Good morning. Welcome to 3i's Interim Results Presentation. While it's been a difficult year in the U.K. and beyond, the 3i team has maintained its focus on building long-term portfolio value for the benefit of our shareholders and other stakeholders. We're reporting on a very strong first half at 3i, as you can see from this morning's results, and we continue to make real progress against both our strategic and financial objectives. We've produced a total return of 15%, based on a strong performance from both investment teams. Our NAV per share is now at 905p, and that's after a gross return in private equity of 19%, and some GBP 231 million of new investment. Infrastructure has also started the year well, with a 12% gross investment return. Group liquidity is strong, and we made an operating cash profit of GBP 14 million in the first half.
Private equity has quickly recovered its momentum since the spring lockdowns, with some outstanding performance in the portfolio, as well as good recovery from our retail assets. 85% of our top 20 assets by value grew their earnings in the year to 30th of June, and we completed two transformational bolt-on acquisitions, as well as a new investment in a digital retail platform, GartenHaus, in Hamburg, Germany. The themes and underlying trends which have been driving our investment activity over the last eight years have underpinned this resilient performance in our PE portfolio. As you can see from slide five, over 95% by value of our portfolio is in the blue box, and these companies have either excelled in this challenging environment or adapted to the changing circumstances. Sorry about that. We had a bit of technical issue there.
Some of the themes, such as e-commerce and value for money retail, are going to become even more important as the world moves forward in the face of the economic consequences of government actions taken during the pandemic. How would it look if we were to break down portfolio earnings growth for the top 20 investments in the portfolio? Incidentally, these 20 assets make up 99% of our PE portfolio value. Action stands in the middle bar, and those companies on the left of slide five that had even stronger growth than Action make up the top two bars. We will continue to see very strong growth from this top tier of companies that span consumer, e-commerce, healthcare, and business services. I'll turn to a few specifics and start with Action.
As we mentioned at our capital markets day in September, Action has engineered an impressive recovery after the spring lockdowns. Net sales to the end of October are now up over 10% against 2019, even though 900 of Action's stores were closed for two months in the spring. 2020 has obviously been a challenging year for Action, with huge swings in performance over the year to date. The year started with a strong early trading before the pandemic really took hold in Europe in March, as you can see in periods one and two. Action was forced to close some 900 stores at the peak of the crisis. As a result, it closed all of its French DCs and reduced activity in its German and Polish DCs. You can see this impact most clearly on the like-for-like performance in P3, P4, and P5 on the chart.
It was relatively easy to reopen the store networks, but it was very challenging to bring the full supply chain back to optimum performance when you're faced with the reopening of so many stores with such high levels of demand from consumers all at the same time. It took most of the summer to bring back article availability levels from the DCs to over 90%, with the French network being the most challenged during this period. I'd like to give you some country like-for-like information from mid-May. It's been great to see such strong performance from the German store network in particular, as well as the consistency of performance in Holland, where most of the high street has remained open throughout the year. COVID impacted customer behavior for the first part of 2020. Footfall dropped and basket size grew significantly in all markets, with shoppers buying more items per visit.
Post the first lockdown, footfall has fully recovered in most places, although it is still a little below 2019 levels in both Holland and Belgium. You can also see the top six categories by growth this year on the right-hand side of this slide. The very strong sales leverage that we have seen since the re-openings has led to good profit performance across the group, with P10 LTM EBITDA now at GBP 608 million, some 17% ahead of last year. With the lack of openings in the spring and early summer, we have reduced the store expansion target this year to a little over 160 from the original 242. We've opened 115 new stores to the end of P10, including five new stores in the Czech Republic, where early trading has been well ahead of our plan.
We're now planning to open our first stores in Italy in Q2 2021. Our new DC at Verrières in Western France has now started operating, as has our new distribution hub in Rokitno, Poland. Action has not been immune to the increasing government measures to fight COVID-19 this winter, but these are very different lockdowns to the spring. Action's own social distancing protocols already comply with most of the newly introduced national measures, and we are not facing store closures as we did in the first wave. As you can see here, we have recently been restricted to just selling essential items in France and Belgium. Essentials account for about 60% of the catalog in France and about 55% in Belgium.
Since the end of P10, trading has remained very strong in Germany, Holland, and Poland, but obviously has been restricted to essentials in France and Belgium, where we had to close all stores for a few days while we reconfigured the offer in store. Action will miss some sales in France and Belgium this month, but the drop in sales is likely to be a small fraction of what we saw in the spring. Importantly, we will not be closing any of our DCs as a result of these new measures. It's been a remarkable recovery by Action after a very challenging spring and summer.
The recovery in sales and profitability, as well as the reception to the new stores in the Czech Republic, has all been very reassuring, and we should see a very strong increase in profitability in Action's first half next year as we cycle through the spring closures this year. While the elements of the five-year plan may change a little due to the store rollout delay this year, the Action board remains confident of hitting the sales and profits targets in 2023. I should add here that I took over as chair of the company in October after Adrian Bellamy retired. Adrian did a great job at Action, and we wish him well in his retirement. As I've just described, Action has recovered very strongly, but we have a good number of companies that have excelled this year.
These investments spanning consumer, e-commerce, healthcare, and business services are capable of generating very material returns to 3i over the medium term. They are all very well placed in terms of the mega trends they are positioned for and likely to see good organic growth as well as further M&A opportunities in a number of cases. Their performance has been very strong and sustained throughout the first part of this year. We have also made two material write-downs. It's no secret that the travel situation in the U.K. and U.S. has been very difficult this year, and Audley's departure revenue has been badly affected. We've now taken the view that we are unlikely to see a significant recovery until the third quarter of 2021. However, we do believe that carefully planned international level travel will return, and Audley will be well positioned to benefit during this recovery.
That looks more likely given recent vaccine developments. We've just provided some GBP 50 million of new capital to Audley in order to maintain the Audley team and service proposition over this low travel period. While cash for Formel D has been strong so far, we have not seen activity pick up for the last quarter of 2020 as we had expected. We had a further write-down here as well. In September, we completed the acquisition of GartenHaus, which operates in another very interesting online niche, outdoor garden buildings like sheds and saunas. This outdoor market enjoys double-digit growth, and we intend to develop GartenHaus into a Pan-European leader in the sector. In July, we also completed the acquisition of Sani-Tech West for our bioprocessing platform.
This is a major step which rounds out our global bioprocessing consumables platform, delivers scale, U.S. manufacturing capacity, and an enhanced product offering and capability. We are confident we will see significant growth from this company going forward. We also supported the acquisition of Technogroup by Evernex this summer. That combined business created the leading company in third-party maintenance of critical IT infrastructure in Europe. This is another exciting platform where we expect to see good growth over the medium term. We've once again benefited from another very solid performance from our infrastructure team. They delivered resilient portfolio performance, strong cash generation, and further AUM growth. As a significant investor in 3iN, we are delighted that they produced another quality performance in the first half with a 19% TSR and good portfolio income.
Scandlines faced significant disruption from border closures in the first half, but they still generated good levels of cash from resilient freight volume traffic and a good recovery in passenger traffic when borders reopened. Denmark is now subject to selected travel restrictions again, but we believe the company is well positioned to manage through the pandemic. I hope you agree this has been a good first half for 3i. The quality and resilience of our portfolio is clear. As I've showed you, many of our portfolio companies are either performing or recovering very well. That resilience will also be apparent as we move out of the pandemic and into a period of tough economic choices. We are confident of a strong recovery in the modest number of companies that have suffered the worst effect of government lockdown policies. Thank you, and I'll now pass over to Julia.
Thanks, Simon. We've clearly delivered a strong set of results for the six months to the 30th of September. Well ahead of what we thought we might achieve when we first went into lockdown back in March. With a small number of exceptions that Simon described, our portfolio has shown resilient performance, which is the main component of the 13% increase in our NAV per share from GBP 8.04 at the 31st of March, GBP 9.05 at the 30th of September. As usual, you have the Q2 bridge in the back of the slide pack. Shows a significant pickup in value growth in Q2. Pandemic restrictions were eased. Total value growth for the six months was GBP 1.2 billion, half of which comes from Action's strong recovery, as you can see here.
We also saw another GBP 546 million of value increase from the other strong performers in the private equity portfolio, such as Royal Sanders, Luqom, Cirtec and Hans Anders, just to name a few. 3iN's share price recovery contributed GBP 113 million, the GBP 127 million of value growth from infrastructure. As Simon's talked about, it's not all positive, and the challenges in the travel and automotive sectors are reflected in the GBP 119 million reductions that we recorded in private equity, including Audley Travel and also Formel D. Let me talk in some more detail about the private equity portfolio valuations. At the year-end, I described the valuations process we went through as one of the most difficult I had ever been involved with.
In comparison to that, valuing the portfolio this time was easier, but it still needed some careful judgments. We obviously had to think about the deteriorating environment since governments have again resorted to lockdown strategies and other restrictions. On the positive side, the vast majority of the private equity portfolio has outperformed our forecasts that we used back in March. Most of those companies are being valued using their last 12 months earnings to June, albeit with some adjustment to allow for the effects of the trading impact from the spring lockdowns and restrictions. In a small number of cases, like Cirtec and Evernex, we have also increased the multiple we apply to those earnings to reflect the sector strength and input from the transformational bolt-ons. Those companies where we're seeing a more prolonged impact from the pandemic, we've had to take a range of approaches.
We're now valuing Audley on a DCF basis. Companies with exposure to the automotive sector, we have also taken account of the 2020 and 2021 outlook to form a view on maintainable earnings and value. Where appropriate, I expect we'll have to take this sort of case-by-case approach through the rest of this financial year, particularly in light of the recent reinsertion of restrictions throughout Europe. Here, you can see how this approach to valuations has come through in the numbers. The single biggest contributor is Action, accounting for GBP 644 million of the total GBP 1.1 billion of private equity value growth. I'll come onto that in a minute. The GBP 392 million of positive performance reflects the strong earnings growth elsewhere in the private equity portfolio, which Simon has talked about. That includes companies like Royal Sanders and Luqom.
The negative value growth is dominated by companies with exposure to the automotive and travel sectors. We did take some recovery in multiples where we believe that a negative earnings impact is short-term, which is included in the GBP 211 million attributed to multiples. Together with a small number of increases for companies such as Cirtec Medical and Evernex that I mentioned a minute ago. In keeping with our long-term policy, 16 of the 19 companies valued on an earnings basis are on adjusted multiples, which sit below the market comparables. The average post-discount EBITDA multiple, excluding Action, is up about a turn to 11.9x, reflecting the growing weight of our higher growth companies. Turning to Action. Simon has talked about the excellent recovery we've seen in Action's trading performance since European lockdowns were eased in May.
At 31st of March, there was significant uncertainty about how long lockdowns would last for and about how customers would respond when restrictions were eased or lifted. We remained confident in the long-term plan for Action. We had decided to value our investment using the foundation of the September 2019 third-party transaction. I'd expected to remain at that level until at least September 2020. The recovery was so strong as people came back to the shops, that we decided to revert to our usual methodology at the 30th of June. As a reminder, the way we do it, value the business using its run rate earnings and applying a multiple based loosely on a set of companies, which you can see here. We follow closely how these companies have performed through this challenging period.
You may notice that we've now removed Inditex from the group and added Dollar General to the mix. That's because we regularly assess whether the peer group is a good reflection of the dynamics which drive Action. We have held the multiple we're using to value Action at the 30th of September flat, at the 18x we used at the 30th of June. The strong earnings growth has lifted the EV to EUR 11.26 billion, as you can see here. Taking into account the significant cash generation as well, that's an increase in our balance sheet value from GBP 3.5 billion at March, GBP 4.3 billion at September. Our private equity business finished the period with an excellent 19% gross investment return. Despite the challenging environment, the team has also invested GBP 231 million to build future returns and support our current portfolio.
We invested GBP 115 million in the two transformational portfolio acquisitions that Simon talked about, and with GBP 64 million for GartenHaus. Plenty more information about the private equity portfolio in the appendix, including information on ESG following the capital markets day we held in September. Our infrastructure team have also had a strong first half, as many of you will have seen through 3iN's results, which were reported yesterday. 3iN's share price increase contributed GBP 113 million of our total gross investment return of GBP 134 million. That's a return of 12% in the half. Our two U.S. infrastructure investments have also managed well through this difficult period. Both assets are classified as providing essential services. It means they can continue to operate throughout the pandemic. Smarte Carte's exposure to airline travel means we expect it to have a longer period of recovery.
While in regional rail, we've seen performance continue ahead of expectations. Scandlines also provides essential infrastructure for freight traffic between Germany and Scandinavia. It has demonstrated its resilience, particularly as travel restrictions were eased in the summer. Income from Scandlines makes an important contribution to our cash operating profit. Scandlines is managing its cash and liquidity well, but we don't expect to receive any dividends from the company in this financial year. However, the material and stable contribution from infrastructure, together with a particularly strong contribution from private equity, means we've been able to make a GBP 14 million operating cash profit six months. As you'll recall, our objective is simply to break even on this measure, so that there is no question of us needing to accelerate any realizations to pay the cost of running our business.
This is one of the key pillars of our conservative approach to running 3i. In that same context, the decision by the trustees of the 3i U.K. Pension Plan to insure all its remaining liabilities in a GBP 650 million buy-in contract was a good one for its members and also for 3i. The plan has been very conservatively and well managed for many years, and the trustees were able to execute the transaction without any funding from 3i. As well as fundamentally securing benefits for its members, the plan now has no meaningful exposure to the longevity, interest rates or inflation risks that could have needed funding from 3i.
The IAS 19 write-down of GBP 118 million is an accounting difference, not a cash difference, mainly due to the IAS 19 pension valuation being based on prescribed discount rates compared to the real-world commercial outcome of the buy-in transaction. Removing our funding exposure to the pension plan makes good commercial sense and further simplifies our balance sheet. To remind you, we have a high quality and resilient portfolio. In June, we took the opportunity to extend our funding profile and raised a GBP 400 million, 20-year sterling bond. With the gross cash we had of GBP 687 million on the 30th of September, our GBP 400 million RCF remains undrawn. These factors underpinned the board's decision to declare a first dividend for FY 2021 of GBP 0.175, in line with our policy, and which will be paid in January 2021. Altogether, a very good result for an unprecedented period.
I'll now hand back to Simon to make some concluding remarks before we take questions.
Thanks, Julia. I'd like to conclude by saying that throughout this pandemic, our focus has been first and foremost on protecting the well-being of our own employees, as well as the people in our portfolio companies and the communities where we collectively operate. Of course, we've continued to closely follow local government guidance. I'd like to thank the 3i team for getting on with things this year, and for doing a great job despite the pandemic and frequent governmental interruptions. The agility and adaptability we have seen at 3i, and in the portfolio teams, has been impressive. Their resilience has underpinned our strong performance so far. With the benefit of hindsight, we may well have been cautious in nearly all cases when we rebased portfolio budgets in mid-March. The quality and shape of our portfolio is now coming through very clearly.
We have a significant proportion of true growth companies in our portfolio, which we can add to over time, and which are capable of underpinning years of compounding growth for 3i shareholders. By true growth, I mean companies that can achieve double-digit annual growth rates and produce real profits and cash. Thanks for joining us. We'll now open the lines for some Q and A.
Ladies and gentlemen, we will now begin the question and answer session. If you wish to ask a question, please press star one on your phone and wait for your name to be announced. Again, star one. If you wish to cancel your request, please press the pound or hash key. We'll pause for just a moment to compile the Q and A roster. Once again, if you wish to ask a question, please press star one on your phone and wait for your name to be announced. Luke Mason, your line is now open.
Hi, yes. Just a few questions on Action, please. Just wondering with the second lockdown how this might impact Action store opening pipeline, if at all. Just in terms of post pandemic, how should we think about the opportunities in terms of store openings from there, potential rent negotiations or a faster pace of store opening? Just secondly, on Action's net debt. You can see in the tables, that it's dropped to a range of three to four times. I just wonder if you could give any more detail on what the target range would be in the medium term for Action's net debt level, and how we should think about dividend payments from Action in the coming years.
Just lastly, on customer acquisition for Action, how is this mix between existing customers and I guess new customers during recent months, if you've got any insight into that? Thanks.
Thanks, Luke. Okay. Let me go through those one by one. The number I gave out in the presentation of 160+ remains the target for this year. We are continuing to open new stores. At the moment, we don't see a reason to move off that target. Obviously, it could change at any moment, but at the moment, we are opening stores, and that is the target. In terms of the post-pandemic store rollout, we believe we can open 300 stores in a year, which is probably slightly more than we originally planned for next year. It's likely that, again, dependent on the pandemic, we would go into next year with that sort of target in order to achieve a degree of catch-up from the gap that we saw this year. We might do the same in the following year.
In terms of gearing, this has been pretty consistent. We tend to gear up to between five and six times on re-financings, and then we look at it again once the thing comes below four times, as it's well on the way to doing. I don't think we're going to be changing that policy. In terms of customer acquisition, I would think what has been noticeable in the year up to the end of P10, up to the end of October, was that we have seen pretty much full customer recovery in terms of footfall. We've seen sustained larger basket sizes. People are shopping more of our categories, and we're obviously benefiting to a degree from more stay-at-home lifestyle that we see. There has been no letup.
In the countries that have not suffered any store disruption in November, we're seeing stronger trading again than the like-for-like that we saw in October. It's continued very strong trading in those places where we're allowed to sell the full catalog in the store.
Great. Thanks.
Once again, if you wish to ask a question, please press star one on your phone and wait for your name to be announced. Again, star one. Our next question comes from the line of Jens Henrik from Citi. Your line is open.
Hi. Good morning, guys. Thanks for the presentation. Apologies if I've missed a bit. I had a bit of trouble with my line in the meantime. Can you just, in terms of your capital deployment or general focus, I thought about half a year ago, that kind of guidance was more to focus on the value creation within the existing portfolio, and obviously we've seen some bolt-on investments there. Now you've done, I think the GartenHaus acquisition was kind of a new investment. Can you just give a bit of color as to what you expect for the next half year? Will it still be very much focused on the value creation within the portfolio? Or are you looking increasingly at adding new investments as well? Thanks.
Thanks, Jens. The group has put a heavy emphasis on platform identification and follow-on bolt-ons for the last five or six years, and we've developed some very interesting companies as a result of that approach. That is a very strong priority, particularly in an environment where sometimes due diligence activity and other things can be quite restricted. That will continue to be a significant feature and that will happen to investments that we very recently acquired as much as investments that we've held for a while. We've just made a new investment. You may have read about that in the pet food business in the U.K. We are continuing to look at a number of prospects as brand new investments, but there's a heavy emphasis on adding bolt-ons to existing platforms.
We're very busy on that front.
Okay. Thanks. Just so I get that correct, is it fair to say that kind of the, I suppose, capital deployment space for new investments has opened up a little bit as well, as compared to probably six months ago?
Yeah, we're certainly still looking at that. We feel more comfortable about the grip and the focus we have on one or two targets in particular. We're very averse to overpaying, so not all of the activity that goes on in the market is really at all suitable for us. Where we have a particular angle or something, that is where we get excited.
Got it. Thank you.
Once again, if you wish to ask a question, please press star one on your phone and wait for your name to be announced. Again, star one. Our next question comes from the line of Shamoli Ravis hanker from Morgan Stanley. Your line is open.
Hi, all. Thank you very much for the presentation. I just had a follow-up on the potential refi deal for Action. If you could expand on plans for distribution of the proceeds, given it could mean a considerable amount this time around, given you're quite a bit below the typical four times leverage. Could distributing the entire amount as ordinary make the progressive dividend policy challenging for the following year as such?
I think it's a little early. In general, we're not looking to do specials. We basically have an interesting WIP and over time, I suspect we will have plenty of opportunity to recycle that cash as we have done in the past. I would say that's probably going to be the main focus, and the main focus will be on looking at our principal dividend rather than looking to specials over time.
Okay. Thank you.
Thanks, Shamoli.
Our next question comes from the line of Michael Sanderson from Barclays. Your line is open.
Hey. Good morning, Simon. Good morning, Julia. Just two very quick ones, please. First of all, those companies where you are not valuing at a discount to the listed multiples, what are the characteristics around those, and why are those treated differently? Second one is sort of slightly more generic, but lots of discussions about capital gains, taxes moving, et cetera. Would this have a impact at all on the way that any of your carry schemes or payment for your staff work out, please?
Thanks, Michael. Good morning. I think both of those questions are better given to Julia to answer. Thanks.
Yeah. Thanks, Simon. Thanks, Mike. The three companies that by sort of process of elimination, 16 out of 19 at a discount to the concept. We've got one very strong performer, and I'll leave you to try and work out which that is, which sits at a marginal premium to the concept. We feel very comfortable about it because of the strength of its performance, and it could be one that we might, in due course, think about how that might progress over time. It's one of the very strong performers. The other two are actually on a floating basis, where you've had some correction in multiples in the past, if they've come below where we think the longer-term average is, then they're sort of floating around that.
We do see that from time to time as companies go around where we think the longer term sector average multiple would be. It's nothing too significant there. On the CGT point, obviously, it's getting quite a lot of press coverage this morning. Bear in mind, we have a lot of people who are Carry participants who sit outside the U.K., that's obviously a U.K.-centric type of issue. I think the view we've always taken with Carry is, it's important that we, as 3i, as a listed company, don't find ourselves having a different treatment for our U.K. employees than other sort of private equity competitors might have. We stay very well connected to how these things are developing, and we'll keep a close eye on it.
The taxation will be what the taxation is, and the main thing is keeping a close eye and making sure that we don't have a significantly differential treatment for our employees versus other people.
Thank you.
Once again, if you wish to ask a question, just press star one on your phone. Again, star one. There are no questions at this time. I will now pass back to the management.
Okay. Thank you, operator. Well, thanks everyone for dialing in. We appreciate the interest. We know we're going to be speaking with quite a lot of you in the next week or two, and we look forward to doing that. Thanks for tuning in and stay safe. Okay. Bye-bye.
Thanks very much.