Unaudited Results Announcement

RNS Number : 1026P
Electra Private Equity PLC
24 May 2018
 

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR PART, IN, INTO OR FROM ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUE A VIOLATION OF THE RELEVANT LAWS OF SUCH JURISDICTION

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION

24 May 2018
Electra Private Equity PLC

Unaudited Results Announcement for the Half Year ended 31 March 2018 and Announcement of Strategic Review and Commencement of Formal Sale Process

This Preliminary Announcement for the Half Year ended 31 March 2018 has been extracted from the Half Year Report.

Highlights for the Half Year to 31 March 2018

·    Increase in NAV of 3.9% to £425 million in the six month period (adjusted for Special Dividend paid on 1 December 2017)

·     Inclement weather in March 2018 impacted key portfolio companies with an estimated £15-20 million impact on NAV

·      NAV per share of 1,109 pence, (of which cash and liquidity funds 254 pence),

·      £349 million returned to shareholders in December 2017 bringing total in last 18 months to £1.8 billion

·    The Board announced the outcome of the second phase ("Phase 2") of its strategic review on 23 October 2017 to:

·      Focus on optimisation of return on shareholders capital

·      Market conditions not considered to support new investment currently

·      Further simplification of group structure being implemented

·      Exploring possibility of a change in listing category

·      Simplification of group structure and disposal of non-core assets continued

·     Edward Bramson stepped back into Non-Executive role from the AGM in March with the duties of the Chief Executive being split between the Chairman, Neil Johnson and the Chief Financial Officer, Gavin Manson

 

Subsequent to 31 March 2018

·    Today the Board announces the commencement of the third and final stage of its strategic review ("Phase 3"), including the commencement of a formal sale process as referred to in the City Code on Takeovers and Mergers (the "Takeover Code")

·     The objective of Phase 3 of the strategic review will be to consider all options for the future direction of the Company and implement a strategy to optimise shareholder value

·   The Board also announces the payment of a Special Dividend of 25 pence per share, payable to shareholders on the register at close of business on 8 June 2018 and payable on 28 June 2018

 

Strategic review and commencement of formal sale process under the Takeover Code

Phase 2 of the Company's strategic review set out the strategy of optimising value for shareholders through an evaluation of return on invested capital versus a return of cash to shareholders. The continued strong private equity market, particularly for secondary sales, has led the Board to choose to undertake a  third, final phase of the review to evaluate the acceleration of selective divestment of some or all of the portfolio, including exploring offers for the Company as a whole, as a means of maximising shareholder value.

 

Throughout the course of Phase 3  the Company will continue to support its portfolio companies in delivery of their respective strategies through continuation of its existing investment policy.

 

The Panel on Takeovers and Mergers (the ''Takeover Panel'') has agreed that any discussions with third parties with regards to the potential sale of the entire issued and to be issued share capital of the Company may be conducted within the context of a 'formal sale process' (as referred to in the Takeover Code)

 

The Company is not currently in receipt of any approach with regard to a possible offer for the Company and is not in talks with any potential offeror.  However, the Company has received expressions of interest from several parties regarding certain groupings of portfolio assets and also for the entire portfolio. No discussions regarding the entire portfolio are currently ongoing and discussions around certain groupings of assets are at an early stage and there can be no certainty that these discussions will result in a transaction acceptable to the Board.

 

Having decided to pursue the next phase of its strategic review, the Company has engaged Greenhill & Co. International LLP ('Greenhill') as its financial adviser in respect of the strategic review and formal sale process. 

 

Parties with an interest in making a proposal should contact Greenhill through the contact details set out at the end of this announcement.

 

It is currently expected that any party interested in participating in the formal sale process, will, at the appropriate time, enter into a non-disclosure and standstill agreement with the Company on terms satisfactory to the Board. The Company then intends to provide such interested parties with certain information on the portfolio assets and the business, following which interested parties shall be invited to submit their proposals to Greenhill. It is expected that the outcome of Phase 3 of the strategic review will be communicated not later than September 2018, however further updates on timing and outcome will be communicated in due course.

 

The Takeover Panel has granted a dispensation from the requirements of Rules 2.4(a), 2.4(b) and 2.6(a) of the Takeover Code such that any interested party participating in the formal sale process will not be required to be publicly identified as a result of this announcement and will not be subject to the 28 day deadline referred to in Rule 2.6(a) of the Takeover Code for so long as it is participating in the formal sale process. Following this announcement, the Company is now considered to be in an "offer period" as defined in the Takeover Code, and the dealing disclosure requirements listed below will apply.

 

There can be no certainty that an offer will be made, nor as to the terms on which any offer may be made.

 

The Board of Electra reserves the right to alter or terminate the formal sale process at any time and in such cases will make an announcement as appropriate. The Board of Electra also reserves the right to reject any approach or terminate discussions with any interested party at any time.

 

Commenting, Neil Johnson, Chairman of Electra Private Equity PLC, said:

"Since the internalisation of management in 2017 we have increased our focus on optimising value for shareholders. In the last six months we have completed an in-depth review of the companies in our corporate portfolio with their management teams and we are confident that each of the controlled investments now has a deliverable strategy to grow value. We have invested to remove impediments to delivery and are confident in the ability of these investments to create value.

 

We have further reduced our non-corporate portfolio and simplified our corporate structure, reducing costs and resolving legacy issues. The time is right to commence the final stage of our strategic review which will consider all options in order to optimise shareholder value.''

 

For further information, please contact:

Electra Private Equity PLC
Gavin Manson, Chief Financial Officer                                                                            020 3874 8300
 

Greenhill & Co. International LLP
David Wyles / Brenlen Jinkens / Briac Houtteville / Michael Lord                                   020 7198 7400

Brunswick Group
Ammerance Ozioro                                                                                                         020 7404 5959

The person responsible for arranging for the release of this announcement on behalf of Electra Private Equity PLC is Gavin Manson, Chief Financial Officer.

 

Chairman's Statement

 

As we approach the first anniversary of the internalisation of management of the Company on 1 June 2017 I am pleased to give an update both on the performance of the Company in the first half of the year and  our strategic direction.

 

Our Net Asset Value (NAV) as at 31 March of £425m represents an uplift of 3.9% from 30 September 2017 (adjusted for the dividend paid in December). The movement in NAV reflects both the performance of investments in the period (considered further below) and the impact of our ongoing simplification and tidying up of the corporate structure and legacy issues. In relation to one such issue, the Company has recently received legal advice which adds greater clarity to the payment mechanics of carried interest to the former investment manager and has consequently recognised a credit of £23 million to the income statement.  As at 31 March the NAV included £22m of cash and £75m of money market funds. 

 

Our focus portfolio of investments, the management of which will determine the future direction of the company,  comprises five corporate investments with a value as at 31 March 2018 of £311m following investment of £11m in the current financial year, (September 2017 £315m).  These five businesses can be considered in two categories:

 

·    Controlled Assets: TGI Fridays (£149m) and Hotter Shoes (£30m). Since 1 June 2017 we have been working closely with management to understand the businesses in detail, to optimise strategic and operational planning and to ensure robust implementation plans are in place. We have bought out non-management minority shareholders in each business to increase control and facilitate the actions necessary to grow value. 

·     As consumer businesses with a material retail presence the performance of both businesses was impacted by the unusually severe weather of February and March. We estimate that this reduced the valuation of these businesses as at 31 March by £15-20m.

o  TGI Fridays is a well-run profitable business with a track record of outperforming its peers across the economic cycle. Demand in the casual dining sector remains strong. However cost pressure combined with over-supply has led to a challenging current environment. Future value creation is focused on a continued sustainable development plan and operational continuous improvement in anticipation of a sector recovery as competitors retrench following a period of unsustainable growth. The business is in a strong position to take advantage of opportunities in the sector as the current over-supply is addressed.

o  Hotter Shoes is a profitable business in a niche market. The business has significant opportunities to expand profitably beyond its current niche but has in the past been constrained by a lack of alignment of objectives between shareholders and under- investment. This has been addressed through the purchase of minority interests in April 2018. The business has a clearly defined value creation strategy which it is now in a position to implement, supported by shareholder investment.

 

·   Non-Controlled Assets: Photobox (£92m), Knight Square (£34m) and Sentinel (£6m). These businesses are not controlled by the Company either as a consequence of having a minority interest (Photobox) or as a result of shareholder agreements put in place by the former manager (Knight Square and Sentinel).

o  Photobox is a business in the midst of significant internal change to deliver the integration, system improvements and management upgrades that form a key part of our investment hypothesis. The investment hypothesis remains valid.

o  Knight Square is a business that has been substantially turned around following its acquisition from administration. Performance indicated by lead KPIs is strong and the business is well placed to pursue an industry consolidation strategy. The current shareholder base may constrain implementation.

o  Sentinel has been stabilised following a material loss of market share to a new entrant in 2014 and following release of new products and international expansion is poised to return to growth.

 

Strategic Review Final Phase

Phase 2 of the Company's strategic review set out the strategy of optimising value for shareholders through a review of return on invested capital versus a return of cash to shareholders. The continued strong private equity market, particularly for secondary sales, has led the Board to choose to undertake a  third, final phase of the review to evaluate the acceleration of selective divestment of some or all of the portfolio, including exploring offers for the Company as a whole, as a means of maximising shareholder value. 

 

Throughout the course of Phase 3 the Company will continue to support its portfolio companies in delivery of their respective strategies through continuation of its existing investment policy.

 

It is expected that the outcome of Phase 3 of the strategic review will be communicated not later than September 2018, however further updates on timing and outcome will be communicated in due course.

 

Dividends

 

A Special Dividend of £349m was declared in the current financial year and paid in December 2017.

 

Pending the outcome of the strategic review the Board announces payment of a Special Dividend of 25 pence per share, payable on 28 June 2018 to shareholders on the register on 8 June 2018.

 

 

Neil Johnson

Chairman

23 May 2018

 

 

 

Portfolio Overview

 

Electra's investment portfolio decreased from £358m to £331m during the six months to 31 March 2018. The decrease of £27m resulted from realisation of £36m of investments, offset by £11m of new investments and a smaller impact from portfolio performance.  Most investments in the portfolio have  increased in value, although two businesses, TGI Fridays and Hotter, in common with most of the UK consumer industry, suffered from unusually severe weather in the first quarter of 2018, causing the double impact on valuations of a short term drop in EBITDA and consequent higher net debt positions. We estimate the impact on these asset valuations to have been £15-20 million.

 

Electra also holds money market funds of £75 million. These are short-term liquidity investments held for cash management purposes.

 

 

 

 

Fair value of

holding at

Net investments/

(realisations)

Investment

return

Fair value of holding at

30-Sep-17

 

 

31-Mar-18

 

£m

£m

£m

£m

Buyouts and Co-investments

 

 

 

 

TGI Fridays

 162

 7

 (20)

 149

Photobox Group

 84

-

 8

 92

Knight Square

 28

-

 6

 34

Hotter Shoes

 38

 4

(12)

 30

Sentinel Performance Solutions

 3

-

 3

 6

Special Products Company

 2

-

 1

 3

Other

 4

(7)

 7

 4

Total Buyouts and Co-investments

 321

 4

 (7)

 318

Secondaries

 

 

 

 

Other

 2

(2)

 1

 1

Total Secondaries

 2

(2)

 1

 1

Fund Investments

 

 

 

 

Listed

 9

(10)

 1

 -  

Funds

 26

(17)

 3

 12

Total Non-core Investments

 35

(27)

 4

 12

 

 

 

 

 

TOTAL INVESTMENT PORTFOLIO

 358

(25)

 (2)

 331

 

 

 

Consolidated Income Statement (unaudited)

 

 

 

 

 

2018

 

 

2017

 

 

Revenue

Capital

Total

Revenue

Capital

Total

Note

£m

£m

£m

£m

£m

£m

1, 6 

Investment income/net gain

 4

 11

 15

 47

 199

 246

 

Gain on revaluation of foreign currencies

 -

2

 2

 -  

 -  

 -  

10

Incentive schemes

 -  

 22

 22

 -  

(30)

(30)

9

Priority profit share

 -  

 -  

 -  

(17)

 -  

(17)

9

Termination payment

 -  

 -  

 -  

(2)

 -  

(2)

 

Income reversal

 (17)

 -  

   (17)

 -  

- 

 

Other expenses

(3)

 -  

(3)

(6)

 -  

(6)

 

Recycling of gains on foreign exchange translation previously recognised in equity reserves

-

31

31

-

-

-

 

Net Profit before Finance Costs and Taxation

 (16)

 66

 50

 22

 169

 191

 

Taxation expenses

2

 (2)  

-

(3)

 -  

(3)

 

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

 (14)

 64

 50

 19

 169

 188

4

Basic Earnings per Ordinary Share (pence)

 (40.27)

 168.36

128.09

 47.14

 432.20

 479.34

4

Diluted Earnings per Ordinary Share (pence)

 (40.27)

168.36

128.09

 47.14

 432.20

 479.34

 

The 'Total' columns of this statement represent the Group's Consolidated Income Statement prepared in accordance with International Financial Reporting Standards adopted by the EU ("IFRS"). The supplementary Revenue and Capital columns are both prepared under guidance published by the Association of Investment Companies.

 

 

Consolidated Statement of Comprehensive Income (unaudited)

 

 

 

2018

2017

Note

For the six months ended 31 March

£m

£m

 

Profit for the period

 50

 188

 

Items that may be subsequently reclassified to profit or loss

 (3)

(1)

 

Exchange differences arising on consolidation

 

Total Comprehensive Income attributable to owners of the Group

 47

 187

 

 

The Notes 1 - 12 are an integral part of the Half Year Report.

 

 

Consolidated Statement of Changes in Equity (unaudited)

 

 

 

 

Called up share capital

Share premium

Capital redemption reserve

Own shares held

Translation reserve

Realised capital profits

Unrealised capital profits / (losses)

Revenue reserves

Total equity

Note

For the six months ended 31 March 2018 for the Group

£m

£m

£m

£m

£m

£m

£m

£m

£m

 

Opening balance at 1 October 2017

 9

 123

 35

(1)

 12

 616

(120)

84

 758

 

Net revenue loss added to the reserves

 -  

 -  

 -  

 -  

 -  

 -  

 -  

(14)

 (14)

 

Net profits on realisation of investments during the period

 -  

 -  

 -  

 -  

 -  

 5

 -  

 -  

5

 

Increase in value of non-current investments

 -  

 -  

 -  

 -  

 -  

 -  

 6

 -  

 6

10

Decrease in incentive provisions

 -  

 -  

 -  

 -  

 -  

 -  

 22

 -  

 22

 

Investments sold during the period

 -  

 -  

 -  

 -  

 -  

 10

(10)

 -  

 -  

 

Foreign currency translation on liquidation

- 

 - 

 - 

 - 

 (31) 

 31 

 - 

 - 

 - 

 

Foreign currency translation differences - other comprehensive income

 -  

 -  

 -  

 -  

(3)

-

-  

 -  

(3)

 

Total comprehensive income

 -  

 -  

 -  

 -  

(34)

 46

 18

 (14)

 16

2

Dividends

 -  

 -  

 -  

 -  

 -  

(349)

 -  

 -  

(349)

 

At 31 March 2018

 9

 123

 35

(1)

(22)

 313

(102)

 70

 425

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Called up share capital

Share premium

Capital redemption reserve

Own shares held

Translation reserve

Realised capital profits

Unrealised capital profits / (losses)

Revenue reserves

Total equity

Note

For the six months ended 31 March 2017 for the Group

£m

£m

£m

£m

£m

£m

£m

£m

£m

 

Opening balance at 1 October 2016

 10

 123

 34

 -  

 11

 1,508

 311

 77

 2,074

 

Net revenue profit added to the reserves

 -  

 -  

 -  

 -  

 -  

 -  

 -  

 19

 19

 

Net profits on realisation of investments during the period

 -  

 -  

 -  

 -  

 -  

 106

 -  

 -  

 106

 

Increase in value of non-current investments

 -  

 -  

 -  

 -  

 -  

 -  

 93

 -  

 93

10

Increase in incentive provisions

 -  

 -  

 -  

 -  

 -  

 -  

(30)

 -  

(30)

 

Foreign currency translation differences - other comprehensive income

 -  

 -  

 -  

 -  

(1)

 -  

 -  

 -  

(1)

 

Investments sold during the period

 -  

 -  

 -  

 -  

 -  

 244

(244)

 -  

 -  

 

Total comprehensive income

 -  

 -  

 -  

 -  

(1)

 350

(181)

 19

 187

7

Buy back of ordinary shares

(1)

 -  

 1

 -  

 -  

(94)

 -  

 -  

(94)

2

Dividends

 -  

 -  

 -  

 -  

 -  

(44)

 -  

 -  

(44)

 

At 31 March 2017

 9

 123

 35

 -  

 10

 1,720

 130

 96

 2,123

 

The Notes 1 - 12 are an integral part of the Half Year Report.

 

 

Consolidated Balance Sheet (unaudited)

 

 

 

 

31 March

30 September

31 March

 

 

2018

2017

2017

Note

 

£m

£m

£m

 

Non-Current Assets

 

 

 

6

Investments held at fair value

 320

 321

 879

 

 

 320

 321

 879

 

Current Assets

 

 

 

6

Investments held at fair value

 75

 380

 -  

6

Assets held for sale

 11

 37

 -  

 

Trade and other receivables

 -  

 1

 -  

 

Current tax asset

1

-

-

 

Cash and cash equivalents

 22

 54

 1,373

 

 

 109

 472

 1,373

 

Current Liabilities

 

 

 

 

Current tax liability

 - 

 -  

(3)

 

Trade and other payables

(2)

(4)

(5)

9

Termination payment provision

 -  

 -  

(34)

 

Total Current Liabilities

(2)

(4)

(42)

 

Total Assets less Current Liabilities

 427

 789

 2,210

 

Non-Current Liabilities

 

 

 

10

Provisions for liabilities and charges

(1)

(29)

(87)

 

Deferred tax liability

(1)

(2)

 -  

 

Non-Current Liabilities

(2)

(31)

(87)

 

Net Assets

 425

 758

 2,123

 

Capital and Reserves

 

 

 

7

Called up share capital

 9

 9

 9

 

Share premium

 123

 123

 123

 

Capital redemption reserve

 35

 35

 35

 

Own shares held

(1)

(1)

 -  

 

Translation reserve

(22)

 12

 10

 

Realised capital profits

 313

 616

 1,720

 

Unrealised capital profits/(losses)

(102)

(120)

 130

 

Revenue reserve

 70

 84

 96

 

Total Equity

 425

 758

 2,123

5

Basic Net Asset Value per Ordinary Share (pence)

 1,109.27

 1,980.96

5,544.28

7

Ordinary Shares in issue at 31 March

38,282,763

 38,282,763

38,282,763 

 

 

The Notes 1 - 12 are an integral part of the Half Year Report.

 

These Half Year Report were approved by the Directors on 23 May 2018 and were signed on their behalf by:

 

 

Neil Johnson

Chairman                                                             

Company Number: 00303062                         

 

 

Consolidated Cash Flow Statement (unaudited)

 

 

For the six months ended 31 March

2018

2017

£m

£m

Operating activities

 

 

Purchase of investments

(50)

(4)

Amounts paid under incentive schemes

(6)

(192)

Sales of investments

 377

 1,006

Dividends and distributions received

 1

 3

Interest income received

 1

 61

Expenses paid

(5)

(23)

Cash generated from operations

 318

 851

Taxation (paid)/repaid

(1)

 1

Net cash inflow from operating activities

 317

 852

Financing activities

 

 

Dividends paid

(349)

(44)

Repurchase of own shares

 -  

(94)

Net cash used in financing activities

(349)

(138)

Net (decrease)/increase cash and cash equivalents

(32)

 714

Cash and cash equivalents at 1 October

 54

 659

Cash and cash equivalents at 31 March

 22

 1,373

 

 

Notes to the Accounts

 

1 Segmental Analysis

 

The Group operates a single business segment for reporting purposes and is managed as a single investment company, with multiple investment categories including Buyouts and Co-investments, Secondaries, debt and Funds. Reporting provided to the Board of Directors is on an aggregated basis. These investments are located across multiple geographic regions and revenues are allocated as follows:

 

Investment income for the six months ended 31 March 

2018

£m

United Kingdom

7

Continental Europe

7

US

1

Total investment income/net gain

15

 

 

2 Dividends

 

 

2018

2017

For the six months ended 31 March

£m

£m

Third Special Dividend (914p per share)

 349

 -  

Second 2016 Interim Dividend (110p per share)

 -  

 44

 

 349

 44

 

An interim dividend of £10m or 25p per share has been declared since 31 March 2018.

 

 

3 Income Reversal

 

Accrued income is recognised when the value of investment is greater than the value of any loan note associated with the investment. Income reversal is the reversal of accrued income recognised in previous periods arising from changes in valuation of certain investments.

 

 

4 Earnings Per Share

 

For the six months ended 31 March

2018

2017

Net revenue profit attributable to ordinary shareholders (£m)

 (14)

 19

Net capital return attributable to ordinary shareholders (£m)

 64

 169

Net revenue profit on which diluted earnings per share calculated with finance charge net of taxation of £nil (2017: £nil) added back

(14)

 19

Net capital return on which diluted earnings per share calculated (£m)

 64

 169

Total Basic and Diluted Return (£m)

 50

 188

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

 38,282,763

 39,200,194

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

 38,282,763

 39,200,194

 

 

 

 

Basic earnings per share

 Diluted earnings per share

 

2018

2017

2018

2017

p

p

p

p

Revenue profit per ordinary share

                              (40.27)

                      47.14

                      (40.27)

                      47.14

Capital return per ordinary share

168.36

                    432.20

168.36

                    432.20

Earnings per ordinary share

128.09

                    479.34

128.09

                    479.34

 

5 NAV per Ordinary Share

 

The NAV per share is calculated by dividing the NAV of £424,659,930 (2017: 2,122,503,000) by the number of ordinary shares in issue amounting to 38,282,763 (2017: 38,282,763).

 

6 Financial Instruments

 

The Group's activities expose it to a variety of financial risks: market risk (including foreign currency risk, interest rate risk and price risk), credit risk and liquidity risk.

 

The condensed consolidated half year accounts do not include all financial risk management information and disclosures required in the annual financial statements; they should be read in conjunction with the Group's annual financial statements as at 30 September 2017.

 

There have been no changes in the risk management policies and procedures since the year end.

 

The unlisted financial assets held at fair value are valued in accordance with the Principles of Valuation of Unlisted Equity Investments as detailed within the Basis of Accounting and Significant Accounting Policies (Note 12).

 

Fair Value Hierarchy

 

Fair value is the amount for which an asset could be exchanged between knowledgeable willing parties in an arm's length transaction.

 

The Group complies with IFRS 13 in respect of disclosures about the degree of reliability of fair value measurements. This requires the Group to classify, for disclosure purposes, fair value measurements using a fair value hierarchy that reflects the significance of the inputs used in making the measurements.

 

The levels of fair value measurement bases are defined as follows:

 

Level 1: fair values measured using quoted prices (unadjusted) in active markets for identical assets or liabilities.

 

Level 2: fair values measured using valuation techniques for all inputs significant to the measurement other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).

 

Level 3: fair values measured using valuation techniques for which any significant input to the valuation is not based on observable market data (unobservable inputs).

 

The determination of what constitutes 'observable' requires significant judgement by the Directors. The Group considers observable data to be market data that is readily available, regularly distributed or updated, reliable and verifiable, not proprietary and provided by independent sources that are actively involved in the relevant market.

 

The following tables represent the Group's and Company's assets by hierarchy levels, and all fair value measurements disclosed are recurring fair value measurements.

 

 

Financial assets and liabilities at fair value through profit or loss

 

As at 31 March 2018

Total

Level 1

Level 2

Level 3

 

£m

£m

£m

£m

Investments held at fair value

 395

 75  

    -  

 320

Investments held for sale

11

-

-

11

 

 406

 75  

 -  

 331

 

 

As at 31 March 2017

Total

Level 1

Level 2

Level 3

 

£m

£m

£m

£m

Investments held at fair value

 879

 62

 -  

 817

 

 879

 62

 -  

 817

 

Investments whose values are based on quoted market prices in active markets are therefore classified within Level 1, which include active listed equities. The Group does not adjust the quoted price for these instruments. Investments classified within Level 1 are liquidity funds and a listed investment.

 

Financial instruments that trade in markets that are not considered to be active but are valued based on quoted market prices, dealer quotations or alternative pricing sources supported by observable inputs are classified within Level 2.

 

Investments classified within Level 3 make use of significant unobservable inputs in deriving fair value, as they trade infrequently. As observable prices are not available for these securities, the Group has used valuation techniques to derive the fair value. Investments classified within Level 3 consist of private equity direct investments and fund and secondary positions.

 

The main inputs into the Group's valuation models for private equity investments are EBITDA multiples (based on a rolling 12 months basis of the issuer and equivalent corresponding EBITDA multiples of comparable listed companies), quality of earnings assessments, assessments of third party external debt, comparability difference adjustments, cost of capital adjustments and probabilities of default. The Group also considers the original transaction prices, recent transactions in the same or similar instruments and completed third-party transactions in comparable companies' instruments and adjusts the model as deemed necessary.

 

In determining the valuation for the Group's equity instruments, comparable trading multiples are used in arriving at the valuation for private equity. In accordance with the Group's policy, appropriate comparable public companies based on industry, size, developmental stage, revenue generation and strategy are determined and a trading multiple for each comparable company identified is then calculated. The multiple is calculated by dividing the enterprise value of the comparable group by its EBITDA. The trading multiple is then adjusted for points of difference such as illiquidity, the markets in which the company operates, its competitive position and other differences, advantages and disadvantages between the Group's portfolio company and the comparable public companies based on company specific facts and circumstances.

 

The value of private equity funds is primarily based on the latest available financial/capital account statement of the private equity fund. The Company may make adjustments to the value as set out in Note 12.

 

As at 31 March 2018 4% (2017: 16%) of financial assets at fair value comprise of investments in private equity funds that have been valued in accordance with the policies set out in Note 12. The private equity funds are not publicly traded and prior to maturity an exit can only be made by the Company through a sale of its investment and commitment through a secondary market. The carrying values of the private equity funds may be significantly different from the values ultimately realised on an exit via a secondary market sale.

 

The following tables present the movement of assets measured at fair value, based on fair value measurement levels.

 

 

Level 1

Level 1

 

2018

2017

£m

£m

Opening balance as at 30 September

 389

 54

Purchases

 39

 -  

Realisations

(354)

(36)

Transfer from Level 3

-

46

Increase / (decrease)  in valuation

 1  

 (2)

Closing balance as at 31 March

 75

 62

 

 

 

 

Level 3

Level 3

 

2018

2017

£m

£m

Opening balance as at 30 September

 349

 1,642

Purchases

 11

 4

Realisations

(26)

(1,031)

Transfer to Level 1

 -  

(46)

Increase / (decrease)  in valuation

 (3)

 248

Closing balance as at 31 March

 331

 817

 

Increases or decreases in valuation are recognised as part of the investment income/net gain in the Consolidated Income Statement. 

 

During the six month period to 31 March 2017 transfers from Level 3 to Level 1 were £46,000,000 (2016: £nil). This relates to the ordinary shares of Premier Asset Management PLC which were listed on the London Stock Exchange in the period.

 

The tables below present those investments in portfolio companies whose fair values are recognised in whole or in part using valuation techniques based on assumptions that are not supported by prices or other inputs from observable current market transactions in the same instrument and the effect of changing one or more of those assumptions behind the valuation techniques adopted based on reasonable possible alternative assumptions.

 

The changes in valuations disclosed in the table below show the relative increase or decrease in the input variables deemed to be subject to the most judgement and the respective impact on the fair value presented in the Accounts. Increase in the EBITDA multiple would each lead to an increase in estimated value. However, an increase in the comparability difference adjustment would lead to a decrease in value.

 

Description

Fair value Mar 2018
£m

Valuation Technique

Unobservable Inputs

Weighted Average Input

Reasonable possible shift +/- (absolute value/%)

Change in valuation +/- £m

Consumer goods and services

 

Comparable trading multiples

EBITDA multiple

10.1x

1x

46/(46)

271

Comparability difference adjustment

24%

5%

(29)/29

4

Yield

Yield %

8%

1%

-

Business services

 

Comparable trading multiples

EBITDA multiple

12.2x

1x

4/(4)

43

Comparability difference adjustment

41%

5%

(5)/5

13

NAV valuation

NAV

n/a

5%

1/(1)

331

 

 

 

 

 

 

 

7 Called up Share Capital and Reserves

 

 

2018

2017

 

£m

£m

Opening allotted, called-up and fully paid 38,282,763 (2016: 40,270,531) ordinary shares of 25p each

 9

 10

Ordinary Shares purchased by the Company nil (2017: 1,987,768)

 - 

 (1) 

Closing allotted, called-up and fully paid 38,282,763 (2017: 38,282,763) ordinary shares of 25p each

 9

 9

 

In the six months ended 31 March 2017, Electra repurchased 1,987,768 (5%) of its ordinary shares for £94m or 4,650p per share. The expenses directly relating to the acquisition of £2m have been charged against realised profit.

Own Shares Held

As a result of the new Long-Term Incentive plan introduced by the Group in 2017, 93,611 shares have since been purchased at a total market value of £1,235,362 by the Group's Employee Benefit Trust. In addition, a further 13,758 shares were purchased at a market value of £132,170 during the period for the purpose of a deferred director's bonus. Both are recognised as Own Shares Held as at 31 March 2018. 

Realised Capital Reserves

The realised capital reserve is the gains and losses on the realisation of investments.

Unrealised Capital Reserves

The unrealised capital reserve is the changes in the value of financial instruments measured at fair value which have been taken through profit and loss.

Revenue Reserves

Revenue reserves is the net revenue profit and losses of the Group.

Other reserves

Other reserves included Subordinated Convertible Bonds that were converted into new ordinary shares of Electra. The share based payment reserve of £220,534 was also included in the other reserve balance as at 31 March 2018.

 

8 Share Based Payments

 

During 2017, a new Long-Term Incentive plan ("LTIP") was introduced in compensation to the executives of the Group. Subsequent to its grant of 47,783 nil value options in July 2017, the third Special Dividend was paid by the Company and this resulted in a corresponding reduction in the Company's share price. To compensate for the loss of value suffered by participants in the 2017 LTIP scheme, on 29 December 2017, the Company granted an additional 45,828 nil value options to existing participants in the scheme. The LTIPs is an equity settled share-based payment scheme. However, awards can be settled in cash equivalents at the discretion of the Group Remuneration Committee. For the purpose of classification, the LTIP is recognised as equity settled on the basis that the Group has no present obligation for settling awards in cash, contractually or constructively i.e. past practice.

 

The cost of share-based payments is recognised as an expense with a corresponding increase in the share-based payment reserve. Expenses are borne by the Group and recognised over the period in which vesting conditions are fulfilled. No expense is recognised for awards that do not ultimately vest. The total charge in the Consolidated Income Statement for the period to 31 March 2018 was £176,052 (2017: £nil).

 

Details of the share-based payment scheme are as follows:

 

Grant Date

13 July 2017

29 December 2017

Number of shares granted

47,783

45,828

Market Price on Grant Date

£795,102

£440,260

Performance period

36 months

31 months

Vesting Date

13 July 2020

13 July 2020

Vesting conditions

 

 

 

 

 

 

 

1. Continued services over the vesting period.

2. The Group's total shareholder return ("TSR") performance relative to that of a comparator group of companies, comprised of the constituents of the FTSE 250 index (excluding investment trusts) over the vesting period. Vesting percentage of the award are as follows:

 

TSR against comparator group over performance period

Percentage of award that vests

Below median 

0%

Median

20%

Between median and upper quartile

Between 20% and 100% straight-line

Upper quartile or more   

100%

 

Change in corporate control and other corporate events

All unvested awards shall vest on date of such event, subject to performance criteria at the discretion of the Remuneration Committee.

Settlement method

Equity settled, with option of cash alternative determined by the Group Remuneration Committee.

 

Consistent with the grant in 2017, the Directors consider that the market value of shares at the grant date materially reflects the variable inputs in the fair valuation of the nil-cost options granted. Assumptions that may result in changes to the share-based payment expense and reserves in the Group financial statements will be reassessed at all future reporting dates.

 

Analysis of movements in the number of options is set out below:

 

Number of outstanding options

 

 

2018

2017

 

 

Group

Group

As at 30 September

 

 

47,783

-

Granted during the period

 

 

45,828

-

As at 31 March

 

 

93,611

-

                               

 

9 Related Party Transactions

 

Balances and transactions between the Company and its subsidiaries for Group are eliminated on consolidation. Details of transactions between the Group and Company and other related parties are disclosed below.

Termination Payment

On 26 May 2016, the Company served notice of termination of the Management and Investment Guideline Agreement on Epiris effective on 31 May 2017. At this date Epiris ceased to be a related party. Under the terms of their contract, Epiris were paid £34m compensation, based on the Priority Profit Share received in the year to 31 May 2017. £32m was accounted for during the year ended 30 September 2016 with the remaining £2m being recognised during the six months ending 31 March 2017.

Carried Interest Schemes              

Certain members of Epiris (the "participants") are entitled to benefit from carried interest schemes under the terms of the limited partnerships through which Electra invests. Details of these schemes are as follows:

Long term Incentive Scheme ("LTI")

Under this scheme participants invested in every new investment made by Electra between 1995 and March 2006. In return, the participants are entitled to a percentage of the total capital and revenue profits made on each such investment. The participants do not receive any profit until Electra has received back its initial investment.

The Initial Pool

This relates to a pool of investments valued at £160m at 31 March 2006 (the "initial pool"). Under this arrangement participants are entitled to 10% (the "carried interest") of the aggregate realised profits of the initial pool. The realised profits are calculated as being the aggregate of income and sale proceeds received by Electra less the £160m opening value, less any additional purchases and less Priority Profit Share. Carried interest is payable only once realised profits exceed a preferred return of 15% compounded annually on the opening value of the initial pool plus the cost of further investments less realisations. A full catch-up is payable once the realised profits of the initial pool exceed the preferred return. This catch-up means that all proceeds above the cumulative preferred return accrue to participants until they have been paid an amount equating to 10% of the total realised profits of the initial pool. Thereafter proceeds are split 90%:10% between Electra and the participants.

2006, 2009, 2012 and 2015 Pools

In October 2006, new arrangements were entered into in respect of investments made over each consecutive 3 year period. At the reporting date, such arrangements are in operation in relation to the 3 year periods from 2006 to 2009, 2009 to 2012, 2012 to 2015 and 2015 to 2018 (investments being made in each such period being referred to as a "pool").

 

Under these arrangements participants are entitled to a carried interest of 18% of the aggregate realised profits in relation to direct investments in each pool. The realised profits are calculated as being the aggregate of income and sale proceeds received by Electra less the purchase costs of investments and less Priority Profit Share. Carried interest is payable only once realised profits exceed a preferred return of 8% compounded annually on the cost of investments less realisations. A full catch-up is payable once the realised profits exceed the preferred return. This catch-up means that all proceeds above the cumulative preferred return accrue to participants until they have been paid an amount equating to 18% of the total realised profits. Thereafter proceeds are split 82%:18% between Electra and the participants.

 

Similar arrangements are in place for indirect investments, the difference from the above arrangements being that the carried interest is 9% over an 8% preferred return.

 

No Directors of Electra participate in the above schemes.

 

 

Summary of Carried Interest Pools

 

The following tables are for the comparative period only as Epiris was not a related party in the current period.

 

 

Initial

2006

2009

2012

2015

 

Pool

Pool

Pool

Pool

Pool

As at 31 March 2017

£m

£m

£m

£m

£m

Amount invested

(236)

(436)

(359)

(785)

(175)

Amount realised

 687

 798

 834

 1,368

 9

Valuation of remaining investments

 5

 11

 36

 401

 195

Pool profit

 456

 373

 511

 984

 29

Multiple of cost

 2.9

 1.9

 2.4

 2.3

 1.2

Priority Profit Share

(7)

(32)

(25)

(40)

(3)

Net profit

 449

 341

 486

 944

 26

 

Summary of Provisions for Carried Interest

 

 

 

 

 

 

 

 

 

 

LTI

Initial

2006

2009

2012

2015

20%

Total

Pool

Pool

Pool

Pool

Pool

Reduction *

As at 31 March 2017

£m

£m

£m

£m

£m

£m

£m

£m

Provisional Entitlement

 10

 -  

 2

 7

 72

 5

(8)

 88

Outstanding Entitlement

 1

 1

 -  

 -  

 -  

 -  

 -  

 2

Total Amount Outstanding

 11

 1

 2

 7

 72

 5

(8)

 90

Amount Paid in Period

 7

 -  

 7

 81

 98

 -  

 -  

 193

 

* The carried interest 20% reduction is explained further in the glossary.

 

Participants Investment

During the year ended 30 September 2017, the participants exercised their option to sell their remaining Participants Investments to the Group at a cost of £4m and therefore no investments are held by the participants at 31 March 2018. This is referred to elsewhere in this report as 'Epiris's 1% interest'.

Electra Partners Club 2007 LP co-investment agreement

In November 2007, Electra entered into a co-investment agreement with Electra Partners Club 2007 LP ("Club"), a fund managed by Epiris Managers LLP. The co-investment agreement required Electra to co-invest at the ratio of 2:1 in all Epiris 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 £25m to £75m. Both parties invested on the same terms and conditions. The agreement allowed 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.

Priority Profit Share

For the six months ended 31 March 2018 Priority Profit Share of £nil (2017: £17m) was paid to Epiris or any other related party.

 

Priority Profit Share paid to Epiris was calculated at 1.5% per annum on the gross value of the Company's investment portfolio including cash (but excluding any amounts committed to funds established and managed by Epiris).

 

In the six months to 31 March 2018 no deal fees (2017: £nil) were charged in relation to new investments. These fees were accounted for within the investment income line in the Income Statements. Under the terms of the limited partnership agreements, Epiris was entitled to receive 50% of the aggregate deal fees in excess of abort costs. This was achieved by increasing the Priority Profit Share for the period by the relevant amount.

Sherborne

Sherborne Investors Management LP ("Sherborne") was appointed as adviser to the Group on 22 December 2015. Their role was to advise the Group in connection with research and the formulation and making of proposals to the Board of Directors of the Group, and, in particular the Board of Directors' Management Engagement Committee, for the purpose of monitoring and supervising the performance of Epiris. Under the terms of the contract Sherborne are not entitled to a fee but are entitled to be reimbursed for all reasonable expenses. In the six months ended 31 March 2018 the Group paid Sherborne £41,962 (2017: £101,000) as reimbursement for travel and subsistence costs. Edward Bramson, a Director of Electra, is the managing member of Sherborne Investors Management LP.

 

 

10 Capital Commitments and Contingencies

 

 

2018

2017

As at 31 March

£m

£m

Commitments to private equity funds

-

50

 

 -

50

 

Carried Interest

The Company has recently received legal advice which adds greater clarity to the payment mechanics of carried interest to the former investment manager and has consequently recognised a credit of £23m to the income statement representing a reduction in the Directors' assessment of the provision required. While the Directors are confident in their assessment it is possible that the former manager may dispute the approach adopted. The Directors' current understanding is that all carry payments to date were appropriate.

 

11 Post Balance Sheet Event

 

As announced and approved at the Annual General Meeting on 1 March 2018, in early April 2018, participants in the 2017 Executive Share of Value Plan ("SoVP") have been granted units in the plan.

 

In April 2018, Electra bought out the founder share of the Hotter business bringing the total company's ownership to 90%.

 

12 Basis of Accounting and Significant Accounting Policies

 

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 financial statements for the year ended 30 September 2017, 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 financial statements was unqualified and did not contain a statement made under Section 498(2) or Section 498(3) of the Companies Act 2006.

 

The condensed consolidated interim financial statements comprise the Consolidated Balance Sheets as at 31 March 2018, 30 September 2017 and 31 March 2017 and for the six months ended 31 March 2018 and 31 March 2017, the related Consolidated Income Statement, Consolidated Statement of Comprehensive Income, Consolidated Statement of Changes in Equity, Consolidated Cashflow Statement and the related Notes hereinafter collectively referred to as "financial information".

 

The condensed consolidated interim financial statements have been prepared in accordance with the Disclosure and Transparency Rules of the Financial Conduct Authority, IAS34 and the principal accounting policies and key estimates set out in the Annual Report for the year ended 30 September 2017 which is available on Electra's website (www.electraequity.com). The condensed consolidated interim 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

The following new IFRSs have been issued by the IASB. IFRS 9 Financial Instruments and IFRS 15 Revenue from Contracts with Customers are effective for annual periods beginning on or after 1 January 2018. IFRS 16 Leases is effective for annual periods beginning on or after 1 January 2019. The Group has not early adopted these standards for the six months ended 31 March 2018, however full impact assessments on IFRS 9 Financial Instruments and IFRS 15 Revenue from Contracts with Customers have been completed.

IFRS 9 Financial Instruments

Financial assets within the Group are measured either at fair value or amortised cost. Those measured at amortised cost are held wholly for the purpose of collecting contractual cash flows and so will remain valued in this way. Therefore the new requirements on initial recognition and subsequent measurement of financial assets under IFRS 9 are not expected to have any impact on the Group.

 

There are currently no hedging arrangements in the Group. Therefore requirements on hedging and hedge accounting under IFRS 9 is considered to be not applicable. Should hedging arrangements be put in place in future, the provisions of IFRS 9 will be considered.

 

As at 31 March 2018, the Group held a loans and receivables balance of £1m in total. The Group will implement a 12-month expected credit loss model on adoption of IFRS 9. This is not expected to be materially different to the current incurred credit loss model.

IFRS 15 Revenue from Contracts with Customers

The main revenue generating assets held by the Group are classified as financial assets within the scope of IAS 39 Financial Instruments: Recognition and Measurement and will be within the scope of IFRS 9 Financial Instruments when it becomes effective. On this basis, the Group's main revenue stream will be outside the scope of IFRS 15. Sundry revenue generated by the Group during 2018 amounted to less than £0.2m and is expected to stay at similar levels in future periods.

IFRS 16 Leases

An impact assessment of IFRS 16 is ongoing and the Group will publish the results of the assessment and details of implementation in the financial statements for the year ending 30 September 2018.  While there will be an impact of implementing this standard, this is not expected to be material.

 

The following amended standards became effective for accounting period commencing on or after 1 January 2017 and will be adopted by the Group from 1 October 2017. No material impact is expected on the consolidated financial statements of the Group following the adoption.

§  IFRS 2 (amendments) - Classification and Measurement of Share-based Payment Transactions

§  IAS 7 (amendments) - Disclosure Initiative

§  IAS 12 (amendments) - Recognition of Deferred Tax Assets for Unrealised Losses

§  IFRS 10 and IAS 28 (amendments) - Sale or Contribution of Assets between an Investor and its Associate or Joint Venture

Investments

Purchases and sales of listed investments are recognised on the trade date where a contract exists whose terms require delivery within a time frame determined by the relevant market. Purchases and sales of unlisted investments are recognised when the contract for acquisition or sale becomes unconditional. Investments are designated at fair value through profit or loss (described in the Financial Statements as investments held at fair value) and are subsequently measured at reporting dates at fair value. The fair value of direct unquoted investments is calculated in accordance with the Principles of Valuation of Investments below.

Principles of Valuation of Investments

On 26 May 2016 the Company served notice of termination of the Management and Investment Guideline Agreement on Epiris effective on 31 May 2017, and appointed G10 Capital Limited ("G10") as its AIFM from 1 June 2017.

(i) General

The Group estimates the fair value of each investment at the reporting date in accordance with IFRS 13 and the International Private Equity and Venture Capital Valuation ("IPEV") Guidelines.

Fair value is the price for which an asset could be exchanged between knowledgeable, willing parties in an arm's length transaction. In estimating fair value, the Group applies a valuation technique which is appropriate in light of the nature, facts and circumstances of the investment and uses reasonable current market data and inputs combined with judgement and assumptions. Valuation techniques are applied consistently from one reporting date to another except where a change in technique results in a better estimate of fair value.

 

The Group tests its valuation techniques using a tool known as "calibration". This compares the inputs and assumptions used in estimating fair value on the reporting date to those used on previous reporting dates and to those underlying the initial entry price of an investment in order to ensure that the inputs and assumptions used on the reporting date are consistent with those used previously.

 

In general, the Group will determine the enterprise value of the investee company in question using one of a range of valuation techniques; adjust the enterprise value for factors that would normally be taken into account such as surplus assets, excess liabilities or other contingencies or relevant factors; and apportion the resulting amount between the investee company's relevant financial instruments according to their ranking and taking into account the effect of any instrument that may dilute the economic entitlement of a given instrument.

 

(ii) Unlisted Equity Investments

In respect of each unlisted investment, the Group selects one or more of the following valuation techniques:

§  A market approach, based on the price of the recent investment, earnings multiples or industry valuation benchmarks;

§  An income approach, employing a discounted cash flow technique; and

§  A replacement cost approach valuing the net assets of the portfolio company.

 

In assessing whether a methodology is appropriate, the Group maximises the use of techniques that draw heavily on observable market-based measures of risk and return.

Price of Recent Investment

Where the investment being valued was itself made recently, its cost may provide a good indication of fair value. Using the Price of Recent Investment technique is not a default and at each reporting date the fair value of recent investments is estimated to assess whether changes or events subsequent to the relevant transaction would imply a change in the investment's fair value.

Multiple

Typically the Group uses an earnings multiple technique. This involves the application of an appropriate and reasonable multiple to the maintainable earnings of an investee company.

 

The Group usually derives a multiple by reference to current market-based multiples, reflected in the market valuations of quoted comparable companies or the price at which comparable companies have changed ownership. Differences between these market-based multiples and the investee company being valued are reflected by adjusting the multiple for points of difference which might affect the risk and earnings growth prospects which underpin the earnings multiple. Such points of difference might include the relative size and diversity of the entities, rate of earnings growth, reliance on a small number of key employees, diversity of product ranges, diversity and quality of customer base, level of borrowing, any other reason the quality of earnings may differ.

 

In respect of maintainable earnings, the Group usually uses earnings for the most recent twelve month period adjusted if necessary to represent a reasonable estimate of maintainable earnings. Such adjustments might include exceptional or non-recurring items, the impact of discontinued activities and acquisitions, or forecast material changes in earnings.

 

In some circumstances the Group may apply a multiple to the net assets of a business, typically where the business' value derives mainly from the underlying fair value of its assets rather than its earnings, such as property holding companies.

Discounted Cash Flow

The Discounted Cash Flow technique involves deriving the value of a business or an investment by calculating the present value of the estimated future cash flows from that business or investment using reasonable assumptions and estimations of expected future cash flows, the terminal value or maturity amount and date, and the appropriate risk-adjusted rate that captures the risk inherent to the business or investment. The Group usually uses the Discounted Cash Flow technique in respect of certain debt investments or where the realisation of an investment is imminent with the pricing of the relevant transaction being substantially agreed such that the technique is likely to be the most appropriate one.

 

(iii) Listed Investments

The fair value of financial instruments traded in active markets is based on quoted market prices at the reporting date. A market is regarded as active if quoted prices are readily and regularly available from an exchange, dealer, broker, industry group, pricing service or regulatory agency, and transactions for an asset take place with sufficient frequency and volume to provide pricing information on an on-going basis. The quoted market price used for listed financial instruments held by the Group is the bid price on the reporting date.

(iv) Fund Investments

In determining the fair value of investments in funds the NAV of the fund is used as the starting point. The Group may make adjustments to the reported NAV to reflect, for example, purchases and sales occurring between the fund's measurement date and the reporting date, or any other facts or circumstances which might impact the fair value of the fund.

(v) Money Market/Liquidity Funds

Liquidity funds are held at the current fair value of the note.

(vi) Accrued Income

Accrued income is included within investment valuations.

 

 

Independent Review Report to Electra Private Equity PLC

 

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 2018 which comprises the Consolidated Income Statement, the Consolidated Statement of Comprehensive Income, the Consolidated Statement of Changes in Equity, the Consolidated Balance Sheet, the Consolidated Statement of Cash Flows and the related notes 1 to 12. 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.

 

This report is made solely to the company 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. Our work has been undertaken so that we might state to the company those matters we are required to state to it in an independent review report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company, for our review work, for this report, or for the conclusions we have formed.

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 12, the annual financial statements of the company 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.

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 inquiries, 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 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 2018 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.

 

 

Deloitte LLP

Statutory Auditor

London, United Kingdom

23 May 2018

 

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.

 

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

 

The investment focus is principally on Western Europe, with the majority of investments made in the United Kingdom.

 

The Company 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.

 

Electra has a policy to return to shareholders a targeted 3% of NAV per annum, by way of cash dividend or share buybacks. Any shares bought back under this policy will be cancelled.

 

 

Half Year Report

Current and Future Development

A review of the main features of the six months to 31 March 2018 is contained in the Chairman's Statement and Portfolio Overview.

Performance

A detailed review of performance during the six months to 31 March 2018 is contained in the Portfolio Overview.

Risk Management

The Company has put in place an Investment Management Agreement with G10 Capital Limited ("G10" or "the Manager") for the provision of risk management services as required by the AIFMD rules. The Manager has oversight of risk management and the ongoing process of identifying, evaluating, monitoring and managing the risks facing the Company in accordance with AIFMD. Prior to 1 June 2017, the responsibility for risk management was delegated to Epiris, the former AIFM of the Company, under the supervision of the Board.

 

The Principal Risks facing the Company are considered by the Board to be Macroeconomic Risks, Strategy Implementation Risks, Investment Risks, Portfolio Diversification Risk, Cash Drag Risk, Valuation Risk, Operational Risk, Gearing Risks, and Foreign Currency Risks as set out in the Company's Annual Report and Accounts for the year ended 30 September 2017 along with the risks detailed in Note 19 of the Notes to the Financial Statements for the same year. The principal risks identified in the Company's Annual Report and Accounts for the year ended 30 September 2017 have not changed significantly since the year end.

Related Party Transactions

Details of Related Party Transactions are contained in Note 9 of the Notes to the Accounts for the six months ended 31 March 2018.

Going Concern

The Directors considered it appropriate to adopt the going concern basis of accounting in preparing the Half Year Report and Accounts 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 in these forward looking 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 consolidated interim financial statements have been prepared in accordance with IAS 34 as adopted by the European Union.

 

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

 

(i)           DTR 4.2.7 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

Neil Johnson

Chairman

23 May 2018

 

 

Information for Shareholders

Financial Calendar for 2017/18

Half-year Results announced                           May 2018

Annual Results announced                               December 2018

Annual General Meeting                                      March 2019

Website and Electra News via Email

For further information on share prices, regulatory news and other information, visit www.electraequity.com.

 

If you would like to receive updates from us, please visit the Electra 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 or electronically.

Shareholder Enquiries

In the event of queries regarding your ordinary shareholding, contact the Company's registrar, Equiniti Limited, who will be able to assist you with:

 

•               Registered holdings

•               Balance queries

•               Lost certificates

•               Change of address notifications

 

Equiniti Limited's full details are provided on page 32 or please visit www.equiniti.com.

If you are an existing shareholder and wish to buy more/sell your shares in Electra:

An internet and telephone dealing service has been arranged through Equiniti, which provides a simple way for UK shareholders of Electra to buy or sell Electra's shares. For full details and terms and conditions simply log onto www.shareview.co.uk/dealing or call 0371 384 2351. Please note that lines are open 8.30am to 5.30pm (UK time) Monday to Friday (excluding public holidays in England and Wales).

 

The service is only available to shareholders of Electra who hold shares in their own name, with a UK registered address, who are aged 18 and over.

 

Shareview Dealing is provided by Equiniti Financial Services Limited. Equiniti Financial Services Limited is authorised and regulated by the Financial Conduct Authority of 25 The North Colonnade, Canary Wharf, London E14 5HS (FCA reference 468631). Equiniti Financial Services Limited is registered in England and Wales with number 6208699.

 If you are not an existing shareholder:

We recommend you seek your own personal financial advice from an appropriately qualified independent adviser or alternatively contact your own broker. Electra Private Equity PLC's shares are listed on the London Stock Exchange as ELTA.

 

Please note: The above information is not a recommendation to buy or sell shares. The value of shares and any income from them can fluctuate and you may get back less than the amount invested. If you have any doubt over what action you should take, please contact an authorised financial adviser.

Distribution policy

In February 2015, a distribution policy was announced whereby Electra proposes to return to shareholders a targeted 3% of NAV per annum, by way of cash dividend or share buybacks. Any shares bought back under this policy will be cancelled.

Dividend Reinvestment Plan

A Dividend Reinvestment Plan (the "Plan") has been arranged with Equiniti, the registrar, whereby existing shareholders have the option of reinvesting any dividend payments to buy more fully paid ordinary shares in the Company.  The DRIP option was not available for any of the dividends paid in 2017 or for the special dividend announced today.

 

For further details on the Plan please call the Equiniti helpline on 0371 384 2351* (or +44 121 415 7047 if calling from outside the United Kingdom).

 

* Lines open 8.30am to 5.30pm (UK time), Monday to Friday, excluding public holidays in England and Wales.

Trading Information - Ordinary Shares

Listing                                   London Stock Exchange

ISIN                                      GB0003085445

SEDOL                                 0308544

Ticker/EPIC code                 ELTA

Bloomberg                            ELTALN

Reuters                                 ELTAL

Share Fraud Warning

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). You may also wish to advise us by telephoning 020 3874 8300 or emailing IR@electrapeplc.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

LPEQ is 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)

The AIC is the trade organisation for 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

British Private Equity & Venture Capital Association (BVCA)

The BVCA is the industry body and public policy advocate for the private equity and venture capital industry in the UK. The BVCA's aim is to aid understanding around the activities of its members, promote the private equity and venture capital industry to entrepreneurs and investors as well as to Government, the EU, trade unions, international media and the general public. They communicate the industry's impact and reinforce the crucial role its members play in the global economy as a catalyst for change and growth.

 

For further information visit www.bvca.co.uk

 

 

Glossary

AIF

Alternative Investment Fund. Electra Private Equity PLC is an AIF.

AIFM

Alternative Investment Fund Manager (AFIM) from 1 June 2017 for Electra Private Equity PLC is G10. Epiris Managers LLP was the AIFM for Electra Private Equity PLC until 31 May 2017.

AIFMD

Alternative Investment Fund Managers Directive 2011/61/EU of the European Parliament.

Carried Interest

The incentive arrangements, which were similar to arrangements found elsewhere in the private equity industry, were designed to align previous managers interests with those of Electra's shareholders. These arrangements are typically referred to as "carried interest".

 

The carried interest payable to previous managers was based on three year pools of investments. Under the terms of the arrangement all qualifying investments in a 3 year period were aggregated into a separate pool. Electra must first receive back the aggregate cost of all the investments in the pool, plus related priority profit share (see below) and an 8% compound return (this is often referred to as the "hurdle"). Once Electra has received sufficient cash to pay the amounts as described above, the previous managers were entitled to a carried interest of 18% of the profits. Consequently, they will receive the next 18/82 of the hurdle so that they will have an amount equal to 18% of the profits on the pool up to that point (this is referred to as a "catch up"). Thereafter, Electra and previous managers would share future cash flows in the ratio of 82:18.

 

Below is an example to illustrate in principle how the above described arrangements work:

 

 

£m

Assumptions

Amount invested

500

Amount invested and priority profit share

Amount realised

1,000

Realised after year five

Pool profit

500

 

Hurdle

(210)

8% per annum compound

Catch up

46

18/82 of the hurdle

Balance

44

The amount over the hurdle to get to an aggregate 18% of the pool profit

Total carry

90

18%

Electra

410

82%

 

On 31 May 2017, when the contract with the previous managers terminated, any provision on post 2006 Pools, which was unpaid at that date and any future uplift to it was reduced by 20% which reverted to the Company.

Commitments

Legal obligation to provide capital for future investment in a private equity fund or in relation to a single investment.

Discount

Investment trust shares frequently trade at a discount to NAV. This occurs when the share price is less than the NAV per share. In this circumstance, the price that a shareholder would pay or receive for a share would be less than the value attributable to it by reference to the underlying assets. Traditionally expressed as a percentage.

Distributions to Paid-In Capital (DPI)

DPI, or realisation multiple, is defined by the Global Investment Performance Standards published by the CFA Institute and is the ratio of Distributions to Paid-In capital. It measures, since inception, the cash received by a fund's investors relative to the amount contributed to the fund by those investors. DPI below comprises cumulative realisations net of investment management fees (PPS and carried interest) in the numerator and original investment cost in the denominator in respect of each fund.

 

 

 

2006 Pool

2009 Pool

2012 Pool

2015 Pool

Amount distributed (£m)

          808

          876

        1,607

          198

Notional PPS (£m)

           (32)

           (26)

           (42)

             (5)

Carried interest paid (£m)

           (61)

           (88)

         (140)

            -  

 

          715

          762

        1,425

          193

Amount invested (£m)

         (436)

         (359)

         (785)

         (220)

DPI

           1.6x

           2.1x

           1.8x

           0.9x

Earnings Multiple

This is normally referred to as a price earnings (P/E) ratio. It is the ratio of a company's valuation compared to its earnings.

EBITDA

Earnings Before Interest, Tax, Depreciation and Amortisation. Often used to compare the profitability of similar companies.

EBITA

Earnings Before Interest, Tax & Amortisation.

EBITDA Margin

EBITDA expressed as a percentage derived by dividing EBITDA by net sales.

EV (enterprise value)

This is the aggregate value of a company's entire issued share capital and net debt.

Gearing

This is the level of a company's debt related to its equity capital and is usually expressed in percentage form. It shows the extent to which a company is funded by lenders as opposed to shareholders.

Hedging

Hedging is an investment technique designed to offset a potential loss on one investment by purchasing a second investment that is expected to perform in the opposite way.

Investment Return

This is the aggregate of income and capital profits and losses from the Investment Portfolio. This is sometimes disclosed as portfolio return. This is a common measure used by investment companies.

IPO (initial public offering)

An offering by a company of its share capital to the public with a view to seeking an admission of its shares to a recognised stock exchange.

IRR (internal rate of return)

Is the annualised return on an investment calculated from the cash flows arising from that investment taking account of the timing of each cash flow. It is derived by computing the discount rate at which the present value of all subsequent cash flows arising from an investment are equal to the original amount invested. Where an IRR is stated to be net, this denotes that it has been calculated net of investment management fees (PPS and carried interest).

Listed Company

Any company where the shares are freely tradable and are listed or traded on a recognised stock exchange.

NAV

This is the value of all the Company's assets minus current and long-term liabilities. Can also be referred to as 'shareholders' funds'.

NAV per share

This is the value of the Company's assets attributable to one Ordinary share. It is calculated by dividing 'shareholders' funds' by the total number of Ordinary shares in issue. This is a common measure used by investment companies.

NAV Total Return

The total return to shareholders is the aggregate of income and capital profits of the investment portfolio for the period less all costs. It can be expressed as a percentage of the opening position. This is a common measure used by investment companies.

 

 

 Six months

ending March

 Six months

 ending March

 Reported under IFRS

2018

2017

 Dividend per share (pence)

 914

110

 (Decrease)/increase in NAV per share (pence)

 (872)

 395

 Total return (pence)

 42

 505

 Opening NAV per share (pence)

 1,981

 5,149

 NAV total return

2%

10%

Calculation of Diluted and Basic NAV

The unaudited NAV per share at 31 March 2018 is calculated on the basis of the 38,282,763 ordinary shares in issue at 31 March 2018.

 

The audited NAV per share at 30 September 2017 was calculated on the basis of the 38,282,763 ordinary shares in issue at 30 September 2017.

Permanent Capital

An investment entity that manages capital for an unlimited time horizon.

Priority Profit Share

This is a share of profits equivalent to a management fee. It is calculated at 1.5% of the gross value of the Company's core investment portfolio and 1% of the gross value of the Company's Non-Core Listed and Primary Fund Investments, no fee is paid on cash. Following the Board's decision to serve notice of termination of the management agreement in May 2016, the management fee reverted back to the structure in place prior to 1 April 2015, whereby the Company paid the Manager 1.5% on assets held in cash (rather than nil) and 1.5% was paid on non-core investments (rather than 1%) as well as 1.5% on core assets.

Return on Equity (ROE)

This is the total return divided by opening shareholder funds. Electra's ROE has been calculated by taking the percentage change in NAV per share and adding back dividends paid per share. This is a common measure used by investment companies.

 

 

 

 10 Year Annualised

 Reported under IFRS

2018

2017

 Closing NAV per share (pence)

 1,109

 5,544

 Dividends per share during the period (pence)

 4,710

 295

 Opening NAV per share (pence)

 1,910

 1,811

 Return on Equity

12%

13%

 

Total Shareholder Return (TSR)

TSR is the percentage increase in share price over the period, where the closing price is multiplied by an adjustment factor for each dividend paid in the year ('dividend adjusted closing price').

 

To calculate the dividend adjusted closing price, the closing price is multiplied by an adjustment factor for each dividend paid in the year. The adjustment factor is the share price on the day prior to the ex-div date divided by the amount of the dividend subtracted from that prior day's price. Where there are multiple dividends in the year, the cumulative adjustment factor is the product of the adjustment factor for each dividend paid.

 

 

Share Price (p)

Dividend Adjustment Factor

Dividend Adjusted Share Price (p)

30/09/2017

1,665

-

1,665

31/03/2018

850

1.96

1,666

Total Shareholder Return (%)

 

 

0%

 

 

Dividend per Share (p)

Share Price Prior to Ex-Div Date (p)

Adjustment Factor

02/11/2017

914

1,867

1.96

Cumulative Adjustment Factor

 

 

1.96

Termination Payment

On 26 May 2016 the Company served notice of termination of the Management and Investment Guideline Agreement on Epiris. This termination became effective on 31 May 2017. Under the terms of the contract the previous manager was entitled to compensation based on priority profit share received in the year to 31 May 2017.

 

Total Value to Paid-In Capital (TVPI)

TVPI, or investment multiple, is defined by the Global Investment Performance Standards published by the CFA Institute and is the ratio of Total Value to Paid-In capital. It measures, since inception, the aggregate of the cash received by and the residual value attributable to a fund's investors relative to the amount contributed to the fund by those investors. TVPI below comprises cumulative realisations and fair value net of investment management fees (PPS and carried interest) in the numerator and original investment cost in the denominator in respect of each pool.

 

 

2006 Pool

2009 Pool

2012 Pool

2015 Pool

Amount distributed (£m)

                   808

          876

        1,607

          198

Remaining valuation (£m)

                     -  

                     -  

                   134

            45

Notional PPS (£m)

           (32)

           (26)

           (42)

             (5)

Carried interest paid and provision (£m)

                   (61)

           (88)

         (140)

                     -  

 

          715

          762

        1,559

          238

Amount invested (£m)

         (436)

         (359)

         (785)

                 (220)

TVPI

           1.6x

           2.1x

           2.0x

           1.1x

Return on Capital Employed (ROCE)

ROCE is the EBITA divided by Capital Employed. ROCE has been used to compare the efficiency with which the portfolio company's employ their capital.

NAV Uplift

This is the closing NAV divided by adjusted opening NAV. This is a common measure used by investment companies.

 

 

 Six months

 ending

March

 Six months

 ending March

 

2018

2017

Opening NAV

758

2,074

Dividends during the period

(349)

(44)

Adjustment opening NAV

409

2,030

Closing NAV

425

2,123

Uplift

16

93

NAV Uplift %

3.9%

4.6%

Unlisted Company

Any company whose shares are not listed or traded on a recognised stock exchange.

 

 

Contact Details

 

Electra Private Equity PLC

 

Board of Directors

Neil Johnson (Chairman)

Edward Bramson

Ian Brindle

Paul Goodson

David Lis

Gavin Manson (Chief Financial Officer)

Roger Perkin

Linda Wilding

 

Telephone +44 (0)20 3874 8300

www.electraequity.com

 

Company Secretary

Frostrow Capital LLP

25 Southampton Buildings, London, England, WC2A 1AL

Telephone +44 (0)20 3008 4910

 

Registered Office

(Registered in England: Company No. 00303062)

First Floor, 50 Grosvenor Hill, London, England, W1K 3QT

 

Investor Relations

Gavin Manson

Telephone +44 (0)20 3874 8300

Email IR@electrapeplc.com

 

Registered Independent Auditors

Deloitte LLP

Statutory Auditor

Hill House, 1 Little New Street, London, England, EC4A 3TR

 

Alternative Investment Fund Manager

G10 Capital Limited

136 Buckingham Palace Road, London, England, SW1W 9SA

 

Joint Stockbrokers

HSBC

8 Canada Square, Canary Wharf, London, England, E14 5HQ

 

Morgan Stanley Investment Management Limited

25 Cabot Square, Canary Wharf, London, England, E14 4QA

 

Depositary

Ipes Depositary (UK) Limited

9th Floor, No 1 Minster Court, Mincing Lane, London, England, EC3R 7AA

 

Registrar and Transfer Office

Equiniti Limited

Aspect House, Spencer Road, Lancing, West Sussex, England, BN99 6DA

Telephone (UK) 0371 384 2351 *

Textel/Hard of hearing line (UK) 0371 384 2255 *

Telephone (Overseas) +44 121 415 7047

 

* Lines open 8.30am to 5.30pm (UK time), Monday to Friday (excluding public holidays in England and Wales).

 

Further information

 

Greenhill & Co. International LLP ("Greenhill") is authorised and regulated by the FCA in the United Kingdom. Greenhill is acting exclusively as financial adviser for the Company and for no one else in connection with the matters referred to in this Announcement and will not be responsible to anyone other than the Company for providing the protections afforded to clients of Greenhill, or for providing advice in relation to the matters referred to in this Announcement. Neither Greenhill nor any of its subsidiaries, branches or affiliates owes or accepts any duty, liability or responsibility whatsoever (whether direct or indirect, whether in contract, in tort, under statute or otherwise) to any person who is not a client of Greenhill in connection with the matters referred to in this Announcement.

 

Rule 2.9 of the Takeover Code:

 

In accordance with Rule 2.9 of the Takeover Code, Electra confirms that as at close of business on 23rd May 2018 (being the last business day prior to the date of this announcement), it has in issue 38,282,763 ordinary shares with voting rights of 25p each (excluding treasury shares).  The International Securities Identification Number (ISIN) of the Electra shares is GB0003085445.

 

Disclosure requirements of the Code:

 

Under Rule 8.3(a) of the Code, any person who is interested in 1% or more of any class of relevant securities of an offeree company or of any securities exchange offeror (being any offeror other than an offeror in respect of which it has been announced that its offer is, or is likely to be, solely in cash) must make an Opening Position Disclosure following the commencement of the offer period and, if later, following the announcement in which any securities exchange offeror is first identified.  An Opening Position Disclosure must contain details of the person's interests and short positions in, and rights to subscribe for, any relevant securities of each of (i) the offeree company and (ii) any securities exchange offeror(s).  An Opening Position Disclosure by a person to whom Rule 8.3(a) applies must be made by no later than 3.30 pm (London time) on the 10th business day following the commencement of the offer period and, if appropriate, by no later than 3.30 pm (London time) on the 10th business day following the announcement in which any securities exchange offeror is first identified.  Relevant persons who deal in the relevant securities of the offeree company or of a securities exchange offeror prior to the deadline for making an Opening Position Disclosure must instead make a Dealing Disclosure.

 

Under Rule 8.3(b) of the Code, any person who is, or becomes, interested in 1% or more of any class of relevant securities of the offeree company or of any securities exchange offeror must make a Dealing Disclosure if the person deals in any relevant securities of the offeree company or of any securities exchange offeror.  A Dealing Disclosure must contain details of the dealing concerned and of the person's interests and short positions in, and rights to subscribe for, any relevant securities of each of (i) the offeree company and (ii) any securities exchange offeror, save to the extent that these details have previously been disclosed under Rule 8.  A Dealing Disclosure by a person to whom Rule 8.3(b) applies must be made by no later than 3.30 pm (London time) on the business day following the date of the relevant dealing.

 

If two or more persons act together pursuant to an agreement or understanding, whether formal or informal, to acquire or control an interest in relevant securities of an offeree company or a securities exchange offeror, they will be deemed to be a single person for the purpose of Rule 8.3.

 

Opening Position Disclosures must also be made by the offeree company and by any offeror and Dealing Disclosures must also be made by the offeree company, by any offeror and by any persons acting in concert with any of them (see Rules 8.1, 8.2 and 8.4).

 

Details of the offeree and offeror companies in respect of whose relevant securities Opening Position Disclosures and Dealing Disclosures must be made can be found in the Disclosure Table on the Panel's website at www.thetakeoverpanel.org.uk, including details of the number of relevant securities in issue, when the offer period commenced and when any offeror was first identified.  You should contact the Panel's Market Surveillance Unit on +44 20 7638 0129 if you are in any doubt as to whether you are required to make an Opening Position Disclosure or a Dealing Disclosure.

 

A copy of this announcement is also available on Electra's website at www.electraequity.com.

 


This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.
 
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