ELTA.L Regulatory News (ELTA)

5 Jun 2007 07:02

Electra Private Equity PLC05 June 2007 EMBARGOED UNTIL 07:00 AM, TUESDAY 5 JUNE 2007 ELECTRA PRIVATE EQUITY PLC Announcement of Interim Results for six months ended 31 March 2007 • Continued growth in net asset value - up 17.2% over six months to 1,811p per share at 31 March 2007 - unaudited net asset value per share at 31 May 2007 of 1,822p• Total return to shareholders of 18.3% for the six months• Return on Equity of 15% annualised over five years to 31 March 2007• Share price outperformance relative to the FTSE All-Share Index over short and medium term - up 16.9% over six months (up 160.8% over five years) versus Index which rose 7.6% over six months (rose 28.4% over five years)• Investment portfolio valued at £568m at 31 March 2007, an increase of 65% over12 months• During the six months Electra made on-market purchases of its own shares for cancellation at an aggregate cost of £18 million Commenting on the Interim Results, Sir Brian Williamson, Chairman, said: "The six months have provided a sound start to Electra's return to fullinvestment of its capital resources. These results demonstrate Electra's solidperformance over both the short and medium term." For further information: Sir Brian Williamson, Chairman, Electra Private Equity PLC 020 7306 3883Hugh Mumford, Managing Partner, Electra Partners LLP 020 7214 4200Nick Miles, M: Communications 020 7153 1535 Net Asset Value Per Share 31 March 2007 30 September 2006 31 May 2007Net asset value per share 1,811p 1,545p 1,822p Increase since 30 September 2006 17.2% Increase in FTSE All-Share Index 7.6%since 30 September 2006 Return on Equity comprises Total "Profit on Ordinary Activities after Taxation"divided by opening "Total Equity Shareholders' Funds" calculated on anannualised basis (as these terms are used in the Report and Accounts of Electrafor the year ended 30 September 2006). The unaudited net asset value per share at 31 May 2007 was calculated on thebasis of the net asset value at 31 March 2007 adjusted to reflect the purchasesand sales of investments, currency movements and bid values on that day inrespect of listed investments. These adjustments exclude the investments inMoser Baer and Zensar which were treated as unlisted investments at 31 March and31 May 2007. The figures and financial information in respect of the year ended 30 September2006 have been delivered to the Registrar of Companies and included theAuditors' Report which was unqualified and did not contain a statement undereither section 237(2) or section 237(3) of the Companies Act 1985. A copy of the Chairman's Statement, Investment Manager's Review and the InterimAnnouncement are attached. Chairman's Statement The significant progress achieved by Electra during the year ended 30 September2006 has continued for the six months to 31 March 2007, with strong growth innet asset value and a good share price performance. Over the six months the netasset value per share increased by 17.2% from 1,545p to 1,811p. Over the sameperiod the share price increased by 16.9%, while the FTSE All-Share Indexincreased by 7.6%. Inclusive of the special dividend of 17p per share paid inMarch 2007, Electra achieved a total return to shareholders of 18.3% for the sixmonths. Very satisfactory though these results are, Electra's performance overthe medium term is particularly pleasing and the net asset value per shareincreased by 105% over the five years to 31 March 2007. Over the same period,Electra achieved a return on equity of 15% on an annualised basis, while theshare price rose by 161% and the FTSE All-Share Index increased by 28%. Electra was the winner of the Investment Trusts Magazine award for "Best PrivateEquity Trust" of 2006, having produced a return which was more than four timesthe average return of the other 18 constituents of the Private Equity sector inthe year. Investment StrategyDuring 2006 the Board undertook a thorough review of Electra's market, itsinvestment strategy and the relationship with its Investment Manager, includingits contractual and compensation arrangements. In October 2006 shareholdersapproved Electra's return to full investment of its capital resources in privateequity and the appointment of the independently owned Electra Partners LLP asits Investment Manager. Electra Partners' senior management team has workedtogether since 1992 and has in aggregate, over 80 years' experience in theprivate equity markets. Since 2005 Electra Partners has recruited a further fiveinvestment professionals. Electra Partners' experienced finance, compliance,property investment, portfolio management and marketing teams support theinvestment professionals. In implementing Electra's investment strategy, Electra Partners is typicallytargeting investments at a cost of £25-70 million in companies with anenterprise value of £70-200 million. Investments are sought in companies which have a meaningful part of their business or management team based in the UK, although opportunities will be taken to invest additionally elsewhere in Western Europe. The emphasis is on investments where it is possible for Electra Partners, sometimes in conjunction with like-minded investors, to establish and deliver the portfolio company's strategy, direct the appointment and development of its management team and control the realisation process from the investment. Investment ActivitySince shareholders gave approval for Electra's return to full investment,Electra Partners has quickly developed a strong dealflow, although it isadopting a cautious approach to new investment and, in appropriate cases, willstructure transactions to include financial instruments which will give greaterprotection in a more demanding economic environment. The private equity market remains very active, particularly at the larger endwhere a number of major transactions are being contemplated. In Electra'stargeted deal size the market was very competitive during the six months,although £89 million was successfully invested and there were outstandingcommitments to invest in new portfolio companies and private equity funds of£162 million at 31 March 2007. At 31 March 2007, Electra had a net liquid assets position of £170 millioncompared to £238 million at 30 September 2006. Future changes to this position will relate directly to the timing of new investments and future portfolio realisations. After achieving realisations of £257 million in the year ended 30 September2006, the Board had anticipated that the level of realisations would begin tofall as the age profile of the portfolio changed. During the six months underreview, sale proceeds amounted to £41 million, significantly less than the £81million received in the six months ended 30 September 2006. However, since 31March 2007 Electra has announced the conditional sale of its investment inCapital Safety Group which, if completed, will substantially increaserealisation proceeds for the year. Full details of the investment activity are included in the Investment Manager'sReport. Board of DirectorsColette Bowe and Lucinda Webber were appointed as Non-Executive Directors ofElectra with effect from 1 March 2007 and the Board is already benefiting fromtheir wide and varied experience. These are the first two of three Non-Executiveappointments which the Board intends to make. The process to select a furtherNon-Executive Director is still ongoing and I anticipate that once this has beencompleted there will be a short period of transition after which some of theexisting Directors will retire from the Board. On-Market Purchases of Shares for CancellationAt the Extraordinary General Meeting held in October 2006 shareholders gaveauthority to continue the on-market share buy-back programme. In deciding whento buy-back shares, the Board will take account of the prospective returns onprevailing investment opportunities and the discount at which the shares tradeto their net asset value. The Directors will only use this authority when it isjudged there will be an increase in net asset value and be in the best interestof shareholders generally. During the six months ended 31 March 2007, Electramade on-market purchases of 1.22 million shares at an aggregate cost of £18million representing an average price of 1,469p per share. OutlookThe six months have provided a sound start to Electra's return to fullinvestment of its capital resources and the team at Electra Partners has onceagain delivered a strong investment performance. Electra is now in a position to continue to create shareholder value for bothprivate and institutional investors. Sir Brian Williamson4 June 2007 Investment Portfolio Analysis Summary of Changes to Investment Portfolio + Six months ended 31 March 2007 2006 £'000 £'000Opening Valuation 380,159 353,274Investments 89,047 59,871Realisations (41,280) (176,297)Net capital increase 132,746 106,847Closing valuation 560,672 343,695 + The above investment portfolio at 31 March excludes accrued income (2007:£7,450,000; 2006: £776,000) and investments in floating rate notes (2007:£329,273,000; 2006: £391,759,000). In the six months to 31 March 2007, Electra's net asset value per shareincreased from 1,545p per share to 1,811p per share, an increase of 17.2%. Thisperformance resulted from the continuing good progress of the investmentportfolio and in particular the exceptional increase in value of the investmentin Capital Safety Group. As in the previous financial period, the net assetvalue performance resulted primarily from realised gains and from the increasein value of investments valued with a listed price. The net increase invaluation of unlisted investments resulting from the Directors' valuationprocess accounted for less than 15% of the net asset value performance. During the six month period, the investment rate continued its upward trend withtotal new investment of £89 million. Realisations decreased as expected to atotal of £41 million. The net investment of £48 million combined with thecapital appreciation during the period of£133 million led to a significant increase in the value of the investmentportfolio from£380 million to £561 million at 31 March 2007. The emphasis on investment continues to be in the UK and Europe. At 31 March2007, 81% of the investment portfolio was based there with the remainderinvested 12% in USA and 7% in Asia. Current Operations and OutlookFollowing approval at the Extraordinary General Meeting in October 2006, allrestrictions on the level of investment by Electra were removed. Partly as aresult of this change, investment continued its upward trend in the period underreview. This is expected to continue for the balance of the financial year. Themarket for new investment remains extremely competitive and identifyingtransactions with appropriate potential remains challenging. The level ofcurrent dealflow is, however, encouraging and with Electra's flexible approachin terms of sector, ownership and type of investment instrument, suitable newinvestments are being located at a satisfactory rate. Investment Portfolio Review New InvestmentsIn the six month period, investments totalled £89 million compared to £60million in the corresponding period of the previous year. This almost 50%increase in the rate of investment reflects, in part, the change in investmentstrategy of Electra. New investments included the buyout of Lil-lets Group in which Electra invested£26 million, Safeland - £9.4 million, TCR Capital - £19.6 million and Locatel -£9.9 million. In addition a further £5.0 million was invested in Leiner topurchase the interest of another shareholder and£20.3 million was drawn down under commitments to private equity funds. Lil-lets is the second largest brand in the UK tampon market and the marketleader in South Africa. The company also sells a range of complimentaryproducts. The £78 million buyout was completed in December with Electrainvesting £26 million and the balance funded mainly by borrowings. Theinvestment of £19.6 million in TCR Capital consisted of the purchase of limitedpartnership interests in a French private equity fund which held five unquotedinvestments. One of these investments was subsequently realised resulting in thereturn of £8.1 million to Electra. Safeland invests in property suitable for useas low cost flexible workspace occupied on short term licenses. During theperiod, Safeland purchased £28 million of properties which were financed withequity of £9.4 million provided by Electra. Locatel, purchased in a €77 millionbuyout, is Europe's leading supplier of interactive multi-media solutions forthe hotel and healthcare industries. In April Electra announced the completion of its investment of £34 million inthe £75 million buyout of Nuaire, a leading UK manufacturer of ventilation systems. RealisationsRealisation proceeds for the six month period amounted to £41 million, asignificant reduction from recent periods reflecting the fact that many of themore mature investments have now been realised or refinanced. Shortly after theperiod end proceeds from realisations were increased by the receipt of £17million from Freightliner through repayment of the shareholder loan.Furthermore, in May, Electra announced the sale of Capital Safety Group which,subject to competition clearance, will provide gross proceeds to Electra ofcirca £112 million, subject to exchange rates ruling at the date of completion.Together, these two further realisations will bring the total amount realised inthe year to date to an amount in excess of £170 million. PerformanceDuring the six month period, the investment portfolio achieved net capitalappreciation of£133 million, a percentage increase of 35%. This significant increase resultedprimarily from gains realised on the sale or anticipated sale of investments.Such gains accounted for 77% of the net capital appreciation. Investments valuedagainst a quoted price accounted for a further 8% while the increase inunrealised appreciation on unlisted investments accounted for the balance of14%. As detailed above, the most significant value increase related to the investmentin Capital Safety which was revalued in line with the potential proceeds ofsale, completion of which is expected in June. At 31 March 2007, the investmentwas valued at £110 million giving rise to an uplift over the 30 September 2006valuation of £86 million. Consolidated Income Statement (unaudited) For the six months ended 31 2007 2006March Revenue Capital Total Revenue Capital Total £'000 £'000 £'000 £'000 £'000 £'000 Net gains on investments 16,599 100,519 117,118 11,107 100,578 111,685Profits/(losses) onrevaluation of foreign - 4,937 4,937 - (3,121) (3,121)currencies 16,599 105,456 122,055 11,107 97,457 108,564Other income 642 - 642 2,310 - 2,310Priority profit share paid to (5,626) - (5,626) (5,310) - (5,310)general partnersOther expenses (1,409) (816) (2,225) (768) - (768)Net Profit before FinanceCosts and Taxation 10,206 104,640 114,846 7,339 97,457 104,796 Finance costs (4,819) - (4,819) (3,611) - (3,611)Profit on Ordinary Activitiesbefore 5,387 104,640 110,027 3,728 97,457 101,185 TaxationTaxation Expenses (3,293) - (3,293) (2,449) - (2,449)Profit on Ordinary Activities 2,094 104,640 106,734 1,279 97,457 98,736after TaxationAttributable to Equity 2,094 104,640 106,734 1,279 97,457 98,736Shareholders Basic and Diluted Earnings per 5.50p 275.02p 280.52p 2.96p 225.92p 228.88pOrdinary Share The Total column of this statement represents the Group's Income Statementprepared in accordance with IFRS and the Companies Act 1985. The supplementaryRevenue and Capital columns are both prepared under guidance published by theAssociation of Investment Companies. The amounts dealt with in the Consolidated Income Statement are all derived fromcontinuing activities. 2007 2006Number of Ordinary Shares in issue at 31 March 37,502,687 40,722,687 +------------------------------+--------+-------+--------+-------+-------+-----+|Special Dividends Paid | | | 2007| | | 2006|| | | | | | | ||Total paid (£'000) | | | 6,375| | |8,592|| | | | 17p| | | 20p||Per share | | | | | | |+------------------------------+--------+-------+--------+-------+-------+-----+ Consolidated Statement of Changes in Equity (unaudited) For the six months ended 31 March 2007 2006 £'000 £'000Total equity at 1 October 598,292 520,883Adoption of IAS 39 * - 1,239Profit after taxation 106,734 98,736Special dividend + (6,375) (8,592)Exchange differences arising on (1,320) 1,026consolidationRepurchase of own shares (18,045) (36,080)Total Equity at 31 March 679,286 577,212 * Opening balance at 1 October 2005 has been restated for IAS 39 such thatlisted investments have been valued at bid rather than mid price andmarketability discounts have not been applied. + Special dividend paid of 17p (2006: 20p) per share after share buy-backs of1,000,000 ordinary shares on 18 December 2006, 120,000 ordinary shares on 19December 2006 and 100,000 ordinary shares on 15 January 2007 (2006: 550,000ordinary shares on 6 February 2006). Consolidated Balance Sheet (unaudited) As at 31 March 2007 As at 30 Sept 2006 As at 31 March 2006 £'000 £'000 £'000 £'000 £'000 £'000Non-Current AssetsInvestments held at fairvalue:Unlisted and listed 568,122 386,033 344,471Floating rate notes 329,273 394,201 391,759 897,395 780,234 736,230Current AssetsDebtors 1,577 1,481 5,895Cash and cash equivalents 14,242 9,875 19,735 15,819 11,356 25,630 Current LiabilitiesTrade and other payables 13,759 15,591 10,795Net Current Assets/Liabilities 2,060 (4,235) 14,835Total Assets less Current 899,455 775,999 751,065LiabilitiesBank loans 173,724 165,823 160,311 725,731 610,176 590,754Provision for liabilities and 46,445 11,884 13,542chargesNet Assets 679,286 598,292 577,212Capital and ReservesCalled-up share capital 9,376 9,681 10,181Share premium 24,147 24,147 24,147Capital redemption reserve 33,899 33,594 33,094Translation reserve (2,287) (967) 2,016Realised capital profits 632,414 645,621 623,742Unrealised capital losses (37,178) (136,980) (131,828)Revenue reserves 18,915 23,196 15,860 669,910 588,611 567,031Total Equity Shareholders' 679,286 598,292 577,212FundsNet asset value per ordinary 1,811.30p 1,545.07p 1,417.42pshareOrdinary Shares in issue 37,502,687 38,722,687 40,722,687 Consolidated Cash Flow Statement (unaudited) For the six months ended 31 March 2007 2006 £'000 £'000 £'000 £'000 Operating ActivitiesPurchases of investments (87,571) (216,100)Amounts paid under incentive (1,170) (8,189)schemesSales of investments 105,577 214,589Dividend and distributions 1,424 8,110receivedOther investment income received 13,373 12,832Interest income received 494 1,428Other income received 148 882Expenses paid (9,281) (6,093)Taxation paid (2,225) -Net Cash Inflow from Operating 20,769 7,459Activities Financing ActivitiesBank loans drawn 76,243 56,680Bank loans repaid (63,000) (56,680)Repurchase of own shares (18,045) (36,080)Loans advanced - (1,993)Finance costs (4,646) (3,611)Dividend paid (6,375) (8,592)Other finance costs (173) - Net Cash Outflow from Financing (15,996) (50,276)Activities Changes in cash and cash 4,772 (42,817)equivalentsCash and cash equivalents at 1 9,875 62,610OctoberTranslation difference (405) (58)Cash and cash equivalents at 31 14,242 19,735March END This information is provided by RNS The company news service from the London Stock Exchange