28 Jan 2016 07:00
EMBARGOED UNTIL 07:00AM, 28 JANUARY 2016
Electra Private Equity PLC
Quarterly Update Report as at 31 December 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
· Share price of 3,757p at 31 December 2015, reflecting a total return of 15% since 30 September 2015 against a total return of 3% for the Morningstar Private Equity Index and 4% for the FTSEAll-Share Index.
· Share price total return of 26% over the year to 31 December 2015, compared to a total return of 7% for the Morningstar Private Equity Index and 1% for the FTSE All-Share Index.
· £240 million of net liquid resources.
· £58 million invested.
· Commitments to invest £89 million in Photobox Group (completed in January 2016) and £45 million in Grainger Retirement Solutions.
· £235 million realised.
· Mandatory Conversion of the 5% Subordinated Convertible Bond.
Dame Kate Barker, Chairman of Electra, said:
"This has been an excellent start to the new financial year. Absolute and relative share price performance has been strong, continuing the long-term performance trend and Electra Partners has made further progress in deploying Electra's capital as well as driving value in the portfolio."
Alex Fortescue, Managing Partner of Electra Partners, said:
"Making full use of our flexible investment mandate, we have invested or committed to invest £192 million in a range of exciting opportunities. This is already more than in the whole of the last financial year and we have a strong pipeline of new opportunities in which we expect to be able to deploy further capital.
"We have also continued to see the positive results of our active ownership approach in the portfolio with the completion of a number of previously announced transactions, for example the merger of Electra's holiday park assets with Parkdean Holidays to create a market-leading business with EBITDA of over £100 million."
For further information:
For Dame Kate Barker:
Miranda Ward, Brunswick Group 020 7343 8118
For Alex Fortescue:
Andrew Honnor or Matthieu Roussellier, Greenbrook Communications 020 7952 2000
Nicholas Board or Andrew Kenny, Electra Partners 020 7306 3902
Share Price Performance (Total Return)
| 3 months | 1 year | 3 years | 5 years | 10 years |
Electra | 15% | 26% | 98% | 127% | 254% |
Morningstar PE Index* | 3% | 7% | 68% | 63% | 5% |
FTSE All-Share Index | 4% | 1% | 23% | 34% | 72% |
Performance calculated on a total return basis with dividends reinvested.
* This index, prepared by Morningstar UK Limited, reflects the performance of 20 private equity vehicles, excluding Electra, listed on the London Stock Exchange.
Investment Portfolio
Movements
In the three months to 31 December 2015 | £m |
Investments | 58 |
Realisations | (235) |
Currency movements | 2 |
Valuation movements | 5 |
Net movement* | (170) |
* Electra's investment portfolio is revalued twice a year, at the end of March and September. The table above shows movements in the investment portfolio relating to investments and realisations, currency movements and, under "Valuation movements", realised profits, income received and bid values in respect of listed investments, at 31 December 2015.
New Investment
Total new investment for the three months to 31 December 2015 was £58 million:
| £m |
The Original Bowling Company | 33 |
Tymon Park | 13 |
Other Direct Unlisted | 4 |
Secondaries | 7 |
Funds | 1 |
Total investment* | 58 |
* Excludes the disposal of Park Resorts, South Lakeland Parks and Southview and Manor Park ("Park Resorts Group") for £196 million and the subsequent new investment in Parkdean Resorts of £196 million.
The largest new investment was in respect of The Original Bowling Company ("TOBC"). Electra invested£22 million (of which £12 million was subsequently repaid to the Company) to support TOBC's acquisition of Bowlplex in December. Following completion of this transaction TOBC operates 54 high-quality ten-pin bowling centres across the UK. A further £11 million was subsequently invested to acquire senior debt in TOBC.
£13 million was invested in Tymon Park CLO, a new collateralised loan obligation ("CLO") fund managed by Blackstone / GSO Debt Funds Management Europe Limited.
In October, Electra announced that it had agreed to invest £89 million in the acquisition of Photobox Group, Europe's leading digital consumer service for personalised products and gifts. Completion of the transaction took place in January.
In December, Electra agreed to invest £45 million in the acquisition of Grainger Retirement Solutions, the home reversion equity release business of Grainger plc. Completion of the transaction is subject to regulatory approvals.
Realisations
Realisations in the three months to 31 December 2015 amounted to £235 million:
| £m |
Park Resorts Group* | 95 |
AXIO Data Group | 20 |
The Original Bowling Company | 12 |
Other Direct Unlisted | 11 |
Secondaries | 6 |
Funds | 9 |
Listed | 82 |
Total realisations | 235 |
* Excludes the disposal of Park Resorts, South Lakeland Parks and Southview and Manor Park ("Park Resorts Group") for £196 million and the subsequent new investment in Parkdean Resorts of £196 million.
The largest realisation during the period was in respect of Park Resorts Group, which returned £95 million following the completion in November of the merger of Electra's holiday park assets with Parkdean Holidays. This took total cash proceeds received by Electra to £109 million or 83% of original investment cost.
In October, AXIO Data Group refinanced its aviation business OAG and sold its Asian healthcare information business MIMS. By the end of December £20 million had been received as a result of these transactions, with a further £83 million received in January. Electra has now received total cash proceeds of £184 million or 2x original investment cost, having sold businesses representing less than half of the earnings acquired in 2013.
The Original Bowling Company ("TOBC") returned £12 million in the period resulting from the sale of six bowling centres in order to satisfy undertakings to the Competition and Markets Authority in respect of the acquisition of Bowlplex.
The listed portfolio realisation was in relation to the disposal of Electra's entire holding in Zensar Technologies. Inclusive of dividends and proceeds from the sale of shares, the investment generated a return of 19x on original cost over the 18 years of the investment, an IRR of 18%.
Currency Movements
In the three months to 31 December 2015, currency movements increased the value of the portfolio by £2 million.
Resources and Commitments
| 31 Dec 2015 £m | 30 Sep 2015 £m | 31 Dec 2014 £m |
Liquid resources | 311 | 147 | 272 |
Bank borrowings (facility committed until 2019) | − | − | (155) |
ZDP Shares (repayable August 2016) | (71) | (69) | (66) |
Net liquid resources | 240 | 78 | 51 |
Liquid resources at 31 December 2015 were £311 million, an increase of £164 million since 30 September 2015.
At 31 December 2015 outstanding commitments to private equity funds amounted to £44 million (30 September 2015: £52 million; 31 December 2014: £67 million).
As at 31 December 2015 Electra had commitments to invest in Photobox Group and Grainger Retirement Solutions amounting to £134 million in aggregate. The Directors of the Company had recommended the payment of a final dividend in respect of the year ended 30 September 2015 of 78p per ordinary share, equivalent to£31 million; this dividend was approved at the Company's Annual General Meeting on 25 January 2016 and will be paid on 26 February 2016.
Mandatory Conversion of the Convertible Bond
On 29 December 2015, the 5% Subordinated Convertible Bonds were mandatorily converted into new ordinary shares in Electra. As a result of the conversion, the Company has issued a further 3,781,481 ordinary shares. The total number of ordinary shares in Electra is now 40,270,531. Electra's market capitalisation on 29 December 2015 was £1.5 billion.
Board Changes
On 5 November, Roger Yates stepped down as Chairman of the Company and resigned from the Board. Dame Kate Barker was appointed Chairman in his place and Roger Perkin was appointed Senior Independent Director. On the same day Edward Bramson and Ian Brindle were appointed as non-executive Directors of the Company.
On 23 November, Geoffrey Cullinan resigned as a Director of the Company.
Disclaimer
This statement aims to give an indication of material events and transactions that have taken place during the period from 1 October 2015 to the date of publication of this statement and their impact on the financial position of Electra Private Equity PLC. These indications reflect the Board's current view. They are subject to a number of risks and uncertainties and could change. Factors which could contribute to such difficulties include, but are not limited to, general economic and market conditions and specific factors affecting the financial prospects or performance of individual investments within Electra's portfolio.
No information contained in this announcement shall form the basis of, or be relied upon in connection with any offer or commitment whatsoever in any jurisdiction.
The announcement is not an offer to sell or a solicitation of any offer to buy any securities of Electra Private Equity PLC (the "Company" and any securities, the "Securities") in the United States or any other jurisdiction. The Company is not registered under the U.S. Investment Company Act, as amended (the "Investment Company Act"), and holders of any Securities will not be entitled to the benefits of the Investment Company Act. These securities have not been and will not be registered under the U.S. Securities Act of 1933, as amended (the "Securities Act") and may not be reoffered, resold or transferred in the United States or to, or for the account or benefit of, U.S. persons (as such term is defined in Regulation S under the Securities Act) unless registered under the Securities Act or an exemption from such registration is available. Copies of this announcement are not being, and should not be distributed or sent into the United States, Canada, Japan, Australia or New Zealand. No public offering of Securities is being made in the United States. If for any reason in the future an offering of the Securities is made, such offering will be made by means of a prospectus that may be obtained from the Company and will contain all relevant information about the Company, its management and its financial statements.