Half Yearly Report

RNS Number : 4645M

Electra Private Equity PLC

25 May 2010

 



ELECTRA PRIVATE EQUITY PLC

Unaudited Results for Half Year ended 31 March 2010

The information contained in this announcement is restricted and is not for release, publication, or distribution, directly or indirectly, in or into the United States, Canada, Japan or Australia. The information in this announcement does not constitute an offer of securities for sale in the United States, Canada, Japan or Australia.

References in this announcement to Electra Private Equity PLC and its subsidiaries have been abbreviated to 'Electra' or 'the Group'. References to Electra Partners LLP have been abbreviated to 'Electra Partners'.

·     Net asset value up 10.5% over the six months to 1,900p per share at 31 March 2010 (2009: 1,512p); unaudited net asset value per share at 20 May 2010 of 1,881p

·     Share price up 9.6% over six months to 31 March 2010 (FTSE All-Share up 10.5%)

·     Net asset value per share (incl. Special Dividends) up 86.2% over the five years to 31 March 2010

·     Share price up 43.2% over the five years (FTSE All-Share Index up 18.4%)

·     Return on equity of 13.6% on an annualised basis for the five years

·     More active period of investment: £138 million invested in the six months (2009: £62 million) and £75 million realised (2009: £18 million)

·     Net liquid resources at 31 March 2010 of £48 million

·     Available investment capacity of £233 million

·     Sir Brian Williamson retires. Colette Bowe becomes Chairman

Commenting on the results, Sir Brian Williamson, Chairman, said:

"Electra has weathered the economic turbulence of the last 18 months. Prospects for our portfolio companies have improved and Electra's Manager, Electra Partners, believes that attractive opportunities for investment will increase over the medium term. With its flexible investment mandate and £233 million of available investment capacity Electra is in good shape."

For further information:
Hugh Mumford, Managing Partner, Electra Partners LLP	020 7214 4200
Monique Dumas, Investor Relations Partner, Electra Partners LLP	020 7214 4200
Nick Miles, M: Communications	020 7920 2321

Performance Summary

	20 May 2010	31 March 2010	30 September 2009
Net asset value per share	1,881p	1,900p	1,720p
Increase since 30 September 2009		10.5%
Increase since 31 March 2009		25.7%
Share Price
Increase since 30 September 2009		9.6%
Increase since 31 March 2009		132.2%
FTSE All-Share Index
Increase since 30 September 2009		10.5%
Increase since 31 March 2009		46.7%

Return on Equity comprises "Total Profit on Ordinary Activities after Taxation" divided by opening "Total Equity Shareholders' Funds" calculated on an annualised basis (as these terms are used in the Report and Accounts of Electra for the year ended 30 September 2009).

The unaudited net asset value per share at 20 May 2010 was calculated on the basis of the net asset value at 31 March 2010 adjusted to reflect the purchases and sales of investments, currency movements and bid values on that day in respect of listed investments.

The figures and financial information in respect of the year ended 30 September 2009 have been delivered to the Registrar of Companies and included the Auditors' Report which was unqualified and did not contain a statement under either section 498(2) or section 498(3) of the Companies Act 2006.

CHAIRMAN'S STATEMENT

Overview

Electra continued to make progress in the six months to 31 March 2010. There are signs of a recovery in trading for some of our portfolio companies and we have been able to increase the valuation of a number of these investments.

During the year to 30 September 2009, the emphasis for Electra's Manager, Electra Partners, was to protect the existing investments with the result that Electra ended the year with a stable portfolio. Electra Partners was able to concentrate its efforts in the last six months on seeking new investment opportunities with the result that two new investments were made in attractive businesses together with further investments in existing portfolio companies.

Results

At 31 March 2010 Electra's net asset value per share was 1,900p compared with 1,720p at 30 September 2009 and 1,512p at 31 March 2009. The 10.5% increase over the six months to 31 March 2010 compares with a 10.5% increase in the FTSE All-Share Index over the same period.

Over the five years to 31 March 2010 the net asset value per share, inclusive of Special Dividends, increased by 86.2% and Electra achieved an annualised return on equity of 13.6%. Over this time the share price increased by 43.2% compared to an 18.4% increase in the FTSE All-Share Index.

Share Price Performance

Electra's share price declined by 53.2% in the six months ended 31 March 2009 as a result of the severe economic contraction together with concerns relating to the geared nature of private equity and the dangers of over-dependence on debt financing. Concerns about over-commitment and over-exposure to leveraged buy outs had a negative impact on the private equity industry as a whole and Electra's share price suffered as a consequence although these issues did not apply to Electra.

Since 31 March 2009 Electra's share price has steadily recovered, increasing by 132.2% over the year to 31 March 2010 compared with the FTSE All-Share Index which increased by 46.7%. Both the Board and the Manager continue to promote Electra's strength in comparison with many of its competitors.

Investment Activity

Electra Partners saw an increase in investment activity during the six months and a total of £138 million was invested. Included in this was £55.8 million in respect of BDR Thermea and a further £23.6 million investment to fund a bolt-on acquisition by Premier Asset Management. New investments included £29.7 million in Esure, the online motor insurer, and £9 million in Kalle, the global manufacturer of artificial sausage casings and sponge cloths. In addition £13 million was drawn down under commitments to third party funds.

Realisations totalled £75 million for the six months which included £40.6 million in respect of Baxi. A further £17.1 million, plus £3.2 million as income, was received from the successful sale of senior debt held in Credit Opportunities, Electra's special purpose vehicle set up to purchase senior debt at a discount.

Baxi / BDR Thermea

At 30 September 2009 Electra's interest in Baxi was valued at £41.3 million exclusive of accrued interest of £15.4 million due from Baxi at that date. On 30 October 2009 Electra sold the majority of its interest in Baxi, including accrued interest, and received in exchange securities in BDR Thermea.  

Resources and Commitments

At 31 March 2010 Electra had cash and liquidity funds of £216 million and £168 million of borrowings drawn down under its banking facilities. Available investment capacity amounted to £233 million comprising £48 million of net cash together with banking facilities of £185 million.  At 31 March 2010 Electra also had a quoted portfolio valued at £121 million and commitments to third party funds of £89 million.  During the six months, a further £4.5 million net was raised from the issue by Electra's wholly-owned subsidiary Electra Private Equity Investments PLC of seven-year Zero Dividend Preference shares ("ZDPs") bringing the total net proceeds from ZDPs to £46 million.

Board Changes

Roger Perkin was appointed as a non-executive Director of Electra on 24 November 2009 and became Chairman of the Audit Committee in February 2010. Mr Perkin is a former senior partner at Ernst & Young and brings with him a significant amount of global accounting experience, having specialised in financial services. I am grateful to him for joining the Board.

Since the return to a full investment policy there have been three Board appointments and shareholders can be confident that they have a talented and experienced Board to oversee the next stage of Electra's development.

It is not generally realised how much more complicated the business of an investment trust specialising in private equity has become. The role of the Board has been transformed and governance is of a quite different magnitude to that which existed when I succeeded Michael Stoddart as Chairman in 2000.

Colette Bowe, who joined the Board 3 years ago has experience of Government, investment management and regulation. These skills are highly relevant for Electra and, on my retirement as a director today I am very pleased that she has accepted the Board's invitation to become its next Chairman from the date of this announcement of half year results.

I should like to thank all my colleagues on the Board and Hugh Mumford, the Managing Partner of Electra Partners, who have seen Electra through three stages of policy from the aftermath of the failed 3i bid for the Company. Many shareholders supported the Company through these transitions and I am grateful for their loyalty and support.

Outlook

Electra has weathered the economic turbulence of the last 18 months.  Prospects for our portfolio companies have improved and Electra Partners believes that attractive opportunities for investment will increase over the medium term. With its flexible investment mandate and £233 million of available investment capacity Electra is in good shape.

Sir Brian Williamson

Chairman

24 May 2010

OBJECTIVE AND INVESTMENT POLICY

The business and affairs of Electra are managed on an exclusive and fully discretionary basis by Electra Partners, an independent private equity fund manager. Electra is managed as an HM Revenue and Customs approved investment trust.

Electra's objective is to achieve a rate of return on equity of between 10-15% per annum over the long term by investing in a portfolio of private equity assets. Unless required to do so as an investment trust, Electra's Directors would not recommend the payment of dividends on a regular basis.

Electra Partners, on behalf of Electra, will aim to achieve this target rate of return by:

• exploiting a track record of successful private equity investment;

• utilising the proven skills of its senior management team, its strong record of deal flow generation and long-term presence in the private equity market;

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

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

Total bank borrowings by Electra will always be less than 40% of its total assets.

Electra Partners will target private equity opportunities (including direct investment, fund investment and secondary buy-outs of portfolios and funds) so that the perceived risks associated with such investments are justified by expected returns. These investments will be made across a broad range of sectors and types of financial instrument such as equity, senior equity, convertibles and mezzanine debt.

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

In implementing Electra's investment strategy, Electra Partners typically targets investments at a cost of £20-75 million in companies with an enterprise value of £60-200 million.

Electra will not invest more than 15% of its total assets at the time of investment in any other listed closed-ended investment funds.

THE PORTFOLIO

Electra's portfolio consists of investments in companies and other investment vehicles (the "investment portfolio"). In addition, at 31 March 2010 the Group held cash and liquidity funds valued at £216 million.

The investment portfolio consists primarily of direct investments in unquoted and quoted companies together with investments in funds where investments are held in limited partnerships managed by other private equity managers. Electra will normally invest in unquoted companies but may invest in quoted companies when the management team, which Electra wishes to support, operates through a quoted vehicle. Quoted investments may also be held where they arise from previously unquoted investments and continue to generate the returns required under the investment mandate. In general these are likely to be sold when resources for new unquoted transactions are required. Investments in funds are made principally to gain exposure to geographic areas outside the UK and which, because of the relationship with the fund manager, are likely to generate co-investment opportunities for Electra.

At 31 March 2010 Electra's available investment capacity amounted to £233 million comprising £48 million of net liquid resources, together with banking facilities of £185 million.

		31 March 2010	30 September 2009
		£m	£m
Investment Portfolio *
	Direct investments	583	474
	Funds	88	73
		671	547
Available Investment Capacity		233	281
Investment Portfolio and Available Investment Capacity *		904	828

* Excludes accrued income on the investment portfolio of £26,660,000 (30 September 2009: £29,450,000).

At 31 March 2010 Electra held direct investments in 63 companies with an aggregate value of £583 million and investments in 24 funds with an aggregate value of £88 million.

The top ten and twenty investments account for 58% and 80% respectively of the investment portfolio.

Geographically, 55% of the investment portfolio was situated in the UK, 31% in Continental Europe, 8% was based in the USA and 6% in Asia and elsewhere.

INVESTMENT PORTFOLIO ANALYSIS

The six months to 31 March 2010 saw continuing growth in the net asset value. Over this period the net asset value increased from 1,720p to 1,900p, an increase of 10.5%. This has brought the increase in the net asset value in the last twelve months to 25.7%. The increase in the last six month period reflected a good all round performance by the portfolio and was achieved despite continuing pressure on the profit levels of portfolio companies. The performance included gains from all segments of the portfolio and benefitted from a minimal level of provisions and good progress by some of the larger investments.

During the six month period the investment portfolio increased from £547 million to £671 million, increasing through net investment of £63 million and through net appreciation in the value of the investments in the portfolio of £61 million.

Six months to 31 March	2010 £m	2009 £m
Opening portfolio	547	505
Investments	138	62
Realisations	(75)	(18)
Net capital increase/(decrease)	61	(79)
Closing portfolio *	671	470

* As at 31 March 2010 excludes accrued income on the investment portfolio of £26,660,000 (2009: £8,199,000) and excludes investments in money market funds and FRNs of £154,044,000 (2009: £248,895,000).

Prospects

As anticipated, activity in the private equity market has seen an increase over the most recent period. This has manifested itself in a higher level of investment while realisations have remained relatively slow. Based on current proposals in the pipeline however, we anticipate that the rate of disposals should begin to increase in the second half of the current year.

At present, Electra has over £200 million of available investment capacity which will be enhanced by any further realisations. Electra thus remains well placed to make new investments in a market which is anticipated to produce attractive investment opportunities. In the meantime we expect to see further progress from the existing portfolio through the recognition of additional upside, particularly if the prospects for the economy continue to improve.

INVESTMENT PORTFOLIO REVIEW

Investments

In the six months to 31 March 2010 investments totalled £138 million compared to £62 million in the corresponding period of the previous year. The period therefore saw a welcome revival in the rate of investment with the total amount invested exceeding the amount invested in each of the last two years. The pricing of transactions however did not fall as much as we expected and good quality non-cyclical businesses have continued to sell at high earnings multiples. This reflects the plentiful supply of private equity funds following the low investment rates in the last two years. Overall we believe that Electra has made good progress in the six month period and the quality of the portfolio has improved through the addition of new companies and through add-on investments.

New investment included the purchase of a £29.7 million stake in Esure as part of the buyout of the business from Lloyds Banking Group led by Peter Wood who had previously founded Direct Line.  Both directly and through the Sheilas' Wheels brand Esure provides car and other insurances marketed via the internet and by phone. £9 million was invested in Kalle, a global manufacturer of artificial sausage casings and sponge cloths. Kalle is a market leader in its segment of the resilient food sector and has a track record and future pipeline of product innovations.

Our focus on improving the quality of existing portfolio companies came to fruition in respect of three portfolio companies. In the first instance the combination of Baxi and De Dietrich Remeha to form BDR Therma was completed in October 2009 and is now Electra's second largest investment with a current value of £55.6 million. The combination of these two companies will give rise to significant synergies in an enterprise with a leading position in the European heating products market. In December Electra provided equity funding of £23.6 million to Premier Asset Management to facilitate the acquisition of the management contracts for two OEIC fund umbrellas, in a transformational transaction for the company. Electra has also supported the acquisition of a £825 million credit card portfolio for SAV Credit. This acquisition provides SAV Credit with 540,000 additional credit card customer accounts effectively doubling the total number of customers. It is believed that this acquisition will significantly enhance the prospects of SAV Credit and consequently the value of Electra's investment.

Realisations

Realisations for the six months totalled £75 million including £40.6 million in respect of the merger of Baxi and De Dietrich Remeha and £20.3 million from Credit Opportunities, of which £3.2 million was received as income. In the latter case the recovery of the leveraged debt market meant that we were able to sell all but two of the positions realising a good return in a relatively short time scale. In addition Electra realised £4.3 million from the sale of one of the smaller companies in the Steadfast portfolio. Returns from private equity funds remained at a relatively low level with £4.7 million arising from the sales of portfolio companies, principally in North and South America.

Performance

During the six month period the valuation of Electra's investment portfolio increased by £61 million or 11.2%. Currency movements in the period were minimal. The value of the direct investments (including secondaries) increased by 14.1%, private equity funds by 9.7% and listed investments by 3.2%. In arriving at the valuation of the direct unlisted investments net gains amounted to £50 million. These included £4.7 million of realised gains. Most of the changes in valuation were positive in the period, gains being recorded in respect of 16 investments and a reduction in value in respect of one investment only after eliminating the effect of currency movements.

The largest individual gain was recorded in respect of Allflex where £12.5 million was added to the value, largely to reflect an improvement in underlying profitability. Other significant gains were recorded in respect of MPS (£6.4 million), again to reflect profit improvement and strong cash flow and in respect of Amtico (£5.9 million) where financial restructuring allowed the value of Electra's mezzanine investment to be restored. Other gains were recorded in respect of Premier Asset Management (£4.9 million) and SAV Credit (£2.8 million) to reflect the value added effect of the acquisitions made during the period.

Electra Partners LLP

24 May 2010

HALF YEAR MANAGEMENT REPORT

Current and Future Development

A review of the main features of the six months to 31 March 2010 is contained in the Chairman's Statement, the Investment Portfolio Analysis and Investment Portfolio Review.

Performance

A detailed review of performance during the six months to 31 March 2010 is contained in the Investment Portfolio Analysis and Investment Portfolio Review.

Risk Management

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

The principal risks faced by Electra include Market Price Risk, Credit Risk, Interest Rate Risk, Liquidity Risk and Foreign Currency Risk as set out in Note 17 in the Notes to the Accounts of Electra's Annual Report  2009. In addition Electra is also focused on Macroeconomic Risks, Long-term Strategic Risk, Gearing Risks of Zero Dividend Preference shares, Government Policy and Regulation Risk, Investment Risks and Operational Risk as set out in the Report of the Directors of Electra's Annual Report 2009.

RESPONSIBILITY STATEMENT

The Directors confirm to the best of their knowledge that:

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

b)  the Half Year Management Report includes a fair review of the information required by the FSA's Disclosure and Transparency Rules (4.2.7R and 4.2.8R).

By order of the Board of Directors

Sir Brian Williamson, Chairman, Paternoster House

65 St Paul's Churchyard, London EC4M 8AB

24 May 2010

Consolidated Income Statement (Unaudited)

	For the six months ended 31 March			2010			2009
		Revenue	Capital	Total	Revenue	Capital	Total
Note		£'000	£'000	£'000	£'000	£'000	£'000
	Net gains/(losses) on investments	19,121	57,606	76,727	10,269	(87,205)	(76,936)
	Profit/(Losses) on revaluation of foreign currencies	-	4,892	4,892	-	(17,810)	(17,810)
		19,121	62,498	81,619	10,269	(105,015)	(94,746)
	Other income	234	-	234	825	-	825
	Incentive schemes	-	(4,155)	(4,155)	-	807	807
	Priority profit share	(6,396)	-	(6,396)	(5,945)	-	(5,945)
	Other expenses	(2,761)	-	(2,761)	(4,035)	-	(4,035)
	Net Profit/(Loss) before Finance Costs and Taxation	10,198	58,343	68,541	1,114	(104,208)	(103,094)
	Finance costs	(3,954)	(1,546)	(5,500)	(3,168)	-	(3,168)
	Profit/(Loss) on Ordinary Activities before Taxation	6,244	56,797	63,041	(2,054)	(104,208)	(106,262)
	Taxation credit/(expenses)	1,613	189	1,802	(1,224)	12,442	11,218
	Profit/(Loss) on Ordinary Activities after Taxation attributable to owners of the parent	7,857	56,986	64,843	(3,278)	(91,766)	(95,044)
3	Basic and Diluted Earnings per Ordinary Share	22.23p	161.26p	183.49p	(9.25)p	(259.02)p	(268.27)p

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

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

Consolidated Statement of Comprehensive Income (Unaudited)

		2010	2009
For the six months ended 31 March		£'000	£'000
	Profit/(Loss) for the period	64,843	(95,044)
	Exchange differences arising on consolidation	(1,305)	(9,595)
	Total comprehensive income for the period	63,538	(104,639)
	Total comprehensive income attributable to owners of the parent	63,538	(104,639)

Consolidated Statement of Changes in Equity (unaudited)

	For the six months ended 31 March	2010	2009
Note		£'000	£'000
6	Total equity at 1 October	607,953	640,949
	Total comprehensive income for the period	63,538	(104,639)
6	Repurchase of own shares*	-	(2,119)
	Total Equity attributable to the owners of the parent at 31 March	671,491	534,191

* No special dividend was paid during the period (2009: £nil). There were no share buy-backs or cancellations during the

six months to 31 March 2010 (2009: 7,000 ordinary shares on 26 November 2008 and 250,000 ordinary shares on

2 December 2008).

Consolidated Balance Sheet (Unaudited)

		As at 31 March 2010		As at 30 September 2009		As at 31 March 2009
Note		£'000	£'000	£'000	£'000	£'000	£'000
	Non-Current Assets
	Investments held at fair value:
	Unlisted and listed		698,008		576,291		478,133
	Other investments		154,044		229,322		249,744
			852,052		805,613		727,877
	Current Assets
	Trade and other receivables	2,888		5,113		2,365
	Cash and cash equivalents	62,099		36,500		30,505
		64,987		41,613		32,870
	Current Liabilities
	Trade and other payables	5,816		6,757		7,056
	Net Current Assets		59,171		34,856		25,814
	Total Assets Less Current Liabilities		911,223		840,469		753,691
4	Zero Dividend Preference Shares	47,899		41,896		-
	Bank loans	168,212		169,732		205,240
	Deferred tax	-		148		12
	Provision for liabilities and charges	23,621		20,740		14,248
	Non-Current Liabilities		239,732		232,516		219,500
	Net Assets		671,491		607,953		534,191
	Capital and Reserves
5	Called-up share capital		8,835		8,835		8,835
6	Share premium	24,147		24,147		24,147
6	Capital redemption reserve	34,440		34,440		34,440
6	Translation reserve	(4,680)		(3,375)		(8,561)
6	Realised capital profits	785,410		780,882		855,581
6	Unrealised capital losses	(208,458)		(260,916)		(388,866)
6	Revenue reserves	31,797		23,940		8,615
			662,656		599,118		525,356
	Equity attributable to the owners of the parent		671,491		607,953		534,191
	Net Asset Value Per Ordinary Share		1,900.16p		1,720.36p		1,511.63p
	Ordinary Shares In Issue		35,338,687		35,338,687		35,338,687

Consolidated Cash Flow Statement (Unaudited)

For the six months ended 31 March		2010		2009
	£'000	£'000	£'000	£'000
Operating Activities
Purchases of investments	(138,130)		(181,400)
Amounts paid under incentive schemes	(1,380)		(1,934)
Sales of investments	165,590		163,210
Dividends and distributions received	674		1,071
Other investment income received	5,219		8,827
Interest income received	113		676
Other income received	148		148
Expenses paid	(8,570)		(7,540)
Taxation received/(paid)	1,203		(1,427)
Net Cash Inflow/(Outflow) from Operating Activities		24,867		(18,369)
Financing Activities
Bank loans drawn	-		206,846
Bank loans repaid	-		(198,262)
Issue of additional Zero Dividend Preference Shares	4,459		-
Repurchase of own shares	-		(2,119)
Finance costs	(3,454)		(2,973)
Dividend paid	-		-
Other finance costs	(41)		(195)
Net Cash Inflow from Financing Activities		964		3,297
Changes in cash and cash equivalents		25,831		(15,072)
Cash and cash equivalents at 1 October		36,500		43,791
Translation difference		(232)		1,786
Cash and Cash Equivalents at 31 March		62,099		30,505

NOTES TO THE ACCOUNTS

1          Basis of Accounting

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

The statutory accounts for 2009, which were prepared in accordance with International Financial Reporting Standards, as endorsed by the European Union ("IFRS") and with those parts of the Companies Act 2006 applicable to companies reporting under IFRS, have been delivered to the Registrar of Companies. The Auditor's opinion on those accounts was unqualified and did not contain a statement made under Section 498(2) or Section 498(3) of the Companies Act 2006. The financial information comprises the Consolidated Balance Sheets as at 31 March 2010, 30 September 2009 and 31 March 2009 and for the periods ended 31 March 2010 and 31 March 2009, the related Consolidated Statement of Income, Consolidated Statement of Comprehensive Income, Consolidated Statement of Changes in Equity, Consolidated Cashflow Statement and the related notes hereinafter referred to as "financial information".

The financial information has been prepared in accordance with the Disclosure and Transparency Rules of the Financial Services Authority and the principal accounting policies set out in the Annual Report for the year ended 30 September 2009 which is available on Electra's website (www.electraequity.com). The financial statements are prepared in accordance with IAS 34.

Application of new standards

Amendments to existing standards and IFRIC interpretations, that became effective in the year, have been applied by the Group but none have had a material impact on the financial statements or accounting policies. These included:

IAS 1 (revised), 'Presentation of financial statements' (effective 1 January 2009) has resulted in the replacement of the statement of recognised gains and losses with the statement of comprehensive income and the requirement to present a statement of changes in equity. The adoption of IAS 1 (revised) does not change the recognition, measurement or disclosure of specific transactions or events required by other standards; and

IFRS 8, 'Operating segments' (effective 1 January 2009) requires the adoption of a management approach to segmental reporting under which segment information is presented on the same basis as that used for internal reporting purposes. This has not resulted in a change to the segments disclosed.

The following new standards, amendments to standards and interpretations have been issued, but have no material impact on the interim financial statements:

Amendment to IAS 27, 'Consolidated and separate financial statements', on the 'Cost of an investment in a subsidiary, jointly controlled entity or associate' (effective 1 January 2009); and

Amendment to IFRS 7, 'Financial instruments: Disclosures' (effective 1 January 2009).

2          Segmental Analysis

For the six months ended 31 March				2010				2009
	UK and				UK and
	Continental				Continental
	Europe	Americas	Far East	Total	Europe	Americas	Far East	Total
	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000
Net Gains/(Losses) on Investments
Realised and unrealised capital gains/(losses) on investments	44,875	11,148	1,583	57,606	(81,023)	5,285	(11,467)	(87,205)
Portfolio investment income	18,934	187	-	19,121	9,703	18	548	10,269
	63,809	11,335	1,583	76,727	(71,320)	5,303	(10,919)	(76,936)
Realised and unrealised capital gains/(losses) on foreign currency	(1,638)	5,918	612	4,892	(21,110)	5,626	(2,326)	(17,810)
	62,171	17,253	2,195	81,619	(92,430)	10,929	(13,245)	(94,746)
Other income				234				825
Incentive schemes				(4,155)				807
Priority profit share				(6,396)				(5,945)
Other expenses				(2,761)				(4,035)
Net Profit/(Loss) before Finance Costs and Taxation				68,541				(103,094)
Finance costs				(5,500)				(3,168)
Profit/(Loss) on Ordinary Activities Before Taxation				63,041				(106,262)
Balance Sheet
Investments held at fair value	754,932	56,760	40,360	852,052	674,648	37,658	15,571	727,877

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

Segmental result is £81,619,000.

3          Earnings Per Share

For the six months ended 31 March	2010	2009
	p	p
Revenue return per ordinary share	22.23	(9.25)
Capital return per ordinary share	161.26	(259.02)
Earnings per ordinary share (basic and diluted)	183.49	(268.27)

The calculation of revenue return per share is based on the revenue profit attributable to shareholders of £7,857,000 (2009: loss of £3,278,000) on a weighted average number of 35,338,687 (2009: 35,427,413) ordinary shares of 25p each in issue. The calculation of capital return per ordinary share is based on the capital profit attributable to ordinary shareholders of £56,986,000 (2009: loss of £91,764,000) on a weighted average number of 35,338,687 (2009: 35,427,413) ordinary shares of 25p each in issue. There were no potentially dilutive shares in issue in either year.

4          Zero Dividend Preference Shares

As at 31 March	2010	2009
	£'000	£'000
	47,899	-

On 2 December 2009 4,295,000 Zero Dividend Preference Shares were issued at a price of 104p each. Each share has a par value of 0.01p and is redeemable on 5 August 2016 for 155.4p.

5          Share Capital

As at 31 March	2010	2009
	£'000	£'000
Allotted, called up and fully paid 35,338,687 (2009: 35,338,687)
ordinary shares of 25p each	8,835	8,835

Under the Companies Act 2006, the concept of authorised share capital was abolished with effect from 1 October 2009.  At the Company's Annual General Meeting held on 2 February 2010, a special resolution was passed to adopt new Articles of Association of the Company and as a result there is no maximum amount of shares that may be allotted by the Company. Directors will still need to obtain the usual shareholders' authorisation in order to allot shares, except in respect of employee share schemes.

6          Capital and Reserves

For the six months ended 31 March 2010						Unrealised
	Called-up		Capital		Realised	capital		Total
	share	Share	redemption	Translation	capital	(losses)/	Revenue	shareholders'
	capital	premium	reserve	reserve	profits	profits	reserve	funds
	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000
Opening balance at 1 October 2009	8,835	24,147	34,440	(3,375)	780,882	(260,916)	23,940	607,953
Net revenue transferred to reserves	-	-	-	-	-	-	7,857	7,857
Net profits on realisation of investments during the period	-	-	-	-	213	-	-	213
Increase in value of non-current assets	-	-	-	-	-	59,124	-	59,124
Incentive schemes	-	-	-	-	-	(4,155)	-	(4,155)
Gains and losses on foreign currencies	-	-	-	-	3,372	1,520	-	4,892
Exchange differences arising on consolidation	-	-	-	(1,305)	-	-	-	(1,305)
Unrealised net (depreciation)/appreciation at
1 October 2009 on investments sold during the period	-	-	-	-	754	(4,031)	-	(3,277)
Tax liabilities on capital	-	-	-	-	189	-	-	189
At 31 March 2010	8,835	24,147	34,440	(4,680)	785,410	(208,458)	31,797	671,491

 7          Related Party Transactions

For the six months ended 31 March 2009					Realised	Unrealised
	Called-up		Capital		capital	capital		Total
	share	Share	redemption	Translation	profits/	(losses)/	Revenue	shareholders'
	capital	premium	reserve	reserve	(losses)	profits	reserve	funds
	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000
Opening balance at 1 October 2008	8,899	24,147	34,376	1,034	834,672	(274,072)	11,893	640,949
Net revenue transferred to reserves	-	-	-	-	-	-	(3,278)	(3,278)
Net profits on realisation of investments during the period	-	-	-	-	1,310	-	-	1,310
Net capital losses on non-current assets	-	-	-	-	-	(88,514)	-	(88,514)
Incentive schemes	-	-	-	-	-	807	-	807
Gains and losses on foreign currencies	-	-	-	-	2,113	(19,923)	-	(17,810)
Movement on tax provision	-	-	-	-	12,441	-	-	12,441
Exchange differences arising on consolidation	-	-	-	(9,595)	-	-	-	(9,595)
Repurchase of own shares	(64)	-	64	-	(2,119)	-	-	(2,119)
Unrealised net appreciation/(depreciation) at
1 October 2008 on investments sold during the period	-	-	-	-	7,164	(7,164)	-	-
At 31 March 2009	8,835	24,147	34,440	(8,561)	855,581	(388,866)	8,615	534,191

Certain members of Electra Partners (the "participants") are entitled under various limited partnership agreements to benefit from carried interest and co-investment arrangements. Under these schemes the participants invest in every new investment made by Electra up to 31 March 2006. In return the participants receive a percentage of the total capital and revenue profits made on each investment. The participants do not receive any profits until Electra has received back its initial investment. During the six months ended 31 March 2010 the participants received £418,000 (31 March 2009: £1,364,000) and are entitled to receive £nil (31 March 2009: £nil) under these schemes and had unrealised gains of £10,414,000 (31 March 2009: £6,546,000). The participants are entitled to a percentage of the incremental value of unlisted investments held at 31 March 1995, subject to Electra having received in total proceeds equal to the valuation of those investments as at 31 March 1995 and a preferred return. During the six months ended 31 March 2010 the participants received £962,000 (31 March 2009: £nil) under the scheme and had unrealised gains of £72,000 (31 March 2009: £982,000).

Following approval at the Extraordinary General Meeting held on 12 October 2006 the participants entered two new schemes. The participants are entitled to receive a percentage of the incremental value of certain investments held at 31 March 2006 following Electra receiving total proceeds equal to the operating value and a preferred return, after deduction of related priority profit share ("PPS"). During the six months ended 31 March 2010 the participants received £nil (31 March 2009: £570,000) and had unrealised gains of £12,633,000 (31 March 2009: £6,720,000) under this scheme. The second scheme entered into under the new arrangements requires the participants to invest in every new investment made by Electra since 1 April 2006. On a pooled basis participants receive a percentage of the total capital and revenue profits once Electra has received back its initial investment, a preferred return and a related priority profit share. During the six months ended 31 March 2010 the participants received £nil (31 March 2009: £nil) and had unrealised gains of £nil (31 March 2009: £nil).

Members of Electra Partners, the Manager, are entitled to incentives based on the performance of investments in Electra. Under the arrangements relating to the management of the listed portfolio, certain executives of Electra Partners will receive bonuses over a one year period if the listed portfolio outperforms a composite index.

No Directors of Electra participate in the above schemes.

ENDS

No information contained in this announcement shall form the basis of, or be relied upon in connection with, any offer or commitment whatsoever in any jurisdiction.

This announcement is not an offer to sell or a solicitation of any offer to buy any securities of Electra Private Equity PLC (the "Company", and such securities, the "Securities") in the United States or any other jurisdiction. The Company is not registered under the U.S. Investment Company Act of 1940, as amended (the "Investment Company Act"), and holders of any Securities will not be entitled to the benefits of the Investment Company Act. The Securities have not been and will not be registered under the U.S. Securities Act of 1933, as amended (the "Securities Act"), and may not be reoffered, resold or transferred in the United States or to, or for account or benefit of, U.S. persons (as such term is defined in Regulation S under the Securities Act) unless registered under the Securities Act or an exemption from such registration is available. Copies of this announcement are not being, and should not be, distributed or sent into the United States. No public offering of Securities is being made in the United States. If for any reason in the future an offering of the Securities is made, such offering will be made by means of a prospectus that may be obtained from the Company and will contain all relevant information about the Company, its management, and its financial statements.

 

END

 

 

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