TIDMELTZ
RNS Number : 1245Y
Electra Private Equity Invest PLC
27 November 2014
EMBARGOED UNTIL 07:00 AM, THURSDAY 27 NOVEMBER 2014
ELECTRA PRIVATE EQUITY INVESTMENTS PLC
Audited Results for the Full Year ended 30 September 2014
The information contained in this announcement is restricted and
is not for release, publication or distribution, directly or
indirectly, nor does it constitute an offer of securities for
sale in the United States, Canada, Japan, Australia or New
Zealand.
References in this announcement to Electra Private Equity
Investments PLC have been abbreviated to 'the Company'. References
to the Company's parent company, Electra Private Equity PLC, have
been abbreviated to 'Electra'. References to Electra Partners LLP,
Electra's Manager, have been abbreviated to 'Electra Partners'.
Corporate Summary of Zero Dividend Preference Shares
Electra Private Equity PLC Asset Cover at 30 September 2014:
16.2 times (2013: 14.0 times) Final Capital Entitlement as at 5
August 2016.
Redemption Yield of 6.5% based on initial placing price of 100p
per ZDP Share.
Final Capital Entitlement per ZDP Share of 155.41p on 5 August
2016.
The figures below show the movement in the middle market price
from the first day the ZDP Shares were listed on 5 August 2009
through to 30 September 2014. The initial placing price of the ZDP
Shares was 100p.
Share price of ZDP Shares
Share price
p
--------------- ------------
5 August 2009 102.0
30 September
2009 106.8
31 March 2010 107.8
30 September
2010 115.5
31 March 2011 116.1
30 September
2011 119.0
31 March 2012 128.6
30 September
2012 132.3
31 March 2013 134.9
30 September
2013 139.9
31 March 2014 143.5
30 September
2014 145.0
--------------- ------------
The ZDP Shares offer a pre-determined rate of growth in capital
entitlement up to the repayment date of 5 August 2016 but no right
of income. The ZDP Shares rank ahead of Electra's Ordinary
Shareholders and Subordinated Convertible Bondholders but behind
any bank borrowings of Electra. The Final Capital Entitlement for
the ZDP Shares is not guaranteed should Electra's net assets be
insufficient on the repayment date of 5 August 2016.
The ZDP Shares do not normally carry voting rights at general
meetings of the Company. The separate approval of a special
resolution of holders of the Company's ZDP Shares is required for
certain proposals which would be likely to affect their rights or
general interests.
The Full Year Report for the year ended 30 September 2014 will
be available on the Company's website www.electraequity.com/eltz.
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.
Chairman's Statement
I am pleased to present the Company's Annual Report and Accounts
for the year ended 30 September 2014.
The Company is a wholly owned subsidiary of Electra Private
Equity PLC ("Electra") and was established solely for the purpose
of issuing and redeeming Zero Dividend Preference ('ZDP') Shares.
Further details can be found elsewhere in this Annual Report and
Accounts.
ZDP Shares
Following the ZDP Share issues in 2009, the Company has not
issued any further ZDP Shares.
The 2009 ZDP Share issues raised a total of GBP46 million of net
proceeds. Pursuant to a loan agreement between the Company and
Electra, in 2009 the Company lent Electra the whole of the net
proceeds and these funds continue to be managed in accordance with
the investment policy of Electra. This loan is on terms requiring
its repayment by Electra to the Company at any time up to or
immediately prior to the ZDP repayment date.
Electra has undertaken that, at any time up to or immediately
prior to the ZDP repayment date, it will subscribe for such number
of ordinary shares in the Company as is necessary to provide the
Company on the ZDP repayment date (after taking into account the
monies to be received by it on repayment of the loan) with
sufficient funds to meet the repayment obligations in respect of
the ZDP Shares.
Board Composition
Roger Perkin and Geoffrey Cullinan were Directors of the Company
throughout the year ended 30 September 2014.
I was appointed as a Director of the Company on 26 November
2013. Upon the retirement of Colette Bowe as Chairman and Director
of both the Company and Electra following the Electra Annual
General Meeting on 11 March 2014, I succeeded Colette as Chairman
of both the Company and Electra on the same date.
All of the Directors of the Company are also Directors of
Electra.
Outlook
The Board believes that the Company will be in a position to
fulfil its requirement to meet the Final Capital Entitlement to the
ZDP Shareholders in August 2016.
Roger Yates
Chairman
26 November 2014
Strategic Report
To the Members of Electra Private Equity Investments PLC
The Directors present the audited Accounts of the Company for
the year ended 30 September 2014 and their Strategic Report on its
affairs.
Strategic Report
The Company is a subsidiary of Electra, which owns the entire
issued ordinary share capital of the Company.
The Strategic Report describes the business of the Company and
details the main risks and uncertainties associated with the
Company's activities, taking into account performance as measured
by the Key Performance Indicators ("KPIs").
Objective, Strategy and Business Model
The objective of the Company is to provide the final capital
entitlement of the Company's Zero Dividend Preference ('ZDP')
Shares to the Zero Dividend Preference Shareholders at the
repayment date of 5 August 2016. This also represents the Company's
strategy and business model.
Current and Future Development
A review of the main features of the year is contained in the
Corporate Summary of Zero Dividend Preference Shares and in the
Chairman's Statement on pages 1 and 2.
Performance
A number of performance measures are considered by the Board in
assessing the Company's success towards achieving its objective.
The KPIs used to measure the progress and performance of the
Company are as follows:
-- Electra Private Equity PLC Asset Cover
-- The movement in share price
Details of the KPIs are shown on page 1.
Risk Management
The Company is a wholly owned subsidiary of Electra and was
established solely for the purpose of issuing and redeeming ZDP
Shares. Accordingly the principal risks facing the Company include
Market Price Risk, Liquidity Risk and Capital Risk as further
detailed in Note 19 of the Notes to the Accounts. In addition, the
Company is also focused on the following principal risks:
Final Capital Entitlement
Electra's debt to the Company is pursuant to the loan agreement
which ranks behind any secured creditors of Electra. Therefore it
is not guaranteed that the final capital entitlement will be paid.
On a return of assets, including a winding up of Electra, the
Company will not receive payment if there are insufficient assets
of Electra, having first taken account of prior ranked liabilities
and having regard to all other unsecured liabilities of Electra.
ZDP Shares are not a secured, protected or guaranteed
investment.
Liquid Market for ZDP Shares
The market price and realisable value of the ZDP Shares, as well
as being affected by the underlying value of Electra's net assets,
will be affected by interest rates, supply and demand for the ZDP
Shares, market conditions and general investor sentiment. As such,
the market value and the realisable value (prior to redemption) of
a ZDP Share can fluctuate and may not always reflect its accrued
capital entitlement. In addition, given the Company's size and
type, there is no guarantee that an active market will be sustained
for the ZDP Shares. If an active trading market is not maintained,
the liquidity and trading price of the ZDP Shares could be
adversely affected.
Macroeconomic and Investment Risks
The Company's obligation to pay the ZDP Shareholders the final
capital entitlement is dependent upon Electra's ability to comply
with its obligations to the Company. This in turn is impacted by
Electra's performance and its ability to manage macroeconomic and
investment risk. A material fall in the value of the assets in the
investment portfolio of Electra may lead to the winding up of
Electra in the longer term.
The performance of Electra's underlying investment portfolio is
principally influenced by a combination of economic conditions, the
availability of appropriately priced debt finance, interest rates
and the number of active trade and financial buyers. All of these
factors have an impact on Electra's ability to invest, Electra's
ability to exit from its underlying portfolio and the levels of
profitability achievable on exit.
Electra operates in a very competitive market. Changes in the
number of market participants, the availability of funds within the
market, the pricing of assets, or in the ability of its Manager,
Electra Partners, to access deals could have a significant effect
on Electra's competitive position and on the sustainability of
returns.
In order to source and execute good quality investments, Electra
is primarily dependent upon Electra Partners having the ability to
attract and retain executives with the requisite investment
experience and whose compensation is in line with Electra's
objectives.
Once invested, the performance of the Electra portfolio is
dependent upon a range of factors. These include but are not
limited to: (i) the quality of the initial investment decision;
(ii) the ability of the portfolio company to execute successfully
its business strategy; and (iii) actual outcomes against the key
assumptions underlying the portfolio company's financial
projections. Any one of these factors could have an impact on the
valuation of a portfolio company and upon Electra's ability to make
a profitable exit from the investment within the desired timeframe.
Future Electra share issues, share buy backs or raising new debt
facilities in the longer term could dilute the interests of the ZDP
Shareholders and reduce the price of the ZDP Shares.
Government Policy and Regulation Risk
Electra carries on business as an investment trust under section
1158 of the Corporation Taxes Act 2010. Retention of investment
trust status is subject to Electra conducting its affairs in a
manner which will satisfy the HM Revenue and Customs conditions for
continuing approval as an investment trust. Any change in Electra's
tax status, or in taxation legislation or practice in the UK or
elsewhere, could affect the value of investments in Electra's
investment portfolio and Electra's ability to achieve its
investment objective and could also affect the tax treatment of the
ZDP Shares and the tax treatment of the final capital
entitlement.
Board Diversity
Following the appointment of Mr Yates as a Director in November
2013, the balance of the Board was 1:3 women:men, with one female
and three male Directors on the Board. Following the retirement of
Dr Bowe in March 2014, all the Directors on the Board are male.
All Directors are also Directors of Electra. Electra's policy on
Board Diversity is shown below. The Board of the Company subscribes
to this policy to the extent consistent with the other
responsibilities of the Directors of the Boards of both
companies.
The Company aims to have a balance of relevant skills,
experience and background amongst the Directors on the Board and
believes that all Board appointments should be made on merit and
with due regard to the benefits of diversity, including gender. The
Board's aim is to continue to maintain a diverse Board and, subject
to appointing the best candidates available when current Directors
retire, to have a proportion of at least one third female Board
representation.
At 30 September 2014 there were three female and three male
Directors on the Board of Electra.
The Company is a subsidiary of an investment trust and has no
employees other than the non-executive Directors and therefore has
no disclosures to make in this regard.
Community, Social, Employee, Human Rights and Environmental
Issues
In carrying out its activities and in its relationship with the
community, the Company aims to conduct itself responsibly,
ethically and fairly, including in relation to social and human
rights issues. The Company has no employees and the Board is
comprised entirely of non-executive Directors. In common with its
parent Company Electra, the Company has no direct impact on the
environment.
Roger Yates
Chairman
26 November 2014
Report of the Directors
To the Members of Electra Private Equity Investments PLC
The Directors present the audited Accounts of the Company for
the year ended 30 September 2014 and their Report on its
affairs.
In accordance with the requirement for the Directors to prepare
a Strategic Report for the year ended 30 September 2014, the
following information, some of which was previously included within
the Directors' Report, is set out in the Strategic Report on pages
3 to 5: The Company's Objective, Strategy and Business Model,
information regarding Community, Social, Employee, Human Rights and
Environmental Issues, and the Board Diversity Statement.
Corporate Governance
The Company has a 'Standard' listing on the London Stock
Exchange and so is not required to comply with the UK Corporate
Governance Code but it is committed to appropriately high standards
of corporate governance. The Company's corporate governance
arrangements are described on pages 8 and 9.
Share Capital
At 30 September 2014 there were a total of 50,000 ordinary
shares of GBP1.00 each in issue.
Zero Dividend Preference Shares
At 30 September 2014 there were a total of 47,295,000 ZDP Shares
of 0.01 pence each in issue.
In accordance with the Company's Articles of Association, the
ZDP Shares carry no entitlement to any dividends or other
distributions or to participate in the revenue or any other profits
of the Company. The ZDP Shareholders have no right to receive
notice of, or to attend or vote at, any general meeting of the
Company except in those circumstances set out in the Company's
Articles of Association.
Directors
The current Directors of the Company are listed on page 20. Mr
Cullinan and Mr Perkin served as Directors throughout the year
ended 30 September 2014.
Mr R Yates was appointed a non-executive Director of the Company
on 26 November 2013. Upon the retirement of Dr Colette Bowe as
Chairman and Director of both the Company and Electra on 11 March
2014 he succeeded Dr Bowe as Chairman of both the Company and
Electra.
All Directors will retire at the Company's Annual General
Meeting to be held on 16 March 2015 and, being eligible, offer
themselves for re-election.
Mr Yates, Mr Cullinan and Mr Perkin and are all Directors of the
Company's parent company Electra.
Directors' Conflicts of Interest
Each of the Directors is also a Director of Electra and is
accordingly to be regarded as interested in any transaction or
arrangement that may be made with Electra. The Boards of Electra
and the Company have agreed that each Director of the Company is
authorised to continue to act as a Director of the Company and of
Electra and to consider and approve transactions or arrangements
between the Company and its parent, notwithstanding his interest in
such matters as a result of his appointment as a Director of either
Board.
The Board considers the matter of potential conflicts of
interest on a regular basis and it has been agreed that to date
none of the Directors has a conflict of interest.
Directors' Interests
None of the Directors had an interest in either the ordinary
shares or the ZDP Shares of the Company during the period under
review and there have been no changes in this position between 1
October 2014 and 26 November 2014.
The interests of the Directors in the Ordinary Shares and 5%
Subordinated Convertible Bonds of Electra, the Company's parent
company, are shown in Electra's Report and Accounts for the year
ended 30 September 2014.
None of the Directors has a service contract with the
Company.
Directors' Indemnity
Directors' and Officers' Liability insurance cover has been put
in place. In addition, the Company's Articles of Association
provide, subject to the provisions of applicable UK legislation, an
indemnity for Directors in respect of costs incurred in the defence
of any proceedings brought against them by third parties arising
out of their positions as Directors, in which they are acquitted or
judgement is given in their favour.
Substantial Interests
At 26 November 2014 Electra owned 100% of the voting rights in
the Company's ordinary share capital.
Independent Auditors
A resolution to re-appoint PricewaterhouseCoopers LLP as
Auditors of the Company will be proposed at the Annual General
Meeting of the Company's ordinary shareholders in 2015. A separate
resolution will be proposed at the Annual General Meeting
authorising the Directors to determine the remuneration of the
Auditors.
The auditors PricewaterhouseCoopers LLP have indicated their
willingness to continue in office.
Audit Information
Each of the Directors confirms that so far as they are aware,
there is no relevant audit information of which the Company's
Auditors are unaware and the Directors have taken all steps they
ought to have taken to make themselves aware of any relevant audit
information and to establish that the Company's Auditors are aware
of that information.
Significant Agreements
Pursuant to the Intercompany Loan Agreement between the Company
and Electra documenting the loan from the Company to Electra of the
net proceeds of the ZDP share placing, Electra is required to repay
the loan to the Company immediately prior to the ZDP Repayment
Date, being 5 August 2016.
These funds are to be managed in accordance with the investment
policy of Electra.
Pursuant to the undertaking between the Company and Electra,
Electra has undertaken that it will subscribe for such number of
ordinary shares in the Company as is necessary to provide the
Company on the ZDP Repayment Date in August 2016 (after taking into
account the monies received by the Company on repayment of the
loan) with sufficient funds to meet the repayment obligations in
respect of the ZDP Shares.
Going Concern
The Company is in the position of having net liabilities and is
loss making. However, Electra has guaranteed that it will provide
adequate resources for the Company to continue in operational
existence for the foreseeable future. The Directors believe,
therefore, that it is appropriate to continue to adopt the going
concern basis in preparing the Annual Report and Accounts.
By order of the Board of Directors
Frostrow Capital LLP, Company Secretary
Paternoster House, 65 St Paul's Churchyard, London, EC4M 8AB
26 November 2014
Corporate Governance
The Company has a 'Standard' listing on the London Stock
Exchange and so is not required to comply with the UK Corporate
Governance Code but it is committed to appropriately high standards
of corporate governance. The Company's corporate governance
arrangements are described below.
The Board of Directors
The Company is a wholly owned subsidiary of Electra. The Company
is managed by the Board, which comprises three non-executive
Directors. Mr Perkin and Mr Cullinan served as Directors throughout
the year ended 30 September 2014. Dr Bowe retired from the Board
with effect from the Company's Annual General Meeting on 11 March
2014. Mr Roger Yates, who was appointed as a Director on 26
November 2013, was appointed as Chairman of the Company in Dr
Bowe's place at the Annual General Meeting in March 2014.
It is the responsibility of the Board to ensure that there is
effective stewardship of the Company's affairs. All decisions are
taken by the Board and the Board meets as required to discharge its
duties. The Board met four times during the year and all Directors
attended all the meetings held while they were appointed as
Director.
The Board receives information that it considers to be
sufficient and appropriate to enable it to discharge its duties.
Directors receive Board papers several days in advance of Board
meetings and are able to consider in detail any issues to be
discussed in advance at the relevant meeting.
The Directors believe that the Board has an appropriate balance
of skills and experience, independence and knowledge of the Company
to enable it to provide effective strategic leadership and proper
governance of the Company. Information about the Directors,
including their relevant experience, can be found on page 20.
Given the nature of the Company's business and the number of
Directors, the Directors have not established separate Committees
of the Board but deal with all business themselves.
Independence of the Board
All the Directors were non-executive Directors of the Company's
parent company, Electra, throughout the year.
The Board has carefully considered the independence of each
Director and, notwithstanding the cross-directorships detailed
above, has concluded that each Director is wholly independent on
the basis that the Board firmly believes that independence is a
state of mind and the character and judgement which accompany this
are distinct from and are not compromised by length of service.
The Board did not undertake a separate formal appraisal process
of its own operations and performance during the year or separate
Director appraisals as these processes were covered by the
appraisals carried out by the Board of Electra, as described in the
Report and Accounts of that company for the year ended 30 September
2014.
Directors' Terms of Appointment
It is the Board's policy that Directors shall retire and be
subject to appointment by shareholders at the first Annual General
Meeting following their appointment by the Board and be subject to
re-election at least every third year thereafter.
Re-election of Directors
In accordance with the decision of the Directors of Electra to
offer themselves for re-election each year, all the Directors will
retire at the Annual General Meeting to be held in 2015 and offer
themselves for re-election.
Biographical details of the Directors seeking election or
re-election are set out on page 20.
Independent Professional Advice
Individual Directors may seek independent professional advice in
furtherance of their duties at the Company's expense within certain
parameters. All Directors have access to the advice and services of
the Company Secretary.
Company Secretary
Frostrow Capital LLP acted as the independent Company Secretary
in addition to its role as Board Advisor during the year under
review.
Induction and Training
New Directors are provided with an induction programme which is
tailored to the particular circumstances of the appointee and which
includes being briefed fully about the Company by the Chairman,
senior executives of Electra Partners and the Company Secretary.
Following appointment, the Chairman regularly reviews and agrees
with Directors their training and development needs as necessary to
enable them to discharge their duties.
Internal Control
The Board confirms that it has an ongoing process for
identifying, evaluating and managing the significant risks faced by
the Company. This process has been in place throughout the year and
has continued since the year end. It is reviewed at regular
intervals by the Board.
The Board is responsible for the Company's system of internal
control and has reviewed its effectiveness for the year ended 30
September 2014. This review encompasses all controls including
financial, operational and compliance controls and risk management.
The system of internal control is designed to manage, rather than
eliminate, the risk of failure to achieve business objectives and
can only provide reasonable and not absolute assurance against
material misstatement or loss.
The Company's annual financial statements and half-yearly
financial statements are prepared in accordance with applicable
regulatory requirements.
The Company's system of internal control mainly comprises the
regular monitoring by the Board of the key investment and financial
data of the Company's parent Electra and the review of the
Company's own financial statements.
Statement of Directors' Responsibilities
The Directors are responsible for preparing the Annual Report
and the financial statements in accordance with applicable law and
regulations.
Company law requires the Directors to prepare financial
statements for each financial year. Under that law the Directors
have prepared the financial statements in accordance with
International Financial Reporting Standards (IFRSs) as adopted by
the European Union. Under Company Law the Directors must not
approve the financial statements unless they are satisfied that
they give a true and fair view of the state of affairs of the
Company and of the profit or loss of the Company for that period.
In preparing these financial statements, the Directors are required
to:
-- select suitable accounting policies and then apply them consistently;
-- make judgements and accounting estimates that are reasonable and prudent;
-- state whether applicable International Financial Reporting
Standards (IFRSs) as adopted by the European Union have been
followed;
-- prepare the financial statements on the going concern basis
unless it is inappropriate to presume that the Company will
continue in business.
The Directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the Company's
transactions and disclose with reasonable accuracy at any time the
financial position of the Company and enable them to ensure that
the financial statements comply with the Companies Act 2006. They
are also responsible for safeguarding the assets of the Company and
hence for taking reasonable steps for the prevention and detection
of fraud and other irregularities.
The financial statements are published on
www.electraequity.com/eltz, which is a website maintained by
Electra Partners. The maintenance and integrity of the website is,
so far as it relates to the Company, the responsibility of Electra
Partners. The work carried out by the auditors does not involve
consideration of the maintenance and integrity of this website and,
accordingly, the auditors accept no responsibility for any changes
that have occurred to the financial statements since they were
initially presented on the website. Visitors to the website need to
be aware that legislation in the United Kingdom governing the
preparation and dissemination of the financial statements may
differ from legislation in other jurisdictions.
Each of the Directors, whose names and functions are listed in
the Board of Directors section of the Annual Report confirm that,
to the best of their knowledge:
-- the Company's financial statements, which have been prepared
in accordance with IFRS as adopted by the EU, give a true and fair
view of the assets, liabilities, financial position and loss of the
Company; and
-- the Strategic Report contained in the Reports section of the
Annual Report includes a fair review of the development and
performance of the business and position of the Company, together
with a description of the principal risks and uncertainties that it
faces; and
-- so far as each Director is aware, there is no relevant audit
information of which the Company's auditors are unaware; and
-- they have taken all the steps that they ought to have taken
as a Director in order to make themselves aware of any relevant
audit information and to establish that the Company's Auditors are
aware of that information.
On behalf of the Board of Directors
Roger Yates
Paternoster House, 65 St Paul's Churchyard, London EC4M 8AB
26 November 2014
Statement of Comprehensive Income
2014 2013
Note For the year ended 30 September GBP'000 GBP'000
----- -------------------------------- ----------- -----------
3 Income 2,095 2,317
4 Expenses (37) (53)
Net profit before finance
costs and taxation 2,058 2,264
----- -------------------------------- ----------- -----------
6 Finance costs (4,196) (3,940)
----- -------------------------------- ----------- -----------
Loss on ordinary activities
before taxation (2,138) (1,676)
7 Taxation (636) 83
----- -------------------------------- ----------- -----------
Loss on ordinary activities
attributable to the owners
of the parent (2,774) (1,593)
Other comprehensive income - -
----- -------------------------------- ----------- -----------
Total comprehensive loss
for the year (2,774) (1,593)
----- -------------------------------- ----------- -----------
Basic and diluted earnings
9 per ordinary share GBP(55.48) GBP(31.86)
----- -------------------------------- ----------- -----------
The amounts dealt with in the Statement of Comprehensive Income
are all derived from continuing activities.
Statement of Changes in Equity
Total
Share Revenue Shareholders'
Capital Reserve Funds
For the year ended 30 September
2014 GBP'000 GBP'000 GBP'000
--------------------------------- --------- --------- ---------------
Total equity at 1 October
2013 50 (6,178) (6,128)
Loss for the year and total
comprehensive loss - (2,774) (2,774)
Total equity attributable
to the owners of the parent
at
30 September 2014 50 (8,952) (8,902)
--------------------------------- --------- --------- ---------------
For the year ended 30 September
2013 GBP'000 GBP'000 GBP'000
--------------------------------- -------- -------- --------
Total equity at 1 October
2012 50 (4,585) (4,535)
Loss for the year and total
comprehensive loss - (1,593) (1,593)
Total equity attributable
to the owners of the parent
at
30 September 2013 50 (6,178) (6,128)
--------------------------------- -------- -------- --------
Balance Sheet
2014 2013
Note As at 30 September GBP'000 GBP'000
----- --------------------------- --------- ---------
Current Assets
10 Loans and receivables 56,037 54,281
Cash and cash equivalents 315 316
----- --------------------------- --------- ---------
56,352 54,597
Current Liabilities
Trade and other payables (374) (41)
Net Current Assets 55,978 54,556
----- --------------------------- --------- ---------
Non-current Liabilities
Zero Dividend Preference
11 shares (64,880) (60,684)
Net Liabilities (8,902) (6,128)
----- --------------------------- --------- ---------
Capital and Reserves
13 Called-up share capital 50 50
Retained earnings (8,952) (6,178)
Total Equity Shareholders'
Funds (8,902) (6,128)
----- --------------------------- --------- ---------
Cash Flow Statement
2014 2013
For the year ended 30 September GBP'000 GBP'000
--------------------------------- -------- --------
Operating Activities
Interest received - 1
Net Cash Inflow from Operating
Activities - 1
--------------------------------- -------- --------
Net Cash Inflow from Financing
Activities - -
--------------------------------- -------- --------
Net increase in cash and
cash equivalents - 1
--------------------------------- -------- --------
Cash and cash equivalents
at 1 October 316 315
--------------------------------- -------- --------
Cash and cash equivalents
at 30 September 316 316
--------------------------------- -------- --------
Notes to the Financial Statements
1 Basis of Preparation
The financial statements for the year ended 30 September 2014
have been prepared in accordance with the Companies Act 2006 and
International Financial Reporting Standards ("IFRS"). IFRS
comprises standards and interpretations approved by the
International Accounting Standards Board ("IASB") and the
International Financial Reporting Interpretations Committee
("IFRIC") as adopted in the European Union as at 30 September
2014.
The financial statements comprise the Balance Sheet as at 30
September 2014 and for the year ended 30 September 2014 the related
Statement of Comprehensive Income, Statement of Changes in Equity,
Cashflow Statement and the related notes hereinafter referred to as
'financial statements'. The principal accounting policies adopted
by the Company have been applied consistently throughout the year,
and are set out below.
The financial statements are prepared under the historical cost
convention.
The Company's financial statements are presented in sterling,
which is the currency of the primary environment in which the
Company operates. All values are rounded to the nearest thousand
pounds (GBP'000) except when otherwise indicated.
The financial statements have been prepared on a going concern
basis as Electra has undertaken that, at any time up to or
immediately prior to the ZDP repayment date, it will subscribe for
such number of ordinary shares in the Company as is necessary to
provide the Company on the ZDP repayment date (after taking into
account the monies to be received by it on repayment of the loan)
with sufficient funds to meet the repayment obligations in respect
of the ZDP Shares.
Cash and cash equivalents
Cash comprises cash at bank and short term deposits with an
original maturity of less than three months.
Loans and receivables
Loans and other receivables are non-derivative financial assets
with fixed or determinable payments that are not quoted in an
active market. Loans and other receivables are initially recognised
at fair value including direct and incremental transaction costs.
Loans and receivables are subsequently carried at amortised cost
using the effective interest rate method.
Zero Dividend Preference Shares
Zero Dividend Preference Shares which exhibit the
characteristics of liabilities are recognised as liabilities in the
Balance Sheet in accordance with IAS 32. Borrowings are initially
recognised at fair value. After initial recognition, these
liabilities are measured at amortised cost, which represents the
initial net proceeds of the issue after issue costs plus the
accrued entitlement to the date of these financial statements.
The accrued entitlement is calculated as the difference between
the proceeds on the issue of these shares and the final liability
and is charged as interest expense over the term of the life of
these shares using the effective interest method.
Share Capital
Ordinary shares issued by the Group are recognised at fair value
or proceeds received with the excess of the amount received over
nominal value being credited to the share premium account. Direct
issue costs net of tax are deducted from equity.
Income
Income is recognised on an accruals basis.
Finance Costs
Costs of borrowings are expensed as revenue items through the
Income Statement as they accrue on an effective interest rate
basis. Any costs incurred which were not directly related to the
borrowing facility are expensed in the revenue account.
Taxation
The tax effect on income and expenses is calculated using the
Company's effective rate of tax for the accounting period.
Impairment
The Company assesses at the end of each reporting period whether
there is objective evidence that the financial asset is impaired. A
financial asset is impaired and impairment losses are incurred only
if there is objective evidence of impairment; when observable data
indicates there is a measurable decrease in the estimated further
cash flows.
The amount of loss is measured as the difference between the
asset's carrying amount and the present value of estimated future
cash flows discounted at the financial asset's original effective
interest rate.
Application of New Standards
The accounting policies used are consistent with those applied
in the last annual financial statements, as amended to reflect the
adoption of new standards, amendments, and interpretations which
became effective in the year. During 2013, the following relevant
standards, amendments and interpretations endorsed by the EU became
effective for the first time for the Company's 30 September 2014
year end:
-- IFRS 7 Financial Instruments: Disclosures (amendment);
-- IFRS 13 Fair Value Measurement;
-- IAS 1 Presentation of Financial Statements (amendment);
-- IAS 12 Income Taxes (amendment); and
These have resulted in changes to presentation and disclosures
only.
New Standards to be applied
The following relevant standards have been issued and adopted by
the EU but are not effective until 1 January 2014 and have not been
adopted early:
-- IAS 32 Financial Instruments: Presentation (amendment);
-- IAS 36 Impairment of Assets (amendment); and
None of the standards, amendments and interpratations are
expected to have a significant effect on the consolidated financial
statements of the Company. These will result in changes to
presentation or disclosure only.
Other pronouncements are not expected to have a material impact
on the financial statements, but may result in changes to
presentation or disclosure.
Additionally a number of standards have been issued but are not
yet adopted by the EU and so are not available for early adoption.
The most significant of these is IFRS 9 Financial Instruments along
with related amendments to other IFRSs and the impact on the
Company is being reviewed.
None of the standards, amendments and interpretations are
expected to have a significant effect on the consolidated financial
statements of the Company.
2 Segmental Analysis
The chief operating decision-maker has been identified as the
Board of the Company. The Board of the Company considers there to
be only one business segment and there is therefore no further
segmental analysis.
3 Income
2014 2013
For the year ended 30 GBP'000 GBP'000
September
----------------------- -------- --------
Interest receivable
Other interest 2,095 2,317
2,095 2,317
----------------------- -------- --------
4. Expenses
2014 2013
For the year ended 30 September GBP'000 GBP'000
--------------------------------- -------- --------
Administrative expenses 22 38
Auditors' remuneration 15 15
--------------------------------- -------- --------
37 53
--------------------------------- -------- --------
During the year PricewaterhouseCoopers LLP earned the following
fees.
2014 2013
For the year ended 30 September GBP'000 GBP'000
--------------------------------- -------- --------
Audit fees
Statutory audit of the Company 15 15
--------------------------------- -------- --------
5. Directors and Employees
No remuneration was paid to any Directors during the period.
The Company has no employees.
6. Finance costs
2014 2013
For the year ended 30
September GBP'000 GBP'000
-------------------------- -------- --------
Zero Dividend Preference
share costs 4,196 3,940
-------------------------- -------- --------
This represents the amortised cost of the issue expenses plus
the accrued entitlement of the final liability less the proceeds on
issue.
7. Taxation on Ordinary Activities
2014 2013
Taxation on profit for the
year ended 30 September GBP'000 GBP'000
----------------------------------- -------- --------
(a) UK Corporation Tax
Current Tax
UK Corporation Tax on profits
for the year 453 -
Prior year adjustment 183 (83)
--------
Total Current Tax charge/(credit)
for the year 636 (83)
----------------------------------- -------- --------
The difference between the total current tax charge / (credit)
shown above and the amount calculated by applying the effective
rate of UK corporation tax to the loss on ordinary activities
before tax is as follows:
(b) Factors Affecting Tax Charge
for the Year
Loss on Ordinary Activities before
Tax (2,138) (1,676)
------------------------------------ -------- --------
Loss on Ordinary Activities before
tax multiplied by the effective
rate of UK Corporation Tax in
the year of 22% (2013: 23.5%) (470) (394)
Group relief claimed - (532)
Expenses not deductible for tax
purposes 923 926
Prior year adjustment 183 (83)
Current Tax charge/(credit) for
the year 636 (83)
------------------------------------ -------- --------
8. Dividends
No dividend was paid during the year ended 30 September
2014.
9. Earnings per Share
2014 2013
For the year ended
30 September p p
----------------------- -------- --------
Earnings per Ordinary
Share (Basic and
Diluted) (55.48) (31.86)
----------------------- -------- --------
The calculation of earnings per share is based on the loss
attributable to the owners of the parent of GBP2,774,000 (2013:
GBP1,593,000) and on a weighted average number of 50,000 (2013:
50,000) ordinary shares of GBP1 each in issue.
10. Loans and Receivables
2014 2013
As at 30 September GBP'000 GBP'000
-------------------- -------- --------
Amounts owed
by Group entities 56,037 54,281
-------------------- -------- --------
Under the Intercompany Loan Agreement, the Company charges
interest at LIBOR rates plus a margin of 3%.
11. Zero Dividend Preference Shares
2014 2013
As at 30 September GBP'000 GBP'000
-------------------- -------- --------
Zero Dividend
Preference Shares 64,880 60,684
-------------------- -------- --------
On 5 August 2009, the Company issued 43,000,000 Zero Dividend
Preference Shares at 100p each. On 2 December 2009, a further
4,295,000 Zero Dividend Preference Shares were issued at a price of
104p each. Each share has a par value of 0.01p and is redeemable on
5 August 2016 for 155.41p.
12. Financial Instruments
The Company was established for the issuance of Zero Dividend
Preference shares and it has the single objective of providing
final capital entitlement to the Zero Dividend Preference
shareholders at 5 August 2016.
The Company's financial instruments comprise:
1. Cash at bank and in hand.
2. An issuance of Zero Dividend Preference shares.
3. Loan due from Electra.
The Company's obligation to pay the ZDP Shareholders the final
capital entitlement is dependent upon Electra's ability to comply
with its obligations to the Company. The main risks arising from
the Company's financial instruments are fluctuations in market
price, liquidity and capital risk.
Market price risk
Market price risk arises mainly from uncertainty about future
prices of financial instruments used in Electra's operations. It
represents the potential loss Electra might suffer through holding
market positions in the face of price movements, mitigated by stock
selections. Details of how this risk is managed are contained
within the accounts of Electra Private Equity PLC.
Liquidity risk
This is the risk that the Company will encounter difficulty in
meeting obligations associated with financial liabilities.
Liquidity risk is considered to be significant as Electra is
reliant upon the sale of assets which mainly comprise unlisted
investments. Details of how this risk is managed are contained
within the accounts of Electra Private Equity PLC.
Capital risk
The management of Electra's capital risk safeguards its ability
to continue as a going concern and thus its capacity to comply with
its obligations to the Company. Details of how this risk is managed
are contained within the accounts of Electra Private Equity
PLC.
i) Net interest exposure
The risk of adverse movements in interest rates is assessed on
the net of the ZDP finance charge and the intercompany loan to
Electra.
Pursuant to a loan agreement between the Company and Electra,
the Company lent Electra the whole of the net proceeds of the ZDP
shares, charging interest at LIBOR plus a margin of 3%. The net
exposure to interest risk is considered immaterial as a result of
the undertaking by Electra whereby at any time up to or immediately
prior to the ZDP repayment date, Electra will subscribe for such
number of ordinary shares in the Company as is necessary to provide
the Company on the ZDP repayment date (after taking in to account
the monies to be received by it on repayment of the loan) with
sufficient funds to meet the repayment obligations in respect of
the ZDP Shares.
ii) Maturity of Financial Liabilities
The maturity profile of the Company's financial liabilities as
at 30 September was:
2014 2013
As at 30
September GBP'000 GBP'000
------------ -------- --------
Over one
year 73,496 73,496
------------ -------- --------
This relates to the Zero Dividend Preference shares. These are
redeemable on 5 August 2016.
The fair value of the Zero Dividend Preference shares as at 30
September 2014 was GBP68,578,000 (2013: GBP66,154,000).
iii) Fair value of Financial Assets and Liabilities
All the financial assets of the Company are held at fair
value.
13. Share Capital
2014 2013
As at 30 September GBP'000 GBP'000
----------------------------- -------- --------
Alloted, called up and
fully paid 50,000 ordinary
shares of GBP1 each 50 50
----------------------------- -------- --------
14. Related Party Transactions
Pursuant to a loan agreement between the Company and Electra, in
2009 the Company lent Electra the whole of the net proceeds of the
ZDP shares and these funds continue to be managed in accordance
with the investment policy of Electra. This loan is on terms
requiring its repayment by Electra to the Company at any time up to
or immediately prior to the ZDP repayment date. As at 30 September
2014, the outstanding balance of the loan was GBP56,037,000 (2013:
GBP54,281,000) including interest accrued of GBP11,117,000 (2013:
GBP9,022,000).
15. Immediate and Ultimate Parent
The company's immediate and ultimate parent undertaking is
Electra, a company incorporated in Great Britain and registered in
England and Wales. Copies of the financial statements are available
at the Company's registered office at Paternoster House, 65 St.
Paul's Churchyard, London, EC4M 8AB.
Independent Auditors' Report to the Members of Electra Private
Equity Investments PLC
Report on the financial statements
Our opinion
In our opinion, Electra Private Equity Investment PLC's
financial statements (the "financial statements"):
-- give a true and fair view of the state of the company's
affairs as at 30 September 2014 and of its loss and cash flows for
the year then ended;
-- have been properly prepared in accordance with International
Financial Reporting Standards ("IFRSs") as adopted by the European
Union; and
-- have been prepared in accordance with the requirements of the Companies Act 2006.
What we have audited
Electra Private Equity Investment PLC's financial statements
comprise:
-- the Balance Sheet as at 30 September 2014;
-- the Statement of Comprehensive Income for the year then ended;
-- the Cash Flow Statement for the year then ended;
-- the Statement of Changes in Equity for the year then ended; and
-- the notes to the financial statements, which include a
summary of significant accounting policies and other explanatory
information.
The financial reporting framework that has been applied in the
preparation of the financial statements is applicable law and IFRSs
as adopted by the European Union.
In applying the financial reporting framework, the directors
have made a number of subjective judgements, for example in respect
of significant accounting estimates. In making such estimates, they
have made assumptions and considered future events.
Opinions on other matters prescribed by the Companies Act
2006
In our opinion:
-- the information given in the Strategic Report and the Report
of the Directors for the financial year for which the financial
statements are prepared is consistent with the financial
statements; and
-- the part of the Directors' Remuneration Report to be audited
has been properly prepared in accordance with the Companies Act
2006.
Other matters on which we are required to report by
exception
Adequacy of accounting records and information and explanations
received
Under the Companies Act 2006 we are required to report to you
if, in our opinion:
-- we have not received all the information and explanations we require for our audit; or
-- adequate accounting records have not been kept, or returns
adequate for our audit have not been received from branches not
visited by us; or
-- the financial statements and the part of the Directors'
Remuneration Report to be audited are not in agreement with the
accounting records and returns.
We have no exceptions to report arising from this
responsibility.
Directors' remuneration
Under the Companies Act 2006 we are required to report to you
if, in our opinion, certain disclosures of directors' remuneration
specified by law are not made. We have no exceptions to report
arising from this responsibility.
Responsibilities for the financial statements and the audit
Our responsibilities and those of the directors
As explained more fully in the Statement of Directors'
Responsibilities set out on page 10, the directors are responsible
for the preparation of the financial statements and for being
satisfied that they give a true and fair view.
Our responsibility is to audit and express an opinion on the
financial statements in accordance with applicable law and
International Standards on Auditing (UK and Ireland) ("ISAs (UK
& Ireland)"). Those standards require us to comply with the
Auditing Practices Board's Ethical Standards for Auditors.
This report, including the opinions, has been prepared for and
only for the company's members as a body in accordance with Chapter
3 of Part 16 of the Companies Act 2006 and for no other purpose. We
do not, in giving these opinions, accept or assume responsibility
for any other purpose or to any other person to whom this report is
shown or into whose hands it may come save where expressly agreed
by our prior consent in writing.
What an audit of financial statements involves
We conducted our audit in accordance with ISAs (UK &
Ireland). An audit involves obtaining evidence about the amounts
and disclosures in the financial statements sufficient to give
reasonable assurance that the financial statements are free from
material misstatement, whether caused by fraud or error. This
includes an assessment of:
-- whether the accounting policies are appropriate to the
company's circumstances and have been consistently applied and
adequately disclosed;
-- the reasonableness of significant accounting estimates made by the directors; and
-- the overall presentation of the financial statements.
We primarily focus our work in these areas by assessing the
directors' judgements against available evidence, forming our own
judgements, and evaluating the disclosures in the financial
statements.
We test and examine information, using sampling and other
auditing techniques, to the extent we consider necessary to provide
a reasonable basis for us to draw conclusions. We obtain audit
evidence through testing the effectiveness of controls, substantive
procedures or a combination of both.
In addition, we read all the financial and non-financial
information in the Annual Report to identify material
inconsistencies with the audited financial statements and to
identify any information that is apparently materially incorrect
based on, or materially inconsistent with, the knowledge acquired
by us in the course of performing the audit. If we become aware of
any apparent material misstatements or inconsistencies we consider
the implications for our report.
Alison Morris (Senior Statutory Auditor)
for and on behalf of PricewaterhouseCoopers LLP
Chartered Accountants and Statutory Auditors
London
26 November 2014
(a) The maintenance and integrity of the Electra Private Equity
Investments PLC website is the responsibility of the directors; the
work carried out by the auditors does not involve consideration of
these matters and, accordingly, the auditors accept no
responsibility for any changes that may have occurred to the
financial statements since they were initially presented on the
website.
(b) Legislation in the United Kingdom governing the preparation
and dissemination of financial statements may differ from
legislation in other jurisdictions.
Board of Directors
Roger Yates, Chairman
Mr Yates has 30 years' experience as an investment professional
and a business manager in the fund management industry having begun
his career with GT Management Limited in 1981. He was Chief
Executive of Henderson Global Investors from 1999 to 2003 and then,
following the company's listing, of Henderson Group Plc until 2008.
Prior to that he was Chief Investment Officer of Invesco Global and
Morgan Grenfell Investment Management Limited. He is currently
non-executive Chairman of Pioneer Global Asset Management, part of
the UniCredit Group, and a non-executive director of JP Morgan
Elect plc, IG Group Holdings plc and St. James' Place plc and was,
from 2009 to 2010, non-executive director of F&C Asset
Management plc.
Mr Yates was appointed a Director in 2013 and Chairman in
2014.
Geoffrey Cullinan
Mr Cullinan was a Director of Bain & Company from 1997 to
2005. He was the founder and leader of their private equity
business in Europe and continues to be an Adviser to Bain. He was
formerly Chief Executive of Hamleys plc (1996) and senior
non-executive director of Datamonitor plc (1994 to 2002). Prior to
that he was the managing partner of OC&C Strategy Consultants,
which he co-founded in 1986.
Mr Cullinan was appointed a Director in 2012.
Roger Perkin
Mr Perkin is a former senior partner at Ernst & Young with
extensive global accounting experience and financial services
expertise. He spent 40 years at Ernst & Young and its
predecessor firms, including over 30 years as a Partner, working
with a wide range of clients before specialising in financial
services. He is a director of Nationwide Building Society, Friends
Life Group and Tullett Prebon plc.
Mr Perkin was appointed a Director in 2010.
Note
All Directors are also Directors of the Company's parent company
Electra.
Contact Details
Board of Directors
Roger Yates (Chairman)
Geoffrey Cullinan
Roger Perkin
Telephone +44 (0)20 7214 4200
Company Secretary
Frostrow Capital LLP
25 Southampton Buildings
London WC2A 1AL
Telephone +44 (0)20 3008 4910
Registered Office
Paternoster House
65 St Paul's Churchyard
London EC4M 8AB
Company Number
06885579
Registered Independent Auditors
PricewaterhouseCoopers LLP
Chartered Accountants &
Statutory Auditors
7 More London Riverside
London SE1 2RT
Stockbroker
J.P. Morgan Cazenove
Registrar and Transfer Office
Equiniti Limited
Aspect House
Spencer Road
Lancing
West Sussex BN99 6DA
Telephone (UK) 0871 384 2351 *
Textel/Hard of hearing line (UK) 0871 384 2255 *
Telephone (Overseas) +44 121 415 7047
* Calls to these numbers cost 8p per minute plus network extras.
Lines open 8.30am to 5.30pm, Monday to Friday.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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