3i Group plc

Welcome to 3i's financial year 2024 annual results presentation. I'm Simon Borrows, CEO of 3i Group. Also on the call with me today are James Hatchley, our Group Finance Director, and Silvia Santoro, our Group Investor Relations Director. The slides supporting our remarks have been put on our website this morning. As you can see from this morning's numbers, We delivered another strong set of results for the year to 31st of March. And we've achieved those results despite the high interest rate environment, market volatility, and specific challenges across a number of sectors we're exposed to. Our purpose remains the delivery of attractive long-term returns to our shareholders and co-investors. We invest selectively in private equity and infrastructure assets. and take advantage of our permanent capital to run our winners and to build long-term compounders within our concentrated portfolio. We focus on thoughtful thematic origination linked to ambitious plans. Our objective is to at least double the profits of the companies we buy. Importantly, investing well is our overriding priority. and we don't have to buy into what we see as overpriced vintages to put third-party monies to work. In FY24, we generated another good return on equity of 23%, and that's after delivering 36% last year. Our NAV per share finished at £20.85 after a foreign exchange translation loss of £316 million. That compares to the translation gain of 623 million pounds in FY23, close to a billion pound negative swing between the two years. Private equity produced a 25% gross investment return, as well as good cash proceeds of over 1.3 billion. We ended the year at 4% gearing. and we've announced a 15% increase in the annual dividend. After payment of that dividend, we will have returned some 3.8 billion to shareholders in dividends since we announced our restructuring in 2012. And to put that in context, the 3.8 billion amounts to more than twice 3i's market capitalization at the time of the restructuring in 2012. and it represents an average compound annual growth rate of 18%. Here is our Maramico chart or the 3i portfolio on a page at the 31st of March, 2024. When you buy a 3i share, you're not buying into an alternatives fundraising machine. You're buying into the underlying theme-originated gross investments and You're buying into 3i's focus on disciplined active management combined with a longer-term approach. Some 87% of today's portfolio is anchored in private growth companies focused on value, private label, infrastructure, and healthcare. Okay, now I'll turn to our FY24 results. And I'll start with private equity. where we generated a 25% gross investment return, which includes 33% gross investment return from action. 93% of the portfolio by value grew earnings in the year with five companies excluding action growing their earnings at over 20%. It was a bifurcated performance this year with two-thirds of the non-action portfolio and that's more than 20 companies, producing an average 15% return with the remaining third, about 10 companies, contributing negatively. So in the aggregate, the overall return for the non-action PE portfolio ended at 7%. And that's after the strong foreign exchange headwinds James will talk about in a minute. It was a frustrating year for new investment. But we deployed over half a billion pounds on further investments and bolt-ons across the portfolio. We announced the realization of an XI in April, achieving an overall return of 2X. That transaction should complete in the next few months with exit proceeds of about 386 million pounds in addition to the 21 million pounds we've already received. As we move into FY25, the portfolio remains defensively positioned with an increasing exposure to our favored sectors. You can see what I mean in our portfolio earnings growth slide, which shows that the majority of our target companies continue to make good progress. As I said earlier, we saw a resilient performance from the majority of our portfolio. and a very strong performance from the discount private label healthcare and infrastructure sectors. But we also saw some significant value declines as a result of sector or consumer pressures. The fall has included Tato, which specializes in chemicals used primarily in the paints and coatings industry with DIY and construction-related end markets. Wilson, a recruitment process outsourcing business in the U.S., where white collar or professional recruitment has remained subdued. Formal D, which provides services to Europe's auto OEMs in particular, and a number of discretionary consumer businesses where demand has remained weak. And one swallow doesn't make a summer, but we have now seen better trading over the first three months of 2024 in a number of these companies. which suggests we'll have fewer markdowns this year. Although I'm disappointed by the number of names in the right-hand column, it's important to note that they account for some 1.2 billion pounds of our portfolio compared to almost 17 billion pounds in the left-hand column. Action produced another very strong result in 2023, with sales growth of 28% off the back of over 300 store openings, and delivered 16.7% like-for-like sales growth. Continued scale benefits and good cost control delivered 34% growth in EBITDA, as well as excellent cash conversion of 104%. All countries and categories performed well, with generally good availability in store and particularly strong sell-through in the last quarter of the year. That strong performance has continued into 2024, with a further step-up in performance in the first quarter. Like-for-like sales were up 9.8%, with net sales of approximately €3 billion. That's up 21%, and operating EBITDA up 29%. And the strong start has continued with like-for-likes to the end of last week at 9.8% year-to-date. It's important to note that unlike a big part of the retail sector, action is continuing to pass on price reductions to consumers. So this like-for-like growth is all about volume or transaction growth rather than price increases. And that's a key point. Action has opened some 62 stores so far this year. That compares with 49 openings at the same point last year. Cash is currently approximately 663 million euros, and that's after paying significant dividends in December and March. Action continues to have a long run way of growth in front of it, and recently updated its white space analysis in Europe. which would result in a total store count of some 7,300 stores across select European markets. That compares with a little over 2,600 stores today. As I've emphasized before, Three Eyes invests permanent capital rather than time-limited fund capital. That allows us to capture the significant compounding benefits from action-sustained long-term growth and consistent financial performance. Now I'd like to make a few comments about portfolio construction. We have a PE portfolio which is dominated by investments in our preferred sectors. The majority of these investments will be sold at two or three times money multiples after a holding period which is typically four to six years. But a number of assets have the potential to become longer term compounders like Action. And in December, we move Raw Sanders across to our longer-term compounding portfolio. Raw Sanders is a leading personal care private label business and is a low-cost innovator in that sector. It has a winning customer base among supermarkets, discounters, and specialist retailers, where it supports good levels of growth. Raw Sanders is a well-run and efficient business with a successful track record of integrating acquisitions across Northern Europe. We rate the management team highly and will support the company as it looks at further consolidation in this fragmented sector. Our PE team have remained busy with bolt-on activity. In fact, they completed seven deals over the course of the year, including two larger transactions, Coolback and Pinalto, for our European bakery group. And we received over 1.3 billion pounds of cash from the portfolio. The lion's share came from action, but with good contribution from Raw Sanders and WP. In April, we announced the sale of Nexi and achieved a two times money multiple return in a difficult realization market. In fact, that sale process underlines to me the current difficulties in the current financial sponsor or secondary buyout market, where flow is light, and fewer serious parties are turning up to sell processes. Nexar is a good business with a very capable management team who've done a brilliant job since the major setback of the pandemic in 2020 and 21. The infrastructure team produced another very good portfolio performance in Europe for 3IN and other funds, as well as good growth in North America. Unfortunately, that strong portfolio performance was not reflected in the 3IN share price, which had another pedestrian year. The infrastructure business once again contributed very good cash income to the group, with 3IN producing strong total return and dividends in the year. Our North America infrastructure team made good progress with another new investment, as well as bolt-on activity for regional rail and EC waste. Before I hand over to James for a review of the numbers, I'd like to update you on important development in our climate strategy. Today, we are announcing near-term science-based targets, which were approved by the Science-Based Targets Initiative at the end of March. Our targets cover both the emissions associated with Three Eyes operations and those associated with our portfolio. Starting with the emissions from our own operations, or our scope one and two. We have committed to reducing these emissions by 42% by our 2030 financial year from a 2023 baseline. The second group of targets in the right-hand box on the slide regards the emissions associated with our portfolio. These targets cover 82% of our portfolio based on invested capital. The SBTI guidance prescribes different target methodologies for different types of assets. In our case, electricity generation companies and projects are treated separately to the rest of the portfolio. That's why we have two different portfolio emissions reduction targets. So, we commit to 31% of our eligible investments by invested capital. setting SBTI validated targets by financial year 2028. That will increase to 100% by FY2040. We also commit to reducing the carbon intensity of our electricity generation portfolio as a whole by 68% by FY2030. And all targets are against an FY2023 baseline. Our investor relations team will be able to help if you'd like more information on this development. And I'll now hand over to James for the financial review of the year.

Thank you, Simon. And good morning, everyone. Our total return on equity was 23% for the financial year. And as Simon said a minute ago, we closed the year with an NAV per share of £20.85. as you can see here. The NAV increase was principally driven by the significant value growth across the portfolio of 406 pence. Net carry payable reduced that contribution by 25 pence and negative foreign exchange movements by another 33 pence. Strong levels of income outstripped the costs at 3i and added 48 pence to the NAV. A deduction of 56 pence from dividends explains the rest of the movement. You can see the components of the 406 pence per share or 3.9 billion of value growth on this slide. Actions consistency is again present with value growth in the year of 3.6 billion pounds. We also had a good contribution from a number of the stronger performers in the rest of the PE portfolio. with a combined $689 million of value growth. Simon has taken you through some of the most significant names in the mix. He also covered the underperformers in the year, which total reduced the value movement by $368 million. The net impact of multiple movements in the year was to reduce the portfolio value by $39 million. Our two quoted assets, Basic Fit and 3IN, accounted for a combined reduction of 12 million. The most significant movement in the other category was an increase in 1023, which we valued on a sum of the parts basis. Taking the pluses and minuses together, the portfolio grew to 21.6 billion pounds. So, on to valuation and starting with action. Action reported an operating EBITDA in the 12 months to the end of March 2024 of €1.7 billion. The run rate EBITDA of €1.85 billion includes the usual adjustment for newly opened stores as well as the 18.5 million one-off adjustment we set out in the Q3 statement. We continue to apply a consistent post-discount multiple of 18.5 times to those earnings. That gives Action an enterprise value of 34.2 billion euros and a valuation of our 54.8% holding at the end of March of 14.2 billion pounds. The implied prospective multiple for action, looking back at the enterprise value at the end of March last year and considering the actual run rate EBITDA delivered one year later, is 14.4 times. The 18.5 times run rate multiple and the implied prospective multiple are very much within the range of valuations commanded by the action peer group, as you can see on the next slide. Actions multiple is above the peer group averages, but we consider that to be appropriate because actions key performance indicators are at least as impressive as the best performers in this group. And we remain comfortable that the 18.5 times multiple is an appropriate basis for determining the fair value of our interest in action. Okay, let's turn to private equity valuation multiples. This slide shows our PE portfolio valuation multiples in dark blue compared to the average of the multiples for the relevant peer sets in light blue. Before discussing the specifics, I'd like to cover a couple of general statements on the movements in the public markets. In the second half of our financial year, most public stock markets made a good recovery. Over this period, the FTSE and S&P were up 5% and 23% respectively. This movement reflects a general improvement in market sentiment, but it's a less specific barometer for the 3i portfolio. A better representation of the 3i portfolio is the performance of our relevant valuation peer groups we use in this slide. That peer group was also up by more than 10%, with healthcare particularly strong. But private markets are experiencing less momentum than the public markets and remain difficult, as Simon has mentioned. For that reason, we continue to remain cautious and haven't reflected the general increase in public market benchmarks in the valuation of our assets. Instead, we prefer to let our buffers grow a little. So back to the specifics on this slide. We are down to two companies marked above the average of the peer group, one of which, as you know, is Action. In terms of multiple movements, We've moved three multiples up and three down during the year. We consider each movement in multiple and every valuation very carefully. We rely heavily on our wider team's deep understanding of the individual portfolio companies and the industries where they operate. We also welcome a healthy challenge from the board's valuation committee and from our auditors KPMG, which is core to the application of our valuation process. Finally, the overall portfolio weighted average multiple X action is broadly unchanged at 13 times. Our private equity portfolio generated a gross investment return of 25%. And to be clear, That investment return included a £341 million loss on foreign exchange. It's interesting to note that the gross investment return before foreign exchange of £4.4 billion is actually higher in FY24 than FY23 when it was £4.3 billion. Our private equity realisations were similar to last year at £866 million. made up primarily of the proceeds from the pro rata share redemption at action following its successful US dollar refinancing. Taken together with dividend cash in the year, we received over 1.3 billion pounds from our PE portfolio. That's an excellent result. Our cash investment of 556 million includes our reinvestment in action as well as additional investment in the existing portfolio, particularly European Bakery Group and 1023. Low New Deal activity in the year was a result of very difficult market conditions and our consistent application of investment discipline. Our private equity portfolio leverage is similar to last year, except it reflects the refinancing activity across the portfolio, most notably at Action and at Royal Sanders and WP. As you can see from the chart on the left-hand side of this slide, as a group we continue to maintain a prudent long-term perspective on the levels of leverage we're prepared to see across the portfolio. The fact that we have long-term banking relationships and senior-only capital structure helps a great deal. The refinancing profile of the portfolio remains long-dated, as you can see on the chart on the right, with 85% of the portfolio with debt maturities in 2027 and beyond. In addition, over 70% of the portfolio is hedged against interest rate risk. The continued strong performance of action and good performance from our other assets led to a £262 million increase in the carry payable in the year. But we're beginning to see the benefit of the 10-12 vintage carry purchases we made during the course of the last 18 months. Those purchases have materially reduced the carry dilution related to our investment in action. So, On the balance sheet, carried interest payable decreased to 803 million from 1.3 billion this time last year. Of this carry balance, approximately half relates to the 1012 vintage. I've also updated a version of the slide we showed you in September, which sets out the group's gross and net holding in action. It shows the progress we've made during FY24 in increasing our exposure to action. We've done this in two ways. Firstly, we've reinvested a significant part of the proceeds from the Action Pro Rata share redemption into new action shares. That investment increased our gross holding to 54.8%. Secondly, As I've just covered on the previous slide, we've made further progress on buying back the 1012 vintage carried interest. At the beginning of the year, the carry dilution stood at 8%. We completed two carry purchases in the first half of FY24, reducing the carry dilution to approximately 5% as of 30th of September. And we executed a further purchase in February. bringing the carry dilution to just 3% at the end of the year. That means our net holding in action of 31st of March 2024 increased to 53.2%. That's up 4.3% from the beginning of the year. A sensible guide for the net carry accrual as a percentage of gross investment return for the rest of the private equity portfolio is around 12%, and that's unchanged from a year ago. Our infrastructure team delivered a solid gross investment return of 7%. The £72 million unrealised profit is principally made up of £38 million gain from an increase in the 3IN share price, with the balance coming from US infrastructure and other funds. Scanlines generally had a solid year across its leisure activities, but saw softness in freight from lower economic activity. in Scandinavia and in Germany. For now, we continue to take a cautious approach to the Scanlines valuation. Private equity delivered a strong contribution to our cash operating profit in the year, not least from the 375 million dividend from Action. Excluding the Action dividend, we still made a healthy cash operating profit of 92 million, which is well ahead of our break-even objective. Once again, we did a good job of managing expenses, which, from a cash perspective, were down in the year. It's worth noting that the cash expense is impacted by the timing of individual payments, and the modest increase in costs you see in the P&L is a more representative indicator of what is actually happening to the 3i cost base. Costs as a percentage of AUM were only 42 basis points. Moving to the balance sheet. Our portfolio value ended FY24 at over £21.6 billion, and gearing remained low at 4%. Cash was 396 million, and we had approximately 1.3 billion pounds of liquidity at the year end. And that 1.3 billion is before the proceeds from the sale of Nexi, which we expect to complete in the first half of our financial year. Whilst we will retain our investment discipline, we certainly have the firepower to invest as opportunities arise. In terms of foreign exchange, we thought it was important to note the impact of movements on this year's results and to contrast that with last year. This slide sets out the net asset position by currency on the left-hand side of the page. On the right, you can see the foreign exchange movements in FY24 and FY23, both before and after hedging. So in FY24, If you include the impact of hedging, the foreign exchange loss was 316 million. That compares to a positive movement of 623 million last year. The hedging programme remains at 2.6 billion euro and 1.2 billion US dollars and has generated a gain of over 230 million since October 2022. We currently intend to keep the total size of the hedging program stable. Finally, let's turn to the dividend. This morning, we announced our intention to pay a second dividend of 34.5 pence, which together with the interim dividend paid in January, will make a full year dividend payout of 61 pence. This remains subject to shareholder approval and would represent a growth of 15% on the prior year. Before we get into Q&A, I'll hand back to Simon. Thank you, James.

I'd like to close with a few final remarks. FY24 proved to be a challenging year for a number of our companies, and clearly increased interest rates have also made it harder to consummate investment and divestment transactions. We are very happy with the money we did put to work and we continue to see very good growth from the majority of our investments. Action had another excellent year in Canada, 23, and it's very encouraging to see the very strong start it has made in 24. I'm convinced that Action's approach of passing on price reductions to consumers as a result of its growing buying power will continue to underpin sector-leading like-for-like performance over the medium term. It's been great to see the various decisions we've made to increase 3i's stake in action over the last five years lead to such strong returns for the group. Action's performance and our growth in value of almost 11.5 billion pounds since March 2019 has been pretty remarkable. And I have little doubt that action will generate even more growth over the next five years. It's also worth noting the full benefit of last year's carry and stake purchases will come through in this financial year. I'm also pleased that ActionNow has some company in the shape of Royal Sanders, which we moved to our longer-term compounding bucket in December. Our whip of further potential new investment is also looking a little more encouraging. So, We expect to see a decent level of investment this year, as well as a good level of continued bolt-on activity for our portfolio companies. Overall, we will continue with our steady and disciplined approach, and we'll also look to add further investments to our longer-term compounding portfolios in the coming years. We have little doubt that this is the best way to deliver consistent long-term performance for 3i shareholders and continue the strong progress we've achieved over the last 12 years. Thank you, and we'll now open it up for questions.

Thank you, we will now conduct the question and answer session. To ask a question via the conference call, you will need to press star 11 on your telephone keypad and wait for a name to be announced. To withdraw a question, please press star 11 again. As a reminder, participants can also submit questions through the webcast page by using the ask a question button. Please stand by, we'll compile the Q&A roster. This will take a few moments. Now we're going to take our first question, and it comes from Land of Manjari Dar from RBC. Your line is open. Please ask your question.

Thank you. Good morning, Simon. Good morning, James. Thanks for taking my questions. I just had three, if I may. The first one's on action. I wanted to see if you could give some color on the performance of the season on the discretionary lines of action versus the performance of the more essential lines in recent weeks. And then secondly, also on action, I wonder if you had any sort of timeline you're looking forward to reduce the carry-on on action to zero. And then just finally, on the longer-term hold, bucket of investments, I wondered if you had any sort of timeline in mind to sort of build that out further, and could we see another asset moving into that bucket in the next 12 months or so? Thank you. Thank you.

Thanks, Manjari. Okay. I think I can deal with those. The year for action to date is we're once again seeing very strong performance in the essential lines. I think we've had a slightly unfortunate spring, and that's been true across a lot of Europe in the We've had a great deal of rain, and April was pretty cool. So I would say seasonal has been relatively subdued, but we are seeing a good pickup as we've come into May, and we've seen warmer weather. So there have been spots of warmer weather, and as I say, the start of May has been very promising. So we've seen quite a strong pickup in certain seasonal items. So hopefully that will continue and we can all enjoy the sunshine. In terms of reducing the carry to zero, we are very mindful of that and we will continue to look for opportunities to do that. And I wouldn't be at all surprised if we do some more this year. In terms of longer-term holds, yes, we definitely have other candidates, but we We tend to look at this seriously once they approach this 100 million of EBITDA as the time to move them across. And so that will largely dictate when we might make the next promotion into that group.

Thank you. Now we're going to take our next question. And the question comes land of Holly Tam from UBS. Your line is open. Please ask a question.

Morning. Thank you very much for taking my questions. If I could have a couple on action, please, and one action while Saunders on action. Can I ask a question about the like-for-like 9.8% revenue growth year to date? Could you give us numbers, please, on how much that is footfall versus price reduction? And given the comparatives last year were 24% in Q1, I think 90.5% in Q2, and then falling to 14 and 11 in the second half, would it be reasonable for us to expect that like-for-like to be higher in the second half? And then a question on Royal Saunders. I mean, the £580 million valuation now, that's a big uplift, I think 57% from last year. Clearly, you did make some additional investment and we did see that value increase, I think, pretty steadily to the half year and then again to the full year. Could you give us any colour on the multiple that you've applied to this and whether that's changed or whether the value uplift is all earnings driven? Thank you very much, Paul.

Okay. Thanks, Hayley. I'll deal with the first two, and then James can maybe talk about raw standards multiple. The like-for-like 9.8% year-to-date includes a negative price component. So, essentially, you're seeing greater transaction growth than 9.8%. You're seeing something between 10.5% to 11% is volume growth or transaction growth, and the balance is price reduction negative, bringing it down to 9.8%. And that's the story so far. In terms of comparatives in the second half, obviously like-for-likes are all about what the previous year's number is. So, yes, we – we obviously will face easier hurdles to compare against, not so much in the second quarter where it's still around 20%, as you say, but certainly as we get into the last two quarters of the year. And then, James, do you want to talk about rural?

Sure. We don't disclose individual multiples, as you know, Hayley, but, I mean, rural sciences is performing very strongly. We had the refinancing during the year. And as you said, we had the additional purchase. So I just leave it like that. The performance is driven from earnings more than any changes to the multiple.

Thank you. Thank you. Now we're going to take our next question.

And the question comes from Bruce Hamilton from Morgan Stanley. Your line is open. Please ask a question.

Hi, morning, guys. Thanks for taking my questions. First one on action and then two non-action. So I think looking at the first calendar quarter, the EBITDA margin is sort of 13.2% in Q124, which is 80 BIPs higher than prior year. So I just wondered if there was any kind of upside risk to the, I think, somewhere between 10 and 20 BIPs sort of expansion in margins you kind of guided to previously because it feels like that's running quite a bit better. So, I mean, one-offs in there. Secondly, in terms of the P multiples or the multiples applied to the non-action portfolio, what would it take for you to sort of maybe reduce the buffer or the level of conservatism? And then thirdly, In terms of the whip on investments sort of looking better, what are the most sort of promising areas or sectors if there's any kind of particular skew that looks more kind of interesting? Thank you.

Okay, thanks, Bruce. Why don't I take the first and the last, and James can deal with the P multiples. Yeah, I mean, we saw good drop through and good cost control in Q1 relative to Q1 last year. So quite a material step up in the margin. I mean, I'm just going to say it's too early in the year to really be definitive about it. I would say, Bruce, we are on a long term trajectory of reducing prices. That volume-led like-for-like growth means that you don't get the cushion that comes from higher profit margins. Putting more volume through the supply chain and the stores involves more people and more costs. So, while we do expect the EBITDA margin to, again, step up this year, I don't think we're at a point to move away from that original guidance that Yoast gave to you on the 23rd of March. But it's obviously something we'll keep under review as we go through the year, given the strong start that's been made. In terms of new investments and the WIP, I think where we've been particularly seeing some activity is in private label and is particularly in the services and software services related sectors. So they would be the two that are are looking most promising in the short term, I would suggest.

So I'll come back to you, Bruce. In terms of the P multiple X actions of 13 times, I think your question was basically what would it take for us to take those numbers up and reduce the buffer. I think our approach, our valuation approach, has been pretty consistent. We look at these things cross-cycle. And it wasn't so long ago where what seemed like pretty substantial buffers got eroded pretty quickly when the market sort of derated after the sort of high levels we saw in 20 and 21. So I think our approach has withstood the test of time. We've all lived through a lot of cycles. So we'll continue to have a cautious lens on this, but we do review each individual company in great detail. So where there is a justification, when the peer group's moved and the performance is good, you know, we'll always consider it. But it's against that lens that I described. Got it. Thank you. Thanks, Bruce.

Thank you. Now we're going to take our next question. And the question comes from Luke Mason from BNP Paribas. Your line is open. Please ask your question.

Yeah, thanks for taking my questions, guys. Firstly, on sourcing action, previous messaging had been there'd been excess capacity in factories in the Far East. Are you still seeing those dynamics? And I guess what's the lead time for that to work through in terms of sales in the stores? And related to that second question on pricing, the price reductions you passed on last year were broad-based, it seems, 42% of the product catalog. Are you still seeing kind of broad-based price pass-through this year, or are there certain categories where you're seeing more price pass-through to customers? And then just thirdly, on the exit outlook, so you exited Nexi and just wondering what you're seeing in terms of the outlook for further potential exits this year. And maybe if you could just give a comment on Nexi, on the rationale behind the sale versus how you would have thought about it as a potential long-term compounder. Thank you.

Sure. Thanks, Luke. Sourcing. So we're still seeing some very good pricing coming out of China in particular and the Far East. So we still think they're very keen on export orders in particular. So there will continue to be benefits for our customers as as new orders are placed and they come through. I mean, we've been seeing that, if you remember, I first mentioned that at these results last year. And so it's been a pretty consistent drumbeat. And the seasonal stuff that came in before Christmas all benefited from that. And the seasonal stuff that came in for pre-Easter and will be coming in pre-summer is benefiting from that as well. So you can expect to see continued price reductions in the store, and they've been pretty board-based. Going to your second question, and we've taken over 1,000 prices down already this year, and we'll be continuing with that. I mean, in terms of Nexi, so Nexi was at a slightly past its six-year anniversary with the firm, so it was very much in the exit timeline. It, like quite a number of assets had suffered a significant setback as a result of the pandemic and store restrictions and things like that. So the first two years' progress we made with the business were basically given up by what happened in 2020 and 2021. But they've been on a very strong recovery trajectory since then with a particularly good growth in the Eisenmohr business in Germany. And while we'd like to ultimately put all of our things in the long-term hold bucket, we do have to act as filters. And this one felt like the right time to move it on and let the next party take the story on a further step. So that's why we came to the decision. As I say, the realization markets are not easy, but this was a good enough business to sort of deal with that and sail through that. Great. Thank you very much.

Thank you. Dear participants, as a reminder, if you wish to ask a question over the phone, please press star 11 on your telephone keypad. Alternatively, you can submit your questions through the webcast page. And now we're going to take our next question. And it comes from the line of Hubert Lam from Bank of America. Your line is open. Please ask your question.

Hi. Good morning. I've got three questions. Firstly, on Nexia again. Can you please confirm what the uplift we should expect in the sale? I think my calculations is not very much, but just wanted to confirm that for the next quarter or the half year. The second question is on action. Were there any working day effects in the weeks of week 12 to 18? I know when you, in the CMD, when you last gave your update on like-for-like sales, you said it would be adjusted for comparable trading days, and like-for-like sales was actually closer to 11%. Just wondering if there are any other effects for the latest life-for-life sales you reported to May. And lastly, on action, again, the net debt to run rate earnings is 2.2 times, which is still quite low. Can you give any update on any releveraging plans as strong cash generation continues? Thank you.

Thanks, Hubert. Nexi was basically transacted at very close to the bookmark, so there's just a small, small, small uplift into the end of the year for that, so at the two times money multiple. Action in terms of week 12 to 18, there's nothing dramatic. Easter fell in a slightly different part of the year, but we still have about a a 1% type adjustment to make if you want to have a true like-for-like comparison with last year. So the 9.8% would be nearer the 11% that you referred to. In terms of the net debt and refinancing, this is obviously something we're keeping under review, and we will certainly look at again this year given – You know, the cash at week 18 has ended at $6.63. I think the same period last year ended at sort of $3.50, $3.60. So you can see there's been a big step up in cash performance in the first part of this year relative to last year. And so we can expect this thing will be de-gearing very quickly. So that is more than likely, I would say, Hubert. Great. Thank you.

Thank you. Now we're going to take our next question. And the question comes from Charles Mercer from Singer Capital Markets. Your line is open. Please ask your question.

Good morning. Quick question about the sort of weaker portfolio companies. How do you feel about the future performance of these assets? Do you feel your expectations have been suitably calibrated? Yes.

There's a lot of background noise if it's in relation to the weaker portfolio companies and whether our future performance has been appropriately calibrated. That was the question. Future performance.

Is that correct? Yes. I don't understand the question, suitably calibrated.

What do you mean, Charles? I don't know. The earnings came in under expectations when you're looking at your models and your valuations and how you're thinking about these businesses are going to perform. Do you think that's fully incorporated now, given your reviews with management teams?

Yeah, I think we've been pretty aggressive in adjusting some of this stuff down. And I think, as I said in my statement, we've actually seen some pretty good trading from a number of these names in the first part of the year. So while we don't think they're all going to have a standout year this year, we do think some of them are going to see some quite strong recovery. And there are just early signs that the German and other consumers are feeling a little more confident about life. As I say, I can't speak for all of them, but there are a number of those in that right-hand list that look to have made a better start to this year.

Thank you very much.

Thank you. Dear participants, as a reminder, if you wish to ask a question over the phone, please press star 11 on your telephone keypad. Alternatively, you can submit questions on the webcast page. I'm showing no further questions, so I will now hand over to Silvia Santoro, Investor Relations Director, to address the written questions submitted via the webcast page.

There are no questions on the webcast.

Okay. So I think if that's it for questions, we'll wrap it up. Thanks for everyone's attention. We appreciate the interest. Okay. Thanks very much. Goodbye.