TIDMELTA
RNS Number : 3002U
Electra Private Equity PLC
02 December 2021
Electra Private Equity PLC
Unaudited Second Interim Report to 30 September 2021
Update on NAV valuations, progress report on transition of
Electra to Unbound Group PLC and summary of Unbound strategy
Commenting, Neil Johnson, Chairman of Electra Private Equity
PLC, said:
"Following the successful demerger of Hostmore plc on 1 November
2021, we are now entering the final stage of our value realisation
strategy that has now seen us return over GBP2.2 billion to
shareholders from a starting market capitalisation of GBP1.1
billion. We will shortly be starting the formal process that we
intend will lead early in 2022 to the transition of Electra from
the FTSE main market listing to AIM as Unbound Group PLC - a
company that will build on the solid foundation of Hotter Shoes to
grow value through a digital platform supporting the active
lifestyles of the 55 plus demographic with a range of products and
services."
Group Highlights
-- Hostmore plc successfully demerged on 1 November 2021;
-- Electra's current accounting period being extended to
immediately before the planned transition to AIM in early 2022, as
such today's report covering the period to 30 September 2021 is an
unaudited Second Interim Report;
-- Net asset value ("NAV") of Electra as at 30 September 2021
(including maintained transaction risk and liquidity discounts) of
GBP205.0 million or 526.0p per share*, attributable post Hostmore
demerger as 107p per share to Electra/Unbound and 418.9p per share
to Hostmore, equivalent to 129.5p per Hostmore share;
-- Illustrative undiscounted NAV of Electra as at 30 September
2021 (assuming unwind of transaction execution risk, liquidity and
other discounts applied to 30 September 2021 valuation) of GBP325.5
million or 835.2p per share**, attributable post Hostmore demerger
as 173.2p per share to Electra/Unbound and 662.0p per share to
Hostmore, equivalent to 204.6p per Hostmore share;
-- Formal process to complete the Electra transition to Unbound
Group PLC ("Unbound") to commence shortly, with anticipated
completion early in 2022 (subject to shareholder approval); and
-- As announced on 2 November 2021, in preparation for the
transition of Electra to Unbound, two new independent Non-Executive
Directors - Baroness Kate Rock and Suki Thompson have been
appointed to the Electra Board.
Unbound Strategy Summary and Progress
-- Hotter sells its products to over 29% of the UK 55 plus
female population through its direct-to-consumer channels. Building
on the strong brand, customer trust and customer loyalty enjoyed by
Hotter, and reflected in its already rapidly growing range of
digital partnerships selling Hotter products on other leading
online platforms, the group is now building a similar, Unbound
platform to offer a range of selected non-Hotter products and
services that will enhance the enjoyment and wellbeing of customers
in the 55 plus demographic.
-- Cultural and demographic shifts provide a significant
opportunity for Unbound to address a customer audience that is
materially under-served online with the characteristics of:
o rapidly increasing digital literacy - 55 plus demographic now
generating over 30% of overall internet participation;
o long term structural growth in older demographics,
significantly in excess of growth in younger demographics;
o focus on health, wellbeing, leisure and recreation with a more
acute need for comfort over performance; and
o high concentration of UK wealth in the demographic results in
focus for product selection being on value rather than price.
-- The digital platform being built by Unbound allows the
development of a low risk, mutually beneficial arrangement with
select partners which will provide customers in the targeted 55
plus demographic not only with relevant and lifestyle enhancing
products and services but ultimately also a community platform;
-- Initially targeted Unbound brand partners have been
identified and commercial negotiations are in progress; and
-- First Unbound revenues from sales on its own platform of
products other than Hotter footwear expected in Q2 2022, with
medium-term ambition to generate more than half of Unbound's profit
from non-Hotter products.
* This valuation reflects transaction execution risk, liquidity
and other discounts that reflect the circumstances as at 30
September when both businesses were unlisted and completion of the
demerger and subsequent transition of Electra to Unbound was
uncertain (a discount to Fridays value of 33% and to Hotter value
of 35%).
**In the circumstances of the subsequent successful demerger of
Hostmore and planned transition of Electra into Unbound, this
valuation illustrates the impact of removing these discounts to
reflect the adjusted value of Hostmore and Hotter/Unbound as
independent listed businesses using undiscounted peer
multiples.
1
Hotter Shoes Operational Progress and Trading Update
-- Strong trading in light of market-wide supply chain issues
and other headwinds facing ecommerce businesses, with trading
performance remaining consistent with medium-term guidance given at
the Unbound Group Capital Markets Day on 15 September 2021;
-- EBITDA of GBP2.5 million generated from revenue of GBP25
million for H1 FY22 (six months ending July 2021) under FRS;
-- Sales in the third quarter to October were up 9% on prior
year with gross margin increased from 56.2% to 65.8%;
-- Trading over the key "Black Friday" period was up over 10% on the same period last year;
-- Continuation of Hotter's key financial performance trends
including direct-to-consumer driven revenue growth, gross margin
expansion and rapidly accelerating capture of email addresses
taking its database to over one million, up from 850,000 in
September 2021;
-- Effective management of supply chain disruption, with UK
manufacturing facility providing some resilience and the reopening
of supplier factories following Covid-19 lockdowns in India and
Vietnam allowing product availability to recover in October 2021,
however planning assumes disruption continues into 2022;
-- High product demand remained during this period of
disruption, and the direct-to-consumer focused model has allowed
some level of back-orders to be accumulated for later fulfilment as
components and finished goods become available;
-- Increased supply chain costs primarily in relation to
incoming air freight costs, which represents a future opportunity
for cost optimisation as the supply chain reset continues and sea
freight is reintroduced.
ENQUIRIES
Electra Private Equity PLC
Gavin Manson, Chief Financial and Operating Officer
020 3874 8300
Vico Partners
Sofia Newitt
020 3957 5045
2
Chairman's Statement
"Following the successful demerger of Hostmore plc on 1 November
2021, we are now entering the final stage of our value realisation
strategy that has now seen us return over GBP2.2 billion to
shareholders from a starting market capitalisation of GBP1.1
billion. We will shortly be starting the formal process that we
intend will lead in early 2022 to the transition of Electra from
the FTSE main market listing to AIM as Unbound Group PLC - a
company that will build on the solid foundation of Hotter Shoes to
grow value through a digital platform supporting the active
lifestyles of the 55 plus demographic with a range of products and
services."
Background
In late 2018 the Electra Board completed an assessment of the
remaining portfolio, principally Sentinel Performance Solutions
("Sentinel"), Hotter Shoes ("Hotter") and TGI Fridays ("Fridays")
and concluded that each held a significant value creation
opportunity but required significant work in order to realise it.
We targeted completion of our strategy by the end of 2021. With new
management in place in each business, we embarked on the
development and implementation of transformation plans in each
business. The emergence of the Covid-19 pandemic required our
implementation plans to be significantly adapted but not our
targeted end position. We were delighted to complete a very good
exit from Sentinel in May 2021 and have thereafter focussed on
delivering the platform for future value creation through both the
demerger of Hostmore plc ("Hostmore") and the transformation of
Electra into Unbound Group PLC ("Unbound").
The successful completion of the Hostmore demerger on 1 November
2021 marked a key point in the implementation of our strategy.
Hostmore is a highly profitable and cash generative business with a
very strong management team and clear growth strategy. The Board is
confident that Hostmore will create future value significantly
greater than our necessarily discounted September valuation, in
which we continue to take account of both liquidity discount and
transaction execution risk in the discount, reflecting the position
in the transaction timetable as at that date when regulatory
clearances and shareholder approval had yet to be obtained.
We recognise that the market capitalisation of Hostmore
immediately following the demerger is below what we believe is the
true value of the business. Contributing factors to the discount
now prevailing, as at the date of this statement, include the
expected recycling of shares by Electra investors and some
short-term associated volatility following the demerger, the impact
of a negative forward-looking statement from a peer group
comparator, arising in part from reasons wholly unconnected with
Hostmore's own investment case and ongoing uncertainty over Covid
risk to trading conditions. Whilst both Electra and Hostmore
management acknowledge the existence of forward-looking non
Covid-19 pressures affecting the outlook which may affect some peer
group companies, Hostmore's management actions and mitigations
provide us with confidence that Hostmore's future performance will
not be significantly impacted by these issues. Accordingly, we
believe that the fair value of Hostmore as an independent listed
business is more closely aligned to that implied by our adjusted 30
September 2021 valuation (reflected in Table 2 below) announced
today, which is reinforced by the valuations referenced in the
post-demerger research notes published by Numis and Edison. The
Electra Board is confident that Hostmore can deliver significant
value for shareholders going forward and wish the company, its
employees and management well.
Change of Accounting Period
In shortly instigating the process that will, subject to
shareholder approval, see Electra transition to AIM as Unbound
Group PLC in early 2022, we intend aligning the Electra accounting
period with that transition. As such, the current Electra
accounting period will be extended to a date immediately before the
admission to trading on AIM, and therefore this report is a second
interim report to 30 September 2021. It is anticipated that Electra
will cease to be an investment trust with effect from its
transition to AIM in early 2022.
Board Valuation as at 30 September 2021
This report reflects the value the Board considers appropriate
for each of our portfolio assets as at 30 September 2021
individually on the basis of the circumstances in effect at that
time. Given the subsequent demerger of Hostmore and the planned
transition to Unbound, Table 1 below reflects the assets held at 30
September grouped appropriately to reflect both the implied equity
value attributable to each of Hostmore and Unbound as well as the
value attributable to Electra shareholders based on our 30
September 2021 valuations. These valuations reflected in Table 1
below continue to reflect an enterprise value subject to a
transaction execution risk, liquidity and other discounts (in
comparison to listed peers) that reflects the circumstances as at
30 September 2021 when completion of the demerger and subsequent
transition of Electra to Unbound were both uncertain (discounts:
Fridays 33% and Hotter 35%). In the circumstances of the subsequent
successful demerger of Hostmore and proposed admission of Unbound
to AIM, in Table 2 we have illustrated the impact of removing these
discounts to reflect the adjusted estimated value of Hostmore and
Hotter/Unbound as independent listed businesses with valuation
multiples equivalent to their listed peers.
The 35% discount applied to Hotter in the 30 September valuation
and reflected in Table 1 below, includes an assessment of the risk
at the time of completing the extension of its existing banking
facilities. Hotter is currently engaged with its existing bankers
to extend its current facilities to 31 December 2024 whilst at the
same time reducing its gross debt from GBP17.1 million to GBP12.1
million (through an equity investment from Electra). The Board are
confident that this facility amendment will be completed in order
to allow the AIM transition to proceed.
3
Table 1: as reported as at 30 September 2021 - including
application of discount
GBPmillion Electra Hostmore Unbound
-------------------------------------------- --------- --------- --------
Hostmore equity value* 176.0* 176.0* -
Hotter equity value* 33.5* - 33.5*
Management shareholding (15.9) (12.7) (3.2)
Assets being realised** 1.3 - 1.3
Assets being retained*** 2.2 - 2.2
Cash 8.2 - 8.2
Other net liabilities**** (0.3) - (0.3)
-------------------------------------------- --------- --------- --------
NAV attributable to Electra shareholders
as at 30 September 205.0 163.3 41.7
-------------------------------------------- --------- --------- --------
NAV per share (Electra) 525.9p 418.9p 107.0p
NAV per share (Hostmore) - 129.5p -
-------------------------------------------- --------- --------- --------
*Reflects transaction execution/liquidity discounts of 33% (Fridays)
and 35% (Hotter)
**Assets expected to be realised prior to transition to Unbound
***An illiquid property investment expected to be retained with
annual income of approx. GBP0.3 million
****includes accrual for operating costs prior to transition to
Unbound
----------------------------------------------------------------------------
Table 2: Pro-forma as at 30 September 2021 - assuming demerger
and unwind of discount reflected as at 30 September
GBPmillion Electra Hostmore Unbound
------------------------------------------ -------- --------- --------
Hostmore equity value* 278.2* 278.2* -
Hotter equity value* 59.4* - 59.4*
Management shareholding (25.3) (20.2) (5.1)
Assets being realised** 4.0 - 4.0
Assets being retained*** 2.2 - 2.2
Cash 8.2 - 8.2
Other net liabilities**** (1.2) - (1.2)
------------------------------------------ -------- --------- --------
NAV attributable to Electra shareholders
as at 30 September 325.5 258.0 67.5
------------------------------------------ -------- --------- --------
NAV per share (Electra) 835.2p 662.0p 173.2p
NAV per share (Hostmore) - 204.6p -
------------------------------------------ -------- --------- --------
*Reported values adjusted to take out the transaction risk and
liquidity discount reflected in 30 September valuation
**Assets expected to be realised prior to transition to Unbound.
Includes 1.6% shareholding in Hostmore plc
***An illiquid property investment expected to be retained with
annual income of approx. GBP0.3 million
****includes accrual for operating costs prior to transition to
Unbound
-------------------------------------------------------------------------
The Hotter equity value reflected in both tables above does not
reflect any value arising from an ongoing business interruption
insurance claim relating to the Covid-19 pandemic lockdowns. A
range of recovery outcomes from this claim is possible ranging from
nil to in excess of GBP15 million. Resolution is expected in late
2022 or early 2023.
Management Shareholdings
As has been the case in previous reporting periods, the values
attributable to the shareholders of Electra noted above are arrived
at after deducting amounts due to management as a result of value
creation incentives agreed on their recruitment. On demerger,
Hostmore equity reflecting 7.3% of the issued capital was issued to
Hostmore management in satisfaction of their management incentive
plans. Similarly, it is intended that Unbound management will be
issued new Electra/Unbound equity which is currently envisaged to
total approximately 7.8% of the issued capital of Electra/Unbound.
No formal arrangements have yet been entered into. The structure of
these incentives ensures ongoing alignment between the executives
of both companies and shareholders and has no direct impact on the
value attributable to Electra shareholders immediately before the
relevant transaction.
Transition is Subject to Shareholder Approval
As indicated above we will shortly be instigating the formal
processes to complete the transition of Electra to Unbound. These
will involve the calling of a General Meeting of shareholders to
consider certain resolutions in respect of the delisting from the
FTSE main market, with the subsequent admission to trading on AIM.
It is the intention of the Board to unanimously support these
resolutions and to vote in favour of each resolution in respect of
shares held by the Directors.
Unbound Group PLC Strategy
Electra acquired the Hotter Business in 2014 based on its long
heritage as a direct-to-consumer brand that designed, manufactured
and retailed comfort footwear to the 55 plus demographic. At the
time of the acquisition, the growth of the Hotter businesses was
primarily driven through an extensive store roll out programme.
Having been transformed over the last two years into a
digital-first proposition with a right-sized store portfolio, the
Hotter business has returned to growth and is a profitable and cash
generative business. The Hotter business serves almost 1 in 3 of
the over the age of 55 female population in the UK - providing them
with footwear that allows them to get more from the active
lifestyle they love.
4
Building on the strong brand, customer trust and customer
loyalty enjoyed and being strengthened by Hotter, Unbound intends
to extend the range of digital partnerships to create a curated
platform offering additional products and services that will
enhance the enjoyment and wellbeing of customers in the 55 plus
demographic. With the Hotter business already selling to over 29%
of the UK female population over the age of 55, the Directors
believe that this offers an opportunity for significant sustainable
growth beyond that already being delivered by Hotter.
The Directors believe that cultural and demographic shifts
provide an opportunity for Unbound to address a customer audience
that is materially under-served online with the characteristics
of:
-- rapidly increasing digital literacy - 55 plus demographic now
generating over 30% of overall internet participation;
-- long-term structural growth in older demographics,
significantly in excess of growth in younger demographics;
-- focus on health, wellbeing, leisure and recreation with a
more acute need for comfort over performance; and
-- high concentration of UK wealth in the demographic results in
focus for product selection being on value rather than price.
The digital marketplace platform being implemented by Unbound
allows the development of a low risk, mutually beneficial
arrangement with select partners that will provide customers in the
targeted 55 plus demographic not only with relevant and lifestyle
enhancing products and services but ultimately also a community
platform.
Initially targeted Unbound brand partners have been identified
and commercial negotiations are advanced. The extension of the
Hotter IT infrastructure for existing "outbound" partnerships
selling footwear through to coverage of "inbound" partnerships
selling other products and services is in progress. The first
Unbound revenues from products other than Hotter footwear are
expected in Q2 2022 with the medium-term ambition being to generate
more than half of Unbound profit from non-Hotter products.
The Directors believe that the value deliverable to shareholders
through the transition of Electra to Unbound is significantly
greater than the value realisable through selling the Hotter
business as it is via a private sale process and is more
appropriate given the growth potential of Unbound. The AIM
Transition also provides Shareholders with the opportunity to
continue to hold their investments in order to participate in
future value creation opportunities afforded by Unbound and its
existing foundation, the Hotter business.
Hotter Trading
Current Hotter trading has been strong and extremely pleasing in
light of the market wide supply chain issues and other headwinds
facing e-commerce businesses. The trading performance remains
consistent with that envisaged in the medium-term guidance given at
the Unbound Group Capital Markets Day on 15 September 2021.
In H1 FY22 (ending July 2021), Hotter generated EBITDA of GBP2.5
million from revenue of GBP25 million. Third quarter sales of
GBP12.7m were up 9.2% on the prior year with gross margin improved
from 56.2% to 65.8% (all on FRS basis).
We have seen a continuation of Hotter's key trends including
direct-to-consumer driven revenue growth, gross margin expansion
and a rapidly accelerating capture of customer email addresses
taking its database to over one million, up from 850,000 in
September 2021. App downloads continue to accelerate and there is a
continuing recovery in sales within the retail channel.
Hotter is seeing an improvement in the supply chain disruption
that was evident at the start of the Autumn/Winter season in August
and September 2021, however, Hotter is continuing to plan for
ongoing disruption given the widely publicised expectation of
continued disruption in 2022. Hotter's UK manufacturing facility
has provided additional resilience and the reopening of supplier
factories following Covid-19 lockdowns in India and Vietnam allowed
product availability to recover in October 2021, with further
progress in November 2021 albeit impacted again by cyclones in
southern India in recent weeks. Trading over the key "Black Friday"
period was up over 10% on the same period last year.
Product demand has remained high during this period of
disruption and Hotter's direct-to-consumer focussed model allows
some level of back-orders to be accumulated that are being
satisfied as components and finished goods become available.
The impact of costs on the supply chain has been primarily in
relation to incoming freight costs to accelerate raw material
delivery on reopening of supplier factories. Supply disruption has
resulted in increased levels, and costs, of air freight. These
costs are reflected in trading results over recent months and
represent a future opportunity as the supply chain reset continues
and sea freight is reintroduced.
Board composition
In preparation for the planned transition of Electra to Unbound,
as announced on 2 November 2021, the Electra Board has appointed,
with effect from 1 November 2021, two new independent Non-Executive
Directors, both of whom bring relevant skills and significant
experience to the Board.
Baroness Kate Rock is Senior Independent Director of Keller
Group plc and a Member of the House of Lords where she sits on the
Science and Technology Select Committee and was a director of
Imagination Technologies Group PLC until November 2017. She brings
significant experience in the development and application of
business data, technology and skills.
5
Suki Thompson is Founder and Chief Executive Officer of the
wellbeing and performance consultancy Let's Reset, Chair of
Xeim/Oystercatchers and a Non-Executive Director of Gateley Plc.
She brings significant experience in the development and execution
of marketing and digital transformation strategies across consumer
sectors and has extensive experience of creating and implementing
wellbeing programs.
Both new independent Non-Executive Directors will join each of
the Audit & Risk, Remuneration and Nominations Board
Committees.
As previously indicated, following the demerger of Hostmore,
David Lis has stepped down as Senior Independent Director of
Electra to fulfil the same role with Hostmore. Stephen Welker has
also stepped down from the Board. Both David and Stephen continue
to be supportive shareholders of the Company. The Board would like
to thank David and Stephen for their significant contributions to
the implementation of the Electra strategy over recent years and
wish them well.
Paul Goodson has assumed the roles of Senior Independent
Director and Chair of the Remuneration Committee in succession to
David Lis.
The significant progress we have made in the current financial
period towards the successful implementation of our strategy has
only been achievable through the talent and dedication of the
management and wider teams at each of Sentinel, Hotter and
Fridays/Hostmore, and I thank them on behalf of the Board and
shareholders.
Neil Johnson
Chairman
01 December 2021
6
Portfolio Review
Portfolio movement
The value of Electra's investment portfolio rose from GBP128.6
million to GBP197.1 million during the twelve months to 30
September 2021, mainly due to an increase of GBP79.5 million in
investment valuations slightly offset by net realisation of GBP11.0
million.
2021 2020 2019 2018
For the twelve months ended 30 September GBPm GBPm GBPm GBPm
------------------------------------------ ------- ------- -------- -------
Opening investment portfolio 128.6 192.4 267.0 358.0
Investments 13.6 4.1 9.0 45.0
Realisations (24.6) (12.0) (119.0) (63.0)
Investment return 79.5 (55.9) 35.4 (73.0)
------------------------------------------ ------- ------- -------- -------
Closing investment portfolio 197.1 128.6 192.4 267.0
------------------------------------------ ------- ------- -------- -------
Investment Net investments/ Investment Investment
fair value as at (realisations) return fair value as at
30 September 2020 30 September 2021
GBPm GBPm GBPm GBPm
-------------------------------- ------------------- ----------------- ----------- -------------------
TGI Fridays 106.6 12.6 44.1 163.3
Sentinel Performance Solutions 10.9 (22.2) 11.3 -
Hotter Shoes 5.8 1.0 23.5 30.3
-------------------------------- ------------------- ----------------- ----------- -------------------
Total core investments 123.3 (8.6) 78.9 193.6
-------------------------------- ------------------- ----------------- ----------- -------------------
Special Product Company 1.0 - 0.3 1.3
Other 3.9 (2.0) 0.3 2.2
Secondaries 0.4 (0.4) - -
Total non-core investments 5.3 (2.4) 0.6 3.5
-------------------------------- ------------------- ----------------- ----------- -------------------
Total investment portfolio 128.6 (11.0) 79.5 197.1
-------------------------------- ------------------- ----------------- ----------- -------------------
Realisations
Total realisations for the twelve months to 30 September 2021
amounted to GBP24.6 million compared with GBP12.0 million in the
corresponding period in 2020.
Realisations 2021 2020
During the twelve months ended 30 September GBPm GBPm
--------------------------------------------- ----- -----
Sentinel Performance Solutions 22.2 -
Special Product Company - 8.6
Other 2.0 1.8
--------------------------------------------- ----- -----
Total core investments 24.2 10.4
--------------------------------------------- ----- -----
Secondaries/debt 0.4 1.6
Total realisations 24.6 12.0
--------------------------------------------- ----- -----
7
Key Investments
Fridays/Hostmore
The UK franchise of an American-themed restaurant chain
providing a high energy and fun environment, with a wide
demographic appeal.
Investment valuations
2021 2020 2019 2018
As at 30 September GBPm GBPm GBPm GBPm
----------------------- ------ ------ ------ ------
Investment valuations 163.3 106.6 141.4 126.0
------------------------ ------ ------ ------ ------
Hostmore has been created to provide a platform for the
development of hospitality brands to supplement the continued
growth of Fridays and 63rd+1st. Its management team, led by Robert
B. Cook as CEO and Alan Clark as CFO, has a successful track record
of building and leading businesses in the hospitality and leisure
sectors.
The Hostmore Business is, and will be, defined by an iconic
brand experience, vibrant heritage and sector-leading technology.
Its strategic focus will be to optimise its brands, aligning them
with evolving consumer demands and delivering personalised customer
engagement, optimising experience and efficiency through digital
leadership. Its mission is to make every customer experience
relevant and engaging, to celebrate the unique heritage and
character of its brands, and create environments where people have
fun and feel welcomed.
Following the demerger, Hostmore will seek to add rapidly
growing, early-stage businesses to its portfolio of complementary
brands, exploring opportunities to extend its offering in
experience-led hospitality and leisure concepts.
The trading of the Hostmore Group following the graduated
relaxation of Covid-19-related restrictions in the first half of
financial year 2021 has been encouraging, as demonstrated by
trading results included in the Hostmore Group's financial results
for the period to 27 June 2021. Further, the Hostmore Group
generated positive EBITDA of GBP23.5 million for FY2020.
Over the 20 week period following the resumption of indoor
dining on 17 May 2021, the Hostmore Business saw like-for-like
sales growth averaging 11.0% vs the same period in 2019 (on a VAT
adjusted basis, (1.0%))**. Like-for-like trading relative to the
market for the 19 week period ended 26 September 2021 reflected a
2.8% outperformance of the market*.
In the 11 week period following the further reduction of
Covid-19 restrictions on 19 July 2021, the Hostmore Business saw
like-for-like sales growth averaging 12.1% vs. the same period in
2019 (on a VAT adjusted basis, 0.1%)**. This reflected a 1.5%
outperformance of the market*.
Net debt, adjusted to include all Covid-19-related accruals, has
reduced to GBP36.4 million at the end of August 2021 (from GBP46.0
million at the end of December 2020). Cash generated from
operations over the three complete calendar months following
resumption of indoor dining on 17 May 2021 (i.e. June to August)
was GBP12.5m. The free cash flow generated during this period of
GBP14.1 million reflects a 103.0% conversion of EBITDA.
* Market comparison based on industry data compiled by Coffer CGA Business Tracker.
** These figures exclude contributions from (i) new stores
opened in both 2019 and 2021, including 63rd+1st stores; and (ii)
the Fridays Covent Garden store which was permanently closed in
September 2021 as well as other stores that closed in financial
years 2019, 2020 and 2021.
8
Hotter Shoes
The UK's largest shoe manufacturer with a strong focus on
comfort and service.
Investment valuations
2021 2020 2019 2018
As at 30 September GBPm GBPm GBPm GBPm
----------------------- ----- ----- ----- -----
Investment valuations 30.3 5.8 35.0 15.0
------------------------ ----- ----- ----- -----
The Hotter Business provides footwear with uncompromising focus
on comfort and fit, delivered through the use of differentiated
technology, to consumers in the UK and US predominantly in the over
55 plus demographic. Founded in 1959, originally as a slipper
manufacturer, Hotter today offers a wide range of men's and women's
footwear with a focus on comfort technology. The Hotter Business
now operates as a digitally-led omni-channel proposition through
online and wholesale channels, supported by a strategically
selected network of 17 technology centres and six gardens centre
concessions across the UK.
Having undergone a significant transformation which started
before the Covid-19 pandemic, the brand has pivoted towards digital
channels whilst maintaining a right-sized and profitable store
portfolio. The result is a digitally-led business which is agile,
flexible and scalable, yielding strong returns from its leading
online business.
Hotter's mission is to provide footwear that enhances its
consumers lives by allowing them to do more of what they enjoy.
Whilst operating from a lower revenue base in the financial year
ended 29 January 2021, Hotter is now a digital-first brand with
higher quality revenues as a result of the successful repositioning
of the business following its strategic transition to an e-commerce
focussed direct to consumer business. Hotter now serves over 29 per
cent. of the UK's female population over the age of 55 direct to
their home. In the first six months of its current financial year
to January 2022, Hotter's direct to consumer sales have grown by
39%. on the corresponding period in 2020.
Following the implementation of a technology infrastructure to
support its developing e-commerce ambitions, Hotter has established
digital partnerships with a number of parties that serve a wide
demographic - including Hotter's targeted consumers.
Sales through these partnerships have grown by 28%. in the six
months to 31 July 2021 compared with the same period in the prior
year.
Hotter continues to demonstrate delivery as an e-commerce
focussed business and with further product improvements being
introduced on an ongoing basis the Directors have confidence that a
standalone Hotter has the opportunity to deliver value well in
excess of that assigned to it in recent valuations. The
demonstration of sustained growth and profitability in its new
model and the resilience and performance to date give the Directors
grounds for confidence in its development as an increasingly
profitable digital business serving its target demographic of 55
plus in the UK, the US and beyond.
Current Hotter trading has remained strong and extremely
pleasing in light of the market wide supply chain issues and other
headwinds facing e-commerce businesses. For the half year period
ending July 2021, the Hotter Business generated EBITDA of GBP2.5
million from revenue of GBP25 million (on a FRS basis). Over the 12
months to October 2021, the Hotter Business generated revenue of
GBP50.4 million with gross margins and costs consistent with those
envisaged in the medium-term guidance given at the Unbound Group
capital markets day on 15 September.
In the third quarter we have seen a continuation of the key
trends underlying the Hotter Business, including direct to consumer
driven revenue growth, gross margin expansion and a rapidly
accelerating capture of email addresses taking its database to over
one million, up from 850,000 in September 2021. App downloads
continue to accelerate and there is a continuing recovery in sales
within our retail channel.
The Hotter Business is seeing an improvement in the supply chain
disruption which occurred at the start of the Autumn/Winter season
in August and September 2021. The Hotter Business's UK
manufacturing facility has provided additional resilience and the
reopening of supplier factories following Covid-19 lockdowns in
India and Vietnam has allowed product availability to recover in
October 2021, with further progress expected before the key
November 2021 trading period. Product demand has remained high
during this period of disruption and the Hotter Business's
direct-to-consumer focussed model allows some level of back-orders
to be accumulated that are being satisfied as components and
finished goods become available.
The impact on costs arising from the supply chain disruption has
been primarily in relation to incoming freight costs to accelerate
raw material delivery on the reopening of supplier factories.
Supply chain disruption has resulted in increased levels and costs
of air freight. These costs are reflected in the trading results
over recent months, but also represents future opportunities for
cost reduction as the supply chain reset continues and supply via
sea freight is restored.
9
CFOO's Review
"Following a first six months of the financial period focussed
on optimising each portfolio business as we emerged from lockdown,
and in securing a good exit on Sentinel, subsequent months have
been focussed on preparation for the final transactions of our
value realisation strategy and delivery of the Hostmore demerger.
The demerger of Hostmore as a strong independent business was a key
milestone and we are now excited to be working confidently towards
transition into Unbound Group PLC and the delivery of the
significant value creation that we believe is possible through
delivery of the Unbound strategy."
Operating activities
The successful sale of Sentinel in April was an important first
step during the period with the GBP22.2 million cash proceeds being
a positive return on the GBP1.7 million invested since we assumed
control in 2019 for a nominal sum. Although a much smaller
business, the GBP1.6 million proceeds from the sale of Adjustoform
in May also provided a positive outcome for a business that had
until 2020 been valued at GBP0.5 million on a break-up basis.
In preparing both Hostmore and Hotter for futures as independent
businesses a significant proportion of Electra's cash has been
invested in each business. GBP12.5 million was invested in Hostmore
pre-demerger to support working capital and the payment of
transaction costs. Similarly, Hotter's gross debt will be reduced
by GBP5 million to GBP12.1 million prior to Electra's
transformation into Unbound and we anticipate approximately GBP3
million cash being retained in Unbound to support delivery of its
partnership strategy.
Preparation for transition to Unbound Group includes realisation
of all but one of Electra's significant portfolio assets other than
Hotter. These disposals are expected to realise GBP4 million prior
to transition. This cash is taken into account in the expected
retained cash referenced above. The asset retained by Unbound is a
shared leasehold interest in an industrial property. This interest
will produce an annual income of GBP0.3 million for Unbound until
2032.
Operating costs and Share of Value Plan ("SoVP")
Operating costs continue to be closely managed consistent with
the implementation of our realisation strategy. In May 2021
following an increase in the share price, the SoVP vested. This
vesting reflects the performance of the Company over the period
from 1 January 2018 when the SoVP came into effect. In light of the
intended public market solutions for Fridays and Hotter, the cash
vesting of the plan created a potential misalignment between
executive and shareholder interests. In light of this and
reflecting their belief in the value creation opportunity from
Fridays and Hotter, the executives have invested the full GBP3.7
million net proceeds from vesting of the SoVP in new Electra
shares, issued by the Company at 530.0p each. The executives have
undertaken to retain these new shares for a period of at least six
months following the capital market transition for each company.
The gross cost of vesting, including employer's National Insurance
Contributions, is GBP7.9 million. This cost is partially
economically hedged by the 690,481 Electra shares held in the
Electra Employee Benefit Trust (the "Trust"). These shares are
being retained and will act as a partial economic hedge against
portfolio company management incentives linked to value
creation.
Accounting Period
The planned transition to Unbound Group PLC early in 2022 makes
it advantageous to extend the current Electra accounting period to
a date immediately in advance of that transition. This helps ensure
a smooth transition from an investment trust to being the parent of
an AIM listed group, with associated changes in the basis of
accounting.
Going Concern
Following the adoption of the wind down strategy in 2018, it
became appropriate, in light of the likely ultimate wind-up of the
Company, for the Company to report on a basis other than that of a
going concern. Given the intention now to reclassify the Company as
a trading holding company for Hotter, admitted to trading on AIM,
this basis of preparation is no longer appropriate. As such these
accounts are prepared on the basis of a going concern. Given the
situation of the Company, the change of basis of preparation has no
numerical impact on the financial performance or position of the
Company as reported.
In the current circumstances of the proposed transformation to
Unbound Group PLC being subject to shareholder and other approvals
the Company has conducted a going concern review on the basis of
both that transformation proceeding as planned and on the basis
that it does not. On both basis it was concluded that preparation
of the report on a going concern basis was appropriate because the
Group is expected to be able to meet its liabilities as they fall
due for a period of 12 months from the date of approval of the
interim financial statements.
10
Analysis of movement in net asset value ("NAV") per share
NAV per share rose by 172.5p driven by an increase in investment
valuations and income of 197.1p, offset by expenses of 24.6p.
NAV per share p
-------------------------- -------
As at 1 October 2020 353.4
Capital gains and income 197.1
Expenses and other (24.6)
As at 30 September 2021 525.9
-------------------------- -------
Net liquid resources
As at 30 September 2021, the Company held GBP0.6 million (2020:
GBP1.3 million) of cash and GBP7.6 million (2020: GBP5.6 million)
of money market fund investments.
Gearing (including leverage under AIFMD)
Under AIFMD, the Company is required to calculate leverage under
the two methodologies specified by the Directive, the 'Gross
Method' and the 'Commitment Method'. The AIFM has currently set a
maximum limit of 230% on the use of leverage based on the Gross
Method and a maximum limit of 230% on the use of leverage based on
the Commitment Method, which the AIFM considers consistent with the
gearing limit set out in the Company's Investment Objective and
Policy.
At 30 September 2021, Electra was ungeared at the Group
level.
Gavin Manson
Chief Financial and Operating Officer
01 December 2021
11
Condensed Consolidated Income Statement
Unaudited Audited
2021 2020
Revenue Capital Total Revenue Capital Total
Note For the twelve months ended 30 September GBPm GBPm GBPm GBPm GBPm GBPm
----- ---------------------------------------------- -------- -------- ------- -------- -------- --------
2 Investment income 6.4 - 6.4 0.7 - 0.7
7 Investment gains/(losses) - 70.5 70.5 - (57.8) (57.8)
3 Other expenses (10.8) - (10.8) (2.5) - (2.5)
Loss on revaluation of foreign currencies - - - - (0.2) (0.2)
Net (loss)/return before tax (4.4) 70.5 66.1 (1.8) (58.0) (59.8)
Tax - - - (0.2) - (0.2)
----- ---------------------------------------------- -------- -------- ------- -------- -------- --------
(Loss)/return after tax (4.4) 70.5 66.1 (2.0) (58.0) (60.0)
6 Basic and diluted (loss)/return per share (p) (11.5) 184.1 172.6 (5.0) (151.4) (156.4)
----- ---------------------------------------------- -------- -------- ------- -------- -------- --------
The "Total" columns of this statement represent the Group's
Condensed Consolidated Income Statement prepared in accordance with
International Financial Reporting Standards adopted by the EU
("IFRS"). The supplementary "Revenue" and "Capital" columns are
prepared under guidance published by the Association of Investment
Companies ("AIC").
All activities represent continuing operations. The Company has
no recognised gains and losses other than those shown above and
therefore no separate Statement of Total Comprehensive Income has
been presented.
The accompanying notes on pages 16 to 23 are an integral part of
the Second Interim Report.
12
Condensed Consolidated Statement of Changes in Equity
Note For the twelve Called Own shares Capital Revenue Total
months ended 30 up share Share held reserve reserve equity
September 2021 capital premium
(unaudited)
----- -------------------
GBPm GBPm GBPm GBPm GBPm
----- ------------------- ---------- ---------- ----------- --------- --------- --------
As at 1 October
2020 9.6 - (2.4) 76.9 51.2 135.3
10 Share issuance 0.1 3.5 - - - 3.6
Net return during
the period - - - 70.5 (4.4) 66.1
As at 30 September
2021 9.7 3.5 (2.4) 147.4 46.8 205.0
----- ------------------- ---------- ---------- ----------- --------- --------- --------
Note For the twelve Called Capital Own shares Capital Revenue Total
months ended 30 up share Share redemption held reserve reserve equity
September 2020 capital premium reserve
(audited)
----- -------------------------
GBPm GBPm GBPm GBPm GBPm GBPm GBPm
----- ------------------------- ---------- ---------- ------------ ----------- --------- --------- --------
As at 1 October
2019 9.6 122.9 34.9 (0.4) (11.6) 54.5 209.9
Net loss during
the period - - - - (58.0) (0.7) (60.0)
10 Reserve reclassification - (122.9) (34.9) - 157.8 - -
10 Share forfeiture - - - - 0.5 - 0.5
Share-based payments - - - (2.0) - (1.3) (3.3)
8 Dividends - - - - (11.8) - (11.8)
----- ------------------------- ---------- ---------- ------------ ----------- --------- --------- --------
As at 30 September
2020 9.6 - - (2.4) 76.9 51.2 135.3
----- ------------------------- ---------- ---------- ------------ ----------- --------- --------- --------
The accompanying notes on pages 16 to 23 are an integral part of
the Second Interim Report.
13
Condensed Consolidated Balance Sheet
Unaudited Audited
2021 2020
Note As at 30 September GBPm GBPm
----- ------------------------------------------------ ----------- ------------
Non-current assets
7 Investments held at fair value 197.1 128.6
----- ------------------------------------------------ ----------- ------------
197.1 128.6
----- ------------------------------------------------ ----------- ------------
Current assets
7 Investments held at fair value 7.6 5.6
Trade and other receivables 1.0 0.6
Current tax asset 0.1 0.3
Cash and cash equivalents 0.6 1.3
----- ------------------------------------------------ ----------- ------------
9.3 7.8
----- ------------------------------------------------ ----------- ------------
Current liabilities
9 Trade and other payables (1.4) (0.9)
----- ------------------------------------------------ ----------- ------------
(1.4) (0.9)
----- ------------------------------------------------ ----------- ------------
Total assets less current liabilities 205.0 135.5
----- ------------------------------------------------ ----------- ------------
Non-current liabilities
Provisions for liabilities and charges - (0.2)
- (0.2)
----- ------------------------------------------------ ----------- ------------
Net assets 205.0 135.3
----- ------------------------------------------------ ----------- ------------
Capital and reserves
10 Called up share capital 9.7 9.6
10 Share premium 3.5 -
10 Own shares held (2.4) (2.4)
10 Capital reserve 147.4 76.9
10 Revenue reserve 46.8 51.2
----- ------------------------------------------------ ----------- ------------
Total equity 205.0 135.3
----- ------------------------------------------------ ----------- ------------
11 Basic and diluted net asset value per share (p) 525.9 353.4
----- ------------------------------------------------ ----------- ------------
10 Number of ordinary shares in issue 38,973,329 38,282,763
----- ------------------------------------------------ ----------- ------------
The accompanying notes on pages 16 to 23 are an integral part of
the Second Interim Report.
Approved by the Board of Directors and signed on its behalf
by:
Neil Johnson Gavin Manson
Chairman Chief Financial and Operating Officer
01 December 2021 01 December 2021
Electra Private Equity PLC
Company Number: 00303062
14
Condensed Consolidated Cash Flow Statement
For the twelve months ended 30 September Unaudited Audited
-----------------------------------------------------
2021 2020
-----------------------------------------------------
GBPm GBPm
----------------------------------------------------- ---------- --------
Operating activities
Purchase of trading investments (34.6) (14.0)
Sales of trading investments 41.6 31.6
Dividends and distributions received 0.6 1.5
Interest income received 1.5 -
Expenses paid (9.9) (4.6)
----------------------------------------------------- ---------- --------
Cash (used)/generated from operations (0.8) 14.5
Tax repaid 0.2 0.6
----------------------------------------------------- ---------- --------
Net cash (outflow)/inflow from operating activities (0.6) 15.1
----------------------------------------------------- ---------- --------
Financing activities
Dividends paid - (11.8)
Share forfeiture - 0.5
Purchase of shares held under incentive schemes - (2.0)
Repayment of lease liabilities (0.1) (1.0)
----------------------------------------------------- ---------- --------
Net cash used in financing activities (0.1) (14.3)
----------------------------------------------------- ---------- --------
Net (decrease)/increase cash and cash equivalents (0.7) 0.8
Cash and cash equivalents at 1 October 1.3 0.5
Cash and cash equivalents at 30 September 0.6 1.3
----------------------------------------------------- ---------- --------
The accompanying notes on pages 16 to 23 are an integral part of
the Second Interim Report.
15
Notes to the Accounts
1. Segmental Analysis
The Group operates a single business segment for reporting
purposes and is managed as a single investment company, with
multiple investment categories including buyouts and secondaries.
Reporting is provided to the Board of Directors on an aggregated
basis. The Company's portfolio of investments is predominantly
based in the United Kingdom.
2. Revenue Income
Unaudited Audited
2021 2020
For the twelve months ended 30 September GBPm GBPm
------------------------------------------ ---------- --------
Interest income 5.8 0.1
Other income 0.6 0.6
Total revenue income 6.4 0.7
------------------------------------------ ---------- --------
3. Other Expenses
For the twelve months ended 30 September Unaudited Audited
2021 2020
GBPm GBPm
------------------------------------------ ---------- --------
Administrative expenses 10.8 2.5
------------------------------------------ ---------- --------
Total other expenses 10.8 2.5
------------------------------------------ ---------- --------
Administrative expenses for the twelve months period ended 30
September 2021 above includes a GBP7.6 million (2020: GBPnil)
charge related to vesting of the Executive Share of Value Plan
("SoVP"), as detailed in the CFOO's Review.
4. Right-of-Use Assets
Unaudited Audited
2021 2020
GBPm GBPm
------------------------------------- ---------- --------
Opening balance 0.3 -
Adjustment on transition to IFRS 16 - 1.5
Additions - 0.4
Disposals - (1.1)
Depreciation (0.1) (0.2)
Balance as at 30 September 0.2 0.3
------------------------------------- ---------- --------
The Company adopted IFRS 16 Leases on 1 October 2019, in respect
of the head office which the Company rents, using the "modified
retrospective" approach on transition. Prior to adoption of IFRS
16, the lease was recognised as an operating lease and the related
rental expenses were recognised in other expenses in the Income
Statement.
The head office property is the only right-of-use asset in the
Company. As part of its downsizing plan, the Company relocated to a
smaller office in December 2019. Disposals in the above table
relate to the exit of the old lease. The new office lease was
entered into in December 2019 with a three-year lease term and is
measured as a right-of-use asset with an initial value of GBP0.4
million, which is depreciated over its lease term, in accordance
with the Company's accounting policy. The carrying value of
right-of-use assets as at 30 September 2021 is GBP0.2 million.
5. Lease Liabilities
In accordance with IFRS 16 Leases, a corresponding liability of
GBP0.4 million was recognised when the office lease was entered
into. The cash commitment amounts to GBP200,000 in total for the
remaining lease period. Interest charge is calculated at an
incremental borrowing rate of 3.5%, totalling GBP20,000 over the
three-year lease term and charged in the Income Statement. The
carrying value of lease liabilities as at 30 September 2021 is
GBP0.2 million. The Company also has a cash commitment of circa.
GBP10,000 p.a. over a three-year on the lease of one printer for
its office.
6. (Loss)/return per Share
The capital, revenue and total return per ordinary share are
based on the net (loss)/return shown in the Condensed Consolidated
Income Statement and the weighted average number of ordinary shares
during the period of 38,303,814 (2020: 38,282,763). There are no
dilutive instruments issued by the Company.
16
7. Financial Instruments
The Group's activities expose it to a variety of financial
risks: market risk (including interest risk and price risk), credit
risk and liquidity risk.
The condensed consolidated Second Interim Report does not
include all financial risk management information and disclosures
required in the annual financial statements; they should be read in
conjunction with the Group's annual financial statements as at 30
September 2020. There have not been any changes in the risk
management policies and procedures since the year end.
The unlisted financial assets held at fair value are valued in
accordance with the principles of valuation of unlisted equity
investments as detailed in basis of accounting and significant
accounting policies.
Fair Value Hierarchy
Fair value is the amount for which an asset could be exchanged
between knowledgeable willing parties in an arm's length
transaction. The Group complies with IFRS 13 in respect of
disclosures about the degree of reliability of fair value
measurements. This requires the Group to classify, for disclosure
purposes, fair value measurements using a fair value hierarchy that
reflects the significance of the inputs used in making the
measurements. The levels of fair value measurement bases are
defined as follows:
Level 1: fair values measured using quoted prices (unadjusted)
in active markets for identical assets or liabilities.
Level 2: fair values measured using valuation techniques for all
inputs significant to the measurement other than quoted prices
included within Level 1 that are observable for the asset or
liability, either directly (i.e. as prices) or indirectly (i.e.
derived from prices).
Level 3: fair values measured using valuation techniques for
which any significant input to the valuation is not based on
observable market data (unobservable inputs).
The Group considers observable data to be market data that is
readily available, regularly distributed or updated, reliable and
verifiable, not proprietary and provided by independent sources
that are actively involved in the relevant market.
The following tables represent the Group's assets by hierarchy
levels, and all fair value measurements disclosed are recurring
fair value measurements. There has been no transfer between levels
during the twelve months ended 30 September 2021 or 30 September
2020.
Financial Assets at Fair Value through Profit or Loss
Level 1 Level 2 Level 3 Total
As at 30 September 2021 GBPm GBPm GBPm GBPm
------------------------- -------- -------- -------- ------
Investments 7.6 - 197.1 204.7
------------------------- -------- -------- -------- ------
Level 1 Level 2 Level 3 Total
As at 30 September 2020 GBPm GBPm GBPm GBPm
------------------------- -------- -------- -------- ------
Investments 5.6 - 128.6 134.2
------------------------- -------- -------- -------- ------
Investments classified within Level 1 consist only of money
market funds, whose values are based on quoted market prices in
active markets. The Group does not adjust the quoted price for
these instruments.
No financial instruments held by the Group or Company are
classified within Level 2.
Investments classified within Level 3 consist of private equity
direct investments, and secondary investments, on which observable
prices are not available and the Group uses valuation techniques to
derive the fair value.
The main inputs into the Group's valuation models for private
equity investments are EBITDA multiples (based on the deemed
maintainable EBITDA and EBITDA multiples of comparable listed
companies), quality of earnings assessments, assessments of
third-party external debt, comparability difference adjustments,
liquidity discount and probabilities of default.
In accordance with the Group's policy, appropriate comparable
public companies based on industry, size, developmental stage,
revenue generation and strategy are determined and a trading
multiple for each comparable company identified is then calculated.
The multiple is calculated by dividing the enterprise value of the
comparable group by its EBITDA. The trading multiple is then
adjusted for considerations such as illiquidity, other differences,
advantages and disadvantages between the Group's portfolio company
and the comparable public companies based on company-specific facts
and circumstances.
17
7. Financial Instruments (continued)
The following tables present the movement of assets measured at
fair value, based on fair value measurement levels.
Level 1 Level 3
Unaudited Audited Unaudited Audited
----------------------------------
2021 2020 2021 2020
----------------------------------
GBPm GBPm GBPm GBPm
---------------------------------- ---------- -------- ---------- --------
Opening balance 5.6 17.3 128.6 192.4
Purchases 21.0 9.1 13.6 4.1
Realisations (19.0) (20.9) (24.6) (12.0)
Increase/(decrease) in valuation - 0.1 79.5 (55.9)
---------------------------------- ---------- -------- ---------- --------
As at 30 September 7.6 5.6 197.1 128.6
---------------------------------- ---------- -------- ---------- --------
Realisations in the tables above include interest and
distributions received from investments. During the twelve months
ended 30 September 2021, the Company incurred costs of GBP2.3
million (2020: GBP1.9 million) in supporting portfolio companies to
improve performance. Total gains and losses on assets measured at
Level 3 are recognised as part of the investment gains and losses
balance in the Condensed Consolidated Income Statement and no other
comprehensive income has been recognised on these assets. Total
unrealised gains for the twelve months ended 30 September 2021 were
GBP72.8 million after accrued estimated net deal fees of GBP0.8
million on AIM listing of Unbound Group PLC and completion of the
Company's final strategic delivery (2020: loss of GBP58.2
million).
The tables below present those investments in portfolio
companies whose fair values are recognised in whole or in part
using valuation techniques based on assumptions that are not
supported by prices or other inputs from observable current market
transactions in the same instrument and the effect of changing one
or more of those assumptions behind the valuation techniques
adopted based on reasonably possible alternative assumptions. The
sensitivity thresholds have been determined based on the average of
historical changes in each type of unobservable input.
Description Unaudited Valuation Unobservable Weighted
Fair value as technique inputs average input Reasonable Change in
at possible valuation
September 2021 shift +/- +/- GBPm
GBPm
---------------- --------------- --------------- --------------- --------------- --------------- ---------------
Consumer goods, Comparable
leisure and trading EBITDA
hospitality 194.9 multiples multiple 11.1x 2.0x 39.9/(39.9)
---------------- --------------- --------------- --------------- --------------- --------------- ---------------
Comparability
difference
adjustment 33.0% 5.0% (14.5)/14.5
---------------- --------------- --------------- --------------- --------------- --------------- ---------------
Property 2.2 Yield Yield % 7.5% 1.0% (0.3)/0.4
---------------- --------------- --------------- --------------- --------------- --------------- ---------------
Total 197.1
---------------- --------------- --------------- --------------- --------------- --------------- ---------------
Description Audited Valuation Unobservable Weighted
Fair value as technique inputs average input Reasonable Change in
at possible valuation
September shift +/- +/- GBPm
2020
GBPm
---------------- --------------- --------------- --------------- --------------- --------------- ---------------
Consumer goods, Comparable
leisure and trading EBITDA
hospitality 112.5 multiples multiple 8.6x 1.0x 19.3/(19.3)
---------------- --------------- --------------- --------------- --------------- --------------- ---------------
Comparability
difference
adjustment 37.6% 5.0% (13.4)/13.4
---------------- --------------- --------------- --------------- --------------- --------------- ---------------
Comparable
Business trading EBITDA
services 13.2 multiples multiple 13.6x 1.0x 1.5/(1.5)
---------------- --------------- --------------- --------------- --------------- --------------- ---------------
Comparability
difference
adjustment 50.0% 5.0% (2.0)/2.0
---------------- --------------- --------------- --------------- --------------- --------------- ---------------
Property 2.5 Yield Yield % 7.5% 1.0% (0.3)/0.4
---------------- --------------- --------------- --------------- --------------- --------------- ---------------
Private equity
funds 0.4 NAV valuation NAV n/a 5.0% -
---------------- --------------- --------------- --------------- --------------- --------------- ---------------
Total 128.6
---------------- --------------- --------------- --------------- --------------- --------------- ---------------
8. Dividends
Unaudited Audited
2021 2020
For the twelve months ended 30 September GBPm GBPm
-------------------------------------------- ----------- --------
Special Dividend of FY20 (31.0p per share) - 11.8
- 11.8
-------------------------------------------------------- --------
18
9. Trade and Other Payables
Trade and other payables consist of accrued expenses, including
estimated net deal fees of GBP0.8 million on AIM listing of Unbound
Group PLC and completion of the Company's final strategic delivery,
and supplier invoices received but not settled.
10. Called up Share Capital and Reserves
The Company has 38,973,329 (2020: 38,282,763) of allotted,
called up and fully paid ordinary shares of 25p each, totalling
GBP9.7 million as at 30 September 2021 (2020: GBP9.6 million). Upon
vesting of the SoVP in May 2021, as detailed in the CFOO's Review,
the Company issued a total of 690,566 ordinary shares to the
Chairman and CFOO, who have both retained the shareholding in the
Company since issuance.
Own shares held
Own shares held are shares purchased by the Company's Employee
Benefit Trust (the "Trust") in relation to the SoVP scheme operated
by the Company. The number of shares held by the Trust was 690,481
as at 30 September 2021 (2020: 690,481); these are held at a cost
of GBP2.4 million (2020: GBP2.4 million) in the Condensed
Consolidated Balance Sheet.
Share Premium
The Company cancelled its share premium account and share
redemption reserve in July 2020, increasing the distributable
reserves by GBP157.8 million, to facilitate the distribution of the
Company's targeted returns to shareholders. Issuance of the 690,566
ordinary shares at 530.0p each in settlement for vesting of the
SoVP in May 2021 has created a further GBP3.5 million in the share
premium account.
Capital reserve
Capital reserve includes both realised capital reserve, which is
the accumulated gains and losses on the realisation of investments
and unrealised capital reserve, which is the accumulated changes in
the value of financial instruments measured at fair value which
have been charged through profit and loss.
Revenue reserve
The revenue reserve is the accumulated net revenue profits and
losses of the Group.
Share Forfeiture
Following approval at the AGM in February 2020, the Company
commenced a programme to seek to identify and contact shareholders
with whom contact was lost for in excess of 12 years. The programme
was concluded in August 2020 and in total 72 shareholders have been
identified as untraced and as a result 11,194 shares and related
unclaimed dividends with a total value of GBP0.5 million, after
fees, were forfeited.
11. Net Asset Value ("NAV") per Share
The basic NAV per share is calculated by dividing the NAV of
GBP205.0 million (2020: GBP135.3 million) by the number of ordinary
shares in issue at the period end, amounting to 38,973,329 (2020:
38,282,763). There were no dilutive shares during the twelve months
ended 30 September 2021 and 30 September 2020.
12. Related party transactions
Balances and transactions between the Company and its
subsidiaries are eliminated on consolidation. Details of
transactions between the Company and other related parties are
disclosed below.
Sherborne
Sherborne Investors Management LP ("Sherborne") has served as an
adviser to the Group on research and formulation as well as making
proposals to the Board of Directors. Stephen Welker, who is also a
Partner in Sherborne, served as a Non-Executive Director in the
Company until his resignation on 1 November 2021. Under the terms
of its contract with the Company, Directors appointed by Sherborne
have waived their fees but were entitled to be reimbursed for all
reasonable expenses. In the twelve months ended 30 September 2021,
Sherborne charged no expenses to the Company (2020: GBP22,609 as
reimbursement for Mr Welker's travel and subsistence costs), and no
outstanding amount was payable by the Company as at 30 September
2021 (2020: GBPnil). There are now no directors of the Company
appointed by Sherborne.
13. Capital Commitments and Contingencies
There were no outstanding capital commitments or contingent
liabilities as at 30 September 2021.
19
14. Post Balance Sheet Events
Following the period end, the Company completed the demerger of
TGI Fridays and the new parent company Hostmore plc was admitted to
the premium listing segment of the Official List of the Financial
Conduct Authority and to trading on the London Stock Exchange plc's
main market for listed securities on 2 November 2021.
As at 1 December 2021, the market capitalisation of Hostmore is
GBP119.8 million. As detailed in the Chairman's statement, the
Board recognises that this is below what is believed to be the true
value of the business. It believes that contributing factors to the
discount include limited volumes of the expected recycling of
shares by Electra investors and some limited associated volatility
following the demerger, and the impact of negative sector sentiment
linked to poorer than expected results from a peer group
comparator, arising for reasons wholly unconnected with Hostmore's
own investment case. Whilst both the Electra and Hostmore
management acknowledge the existence of the forward-looking
pressures affecting the outlook which may affect some peer group
companies, Hostmore's management actions and mitigations provide us
with the confidence that Hostmore's future performance will not be
significantly impacted by these issues. As such, the Board believes
that the fair value of Hostmore as an independent listed business
is more closely aligned to that implied by our 30 September 2021
valuation, which is reinforced by the valuations referenced in the
post-demerger research notes published by Numis and Edison.
15. Basis of Accounting and Significant Accounting Policies
The Second Interim Report is unaudited and does not constitute
financial statements within the meaning of section 434 of the
Companies Act 2006. The statutory financial statements for the year
ended 30 September 2020, 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
2006 applicable to companies reporting under IFRS, have been
delivered to the Registrar of Companies. The auditor's opinion on
those financial statements was unqualified and did not contain a
statement made under section 498(2) or section 498(3) of the
Companies Act 2006.
The condensed consolidated interim financial statements comprise
the Consolidated Balance Sheet as at 30 September 2021 and 30
September 2020; the Consolidated Income Statement, Consolidated
Statement of Changes in Equity and Consolidated Cash Flow Statement
for the twelve months ended 30 September 2021 and 30 September
2020, and the related notes hereinafter, collectively referred to
as "financial information". The condensed consolidated interim
financial statements have been prepared in accordance with the
Disclosure and Transparency Rules of the Financial Conduct
Authority, IAS 34 and the principal accounting policies and key
estimates set out in the Annual Report for the year ended 30
September 2020, which is available on Electra's website
(www.electraequity.com).
Going Concern
Following the adoption of the wind down strategy in 2018 it
became appropriate, in light of the likely ultimate wind-up of the
Company, for the Company to report on a basis other than that of a
going concern. Given the intention now to reclassify the Company as
a trading holding company for Hotter, listed on AIM, this basis of
preparation is no longer appropriate. As such these accounts are
prepared on the basis of a going concern. Given the situation of
the Company, the change of basis of preparation has no numerical
impact on the financial performance or position of the Company as
reported.
In the current circumstances of the proposed transformation to
Unbound Group PLC being subject to shareholder and other approvals
the Company has conducted a going concern review on the basis of
both that transformation proceeding as planned and on the basis
that it does not. On both basis it was concluded that preparation
of the report on a going concern basis was appropriate because the
Group is expected to be able to meet its liabilities as they fall
due for a period of 12 months from the date of approval of the
interim financial statements.
Investments
Purchases and sales of listed investments are recognised on the
trade date where a contract exists whose terms require delivery
within a timeframe determined by the relevant market. Purchases and
sales of unlisted investments are recognised when the contract for
acquisition or sale becomes unconditional. Investments are
designated at fair value through profit or loss (as detailed in the
financial statements as investments held at fair value) and are
subsequently measured at reporting dates at fair value. The fair
value of direct unquoted investments is calculated in accordance
with the principles of valuation of investments below.
Principles of Valuation of Investments
(i) General
The Group estimates the fair value of each investment at the
reporting date in accordance with IFRS 13 and the International
Private Equity and Venture Capital Valuation ("IPEV")
Guidelines.
Fair value is the price for which an asset could be exchanged
between knowledgeable and willing parties in an arm's length
transaction. In estimating fair value, the Manager applies a
valuation technique which is appropriate in light of the nature,
facts and circumstances of the investment and uses reasonable
current market data and inputs combined with judgement and
assumptions. Valuation techniques are applied consistently from one
reporting date to another except where a change in technique
results in a better estimate of fair value.
20
15. Basis of Accounting and Significant Accounting Policies
(continued)
Principles of Valuation of Investments (continued)
The Group tests its valuation techniques using a tool known as
"calibration". This compares the inputs and assumptions used in
estimating fair value on the reporting date with those used on
previous reporting dates and to those underlying the initial entry
price of an investment in order to ensure that the inputs and
assumptions used on the reporting date are consistent with those
used previously. In general, the Group will determine the
enterprise value of the investee company in question using one of a
range of valuation techniques; adjust the enterprise value for
factors that would normally be taken into account such as surplus
assets, excess liabilities or other contingencies or relevant
factors; and apportion the resulting amount between the investee
company's relevant financial instruments according to their ranking
and taking into account the effect of any instrument that may
dilute the economic entitlement of a given instrument.
(ii) Unlisted Equity Investments
In respect of each unlisted investment the Group selects one or
more of the following valuation techniques:
-- a market approach, based on the price of the recent
investment, earnings multiples or industry valuation
benchmarks;
-- an income approach, employing a discounted cash flow technique; and
-- a replacement cost approach valuing the net assets of the portfolio company.
In assessing whether a methodology is appropriate the Group
maximises the use of techniques that draw heavily on observable
market-based measures of risk and return.
Multiple
Typically, the Group uses an earnings multiple technique. This
involves the application of an appropriate and reasonable multiple
to the maintainable earnings of an investee company.
The Group usually derives a multiple by reference to current or
forecast market-based multiples, reflected in the market valuations
of quoted comparable companies or the price at which comparable
companies have changed ownership. Differences between these
market-based multiples and the investee company being valued are
reflected by adjusting the multiple for points of difference which
might affect the risk and earnings growth prospects which underpin
the earnings multiple. Such points of difference might include the
relative size and diversity of the entities, rate of earnings
growth, reliance on a small number of key employees, diversity of
product ranges, diversity and quality of customer base, level of
borrowing and any other reason the quality of earnings may differ.
Refer to key sources of estimation uncertainty on page 23 for
further details.
In respect of maintainable earnings, the Group usually uses
earnings for the most recent twelve month period adjusted, if
necessary, to represent a reasonable estimate of maintainable
earnings. Such adjustments might include exceptional or
non-recurring items, the impact of discontinued activities and
acquisitions, or forecast material changes in earnings.
In some circumstances the Group may apply a multiple to the net
assets of a business, typically where the business' value derives
mainly from the underlying fair value of its assets rather than its
earnings, such as property holding companies.
(iii) Money Market Investments
Investments in money market funds are held at the current fair
value of the units invested.
Cash and Cash Equivalents
Cash comprises cash at bank and is measured at amortised
cost.
Leased Assets - Group as a Lessee
For any new contracts entered into on or after 1 October 2019,
the Group considers whether a contract is or contains a lease. A
lease is defined as a contract, or part of a contract, that conveys
the right to use an asset (the underlying asset) for a period of
time in exchange for a consideration. The Group assesses whether it
has the right to direct how and for what purpose the asset is used
throughout the period of use.
For leases identified, the Group recognises a right-of-use asset
and a lease liability on the balance sheet at lease commencement
date. The right-of-use asset is measured at cost, which is made up
of the initial measurement of the lease liability, any initial
direct costs incurred by the Group, an estimate of any costs to
dismantle and remove the asset at the end of the lease, and any
lease payments made in advance of the lease commencement date (net
of any incentives received).
The Group depreciates the right-of-use assets on a straight-line
basis from the lease commencement date to the earlier of the end of
the useful life of the right-of-use asset or the end of the lease
term. The Group also assesses the right-of-use asset for impairment
when such indicators exist.
21
15. Basis of Accounting and Significant Accounting Policies
(continued)
Leased Assets - Group as a Lessee (continued)
At the commencement date, the Group measures the lease liability
at the present value of the lease payments unpaid at that date,
discounted using the interest rate implicit in the lease if that
rate is readily available or the Group's incremental borrowing
rate. Lease payments included in the measurement of the lease
liability are made up of fixed payments (including in substance
fixed), variable payments based on an index or rate, amounts
expected to be payable under a residual value guarantee and
payments arising from options reasonably certain to be
exercised.
Subsequent to initial measurement, the liability will be reduced
for payments made and increased for interest. It is remeasured to
reflect any reassessment or modification, or if there are changes
in in-substance fixed payments. When the lease liability is
remeasured, the corresponding adjustment is reflected in the
right-of-use asset, or profit and loss if the right-of-use asset is
already reduced to zero. The Group has elected to account for
short-term leases and leases of low-value assets using the
practical expedients. Instead of recognising a right-of-use asset
and lease liability, the payments in relation to these are
recognised as an expense in profit or loss on a straight-line basis
over the lease term.
Foreign Currencies
The Group's and Company's presentational and functional currency
is Pounds Sterling ("Sterling"), since that is the currency of the
primary economic environment in which the Group operates.
Transactions in currencies other than Sterling are recorded at the
rates of exchange prevailing on the dates of the transactions.
Foreign currency assets and liabilities are translated into the
functional currencies of the Group's respective entities at rates
prevailing at the Balance Sheet date. Foreign currency revenue and
expenses are translated into the functional currencies of the
Group's respective entities at the month end rate for the period
the transaction occurred. Exchange differences arising are
recognised through the Condensed Consolidated Income Statement.
At each Balance Sheet date, assets and liabilities of foreign
operations are translated into Sterling at the rates prevailing on
the Balance Sheet date. Foreign exchange differences arising on
retranslation of the equity and reserves of subsidiaries with
functional currencies other than Sterling are recognised directly
in the translation reserve in equity. Foreign exchange differences
arising on the retranslation of non-monetary items carried at fair
value are included in the Condensed Consolidated Income Statement
for the year.
Investment Income
Dividends receivable from equity shares are accounted for on the
ex-dividend date or, where no ex-dividend date is quoted, when the
Group's right to receive payment is established. Fixed returns on
non-equity shares and debt securities are recognised on a time
apportionment basis so as to reflect the effective yield when it is
probable that economic benefit will flow to the Group. Where income
accruals previously recognised, but not received, are no longer
considered to be reasonably expected to be received, either through
investee company restructuring or doubt over its receipt, then
these amounts are reversed through expenses.
Income distributions from limited partnership funds are
recognised when the right to distribution is established.
Other Income
Interest income received from money market funds is accounted
for as the interest is accrued on an effective interest rate
basis.
Expenses
Expenses are charged through the "Revenue" column of the
Condensed Consolidated Income Statement.
Defined Contribution Plan
The Group operates a defined contribution pension plan under
which the Group pays fixed contributions. Pension contributions are
recognised as expenses in the Condensed Consolidated Income
Statement, as incurred.
Tax
The tax effect of different items of income/gain and
expense/loss is allocated between capital and revenue on the same
basis as the particular item to which it relates, using the
Company's effective rate of tax for the accounting year. The tax
currently payable is based on taxable profit for the year. Taxable
profit differs from profit before tax as reported in the Condensed
Consolidated Income Statement because it excludes items of income
or expense that are taxable or deductible in other years and it
further excludes items that are never taxable or deductible. The
Group's liability for current tax is calculated using tax rates
that have been enacted or substantively enacted by the balance
sheet date.
22
15. Basis of Accounting and Significant Accounting Policies
(continued)
Revenue and Capital Reserves
Net capital return is added to the capital reserve in the
Condensed Consolidated Statement of Changes in Equity, while the
net revenue return is added to the revenue reserve.
Receivables and Payables
Receivables and payables are typically settled in a short time
frame and are carried at the amount due to be settled. As a result,
the fair value of these balances is considered to be materially
equal to the carrying value, after taking into account potential
impairment losses.
Share Capital
Ordinary shares issued by the Group are recognised at the
proceeds or fair value 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.
Critical Accounting Judgements and Key Sources of Estimation
Uncertainty
Critical accounting judgements and key sources of estimation
uncertainty used in preparing the financial information are
continually evaluated and are based on historical experience and
other factors, including expectations of future events that are
believed to be reasonable. The resulting judgements and estimates
will, by definition, seldom equal the related actual results.
In the course of preparing the Second Interim Report for the
twelve months ended 30 September 2021, the Directors concluded that
the Company continues to meet the definition of an investment
entity based on the reassessment of the conditions listed under the
basis of consolidation in the Annual Report and Financial
Statements for the year ended 30 September 2020.
Key sources of estimation uncertainty
The key assumptions concerning the future and other key sources
of estimation uncertainty in the reporting year that may have a
significant risk of causing a material adjustment to the carrying
amounts of assets and liabilities within the next financial year
are discussed below.
Unquoted assets are measured at fair value in accordance with
IFRS 13 and the IPEV Guidelines for financial reporting purposes.
Judgement is required in order to determine the appropriate
valuation methodology and subsequently in determining the inputs
into the valuation model used. The most significant judgements for
the inputs into the valuation models are making assessments of the
future earnings potential of portfolio companies, the appropriate
earnings multiples to apply to these earnings, and adjustments that
are made to earnings multiples in view to comparable listed
companies.
The fair values for the main investments, Fridays and Hotter,
are recognised in whole or in part using valuation techniques based
on assumptions that are not supported by prices or other inputs
from observable current market transactions. The effect of changing
one or more of the assumptions behind the valuation techniques
adopted based on reasonably possible alternative assumptions is
also disclosed in Note 7.
There remain many unknown factors over the degree to which
businesses will be able to resume "normal" levels of trading during
phased recovery and the short, medium, and long-term impact of
Covid-19 on consumer confidence and behaviours. Also due to the
impact of Covid-19 on the pattern of earnings of the portfolio
companies, in some cases a higher degree of judgment, compared with
previous years, has been exercised in the valuations as at 30
September 2021; in particular:
-- Through the use of forecast, instead of actual, maintainable
earnings and market multiples; and
-- in assessing the points of difference discounts to be applied
to comparable listed companies' multiples.
As such, the valuation of our investments as at 30 September
2021 carries more estimation uncertainty than in previous
years.
The Group has also considered the potential impact of Brexit in
preparation of the financial statements, and based on the current
available information, no material impact is expected by the
Group.
The Board has set up a Valuations Committee, which is chaired by
a Non-Executive Director. The Valuations Committee works closely
with G10 Capital Limited ("G10"), the Company's Alternative
Investment Fund Manager ("AIFM"), to establish the appropriate
valuation techniques and inputs for fair value measurement and the
Chairman of the Valuations Committee reports its findings to the
Board every six months to explain the cause of fluctuations in the
fair value of the assets and liabilities.
Sensitivity analysis on key sources of estimation has been
disclosed in Note 7. Information about the valuation techniques and
inputs used in determining the fair value of various assets and
liabilities is disclosed above in this Note.
23
Independent Review Report to Electra Private Equity PLC
We have been engaged by the company to review the condensed set
of financial statements in the interim financial report for the
twelve months ended 30 September 2021 which comprises the Condensed
Consolidated Income Statement, the Condensed Consolidated Statement
of Changes in Equity, the Condensed Consolidated Balance Sheet, the
Condensed Consolidated Cash Flow Statement and the related notes 1
to 15. We have read the other information contained in the interim
financial report and considered whether it contains any apparent
misstatements or material inconsistencies with the information in
the condensed set of financial statements.
Directors' responsibilities
The interim financial report is the responsibility of, and has
been approved by, the directors. The directors are responsible for
preparing the interim financial report in accordance with the
Disclosure Guidance and Transparency Rules of the United Kingdom's
Financial Conduct Authority.
As disclosed in note 15, the annual financial statements of the
group are prepared in accordance with international accounting
standards in conformity with the requirements of the Companies Act
2006 and International Financial Reporting Standards as adopted by
the European Union. The condensed set of financial statements
included in this interim financial report has been prepared in
accordance with International Accounting Standard 34 "Interim
Financial Reporting" as adopted by the European Union.
Our responsibility
Our responsibility is to express to the Company a conclusion on
the condensed set of financial statements in the interim financial
report based on our review.
Scope of review
We conducted our review in accordance with International
Standard on Review Engagements (UK and Ireland) 2410 "Review of
Interim Financial Information Performed by the Independent Auditor
of the Entity" issued by the Financial Reporting Council for use in
the United Kingdom. A review of interim financial information
consists of making inquiries, primarily of persons responsible for
financial and accounting matters, and applying analytical and other
review procedures. A review is substantially less in scope than an
audit conducted in accordance with International Standards on
Auditing (UK) and consequently does not enable us to obtain
assurance that we would become aware of all significant matters
that might be identified in an audit. Accordingly, we do not
express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that
causes us to believe that the condensed set of financial statements
in the interim financial report for the twelve months ended 30
September 2021 is not prepared, in all material respects, in
accordance with International Accounting Standard 34 as adopted by
the European Union and the Disclosure Guidance and Transparency
Rules of the United Kingdom's Financial Conduct Authority.
Use of our report
This report is made solely to the company in accordance with
International Standard on Review Engagements (UK and Ireland) 2410
"Review of Interim Financial Information Performed by the
Independent Auditor of the Entity" issued by the Financial
Reporting Council. Our work has been undertaken so that we might
state to the company those matters we are required to state to it
in an independent review report and for no other purpose. To the
fullest extent permitted by law, we do not accept or assume
responsibility to anyone other than the company, for our review
work, for this report, or for the conclusions we have formed.
Deloitte LLP
Statutory Auditor
London, United Kingdom
01 December 2021
24
Second Interim Report
Current and Future Development
A review of the main features of the twelve months to 30
September 2021 is contained in the Chairman's Statement and
Portfolio Review.
Performance
A detailed review of performance during the twelve months to 30
September 2021 is contained in the Portfolio Review.
Risk Management
The Company has put in place an Investment Management Agreement
with G10 for the provision of risk management services as required
by the AIFMD rules. The AIFM has oversight of risk management and
the ongoing process of identifying, evaluating, monitoring and
managing the risks facing the Company in accordance with AIFMD.
The principal risks facing the Company are considered by the
Board to be portfolio diversification risk, strategy implementation
risk, investment risk, solvency and liquidity risk, macroeconomic
risk, valuation risk, operational risk, gearing risk, foreign
currency risk, and cash drag risk, as set out in the Company's
Annual Report and Financial Statements for the year ended 30
September 2020 along with the risks detailed in Note 15 of the
notes to the financial statements for the same year. The principal
risks have not changed significantly since the year end.
Related Party Transactions
Details of related party transactions for the twelve months
ended 30 September 2021 are disclosed in Note 12.
Going Concern
Following the adoption of the wind down strategy in 2018 it
became appropriate, in light of the likely ultimate wind-up of the
Company, for the Company to report on a basis other than that of a
going concern. Given the intention now to reclassify the Company as
a trading holding company for Hotter, listed on AIM, this basis of
preparation is no longer appropriate. As such these accounts are
prepared on the basis of a going concern. Given the situation of
the Company, the change of basis of preparation has no numerical
impact on the financial performance or position of the Company as
reported.
In the current circumstances of the proposed transformation to
Unbound Group PLC being subject to shareholder and other approvals
the company has conducted a going concern review on the basis of
both that transformation proceeding as planned and on the basis
that it does not. On both basis it was concluded that preparation
of the report on a going concern basis was appropriate because the
Group is expected to be able to meet its liabilities as they fall
due for a period of 12 months from the date of approval of the
interim financial statements.
Forward Looking Statements
Certain statements in this Second Interim Report are
forward-looking. Although the Company believes that the
expectations in these forward-looking statements are reasonable, it
can give no assurance that these expectations will prove to have
been correct. Because these statements involve risks and
uncertainties, actual results may differ materially from those
expressed or implied by these forward-looking statements. The
Company undertakes no obligation to update any forward-looking
statements whether as a result of new information, future events or
otherwise.
25
Responsibility Statement
The Directors confirm to the best of their knowledge that:
a) The condensed consolidated interim financial statements have
been prepared in accordance with IAS 34 as adopted by the European
Union.
b) The Second Interim Report includes a fair review of the information required by:
(i) DTR 4.2.7 of the Disclosure and Transparency Rules, being an
indication of important events that have occurred during the first
twelve months of the financial year and their impact on the
condensed set of financial statements; and a description of the
principal risks and uncertainties for the remaining months of the
year; and
(ii) DTR 4.2.8R of the Disclosure and Transparency Rules, being
related party transactions that have taken place in the first
twelve months of the current financial year and that have
materially affected the financial position or performance of the
Company during that period; and any changes in the related party
transactions described in the last annual report that could do
so.
Approved by the Board of Directors and signed on its behalf
by
Neil Johnson
Chairman
01 December 2021
26
Information for Shareholders
Financial calendar for 2020/21
Second interim results December
announced 2021
Annual results announced Q1 2022
Annual general meeting Q2 2022
Website and Electra News via Email
For further information on share prices, regulatory news and
other information, please visit www.electraequity.com.
If you would like to receive email notification of our
announcements, please visit the Electra website at
www.electraequity.com and click on the "Sign up to our email
alerts" logo on the website's home page. Registering for email
alerts will not stop you receiving Annual Reports or any other
shareholder documents you have selected to receive by post or
electronically.
Shareholder Enquiries
In the event of queries regarding your ordinary shareholding,
contact the Company's registrar, Equiniti Limited, which will be
able to assist you with:
-- registered holdings;
-- balance queries;
-- lost certificates; and
-- change of address notifications.
Equiniti Limited's full details are provided on page 30 or
please visit www.equiniti.com.
If you are an existing shareholder and wish to buy more/sell
your shares in Electra:
An internet and telephone dealing service has been arranged
through Equiniti, which provides a simple way for UK shareholders
of Electra to buy or sell Electra's shares. For full details and
terms and conditions simply log onto www.shareview.co.uk/dealing or
call 0371 384 2351. Please note that lines are open 8.30am to
5.30pm (UK time) Monday to Friday (excluding public holidays in
England and Wales).
The service is only available to shareholders of Electra who
hold shares in their own name, have a UK registered address and are
aged 18 and over.
Shareview Dealing is provided by Equiniti Financial Services
Limited. Equiniti Financial Services Limited is authorised and
regulated by the Financial Conduct Authority of 25 The North
Colonnade, Canary Wharf, London E14 5HS (FCA reference 468631).
Equiniti Financial Services Limited is registered in England and
Wales with number 6208699.
If you are not an existing shareholder:
If you are not an existing shareholder, we recommend you seek
your own personal financial advice from an appropriately qualified
independent adviser or alternatively contact your own broker.
Electra Private Equity PLC's shares are listed on the London Stock
Exchange with the ticker "ELTA".
Please note: The above information is not a recommendation to
buy or sell shares. The value of shares and any income from them
can fluctuate and you may get back less than the amount invested.
If you have any doubt over what action you should take, please
contact an authorised financial adviser.
27
Trading Information - Ordinary Shares
Listing London Stock
Exchange
ISIN GB0003085445
SEDOL 0308544
Ticker/EPIC code ELTA
Bloomberg ELTALN
Reuters ELTAL
Share Fraud Warning
We are aware that in the past a number of shareholders have
received unsolicited phone calls or correspondence concerning
investment matters. These are typically from overseas based brokers
who target UK shareholders, offering to sell them what often turn
out to be worthless or high-risk shares. These operations are
commonly known as boiler room scams.
Please be very wary of any such calls or correspondence. Ask for
the name and organisation of the person calling you and check if
they can be found on the Financial Conduct Authority ("FCA")
Register. If they are not listed, please report it directly to the
FCA using its consumer helpline (0800 111 6768). You may also wish
to advise us by telephoning 020 3874 8300 or emailing
IR@electrapeplc.com.
It is very unlikely that either the Company or the Company's
Registrars, Equiniti, would make unsolicited telephone calls to
shareholders. Such calls would only relate to official
documentation already circulated to shareholders and never be in
respect of investment advice.
Please remember that if you use an unauthorised firm to buy or
sell shares, you will not be eligible to receive payment under the
Financial Services Compensation Scheme if things go wrong.
Other Useful Websites
LPeC
LPeC is a group of private equity investment trusts and similar
vehicles listed on the London Stock Exchange and other major
European stock markets, formed to raise awareness, and increase
understanding of listed private equity.
LPeC provides information on private equity in general, and the
listed sector in particular, undertaking and publishing research
and working to improve levels of knowledge about private equity
among investors and their advisers.
For further information visit www.listedprivatecapital.com.
Association of Investment Companies ("AIC")
The AIC is the trade organisation for closed-ended investment
companies. The AIC represents a broad range of closed-ended
investment companies, including investment trusts, offshore
investment companies and venture capital trusts which are traded on
the London Stock Exchange, Alternative Investment Market, Special
Financials Market, Euronext and the Channel Islands Stock
Exchange.
For further information visit www.theaic.co.uk.
British Private Equity & Venture Capital Association
("BVCA")
The BVCA is the industry body and public policy advocate for the
private equity and venture capital industry in the UK. The BVCA's
aim is to aid understanding around the activities of its members
and promote the private equity and venture capital industry to
entrepreneurs and investors as well as to the Government, the EU,
trade unions, international media and the general public. It
communicates the industry's impact and reinforces the crucial role
its members play in the global economy as a catalyst for change and
growth.
For further information visit www.bvca.co.uk.
28
Glossary
Alternative Investment Fund Managers Directive ("AIFMD")
Agreed by the European Parliament and the Council of the
European Union and transposed into UK legislation, the AIFMD
classifies certain investment vehicles, including investment
companies, as Alternative Investment Funds ("AIFs") and requires
them to appoint an Alternative Investment Fund Manager ("AIFM") and
depositary to manage and oversee the operations of the investment
vehicle. The Board of the Company retains responsibility for
strategy, operations and compliance and the Directors retain a
fiduciary duty to shareholders.
Basic and Diluted NAV
The NAV per share is calculated by dividing the Company's NAV by
the number of ordinary shares in issue. There are no dilutive
shares in the Company.
Commitments
Legal obligation to provide capital for future investment in a
private equity fund or in relation to a single investment.
Earnings Multiple
This is normally referred to as a price earnings ratio. It is
the ratio of a company's valuation compared with its earnings.
EBITDA
Earnings before interest, tax, depreciation and amortisation.
Often used to compare the profitability of similar companies.
Enterprise Value ("EV")
This is the aggregate value of a company's entire issued share
capital and net debt.
Gearing
This is the level of a company's debt related to its equity
capital and is usually expressed in percentage form. It shows the
extent to which a company is funded by lenders as opposed to
shareholders.
Net Assets Value ("NAV")
This is the value of all the Company's assets minus current and
long-term liabilities. Can also be referred to as "shareholders'
funds".
NAV per Share
This is the value of the Company's assets attributable to one
ordinary share. It is calculated by dividing shareholders' funds by
the total number of ordinary shares in issue. This is a common
measure used by investment companies.
NAV Total Return
This is the aggregate of income and capital profits of the
investment portfolio for the period less all costs. It can be
expressed as a percentage of the opening position. This is a common
measure used by investment companies.
Twelve months to 30 September Three years to 30 September
Reported under IFRS 2021 2020 2021 2020
------------------------------------------- ------ -------- ------------- ---------------
Dividend per share (p) - 31.0 450.0 1,389.0
Increase/(decrease) in NAV per share (p) 172.5 (195.0) (366.1) (1,630.6)
------------------------------------------- ------ -------- ------------- ---------------
Total return (p) 172.5 (164.0) 83.9 (241.6)
Opening NAV per share (p) 353.4 548.4 892.0 1,984.0
------------------------------------------- ------ -------- ------------- ---------------
NAV total return 48.8% (29.9)% 9.4% (12.2)%
------------------------------------------- ------ -------- ------------- ---------------
Total shareholder return ("TSR")
This is the total returns delivered by the Company through a
combination of dividends distributed to shareholders and share
price performance. This is expressed as a percentage change in
movement between the dividend adjusted closing share price and the
opening share price.
Twelve months to 30 September Three years to 30 September
Reported under IFRS 2021 2020 2021 2020
-------------------------------------------- ------- -------- -------------- --------------
Closing share price (p) 618.0 182.5 618.0 182.5
Dividends paid (p) - 31.0 450.0 1,389.0
-------------------------------------------- ------- -------- -------------- --------------
Dividend adjusted closing share price (p) 618.0 213.5 1,068.0 1,571.5
Opening share price (p) 182.5 331.5 879.0 1,669.0
-------------------------------------------- ------- -------- -------------- --------------
Total shareholder return 238.6% (35.6)% 21.5% (5.8)%
-------------------------------------------- ------- -------- -------------- --------------
Unlisted Company
Any company whose shares are not listed or traded on a
recognised stock exchange.
29
Contact Details
Electra Private Equity PLC
Board of Directors
Neil Johnson (Chairman)
Paul Goodson
David Lis (resigned on 1 November 2021)
Gavin Manson (Chief Financial and Operating Officer)
Baroness Kate Rock (appointed on 1 November 2021)
Suki Thompson (appointed on 1 November 2021)
Stephen Welker (resigned on 1 November 2021)
Linda Wilding
Registered Office
Registered in England: Company No. 00303062
17 Old Park Lane, London, England W1K 1QT
Telephone +44 (0)20 3874 8300
www.electraequity.com
Company Secretary and Administrator
Frostrow Capital LLP
25 Southampton Buildings, London, England WC2A 1AL
Telephone +44 (0)20 3008 4910
Registered Independent Auditor
Deloitte LLP
Hill House, 1 Little New Street, London, England EC4A 3TR
Alternative Investment Fund Manager
G10 Capital Limited
4(th) Floor, 3 More London Riverside, London, England SE1
2AQ
Corporate Brokers
Stifel Nicolaus Europe Limited
4(th) Floor 150 Cheapside, London, United Kingdom, EC2V 6ET
HSBC
8 Canada Square, Canary Wharf, London, England, E14 5HQ
Depositary
APEX Depositary (UK) Limited
9(th) Floor, No 1 Minster Court, Mincing Lane, London, England
EC3R 7AA
Registrar and Transfer Office
Equiniti Limited
Aspect House, Spencer Road, Lancing, West Sussex, England BN99
6DA
Telephone (UK) 0371 384 2351 *
Textel/hard of hearing line (UK) 0371 384 2255 *
Telephone (overseas) +44 121 415 7047
* Lines open 8.30am to 5.30pm (UK time), Monday to Friday
(excluding public holidays in England and Wales).
30
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(END) Dow Jones Newswires
December 02, 2021 02:00 ET (07:00 GMT)
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