ELTA.L Regulatory News (ELTA)

EMBARGOED UNTIL 07:00 AM, THURSDAY 21 MAY 2015

ELECTRA PRIVATE EQUITY PLC

Unaudited Results for the Half Year ended 31 March 2015

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 for six months to 31 March 2015

· Diluted NAV per share up 12% to 3,548p

· Interim dividend of 1% of net asset value declared, amounting to 38p per share

· Diluted NAV per share, including dividends, up 251% over ten years equivalent to a ten-year annualised return of 13%, at the upper end of the long-term target of 10-15% per annum

· Share price up 19%

· Share price total return of 253% over ten years

· Investment portfolio of £1,491 million equivalent to 110% of net assets

· £117 million of liquid resources

Portfolio Highlights for six months to 31 March 2015

· £129 million invested - largest individual investments: TGI Fridays and Allflex Corporation

· £121 million realised (inclusive of income)

· £211 million total portfolio return, 17% on the existing portfolio

· Largest individual gains: AXIO Data Group (£46 million), The Original Bowling Company(£31 million), Park Resorts (£23 million), Audiotonix (£23 million) and Elian (£20 million)

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

"The portfolio has continued to deliver strong returns for all shareholders, driven by Electra Partners' effective management of the portfolio and successful recent investments.

"We are pleased to be announcing an interim dividend following the review that was completed earlier this year. We believe the changes implemented are creating additional value for all shareholders.

"The Board is confident that Electra Partners are well positioned to continue to produce returns at the upper end of the targeted range of 10-15% as they have consistently done over many years."

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

"This has been another period of strong performance with NAV growth of 12%, and a 10-year annualised net return on equity of 13% which is at the upper end of the targeted range of 10-15%.

"Our active ownership approach is creating value in the investment portfolio, which grew to £1.5 billion during the period. This approach has proven itself across business and economic cycles.

"We continue to see strong performance from some of the newer assets in the portfolio, having bought them well and successfully accelerated their development.

"The combination of investment performance and net new investment means that Electra's capital is increasingly deployed in direct unlisted investments."

For further information:

For Roger Yates & Hugh Mumford:

Andrew Honnor or Matthieu Roussellier, Greenbrook Communications 020 7952 2000

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

Performance Summary

Unless otherwise stated all information is at 31 March 2015 and is unaudited.

At 31 March 2015 the net asset value ("NAV") per share was 3,548p (diluted) and 3,768p (basic). At 15 May 2015 the NAV per share was 3,533p (diluted) and 3,752p (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 six months to 31 March 2015, 6,693 Convertible Bonds ("Bonds") were converted into 326,477 ordinary shares in the Company. Prior to this a total of 3,466 Bonds had been converted into 169,064 ordinary shares and, accordingly, the diluted NAV per share assumes the issue at 31 March 2015 of a further 4,382,504 ordinary shares on the basis of the conversion terms of the Bonds.

Calculation of NAV

At 31 March 2015

The calculation of the unaudited diluted NAV per share at 31 March 2015 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 in the Report and Accounts for the year ended 30 September 2014.

At 15 May 2015

The unaudited diluted NAV per share at 15 May 2015 was calculated on the basis of the NAV at31 March 2015 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 31 March 2015 was 13%.

The Half Year Report for the six months ended 31 March 2015 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 31 March 2015 its net assets were £1.4 billion or 3,548p 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 31 March 2015 Electra's return on equity was 13% 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

"The portfolio has continued to deliver strong returns for all shareholders, driven by Electra Partners' effective management of the portfolio and successful recent investments.

"We are pleased to be announcing an interim dividend following the review that was completed earlier this year. We believe the changes implemented are creating additional value for all shareholders.

"The Board is confident that Electra Partners are well positioned to continue to produce returns at the upper end of the targeted range of 10-15% as they have consistently done over many years."

Overview

I am pleased to report that Electra has made an excellent start to 2015, with a significant increase in net asset value per share as a result of strong performance from the investment portfolio. Good progress has been made in terms of both profit growth and cash generation.

During this period the Board concluded its review of the capital structure, distribution policy and management fees, the results of which were announced in February. We believe these changes will deliver benefits for all shareholders and contribute to maintaining the outstanding performance that has been delivered by Electra Partners over many years.

Results

In the six months to 31 March 2015, Electra's diluted net asset value per share increased by 12%. Electra's share price increased by 19% over the same period, compared to a total return on the FTSE All-Share of 5%.

This excellent performance in the half year is a continuation of good long-term performance. Over the 10 years to 31 March 2015, Electra's diluted net asset value per share, including dividends, has increased by 251%. This compares to the Morningstar Private Equity Index's total NAV return of 49% over ten years. Electra's share price also performed well over the same period, generating a total return of 253%. This compares to the total return of the Morningstar Private Equity Share Price Index of 36% and for the FTSE All-Share of 111%, both over ten years.

For the 10 years to 31 March 2015, Electra's annualised net return on equity was 13%. Over the same period Electra's annualised share price return was also 13%.

The majority of the performance in the six months to 31 March 2015 came from the direct unlisted portfolio, in particular from investments made in the last 12 months.

Investment Activity

During the six months to 31 March 2015 we completed one new major acquisition, investing £99 million in the UK franchise of TGI Fridays, the American-styled restaurant chain. A further £30 million was invested in follow-on and other investments, principally in Allflex Corporation.

Cash generated by the portfolio continues at a substantial level with £121 million realised in the period.

Review of Capital Structure, Distribution Policy and Management Fees

Following the General Meeting in October 2014 and as a result of discussions with shareholders, the Board announced that it was to conduct a review of Electra's capital structure, distribution policy and fee arrangements with Electra Partners. The outcome of this review was announced in February this year. By way of summary the following key changes were agreed by the Board:

· The annual management fee, known as priority profit share, was previously set at 1.5% of gross assets, including cash. From 1 April 2015, no fee is being paid on cash and the management fee on Non-Core Listed and Primary Fund Investments has reduced to 1%. If applied to the year ended 30 September 2014, the fee would have been reduced by £7 million.

· The multi-currency revolving credit facility which was previously drawn to facilitate currency hedging has been repaid. The facility will be redrawn in the future as required to facilitate new investment or meet ongoing expenses. The Board is content under the present circumstances to accept the additional currency exposure that this debt repayment will bring. However, the Company's foreign currency exposure will be kept under review.

· Beyond the Convertible Bonds and the Zero Dividend Preference Shares already in issue, it is not currently intended to borrow on Electra's balance sheet other than through the use of the existing multi-currency facility on a revolving basis.

· For a number of years the Company has not paid dividends unless required to do so to maintain Investment Trust status and has not initiated any share buybacks since 2008. The Board now proposes to implement a distribution policy to return to shareholders a targeted 3% of NAV per annum by way of cash dividend or share buybacks. It is the intention of the Board that any shares bought back under this policy will be cancelled.

The Board believes the above changes are in the interests of all shareholders and will enhance future returns.

Balance Sheet

At 31 March 2015 Electra had net liquid resources of £117 million compared to £166 million at 30 September 2014. As a result of the repayment of the bank facility in line with the revision to the hedging strategy outlined above, borrowings have been reduced by £152 million.

Dividend

In line with the revised distribution policy outlined above, the Board has declared an interim dividend of 1% of net asset value, in respect of the year ending 30 September 2015, amounting to 38p per ordinary share, which will be paid on 24 July 2015 to shareholders on the register of members at close of business on 5 June 2015. A dividend reinvestment plan is being arranged with Equiniti, whereby existing shareholders will be able to reinvest their dividends in the Company's shares. Further information on this plan can be found in the Information for Shareholders section of this report.

Outlook

This is another excellent set of results for Electra and a continuation of the strong long-term performance record, delivered in particular by the recent investments in the portfolio. This performance has been achieved by making use of Electra's flexible investment strategy and by Electra Partners' investment selection and value creation skills.

The Board believes that Electra remains well positioned to build on and strengthen its high quality portfolio and to carry on delivering outstanding returns for its shareholders.

Roger Yates

Chairman

20 May 2015

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 £4.5 billion in more than 200 deals, 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 31 March 2015 Electra Partners had funds under management of over £1.6 billion including capital available for investment of nearly £400 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 251%. This is over five times the NAV per share return of the Morningstar Private Equity Index. This is equivalent to a ten-year annualised return of 13%, 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 quartile 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: A UK 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, Audiotonix: 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.

· 250 investment opportunities considered during the six months to 31 March 2015

· 85% of completed UK buyout deals in Electra's space seen in the six months

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.

· 2 direct unlisted and 2 secondary transactions completed in the six months to 31 March 2015

· Over £155 million of new debt raised in the six months

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.

· 3 bolt-on transactions completed in the six months to 31 March 2015

· 16% profits growth in direct unlisted portfolio in the 12 months to 31 March 2015*

Exit - realising the investment:

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

· £121 million of capital realised in the six months to 31 March 2015

· Over £64 million of cash returned from repayment of loans in the six months

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 12 months and property investments

Investment Team

Electra Partners' senior management team is one of the most experienced teams in the industry and has on 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

"This has been another period of strong performance with NAV growth of 12%, and a 10-year annualised net return on equity of 13% which is at the upper end of the targeted range of 10-15%.

"Our active ownership approach is creating value in the investment portfolio, which grew to £1.5 billion during the period. This approach has proven itself across business and economic cycles.

"We continue to see strong performance from some of the newer assets in the portfolio, having bought them well and successfully accelerated their development.

"The combination of investment performance and net new investment means that Electra's capital is increasingly deployed in direct, unlisted investments."

Performance

Over the six months to 31 March 2015, Electra's share price increased by 19% compared to a 5% total return for the FTSE All-Share and a 16% 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 12% to 3,548p at the half-year compared to a 5% NAV per share increase for the Morningstar Private Equity Index.

The total return for the investment portfolio over the six months to 31 March 2015 amounted to £211 million or 17%. Further information on the effect of this strong investment performance on Electra's NAV is included in the Financial Review on pages 39 to 40.

Long-Term Performance

Over the last ten years, Electra's shares have delivered a total return of 253%. This compares favourably to the share price total return over the same period of both the FTSE All-Share (111%) and the Morningstar Private Equity Index (36%).

Over the same period, Electra's NAV per share total return has been 251%. This again compares favourably to the NAV per share total return of the Morningstar Private Equity Index of 49%.

Our objective, approved by shareholders in 2006, is to achieve an annualised net return on equity ("ROE") of 10% to 15% over the long term. For the ten years to 31 March 2015, Electra's annualised net ROE was 13%.

Investment Activity

New investment for the six months to 31 March 2015 reached £129 million compared with £134 million in the corresponding period of the prior year. The direct unlisted portfolio, where activity included one new investment, in TGI Fridays, and one follow-on investment, in support of Allflex's acquisition of SCR, accounted for £112 million of this investment.

Realisations from the portfolio amounted to £121 million, compared to £152 million in the six months to 31 March 2014. The lower level of realisations reflects the high level of realisations in recent years. The largest individual realisation was £49 million in respect of AXIO Data Group, following its sale of JOC Group and Breakbulk in December 2014. £30 million was realised from funds and secondaries and £8 million was realised by the sale of listed securities as the process of reducing Electra's listed holdings continued.

Outlook

The six months to 31 March 2015 has been another period of strong investment performance. Investment performance reflects our success in buying attractive assets well and then accelerating their development by implementing value creation strategies. The combination of investment performance and net new investment has resulted in further improvement in the deployment of Electra's balance sheet, with an investment portfolio amounting to 110% of the net asset value.

Looking to the future, we expect further strong performance from the investment portfolio as the strategies we have set within portfolio companies continue to take effect, from organic growth, operational improvement and M&A. The reduction in cash balances will also contribute to the improved NAV performance. Although the private equity market has become more competitive, we continue to see opportunities to deploy Electra's capital. Our strategy remains to use Electra's flexible investment mandate to build an attractive portfolio of private equity assets, and to use our own experience and resources to drive returns in that portfolio. This is an active ownership approach pursued with patience and discipline with a proven record across economic and business cycles.

Portfolio Overview

At 31 March 2015, Electra's investment portfolio was valued at £1,491 million. The investment portfolio consists of direct unlisted investments, secondaries, listed securities and funds. The top 10 and 20 investments account for 65% and 87% respectively of the investment portfolio.

Portfolio Breakdown

Direct Unlisted Investments (82% of portfolio)

Direct unlisted investments form the major part (82% compared to 79% at 30 September 2014 and 70% at 31 March 2014) of Electra's portfolio and consist of investments in 29 private companies with an aggregate value of £1,215 million. The 10 largest investments account for 75% of the direct unlisted investment portfolio at 31 March 2015.

Secondary Investments (7% of the 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 31 March 2015 Electra held investments in six secondary portfolios with an aggregate value of £101 million.

Listed Investments (6% of portfolio)

Electra held seven listed investments with an aggregate value of £95 million at 31 March 2015. The largest listed investment was Zensar Technologies with a value of £72 million. Zensar is included within the core investment portfolio, the remaining six investments with a value of £23 million are outside the core investment portfolio.

Core Investment Portfolio (93% 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 93% of the investment portfolio at 31 March 2015.

Fund Investments (5% of portfolio)

Fund investments consist of limited partnership interests in third party private equity funds where Electra made a primary commitment to that fund. New primary commitments to funds are no longer part of Electra's investment strategy. In total, Electra held investments in 15 funds comprising 65 underlying investments with an aggregate value of £80 million at 31 March 2015. This compares to 18 funds comprising 78 underlying investments with an aggregate value of £80 million at 30 September 2014.

Investment Portfolio - Sector Breakdown

Direct Unlisted Investments - Age Analysis

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 £1,272 million to £1,491 million during the six months to 31 March 2015. The increase of £219 million resulted from the acquisition of £129 million of new investments together with the portfolio return of £211 million, offset by realisations of £121 million.

New Investments

Total new investment for the period reached £129 million compared to £134 million in the corresponding period of the previous year.

The most significant new investments were in respect of TGI Fridays and Allflex.

In December 2014 Electra invested £99 million of equity in the buyout of TGI Fridays, the UK franchise of the eponymous American-styled restaurant chain. It operates from 66 UK restaurants in a range of locations, including city centres, shopping centres and retail parks. The business offers a differentiated product, with a wide demographic appeal, in the growing casual dining market. The intention is to grow through new restaurant openings as well as improving yield management.

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

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

A further £3 million was drawn down by private equity funds in which Electra is a limited partner. Commitments outstanding to private equity funds fell to £54 million compared to £77 million at September 2014.

Realisations

Total realisations in the period came to £121 million compared to £152 million in the corresponding period of the previous year.

The most significant realisations during the period were in respect of AXIO Data Group, Knight Square, the Isle of Man Steam Packet Company, the EP1 Secondary Portfolio and Capitol Health.

AXIO is a diverse and cash-generative group of individual information services companies. Electra Partners' strategy is to improve each of these businesses, through efficiency programmes, quality of earnings enhancements and M&A, prior to exiting each business. Two such exits, of JOC Group and Breakbulk, were completed in December 2014. Using the proceeds of these sales as well as operating cash flow, AXIO repaid £49 million to Electra. Following these transactions, in which AXIO has sold businesses representing less than 15% of the earnings acquired in 2013, Electra has received total cash proceeds exceeding 80% of its investment cost.

Electra Partners' strategy in respect of Knight Square, formerly known as Peverel, is to invest in service improvement and business development initiatives to stimulate growth. At the same time as implementing these initiatives, Knight Square has continued to be highly cash generative and has additionally made progress in realising surplus assets, resulting in its acquisition debt being substantially paid down. In October 2014 the group completed a refinancing that allowed it to make loan repayments of £14 million to Electra.

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

The secondaries portfolio produced realisations of £23 million in the period. The largest component was the EP1 Secondary Portfolio, in respect of which Electra received distributions totalling £17 million. This takes total distributions from the EP1 Secondary Portfolio to £51 million or 58% of cost and the total return on the investment to 1.5x cost. In addition Electra received distributions of £6 million in respect of Capitol Health, a US healthcare fund in which Electra purchased a secondary interest in 2005. Total distributions from this fund now stand at £23 million and a total return at 4.2x original cost.

Other realisation proceeds received by Electra were £7 million from private equity funds in which Electra held a limited partnership interest and £8 million from listed investments, including the sale of Electra's entire holding in esure.

Performance

During the six months to 31 March 2015 Electra's investment portfolio generated a total return of £211 million, an increase of 17% on the opening portfolio of £1,272 million.

The performance arose principally from the direct unlisted portfolio which generated a total return of £190 million, representing an increase of 19%. Excluding investments held for less than 12 months and property investments, earnings in direct unlisted portfolio companies grew by a weighted average of 16% year-on-year. Listed investments produced a return of £12 million, of which £9 million related to Zensar Technologies. The secondaries portfolio contributed £5 million to the total return, representing an increase of 5%. Private equity funds contributed £4 million, or 5% of the opening portfolio of £80 million.

The total return of £190 million from the direct unlisted portfolio included £8 million of realised gains with the balance being unrealised. Unrealised appreciation included £60 million resulting from profit increases, £45 million in respect of debt repayment by portfolio companies and £77 million as a result of changes in multiples used for valuation.

Analysis of Gains (Direct Unlisted Portfolio)

At 31 March 2015 direct unlisted investments valued on an earnings basis reflected a weighted average EV:EBITDA ratio of 8.7x compared to 8.2x at 30 September 2014.

Direct Unlisted Investments - Valuation Changes

The most significant increases in valuation arose in respect of AXIO Data Group, The Original Bowling Company, Park Resorts, Audiotonix (formerly known as the Console Group), Elian, Southview and Manor Park holiday parks and Allflex.

Electra's investment in AXIO produced a total return of £46 million in the period. In December 2014 AXIO achieved two exits, from JOC Group and Breakbulk, at valuations in excess of their carrying value. The remainder of the return from this investment during the period is the result of profits growth, cash flow and an increase in the multiples used to value the individual businesses. Underlying profits growth last year was 16% as a result of a continued emphasis on revenue growth and cost efficiency. Further profits growth is expected to result from a number of initiatives, including the integration of the recently acquired FlightView business into OAG. The total return on this investment at the end of March was 2.4x original cost.

The valuation of The Original Bowling Company ("TOBC") increased by £31 million as a result of profits growth, which was ahead of plan, and strong cash generation. Profits growth in the current year has come from newly opened and refurbished sites as well as improved yield management, particularly in the peak holiday and weekend periods. The total return on this investment at the end of March was 1.6x original cost. In April 2015 TOBC announced the acquisition of Bowlplex, a similar operator of ten-pin bowling centres. The deal is subject to the approval of the Competition and Markets Authority.

Park Resorts continued to perform well during the latter part of 2014. In line with our business plan for the company, Park Resorts has increased its growth investment programme. This, together with improved management of margins as well as strong trading conditions, led to profits increasing by 22% to £42 million in 2014, ahead of plan; and is expected to underpin further profits growth in future. The performance resulted in the valuation of Electra's investment in the company increasing by £23 million. The total return on this investment at the end of March was 2.4x original cost. In April 2015 Electra invested a further £25 million in Park Resorts, acquiring preference shares at a discount to face value.

Audiotonix, formerly known as the Console Group, was formed in July 2014 by the merger of Electra's existing investment in Allen & Heath with DiGiCo. Performance of the group has been ahead of plan since completion of the merger, as a result of an increased focus on sales and marketing, new product development effectiveness and stronger cost controls. This performance, together with cash flow and an increase in the multiple used to value the business, resulted in the valuation of Electra's investment increasing by £23 million. The total return on this investment at the end of March was 1.4x original cost.

Elian has performed ahead of expectations since its acquisition in June 2014 as a result of a sharper focus on business development as well as productivity improvements. This performance, coupled with strong cash generation, has resulted in a £20 million increase in the valuation of Electra's investment which at the end of March showed a total return of 1.3x original cost.

The largest valuation decrease was in respect of Daler-Rowney. This reflected a number of influences which reduced profitability, including the weakening of the Euro against Sterling, operational reorganisation resulting from the integration of an acquisition made in 2013 and movements in product mix.

The table below shows the valuation changes in respect of Electra's direct unlisted investments.

The other reductions in valuation comprised several items, the largest of which was Sentinel Performance Solutions, which has experienced reduced profits as a result of increased competition in its markets.

Hugh Mumford

Managing Partner

Electra Partners LLP

20 May 2015

Market Review

"Although the market has been quieter this year than last, we have deployed £129 million in new investment and supported a number of portfolio companies in making synergistic acquisitions."

Summary

In the UK, as well as in Europe, deal numbers have been subdued over the past six months. Deal pricing is comparable with the last few periods but still at relatively high levels. We have invested £99 million in one new control buyout, £14 million in two secondary transactions and £11 million in portfolio company bolt-ons.

Our focus on the new deal front remains on 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.

Conditions are clearly good for realisations and we are exploiting these where appropriate.

Market deal volumes

Deal volumes in the six months to 31 March 2015 have been below the levels seen last year. There have been 13 private equity deals in the UK in the £75 million to £300 million range. This is behind both the first and second halves of last year.

Quarterly UK deal volumes for the year ended 30 September (£75 million to £300 million)

Source: MergerMarket (completed deals when EV is provided)

We continue to see the majority of deals in Electra's size range. Of the 13 private equity deals completed in the UK in the six months to 31 March 2015, we considered 10 of them (85%) and completed one (TGI Fridays).

Deal Pricing

Deal pricing has remained steady since 2013. The average entry multiple for UK buyouts valued at over £10 million was 10.6x EBITDA compared to 10.5x in the year to 30 September 2014 and 10.5x in the year to 30 September 2013 (source: CMBOR).

Our average entry multiple, a weighted average of 8.0x EBITDA, remains below that of the wider market reflecting the mix of deals in this period.

Our deal pipeline remains healthy and we see plenty of opportunity to deploy a significant portion of Electra's firepower in the short term. We will of course continue to apply the patience and discipline that are at the heart of our strong long-term performance.

Alex Fortescue

Chief Investment Partner

Electra Partners LLP

20 May 2015

Key New Investment

TGI Fridays

Date of initial investment: December 2014

Type of deal: Buyout

Growth themes: n/a

Equity ownership: 78%

Cost: £99 million

Valuation: £99 million

Valuation: Based on price of recent investment

Location: UK

Website: www.tgifridays.co.uk

Management: Karen Forrester, CEO

In December 2014 Electra invested £99 million of equity in the management buyout of the UK franchise of TGI Fridays ("TGIF") from its American parent.

TGIF, which has the exclusive UK rights to operate under the TGI Fridays brand, has 66 American-styled restaurants in a range of locations, including city centres, shopping centres and leisure parks. This is an established brand which works well across the country, with 56 of its sites outside London. It offers bold, distinctive American food as well as an innovative cocktail list, and provides a high-energy, fun environment with a wide demographic appeal. Key to the success of the customer experience is the company's focus on hiring and retaining enthusiastic front-of-house staff to offer a high level of service.

In March 2015, TGIF topped the Sunday Times "Best Big Companies to Work For" list.

The company offers a differentiated product, with a wide demographic appeal, in the growing casual dining market. The intention is to continue to grow through new restaurant openings as well as improving yield management.

Trading has been in line with expectations since completion of the investment in December and the new site opening programme is on schedule.

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 42% of the total value.

Large Private Equity Investments

Park Resorts

Date of initial investment: January 2012

Type of deal: Debt

Growth themes: Austerity / Value, Demographic change

Equity ownership: 49%

Cost: £69 million

Valuation: £156 million

Valuation: Based on multiple of earnings

Multiple: 2.4x

Location: UK

Website: www.park-resorts.com

Management: David Boden, CEO; Alan Parker, CBE, 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 UK operator of caravan holiday parks. The company has a strong management team and operates 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. Further such capital expenditure has been completed in the winter of 2014/5. Growth investment, together with improved management of margins as well as strong trading conditions, has resulted in strong financial performance across Electra's holiday park investments, with aggregate revenue and profits growth in the year to December 2014 of 8% and 28% respectively. Electra has recently invested a further £25 million in preference shares issued by Park Resorts which have been acquired from GI Partners at a discount to their face value.

AXIO Data Group

Date of initial investment: April 2013

Type of deal: Buyout

Growth themes: International, Digital economy

Equity ownership: 69%

Cost: £25 million

Valuation: £139 million

Valuation: Based on multiple of earnings

Multiple: 2.4x

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 originally comprised 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 December 2014 AXIO announced that it had sold two of its seven businesses, namely JOC Group and Breakbulk. Following these transactions, in which AXIO has sold businesses representing less than 15% of the profits it acquired in 2013, Electra's total cash proceeds from the investment were £76 million, more than 80% of original cost.

The group has continued to make progress developing growth and business improvement initiatives in its remaining businesses. Financial performance remains strong, with underlying profits in the year to December 2014 increasing by 16% on flat sales. In January 2015 AXIO announced that its aviation division, OAG, had acquired FlightView, Inc., the leading provider of real-time flight information for the aviation and travel industries. The acquisition has created a market leader in the growing global flight status and schedules data markets.

Elian

Date of initial investment: June 2014

Type of deal: Buyout

Growth themes: International, Regulation

Equity ownership: 59%

Cost: £76 million

Valuation: £96 million

Valuation: Based on multiple of earnings

Multiple: 1.3x

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.

Elian is continuing to grow by developing its international office network, expanding the team and through acquisition.

Since completion of the investment in June 2014 Electra Partners have been working closely with the management team and the Chairman, John Connolly, who was appointed at the end of last year, to complete the separation of the business from its former owners and to accelerate organic and acquisition-led growth. A sharper focus on business development has led to a number of new business wins while productivity improvements have enhanced margins. A strong M&A pipeline has been developed. Elian's financial performance has been ahead of expectations.

Audiotonix (formerly Console Group)

Date of initial investment: August 2014

Type of deal: Buyout

Growth themes: International

Equity ownership: 58%

Cost: £64 million

Valuation: £87 million

Valuation: Based on multiple of earnings

Multiple: 1.4x

Location: UK

Website: www.audiotonix.com

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. 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 business is gaining 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 are also being considered.

Since completion of the merger in August 2014, the three businesses have started to share expertise and to develop cross-selling opportunities. Cost synergies have been realised in excess of expectations. The senior management team has been strengthened with two key appointments in the finance and technology functions in order to support future developments. The group's financial performance has been ahead of 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: £81 million

Valuation: Based on multiple of earnings

Multiple: 1.6x

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 private shareholders and CBPE Capital.

TOBC operates 44 ten-pin bowling centres under the Hollywood Bowl and AMF brands. TOBC offers 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.

The company's financial performance since completion of the investment in September 2014 has been significantly ahead of expectations. This performance is the result of improved yield management, particularly in the peak holiday and weekend periods; the opening of the new Cheltenham site, which is performing ahead of the investment case; and the success of a number of site refurbishment projects. In April 2015 TOBC announced that it had agreed to acquire Bowlplex, which operates 17 ten-pin bowling centres, subject to approval from the Competition and Markets Authority.

Allflex Corporation

Date of initial investment: July 2013

Type of deal: Co-investment

Growth themes: Regulation, International

Equity ownership: 15%

Cost: £68 million

Valuation: £79 million

Valuation: Based on multiple of earnings

Multiple: 1.2x

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. In January 2015 Electra made a further investment of £11 million to support the $250 million acquisition of SCR (Engineers) Ltd.

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 Allflex.

The company continued to grow in 2014 with revenue and profits growth of 8% and 10% respectively.

In January 2015 Allflex completed the acquisition of SCR, the world's largest manufacturer of electronic milk meters and smart tags for monitoring cow fertility and health. The acquisition brings a number of benefits, including access to an attractive growth sector; cementing Allflex's position as the worldwide leader in animal traceability and farm livestock management products; and further growth opportunities as the group makes use of its combined distribution, technology and product development resources. The integration is progressing well with significant focus on revenue and cost synergies.

Hotter Shoes

Date of initial investment: January 2014

Type of deal: Buyout

Growth themes: International, Demographic change

Equity ownership: 61%

Cost: £84 million

Valuation: £74 million

Valuation: Based on multiple of earnings

Multiple: 0.9x

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.

The company has made continued progress with the implementation of its growth plan. The effects of a number of initiatives, including management strengthening, UK store openings, entering the German market and upgrading the web platform in the UK and US, are now evident. Revenue growth has started to accelerate, reaching 8% in the year to January 2015. Profits, which had declined since completion of the investment in January 2014 as a result of growth investment, are now starting to grow again. In April 2015 Hotter announced that it had won the Queen's Award for Enterprise in recognition of its success in international trade.

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: £49 million

Valuation: Based on multiple of earnings

Multiple: 2.4x

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 with 2,500 pitches in the English Lake District and Morecambe Bay area. 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.

At the time of acquisition, a number of opportunities were identified. First, to deliver operational improvements and profits growth in the South Lakeland portfolio through improved management of the estate. Second, to invest in the infrastructure and facilities of the holiday parks in order to further enhance their appeal to both caravan owners and holiday-makers. Third, to consider the further development of the existing South Lakeland estate.

Since completion of the transaction in September 2013, a £4 million infrastructure and growth investment programme at several parks as well as a number of revenue and cost optimisation projects have been implemented. Financial performance has been strong across Electra's holiday park investments, with aggregate revenue and profits growth in the year to December 2014 of 8% and 28% respectively.

Nuaire

Date of initial investment: April 2007

Type of deal: Buyout

Growth themes: Regulation

Equity ownership: 51%

Cost: £14 million

Valuation: £48 million

Valuation: Based on multiple of earnings

Multiple: 2.8x

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, in particular in the mechanical ventilation and heat recovery area. This development reflects Nuaire's continued investment in product development and manufacturing during and since the recession. In the last three years, the company has invested more than £4 million in capital equipment including upgrading manufacturing capacity.

Nuaire's financial performance in the year to September 2014 was strong, with revenue and profits increasing by 15% and 25% respectively. This growth has continued into the current year. Meanwhile the Construction Products Association is forecasting further market growth in the next three years.

CALA Group

Date of initial investment: March 2013

Type of deal: Co-investment

Growth themes: n/a

Equity ownership: 11%

Cost: £32 million

Valuation: £41 million

Valuation: Based on net assets

Multiple: 1.3x

Location: UK

Website: www.cala.co.uk/cala-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 macro-economic environment have created favourable conditions for an investment in the housebuilding sector.

The integration of Banner Homes into CALA is now complete with operational and cost efficiencies ahead of expectations. The group's financial performance is strong; following revenue and profits growth of 22% and 62% in the year to June 2014, the group has made further advances in the current year in terms of sales volumes and prices. CALA's controlled land bank now stands at over 13,400 plots with a potential GDV of £5 billion.

Knight Square (formerly known as Peverel Group)

Date of initial investment: March 2012

Type of deal: Buyout

Growth themes: Austerity / Value, Demographic change

Equity ownership: 49%

Cost: £8 million

Valuation: £34 million

Valuation: Based on multiple of earnings

Multiple: 2.2x

Location: UK

Website: www.knightsquare.com,

Management: 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. In October 2014 the company completed a refinancing that allowed it to make loan repayments of £14 million to Electra.

Peverel, now known as Knight Square, is one of the UK's leading property services businesses. Through its FirstPort business, the group provides general management services to almost 4,000 retirement and other residential developments across the UK. Through Appello, it also provides telecare and telehealth monitoring services that allow people to live independently in their own homes.

Knight Square 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 group's business process redesign exercise has delivered tangible benefits including improved customer satisfaction, stronger risk management and reduced cost. Investment in IT and further process enhancements continues. The focus on growth has been strengthened with the decentralisation of the group; FirstPort and Appello are now managed as standalone businesses and the central group functions have been largely disbanded.

Profits growth in the year to December 2014 was 9% on revenues which were flat.

Southview and Manor Park

Date of initial investment: August 2014

Type of deal: Buyout

Growth themes: Austerity / Value, Demographic change

Equity ownership: 72%

Cost: £18 million

Valuation: £34 million

Valuation: Based on multiple of earnings

Multiple: 2.2x

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.

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. Electra's existing portfolio company, Park Resorts, has managed both parks since 2010 and continues to do so.

This was the second bolt-on transaction for Park Resorts, the first being South Lakeland Parks which was completed in September 2013, and took 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.

The implementation of the development plan at Southview has continued over the winter months, with investment in new pitches and central facilities. Financial performance across Electra's holiday park investments is strong, with aggregate revenue and profits growth in the year to December 2014 of 8% and 28% respectively.

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 multiple of earnings

Multiple: 1.0x

Location: International

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

Management: Mark Robertshaw, 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 investment in new manufacturing capacity in Cumbria to support this contract continues, with production scheduled to commence in 2016. A new CEO, Mark Robertshaw, formerly CEO of Morgan Advanced Materials, has been appointed following the planned retirement of his predecessor. The group's financial performance since completion is behind expectations as a result of the lumpy nature of orders from customers of Innovia Security.

Premier Asset Management

Date of initial investment: September 2007

Type of deal: Buyout

Growth themes: Regulation

Equity ownership: 25%

Cost: £30 million

Valuation: £29 million

Valuation: Based on multiple of earnings

Multiple: 0.9x

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. In 2014 Electra sold a majority shareholding in Premier to funds under the management of Elcot Capital Management for a consideration comprising £20 million in cash and £26 million of preference shares while retaining an equity interest of 25%.

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 recent years the company has increased its investment in marketing and distribution in order to take advantage of strong fund performance as well as a favourable demand environment. Net sales of investment products have improved and AUM now stand at £3.8 billion, 40% ahead of the prior year. Financial performance is strong, with sales and profits growth in the year to September 2014 of 16% and 29% respectively.

PINE

Date of initial investment: June 2005

Type of deal: Co-investment

Growth themes: n/a

Equity ownership: 99%

Cost: £14 million

Valuation: £26 million

Valuation: Derived from property investment value

Multiple: 1.7x

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 £22 million at 31 March 2015. PINE now owns 31 properties leased to nursery school operators; these properties offer leases of twenty years or more with indexed rents.

The company continues to build a pipeline of freehold property acquisition opportunities, not only within the nursery school sector but also more broadly in the education market. The objective remains to grow the portfolio to enhance its appeal to institutional investors.

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

Multiple: 0.6x

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 current focus of Davies is on the broker and MGA market and the development of selective additional business areas both organically and through M&A. The company's strategy is to invest in technology and other service improvement and extension initiatives in order to become a partner of choice for insurers increasingly outsourcing claims management.

Davies has continued to make good progress following the business transformation initiated in 2013. A technology-led operational change programme to enhance customer service and streamline business processes is approaching its conclusion. New business has developed well although revenue and profits growth, which are currently 8% and 13% respectively, have been held back by benign weather impacting claims volumes. Garwyn, which was acquired at the end of 2013, has been fully integrated and the company's M&A programme has continued with the acquisition of Associated Loss Adjusters, an Irish specialist loss-adjuster, and a pipeline of further opportunities under consideration.

Treetops Nurseries

Date of initial investment: February 2012

Type of deal: Buyout

Growth themes: Demographic change

Equity ownership: 79%

Cost: £12 million

Valuation: £22 million

Valuation: Based on multiple of earnings

Multiple: 1.7x

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. More than 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. A new senior management team has been recruited to implement this strategy.

Since 2012, the company has made a number of acquisitions which have more than doubled profitability and brought it greater scale in the attractive markets of London and the South East. Further M&A opportunities are under active consideration. Operational improvement and site enhancement programmes have been implemented in acquired sites. Financial performance is strong with sales and profits growth in the year to September 2014 of 33% and 41% respectively.

Promontoria

Date of initial investment: October 2007

Type of deal: Buyout

Growth themes: n/a

Equity ownership: 11%

Cost: £12 million

Valuation: £16 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 82 retail properties situated throughout Germany. Of these, 61 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 are being sold when attractive and deliverable offers are received.

Promontoria continued with its refurbishment programme in 2014 and a number of redeveloped sites were let to a range of high-street names including Woolworths, C&A and H&M. A new €5 million redevelopment was commenced in Frankfurt for completion in late 2015.

The realisation of the portfolio has also continued. In the six months to March 2015 nine stores were sold for a consideration of €30 million. This takes total proceeds from the 27 stores divested over the past seven years to €213 million. These proceeds have been distributed to shareholders, with Electra's share being €22 million. Contracts have been exchanged in respect of the sale of 11 further properties.

Daler-Rowney

Date of initial investment: March 2011

Type of deal: Buyout

Growth themes: International

Equity ownership: 41%

Cost: £17 million

Valuation: £14 million

Valuation: Based on multiple of earnings

Multiple: 0.8x

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 ranging 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 to accommodate the group's growth as well as to manufacture new products, such as stretched canvases. Further progress has been made in developing key customer relationships, particularly in the core UK and US markets. The group has experienced some disruption to its operations as a result of the ongoing integration of production sites acquired as part of the Schoenfeld acquisition in 2013. Together with adverse FX and product mix movements, this led to a decrease in the group's profits in the year to December 2014.

Labco

Date of initial investment: July 2008

Growth themes: Demographic change

Type of deal: Co-investment

Equity ownership: 5%

Cost: £25 million

Valuation: £14 million

Valuation: Based on multiple of earnings

Multiple: 0.6x

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 150 million tests for 20 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.

In 2014, Labco completed the acquisition of SDN, an Italian provider of medical imaging and laboratory diagnostic services, as well as extending its UK presence with new partnerships with hospitals in Basildon and Southend. Pro forma sales and profits growth in the year to December 2014 were 12% and 6% respectively, 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: 23%

Cost: £4 million

Valuation: £72 million

Multiple: 19.0x

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 Mumbai-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 in the US and UK) whereas for the offsite 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. The company has an acquisition strategy to add niche capabilities and to bulk up.

Today the company employs over 8,000 people at 20 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, Delhi and Bangalore), South Africa, the UK, Amsterdam and the USA (Westborough).

Revenue and profits growth in the year to March 2015 were 14% and 9% respectively. At the end of March 2015 the share price implied a valuation of Zensar equivalent to 7.0x EBITDA of £43 million.

To date, US$11 million has been returned to Electra by way of dividends and sales of shares.

Electra's investment in the holiday parks sector

The Deal

In 2012, Electra invested £70 million in a series of purchases of senior debt with a face value of £130 million issued by Park Resorts. These purchases made Electra the largest lender to the group, although the primary plan was to pursue a consensual debt restructuring to obtain an equity interest in the group.

Electra invested a further £62 million to support the acquisitions of South Lakeland Parks in 2013 and Southview and Manor Park in 2014, and in acquiring a further interest in Park Resorts preference shares in April 2015.

The Business

Park Resorts is a leading operator of caravan holiday parks, operating 49 sites in coastal locations across the UK.

The company's customer base comprises second-home owners and holidaymakers. The former group, who occupy 68% of the group's c.24,000 pitches, buy static caravans and lease pitches from the company. Caravans and lodges cost from £7,000 to over £600,000; pitch fees account for 24% of revenues and 33% of gross margin; and the average tenure of an owner is six years. Holiday makers rent caravans for short stays at an average price of £300 per week. Further revenues are generated from food, beverage and other on-site leisure facilities.

The Investment

The holiday park sector benefits from a number of attractive characteristics: it is resilient through the economic cycle; demand is growing driven by the ageing demographic and a trend to more frequent holiday breaks; there is substantial asset backing through ownership of freehold land; and the sector is fragmented suggesting potential for consolidation through M&A.

Sector knowledge, together with Park Resorts' situation - it was a classic "good company, bad balance sheet" - facilitated the acquisition of a blocking position in the company's senior debt at a valuation of below 7x EBITDA. The strategy was to restructure the debt to take an equity position and then grow organically and through acquisition; if this was not achievable then Electra was well positioned and would earn an attractive return from simply holding the debt to maturity.

Update

The restructuring of Park Resorts' debt was finalised in August 2013 after a lengthy and intensive process. Funds under the management of Electra Partners took a substantial equity position and a place on the board while remaining the largest lender to the group. The business plan was then implemented:

Management succession

Upon completion of the refinancing, David Boden was appointed as CEO. David had over 30 years' experience in the leisure industry having held senior board-level positions at Rank Group and Hippodrome Casinos. This appointment allowed founder David Vaughan to begin his staged retirement by becoming Chairman.

A year later David Vaughan retired fully and Alan Parker CBE, formerly Chief Executive of Whitbread, was appointed as Chairman.

Growth

Profits growth in 2012 and 2013, prior to Electra Partners' involvement at board level, was slow at approximately 3% p.a. Electra Partners' view was that growth was constrained by under-investment. As a part of the restructuring, a growth capital expenditure programme was planned, to be financed from the company's cash flows.

The first phase of growth investment was completed over the winter of 2013/14, with £4 million invested in hire fleet, pitches and park facilities. This supported sales and profits growth of 6% and 22% respectively in 2014. A further investment of £5 million over the winter of 2014/15 is expected to underpin further growth in 2015.

Margin improvement

The opportunity for margin improvement was identified. Through a reduction in promotional activity and close management of costs, the EBITDA margin has improved by more than four percentage points to 24%, with further increases planned.

M&A

Electra completed two further acquisitions, of South Lakeland Parks in September 2013 and of Southview and Manor Park in August 2014.

South Lakeland Parks has traded strongly since acquisition, with business improvement initiatives, cost synergies and a £4 million investment in infrastructure supporting sales and profits growth of 41% and 64% respectively in 2014. Further growth at both businesses is anticipated as a result of £4 million growth investment made over the winter of 2014/15.

In April 2015 Park Resorts announced that it had made a further acquisition, of the Summerfields Holiday Park in Norfolk.

Outlook

What started as an investment in Park Resorts senior debt is now a significant equity position in a leading UK freehold holiday parks operator acquired at the attractive multiple of approximately 7x EBITDA. Financial performance has been strong, with revenue and EBITDA growth across Electra's holiday parks investments in 2014 of 8% and 28% respectively. Further growth is anticipated as a result of the ongoing investment programme as well as continued focus on managing yield and margins. Electra's investment is performing well, with a total return to the end of March 2015 of 2.3x cost, achieved by buying well, reinvigorating growth and enhancing value through M&A.

Progression of profits (Pro forma EBITDA)

Entry cost vs. current valuation

Financial Review

"The Company's diluted NAV per share increased by 12% during the six months to 3,548p as a result of a strong performance from the total portfolio which delivered gains of £211 million."

Analysis of Movement in Net Asset Value per share

The Consolidated Income Statement on page 41 of this Half Year Report shows the total return for the period and, together with the impact of Bond conversions during the period, explains the movement in NAV for the six months to 31 March 2015.

Performance from the investment portfolio contributed £5.22 per share, slightly over 16% of the opening NAV. Deducted from this, as shown below, were finance and operating costs, FX movements and tax, which together totalled 36p per share; the priority profit share paid to Electra Partners for managing the portfolio amounted to 32p per share; and the charge for incentive schemes amounted to 85p per share. Bond conversions during the period increased NAV per share by 5p. These net costs, together with the investment performance, resulted in an increase to net assets of £3.74 per share, a total return of 12% for the six month period.

Incentive Schemes

The current incentive schemes operated by Electra (alternatively referred to as "carried interest") are based on three-year pools. Currently, there are three pools in relation to the three-year periods commencing 2006, 2009 and 2012. The carried interest schemes are described in more detail in Note 7 on pages 48 to 50.

The increase of £34 million (equivalent to 85p per share) to the provision for incentives made during this period reflects the strong performance of the investment portfolio, which produced a total return of £211 million in the six months. The majority of this increase relates to the 2009 and 2012 pools. Both of these pools require substantial cash realisations to occur before Electra would have received back the cost of its original investment, related priority profit share and its preferred return - in the order of £800 million. Accordingly, no cash payments can be made to Electra Partners until investments equating to this value have been sold.

The provision made in this period represents 16% of the gains on the investment portfolio. This figure is less than the 18% relevant to the current incentive schemes because some of the return relates to pre-2006 incentive schemes which accrue at 8% on a deal-by-deal basis rather than the 18% on a pooled basis in the post-2006 incentive arrangements. Zensar Technologies was one of the larger investments which fall into this category. Zensar contributed £9 million during this period, being 4% of total gains on investments.

Net Liquid Resources

The Consolidated Cash Flow Statement on page 44 analyses the movement in the Group's cash for the six months. Cash has reduced by £81 million during the period. The largest component of this was the repayment of the multi-currency bank facility in March following the conclusion of the Board's strategic review and consequent change in currency hedging policy. This was partially offset by £120 million generated by the sale of investments in liquidity funds. Cash flow on private equity investments was broadly neutral with the balance of cash outflows arising from operating costs.

Net liquid resources were £117 million at 31 March 2015, which is approximately half the average level of the past two years. The fall in the level of liquid resources follows a period of very high investment activity in the last three years, with approximately £1 billion in aggregate invested.

Finance Costs

Finance costs of 22p per share, or £9 million, in the six months were made up as follows:

The coupon payable in respect of the bank facility is based on LIBOR plus a margin of 2.5%, which was equivalent to an average 3.7% during the period. The Convertible Bond pays a coupon of 5% per annum, amounting to £2 million in the period. A further amount was accrued in respect of the Convertible Bond to represent the cost of the embedded derivative of the conversion option. In total the accrual rate adopted is 9.9% adding an additional £2 million in the period. The Zero Dividend Preference Share ("ZDP") 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 £2 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 period was 6.1%.

As stated above, following the Board's strategic review the bank facility was repaid in full at the end of March. Should the facility remain undrawn, commitment fees will continue to be paid at a cost of £2 million per annum.

Borrowings

The bank facility has been increased from £195 million to £275 million and its term extended from December 2017 to December 2019. At the same time, the margin, commitment fees and other terms were improved.

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

20 May 2015

Consolidated Income Statement (unaudited)

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.

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

Consolidated Statement of Comprehensive Income (unaudited)

Consolidated Statement of Changes in Equity (unaudited)

Consolidated Balance Sheet (unaudited)