ELTA.L Regulatory News (ELTA)

EMBARGOED UNTIL 07:00 AM, THURSDAY 27 NOVEMBER 2014

ELECTRA PRIVATE EQUITY PLC

Audited Results for the Full Year ended 30 September 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'.

Financial Highlights

· Diluted NAV per share up 15% to 3,174p

· Diluted NAV per share, including dividends, up 262% over ten years equivalent to a ten-year annualised return of 14%, at the upper end of the long-term target of 10-15% per annum

· Return per share (diluted) of 419p for the year

· Share price up 19% against a 6% total return for the FTSE All-Share

· Share price total return of 248% over ten years against 120% for the FTSE All-Share

· Investment portfolio of £1,272 million equivalent to 106% of net assets

· £166 million of liquid resources net of bank borrowings

Portfolio

· Record level of investment, building on a record 2013

· £410 million invested - largest individual investments: Hotter Shoes, Elian (formerly Ogier Fiduciary Services), Console Group, The Original Bowling Company and Innovia Group

· £352 million realised (inclusive of income)

· £246 million total portfolio return, 25% on the existing portfolio for the year, following effective operational and value creation work

· Largest individual gains: AXIO Data Group (£57 million), Park Resorts (£51 million), Zensar Technologies (£40 million), South Lakeland Parks (£22 million) and Nuaire (£18 million)

Commenting on the results, Roger Yates, Chairman of Electra Private Equity, said:

"Electra has had an excellent year, with another record level of new investment and strong performance from its investment portfolio.

"The performance from some of the recent investments in the portfolio is extremely encouraging and perfectly demonstrates the investment selection and value creation skills of Electra Partners.

"The 15% NAV per share total return over the year was again at the upper end of Electra's long-term target range of between 10% and 15% per year. Electra is well positioned to continue to deliver outstanding returns for its shareholders."

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

"The 2014 financial year was a record year for new investment demonstrating the benefit of Electra's flexible investment mandate.

"Trading conditions across the portfolio as a whole have strengthened allowing its prospects to be viewed with confidence.

"The 25% total return from the investment portfolio over the year reflects the quality and pricing of the deals done over recent years as well as the success of our strategies for generating returns."

For further information:

For Roger Yates & Hugh Mumford:

Andrew Honnor, Charlotte Balbirnie or Matthieu Roussellier, Greenbrook Communications 020 7952 2000

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

Performance Summary

Unless otherwise stated all information is at 30 September 2014.

At 30 September 2014 the net asset value ("NAV") per share was 3,174p (diluted) and 3,366p (basic). At 21 November 2014 the NAV per share was 3,185p (diluted) and 3,378p (basic).

Performance (Total Return):

Performance calculated on a total return basis with dividends reinvested.

* The above index, prepared by Morningstar UK Limited, reflects the performance of 19 private equity vehicles, excluding Electra, listed on the London Stock Exchange.

Share price vs. NAV per share (diluted) vs. FTSE All-Share (Total Return)

Historic NAV, Share price and Return on Equity

Please note:

In 1999 Electra ceased to make new investments and was placed into a realisation phase. Between 1999 and 2006 Electra returned a total of £1.2 billion to shareholders through a mixture of share buybacks and tender offers. Electra returned to full investment in October 2006.

Diluted and Basic NAV

During the year to 30 September 2014, 3,392 Convertible Bonds (the "Bonds") were converted into 165,459 ordinary shares in the Company. Prior to this a total of 74 Bonds had been converted into 3,605 ordinary shares and, accordingly, the diluted NAV per share assumes the issue at 30 September 2014 of a further 4,708,981 ordinary shares on the basis of the conversion terms of the Bonds.

Calculation of NAV

At 30 September 2014

The calculation of the unaudited diluted NAV per share at 30 September 2014 has been affected by the issue of the Bonds. Electra is required to prepare accounts and report in accordance with the Companies Act 2006 and International Financial Reporting Standards (IFRS) as adopted by the European Union. Under IFRS, the Bonds are a compound financial instrument which contains both a liability and an equity component. Of the £100 million raised, £23 million of the Bonds was accounted for as an equity instrument with the balance accounted for as debt. Further details of the accounting treatment of the Bonds are set out on page 54.

At 21 November 2014

The unaudited diluted NAV per share at 21 November 2014 was calculated on the basis of the NAV at 30 September 2014 adjusted to reflect purchases and sales of investments, currency movements and bid values on that day in respect of listed investments.

Return on Equity

This is the total return divided by opening shareholder funds. Electra's ROE has been calculated by taking the percentage change in diluted NAV per share and adding back dividends paid per share. The annualised return on equity for the 10 years ended 30 September 2014 was 14%.

The Full Year Report for the year ended 30 September 2014 will be available on the Company's website www.electraequity.com. Neither the contents of this website nor the contents of any website accessible from hyperlinks on this website (or any other website) is incorporated into, or forms part of this announcement.

About Electra Private Equity PLC

Electra Private Equity PLC ("Electra" or the "Group") is a private equity investment trust which has been listed on the London Stock Exchange since 1976. As at 30 September 2014 its net assets were £1.2 billion or 3,174p per share fully-diluted.

Electra's business and affairs are managed on an exclusive and fully discretionary basis by Electra Partners LLP, an independent private equity fund manager with over 25 years' experience in the mid-market and a superior performance record. Electra is overseen by a board of independent non-executive Directors.

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

Performance is in line with this objective: for the 10 years to 30 September 2014 Electra's return on equity was 14% per year. Electra's performance has been consistently superior to that of the Morningstar Private Equity Index and the FTSE All-Share Index.

Private equity benefits from:

· an active approach based on a high level of engagement between the fund manager and the management teams of investee companies both before and after an investment is made;

· the alignment of interests between managers and investors through economic incentives; and

· an ownership framework which facilitates long-term decision-making.

Electra offers shareholders differentiated, direct access to private equity through a flexible listed vehicle.

Chairman's Statement

"Electra has had an excellent year, with another record level of new investment and strong performance from its investment portfolio.

"The performance from some of the recent investments in the portfolio is extremely encouraging and perfectly demonstrates the investment selection and value creation skills of Electra Partners.

"The 15% NAV per share total return over the year was again at the upper end of Electra's long-term target range of between 10% and 15% per year. Electra is well positioned to continue to deliver outstanding returns for its shareholders."

Overview

The year to September 2014 has been a successful one and I am pleased to report another year of strong performance achieved in the face of considerable distraction. Excellent progress has been made in terms of investment activity, with capital deployed in new investments again reaching a record level. The portfolio continues to perform strongly with, in particular, a significant contribution from investments made in the last three years. The encouraging trading within the underlying portfolio companies augurs well for the future.

Results

At 30 September 2014, Electra's diluted net asset value per share was 3,174p compared to 2,764p a year earlier, an increase of 15%. Electra's share price increased from 2,230p to 2,650p over this period representing a return of 19%, compared to a total return on the FTSE All-Share of 6%.

Over the 10 years to 30 September 2014, Electra's diluted net asset value per share including dividends has increased by 262%. This is equivalent to a 10-year annualised return on equity of 14%. Electra's share price also performed well in this period generating a total return of 248%, also equivalent to an annualised total return of 14%. This compares to a 10-year total return for the FTSE All-Share of 120%, equivalent to an annualised return of 8%.

Three quarters of the performance in the year came from the direct unlisted portfolio, in particular from three investments (AXIO, Park Resorts and South Lakeland). All three are recent investments, made within the last three years. It is also pleasing to see strong performance in the listed portfolio, especially from Zensar Technologies which increased by £40 million or 163% over the year.

Investment Activity

Over the year Electra invested £410 million, compared to £337 million in 2013. In aggregate £747 million has been invested over the last two years representing 86% of the opening value of the investment portfolio at the beginning of that period.

Sherborne Investors

During the early part of 2014 Sherborne Investors (Guernsey) B Limited ("SIGB") began acquiring shares in Electra, eventually reaching a position whereby it controlled approximately 20% of the ordinary share capital. On 21 August 2014, SIGB requisitioned a General Meeting to appoint two nominees to the Board and to remove an existing Director, Geoffrey Cullinan. SIGB announced that it expected its two nominees, if appointed, to lead a strategic review of Electra.

Despite requests for an explanation of the need for, or benefits of, a strategic review, SIGB did not provide one. On 17 September 2014, SIGB sent a letter to Electra shareholders making, for the first time, a number of critical points concerning performance, investment management, investment expenses and balance sheet structure. Electra published its response to these criticisms on 22 September 2014. At the General Meeting of the Company held on 6 October 2014 shareholders voted against all the resolutions proposed by SIGB.

The Board of Electra has always been open to constructive dialogue with its shareholders and seeks always to act in shareholders' best interests. Accordingly, we believe it is paramount that Electra should continue to have an independent Board comprised of individuals with the appropriate mixture of skills and experience so that Electra's future strategy and direction will continue to serve the best interests of shareholders as a whole.

Following the General Meeting and as a result of discussions with shareholders, the Board is conducting a review of Electra's fee arrangements with Electra Partners and of its capital structure and distribution policy. We intend to announce the result of this review shortly.

Balance Sheet

At 30 September 2014 Electra had net liquid resources of £166 million compared to £294 million at September 2013. Twelve months ago liquidity levels were higher than usual as a result of the record level of realisations during the year. Liquidity is now at an optimal operating level, where there is sufficient cash together with bank facilities to cover new investments and meet ongoing costs and commitments.

Alternative Investment Fund Managers Directive ("AIFMD")

The AIFMD came into effect during the period under review and Electra, as an Alternative Investment Fund, became subject to the Directive from 11 July 2014. As previously reported, Electra Partners LLP received approval from the Financial Conduct Authority ("FCA") to vary its status and act as Electra's Alternative Investment Fund Manager ("AIFM") under the AIFMD regulations.

The Board continues to be of the view that compliance with the AIFMD regulations will not materially affect Electra's business.

Outlook

This is another strong set of results and it is particularly encouraging that the recent investments in the portfolio are already delivering substantial value. These investments were made by exploiting Electra's flexible investment strategy and robust balance sheet. Their performance follows several years of high investment activity and excellent value creation work by the Electra Partners team.

Electra's balance sheet is now more efficiently deployed as a result of the high levels of investment over the last two years.

The Board believes that Electra is well positioned to build on and strengthen its high quality portfolio and continue to deliver outstanding returns for Electra's shareholders.

Roger Yates

Chairman

26 November 2014

Strategic Report

The Strategic Report provides a review of the Company's business, strategy and performance during the year to 30 September 2014, and a description of the principal risks and uncertainties facing the Company. References to other sections of this Report and Accounts are provided where appropriate.

Business Model

Electra

Electra is an approved Investment Trust with effect from 1 October 2012 and will continue to be exempt from capital gains tax provided it continues to meet the eligibility conditions of Section 1158 of the Corporation Tax Act 2010 and of the ongoing requirements for approved companies in the Investment Trust (Approved Company) (Tax) Regulations 2011.

Electra's business and affairs are managed by an exclusive and fully discretionary Manager. Electra Partners LLP was appointed as the Manager in 2006 and manages the Company's assets and investments in accordance with guidelines determined by the Directors and as specified in limited partnership and in management and investment guideline agreements.

The Manager

Electra Partners is an independent private equity fund manager with over 25 years' experience in the mid-market. Electra Partners' investment performance is in the top third when compared with similar fund sizes, strategies and vintages. Electra Partners has successfully delivered consistently strong returns. For the ten years to 30 September 2014 Electra's annualised return on equity was 14%. Further information about Electra Partners is to be found in "The Manager" section on pages 12 to 15.

Fee Arrangements

Electra Partners receives a priority profit share of 1.5% per annum on the gross value of the Company's investment portfolio including cash. The partners of Electra Partners participate in co-investment and carried interest schemes which are explained in more detail in Notes 22 and 23 of the Notes to the Financial Statements.

Alignment of Interests

The alignment of interests between investors and managers through economic incentives is a critical feature of the private equity model. It contributes to the outperformance of private equity compared to other asset classes.

When Electra invests in a buyout or co-investment, it is normal for the management team of the underlying company to make a meaningful investment in the equity of that company alongside Electra. This serves to align each portfolio company management team's interests with Electra's in making decisions relating to that company.

Equally, the partners of Electra Partners are obliged to invest pari passu in each investment which Electra makes. These individuals also benefit from carried interest schemes whereby they share in realised investment profits relating to certain investment pools, subject to a minimum annual return for Electra and after deducting the relevant part of the priority profit share paid to Electra Partners. These arrangements, which reward only realised returns and take into account the time value of money, ensure that Electra Partners is incentivised to construct a portfolio of attractive investments and to realise each investment at the optimum time.

These arrangements are described in more detail in Notes 22 and 23 of the Notes to the Financial Statements.

Objective and Strategy

Objective

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

Strategy

Under the investment strategy approved by shareholders in October 2006, all of Electra's capital resources are available for investment in private equity. Electra actively manages its gearing and capital position in light of prevailing market conditions.

Electra's strategy, along with the performance of the Manager, is kept under active review by the Board.

Investment Strategy

Electra has one of the most flexible mandates in the private equity sector. This means that it invests across the full range of private equity opportunities, in any sector and across the capital structure.

This flexibility allows Electra Partners to tailor its investment strategy to suit changing market conditions, thereby deploying capital where it sees the best relative value for shareholders. Electra Partners focuses on the following types of investment: buyouts and co-investments, secondaries and debt investments.

Electra's structure means Electra can provide long-term capital to portfolio businesses. As it invests directly rather than through a fund structure, its investment horizons are not influenced by fund investment periods or fund-raising cycles. This means that it can support its investee companies with a long-term strategy and access to capital. Exits are sought only when returns can be maximised for shareholders.

Electra Partners manages Electra's business and affairs on an exclusive and fully discretionary basis. Further information on Electra Partners and its investment strategy can be found on pages 12 to 15.

Asset Management

Electra Partners employs a rigorous investment process which ensures disciplined investment selection and portfolio management. In constructing and managing Electra's investment portfolio, Electra Partners takes into consideration not only the specific circumstances of each individual investment but also the profile of the portfolio as a whole.

The portfolio is managed to avoid concentration in any one sector or asset. At the time of investment, not more than 15% of Electra's total assets will be invested in any single investment. If Electra acquires a portfolio of assets in a single transaction, this limitation shall be applied individually to each of the underlying assets and not to the portfolio as a whole. The largest investment made by Electra during the year was Hotter Shoes which represented 8% of its total assets at the time of investment.

Gearing and Capital Management

Electra has a policy to maintain total gearing below 40% of its total assets. At 30 September 2014 gearing stood at 20% of total assets.

An appropriate level of liquidity is maintained to ensure that Electra can participate in all investments arranged by Electra Partners, support its portfolio with follow-on investment as required and meet ongoing costs and commitments. At 30 September 2014 net liquid resources (being cash less borrowings under the multi-currency revolving credit facility) were £166 million.

The Company makes use of borrowings to provide investment capacity and to hedge currency risk. The capital position and levels of gearing are managed in light of prevailing economic conditions.

Further information on Electra's borrowings is provided in Note 16 on page 53.

Costs

Electra's ongoing charges ratio for the year to 30 September 2014 was 2.3% (2013: 2.3%).

Commitments

Unlike many other listed private equity companies, Electra for the most part invests directly in transactions arranged by Electra Partners rather than through a limited partnership fund which may be managed in the interests of a number of investors.

This means that Electra's interests are clearly and independently taken into account by Electra Partners, which can moderate or accelerate the pace of investment to suit Electra's net liquid resources. As a result, there is a low risk of Electra becoming over-committed.

At 30 September 2014 Electra had commitments outstanding to private equity funds of £77 million, of which £51 million was to funds still in their investment period.

Dividend Policy

It is the current policy of the Directors not to pay a dividend unless required to do so to maintain Electra's investment trust status.

Electra's portfolio is therefore structured to deliver capital growth rather than yield. The policy of the Directors is to reinvest the proceeds of realisations with the benefit of Electra's flexible mandate in order for Electra Partners' investment performance to continue to grow Electra while at the same time allowing Electra Partners to focus on investment activity without the distraction of fund raising.

Discount Management

The Board actively considers discount control mechanisms, including dividends, share buybacks, share splits and improved or ad hoc disclosure.

In evaluating dividends, share buybacks or other returns of capital to shareholders, the Board takes into account the discount at which Electra's shares trade relative to their net asset value, the prospective returns available from investment opportunities as well as other competing calls on the Company's capital.

The Directors intend to continue to seek shareholder authority on an annual basis to enable them to purchase shares for cancellation when they believe it will be in the best interests of shareholders.

Shareholder Engagement

Electra places great importance on communication with its shareholders. Working together with Electra Partners, it endeavours to provide valuable information and insight on the Company and its performance to shareholders. Representatives of the Board hold meetings with principal shareholders to discuss relevant issues as they arise. Electra Partners maintains a regular and proactive dialogue with institutional shareholders and analysts; markets Electra's shares to potential shareholders; maintains relationships with journalists, trade bodies and other industry commentators; and is responsive to enquiries from any shareholder or potential shareholder. Electra Partners' investor relations team regularly reports to the Board on its activities.

Principal Risks and Risk Management

Risk Management

The appointment of Electra Partners as AIFM of the Company under the AIFMD means that it is now responsible for risk management and the ongoing process of identifying, evaluating, monitoring and managing the risks facing the Company in accordance with the requirements of the AIFMD. The Board keeps Electra Partners' performance of these responsibilities under review as part of its overall responsibility for the Company's internal controls. The Board and Electra Partners consider that the following are the principal risks facing the Company along with the risks detailed in Note 19 of the Notes to the Financial Statements.

Macroeconomic Risks

The performance of the Company's investment portfolio is materially influenced by economic conditions. These may affect demand for products or services supplied by investee companies, foreign exchange rates, the price of commodities or other input costs, interest rates, debt and equity capital markets and the number of active trade and financial buyers. All of these factors have an impact on the Company's ability to realise its investment portfolio and the level of return realisable.

Gearing Risks

One of the principal risks of gearing is that it can cause both gains and losses in the asset value of a company to be magnified. Another significant risk associated with gearing is the potentially severe operational impact on the Company of a breach of its banking covenants. Secondary risks relate to whether the cost of gearing is too high and whether the length of the gearing is appropriate. The Board and Electra Partners regularly monitor the headroom available under banking covenants and review the impact of the various forms of gearing and their cost to the Company.

The Company uses gearing in a number of forms, through its multi-currency revolving credit facility, its Subordinated Convertible Bonds and Zero Dividend Preference Shares ("ZDP Shares").

Gearing is also used across the Company's investment portfolio. Each investment in which gearing is employed presents the same risks as are faced by Electra. Electra Partners actively monitors gearing across the investment portfolio, including working closely with management teams to ensure that the terms of any borrowing facilities are being observed and maintaining relationships with the lenders who make facilities available.

Foreign Currency Risks

A proportion of the Company's investment portfolio, comprising investments in the USA, Continental Europe and Asia, is denominated in currencies other than Sterling. Movements in foreign exchange rates may therefore affect the Company's net assets.

The foreign investments held are principally held in the USA, Continental Europe and Asia.

During the year, the Company held loans denominated in US Dollars and Euros, which partially offset foreign currency risk on foreign investments. The ratio of loans held in US Dollars and Euro is under regular review by Electra Partners in order to partially hedge as efficiently as possible.

Long-term Strategic Risks

The Company is subject to the risk that its long-term strategy and its level of performance fail to meet the expectations of its shareholders.

The Board regularly reviews the Objective and Investment Policy, which can be found on page 82, in light of prevailing investor sentiment to ensure the Company remains attractive to its shareholders.

Investment Risks

The Company operates in a highly competitive market. The supply of investment opportunities relative to that of investment capital, as well as the ability of Electra Partners to access investment opportunities, could have a significant effect on the Company's competitive position and on the sustainability of returns.

In order to source and execute good quality investments the Company is primarily dependent on Electra Partners having the ability to attract and retain executives with the requisite investment experience and whose compensation is in line with the Company's objectives.

The performance of the Company's portfolio is influenced by a number of factors. These include but are not limited to: (i) the quality of the initial investment decision; (ii) the quality of the management team of each underlying portfolio company as well as the ability of that team successfully to implement its business strategy; and (iii) the macroeconomic risks described above. Any one of these factors could have an impact on the valuation of an investment and on the Company's ability to realise the investment in a profitable and timely manner.

Electra Partners has in place a rigorous investment process which ensures disciplined investment selection and portfolio management. This includes detailed due diligence, regular portfolio reviews and in many cases an active engagement with portfolio companies including by way of board representation.

The Board regularly reviews both the performance of Electra Partners and its incentive arrangements in order to ensure that both remain appropriate to the Company's objectives.

Valuation Risk

The valuation of investments in accordance with IAS 39 and IFRS 13 requires considerable judgement and is explained on pages 70 to 72.

Operational Risk

The Company's investment management, custody of assets and many administrative systems are provided or arranged by Electra Partners. The Company is thus exposed to a range of operational risks including those relating to human resources, legal and regulatory matters, information technology systems, business disruption or shortcomings in internal controls.

The Company's system of internal control mainly comprises the monitoring of the services provided by Electra Partners, including the operating controls established by them to ensure they meet the Company's business objectives. Further information is included in the Corporate Governance Statement on pages 95 to 99.

Community, Social, Employee, Human Rights and Environmental Issues

In carrying out its activities and in its relationships with the community, the Company aims to conduct itself responsibly, ethically and fairly, including in relation to social and human rights issues.

The Company has no employees and the Board is composed entirely of non-executive Directors. As an investment trust, the Company has no direct impact on the environment. However the Company believes that high standards of corporate social responsibility ("CSR") make good business sense and have the potential to protect and enhance investment returns. Consequently, Electra Partners' investment process is encouraged to take social, environmental and ethical issues into account when these have a material impact on either investment risk or return.

Electra recognises and supports the view that social, environmental and ethical best practice should be encouraged.

Board Diversity

There are currently three female and three male Directors on the Board and there have been at least two female Directors on the Board since 2007.

The Company aims to have a balance of relevant skills, experience and background amongst the Directors on the Board and believes that all Board appointments should be made on merit and with due regard to the benefits of diversity, including gender. The Board's aim is to continue to maintain a diverse Board and, subject to appointing the best candidates available when current Directors retire, to have a proportion of at least one third female Board representation.

Apart from the main Board Directors all nine non-executive Directors of the Company's consolidated subsidiaries, all of which are investment holding or finance vehicles, are male.

Electra is an investment trust which has no employees other than the non-executive Directors of its main Board and therefore has no disclosures to make in this regard.

Performance and Prospects

Performance

A number of Key Performance Indicators ("KPIs") are considered by the Board and Electra Partners in assessing the Company's success in achieving its objectives. These KPIs are:

· Return on equity over the long term

The Company's objective is to achieve a return on equity of between 10% and 15% per year over the long term. Over the 10 years to 30 September 2014 the Company's annualised diluted NAV per share return was 14% per year.

· The movement in net asset value per ordinary share

The increase in the Company's diluted net asset value per share was 15% over the twelve months and 262% over the ten years to 30 September 2014. These increases compared with 11% and 56% respectively by the Morningstar Private Equity Index.

· The movement in share price

The increase in the Company's share price was 19% over the twelve months and 248% over the ten years to 30 September 2014. These increases compared with 7% and 41% respectively by the Morningstar Private Equity Index and 6% and 120% respectively by the FTSE All-Share Index.

Further details on the KPIs are shown on pages 1 to 3 of this Annual Report. Further information on the Company's performance is given in the Chairman's Statement, the Investment Highlights and Portfolio Review and the Financial Review on pages 5 to 6, 16 to 23, and 41 to 42 respectively.

Prospects

The Company's current position and prospects are described in the Chairman's Statement, the Investment Highlights and Portfolio Review, the Market Review and the Financial Review sections of this Annual Report, on pages 5 to 6, 16 to 24 and 41 to 42 respectively.

Roger Yates

Chairman

26 November 2014

The Manager

About Electra Partners

Electra Partners is an independent private equity fund manager with over 25 years' experience in the mid-market.

During this time, the Electra Partners team has invested in excess of £4.4 billion in more than 200 deals and realised £6.3 billion, with a consistent focus on mid-market companies. This track record of investing through numerous economic cycles gives Electra Partners both broad and deep experience across sectors, geographies and business models.

At 30 September 2014 Electra Partners had funds under management of over £1.6 billion including capital available for investment of circa £300 million. Electra accounts for more than 90% of Electra Partners' funds under management; the balance is managed on behalf of US and European pension funds, asset managers and family offices.

Superior Performance

Over the last ten years Electra, which is managed on an exclusive and fully discretionary basis by Electra Partners, has seen diluted NAV per share grow by 262%. This is nearly five times the NAV per share return of the Morningstar Private Equity Index. This is equivalent to a ten-year annualised return of 14%, at the upper end of Electra's target range of 10-15% over the long-term.

Over the past 25 years, the Electra Partners team has delivered investment performance in the top third when compared with similar fund sizes, strategies and vintages.

The Electra Difference - Flexible Capital

Electra's investment strategy and structure is different from that of almost every other private equity fund. This has two key implications:

First, Electra Partners is able to invest across the full range of private equity opportunities: control and minority, equity and debt, direct and indirect. This means that it can tailor its investment strategy to suit changing market conditions and invest where many others cannot.

Second, Electra Partners is able to provide stable long-term capital. It doesn't face expiring investment periods or exit pressure driven by fund-raising cycles. This means that it can fully support investee companies with a long-term strategy and access to capital, and exit when returns are maximised for shareholders.

Investment Strategy

Throughout its history, Electra Partners has focused on investing for profits growth by backing the right management teams, comprising talented and experienced people with a credible strategy. Electra's flexible capital allows Electra Partners to invest across all forms of private equity situations, which it categorises into three groups:

1. Buyouts and Co-investments: direct investment in high-quality, well-managed businesses that have the potential for profits growth - through organic growth, operational improvement or acquisition. As lead investor, Electra Partners typically targets investments of £40 million to £120 million in UK-centric companies with an enterprise value of up to £300 million. Electra Partners also co-invests £20 million to £60 million in minority positions in UK or international companies alongside founders, other private equity firms, corporates or the public markets.

2. Secondaries: secondary purchases of existing investors' positions in either individual or portfolios of private equity funds, as well as acquisitions of portfolios of businesses, known as "secondary directs".

3. Debt: secondary purchases from existing lenders of individual or portfolios of either performing or stretched loans, where "stretched" refers to debt in good businesses with bad balance sheets where Electra Partners can take a role in the restructuring of the capital structure.

Electra Partners applies the disciplines of buyout investing to its appraisal and management of investments in all three of these groups.

Growth Themes

Electra Partners' investment strategy targets businesses driven by one or more macro growth themes, including:

Austerity / Value:

Consumers and businesses are increasingly focused on saving money through scale, technology or value propositions.

Example, Park Resorts: The UK's largest operator of holiday parks. Demand is supported by the value proposition of static caravan parks to consumers looking for second homes or holidays.

Regulation:

Increasing regulation drives growth opportunities for compliance products / services and market consolidation.

Example, Allflex Corporation: A leading supplier of animal identification products. Growth is driven by increased regulation of the food chain to ensure food safety.

Demographic change:

Changes in population structure and profile create demand for specialist products and services.

Example, Hotter Shoes: The UK's largest shoe manufacturer. Demand for Hotter's cushioned and supportive footwear is growing due to population ageing.

International:

The internationalisation of business offers domestic or regional companies opportunities to enter new geographic markets using a range of strategies.

Example, Console Group: A leading supplier of professional audio equipment. Growth is based on an increasing number of live events in developed and developing markets.

Digital economy:

Processing and communication technology development creates opportunities for new products and services.

Example, AXIO Data Group: An international group of information services businesses. New software applications are creating further opportunities to sell or integrate information into customers' workflow.

Investment Model

Electra Partners' investment team is managed by Chief Investment Partner Alex Fortescue and reports to the Investment Advisory Committee and the Investment Commitments Committee. Electra Partners operates a rigorous and disciplined investment model, as described below:

Origination - creating deal flow:

Managing networks of intermediaries, industry experts and other introducers; thematic and sector analysis to identify interesting areas and businesses; developing relationships with target company management teams and vendors.

· 404 investment opportunities considered during year to 30 September 2014

· 89% of completed UK buyout deals in Electra's space seen

Execution - making investments:

Evaluation and pricing of investment opportunities; in-house and third-party due diligence; raising debt from specialist capital markets; developing 100-day and business plans with management teams; winning deals; structuring, negotiation and closing.

· 10 direct unlisted transactions completed in the year to 30 September 2014

· Over £300 million of new debt raised

Portfolio Management - creating returns:

Putting in place the right management team to drive profits growth and cash generation; working closely with the team to develop strategy, set targets, measure and manage performance; making use of M&A and financing; and dealing with problems and opportunities.

· 5 bolt-on transactions completed in the year to 30 September 2014

· 21% profits growth in direct unlisted portfolio in the year to 30 September 2014*

Exit - realising the investment:

Identifying strategic / financial acquirers; timing the exit; creating buyer appetite and competitive tension; supplementing M&A with refinancings.

· £352 million of capital realised in the year

· Over £45 million of cash returned from repayment of loans in the year to 30 September 2014

Investment Process: pre-investment: weekly and monthly investment team deal flow meetings; weekly and ad hoc investment committee meetings to consider new investments.

Investment Process: post-investment: weekly investment committee review of trading data; for each investment, 100-day review, biannual valuation process and annual strategy review.

* Excluding investments held for less than twelve months and property investments

Investment Team

Electra Partners' senior management team is one of the most experienced teams in the industry and has an average 24 years' experience in private equity. The investment team has an average of 19 years' experience in private equity and is supported by a team experienced in compliance, finance, investor relations and marketing.

For more information about Electra Partners please visit www.electrapartners.com.

Investment Highlights

"The 2014 financial year was a record year for new investment demonstrating the benefit of Electra's flexible investment mandate.

"Trading conditions across the portfolio as a whole have strengthened allowing its prospects to be viewed with confidence.

"The 25% total return from the investment portfolio over the year reflects the quality and pricing of the deals done over recent years as well as the success of our strategies for generating returns.

"The 15% NAV per share total return over the year was again at the upper end of Electra's long term target range of between 10% and 15% per annum. Over the past ten years Electra's return on equity has been 14% per annum."

Performance for the Year

During the year, Electra's share price increased by 19% compared to a 6% total return for the FTSE All-Share and a 7% total return for the Morningstar Private Equity Index over the same period.

Electra's diluted net asset value ("NAV") per share also continued to grow strongly, increasing by 15% to 3,174p at the end of the financial year compared to an 11% NAV per share increase for the Morningstar Private Equity Index.

The total return from the investment portfolio over the year amounted to £246 million or 25%. Further information regarding the effect of this strong investment performance on Electra's net asset value is included in the Financial Review on pages 41 to 42.

Long-Term Performance

Over the last ten years, Electra's shares have delivered a total return of 248%. This compares favourably to the total return over the same period of both the FTSE All-Share (120%) and the Morningstar Private Equity Index (41%).

Over the last ten years, Electra's NAV per share total return has been 262%. This again compares favourably to the NAV per share total return over the same period for the Morningstar Private Equity Index of 56%.

Investment Activity

New investment for the year totalled £410 million, a record level for Electra compared to £337 million in the previous year, itself a record year. The direct unlisted portfolio accounted for £392 million of this investment where new investments were made in buyouts, co-investments and bolt-on transactions, all at attractive pricing levels.

Realisations from the portfolio during the year reached £352 million, compared to £459 million in the previous year. Realisations from the direct unlisted portfolio fell as a result of the high level of realisations in the last two years. However, £58 million was realised by the sale of listed securities and £60 million was realised from funds and secondaries.

Outlook

The year to 30 September 2014 has been a year of excellent progress for Electra. The combination of a high level of new investment and strong value growth has increased the investment portfolio to £1.3 billion. This has resulted in Electra's balance sheet being more effectively deployed with an investment portfolio amounting to 106% of the net asset value.

Electra's existing capital is invested in a diversified portfolio of investments which have been acquired at attractive entry multiples. The trading performance of many of these investments has been strong over the past year and they are well positioned for further growth. Our investment strategy remains to use Electra's flexible investment mandate to build and create further returns from the addition of appropriate private equity assets. We will continue to implement this strategy with patience and discipline in a competitive market.

Portfolio Overview

At 30 September 2014, Electra's investment portfolio was valued at £1,272 million. The investment portfolio consists of direct unlisted investments, secondaries, listed securities and funds. The top 10 and 20 investments account for 62% and 85% respectively of the investment portfolio.

Portfolio Breakdown

Direct Unlisted Investments (79% of portfolio)

Direct unlisted investments form the major part (79% compared to 68% at 30 September 2013) of Electra's portfolio and consist of investments in 30 private companies with an aggregate value of £996 million. The 10 largest investments account for 72% of the direct unlisted investment portfolio at 30 September 2014.

Secondary Investments (8% of portfolio)

Secondary investments consist of limited partnership interests in third party private equity funds purchased from investors exiting their positions prior to the end of the fund's life. As a result of their relative maturity, secondary investments typically produce faster cash returns than direct unlisted investments. At 30 September 2014 Electra held investments in five secondary portfolios with an aggregate value of £105 million.

Listed Investments (7% of portfolio)

Electra held seven listed investments with an aggregate value of £91 million at 30 September 2014. The largest listed investment was Zensar Technologies with a valuation of £63 million. Zensar is included within the core investment portfolio, the remaining six investments with a value of £28 million were outside the core investment portfolio.

Core investment portfolio (92% of portfolio)

The core investment portfolio includes investments where we have an active role in originating, evaluating, negotiating and/or managing the investment. The core investment portfolio accounts for 92% of the investment portfolio at 30 September 2014.

Fund Investments (6% of portfolio)

Fund investments consist of limited partnership interests in third party private equity funds where Electra made primary commitments to that fund. New primary commitments to funds are no longer a core part of Electra's investment strategy. In total, Electra held investments in 18 funds with an aggregate value of £80 million at 30 September 2014.

Investment Portfolio - Sector Breakdown

Direct Unlisted Investments - Age Analysis (by last refinancing date)

Direct Unlisted Investments - Valuation Basis

Investment Portfolio - Geographic Breakdown*

* Based on the location of the investee company's head office.

Portfolio Review

Portfolio Movement

Electra's investment portfolio increased from £968 million to £1,272 million during the twelve months to 30 September 2014. The increase of £304 million resulted from the acquisition of £410 million of new investments together with the portfolio return of £246 million, offset by realisations of £352 million.

New Investments

Total new investment for the period reached £410 million compared to £337 million in the previous year.

The most significant individual new investments were in respect of Hotter Shoes, Elian, Console Group, The Original Bowling Company, Innovia and the Southview and Manor Park holiday parks.

In January 2014 Electra invested £84 million in the buyout of Hotter Shoes ("Hotter"). Hotter is Britain's largest shoe manufacturer and sells over two million pairs of shoes each year in the UK and internationally in stores, in catalogues and online. Its customers comprise those whose age, health or lifestyle require more cushioned and supportive footwear. Hotter more than doubled its sales in the four years prior to Electra's investment as a result of its UK store opening programme and its entry into the US market. Furthermore, the company benefits from a strong brand and favourable demographic trends. This growth trend will be continued with new product development, further UK store openings and opportunities in international markets.

Elian, formerly known as Ogier Fiduciary Services, is a leading provider of offshore trust, fund and company administration services. The company is headquartered in Jersey, is present in a number of other offshore centres and serves 3,000 corporate, private and investment fund clients worldwide. The business exhibits a number of characteristics which are attractive, including a high level of recurring revenues and strong cash generation. Moreover its fragmented, global market benefits from high barriers to entry and fundamental growth drivers in the form of the increasing regulation and internationalisation of its corporate and investment management markets. The intention is to continue the company's growth trend by developing its international office network, expanding the team and through acquisition. Electra invested £81 million in the buyout of Elian in June 2014.

The strategy for Allen & Heath includes growth through acquisitions in the fragmented professional audio sector. In March Electra invested £15 million in Allen & Heath to finance the acquisition of Calrec. In August, Allen & Heath was merged with DiGiCo to create a new professional audio group known as the Console Group. This transaction took the form of a realisation of Electra's interest in Allen & Heath followed by a £64 million investment in the newly formed Console Group.

In September 2014 Electra invested £50 million in the buyout of The Original Bowling Company ("TOBC"). TOBC is the UK's largest ten-pin bowling operator with 43 bowling centres operating under the Hollywood Bowl and AMF brands. The company specialises in large, high-quality bowling centres, predominantly located in leisure or retail parks, which offer a complete family entertainment experience with restaurants, licenced bars and state-of-the-art family games arcades. TOBC benefits from a well-invested estate which has allowed it to grow ahead of its market. This growth trend will be continued with close management of the existing estate as well as new openings and acquisitions.

Innovia Group is a leading global producer of speciality high performance films used in the packaging industry, where the company occupies leadership positions in niche markets and enjoys long-term customer relationships. Innovia is also an established manufacturer of polymer banknote substrate for central banks. Polymer banknotes have numerous advantages over paper notes including security, durability, impermeability and cleanliness but today account for only a small share of all banknotes in circulation. The company's strategy is to grow its packaging films business through product innovation and capacity expansion, while developing its banknote substrate business as central banks around the world increasingly choose to benefit from the advantages of polymer over paper banknotes. In April 2014 Electra invested €40 million (£33 million) alongside Arle Capital in the buyout of Innovia.

In August 2014, Electra made a £20 million investment in the acquisition of the Southview and Manor Park holiday parks ("SVMP"). These are large and established holiday parks which together comprise more than 2,000 pitches, a 9 hole golf course and a four-star hotel. The acquisition has been made in partnership with Electra's existing portfolio company, Park Resorts, which has managed both parks since 2010 and continues to do so. Operating together, Park Resorts, South Lakeland Parks and SVMP constitute the largest operator by number of sites in the fragmented and resilient UK holiday parks sector. The acquisition brings Electra's investment in the holiday parks sector to over £100 million.

In addition to the investments described above, Electra invested a further £18 million in CALA Group to finance land purchases and the acquisition of Banner Homes, £5 million in Treetops to finance the acquisition of 15 nursery schools from the Happy Child Group and £3 million in Davies Group in respect of the acquisition of Garwyn. A further £18 million was drawn down by private equity funds in which Electra is a limited partner. Commitments outstanding to private equity funds fell to £77 million at 30 September 2014, compared to £94 million a year earlier.

Realisations

Total realisations for the year came to £352 million compared to £459 million in the previous year. The reduction in the level of disposals was anticipated as a consequence of the very high levels of realisations experienced in the two years to September 2013.

The most significant realisations during the year were in respect of Allen & Heath, Lil-lets Group, LondonMetric Property, the EP1 Secondary Portfolio, AXIO Data Group, BDR Thermea and Premier Asset Management.

As mentioned previously Allen & Heath was merged with DiGiCo to form the Console Group in August 2014. The transaction generated total proceeds of £74 million in cash and in securities in the Console Group.

In November 2013 Electra sold its interest in Lil-lets Group, the feminine hygiene brand, to Premier Foods (Pty) Limited, a major South African manufacturer and distributor of fast-moving consumer goods, receiving proceeds of £37 million.

Electra sold its entire holding in LondonMetric Property during the year, realising total proceeds of £36 million. Electra sold a further six holdings from its listed portfolio during the year, realising further proceeds of £20 million excluding dividends.

During the course of the year Electra received total distributions from the EP1 Secondary Portfolio of £28 million. The investment in the EP1 Secondary Portfolio has to date produced a return of over 40% on original investment cost in less than two years.

Electra received £22 million of loan repayments and interest from AXIO Data Group. Strong cash generation has resulted from profits, a reduction in working capital and disposals of non-core assets. This cash generation has allowed the return of 30% of the original investment cost of £91 million in less than eighteen months.

In January 2014, Electra received the final instalment of £20 million in respect of deferred consideration from the sale of BDR Thermea, bringing this investment to a successful conclusion.

In August 2014 Electra announced that it had agreed to sell a majority shareholding in Premier Asset Management to Elcot Capital Management. Electra received total proceeds of £20 million cash and £26 million of preference shares, while retaining an equity interest of 25%. This represents a £10 million increase in the valuation over the year and compares to an original cost of £56 million. The transaction has enabled Electra to crystallise some of the benefit of Premier's recent strong trading performance while retaining structured equity exposure to a pure-play retail asset management business growing at more than 30% per annum.

Other realisation proceeds received by Electra were £16 million of loan repayments from the refinancing of Nuaire and a further £26 million from private equity funds in which Electra held a limited partnership interest.

Performance

During the year to 30 September 2014 Electra's investment portfolio generated a total return of £246 million, an increase of 25% on the opening portfolio of £968 million.

The performance arose principally from the direct unlisted portfolio which generated a total return of £182 million, representing an increase of 27%. Excluding investments held for less than twelve months and property investments, earnings in portfolio companies grew by 21% year on year. Listed investments produced a return of £56 million or 64%, mainly due to an increase in the share price of Zensar Technologies. The secondaries portfolio contributed £12 million to the total return. Private equity funds have produced a negative return over the past three years, but returns are expected to improve as more of these funds move into a realisation period.

The total return of £182 million from the direct unlisted portfolio included £35 million of realised gains with the balance being unrealised. Unrealised appreciation included £125 million of valuation growth resulting from profit increases, £17 million in respect of debt repayment by portfolio companies and £5 million as a result of changes in multiples used for valuation.

Analysis of Gains (Direct Unlisted Portfolio)

At 30 September 2014 direct unlisted investments valued on an earnings basis reflected a weighted average EV:EBITDA ratio of 8.2x.

Valuation Changes

In respect of direct unlisted investments retained at the end of the year, the most significant increases in valuation arose in respect of AXIO Data Group, Park Resorts, South Lakeland Parks and Nuaire.

The investment strategy for AXIO Data Group included measures identified during due diligence to improve profit and cash performance through a focus on costs and working capital. In 2013 the company implemented operating and capital efficiency programmes across the group and the positive effects of these have continued into the current year. The group has continued to simplify its portfolio by disposing of non-core assets and has acquired complementary businesses in order to strengthen its strategic position in selected markets. Further progress has been made in strengthening divisional management teams while implementing performance improvement and growth initiatives across the group. The combination of increased profitability, cash generation and an increase in the multiple used to value the company resulted in the valuation of Electra's investment in AXIO Data Group increasing by £57 million. The valuation of this investment at the end of September was 1.9x original cost.

In line with our business plan for Park Resorts following the company's consensual debt restructuring in August 2013, the winter of 2013/14 was spent investing in new capacity and growth. Together with strong trading conditions, this investment programme has led to profits increasing by 22% to £40 million this year. The performance resulted in the valuation of Electra's investment in Park Resorts increasing by £51 million. The valuation of this investment at the end of September was 1.9x original cost. Further investment is planned for the forthcoming winter season.

Recognising that Park Resorts was an excellent platform for acquisition-led growth, we have made two further acquisitions in the holiday parks sector, South Lakeland Parks in September 2013 and Southview and Manor Park in August 2014. The management of South Lakeland Parks was taken over by Park Resorts on acquisition; cost synergies and performance improvement initiatives implemented since have resulted in profits growth substantially ahead of plan and the valuation of Electra's investment increasing by £22 million. The valuation of South Lakeland Parks at the end of September was 2.1x original cost.

The valuation of Nuaire was increased by £18 million as a result of strong profits growth and an increase in the multiple used to value the investment. Under Electra's ownership the company maintained its investment in product development and manufacturing capabilities throughout the recession and is now well positioned to benefit from the recovery in the construction cycle. During the year the company refinanced its borrowings, returning £15 million to Electra. The total return on this investment at the end of September was 2.4x original cost.

The largest decreases in valuation, all of which were unrealised during the year, were in respect of Hotter Shoes, Promontoria and Sentinel Performance Solutions.

The valuation of Electra's investment in Hotter Shoes was reduced by £10 million. The management team has successfully achieved a number of strategic objectives this year, including further UK store openings, entering the German home shopping market and broadening the product range and price architecture for the Autumn/Winter 2014/15 range. A number of key appointments have been made to strengthen the senior management team. However, a provision was made to reflect the difficult trading environments in the UK and the US which have held back profits growth.

Following a portfolio review, Promontoria reduced the valuation of its real estate holdings. This review combined with negative currency movements reduced the valuation of Electra's investment in Promontoria by £7 million. The total return on this investment at the end of September was 1.9x original cost.

Sentinel's trading environment has weakened this year for a number of reasons. An early start to spring and a warm autumn have reduced demand. This has been compounded by the competitive environment and some customer destocking. A number of improvements have been made to the sales function in response. The valuation of Electra's investment however has reduced by £4 million. The valuation of this investment at the end of September was 0.6x original cost.

Direct Unlisted Investments - Valuation Changes

The table below shows the valuation changes in respect of Electra's largest direct unlisted investments over the course of the year. The remaining direct unlisted investments were increased in value by £1 million in aggregate.

Hugh Mumford

Managing Partner

Electra Partners LLP

26 November 2014

Market Review

"Electra Partners continues to be able to find value by executing proprietary and off market deals at attractive entry prices, not only in traditional buyouts, but also through portfolio company bolt-ons and co-investments.

"We remain extremely selective and we will continue to concentrate on buying the right assets at the right price."

This has been another record year of new investment in which we have maintained pricing discipline despite the backdrop of a competitive market. We have focused investment in three areas: first in growth businesses playing to our key investment themes; second in stable, cash-generative businesses which appear to be relatively undervalued by the market at the moment; and third in bolt-on acquisitions in which synergies and frequently limited competition allow us to deploy capital at favourable prices.

Market deal volumes

Deal volumes are stable but not buoyant. In the year to 30 September 2014 there have been 36 private equity deals in the UK in the £75 to £300 million range. This is a slight improvement on the 34 deals last year, but still a long way below the pre-recession peak. Volumes this year were held back by IPO market conditions in the first quarter, which diverted deal flow from the private equity market.

Quarterly UK deal volumes (£75m - £300m)

Source: MergerMarket (completed deals when EV is provided)

We see the vast majority of appropriate deals in Electra's size range. Of the 36 deals completed in the UK for the year to 30 September 2014, we considered 32 of them (89%) and completed three.

Deal Pricing

Deal pricing has continued to rise. In the year to 30 September 2014 the average entry multiple for UK buyouts valued at more than £10 million was 10.6x EBITDA compared to 10.5x in 2013 and 9.0x in 2012 (source: CMBOR). We are and should be prepared to pay a full price for a high-quality asset. However, by deploying the focus described above, we have successfully achieved a significantly lower average entry multiple than the market, transacting at a weighted average 7.5x EBITDA. We expect this to continue.

Alex Fortescue

Chief Investment Partner

Electra Partners LLP

26 November 2014

Key New Investments & Realisations

New Investments

Hotter Shoes

Date of initial investment: January 2014

Type of deal: Buyout

Growth themes: International, Demographic Change

Equity ownership: 61%

Cost: £84 million

Valuation: £72 million

Valuation: Based on multiple of earnings

Location: International

Website: www.hotter.com

Management: Peter Taylor, CEO; Alan White, Chairman

In January 2014 Electra invested £84 million in equity in the management buyout of Hotter Shoes ("Hotter") from Stewart Houlgrave, the company's founder, and Gresham LLP.

Established in 1959, Hotter is Britain's largest shoe manufacturer and sells over two million pairs of shoes each year in the UK and internationally in stores, in catalogues and online. The company, with a strong focus on comfort and service, serves customers whose age, health or lifestyle are such that they require more cushioned and supportive footwear.

Hotter is a growth business whose sales had more than doubled in the four years prior to the buyout, driven by demographic change, in particular population ageing, and international growth opportunities in the US and South Africa.

The company's growth strategy is built on a continued store opening programme in the UK, on further growth in international markets through distance selling channels, on increasing online sales, and on range development and extension to broaden the target market.

Since completion of the investment, Alan White, formerly CEO of N Brown Group PLC, has joined the company as non-executive Chairman. We have started the implementation of the growth plan by strengthening the senior management team through key appointments in marketing and operations. A number of successes have been achieved, including UK store openings, entering the German market and upgrading the web platform in the UK and US. However, revenue growth has slowed this year due to difficult trading conditions in the UK and US, and profits have declined as the investment in growth has been maintained.

Elian

Date of initial investment: June 2014

Type of deal: Buyout

Growth themes: International, Regulation

Equity ownership: 60%

Cost: £81 million

Valuation: £81 million

Valuation: Based on price of recent transaction

Location: International

Website: www.elian.com

Management: Paul Willing, CEO; John Connolly, Chairman

In June 2014 Electra made an £81 million equity investment in the £180 million management buyout of Elian, formerly Ogier Fiduciary Services, from Ogier LLP.

Elian is a leading provider of offshore trust, fund and company administration services employing over 400 people. It is headquartered in Jersey and has operations in Cayman, Luxembourg, Guernsey, BVI, Bahrain, Hong Kong and London. The company serves 3,000 corporate, private and investment fund clients worldwide.

The business enjoys a high level of recurring revenue and strong cash generation. It has a blue chip client base and strong relationships with its regulators. Its fragmented, global market benefits from high barriers to entry as well as a number of growth drivers: demand is driven not only by legislation and regulation which favour larger players, but also by the increasing levels of international trade and investment which require corporate or fund structures to be established and administered.

The intention is to continue the company's historic growth trend by developing its international office network, expanding the team and through acquisition.

Since completing the investment, we have appointed John Connolly, formerly Global Chairman of Deloitte LLP and currently Chairman of Amec Foster Wheeler PLC and G4S PLC, as non-executive Chairman. We have now largely completed the separation of the business from its former owners and are working closely with the management team to accelerate organic and acquisition-led growth. The company's financial performance since completion has been ahead of expectations.

Console Group

Date of initial investment: August 2014

Type of deal: Buyout

Growth themes: International

Equity ownership: 58%

Cost: £64 million

Valuation: £64 million

Valuation: Based on price of recent transaction

Location: UK

Website: www.allen-heath.com; www.calrec.com; www.digico.biz

Management: James Gordon, CEO; Malcolm Miller, Chairman

In 2013 Electra invested £42 million in the acquisition of Allen & Heath. In March 2014 Electra invested a further £15 million in Allen & Heath for the acquisition of Calrec. In August 2014 Allen & Heath was merged with DiGiCo to create a new professional audio group. The financing of the acquisition of control by Electra was provided by Electra out of its own funds and bank financing arranged by Electra Partners LLP. Electra retained a 58% interest in the new group at a cost of £64 million.

Allen & Heath, Calrec and DiGiCo all design and manufacture audio mixing consoles used to manage live sound in settings ranging from concert venues or houses of worship to live television broadcasts. All three businesses have strong premium brands, well-regarded products and a history of product innovation. The global market for professional audio products is growing, fuelled by an increasing number of live events in both developed and developing markets.

The intention is to continue to gain market share by optimising new product development and sales and marketing activities across the brand portfolio. Further opportunities to consolidate the fragmented professional audio market through acquisition will also be considered.

Since the date of Electra's original investment the company has stimulated growth by investing in new product development as well as sales and marketing, and has improved margins with a reorganisation of its manufacturing operations. The financial performance of the group since the DiGiCo transaction has been in line with expectations.

The Original Bowling Company

Date of initial investment: September 2014

Type of deal: Buyout

Growth themes: n/a

Equity ownership: 85%

Cost: £50 million

Valuation: £50 million

Valuation: Based on price of recent transaction

Location: UK

Website: www.amf-bowling.co.uk; www.hollywoodbowl.co.uk

Management: Steve Burns, CEO; Peter Boddy, Chairman

In September 2014 Electra made a £50 million equity investment in the £91 million management buyout of The Original Bowling Company ("TOBC"), from CBPE Capital. The financing of the acquisition of control by Electra was provided by Electra out of its own funds and bank financing arranged by Electra Partners LLP.

TOBC is the UK's largest ten-pin bowling business with 44 bowling centres operating under the Hollywood Bowl and AMF brands. TOBC specialises in large, high-quality bowling centres, predominantly located in leisure or retail parks, which offer a complete family entertainment experience with restaurants, licenced bars and state-of-the-art family games arcades.

Ten-pin bowling is a robust and growing part of the UK leisure sector offering opportunities for further expansion through new openings. TOBC has grown ahead of its market thanks to its leading management team and history of investment-backed growth, as a result of which its estate is well-positioned to make further advances.

TOBC's historical growth trend is expected to continue with close management of the existing estate in order to optimise yield and return on capital. The business plan also anticipates a number of openings of new bowling centres as well as acquisition-led growth.

At completion of the transaction Peter Boddy was appointed as non-executive Chairman. Peter has significant experience of the leisure sector having been CEO of Megabowl Group, a large ten-pin bowling operator, UK Managing Director of Fitness First during the company's growth and CEO of Maxinutrition, Europe's leading sports nutrition company. The company's first new site under Electra's ownership, in Cheltenham, opened in November 2014. The company's financial performance since completion has been ahead of expectations.

Southview and Manor Park

Date of initial investment: August 2014

Type of deal: Buyout

Growth themes: Austerity / Value, Demographic Change

Equity ownership: 80%

Cost: £20 million

Valuation: £20 million

Valuation: Based on price of recent transaction

Location: UK

Website: www.park-resorts.com

Management: David Boden, CEO; Alan Parker, Chairman

In August 2014 Electra made a £20 million equity investment in the £49 million acquisition of Southview and Manor Park holiday parks from Bluebird Partners and a European bank. The financing of the acquisition of control by Electra was provided by Electra out of its own funds and bank financing arranged by Electra Partners LLP.

Southview and Manor Park ("SVMP") are large and established holiday parks - Southview in Skegness, Lincolnshire and Manor Park in Hunstanton, Norfolk. Together the parks comprise more than 2,000 pitches, a 9 hole golf course as well as the four-star Southview Park Hotel.

This is the second bolt-on transaction for Park Resorts, the first being South Lakeland Parks which was completed in September 2013, and takes Electra's investment in the UK holiday parks sector to over £100 million. Each of these investments benefits from: a resilient market supported by customer demographics and strong value propositions; high barriers to entry; a cash-generative business model; and growth potential. SVMP's large and well-invested sites offer growth potential through the development of new pitches.

Electra's existing portfolio company, Park Resorts, has managed both parks since 2010 and continues to do so. Operating together, Park Resorts, South Lakeland Parks and SVMP constitute the largest operator of holiday parks in the UK.

The company's financial performance since completion in August is on plan. Management is embarking on a major development plan at Southview to expand capacity over the next two seasons.

Innovia Group

Date of initial investment: April 2014

Type of deal: Co-investment

Growth themes: International

Equity ownership: 24%

Cost: £33 million

Valuation: £33 million

Valuation: Based on price of recent transaction

Location: International

Website: www.innoviafilms.com, www.innoviasecurity.com

Management: David Beeby, CEO; Malcolm Fallen, Chairman

In April 2014 Electra made a €40 million (£33 million) equity investment in the €498 million buyout of Innovia Group from the Candover 2001 Fund.

The group is headquartered in Cumbria and operates five manufacturing sites worldwide. Innovia's Films division is a leading global producer of speciality high performance films primarily used in packaging applications for the food and tobacco industries. Innovia Films benefits from high barriers to entry and steadily growing demand. It occupies leading positions in mature niche markets and enjoys long-term customer relationships.

Innovia's Security division is the leading manufacturer of polymer banknote substrate for central banks. Polymer banknotes have numerous advantages over paper notes including security, durability and cleanliness, yet today account for only a small share of all banknotes in circulation. Innovia Security benefits from a strong intellectual property portfolio and a 20-year track record producing substrate for 36 central banks.

The group's strategy is to continue to grow its packaging films business through product innovation and capacity expansion, while developing its banknote substrate business as central banks around the world increasingly choose to benefit from the advantages of polymer over paper banknotes.

In early 2014 Innovia Security announced a new contract with the Bank of England for the supply of polymer substrate for the next generation £5 and £10 notes. The group's financial performance since completion is behind expectations as a result of the lumpy nature of orders from customers of Innovia Security.

Realisations

Lil-lets Group

Date of initial investment: December 2006

Date of realisation: November 2013

Type of deal: Buyout

Growth themes: International

Cost: £28 million

Proceeds: £37 million

Multiple: 1.3x

IRR: 6%

Location: UK and South Africa

Website: www.lil-lets.com

Management: Martin Frost, CEO; Ken Pringle, Chairman

In 2006 Electra made a £26 million equity investment in the management buyout of Lil-lets from Accantia Group. Having previously seen the return of £5 million, Electra made a further £7 million equity investment in 2012 in order to support growth.

Lil-lets is a leading branded feminine hygiene business and offers a complete portfolio of feminine hygiene products under one brand. The business occupies leadership positions in both the mature UK and growing African markets, supported by a trusted brand and an innovative approach to new product development.

In the UK, growth has been stimulated through brand investment. In Africa, the business has been expanded through geographic extension and performance improvement.

In November 2013 Lil-lets was sold to Premier Foods (Pty) Limited, a major South African manufacturer and distributor of fast-moving consumer goods. Electra received gross proceeds of £37 million.

LondonMetric Property

Date of initial investment: November 2007

Date of realisation: June 2014

Type of deal: Listed

Growth themes: n/a

Cost: £30 million

Proceeds: £49 million

Multiple: 1.6x

IRR: 10%

Location: UK

Website: www.londonmetric.com

Management: Andrew Jones, CEO; Patrick Vaughan, Chairman

In 2007 Electra invested £20 million in commercial property fund London & Stamford Property PLC's £285 million listing on AIM. A further investment of £10 million was made in 2009. In 2013 the company merged with Metric Property Investments PLC and was renamed LondonMetric Property.

LondonMetric invests across the UK, primarily in out-of-town retail and distribution assets but with some exposure to office and London residential property. The company employs an active asset management approach in order to improve both rental values and the security and longevity of income.

In 2007 LondonMetric's senior management team, led by Raymond Mould and Patrick Vaughan, anticipated that depressed valuations in the commercial property market would create the opportunity for a cash-rich fund to make a number of well-priced acquisitions. Electra had previously backed Raymond and Patrick in successful investments in Arlington and Pillar.

Since the merger with Metric, LondonMetric has rebalanced its portfolio by selling the majority of the residential property assets and buying retail distribution sites to benefit from the growth of internet shopping. This has had the added benefit of improving the income generation capacity of the portfolio to service a growing dividend yield.

Between October 2013 and June 2014, following a strong rise in LondonMetric's share price, Electra sold its interest in the company. Over the seven years of its investment, Electra received total proceeds, including dividends, of £49 million. This equates to a return of 1.6x cost and an IRR of 10%.

Premier Asset Management

Date of initial investment: September 2007

Type of deal: Buyout

Growth themes: Regulation

Equity ownership: 25%

Cost: £56 million

Proceeds: £20 million

Valuation: £26 million

Valuation: Based on price of recent transaction

Multiple: 0.9x

IRR: n/a

Location: UK

Website: www.premierfunds.co.uk,

Management: Mike O'Shea, CEO; Mike Vogel, Chairman

In 2007 Electra made a £33 million minority equity and debt investment in the take-private of Premier. In 2009 Electra made a further £24 million equity investment to support the acquisition of two OEICs from Aberdeen Asset Management.

Premier is a retail asset manager, with the bulk of its assets under management ("AUM") in branded retail funds, of which the largest franchises are in multi-asset, UK equities, global equities and fixed income.

The retail investment market displays growth drivers including demographic and regulatory change from which Premier is well placed to benefit due to its strong product portfolio and investment performance. The intention remains to accelerate growth by investing in sales and marketing and by exploring other opportunities to extend the scope of the business.

In 2013 the company increased its marketing investment in order to take advantage of strong fund performance as well as a favourable demand environment. Following the success of this initiative, in 2014 the company extended its marketing investment programme. Net sales of investment products have improved and AUM now stand at £3.1 billion, 20% ahead of the prior year. Financial performance is strong, with sales and profits growth of 15% and 30% respectively.

In September 2014 Electra sold a majority shareholding in Premier to Elcot Capital Management. On completion Electra received total proceeds of £20 million cash and £26 million of preference shares, while retaining an equity interest of 25%. This represents a £10 million increase in the valuation over the year and compares to an original cost of £56 million.

Key Investments

Direct Unlisted and Secondary Investments

Listed Investments

Fund Investments

The three largest funds were Gaja Capital, Motion Equity Partners, and TCR Capital, which accounted for 38% of the total value.

Large Private Equity Investments

AXIO Data Group

Date of initial investment: April 2013

Type of deal: Buyout

Growth themes: International, Digital Economy

Equity ownership: 69%

Cost: £69 million

Valuation: £140 million

Valuation: Based on multiple of earnings

Multiple: 1.9x

Location: International

Website: www.axiogroup.net

Management: Henry Elkington, CEO; Hans Gieskes, Chairman

In 2013 Electra invested £91 million in debt and equity to finance the £148 million acquisition of UBM plc's Data Services division, since renamed AXIO Data Group.

AXIO comprises seven information businesses serving a range of sectors in over 25 countries: healthcare, intellectual property licensing, containerised trade and breakbulk services, aviation and forest products.

AXIO's businesses are defensive by virtue of their industry and geographic diversity. Its strong brands occupy leadership positions in niche markets and it is robust and cash-generative. The strategy is to grow profits through growth in revenues from digital products, performance improvement and acquisition, and to realise multiple arbitrage by selling the portfolio's components to strategic acquirers.

In 2013 the group implemented operating and working capital efficiency programmes across its portfolio and the positive effects of these have continued into the current year. The group has acquired complementary businesses, for example FOEX Indices in Finland, in order to strengthen its position in selected markets; and it has continued to simplify its portfolio by disposing of non-core assets such as Medical Observer and Air Cargo World. Further progress has been made in strengthening divisional management teams while implementing business improvement and growth initiatives across the group.

Financial performance is strong with profits increasing by 15% compared to prior year on flat sales. In November 2014 it was announced that AXIO had agreed to sell one of its seven businesses, JOC Group, to IHS Inc.

Park Resorts

Date of initial investment: December 2012

Type of deal: Debt

Growth themes: Austerity / Value, Demographic Change

Equity ownership: 49%

Cost: £70 million

Valuation: £135 million

Valuation: Based on multiple of earnings

Multiple: 1.9x

Location: UK

Website: www.park-resorts.com

Management: David Boden, CEO; Alan Parker, Chairman

In 2012 Electra acquired senior debt in Park Resorts for £70 million at a significant discount to face value, making Electra the largest lender to the group.

Park Resorts is a leading UK operator of caravan holiday parks. The company has a strong management team and a leading position in a defensive, fragmented sector that has performed strongly throughout the recession as a result of its customer demographic and value proposition.

While the investment case produced attractive returns in the event of the debt position being held to maturity, the strategy was to take an equity position in Park Resorts through a restructuring of the company's debt and thereafter to grow the business both organically and through acquisition.

The restructuring of Park Resorts' debt was completed in August 2013, when funds managed or advised by Electra Partners became the majority shareholders, and a significant amount of capital was made available to improve park facilities.

Following this restructuring, the winter of 2013/4 was spent implementing a £4 million growth capital expenditure programme, with new investment in hire fleet, pitches and park facilities. Together with strong trading conditions, this programme has led to sales and profits growth of 6% and 22% respectively.

In November 2014 the appointment of Alan Parker CBE, formerly Chief Executive of Whitbread plc and currently Chairman of Darty plc and Mothercare plc, as non-executive Chairman of Park Resorts was announced. Alan joins the business as it embarks on another growth investment programme, with a further £4 million of capital expenditure approved to drive future growth.

Allflex Corporation

Date of initial investment: July 2013

Type of deal: Co-investment

Growth themes: Regulation, International

Equity ownership: 15%

Cost: £57 million

Valuation: £54 million

Valuation: Based on multiple of earnings

Multiple: 1.0x

Location: International

Website: www.allflex-group.com

Management: Jacques Martin, CEO; Jean-Baptiste Wautier, Chairman

In 1998 Electra invested £23 million in the US$160 million buyout of Allflex. In 2013 Electra sold its investment in Allflex generating a return of 15x original cost and an IRR of 28%. Electra made a new equity investment of £57 million for a minority stake in Allflex alongside the private equity buyer.

Allflex is the world's leading manufacturer and distributor of visual and electronic animal identification tags. Headquartered in the US and with operations in key global livestock markets, including Brazil, France and China, Allflex sells more than 200 million tags each year in over 60 countries worldwide.

The company has seen strong growth driven by not only greater regulation of the food chain to ensure food safety, but also increasingly sophisticated farm management techniques. Since 1998, the company has expanded geographically, developed new products to address a wider range of animal species, invested in new technologies such as electronic identification and genetic tags, and acquired a number of smaller competitors. Increasing requirements for food chain security create strong long-term growth prospects for Allfex.

Following a slow year in 2013 as a result of severe drought conditions in Australia and a cold spring in northern Europe, the company has returned to growth in 2014. Performance in Australia is improving and Allflex has enjoyed strong growth in the Americas and most European markets. Sales and profits growth are now satisfactory at 8% and 10% respectively. As a US Dollars-denominated investment, the sterling valuation has been negatively impacted by currency movements since the date of Electra's investment.

Peverel Group

Date of initial investment: March 2012

Type of deal: Buyout

Growth themes: Austerity / Value, Demographic Change

Equity ownership: 49%

Cost: £22 million

Valuation: £44 million

Valuation: Based on multiple of earnings

Multiple: 2.0x

Location: UK

Website: www.peverel.co.uk,

Management: Janet Entwistle, CEO; Paul Lester CBE, Chairman

In 2012 Electra made a £22 million equity investment in the £62 million acquisition of Peverel, the UK's leading property management services group, from its administrators.

Peverel is one of the UK's leading property services businesses. The company provides general management services to almost 4,000 retirement and other residential developments across the UK. The company also provides telecare and telehealth monitoring services that allow people to live independently in their own homes.

The business is the leader in a robust market, and offers the opportunity to grow not only as a result of demographic change but also by taking advantage of its nationwide coverage and economies of scale. The intention is to invest in service improvement initiatives and business development capabilities in order to enable the business to solidify its market leadership position and then grow its customer base.

The company has continued to improve customer service by redesigning business processes. These initiatives are being complemented with a substantial investment in IT across the business, in enterprise systems and hand-held technology in the field, as well as in new product development. Further investment currently underway in business development resources and strategies is intended to enable the business to accelerate its growth rate.

Revenues and profits are growing at 7% and 5% respectively compared to prior year.

South Lakeland Parks

Date of initial investment: September 2013

Type of deal: Buyout

Growth themes: Austerity / Value, Demographic Change

Equity ownership: 71%

Cost: £19 million

Valuation: £41 million

Valuation: Based on multiple of earnings

Multiple: 2.1x

Location: UK

Website: www.southlakelandparks.co.uk

Management: David Boden, CEO; Alan Parker, Chairman

In September 2013 Electra invested £21 million in equity in the £47 million management buyout of South Lakeland Parks from White Ocean Leisure and its lenders. Of this investment, £2 million was subsequently syndicated to a co-investor.

South Lakeland owns and operates nine freehold holiday parks in the English Lake District and Morecambe Bay area. The parks have 2,500 pitches with around 90% being occupied by caravan or lodge owners. Since acquisition these parks have been managed by Park Resorts.

The holiday park sector is defensive and fragmented and has performed strongly throughout the recession as a result of its customer demographic and value proposition. South Lakeland's estate of high-quality parks fits well with the existing Park Resorts portfolio.

The intention is to deliver operational improvements and profits growth in the South Lakeland portfolio through improved management of the estate. Investment in the infrastructure and facilities of the holiday parks will further enhance their appeal to both caravan owners and holiday-makers. Opportunities to further develop the existing South Lakeland estate will also be considered.

Since completion of the transaction in September 2013, a £2 million infrastructure investment programme at several parks has been completed and a number of revenue and cost optimisation projects have also been implemented. Financial performance is strong with sales and profits growth of 35% and 50% respectively. Further growth will result from the £2 million investment planned for the upcoming winter season.

CALA Group

Date of initial investment: March 2013

Type of deal: Co-investment

Growth themes: n/a

Equity ownership: 11%

Cost: £32 million

Valuation: £38 million

Valuation: Based on net assets

Multiple: 1.2x

Location: UK

Website: www.cala.co.uk/group

Management: Alan Brown, CEO; Anthony Fry, Chairman

In 2013 Electra made an equity investment of £13 million alongside Patron Capital Partners and Legal & General in the £210 million acquisition of CALA Group from Lloyds Banking Group. During 2014 Electra increased its investment to £32 million to support land purchases and the acquisition of Banner Homes in March.

CALA Group is a national house builder which provides high quality homes in Scotland, the Midlands and South East England. Banner Homes' focus on premium homes in the South East represents a strong strategic fit for CALA and accelerates its strategy to double in size by 2017. Following the acquisition, CALA is one of the ten largest housebuilders in the UK.

The UK currently experiences a significant undersupply of new houses. Loosening planning regulations, measures to improve mortgage availability and an improving macroeconomic environment have created favourable conditions for an investment in the house building sector.

The investment strategy is to develop the land bank, much of which was acquired at attractive prices following the global financial crisis, while supporting the company with further capital for either land or corporate acquisitions.

CALA's financial performance is strong, with higher selling prices and increased volume contributing to revenue and profits growth of 22% and 76% respectively.

Nuaire

Date of initial investment: April 2007

Type of deal: Buyout

Growth themes: Regulation

Equity ownership: 49%

Cost: £14 million

Valuation: £38 million

Valuation: Based on multiple of earnings

Multiple: 2.4x

Location: UK

Website: www.nuaire.co.uk

Management: Mark Huxtable, CEO; Kevin Sargeant, Chairman

In 2007 Electra invested £23 million in the £83 million management buyout of Nuaire from ECI Partners.

Headquartered in Caerphilly, Nuaire is a leading UK-based manufacturer and distributor of ventilation equipment for infrastructure, commercial and residential applications. The company's innovative products help clients reduce their energy consumption and carbon emissions.

The company is benefiting from increasing demand for intelligent ventilation systems to comply with more stringent UK building regulations and energy efficiency requirements. Nuaire's strategy is to capitalise on this demand dynamic by offering innovative and high-quality products supported by superior service.

Nuaire has continued to broaden its addressable market through new product development and this year has seen the launch of products including the XBOXER XBC commercial heat recovery range which was named "Energy Saving Product of the Year" by the Chartered Institution of Building Services Engineers. This development reflects Nuaire's continued investment in product development and manufacturing during the recession. In the last three years, the company has invested £4 million in capital equipment including upgrading manufacturing capacity.

At the same time the company has achieved efficiency savings across the business. Meanwhile construction markets have continued to recover with the Construction Products Association forecasting further growth in the next three years. Financial performance is strong with revenues and profits growth of 15% and 25% respectively.

Daler-Rowney

Date of initial investment: March 2011

Type of deal: Buyout

Growth themes: International

Equity ownership: 41%

Cost: £17 million

Valuation: £29 million

Valuation: Based on multiple of earnings

Multiple: 1.7x

Location: International

Website: www.daler-rowney.co.uk

Management: Patrick Giraud, CEO; Luis Bach, Chairman

In 2011 Electra made a £17 million equity investment in support of the buyout of Daler-Rowney from private shareholders.

Daler-Rowney is one of the largest suppliers of fine art materials in the world with a comprehensive product range including artists' paints, brushes, papers and canvases which meet the needs of artists from beginners to professionals. The company manufactures its products in the UK, the Dominican Republic and Germany and sells in more than ninety countries worldwide.

The company occupies a leading position in a stable, niche market benefiting from high barriers to entry created by products, brands and supply chain complexity. The intention is to continue to invest in product development and in sales and marketing in order to grow market share, and at the same time to undertake further geographic expansion.

Daler-Rowney has continued to expand its manufacturing platform in the Dominican Republic, not only to accommodate expansion elsewhere in the group but also to manufacture new products, such as canvas panels. Sales synergies between Daler-Rowney and Schoenfeld, which was acquired at the beginning of 2013, have been created, and the company has built and strengthened relationships with a number of retail multiples.

Financial performance is satisfactory with sales growth of 4% and underlying profits, which have been held back by currency movements, at the same level as in the previous year.

PINE

Date of initial investment: June 2005

Type of deal: Co-investment

Growth themes: n/a

Equity ownership: 99.0%

Cost: £14 million

Valuation: £24 million

Valuation: Derived from property investment value

Multiple: 1.6x

Location: UK

Website: www.thepinefund.com

Management: Harry Hyman, CEO (Nexus Group)

Electra first invested in PINE in 2005 as a start-up to exploit an identified opportunity to create a new institutionally acceptable property asset class in conjunction with an experienced property specialist and a nursery school operator.

PINE initially comprised a sale and leaseback property investment portfolio of nursery schools let on index-linked leases to nursery school operators, as well as a nursery school operating business. In 2012 Treetops Nurseries was spun out of PINE as part of a refinancing and is now a standalone investment in Electra's portfolio, valued at £16 million at 30 September 2014.

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

Davies Group

Date of initial investment: September 2011

Type of deal: Buyout

Growth themes: Austerity / Value

Equity ownership: 57%

Cost: £39 million

Valuation: £23 million

Valuation: Based on multiple of earnings

Location: UK

Website: www.davies-group.com

Management: Dan Saulter, CEO; Adrian Hill, Chairman

In 2011 Electra invested £36 million in equity in the £60 million management buyout of Davies Group from LDC. A further £3 million was invested in December 2013 to fund the acquisition of Garwyn.

Davies is a leading insurance claims service provider. It employs 580 people across the UK and Republic of Ireland and offers a full spectrum of validation and fulfilment services including claims management, loss adjusting, restoration and repair. Davies's focus is on servicing claims relating to residential property, commercial and specialist liability policies. The business handles over 120,000 claims each year and manages more than £600 million of indemnity spend.

The claims management sector benefits from barriers to entry built on the scale and systems required to deliver service quality in an area of critical importance to insurers.

Following disappointing initial trading, the financial and operational performance of Davies has been transformed. There have been four main components to this transformation. Firstly, management was strengthened with the appointment of a new chairman, CEO and CFO. Secondly, we undertook a significant cost programme with more than £8 million removed from the operating cost base. Thirdly, the foundations for future growth were laid with major investment in systems, training/culture, business development and operating model. Finally, we made the transformative acquisition of Garwyn, a leader in the liability space.

Davies has returned to growth with profits increasing fourfold in the year to July 2014 and with an exciting pipeline of both organic and acquisitive growth opportunities.

Promontoria

Date of initial investment: October 2007

Type of deal: Buyout

Growth themes: n/a

Equity ownership: 11%

Cost: £12 million

Valuation: £18 million

Valuation: Based on net assets

Multiple: 1.9x

Location: Germany

Website: n/a

Management: n/a as holding company

In 2002 Electra provided acquisition funding to a new company to allow it to undertake the sale and leaseback of certain German retail property assets. The company was itself acquired in 2007 by Promontoria, an unleveraged investment company, for which Electra received consideration in the form of ordinary shares and loan stock.

Today Promontoria owns 91 retail properties situated throughout Germany. Of these, 79 are leased to the German discount chain Woolworth, which underwent a financial restructuring in 2010. The business strategy is to continue to develop the portfolio and improve the tenant mix. Properties will be sold when attractive and deliverable offers are received.

Over the past two years, 14 stores have been redeveloped for a total investment of €30 million and leased to a range of high street names including Woolworths, C&A, TK Maxx and H&M. A new €5 million redevelopment has recently commenced in Frankfurt for completion in late 2015. Over the past seven years, 18 stores have been sold by Promontoria for aggregate proceeds in excess of €185 million. These funds have been distributed to shareholders, with Electra receiving €19 million.

Treetops Nurseries

Date of initial investment: February 2012

Type of deal: Buyout

Growth themes: Demographic Change

Equity ownership: 79%

Cost: £12 million

Valuation: £16 million

Valuation: Based on multiple of earnings

Multiple: 1.3x

Location: UK

Website: www.treetopsnurseries.co.uk,

Management: Charles Eggleston, CEO; Stephen Booty, Chairman

In 2012 Treetops Nurseries was spun out of PINE as part of a refinancing and is now a standalone investment in Electra's portfolio. Electra invested a further £2 million in 2013 to finance the acquisition of Toybox (four freehold sites in Bedfordshire) and a further £5 million in 2014 to fund the acquisition of Happy Child (15 nurseries).

Headquartered in Derby, Treetops is the sixth-largest nursery school operator in the UK, operating 50 nurseries (30 freehold, 20 leasehold) predominantly in the Midlands and South East and with over 3,300 registered places. Around 90% of the company's nurseries are rated Good or Outstanding by OFSTED.

Treetops was separated from PINE in order to allow it to benefit from dedicated management focus and access to growth capital. Treetops expects to grow organically, in particular through improved marketing and investment in the sites, designed to improve occupancy. Opportunities to grow through acquisition of other operators in the highly fragmented nursery market are also being actively pursued. The cash generative nature of the business model creates capacity to finance acquisitions internally.

Since 2012, the company has built a senior management team experienced in acquisition-led growth. Treetops has made a number of acquisitions which have more than doubled profitability, bringing the company greater scale and a more significant presence in the attractive London and South East markets. Operational improvement and site enhancement programmes have been implemented in acquired sites. Financial performance is strong with sales and profits growth of 27% and 22% respectively.

Labco

Date of initial investment: July 2008

Growth themes: Demographic Change

Type of deal: Co-investment

Equity ownership: 5%

Cost: £25 million

Valuation: £13 million

Valuation: Based on multiple of earnings

Multiple: 0.5x

Location: International

Website: www.labco.eu

Management: Philippe Charrier, CEO; Andreas Gaddum, Chairman

In 2008 Electra invested €30 million in a minority equity position in Labco.

Labco is a leading pan-European clinical laboratory services group. The company is the market leader in France, Spain and Portugal and also occupies leading positions in Italy and Belgium. It operates over 200 laboratories in which its 500 senior chemists and doctors perform 500,000 tests per day for more than 15 million patients each year.

The company operates in fragmented markets in which overall demand is growing due to demographic change, medical advances and an increased propensity to test preventatively. At the same time, regulatory changes and public spending pressure are expected to lead to market consolidation favouring larger players.

The strategy has been to support Labco in its acquisition of smaller laboratory groups, with the company's scale and infrastructure subsequently being used to improve the acquired businesses. Electra's investment was used to fund acquisitions in Spain, Germany, France and Italy.

Following the sale of its sub-scale German business for €76 million in 2013, the company has continued to make acquisitions in its core markets. Sales and profits growth are both 2%, reflecting both organic growth and the effect of acquisitions.

Large Listed Investment

Zensar Technologies

Date of initial investment: September 1997

Type of deal: Co-investment

Equity ownership: 24%

Cost: £4 million

Valuation: £63 million

Multiple: 17.0x

Location: International

Website: www.zensar.com

Management: Ganesh Natarajan, CEO; Harsh Goenka, Chairman

In 1997 Electra invested US$9 million in the equity of an unquoted subsidiary of listed parent, Zensar Technologies. In 2001 the listed parent closed down its operations and the unlisted subsidiary performed a reverse merger. This resulted in Electra owning shares in the listed entity.

Zensar is a provider of software development services to large corporates, offering both an onsite and offsite service. Onsite services consist of contracts, whereby Zensar provides software engineers to work on customers' premises (mainly the US and UK) whereas for the offshore business the work is undertaken by Zensar's software professionals located in its software development centres in India.

As an early entrant to the software services market and having established strong customer relationships and a good reputation, Zensar was well positioned to be able to grow in the sector.

Today the company employs over 6,800 people at 22 locations around the globe. The company has a global reach operating in the US, Europe, Africa, Middle East, Singapore and Australia regions and has delivery centres in India (Pune, Hyderabad and Bangalore), China, the UK, Amsterdam and the USA (Westborough).

The company has an acquisition strategy to add niche capabilities and to bulk up.

To date, US$10 million has been returned to Electra by way of dividends and sales of shares.

Financial Review

"The Company's diluted NAV per share increased by 15% during the year to 3,174p as a result of a strong performance from the total portfolio which delivered gains of £246 million."

Analysis of Movement in Net Asset Value per share

The Consolidated Income Statement on page 43 shows the total return for the period which, together with the impact of Bond conversions, provides an analysis of the movement in NAV. Performance from the investment portfolio contributed £6.15 per share, just over 22% of the opening NAV. Foreign currency movements on the loan used for hedging contributed a further 15p. From this, finance, operating costs and tax were 75p. The priority profit share paid to Electra Partners for managing the portfolio was 62p per share and the charge for incentive schemes was 90p. Lastly, a bond conversion increased NAV by 7p. The above net costs together with the investment performance result in an increase to net assets of £4.10 per share, a total return of 15%.

Incentive Schemes

The incentive arrangements (alternatively referred to as "carried interest"), which are similar to arrangements found elsewhere in the private equity industry, are designed to align Electra Partners' interests with Electra's shareholders. This is achieved by linking the incentive arrangements to cash realisations and taking into account the time value of money. The provision for incentives made during the year is a reflection of the strong investment returns which Electra Partners has generated over the past five years. It will remain a provision, subject to future performance, until such time as cash realisations are sufficient for Electra to have received back the cost of its investment and related management fees together with a priority return.

£36 million, equivalent to 90p per share, was provided in the year to 30 September 2014, being 15% of the gains on the investment portfolio. This figure is less than 18% because Zensar, which contributed £40 million (16% of the total gains on investments), is contained within an incentive scheme set up in 1995 which accrues carried interest at 8% on a deal by deal basis, rather than the 18% on a pooled basis in the post 2006 incentive arrangements.

The provision for incentives in the year to 30 September 2013, of £63 million, amounted to 28% of the investment returns in that period. This amount exceeded 18% because the realisation of Allflex triggered a first time provision in the 2006 pool. Previously, realisations together with the fair value of remaining investments were insufficient for the profits on the pool to exceed the compound 8% hurdle that Electra Partners needs to achieve in each pool, some £160 million at 30 September 2013. The sale of Allflex, which produced a return of £113 million in 2013, pushed the total pool profits well above the hurdle triggering a provision of £45 million in relation to that pool.

The carried interest is described in more detail in Note 22 on pages 66 to 68.

Net Liquid Resources

The Consolidated Cash Flow Statement on page 48 analyses the movement in the Group's cash for the year. Whilst cash at bank was largely unchanged in the period, the cash held in liquidity funds was substantially reduced - falling by 50% over the period to £120 million. As a result net liquidity stood at £166 million compared to £294 million last year. Record levels of realisations over the last three periods with total proceeds exceeding £1.1 billion led to unusually high liquidity, particularly last year. However, investment activity, with £900 million invested over this same period, has reduced cash to a level necessary to cover ongoing investment activity and operating costs.

Finance Costs

Finance costs of 50p per share or £20 million are made up as follows:

The costs of the bank facility are LIBOR plus a margin of 3%, which was equivalent to an average 4.7% during the period. The Convertible Bond pays a coupon of 5% amounting to £5 million in the period. Additionally a further amount was accrued to represent the cost of the embedded derivative of the conversion option. In total the accrual rate adopted is 9.9% adding an additional £4 million to this charge. The Zero Dividend Preference share is accounted for by accruing at the compound yield of 6.5% which is the yield to maturity based on its redemption value. The amount charged in this period was £4 million which was charged to the capital column in the Consolidated Income Statement reflecting the way in which this instrument will be eventually repaid. The weighted average cost of debt for the year was 6.7%.

Operating Costs

Expenses were £6 million during the year to 30 September 2014 compared to £2 million in 2013. £3 million of this increase relates to the exceptional costs of advisory and legal fees in relation to Circulars to Shareholders and the General Meeting held in October 2014. Additionally, there were some one off costs in relation to advisory work undertaken in relation to certain regulatory changes, in particular AIFMD and FATCA.

Borrowings

Electra has a £195 million multi-currency revolving credit facility which is repayable in December 2017. Electra's policy is to use its credit facility to partially hedge against US Dollars and Euro movements for investments held in these currencies.

Electra raised £46 million of ZDPs in 2009 and £100 million of Subordinated Convertible Bonds in 2010. The ZDPs are repayable in 2016, while the Subordinated Convertible Bonds are repayable in 2017 if they have not been converted into ordinary shares.

Steve Ozin

Partner

Electra Partners LLP

26 November 2014

Consolidated Income Statement

The 'Total' columns of this statement represent the Group's 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. This is further explained in the Basis of Accounting and Significant Accounting Policies in Note 24.

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

Consolidated Statement of Comprehensive Income

Consolidated Statement of Changes in Equity

Company Statement of Changes in Equity