Half Year Unaudited Results

RNS Number : 8489F
Electra Private Equity PLC
30 May 2013
 



 

 

ELECTRA PRIVATE EQUITY PLC

Unaudited Results for Half Year ended 31 March 2013

 

The information contained in this announcement is restricted and is not for release, publication, or distribution, directly or indirectly, nor does it constitute an offer of securities for sale in the United States, Canada, Japan, Australia or New Zealand.

 

References in this announcement to Electra Private Equity PLC and its subsidiaries have been abbreviated to 'Electra' or 'the Company'. References to Electra Partners LLP and EQM Capital LLP (manager of Electra's money market investments) have been abbreviated to 'Electra Partners' or 'the Manager'.

 

 

Unaudited Financial Highlights for Half Year ended 31 March 2013

 

·      Diluted NAV per share up 9% to 2,684p

·      Diluted NAV per share at 23 May 2013 of 2,707p

·      Diluted NAV per share, including dividends, up 298% over ten years resulting in a ten-year annualised ROE of 15%

·      Return per share (diluted) of 210p for six months

·      Share price up 34% against 15% increase for FTSE All-Share

·      Share price up 394% over ten years against 175% for FTSE All-Share

·      £189 million of liquid resources (net of bank borrowings) at 31 March 2013

·      £111 million of liquid resources (net of bank borrowings) at 23 May 2013

·      US$398 million (circa £257 million) of proceeds expected on completion of Allflex Holdings sale

·      Multicurrency facility of £195 million extended to December 2017

 

Portfolio

 

·      £204 million invested

·      £112 million (inclusive of income) realised

·      £161 million of net valuation increases

·      Largest individual gains: Allflex Holdings (£98 million) and esure (£15 million)

 

 

Commenting on the six month results, Colette Bowe, Chairman of Electra Private Equity, said:

 

"Electra had a good six months to 31 March 2013 with high levels of new investment, portfolio realisations at excellent uplifts to carrying values, an increase in net asset value and a strong share price performance.

 

"The second half of the year has also started well with the announcement in May of the sale of Allflex Holdings, Electra's largest investment.

 

"Although the UK economic outlook is still uncertain, Electra Partners has successfully invested through a number of economic cycles and is able to adapt to market conditions and structure deals creatively. It is encouraging that Electra has adequate liquid resources as the conversion rate of new opportunities to completed investments increases."

 

 

Commenting on Electra's position, Hugh Mumford, Managing Partner of Electra Partners, said:

 

"Electra Partners continues to see an increase in the number of potential investment opportunities in a market where we believe patience and a disciplined approach to investment is likely to be
well-rewarded.

 

 "Electra's portfolio has seen a high level of activity in the period, with a record level of investments and some major disposals at significant uplifts. The portfolio remains well positioned to make further progress."

 

 

For further information:

For Colette Bowe & Hugh Mumford:

Kate Ruck Keene and Charlotte McMullen, M:Communications                                           020 7920 2322

Nicholas Board and Andrew Kenny, Electra Partners LLP                                                    020 7306 3902

 

 

Performance Summary

 

Unless otherwise stated all information is at 31 March 2013 and is unaudited.

 

At 31 March 2013 the net asset value ('NAV') per share was 2,684p (diluted) and 2,828p (basic). At 23 May 2013 the NAV per share (diluted) was 2,707p and 2,854p (basic).

 

Performance (Total Return):


Six months

One

year

Three years

Five years

Ten years

Electra NAV per share (diluted)

9% 

14%

41%

41%

298%

Morningstar PE Index NAV per share return (ex. Electra)*

11%

10%

20%

(31)%

52%

Electra share price

34%

38%

75%

49%

394%

Morningstar PE Index share price return (ex. Electra)**

32%

35%

40%

(25)%

73%

FTSE All-Share Index

15%

17%

29%

39%

175%

 

Performance calculated on a total return basis with dividends reinvested.

 

*        The above index, prepared by Morningstar UK Limited, reflects the NAV per share performance of 20 private equity vehicles, excluding Electra, quoted on the London Stock Exchange

**      The above index, prepared by Morningstar UK Limited, reflects the share price performance of 20 private equity vehicles, excluding Electra, quoted on the London Stock Exchange

 

Diluted and Basic NAV

 

As a result of the issue of £100 million 5% Subordinated Convertible Bonds ('Bonds') in December

2010, Electra is required to report both a basic and diluted NAV per share. During the six months to 31 March 2013 a total of 13 Bonds were converted into 634 ordinary shares. Accordingly, the diluted NAV per share assumes the issue at 31 March 2013 of a further 4,875,707 ordinary shares on the basis of the conversion terms of the Bonds.

 

Calculation of NAV

 

At 31 March 2013

The calculation of the unaudited NAV per share at 31 March 2013 has been affected by the issue of the Bonds. Electra is required to prepare accounts and report in accordance with the Companies Act 2006 and International Financial Reporting Standards (IFRS) as adopted by the European Union. Under IFRS, the Bonds are a compound financial instrument which contains both a liability and an equity component. Of the £100 million raised, £20 million of the Bonds was accounted for as an equity instrument with the balance accounted for as debt at 31 March 2013. Further details of the accounting treatment of the Bonds are set out in the Report and Accounts for the year ended 30 September 2012.

 

At 23 May 2013

The unaudited NAV per share at 23 May 2013 was calculated on the basis of the NAV at 31 March 2013 adjusted to reflect purchases and sales of investments, currency movements and bid values on that day in respect of listed investments.

 

Return on Equity

Return on Equity is the internal rate of return based on the difference between the opening and closing NAV plus any dividend paid in the period. The annualised return on equity for the 10 years ended 31 March 2013 was 15%.

 

Allflex Holdings Realisation Proceeds

On 3 May 2013 Electra announced the receipt of a binding offer for its investment in Allflex Holdings for gross proceeds of US$398 million (£257 million based on exchange rates on that date). The offer has subsequently been accepted and completion is subject to certain regulatory approvals.

 

 

The Half Year Report for the six months ended 31 March 2013 will be available on the Company's website www.electraequity.com. Neither the contents of this website nor the contents of any website accessible from hyperlinks on this website (or any other website) is incorporated into, or forms part of this announcement. 

 

 



 

Objective and Investment Policy

 

Electra has been quoted on the London Stock Exchange since 1976. Electra is managed as an HM Revenue and Customs approved investment trust, and invests primarily in the private equity mid-market.

 

The business and affairs of Electra are managed on an exclusive and fully discretionary basis by Electra Partners, an independent private equity fund manager with over 25 years experience in the mid-market.

 

Electra's objective is to achieve a rate of return on equity of between 10-15% per year over the long-term by investing in a portfolio of private equity assets.

 

Electra Partners aims to achieve this target rate of return on behalf of Electra by utilising a flexible investment strategy and:

 

·      exploiting a track record of successful private equity investment;

·      utilising the proven skills of its management team with a strong record of deal flow generation and long-term presence in the private equity market;

·      targeting private equity opportunities (including direct investment, fund investments and secondary buyouts of portfolios and funds) so that the perceived risks associated with such investments are justified by expected returns;

·      investing in a number of value creating transactions with a balanced risk profile across a broad range of investment sectors through a variety of financial instruments; and

·      actively managing its capital position and levels of gearing in light of prevailing economic conditions.

 

The investment focus is principally on Western Europe, with the majority of investments made in the United Kingdom where Electra Partners has historically been most active. There is an emphasis on areas where Electra Partners has specific knowledge and expertise. In circumstances where Electra Partners feels that there is merit in gaining exposure to countries and sectors outside its network and expertise, consideration is given to investing in specific funds managed by third parties or co-investing with private equity managers with whom it has developed a relationship.

 

In implementing Electra's flexible investment strategy, Electra Partners typically targets investments at a cost of £40 million to £100 million in companies with an enterprise value of up to £300 million.

 

Electra Partners attempts to mitigate risk through portfolio diversification. Investments will therefore be made across a broad range of sectors and industries. At the time of investment, not more than 15% of Electra's total assets will typically be invested in any single investment. If Electra acquires a portfolio of companies in a single transaction, this limitation shall be applied individually to each of the underlying companies purchased and not to the portfolio as a whole.

 

Electra has a policy to maintain total gearing below 40% of its total assets.

 

Unless required to do so to maintain Electra's investment trust status, it is the policy of the Directors not to pay dividends.

 



 

Chairman's Statement

 

Overview

 

Electra had a good six months to 31 March 2013 with high levels of new investment, portfolio realisations at excellent uplifts to carrying values, an increase in net asset value and a strong share price performance.

 

The second half of the year has also started well with the announcement in May of the receipt of a binding offer to acquire Allflex Holdings, Electra's largest investment.

 

Results

 

At 31 March 2013 Electra's diluted net asset value per share was 2,684p compared with 2,473p at 30 September 2012, an increase of 9% against a FTSE All-Share rise of 15%. Electra's share price increased by 34% over the period. The share price of 2,365p at 31 March 2013 represented a discount to diluted net asset value of 12%, a further improvement from the discount at 30 September 2012 of 28%. The return per share on a diluted basis for the six months amounted to 210p.

 

Based on indices prepared by Morningstar UK Limited, Electra's share price has increased by 394% over the 10 years to 31 March 2013, while the FTSE All-Share Index increased by 175%, on a total return basis.

 

Performance

 

Over the six months Electra's portfolio produced a total return of £161 million, an increase of 19%. A significant part of this increase was due to the uplift in the valuation of Allflex Holdings at 31 March 2013 and the realisation of a substantial part of Electra's holding in esure.

 

Investment Activity

 

The first six months of the year were exceptionally busy as Electra took advantage of its flexible investment approach and invested a record amount in a six month period of £204 million. This compares to £92 million in the six months to 31 March 2012 and £150 million for the year to 30 September 2012. These investments were principally in bank related assets where the purchase price was at a discount to the valuation of the underlying assets.

 

Realisations in the period totalled £112 million compared to £268 million for the six months to 31 March 2012 and £301 million for the year to 30 September 2012.

 

Carried Interest Provision

 

As part of the update of investment strategy and terms of appointment for Electra Partners which were approved by shareholders in 2006, members of Electra Partners receive a carried interest of 18% of net profits on each relevant three year pool of investments, subject to Electra receiving back the aggregate amounts advanced to finance investments in the relevant pool, a related priority profit share of 1.5% of valuation per annum and a performance hurdle of 8% per annum compound.

 

In accordance with the financial reporting requirements to which Electra is subject, an accounting provision is only made in respect of carried interest arrangements when there is a reasonable likelihood that an amount may become payable in respect of a relevant investment pool.

 

The high level of realisation proceeds expected from the binding offer received for Allflex Holdings together with the changes in valuation to other relevant investments, has triggered a first time carried interest provision of £40 million in respect of the 2006 investment pool. The uplift in diluted net asset value per share of 9% for the six months is calculated after reflecting this provision.

 

Net Liquid Resources

 

At 31 March 2013 Electra had £189 million of liquid resources net of bank borrowings of £163 million. By 23 May 2013 liquid resources had reduced to £111 million principally as a result of new investments in AXIO Data Group and the EP I Secondary Portfolio.

 

Following completion of the Allflex Holdings realisation, Electra's liquid resources will increase by the receipt of US$398 million (circa £257 million).

 

In 2011 Electra's multi-currency revolving credit facility was refinanced, increasing the size from £185 million to £195 million and extending the loan term from January 2013 to June 2016. The maturity profile of Electra's capital base has now been further improved by an 18 month extension of the term, with the result that the facility is repayable in four and a half years' time in December 2017.

 

Board Changes

 

As indicated in my Statement for the year ended 30 September 2012, Lucinda Webber retired from the Board with effect from the Annual General Meeting held on 7 March 2013. Francesca Barnes was appointed a non-executive Director of the Company on the same day.

 

Francesca has recently retired from a 27 year career in finance, the last seven of which were spent as Global Head of private equity for UBS. Her extensive knowledge of the private equity sector will prove valuable in Board discussions.

 

I am also pleased to report that Kate Barker has been appointed Chairman of the Remuneration and Nomination Committee and Senior Independent Director in succession to Lucinda Webber.

 

Outlook

 

I indicated in my last Statement that the Board expected that Electra's deal flow would increase in the period ahead driven by distressed sales and the necessity for companies to refinance debt and dispose of non-core assets.

 

Electra Partners has an interesting pipeline of potential transactions with a continued focus on bank owned assets. Although the UK economic outlook is still uncertain, Electra Partners has successfully invested through a number of economic cycles and is able to adapt to market conditions and structure deals creatively. It is encouraging that Electra has adequate liquid resources as the conversion rate of new opportunities to completed investments increases.

 

 

 

 

 

Dr Colette Bowe

Chairman

29 May 2013

 

 

 



 

The Manager

 

Electra Partners is an independent private equity fund manager with over 30 years' experience in the mid-market. During this time the firm has invested in excess of £3 billion, accumulated considerable expertise and built a strong track record.

 

As at 31 March 2013, Electra Partners had funds under management of over £1.6 billion on behalf of Electra and other clients.

 

The senior management team have on average 26 years' experience in private equity. The investment team is supported by a 23-strong team experienced in compliance, finance, investor relations and marketing.

 

Senior Management Team


Years of private equity experience

Hugh Mumford

Managing Partner

31

Tim Syder

Deputy Managing Partner

27

David Symondson

Deputy Managing Partner

29

Alex Fortescue

Chief Investment Partner

18

Rhian Davies

Partner

19

Philip Dyke

Partner

39

Steve Ozin

Partner

23

 

 

Investment Team


Years of private equity experience

Alex Cooper-Evans

Investment Partner

18

Charles Elkington

Investment Partner

18

Nigel Elsley

Investment Partner

24

Chris Hanna

Investment Partner

14

Sarah Williams

Investment Director

10

John Martin

Investment Manager

10

Ian Wood

Investment Manager

10

Shakira Adigun-Boaye

Investment Associate

1

Tom Stenhouse

Investment Associate

1




Oliver Huntsman

Portfolio Manager, UK

30

Peter Carnwath

Portfolio Manager, US

30

John Levack

Portfolio Manager, Asia

22

 



 

Investment Highlights

 

Electra's portfolio has seen a high level of activity in the period, with a record level of new investment and the sale of two of the largest investments in the portfolio.

 

Market Environment

 

During the six months to 31 March 2013 the private equity market has remained challenging. While Electra's dealflow has been robust, the economic outlook has in many cases created uncertainty in the valuation of potential investments, making it difficult to match pricing expectations of vendors. This has impacted the rate of conversion of opportunities into portfolio investments. Electra has continued to focus on transactions where either the vendor is under pressure to sell or the complexities of the deal have reduced the level of competition - circumstances which allow investments to be made at more attractive pricing levels.

 

Performance

 

Electra's net asset value has continued to make positive progress with the unaudited fully diluted net asset value per share increasing to 2,684p at 31 March 2013 from 2,473p at 30 September 2012. This 211p per share increase represents growth of 9% compared to an increase in the FTSE All-Share Index over the same period of 15%. Over the year to 31 March 2013 the NAV has increased by 14% compared to the FTSE All-Share Index of 17%.

 

During the six months to 31 March 2013, the investment portfolio generated a total return of 19%. This strong performance triggered a significant carried interest charge in relation to the 2006-2009 management incentive scheme due to the fact that provisions for incentive payments are not recognised until performance thresholds are exceeded.

 

Analysis of Movement in Net Asset Value

 


£m

30 September 2012 Opening NAV

916

Net gains on investments

161

Finance and other costs, other income

(7)

Priority profit share

(11)

Incentive provisions

(51)

Net FX movements

(9)

31 March 2013 Closing NAV

999

 

 

Investment Activity

 

Contrary to the low volume of transactions in the private equity market, Electra's investment activity reached a high level in the six months to 31 March 2013 both in terms of new investment and realisations from the portfolio. Total new investment for the period reached £204 million, more than double the amount of investment in the corresponding period of the previous year. In line with Electra's investment strategy, these new investments were made at attractive pricing levels. The period also saw  sale activity for two of Electra's largest investments - esure was listed on the London Stock Exchange in March 2013 and Allflex is now the subject of a binding contract of sale with completion anticipated in the near term.

 

Outlook

 

The six months to 31 March 2013 have seen continued good progress from Electra's investment portfolio, with substantial additions to the portfolio and major disposals at significant uplifts to opening book value. While activity in the private equity market remains at a relatively low level, we expect an increase in the number of interesting investment opportunities as the rebalancing of the UK economy takes place. We continue to believe that this is a market where patience and a disciplined approach to investment is likely to be well-rewarded.

 



 

Portfolio Review

 

At 31 March 2013 Electra's investment portfolio was valued at £1,121 million. The investment portfolio consists of direct unlisted investments, secondaries, funds and listed companies. The top 10 and 20 investments account for 64% and 81% respectively of the investment portfolio.

 

Portfolio Breakdown

 

Investment Portfolio
As at 31 March

2013
£m

2012
£m

Direct unlisted

777

543

Secondaries

138

40

Funds

113

109

Listed

93

94

Investment portfolio

1,121

786

 

 

Direct Unlisted Investments (70% of portfolio)

Direct unlisted investments form the major part of Electra's portfolio and consist of investments in 36 companies with an aggregate value of £777 million. The 15 largest investments accounted for 90% of the direct unlisted investments at 31 March 2013.

 

Secondary Investments (12% of portfolio)

Secondary investments consist of limited partnership interests in third party funds or secondary funds where an existing investor is seeking to sell its position prior to the end of the fund's life. As a result of their relative maturity, secondary investments typically produce faster returns than direct investments. At 31 March 2013 Electraheld investments in 12 secondary positions.

 

Fund Investments (10% of portfolio)

Since 2006 investments in funds have consisted of limited partnership interests in funds managed by other private equity managers where Electra has made an original commitment to a fund. These are made primarily to generate co-investment opportunities for Electra. At 31 March 2013, the fund portfolio also contained investments in funds made prior to 2006 which are in a process of run off.

 

Listed Investments (8% of portfolio)

For the most part, listed investments are held where they arise from previously unlisted investments. However, Electra may also invest in listed companies where the management team, which Electra wishes to support, operates through a listed vehicle. Listed investments had an aggregate value of £93 million at 31 March 2013.

 

 

Investment Portfolio - Geographic breakdown

 

 At 31 March

2013

2012


%

%

UK

63

68

Continental Europe

23

19

USA

10

8

Asia and elsewhere

4

5

 

 

Investment Portfolio - Sector Breakdown

 

 At 31 March

2013

2012


%

%

Agricultural

23

17

Building and construction

2

2

Financial services

14

16

Healthcare

7

12

Non-cyclical consumer goods

5

10

Private equity funds

21

17

Property investment

14

12

Senior bank debt

7

5

Software and computing

3

4

Speciality engineering

3

3

Other

1

2

 

 



 

Direct Unlisted - Age Analysis (by last refinancing date)

 

At 31 March 

2013

2012


%

%

Less than 1 year old

16

21

1 - 2 years

18

5

2 - 3 years

4

22

Over 3 years

62

52

 

 

Portfolio Movement

 

Electra's investment portfolio increased from £868 million to £1,121 million during the six months to 31 March 2013 as a result of net investment of £92 million and the generation of a total return from the investment portfolio of £161 million.

 

Six months to 31 March

2013

2012

2011


£m

£m

£m

Opening investment portfolio

868

883

766

Investments

204

92

73

Realisations

(112)

(268)

(91)

Total return

161

79

84

Closing investment portfolio

1,121

786

832

 

 

New Investments

 

New investments during the six months to 31 March 2013 amounted to £204 million which compared to £92 million in the corresponding period of the previous year. Investments included £91 million in the AXIO Data Group, £78 million in the purchase of secondary private equity funds and £13 million in CALA Group.

 

AXIO Data Group is a provider of data and information products to customers in 28 countries worldwide, with the UK, France, Canada, the US and Singapore being the key territories. Business information is provided to a wide range of sectors including healthcare, technology & IP, global trade, aviation and forest products. AXIO Data Group was purchased in a £160 million buyout from UBM plc arranged by Electra Partners.

 

During the first six months of the financial year, Electra acquired limited partnership interests in seven secondary funds for a total investment of £78 million. These secondary funds had interests in 90 primary funds which commenced investing between 2006 and 2008 and are now mainly in a cash generative stage. Outstanding commitments at 31 March 2013 in respect of these secondary purchases amounted to £25 million. These secondary positions were purchased at a significant discount to the valuation of the investments in the underlying primary funds.

 

The investment in CALA Group was made in March 2013. CALA is a mid-market house builder based in the UK, well known as a high quality operator in the premium housing segment. While the majority of the land bank and current sales are in Scotland, CALA also has extensive interests in the Midlands and South East England. Electra's investment was made alongside Patron Capital, a property focused private equity fund, and Legal & General.

 

Electra made a number of other smaller investments and a further £9 million was drawn down by private equity funds in which Electra is a limited partner. Commitments outstanding to private equity funds increased to £104 million at 31 March 2013 including £25 million in respect of the secondary interests purchased in the period under review.

 

Realisations

 

Realisations for the six months to 31 March 2013 amounted to £112 million. The most significant realisation related to esure, the insurance services business which was subject to an initial public offering in March 2013. Including proceeds received in February 2013, prior to this offering, Electra realised £68 million for the majority of its investment in esure, of which £57 million was realised prior to the half year end and £11 million was received shortly thereafter. Post receipt of this last payment, Electra's investment consists of 2.1 million shares in esure which had a valuation of £6 million at the issue price. The total cash received over the holding period of this investment together with the value of the shares retained have provided a return to Electra of three times the original cost of £30 million in just over three years.

 

In addition to the proceeds from esure, Electra also received a further £12 million of proceeds in respect of the sale of BDR Thermea and £18 million from the sale of investments in private equity funds in which Electra holds a limited partnership interest.

 

Shortly after the end of the half year period, Electra entered into a binding contract to sell its entire interest in Allflex Holdings, for total proceeds of US$398 million.

 

Performance

 

During the six months to 31 March 2013, Electra's investment portfolio generated a total return of £161 million, an increase of 19% on the opening portfolio of £868 million.

 

This return arose principally from the direct investment portfolio which generated a total return of £122 million representing an increase in the six month period of 20%. The investments in secondary portfolios contributed £37 million to the total return while the fund portfolio added £7 million. Listed investments declined by £5 million in the period under review.

 

Of the total return in the period of £161 million - income received, gains realised or recognised for a contracted sale amounted to £123 million or 76% of the total return. The remaining £38 million arose from a net increase in unrealised appreciation. Of this £38 million, £33 million arose in relation to the EP I Secondary Portfolio investment which was revalued in accordance with relevant accounting standards. This return included currency movements, increases in valuation of the funds since purchase and the elimination of the discount received on the initial purchase.

 

Valuation Changes

 

The majority of changes in valuation during the period were made to recognise a realisation or impending sale. The largest gain related to Allflex Holdings, where an impending sale allowed a gain of £98 million to be recognised in respect of this investment. This resulted in the valuation of £154 million at the beginning of the period increasing to £252 million at 31 March 2013, an increase of 64%. The initial public offering of esure produced gains of £15 million. The combination of sale proceeds and retained shares represented an increase of 26% on the valuation of the investment at 30 September 2012.

 

Apart from esure and Allflex Holdings, Electra had holdings in 17 direct investments with a valuation of £7.5 million or more. Of these 17 investments, 12 investments were increased in value during the period, two investments were retained at their existing valuation and three were reduced in value. The net change in unrealised appreciation of these direct investments amounted to £13 million of which £3 million related to Noumena which was sold for £9 million shortly after the period end. The unrealised appreciation of direct investments with a value below £7.5 million, was reduced in aggregate by £4 million in the period.

 



 

Direct Unlisted Investments - Valuation Changes

 



Valuation change

Company

£m

%

Allflex Holdings

98.3

63.8

esure

15.2

25.8

Daler-Rowney

3.8

18.1

Premier Asset Management

3.8

16.6

Noumena

3.3

56.8

Kalle

2.9

27.9

Park Resorts

2.1

3.0

BDR Thermea

2.0

6.9

Lil-lets Group

1.8

5.0

Peverel Group

1.6

5.0

Labco

1.6

12.2

Sentinel Performance Solutions

1.3

12.9

PINE

0.9

5.2

Treetops

0.6

10.7

AXIO Data Group

0.0

0.0

CALA Group

0.0

0.0

Promontoria

(2.2)

(6.6)

Nuaire

(4.2)

(13.3)

Davies Group

(6.1)

(25.4)

 

 

Direct Unlisted Investments - Valuation Basis

 

 At 31 March

2013

2012


%

%

Earnings basis

30

69

Exit price

40

7

Recent cost / listed price

14

13

Redemption value

10

Yield basis

6

11

 

 

 

 

Hugh Mumford

Managing Partner

Electra Partners LLP

29 May 2013

 

 

 



 

Key New Investments and Realisations

 

New Investments

 

AXIO Data Group

 

Location: International

Equity Ownership: 68.8%

Valuation: £90,584,000

Cost: £90,584,000

Type of Deal: MBO

 

In February 2013 Electra exchanged contracts to acquire UBM plc's Data Services division for £160 million. The majority of the transaction completed in April 2013 with the remaining parts of the transaction (accounting for £15.3 million of the consideration) due to complete separately as a result of outstanding regulatory and other approvals. Electra has invested £91 million to date and, should the outstanding part of the transaction complete, the total investment will be £98.5 million.

 

The businesses provide data and information products which professionals use to support their decision-making and day-to-day business activities. Operating in 28 countries worldwide, the businesses serve a wide range of sectors including healthcare, technology & IP, global trade, aviation and forest products.

 

Although the individual businesses will continue to operate under their own well established brands, the group will be known as AXIO Data Group.

 

 

CALA Group

 

Location: UK

Equity Ownership: 10.7%

Valuation: £13,286,000

Cost: £13,286,000

Type of Deal: Co-investment

Website: www.cala.co.uk/group

In March 2013 Electra invested £13.3 million as a co-investor in Patron Capital Partners and Legal & General's acquisition of CALA Group from Lloyds Banking Group. The transaction valued CALA at £210 million and was financed by £70 million of debt and £140 million of equity.

 

Headquartered in Edinburgh, CALA Group is a national house builder which provides high quality homes in the North, East and West of Scotland, in the Midlands and in the South East of England, focusing on high quality, well designed homes in prime locations, from starter homes to luxury detached family properties.

 

CALA expects to capitalise on the continued recovery in the housing market.

 

 



 

Realisations

 

esure

 

Proceeds: £56,973,000

Residual Value: £17,192,000

Type of Deal: MBO

 

In 2010 Electra invested £30 million in the management buyout of esure from Lloyds Banking Group, led by Peter Wood, founder and Executive Chairman of esure. The transaction was unleveraged and the total value was in excess of £185 million. esure is now one of the UK's leading motor insurers, offering car, home, pet and travel insurance over the internet and by phone through the esure and Sheilas' Wheels brands. esure also has a 50% interest in Go compare, the internet aggregator.

 

In March 2013 esure successfully completed an IPO, allowing Electra to realise the majority of its investment. Prior to the IPO, £15.3 million of Electra's original investment had been repaid. As a result of the IPO, Electra received further cash proceeds of £51.5 million and retained a holding of 6.2 million ordinary shares in esure. Subsequently in April 2013, Electra sold 4 million of the 6.2 million esure shares receiving further proceeds of £11.2 million. Electra retains 2.2 million shares in esure which, at the IPO price, have a valuation of £6.4 million.

 

Including income and the shares still held, the investment in esure has generated a gross return of 3x cost for Electra; an IRR of 48%.

 

 

Noumena

 

Proceeds: £9,300,000

Cost: £4,628,000

Type of Deal: Co-investment

 

In 2002 Electra invested £3.7 million alongside other investors to acquire a large property in Central London at a total cost of £37 million. The property, which was purpose-built as a post office sorting facility, had been unoccupied for a considerable period of time and had a difficult planning position.

 

The objective was to obtain a revised planning consent based on the use required by a major anchor tenant.

 

In March 2013 it was agreed that the building would be sold for £95 million to a financial buyer. As a result, Electra is due to receive proceeds of £9.3 million which would represent a gross return of 2x original cost; an IRR of 7%.



 

Key Investments

 

Direct Unlisted and Secondary Investments

 

Company

Fair
Value of holding at
30 Sept 2012
£'000

Net
payments/
(receipts)
£'000

Performance in period £'000

Fair
Value of holding at
31 Mar 2013
£'000

Cost of holding at
31 Mar
2013
£'000

ALLFLEX HOLDINGS

154,143

98,307

252,450

49,269

Animal identification tags






EP I SECONDARY PORTFOLIO

76,544

33,455

109,999

76,544

Secondary private equity funds






AXIO DATA GROUP

90,584

90,584

90,584

B2B information services






PARK RESORTS

69,788

(1,647)

2,084

70,225

69,000

Caravan parks operator






LIL-LETS GROUP

36,265

4,950

1,815

43,030

28,144

Feminine hygiene products






PEVEREL GROUP

33,164

1,648

34,812

21,972

Property management services






PROMONTORIA

33,599

(984)

(2,203)

30,412

14,082

Property holding company






NUAIRE

31,960

(4,248)

27,712

23,138

Ventilation systems manufacturer






PREMIER ASSET MANAGEMENT

22,843

3,788

26,631

55,837

Investment management






DALER-ROWNEY

21,149

3,824

24,973

17,435

Fine art materials supplier






BDR THERMEA

28,900

(12,406)

2,006

18,500

Heating products






DAVIES GROUP

23,855

(6,054)

17,801

35,789

Provider of claims solutions






PINE

17,200

(594)

894

17,500

14,030

Property investment in nursery education






ESURE

58,945

(56,973)

15,220

17,192

Motor and home insurance






LABCO

13,236

1,614

14,850

25,336

Medical diagnostics






KALLE

10,520

2,933

13,453

9,001

Food casings






CALA Group

13,286

13,286

13,286

National house builder







555,567

112,760

155,083

823,410

543,447

Other investments

90,114

(2,377)

4,001

91,738



645,681

110,383

159,084

915,148


 

 

 



 

Listed Investments

 


Fair
Value of
holding at
30 Sept 2012
£'000

Net payments/
(receipts)
£'000

Performance in period £'000

Fair
Value of
holding at
31 Mar 2013 £'000

Cost of holding at 31 Mar
2013
£'000

ZENSAR TECHNOLOGIES

34,413

(494)

(2,620)

31,299

4,072

Software






LONDONMETRIC PROPERTY

34,125

(5,184)

(1,350)

27,591

26,463

Property holding company







68,538

(5,678)

(3,970)

58,890

30,535

Other investments

36,292

(1,608)

(512)

34,172



104,830

(7,286)

(4,482)

93,062


 

 

Fund Investments

 

Funds

117,176

(10,699)

6,616

113,093

133,373

 

The three largest funds were Motion Equity Partners, Sinergo Con Imprenditori and TCR 3, which accounted for 46% of the total value.



Large Private Equity Investments

 

Allflex Holdings

 

Location: International

Equity Ownership: 37.7%

Valuation: £252,450,000

Cost: £49,269,000

Type of Deal: MBO

Website: www.allflexusa.com

 

Valuation based on exit value

 

In 1998 Electra invested £23.1 million in the US$160 million buyout of Allflex. Allflex is the world's leading manufacturer and distributor of plastic and electronic animal identification tags with factories in France, Brazil, Poland and China. In 2003, 2005 and 2007 the business was refinanced which resulted in Electra receiving aggregate proceeds of £98 million, whilst retaining an investment in the business.

 

The business continues to show strong growth as a result of the impact of an acquisition completed in 2011, organic growth in non-regulated markets and the impact of new regulations.

 

In early 2013 a strategic review of Electra's interest in Allflex was undertaken with both a possible sale and refinancing considered. After significant interest from both trade and private equity, Electra received a binding offer for Allflex from BC Partners on 3 May 2013.

 

The offer has subsequently been accepted and completion is subject to certain regulatory approvals. On completion, Electra will receive US$398 million which would represent a gross return of 15x original cost (including income) over the 14 years of investment; an IRR of 28%.

 

 

Park Resorts

 

Location: UK

Equity Ownership: nil
Valuation: £70,225,000
Cost: £69,000,000

Type of Deal: Senior debt

Website: www.park-resorts.com


Valuation based on price of recent transactions

 

In 2012 Electra invested £69 million in the acquisition of senior debt in Park Resorts at a discount. Park Resorts is a leading operator of holiday parks offering caravan holidays at its 39 sites in largely coastal locations across the UK including Essex, Yorkshire, Kent, Sussex and Scotland. Its market has proved resilient in recent years, with demand supported by demographics and the trend towards UK holidays, driven by airport queues and taxes and pressure on disposable incomes.

 

Park Resorts traded well in the year to March 2013, despite unusually poor weather, continuing depressed economic conditions and the distractions of the London Olympics, and ended the year with EBITDA marginally ahead of the prior year.

 



 

Lil-lets Group

 

Location: UK and South Africa

Equity ownership: 61.7%

Valuation: £43,030,000

Cost: £28,144,000

Type of deal: MBO

Website: www.lil-lets.com

 

Valuation based on multiple of earnings

 

In 2006 Electra made an equity investment in the management buyout of Lil-lets. Lil-lets is a leading feminine hygiene brand with operations in the UK and South Africa and sells a range of tampons, sanitary towels and pantliners.

 

Lil-lets' 2011 rebranding and launch of a number of new, innovative products (applicator tampons, FreshLOCK Towels and Teens Towels) has been successfully achieved. This UK expansion from tampons to a broader range of feminine hygiene products is in response to shifting consumer demand and improving product quality in other formats. The investment in establishing the broader product range is continuing on the back of distribution gains from the trade and positive consumer feedback.

 

Whilst the UK market for feminine hygiene products remains competitive, South Africa continues to be a growth market in which the company has a leading position with a broad range of product formats. Further market opportunities exist in the wider Sub-Saharan Africa and Lil-lets has just entered into distribution agreements in both East and West Africa. 

 

In December 2012, Electra invested a further £5 million in Lil-lets to support the growth of the business.

 

 

Peverel Group

 

Location: UK

Equity Ownership: 49.4%
Valuation: £34,812,000
Cost: £21,972,000
Type of Deal: MBI / MBO

Website: www.peverel.co.uk


Valuation based on multiple of earnings

 

In 2012 Electra, in conjunction with other investors, acquired Peverel, the UK's leading property management services group, from its administrators. Electra invested £22 million in the £62 million deal.

 

Headquartered in New Milton, Hampshire, Peverel has offices in London, Luton, Birmingham and Glasgow and employs over 4,200 people. Its activities include residential property management services, which are provided to 4,000 developments across the UK, property sales, insurance services, installation and maintenance of safety and security systems, telecare and telehealth monitoring.

 

Peverel has benefitted from the stability of new ownership and has rebuilt its management team since acquisition. The main focus of the management team has been on improving service quality. The new Appello telehealth product has been launched and represents a potentially very exciting growth area for the business.

 

The recent financial performance of the business has been encouraging and has benefitted from the strengthening of Peverel's balance sheet since acquisition.

 



 

Promontoria

 

Location: Germany

Equity Ownership: 10.7%

Valuation: £30,412,000

Cost: £14,082,000

Type of Deal: Acquisition Capital

 

Valuation based on a combination of rental yield and expected disposal value

 

In 2002 Electra provided acquisition funding to a new company which was subsequently acquired by Promontoria, an unleveraged investment company, which now owns 94 retail properties situated throughout the major towns and cities in Germany. Of these, 81 are leased to the discount chain Woolworth, which underwent a significant financial restructuring in 2010 and since that time has opened more than 50 new stores. Electra's investment in Promontoria is in the form of ordinary shares and loan stock.

 

The German retail property market remained buoyant throughout 2012 with investor demand continuing to be high. Against this background, Promontoria has continued to progress; the two significant redevelopments of vacated properties at Bad Homburg and Ingolstadt have been completed, let and now sold for aggregate post tax proceeds of €45 million. Up to ten further redevelopments have been identified and will be progressed. In total, 15 properties have now been sold for aggregate post tax proceeds of more than €150 million and more than 10,000m² of retail space has been leased to third parties over the past 12 months.

 

 

Nuaire

 

Location: UK

Equity Ownership: 38.8%

Valuation: £27,712,000

Cost: £23,138,000

Type of Deal: MBO

Website: www.nuaire.co.uk

 

Valuation based on multiple of earnings

 

In 2007 Electra led the £83 million management buyout of Nuaire.

 

Nuaire is a leading UK based manufacturer and distributor of ventilation equipment for commercial and residential applications, headquartered in Caerphilly, South Wales.

 

Nuaire achieved modest growth in profits during the year to 30 September 2012 and continues to reduce its net debt. The market remains challenging in 2013, however legislative changes focussed on energy efficiency and a series of new product development initiatives create the opportunity to broaden Nuaire's addressable markets and increase its market share.

 



 

Premier Asset Management

 

Location: UK

Equity Ownership: 73.7%

Valuation: £26,631,000

Cost: £55,837,000

Type of Deal: MBO

Website: www.premierassetmanagement.co.uk

 

Valuation based on multiple of earnings

 

Premier is a retail asset manager distributing funds through IFAs as well as other discretionary and advisory channels. Electra initially invested in minority equity and subordinated debt in support of the take-private of Premier in 2007. In 2009 Electra made a further equity investment in Premier in order to support the acquisition of two OEICs from Aberdeen Asset Management.

 

Assets under management were £2.2 billion at the end of March 2013, having benefitted from market and performance growth since the start of the current financial year. Net sales of investment products have continued to improve over the past six months, particularly driven by upper quartile multi-asset performance. In addition, the fund management team has been strengthened further with new hires.

 

Premier is well positioned for organic growth based on its IFA market positioning and distribution infrastructure, the effects of the FCA's Retail Distribution Review on the advisory market, as well as the long-term growth nature of the retail investment market. The company's strategy is to accelerate organic growth by selective recruitment and to make further acquisitions.

 

 

Daler-Rowney

 

Location: International

Equity Ownership: 41.1%

Valuation: £24,973,000

Cost: £17,435,000

Type of Deal: MBO

Website: www.daler-rowney.co.uk

 

Valuation based on multiple of earnings

 

Electra made a £17.4 million equity investment in Daler-Rowney in 2011. Daler-Rowney is one of the largest suppliers of fine art materials in the world with a comprehensive product range including artists' paints, brushes, papers and canvases which meet the needs of beginner, amateur, student and professional artists. The company manufactures its products in the UK and the Dominican Republic and sells in more than 90 countries worldwide.

 

Daler-Rowney continues to grow sales in every market on the back of increased distribution. The company has built on its heritage brands with new product launches and at the same time has strengthened existing customer relationships and developed new ones.

 

The company completed its first acquisition in Germany in December 2012. This investment will make Daler-Rowney one of the biggest fine art product suppliers in Germany, Europe's largest market.

 



 

Davies Group

Location: UK

Equity Ownership: 46.2%
Valuation: £17,801,000
Cost: £35,789,000
Type of Deal: MBO

Website: www.davies-group.com


Valuation based on multiple of earnings

 

In 2011 Electra invested £35.8 million in Davies Group, a leading provider of claims management solutions to the insurance industry. Davies Group provides a range of insurance claims services across all sectors of the insurance market, including claims management, validation and loss adjusting, and claims fulfilment. Operating nationally, Davies acts on behalf of a range of insurance companies, specialist sectors such as Lloyd's of London, as well as service companies, brokers and self-insured entities.

 

Following the disappointment of some client losses and a market notably lacking in weather events, Davies has won a number of significant new clients putting the company back on a growth footing. It has also successfully integrated a bolt-on acquisition of a niche provider to local authority markets.

 

There has been significant progress in its entry into the commercial and liability claims markets which are not correlated to weather patterns. Significant investment in an innovative mobile IT system to support the company's field force of inspectors and loss adjusters is aimed at increasing service levels and productivity.

 

 

PINE

 

Location: UK

Equity Ownership: 99.0%

Valuation: £17,500,000

Cost: £14,030,000

Type of Deal: Start up

Website: www.thepinefund.com

 

Valuation derived from property investment value

 

Electra first invested in PINE as a start up business in 2005. PINE comprises a sale & leaseback property investment portfolio of nursery schools let on index-linked leases to nursery school operators who are ranked in the top ten in the UK.

 

PINE's property portfolio is cash positive post debt servicing and has maintained its value in a difficult commercial property market through a combination of rental growth and general market appetite for index-linked rental income.

 



Consolidated Income Statement (unaudited)

 





2013



2012

Note

For the six months ended 31 March

Revenue
£'000

Capital
£'000

Total
£'000

Revenue
£'000

Capital
£'000

Total
£'000


Profit on investments:








Investment income/net gain

14,567

154,074

168,641

24,301

55,814

80,115


(Loss)/Profit on revaluation of foreign currencies

(10,758)

(10,758)

 −

3,234

3,234



14,567

143,316

157,883

24,301

59,048

83,349


Other income

286

286

252

252


Incentive schemes

(51,052)

(51,052)

(4,001)

(4,001)


Priority profit share

(10,807)

(10,807)

(8,827)

(8,827)


Income reversal

(4,391)

(4,391)


Other expenses

(1,394)

(1,394)

(1,230)

 −

(1,230)


Net Profit  before Finance Costs and Taxation

(1,739)

92,264

90,525

14,496

55,047

69,543


Fair value movement of derivatives

337

337

(355)

(355)


Finance costs

(7,889)

(1,934)

(9,823)

(8,912)

(1,826)

(10,738)


Profit on Ordinary Activities before Taxation

(9,291)

90,330

81,039

5,229

53,221

58,450


Taxation credit/(expenses)

82

9

91

(3,823)

 −

(3,823)


Profit on Ordinary Activities after Taxation attributable to owners of the parent

(9,209)

90,339

81,130

1,406

53,221

54,627

3

Basic Earnings per Ordinary Share

(26.06)p

255.62p

229.56p

3.98p

150.60p

154.58p

3

Diluted Earnings per Ordinary Share

(15.06)p

224.63p

209.57p

10.72p

132.34p

143.06p

 

 

The 'Total' columns of this statement represent the Group's Income Statement prepared in accordance with International Accounting Standard ('IAS') 34 'Interim Financial Reporting' as adopted by the European Union. The supplementary Revenue and Capital columns are both prepared under guidance published by the Association of Investment Companies.

 

The amounts dealt with in the Consolidated Income Statement are all derived from continuing activities.

 

 

Consolidated Statement of Comprehensive Income (unaudited)

 



2013

2012

Note

For the six months ended 31 March

£'000

£'000


Profit for the period

81,130

  54,627


Exchange differences arising on consolidation

1,924

(285)


Total Comprehensive Income for the period

  83,054

  54,342


Total Comprehensive Income attributable to owners of the parent

  83,054

  54,342

 

 



 

Consolidated Statement of Changes in Equity (unaudited)

 

For the six months ended
31 March 2013 for the Group

Called-up
share
capital
£'000

Share
premium
£'000

Capital

redemption

reserve

£'000

Other

reserves

£'000

Translation

reserve

£'000

Realised

capital

profits/

(losses)

£'000

Unrealised

capital

profits/

(losses)

£'000

Revenue

reserves

£'000

Total
shareholders'
funds
£'000

Opening balance at 1 October 2012

                    8,835

             24,181

             34,440

             23,046

 (4,295)

852,850

(43,872)

                21,119

                   916,304

Net revenue transferred to reserves

                          -  

                     -  

                     -  

                     -  

                     -  

-

-

(9,209)

 (9,209)

Net profits on realisation of investments during the period

                          -  

                     -  

                     -  

                     -  

                     -  

12,784

-

                        -  

                          12,784

Financing costs

-  

-  

-  

-  

-  

(1,934)

-

-  

 (1,934)

Increase in value of non-current investments

                          -  

                     -  

                     -  

                     -  

                     -  

-

141,290

                        -  

                   141,290

Increase in incentive provisions

                          -  

                     -  

                     -  

                     -  

                     -  

-

(51,052)

                        -  

 (51,052)

Gains and losses on foreign currencies

                          -  

                     -  

                     -  

                     -  

               1,924

2,188

(12,946)

                        -  

 (8,834)

Unrealised net appreciation at 1 October 2012 on investments sold during the period

                          -  

                     -  

                     -  

                     -  

                     -  

27,405

(27,405)

                        -  

                             -  

Conversion of convertible bond

                          -  

                    13

                     -  

                     -  

                     -  

-

-

                        -  

                            13

Tax liabilities on Capital

-  

-  

-  

-  

-  

9

-

-  

9

At 31 March 2013

8,835

24,194

34,440

23,046

(2,371)

893,302

6,015

11,910

999,371

 

 

Consolidated Statement of Changes in Equity (unaudited)

 

For the six months ended
31 March 2012 for the Group

Called-up share capital £'000

Share premium £'000

Capital redemption reserve £'000

Other reserves £'000

Translation reserve £'000

Realised

capital

profits/

(losses)

£'000

Unrealised

capital

profits/

(losses)

£'000

Revenue reserves £'000

Total shareholders' funds
£'000

Opening balance at 1 October 2011

8,835

24,181

34,440

23,046

(4,080)

792,823

(87,456)

29,703

821,492

Net revenue transferred to reserves

                          -  

                     -  

                     -  

                     -  

                     -  

                        -  

                             -  

1,406

1,406

Net profits on realisation of investments during the period

                          -  

                     -  

                     -  

                     -  

                     -  

30,336

                             -  

                        -  

30,336

Financing costs

-  

-  

-  

-  

-  

(1,826)

-  

-  

(1,826)

Increase in value of non-current investments

                          -  

                     -  

                     -  

                     -  

                     -  

                        -  

25,478

                        -  

25,478

Increase in incentive provisions

                          -  

                     -  

                     -  

                     -  

                     -  

                        -  

(4,001)

                        -  

(4,001)

Gains and losses on foreign currencies

                          -  

                     -  

                     -  

                     -  

(285)

(1,406)

4,823

                        -  

3,132

Unrealised net appreciation at 1 October 2011 on investments sold during the period

                          -  

                     -  

                     -  

                     -  

                     -  

27,248

(27,248)

                        -  

                             -  

Exchange loss transferred to income statement on liquidation of subsidiary

                          -  

                     -  

                     -  

                     -  

                  183

-                    (183)

                             -  

                        -  

-

At 31 March 2012

8,835

24,181

34,440

23,046

(4,182)

              846,992

(88,404)

                31,109

                   876,017

 

 



 

Consolidated Balance Sheet (unaudited)

 



As at 31 March
 2013

(Audited)
As at 30 September 2012

As at 31 March
 2012

Note


£'000

£'000

£'000

£'000

£'000

£'000


Non-Current Assets








Investments held at fair value:








Unlisted and listed portfolio


1,121,303


867,687


785,843


Other investments


275,898


298,969


397,190




1,397,201


1,166,656


1,183,033


Current Assets








Trade and other receivables

19,359


3,746


4,334



Current tax asset

819



1,482



Cash and cash equivalents

76,284


78,387


16,211




96,462


82,133


22,027



Current Liabilities








Current tax liability


1,305


3,822



Trade and other payables

110,701


8,199


4,934



Derivative financial instrument

1,674


2,010


712



Net Current (Liabilities)/Assets


(15,913)


70,619


12,559


Total Assets less Current Liabilities


1,381,288


1,237,275


1,195,592


Bank loans

163,068


153,629


158,930



Zero Dividend Preference Shares

58,677


56,743


54,859



Convertible bond

79,898


78,295


76,683



Deferred tax liability


8




Provisions for liabilities and charges

80,274


32,296


29,103



Non-Current Liabilities


381,917


320,971


319,575


Net Assets


999,371


916,304


876,017


Capital and Reserves








Called up share capital


8,835


8,835


8,835


Share premium

24,194


24,181


24,181



Capital redemption reserve

34,440


34,440


34,440



Other reserves

23,046


23,046


23,046



Translation reserve

(2,371)


(4,295)


(4,182)



Realised capital profits

893,302


852,850


846,992



Unrealised capital profits/(losses)

6,015


(43,872)


(88,404)



Revenue reserve

11,910


21,119


31,109





990,536


907,469


867,182


Total Equity Shareholders' Funds


999,371


916,304


876,017

4

Basic Net Asset Value per Ordinary Share


2,827.79p


2,592.80p


2,478.80p

4

Diluted Net Asset Value per Ordinary Share


2,683.63p


2,473.10p


2,360.36p


Ordinary Shares in issue at 31 March


35,341,025


35,340,391


35,340,391

 

The notes on pages 25 to 27 are an integral part of the financial statements.

 

 

 



 

Consolidated Cash Flow Statement (unaudited)

 



2013


2012

For the six months ended 31 March

£'000

£'000

£'000

£'000

Operating activities





Purchase of portfolio investments

(102,728)


(86,750)


Purchase of other investments

(158,100)


(283,600)


Amounts paid under incentive schemes

(3,073)


(12,322)


Sales of portfolio investments

89,761


219,459


Sales of other investments

181,100


116,600


Dividends and distributions received

6,071


8,241


Other investment income received

4,488


35,666


Interest income received

64


104


Other income received

223


148


Expenses paid

(12,714)


(12,170)


Taxation expense

(2,042)


(652)


Net Cash Inflow/(Outflow) from Operating Activities


3,050


(15,276)

Financing Activities





Finance costs paid

(3,088)


(3,790)


Other finance costs

(251)



Convertible Bond Interest paid

(2,499)


(2,499)


Net Cash Outflow from Financing Activities


(5,838)


(6,289)

Changes in cash and cash equivalents


(2,788)


(21,565)

Cash and cash equivalents at 1 October


78,387


39,434

Translation gain/(loss)


685


(1,658)

Cash and Cash Equivalents at 31 March


76,284


16,211

 

 



 

Notes to the Accounts

 

Within the notes to the Half Year Report, all current and comparative data covering periods to, or as at, 31 March are unaudited.

 

1 Basis of Preparation

 

The Half Year Report is unaudited and does not constitute financial statements within the meaning of Section 434 of the Companies Act 2006.

 

The statutory accounts for the year ended 30 September 2012, which were prepared in accordance with International Financial Reporting Standards, as endorsed by the European Union ("IFRS") and with those parts of the Companies Act 2006 applicable to companies reporting under IFRS, have been delivered to the Registrar of Companies. The Auditor's opinion on those accounts was unqualified and did not contain a statement made under Section 498(2) or Section 498(3) of the Companies Act 2006. The financial information comprises the Consolidated Balance Sheets as at 31 March 2013, 30 September 2012 and 31 March 2012 and for the periods ended 31 March 2013 and 31 March 2012, the related Consolidated Income Statement, Consolidated Statement of Comprehensive Income, Consolidated Statement of Changes in Equity, Consolidated Cash Flow Statement and the related notes hereinafter referred to as "financial information".

 

The financial information has been prepared in accordance with the Disclosure and Transparency Rules of the Financial Conduct Authority and the principal accounting policies and key estimates set out in the Annual Report for the year ended 30 September 2012 which is available on Electra's website (www.electraequity.com). The financial statements are prepared in accordance with IAS 34. The financial statements have been prepared on a going concern basis and under the historical cost basis of accounting, modified to include the revaluation of certain assets at fair value.

 

Application of new standards

 

At the balance sheet date, the Company has adopted all Standards and IFRIC interpretations that were either issued, or which become effective, during the year. None of the standards adopted below had any significant impact on the Group's accounts:

 

·      IFRS 1 (revised) First time adoption

·      IFRS 3 (revised) Business Combinations

·      IAS 27 (revised) Consolidated and separate financial statements

 

At the date of authorisation of these financial statements, there were no new standards, amendments or interpretations issued that are applicable to the Group's accounts.

 

2 Segmental Analysis

 

The chief operating decision-maker has been identified as Electra Partners. Electra Partners reviews the Group's internal reporting in order to assess performance and allocate resources. Electra Partners has determined the operating segments based on these reports. Electra Partners considers the business as  a single operating segment.

 

 



3 Earnings per Share

 


2013

2012

Net revenue (loss)/return attributable to ordinary shareholders (£'000)

(9,209)

1,406

Net capital return attributable to ordinary shareholders (£'000)

90,339

53,221

Total return (£'000)

81,130

54,627

Total equity shareholders' funds (£'000)

999,371

876,017

Net revenue (loss)/return on which diluted return per share calculated finance charge net of taxation of £3,151,000 (2012: £2,904,000) added back (£'000)

(6,058)

4,310

Net capital return on which diluted return per share calculated (£'000)

90,339

53,221

Weighted average number of ordinary shares in issue during the period on which the undiluted return per ordinary share was calculated

35,340,555

35,340,391

Weighted average number of ordinary shares in issue during the period on which the diluted return per ordinary share was calculated

40,216,732

40,216,732

 

 



Basic earnings
per share


Diluted earnings
per share


2013
p

2012
p

2013
p

2012
p

Revenue return per ordinary share

(26.06)

3.98

(15.06)

10.72

Capital return per ordinary share

255.62

150.60

224.63

132.34

Earnings per ordinary share

229.56

154.58

209.57

143.06

 

 

4 Net Asset Value per Ordinary Share

 

On 29 December 2010 Electra issued £100 million of 5% Subordinated Convertible Bonds at an issue price of 100 per cent and an initial conversion price of 2,050p. Bondholders may convert their Bonds into ordinary shares of the Company from 7 February 2011 up to and including the date falling seven business days prior to 29 December 2017. The Bond has been treated as a compound financial instrument containing both a liability and an equity component.

 

The basic Net Asset Value ("NAV") per share is calculated by dividing NAV of £999,371,000 (2012: £876,017,000) by the number of ordinary shares in issue amounting to 35,341,025 (2012: 35,340,391).

 

The diluted NAV per share is calculated by adding the liability component of the Convertible Bonds amounting to £79,898,000                 (2012: £73,244,000) to NAV of £999,371,000 (2012: £876,017,000) and then dividing by the fully diluted number of ordinary shares amounting to 40,216,732 (2012: 40,216,732) after taking into account dilutive potential shares.

 

 

5 Share Capital

 

For the six months ended 31 March

2013
£'000

2012
£'000

Allotted, called-up and fully paid 35,341,025 (2012: 35,340,391) ordinary shares of 25p each

8,835

8,835

 

 

During the six months ended 31 March 2013, 13 (2012: nil) Subordinated Convertible Bonds were converted into 634 ordinary shares.               

 

 

6 Related Party Transactions

 

Certain members of Electra Partners (the "participants") are entitled under various limited partnership agreements to benefit from carried interest and co-investment arrangements. Under these schemes the participants invest in every new investment made by Electra up to 31 March 2006. In return the participants receive a percentage of the total capital and revenue profits made on each investment, "LTI". The participants do not receive any profits until Electra has received back its initial investment.

 

In addition the participants are entitled to a percentage of the incremental value of unlisted investments held at 31 March 1995, subject to Electra having received in total proceeds equal to the valuation of those investments as at 31 March 1995 and a preferred return "1995 LTI".

 

Following approval at the Extraordinary General Meeting held on 12 October 2006 the participants entered two new schemes. The participants are entitled to receive a percentage of the incremental value of certain investments held at 31 March 2006, "Initial Pool", following Electra receiving total proceeds equal to the opening value and a preferred return, after deduction of related priority profit share ("PPS"). The second scheme entered into under the new arrangements requires the participants to invest in every new investment made by Electra since 1 April 2006, "2006 Pool". On a pooled basis participants receive a percentage of the total capital and revenue profits once Electra has received back its initial investment, a preferred return and a related priority profit share. Following the same methodology new pools commenced for deals starting 1 October 2009,"2009 Pool" and 1 October 2012, "2012 Pool".

 

No Directors of Electra participate in the above schemes.

 

As at 31 March

LTI
2013
£'000

1995 LTI
2013
£'000

Initial Pool
2013
£'000

2006 Pool
2013
£'000

2009 Pool
2013
£'000

2012 Pool
2013
£'000

Total
2013
£'000

Provisional Entitlement

9,875

69

8,343

39,987

15,289

5,889

79,452

Outstanding Entitlement

645

177

822

Total Amount Outstanding

10,520

69

8,520

39,987

15,289

5,889

80,274

Amount Paid in Period

1,311

1,762

3,073

 

 

As at 31 March

LTI
2012
£'000

1995 LTI
2012
£'000

Initial Pool
2012
£'000

2006 Pool
2012
£'000

2009 Pool
2012
£'000

2012 Pool
2012
£'000

Total
2012
£'000

Provisional Entitlement

10,416

80

10,338

8,269

29,103

Outstanding Entitlement

Total Amount Outstanding

10,416

80

10,338

8,269

29,103

Amount Paid in Period

3,653

8,669

 −

12,322

 

 

In November 2007, Electra entered into a co-investment agreement with Electra Partners Club 2007 LP ("Club"), a fund managed by Electra Partners LLP. The co-investment agreement requires Electra to co-invest at the ratio of 2:1 in all Electra Partners investments in private equity opportunities in Western Europe where the combined investment of Electra and the Club would represent a controlling stake and where the combined equity investment is between £25 million to £75 million. Both parties will invest on the same terms and conditions. The agreement allows for variations to these arrangements in certain prescribed circumstances. For example, where investment would compromise Electra's ability to qualify as an Investment Trust or where the Club would exceed certain concentration ratios. Investments that arise from interests that Electra already held prior to the establishment of the Club are unaffected by these sharing arrangements. These arrangements expired in May 2013.

 

 



 

Independent review report to Electra Private Equity PLC

 

Introduction

 

We have been engaged by the company to review the condensed set of financial statements in the half-yearly financial report for the six months ended 31 March 2013, which comprises the Consolidated Income Statement, the Consolidated Statement of Changes in Equity, the Consolidated Balance Sheet, the Consolidated Cash Flow Statement and related notes. We have read the other information contained in the Half-Yearly financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.

 

Directors' responsibilities

 

The half-yearly financial report is the responsibility of, and has been approved by, the Directors. The Directors are responsible for preparing the Half-Yearly financial report in accordance with the Disclosure and Transparency Rules of the United Kingdom's Financial Conduct Authority.

 

As disclosed in note 1, the annual financial statements of the group are prepared in accordance with IFRSs as adopted by the European Union. The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with International Accounting Standard 34, "Interim Financial Reporting", as adopted by the European Union.

 

Our responsibility

 

Our responsibility is to express to the company a conclusion on the condensed set of financial statements in the half-yearly financial report based on our review. This report, including the conclusion, has been prepared for and only for the company for the purpose of the Disclosure and Transparency Rules of the Financial Conduct Authority and for no other purpose. We do not, in producing this report, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior consent in writing.

 

Scope of review

 

We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410, 'Review of Interim Financial Information Performed by the Independent Auditor of the Entity' issued by the Auditing Practices Board for use in the United Kingdom. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

 

Conclusion

 

Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the six months ended 31 March 2013 is not prepared, in all material respects, in accordance with International Accounting Standard 34 as adopted by the European Union and the Disclosure and Transparency Rules of the United Kingdom's Financial Conduct Authority.

 

 

 

 

 

PricewaterhouseCoopers LLP
Chartered Accountants
London

29 May 2013



 

Half Year Management Report

 

Current and Future Development

 

A review of the main features of the six months to 31 March 2013 is contained in the Chairman's Statement, the Investment Highlights and Portfolio Review which are on pages 4 to 5 and 7 to 11.

 

Performance

 

A detailed review of performance during the six months to 31 March 2013 is contained in the Investment Highlights and Portfolio Review on pages 7 to 11.

 

Risk Management

 

As the Company is focused on investment in private equity assets, Electra Partners aims to limit the risk attaching to the portfolio as a whole by careful selection of investments and by a spread of holdings in terms of overall portfolio analysis, age and geographic split in accordance with the Company's Objective and Investment Policy.

 

It is the role of the Board to review and manage all risks associated with the Company either mitigating these directly or through Electra Partners. The principal risks facing the Company include Market Price Risk, Credit Risk, Interest Rate Risk, Liquidity Risk and Capital Risk as set out in Note 19 in the Notes to Accounts of the Company's Report and Accounts for the year ended 30 September 2012. In addition the Company is also focused on Macroeconomic Risks, Gearing Risks, Foreign Currency Risk, Long-Term Strategic Risk, Government Policy and Regulation Risk, Investment Risks, Valuation Risk and Operational Risk as set out in the Report of the Directors of the Company's Report and Accounts for the year ended 30 September 2012. The risks identified in the Company's Report and Accounts for the year ended 30 September 2012 have not changed significantly since the year end.

 

Related Party Transactions

 

Details of Related Party Transactions are contained in Note 6 of the Notes to the Accounts for the six months ended 31 March 2013.

 

Going Concern

 

The Directors believe that it is appropriate to continue to adopt the going concern basis in preparing the Half Year Report as the Company has adequate resources to continue in operational existence for the foreseeable future.

 

Forward-looking Statement

 

Certain statements in this Half Year Report are forward looking. Although the Company believes that the expectations reflected in these forward statements are reasonable, it can give no assurance that these expectations will prove to have been correct. Because these statements involve risks and uncertainties, actual results may differ materially from those expressed or implied by these forward-looking statements. The Company undertakes no obligation to update any forward-looking statements whether as a result of new information, future events or otherwise.        

 

 

 



 

Responsibility Statement

 

The Directors confirm to the best of their knowledge that:

 

a)      the condensed financial statements have been prepared in accordance with IAS 34 as adopted by the European Union; and

 

b)      the Half Year Management Report includes a fair review of the information required by:

 

(i)      DTR 4.2.7R of the Disclosure and Transparency Rules, being an indication of important events that have occurred during the first six months of the financial year and their impact on the condensed set of financial statements; and a description of the principal risks and uncertainties for the remaining six months of the year; and

 

(ii)     DTR 4.2.8R of the Disclosure and Transparency Rules, being related party transactions that have taken place in the first six months of the current financial year and that have materially affected the financial position or performance of the Company during that period; and any changes in the related party transactions described in the last annual report that could do so.

 

By order of the Board of Directors

 

 

 

 

 

Dr Colette Bowe

Chairman

29 May 2013

 

 



 

Information for Shareholders

 

Financial Calendar

 

Interim Management Statement to December 2012                                                                          14 February 2013

Annual General Meeting                                                                                                                           7 March 2013

Half-year Results announced                                                                                                                     30 May 2013

Interim Management Statement to June 2013                                                                                     July/August 2013

Annual Results announced                                                                                                   November/December 2013

 

New Website

 

A complete overhaul of Electra's website was conducted during 2012 and the new site launched in March 2013. To view the new website please visit www.electraequity.com.

 

Electra News via Email

 

If you would like to receive email notice of our announcements please visit our website at www.electraequity.com and click on the "Subscribe to receive news alerts" logo on the Home page. Registering for email alerts will not stop you receiving annual reports or any other documents you have selected to receive by post.

 

Trading Information - Ordinary shares

 

Listing                                   London Stock Exchange

ISIN                                      GB0003085445

SEDOL                                 0308544

Ticker/EPIC code                 ELTA

Bloomberg                            ELTALN

Reuters                                 ELTAL

 

Trading Information - Convertible Bond

 

Listing                                  London Stock Exchange

ISIN                                     GB00B5B0NW64

SEDOL                                B5B0NW6

Ticker/EPIC code                ELTC

Bloomberg                           ELTALN5 12/29/2017 Corp

 

Convertible Bond

 

What is a Convertible Bond?

 

A convertible bond is a tradable debt that can be converted into a predetermined amount of the company's equity during its life.

In the case of Electra, £100 million of Convertible Bonds were raised in December 2010. Each bond was priced at £1,000 per bond and generates 5% interest per annum payable semi-annually in equal instalments in arrears on 29 June and 29 December in accordance with the terms of the Prospectus.

Bondholders can convert their bonds into Electra shares at any time within the life of the bond (expires 2017) in accordance with the terms of the Prospectus. The conversion price in effect immediately upon issue of the bonds is 2,050p. The Convertible Bond is listed on the London Stock Exchange and can be traded like other listed securities.

In the unlikely event of Electra winding up, the Bondholders would rank above the ordinary shareholders in terms of being entitled to the capital of Electra.

 

For further information please visit our website www.electraequity.com/convertible.

 

Registrar

 

The Company's ordinary share register is maintained on behalf of the Company by Equiniti Limited.

 

Ordinary Shareholders who have enquiries concerning their registered holdings, including balance queries, assistance with lost certificates and change of address notifications should contact Equiniti Limited, whose full details are provided on page 33.

 

Share Fraud Warning - 'Boiler Room' Scams

 

We are aware that in the past a number of shareholders have received unsolicited phone calls or correspondence concerning investment matters. These are typically from overseas based 'brokers' who target UK shareholders, offering to sell them what often turn out to be worthless or high risk shares. These operations are commonly known as 'Boiler Room' scams.

Please be very wary of any such calls or correspondence. Ask for the name and organisation of the person calling you and check if they can be found on the FCA Register. If they are not listed, please report it directly to the FCA using their consumer helpline (0800 111 6768) or at www.fca.org.uk/consumers/scams. You may also wish to advise us by telephoning 020 7214 4200 or emailing ir@electrapartners.com.

It is very unlikely that either the Company or the Company's Registrars, Equiniti, would make unsolicited telephone calls to shareholders. Such calls would only relate to official documentation already circulated to shareholders and never be in respect of investment 'advice'.

Please remember that if you use an unauthorised firm to buy or sell shares, you will not be eligible to receive payment under the Financial Services Compensation Scheme if things go wrong.

 

Other Useful Websites

 

LPEQ

 

Electra is a founder member of LPEQ (formerly iPEIT), a group of private equity investment trusts and similar vehicles listed on the London Stock Exchange and other major European stock markets, formed to raise awareness and increase understanding of listed private equity.

 

LPEQ provides information on private equity in general, and the listed sector in particular, undertaking and publishing research and working to improve levels of knowledge about private equity among investors and their advisers.

 

For further information visit www.lpeq.com

 

Association of Investment Companies (AIC)

 

Electra is a member of the AIC, the trade organisation for the closed-ended investment companies. The AIC represents a broad range of closed-ended investment companies, including investment trusts, offshore investment companies and venture capital trusts which are traded on the London Stock Exchange, Alternative Investment Market, Special Financials Market, Euronext and the Channel Islands Stock Exchange.

 

For further information visit www.theaic.co.uk

 

 

 



 

Contact Details

 

Board of Directors

Colette Bowe Chairman

Kate Barker

Francesca Barnes

Geoffrey Cullinan

Roger Perkin

Roger Yates

Telephone +44 (0)20 7214 4200

www.electraequity.com

 

Secretary

Frostrow Capital LLP

25 Southampton Buildings

London WC2A 1AL

Telephone +44 (0)20 3008 4910

 

Registered Office

Paternoster House

65 St Paul's Churchyard

London EC4M 8AB

 

Company number

303062

 

Manager

Electra Partners LLP

Paternoster House

65 St Paul's Churchyard

London EC4M 8AB

Telephone +44 (0)20 7214 4200

www.electrapartners.com

 

Investor Relations

Andrew Kenny and Nicholas Board

Telephone +44 (0)20 7214 4200

Email ir@electrapartners.com

 

Registered Independent Auditors

PricewaterhouseCoopers LLP

Chartered Accountants &

Statutory Auditors

7 More London Riverside

London SE1 2RT

 

Stockbroker

JPMorgan Cazenove

 

Financial Advisor

Evercore Partners

15 Stanhope Gate

London W1K 1LN

 

Registrar and Transfer Office

Equiniti Limited

Aspect House

Spencer Road

Lancing

West Sussex BN99 6DA

Telephone (UK) 0871 384 2351 *

Textel/Hard of hearing line (UK) 0871 384 2255 *

Telephone (Overseas) +44 121 415 7047

 

* Calls to these numbers cost 8p per minute plus network extras. Lines open 8.30am to 5.30pm, Monday to Friday

 


This information is provided by RNS
The company news service from the London Stock Exchange
 
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