30 May 2008 07:00
EMBARGOED UNTIL 07:00 AM, FRIDAY 30 MAY 2008
ELECTRA PRIVATE EQUITY PLC
Announcement of Half-Yearly Results for the six months ended 31 March 2008
Reduced level of investment activity in first half of the current year - £60 million invested and £98 million realised
Net liquid resources at 31 March 2008 of £141 million after share buybacks of £26 million and£9 million cost of special dividend payment in the six months
£400 million of resources available for new investment at 31 March 2008, a favourable position as more attractive buying opportunities are likely to arise as a result of the present credit difficulties
Net asset value of 1,910p per share at 31 March 2008, a rise of 5.4% over the 12 months to31 March 2008 as a result of a 10.5% rise in the first six months and a decline of 4.6% in the last six months
Decline in the FTSE All-Share Index of 10.8% over the 12 months to 31 March 2008 having risen by 1.0% in the first six months and declined by 11.8% in the last six months
Return on equity of 22.6% on an annualised basis for the five years to 31 March 2008
Unaudited net asset value of 1,929p per share at 23 May 2008
Commenting on the Half-Yearly Results, Sir Brian Williamson, Chairman, said:
"These are good results for the six months to 31 March 2008 when the financial markets experienced significant turbulence. Electra's performance has been significantly stronger than the FTSE All-Share Index over the six months and over the longer term.
Prospects for successful private equity investment remain attractive for investors such as Electra with strong cash resources. Electra Partners currently has a good deal flow and believes that opportunities will become more attractive in the medium term."
For further information:
Sir Brian Williamson, Chairman, Electra Private Equity PLC 020 7306 3883
Hugh Mumford, Managing Partner, Electra Partners LLP 020 7214 4200
Nick Miles, M: Communications 020 7153 1521
Net Asset Value Per Share
| 31 March 2008 | 30 September 2007 | 23 May 2008 | |
| Net asset value per share | 1,910p | 2,001p | 1,929p |
| Decrease since 30 September 2007 | (4.6%) | ||
| Increase since 1 April 2007 | 5.4% | ||
| Decrease in FTSE All-Share Index since 30 September 2007 | (11.8%) | ||
| Decrease in FTSE All-Share Index since 1 April 2007 | (10.8%) |
Return on Equity comprises Total "Profit on Ordinary Activities after Taxation" divided by opening "Total Equity Shareholders' Funds" calculated on an annualised basis (as these terms are used in the Report and Accounts of Electra for the year ended 30 September 2007).
The unaudited net asset value per share at 23 May 2008 was calculated on the basis of the net asset value at 31 March 2008 adjusted to reflect the purchases and sales of investments, currency movements and bid values on that day in respect of listed investments.
The figures and financial information in respect of the year ended 30 September 2007 have been delivered to the Registrar of Companies and included the Auditors' Report which was unqualified and did not contain a statement under either section 237(2) or section 237(3) of the Companies Act 1985.
Interim Management Report
Current and Future Development
A review of the main features of the six months to 31 March 2008 is contained in the Chairman's Statement, the Investment Portfolio Analysis and Investment Portfolio Review.
Performance
A detailed review of performance during the six months to 31 March 2008 is contained in the Investment Portfolio Analysis and Investment Portfolio Review.
Risk Management
As the Company is focused on investment in private equity assets, Electra Partners aims to limit the risk attaching to the portfolio as a whole by careful selection of investments and by a spread of holdings in terms of age, geographic split and investment portfolio composition in accordance with the Company's Objectives and Investment Policy.
The principal risks faced by the Company are Market Price Risk, Interest Rate Risk, Liquidity Risk and Foreign Currency Risk as set out in Note 16 in the Notes to the Accounts of the Company's Annual Report 2007. This Interim Management Report also refers, where appropriate, to specific risks and uncertainties for the remaining six months of the financial year and these should be viewed in conjunction with the principal risks.
Responsibility Statement
The Directors confirm to the best of their knowledge that: a) the condensed set of financial statements have been prepared in accordance with IAS 34 as adopted by the European Union; and b) the Interim Management Report includes a fair review of the information required by the FSA's Disclosure and Transparency Rules (4.2.7R and 4.2.8R).
By order of the Board of Directors,
Sir Brian Williamson, Chairman
29 May 2008
A copy of the Chairman's Statement, Manager's Review and the Half-Yearly Announcement are attached.
CHAIRMAN'S STATEMENT
Overview
A busy period of investments and realisations in the year to 30 September 2007 was followed by a reduced level of investment activity in the first half of the current year, driven by a more cautious outlook towards investment. At 31 March 2008 Electra had net liquid resources amounting to £141 million, after share buybacks of £26 million during the six months and the £9 million cost of the special dividend paid in March 2008. Together with borrowing facilities, Electra had £400 million of resources available for new investment at 31 March 2008. This is, as our manager Electra Partners agrees, a favourable position at this stage as more attractive buying opportunities are likely to arise as a result of the present credit difficulties.
Results
At 31 March 2008 the net asset value was 1,910p per share compared to 2,001p per share at 30 September 2007. Over the 12 months to 31 March 2008 the net asset value per share increased by 5.4% as a result of a rise of 10.5% in the first six months and a decline of 4.6% in the last six months. By comparison the FTSE All-Share Index declined by 10.8% over the 12 months to 31 March 2008 having risen by 1.0% in the first six months and declined by 11.8% in the last six months.
Together with the special dividend paid in March 2008, Electra achieved a total return of 6.9% for the 12 months ended 31 March 2008. Over the five years to 31 March 2008 Electra's net asset value, inclusive of special dividends in 2006, 2007 and 2008, increased by 181.1% and Electra achieved a return on equity of 22.6% on an annualised basis.
These are good results for the six months to 31 March 2008 when the financial markets experienced significant turbulence. Despite the decline in net asset value per share in absolute terms, Electra's performance has been significantly stronger than the FTSE All-Share Index over the six months and over the longer term.
Investment Activity
In total £60 million was invested in the period comprising £20 million in London & Stamford Property, together with £22 million in existing portfolio companies and £18 million in a number of specialist private equity funds.
During the period £98 million was received from the sale of investments, including £36.7 million in respect of Dakota, Minnesota & Eastern Railroad, which was detailed in the Annual Report. This was a very satisfactory conclusion to an investment which had been held for over 20 years.
During the last six months Electra Partners raised Electra Partners Club 2007 ("Club 2007"), an investment fund of £100 million for institutional investors. Club 2007 will invest on a pre-agreed basis in parallel with Electra in private equity opportunities. As part of the arrangements to establish Club 2007 partial disposals of Electra's holdings in Kingfield Heath and Nuaire were made to Club 2007 in December 2007.
Full details of the investment activity for the six months are set out in the Manager's Review from Electra Partners.
Buyback of Shares for Cancellation
During the six months to 31 March 2008 Electra took advantage of declining stock market confidence and repurchased for cancellation 1,657,000 shares at an average price of 1,588p per share for a total cost of £26 million.
Outlook
Prospects for successful private equity investment remain attractive for investors such as Electra with strong cash resources. Electra Partners currently has a good deal flow and believes that opportunities will become more attractive in the medium term.
Sir Brian Williamson
Chairman
29 May 2008
INVESTMENT PORTFOLIO ANALYSIS
In the six months to 31 March 2008, Electra's net asset value per share declined from 2,001p per share at the beginning of the period to 1,910p per share at 31 March 2008, a decline of 4.6%. The decline in the net asset value per share resulted from the fall in stock market valuations during the period rather than from the underlying trading of portfolio companies, which on the whole has proved robust in the time of the credit crisis and the issues in the financial sector.
During the six month period new investments were relatively few reflecting uncertainties in the private equity market while realisations remained at a reasonable rate. Realisations exceeded new investments in the period by £38 million and this fact, together with the reduction in capital value of the remaining portfolio, led to a decrease in the overall portfolio size from £620 million at the beginning of the period to £568 million at 31 March 2008.
| Six months to 31 March | 2008 £m | 2007 £m |
| Opening portfolio | 620 | 380 |
| Investments | 60 | 89 |
| Realisations | (98) | (41) |
| Net capital (decrease)/increase | (14) | 133 |
| Closing portfolio * | 568 | 561 |
* As at 31 March 2008 excludes accrued income on the investment portfolio of £10,497,000 (2007: £7,450,000) and excludes investments in FRNs of £251,988,000 (2007: £329,273,000).
PROSPECTS
Market conditions prevailing in the six months to 31 March 2008 made this a difficult period in which to conduct business and to continue the excellent progress which has been achieved over the past few years. Prices of potential transactions have been slow to adjust to rapidly changing financial markets with the result that acquiring new portfolio companies at attractive prices has been difficult. Realisations have also slowed as a result of reduced liquidity in the markets and refinancings have not been readily achievable.
The volume of dealflow is however encouraging and once asking prices from vendors have adjusted to more realistic levels, the rate of investment is likely to increase. In view of its strong liquid position, Electra is well positioned to take advantage of new investment opportunities as they arise.
INVESTMENT PORTFOLIO REVIEW
Investments
In the six month period investments totalled £60 million compared to £89 million in the corresponding period of the previous year. This fall in investment rate has been a general feature of the private equity industry as the industry comes to terms with the change in market conditions arising from the credit crisis. While the sector of the market in which Electra operates has been least affected by changes in the banking market, prices of transactions have been slow to adjust to the new market conditions. Electra has continued to bid on a wide range of new investment opportunities, however, the bids have on the whole been unsuccessful as other bidders have taken a more optimistic view of the market conditions.
New investments included £20 million in London & Stamford Property and £18 million drawn down under commitments to private equity funds. In addition a further £7.5 million was invested in Baxi to support the on-going operations of the business and £7.9 million was invested in SAV Credit to enable the company to purchase the Marbles portfolio from HSBC.
London & Stamford Property is an AIM listed company specialising in property investment. In October 2007 the company raised £285 million to provide capital to exploit undervalued situations in the property market. Electra invested £20 million to support a management team which has in the past made excellent returns for Electra through previous investments in Arlington and Pillar Properties. The recent corrections in the industrial and commercial property market have validated the logic of the company's strategy.
Realisations
Realisation proceeds for the six month period amounted to £98 million compared to £41 million in the corresponding six months of the previous year.
The most significant realisation related to the Dakota, Minnesota & Eastern Railroad ("DM&E") where the transaction involved the sale of the company to Canadian Pacific Railroad. The sale completed in early October 2007 and resulted in proceeds to Electra of £36.7 million. As well as these proceeds Electra may receive further consideration of up to £34 million (at current exchange rates) depending on the commencement and success of the Powder River Basin project. No value has so far been recognised in respect of these potential payments to reflect the current estimate of the timing and quantum of future cash flows.
In December part of the investments in Kingfield Heath and Nuaire were sold to Electra Partners Club 2007 realising proceeds of £22.2 million in respect of Kingfield Heath and £12.2 million in respect of Nuaire. These sales were made as part of existing arrangements between Electra and the institutional investors who provided approximately £100 million for Electra Partners Club 2007 to invest on a pre-agreed basis in parallel with Electra.
Performance
At 31 March 2008, the valuation of the investment portfolio was reduced by £14.3 million, a percentage decrease of 2.3%. This reduction included a decrease in the value of listed investments of £17.4 million, a percentage reduction of 14.7% and a decrease in the valuation of direct unlisted investments of £6.8 million equivalent to a percentage decrease of 1.7%. Private equity funds on the other hand, increased in value during the six month period by £9.9 million, a percentage of 10.4%.
In arriving at the valuation of the direct unlisted investments, the reduction in value of £6.8 million was made up of increases of £44.5 million offset by decreases of £51.3 million. The increases in value related almost entirely to two investments, namely Freightliner and Forthpanel. Freightliner was increased in value by £22.4 million to reflect continuing good progress. In the case of Forthpanel the investment was increased by £17.3 million to reflect the result of the transaction completed with Cerberus involving the purchase of Deutsche Woolworth and selected properties. While the majority of portfolio companies continue to trade according to budget and ahead of last year, valuations have been updated to reflect comparable measures of fair value. On this basis valuation reductions were recorded against fifteen investments of which the largest were a £12.2 million reduction in the valuation of Premier Asset Management and a £7.8 million reduction in respect of Baxi. Property related investments were decreased in value by £11.4 million to reflect changes in market yields. Elsewhere a reduction of £5.0 million was made against the valuation of SAV Credit to reflect current market uncertainties and Leiner was fully written down from its previous valuation of £8.2 million in view of legal and technical issues affecting the company's operation.
Electra Partners LLP
29 May 2008
Consolidated Income Statement (unaudited)
| Note | For the six months ended 31 March | Revenue £'000 | Capital £'000 | 2008 Total £'000 | Revenue £'000 | Capital £'000 | * Restated 2007 Total £'000 |
| Net gains on investments | 17,881 | (16,339) | 1,542 | 16,599 | 136,133 | 152,732 | |
| (Losses)/profits on revaluation of foreign currencies | - | (10,043) | (10,043) | - | 4,937 | 4,937 | |
| 17,881 | (26,382) | (8,501) | 16,599 | 141,070 | 157,669 | ||
| Other income | 1,312 | 1,708 | 3,020 | 642 | - | 642 | |
| Incentive schemes | - | (3,499) | (3,499) | - | (35,614) | (35,614) | |
| Priority profit share | (6,994) | - | (6,994) | (5,626) | - | (5,626) | |
| Other expenses | (7,792) | - | (7,792) | (1,409) | (816) | (2,225) | |
| Net (Loss)/Profit before Finance Costs and Taxation | 4,407 | (28,173) | (23,766) | 10,206 | 104,640 | 114,846 | |
| Finance costs | (4,270) | - | (4,270) | (4,819) | - | (4,819) | |
| (Loss)/Profit on Ordinary Activities before Taxation | 137 | (28,173) | (28,036) | 5,387 | 104,640 | 110,027 | |
| Taxation Expenses | (2,253) | - | (2,253) | (3,293) | - | (3,293) | |
| (Loss)/Profit on Ordinary Activities after Taxation | (2,116) | (28,173) | (30,289) | 2,094 | 104,640 | 106,734 | |
| Attributable to Equity Shareholders | (2,116) | (28,173) | (30,289) | 2,094 | 104,640 | 106,734 | |
| 4 | Basic and Diluted Earnings per Ordinary Share | (5.75)p | (76.61)p | (82.36)p | 5.50p |
275.02p |
280.52p |
* See Note 2.
The Total column of this statement represents the Group's Income Statement prepared in accordance with International Financial Reporting Standards adopted by the European Union ("IFRS"). The supplementary Revenue and Capital columns are both prepared under guidance published by the Association of Investment Companies.
The amounts dealt with in the Consolidated Income Statement are all derived from continuing activities.
2008 2007
Number of Ordinary Shares in issue at 31 March 35,595,687 37,502,687
| 3 | Special Dividends Paid Total paid (£'000) Per share | 9,149 25p | 6,375 17p |
Consolidated Statement of Changes in Equity (unaudited)
| Note | For the six months ended 31 March | 2008 £'000 | 2007 £'000 |
| 6 | Total equity at 1 October | 745,506 | 598,292 |
| 6 | (Loss)/Profit after taxation | (30,289) | 106,734 |
| 6 | Special dividend * | (9,149) | (6,375) |
| 6 | Exchange differences arising on consolidation | 222 | (1,320) |
| 6 | Repurchase of own shares | (26,492) | (18,045) |
| Total Equity at 31 March | 679,798 | 679,286 |
* Special dividend paid of 25p (2007: 17p) per share after share buy-backs and cancellation of 50,000 ordinary shares on 23 November 2007, 160,000 ordinary shares on 27 November 2007, 200,000 ordinary shares on 5 December 2007, 92,000 ordinary shares on 6 December 2007, 55,000 ordinary shares on 14 December 2007, 100,000 ordinary shares on 22 January 2008 and 1,000,000 ordinary shares on 17 March 2008 (2007: 1,000,000 ordinary shares on 18 December 2006, 120,000 ordinary shares on 19 December 2006 and 100,000 ordinary shares on 15 January 2007).
Consolidated Balance Sheet (unaudited)
| Note | | As at 31 March 2008 | As at 30 Sept 2007 | As at 31 March 2007 | |||
| | | £’000 | £’000 | £’000 | £’000 | £’000 | £’000 |
| | Non-Current Assets | | | | | | |
| | Investments held at fair value: | | | | | | |
| | Unlisted and listed | | 578,357 | | 633,311 | | 568,122 |
| | Floating rate notes | | 251,987 | | 299,437 | | 329,273 |
| | | | 830,344 | | 932,748 | | 897,395 |
| | Current Assets | | | | | | |
| | Debtors | 2,587 | | 16,189 | | 1,577 | |
| | Cash and cash equivalents | 62,508 | | 16,948 | | 14,242 | |
| | | 65,095 | | 33,137 | | 15,819 | |
| | Current Liabilities | | | | | | |
| | Trade and other payables | 7,749 | | 19,584 | | 13,759 | |
| | Net Current Assets | | 57,346 | | 13,553 | | 2,060 |
| | Total Assets less Current Liabilities | | 887,690 | | 946,301 | | 899,455 |
| | Bank loans | 170,278 | | 160,699 | | 173,724 | |
| | Deferred tax | 12,549 | | 12,701 | | 1,236 | |
| | Provision for liabilities and charges | 25,065 | | 27,395 | | 45,209 | |
| | Non-current Liabilities | | 207,892 | | 200,795 | | 220,169 |
| | Net Assets | | 679,798 | | 745,506 | | 679,286 |
| | Capital and Reserves | | | | | | |
| 5 | Called-up share capital | | 8,899 | | 9,313 | | 9,376 |
| 6 | Share premium | 24,147 | | 24,147 | | 24,147 | |
| 6 | Capital redemption reserve | 34,376 | | 33,962 | | 33,899 | |
| 6 | Translation reserve | 819 | | 597 | | (2,287) | |
| 6 | Realised capital profits | 784,137 | | 792,960 | | 632,414 | |
| 6 | Unrealised capital losses | (187,415) | | (141,573) | | (37,178) | |
| 6 | Revenue reserves | 14,835 | | 26,100 | | 18,915 | |
| | | | 670,899 | | 736,193 | | 669,910 |
| | Total Equity Shareholders’ Funds | | 679,798 | | 745,506 | | 679,286 |
| | Net asset value per Ordinary Share | | 1,909.78p | | 2,001.21p | | 1,811.30p |
| | Ordinary Shares in issue | | 35,595,687 | | 37,252,687 | | 37,502,687 |
Consolidated Cash Flow Statement (unaudited)
| For the six months ended 31 March | £'000 | 2008 £'000 | £'000 | 2007 £'000 |
| Operating Activities | ||||
| Purchases of investments | (265,994) | (87,572) | ||
| Amounts paid under incentive schemes | (17,736) | (1,170) | ||
| Sales of investments | 364,275 | 105,577 | ||
| Dividends and distributions received | 1,737 | 1,424 | ||
| Other investment income received | 13,083 | 13,373 | ||
| Interest income received | 1,164 | 494 | ||
| Other income received | 148 | 148 | ||
| Expenses paid | (9,657) | (9,281) | ||
| Taxation paid | (1,087) | (2,225) | ||
| Net Cash Inflow from Operating Activities | 85,933 | 20,768 | ||
| Financing Activities Bank loans drawn Bank loans repaid Repurchase of own shares Finance costs Dividend paid Other finance costs | 27,972 (27,783) (26,492) (4,096) (9,149) (174) | 76,243 (63,000) (18,045) (4,646) (6,375) (173) | ||
| Net Cash Outflow from Financing Activities | (39,722) | (15,996) | ||
| Changes in cash and cash equivalents | 46,211 | 4,772 | ||
| Cash and cash equivalents at 1 October | 16,948 | 9,875 | ||
| Translation difference | (651) | (405) | ||
| Cash and Cash Equivalents at 31 March | 62,508 | 14,242 |
NOTES TO THE ACCOUNTS
1. Basis of Accounting
The Half-Yearly Report is unaudited and does not constitute accounts within the meaning of Section 240 of the Companies Act 1985.
The statutory accounts for 2007, which were prepared in accordance with International Financial Reporting Standards, as endorsed by the European Union ("IFRS") and with those parts of the Companies Act 1985 applicable to companies reporting under IFRS, have been delivered to the Registrar of Companies. The Auditor's opinion on those accounts was unqualified and did not contain a statement made under Section 237(2) or Section 237(3) of the Companies Act 1985. The financial information comprises the Consolidated Balance Sheets as at 31 March 2008, 30 September 2007 and 31 March 2007 and for the periods ended 31 March 2008 and 31 March 2007, the related Consolidated Statement of income, Consolidated Statement of Changes in Equity, Consolidated Cashflow Statement and the related notes hereinafter referred to as "financial information".
The financial information has been prepared in accordance with the Disclosure and Transparency Rules of the Financial Services Authority and the principal accounting policies set out in the Annual Report for the year ended 30 September 2007 which is available on the Company's website (www.electraequity.com). The accounts are prepared in accordance with IAS 34.
2. Segmental Analysis
| For the six months ended 31 March | 2008 | 2007 | ||||||
| | UK & Continental Europe £’000 | Americas £’000 | Far East £’000 | Total £’000 | UK & Continental Europe £’000 | Americas £’000 | Far East £’000 | Total £’000 |
| Net Gain on Investments | | | | | | | | |
| Realised and unrealised | | | | | | | | |
| capital gains on investments* | 8,577 | (8,346) | (16,570) | (16,339) | 119,400 | 7,388 | 9,345 | 136,133 |
| Portfolio investment income | 17,857 | 24 | - | 17,881 | 16,320 | 226 | 53 | 16,599 |
| | 26,434 | (8,322) | (16,570) | 1,542 | 135,720 | 7,614 | 9,398 | 152,732 |
| Realised and unrealised capital | | | | | | | | |
| gain on foreign currency | (16,781) | 6,738 | - | (10,043) | (101) | 5,038 | - | 4,937 |
| | 9,653 | (1,584) | (16,570) | (8,501) | 135,619 | 12,652 | 9,398 | 157,669 |
| Other income | | | | 3,020 | | | | 642 |
| Incentive schemes * | | | | (3,499) | | | | (35,614) |
| Priority profit share | | | | (6,994) | | | | (5,626) |
| Other Expenses | | | | (7,792) | | | | (2,225) |
| Net Profit before Finance Costs and Taxation | | (23,766) | | | | 114,846 | ||
| Finance costs | | | | (4,270) | | | | (4,819) |
| Profit on Ordinary Activities before Taxation | | (28,036) | | | | 110,027 | ||
* Electra has historically deducted amounts due under incentive schemes in calculating net gains on investments. These amounts have now been reclassified and disclosed separately in the Consolidated Income Statement, in order to be consistent with the gross presentation in the Consolidated Balance Sheet. This reclassification is presentational only and has no effect on net profit on ordinary activity before taxation, return attributable to equity shareholders or the net assets of Electra.
Geographical segments are considered to be the primary reporting segment. The secondary reporting segment is the Group's activity as an investment trust company. This activity is the Group's single business segment.
3. Dividends
| For the six months ended 31 March | 2008 £'000 | 2007 £'000 | ||||
| Dividends paid in the period Dividends paid per share | 9,149 25p | 6,375 17p |
4. Earnings per Share
| For the six months ended 31 March | 2008 p | 2007 p | ||||
| Revenue return per ordinary share Capital return per ordinary share Earnings per ordinary share (basic and diluted) | (5.75) (76.61) (82.36) | 5.50 275.02 280.52 |
The calculation of revenue return per share is based on the revenue loss attributable to shareholders of £2,116,000 (2007: profit of £2,094,000) on a weighted average number of 36,775,299 (2007: 38,048,291) ordinary shares of 25p each in issue. The calculation of capital return per ordinary share is based on the capital loss attributable to ordinary shareholders of £28,173,000 (2007: profit of £104,640,000) on a weighted average number of 36,775,299 (2007: 38,048,291) ordinary shares of 25p each in issue. There were no potentially dilutive shares in issue in either year.
5. Share Capital
| As at 31 March | 2008 £'000 | 2007 £'000 | ||||
| Allotted, called up and fully paid 35,595,687 (2007: 37,502,687) ordinary shares of 25p each Unissued 164,404,313 (2007: 162,497,313) ordinary shares of 25p each | 8,899 41,101 | 9,376 40,624 | ||||
| Authorised 200,000,000 ordinary shares of 25p each | 50,000 | 50,000 |
During the six months ended 31 March 2008 the Company purchased from shareholders and cancelled 1,657,000 ordinary shares of 25p each at prices between £16.40 and £15.50 per share. The cost of acquiring 1,657,000 ordinary shares of 25p each including expenses of £184,000 amounted to £26,492,000.
6. Capital and Reserves
For the six months ended 31 March 2008
| | | | | | Realised | | | |
| | | | Capital | | capital | Unrealised | | Total |
| | Called-up | Share | redemption | Translation | profits/ | capital | Revenue | shareholders’ |
| | share capital | premium | reserve | reserve | (losses) | losses | reserve | funds |
| | £’000 | £’000 | £’000 | £’000 | £’000 | £’000 | £’000 | £’000 |
| Opening balance at 1 October 2007 | 9,313 | 24,147 | 33,962 | 597 | 792,960 | (141,573) | 26,100 | 745,506 |
| Net revenue transferred to reserves | – | – | – | – | – | – | (2,116) | (2,116) |
| Dividend payment | – | – | – | – | – | – | (9,149) | (9,149) |
| Net capital gains on non-current assets | – | – | – | – | 2,694 | (19,033) | – | (16,339) |
| Incentive schemes | – | – | – | – | – | (3,499) | – | (3,499) |
| Gains and losses on foreign currencies | – | – | – | – | 10,754 | (19,089) | – | (8,335) |
| Exchange differences arising on consolidation | – | – | – | 222 | – | – | – | 222 |
| Repurchase of own shares | (414) | – | 414 | – | (26,492) | – | – | (26,492) |
| Unrealised net (depreciation)/appreciation at 1 October 2007 on investments sold during the period | – | – | – | – | 4,221 | (4,221) | – | – |
| | | | | | | | | |
| At 31 March 2008 | 8,899 | 24,147 | 34,376 | 819 | 784,137 | (187,415) | 14,835 | 679,798 |
For the six months ended 31 March 2007
| | | | | | Realised | Unrealised | | |
| | | | Capital | | capital | capital | | Total |
| | Called-up | Share | redemption | Translation | profits/ | (losses)/ | Revenue | shareholders’ |
| | share capital | premium | reserve | reserve | (losses) | profits | reserve | funds |
| | £’000 | £’000 | £’000 | £’000 | £’000 | £’000 | £’000 | £’000 |
| Opening balance at 1 October 2006 | 9,681 | 24,147 | 33,594 | (967) | 645,621 | (136,980) | 23,196 | 598,292 |
| Net revenue transferred to reserves | – | – | – | – | – | – | 2,094 | 2,094 |
| Dividend payment | – | – | – | – | – | – | (6,375) | (6,375) |
| Net capital gains on non-current assets | – | – | – | – | 12,663 | 123,471 | – | 136,134 |
| Exchange differences arising on consolidation | – | – | – | (1,320) | – | – | – | (1,320) |
| Incentive schemes | – | – | – | – | – | (35,614) | – | (35,614) |
| Gains and losses on foreign currencies | – | – | – | – | (1,222) | 5,342 | – | 4,120 |
| Repurchase of own shares | (305) | – | 305 | – | (18,045) | – | – | (18,045) |
| Unrealised net (depreciation)/appreciation at 1 October 2006 on investments sold during the period | – | – | – | – | (6,603) | 6,603 | – | – |
| At 31 March 2007 | 9,376 | 24,147 | 33,899 | (2,287) | 632,414 | (37,178) | 18,915 | 679,286 |
7. Related Party Transactions
Certain members of Electra Partners (the "participants") are entitled under various limited partnership agreements to benefit from carried interest and co-investment arrangements. Under these schemes the participants invest in every new investment made by the Company up to 31 March 2006. In return the participants receive a percentage of the total capital and revenue profits made on each investment. The participants do not receive any profits until the Company has received back its initial investment. During the six months ended 31 March 2008 the participants received £14,322,000 (31 March 2007: £1,170,000) and are entitled to receive £11,135,000 (31 March 2007: £nil) under these schemes and had unrealised gains of £13,388,000 (31 March 2007: £27,795,000). The participants are entitled to a percentage of the incremental value of unlisted investments held at 31 March 1995, subject to the Company having received in total proceeds equal to the valuation of those investments as at 31 March 1995 and a preferred return. During the six months ended 31 March 2008 the participants received £nil (31 March 2007: £nil) under the scheme and had unrealised gains of £999,000 (31 March 2007: £743,000).
Following approval at the Extraordinary General Meeting held on 12 October 2006 the participants entered two new schemes. The participants are entitled to receive a percentage of the incremental value of certain investments held at 31 March 2006 following the Company receiving total proceeds equal to the operating value and a preferred return, after deduction of related priority profit share ("PPS"). During the six months ended 31 March 2008 the participants received £3,414,000 (31 March 2007: £nil) and had unrealised gains of £9,894,000 (31 March 2007: £16,671,000) under this scheme. The second scheme entered into under the new arrangements requires the participants to invest in every new investment made by the Company since 1 April 2006. On a pooled basis participants receive a percentage of the total capital and revenue profits once the Company has received back its initial investment, a preferred return and a related priority profit share. During the six months ended 31 March 2008 the participants received £nil (31 March 2007: £nil) and had unrealised gains of £784,000 (31 March 2007: £nil).
Members of Electra Partners, the Manager, are entitled to incentives based on the performance of investments in Electra. Under the arrangements relating to the management of the listed portfolio, certain executives of Electra Partners will receive bonuses over a one year period if the listed portfolio outperforms a composite index.
No Directors of Electra participate in the above schemes.
During the year ended 30 September 2007 Electra Partners exercised its option to cancel all PPS reductions by paying Electra the equivalent of the net present value of the remaining expected PPS reductions. An amount of £1.1 million will be payable over the period to October 2009. The amount was approved by a qualified independent third party.
Net sales of investments from Electra Investments Limited to Electra amounted to £14,608,000 for the six months ended 31 March 2008 (31 March 2007: £nil). Net loans advanced by Electra Investments Limited to Electra were £38,705,000 (31 March 2007: loans advanced by Electra to Electra Investments Limited of £29,141,000). Interest of £1,199,000 (31 March 2007: £2,760,000) was paid on the outstanding balance.
Net loans for working capital and/or to clear intercompany balances were made to Albion (Electra) for £28,000 (31 March 2007: £408,000) to Electra Property Inc for £56,000 (31 March 2007: from Electra Property Inc for: £100,000), to Electra Holdings Inc for £41,000 (2007: to Electra Holdings Inc for £56,000), Electra Oil & Gas Inc £nil (31 March 2007: from Electra Oil & Gas Inc for £16,000), EUK Limited £nil (31 March 2007: £nil) and Electra Associates Inc £nil (2007: from Electra Associates Inc for £2,000).
Copies of the Half-Yearly Report will be sent to shareholders shortly and will thereafter be available from the Company's registered office. Copies of this announcement will be available on the Company's website (www.electraequity.com).
END