Committee that are in line with market practice and
at each meeting on the output of the enable the Group to attract and retain
latest GRC meeting the best talent
and sustainability
Performance, risk
• By excluding Executive Directors from
carried interest or performance fee
Valuations Committee profit schemes, the Committee ensures
that their remuneration is more directly
• Specific and primary responsibility for aligned with shareholder returns
the valuation policy and valuation of the
Group’s investment portfolio
• Provides oversight and challenge of Nominations Committee
underlying assumptions on the valuation
of the unquoted investment portfolio • Responsible for ensuring that the Board
(83% of net assets at 31 March 2018) has the necessary, skills, experience
• Direct engagement with the external and knowledge to enable the Group
Auditor, including their specialist to deliver its strategic objectives
valuations team Chief Executive
• Delegated responsibility for

management of the Group
• Delegated responsibility
for investment decisions
• Delegated responsibility
for Risk Management
Executive Committee Investment Committee Group Risk Committee
• Monitors divisional performance • Principal committee for managing the • Assists the Chief Executive with the
• Facilitates information sharing Group’s investment portfolio, its most oversight of risk management across
between divisions material risk, and meets as often the Group
• Meets monthly as required • Implements the Group’s risk appetite
• Chaired by the Chief Executive policy and monitors performance
• Strict oversight of each step of the • Maintains the Group risk review which
Conflicts Committee investment lifecycle details its risk exposure and appropriate
• Approves all investment, divestment mitigations and controls
• Deals with potential conflicts as required and material portfolio decisions • Two members of the GRC, the Group
• Monitors investments against original Finance Director and General Counsel,
investment case form the Risk Management Function
Treasury Transactions Committee as required under AIFMD
• Ensures investments are in line with
• Considers specific treasury transactions the Group’s investment policy and
as required risk appetite

Risk management
continued
The risk framework is augmented by a Role of Group Risk Committee Role of Investment Committee
separate Risk Management Function
in risk management in risk management
which has specific responsibilities under
the FCA’s Investment Funds Sourcebook. The quarterly Group risk review process Our Investment Committee is fundamental
It meets ahead of the GRC meetings to includes the monitoring of key strategic and to the management of investment risk.
consider the key risks impacting the Group, financial metrics (such as KPIs) considered The Investment Committee is involved in and
and any changes in the relevant period to be indicators of potential changes in the approves every step of the investment and
where appropriate. It also considers the Group’s risk profile. The GRC uses these to realisation process.
separate risk reports for each Alternative identify its principal risks. It then evaluates
The investment case presented at the outset
Investment Fund (“AIF”) managed by the the impact and likelihood of each risk, with
of our investment consideration process
Group, including areas such as portfolio reference to associated measures and key
includes the expected benefit of operational
composition, portfolio valuation, operational performance indicators. The adequacy of
improvements, growth initiatives and M&A
updates and team changes, which are then the mitigation plans is then assessed and, if
activity that will be driven by our investment
considered by the GRC. necessary, additional actions are agreed and
professionals together with the portfolio
then reviewed at the subsequent meeting.
In practice, the Group operates a “three lines company’s management team. It will also
of defence” framework for managing and A number of focus topics are also agreed include a view on the likely exit strategy
identifying risk. in advance of each meeting. In FY2018, the and timing.
GRC covered the following:
• The first line of defence against The execution of this investment case is
outcomes outside our risk appetite are • an update on the Group’s Brexit planning closely monitored:
our two divisions and their respective process, including the incorporation of
• our monthly portfolio monitoring reviews
Managing Partners. an approved Alternative Investment Fund
current performance against budget
Manager (”AIFM“) in Luxembourg;
• Line management is supported by and prior year and a set of traffic light
oversight and control functions such • a semi-annual update on Environmental, indicators and bespoke, forward looking
as finance, human resources and legal Social, business integrity and corporate KPIs; and
which constitute the second line of Governance (”ESG“) issues and
• both Private Equity and Infrastructure
defence. The compliance function is themes, especially with respect to its
hold semi-annual reviews that focus
also in the second line of defence; its portfolio companies;
on the longer-term performance and
duties include reviewing the effective • a review of the Group’s stress tests to plan for the investment compared to
operation of our processes in meeting support its Internal Capital Adequacy the original investment case, together
regulatory requirements. Assessment Process (“ICAAP”) and with any strategic developments and
• Internal audit provides independent Viability statement; market outlook.
assurance over the operation of • a review of the Group’s IT framework The monthly portfolio monitoring reviews
controls and is the third line of defence. including cyber security and business and the semi-annual reviews are attended
The internal audit programme includes the resilience; and by the Investment Committee and the senior
review of risk management processes and • the proposed risk disclosures in the 2018 members of the investment teams.
recommendations to improve the internal Annual report and accounts.
control environment. Finally, we recognise the need to plan
There were no significant changes to the and execute a successful exit at the
GRC’s approach to risk governance or its optimum time for the portfolio company’s
operation in FY2018 but we continued to development, taking consideration of market
refine our framework for risk management conditions. This risk is closely linked to the
where appropriate. external economic environment. Exit plans
are refreshed where appropriate in the semi-
annual portfolio reviews and the divestment
process is clearly defined and overseen by
the Investment Committee.
Individual portfolio company
underperformance could have adverse
reputational consequences for the Group,
even though the value impact may not be
material. We review our internal processes
and investment decisions in light of actual
outcomes on an ongoing basis.
Further details on 3i’s approach as
a responsible investor are available
at www.3i.com

Principal risks and mitigations
Aligning risk to our strategic objectives
Business and risk environment The longer-term implications of the Operational

UK’s negotiations to leave the EU on 3i’s
in FY2018 Attracting and retaining key people is
business remains unclear. Therefore, we
Although the business environment over our most significant operational risk.
have implemented an alternative regulatory
the last 12 months has been challenging, Our Remuneration Committee ensures that
strategy to ensure continuity of our business
as a result of the ongoing political instability, our variable compensation schemes are in
across a range of reasonably foreseeable
economic uncertainty and volatile market line with market practice. Carried interest is
scenarios. This strategy includes permission
conditions, there has been no significant an important incentive and rewards cash-to-
from the Luxembourg regulator, the CSSF,
change to our risk management approach. cash returns.
to establish an AIFM in Luxembourg,
The Directors have carried out a robust received in March 2018. 3i has had a In addition, detailed succession plans are
assessment of the principal risks facing the presence in Luxembourg for many years. in place for each division. The Board last
Group, including those that would threaten Currently 68% of our portfolio is invested completed its annual review of the Group‘s
its business model, future performance, in northern Europe, and this approval will organisational capability and succession
solvency or liquidity. We define our principal enable 3i to continue the Group‘s activities plans in September 2017. The success of the
risks as those that have the potential to in Europe after March 2019, when the UK Group since the 2012 restructuring has led
impact the delivery of our strategic objectives is expected to leave the EU. to very modest (8%) levels of staff turnover.
materially. We also maintain a log of risks The risk in relation to the new Infrastructure
which have the potential to become principal
Investment
business initiatives has decreased in view of
risks but are not yet considered to be so. Our overarching objective is to source
the progress made to date. We continued
This is called our “watch list”. These risks are attractive investment opportunities at the
to enhance our cyber security management
regularly reviewed to determine if they have right price and execute our investment
and reporting and engaged an external firm
the potential to impact the delivery of our plans successfully.
to provide a dedicated Chief Information
and sustainability
Performance, risk
strategy. In the year, none of our watch list As part of our portfolio monitoring, all of Security Officer service in the year. Due to
risks were considered sufficiently material to our new Private Equity and Infrastructure the nature of our business, cyber security
be classified as a principal risk. investments in the year were subject to is not considered a principal risk but is
rigorous review, including performance included on our watch list and remains under
External
against a 180-day plan. We continued to regular review by the GRC and Audit and
External risks are the risks to our business which monitor the portfolio actively, and held Compliance Committee.
are usually outside of our direct control such as additional reviews for the small number
political, economic, regulatory and competitor of Private Equity assets where operational Outlook
risks. In FY2018, we saw a general deterioration improvements and reorganisation were Competition for the best assets in our sectors
in the geo-political environment, including particularly intense. Investment teams remains intense, with an environment of high
an increased likelihood of a trade war and an are responsible for origination and prices requiring a disciplined approach to
uncertain political backdrop in the UK with asset management and are rewarded investment. We remain focused on executing
the potential to impact investor confidence. with performance-based remuneration. our strategy as we navigate what looks to be
We concluded that these risks were not another year of uncertainty.
currently material to our portfolio but we will
continue to monitor developments closely.
Viability statement At the strategy away day, the Directors including financial and operational risks,
consider the strategy and opportunities for, under such stress scenarios. Our analysis
The Directors have assessed 3i’s viability
and threats to, each business line and the shows that, while there may be a significant
over a three-year period to March 2021.
Group as a whole. The outcome of those impact on the Group’s reported
3i conducts its strategic planning over a
discussions is included in the next iteration performance in the short term under these
five-year period; this statement is based on
of the strategic plan which is then used to scenarios, the resilience and quality of
the first three years, which provides more
support the viability assessment. our balance sheet is such that solvency is
certainty over the forecasting assumptions
maintained and our business remains viable.
used. 3i’s strategic plan, ICAAP and The Group’s ICAAP and viability testing
associated principal risks (as set out on considers multiple severe, yet plausible, Taking the inputs from the strategic planning
pages 48 to 51 of the Strategic report) are individual and combined stress scenarios. process, the ICAAP and its stress scenarios,
the foundation of the Directors’ assessment. They include a severe downside economic the Directors reviewed an assessment of the
scenario and the impact of a material single potential effects of 3i’s principal risks on its
The assessment is overseen by the Group
asset event. The severe downside assumes current portfolio and forecast investment
Finance Director and is subject to challenge by
that the global economy enters a severe and realisation activity, and the consequent
the GRC, review by the Audit and Compliance
recession; global equities fall and long-term impact on 3i’s capital and liquidity.
Committee and approval by the Board.
interest rates reach new lows. The material
Based on this assessment, the Directors
Our Group strategic plan projects the single asset event considers the impact of
have a reasonable expectation that the
performance, net asset value and liquidity of a significant asset experiencing a severe
Company and the Group will be able to
3i over a five-year period and is presented at downturn in performance.
continue in operation and meet all their
the Directors’ annual strategy away day and
We project the amount of capital we liabilities as they fall due up to at least
updated throughout the year as appropriate.
need in the business to cover our risks, March 2021.


continued
The disclosures on the following pages are not an exhaustive list of risks
and uncertainties faced by the Group, but rather a summary of those
principal risks which are regularly reviewed by the GRC and the Board,
and have the potential to affect materially the achievement of the Group’s
strategic objectives and impact its financial performance, reputation
and brand integrity.
External
Key risk Link to Potential
factors strategic objectives impact
Economic growth and investor Grow investment • Limited growth or reduction in NAV
portfolio earnings owing to contraction of earnings in
and market confidence
Realise investments with our investments in Private Equity or
is vulnerable to ongoing good cash-to-cash returns Infrastructure and/or changes in multiples
challenges, including and discount rates used for their valuations
geo-political developments, • Increases covenant risks or limits ability
in the global economy to refinance our investments
• Impacts general market confidence and
risk appetite
• Leads to reduced M&A volumes, economic
instability and lower growth, which impacts
realisation levels
Volatility in foreign exchange Grow investment • Unhedged foreign exchange rate

portfolio earnings movements impact total return and NAV
and capital markets
Realise investments with • May impact portfolio performance
and realisation processes
distributions
• Increases risks with IPO exit route
and bank financing
• Potential for large equity market fall
to impact valuation
Competitive M&A markets and Realise investments with • Reduced investment rates in Private Equity
good cash-to-cash returns and Infrastructure
high pricing in 3i’s core sectors
Use our strong • Increased risk of overpaying
balance sheet
for investments, which impacts
Increase shareholder potential returns
distributions
• Potential for higher cash realisations
on exits

Movement
Risk management in risk status FY2018
and mitigation in FY2018 outcome
• Regular portfolio company reviews as well as Investment • GIR strong at 27% with impact from macro-economic and
Committee focus on investment strategy, exit processes geo-political uncertainty on 3i and its portfolio companies
and refinancing strategies limited by robust performance in largest investments
• Monthly portfolio monitoring to identify and address • Gearing remains nil and liquidity strong at £1.4 billion
portfolio issues promptly • Approval received from the Luxembourg regulator to
and sustainability
Performance, risk
• Valuations Committee monitoring of valuations and establish an AIFM in Luxembourg to ensure the continuity
application of policy of our business when the UK leaves the EU
• Active management of exit strategies by Investment • Foreign exchange exposures at the portfolio company
Committee to enable us to adapt to market conditions level monitored and hedged appropriately
• Portfolio company reviews focus on investment strategy, • Realised £69 million from continued sales of
exit plans and refinancing strategies quoted investments
• Matching of currency flows from investments and • Quoted asset exposure of 13%, with 9% being 3iN
realisations where appropriate • Policy to adjust multiples to reflect longer-term trends
• Regular liquidity and currency monitoring and strategic mitigated volatility in FY2018
reviews of the balance sheet • Successful refinancings of Action and Scandlines reduced
money at risk
• Central oversight and disciplined approach to • Market conditions were favourable in the year and we
investment pipeline sold eight Private Equity companies
• Active management of investments and exit strategies • Invested in four new Private Equity companies and
by Investment Committee completed a number of further investments to support
• Maintenance of our networks facilitates buy-and-build strategies
off-market transactions • Advised 3iN on six investments, including Attero which
will complete in FY2019
Risk exposure has increased No significant change in risk exposure Risk exposure has decreased


continued
Investment
Investment rate or quality is Grow investment • Impacts longer-term returns and capital
portfolio earnings management and therefore ability to
lower than expected because
Use our strong deliver strategic plan
we pay the wrong price balance sheet
• Reduces staff morale and confidence
distributions
• Cost base may not be sustainable
• Poor investment impacts Group’s
reputation as an investor of proprietary
capital, as an adviser to 3iN and as a
manager of other funds
Underperformance of Grow investment • Reduction in NAV and realisation potential,

portfolio earnings impacting shareholder returns
portfolio companies
Realise investments with • Higher value concentration in the portfolio
increases the potential impact and profile
Increase shareholder of specific cases of underperformance
distributions
• Underperformance impacts reputation as
an investor of proprietary capital, an adviser
to 3iN and manager of other funds
Operational
Failure to recruit, develop and Realise investments with • Restricts our ability to attract the
good cash-to-cash returns best people
retain key people
Use our strong • Potential to undermine investor/
balance sheet
shareholder confidence
distributions
• Potential to delay execution of
strategic plan
New Infrastructure initiatives Maintain an operating • Slower growth could impact operating cash
cash profit profit and potentially dilute capital returns
Use our strong • New initiatives could distract from the 3iN
balance sheet
advisory mandate
distributions

Movement
• Regular monitoring of investment and • Completed four new investments and one significant
divestment pipeline further investment in Private Equity and generated
• Close oversight by management and early involvement £1,002 million of realisation proceeds
of Investment Committee when key targets • Completed our first US Infrastructure investment
are identified • Advised 3iN on six investments, including Attero which
• Disciplined approach to sourcing investment will complete in FY2019, and the realisations of AWG
opportunities and pricing and Elenia
• Regular review of asset allocation
• Rigorous initial assessment of new investment • 91% of the assets valued on an earnings basis grew
opportunities to maintain quality of our their earnings over the last 12 months
investment pipeline • Responsible Investment/ESG risk evaluation further
• Monthly portfolio monitoring to review operating improved and is reviewed semi-annually at the portfolio
performance, identify weakness and opportunity early company reviews and GRC
and sustainability
Performance, risk
and take action as appropriate • Regular portfolio monitoring aims to track performance
• Additional monitoring of Action, including 3i Chief and, where appropriate, identify assets promptly where a
Executive membership of the Action board deeper review is needed, such as Christ and Schlemmer
• ESG and governance requirements and monitoring
Movement
• Specific focus by Remuneration Committee which • Organisational capability and succession plan reviewed
approves all material incentive arrangements to ensure by the Board in September 2017
they reflect market practice
• Annual Board review of succession planning
• Regular review of resourcing and key man exposures as
part of business line reviews and the portfolio company
review process
• Rigorous assessment of new opportunities • Close oversight of performance of new investments

• Regular business updates and monthly • Launched two new Infrastructure funds
portfolio monitoring • Completed our first US Infrastructure investment
• Additional recruitment to ensure no dilution of our focus
on the 3iN mandate
• Induction and oversight of new hires
Risk exposure has increased No significant change in risk exposure Risk exposure has decreased

Sustainability
3i is committed to achieving its strategic and investment A responsible employer

objectives while behaving responsibly as an employer, Recruiting, developing and retaining
our talent is one of our most important
as an investor and as an international corporate citizen. priorities. We work towards that objective
We take responsibility for our actions, carefully consider by communicating openly and consistently
with our employees, providing training and
how others will be affected by our choices and ensure opportunities for career advancement,
rewarding our employees fairly and
that our values and ethics are integrated into our formal encouraging employees to give direct
business policies, practices and plans. We believe that feedback to senior management. We are
a meritocracy and our employees are
encouraging this approach to our portfolio is a driver recruited, promoted and remunerated
of long-term outperformance. strictly on the basis of merit, ability
and performance.
We recognise the importance of providing
Our sustainability strategy is defined a supportive working environment and
by three key priorities: of providing a healthy work/life balance
for all our employees. 3i has a suite of
1. Recruit and develop a diverse pool of talent human resources policies and procedures
covering areas including recruitment, vetting
2. Invest responsibly and performance management, equal
opportunities and diversity, family-friendly
policies, medical insurance and health
3. Embed responsible business practices screening, health and safety and flexible
throughout the organisation working, and appropriate processes to
monitor their application. Summaries of a
We are committed to communicating both financial and non-financial performance in a clear, number of these policies can be found on
open and comprehensive manner and to maintaining an open dialogue with stakeholders. our website.
Accordingly, we welcome the publication of the Recommendations of the Taskforce on
Climate-Related Financial Disclosures (“TCFD”). We made our preliminary disclosures under Human rights
that framework in our Sustainability report 2018, with a view to incorporating relevant aspects Whilst 3i does not have a formal human
in our Annual report from next year. rights policy, our policies are consistent with
internationally proclaimed human rights
principles. We comply fully with applicable
human rights legislation in the countries
in which we operate, for example covering
areas such as freedom of association and
the right to collective bargaining, equal
This section aims to provide a brief remuneration and protection against
summary of our approach to sustainability.
discrimination. 3i is an equal opportunities
For more information, please see
employer and has clear grievance and
our Sustainability report, available on
our website. disciplinary procedures, an employee
Further information on our approach assistance programme and an independent,
to corporate responsibility, including external “whistle blowing” hotline service.
summaries of relevant policies,
can also be found on our website. We are committed to ensuring that the
businesses we invest in comply with all
www.3i.com/sustainability applicable laws in relation to their employees
(amongst other things) and, where
appropriate, that they work towards meeting
relevant international standards (such as the
ILO Fundamental Conventions) where those
are more stringent. We also encourage
our business partners and suppliers to
adopt the same standards with respect
to human rights.

Equal opportunity and diversity Employee engagement A responsible investor
3i is fully committed to being an equal We encourage a culture of open With fewer than 250 employees globally, as
opportunities employer, and prohibits communication between our employees a company we have a relatively small direct
unlawful and unfair discrimination. and senior and executive management. impact in terms of the environment and
We believe that there are great benefits to We benefit from being a small organisation, other sustainability issues. However, with
be gained from having a diverse and varied operating in a relatively flat structure, assets under management of approximately
workforce. Although we do not set specific with few hierarchies. The members of our £12 billion we recognise that our decisions
diversity targets, we seek to ensure that our Executive Committee have an open-door as an investor potentially impact a broad
corporate culture and policies create an policy and know most employees by name. range of stakeholders. We are committed to
inclusive work environment that helps investing responsibly and believe that:
We promote and facilitate the ownership
to bring out the best in our employees.
of 3i shares among employees through • it is vital that we seek to identify all
3i’s Equal Opportunities and Diversity policy variable compensation or share investment material ESG risks and opportunities
establishes that all 3i employees (temporary plans. As a result, most of our employees through our due diligence at the point
and permanent), contract workers and are shareholders in the Company and feel we invest and manage those risks and
job applicants are treated fairly and are invested in the success of the organisation. opportunities effectively during the period
offered equal opportunity in selection, of 3i‘s investment;
We pride ourselves on the engagement and
training, career development, promotion • the effective assessment and management
the sense of ownership we have fostered
and remuneration. of ESG risks and opportunities has a
over the years.
Achieving better gender diversity is important positive effect on the value of our investee
to 3i, and we believe we are making good 84% Participation in UK SIP1 companies and of 3i Group itself; and
8% Unplanned employee turnover rate2
progress in that respect, within the constraints • compliance with local laws and regulations
and sustainability
Performance, risk
imposed by being a small organisation with 1 Proportion of UK-based employees who subscribe to may not be enough to meet global
limited staff turnover. At 31 March 2018, 3i a Share Incentive Plan available to UK employees only. expectations, deliver value and enhance
had a total of 244 employees of which 158 2 During the year, 3i closed its Madrid operations. our reputation and license to operate.
were employed in the UK. The breakdown by The impact of this change is excluded from the
calculation of the employee turnover rate. We are uniquely well positioned to make
gender was as follows:
a difference as a responsible investor:
(number) Total Male Female Graduate training scheme • for more than a decade we have carried
All 3i employees 244 145 99 Our graduate recruitment scheme, designed out our investment activities under our
3i Group Directors1 8 6 2 to develop our next generation of world- Responsible Investment policy, which is
Senior managers2 39 29 10 class investment professionals and business embedded in our investment and portfolio
leaders, was launched in 2015. We are a management processes and is considered
1 Includes non-executive Directors who are not 3i employees. small organisation, however we believe rigorous by industry standards. We have
2 Senior managers excludes Simon Borrows and this programme is important in fostering a been signatories of the UN Principles for
Julia Wilson (who are included as Directors of 3i Group distinctive 3i culture. Our first five graduate Responsible investment since 2011;
plc) and includes 23 people who were directors of
undertakings included in the consolidated Group
analysts joined us in 2015 and we have since • we have a medium to long-term
accounts, of whom 20 were male and three were female. been joined by five in September 2016 investment horizon, typically buying
and three in September 2017. A further controlling stakes in our portfolio
three are due to join us in September 2018. companies and being represented
Since we started the programme, only 14% on their boards. We are therefore well
of total applications have been from female placed to drive sustainable growth
candidates. However, out of the 16 graduate in our portfolio. This involves the
positions offered since 2015, six, or 37.5% of continuous assessment, monitoring and
the total, were offered to women. The top management of ESG risks, as well as
performers on the programme are offered making targeted investments through
the opportunity to be fast-tracked directly new or existing portfolio companies in
into our business. opportunities arising from developments
Further information on our performance as such as climate change regulation,
a responsible employer is available in our changes to consumer preferences in
Sustainability report 2018. response to environmental issues and
the development of business solutions to
global sustainability challenges.

Sustainability
continued
Our Responsible 3i commits to use its influence as an investor A good corporate citizen
Investment policy to promote a commitment in our investee
As a company, we strive to embed
companies to:
We have a clear and comprehensive responsible business practices throughout
Responsible Investment (“RI”) policy which is • comply, as a minimum, with applicable the organisation. Good corporate
embedded into our investment and portfolio local and international laws and citizenship is achieved by having robust
monitoring processes. In our experience, regulations and, where appropriate, policies and processes in place and by
there is a strong link between companies relevant international standards (such promoting the right values and culture
that have high ESG standards and those as the IFC Performance Standards and within our organisation.
that are able to achieve sustainable business the ILO Fundamental Conventions),
All employees are assessed annually against
growth. This policy sets out the businesses where these are more stringent than
our corporate values of ambition, rigour and
in which 3i will not invest, as well as minimum applicable laws;
energy, integrity and accountability and have
standards in relation to ESG matters which • mitigate any adverse environmental and a responsibility to be aware of, and abide by,
we expect new portfolio companies to meet, social impacts and enhance positive 3i’s compliance, behaviour, environmental,
or to commit to meeting over a reasonable effects on the environment, workers ethical and social policies and procedures.
time period. The policy applies to all our and relevant stakeholders; and For more information on our corporate
investments, irrespective of their country • uphold high standards of business values, policies and processes, please see
or sector. integrity and good corporate governance. our Sustainability report 2018.
The Board of Directors is responsible For more information on our approach
for the RI policy, including for the review to responsible investing, please see our Governance
and approval of any material changes. Sustainability report. A summary of our
Good corporate governance is fundamental
Responsible Investment policy is available
The Investment Committee is responsible for on www.3i.com to 3i and its activities and is critical to
the implementation of the RI policy, and for the delivery of value to our stakeholders.
ensuring that it is executed in a meaningful For full details of our governance structure
way by 3i’s investment teams in all investment and processes, please see the Corporate
and portfolio management processes. Governance section of this report.
Our RI policy has been integrated into our
investment and portfolio management Transparency
processes and procedures, which are As a publicly-listed company, 3i operates
described in the Risk management section within a framework of formal legal and
on page 46, and is supported by detailed regulatory disclosure requirements.
guidance notes, a global network of It also meets the high expectations for
specialist external advisers and dedicated transparency of our shareholders, fund
internal resource. investors, staff and the media.
Anti-bribery and corruption

3i does not offer, pay or accept bribes
and we only work with third parties
whose standards of business integrity
are substantively consistent with ours.
We expect the businesses we invest in to
operate in compliance with all applicable
laws and regulations and, where appropriate,
work towards meeting relevant international
standards where these are more stringent.
This includes, in particular, upholding high
standards of business integrity, avoiding
corruption in all its forms and complying with
applicable anti-bribery, anti-fraud and anti-
money laundering laws and regulations.

Modern slavery Environmental impact We consolidate our organisational boundary
according to the operational control
3i updated its slavery and human trafficking This section has been prepared in
approach, which includes all our offices.
statement for the financial year ending accordance with our regulatory obligation to
We have adopted a materiality threshold of
31 March 2017, as required by section report greenhouse gas (“GHG”) emissions
5% for GHG reporting purposes. The GHG
54 of the Modern Slavery Act 2015, in pursuant to section 7 of the Companies Act
sources that constituted our operational
September 2017. The slavery and human 2006 (Strategic Report and Directors’ Report)
boundary for the year to 31 March 2018 are:
trafficking statement for the financial year Regulations 2013.
ending 31 March 2018 will be published • Scope 1: natural gas combustion within
During the year to 31 March 2018, our
in September 2018. 3i is committed to boilers and fuel combustion within leased
measured Scope 1 and 2 emissions (location-
ensuring that: vehicles; and
based) totalled 750.8 tCO2e. This comprised:
• there is no slavery and human trafficking • Scope 2: purchased electricity and heat
Scope FY2018 FY2017 consumption for our own use.
in any part of its business or supply chains;
and 1 156.4 191.0 In some cases, where data is missing,
• the companies in which it invests are 2 Location-based 594.4 768.8 values have been estimated using either
similarly committed to ensuring that there 2 Market-based¹ 137.4 174.8 extrapolation of available data or data from
is no slavery or human trafficking in any the previous year as a proxy.
1 Emissions from the consumption of electricity outside
part of their business or supply chains. the UK and emissions from purchased electricity are The new Scope 2 Guidance requires that
Our latest Modern Slavery disclosure is calculated using the market-based approach using we quantify and report Scope 2 emissions
supplier-specific emission factors are reported in
available on our website at www.3i.com/ according to two different methodologies
tCO 2 rather than tCO 2 e due to the availability of
media/3436/modern-slavery-statement.pdf
emission factors. (“dual reporting”): (i) the location-based
method, using average emissions factors for
and sustainability
Performance, risk
This is equivalent to 3.1 tCO2e per full-time
Data protection the country in which the reported operations
equivalent employee, based on an average
take place; and (ii) the market-based method,
We are reviewing our data protection of 241 employees during the year (2017: 3.4
which uses the actual emissions factors of the
policy and procedures in the light of the tCO2e; 281 employees). Overall our Scope
energy procured.
General Data Protection Regulation, which 1 and 2 emissions decreased by 21.8%
comes into effect in May 2018. 3i maintains in the year due to the sale of our Debt Whilst we have a very low footprint on the
an Information Security Management Management business in March 2017 environment, we are committed to reducing
System that: (i) ensures that risks to the and the full impact of the closure of our it further. In our London and Luxembourg
confidentiality, integrity and availability of Stockholm office. offices, which account for over 80% of
information are managed to an acceptable our overall electricity consumption, we
Our emissions have been verified to a
level using a standard risk management purchase all of our electricity from 100%
reasonable level of assurance by an
framework; (ii) protects information from renewable sources.
external third party according to the
accidental or intentional damage, loss,
ISO 14064-3 standard.
unauthorised disclosure or modification;
(iii) provides secure and reliable information We quantify and report our organisational
to enable 3i employees to conduct their jobs GHG emissions in alignment with the
effectively; and (iv) ensures compliance with World Resources Institute’s Greenhouse
legal and statutory obligations. Gas Protocol Corporate Accounting and
Reporting Standard and in alignment with
the Scope 2 Guidance.

Sustainability
continued
Community External benchmarking

We focus our charitable activities on the We believe that it is important to
disadvantaged, on the elderly, on young evidence our commitment to operating
people and on education, aiming to equip responsibly and to show how we are
young people from all backgrounds with performing. Accordingly, we provide
the tools and opportunities to pursue a information to shareholders and other
successful career. interested stakeholders.
The charities we partner with are supported
on the basis of their effectiveness and
Sustainability indices
impact. We also support staff giving and We have been a member of the Dow Jones
sponsorship through matching donations. Sustainability Europe Index and of the
FTSE4Good Index Series since 2002 and
Our charitable giving for the year to 31 March 2011 respectively. In addition, 3i became a
2018 totalled £390,000 (2017: £288,000). member of the Ethibel Sustainability Index
Further details of the charities we support (ESI) Excellence Europe in September 2016
are available in our Sustainability report 2018. and was reconfirmed as a constituent of that
Further information on our corporate index in March 2018.
citizenship performance is available in our For more information, please see
Sustainability report 2018. www.sustainability-indices.com
www.ftse.com/products/indices/FTSE4Good
www.forumethibel.org/content/ethibel_
sustainability_index_excellence_europe.html
Carbon Disclosure Project

CDP (formerly Carbon Disclosure Project) is
an international, not-for-profit organisation
providing a framework which enables
businesses to disclose their greenhouse
gas emissions and other metrics voluntarily.
3i has been making annual submissions to
CDP since 2006. 3i‘s score in the 2017 CDP
assessment was A-.
For more information, please see
www.cdp.net
For the purposes of the UK Companies Act
2006, the Strategic report of 3i Group plc
comprises pages 2 to 56.
By order of the Board
Simon Borrows
Chief Executive
16 May 2018

Governance
Sets out how we maintain strong
and effective oversight with
rigorous controls to ensure the
long-term health of the business

Governance
Chairman’s
introduction
Good corporate governance is fundamental to the way
that 3i, and its investee companies, conduct business.
Particularly in the current volatile economic and political
environment, effective oversight of strategy, risk
management and people is vital to the delivery of long-
term, sustainable value to the Group’s stakeholders.
The Board must also remain responsive to the evolving
regulatory environment and changing societal
expectations of business.
The Board is responsible to shareholders for The Board is also responsible for ensuring
the overall management and oversight of that the Group has the necessary people,
the Group to ensure its long-term success. resources and structures to deliver
In particular, the Board is responsible for the strategy.
approving the Group’s strategy, setting
the Group’s risk appetite, monitoring
performance, and maintaining an effective
system of risk management and internal
controls. It is also responsible for the Group’s Simon Thompson
approach to sustainability. Chairman
Corporate governance statement

The Company seeks to comply with established best practice in the field of
corporate governance. The Board has adopted core values and global policies
which set out the behaviour expected of staff in their dealings with shareholders,
customers, colleagues, suppliers and others who engage with the Company.
Throughout the year, the Company complied with the provisions of the UK
Corporate Governance Code (the “Code”) published by the Financial Reporting
Council (“FRC”) in September 2016 which is available on the FRC website.

The purpose of corporate governance is
to facilitate effective, entrepreneurial and
prudent management to ensure the
long-term success of the Company.
Leadership 60
Effectiveness
Governance
63
Accountability 66
Remuneration 73
Relations with
shareholders 83

Governance
Leadership
Board of Directors and Executive Committee
Board of Directors
Simon Thompson Simon Borrows Julia Wilson

Chairman Chief Executive Group Finance Director
Non-executive Director since April 2015 and Chief Executive since 2012, and an Executive Group Finance Director and member of the
appointed Chairman with effect from close of Director since he joined 3i in 2011. Chairman of the Executive Committee since 2008. A member of the
2015 AGM. Chairman of Rio Tinto plc. Group’s Risk Committee, Executive Committee and Investment Committee since 2012. Joined 3i in 2006
Investment Committee. Member of the Supervisory as Deputy Finance Director. Also a non-executive
Previous experience
Board of Peer Holding I B.V., the Dutch holding director of Legal & General Group Plc.
Until April 2017 Chairman of Tullow Oil plc.
company for the Group’s and EFV’s investment
Formerly an executive director of Anglo American Previous experience
in Action.
plc and chairman of the Tarmac Group. Non- Formerly Group Director of Corporate Finance
executive director of AngloGold Ashanti Ltd, Previous experience at Cable & Wireless plc, having previously held a
Newmont Mining Corporation and Sandvik AB. Formerly Chairman of Greenhill & Co International variety of tax and finance roles at Cable & Wireless
Senior Independent Director of Amec Foster LLP, having previously been Co-Chief Executive plc, Hanson plc and Tomkins plc.
Wheeler plc. Previous career in investment banking Officer of Greenhill & Co, Inc. Before founding the
with N M Rothschild and S.G. Warburg. European operations of Greenhill & Co in 1998
he was the Managing Director of Baring Brothers
International Limited. Formerly a non-executive
Director of the British Land Company PLC and
Inchcape plc.
David Hutchison Caroline Banszky Peter Grosch

Non-executive Director Non-executive Director Non-executive Director
Non-executive Director since December 2013. Non-executive Director since July 2014. Non-executive Director since November 2015.
Chief Executive of Social Finance Limited. Deputy Chairman of SLM Solutions AG as well
Previous experience
as being chairman of Euro-Diesel S.A., a 3i
Previous experience Formerly the Chief Executive of the Law
investee company.
Until 2009 Head of UK Investment Banking at Debenture Corporation p.l.c. from 2002 to 2016.
Dresdner Kleinwort Limited and a member of its Chief Operating Officer of SVB Holdings PLC, now Previous experience
Global Banking Operating Committee. From 2012 Novae Group plc, a Lloyd’s listed integrated vehicle, Formerly CEO and President of Diehl Aerospace
to 2017, a non-executive director of the Start-Up from 1997 to 2002. Previously, Finance Director and Defence Systems, Executive Vice President
Loans Company. of N M Rothschild & Sons Limited from 1995 to DaimlerChrysler Off-Highway and Managing
1997, having joined the bank in 1981. She originally Director and Board Member of MTU Friedrichhafen
trained at what is now KPMG. (now Rolls Royce Power Systems).

Executive Committee
Jonathan Asquith Menno Antal Kevin Dunn

Deputy Chairman Managing Partner, Private Equity General Counsel and Company Secretary
Deputy Chairman since April 2015 and Senior A member of the Executive Committee and the Responsible for 3i’s legal, compliance, internal
Independent Director since July 2014. Non- Investment Committee since 2010. Member of audit, human resources and company secretarial
executive Director since March 2011. Chairman of the Supervisory Board of Peer Holding I B.V., the functions. A member of the Executive Committee
the Risk and Audit Committee of Tilney Group Dutch holding company for the Group’s and EFV’s since joining 3i in 2007.
Limited and a non-executive Director of CiCap investment in Action.
Previous experience
Limited, the parent company of Coller Capital.
Governance
Previous experience Prior to joining 3i, was a Senior Managing Director,
Previous experience Joined 3i in 2000 and Managing Director, Benelux, running GE’s European Leveraged Finance business
Formerly Chairman of Citigroup Global Markets since 2003. Prior to joining 3i, spent 10 years at after serving as European General Counsel for GE.
Limited, Dexion Capital plc and AXA Investment Heineken in a range of international managerial Prior to GE, was a partner at the law firms Travers
Managers. Non-executive director of Ashmore positions. Holds an engineering degree from Delft Smith and Latham & Watkins.
Group plc. Director of Schroders plc from 2002 University and an MBA from IMD.
to 2008, during which time he was Chief Financial
Officer and later Vice Chairman. Previously spent
18 years in investment banking with Morgan
Grenfell and Deutsche Bank.
Stephen Daintith Alan Giddins Phil White

Non-executive Director Managing Partner, Private Equity Managing Partner, Infrastructure
Non-executive Director since October 2016. A member of the Executive Committee and the A member of the Executive Committee and
Chief Financial Officer and an executive director Investment Committee since 2010. Also a non- the Investment Committee since 2014.
of Rolls-Royce Holdings plc. executive director of Hill & Smith Holdings PLC.
Previous experience
Previous experience Previous experience Joined 3i in 2007. Prior to joining 3i, experience in
Formerly Finance Director of Daily Mail and Joined 3i in 2005. Prior to joining 3i, spent 13 years infrastructure investment, advisory and financing,
General Trust plc (“DMGT”) from 2011 to 2017. in investment banking, latterly as a Managing including roles at Macquarie, WestLB and Barclays.
Non-executive director of ZPG Plc. Prior to joining Director at Société Générale. Qualified as a Holds an MBA from London Business School.
DMGT he was Chief Operating Officer and Chief chartered accountant with KPMG and has a degree
Financial Officer of Dow Jones and prior to that in economics.
Chief Financial Officer of News International.
He originally qualified as a chartered accountant
with Price Waterhouse (now part of PwC).

Governance
Leadership
The role of the Board
How the Board operates Matters delegated by the Board to the

Chief Executive include implementation
The Board is accountable for the long‑term
of the Board approved strategy, most
success of the Company by approving the
investment decisions, day-to-day
Group’s strategic objectives and monitoring
management and operation of the business,
performance against those objectives.
the appointment and remuneration of
The Board meets formally on a regular basis,
staff below the Executive Committee and
usually in London, and, at each meeting,
risk management.
considers business performance. There is a
clearly deﬁned schedule of matters reserved Day-to-day management of the Group is
for the Board. the responsibility of the Chief Executive.
To assist him in this role, the Chief Executive
The Board is assisted by various Principal
has established a number of additional
Committees of the Board, which report to
management committees, including the
it regularly and details of their activity in the
Investment Committee, which are outlined
year are provided on pages 65 to 82.
in the Risk management section of the
Strategic report on page 45.
Role of the Chairman Role of the Chief Executive Role of non-executive Directors
• Leads the Board in setting its agenda, • Direct charge of the Group on a day- • Scrutinise the performance of
approving strategy, monitoring financial to-day basis and is accountable to the management in meeting agreed
and operational performance, and Board for the financial and operational objectives and monitor the reporting
establishing the Group’s risk appetite. performance of the Group. of performance.
• Organises the business of the Board, • Chairs the Investment Committee to • Seek assurance on the integrity of the
ensuring its effectiveness, and maintains review the acquisition, management financial information and that financial
an effective system of internal controls. and disposal of investments. controls and systems of risk management
• Ensures that non-executive Directors • Leads the Executive Management team are robust and defensible.
receive relevant and accurate information to develop and implement the Group’s • Determine appropriate levels of
to facilitate an open and effective strategy and manage the risk and the remuneration for Executive Directors and
discussion. This includes ensuring that the internal control framework. Executive Committee and have a prime
non-executive Directors receive regular • Reports to the Board on financial role in appointing Directors and
reports on shareholders’ views and operational performance, risk in succession planning.
on the Group. management and progress in delivering • Constructively challenge and help
• Responsible for the composition of the strategic objectives. develop proposals on strategy; this
the Board and facilitates the effective • Regularly engages with shareholders occurs at meetings of the Board, and in
contribution of non-executive Directors and other key stakeholders on the particular at the annual review meeting to
and constructive relationships between Group’s activities and progress. discuss ongoing strategy, the most recent
Executive and non-executive Directors. of which took place in December 2017.

Effectiveness
Performance and risk management
What the Board did in FY2018 • the Group’s strategic plan, related KPIs Training and advice
and annual budget;
The Board met formally seven times during The Company has a training policy which
FY2018. In addition, the Board held a • regular reports from the Chief Executive; provides a framework within which training
strategy day in December 2017. A table of for Directors is planned with the objective
• reviews of and updates on the
individual Board member attendance at of ensuring Directors understand the duties
Group’s Private Equity and
the formal Board and Committee meetings and responsibilities of being a director of
Infrastructure businesses;
is provided below. This shows the number a listed company. All Directors are required
of full meetings of the Board and its • regular reports from the to keep their skills up-to-date and maintain
Committees attended by each Director Board’s Committees; their familiarity with the Company and its
in the year together with (in brackets) the business continually.
• remuneration and pension matters
number of such meetings they were eligible
including remuneration philosophy On appointment, all non-executive Directors
to attend.
and strategy; have discussions with the Chairman
The Board’s agenda is set by the Chairman. and the Chief Executive following which
• the recommendations of the Valuations
Board members and, as appropriate, appropriate briefings on the responsibilities
Committee on valuations of investments;
executives from the relevant business areas of Directors, the Company’s business and
are invited to present on key items allowing • the Annual report and accounts, the Company’s procedures are arranged.
the Board the opportunity to debate Half-yearly report and quarterly The Company provides opportunities
and challenge on initiatives directly with performance updates; for non-executive Directors to obtain a
the senior management team along with thorough understanding of the Company’s
• dividend policy and dividends;
the executives. business by meeting members of the
• reports on regulatory matters including senior management team who in turn
The principal matters considered by the
Governance
significant regulation affecting the Group; arrange, as required, visits to investment
Board during the year (in addition to matters
or support teams.
formally reserved to the Board) included: • review of balance sheet strategy; and
The Company has procedures for
• organisational capability and
Directors to take independent legal or
succession plans.
other professional advice in relation to the
performance of their duties. In addition,
Directors have access to the advice
and services of the General Counsel
and Company Secretary, who advises
the Board, through the Chairman, on
governance matters.
Attendance at Board and Committee meetings

Non-executive Directors also attended a number of other Company meetings to increase their
understanding of the principal risks in the business and the strength and depth of our people.
Audit and Nominations Remuneration Valuations
Independent Board Compliance Committee Committee Committee Committee
Total meetings held 7 6 3 5 4
Number attended:
S R Thompson On appointment 7(7) 3(3) 4(4)
S A Borrows Executive Director 7(7) 4(4)
J S Wilson Executive Director 7(7) 4(4)
J P Asquith Senior Independent Director 7(7) 6(6) 3(3) 5(5)
C J Banszky Independent 7(7) 6(6) 3(3) 5(5)
S W Daintith Independent 7(7) 6(6) 2(3) 4(4)
P Grosch Not independent1 7(7) 3(3) 4(4)
D A M Hutchison Independent 7(7) 3(3) 5(5) 4(4)
M G Verluyten2 Independent 2(2) 1(1) 0(0) 0(1)
1 Mr P Grosch is not considered independent because of his links with the Group’s Private Equity business including his position as chairman of Euro-Diesel,
a company in which the Group is invested. Mr P Grosch receives director’s fees and is a shareholder in Euro-Diesel.
2 Retired on 29 June 2017.

Governance
Effectiveness
Performance and risk management
continued
Performance and evaluation Risk management and Financial reporting
During the year, the Board conducted its internal control In the context of the Group’s internal control
annual evaluation of its own performance The Board has overall responsibility for risk and risk management systems, there are
and that of its committees and individual management and internal control, including specific processes in place in relation to
Directors. The evaluation was externally the determination of the nature and extent financial reporting, including:
facilitated by Lintstock Limited in 2015/16 and of the principal risks it is willing to take to • comprehensive system of key control and
on this occasion the process was conducted achieve its strategic objectives and ensuring oversight processes, including regular
internally by the Chairman with support from that an appropriate culture has been reconciliations, line manager reviews and
Lintstock Limited. The Chairman held one- embedded throughout the organisation. systems’ access controls;
to-one interviews with Directors informed by
the results of a questionnaire which had been The Board has put in place an organisational • updates for consideration by the Audit
completed by all Board members and the structure with clearly defined lines of and Compliance Committee of accounting
Company Secretary. The Chairman reported responsibility and delegation of authority. developments, including draft and new
the results of the evaluation to the Board. The GRC is a management committee accounting standards and legislation;
Overall, the evaluation concluded that the formed by the Chief Executive. Details of
the risk management framework can be • a separate Valuations Committee which
Board continued to perform well. Some areas
found in the Risk management section of considers the Group’s investment valuation
for additional Board focus were identified
the Strategic report on pages 44 to 51. policies, application and outcome;
including further refinement of the strategic
objectives for the medium term. The overall risk management and internal • approval of the Group’s budget by the
control process is regularly reviewed by Board and a comprehensive system of
Following the review the Board identified
the Board and the Audit and Compliance financial reporting to the Board, based on
areas requiring greater time for Board
Committee and complies with the Guidance the annual budget with monthly reporting
discussion and areas for additional Board
on Risk Management, Internal Control and of actual results, analysis of variances,
reporting. These included updates on
Related Financial and Business Reporting scrutiny of key performance indicators
longer-term succession planning across
issued by the Financial Reporting Council. and regular re-forecasting;
the Group and medium-term investment
portfolio development. The Audit and Compliance Committee • reports from Internal Audit on matters
performed its annual review of the system’s relevant to the financial reporting process,
In his role as Senior Independent Director, effectiveness and reported its conclusions including periodic assessments of internal
Jonathan Asquith led a review by the to the Board. The process has been in place controls, processes and fraud risk;
Directors of the performance of the for the year under review and up to the
Chairman and subsequently reported back date of approval of this Annual report and • independent updates and reports from
to the Board and provided feedback to accounts 2018. the external Auditor on accounting
the Chairman. developments, application of accounting
standards, key accounting judgements
and observations on systems and controls;
• appointment of experienced and
professional staff, both by recruitment
and promotion, of the necessary calibre
to fulfil their allotted responsibilities; and
• appropriate Board oversight of
external reporting.
The topics covered by the annual Board evaluation included:

• Board composition and expertise;
• Board dynamics;
• time management and Board support;
• the performance of the Board’s Committees;
• the Board’s strategic and operational oversight;
• risk management and internal control;
• succession planning and human resources management; and
• priorities for change.

Nominations Committee report
Dear Shareholder Diversity

I am pleased to present the Nominations Further to the publication of the Davies
Committee report for the year ended Report on Women on Boards, and Code
31 March 2018. My report explains the Provision B.2.4, the Board strongly supports
role of the Committee as well as its work the principle of boardroom diversity, of which
this year. gender is one important aspect. The Board’s
aim is to have a diverse Board in terms of
The Committee’s principal role is to ensure
gender, industry experience, skills and
that the Board has the necessary skills and
educational background, and nationality and
experience to enable the Group to deliver
makes appointments on merit and against
its current and future strategic objectives.
objective criteria.
Membership during the year We regularly review the balance and
Name Membership status
composition of the Board, and develop We have a formal, rigorous and transparent
appropriate succession plans, including process for the appointment of Directors,
Simon Thompson Member since April 2015 and contingency plans. with the objective of identifying the skills
Chairman since June 2015
and experience required of new Directors,
All Directors are subject to reappointment
Jonathan Asquith Member since March 2011 and identifying and appraising suitable
every year. Accordingly, at the AGM to
candidates. In the case of non-executive
Caroline Banszky Member since July 2014 be held on 29 June 2018, all the Directors
Directors, the appraisal includes an
will retire from office. All the Directors
Stephen Daintith Member since October 2016
assessment of whether potential candidates
are eligible for and seek reappointment.
have sufficient time available to fulfil their
The Board’s recommendation for the
Peter Grosch Member since November 2015 roles. Specialist recruitment consultants
reappointment of Directors is set out in
Governance
assist the Committee with this process.
David Hutchison Member since November 2013 the 2018 Notice of AGM.
Our recommendations for appointment
Martine Verluyten Member since January 2012 are put to the full Board for approval.
Retired in June 2017
Directors
Directors’ biographical details are set out The external search consultancies we engage
on pages 60 and 61. are instructed to put forward for all Board
60 Read more about the
Composition of the Board Jonathan Asquith served as Senior
positions a diversity of candidates. This year
we worked with external search consultants
Further information on the Nominations Independent Director (“SID”) throughout Heidrick and Struggles JCA Group although
Committee’s terms of reference can be the year. The SID supports me and I meet we did not make any recommendations to
found on www.3i.com him regularly. He is also available to the the Board for appointment. Heidrick and
Company’s shareholders in relation to any Struggles JCA Group had no other
concerns that they may not have been able connections with 3i during the year.
to resolve through me, Simon Borrows or
Julia Wilson, or where you, as shareholder, Simon Thompson
consider these channels are inappropriate. Chairman, Nominations Committee
16 May 2018
Composition of the Board
25% 25%
38%
Sector Gender
Tenure
experience diversity
62%
75% 75%
Financial services 3–9 years Male
Other 1–3 years Female

Governance
Accountability
Audit and Compliance Committee report
Dear Shareholder I regularly meet with the Ernst & Young LLP
audit team as part of my ongoing review of
I am pleased to present the Audit and
their effectiveness. As part of my year end
Compliance Committee report for the
review, I also met Ernst & Young LLP’s Head
year ended 31 March 2018. My report
of Audit Quality for UK Financial Services
explains the Committee’s work this year.
and their Head of Assurance for UK Financial
We held six meetings this year, four of Services to discuss their approach to audit
which were coordinated with 3i’s external quality and what assurance had been taken
reporting timetable. In addition to the in connection with their audit of 3i.
Committee’s usual focus on internal controls
The rest of the report sets out in detail the
and the integrity of the Group’s financial
Committee’s activities in the year and is
Membership during the year reporting, this year we spent time reviewing
structured into four parts:
Name Membership status
management’s approach to cyber risk,
developments in tax reporting, preparations • Governance
Caroline Banszky Member since July 2014 and for the audit tender, which will take place this
Chairman since January 2015 • Report on the year
summer, the implementation of IFRS 15 and
• Internal audit
Jonathan Asquith Member since March 2011 regulatory challenges arising from Brexit.
• External audit
Stephen Daintith Member since October 2016 In advance of each Committee meeting,
I met the Group Finance Director, the I look forward to engaging with you on the
Martine Verluyten Member since November 2015 Group Financial Controller and the Heads work of the Committee.
Retired in June 2017
of Compliance and Internal Audit to discuss Caroline Banszky
their reports as well as any relevant issues. Chairman, Audit and Compliance Committee
Other regular attendees at the Committee
meetings include the following: Group Chairman; I also met privately with the external Auditor. 16 May 2018
Chief Executive; Group Finance Director; Group
General Counsel; Group Financial Controller;
the Head of Internal Audit; the Head of
Compliance; and the external Auditor,
Ernst & Young LLP.
Further information on the Audit and

Compliance Committee’s terms of
reference can be found on our website
www.3i.com
What the Committee reviewed in FY2018
Financial reporting Internal control and External audit Risk reviews

risk management
• Annual and half-year reports • Review of 3i’s system of • Confirmation of the external • Valuation reports and
• Quarterly control and risk management Auditor’s independence recommending the
performance updates • External and internal • Policy and approval for investment portfolio
audit reports non-audit fees valuation to the Board
• Key accounting judgements
and estimates • Review of the viability • The FY2018 Audit plan, • Review of strategy to
statement and the supporting including significant audit address Brexit related
• Update on the relevant
stress test scenarios risks (being the valuation of regulatory challenge
thematic reviews from the FRC
• Update on cyber security the unquoted investment • Regular reviews of compliance
• Update on the Group’s
portfolio and the calculation with regulatory rules
proposed implementation • Update on HMRC’s
of carried interest) as well • Annual tax update, including
of IFRS 15 Senior Accounting
as the area of audit focus Investment Trust matters and
• Reviewing the Annual report Officer Certificates
(revenue recognition) country by country reporting
to ensure that it is fair, • Review of the ICAAP
• Audit results report, including • Reports on approach to
balanced and understandable
the results from testing Key tax policy and strategy
• Update on result of the re- Audit Matters
tender of the Group’s existing • Litigation
• Auditor performance
finance outsourcing contract • Liquidity and going concern
and effectiveness
• Update on the Group’s
• Upcoming audit
Corporate Criminal
tender process
Sanctions policy

Governance Financial reporting regulators Going concern and viability
All members of the Committee are The Committee considered comment The Directors are required to make a
independent non-executive Directors. letters and papers from the FRC, including statement in the Annual report as to 3i’s
The Board believes members have the their Year End Advice Letter to Audit long-term viability. The Committee provides
necessary range of financial, risk, control Committee Chairs and Finance Directors advice to the Board on the form and content
and commercial experience required to and their published thematic reviews. of the statement, including the underlying
provide effective challenge to management. The Committee reviewed a paper prepared assumptions. In advance of the year end the
In particular, the Board is satisfied that by management which detailed how they Committee reviewed the Group’s proposed
Caroline Banszky has the recent and had taken due account of the matters raised stress test scenarios to support the Viability
relevant financial experience as outlined and the enhancements they proposed to Statement. At the year end, the Committee
in the FRC’s Corporate Governance Code. relevant disclosures in the Annual report evaluated a report from management
The attendance of members at meetings and accounts 2018. In particular, as 3i setting out its view of 3i’s long-term viability
is shown in the table on page 63. presents its results under its non-GAAP and content of the proposed Viability
Investment basis as well as preparing Statement. This report was based on the
The Committee meets privately for part
IFRS financial statements, the Committee Group’s five-year strategic plan and covered
of its meetings and also has regular private
specifically reviewed management’s forecasts for investments and realisations,
meetings with the external Auditor, the
assessment of the FRC’s thematic review liquidity and leverage, including forecast
Group Finance Director, the Head of Internal
on APMs and management’s consideration outcomes of the stress test of the plan and
Audit and the Head of Compliance in the
of its recommendations. forecast capital and liquidity performance
absence of other management.
against an assessment of the Group’s risk
Taxation profile. The three-year period was chosen
Report on the year as it provided more certainty on the
Governance
The Committee received an annual update
In addition to the areas of significant from the Head of Tax on the Group’s taxation Group’s performance.
accounting judgement and monitoring the status together with a more general update Taking into account the assessment of the
effectiveness of 3i’s risk management, the on the status of current and upcoming Group’s stress testing results and its risk
Committee particularly focused on a number legislative and regulatory changes. appetite statement (as disclosed on page
of topics: This year’s reports covered tax transparency 44), the Committee agreed to recommend
initiatives that have come into force, such the Viability statement and three-year
Accounting policies and practices as country by country reporting and the viability period to the Board for approval.
The Committee discussed a report from publication online of 3i’s tax approach and
management on the new accounting strategy, as required by new UK tax rules for Areas of accounting judgement
standard IFRS 15 (Revenue Recognition), large businesses. and control focus
which is effective for 3i from 1 April 2018.
The Committee pays particular attention
The Committee discussed the key technical
to matters it considers to be important
decisions and interpretations required, and
by virtue of their size, complexity, level of
3i’s approach to these, together with the
judgement and potential impact on the
Group’s disclosure on the expected impact
financial statements and wider business
of IFRS 15 in the Financial review and
model. Significant areas of focus considered
page 99 of the financial statements.
by the Committee are detailed in the table
on the following page, alongside the actions
taken by the Committee (with appropriate
challenge from the external Auditor) to
address them.

Governance
Accountability
Audit and Compliance Committee report
continued
Area of significant attention What the Committee reviewed and concluded

Valuation of the proprietary capital investment portfolio
The most material area of judgement in the financial statements, On behalf of the Board, the Committee received quarterly reports
and noted as a significant risk and Key Audit Matter by the external from the Chairman of the Valuations Committee and the external
Auditor, relates to the valuation of the unquoted Proprietary Capital Auditor, with particular focus on the assumptions supporting the
investment portfolio, which at 31 March 2018 was £5,806 million, unquoted asset investments, any valuation uncertainties and the
or 83% of net assets, under the Investment basis. proposed disclosure in the financial statements. Members of the
Committee also attend the Valuations Committee meetings.
In recognition of the importance of this area, the Board has a
Valuations Committee to review the valuations policy, process and The detail on the key valuation considerations and the review
application to individual investments. This Committee provides and challenge undertaken in the year is included in the Valuations
quarterly oral reports to the Audit and Compliance Committee Committee report on pages 70 to 72.
and the Board.
Carried interest payable and receivable
The valuation of the proprietary capital portfolio is a primary input Internal Audit reviews the carried interest balances and carry plan
into the carried interest payable and receivable balances, which are distributions made to plan participants before the payments are
determined by reference to the valuation at 31 March 2018. made. Summaries of the work done are included in updates to
the Committee.
We are through the hurdle to recognise carried interest receivable
from EFV on an accounting basis. Carried interest receivable will be The Committee reviewed the carried interest payable and
recognised in accordance with IFRS 15 from 1 April 2018. receivable as part of the overall summary prepared by management
to support the Annual report and accounts 2018.
We are also through the hurdle to pay carried interest to investment
teams on 3i’s proprietary capital invested in the 2010-2012 vintage. In advance of the year end, the Committee reviewed a paper from
management on the Group’s proposed accounting policy for
carried interest under IFRS 15, and the carried interest receivable
from EFV in particular, and the proposed disclosure in the Annual
report and accounts 2018.
Fair, balanced and understandable and the presentation of 3i’s results
Under the UK Corporate Governance Code the Board should The Committee reviewed the Half-yearly and Annual financial
establish arrangements to ensure the Annual report presents a fair, statements as well as the Quarterly Performance Updates with
balanced and understandable assessment of the Group’s position management, focusing on the integrity and clarity of disclosure
and prospects. and enabling the Board to provide the fair, balanced and
understandable confirmation to shareholders in the Annual report
The Group prepares the non-GAAP Investment basis financial
and accounts 2018.
statements to ensure that its results remain understandable.
A report summarising the considerations for the Annual report and
accounts 2018 was reviewed by the Committee in advance of the
year end and a summary of the detailed procedures undertaken
was prepared alongside the Annual report and accounts 2018.
The external Auditor also confirmed that the inclusion of the
Investment basis remained consistent with the prior year.

Internal audit It also ensures that where fees for approved Assessing external
non-audit services are greater than a pre- audit effectiveness
The Committee continued to monitor
determined limit, they are subject to the
the scope, activity, and resources of the The Committee reviews the effectiveness
Committee Chairman’s prior approval.
Group’s internal audit function, including of Ernst & Young LLP through the use of
approving the internal audit plan and The Policy permits certain non-audit services questionnaires completed by management,
whether the operating model remained to be procured, following approval, when by considering the extent of their contribution
effective. The Committee monitors Internal the Committee continues to see benefits for at its meetings throughout the course of the
Audit activity quarterly, covering change the Group in engaging Ernst & Young LLP. year, and in one-to-one meetings.
management and other areas of identified Examples of this include work:
higher risk and reviewed Internal Audit’s The FY2018 evaluation also reviewed the
• that is closely related to the external audit; quality of the audit process, the use of
self-assessment of quality in the year.
The Committee concluded that the Internal • where a detailed understanding of the Ernst & Young LLP’s valuation practice to
Audit function remained appropriate. Group is required; and support the audit of the portfolio valuations,
• where Ernst & Young LLP is able to provide the technical knowledge of the team and
Risk and internal control reviews a higher quality and/or better value service staff turnover within the Ernst & Young LLP
than other potential providers. audit team. The Committee concluded
The Committee is responsible on behalf of that the audit was effective and that there
the Board for overseeing the effectiveness The key principle of our policy is that should be a resolution to shareholders to
of the Group’s risk management and internal permission to engage the external Auditor recommend the reappointment of
control systems. It monitors the activities of will always be refused when a threat Ernst & Young LLP at the 2018 AGM.
the Group Risk Committee (“GRC”), the risk to independence and/or objectivity is
management processes in place and Internal perceived. The Committee Chairman is Audit tender
Governance
Audit’s assessment of the effectiveness asked to approve all assignments to be
of controls, the use of the Group’s allocated to Ernst & Young LLP over a Ernst & Young LLP (including its predecessor
whistleblowing facility and compliance defined limit, other than those related to firms) has been the Group’s external
with the UK Bribery Act. due diligence undertaken as part Auditor since November 1973. In line with
of the Group’s investment process. the Competition and Markets Authority
As highlighted on page 44 in the Risk Statutory Audit Services Order, the Group
Appointments in relation to the investment
management section, a report summarising must appoint a new Auditor for its year
process are independent of the audit
each quarterly GRC meeting, along with ending 31 March 2021. As noted in the
team and are reviewed separately by the
the risk report considered, is provided to FY2017 report, the Committee delayed the
Investment Committee. Ernst & Young
the Committee for review and discussion. rotation of the current auditor to no later
LLP inform the Group of all due diligence
In addition, the Head of Internal Audit than 2020 due to the scale of the current
engagements before they accept them and
prepares a report on internal controls engagements across the Group and its
all material due diligence commitments are
for presentation to the Committee. portfolio companies with the firms that may
reported to the Committee Chairman.
The review documents the components participate in any tender, as well as
of the internal control framework and Ernst & Young LLP has reviewed its own the complexities around how the rules on
highlights the key developments in the independence in line with these criteria non-audit services would apply, for example,
year. A commentary on the operation of and its own ethical guideline standards. to private equity investments.
the internal control framework over the This includes the review of due diligence
year is also independently prepared by processes undertaken within the Group’s In May 2018, the Committee decided to put
Internal Audit. Additional information can investment activities. Ernst & Young LLP has the Group’s audit out to tender. Based on its
be found on page 64 of the Corporate confirmed to the Committee that following current timetable, it intends to recommend
Governance report. its review it is satisfied that it has acted in an alternative audit firm by September
accordance with relevant regulatory and 2018. Due to the time a new auditor will take
professional requirements. to become independent, the Committee
External audit currently expects that Ernst & Young LLP will
The Committee has responsibility for be retained as auditor until at least the end
Audit and non-audit fees
making recommendations to the Board on of FY2019 but that a new auditor will be in
the reappointment of the external Auditor, The total audit fee for the year was £1.9 million place ahead of the deadline of 1 April 2020.
determining their independence from the (2017: £1.9 million). Non-audit fees paid
to the external Auditor were £0.4 million 3i is in compliance with the requirements
Group and its management and agreeing
(2017: £1.3 million). The Committee concluded of The Statutory Audit Services for Large
the scope and fee for the audit.
that all of these fees fell within its criteria for Companies Market Investigation (Mandatory
engaging Ernst & Young LLP and does not Use of Competitive Tender Processes and
Auditor independence
believe they pose a threat to the Auditor’s Audit Committee Responsibilities) Order
The Group has a policy for setting out what 2014, in the year ended 31 March 2018.
independence or objectivity.
non-audit services can be purchased from
the firm appointed as external Auditor.
The aim of the policy is to support and
safeguard the objectivity and independence
of the external Auditor and to comply with
the FRC’s Ethical Standards for auditors.

Governance
Accountability
Valuations Committee report
Dear Shareholder I met the Group Finance Director and the

Group Financial Controller in advance of
I am pleased to present the Valuations
each meeting to discuss the key valuation
Committee report for the year ended
assumptions. I also met the external
31 March 2018. My report explains the
Auditor privately to discuss the results of
role of the Committee as well as the
their quarterly reviews. In February 2018,
work we reviewed this year.
the external Auditor and I discussed their
The Valuations Committee plays an approach to the year-end audit and the
important role in providing the Board with assets that their specialist valuations team
assurance that the valuation process is robust intended to select for their in-depth review.
and independently challenged. We review
In advance of the full-year and half-
Membership during the year and challenge the assumptions behind
year reporting, management hold
management’s proposed asset valuations
Name Membership status individual portfolio company reviews
and report to the Audit and Compliance
David Hutchison Chairman and Member since
with the respective investment teams.
Committee and the Board.
December 2013 Non-executive Directors, including
During the year, we met four times as part members of the Committee, attended
Simon Thompson Member since June 2015 of the Group’s external reporting timetable. a significant proportion of the meetings
Stephen Daintith Member since October 2016 Our principal focus continued to be the held in September 2017 and March 2018
Group’s Private Equity investments as a high and were represented at the reviews of
Peter Grosch Member since January 2016 level of judgement is required to value the the five largest Private Equity portfolio
unquoted portfolio. This accounts for 95% company investments.
Martine Verluyten Member since December 2013
Retired in June 2017 of 3i’s proprietary capital invested in Private
The rest of this report sets out in more
Equity. The valuation of the Group’s principal
Simon Borrows Member since May 2012 detail what the Committee did in the year.
Infrastructure investment, its quoted holding
Julia Wilson Member since December 2008
in 3i Infrastructure plc, requires limited D A M Hutchison
oversight given that it is a listed company. Chairman, Valuations Committee
Other regular attendees at the Committee However, we devoted more time to 16 May 2018
meetings include the following: Audit Committee Infrastructure in the second half of the year
Chairman; Deputy Chairman; Group Financial following the Group’s first US Infrastructure
Controller; Group General Counsel; the Co-Heads
of Private Equity; the external Auditor, Ernst & investment, Smarte Carte and the Group’s
Young LLP investments in the 3i Managed Infrastructure
Acquisitions LP and the 3i European
Operational Projects Fund.
Further information on the Valuations
Committee’s terms of reference can be At each meeting we received a detailed
found on our website at www.3i.com report from the Group Finance Director
recommending the proposed valuation of
the Group’s investment portfolio. This report
highlights the main drivers of value
movement analysed between performance,
multiple movements and other factors.
At each meeting we also reviewed selected
assets for detailed discussion; examples of
such assets covered during the year included
Action, ATESTEO, Audley Travel, Christ,
Euro-Diesel, Ponroy Santé, Scandlines,
Schlemmer and Smarte Carte.

The Committee focused on the following significant issues in the FY2018:
Area of judgement What the Committee did

Earnings and multiple assumptions
The majority (68%) of the portfolio is valued using a multiple of Earnings data is received monthly from Private Equity portfolio
earnings. This requires judgement as the earnings of the portfolio companies and monitored closely by management. Actual earnings may
company may be adjusted so that they are considered “maintainable”. then be adjusted in management’s proposed valuations, for example,
We also apply a liquidity discount to the enterprise value using factors to reflect a full year’s trading of an acquired business, removing profit
such as our alignment with management and other shareholders and from discontinued activities, any forecast uncertainty or to exclude
our investment rights in the company. exceptional transaction costs. Material adjustments are highlighted to
There is also a significant degree of judgement in selecting the set the Committee in the quarterly report for review and approval.
of comparable quoted companies to determine the appropriate Management continued to adjust a significant proportion of multiples
multiple to generate an enterprise value. Multiples are selected by used where the longer-term view (of the exit or multiple) supports the
reference to the market valuation of quoted comparable companies, use of a different, typically lower, multiple. Notable changes in multiples
M&A transactions and input in certain cases from corporate finance in a quarter are presented to the Committee and adjustments are
advisers. We also take into account growth profile, geographic reviewed by the Committee at each meeting.
location, business mix, degree of diversification and leverage/ The Committee reviewed the work done by management on
refinancing risk. The multiple implied by the quoted comparables may the potential use of a DCF valuation for Action and agreed with
be adjusted if, in certain cases, the longer-term view (cycle or exit plan) management’s assessment that, while providing an informative
supports the use of a different multiple. This has been a particularly reference point, the earnings based approach remained the
important exercise in light of the movement in the quoted equity
Governance
most appropriate.
markets over the period under review.
Private Equity assets are typically valued using a multiple of earnings.
However, alternative valuation methodologies, such as Discounted
Cash Flow (“DCF”) valuations, may be considered as an alternative
benchmark for potential values as a cross check relative to the
earnings based value.
Assets valued using a DCF basis
For assets valued using DCF techniques the key valuation judgements Material assumptions in the DCF valuations and changes to these
relate to longer-term assumptions that drive the underlying business assumptions are reviewed by the Committee. This may include third-
plan and cash flows and the decisions party support if available. Sensitivity to assumptions is also noted.
on the appropriate discount rates. Discount rates are selected by management with reference to market
transactions, weighted average cost of capital calculations and other
public data. Any material changes are reviewed by the Committee and
external advice is sought from time to time.
The Committee reviewed the particular valuation methodology
and assumptions behind the valuation of the Group’s investment in
Smarte Carte.
Imminent sale assets
At any point in time it is likely that a number of potential exit Assets that are within active sales processes are reviewed by the
processes from the portfolio are underway. Judgement is applied Committee including details such as the timeline to potential
by management as to the likely eventual exit proceeds and certainty completion, the number and make-up of bidders for investments,
of completion. This means that in some cases an asset may not be execution and due diligence risks and regulatory or competition
moved to an imminent sales basis until very shortly before completion; clearance issues. Management propose a treatment for each asset
in other cases the switch may occur on signing. However, as a general in a sales process which the Committee reviews.
rule an asset moves to an imminent sale basis only when a process Although not an area of valuation judgement, the Committee actively
is materially complete and the remaining risks are estimated to reviews the results of the back-testing that management prepares on all
be small, given the amount of completion risk around unquoted assets disposed in each quarter to reconcile the price achieved with the
equity transactions. carrying value at the last balance sheet date. Typically, differences are
due to increased earnings, the unwind of the liquidity discount and the
circumstances of the buyer or the competitiveness of the sales process.
This review acts as an important hindsight test of the fair value applied
to assets in the quarters up to disposal.
The Committee focused on the disposal of ATESTEO and upcoming
sale of Scandlines, which were at significant uplifts to the opening
valuation and benefited in each case from the competitiveness of the
auction process.
Governance
Accountability
Valuations Committee report
continued
As part of its challenge and review process, External audit Portfolio trends
the Committee:
As part of its external audit, Ernst & Young At least annually the Committee Chairman
• considered the management information LLP review the proposed investment and management conduct a review of the
provided to support the Committee’s portfolio valuation to determine that the valuation outcomes in the portfolio over
review of the valuations, including valuation policy is being complied with the preceding three years. The Committee
management’s responses to any and that there is consistent application and Chairman and Group Finance Director
challenges raised by the Committee support for the underlying assumptions. reported to the Board in May 2018 on the
members or the external Auditor; As part of their year-end audit, and to key observations.
• sought assurance from the external support their opinion on the Financial
Auditor as to whether and how they had statements as a whole, Ernst & Young LLP’s
considered each of these areas; specialist valuations team review a selection
of investments to provide assurance
• reviewed the consistency of the views of
on their overall audit conclusion on the
management and the external Auditor;
appropriateness of 3i’s portfolio valuation.
and
• reviewed any differential between
carrying values and those implied by
the floating multiple of comparable
quoted companies.
The Committee was satisfied that the
application of the policy and process was
appropriate during the period under review,
and recommended the portfolio valuation to
the Audit and Compliance Committee and
the Board at each quarter end for approval
by the Board.
In addition, the Committee is responsible for
keeping the Group’s valuation policy under
review and recommending any changes
to the policy to the Audit and Compliance
Committee and the Board. The policy is
reviewed at least annually, with the last
update in January 2018.
More information on our valuation
methodology, including definitions and
rationale, is included in the Portfolio
valuation – an explanation section on pages
150 and 151.

Directors’
remuneration report
Performance in the year Operating profit
I am pleased to report that this has been Our continued disciplined approach to
another successful year with a total return cost management and the important
on equity of 24%. The results and the developments in the Infrastructure business
Committee’s decisions concerning the resulted in an operating cash profit of
Executive Directors’ remuneration are £11 million, notwithstanding the significant
underpinned by a balanced scorecard of reduction in fee income resulting from the
both financial and strategic measures agreed sale of the Debt Management business
by the Committee. While the facts driving in FY2017.
our assessment of performance against that
Dear Shareholder balanced scorecard are available elsewhere Strategy and people
in this Annual report, we have summarised We continue to focus our resources on our
As Remuneration Committee Chairman,
them here for ease of reference. core markets. In the year, we reviewed the
I am pleased to introduce the Directors’
remuneration report for the financial coverage of each of our businesses, which
year 1 April 2017 to 31 March 2018
Portfolio return led to the decision to close our Madrid office
(“the year”) and to provide some details The Private Equity portfolio generated following the disposal of Mémora. With the
of the background against which the an excellent gross investment return of sale of our Debt Management business, our
Committee’s decisions have been taken £1,438 million or 30% of opening portfolio fund management focus has switched to the
in the year. References to “FY2019” value, supported by good growth in development of the Infrastructure business,
relate to the financial year 1 April 2018 unrealised profits in the portfolio and with two new European funds closed
to 31 March 2019. a number of realisations at significant during FY2018, and our North American
Governance
uplifts. Our investment in 3iN produced an Infrastructure business continues to grow.
At our 2017 Annual General Meeting, outstanding performance during the year.
our Remuneration policy was approved. 3iN generated a total return of 29%, assisted Conclusion
That policy has served us well and we are by high prices achieved in the sales of Elenia
not proposing any changes to it at this time, In light of the strong performance across the
and AWG. Group the Remuneration Committee has set
other than minor clarification of the Malus
and Clawback policy, which now reads as annual bonuses for each Executive Director
Investment at 92.5% of maximum. Furthermore, the
set out on page 81.
Investment levels within our Private Equity last three years have delivered exceptional
The policy is available on business demonstrated that the team is shareholder returns resulting in the
our website www.3i.com
working very effectively with £502 million maximum hurdle on the LTIP being materially
invested in four new investments, including exceeded as detailed later in this report.
£172 million and £132 million invested in
Hans Anders and Formel D respectively,
and £80 million in three add-on investments
including Vascotube (Cirtec) and Aragan
(Ponroy Santé). Our new North American
Infrastructure business completed its
first investment in Smarte Carte and
the European Infrastructure business
advised 3iN on £525 million of investment
and commitments.

Governance
Directors’
remuneration report
continued
FY2019 implementation Changes in the year The Executive Directors have led the
transformation of the Group since its
The Executive Directors will be awarded The Committee continues to review the level
restructuring plan was put in place in 2012.
a 3% salary increase effective 1 July 2018, of disclosure it makes through the annual
FY2018 marks the fourth year in succession
in line with Group-wide salary increases. performance metrics and their impact on
in which Group Total Returns have exceeded
There are no proposed changes to the rest remuneration. The FY2018 scorecard, which
20%, registering a compound growth of 22%
of the remuneration package. The Board and the Committee has used as a prompt and
over the last 5 years. This growth has been
the Remuneration Committee have reviewed guide to judgement of performance, has
mirrored in a compound TSR for investors
the level and structure of the non-executive been further improved with more than half
in the Group of some 27% over the same
Director and Company Chairman fees of the scorecard now being directly linked
period. As a result of the performance of the
respectively. The non-executive Directors to quantitative measures (Portfolio returns
business over the last five years, the growth
fees were last set in 2014 as an annual cash and Operating performance). As shown on
in returns to shareholders has far exceeded
fee (of £50k) plus a fixed number (3,000) of page 76, these metrics have been set with
the increase in rewards to the executive
3i shares. Since then, the 3i share price has threshold and maximum levels.
directors, whose maximum fixed plus
grown from 475p to 859p (29 March 2018),
variable packages at grant have risen by 3%
increasing the value of the share component Looking back per annum.
of non-executive Director fees from c.£14k
Looking back over the last 5 years, it is 20% annual compound growth in value is
to c.£27k. The Board has decided that, with
striking that the Executive Directors have a challenging target for a company in the
effect from FY2019, non-executive Director
performed sufficiently well in each of them FTSE 100 by any standards, not least in a low
share awards will be reduced to the share
to merit annual bonus awards in the 85- inflation and low interest rate environment.
equivalent of £15k, effectively rebasing this
95% range, while their trailing three year The Committee is of the view that the fact
component of annual remuneration to its
performance since 2015 has been sufficiently that it has been regularly exceeded at 3i
2014 level. The Committee also reviewed
strong to ensure LTIP payouts in the 90-100% over recent years reflects the strength of the
the Company Chairman’s fees, and decided
range. It is natural to ask, with the benefit of management team’s performance during
to change the proportions paid in cash and
hindsight, whether the targets set for them the period, rather than any weakness in the
shares to align with the new structure for
were sufficiently ambitious. targets set.
non-executive Director pay. Accordingly,
from 2019 the Chairman will be paid £240k The Executive Directors’ remuneration is The Committee remains committed to
in cash and £70k in shares (2018: £280k and significantly weighted towards the variable maintaining a remuneration framework which
£30k respectively). components of annual bonus and LTIP, and strictly rewards progress in meeting the
vests over a number of years. As detailed Group’s strategic objectives and alignment
To further emphasise shareholder alignment
elsewhere in this report, variable awards with shareholders. We will also continue to
at the Board level, it has also been agreed
are judged in relation to a range of KPIs monitor and comply with relevant guidelines
that for FY2019 the non-executive Directors
including absolute and relative multi-year and regulatory changes.
and the Chairman will be subject to a
TSRs, portfolio returns and cash discipline.
shareholding target requiring them to
All of the LTIP and 80% of the annual bonus Jonathan Asquith
build up over time and thereafter maintain
are delivered in the form of shares, ensuring Chairman, Remuneration Committee
a shareholding in the Company’s shares
strong alignment with shareholders. 16 May 2018
equivalent to at least 1x their respective
All awards are capped on the upside, so that
annual base fees (cash and shares).
in the years in which performance targets
are exceeded there is no further uplift
in remuneration.

The Annual report of remuneration (Implementation report)
During FY2018, we continued to operate under the remuneration policy approved at the 2017 AGM, which can be found on our website
at www.3i.com.
Director remuneration for the year

Single total figure of remuneration for each Director
FY2018 FY2017
Salary/ Annual Salary/ Annual
£’000 fees Benefits Pension bonus LTIP Total fees Benefits Pension bonus LTIP Total
S A Borrows 615 15 16 2,290 3,911 6,847 597 14 16 2,284 4,633 7,544
J S Wilson 447 16 47 1,041 1,778 3,329 434 17 46 1,011 2,106 3,614
S Thompson 310 – – – – 310 295 – – – – 295
J P Asquith 139 – – – – 139 131 – – – – 131
C J Banszky 107 – – – – 107 108 – – – – 108
S W Daintith 95 – – – – 95 42 – – – – 42
P Grosch 175 – – – – 175 250 – – – – 250
D A M Hutchison 107 – – – – 107 99 – – – – 99
M G Verluyten 23 – – – – 23 87 – – – – 87
Governance
• Benefits include a car allowance, provision of health insurance and, for Mrs Wilson, the value of the Share Incentive Plan matching share awards.
• Mr Borrows and Mrs Wilson received salary supplements in lieu of pension contributions of £16k and £47k respectively. These supplements
were in line with pension contributions for the Group’s employees generally.
• Annual bonus awards made in respect of the year are delivered as 60% payable in 3i Group plc shares deferred for four years, and the
remaining 40% being half as a cash payment immediately and half as 3i Group plc shares which are subject to a six-month retention period.
All annual bonus awards are subject to the malus/clawback policy. Those shares deferred for four years are released in four equal annual
instalments over the four years commencing June 2019 and all share awards carry the right to receive dividends and other distributions.
• In the case of Ms Banszky, the sum shown for FY2017 includes an amount of £69k (including VAT) paid to her then principal employer,
the Law Debenture Corporation p.l.c., which released her to serve as a non-executive Director.
• In the case of Mr P Grosch, the sum shown includes €100k of fees paid to him by Euro-Diesel (a 3i portfolio company) for his role as Executive
Chairman (2017: €200k).
• In addition to the table above, dividends or dividend equivalents on unvested deferred share awards were paid during the year (Mr Borrows:
£133k, Mrs Wilson: £56k).
• The values shown in the LTIP column represent the performance shares vesting from the 2015 LTIP, together with the value of accrued
dividends on those shares. The shares have been valued using the 29 March 2018 closing share price (859 pence). Further detail is provided
on page 77.
• The fees shown for the non-executive Directors include fees used to purchase shares in the Company. Non-executive Directors receive
reimbursement for their reasonable expenses for attending Board meetings. The Group meets the associated tax cost.
• In addition to the fees shown above, Mr Borrows retained directors’ fees of £21k from The British Land Company PLC, and Mrs Wilson
retained directors’ fees of £115k from Legal and General Group plc.

Governance
Directors’
remuneration report
continued
FY2018 performance
The Committee has continued to review the level of disclosure it makes through the annual performance metrics and has increased
the proportion that is directly linked to quantitative measures this year (from 50% to 60%).
Formulaic performance measures (60% of total)

Area of strategic focus Weighting Metric Threshold Maximum Performance Payout
Portfolio returns 45% Private Equity Gross investment return 10% 20% 30% 100%
(% of opening portfolio value)
Portfolio returns 5% 3iN total return 8%1 10%1 29% 100%
Operating performance 10% Manage operating expenses £133m £128m £121m 100%
Qualitative performance measures (40% of total)

Area of strategic focus Weighting Metric Target/Expectation Performance Comments
Investment 30% New capital invested in E €800m €825m Another year of increased investment levels in Private
Management Private Equity Equity, while maintaining a disciplined and selective
approach to new investments.
New 3iN capital E £250m– £525m A strong year of investment activity, well above
committed in Core/PPP £325m expectation, with 6 investments made or committed
by 3iN.
Investment benefited from a targeted approach around our key sectors and themes, with our focus on targets that were not being sold in
more broadly-based processes resulting in a good hit rate. There was also a significant increase in strategic acquisitions and bolt-ons for
existing portfolio companies in both PE and Infrastructure.
Strategy 10% Achievement of strategy and people targets Good progress on refocusing the Group’s fund
and people is measured against a balanced scorecard of management strategy following the sale of the Debt
objectives set by the Remuneration Committee Management in FY2017, including the further
development of the North American Infrastructure team
and the successful close of two new European
Infrastructure funds.
Designing and obtaining regulatory approval for a new
corporate structure in Europe to manage potential
regulatory risks posed by Brexit.
Closure of the Madrid office and continued consolidation
of the Infrastructure and Private Equity teams, including
through key hires, internal development and promotions.
Consistent shareholder support for the Group’s
performance and strategy and a further broadening
of the shareholder base.
Development, retention and succession plans for the
Group’s key talent and leadership team progressing
according to plan.
1 The threshold and maximum return targets are set in line with 3iN’s public return objectives.
T = Target E = Expectation
Consistent with last year, the Board did not set a threshold to maximum range for all metrics and set expectations rather than targets for some
metrics. This is because the timing of investments and realisations is highly sensitive to market conditions, and a more prescriptive approach
would run the risk of creating perverse incentives for executives. For example, setting a target level of realisations may result in the earlier sale
of assets than would otherwise be appropriate, and setting a target level of investments may result in investing at inflated prices. In relation to
Operating performance, the continued tight focus on managing operating costs is emphasised by specifying a narrow range of acceptable
outcomes rather than a single numerical target. Operating costs as a percentage of assets under management compares favourably with
other investment groups.
Chief Executive and Group Finance Director annual bonus outcomes

In light of the achievements detailed above, and the exceptional performance of the Group in the year, the Committee awarded Mr Borrows
a bonus in respect of FY2018 of £2,290,411 (being 92.5% of his maximum bonus opportunity), and awarded Mrs Wilson a bonus in respect
of FY2018 of £1,041,095 (being 92.5% of her maximum bonus opportunity). In each case, 20% of the award will be paid in cash immediately,
20% will be delivered as shares with a retention period of six months and the remaining 60% will be deferred into the Company’s shares
vesting in equal instalments over four years. Annual bonus awards are subject to the malus/clawback policy.

Share awards vesting in 2018 subject to performance conditions
2015 Long-term incentive award
The long-term incentive awards granted in June 2015 to Mr Borrows and Mrs Wilson were subject to performance conditions based on
absolute and relative Total Shareholder Return over the three financial years to 31 March 2018. The table below shows the achievement against
these conditions and the resulting proportion of the awards which will vest in June 2018.
Weighting Threshold Maximum Actual

Total Shareholder Return Measure % Performance % vesting Performance % vesting Performance % vesting
Absolute Total Shareholder Return 50% 10% pa 20% 18% p.a. 100% 29.6% 100%
Relative Total Shareholder Return Upper Above Upper
(as measured against the FTSE 350 Index) 50% Median 25% quartile 100% Quartile 100%
The table below shows the grants made to each Executive Director on 25 June 2015 at a share price of 541.1 pence and the resulting number
of shares that will vest due to the achievement against the performance targets as set out above. The value of the shares vesting has been
included in the single figure table using the 31 March 2018 closing share price of 859 pence.
Number of
shares awarded Number Value of share
Face value at 541.1p of shares vesting at 859p
Basis of award at grant at grant per share % vesting vesting per share
S A Borrows Face value award of 4 times base salary of £567k £2,266k 418,768 100% 418,768 £3,597k
Governance
J S Wilson Face value award of 2.5 times base salary of £412k £1,030k 190,349 100% 190,349 £1,635k
The proportion of the award vesting will be released 50% in June 2018, 25% in June 2019 and 25% in June 2020 together with the value of
dividends that would have been received during the period from grant to the release date.
Change in the remuneration of the Chief Executive compared to other employees

The table below shows the percentage change in remuneration awarded to the Chief Executive and employees as a whole, between the year
to 31 March 2017 and the year to 31 March 2018.
Salary Benefits Bonus

Chief Executive 3% 0% 0%
All other employees 6% 0% 2%
Details of share awards granted in the year

LTIP
Performance share awards were granted to the two Executive Directors during the year as shown in the table below.
Description of award A performance share-based award, which releases shares, subject to satisfying the performance conditions,
50% on the third anniversary of grant and 25% on the fourth and fifth anniversaries.
Face value Chief Executive – 400% of salary, being 287,800 shares.
Group Finance Director – 250% of salary, being 130,818 shares.
The share price used to make the award was the average mid-market closing price over the five working days
starting with the day of the announcement of the 2017 annual results (835.3p).
Performance period 1 April 2017 to 31 March 2020.
Performance targets 50% of the award is based on absolute TSR measured over the performance period, and vests:
• 0% vesting below 10% pa TSR;
• 20% vesting at 10% pa TSR;
• Straight-line vesting between 10% and 18% pa TSR; and
• 100% vesting at 18% pa TSR.
50% of the award is based on relative TSR measured against the FTSE 350 Index over the performance period, and vests:
• 0% vesting for below median performance against the index;
• 25% vesting for median performance against the index;
• 100% vesting for upper quartile performance against the index; and
• Straight-line vesting between median and upper quartile performance.
Remuneration The Committee can reduce any award which would otherwise vest if gross debt or gearing targets are missed.
Committee discretion

Governance
Directors’
remuneration report
continued
Deferred bonuses awarded in FY2018
The two Executive Directors are considered to be AIFMD Identified Staff and, as such, 60% of their annual bonuses will be delivered in
3i Group plc shares deferred for four years (and which vest one quarter per annum over those four years). The remaining 40% will
be delivered half as a cash bonus and half in 3i Group plc shares which are subject to a six-month retention period. The following awards
were made on 10 June 2017 in respect of FY2017 performance:
20% of FY2017 delivered as shares

60% of FY2017 bonus deferred for four years subject to a six-month retention period
Number of shares Number of shares
awarded at awarded at
Face value at grant 835.3p per share Vesting Face value at grant 835.3p per share Released
S A Borrows £1,370,280 164,046 Four equal £456,760 54,682 At the expiry
J S Wilson £606,462 72,604 instalments £202,154 24,201 of the six-month
annually from retention period
1 June 2018
These face values were reported in the FY2017 single figure of remuneration for each Director. The share price used to calculate face value
was the average of the mid-market closing prices over the five working days starting with the date of the announcement of the Company’s
results for the year ended 31 March 2017 (18 May 2017 to 24 May 2017), which was 835.3 pence. These awards are not subject to further
performance conditions.
Share Incentive Plan

During the year, Mrs Wilson participated in the HMRC approved Share Incentive Plan which allowed employees to invest up to £150 per
month from pre-tax salary in ordinary shares (“partnership shares”). For each partnership share, the Company grants two free ordinary shares
(“matching shares”) which are normally forfeited if employment ceases within three years of grant. Dividends are reinvested in further ordinary
shares (“dividend shares”).
During the year, Mrs Wilson purchased 198 partnership shares, and received 396 matching shares and 464 dividend shares at prices ranging
between £7.995 and £9.535 per share, with an average price of £9.089.
Hedging of share awards

As a matter of policy the Group ensures that it holds the maximum potential number of shares granted under the LTIP, Deferred Share
Plan and Share Incentive Plan from the date of grant. Shares are purchased in the market as and when required to ensure that coverage
is maintained.
Pension arrangements
Mr Borrows and Mrs Wilson receive pension benefits on the same basis as other employees of the Company. During the year, they received
salary supplements in lieu of pension of £16k and £47k respectively.
Payments to past Directors

Mr Queen, who resigned as Chief Executive on 16 May 2012, retained interests in arrangements relating to his previous roles as Managing
Partner, Infrastructure and Managing Partner, Growth Capital. During the year, he received payments under those arrangements totalling £5k
together with a return of a capital commitment of €9k. It is anticipated that he will receive further payments of €101k from these arrangements.
Payments for loss of office

No payments to Directors for loss of office have been made in the year.
Statement of Directors’ shareholding and share interests

The Company’s share ownership and retention policy requires Executive Directors to build up over time and thereafter maintain
a shareholding in the Company’s shares equivalent to at least 3.0 times gross salary in the case of the Chief Executive and 2.0 times
gross salary for the Group Finance Director. In addition, shareholding targets have been introduced for other members of the Executive
Committee at 1.5 times their gross salaries and for partners in the Group’s businesses at 1.0 times their gross salaries.
Details of Directors’ interests (including interest of their connected persons) in the Company’s shares as at 31 March 2018 are shown
in the table opposite. The closing share price on 29 March 2018 was £8.59.

Current
Owned Deferred Subject to Shareholding shareholding
outright1 shares2 performance requirement (% salary)
S A Borrows3 12,933,394 1,354,132 739,508 300% 17,947%
J S Wilson 3
645,791 606,773 336,140 200% 1,232%
Shares owned outright

S Thompson3 48,558
J P Asquith3 46,001
C Banszky3 15,995
S Daintith3 4,241
P Grosch3 7,249
D Hutchison3 62,966
1 The share interests shown for Mrs Wilson include shares held in the 3i Group Share Incentive Plan. The owned outright column includes partnership and dividend shares under the SIP.
The deferred shares column includes matching shares under the SIP.
2 The number of shares shown includes the 2015 Performance Share award. The performance target has been met with 100% of the shares being released as described on page 77.
3 Directors are restricted from hedging their exposure to the 3i share price.
4 From 1 April 2018 to 1 May 2018, Mrs Wilson became interested in a further 17 shares overall outright (SIP Partnership Shares) and a further 34 deferred shares (SIP Matching Shares).
There were no other changes to Directors’ share interests in that period.
Governance
Chief Executive’s single figure remuneration history (£’000)
FY2018 646 458 1,832 2,266 1,645
FY2017 628 457 1,827 2,200 2,433
FY2016 610 432 1,727 2,156 896
FY2015 593 1,047 1,047 2,324 3,267
Fixed remuneration Cash bonus Deferred Share Award

Value of LTIP vesting at grant price Additional LTIP value due to share price growth and dividends
Performance graph – TSR graph

This graph compares the Company’s total shareholder return for the nine financial years to 31 March 2018 with the total shareholder return
of the FTSE 350 Index. The FTSE 350 Index is considered to be an appropriate comparator as it reflects both the variety of the Company’s
portfolio of international investments as well as the diverse currencies in which those investments are denominated.
3i total shareholder return vs FTSE 350 total return over the nine years to 31 March 2018
900
800
700
600
500
400
300
200
100
0
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
3i Group FTSE 350 Rebased at 100 at 31 March 2009

Governance
Directors’
remuneration report
continued
Performance table
Table of historic Chief Executive data
Single figure of Percentage Percentage

total remuneration of maximum of maximum
Year Chief Executive £’000 bonus paid LTIP vesting
FY2018 S A Borrows 6,847 92.5% 100%
FY2017 S A Borrows 7,544 95% 100%
FY2016 S A Borrows 5,821 92.5% 98%
FY2015 S A Borrows 8,278 92.5% 90.85%
FY2014 S A Borrows 3,222 92.5% 0%
FY20131 S A Borrows 2,932 90% n/a
M J Queen 429 0% 0%
FY2012 M J Queen 641 0% 0%
FY2011 M J Queen 1,305 54% 0%
FY2010 M J Queen 1,989 75% 0%
1 M J Queen ceased to be a Director on 16 May 2012. Mr Borrows was appointed Chief Executive on 17 May 2012 having previously been Chief Investment Officer.
Relative importance of spend on pay

Change
FY2018 FY2017 %
Remuneration of all employees £83m £88m (6)%
Dividends paid to shareholders £255m £230m 11%
Statement of implementation of the remuneration policy in the coming year

The table below sets out how the Committee intends to operate the remuneration policy in FY2019.
Policy element Implementation of policy during FY2019

Base salary A Group-wide 3% increase to salaries will take place in FY2019, which will also be applied to Executive Director
salaries. Effective from 1 July 2018, salaries for the Executive Directors will therefore be as follows:
• Chief Executive: £637,601 (+3%)
• Group Finance Director: £463,709 (+3%)
Pension No changes to the current arrangements are proposed for FY2019. The Executive Directors will continue to
receive a pension contribution or salary supplement as follows:
• Chief Executive: £16k
• Group Finance Director: 12% of salary
Benefits No changes to the current arrangements are proposed for FY2019.
Benefits will continue to include a car allowance, provision of health insurance and any Share Incentive Plan
matching share awards.
Annual bonus The maximum annual bonus opportunities for FY2019 will remain unchanged, in line with the remuneration
policy, as follows:
• Chief Executive: 400% of salary
Any bonus will be awarded based on a balanced scorecard of both financial and strategic measures agreed by
the Committee, alongside a consideration of the wider context of personal performance (including values and
behaviours), risk, market and other factors.
Measures for the FY2019 scorecard are based 90% on financial measures (65% portfolio return, 20% investment
management and 5% operating performance) and 10% on strategic and people objectives. They are calibrated
to current business strategy and evolve year-on-year as the Group’s situation and priorities develop.
The Committee considers that the specific targets and expectations contained within the FY2019 scorecard are
commercially sensitive and therefore will not be disclosed in advance. We will report to shareholders next year
on performance and the resulting bonus out-turns.
At least 50% of any bonus award will be deferred into shares vesting in equal instalments over four years.
Awards are subject to the Company’s malus and clawback policy.

Policy element Implementation of policy during FY2019
Long-term incentive plan Awards under the long-term incentive plan in FY2019 will remain unchanged and be made as follows:
Performance will be measured over a three-year period and will be determined by the Remuneration
Committee. Performance measures remained unchanged from the previous year and will be as follows:
• 50% of the award is based on absolute TSR measured over the performance period, and vests:
• 0% vesting below 10% pa TSR;
• 20% vesting at 10% pa TSR;
• straight-line vesting between 10% and 18% pa TSR; and
• 100% vesting at 18% pa TSR.
50% of the award is based on relative TSR measured against the FTSE 350 Index over the performance period,
and vests:
• 0% for below median performance against the index;
• 25% for median performance against the index;
• 100% for upper quartile performance against the index; and
• straight-line vesting between median and upper quartile performance.
Awards are subject to the Company’s malus and clawback policy.
Shareholding requirements Shareholding requirements will be as follows:
Governance
• non-executive Directors (including the Company Chairman): 100% of base fee
Non-executive Director fees The fees for the Non-executive Directors for FY2019 will be:
Chairman fee: £240,000 plus £70,000 in 3i shares
Non-executive Directors:
Board membership base fee: £50,000 plus £15,000 in 3i shares
Deputy Chairman (including SID fee): £40,000
Senior independent director fee: £10,000
Committee chairman: £20,000
Committee member: £8,000
Committee fees are payable in respect of the Audit and Compliance Committee, Remuneration Committee
and Valuations Committee.
Malus and Clawback policy Long-term incentive awards and deferred bonus share awards made during the year to Executive Directors (and
certain other Senior Executives), may be forfeited or reduced prior to vesting in exceptional circumstances on
such basis as the Committee considers fair, reasonable and proportionate taking into account an individual’s
role and responsibilities. This would include, but is not limited to, material misstatement of Group financial
statements, or cases where an individual is deemed to have caused a material loss for the Group as a result of
reckless, negligent or wilful actions, inappropriate values or behaviour.
In exceptional circumstances (and on such basis as the Committee considers fair, reasonable and proportionate
taking into account an individual’s role and responsibilities), the Group may recover amounts that have been
paid or released from awards (including cash bonus awards), as long as a written request for the recovery of
such sums is made in the two-year period from the date of payment or release and in circumstances where
either (a) there has been a material misstatement of Group financial statements or (b) the Group suffers a
material loss. In arriving at its decision, the Committee will take into consideration such evidence as it may
reasonably consider relevant including as to the impact of the affected individual’s conduct, values or
behaviours on the material misstatement or material loss, as the case maybe.

Governance
Directors’
remuneration report
continued
Consideration by the Directors of matters relating to Directors’ remuneration
The following Directors were members of the Remuneration Committee during the year:
Remuneration Committee
Meetings attended Meetings eligible to
Name Role Membership status in the year attend in the year
J P Asquith (Chairman) Non-executive Director Member since March 2011
Chairman since May 2011 5 5
C J Banszky Non-executive Director Member since November 2015 5 5
D A M Hutchison Non-executive Director Member since December 2013 5 5
The Committee’s terms of reference are available on the Company’s website.

The Committee appointed Deloitte LLP as advisers in 2013 and during the year they provided the Committee with external,
independent advice.
Deloitte LLP are members of the Remuneration Consultants Group and as such, voluntarily operate under the code of conduct in relation to
executive remuneration consulting in the UK. During the year, Deloitte LLP also provided 3i with certain tax advisory services. The Committee
has reviewed the advice provided during the year and is satisfied that it has been objective and independent. The total fees for advice during
the year were £27,400 (excluding VAT) (2017: £44,350 (excluding VAT)).
The Company Chairman, Chief Executive, the Remuneration Director and the General Counsel, Company Secretary & Head of HR attend
Committee meetings by invitation, other than when their personal remuneration is being discussed.
Result of voting at the 2017 AGM

At the 2017 AGM, shareholders approved the Remuneration report that was published in the 2017 Annual report and accounts. At the 2017
AGM, shareholders approved the Directors’ remuneration policy. The results for both of these votes are shown below:
Resolution Votes for Votes against Total votes cast Votes withheld
Approval of the Directors’ remuneration report at the 2017 AGM 693,120,571 24,658,579 717,779,150 1,071,340
(96.56%) (3.44%)
Approval of the Directors’ remuneration policy at the 2017 AGM 684,177,712 33,578,863 717,756,575 1,094,463
(95.32%) (4.68%)
The Remuneration policy is available on 3i’s website www.3i.com
Audit
The tables in this report (including the Notes thereto) on pages 75 to 80 have been audited by Ernst & Young LLP.
Jonathan Asquith
Chairman, Remuneration Committee
16 May 2018

Relations with shareholders
Approach to Investor Relations

The Board recognises the importance
of maintaining a purposeful relationship
May June July Sept Nov Feb March
with shareholders. The Group has
a comprehensive Investor Relations
Full-year AGM Performance Capital Half-year Q3 Capital
programme to help existing and potential results 29.06.17 update markets results Performance markets
investors to understand its activities, 18.05.17 26.07.17 seminar 16.11.17 update seminar
strategy and financial performance. Road shows 18.09.17 Roadshows 01.02.18 09.03.18
The Chief Executive and the Group from 19.05.17 from 16.11.17
Finance Director meet with the Company’s
principal shareholders to discuss relevant
issues as they arise. The Chairman seeks Annual and half-yearly Individual investors
to engage with major shareholders on results presentations Individual investors are encouraged to
corporate governance, strategy and
The Executive Directors present the annual engage with the Group and provide
management once a year, and is available
and half-yearly results to institutional feedback through the Investor Relations
more often as required. Non-executive
investors and analysts. These presentations team and the Company Secretary, whose
Directors are offered the opportunity to
are webcast live on 3i’s website, and the contact details are available on the website.
meet shareholders.
on-demand webcast remains available on
the website for a period of 12 months. Annual General Meeting
Board oversight The Company also uses its AGM as an
The Executive Directors brief the Board Industry conferences opportunity to communicate with its
Governance
on a regular basis on the implementation Throughout the year, the Executive Directors shareholders. At the Meeting, business
of the Investor Relations programme and and Investor Relations team also participated presentations are generally made by
on feedback received from analysts and in a number of industry conferences the Chairman and the Chief Executive.
investors. Any significant concern raised by organised by investment banks for their The Chairmen of the Remuneration,
shareholders in relation to the Group is also institutional investor base. These included Audit and Compliance, and Nominations
communicated to the Board. The Board also conferences organised by Barclays, Morgan Committees are generally available to
receives periodic feedback from existing Stanley, Société Générale, Bank of America answer shareholders’ questions. Business to
shareholders and potential investors through Merrill Lynch, JPMorgan Cazenove and Citi. be discussed at the Meeting is notified
3i’s corporate brokers, Bank of America to shareholders in advance through the
Merrill Lynch and Barclays. Capital markets seminars Notice of Meeting and covers matters
such as the annual election of Directors,
3i held three capital markets seminars in
Investor Relations programme London in FY2018, including two on Action,
the appointment of the Auditor and
the dividend declaration. During the
Meetings with 3i’s largest investment, and one on four other
Meeting, shareholders are also asked
assets in the Private Equity portfolio. The two
principal shareholders Action capital markets seminars, held in
to approve the financial statements and
The Executive Directors meet with the reports of the Directors and the Auditor.
May 2017 and in March 2018, consisted of
Group’s principal shareholders on a twice- In addition, shareholders are asked to
presentations to significant shareholders and
yearly basis, following the publication of approve the Directors’ remuneration report.
analysts by the 3i Chief Executive and the
annual and half-yearly results and as required The 2017 Notice of AGM was dispatched to
management team of Action. These events
during the year. The Chairman and Senior shareholders not less than 20 working days
focused on Action’s business model and
Independent Director are also available before the Meeting. At that Meeting, voting
strategy and on its financial performance.
to meet with shareholders as required. on each resolution was taken on a poll and
Recordings of the seminars and the
The Investor Relations team also manages the poll results were made available on the
presentation materials used were made
a programme of engagement with smaller Company’s website.
available on 3i’s website. The Private Equity
shareholders, implemented through regular capital markets seminar, held in September
presentations and meetings. 2017, involved presentations on four of our
Website
most recent Private Equity investments: 3i’s website provides a brief description of
Meetings with potential investors Aspen Pumps, ATESTEO, Ponroy Santé 3i’s history, current operations and strategy,
During the year, the Executive Directors and Q Holding. The presentations were as well as an archive of over 10 years of news
and the Investor Relations team held regular delivered by the Private Equity investment and historical financial information on the
meetings with potential investors, as part of partners responsible for those investments. Group and details of forthcoming events for
arranged UK and international roadshows, to The presentation materials used during the shareholders and analysts.
communicate the strategy and performance seminar were made available on 3i’s website.
of 3i.

Governance
Additional statutory and corporate

governance information
This section of the Directors’ report contains the
corporate governance statement required by FCA
Disclosure Guidance and Transparency Rule 7.2.
Investment policy 3i makes an investment in an existing The Board believes that this clarification
portfolio business as part of a reorganisation will provide greater certainty on the
The UK Listing Authority’s Listing Rules
or restructuring of its investment in that applicable exposure limit treatment
require 3i, as a closed-ended investment
existing portfolio business. The Board has when 3i restructures existing investments.
fund, to publish an investment policy.
therefore amended the investment policy to The Board also considers that the
Shareholder approval is required for material
clarify that the cost of any such investment, amendment to the investment policy is
changes to this policy. Non-material changes
for the purposes of determining the non-material. Consequently, the amendment
can be made by the Board. The Board has
maximum exposure limit under the policy, does not require shareholder approval.
taken the view that the investment policy
will be the cost of the existing investment The revised investment policy is
required clarification as to how the maximum
prior to the reorganisation or restructuring, set out in the box below.
exposure limit would apply in cases where
rather than the cost of that investment at the
time of the reorganisation or restructuring.
Investment policy • 3i seeks to diversify risk through significant • Investments are generally funded with a
dispersion of investments by geography, mixture of debt and shareholders’ funds
• 3i is an investment company which aims
economic sector, asset class and size as with a view to maximising returns to
to provide its shareholders with quoted
well as through the maturity profile of its shareholders, whilst maintaining a strong
access to private equity and infrastructure
investment portfolio. capital base. 3i’s gearing depends not
returns. Currently, its main focus is on
only on its level of debt, but also on the
making quoted and unquoted equity and/ • Although 3i does not set maximum
impact of market movements and other
or debt investments in businesses and exposure limits for asset allocations, it
factors on the value of its investments.
funds in Europe, Asia and the Americas. does have a maximum exposure limit that,
The Board takes this into account when,
The geographies, economic sectors, save as mentioned below, no investment
as required, it sets a precise maximum
funds and asset classes in which 3i invests will be made unless its cost1 does not
level of gearing. The Board has therefore
continue to evolve as opportunities are exceed 15% of the investment portfolio
set the maximum level of gearing at 150%
identified. Proposed investments are value as shown in the last published
and has set no minimum level of gearing.
assessed individually and all significant valuation. A further investment may be
If the gearing ratio should exceed the
investments require approval from made in an existing portfolio business
150% maximum limit, the Board will take
the Group’s Investment Committee. provided the aggregate cost of that
steps to reduce the gearing ratio to below
Overall investment targets are subject investment and of all other unrealised
that limit as soon as practicable thereafter.
to periodic reviews and the investment investments in that portfolio business
3i is committed to achieving balance
portfolio is also reviewed to monitor does not exceed 15% of the investment
sheet efficiency.
exposure to specific geographies, portfolio value as shown in the last
economic sectors and asset classes. published valuation. A higher limit of 30%
will apply to the Company’s investment in
3i Infrastructure plc. For the avoidance of
doubt, 3i may retain an investment, even
if its carrying value is greater than 15% or
30% (as the case may be) of the portfolio
value at the time of an updated valuation.
1 Where 3i makes an investment in an existing portfolio business as part of a restructuring or reorganisation of its investment in that existing portfolio
business (which restructuring or reorganisation may involve, without limitation, 3i disposing of all or part of its existing investment in the relevant portfolio
business and re-investing all or part of the proceeds into a different entity which acquires or holds the relevant portfolio business or a substantial
part thereof), the cost of that investment, for the purposes of determining the maximum exposure limit under this policy, shall, to the extent that the
investment does not increase 3i’s exposure to the relevant portfolio business, be deemed to be the cost of 3i’s existing investment in the relevant
portfolio business (or, in the case of a partial re-investment, the pro-rated cost of 3i’s existing investment in the relevant portfolio business) immediately
prior to the restructuring or reorganisation. If 3i’s investment includes a further investment, such that 3i increases its overall exposure to the relevant
portfolio business as part of the restructuring or reorganisation, the cost of any such further investment at the date of such investment shall be added to
the cost of the investment in the existing portfolio business as determined pursuant to the previous sentence.

Previously, the third bullet point of the Appointment and re-election The Board’s responsibilities
Investment policy, set out in the box
of Directors and processes
opposite, read as follows:
Subject to the Company’s Articles of The composition of the Board and its
“Although 3i does not set maximum Association, the Companies Acts and Committees as well as the Board’s key
exposure limits for asset allocations, it does satisfactory performance evaluation, responsibilities and the way in which it and
have a maximum exposure limit that, save non-executive Directors are appointed for its Committees work are described on
as mentioned below, no investment will an initial three-year term. Before the third pages 60 to 82. The Board is responsible to
be made unless its cost does not exceed and sixth anniversaries of first appointment, shareholders for the overall management of
15% of the investment portfolio value as the Director discusses with the Board the Group and may exercise all the powers
shown in the last published valuation. whether it is appropriate for a further of the Company subject to the provisions
A further investment may be made in an three-year term to be served. of relevant statutes, the Company’s Articles
existing investee company provided the of Association and any directions given
aggregate cost of that investment and of all Under the Company’s Articles of Association,
by special resolution of the shareholders.
other investments in that investee company the minimum number of Directors is two
The Articles of Association empower the
does not exceed 15% of the investment and the maximum is 20, unless otherwise
Board to offer, allot, grant options over
portfolio value as shown in the last published determined by the Company by ordinary
or otherwise deal with or dispose of the
valuation. A higher limit of 30% will apply to resolution. Directors are appointed by
Company’s shares as the Board may decide.
the Company’s investment in 3i Infrastructure ordinary resolution of shareholders or
plc. For the avoidance of doubt, 3i may retain by the Board. The Company’s Articles of The Companies Act 2006 authorises the
an investment even if its carrying value is Association provide for Directors to retire by Company to make market purchases of its
greater than 15% or 30% (as the case may rotation at an AGM if they were appointed own shares if the purchase has first been
be) of the portfolio value at the time of an by the Board since the preceding AGM, they authorised by a resolution of the Company.
Governance
updated valuation.” held office during the two preceding AGMs
The Board’s diversity policies in relation to
but did not retire at either of them, they held
Directors are described in the Nominations
non-executive office for a continuous period
Corporate governance of nine years or more at the date of that
Committee report on page 65 and such
Throughout the year, the Company complied policies in relation to staff are described on
AGM, or they choose to retire from office.
with the provisions of the UK Corporate page 88.
Governance Code (the “Code”) published Shareholders can remove any Director by
At the AGM in June 2017, shareholders
by the FRC in September 2016 and which is special resolution and appoint another
renewed the Board’s authority to allot
available on the FRC website. person to be a Director in their place by
ordinary shares and to repurchase ordinary
ordinary resolution. Shareholders can also
The Group’s internal control and risk shares on behalf of the Company subject to
remove any Director by ordinary resolution
management systems including those in certain limits. Details of the authorities which
of which special notice has been given.
relation to the financial reporting process the Board will be seeking at the 2018 AGM
are described on page 64. Subject to the Company’s Articles of are set out in the 2018 Notice of AGM.
Association, retiring Directors are eligible
for reappointment. The office of Director
Directors is vacated if the Director resigns, becomes
Directors’ biographical details are set out bankrupt or is prohibited by law from being
on pages 60 and 61. The Board currently a Director or where the Board so resolves
comprises the Chairman, five non-executive following the Director suffering from ill health
Directors and two Executive Directors. or being absent from Board meetings for
Mr S R Thompson, Mr J P Asquith, Ms C J 12 months without the Board’s permission.
Banszky, Mr S A Borrows, Mr S W Daintith,
Mr P Grosch, Mr D A M Hutchison, and Mrs
J S Wilson served as Directors throughout
the year under review. Ms M G Verluyten
served as a Director during the year until
29 June 2017.

Governance

continued
Matters reserved for the Board Holders of ordinary shares are entitled to In the latter circumstances the Company may
attend, speak and vote at general meetings make the relevant shares subject to certain
The Board has approved a formal schedule
and to appoint proxies and, in the case of restrictions (including in respect of the ability
of matters reserved to it and its duly
corporations, corporate representatives to to exercise voting rights, to transfer the
authorised Committees for decision.
attend, speak and vote at such meetings on shares validly and, except in the case of a
These include matters such as the Group’s
their behalf. To attend and vote at a general liquidation, to receive the payment of sums
overall strategy, strategic plan and
meeting a shareholder must be entered due from the Company).
annual operating budget; approval of the
on the register of members at such time
Company’s financial statements and changes There are no shares carrying special rights
(not being earlier than 48 hours before the
to accounting policies or practices; changes with regard to control of the Company.
meeting) as stated in the Notice of general
to the capital structure or regulated status There are no restrictions placed on voting
meeting. On a poll, holders of ordinary
of the Company; major capital projects or rights of fully paid shares, save where in
shares are entitled to one vote for each
changes to business operations; investments accordance with Article 12 of the Company’s
share held.
and divestments above certain limits; Articles of Association a restriction notice
policy on borrowing, gearing, hedging and Holders of ordinary shares are entitled has been served by the Company in
treasury matters; and adequacy of internal to receive the Company’s Annual report respect of shares for failure to comply with
control systems. and accounts, to receive such dividends statutory notices or where a transfer notice
and other distributions as may lawfully be (as described below) has been served in
Rights and restrictions paid or declared on such shares and, on respect of shares and has not yet been
any liquidation of the Company, to share complied with. Where shares are held on
attaching to shares in the surplus assets of the Company after behalf of former or current employees under
A summary of the rights and restrictions satisfaction of the entitlements of the holders employee share schemes, those participants
attaching to shares as at 31 March 2018 of any shares with preferred rights as may can give instructions to the holder of such
is set out below. then be in issue. shares as to how votes attached to such
The Company’s Articles of Association shares should be exercised.
There are no restrictions on the transfer of
may be amended by special resolution fully paid shares in the Company, save as In the circumstances specified in Article 38
of the shareholders in a general meeting. follows. The Board may decline to register: of the Company’s Articles of Association
Holders of ordinary shares enjoy the rights a transfer of uncertificated shares in the the Company may serve a transfer notice on
set out in the Articles of Association of the circumstances set out in the Uncertificated holders of shares. The relevant circumstances
Company and under the laws of England and Securities Regulations 2001; a transfer to relate to: (a) potential tax disadvantage to the
Wales. Any share may be issued with or have more than four joint holders; a transfer of Company, (b) the number of “United States
attached to it such rights and restrictions certificated shares which is not in respect of Residents” who own or hold shares being 75
as the Company by ordinary resolution only one class of share; a transfer which is not or more, or (c) the Company being required
or, failing such resolution, the Board accompanied by the certificate for the shares to be registered as an investment company
may decide. to which it relates; a transfer which is not under relevant US legislation. The notice
duly stamped in circumstances where a duly would require the transfer of relevant shares
stamped instrument is required; or a transfer and pending such transfer the rights and
where in accordance with section 794 of privileges attaching to those shares would
the Companies Act 2006 a notice (under be suspended.
section 793 of that Act) has been served by
The Company is not aware of any agreements
the Company on a shareholder who has then
between holders of its securities that may
failed to give the information required within
restrict the transfer of shares or exercise of
the specified time.
voting rights.

Share capital and debentures Portfolio management 3i Investments plc is authorised by the FCA
to, among other things, manage Alternative
The issued ordinary share capital of the and voting policy
Investment Funds (“AIFs”). It is currently
Company as at 1 April 2017 was 972,808,424 In relation to unquoted investments, the the Alternative Investment Fund Manager
ordinary shares and at 31 March 2018 was Group’s approach is to seek to add value (“AIFM”) of five AIFs. In compliance with
972,897,006 ordinary shares of 7319/22 pence to the businesses in which the Group regulatory requirements, 3i Investments
each. It increased over the year by 88,582 invests through the Group’s extensive plc has ensured that a depository has
ordinary shares on the issue of shares to the experience, resources and contacts and been appointed for each AIF. For four AIFs
trustee of the 3i Group Share Incentive Plan. through active engagement with the this is Citibank Europe plc, UK Branch.
At the Annual General Meeting (“AGM”) on Boards of those companies. In relation to Citibank Europe plc, Luxembourg branch,
29 June 2017, the Directors were authorised quoted investments, the Group’s policy is to is the depository for one AIF.
to repurchase up to 97,000,000 ordinary exercise voting rights on all matters affecting
its interests. The Annual report and accounts meet the
shares in the Company (representing
investor disclosure requirements as set out
approximately 10% of the Company’s
in FUND 3.2.2R, 3.2.3R, 3.2.5R and 3.2.6R
issued ordinary share capital as at 15 May Tax and investment of the FCA’s Investment Funds sourcebook
2017) until the Company’s AGM in 2018 or company status for 3i Group plc as a standalone entity.
28 September 2018, if earlier. This authority
The Company is an investment company The Company’s profit for the year is stated
was not exercised in the year. Details of the
under section 833 of the Companies Act in its Statement of changes in equity and
authorities which the Board will be seeking at
2006. HM Revenue & Customs has approved its Financial position is shown on page 96.
the 2018 AGM are set out in the 2018 Notice
the Company as an Investment Trust under The Company performs substantially all
of AGM.
section 1158 of the Corporation Tax Act 2010 of its investment related activities through
As detailed in Note 16 to the Accounts, and the Company directs its affairs to enable its subsidiaries and therefore the Group’s
Governance
as at 31 March 2018 the Company had in it to continue to remain so approved. Consolidated statement of comprehensive
issue Notes issued under the 3i Group plc income is considered to be more useful to
Where appropriate, the Company looks
£2,000 million Note Issuance Programme. investors than a Company statement.
to the provisions included within the
The Articles of Association also specifically Association of Investment Companies SORP. Furthermore, in some instances the relevant
empower the Board to exercise the FUND disclosures have been made in
Company’s powers to borrow money and 3i Investments plc relation to the Group on a consolidated
to mortgage or charge the Company’s basis rather than in respect of 3i Group plc
3i Investments plc acts as investment
assets and any uncalled capital and to issue as a standalone entity. This is because 3i
manager to the Company and certain of its
debentures and other securities. Group plc, as a standalone entity, operates
subsidiaries. Contracts for these investment
through its group subsidiaries and therefore
management and other services, for which
Major interests in reporting on the Group’s activities provides
regulatory authorisation is required, provide
more relevant information on the Company
ordinary shares for fees based on the work done and
and its position. There have been no material
The table below shows notifications of major costs incurred in providing such services.
changes to the Company’s operations in the
voting interests in the Company’s ordinary These contracts may be terminated by either
past year.
share capital (notifiable in accordance with party on reasonable notice.
Chapter 5 of the FCA’s Disclosure Guidance 3i Investments plc also acts as investment
and Transparency Rules or section 793 adviser to 3i Infrastructure plc under a
Companies Act 2006) which had been contract which provides for the services
received by the Company as at 31 March to be provided and the related fees which
2018 and 1 May 2018. are payable.
Major interests in ordinary shares

As at % of issued As at % of issued
31 March 2018 share capital 1 May 2018 share capital
BlackRock, Inc 81,545,008 8.38 81,694,106 8.40
Artemis Investment Management LLP 52,625,885 5.41 52,637,910 5.41
Threadneedle Asset Management Ltd 36,939,402 3.80 34,161,832 3.51

Governance

continued
Although the disclosures required by Directors’ conflicts of interests Employment
FUND 3.2.2R, 3.2.3R, 3.2.5R and 3.2.6R of
and Directors’ indemnities The employment policy of the Group is
the FCA’s Investment Funds sourcebook
Directors have a statutory duty to avoid one of equal opportunity in the selection,
are covered in this Annual report they are
conflicts of interest with the Company. training, career development and promotion
also, for convenience, summarised on the 3i
The Company’s Articles of Association of employees, regardless of age, gender,
website at www.3i.com. This will be updated
enable Directors to approve conflicts sexual orientation, ethnic origin, religion and
as required and changes noted in future
of interest and include other conflict whether disabled or otherwise.
Annual reports.
of interest provisions. The Company 3i treats applicants and employees with
The Alternative Investment Fund Managers has implemented processes to identify disabilities fairly and provides facilities,
Directive requires 3i to comply with certain potential and actual conflicts of interest. equipment and training to assist
reporting obligations. A summary of the Such conflicts are then considered for disabled employees to do their jobs.
remuneration policy of 3i can be found on approval by the Board, subject, if necessary, Arrangements are made as necessary
the Company’s website. to appropriate conditions. to ensure support to job applicants who
The total amount of remuneration paid by As permitted by the Company’s Articles of happen to be disabled and who respond
3i to its staff for the year was £83 million, of Association during the year and as at the to requests to inform the Company of any
which £40 million was fixed remuneration date of this Directors’ report, there were requirements. Should an employee become
and £43 million was variable remuneration. in place Qualifying Third-Party Indemnity disabled during their employment, efforts
The aggregate total remuneration paid Provisions (as defined under relevant would be made to retain them in their current
to AIFM Identified Staff for the year was legislation) for the benefit of the Company’s employment or to explore the opportunities
£17 million, of which £14 million was paid to Directors and for the benefit of directors for their retraining or redeployment within
Senior Management and £3 million was paid of one associated company and Qualifying 3i. Financial support is also provided by 3i
to other AIFM Identified Staff. Pension Scheme Indemnity Provisions to support disabled employees who are
for the benefit of the directors of one unable to work, as appropriate to local
Dividends associated company. market conditions.
An interim dividend of 8.0 pence per 3i’s principal means of keeping in touch
ordinary share in respect of the year to Directors’ employment with the views of its employees is through
31 March 2018 was paid on 10 January 2018. contracts employee appraisals, informal consultations,
The Directors recommend a dividend of team briefings and staff conferences.
Mr S A Borrows and Mrs J S Wilson each have
22.0 pence per ordinary share (comprising a Managers throughout 3i have a continuing
employment contracts with the Group with
base dividend of 8 pence and an additional responsibility to keep their staff informed of
notice periods of 12 months where notice is
dividend of 14 pence) be paid in respect of developments and to communicate financial
given by the Group and six months where
the year to 31 March 2018 to shareholders results and other matters of interest. This is
notice is given by the Director. Save for these
on the Register at the close of business on achieved by structured communication
notice periods their employment contracts
15 June 2018. including regular meetings of employees.
have no unexpired terms. None of the
The trustee of The 3i Group Employee Trust other Directors has a service contract with 3i is an equal opportunities employer
(“the Employee Trust”) has waived (subject the Company. and has clear grievance and disciplinary
to certain minor exceptions) dividends procedures in place. 3i also has an employee
declared on shares in the Company held by assistance programme which provides
the Employee Trust and the Trustee of The a confidential, free and independent
3i Group Share Incentive Plan has waived counselling service and is available to all UK
dividends on unallocated shares in the staff and their families in the UK.
Company held by it.

3i’s employment policies are designed to Significant agreements Appointment of Auditor
provide a competitive reward package which
As at 31 March 2018, the Company was In accordance with section 489 of the
will attract and retain high quality staff, whilst
party to one agreement subject to a Companies Act 2006, a resolution proposing
ensuring that the relevant costs remain at an
renegotiation period on a change of control the reappointment of Ernst & Young LLP
appropriate level.
of the Company following a takeover bid. as the Company’s Auditor will be put to
3i’s remuneration policy is influenced by 3i’s This agreement is a £350 million multi- members at the forthcoming AGM.
financial and other performance conditions currency Revolving Credit Facility Agreement
and market practices in the countries in dated 5 September 2014, between the Information required
which it operates. All employees receive Company, Barclays Bank PLC and a number
a base salary and are also eligible to be of other banks. The Company is required
by Listing Rule 9.8.4
considered for a performance-related annual to notify Barclays Bank PLC, as agent bank, Information required by Listing Rule 9.8.4
variable incentive award. For those members within five days, of a change of control. not included in this section of the Directors’
of staff receiving higher levels of annual This opens a 20-day negotiation period to report may be found as set out below:
variable incentive awards, a proportion of determine if the Majority Lenders (as defined
Topic Location
such awards is delivered in 3i shares, vesting in the agreement) are willing to continue
over a number of years. Remuneration policy the facility. Failing agreement, amounts Capitalised interest Portfolio income
is reviewed by the 3i Group plc Remuneration outstanding would be repayable and the on page 30
Committee, comprising 3i Group plc non- facility cancelled. Share allotments Note 19 on page 121
executive Directors.
Where appropriate, employees are eligible Going concern
Information included
to participate in 3i share schemes to The Directors have acknowledged their
in Strategic report
Governance
encourage employees’ involvement in 3i’s responsibilities in relation to the financial
performance. Investment executives in statements for the year to 31 March 2018. In accordance with section 414 C (11) of
the Private Equity business line may also the Companies Act 2006, the following
participate in carried interest schemes, After making enquiries, the Directors information otherwise required to be set out
which allow executives to share directly considered it appropriate to prepare the in the Directors’ report has been included
in future profits on investments. Similarly, financial statements of the Company, and in the Strategic report: risk management
investment executives in the Infrastructure the Group, on a going concern basis. objectives and policies; post balance sheet
business line may participate in asset-linked The Viability statement is included on page 47. events; likely future developments in the
and/or fee-linked incentive arrangements. business; and greenhouse gas emissions.
Employees participate in local state or Audit information The Directors’ viability statement is also
company pension schemes as appropriate shown in the Strategic report on page 47.
to local market conditions. Pursuant to section 418(2) of the Companies
Act 2006, each of the Directors confirms that:
Political donations (a) so far as they are aware, there is no
In line with Group policy, during the year relevant audit information of which the
to 31 March 2018 no donations were made Company’s Auditor is unaware; and
to political parties or organisations, or (b) they have taken all steps they ought to
independent election candidates, and no have taken to make themselves aware
political expenditure was incurred. of any relevant audit information and to
establish that the Company’s Auditor is
aware of such information.

Governance

continued
Statement of Directors’ The Directors have a responsibility for Directors’ report
ensuring that proper accounting records are
responsibilities For the purposes of the UK Companies
kept which are sufficient to show and explain
The Directors are responsible for preparing Act 2006, the Directors’ report of 3i Group
the Group’s transactions and disclose with
the Annual report and accounts in plc comprises the Governance section on
reasonable accuracy at any time the financial
accordance with applicable United Kingdom pages 58 to 90 other than the Directors’
position of the Group and enable them to
law and those International Financial remuneration report on pages 73 to 82.
ensure that the Group financial statements
Reporting Standards (“IFRSs”) which have comply with the Companies Act 2006. The Strategic report, Directors’ report and
been adopted by the European Union. Directors’ remuneration report have been
They have a general responsibility for
Under Company Law the Directors must drawn up and presented in accordance
taking such steps as are reasonably open
not approve the Group financial statements with and in reliance upon English company
to them to safeguard the assets of the
unless they are satisfied that they present law and the liabilities of the Directors in
Group and to prevent and detect fraud and
fairly the financial position, financial connection with those reports shall be
other irregularities.
performance and cash flows of the Group subject to the limitations and restrictions
for that period. The Directors consider that In accordance with the FCA’s Disclosure and provided by that law.
this Annual report and accounts, taken as a Transparency Rules, the Directors confirm to
whole, is fair, balanced and understandable the best of their knowledge that:
and provides the information necessary K J Dunn
(a) the financial statements, prepared in
for shareholders to assess the Company’s Company Secretary
accordance with applicable accounting
performance, business model and strategy. 16 May 2018
standards, give a true and fair view of
In preparing the Group financial statements the assets, liabilities, financial position Registered Office:
the Directors: and profit or loss of the Company 16 Palace Street
(a) select suitable accounting policies and the undertakings included in the London SW1E 5JD
in accordance with International consolidation taken as a whole; and
Accounting Standard 8: Accounting (b) the Strategic report includes a fair review
Policies, Changes in Accounting of the development and performance
Estimates and Errors and then apply of the business and the position of
them consistently; the Company and the undertakings
(b) present information, including included in the consolidation taken as
accounting policies, in a manner that a whole together with a description of
provides relevant, reliable, comparable the principal risks and uncertainties that
and understandable information; they face.
(c) provide additional disclosures The Directors of the Company and their
when compliance with the specific functions are listed on pages 60 and 61.
requirements in IFRSs as adopted by 3i Group plc is registered in England with
the EU is insufficient to enable users company number 1142830.
to understand the impact of particular
transactions, other events and conditions
on the Group’s financial position and
financial performance;
(d) state that the Group has complied with
IFRSs as adopted by the EU, subject to
any material departures disclosed and
explained in the financial statements; and
(e) make judgements and estimates that
are reasonable.

Audited
financial
statements
Includes the detailed IFRS
financial performance,
accounting policies and notes
to explain the accounts

Consolidated statement of comprehensive income

2018 2017
Notes £m £m
Realised profits/(losses) over value on the disposal of investments 2 18 (25)
Unrealised profits on the revaluation of investments 3 386 262
Fair value movements on investment entity subsidiaries 11 848 1,041
Portfolio income
Dividends 29 38
Foreign exchange on investments (12) 64
Operating expenses 4 (120) (116)
Exchange movements 57 42
Income from investment entity subsidiaries 19 18
Other income 2 10
Carried interest
Carried interest and performance fees receivable 13 228 280
Carried interest and performance fees payable 14 (32) (108)
Operating profit before tax 1,488 1,524
Income taxes 7 (25) 3
Profit for the year from continuing operations 1,463 1,527
Profit for the year from discontinued operations, net of tax – 98
Profit for the year 1,463 1,625
Other comprehensive expense that may be reclassified to the income statement

Exchange differences on translation of foreign operations (38) (4)
Other comprehensive expense that will not be reclassified to the income statement
Re-measurements of defined benefit plans 26 – (22)
Other comprehensive expense for the year from continuing operations (38) (26)
Other comprehensive expense for the year from discontinued operations – (7)
Total comprehensive income for the year (“Total return”) 1,425 1,592
Earnings per share from continuing operations

Basic (pence) 8 151.7 159.0
Diluted (pence) 8 151.0 158.3
Earnings per share

Basic (pence) 8 151.7 169.2
Diluted (pence) 8 151.0 168.4
Dividend per share

Interim dividend per share paid (pence) 9 8.0 8.0
Dividend per share (pence) 9 22.0 18.5
The Notes on pages 104 to 138 form an integral part of these financial statements.

Consolidated statement of financial position
as at 31 March
2018 2017
Notes £m £m
Assets
Non-current assets
Investments
Quoted investments 10 345 390
Unquoted investments 10 1,751 1,316
Investments in investment entity subsidiaries 11 4,034 3,483
Other non-current assets 15 28 50
Intangible assets 12 –
Retirement benefit surplus 26 125 121
Property, plant and equipment 4 5
Current assets
Other current assets 15 34 12
Current income taxes 3 2
Deposits – 40
statements
Audited financial
Cash and cash equivalents 972 931
Total current assets 1,102 994
Liabilities
Trade and other payables 18 (1) (24)
Loans and borrowings 16 (575) (575)
Retirement benefit deficit 26 (23) (22)
Deferred income taxes 7 (3) –
Provisions 17 (1) (2)
Total non-current liabilities (708) (747)
Current liabilities
Current income taxes (11) –
Provisions 17 (1) (4)
Total liabilities (875) (877)
Equity
Issued capital 19 719 719
Capital redemption reserve 43 43
Share-based payment reserve 32 30
Translation reserve (8) 218
Capital reserve 4,700 3,390
Revenue reserve 778 689
Own shares 20 (26) (38)
Simon Thompson
Chairman
16 May 2018
Consolidated statement of changes in equity

Share-
Capital based
Share Share redemption payment Translation Capital Revenue Own Total
capital premium reserve reserve reserve reserve reserve shares equity
2018 £m £m £m £m £m £m £m £m £m
Total equity at the start of the year 719 785 43 30 218 3,390 689 (38) 5,836
Profit for the year – – – – – 1,318 145 – 1,463
Exchange differences on translation of foreign
operations – – – – (38) – – – (38)
Total comprehensive income for the year – – – – (38) 1,318 145 – 1,425
Share-based payments – – – 17 – – – – 17
Release on exercise/forfeiture
of share options – – – (15) – – 15 – –
Exercise of share awards – – – – – (12) – 12 –
Ordinary dividends – – – – – (83) (71) – (154)
Additional dividends – – – – – (101) – – (101)
Issue of ordinary shares – 1 – – – – – – 1
Transfer from translation reserve to
capital reserve1 – – – – (188) 188 – – –
Total equity at the end of the year 719 786 43 32 (8) 4,700 778 (26) 7,024
1 Transfer relates to the translation reserve for Investment entity subsidiaries that was not reclassified on adoption of IFRS 10.
Share-
Capital based
Share Share redemption payment Translation Capital Revenue Own Total
capital premium reserve reserve reserve reserve reserve shares equity
2017 £m £m £m £m £m £m £m £m £m
Total equity at the start of the year 719 784 43 32 229 2,080 622 (54) 4,455
Profit for the year – – – – – 1,489 136 – 1,625
Exchange differences on translation of foreign
operations – – – – (4) – – – (4)
Re-measurements of defined benefit plans – – – – – (22) – – (22)
Other comprehensive income from
discontinued operations – – – – (7) – – – (7)
Total comprehensive income for the year – – – – (11) 1,467 136 – 1,592
Share-based payments – – – 18 – – – – 18
Release on exercise/forfeiture
of share options – – – (20) – – 20 – –
Exercise of share awards – – – – – (16) – 16 –
Ordinary dividends – – – – – (39) (89) – (128)
Additional dividends – – – – – (102) – – (102)
Issue of ordinary shares – 1 – – – – – – 1
Total equity at the end of the year 719 785 43 30 218 3,390 689 (38) 5,836

Consolidated cash flow statement
2018 2017
Notes £m £m
Proceeds from investments 414 310
Cash inflow from investment entity subsidiaries 11 430 246
Portfolio fees received 13 9
Fees received from external funds 55 71
Carried interest and performance fees received 13 6 39
Carried interest and performance fees paid 14 (40) (27)
Operating expenses paid (114) (131)
Co-investment loans received 5 2
Other cash income – 2
Income taxes paid (10) (2)
statements
Audited financial
Issue of shares 1 1
Dividend paid 9 (255) (230)
Proceeds from sale of Debt Management business – 232
Cash held in disposed subsidiaries – (4)
Purchases of property, plant and equipment (2) (1)
Purchase of intangibles (13) –
Net cash flow from investing activities 26 227
Cash and cash equivalents at the start of the year 931 957
Cash and cash equivalents at the end of the year 972 931

Company statement of financial position

as at 31 March
2018 2017
Notes £m £m
Assets
Non-current assets
Investments
Quoted investments 10 345 390
Unquoted investments 10 1,751 1,295
Interests in Group entities 22 4,112 3,542
Other non-current assets 15 20 21
Current assets
Other current assets 15 2 4
Deposits – 40
Cash and cash equivalents 939 887
Total current assets 944 932
Liabilities
Carried interest and performance fees payable – (16)
Loans and borrowings 16 (575) (575)
Total non-current liabilities (575) (591)
Current liabilities
Total liabilities (1,102) (1,097)
Equity
Issued capital 19 719 719
Capital redemption reserve 43 43
Share-based payment reserve 32 30
Capital reserve 5,015 3,874
Revenue reserve 40 28
Own shares 20 (26) (38)
The Company profit for the year to 31 March 2018 is £1,405 million (2017: £1,650 million).
Simon Thompson
Chairman
16 May 2018

Company statement of changes in equity
Share-
Capital based
Share Share redemption payment Capital Revenue Own Total
capital premium reserve reserve reserve reserve shares equity
2018 £m £m £m £m £m £m £m £m
Total equity at the start of the year 719 785 43 30 3,874 28 (38) 5,441
Profit for the year – – – – 1,337 68 – 1,405
Total comprehensive income for the year – – – – 1,337 68 – 1,405
Share-based payments – – – 17 – – – 17
Release on exercise/forfeiture of share options – – – (15) – 15 – –
Exercise of share awards – – – – (12) – 12 –
Ordinary dividends – – – – (83) (71) – (154)
Additional dividends – – – – (101) – – (101)
Issue of ordinary shares – 1 – – – – – 1
Total equity at the end of the year 719 786 43 32 5,015 40 (26) 6,609
Share-
Capital based
Share Share redemption payment Capital Revenue Own Total
capital premium reserve reserve reserve reserve shares equity
2017 £m £m £m £m £m £m £m £m
Total equity at the start of the year 719 784 43 32 2,462 16 (54) 4,002
statements
Audited financial
Profit for the year – – – – 1,569 81 – 1,650
Total comprehensive income for the year – – – – 1,569 81 – 1,650
Share-based payments – – – 18 – – – 18
Release on exercise/forfeiture of share options – – – (20) – 20 – –
Exercise of share awards – – – – (16) – 16 –
Ordinary dividends – – – – (39) (89) – (128)
Additional dividends – – – – (102) – – (102)
Issue of ordinary shares – 1 – – – – – 1
Total equity at the end of the year 719 785 43 30 3,874 28 (38) 5,441

Company cash flow statement

2018 2017
Notes £m £m
Proceeds from investments 395 307
Distributions from subsidiaries 1,002 1,241
Drawdowns by subsidiaries (624) (763)
Portfolio fees paid (2) (3)
Carried interest and performance fees received 13 4 15
Carried interest and performance fees paid (23) (28)
Co-investment loans received 5 2
Issue of shares 1 1
Dividend paid 9 (255) (230)
Net cash flow from investing activities 41 –
Cash and cash equivalents at the start of the year 887 857
Cash and cash equivalents at the end of the year 939 887

Significant accounting policies
Reporting entity
3i Group plc (the “Company”) is a public limited company incorporated and domiciled in England and Wales. The Consolidated financial
statements (“the Group accounts”) for the year to 31 March 2018 comprise the financial statements of the Company and its consolidated
subsidiaries (collectively, “the Group”).
The Group accounts have been prepared and approved by the Directors in accordance with section 395 of the Companies Act 2006 and
the Large and Medium-Sized Companies and Groups (Accounts and Reports) Regulations 2008. The Company has taken advantage of the
exemption in section 408 of the Companies Act 2006 not to present its Company statement of comprehensive income and related Notes.
A Basis of preparation
The Group and Company accounts have been prepared and approved by the Directors in accordance with all relevant International Financial
Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”), and interpretations issued by the IFRS
Interpretations Committee for the year ended 31 March 2018, endorsed by the European Union (“EU”).
The following standards, amendments and interpretations have been issued and endorsed by the EU, with implementation dates that do not
impact on these financial statements:
Effective for annual periods beginning on or after

IFRS 9 Financial instruments 1 January 2018
IFRS 15 Revenue from contracts with customers 1 January 2018
IFRS 16 Leases 1 January 2019
statements
Audited financial
The Group does not anticipate that IFRS 9 will have a material impact on its results. IFRS 16 is expected to result in an increase in the Group’s
total assets and total liabilities but is not anticipated to have a material impact on net assets or total return.
The Group expects that IFRS 15 will only impact its accounting policy for carried interest and performance fees receivable. This is because
IFRS 15 will introduce an assessment of the extent to which it is highly probable that there will not be a significant reversal of carried interest
receivable when the uncertainty is resolved. When making our assessment, the following will be considered: remaining duration of the fund,
position in relation to the cash hurdle, the number of assets remaining in the fund and the potential for clawback. The substantial majority of
the Group’s carried interest receivable is from EFV and dependent on the realisation of Action. Given Action’s strong performance, its forecast
growth profile, and consistent with our investment and expected exit strategy, our current assessment is that we do not expect the adoption
of IFRS 15 to have a material impact on the recognition of carried interest receivable in the Group’s results. More details on our assessment
of IFRS 15 are included on page 32 of the Financial review.
The principal accounting policies applied in the preparation of the Group accounts are disclosed below, but where possible, they have been
shown as part of the Note to which they specifically relate in order to assist the reader’s understanding. These policies have been consistently
applied and apply to all years presented.
The financial statements are prepared on a going concern basis as disclosed in the Directors’ report and presented to the nearest million
sterling (£m), the functional currency of the Company and the Group.


continued
B Basis of consolidation
In accordance with IFRS 10 the Company meets the criteria as an investment entity and therefore is required to recognise subsidiaries that also
qualify as investment entities at fair value through profit or loss. It does not consolidate the investment entities it controls. Subsidiaries that
provide investment related services, such as advisory, management or employment services, are not classified at fair value through profit and
loss and continue to be consolidated unless they are deemed investment entities, in which case they are recognised at fair value.
Subsidiaries are entities controlled by the Group. Control, as defined by IFRS 10, is achieved when the Group has all of the following:
• power over the relevant activities of the investee;
• exposure, or rights, to variable returns from its involvement with the investee; and
• the ability to affect those returns through its power over the investee.
The Group is required to determine the degree of control or influence the Group exercises and the form of any control to ensure that the
financial treatment is accurate.
Subsidiaries are fully consolidated from the date on which the Group effectively obtains control. All intra-group balances and transactions with
subsidiaries are eliminated upon consolidation. Subsidiaries are de-consolidated from the date that control ceases.
The Group comprises several different types of subsidiaries. The Group re-assesses the function performed by each type of subsidiary to
determine its treatment under the IFRS 10 exception from consolidation on an annual basis. The types of subsidiaries and their treatment
under IFRS 10 are as follows:
General Partners (GPs) – Consolidated
General Partners provide investment management services and do not hold any direct investments in portfolio assets. These entities are not
investment entities.
Investment managers/advisers – Consolidated
These entities provide investment related services through the provision of investment management or advice. They do not hold any direct
investments in portfolio assets. These entities are not investment entities.
Holding companies of investment managers/advisers – Consolidated
These entities provide investment related services through their subsidiaries. Typically they do not hold any direct investment in portfolio
assets and these entities are not investment entities.
Limited Partnerships and other intermediate investment holding structures – Fair valued
The Group makes investments in portfolio assets through its ultimate parent company as well as through other limited partnerships and
corporate subsidiaries which the Group has created to align the interests of the investment teams with the performance of the assets through
the use of various carried interest schemes. The purpose of these limited partnerships and corporate holding vehicles, many of which
also provide investment related services, is to invest for investment income and capital appreciation. These partnerships and corporate
subsidiaries meet the definition of an investment entity and are classified at fair value through profit and loss.
Portfolio investments – Fair valued
Under IFRS 10, the test for accounting subsidiaries takes wider factors of control as well as actual equity ownership into account. In accordance
with the investment entity exception, these entities have been held at fair value with movements in fair value being recognised in the
Consolidated statement of comprehensive income.
Associates – Fair valued
Associates are those entities in which the Group has significant influence, but not control, over the financial and operating policies.
Investments that are held as part of the Group’s investment portfolio are carried in the Consolidated statement of financial position
at fair value even though the Group may have significant influence over those companies.
Further detail on our application of IFRS 10 can be found in the Reconciliation of Investment basis to IFRS section on pages 38 to 42 of the
Strategic report.

C Critical accounting judgements and estimates
The reported results of the Group are sensitive to the accounting policies, assumptions and estimates that underlie the preparation of
its financial statements. UK company law and IFRS require the Directors, in preparing the Group’s financial statements, to select suitable
accounting policies, apply them consistently and make judgements and estimates that are reasonable and prudent. The Group’s estimates
and assumptions are based on historical experience and expectation of future events and are reviewed periodically. The actual outcome
may be materially different from that anticipated.
(a) Critical judgements

In the course of preparing the financial statements, one judgement has been made in the process of applying the Group’s accounting policies,
other than those involving estimations, that has had a significant effect on the amounts recognised in the financial statements as follows:
I. Assessment as an investment entity

The Board has concluded that the Company continues to meet the definition of an investment entity as its strategic objective of investing
in portfolio investments and providing investment management services to investors for the purpose of generating returns in the form
of investment income and capital appreciation remains unchanged.
(b) Critical estimates

In addition to this significant judgement the Directors have made two estimates, which they deem to have a significant risk of resulting
in a material adjustment to the amounts recognised in the financial statements within the next financial year. The details of these estimates
are as follows:
I. Fair valuation of the investment portfolio
statements
Audited financial
The investment portfolio, a material asset of the Group, is held at fair value. Details of valuation methodologies used and the associated
sensitivities are disclosed in Note 12 Fair values of assets and liabilities. Further information can be found in Portfolio valuation – an
explanation on pages 150 and 151. Given the importance of this area, the Board has a separate Valuations Committee to review the valuations
policies, process and application to individual investments. A report on the activities of the Valuations Committee (including a review of the
assumptions made) is included on pages 70 to 72. In addition, sensitivity to a net 1x movement on Action’s multiple, the largest investment in
our portfolio, is included on page 23 of the Strategic report.
II. Carried interest receivable and payable

Carried interest receivable and payable are calculated based on the underlying agreements, and assuming all portfolio investments are sold
at their fair values at the balance sheet date. The actual amounts of carried interest received and paid will depend on the cash realisations of
these portfolio investments and valuations may change significantly in the next financial year. The fair valuation of the investment portfolio is
itself a critical estimate, as detailed above. The sensitivity of carried interest to movements in the investment portfolio is disclosed in Notes 13
and 14.
Valuation of the defined benefit schemes

The Group considered that the required estimate of an appropriate discount rate in accordance with IAS 19 was not sensitive enough to
change the valuation of the pension scheme materially and therefore it is no longer considered a critical estimate. The sensitivity to changes
in discount rates is shown in Note 26.


continued
D Other accounting policies

(a) Gross investment return
Gross investment return is equivalent to “revenue” for the purposes of IAS 1. It represents the overall increase in net assets from the
investment portfolio net of deal-related costs and includes foreign exchange movements in respect of the investment portfolio.
The substantial majority is investment income and outside the scope of IAS 18 (and IFRS 15 from 1 April 2019). It is analysed into the following
components with the relevant standard shown where appropriate:
I. Realised profits or losses over value on the disposal of investments are the difference between the fair value of the consideration in
accordance with IFRS 13 received less any directly attributable costs, on the sale of equity and the repayment of interest income from the
investment portfolio, and its carrying value at the start of the accounting period, converted into sterling using the exchange rates in force
at the date of disposal.
II. Unrealised profits or losses on the revaluation of investments are the movement in the fair value of investments in accordance with
IFRS 13 between the start and end of the accounting period converted into sterling using the exchange rates in force at the date of fair
value assessment.
III. Fair value movements on investment entity subsidiaries are the movements in the fair value of Group subsidiaries which are classified
as investment entities under IFRS 10. The Group makes investments in portfolio assets through these entities which are usually limited
partnerships or corporate subsidiaries.
IV. Portfolio income is that portion of income that is directly related to the return from individual investments. It is recognised to the extent
that it is probable that there will be economic benefit and the income can be reliably measured. The following specific recognition criteria
in accordance with IAS 18 must be met before the income is recognised:
• Dividends from equity investments are recognised in the Consolidated statement of comprehensive income when the shareholders’
rights to receive payment have been established.
• Interest income from investment portfolio is recognised as it accrues by reference to the principal outstanding and the effective interest
rate applicable, which is the rate that exactly discounts the estimated future cash flows through the expected life of the financial asset
to the asset’s carrying value. When the fair value of an investment is assessed to be below the principal value of a loan the Group
recognises a provision against any interest accrued from the date of the assessment going forward until the investment is assessed
to have recovered in value.
• Fee income is earned directly from investee companies when an investment is first made and through the life of the investment.
Fees that are earned on a financing arrangement are considered to relate to a financial asset measured at fair value through profit
or loss and are recognised when that investment is made. Fees that are earned on the basis of providing an ongoing service to the
investee company are recognised as that service is provided.
V. Foreign exchange on investments arises on investments made in currencies that are different from the functional currency of the Group
entity. Investments are translated at the exchange rate ruling at the date of the transaction in accordance with IAS 21. At each subsequent
reporting date, investments are translated to sterling at the exchange rate ruling at that date.

(b) Foreign currency translation
For the Company and those subsidiaries whose balance sheets are denominated in sterling, which is the Company’s functional and
presentational currency, monetary assets and liabilities and non-monetary assets held at fair value denominated in foreign currencies
are translated into sterling at the closing rates of exchange at the balance sheet date. Foreign currency transactions are translated into
sterling at the average rates of exchange over the year and exchange differences arising are taken to the Consolidated statement of
comprehensive income.
The statements of financial position of subsidiaries and associates, which are not held at fair value, denominated in foreign currencies are
translated into sterling at the closing rates. The statements of comprehensive income for these subsidiaries and associates are translated at
the average rates and exchange differences arising are taken to other comprehensive income. Such exchange differences are reclassified to
the Consolidated statement of comprehensive income in the period in which the subsidiary or associate is disposed of.
Exchange movements in relation to forward foreign exchange contracts are included within exchange movements in the Consolidated
statement of comprehensive income, where appropriate. No forward foreign exchange contracts were held at the year end.
(c) Treasury assets and liabilities

Short-term treasury assets and short and long-term treasury liabilities are used in order to manage cash flows and minimise the overall costs
of borrowing.
Cash and cash equivalents comprise cash at bank and amounts held in money market funds, which are readily convertible into cash and there
is an insignificant risk of changes in value. Financial assets and liabilities are recognised in the balance sheet when the relevant Group entity
becomes a party to the contractual provisions of the instrument. De-recognition occurs when rights to cash flows from a financial asset expire,
or when a liability is extinguished.
statements
Audited financial

Notes to the accounts
1 Segmental analysis
Operating segments are the components of the Group whose results are regularly reviewed by the Group’s chief operating decision maker
to make decisions about resources to be allocated to the segment and assess its performance.
The Chief Executive, who is considered to be the chief operating decision maker, managed the Group on the basis of business divisions
determined with reference to market focus, geographic focus, investment funding model and the Group’s management hierarchy.
A description of the activities, including products and services offered by these divisions and the allocation of resources, is given in
the Strategic report. For the geographical segmental split, revenue information is based on the locations of the assets held.
The segmental information that follows is presented on the basis used by the Chief Executive to monitor the performance of the Group.
The reported segments are Private Equity, Infrastructure and other, where other comprises the residual investments retained following the
sale of our Debt Management business. These investments were sold during the year.
The segmental analysis is prepared on the Investment basis to provide the most meaningful information to the reader of the accounts.
Investment basis Private
Equity Infrastructure Other1 Total
Year to 31 March 2018 £m £m £m £m
Realised profits/(losses) over value on the disposal of investments 199 10 (2) 207
Unrealised profits on the revaluation of investments 1,080 83 – 1,163
Portfolio income
Dividends 5 27 9 41
Interest income from investment portfolio 112 4 – 116
Fees receivable 14 – – 14
Foreign exchange on investments 28 (11) (6) 11
Gross investment return 1,438 113 1 1,552
Fees receivable from external funds 7 50 – 57
Operating expenses (75) (46) – (121)
Interest receivable 2
Interest payable (37)
Exchange movements (27)
Other income 2
Operating profit before carry 1,428
Carried interest
Carried interest and performance fees receivable 138 90 – 228
Carried interest and performance fees payable (196) (9) – (205)
Operating profit 1,451
Income taxes (26)
Re-measurements of defined benefit plans –
Total return 1,425
Net divestment/(investment)
Realisations2 1,002 169 152 1,323
Cash investment (587) (217) (23) (827)
415 (48) 129 496
Balance sheet
Opening portfolio value at 1 April 2017 4,831 706 138 5,675
Investment3 674 217 23 914
Value disposed (803) (159) (154) (1,116)
Unrealised value movement 1,080 83 – 1,163
Other movement4 43 (15) (7) 21
Closing portfolio value at 31 March 2018 5,825 832 – 6,657
1 The Other segment comprises the residual Debt Management portfolio.
2 £46 million in Private Equity relates to cash in transit at year end.
3 Includes capitalised interest and other non-cash investment.
4 Other movement relates to foreign exchange and the provisioning of capitalised interest.
A number of items are not managed by segment by the chief operating decision maker and therefore have not been allocated to a specific segment.

1 Segmental analysis continued
Investment basis Total
Private continuing Discontinued
Equity Infrastructure Other1 operations operations1 Total
Year to 31 March 2017 £m £m £m £m £m £m
Realised profits/(losses) over value on the disposal
of investments 38 (1) 1 38 – 38
Unrealised profits on the revaluation
of investments 1,274 59 9 1,342 3 1,345
Portfolio income
Dividends 8 23 19 50 16 66
Interest income from investment portfolio 50 – – 50 3 53
Fees receivable 6 – – 6 – 6
Foreign exchange on investments 248 6 15 269 16 285
Gross investment return 1,624 87 44 1,755 38 1,793
Fees receivable from external funds 10 36 – 46 25 71
Operating expenses (76) (41) – (117) (13) (130)
Interest receivable 2 – 2
Interest payable (49) – (49)
Exchange movements 28 (9) 19
Other income 10 2 12
statements
Audited financial
Operating profit before carry 1,675 43 1,718
Carried interest
fees receivable 275 4 – 279 1 280
fees payable (431) (3) – (434) – (434)
Operating profit 1,520 44 1,564
Profit on disposal of Debt Management
business before tax – 48 48
Income taxes 3 (1) 2
Re-measurements of defined benefit plans (22) – (22)
Total return 1,501 91 1,592
Realisations2 982 12 11 1,005 270 1,275
Cash investment (478) (131) (29) (638) (51) (689)
504 (119) (18) 367 219 586
Balance sheet
Opening portfolio value at 1 April 20163 3,741 527 92 4,360 137 4,497
Investment4 548 131 29 708 51 759
Value disposed (944) (13) (10) (967) (191) (1,158)
Unrealised value movement 1,274 59 9 1,342 3 1,345
Other movement5 212 2 18 232 – 232
Closing portfolio value at 31 March 2017 4,831 706 138 5,675 – 5,675
1 Discontinued operations relate to the Debt Management business sold to Investcorp. Other relates to the residual Debt Management investments retained by 3i.
2 Private Equity does not include proceeds paid from investee holding companies of £33 million. Total proceeds from the sale of the Debt Management business were £270 million, of which
£17 million related to the investment made by 3i Group plc on behalf of Debt Management Investments Ltd and £16 million related to an intercompany loan provided by 3i Group plc to
Debt Management US LLC and not included within the consolidated Group.
3 The opening portfolio values have been re-presented to reflect the classification of the Group’s Debt Management business sold to Investcorp as discontinued operations. The residual
Debt Management stakes are included within Other.
4 Includes capitalised interest and other non-cash investment.
5 Other movement relates to foreign exchange and the provisioning of capitalised interest.
A number of items are not managed by segment by the chief operating decision maker and therefore have not been allocated to a specific segment.


continued
1 Segmental analysis continued

Investment basis Northern North Rest of
UK Europe America World Total
Year to 31 March 2018 £m £m £m £m £m
Gross investment return
Realised profits/(losses) over value on the
disposal of investments 9 154 (5) 49 207
Unrealised profits on the
revaluation of investments 148 932 67 16 1,163
Portfolio income 54 104 12 1 171
Foreign exchange on investments – 91 (55) (25) 11
211 1,281 19 41 1,552
Realisations 270 782 91 180 1,323
Cash investment (32) (434) (361) – (827)
238 348 (270) 180 496
Balance sheet
Closing portfolio value at 31 March 2018 1,249 4,504 664 240 6,657
Investment basis Northern North Rest of

UK Europe America World Total
Year to 31 March 2017 £m £m £m £m £m
Gross investment return
Realised (losses)/profits over value on the
disposal of investments (33) 51 12 8 38
Unrealised profits/(losses) on the
revaluation of investments 160 1,183 12 (10) 1,345
Portfolio income/(expense) 34 77 15 (1) 125
Foreign exchange on investments 1 196 43 45 285
162 1,507 82 42 1,793
Realisations 239 818 179 39 1,275
Cash investment (131) (488) (69) (1) (689)
108 330 110 38 586
Balance sheet
Closing portfolio value at 31 March 2017 1,309 3,639 349 378 5,675

2 Realised profits over value on the disposal of investments
2018 2018
Unquoted Quoted 2018
investments investments Total
£m £m £m
Realisations 329 85 414
Valuation of disposed investments (315) (81) (396)
14 4 18
Of which:
– profits recognised on realisations 22 4 26
– losses recognised on realisations (8) – (8)
14 4 18
2017 2017
£m £m £m
Realisations 266 20 286
Valuation of disposed investments (292) (19) (311)
(26) 1 (25)
Of which:
statements
Audited financial
– profits recognised on realisations 23 1 24
– losses recognised on realisations (49) – (49)
(26) 1 (25)
3 Unrealised profits on the revaluation of investments

2018 2018
£m £m £m
Movement in the fair value of investments 346 40 386
Of which:
– unrealised gains 365 40 405
– unrealised losses (19) – (19)
346 40 386
2017 2017
£m £m £m
Movement in the fair value of investments 224 38 262
Of which:
– unrealised gains 243 38 281
– unrealised losses (19) – (19)
224 38 262


continued
4 Operating expenses
Operating expenses of £120 million (2017: £116 million) recognised in the IFRS Consolidated statement of comprehensive income include the
following amounts:
2018 2017
£m £m
Depreciation of property, plant and equipment 2 2
Amortisation of intangible assets 1 –
Audit fees (Note 6) 2 2
Staff costs (Note 5) 83 78
Redundancy costs 2 2
Including expenses incurred in the entities accounted for as investment entity subsidiaries of £1 million (2017: £1 million), the Group’s total
operating expenses for the year were £121 million (2017: £117 million).
5 Staff costs
The table below is prepared in accordance with Companies Act requirements, which is consistent with both the IFRS and the Investment basis.
2018 2017
£m £m
Wages and salaries from continuing operations 63 57
Social security costs from continuing operations 11 10
Share-based payment costs from continuing operations (Note 27) 5 7
Pension costs from continuing operations 4 4
Staff costs from continuing operations 83 78
Wages and salaries from discontinued operations – 9
Social security costs from discontinued operations – 1
Staff costs from discontinued operations – 10
Total staff costs 83 88
The average number of employees during the year was 241 (2017: 281), of which 159 (2017: 189) were employed in the UK.
Wages and salaries shown above include salaries paid in the year, bonuses and portfolio incentive schemes relating to the year ended
31 March 2018. These costs are included in operating expenses. The table below analyses these costs between fixed and variable elements.
2018 2017
£m £m
Fixed staff costs from continuing operations 40 37
Variable staff costs from continuing operations1 43 41
Staff costs from continuing operations 83 78
Fixed staff costs from discontinued operations – 4
Variable staff costs from discontinued operations1 – 6
Staff costs from discontinued operations – 10
Total staff costs 83 88
1 Includes cash bonuses and equity and cash settled share awards.
More detail on this information is included in the Directors’ remuneration report on pages 73 to 82.

6 Information regarding the Group’s Auditor
During the year the Group received the following services from its Auditor, Ernst & Young LLP. The table below is prepared in accordance with
Companies Act requirements, which is consistent with both the IFRS and the Investment basis.
2018 2017
£m £m
Audit services
Statutory audit – Company 1.3 1.2
– UK subsidiaries 0.5 0.5
– Overseas subsidiaries 0.1 0.2
Total audit services 1.9 1.9
Non-audit services
Other assurance services 0.3 0.2
Investment due diligence 0.1 1.0
Tax services (compliance and advisory services) – 0.1
Total audit and non-audit services 2.3 3.2
7 Income taxes
Accounting policy:
statements
Audited financial
Income taxes represent the sum of the tax currently payable, withholding taxes suffered and deferred tax. Tax is charged or credited in the
Consolidated statement of comprehensive income, except where it relates to items charged or credited directly to equity, in which case the
tax is also dealt within equity.
The tax currently payable is based on the taxable profit for the year. This may differ from the profit included in the Consolidated statement
of comprehensive income because it excludes items of income or expense that are taxable or deductible in other years and it further
excludes items that are never taxable or deductible.
To enable the tax charge to be based on the profit for the year, deferred tax is provided in full on temporary timing differences, at the rates
of tax expected to apply when these differences crystallise. Deferred tax assets are recognised only to the extent that it is probable that
sufficient taxable profits will be available against which temporary differences can be set off. All deferred tax liabilities are offset against
deferred tax assets, where appropriate, in accordance with the provisions of IAS 12.
The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable
that sufficient taxable profits will be available to allow all or part of the asset to be recovered.
The main rate of UK corporation tax is 19% and is to be reduced to 17% from 1 April 2020. This change will affect future UK corporate taxes
payable and the rate at which deferred tax assets are expected to reverse.
2018 2017
£m £m
Current taxes
Current year – UK 22 –
– Overseas 1 1
Prior year – UK – –
– Overseas (1) (4)
Deferred taxes
Deferred income taxes 3 –
Total income tax charge/(credit) in the Consolidated statement of comprehensive income 25 (3)


continued
7 Income taxes continued

Reconciliation of income taxes in the Consolidated statement of comprehensive income
The tax charge for the year is different to the standard rate of corporation tax in the UK, currently 19% (2017: 20%), and the differences are
explained below:
2018 2017
£m £m
Profit before tax 1,488 1,524
Profit before tax multiplied by rate of corporation tax in the UK of 19% (2017: 20%) 283 305
Effects of:
Non-taxable capital profits due to UK approved investment trust company status (257) (309)
Non-taxable dividend income (9) (6)
17 (10)
Other differences between accounting and tax profits:
Permanent differences – non-deductible items 2 –
Temporary differences on which deferred tax is not recognised 4 4
Overseas countries taxes – (3)
Recognition of previously unrecognised deferred tax or losses 5 –
Excess unutilised tax losses arising in the period – 6
Utilisation of brought forward losses (3) –
Total income tax charge/(credit) in the Consolidated statement of comprehensive income 25 (3)
The affairs of the Group’s parent company 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. An approved Investment Trust company is a UK investment company which is required to
meet certain conditions set out in the UK tax rules to obtain and maintain its tax status. This approval allows certain investment profits of the
Company, broadly its capital profits, to be exempt from tax in the UK.
The Group has recognised a current UK corporation tax liability of £22 million (2017: nil) for the year. This is higher than previous years due
to increased levels of taxable interest income from portfolio companies, reduced interest expenditure following the repayment of a bond in
March 2017, and a £90 million performance fee from 3iN following its disposals of AWG and Elenia in the year. Finally, the use of losses brought
forward has been restricted with effect from 1 April 2017.
Including a net tax charge of £1 million (2017: nil) in the fair valued entities, the Group recognised a total tax charge of £26 million (2017:
tax credit £3 million) under the Investment basis.
Deferred income taxes
2018 2017
£m £m
Opening deferred income tax asset
Tax losses 8 7
Income in accounts taxable in the future (8) (7)
Other – 3
– 3
Recognised through Consolidated statement of comprehensive income
Tax losses recognised (5) 1
Income in accounts taxable in the future 2 (1)
(3) –
Recognised within discontinued operations
Deferred tax asset transferred with discontinued operations – (3)
– (3)
Closing deferred income tax liability
Tax losses 3 8
Income in accounts taxable in the future (6) (8)
(3) –
At 31 March 2018, the Group had carried forward tax losses of £1,400 million (31 March 2017: £1,390 million), capital losses of £102 million
(31 March 2017: £93 million) and other temporary differences of £83 million (31 March 2017: £94 million). With the additional restrictions
on utilising brought forward losses introduced from 1 April 2017, and the uncertainty that the Group will generate sufficient or relevant
taxable profits in the foreseeable future to utilise these amounts, no deferred tax asset has been recognised in respect of these losses.
Deferred income taxes are calculated using an expected rate of corporation tax in the UK of 19% (2017: 19%).

8 Per share information
The calculation of basic earnings per share is based on the profit attributable to shareholders and the number of basic average shares.
When calculating the diluted earnings per share, the weighted average number of shares in issue is adjusted for the effect of all dilutive share
options and awards.
2018 2017
Earnings per share (pence)
Basic earnings per share 151.7 169.2
– of which from continuing operations 151.7 159.0
– of which from discontinued operations – 10.2
Diluted earnings per share 151.0 168.4

– of which from continuing operations 151.0 158.3
– of which from discontinued operations – 10.1
Earnings (£m)
Profit for the year attributable to equity holders of the Company 1,463 1,625
– of which from continuing operations 1,463 1,527
– of which from discontinued operations – 98
2018 2017
statements
Audited financial
Weighted average number of shares in issue
Ordinary shares 972,849,842 972,734,609
Own shares (8,758,180) (12,580,145)
964,091,662 960,154,464
Effect of dilutive potential ordinary shares
Share options and awards 4,613,775 4,710,808
Diluted shares 968,705,437 964,865,272
2018 2017
Net assets per share (£)
Basic 7.28 6.07
Diluted 7.24 6.04
Net assets (£m)
Net assets attributable to equity holders of the Company 7,024 5,836
Basic NAV per share is calculated on 965,040,405 shares in issue at 31 March 2018 (31 March 2017: 961,458,801). Diluted NAV per share is
calculated on diluted shares of 969,773,150 at 31 March 2018 (31 March 2017: 966,553,549).
9 Dividends
2018 2018 2017 2017
pence per share £m pence per share £m
Declared and paid during the year
Ordinary shares
Final dividend 18.5 178 16.0 154
Interim dividend 8.0 77 8.0 76
26.5 255 24.0 230
Proposed dividend 22.0 212 18.5 178
The Group’s current dividend policy was introduced in May 2016. In accordance with this policy, the Group pays a base dividend of 16
pence per share and an additional dividend which is based on cash realisations, the investment pipeline and the balance sheet at year end.
The Group will only pay an additional dividend if gross debt is less than £1 billion and gearing is less than 20%, to maintain its conservative
balance sheet approach.
The dividend can be paid out of either the capital reserve or the revenue reserve subject to the investment trust rules. The distributable
reserves of the parent company are £1,941 million (31 March 2017: £1,742 million) and the Board reviews the distributable reserves bi-annually
ahead of proposing any dividend. The Board also reviews the proposed dividends in the context of the requirements of being an approved
Investment Trust. Details of the Group’s continuing viability and going concern can be found on page 47 and 89.


continued
9 Dividends continued
In light of the Group’s continued progress in executing its strategy, we now propose to replace our base and additional dividend policy
with a simpler policy. Further details are on page 34 of the Financial review.
10 Investment portfolio
Accounting policy:
Investments are recognised and de-recognised on the date when their purchase or sale is subject to a relevant contract and the associated
risks and rewards have been transferred. The Group manages its investments with a view to profiting from the receipt of investment income
and capital appreciation from changes in the fair value of investments.
All investments are initially recognised at the fair value of the consideration given and are subsequently measured at fair value, in
accordance with the Group’s valuation policies.
Quoted investments are designated at fair value through profit and loss and subsequently carried in the Consolidated statement of
financial position at fair value. Fair value is measured using the closing bid price at the reporting date, where the investment is quoted
on an active stock market.
Unquoted investments, including both equity and loans are designated at fair value through profit and loss and are subsequently carried
in the Consolidated statement of financial position at fair value. Fair value is determined in line with 3i’s valuation policy, which is compliant
with the fair value guidelines under IFRS and the International Private Equity and Venture Capital (IPEV) Valuation Guidelines, details of
which are available in “Portfolio valuation – an explanation” on pages 150 and 151.
Interest bearing loans accrue interest which is either settled in cash or capitalised on a regular basis and included as part of the principal
loan balance. The capitalisation of accrued interest is treated as part of investment additions during the year. If the fair value of an
investment is assessed to be below the principal value of the loan the Group recognises a fair value reduction against any interest income
accrued from the date of the assessment going forward. “Capitalisation at nil value” is the term used to describe the capitalisation of
accrued interest which has been fully provided for. These transactions are disclosed as additions to portfolio cost with an equal reduction
made where loan notes have nil value.
In accordance with IFRS 10, the proportion of the investment portfolio held by the Group’s unconsolidated subsidiaries is presented as part
of the fair value of investment entity subsidiaries, along with the fair value of their other assets and liabilities. A reconciliation of the fair value
of Investments in investment entities is included in Note 11.
Group Group Company Company

2018 2017 2018 2017
£m £m £m £m
Opening book value 1,706 1,540 1,685 1,400
Additions from continuing operations 481 291 481 306
– of which loan notes with nil value – (10) – (10)
Additions from discontinued operations – 70 – 18
Disposals, repayments and write-offs from continuing operations (396) (311) (375) (307)
Disposals, repayments and write-offs from discontinued operations – (191) – (24)
Fair value movement from continuing operations1 386 262 386 256
Fair value movement from discontinued operations – 3 – –
Other movements and net cash movements from continuing operations2 (81) 71 (81) 65
Other movements and net cash movements from discontinued operations2 – (19) – (19)
Closing book value 2,096 1,706 2,096 1,685
Quoted investments 345 390 345 390
Unquoted investments 1,751 1,316 1,751 1,295
1 All fair value movements relate to assets held at the end of the period.
2 Other movements includes the impact of foreign exchange and the transfer of an investment to an investment entity subsidiary.
The holding period of 3i’s investment portfolio is on average greater than one year. For this reason the portfolio is classified as non-current.
It is not possible to identify with certainty investments that will be sold within one year.
Additions from continuing operations include cash investment of £470 million (2017: £280 million) and £11 million (2017: £11 million) in
capitalised interest received by way of loan notes, of which nil (2017: £10 million) has been written down in the period to nil.

10 Investment portfolio continued
Included within the Consolidated statement of comprehensive income is £26 million (2017: £10 million) of interest income. This is made up
of the £11 million of capitalised interest noted above, £4 million (2017: £4 million) of cash income and the capitalisation of prior year accrued
income and non-capitalised accrued income of £11 million (2017: £5 million).
Quoted investments are classified as Level 1 in the fair value hierarchy and unquoted investments are classified as Level 3 in the fair value
hierarchy, see Note 12 for details.
11 Investments in investment entity subsidiaries
Accounting policy:
Investments in investment entity subsidiaries are accounted for as financial instruments at fair value through profit and loss.
These entities are typically limited partnerships and other intermediate investment holding structures which hold the Group’s interests in
investments in portfolio companies. The fair value can increase or reduce from either cash flows to/from the investment entity subsidiaries
or valuation movements in line with the Group’s valuation policy.
Substantially all of these entities meet the definition of a Fund under the IPEV guidelines and the fair value and unit of account of these
entities is their net asset values. There were no adjustments to the subsidiaries’ net asset values in the year.
We determine that in the ordinary course of business, the net asset values of investment entity subsidiaries are considered to be the
most appropriate to determine fair value. At each reporting period, we consider whether any additional fair value adjustments need to
be made to the net asset values of the investment entity subsidiaries. These adjustments may be required to reflect market participants’
considerations about fair value that may include, but are not limited to, liquidity and the portfolio effect of holding multiple investments
statements
Audited financial
within the investment entity subsidiary. There was no particular circumstance to indicate that a fair value adjustment was required and after
due consideration we concluded that the net asset values were the most appropriate reflection of fair value at 31 March 2018.
Group Group
2018 2017
Non-current £m £m
Opening fair value 3,483 2,680
Net cash flow from investment entity subsidiaries (430) (246)
Fair value movements on investment entity subsidiaries 848 1,041
Transfer of assets from investment entity subsidiaries 133 8
Closing fair value 4,034 3,483
All investment entity subsidiaries are classified as Level 3 in the fair value hierarchy, see Note 12 for details.
A 5% movement in the closing book value of investments in investment entities would have an impact of £202 million
Restrictions
3i Group plc, the ultimate parent company, receives dividend income from its subsidiaries. There are no restrictions on the ability to transfer
funds from these subsidiaries to the Group except for a cash balance of £85 million (31 March 2017: £56 million) held on escrow in investment
entity subsidiaries for carried interest payable.
Support
3i Group plc continues to provide, where necessary, ongoing support to its investment entity subsidiaries for the purchase of portfolio
investments. During the year, there were net cash flows to the Group as noted in the table above. The Group’s current commitments are
disclosed in Note 24.


continued
12 Fair values of assets and liabilities
Accounting policy:
Financial instruments, other than those held at amortised cost, are held at fair value and are designated irrevocably at inception.
In particular, 3i designates groups of financial instruments as being at fair value when they are managed, and their performance evaluated,
on a fair value basis in accordance with a documented risk management or investment strategy, and where information about the groups
of financial instruments is reported to management on that basis.
(A) Classification
The following tables analyse the Group’s assets and liabilities in accordance with the categories of financial instruments in IAS 39:
Group Group Group Group

2018 2018 2017 2017
Designated Other Designated Other
at fair value financial at fair value financial
through instruments Group through instruments Group
profit and at amortised 2018 profit and at amortised 2017
loss cost Total loss cost Total
£m £m £m £m £m £m
Assets
Quoted investments 345 – 345 390 – 390
Unquoted investments 1,751 – 1,751 1,316 – 1,316
Investments in investment entities 4,034 – 4,034 3,483 – 3,483
Other financial assets – 653 653 – 425 425
Total 6,130 653 6,783 5,189 425 5,614
Liabilities
Loans and borrowings – 575 575 – 575 575
Other financial liabilities – 261 261 – 274 274
Total – 836 836 – 849 849
Company Company Company Company

2018 2018 2017 2017
Designated Other Designated Other
at fair value financial at fair value financial
through instruments Company through instruments Company
profit and at amortised 2018 profit and at amortised 2017
loss cost Total loss cost Total
£m £m £m £m £m £m
Assets
Quoted investments 345 – 345 390 – 390
Unquoted investments 1,751 – 1,751 1,295 – 1,295
Other financial assets – 564 564 – 384 384
Total 2,096 564 2,660 1,685 384 2,069
Liabilities
Loans and borrowings – 575 575 – 575 575
Other financial liabilities – 527 527 – 522 522
Total – 1,102 1,102 – 1,097 1,097
Within the Company £4,045 million (31 March 2017: £3,483 million) of the Interest in Group entities is held at fair value.
(B) Valuation
The fair values of the Group’s financial assets and liabilities, not held at fair value, are not materially different from their carrying values with the
exception of loans and borrowings. The fair value of the loans and borrowings is £718 million (31 March 2017: £741 million), determined with
reference to their published market prices. The carrying value of the loans and borrowings is £575 million (31 March 2017: £575 million) and
accrued interest payable (included within trade and other payables) is £8 million (31 March 2017: £8 million).

12 Fair values of assets and liabilities continued
Valuation hierarchy
The Group classifies financial instruments measured at fair value in the investment portfolio according to the following hierarchy:
Level Fair value input description Financial instruments

Level 1 Quoted prices (unadjusted) from active markets Quoted equity instruments
Level 2 Inputs other than quoted prices included in Level 1 that are observable Fixed rate loan notes
either directly (ie as prices) or indirectly (ie derived from prices)
Level 3 Inputs that are not based on observable market data Unquoted equity instruments and loan instruments
Unquoted equity instruments and debt instruments are measured in accordance with the IPEV Guidelines with reference to the most
appropriate information available at the time of measurement. Further information regarding the valuation of unquoted equity instruments
can be found in the section Portfolio valuation – an explanation on pages 150 and 151.
The tables below show the classification of financial instruments held at fair value into the valuation hierarchy at 31 March 2018:
Group Group Group Group Group Group Group Group

2018 2018 2018 2018 2017 2017 2017 2017
Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total
£m £m £m £m £m £m £m £m
Assets
Quoted investments 345 – – 345 390 – – 390
– – 1,751 1,751
statements
Audited financial
Unquoted investments – – 1,316 1,316
Investments in investment
entity subsidiaries – – 4,034 4,034 – – 3,483 3,483
Total 345 – 5,785 6,130 390 – 4,799 5,189
The above disclosure only relates to the investment portfolio and the investments in our investment entity subsidiaries. We determine that
in the ordinary course of business, the net asset values of an investment entity subsidiary are considered to be the most appropriate to
determine fair value. The underlying portfolio is valued under the same methodology as directly held investments, with any other assets or
liabilities within investment entity subsidiaries fair valued in accordance with the Group’s accounting policies. Note 11 details the Directors’
considerations about the fair value of the underlying investment entity subsidiaries.
Movements in the directly held investment portfolio categorised as Level 3 during the year:

2018 2017 2018 2017
£m £m £m £m
Opening book value 1,316 1,243 1,295 1,103
Additions from continuing operations 481 213 481 228
– of which loan notes with nil value – (10) – (10)
Additions from discontinued operations – 70 – 18
Disposals, repayments and write-offs from continuing operations (315) (292) (293) (288)
Disposals, repayments and write-offs from discontinued operations – (191) – (24)
Fair value movement from continuing operations1 346 224 346 218
Fair value movement from discontinued operations – 3 – –
Other movements and net cash movements from continuing operations2 (77) 75 (78) 69
Other movements and net cash movements from discontinued operations2 – (19) – (19)
1 All fair value movements relate to assets held at the end of the period.
2 Other movements include the impact of foreign exchange and the transfer of an investment to an investment entity subsidiary.


continued
12 Fair values of assets and liabilities continued

On a continuing basis, unquoted investments valued using Level 3 inputs also had the following impact on the Consolidated statement of
comprehensive income: realised profits over value on disposal of investment of £14 million (2017: realised loss of £26 million), dividend income
of £13 million (2017: £24 million) and foreign exchange losses of £12 million (2017: foreign exchange gains of £63 million).
Level 3 inputs are sensitive to assumptions made when ascertaining fair value as described in the Portfolio valuation – an explanation section.
On an IFRS basis, of assets held at 31 March 2018, classified as Level 3, 40% (31 March 2017: 33%) were valued using a multiple of earnings
and the remaining 60% (31 March 2017: 67%) were valued using alternative valuation methodologies. Of the underlying portfolio held by
investment entity subsidiaries, 95% (31 March 2017: 96%) were valued using a multiple of earnings and the remaining 5% (31 March 2017: 4%)
were valued using alternative valuation methodologies.
Assets move between Level 1 and Level 3 when an unquoted equity investment lists on a quoted market exchange. There were no transfers in
or out of Level 3 during the year.
Valuation multiple – The valuation multiple is the main assumption applied to a multiple of earnings based valuation. The multiple is derived
from comparable listed companies or relevant market transaction multiples. Companies in the same industry and geography and, where
possible, with a similar business model and profile are selected and then adjusted for factors including liquidity risk, growth potential and
relative performance. They are also adjusted to represent our longer term view of performance through the cycle or our exit assumptions.
The value weighted average post discount earnings multiple used when valuing the portfolio at 31 March 2018 was 11.7x (31 March 2017: 10.2x).
If the multiple used to value each unquoted investment valued on an earnings multiple basis as at 31 March 2018 decreased by 5%, the
investment portfolio would decrease by £43 million (31 March 2017: £18 million) or 2% (31 March 2017: 1%). If the same sensitivity was applied to
the underlying portfolio held by investment entity subsidiaries, this would have a negative impact of £270 million (31 March 2017: £224 million)
or 6% (31 March 2017: 6%).
If the multiple increased by 5% then the investment portfolio would increase by £35 million (31 March 2017: £16 million) or 2% (31 March
2017: 1%). If the same sensitivity was applied to the underlying portfolio held by investment entity subsidiaries, this would have a positive
impact of £260 million (31 March 2017: £215 million) or 6% (31 March 2017: 5%).
Alternative valuation methodologies – There are a number of alternative investment valuation methodologies used by the Group, for
reasons specific to individual assets. The details of such valuation methodologies, and inputs that are used, are given in the Portfolio valuation
– an explanation section on pages 150 and 151.
Each methodology is used for a proportion of assets by value, and at year end the following techniques were used under an IFRS basis:
5% DCF (31 March 2017: 41%), nil broker quotes (31 March 2017: 4%), 45% imminent sale (31 March 2017: 2%), 7% industry metric (31 March
2017: 10%) and 3% other (31 March 2017: 10%).
If the value of all of the investments valued under alternative methodologies moved by 5%, this would have an impact on the investment
portfolio of £53 million (31 March 2017: £44 million) or 3% (31 March 2017: 3%). If the same sensitivity was applied to the underlying portfolio
held by investment entity subsidiaries, this would have an impact of £10 million (31 March 2017: £7 million) or 0.3% (31 March 2017: 0.2%).
13 Carried interest and performance fees receivable
Accounting policy:
The Group earns a share of profits (“carried interest and performance fees receivable”) from funds which it manages on behalf of third
parties. These profits are earned when the funds meet certain performance conditions.
Carried interest and performance fees receivable include amounts receivable from Private Equity and Infrastructure. Each scheme is
separately reviewed at the balance sheet date, and an accrual for carried interest receivable is made once the performance conditions
would be achieved if the remaining assets in that fund were realised at fair value.
Fair value of the assets is determined using the Group’s valuation methodology and is measured at the balance sheet date. An accrual is
made equal to the Group’s share of profits in excess of the performance conditions, taking into account the cash already returned to fund
investors and the fair value of assets remaining in the fund.
The performance fee receivable from 3iN is based on 3iN’s most recently published NAV subject to a performance hurdle and a high
water mark.

13 Carried interest and performance fees receivable continued
2018 2017 2018 2017
£m £m £m £m
Opening carried interest and performance fees receivable 363 117 359 87
Carried interest and performance fees receivable recognised in the statement
of comprehensive income during the year from continuing operations 228 280 183 276
Carried interest and performance fees receivable recognised in the statement
of comprehensive income during the year from discontinued operations – 1 – 4
Cash received in the year from continuing operations (6) (35) (4) (14)
Cash received in the year from discontinued operations – (4) – (1)
Carried interest receivable transferred with discontinued operations – (5) – –
Other movements1 6 9 4 7
Closing carried interest and performance fees receivable 591 363 542 359
Of which: receivable in greater than one year 498 354 539 358
1 Other includes the impact of foreign exchange.
A 5% movement in the valuation of all individual assets in the underlying investment portfolio would result in a £22 million movement in the
carried interest receivable balance. As there is only £5 million of carried interest receivable included within investment entity subsidiaries, there
is no material difference when carried interest receivable within investment entity subsidiaries is included.
statements
Audited financial
14 Carried interest and performance fees payable
Accounting policy:
The Group offers investment executives the opportunity to participate in the returns from investments subject to certain performance
conditions. “Carried interest and performance fees payable” is the term used for amounts payable to executives on these investment-
related transactions.
A variety of asset pooling arrangements are in place so that executives may have an interest in one or more carried interest plans.
Carried interest payable is accrued if its performance conditions, measured at the balance sheet date, would be achieved if the remaining
assets in that plan were realised at fair value. An accrual is made equal to the executive’s share of profits in excess of the performance
conditions in place in the carried interest plan, discounted to reflect the likely actual cash payment date, which may be materially later than
the time of the accrual.
The Infrastructure performance fee is accrued based on the expected award. A significant proportion of the amount awarded is deferred
over time and may be granted in either 3i Group plc or 3i Infrastructure plc shares. This is recognised over the vesting period in line with the
requirements of IFRS 2 or IAS 19 depending on the type of award.
Under IFRS 10, where carried interest payable reduces the fair value of an investment entity subsidiary, that movement is recorded through
“Fair value movements on investment entity subsidiaries”. At 31 March 2018, £710 million of carried interest payable was recognised in the
Consolidated statement of financial position of these investment entity subsidiaries (31 March 2017: £538 million).


continued
14 Carried interest and performance fees payable continued

Group Group
2018 2017
£m £m
Opening carried interest and performance fees payable 147 105
Carried interest and performance fees payable recognised in the Consolidated statement of comprehensive
income during the year from continuing operations1 19 98
Carried interest and performance fees payable recognised in the Consolidated statement of comprehensive
income during the year from discontinued operations – –
Cash paid in the year from continuing operations (40) (25)
Cash paid in the year from discontinued operations – (2)
Carried interest payable transferred with discontinued operations – (3)
Other movements2 34 (26)
Closing carried interest and performance fees payable 160 147
Of which: payable in greater than one year 105 124
1 The carry payable charge in the table above does not include £13 million (2017: £10 million) associated with the share-based payment charge arising from related carry schemes. The total
carried interest and performance fee payable recognised in the Consolidated statement of comprehensive income is £32 million (2017: £108 million). See Note 27 Share-based payments
for further details.
2 Other includes the impact of foreign exchange and a transfer from trade and other payables.
A 5% increase in the valuation of all individual assets in the underlying investment portfolio (including those portfolio investments held by
investment entity subsidiaries) would result in a £4 million increase in carried interest payable. Including carried interest payable recognised in
investment entity subsidiaries it would result in a £45 million increase.
A 5% decrease in the valuation of all of individual assets in the underlying investment portfolio would result in a £4 million decrease in carried
interest payable. Including carried interest payable recognised in investment entity subsidiaries it would result in a £35 million decrease.
15 Other assets
Accounting policy:
Assets, other than those specifically accounted for under a separate policy, are stated at their cost less impairment losses. They are
reviewed at each balance sheet date to determine whether there is any indication of impairment. If any such indication exists, the asset’s
recoverable amount is estimated based on expected discounted future cash flows. Any change in the level of impairment is recognised
directly in the Consolidated statement of comprehensive income.

2018 2017 2018 2017
£m £m £m £m
Prepayments 3 2 – –
Other debtors 59 60 21 24
Amounts due from subsidiaries – – 1 1
Total other assets 62 62 22 25
Of which: receivable in greater than one year 28 50 20 21
At 31 March 2018, there were no amounts that were past due or impaired for the Group or the Company (31 March 2017: nil for the Group or
the Company).

16 Loans and borrowings
Accounting policy:
All loans and borrowings are initially recognised at the fair value of the consideration received. After initial recognition, these are
subsequently measured at amortised cost using the effective interest method, which is the rate that exactly discounts the estimated
future cash flows through the expected life of the liabilities. Financial liabilities are derecognised when they are extinguished.
Group Group
2018 2017
£m £m
Loans and borrowings are repayable as follows:
Within one year – –
Between the second and fifth year 200 –
After five years 375 575
575 575
Principal borrowings include:

2018 2017 2018 2017
Rate Maturity £m £m £m £m
Issued under the £2,000 million note
statements
Audited financial
issuance programme
Fixed rate
£200 million notes (public issue) 6.875% 2023 200 200 200 200
£375 million notes (public issue) 5.750% 2032 375 375 375 375
575 575 575 575
Committed multi-currency facilities
£350 million LIBOR+0.60% 2021 – – – –
– – – –
Total loans and borrowings 575 575 575 575
There has been no change in total financing liabilities for the Group or the Company during the year as the cash flows relating to the financing
liabilities are equal to the income statement expense. Accordingly, no reconciliation between the movement in financing liabilities and the
cash flow statement has been presented.
The maturity of the Company’s £350 million (31 March 2017: £329 million) syndicated multi-currency facility is September 2021. The £350 million
facility has no financial covenants.
All of the Group’s borrowings are repayable in one instalment on the respective maturity dates. None of the Group’s interest-bearing loans
and borrowings are secured on the assets of the Group.
The fair value of the loans and borrowings is £718 million (31 March 2017: £741 million), determined with reference to their published market
prices. The loans and borrowings are included in Level 2 of the fair value hierarchy.
In accordance with the FCA Handbook (FUNDS 3.2.2. R and Fund 3.2.6. R), 3i Investments plc, as AIFM of the Company is required to calculate
leverage in accordance with a set formula and disclose this to investors. In line with this formula, leverage for the Group is 111% (31 March
2017: 115%) and the Company is 105% (31 March 2017: 107%) under both the gross method and the commitment method. The leverage for
3i Investments plc is 100% (31 March 2017: 100%) under both the gross method and the commitment method.
Under the Securities Financing Transactions Regulation (“SFTR”) and AIFMD, 3i is required to disclose certain information relating to the use of
securities financing transactions (“SFTs”) and total return swaps. At 31 March 2018, 3i was not party to any transactions involving SFTs or total
return swaps.


continued
17 Provisions
Accounting policy:
Provisions are recognised when the Group has a present obligation of uncertain timing or amount as a result of past events and it is
probable that the Group will be required to settle that obligation and a reliable estimate of that obligation can be made. The provisions are
measured at the Directors’ best estimate of the amount to settle the obligation at the balance sheet date and are discounted to present
value if the effect is material. Changes in provisions are recognised in the Consolidated statement of comprehensive income.

2018 2018 2018 2018
Property Redundancy Restructuring Total
£m £m £m £m
Opening balance 3 3 – 6
Charge for the year – – – –
Utilised in the year (1) (3) – (4)
Closing balance 2 – – 2
Of which: payable in greater than one year 1 – – 1

2017 2017 2017 2017
Property Redundancy Restructuring Total
£m £m £m £m
Opening balance 2 5 1 8
Charge for the year 1 2 – 3
Utilised in the year – (4) (1) (5)
Closing balance 3 3 – 6
Of which: payable in greater than one year 2 – – 2
The provision for redundancy related to staff reductions communicated prior to 31 March 2017. The provision was fully utilised during the year.
The Group has a number of leasehold properties whose rent and unavoidable costs exceed the economic benefits expected to be received.
These costs arise over the period of the lease, and have been provided for to the extent they are not covered by income from subleases.
The leases covered by the provision have a remaining term of up to two years. The property provision also includes an estimate of the costs
required to restore leased property to its original condition at the end of the lease term.
18 Trade and other payables
Accounting policy:
Liabilities, other than those specifically accounted for under a separate policy, are stated based on the amounts which are considered to be
payable in respect of goods or services received up to the balance sheet date.

2018 2017 2018 2017
£m £m £m £m
Amounts due to subsidiaries – – 519 477
Trade and other payables 101 127 8 29
Total trade and other payables 101 127 527 506
Of which: payable in greater than one year 1 24 – –

19 Issued capital
Accounting policy:
Ordinary shares issued by the Group are recognised at the proceeds or fair value received with the excess of the amount received over
nominal value being credited to the share premium account. Direct issue costs net of tax are deducted from equity.
2018 2018 2017 2017

Issued and fully paid Number £m Number £m
Ordinary shares of 73 19⁄22 p
Opening balance 972,808,424 719 972,661,444 719
Issued on exercise of share options and under employee share plans 88,582 – 146,980 –
Closing balance 972,897,006 719 972,808,424 719
The Company issued 88,582 ordinary shares to the Trustee of the 3i Group Share Incentive Plan for a total cash consideration of £809,378 at
various prices from 799.50 pence to 953.50 pence per share (being the market prices on the issue dates which were the last trading day of each
month in the year). These shares were ordinary shares with no additional rights attached to them and had a total nominal value of £65,430.
20 Own shares
Accounting policy:
Own shares are recorded by the Group when ordinary shares are acquired by the Company or by The 3i Group Employee Benefit Trust.
statements
Audited financial
Own shares are deducted from shareholders’ equity. A transfer is made to retained earnings at their weighted average cost in line with the
vesting of own shares held for the purposes of share-based payments. The number of own shares held by the Trust and the schemes are
described in Note 27.
2018 2017
£m £m
Opening cost 38 54
Awards granted and exercised (12) (16)
Closing cost 26 38
21 Capital structure
The capital structure of the Group consists of shareholders’ equity and net debt or cash. The type and maturity of the Group’s borrowings are
analysed further in Note 16. Capital is managed with the objective of maximising long-term return to shareholders, whilst maintaining a capital
base to allow the Group to operate effectively in the marketplace and sustain the future development of the business.
2018 2017 2018 2017
£m £m £m £m
Cash and deposits 972 971 939 927
Borrowings and derivative financial liabilities (575) (575) (575) (575)
Net cash1 397 396 364 352
Total equity 7,024 5,836 6,609 5,441
Gearing (net debt/total equity) nil nil nil nil
1 The above numbers have been prepared under IFRS and differ from the Investment basis as detailed in the Strategic report.
Capital constraints
The Group is generally free to transfer capital from subsidiary undertakings to the parent company subject to maintaining each subsidiary with
sufficient reserves to meet local statutory/regulatory obligations. No significant constraints (apart from those shown in Note 11) have been
identified and the Group has been able to distribute profits as appropriate.
The Group’s regulated capital requirement is reviewed regularly by the Board of 3i Investments plc, an investment firm regulated by the FCA,
and the Group’s Audit and Compliance Committee. In addition, the Group’s Internal Capital Adequacy Assessment Process (ICAAP) report is
updated as appropriate and reviewed by the Board of 3i Investments plc and the Audit and Compliance Committee. The Group complies with
the Individual Capital Guidance as agreed with the FCA and operates with a significant consolidated regulatory capital surplus, well in excess
of the FCA’s prudential rules. The Group’s Pillar 3 disclosure document can be found on www.3i.com.


continued
22 Interests in Group entities
Accounting policy:
The Company has controlling equity interests in, and makes loans to, both consolidated and fair valued Group entities. Investment entities
are all held at fair value and all other subsidiaries are held at cost less impairment in the Company’s accounts. The net assets of these
entities are deemed to represent fair value.
Company
2018 Company Company
Equity 2018 2018
investments Loans Total
£m £m £m
Opening book value 2,139 1,403 3,542
Additions 23 361 384
Share of profits from partnership entities – 532 532
Disposals and repayments (7) (792) (799)
Fair value movements 262 180 442
Exchange movements – 11 11
Closing book value 2,417 1,695 4,112
Company
2017 Company Company
Equity 2017 2017
investments Loans Total
£m £m £m
Opening book value 1,240 1,608 2,848
Additions 93 405 498
Share of profits from partnership entities – 373 373
Disposals and repayments (12) (1,139) (1,151)
Fair value movements 818 63 881
Exchange movements – 93 93
Closing book value 2,139 1,403 3,542
Details of significant Group entities are given in Note 30.
23 Operating leases
Accounting policy:
The Group leases its office space. Future minimum payments due under non-cancellable operating lease rentals are shown in the table
below. The Company held no operating leases during the year.
Leases as lessee
Group Group
2018 2017
£m £m
Within one year 5 7
Between the second and fifth year 18 19
After five years 9 13
32 39
The Group leases a number of its offices under operating leases. None of the leases include contingent rentals.
During the year to 31 March 2018, £4 million (2017: £5 million) was recognised as an expense in the Consolidated statement of comprehensive
income in respect of operating leases. There was nil impact (2017: nil) on the Consolidated statement of comprehensive income in respect of
subleases, as the difference between future lease and sublease obligations was already provided for in prior years (refer to Note 17). The total
future sublease payments expected to be received under non-cancellable subleases are £1 million (2017: £3 million).

24 Commitments
Accounting policy:
Commitments represent amounts the Group has contractually committed to pay third parties but do not yet represent a
charge or asset. This gives an indication of committed future cash flows. Commitments at the year end do not impact the
Group’s financial results for the year.
Group Group
Group 2018 Group Group 2017 Group
2018 due 2018 2017 due 2017
due between due Group due between due Group
within 2 and over 2018 within 2 and over 2017
1 year 5 years 5 years Total 1 year 5 years 5 years Total
£m £m £m £m £m £m £m £m
Equity and loan investments 166 1 – 167 393 2 – 395
Company Company
Company 2018 Company Company 2017 Company
2018 due 2018 2017 due 2017
due between due Company due between due Company
within 2 and over 2018 within 2 and over 2017
1 year 5 years 5 years Total 1 year 5 years 5 years Total
£m £m £m £m £m £m £m £m
Equity and loan investments 85 1 – 86 190 2 – 192
statements
Audited financial
The amounts shown above include £135 million and £54 million of commitments made by the Group and Company respectively, to invest in
one Private Equity company (31 March 2017: £272 million and £109 million in two companies). The Group and Company were contractually
committed to this investment as at 31 March 2018, and it completed on 3 April 2018.
Operating lease commitments are detailed in Note 23.
25 Contingent liabilities
Accounting policy:
Contingent liabilities are potential liabilities where there is even greater uncertainty, which could include a dependency on events not
within the Group’s control, but where there is a possible obligation. Contingent liabilities are only disclosed and not included within the
Consolidated statement of financial position.
The Company has provided a guarantee to the Trustees of the 3i Group Pension Plan in respect of liabilities of 3i plc to the Plan. 3i plc is
the sponsor of the 3i Group Pension Plan. On 4 April 2012, the Company transferred eligible assets (£150 million of ordinary shares in 3i
Infrastructure plc) as defined by the agreement to a wholly-owned subsidiary of the Group. The Company will retain all income and capital
rights in relation to the 3i Infrastructure plc shares, as eligible assets, unless the Company becomes insolvent or fails to comply with material
obligations in relation to the agreement with the Trustees, all of which are under its control. The fair value of eligible assets held by this
subsidiary at 31 March 2018 was £237 million (31 March 2017: £265 million). As part of the latest triennial valuation of the Plan, the Company
has agreed to pay up to £50 million to the Plan if the Group’s gearing increases above 20%, gross debt above £1 billion or net assets fall below
£2 billion. In addition, if the gearing, gross debt or net assets limits noted are reached, the Group may also be required to increase
the potential cover provided by the contingent asset arrangement until the gearing, gross debt or net assets improve.
At 31 March 2018, there was no material litigation outstanding against the Company or any of its subsidiary undertakings.


continued
26 Retirement benefits
Accounting policy:
Payments to defined contribution retirement benefit plans are charged to the Consolidated statement of comprehensive income as they
fall due.
For defined benefit retirement plans, the cost of providing benefits is determined using the projected unit method with actuarial valuations
being carried out at each balance sheet date. Interest on the net defined benefit asset/liability, calculated using the discount rate used to
measure the defined benefit obligation, is recognised in the Consolidated statement of comprehensive income. Re-measurement gains or
losses are recognised in full as they arise in other comprehensive income.
A retirement benefit deficit is recognised in the Consolidated statement of financial position to the extent that the present value of the
defined benefit obligations exceeds the fair value of plan assets.
A retirement benefit surplus is recognised in the Consolidated statement of financial position where the fair value of plan assets exceeds
the present value of the defined benefit obligations limited to the extent that the Group can benefit from that surplus.
Retirement benefit plans

(i) Defined contribution plans
The Group operates a number of defined contribution retirement benefit plans for qualifying employees throughout the Group. The assets
of these plans are held separately from those of the Group. The employees of the Group’s subsidiaries in France are members of a state
managed retirement benefit plan operated by the country’s government. 3i Europe plc’s French branch is required to contribute a specific
percentage of payroll costs to the retirement benefit scheme to fund these benefits.
The total expense recognised in the Consolidated statement of comprehensive income is £3 million (2017: £3 million), which represents the
contributions paid to these defined contribution plans. There were no outstanding payments due to these plans at the balance sheet date.
(ii) Defined benefit plans

The Group operates a final salary defined benefit plan for qualifying employees of its subsidiaries in the UK (“the Plan”). The Plan is approved
by HMRC for tax purposes and is operated separately from the Group and managed by an independent set of Trustees, whose appointment
and powers are determined by the Plan’s documentation.
Membership of the Plan has not been offered to new employees joining 3i since 1 April 2006. The Plan was closed to the future accrual of
benefits by members with effect from 5 April 2011, although the final salary link is maintained on existing accruals. Members of the Plan have
been invited to join the Group’s defined contribution plan with effect from 6 April 2011. The defined benefit plan is a funded scheme, the
assets of which are independent of the Company’s finances and are administered by the Trustees. The Trustees are responsible for managing
and investing the Plan’s assets and for monitoring the Plan’s funding position. As the Plan is now closed to future accrual, measures have been
taken to de-risk the Plan, including through changes to its investment policy.
The valuation of the Plan has been updated on an IAS 19 basis by an independent qualified actuary as at 31 March 2018.
Employees in Germany and Spain are entitled to a pension based on their length of service. The future liability calculated by German
and Spanish actuaries is £24 million (31 March 2017: £23 million). The Spanish branch of 3i Europe plc contributes to individual investment
policies for its employees and has agreed to indemnify any shortfall on an employee’s investment policy should it arise. The total value of
these investment policies intended to cover pension liabilities is £1 million (31 March 2017: £1 million). There was no expense (2017: £1 million
expense) recognised in the Consolidated statement of comprehensive income for the year and a £1 million loss (2017: nil) in other
comprehensive income for these schemes.
The amount recognised in the Consolidated statement of financial position in respect of the Group’s defined benefit plans is as follows:
2018 2017
£m £m
Present value of funded obligations 782 869
Fair value of the Plan assets (975) (1,055)
Asset restriction 68 65
Retirement benefit surplus in respect of the Plan (125) (121)
Retirement benefit deficit in respect of other defined benefit schemes 23 22
A retirement benefit surplus is recognised in respect of the Plan on the basis that the Group is entitled to a refund of any remaining surplus
once all benefits have been settled in the expected course. The asset restriction relates to tax that would be deducted at source in respect of
a refund of the Plan surplus.

26 Retirement benefits continued
The amounts recognised in the Consolidated statement of comprehensive income in respect of the Plan are as follows:
2018 2017
£m £m
Included in interest payable
Interest income on net defined benefit asset – (3)
Included in other income
Reduction in past service cost – (6)
Included in other comprehensive income
Re-measurement (gain)/loss (2) 30
Asset restriction 1 (8)
Total re-measurement (gain)/loss and asset restriction (1) 22
Total (1) 13
The total re-measurement loss recognised in other comprehensive income is nil (2017: £22 million). There was a £1 million loss on our overseas
schemes (2017: nil), as noted above.
Changes in the present value of the defined benefit obligation were as follows:
2018 2017
£m £m
Opening defined benefit obligation 869 789
statements
Audited financial
Interest on Plan liabilities 20 26
Re-measurement (gain)/loss:
– gain from change in demographic assumptions (5) –
– loss from change in financial assumptions 5 210
– experience gains (3) (31)
Benefits paid (104) (119)
Reduction in past service costs – (6)
Closing defined benefit obligation 782 869
Changes in the fair value of the Plan assets were as follows:

2018 2017
£m £m
Opening fair value of the Plan assets 1,055 992
Interest on Plan assets 22 32
Actual return on Plan assets less interest on Plan assets (1) 149
Employer contributions 3 1
Benefits paid (104) (119)
Closing fair value of the Plan assets 975 1,055
Contributions paid to the Plan are related party transactions as defined by IAS 24 Related party transactions.
The fair value of the Plan’s assets at the balance sheet date is as follows:
2018 2017
£m £m
Equities 150 237
Corporate bonds 160 150
Gilts 474 474
Annuity contract 174 182
Other 17 12
975 1,055


continued

The Plan’s assets are predominantly invested with Legal and General Investment Management in quoted and liquid funds. The annuity
contract is provided by Pension Insurance Corporation as a result of a buy-in transaction completed by the 3i Pension Plan Trustees during
FY2017. The buy-in, which is a bulk annuity purchase, reduces member longevity risk for those pensioners covered while improving investment
returns over the assets used to fund the purchase. This contract provides an exact match for the member benefits insured and covers two in
five pensioners. The fair value of the insurance policy is calculated using the same assumptions and methodology as used to calculate the
value of the pension liability as at 31 March 2018.
The Plan’s assets do not include any of the Group’s own equity instruments nor any property in use by the Group.
Changes in the asset restriction were as follows:
2018 2017
£m £m
Opening asset restriction 65 71
Interest on asset restriction 2 2
Re-measurements 1 (8)
Closing asset restriction 68 65
The principal assumptions made by the actuaries and used for the purpose of the year end valuation of the Plan were as follows:
2018 2017
Discount rate 2.5% 2.5%
Expected rate of salary increases 5.8% 5.8%
Expected rate of pension increases 0% to 3.4% 0% to 3.4%
Retail Price Index (RPI) inflation 3.3% 3.3%
Consumer Price Index (CPI) inflation 2.3% 2.3%
In addition, it is assumed that members exchange 25% of pension for lump sum at retirement on the conversion terms in place at 31 March
2018 with an allowance for the terms to increase in future. The duration of the Plan’s defined benefit obligation at the accounting date was
around 21 years.
The post-retirement mortality assumption used to value the benefit obligation at 31 March 2018 is 80% of the S2NA Light tables allowing
for improvements in line with the CMI 2015 core projections with a long-term annual rate of improvement of 1.75% (31 March 2017: 80% of
S1NA Light tables allowing for improvements in line with the CMI 2012 core projections with a long-term annual rate of improvement of
1.5%). The life expectancy of a male member reaching age 60 in 2038 (31 March 2017: 2037) is projected to be 34.0 (31 March 2017: 33.7) years
compared to 31.3 (31 March 2017: 31.4) years for someone reaching 60 in 2018.
The sensitivity of the defined benefit surplus to changes in the weighted principal assumptions is:
Impact on retirement benefit surplus

Change in assumption 2018 2017
Discount rate Decrease by 0.1% Decrease by £9 million Decrease by £10 million
Retail Price Index (RPI) inflation Increase by 0.1% Decrease by £8 million Decrease by £7 million
Life expectancy Increase by 1 year Decrease by £17 million Decrease by £13 million
The above sensitivity analysis is based on changing one assumption whilst all others remain constant. In practice this is unlikely to occur
and changes in some of the assumptions may be correlated.

Through its defined benefit plan the Group is exposed to a number of risks, the most significant of which are detailed below:
Asset volatility A fall in the value of the Plan’s assets may reduce the value of the defined benefit surplus and could affect the future
funding requirements. To reduce the volatility of the Plan’s assets, the Trustees have implemented an investment
strategy that reduces the Plan’s equity holdings by switching them to bonds over time. The Plan’s assets are also
diversified across different asset classes and during FY2017 it purchased an annuity contract that is an exact match
for a proportion of the Plan’s liabilities.
Changes in bond yields A decrease in corporate bond yields will increase the Plan’s IAS 19 defined benefit obligation. However, the Plan
holds a proportion of its assets in corporate bonds and so any increase in the defined benefit obligation would
be partially offset by an increase in the value of the Plan’s assets.
Inflation risk The Plan’s defined benefit obligations are linked to inflation, and higher inflation will lead to higher liabilities.
The majority of the Plan’s assets are either unaffected by or only loosely correlated with inflation, meaning that
an increase in inflation could reduce or eliminate the defined benefit surplus.
Life expectancy The Plan’s obligations are to provide benefits for the life of the members, so increases in life expectancy will result
in an increase in the Plan’s defined benefit obligation.
As the Plan was closed to future accrual of benefits by members with effect from 5 April 2011, the Group ceased to make regular contributions
to the Plan in the year to 31 March 2012.
The latest triennial valuation for the Plan was completed on 25 September 2017, based on the position at 30 June 2016. The outcome was an
actuarial deficit of £50 million. This valuation is produced for funding purposes and is calculated on a different basis to the IAS 19 valuation
net asset of £125 million which is shown in the Note above. The actuarial funding valuation is as at 30 June 2016 and considers expected
future returns on the Plan’s assets against the expected liabilities, using a more prudent set of assumptions. The IAS 19 accounting valuation
statements
Audited financial
compares the 31 March 2018 fair value of plan assets and liabilities, with the liabilities calculated based on the expected future payments
discounted using AA corporate bond yields.
As part of the triennial valuation it was agreed that it was not necessary for the Group to make any immediate contributions to the Plan, taking
into account the volatile market conditions at the valuation date (immediately after the UK’s referendum to leave the EU), and improvements
in market conditions and liability management actions implemented since then. The Group has agreed to pay up to £50 million to the Plan
if its gearing increases above 20%, gross debt exceeds £1 billion, or net assets fall below £2 billion. The Plan also benefits from a contingent
asset arrangement, details of which are provided in Note 25. If the gearing, net debt or net asset limits noted are reached, the Group may be
required to increase the potential cover provided by the contingent arrangement until the gearing, gross debt or net assets improve. The next
triennial funding valuation will be based on the Plan’s position as at 30 June 2019.
27 Share-based payments
Accounting policy:
The Group has equity-settled and cash-settled share-based payment transactions with certain employees. Equity-settled schemes are
measured at fair value at the date of grant, which is then recognised in the Consolidated statement of comprehensive income over the
period that employees provide services, generally the period between the start of performance period and the vesting date of the shares.
The number of share awards expected to vest takes into account the likelihood that performance and services conditions included in the
terms of the award will be met.
Fair value is measured by use of an appropriate model which takes into account the exercise price of the option (if any), the current share
price, the risk-free interest rate, the expected volatility of the share price over the life of the option and any other relevant factors. In valuing
equity-settled transactions, no account is taken of any vesting conditions, other than conditions linked to the price of the shares of 3i Group
plc. The charge is adjusted at each balance sheet date to reflect the actual number of forfeitures, cancellations and leavers during the year.
The movement in cumulative charges since the previous balance sheet is recognised in the Consolidated statement of comprehensive
income, with a corresponding entry in equity.
Liabilities arising from cash-settled share-based payment transactions are recognised in the Consolidated statement of comprehensive
income over the vesting period. They are fair valued at each reporting date. The cost of cash-settled share-based payment transactions is
adjusted for the forfeitures of the participants’ rights that no longer meet the plan requirements as well as for early vesting.
Share-based payments are in certain circumstances made in lieu of annual cash bonuses or carried interest payments. The cost of the
share-based payments is allocated either to operating expenses (bonuses) or carried interest depending on the original driver of the
award. Executive Director Long-Term Incentives are allocated to operating expenses.


continued
27 Share-based payments continued

The total cost recognised in the Consolidated statement of comprehensive income is shown below:
2018 2017
£m £m
Share awards included as operating expenses1, 2 8 11
Share awards included as carried interest1 9 7
Cash-settled share awards included within discontinued operations – 2
Cash-settled share awards3 8 5
25 25
1 Credited to equity.
2 For the year ended 31 March 2018, £5 million is shown in Note 5 (2017: £7 million), which is net of a £3 million (2017: £4 million) release from the bonus accrual.
3 Recognised in operating expenses and/or carried interest.
The features of the Group’s share schemes for Executive Directors are described in the Directors’ remuneration report on pages 73 to 82.
To ensure that employees’ interests are aligned with shareholders, a significant amount of variable compensation paid to higher earning
employees is deferred into shares that vest over a number of years. For legal, regulatory or practical reasons certain participants may be
granted “phantom awards” under these schemes, which are intended to replicate the financial effects of a share award without entitling the
participant to acquire shares. The carrying amount of liabilities arising from share-based payment transactions at 31 March 2018 is £10 million
For the share-based awards granted during the year, the weighted average fair value of those options at 31 March 2018 was 753 pence
(31 March 2017: 436 pence).
The main assumptions for the valuation of certain share-based awards with market conditions attached comprised:
Expected
Share price Exercise Expected option life Dividend Risk free
Valuation methodology at issue price volatility in years yield interest rate
Monte Carlo model 916p – 26% 3 – 0.25%
Black Scholes 931p – 31% 0.5-4 2.8% 1.27%
Expected volatility was determined by reviewing share price volatility for the expected life of each option up to the date of grant.
Movements in share awards

The number of share-based awards outstanding as at 31 March are as follows:
2018 2017
Number Number
Outstanding at the start of the year 10,113,875 11,653,772
Granted 1,957,521 3,929,354
Exercised (3,907,171) (5,360,537)
Lapsed (85,779) (108,714)
Outstanding at the end of year 8,078,446 10,113,875
Weighted average remaining contractual life of awards outstanding in years 1.9 2.8
Exercisable at the end of the year 60,254 109,266
The weighted average market price at the date of exercise was 919 pence (2017: 574 pence).
Holdings of 3i Group plc shares

The Group has established an employee benefit trust and the total number of 3i Group plc shares held in this trust at 31 March 2018 was
8 million (31 March 2017: 11 million). Dividend rights have been waived on these shares. The total market value of the shares held in trust based
on the year end share price of 859 pence (31 March 2017: 750 pence) was £67 million (31 March 2017: £85 million).

28 Financial risk management
Introduction
A review of the Group’s objectives, policies and processes for managing and monitoring risk is set out in the Risk management section
on pages 44 to 51. This Note provides further detail on financial risk management, cross-referring to the Risk management section where
applicable, and includes quantitative data on specific financial risks.
The Group is a highly selective investor and each investment is subject to an individual risk assessment through an investment approval
process. The Group’s Investment Committee is part of the overall risk management framework set out in the Risk section. The risk
management processes of the Company are aligned with those of the Group and both the Group and the Company share the same
financial risks.
Financial risks
Concentration risk
3i seeks to diversify risk through significant dispersion of investments by geography, economic sector, asset class and size as well as through
the maturity profile of its investment portfolio. Although 3i does not set maximum limits for asset allocation, it does have a maximum exposure
limit for the cost of new investments. This is detailed in the Investment policy on page 84 in the Governance section. Quantitative data
regarding the concentration risk of the portfolio across geographies can be found in the Segmental analysis in Note 1 and in the 20 large
investments table on pages 148 and 149.
Credit risk
The Group is subject to credit risk on its unquoted investments, cash and deposits. The maximum exposure is the balance sheet amount.
The Group’s cash is held with a variety of counterparties with 93% of the Group’s surplus cash held on demand in AAA rated money market
statements
Audited financial
funds (31 March 2017: 85%).
The credit quality of unquoted investments, which are held at fair value and include debt and equity elements, is based on the financial
performance of the individual portfolio companies. The credit risk relating to these assets is based on their enterprise value and is reflected
through fair value movements. Further detail can be found in the Price risk – market fluctuations disclosure in this Note and the sensitivity
disclosure to changes in the valuation assumptions is provided in the valuation section of Note 12.
Liquidity risk
The liquidity outlook is monitored monthly by management and regularly by the Board in the context of periodic strategic reviews of the
balance sheet. The new investment pipeline and forecast realisations are closely monitored and assessed against our vintage control policy,
as described on page 44 of the Risk management section. The table on the next page analyses the maturity of the Group’s gross
contractual liabilities.


continued
28 Financial risk management continued

Financial liabilities
Due Due
Due between between Due
within 1 and 2 and more than
1 year 2 years 5 years 5 years Total
As at 31 March 2018 £m £m £m £m £m
Gross commitments:
Fixed loan notes 35 35 306 590 966
Committed multi-currency facility 1 1 1 – 3
Carried interest and performance fees payable within one year 55 – – – 55
Trade and other payables 100 – 1 – 101
Total 191 36 308 590 1,125
Gross commitments include principal amounts and interest and fees where relevant. Carried interest and performance fees payable greater
than one year of £105 million (31 March 2017: £124 million) have no stated maturity as they result from investment related transactions and it is
not possible to identify with certainty the timing of when the investments will be sold. Carried interest and performance fees payable greater
than one year are shown after discounting which has an impact of £1 million (31 March 2017: £4 million).
Due Due
Due between between Due
within 1 and 2 and more than
1 year 2 years 5 years 5 years Total
As at 31 March 2017 £m £m £m £m £m
Gross commitments:
Fixed loan notes 35 35 106 825 1,001
Committed multi-currency facility 1 1 2 – 4
Carried interest and performance fees payable within one year 23 – – – 23
Trade and other payables 103 2 1 21 127
Total 162 38 109 846 1,155
Forward foreign exchange contracts

At 31 March 2018, there were no forward foreign exchange contracts in place (31 March 2017: none).
The Company disclosures are the same as those for the Group with the following exceptions; carried interest and performance fees payable
within one year is nil (31 March 2017: nil) and trade and other payables within one year is £527 million (31 March 2017: £506 million).
Market risk
The valuation of the Group’s investment portfolio is largely dependent on the underlying trading performance of the companies within the
portfolio but the valuation and other items in the financial statements can also be affected by interest rate, currency and quoted market
fluctuations. The Group’s sensitivity to these items is set out below.

28 Financial risk management continued
(i) Interest rate risk
On the liability side, the direct impact of a movement in interest rates is limited to any drawings under the committed multi-currency facility as
the Group’s outstanding debt is fixed rate. The sensitivities below arise principally from changes in interest receivable on cash and deposits.
An increase of 100 basis points, based on the closing balance sheet position over a 12-month period, would lead to an approximate increase
in total comprehensive income of £11 million (2017: £10 million increase) for the Group and £9 million (2017: £9 million) for the Company.
In addition, the Group and Company have indirect exposure to interest rates through changes to the financial performance and the valuation
of portfolio companies caused by interest rate fluctuations.
(ii) Currency risk

The Group’s net assets in euro, US dollar, Danish krone and all other currencies combined are shown in the table below. This sensitivity analysis
is performed based on the sensitivity of the Group’s net assets to movements in foreign currency exchange rates assuming a 10% movement
in exchange rates against sterling. The sensitivity of the Company to foreign exchange risk is not materially different from the Group.
The Group considers currency risk on specific investment and realisation transactions. Further information on how currency risk is managed
is provided on page 44.
US Danish
Sterling Euro dollar krone Other Total
As at 31 March 2018 £m £m £m £m £m £m
Net assets 1,390 4,542 862 137 93 7,024
Sensitivity analysis
statements
Audited financial
Assuming a 10% movement in exchange rates against sterling:
Impact on net assets n/a 454 86 14 9 563
US Danish
Sterling Euro dollar krone Other Total
As at 31 March 2017 £m £m £m £m £m £m
Net assets 1,420 3,373 751 147 145 5,836
Sensitivity analysis
Assuming a 10% movement in exchange rates against sterling:
Impact on net assets n/a 337 75 15 14 441
(iii) Price risk – market fluctuations

The Group’s management of price risk, which arises primarily from quoted and unquoted equity instruments, is through the careful
consideration of the investment, asset management and divestment decisions at the Investment Committee. The Investment Committee’s
role in risk management is provided on page 46 in the Risk management section. A 15% change in the fair value of those investments would
have the following direct impact on the Consolidated statement of comprehensive income:
Investment in
investment
Quoted Unquoted entity
investment investment subsidiaries Total
Group £m £m £m £m
At 31 March 2018 52 263 605 920
At 31 March 2017 59 197 522 778
Quoted Unquoted
investment investment Total
Company £m £m £m
At 31 March 2018 52 263 315
At 31 March 2017 59 194 253


continued
29 Related parties and interests in other entities

The Group has various related parties stemming from relationships with limited partnerships managed by the Group, its investment portfolio
(including unconsolidated subsidiaries), its advisory arrangements and its key management personnel. In addition, the Company has related parties
in respect of its subsidiaries. Some of these subsidiaries are held at fair value (unconsolidated subsidiaries) due to the treatment prescribed in IFRS 10.
Related parties
Limited partnerships
The Group manages a number of external funds which invest through limited partnerships. Group companies act as the general partners of these
limited partnerships and exert significant influence over them. The following amounts have been included in respect of these limited partnerships:

2018 2017 2018 2017
Statement of comprehensive income £m £m £m £m
Carried interest receivable 138 276 183 276
Fees receivable from external funds 29 26 – –

2018 2017 2018 2017
Statement of financial position £m £m £m £m
Carried interest receivable 500 356 541 356
Investments
The Group makes investments in the equity of unquoted and quoted investments where it does not have control but may be able to
participate in the financial and operating policies of that company. IFRS presumes that it is possible to exert significant influence when
the equity holding is greater than 20%. The Group has taken the investment entity exception as permitted by IFRS 10 and has not equity
accounted for these investments, in accordance with IAS 28, but they are related parties. The total amounts included for investments where
the Group has significant influence but not control are as follows:

2018 2017 2018 2017
Realised profit over value on the disposal of investments 7 – 11 –
Unrealised profits on the revaluation of investments 36 57 36 51
Portfolio income 9 17 5 7
Profit for the year from discontinued operations – 21 – 4

2018 2017 2018 2017
Unquoted investments 380 429 380 407
Advisory arrangements
The Group acts as an adviser to 3i Infrastructure plc, which is listed on the London Stock Exchange. The following amounts have been
included in respect of this advisory relationship:

2018 2017 2018 2017
Realised profit over value on the disposal of investments 4 – 4 –
Unrealised profits on the revaluation of investments 40 38 40 38
Fees receivable from external funds 29 21 – –
Performance fees receivable 90 4 – –
Dividends 16 14 16 14

2018 2017 2018 2017
Quoted equity investments 345 390 345 390
Performance fees receivable 90 4 – –

29 Related parties and interests in other entities continued
Subsidiaries
Transactions between the Company and its fully consolidated subsidiaries, which are related parties of the Company, are eliminated on
consolidation. Details of related party transactions between the Company and its subsidiaries are detailed below.
Management, administrative and secretarial arrangements
The Company has appointed 3i Investments plc, a wholly-owned subsidiary of the Company incorporated in England and Wales, as investment
manager of the Group. 3i Investments plc received a fee of £13 million (2017: £13 million) from 3i plc, a fellow subsidiary, for this service.
The Company has appointed 3i plc, a wholly-owned subsidiary of the Company incorporated in England and Wales, to provide the Company
with a range of administrative and secretarial services. 3i plc received a fee of £90 million (2017: £89 million) for this service.
Key management personnel

The Group’s key management personnel comprise the members of the Executive Committee and the Board’s non-executive Directors.
The following amounts have been included in respect of these individuals:
Group Group
2018 2017
Statement of comprehensive income £m £m
Salaries, fees, supplements and benefits in kind 4 5
Cash bonuses 2 4
Carried interest and performance fees payable 25 43
statements
Audited financial
Share-based payments 9 12
Termination payments – 1
Group Group
2018 2017
Statement of financial position £m £m
Bonuses and share-based payments 15 14
Carried interest and performance fees payable within one year 15 4
Carried interest and performance fees payable after one year 80 68
No carried interest was paid or accrued for the Executive or non-executive Directors (2017: nil). Carried interest paid in the year to other key
management personnel was £1 million (2017: £12 million).
Unconsolidated structured entities

The application of IFRS 12 requires additional disclosure on the Group’s exposure to unconsolidated structured entities.
The Group has exposure to a number of unconsolidated structured entities as a result of its investment activities across its Private Equity and
Infrastructure business lines. The nature, purpose and activities of these entities are detailed below along with the nature of risks associated
with these entities and the maximum exposure to loss.
Closed-end limited partnerships
The Group manages a number of closed-end limited partnerships, which are either Private Equity or Infrastructure focused, in return for
a management fee. The purpose of these partnerships is to invest in Private Equity or Infrastructure investments for capital appreciation.
Limited Partners, which in some cases may include the Group, finance these entities by committing capital to them and cash is drawn down
or distributed for financing investment activity.
The Group’s attributable stakes in these entities are held at fair value, fees receivable are recognised on an accruals basis and carried interest
is accrued when relevant performance hurdles are met.
The risk and maximum exposure to loss arising from the Group’s involvement with these entities are summarised below:
Carrying amount
Maximum
Assets Liabilities Net loss exposure
Balance sheet line item of asset or liability £m £m £m £m
Carried interest receivable 500 – 500 500
Total 500 – 500 500
At 31 March 2017, the carrying amount of assets and maximum loss exposure of carried interest receivable was £356 million. The carrying
amount of liabilities was nil.
At 31 March 2018, the total assets under management relating to these entities was £3.9 billion (31 March 2017: £3.0 billion). The Group earned
fee income of £29 million (2017: £26 million) and carried interest of £138 million (2017: £276 million) in the year.

continued
29 Related parties and interests in other entities continued

Regulatory information relating to fees
3i Investments plc acts as the AIFM of 3i Group plc. In performing the activities and functions of the AIFM, the AIFM or another 3i company
may pay or receive fees, commissions or non-monetary benefits to or from third parties of the following nature:
Transaction fees
3i companies receive monitoring and directors’ fees from portfolio companies. The amount is agreed with the portfolio company at the time
of the investment but may be re-negotiated. Where applicable, 3i may also receive fees on the completion of transactions such as acquisitions,
refinancings or syndications either from the portfolio company or a co-investor. Transaction fees paid to 3i are included in portfolio income.
Payments for third-party services
3i companies may retain the services of third-party consultants; for example for an independent director or other investment management
specialist expertise. The amount paid varies in accordance with the nature of the service and the length of the service period and is usually,
but not always, paid/reimbursed by the portfolio companies. The payment may involve a flat fee, retainer or success fee. Such payments,
where borne by 3i companies, are usually included in portfolio income.
Payments for services from 3i companies
One 3i company may provide investment advisory services to another 3i company and receive payment for such services.
30 Subsidiaries and related undertakings

IFRS 10 deems control, as opposed to equity ownership, as the key factor when determining what meets the definition of a subsidiary.
If a group is exposed to, or has rights to, variable returns from its involvement with the investee, then under IFRS 10 it has control. This is
inconsistent with the UK’s Companies Act 2006, where voting rights being greater than 50% is the key factor when identifying subsidiaries.
Under IFRS 10, 23 of the Group’s portfolio company investments are considered to be accounting subsidiaries. As the Group applies the
investment entity exception available under IFRS 10, these investee companies are classified as investment entity subsidiaries.
The Companies Act 2006 requires disclosure of certain information about the Group’s related undertakings. Related undertakings are
subsidiaries, joint ventures, associates and other significant holdings. In this context, significant means either a shareholding greater than
or equal to 20% of the nominal value of any class of shares or a book value greater than 20% of the Group’s assets.
The Company’s related undertakings at 31 March 2018 are listed below:
Description Holding/share class Footnote

Subsidiaries
3i Holdings plc 100% ordinary shares 1
3i Investments plc 100% ordinary shares 1
3i plc 100% ordinary shares 1
3i International Holdings 100% ordinary shares 1
Investors in Industry plc 100% ordinary shares/cumulative preference shares 1
Mayflower GP Limited 100% ordinary shares 1
3i Assets LLP 100% partnership interest 1
3i General Partner No 1 Limited 100% ordinary shares 1
3i Corporation 100% ordinary shares 2
3i DM US (SLF) LP 100% partnership interest 3
3i Deutschland Gesellschaft für Industriebeteiligungen mbH 100% ordinary shares 4
Gardens Nominees Limited 100% ordinary shares 1
Gardens Pension Trustees Limited 100% ordinary shares 1
3i DM GIF 2015 GP Limited 100% ordinary shares 1
3i DM Europe Limited 100% ordinary shares 1
3i Europe plc 100% ordinary shares 1
3i Nominees Limited 100% ordinary shares 1
3i PVLP Nominees Limited 100% ordinary shares 1
3i Group Investments LP 100% partnership interest 1
3i APTech Nominees Limited 100% ordinary shares 1
3i APTech GP Limited 100% ordinary shares 1
Mayflower LP 100% partnership interest 5

30 Subsidiaries and related undertakings continued
3i Osprey GP Limited 100% ordinary shares 1
3i Investments GP Limited 100% ordinary shares 1
3i IIF GP Limited 100% ordinary shares 5
3i Nordic plc 100% ordinary shares 1
3i GP 2004 Limited 100% ordinary shares 3
3i Networks Finland Limited 100% ordinary shares 1
3i Ademas LP 100% partnership interest 1
The 3i Group Employee Trust n/a 6
3i International Services plc 100% ordinary shares 1
3i EFIV Nominees Limited 100% ordinary shares 1
3i EFV Nominees A Limited 100% ordinary shares 1
3i EFV Nominees B Limited 100% ordinary shares 1
3i India Private Limited 100% ordinary shares 7
3i Sports Media (Mauritius) Limited 90% ordinary shares 8
3i Asia Limited 100% ordinary shares 8
3i EFV GP Limited 100% ordinary shares 1
3i EF4 GP Limited 100% ordinary shares 1
statements
Audited financial
3i srl 100% ordinary shares 9
3i Infraprojects (Mauritius) Limited 100% ordinary shares 8
3i Research (Mauritius) Limited 100% ordinary shares 8
IIF SLP GP Limited 100% ordinary shares 3
3i Buyouts 2010 A LP 82% partnership interest 1
3i Buyouts 2010 B LP 75% partnership interest 1
3i Buyouts 2010 C LP 50% partnership interest 1
GP CCC 2010 Limited 100% ordinary shares 3
3i GC GP Limited 100% ordinary shares 1
3i Growth Capital A LP 100% partnership interest 1
3i Growth Capital G LP 100% partnership interest 1
3i Growth Capital (USA) D L.P. 100% partnership interest 5
3i Growth 2010 LP 85% partnership interest 1
3i Growth USA 2010 L.P. 83% partnership interest 5
3i Growth Capital (USA) P L.P. 100% partnership interest 5
3i GC Holdings Ref 2 s.a.r.l 50% ordinary shares 10
Strategic Investments FM (Mauritius) Alpha Limited 70% ordinary shares 8
3i GC Nominees A Limited 100% ordinary shares 1
3i GC Nominees B Limited 100% ordinary shares 1
Ebrain 1 Limited 100% ordinary shares 36
3i India Infrastructure B LP 99% partnership interest 1
3i Pan European Growth Capital 2005-06 LP 80% partnership interest 1
3i Asia Pacific 2004-06 LP 100% partnership interest 1
3i UK Private Equity 2004-06 LP 80% partnership interest 1
3i Pan European Buyouts 2004-06 LP 79% partnership interest 1
3i 2004 GmbH & Co KG 100% partnership interest 4
3i General Partner 2004 GmbH 100% ordinary shares 4
Pan European Buyouts Co-invest 2006-08 LP 100% partnership interest 1
Pan Euro Buyouts (Dutch) A Co-invest 2006-08 LP 100% partnership interest 1


continued

3i US Growth Partners LP 94% partnership interest 5
3i US Growth Corporation 100% ordinary shares 11
Global Growth Co-invest 2006-08 LP 100% partnership interest 5
Pan European Growth Co-invest 2006-08 LP 100% partnership interest 1
Pan European Growth (Dutch) A Co-invest 2006-08 LP 100% partnership interest 1
US Growth Co-invest 2006-08 LP 72% partnership interest 1
Asia Growth Co-invest 2006-08 LP 100% partnership interest 1
3i GP 2006-08 Limited 100% ordinary shares 1
Pan European Buyouts (Nordic) Co-invest 2006-08 LP 100% partnership interest 1
Pan European Growth (Nordic) Co-invest 2006-08 LP 100% partnership interest 1
3i Buyouts 08-10 A LP 99% partnership interest 1
3i Buyouts 08-10 B LP 98% partnership interest 1
3i Buyouts 08-10 C LP 98% partnership interest 1
3i Growth 08-10 LP 99% partnership interest 1
GP CCC 08-10 Limited 100% ordinary shares 3
3i GP 08-10 Limited 100% ordinary shares 1
3i Growth (Europe) 08-10 LP 99% partnership interest 1
3i PE 2013-16A LP 100% partnership interest 1
3i PE 2013-16C LP 100% partnership interest 1
3i GP 2013 Ltd 100% ordinary shares 1
GP 2013 Ltd 100% ordinary shares 3
3i BIFM Investments Limited 100% ordinary shares 1
BIIF GP Limited 100% ordinary shares 1
BEIF II Limited 100% ordinary shares 1
BAM General Partner Limited 100% ordinary shares 1
BEIF Management Limited 100% ordinary shares 1
3i BIIF GP LLP 100% partnership interest 1
3i BEIF II GP LLP 100% partnership interest 1
3i PE 2016-19 A LP 100% partnership interest 1
3i Managed Infrastructure Acquisitions GP (2017) LLP 100% partnership interest 1
3i Managed Infrastructure Acquisitions GP Limited 100% ordinary shares 1
3i 2016 Gmbh & Co. KG 100% partnership interest 4
3i European Operational Projects GmbH & Co. KG 100% partnership interest 4
Crown Bidco B.V. 100% ordinary shares 12
Crown Holdco B.V. 100% ordinary shares 12
Crown Midco B.V. 100% partnership interest 12
GP 2016 Limited 100% ordinary shares 3
3i European Operational Projects GP s.a.r.l 100% ordinary shares 10
3i SCI Holdings Limited 100% ordinary shares 1
3i North America Infrastructure, LLC 80% partnership interest 38
3i Abaco ApS 100% ordinary shares 39

Associates
3i Growth Carry A LP 25% partnership interest 3
3i Growth Carry B LP 25% partnership interest 3
3i GC Holdings Ref 1 S.a.r.l 36% ordinary shares 10
Moon Topco GmbH 49% ordinary shares 13
Layout Holdco A/S 49% ordinary shares 14
Fuel Holdco SA 43% ordinary shares 10
Boketto Holdco Limited 47% ordinary shares 15
Klara HoldCo S.A. 47% ordinary shares 10
Colorado Holdco Limited 48% ordinary shares 16
Shield Holdco LLC 49% ordinary shares 17
Q Holdco Ltd 26% ordinary shares 18
3i Infrastructure plc 34% ordinary shares 19
ACR Capital Holdings Pte Ltd 25% ordinary shares 20
Peer Holding 1 BV 43% ordinary shares 21
AES Engineering Ltd 43% ordinary shares 22
Chrysanthes 1 S.a.r.l 49% ordinary shares 10
statements
Audited financial
Mito Holdings S.a.r.l 47% ordinary shares 10
Carter Thermal Industries Limited 34% ordinary shares 23
Echezeaux Investissement SA 40% ordinary shares 10
Harper Topco Limited 42% ordinary shares 24
MDY Healthcare Limited 27% ordinary shares 25
OneMed AB 29% ordinary shares 26
Orange County Fundo de Investmento EM Particpacoes 39% equity units 27
Permali Gloucester Limited 32% ordinary shares 28
Scandlines Holding ApS 48% ordinary shares 29
SLR Management Limited 21% ordinary shares 30
Tato Holdings Limited 27% ordinary shares 31
Lilas 1 SAS 49% ordinary shares 32
Indiareit Offshore Fund (Mauritius) 20% partnership interest 33
Nimbus Communications Ltd 30% ordinary shares 34
Artisan du Luxe Holding Limited 26% ordinary shares 35
Asia Strategic MedTech Holdings (Mauritius) Limited 36% ordinary shares 8
Aurela TopCo Gmbh 43% ordinary shares 37
Retina Holdco BV 49% ordinary shares 41
C Medical Holdco, LLC 49% ordinary shares 2
3i India Infrastructure Holdings Ltd 21% ordinary shares 8
Pearl Group Holdings Limited 44% ordinary shares 40
Racing Topco GmbH 49% ordinary shares 42


continued

There are no joint ventures or other significant holdings. The 20 large portfolio companies by fair value are detailed on pages 148 and 149.
The combination of the table above and that on pages 148 and 149 is deemed by the Directors to fulfil the requirements under IFRS 12 on the
disclosure of material subsidiaries.
Footnote Address
1 16 Palace Street, London, SW1E 5JD, UK
2 1 Grand Central Place East, 42nd Street, Suite 4100 New York, NY 10165, USA
3 50 Lothian Road, Festival Square, Edinburgh, EH3 9WJ, UK
4 OpernTurm, Bockenheimer Landstresse 2-4, 60306 Frankfurt am Main, Germany
5 Lime Grove House, Green Street, St Helier, JE1 2ST, Jersey
6 Computershare, Queensway House, Hilgrove Street, St Helier, JE1 1ES, Jersey
7 Level 7, The Capital B-Wing, Bandra Kurla Complex, Bandra East, Mumbai, 400051, India
8 Ebene Esplanade, 24 Cybercity, Ebene, Mauritius
9 Via Orefici 2, 20123 Milan, Italy
10 9 Rue Sainte Zithe, L-2763 Luxembourg, Grand Duchy of Luxembourg
11 2711 Centervilla Road, Suite 4000, Wilmington, DE 19808, New Castle, USA
12 Cornelis Schuytstraat 72, 1071JL Amsterdam, Netherlands
13 Gruber Str. 48, 85586 Poing, Germany
14 Mørupvej 16 Mørup 7400 Herning, Denmark
15 New Mill, New Mill Lane, Witney, Oxfordshire, OX29 9SX, UK
16 Aspen Building, Apex Way, Hailsham, East Sussex, BN27 3WA, UK
17 400 Madison Avenue, Suite 9C, New York, NY 10017, USA
18 Berger House (2nd Floor), 36-38 Berkeley Square, London, W1J 5AE, UK
19 12 Castle Street, St Helier, JE2 3RT, Jersey
20 6 Temasek Blvd, Singapore 038986, Singapore
21 Perenmarkt 15, Zwaagdijk East, 1681PG, Netherlands
22 Bradmarsh Business Park, Mill Close, Rotherham, South Yorkshire, S60 1BZ, UK
23 Redhill Rd, Birmingham, B25 8EY, UK
24 5th Floor, 6 St Andrew Street, London, EC4A 3AE, UK
25 First Floor, Quay 2, 139 Fountainbridge, Edinburgh, EH3 9QG, UK
26 Svärdvägen 3 B, Danderyd, 182 33, Sweden
27 Av. Ataulfo de Paiva, 1.100, 7th Floor, Leblon, Rio de Janeiro, RJ 22440-035, Brazil
28 Bristol Rd, Gloucester, GL1 5TT, UK
29 35 Great St Helen’s, London, EC3A 6AP, UK
30 7 Wornal Park Menmarsh Road, Worminghall, Aylesbury, Buckinghamshire, HP18 9JX, UK
31 Thor Group Ltd, Bramling House, Bramling, Canterbury, Kent, CT3 1NB, UK
32 Park a Eco Vendee Sud Loire, 85600, Bouffere, France
33 IFS Court, TwentyEight, Cybercity, Ebene, Mauritius
34 44 Oberoi Complex, Andthei (West), Mumbai, India
35 42 KCS Chambers, PO BOX 4051, Road Town, Tortola, British Virgin Islands
36 47 Esplanade, St Helier, JE1 0BD, Jersey
37 Seelbüde 13, 36110 Schlitz, Germany
38 1209 Orange Street, Wilmington, Delaware 19801, USA
39 Holbergsgade 14, 2tv, 1057, Copenhagen, Denmark
40 1 Georges Square, Bath Street, Bristol, BS1 6BA, UK
41 Papland 21, 4206CK Gorinchem, Netherlands
42 Hunsrückstraße 1, 53842 Frankfurt am Main, Germany

Independent Auditor’s report to the members of 3i Group plc
Opinion
In our opinion:
• 3i Group plc’s Group financial statements and Parent company financial statements (the “financial statements”) give a true and fair view
of the state of the Group’s and of the Parent company’s affairs as at 31 March 2018 and of the Group’s profit for the year then ended;
• the Group financial statements have been properly prepared in accordance with International Financial Reporting Standards as adopted
by the European Union (“IFRSs as adopted by the EU”);
• the Parent company financial statements have been properly prepared in accordance with IFRSs as adopted by the EU as applied in
accordance with the provisions of the Companies Act 2006; and
• the financial statements have been prepared in accordance with the requirements of the Companies Act 2006, and, as regards the Group
financial statements, Article 4 of the IAS Regulation.
We have audited the financial statements of 3i Group plc which comprise:
Group Parent company

Consolidated statement of comprehensive income for the year to Company statement of financial position as at 31 March 2018
31 March 2018
Consolidated statement of financial position as at 31 March 2018 Company statement of changes in equity for the year to 31 March 2018
Consolidated statement of changes in equity for the year to Company cash flow statement for the year to 31 March 2018
31 March 2018
Consolidated cash flow statement for the year to 31 March 2018
statements
Audited financial
Related notes 1 to 30 to the financial statements
The financial reporting framework that has been applied in their preparation is applicable law and IFRSs as adopted by the EU and, as regards
the Parent company financial statements, as applied in accordance with the provisions of the Companies Act 2006.
Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under
those standards are further described in the Auditor’s responsibilities for the audit of the financial statements section of our report below.
We are independent of the Group and Parent company in accordance with the ethical requirements that are relevant to our audit of the
financial statements in the UK, including the FRC’s Ethical Standard as applied to listed public interest entities, and we have fulfilled our other
ethical responsibilities in accordance with these requirements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Use of our report

This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006.
Our audit work has been undertaken so that we might state to the company’s members those matters we are required to state to them in an
auditor’s 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 and the company’s members as a body, for our audit work, for this report, or for the opinions we have formed.
Conclusions relating to principal risks, going concern and viability statement

We have nothing to report in respect of the following information in the annual report, in relation to which the ISAs (UK) require us to report
to you whether we have anything material to add or draw attention to:
• the disclosures in the annual report set out on pages 47 to 51 that describe the principal risks and explain how they are being managed
or mitigated;
• the directors’ confirmation set out on page 47 in the annual report that they have carried out a robust assessment of the principal risks
facing the entity, including those that would threaten its business model, future performance, solvency or liquidity;
• the directors’ statement set out on page 89 in the financial statements about whether they considered it appropriate to adopt the going
concern basis of accounting in preparing them, and their identification of any material uncertainties to the entity’s ability to continue to
do so over a period of at least twelve months from the date of approval of the financial statements;
• whether the directors’ statement in relation to going concern required under the Listing Rules in accordance with Listing Rule 9.8.6R(3)
is materially inconsistent with our knowledge obtained in the audit; or
• the directors’ explanation set out on page 47 in the annual report as to how they have assessed the prospects of the entity, over what
period they have done so and why they consider that period to be appropriate, and their statement as to whether they have a reasonable
expectation that the entity will be able to continue in operation and meet its liabilities as they fall due over the period of their assessment,
including any related disclosures drawing attention to any necessary qualifications or assumptions.


continued
Overview of our audit approach

Key audit matters • Incorrect valuation of unquoted proprietary investments.
• Incorrect calculation of carried interest.
• Incorrect recognition of portfolio income and of realised profits on disposal of investments.
The first two risks are considered to be significant risks, consistent with the 2017 audit.
Audit scope • The Group is principally managed from one location in London. All core functions, including finance and operations, are
located in London. The Group operates seven international offices, which are primarily responsible for deal origination
and investment portfolio monitoring.
• The Group comprises 87 consolidated subsidiaries and 62 investment entity subsidiaries. Monitoring and control over
the operations of these subsidiaries, including those located overseas, is centralised in London.
• The London based Group audit team performed direct audit procedures on all items material to the Group financial
statements. Our audit sample covered 99% of the investment portfolio and 99% of carried interest accruals.
This approach is consistent with the 2017 audit.
Materiality • Overall Group materiality is £70m (2017: £58m) which represents 1% of net assets.
This approach is consistent with the 2017 audit.
Key audit matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements of
the current period and include the most significant assessed risks of material misstatement (whether or not due to fraud) that we identified.
These matters included those which had the greatest effect on: the overall audit strategy, the allocation of resources in the audit; and directing
the efforts of the engagement team. These matters were addressed in the context of our audit of the financial statements as a whole, and in
our opinion thereon, and we do not provide a separate opinion on these matters.

Risk Our response to the risk
Group and Parent company risk Our procedures extended to testing 99% of the related balance.
Incorrect valuation of unquoted proprietary investments We obtained an understanding of management’s processes and
(£5,806m, PY comparative £4,782m) controls for determining the fair valuation of unquoted proprietary
Refer to the Audit and Compliance Committee report (pages 66 to investments. This included discussing with management the
69); Significant accounting policies (page 101); and Notes 10, 11 valuation governance structure and protocols around their oversight
and 12 of the financial statements (pages 112 to 116) of the valuation process and corroborating our understanding by
attending Valuations Committee meetings. We have identified key
The proprietary investment portfolio comprises a number of controls in the process, assessed the design adequacy and tested the
unquoted securities. In the Consolidated statement of financial operating effectiveness of those controls. We were able to rely on
position these are shown both as Investments (which are held directly controls over portfolio company and comparable company data used
by consolidated subsidiaries of the Group and Parent Company), in the valuation of unquoted investments.
and as Investments in investment entities (which are typically limited
We compared management’s valuation methodology to IFRS and the
partnerships and other holding structures). In the Company
IPEV guidelines. We sought explanations from management where
statement of financial position these are shown both as investments
there were judgments applied in its application of the guidelines
(which are held directly by the Parent Company), and as Investments
and assessed their appropriateness.
in investment entities (which are included within the Interests in
Group entities line item). With the assistance of our valuations specialists, we formed an
independent range for the key assumptions used in the valuation
The Group adopts a valuation methodology based on the
of a sample of unquoted investments, with reference to the relevant
International Private Equity and Venture Capital Valuation 2015 (IPEV)
industry and market valuation considerations. We derived a range of
guidelines, in conformity with IFRS 13 – Fair Value Measurements
fair values using our assumptions and other qualitative risk factors.
(IFRS 13). Owing to the unquoted and illiquid nature of these
We compared these ranges with management’s assumptions, and
investments, the assessment of fair valuation is subjective and
discussed our results with both management and the Valuations
requires a number of significant and complex judgments to be made
Committee.
by management. The exit value will be determined by the market at
statements
Audited financial
the time of realisation and therefore despite the valuation policy With respect to unquoted investments in the private equity business
adopted and judgments made by management, the final sales value line, on a sample basis we corroborated key inputs in the valuation
may differ materially from the valuation at the year end date. models, such as earnings and net debt to source data. We also
performed the following procedures on key judgments made by
There is the risk that inaccurate judgments made in the assessment
management in the calculation of fair value:
of fair value, in particular in respect of; earnings multiples, the
application of liquidity discounts, calculation of discount rates and • assessed the suitability of the comparable companies used in the
the estimation of future maintainable earnings, could lead to the calculation of the earnings multiples;
incorrect valuation of the unquoted proprietary investment portfolio. • challenged management on the applicability of adjustments
In turn, this could materially misstate the value of the Investment
made to earnings multiples by obtaining rationale and supporting
portfolio in the Consolidated statement of financial position, the
Gross investment return and Total return in the Consolidated evidence for adjustments made;
statement of comprehensive income, and the Net asset value per • performed corroborative calculations to assess the
share. appropriateness of discount rates; and
There is also the risk that management may influence the significant • discussed with management the adjustments made to
judgments and estimations in respect of unquoted proprietary calculate future maintainable earnings and corroborated this to
investment valuations in order to meet market expectations of the supporting documentation.
overall Net asset value of the Group.
We checked the mathematical accuracy of the valuation models on
The risk has neither increased nor decreased in the current year. a sample basis. We recalculated the unrealised profits on the
revaluation of investments impacting the Consolidated statement
of comprehensive income.
We discussed with management the rationale for any differences
between the exit prices of investments realised during the year and
the prior year fair value, to further verify the reasonableness of the
current year valuation models and methodology adopted by
management.
We performed a site visit, accompanied by our Valuations Specialists,
to the most material asset in the portfolio, which enabled us to
corroborate our understanding of, and gain specific insights into,
the asset.
Key observations communicated to the Audit and Compliance Committee:
The valuation of the unquoted proprietary investment portfolio is determined to be within a reasonable range of fair values. All valuations
tested are materially in accordance with IFRS and the International Private Equity and Venture Capital Valuation Guidelines (IPEV Guidelines)
– December 2015. Reasonable inputs to the valuations were used. Based on our procedures performed we had no material matters to report
to the Audit and Compliance Committee.


continued

Group and Parent company risk Our procedures extended to testing 99% of the related balance.
Incorrect calculation of carried interest (carried interest and We obtained an understanding of management’s processes and
performance fees receivable £596m, PY comparative £366m; controls for the calculation of carried interest by performing
carried interest and performance fees payable £870m, PY walkthrough procedures, and discussing with management the
comparative £685m) governance structure and protocols around their oversight of the
Refer to the Audit and Compliance Committee report (pages 66 to carried interest arrangements. We adopted a substantive approach
69); Significant accounting policies (page 101); and Notes 13 and 14 to our testing.
of the financial statements (pages 116 to 118) We agreed a sample of calculation methodologies to their respective
terms and conditions set out in the underlying agreements.
Carried interest receivable is an accrual of the share of the profits
from funds managed by the Group on behalf of third parties. Carried Our audit procedures on the fair value of the underlying investments
interest payable is an accrual of amounts payable to investment are described in the preceding risk section. We performed analytical
executives in respect of the returns on successful investments both procedures comparing the performance of the reference investments
from Group proprietary capital and third-party capital. Carried in each fund or scheme, taking into account the investment
interest is only paid on realisation of investments. realisations, to the related accruals in the financial statements.
Carried interest receivable and payable is calculated as a percentage On a sample basis we:
of the profits that would be achieved, if the investments within each • recalculated the returns on the fund or scheme to test that hurdles
fund or scheme were realised at fair value at the year-end date, or performance conditions had been met where carried interest
subject to the relevant hurdle rates or performance conditions being was being accrued;
met. • recalculated the carried interest accruals for mathematical accuracy
Judgment is required in determining the fair value of the investment and agreed the investment fair values to our audit work on the
portfolio (as described in the preceding risk section) and therefore, fair value of the investment portfolio, the fee rates to the relevant
whether hurdles or performance conditions have been achieved. agreements and realised gains to our audit work on realised profits;
There are multiple carried interest arrangements in place and • determined the reasonableness of investment exit dates with
investment executives may participate in more than one scheme. reference to our audit work on the fair value of the investment
These arrangements have been structured over multiple periods and portfolio and our understanding of the life cycle of the relevant
include different pools of investments. The process of calculating investments, and then compared this against the anticipated
carried interest receivable and payable relies on manual calculations. payment dates used to discount the carried interest accrual; and
Due to the complexities inherent in the arrangements and the • ensured the resulting cash flow was as a result of a triggering event
manual nature of the recognition process, there is a risk that the such as a realisation or a re-finance by verifying the cash flow to
carried interest calculations are incorrectly calculated or recognised bank statements (and in the case of carry payable to award letters
in the wrong period. sent to investment executives).
Carried interest is recorded in the Consolidated statement of
financial position as Carried interest and performance fees receivable
or Carried interest and performance fees payable, and is also
recorded within Investments in investment entity subsidiaries.
The risk has neither increased nor decreased in the current year.
Our audit procedures did not identify any matters regarding the recognition of carried interest in accordance with IFRSs as adopted by the
EU. All calculations tested have been performed materially in accordance with contractual terms. Based on our procedures performed we
had no material matters to report to the Audit and Compliance Committee.

Group and Parent company risk Our procedures extended to testing 81% of the related amount.
Incorrect recognition of portfolio income and of realised profits We obtained an understanding of the processes and controls around
on disposal of investments (£364m, PY comparative £138m) accounting for portfolio income and realised gains by performing
Refer to the Audit and Compliance Committee report (pages 66 walkthroughs of the processes. We identified key controls in the
to 69); Significant accounting policies (page 102); and Note 2 of processes, assessed design adequacy and tested the operating
the financial statements (page 107) effectiveness of those controls.
We performed detailed testing on a sample of transactions in order
Portfolio income is directly attributable to the return from
to confirm whether they had been appropriately recorded in the
investments. This includes: dividends from investee companies and
Consolidated statement of comprehensive income.
interest income from the investment portfolio.
For portfolio income, on a sample basis, we:
Realised profits originate from disposals of investments. Realised
profits are calculated as the difference between the net proceeds • agreed dividends from investee companies to the dividend notice;
and the investment’s fair value at the beginning of the year. and
Market expectations and revenue based targets may place pressure • recalculated interest income based on the terms of the
on management to influence the recognition of portfolio income or underlying agreements.
realised gains. This may result in overstatement or deferral of For all samples selected for testing we verified that revenue is
revenues to assist in meeting current or future targets or recognised when the rights to receive the income have been
expectations. established.
Where income is recorded in a consolidated subsidiary, in the For realised gains, on a sample basis, we:
Consolidated statement of comprehensive income it is recorded as • analysed the contract and terms of the sale to determine whether
Portfolio Income and Realised profits/(losses) over value on the the Group has met the stipulated requirements, confirming that
disposal of investments. Where the income is recorded in an the net proceeds and therefore the realised profits over opening
investment entity subsidiary, it is recorded as Fair value movements value can be reliably measured; and
statements
Audited financial
on investment entity subsidiaries. • re-performed management’s calculations to determine
The risk has neither increased nor decreased in the current year. mathematical accuracy and confirmed the collection of the net
proceeds by agreeing the cash receipt to bank statements.
For all samples selected for testing we verified that revenue is
recognised when the significant risks and rewards of ownership have
been transferred.
In order to address the risk of cut-off, we performed enquiries of
management, read minutes of meetings throughout the year and
subsequent to the year end, and performed journal entry testing in
order to address the risk of management override of controls to
overstate or defer revenue recognition.
Our audit procedures did not identify any material matters regarding the recognition of portfolio income and of realised profits on disposal
of investments. All transactions tested have been materially recognised in accordance with contractual terms and IFRSs as adopted by the
EU. Based on our procedures performed we had no material matters to report to the Audit and Compliance Committee.
In the prior year, our auditor’s report included a key audit matter in relation to incorrect accounting treatment of the sale of the Debt
Management business and calculation of the proﬁt on disposal. This key audit matter is no longer applicable for the current year, as the
Debt Management business was sold during the prior year and there are no discontinued operations as at 31 March 2018.
An overview of the scope of our audit

Tailoring the scope
Our assessment of audit risk, our evaluation of materiality and our allocation of performance materiality determine our audit scope for each
entity within the Group. Taken together, this enables us to form an opinion on the Consolidated financial statements. We take into account
size, risk profile, the organisation of the Group and effectiveness of Group-wide controls, changes in the business environment and other
factors such as recent Internal audit results when assessing the level of work to be performed at each entity.
The investment portfolio balance is the most material part of the Consolidated statement of financial position. Monitoring and control over
the valuation of investments is exercised by management centrally in London, and as such is audited wholly by the London based Group audit
team. Monitoring and control over the operations of the subsidiaries within the Group, including those located overseas, is centralised in
London. The Group audit team performed all the work necessary to issue the Group and Parent company audit opinion, including undertaking
all of the audit work on the risks of material misstatement identified above.
Involvement with component teams

All audit work performed for the purposes of the audit was undertaken by the Group audit team.


continued
Our application of materiality

We apply the concept of materiality in planning and performing the audit, in evaluating the effect of identified misstatements on the audit and
in forming our audit opinion.
Materiality
The magnitude of an omission or misstatement that, individually or in the aggregate, could reasonably be expected to influence the economic
decisions of the users of the financial statements. Materiality provides a basis for determining the nature and extent of our audit procedures.
We determined materiality for the Group to be £70 million (2017: £58 million), which is 1% (2017: 1%) of net assets. We believe that net assets
provides us with a consistent year on year basis for determining materiality, and is the most relevant measure to the stakeholders of the entity.
We determined materiality for the Parent Company to be £66 million (2017: £41 million), which is 1% (2017: 1%) of net assets.
We calculated materiality during the planning stage of the audit and then during the course of our audit, we reassessed initial materiality
based on 31 March 2018 net asset value, and adjusted our audit procedures accordingly
Performance materiality
The application of materiality at the individual account or balance level. It is set at an amount to reduce to an appropriately low level the
probability that the aggregate of uncorrected and undetected misstatements exceeds materiality.
On the basis of our risk assessments, together with our assessment of the Group’s overall control environment, our judgment was that
performance materiality was 50% (2017: 50%) of our planning materiality, namely £35m (2017: £29m). We have set performance materiality at
this percentage due to the judgmental nature of the valuations in the Consolidated statement of financial position and the relative value of
transactions recorded in the other primary statements, to ensure that total uncorrected and undetected audit differences in all accounts did
not exceed our materiality of £70m.
Reporting threshold
An amount below which identified misstatements are considered as being clearly trivial.
We agreed with the Audit and Compliance Committee that we would report to them all uncorrected audit differences in excess of £3.5m
(2017: £2.9m), which is set at 5% of planning materiality, as well as differences below that threshold that, in our view, warranted reporting on
qualitative grounds.
We evaluate any uncorrected misstatements against both the quantitative measures of materiality discussed above and in light of other
relevant qualitative considerations in forming our opinion.
Other information
The other information comprises the information included in the annual report (set out on pages 1 to 90 and 147 to 156), including the
Strategic report (including sections on: Introduction, Performance highlights, Chairman’s statement, Chief Executive’s statement, Action,
Our business at a glance, Our business model, Our strategic objectives, Key performance indicators, Private Equity, Infrastructure, Financial
review, Investment basis, Reconciliation of Investment basis and IFRS, Alternative Performance Measures, Risk management, Principal risks and
mitigations and Sustainability), Directors’ report (including sections on: Chairman’s introduction, Board of Directors and Executive Committee,
Nominations Committee report, Audit and Compliance Committee report, Valuations Committee report, Relations with shareholders and
Additional statutory and corporate governance information), Directors’ remuneration report and Portfolio and other information (including
sections on: 20 Large investments, Portfolio valuation – an explanation, Information for shareholders and Glossary) sections, other than the
financial statements and our auditor’s report thereon. The directors are responsible for the other information.
Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in this
report, we do not express any form of assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether
the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to
be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether
there is a material misstatement in the financial statements or a material misstatement of the other information. If, based on the work we have
performed, we conclude that there is a material misstatement of the other information, we are required to report that fact.
We have nothing to report in this regard.

In this context, we also have nothing to report in regard to our responsibility to specifically address the following items in the other
information and to report as uncorrected material misstatements of the other information where we conclude that those items meet the
following conditions:
• Fair, balanced and understandable (set out on page 90) – the statement given by the directors that they consider the annual report
and accounts taken as a whole is fair, balanced and understandable and provides the information necessary for shareholders to assess the
Group’s performance, business model and strategy, is materially inconsistent with our knowledge obtained in the audit; or
• Audit committee reporting (set out on pages 66 to 69) – the section describing the work of the audit committee does not appropriately
address matters communicated by us to the audit committee is materially inconsistent with our knowledge obtained in the audit; or
• Directors’ statement of compliance with the UK Corporate Governance Code (set out on page 85) – the parts of the directors’
statement required under the Listing Rules relating to the company’s compliance with the UK Corporate Governance Code containing
provisions specified for review by the auditor in accordance with Listing Rule 9.8.10R(2) do not properly disclose a departure from a relevant
provision of the UK Corporate Governance Code.
Opinions on other matters prescribed by the Companies Act 2006

In our opinion, the part of the Directors’ remuneration report to be audited has been properly prepared in accordance with the
Companies Act 2006.
In our opinion, based on the work undertaken in the course of the audit:
• the information given in the Strategic report and the Directors’ report for the financial year for which the financial statements are prepared
is consistent with the financial statements; and
• the Strategic report and the Directors’ report have been prepared in accordance with applicable legal requirements.
statements
Audited financial
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the Group and the Parent company and its environment obtained in the course
of the audit, we have not identified material misstatements in the Strategic report or the Directors’ report.
We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report
to you if, in our opinion:
• adequate accounting records have not been kept by the Parent company, or returns adequate for our audit have not been received
from branches not visited by us; or
• the Parent company financial statements and the part of the Directors’ remuneration report to be audited are not in agreement
with the accounting records and returns; or
• certain disclosures of directors’ remuneration specified by law are not made; or
• we have not received all the information and explanations we require for our audit.
Responsibilities of directors
As explained more fully in the Statement of Directors’ responsibilities set out on page 90, the directors are responsible for the preparation
of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine
is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are responsible for assessing the Group and Parent company’s ability to continue as
a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the
directors either intend to liquidate the Group or the Parent company or to cease operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement,
whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance,
but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected
to influence the economic decisions of users taken on the basis of these financial statements.


continued
Explanation as to what extent the audit was considered capable of detecting irregularities,
including fraud
The objectives of our audit, in respect to fraud, are; to identify and assess the risks of material misstatement of the financial statements due to
fraud; to obtain sufficient appropriate audit evidence regarding the assessed risks of material misstatement due to fraud, through designing
and implementing appropriate responses; and to respond appropriately to fraud or suspected fraud identified during the audit. However, the
primary responsibility for the prevention and detection of fraud rests with both those charged with governance of the entity and management.
Our approach was as follows:
• We obtained an understanding of the legal and regulatory frameworks that are applicable to the Group and have a direct impact on
the preparation of the financial statements. We determined that the most significant frameworks which are directly relevant to specific
assertions in the financial statements are those that relate to the reporting framework (IFRS as adopted by the EU, the Companies Act 2006
and UK Corporate Governance Code) and relevant tax compliance regulations. In addition, we concluded that there are certain significant
laws and regulations which may have an effect on the determination of the amounts and disclosures in the financial statements being the
Listing Rules of the UK Listing Authority and relevant FCA rules and regulations.
• We understood how 3i Group plc is complying with those frameworks by making enquiries of senior management, including the General
Counsel and Company Secretary, Group Finance Director, Head of Compliance, Head of Internal Audit and also Non-Executive Directors
including the Chairmen of the Audit and Compliance Committee and Valuations Committee. We corroborated our understanding
through our review of board minutes, papers provided to the Audit and Compliance Committee and correspondence received from
regulatory bodies.
• We assessed the susceptibility of the Group’s financial statements to material misstatement, including how fraud might occur by meeting
with management to understand where they considered there was susceptibility to fraud. We also considered performance targets and
their potential influence on efforts made by management to manage net asset value per share or the total return on equity. We considered
the controls that the Group has established to address risks identified, or that otherwise prevent, deter and detect fraud; and how senior
management monitors those controls. Where the risk was considered to be higher, we performed audit procedures to address each
identified fraud risk.
• Based on this understanding we designed our audit procedures to identify non-compliance with such laws and regulations identified in the
paragraphs above. Our procedures involved: journal entry testing, with a focus on manual journals and journals indicating large or unusual
transactions based on our understanding of the business; enquiries of senior management; and focused testing, as referred to in the key
audit matters section above.
• The FCA has regulatory oversight over 3i Group plc and certain other entities within the Group.
A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council’s website
at https://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report.
Other matters we are required to address

• We were appointed by the board on 5 November 1973 to audit the financial statements of the Parent company for the period ending
31 March 1974 and subsequent financial periods. Our appointment was subsequently ratified at the annual general meeting of the Parent
company on 6 August 1974.
• Our total uninterrupted period of engagement is 45 years, covering periods from our appointment through to the period ending
31 March 2018.
• The non-audit services prohibited by the FRC’s Ethical Standard were not provided to the Group or the Parent company and we remain
independent of the Group and the Parent company in conducting the audit.
• The audit opinion is consistent with the additional report to the audit committee.
Julian Young (Senior statutory auditor)
for and on behalf of Ernst & Young LLP, Statutory Auditor
London
16 May 2018
Notes:
1 The maintenance and integrity of the 3i Group plc web site 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 financial statements since they were initially presented on the web site.
2 Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

Portfolio
and other
information
Includes details of our 20 Large
investments, a glossary of terms
and other useful shareholder
information

20 Large investments
The 20 investments listed below account for 93% of the portfolio at 31 March 2018 (31 March 2017: 89%). For each of our investments we have
assessed whether they classify as accounting subsidiaries under IFRS and/or subsidiaries under the UK Companies Act. This assessment forms
the basis of our disclosure of accounting subsidiaries in the financial statements.
The UK Companies Act defines a subsidiary based on voting rights, with a greater than 50% majority of voting rights resulting in an entity
being classified as a subsidiary. IFRS 10 applies a wider test and, if a group is exposed, or has rights to variable returns from its involvement
with the investee and has the ability to affect these returns through its power over the investee then it has control, and hence the investee
is deemed an accounting subsidiary. Controlled subsidiaries under IFRS are noted below. None of these investments are UK Companies
Act subsidiaries.
In accordance with Part 5 of The Alternative Investment Fund Managers Regulations 2013 (“the Regulations”), 3i Investments plc, as AIFM,
requires all controlled portfolio companies to make available to employees an annual report which meets the disclosure requirements of the
Regulations. These are available either on the portfolio company’s website or through filing with the relevant local authorities.
Residual Residual
Business line cost1 cost Valuation Valuation
Geography March March March2 March2 Relevant
Investment First invested in 2017 2018 2017 2018 transactions
Description of business Valuation basis £m £m £m £m in the year
Action* Private Equity 1 12 1,708 2,064 Refinancing returned
Non-food discount retailer Netherlands £307m of proceeds
2011
Earnings
Scandlines* Private Equity 114 114 538 803 Refinancing returned
Ferry operator between Denmark/Germany £50m of proceeds in
Denmark and Germany 2007/2013 July 2017, sale announced
Imminent sale in March 2018
3i Infrastructure plc* Infrastructure 399 310 655 581 Special dividend returned
Quoted investment company, UK £143m of proceeds
investing in infrastructure 2007
Quoted
Basic-Fit Private Equity 11 11 184 270
Discount gyms operator Netherlands
2013
Quoted
WP* Private Equity 161 175 200 244
Supplier of plastic Netherlands
packaging solutions 2015
Earnings
Audley Travel* Private Equity 177 195 185 233
Provider of experiential UK
tailor-made travel 2015
Earnings
Q Holding* Private Equity 162 162 222 229
Manufacturer of precision US
engineered elastomeric 2014
components Earnings
Cirtec Medical* Private Equity – 172 – 190 New investment
Outsourced medical US
device manufacturing 2017
Earnings
Hans Anders* Private Equity – 186 – 189 New investment
Value-for-money Netherlands
optical retailer 2017
Earnings

Residual Residual
Business line cost1 cost Valuation Valuation
Geography March March March2 March2 Relevant
Investment First invested in 2017 2018 2017 2018 transactions
Description of business Valuation basis £m £m £m £m in the year
Smarte Carte* Infrastructure – 166 – 167 New investment
Provider of self-serve vended US
luggage carts, electronic lockers 2017
and concession carts DCF
Schlemmer Group* Private Equity 162 174 154 152
Manufacturer of cable Germany
management solutions for the 2016
automotive industry Earnings
Ponroy Santé* Private Equity 123 139 122 145
Manufacturer of natural France
healthcare and 2017
cosmetics products Earnings
AES Engineering Private Equity 30 30 113 139
Manufacturer of mechanical UK
seals and support systems 1996
Earnings
BoConcept* Private Equity 140 142 146 137
Urban living designer Denmark
other information
Portfolio and
2016
Earnings
Formel D* Private Equity – 138 – 133 New investment
Quality assurance provider Germany
for the automotive industry 2017
Earnings
ACR Private Equity 105 105 135 129
Pan-Asian non-life reinsurance Singapore
2006
Industry metric
Tato Private Equity 2 2 112 114
Manufacturer and seller of UK
speciality chemicals 1989
Earnings
Lampenwelt* Private Equity – 98 – 111 New investment
Online lighting specialist retailer Germany
2017
Earnings
Aspen Pumps* Private Equity 78 86 88 108
Manufacturer of pumps and UK
accessories for the air 2015
conditioning, heating and Earnings
refrigeration industry
Euro-Diesel* Private Equity 57 62 95 82
Manufacturer of uninterruptible Belgium
power supply systems 2015
Earnings
1,722 2,479 4,657 6,220
* Controlled in accordance with IFRS.
1 Residual cost includes capitalised interest.
2 Numbers shown on an Investment basis.

Portfolio valuation – an explanation
Policy As unquoted investments are not traded Debt instruments, in particular, may have
on an active market, the Group adjusts the structural rights. In the valuation, it is
The valuation policy is the responsibility
estimated enterprise value by a liquidity assumed third parties, such as lenders or
of the Board, with additional oversight
discount. The liquidity discount is applied holders of convertible instruments, fully
and annual review from the Valuations
to the total enterprise value and we apply a exercise any structural rights they might have
Committee. Our policy is to value 3i’s
higher discount rate for investments where if they are “in the money”, and that the value
investment portfolio at fair value and
there are material restrictions on our ability to the Group may therefore be reduced by
we achieve this by valuing investments
to sell at a time of our choosing. such rights held by third parties. The Group’s
on an appropriate basis, applying a
own structural rights are valued on the basis
consistent approach across the portfolio. The table opposite outlines in more detail
they are exercisable on the reporting date.
The policy ensures that the portfolio the range of valuation methodologies
valuation is compliant with the fair value available to us, as well as the inputs and Assets classified as “terminal”
guidelines under IFRS and, in so doing, is adjustments necessary for each. If we believe an investment has more than a
also compliant with the guidelines issued 50% probability of failing in the 12 months
Apportioning the enterprise value
by the International Private Equity and following the valuation date, we value the
Venture Capital valuation board (the “IPEV
between 3i, other shareholders
and lenders investment on the basis of its expected
guidelines”). The policy covers the Group’s recoverable amount in the event of failure.
Private Equity and Infrastructure investment Once we have estimated the enterprise It is important to distinguish between
valuations. Valuations of the investment value, the following steps are taken: our investment failing and the business
portfolio of the Group and its subsidiaries 1. We subtract the value of any claims, net failing; the failure of our investment does
are performed at each quarter end. of free cash balances that are more senior not always mean that the business has
Fair value is the underlying principle and to the most senior of our investments. failed, just that our recoverable value has
is defined as “the price that would be dropped significantly. This would generally
2. The resulting attributable enterprise result in the equity and loan components
received to sell an asset in an orderly value is apportioned to the Group’s
transaction between market participants at of our investment being valued at nil.
investment, and equal ranking investments Value movements in the period relating
the measurement date” (IPEV guidelines, by other parties, according to contractual
December 2015). Fair value is therefore an to investments classified as terminal
terms and conditions, to arrive at a fair are classified as provisions in our value
estimate and, as such, determining fair value value of the entirety of the investment.
requires the use of judgement. movement analysis.
The value is then distributed amongst the
The quoted assets in our portfolio are valued different loan, equity and other financial Infrastructure unquoted valuation
at their closing bid price at the balance sheet instruments accordingly.
date. The majority of the portfolio, however, The primary valuation methodology used
3. If the value attributed to a specific for unquoted Infrastructure investments is
is represented by unquoted investments. shareholder loan investment in a company the discounted cash flow method (“DCF”).
is less than its carrying value, a shortfall Fair value is estimated by deriving the
Private Equity unquoted valuation is implied, which is recognised in our present value of the investment using
To arrive at the fair value of the Group’s valuation. In exceptional cases, we may reasonable assumptions of expected future
unquoted Private Equity investments, we judge that the shortfall is temporary; cash flows and the terminal value and date,
first estimate the entire value of the company to recognise the shortfall in such a and the appropriate risk-adjusted discount
we have invested in – the enterprise value. scenario would lead to unrepresentative rate that quantifies the risk inherent to the
We then apportion that enterprise value volatility and hence we may choose not to investment. The discount rate is estimated
between 3i, other shareholders and lenders. recognise the shortfall. with reference to the market risk-free rate,
Determining enterprise value Other factors a risk adjusted premium and information
specific to the investment or market sector.
The enterprise value is determined using one In applying this framework, there are
of a selection of methodologies depending additional considerations that are factored
on the nature, facts and circumstances of into the valuation of some assets.
the investment.
Impacts from structuring
Where possible, we use methodologies
Structural rights are instruments convertible
which draw heavily on observable market
into equity or cash at specific points in time
prices, whether listed equity markets
or linked to specific events. For example,
or reported merger and acquisition
where a majority shareholder chooses to
transactions, and trading updates from
sell, and we have a minority interest, we
our portfolio.
may have the right to a minimum return on
our investment.

% of investment
basis portfolio
valued on
Methodology Description Inputs Adjustments this basis
Earnings Most commonly used Earnings multiples are applied to the earnings of A liquidity discount is 68%
(Private Equity) Private Equity valuation the Company to determine the enterprise value applied to the enterprise
methodology value, typically between
Earnings
5% and 15%, using factors
Used for investments Reported earnings adjusted for non-recurring
such as our alignment
which are profitable and items, such as restructuring expenses, for
with management and
for which we can significant corporate actions and, in exceptional
other investors and our
determine a set of listed cases, run-rate adjustments to arrive at
investment rights in the
companies and precedent maintainable earnings
deal structure
transactions, where
relevant, with similar Most common measure is earnings before
characteristics interest, tax, depreciation and amortisation
(“EBITDA”)
Earnings used are usually the management
accounts for the 12 months to the quarter end
preceding the reporting period, unless data from
forecasts or the latest audited accounts provides
a more reliable picture of maintainable earnings
Earnings multiples
The earnings multiple is derived from comparable
other information
Portfolio and
listed companies or relevant market transaction
multiples
We select companies in the same industry and,
where possible, with a similar business model and
profile in terms of size, products, services and
customers, growth rates and geographic focus
We adjust for relative performance in the set
of comparables, exit expectations and other
company specific factors
Quoted Used for investments Closing bid price at balance sheet date No adjustments 13%
(Infrastructure/ in listed companies or discounts applied
Private Equity)
Imminent sale Used where an asset is Contracted proceeds for the transaction, A discount of typically 12%
(Private Equity) in a sales process, a price or best estimate of the expected proceeds 2.5% is applied to reflect
has been agreed but the any uncertain adjustments
transaction has not to expected proceeds
yet settled
Discounted Appropriate for Long-term cash flows are discounted at a rate Discount already implicit 4%
cash flow businesses with long-term which is benchmarked against market data, in the discount rate
(Private Equity/ stable cash flows, typically
where possible, or adjusted from the rate at the applied to long-term
Infrastructure) in Infrastructure initial investment based on changes in the risk cash flows – no further
profile of the investment discounts applied
Specific industry Used for investments in We create a set of comparable listed companies An appropriate discount 2%
metrics industries which have well and derive the implied values of the relevant is applied, depending on
(Private Equity) defined metrics as bases metric the valuation metric used
for valuation – eg book
value for insurance We track and adjust this metric for relative
underwriters performance, as in the case of earnings multiples
Comparable companies are selected using the
same criteria as described for the earnings
methodology
NAV Used for investments in Net asset value reported by the fund manager Typically no further 1%
(Private Equity/ unlisted funds discount applied
Infrastructure) in addition to that applied
by the fund manager
Other Used where elements Values of separate elements prepared on one Discounts applied –%
(Private Equity) of a business are valued of the methodologies listed above to separate elements
on different bases as above
Consistent with IPEV guidelines, all equity investments are held at fair value using the most appropriate methodology and no investments are
held at historical cost.
Information for shareholders
Financial calendar
Ex-dividend date Thursday 14 June 2018
Record date Friday 15 June 2018
Annual General Meeting* Thursday 28 June 2018
FY2018 dividend to be paid Friday 20 July 2018
Half-year results (available online only) November 2018
Interim dividend expected to be paid January 2019
* The 2018 Annual General Meeting will be held at The Queen Elizabeth II Conference Centre, Broad Sanctuary, Westminster, London SW1P 3EE on 28 June 2018 at 11.00am.
For further details please see the Notice of Annual General Meeting 2018.
Information on ordinary shares

Shareholder profile: Location of investors at 31 March 2018
UK 59.4%
North America 24.9%
Continental Europe 11.7%
Other international 4.0%
Share price
Share price at 31 March 2018 859.0p
High during the year (31 August 2017) 969.5p
Low during the year (3 April 2017) 736.5p
Dividends paid in the year to 31 March 2018

FY2017 Final dividend, paid 21 July 2017 18.5.p
FY2018 Interim dividend, paid 10 January 2018 8.0p
Balance analysis summary

Number of
Number of holdings
holdings corporate Balance as at
individuals bodies 31 March 2018 %
1–1,000 12,048 379 5,531,176 0.57
1,001–10,000 4,978 601 13,000,089 1.34
10,001–100,000 146 494 23,836,983 2.45
100,001–1,000,000 17 335 126,484,523 13.00
1,000,001–10,000,000 – 123 351,784,545 36.16
10,000,001–highest – 16 452,259,690 46.48
Total 17,189 1,948 972,897,006 100.00
The table above provides details of the number of shareholdings within each of the bands stated in the register of members at 31 March 2018.

The Common Boiler room and other scams Annual reports and half-yearly
Reporting Standard In the past, some of our shareholders have reports online
New tax legislation under the Organisation received unsolicited telephone calls or If you would prefer to receive shareholder
for Economic Co-operation and correspondence concerning investment communications electronically in future,
Development (“OECD”) Common matters from organisations or persons including annual reports and notices
Reporting Standard for Automatic Exchange claiming or implying that they have some of meetings, please visit our Registrars’
of Financial Account Information was connection with the Company. These are website at www.shareview.co.uk/
introduced on 1 January 2016. The legislation typically from overseas based “brokers” who clients/3isignup and follow the instructions
requires investment trust companies to target UK shareholders offering to sell them there to register.
provide personal information about certain what often turn out to be worthless or high
risk shares in UK or overseas investments. The 2018 half-yearly report will be available
investors who hold shares in investment
Shareholders are advised to be very wary of online only. Please register to ensure you
trusts to HMRC. As an investment company,
any unsolicited advice, offers to buy shares are notified when it becomes available
3i Group plc is therefore required to provide
at a discount or offers of free reports into the at www.3i.com/investor-relations/
information annually to the local tax authority
Company. These approaches are operated financial-news.
on certain certificated shareholders and
corporate entities. This information includes out of what is more commonly known as a More general information on electronic
country of tax residency as well as details of “boiler room”. You may also be approached communications is available on our
shares held and dividends received. The local by brokers offering to purchase your shares website at www.3i.com/investor-relations/
tax authority to which the information is for an upfront payment in the form of a shareholder-information.
initially passed may in turn exchange the broker fee, tax payment or de‑restriction fee.
information with the tax authorities of This is a common secondary scam operated
by the boiler rooms.
Investor relations and
other information
Portfolio and
another country or countries in which the
shareholder may be tax resident, where
general enquiries
If you receive any unsolicited
those countries (or tax authorities in those For all investor relations and general
investment advice:
countries) have entered into agreements enquiries about 3i Group plc, including
to exchange financial account information. • Always ensure the firm is on the Financial requests for further copies of the Report
Certain shareholders have been and will in Conduct Authority (“FCA”) Register and and accounts, please contact:
future be sent a certification form for the is allowed to give financial advice before
Investor relations
purposes of collecting required information. handing over your money. You can check
3i Group plc
at www.fca.org.uk/register;
16 Palace Street
• Double-check the caller is from the firm London, SW1E 5JD
they say they are – ask for their name and
telephone number and say you will call Telephone +44 (0)20 7975 3131
them back. Check their identity by calling email IRTeam@3i.com
the firm using the contact number listed
on the FCA Register. This is important or visit the Investor relations section of our
as there have been instances where website at www.3i.com/investor-relations,
an authorised firm’s website has been for full up-to-date investor relations
cloned but with a few subtle changes, information, including the latest share price,
such as a different phone number or false results presentations and financial news.
email address;
• Check the FCA’s list of known Registrars
unauthorised overseas firms. However, For shareholder administration enquiries,
these firms change their name regularly, so including changes of address please contact:
even if a firm is not listed it does not mean
Equiniti
they are legitimate. Always check that they
Aspect House
are listed on the FCA Register; and
Spencer Road
• If you have any doubts, call the Financial Lancing
Conduct Authority Consumer Helpline West Sussex, BN99 6DA
on 0800 111 6768. If you deal with an
unauthorised firm, you will not be eligible Telephone 0371 384 2031
to receive payment under the Financial Lines are open from 8.30am to 5.30pm,
Services Compensation Scheme. Monday to Friday (international callers
+44 121 415 7183).

Glossary
2013-2016 vintage includes Aspen Pumps, Assets under management (“AUM”) Collateralised Loan Obligation (“CLO”)
Audley Travel, Basic-Fit, Dynatect, Euro- A measure of the total assets that 3i has to A form of securitisation where payments
Diesel, ATESTEO, JMJ, Q Holdings, WP, invest or manages on behalf of shareholders from multiple loans are pooled together
Scandlines further (completed in December and third-party investors for which it and passed on to different classes of owners
2013), Christ, Geka, Óticas Carol and receives a fee. AUM is measured at fair in various tranches.
Blue Interactive. value. In the absence of a third-party fund
Company 3i Group plc.
in Private Equity, it is not a measure of fee
2016-2019 vintage includes BoConcept,
generating capability. Country by Country Reporting
Cirtec, Formel D, Hans Anders, Lampenwelt,
(“CbC Reporting”) refers to a requirement
Ponroy Santé and Schlemmer. Automatic Exchange of Information
for large multinational groups, operating
(“AEOI”) regulation covers the combined
Alternative Investment Funds (“AIFs”) At in different countries, to file an annual
legislative requirements of Common
31 March 2018, 3i Investments plc as AIFM, report with their head office tax authority.
Reporting Standards (“CRS”) and the Foreign
managed five AIFs. These were 3i Group plc, This provides information about the activities
Account Tax Compliance Act (“FATCA”).
3i Growth Capital Fund, 3i Eurofund V, of the entities in the Group, on a country-by-
Both sets of rules require financial groups
3i Managed Infrastructure Acquisitions LP country basis, across the countries in which
to identify investors and report details to
and 3i European Operational Projects Fund. the Group operates. This new requirement
their local authority who will then exchange
applied to the Group from 1 April 2016.
Alternative Investment Fund Manager the information with other relevant
(“AIFM”) is the regulated manager of AIFs. tax authorities. Discounting The reduction in present value
Within 3i, this is 3i Investments plc. at a given date of a future cash transaction
Board The Board of Directors
at an assumed rate, using a discount factor
Approved Investment Trust Company This of the Company.
reflecting the time value of money.
is a particular UK tax status maintained by 3i
Capital redemption reserve is established in
Group plc, the parent company of 3i Group. Discontinued operations are comprised of
respect of the redemption of the Company’s
An approved Investment Trust company is a the assets and liabilities associated with the
ordinary shares.
UK company which meets certain conditions Group’s Debt Management business sold
set out in the UK tax rules which include a Capital reserve recognises all profits that to Investcorp in March 2017.
requirement for the company to undertake are capital in nature or have been allocated
Dividend income from CLO capital
portfolio investment activity that aims to to capital. Following changes to the
is recognised in the Statement of
spread investment risk and for the company’s Companies Act, the Company amended its
comprehensive income when the
shares to be listed on an approved Articles of Association at the 2012 Annual
shareholders’ rights to receive payment
exchange. The “approved” status for an General Meeting to allow these profits to be
have been established.
investment trust must be agreed by the UK distributable by way of a dividend.
tax authorities and its benefit is that certain EBITDA is defined as earnings before
Carried interest is accrued on the
profits of the company, principally its capital interest, taxation, depreciation and
realised and unrealised profits generated
profits, are not taxable in the UK. amortisation and is used as the typical
taking relevant performance hurdles into
measure of portfolio company performance.
consideration, assuming all investments
were realised at the prevailing book value.
Carried interest is only actually paid or
received when the relevant performance
hurdles are met and the accrual is discounted
to reflect expected payment periods.
Carried interest receivable is generated on
third-party capital over the life of the relevant
fund when relevant performance criteria
are met.

EBITDA multiple Calculated as the Fees receivable from external funds are Investment basis Accounts prepared
enterprise value over EBITDA, it is used to fees received by the Group, from third assuming that IFRS 10 had not been
determine the value of a company. parties, for the management of private introduced. Under this basis, we fair
equity and infrastructure funds. value portfolio companies at the level we
Executive Committee The Executive
believe provides the most comprehensive
Committee is responsible for the day-to-day Foreign exchange on investments arises
financial information.
running of the Group and comprises: the on investments made in currencies that are
Chief Executive, Group Finance Director, the different from the functional currency of the The commentary in the Strategic report
Managing Partners of the Private Equity and Group entity. Investments are translated at refers to this basis as we believe it
Infrastructure businesses and the Group’s the exchange rate ruling at the date of the provides a more understandable view of
General Counsel. transaction. At each subsequent reporting our performance.
date, investments are translated to sterling
Fair value movements on investment entity Key Performance Indicators (“KPI”)
at the exchange rate ruling at that date.
subsidiaries The movement in the carrying is a measure by reference to which the
value of Group subsidiaries, classified as Gross investment return (“GIR”) includes development, performance or position
investment entities under IFRS 10, between profit and loss on realisations, increases and of the Group can be measured effectively.
the start and end of the accounting period decreases in the value of the investments
Money multiple is calculated as the
converted into sterling using the exchange we hold at the end of a period, any income
cumulative distributions plus any residual
rates at the date of the movement. received from the investments such as
value divided by paid-in capital.
interest, dividends and fee income and
Fair value through profit or loss (“FVTPL”)
foreign exchange movements. GIR is Net asset value (“NAV”) is a measure of the
is an IFRS measurement basis permitted
measured as a percentage of the opening fair value of our proprietary investments and
for assets and liabilities which meet
portfolio value. the net costs of operating the business.
certain criteria. Gains and losses on assets
other information
Portfolio and
and liabilities measured as FVTPL are Interest income from investment portfolio is OEM is an original equipment manufacturer.
recognised directly in the Statement of recognised as it accrues. When the fair value
Operating cash profit is the difference
comprehensive income. of an investment is assessed to be below
between our cash income (consisting
the principal value of a loan, the Group
Fee income is earned directly from investee of portfolio interest received, portfolio
recognises a provision against any interest
companies when an investment is first made dividends received, portfolio fees received
accrued from the date of the assessment
and through the life of the investment. and fees received from external funds as per
going forward until the investment is
Fees that are earned on a financing the Investment basis Consolidated cash flow
assessed to have recovered in value.
arrangement are considered to relate to a statement) and our operating expenses (as
financial asset measured at fair value through International Financial Reporting Standards per the Investment basis Consolidated cash
profit or loss and are recognised when that (“IFRS”) are accounting standards issued flow statement).
investment is made. Fees that are earned on by the International Accounting Standards
Operating profit includes gross investment
the basis of providing an ongoing service to Board (“IASB”). The Group’s consolidated
return, management fee income generated
the investee company are recognised as that financial statements are required to be
from managing external funds, the costs of
service is provided. prepared in accordance with IFRS, as
running our business, net interest payable,
endorsed by the EU.
movements in the fair value of derivatives,
other losses and carried interest.

Glossary
continued
Portfolio income is that which is directly Share-based payment reserve is a

related to the return from individual reserve to recognise those amounts in
investments. It is recognised to the extent retained earnings in respect of share-
that it is probable that there will be economic based payments.
benefit and the income can be reliably
SORP means the Statement of
measured. It is comprised of dividend
Recommended Practice: Financial
income, income from loans and receivables
Statements of Investment Trust Companies
and fee income.
and Venture Capital Trusts.
Proprietary capital Shareholders’
Total return comprises operating profit
capital which is available to invest to
less tax charge less movement in actuarial
generate profits.
valuation of the historic defined benefit
Public Private Partnership (“PPP”) is a pension scheme.
government service or private business
Total shareholder return (“TSR”) is the
venture which is funded and operated
measure of the overall return to shareholders
through a partnership of government and
and includes the movement in the share
one or more private sector companies.
price and any dividends paid, assuming that
Realised profits or losses over value on all dividends are reinvested on their
the disposal of investments The difference ex-dividend date.
between the fair value of the consideration
Translation reserve comprises all
received, less any directly attributable costs,
exchange differences arising from the
on the sale of equity and the repayment
translation of the financial statements of
of loans and receivables and its carrying
international operations.
value at the start of the accounting period,
converted into sterling using the exchange Unrealised profits or losses on the
rates at the date of disposal. revaluation of investments The movement
in the carrying value of investments between
Revenue reserve recognises all profits that
the start and end of the accounting period
are revenue in nature or have been allocated
converted into sterling using the exchange
to revenue.
rates at the date of the movement.
Segmental reporting Operating segments
are reported in a manner consistent with
the internal reporting provided to the Chief
Executive who is considered to be the
Group’s chief operating decision maker.
All transactions between business segments
are conducted on an arm’s length basis,
with intrasegment revenue and costs being
eliminated on consolidation. Income and
expenses directly associated with each
segment are included in determining
business segment performance.

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Annual report and accounts 2017 have
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3i Group plc
Registered office: 16 Palace Street,
London, SW1E 5JD, UK
Registered in England No. 1142830 Halcyon by David Ridley
An investment company as defined by Oil paint and mixed media
section 833 of the Companies Act 2006 on a box canvas.
www.3i.com
3i Group plc
16 Palace Street, London, SW1E 5JD, UK
Telephone +44 (0)20 7975 3131
THR27381
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3i Group plc

Portfolio and other information

Realise investments with

Use our strong

3i Group Annual report and accounts 2018 01

724p 24% FY2018 was another successful year

30.0p £11m In addition, we completed our

£1,323m £587m politics and increasing tensions across

£1.1bn a number of significant investments across

1 Operating cash profit in 2017 is on a continuing basis.

02 3i Group Annual report and accounts 2018

3i Group Annual report and accounts 2018 03

3i delivered another strong all-round

04 3i Group Annual report and accounts 2018

3i Group Annual report and accounts 2018 05

06 3i Group Annual report and accounts 2018

3i Group Annual report and accounts 2018 07

Store expansion Key financial

Geographical spread of stores

08 3i Group Annual report and accounts 2018

3i Group Annual report and accounts 2018 09

Private Equity rth

10 3i Group Annual report and accounts 2018

Infrastructure rth Other

AUM breakdown by fund

Smarte Carte 3iN

3i Group Annual report and accounts 2018 11

model proposition and underpin our

Key resources How we create value

12 3i Group Annual report and accounts 2018

dividend per share

Capable of generating mid to high

3i Group Annual report and accounts 2018 13

14 3i Group Annual report and accounts 2018

91% • Action’s growth is expected to continue as it 18 For further

£1,002m • Scandlines disposal and partial re-investment 18 For further

£143m 25 For further

£11m • Increasing cash income expected from 29 For further

£587m • Plan to invest up to £750 million pa of proprietary 29 For further

30.0p • The dividend will be subject to the level of 2 For further

1 Includes 21 companies valued on an earnings basis, as well as Basic-Fit and Scandlines.

3i Group Annual report and accounts 2018 15

Gross investment The performance of the Grow investment

2014 2015 2016 2017 2018

2014 2015 2016 2017 2018

Cash investment1,2 Identifying new opportunities Grow investment

Operating cash By covering the cash operating £45m

2014 2015 2016 2017 2018

NAV The measure of the fair value 724p Grow investment

2014 2015 2016 2017 2018

2014 2015 2016 2017 2018

16 3i Group Annual report and accounts 2018

3i Group Annual report and accounts 2018 17

Private Equity Consumer

18 3i Group Annual report and accounts 2018

3i Group Annual report and accounts 2018 19

Our Private Equity business generated very strong returns in

Table 1: Private Equity cash investment in the year to 31 March 2018

20 3i Group Annual report and accounts 2018

3i Group Annual report and accounts 2018 21

22 3i Group Annual report and accounts 2018

Chart 1: Portfolio earnings growth of

3i carrying value at 31 March 2018 (£m) Action

Table 12: Operating cash profit for the year to 31 March