Quarterly Update Report as at 31 December 2014

RNS Number : 1706G

Electra Private Equity PLC

02 March 2015

 



EMBARGOED UNTIL 07:00AM, 2 MARCH 2015

Electra Private Equity PLC

Quarterly Update Report as at 31 December 2014

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

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

The requirement in DTR 4.3 for listed companies to produce an interim management statement has been removed with effect from 7 November 2014. The Board of Electra considers that a quarterly report is a valuable tool for updating Electra's shareholders on significant developments relating to the Company and its portfolio. The Board therefore intends to issue a Quarterly Update Report in place of an Interim Management Statement.

However, whereas Electra's Interim Management Statements previously reported a fully diluted net asset value per share ("NAV"), Electra's Quarterly Update Reports will not do so. Electra's investment portfolio is revalued twice a year, at the end of March and September; the Board's view is that a NAV reported as at June or December is not a meaningful indication of the Company's position.

Highlights

·    Share price of 3,028p at 31 December 2014, up 14% since 30 September 2014 against a 9% total return for the Morningstar Private Equity Index and a 1% total return for the FTSE All-Share Index.

·    £117 million invested, including £99 million in TGI Fridays.

·    £89 million realised, including £48 million from AXIO Data Group following the sales of JOC Group and Breakbulk.

·    £117 million of liquid resources net of bank borrowings, a reduction of £49 million since September 2014 and of £241 million since December 2013.

Roger Yates, Chairman of Electra Private Equity PLC, said:

"Electra is increasingly approaching the optimum balance between invested and investible capital. The Board is delighted with the progress Electra Partners continues to make, delivering consistently superior long-term returns for all our shareholders."

Hugh Mumford, Managing Partner of Electra Partners, said:

"We have again used Electra's flexibility to deploy capital in a range of exciting new opportunities. At the same time, our active management of the portfolio has resulted in a number of attractive partial realisations. As ever, patience and discipline are our watchwords."

For further information:

For Roger Yates & Hugh Mumford:

Andrew Honnor or Matthieu Roussellier, Greenbrook Communications                           020 7952 2000

Andrew Kenny or Nicholas Board, Electra Partners                                                      020 7306 3902

Investment Portfolio

Movements

In the three months to 31 December 2014	£m
Investments	117
Realisations	(89)
Currency movements	7
Valuation movement	3
Net movement	38

Electra's investment portfolio is revalued twice a year, at the end of March and September. The table above shows movements in the investment portfolio relating to investments and realisations, currency movements and, under "Valuation movement", realised profits, income received and bid values in respect of listed investments at that date.

New Investments

Total new investment for the three months to 31 December 2014 was £117 million:

	£m
TGI Fridays	99
Secondaries	14
Funds	4
Total investment	117

The largest new investment was in respect of TGI Fridays, the UK franchise of the eponymous American-styled restaurant chain. It operates from 66 UK restaurants in a range of locations, including city centres, shopping centres and retail parks. The business offers a differentiated product, with a wide demographic appeal, in the growing casual dining market. The intention is to capitalise on the company's strong trading performance through the development of new restaurant openings. Electra invested £99 million of equity in the buyout of TGI Fridays in December 2014.

Electra additionally invested a total of £14 million in two separate secondaries transactions. The larger of these was in respect of a portfolio of secondary funds, including several to which Electra already had an exposure through its investment in the EP1 Secondary Portfolio. The smaller transaction, amounting to some £5 million, was an interest in a Spanish infrastructure fund. Both of these investments were made at a significant discount to NAV.

Realisations

Realisations in the three months to 31 December 2014 amounted to £89 million:

	£m
AXIO Data Group	48
Knight Square (formerly known as Peverel)	14
Isle of Man Steam Packet Company	5
Secondaries	14
Funds	4
Other	4
Total realisations	89

The largest realisation during the period was in respect of AXIO Data Group. AXIO is a diverse and cash-generative group of individual information services companies. Electra Partners' strategy is to improve each of these businesses, including through efficiency programmes, quality of earnings enhancements and M&A, before then exiting each business separately. Two such exits, of JOC Group and Breakbulk, were completed in December 2014, allowing AXIO to repay £48 million of loans advanced by Electra. Following these transactions, in which AXIO has sold businesses representing less than 15% of the earnings acquired in 2013, Electra has received total cash proceeds exceeding 80% of its investment cost.

In October 2014 Knight Square, formerly known as Peverel, completed a refinancing that allowed it to make loan repayments of £14 million to Electra.

£5 million of proceeds were received from the sale of Electra's investment in senior debt issued by The Isle of Man Steam Packet Company, which operates ferry services between Ireland, the UK and the Isle of Man. Electra had invested in the company in December 2012; the sale in December 2014 realised a return of 1.9x money, an IRR of 40%.

Developments since 31 December 2014

Since 31 December 2014, two notable acquisitions have been completed by Electra's portfolio companies.

Allflex Corporation has acquired SCR (Engineers) Ltd, the world's largest manufacturer of electronic milk meters and smart tags for monitoring cow fertility and health. SCR has a strong historical growth trend, driven by dairy farms' increasing need for productivity gains as well as growing concern over animal well-being. Its acquisition provides Allflex with an entry into a highly attractive adjacent sector and cements its position as the worldwide leader in farm livestock management products. Further growth is anticipated as the group makes use of its combined distribution, technology and product development resources. Electra made a further investment of $18 million (£11 million) in Allflex to support the acquisition.

AXIO's aviation division, OAG, has acquired FlightView, Inc., the leading provider of real-time flight information for the aviation and travel industries. The acquisition creates a market-leader in the growing global flight status and schedules data markets and is in line with Electra Partners' strategy of improving AXIO's individual businesses where appropriate through M&A. The transaction was funded by cash on AXIO's balance sheet.

Including these recent developments, total new investment and realisations for the four months to 31 January 2015 amounted to £129 million and £94 million respectively.

Currency Movements

In the three months to 31 December 2014, currency movements increased the value of the portfolio by £7 million. This was partially offset by losses of £3 million arising from the hedging arrangements of drawings under Electra's multi-currency loan facility.

Resources and Commitments

	31 Dec 2014 £m	30 Sep 2014 £m	31 Dec 2013 £m
Liquid resources	272	318	515
Bank borrowings (facility committed until 2019)	(155)	(152)	(157)
ZDP shares (repayable 2016)	(66)	(65)	(62)
Convertible bond (repayable 2017 if not previously converted)	(80)	(82)	(82)
Net (debt)/cash	(29)	19	214

At 31 December 2014 outstanding commitments to private equity funds amounted to £67 million (30 September 2014: £77 million; 31 December 2013: £87 million).

Liquid resources (net of bank borrowings) at 31 December 2014 were £117 million, a reduction of £49 million since 30 September 2014 and of £241 million since 31 December 2013.

In December 2014 the multi-currency revolving credit facility was increased from £195 million to £275 million and extended from December 2017 to December 2019 on improved terms.

At the end of January 2015, the facility was drawn to the amount of £154 million. It has been determined that this amount will now be repaid in full, which will have the effect of reducing financing costs to the Company by £4 million a year if the facility were to remain drawn to the same extent.

This facility will be used when necessary to fund new investments prior to realisations of existing investments and for other working capital purposes.

Disclaimer

This statement aims to give an indication of material events and transactions that have taken place during the period from 1 October 2014 to the date of publication of this statement and their impact on the financial position of Electra Private Equity PLC. These indications reflect the Board's current view. They are subject to a number of risks and uncertainties and could change. Factors which could contribute to such difficulties include, but are not limited to, general economic and market conditions and specific factors affecting the financial prospects or performance of individual investments within Electra's portfolio.

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.

The 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 any securities, the "Securities") in the United States or any other jurisdiction. The Company is not registered under the U.S. Investment Company Act, as amended (the "Investment Company Act"), and holders of any Securities will not be entitled to the benefits of the Investment Company Act. These 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 the 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, Canada, Japan, Australia or New Zealand. 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

 

 

MSCBRGDDCDDBGUI