TIDMELTZ
RNS Number : 0141U
Electra Private Equity Invest PLC
27 November 2013
EMBARGOED UNTIL 07:00 AM, WEDNESDAY 27 NOVEMBER 2013
ELECTRA PRIVATE EQUITY INVESTMENTS PLC
Audited Results for Full Year ended 30 September 2013
The information contained in this announcement is restricted and
is not for release, publication, or distribution, directly or
indirectly, nor does it constitute an offer of securities for sale
in the United States, Canada, Japan, Australia or New Zealand.
References in this announcement to Electra Private Equity
Investments PLC have been abbreviated to 'the Company'. References
to the Company's parent company, Electra Private Equity PLC, have
been abbreviated to 'Electra'. References to Electra Partners LLP,
Electra's Manager, have been abbreviated to 'Electra Partners'.
Corporate Summary of Zero Dividend Preference Shares
Electra Private Equity PLC Asset Cover at 30 September 2013:
14.0 times (2012: 12.5 times) Final Capital Entitlement as at 5
August 2016.
Redemption Yield of 6.5% based on initial placing of 100p per
ZDP Share.
Final Capital Entitlement per ZDP Share of 155.41p on 5 August
2016.
The figures below show the movement in the middle market price
from the first day the ZDP Shares were listed on 5 August 2009
through to 30 September 2013. The initial placing price of the ZDP
Shares was 100p.
Share price of ZDP Shares
Share price
p
------------------- ------------
5 August 2009 102.0
30 September 2009 106.8
31 March 2010 107.8
30 September 2010 115.5
31 March 2011 116.1
30 September 2011 119.0
31 March 2012 128.6
30 September 2012 132.3
31 March 2013 134.9
30 September 2013 139.9
------------------- ------------
The ZDP Shares offer a pre-determined rate of growth in capital
entitlement up to the repayment date of 5 August 2016 but no right
of income. The ZDP Shares rank ahead of Electra's Ordinary
Shareholders and Subordinated Convertible Bondholders but behind
any bank borrowings of Electra. The Final Capital Entitlement for
the ZDP Shares is not guaranteed should Electra's net assets be
insufficient on the repayment date of 5 August 2016.
The ZDP Shares do not normally carry voting rights at general
meetings of the Company. The separate approval of a special
resolution of holders of the Company's ZDP Shares is required for
certain proposals which would be likely to affect their rights or
general interests.
The Full Year Report for the year ended 30 September 2013 will
be available on the Company's website www.electraequity.com/eltz.
Neither the contents of this website nor the contents of any
website accessible from hyperlinks on this website (or any other
website) is incorporated into, or forms part of this
announcement.
Chairman's Statement
I am pleased to present the Company's Annual Report and Accounts
for the year ended 30 September 2013.
The Company is a wholly owned subsidiary of Electra Private
Equity PLC ('Electra') and was established solely for the purpose
of issuing and redeeming Zero Dividend Preference ('ZDP') Shares.
Further details can be found elsewhere in this Annual Report and
Accounts.
ZDP Shares
Following the ZDP Share issues in 2009, the Company has not
issued any further ZDP Shares.
The 2009 ZDP Share issues raised a total of GBP46 million of net
proceeds. Pursuant to a loan agreement between the Company and
Electra, in 2009 the Company lent Electra the whole of the net
proceeds and these funds continue to be managed in accordance with
the investment policy of Electra. This loan is on terms requiring
its repayment by Electra to the Company at any time up to or
immediately prior to the ZDP repayment date.
Electra has undertaken that, at any time up to or immediately
prior to the ZDP repayment date, it will subscribe for such number
of ordinary shares in the Company as is necessary to provide the
Company on the ZDP repayment date (after taking into account the
monies to be received by it on repayment of the loan) with
sufficient funds to meet the repayment obligations in respect of
the ZDP Shares.
Board Composition
Roger Perkin, Geoffrey Cullinan and I were respectively
Directors and Chairman of the Company throughout the year to 30
September 2013. Mr Roger Yates was appointed as a Director on 26
November 2013.
All of the Directors of the Company are also Directors of
Electra.
I have decided to retire from the Board of Electra at its Annual
General Meeting on 11 March 2014 and will, therefore, retire as a
Director of this Company at the same time. I have been Chairman of
this Company and of Electra since 2010.
I should like to thank very warmly all my Board colleagues, past
and present, for their support and I should like to express my
thanks to Electra Partners for all they have done to deliver value
for our shareholders over many years.
I am pleased to be able to announce that Roger Yates will
succeed me as Chairman of the Company and of Electra in March 2014.
Roger has extensive experience in the financial services sector and
I am confident that I am leaving the Company in safe hands.
Outlook
The Board believes that the Company will be in a position to
fulfil its requirement to meet the Final Capital Entitlement to the
ZDP Shareholders in August 2016.
Dr Colette Bowe
Chairman
26 November 2013
Strategic Report
To the Members of Electra Private Equity Investments PLC
The Directors present the audited Accounts of the Company for
the year ended 30 September 2013 and their Strategic Report on its
affairs.
Strategic Report
The Company is a subsidiary of Electra, which owns the entire
issued ordinary share capital of the Company.
The Strategic Report describes the business of the Company and
details the main risks and uncertainties associated with the
Company's activities, taking into account performance as measured
by the Key Performance Indicators ('KPIs').
Objective, Strategy and Business Model
The objective of the Company is to provide the final capital
entitlement of the Company's Zero Dividend Preference ('ZDP')
Shares to the Zero Dividend Preference Shareholders at the
repayment date of 5 August 2016. This also represents the Company's
strategy and business model.
Current and Future Development
A review of the main features of the year is contained in the
Corporate Summary of Zero Dividend Preference Shares and in the
Chairman's Statement on pages 1 and 2.
Performance
A number of performance measures are considered by the Board in
assessing the Company's success towards achieving its objective.
The KPIs used to measure the progress and performance of the
Company are as follows:
-- Electra Private Equity PLC Asset Cover
-- The movement in share price
Details of the KPIs are shown on page 1.
Risk Management
The Company is a wholly owned subsidiary of Electra which was
established solely for the purpose of issuing and redeeming ZDP
Shares and accordingly the principal risks facing the Company
include Market Price Risk, Liquidity Risk and Capital Risk as
further detailed in Note 12 of the Notes to the Accounts. In
addition, the Company is also focused on the following principal
risks:
Final Capital Entitlement
Electra's debt to the Company is pursuant to the loan agreement
which ranks behind any secured creditors of Electra. Therefore it
is not guaranteed that the final capital entitlement will be paid.
On a return of assets, including a winding up of Electra, the
Company will not receive payment if there are insufficient assets
of Electra, having first taken account of prior ranked liabilities
and having regard to all other unsecured liabilities of Electra.
ZDP Shares are not a secured, protected or guaranteed
investment.
Liquid Market for ZDP Shares
The market price and realisable value of the ZDP Shares, as well
as being affected by the underlying value of Electra's net assets,
will be affected by interest rates, supply and demand for the ZDP
Shares, market conditions and general investor sentiment. As such,
the market value and the realisable value (prior to redemption) of
a ZDP Share can fluctuate and may not always reflect its accrued
capital entitlement. In addition, given the Company's size and
type, there is no guarantee that an active market will be sustained
for the ZDP Shares. If an active trading market is not maintained,
the liquidity and trading price of the ZDP Shares could be
adversely affected.
Macroeconomic and Investment Risks
The Company's obligation to pay the ZDP Shareholders the final
capital entitlement is dependent upon Electra's ability to comply
with its obligations to the Company. This in turn is impacted by
Electra's performance and its ability to manage macroeconomic and
investment risk. A material fall in the value of the assets in the
investment portfolio of Electra may lead to the winding up of
Electra in the longer term.
The performance of Electra's underlying investment portfolio is
principally influenced by a combination of economic conditions, the
availability of appropriately priced debt finance, interest rates
and the number of active trade and financial buyers. All of these
factors have an impact on Electra's ability to invest, Electra's
ability to exit from its underlying portfolio and the levels of
profitability achievable on exit.
Electra operates in a very competitive market. Changes in the
number of market participants, the availability of funds within the
market, the pricing of assets, or in the ability of its Manager,
Electra Partners, to access deals could have a significant effect
on Electra's competitive position and on the sustainability of
returns.
In order to source and execute good quality investments, Electra
is primarily dependent upon Electra Partners having the ability to
attract and retain executives with the requisite investment
experience and whose compensation is in line with Electra's
objectives.
Once invested, the performance of the Electra portfolio is
dependent upon a range of factors. These include but are not
limited to: (i) the quality of the initial investment decision;
(ii) the ability of the portfolio company to execute successfully
its business strategy; and (iii) actual outcomes against the key
assumptions underlying the portfolio company's financial
projections. Any one of these factors could have an impact on the
valuation of a portfolio company and upon Electra's ability to make
a profitable exit from the investment within the desired timeframe.
Future Electra share issues, share buy backs or raising new debt
facilities in the longer term could dilute the interests of the ZDP
Shareholders and reduce the price of the ZDP Shares.
Government Policy and Regulation Risk
Electra carries on business as an investment trust under section
1158 of the Corporation Taxes Act 2010. Retention of investment
trust status is subject to Electra conducting its affairs in a
manner which will satisfy the HM Revenue and Customs conditions for
continuing approval as an investment trust. Any change in Electra's
tax status, or in taxation legislation or practice in the UK or
elsewhere, could affect the value of investments in Electra's
investment portfolio and Electra's ability to achieve its
investment objective and could also affect the tax treatment of the
ZDP Shares and the tax treatment of the final capital
entitlement.
Board Diversity
Throughout the year to 30 September 2013, the balance of the
Board was 1:2 women:men, with one female and two male
Directors.
Following the appointment of Mr Yates as a Director, the balance
of the Board is 1:3 women:men, with one female and three male
Directors on the Board. Following the retirement of Dr Bowe in
March 2014, all the Directors on the Board will be male.
All Directors are also Directors of Electra. Electra's policy on
Board diversity is shown below. The Board of the Company subscribes
to this policy to the extent consistent with the other
responsibilities of the Directors of the Boards of both
companies.
The Company aims to have a balance of relevant skills,
experience and background amongst the Directors on the Board and
believes that all Board appointments should be made on merit and
with due regard to the benefits of diversity, including gender. The
Board's aim is to continue to maintain a diverse Board and, subject
to appointing the best candidates available when current Directors
retire, to have a proportion of at least one third women on the
Board.
The Company is a subsidiary of an investment trust and has no
employees other than the non-executive Directors and therefore has
no disclosures to make in this regard.
Community, Social, Employee, Human Rights and Environmental
Issues
In carrying out its activities and in its relationship with the
community, the Company aims to conduct itself responsibly,
ethically and fairly, including in relation to social and human
rights issues. The Company has no employees and the Board is
comprised entirely of non-executive Directors. In common with its
parent Company Electra, the Company has no direct impact on the
environment.
Dr Colette Bowe
Chairman
26 November 2013
Report of the Directors
To the Members of Electra Private Equity Investments PLC
The Directors present the audited Accounts of the Company for
the year ended 30 September 2013 and their Report on its
affairs.
In accordance with the new requirement for the Directors to
prepare a Strategic Report for the year ended 30 September 2013,
the following information some of which was, previously included
within the Directors' Report, is set out in the Strategic Report on
pages 3 to 5: The Company's Objective, Strategy and Business Model,
information regarding Community, Social, Employee, Human Rights and
Environmental Issues, and the Board Diversity Statement.
Corporate Governance
The Company has a 'Standard' listing on the London Stock
Exchange and so is not required to comply with the UK Corporate
Governance Code but it is committed to appropriately high standards
of corporate governance. The Company's corporate governance
arrangements are described on pages 8 and 9.
Share Capital
At 30 September 2013 there were a total of 50,000 ordinary
shares of GBP1.00 each in issue.
Zero Dividend Preference Shares
At 30 September 2013 there was a total of 47,295,000 ZDP Shares
of 0.01 pence each in issue.
In accordance with the Company's Articles of Association, the
ZDP Shares carry no entitlement to any dividends or other
distributions or to participate in the revenue or any other profits
of the Company. The ZDP Shareholders have no right to receive
notice of, or to attend or vote at, any general meeting of the
Company except in those circumstances set out in the Company's
Articles of Association.
Directors
The current Directors of the Company are listed on page 20. Dr
Bowe, Mr Cullinan and Mr Perkin served as Directors throughout the
year ended 30 September 2013.
Mr R Yates was appointed a non-executive Director of the Company
on 26 November 2013.
Mr Cullinan will retire at the Company's Annual General Meeting
to be held on 11 March 2014 and, being eligible, offer himself for
re-election. Mr Yates will offer himself for election at the Annual
General Meeting in 2014.
Dr Bowe has announced her intention to retire as a Director and
Chairman of the Company at the Annual General Meeting in 2014 when
Mr Yates will succeed Dr Bowe as Chairman of the Company.
Dr Bowe, Mr Cullinan, Mr Perkin and Mr Yates are all Directors
of the Company's parent company Electra.
Directors' Conflicts of Interest
Each of the Directors is also a Director of Electra and is
accordingly to be regarded as interested in any transaction or
arrangement that may be made with Electra. The Boards of Electra
and the Company have agreed that each Director of the Company is
authorised to continue to act as a Director of the Company and of
Electra and to consider and approve transactions or arrangements
between the Company and its parent, notwithstanding his or her
interest in such matters as a result of his or her appointment as a
Director of either Board.
The Board considers the matter of potential conflicts of
interest on a regular basis and it has been agreed that to date
none of the Directors has a conflict of interest.
Directors' Interests
None of the Directors had an interest in either the ordinary
shares or the ZDP Shares of the Company during the period under
review and there have been no changes in this position between 1
October 2013 and 26 November 2013.
The interests of the Directors in the Ordinary Shares and 5%
Subordinated Convertible Bonds of Electra, the Company's parent
company, are shown in Electra's Report and Accounts for the year
ended 30 September 2013.
None of the Directors has a service contract with the
Company.
Directors' Indemnity
Directors' and Officers' Liability insurance cover has been put
in place. In addition, the Company's Articles of Association
provide, subject to the provisions of applicable UK legislation, an
indemnity for Directors in respect of costs incurred in the defence
of any proceedings brought against them by third parties arising
out of their positions as Directors, in which they are acquitted or
judgement is given in their favour.
Substantial Interests
At 26 November 2013 Electra owned 100% of the voting rights in
the Company's ordinary share capital.
Independent Auditors
A resolution to re-appoint PricewaterhouseCoopers LLP as
Auditors of the Company will be proposed at the Annual General
Meeting of the Company's ordinary shareholders in 2014. A separate
resolution will be proposed at the Annual General Meeting
authorising the Directors to determine the remuneration of the
Auditors.
The auditors PricewaterhouseCoopers LLP have indicated their
willingness to continue in office.
Audit Information
Each of the Directors confirms that so far as they are aware,
there is no relevant audit information of which the Company's
Auditors are unaware and the Directors have taken all steps they
ought to have taken to make themselves aware of any relevant audit
information and to establish that the Company's Auditors are aware
of that information.
Significant Agreements
Pursuant to the Intercompany Loan Agreement between the Company
and Electra documenting the loan from the Company to Electra of the
net proceeds of the ZDP share placing, Electra is required to repay
the loan to the Company immediately prior to the ZDP Repayment
Date, being 5 August 2016.
These funds are to be managed in accordance with the investment
policy of Electra.
Pursuant to the undertaking between the Company and Electra,
Electra has undertaken that it will subscribe for such number of
ordinary shares in the Company as is necessary to provide the
Company on the ZDP Repayment Date in August 2016 (after taking into
account the monies received by the Company on repayment of the
loan) with sufficient funds to meet the repayment obligations in
respect of the ZDP Shares.
Going Concern
The Company is in the position of having net liabilities and is
loss making. However, Electra has guaranteed that it will provide
adequate resources for the Company to continue in operational
existence for the foreseeable future. The Directors believe,
therefore, that it is appropriate to continue to adopt the going
concern basis in preparing the Annual Report and Accounts.
By order of the Board of Directors
Frostrow Capital LLP, Company Secretary
Paternoster House, 65 St Paul's Churchyard, London, EC4M 8AB
26 November 2013
Corporate Governance
The Company has a 'Standard' listing on the London Stock
Exchange and so is not required to comply with the UK Corporate
Governance Code but it is committed to appropriately high standards
of corporate governance. The Company's corporate governance
arrangements are described below.
The Board of Directors
The Company is a wholly owned subsidiary of Electra. The Company
is managed by the Board, which comprises four non-executive
Directors. Dr Bowe, Mr Perkin and Mr Cullinan served as Directors
throughout the year ended 30 September 2013. Dr Bowe has announced
her intention to retire from the Board with effect from the
Company's Annual General Meeting on 11 March 2014. Mr Roger Yates,
who was appointed as a Director on 26 November 2013, will be
appointed as Chairman of the Company in Dr Bowe's place at the
Annual General Meeting in March 2014.
It is the responsibility of the Board to ensure that there is
effective stewardship of the Company's affairs. All decisions are
taken by the Board and the Board meets as required to discharge its
duties. The Board met twice during the year and all Directors
attended all the meetings held while they were appointed as
Director.
The Board receives information that it considers to be
sufficient and appropriate to enable it to discharge its duties.
Directors receive Board papers several days in advance of Board
meetings and are able to consider in detail any issues to be
discussed at the relevant meeting.
The Directors believe that the Board has an appropriate balance
of skills and experience, independence and knowledge of the Company
to enable it to provide effective strategic leadership and proper
governance of the Company. Information about the Directors,
including their relevant experience, can be found on page 20.
Given the nature of the Company's business and the number of
Directors, the Directors have not established separate Committees
of the Board but deal with all business themselves.
Independence of the Board
All the Directors were non-executive Directors of the Company's
parent company, Electra, throughout the year.
The Board has carefully considered the independence of each
Director and, notwithstanding the cross-directorships detailed
above, has concluded that each Director is wholly independent on
the basis that the Board firmly believes that independence is a
state of mind and the character and judgement which accompany this
are distinct from and are not compromised by length of service.
The Board did not undertake a separate formal appraisal process
of its own operations and performance during the year or separate
Director appraisals as these processes were covered by the
appraisals carried out by the Board of Electra, as described in the
Report and Accounts of that company for the year ended 30 September
2013.
Directors' Terms of Appointment
It is the Board's policy that Directors shall retire and be
subject to appointment by shareholders at the first Annual General
Meeting following their appointment by the Board and be subject to
re-election at least every third year thereafter.
Re-election of Directors
In accordance with the Company's Articles, Dr Bowe will retire
at the Annual General Meeting to be held on 11 March 2014 but will
not offer herself for re-election as she has announced her
intention to retire from the Electra Board on the same day. Mr
Cullinan will retire at the Annual General Meeting to be held in
2014 and will offer himself for re-election. Mr Yates, who was
appointed to the Board on 26 November 2013, will offer himself for
election at the Annual General Meeting to be held in 2014.
Biographical details of the Directors seeking election or
re-election are set out on page 20.
Independent Professional Advice
Individual Directors may seek independent professional advice in
furtherance of their duties at the Company's expense within certain
parameters. All Directors have access to the advice and services of
the Company Secretary.
Company Secretary
Frostrow Capital LLP acted as the independent Company Secretary
in addition to its role as Board Advisor during the year under
review.
Induction and Training
New Directors are provided with an induction programme which is
tailored to the particular circumstances of the appointee and which
includes being briefed fully about the Company by the Chairman,
senior executives of Electra Partners and the Company Secretary.
Following appointment, the Chairman regularly reviews and agrees
with Directors their training and development needs as necessary to
enable them to discharge their duties.
Internal Control
The Board confirms that it has an ongoing process for
identifying, evaluating and managing the significant risks faced by
the Company. This process has been in place throughout the year and
has continued since the year end. It is reviewed at regular
intervals by the Board.
The Board is responsible for the Company's system of internal
control and has reviewed its effectiveness for the year ended 30
September 2013. This review encompasses all controls including
financial, operational and compliance controls and risk management.
The system of internal control is designed to manage, rather than
eliminate, the risk of failure to achieve business objectives and
can only provide reasonable and not absolute assurance against
material misstatement or loss.
The Company's annual financial statements and half-yearly
financial statements are prepared in accordance with applicable
regulatory requirements.
The Company's system of internal control mainly comprises the
regular monitoring by the Board of the key investment and financial
data of the Company's parent Electra and the review of the
Company's own financial statements.
Statement of Directors' Responsibilities
The Directors are responsible for preparing the Annual Report
and the financial statements in accordance with applicable law and
regulations.
Company Law requires the Directors to prepare financial
statements for each financial year. Under that law the Directors
have prepared the financial statements in accordance with
International Financial Reporting Standards (IFRSs) as adopted by
the European Union. Under Company Law the Directors must not
approve the financial statements unless they are satisfied that
they give a true and fair view of the state of affairs of the
Company and of the profit or loss of the Company for that period.
In preparing these financial statements, the Directors are required
to:
-- select suitable accounting policies and then apply them consistently;
-- make judgements and accounting estimates that are reasonable and prudent;
-- state whether applicable International Financial Reporting
Standards (IFRSs) as adopted by the European Union have been
followed;
-- prepare the financial statements on the going concern basis
unless it is inappropriate to presume that the Company will
continue in business.
The Directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the Company's
transactions and disclose with reasonable accuracy at any time the
financial position of the Company and enable them to ensure that
the financial statements comply with the Companies Act 2006. They
are also responsible for safeguarding the assets of the Company and
hence for taking reasonable steps for the prevention and detection
of fraud and other irregularities.
The financial statements are published on
www.electraequity.com/eltz, which is a website maintained by
Electra Partners. The maintenance and integrity of the website is,
so far as it relates to the Company, the responsibility of Electra
Partners. The work carried out by the auditors does not involve
consideration of the maintenance and integrity of this website and,
accordingly, the auditors accept no responsibility for any changes
that have occurred to the financial statements since they were
initially presented on the website. Visitors to the website need to
be aware that legislation in the United Kingdom governing the
preparation and dissemination of the financial statements may
differ from legislation in other jurisdictions.
Each of the Directors, whose names and functions are listed in
the Board of Directors section of the Annual Report confirm that,
to the best of their knowledge:
-- the Company's financial statements, which have been prepared
in accordance with IFRSs as adopted by the EU, give a true and fair
view of the assets, liabilities, financial position and loss of the
Company; and
-- the Strategic Report contained in the Reports section of the
Annual Report includes a fair review of the development and
performance of the business and position of the Company, together
with a description of the principal risks and uncertainties that it
faces.
-- So far as each Director is aware, there is no relevant audit
information of which the Company's auditors are unaware; and
-- They have taken all the steps that they ought to have taken
as a Director in order to make themselves aware of any relevant
audit information and to establish that the Company's Auditors are
aware of that information.
On behalf of the Board of Directors
Dr Colette Bowe
Paternoster House, 65 St Paul's Churchyard, London, EC4M 8AB
26 November 2013
Independent Auditors' Report to the Members of Electra Private
Equity Investments PLC
Report on the financial statements
Our opinion
In our opinion the financial statements:
-- give a true and fair view of the state of the Company's
affairs as at 30 September 2013 and of its loss and cash flows for
the year then ended;
-- have been properly prepared in accordance with International
Financial Reporting Standards (IFRSs) as adopted by the European
Union; and
-- have been prepared in accordance with the requirements of the Companies Act 2006.
This opinion is to be read in the context of what we say
below.
What we have audited
The financial statements for the year ended 30 September 2013,
which are prepared by Electra Private Equity Investments PLC,
comprise :
-- the Statement of Comprehensive Income;
-- the Statement of Changes in Equity;
-- the Balance Sheet; and
-- related notes.
The financial reporting framework that has been applied in their
preparation comprises applicable law and International Financial
Reporting Standards (IFRSs) as adopted by the European Union.
In applying the financial reporting framework, the directors
have made a number of subjective judgements, for example in respect
of significant accounting estimates. In making such estimates, they
have made assumptions and considered future events.
What an audit of financial statements involves
We conducted our audit in accordance with International
Standards on Auditing (UK and Ireland) (ISAs (UK & Ireland)).
An audit involves obtaining evidence about the amounts and
disclosures in the financial statements sufficient to give
reasonable assurance that the financial statements are free from
material misstatement, whether caused by fraud or error. This
includes an assessment of:
-- whether the accounting policies are appropriate to the
Company's circumstances and have been consistently applied and
adequately disclosed;
-- the reasonableness of significant accounting estimates made by the directors; and
-- the overall presentation of the financial statements.
In addition, we read all the financial and non-financial
information in the Report and Accounts to identify material
inconsistencies with the audited financial statements and to
identify any information that is apparently materially incorrect
based on, or materially inconsistent with, the knowledge acquired
by us in the course of performing the audit. If we become aware of
any apparent material misstatements or inconsistencies we consider
the implications for our report.
Other matters on which we are required to report by
exception
In our opinion:
-- the information given in the Strategic Report and the
Directors' Report for the financial year for which the financial
statements are prepared is consistent with the financial
statements.
Other matters on which we are required to report by
exception
Under the Companies Act 2006 we are required to report to you
if, in our opinion:
-- we have not received all the information and explanations we require for our audit; or
-- adequate accounting records have not been kept, or returns
adequate for our audit have not been received from branches not
visited by us; or
-- the financial statements are not in agreement with the accounting records and returns; or
-- certain disclosures of directors' remuneration specified by law have not been made; or
-- a corporate governance statement has not been prepared.
We have no exceptions to report arising from this
responsibility.
Responsibilities for the financial statements and the audit
Our responsibilities and those of the directors
As explained more fully in the Report of the Directors set out
on pages 6 and 7, the directors are responsible for the preparation
of the financial statements and for being satisfied that they give
a true and fair view.
Our responsibility is to audit and express an opinion on the
financial statements in accordance with applicable law and ISAs (UK
& Ireland). Those standards require us to comply with the
Auditing Practices Board's Ethical Standards for Auditors.
This report, including the opinions, has been prepared for and
only for the Company's members as a body in accordance with Chapter
3 of Part 16 of the Companies Act 2006 and for no other purpose. We
do not, in giving these opinions, accept or assume responsibility
for any other purpose or to any other person to whom this report is
shown or into whose hands it may come save where expressly agreed
by our prior consent in writing.
Alison Morris (Senior Statutory Auditor)
for and on behalf of PricewaterhouseCoopers LLP
Chartered Accountants and Statutory Auditors
London
26 November 2013
Statement of Comprehensive Income
2013 2012
Note For the year ended 30 September GBP'000 GBP'000
----- ----------------------------------------- ----------- -----------
3 Income 2,317 2,250
4 Expenses (53) (23)
----- ----------------------------------------- ----------- -----------
Net profit before finance costs and
taxation 2,264 2,227
----- ----------------------------------------- ----------- -----------
6 Finance costs (3,940) (3,710)
----- ----------------------------------------- ----------- -----------
Loss on ordinary activities before
taxation (1,676) (1,483)
7 Taxation 83 --
----- ----------------------------------------- ----------- -----------
Loss on ordinary activities attributable
to the owners of the parent (1,593) (1,483)
Other comprehensive income -- --
----- ----------------------------------------- ----------- -----------
Total comprehensive loss for the year (1,593) (1,483)
----- ----------------------------------------- ----------- -----------
Basic and diluted loss per ordinary
9 share GBP(31.86) GBP(29.67)
----- ----------------------------------------- ----------- -----------
The amounts dealt with in the Statement of Comprehensive Income
are all derived from continuing activities.
Statement of Changes in Equity
Share Revenue Total Shareholders'
For the year ended 30 September Capital Reserve Funds
2013 GBP'000 GBP'000 GBP'000
--------------------------------- --------- --------- --------------------
Total equity at 1 October 2012 50 (4,585) (4,535)
Loss for the year and total
comprehensive loss -- (1,593) (1,593)
--------------------------------- --------- --------- --------------------
Total equity attributable to
the owners of the parent at
30 September 2013 50 (6,178) (6,128)
--------------------------------- --------- --------- --------------------
Share Revenue Total Shareholders'
For the year ended 30 September Capital Reserve Funds
2012 GBP'000 GBP'000 GBP'000
--------------------------------- --------- --------- --------------------
Total equity at 1 October 2011 50 (3,102) (3,052)
Total comprehensive loss for
the year -- (1,483) (1,483)
--------------------------------- --------- --------- --------------------
Total equity attributable to
the owners of the parent at
30 September 2012 50 (4,585) (4,535)
--------------------------------- --------- --------- --------------------
Balance Sheet
As at 30 September As at 30 September
Note 2013 GBP'000 2012 GBP'000
----- --------------------------- ------------------- -------------------
Current Assets
10 Loans and receivables 54,281 51,441
Current tax asset -- 469
Cash and cash equivalents 316 315
54,597 52,225
----- --------------------------- ------------------- -------------------
Current Liabilities
Other payables (41) (17)
Net Current Assets 54,556 52,208
----- --------------------------- ------------------- -------------------
Non-current Liabilities
Zero Dividend Preference
11 Shares (60,684) (56,743)
Net Liabilities (6,128) (4,535)
----- --------------------------- ------------------- -------------------
Capital and Reserves
13 Share capital 50 50
Retained earnings (6,178) (4,585)
Total Equity Shareholders'
Funds (6,128) (4,535)
----- --------------------------- ------------------- -------------------
The notes on pages 15 to 19 form an integral part of the
financial statements.
The Accounts on pages 13 to 19 were approved by the Directors on
26 November 2013 and were signed on their behalf by:
Dr C Bowe, Chairman
Electra Private Equity Investments PLC
Company Number: 6885579
Cash Flow Statement
2013 2012
For the year ended 30 September GBP'000 GBP'000
--------------------------------- --------- ---------
Operating Activities
Interest received 1 --
Net Cash Inflow from Operating
Activities 1 --
--------------------------------- --------- ---------
Net Cash Inflow from Financing
Activities -- --
--------------------------------- --------- ---------
Net increase in cash and cash
equivalents 1 --
--------------------------------- --------- ---------
Cash and cash equivalents
at 1 October 315 315
--------------------------------- --------- ---------
Cash and cash equivalents
at 30 September 316 315
--------------------------------- --------- ---------
Notes to the Financial Statements
1 Basis of Preparation
The financial statements for the year ended 30 September 2013
have been prepared in accordance with the Companies Act 2006 and
International Financial Reporting Standards ("IFRS"). IFRS
comprises standards and interpretations approved by the
International Accounting Standards Board ("IASB") and the
International Financial Reporting Interpretations Committee
("IFRIC") as adopted in the European Union as at 30 September
2013.
The financial statements comprise the Balance Sheet as at 30
September 2013 and for the year ended 30 September 2013 the related
Statement of Comprehensive Income, Statement of Changes in Equity,
Cashflow Statement and the related notes hereinafter referred to as
'financial statements'. The principal accounting policies adopted
by the Company have been applied consistently throughout the year,
and are set out below.
The financial statements are prepared under the historical cost
convention.
The Company's financial statements are presented in sterling,
which is the currency of the primary environment in which the
Company operates. All values are rounded to the nearest thousand
pounds (GBP'000) except when otherwise indicated.
The financial statements have been prepared on a going concern
basis as Electra has undertaken that, at any time up to or
immediately prior to the ZDP repayment date, it will subscribe for
such number of ordinary shares in the Company as is necessary to
provide the Company on the ZDP repayment date (after taking into
account the monies to be received by it on repayment of the loan)
with sufficient funds to meet the repayment obligations in respect
of the ZDP Shares.
Cash and cash equivalents
Cash comprises cash at bank and short term deposits with an
original maturity of less than three months.
Loans and receivables
Loans and other receivables are non derivative financial assets
with fixed or determinable payments that are not quoted in an
active market. Loans and other receivables are initially recognised
at fair value including direct and incremental transaction costs.
Loans and receivables are subsequently carried at amortised cost
using the effective interest rate method.
Zero Dividend Preference Shares
Zero Dividend Preference Shares which exhibit the
characteristics of liabilities are recognised as liabilities in the
Balance Sheet in accordance with IAS 32. Borrowings are initially
recognised at fair value. After initial recognition, these
liabilities are measured at amortised cost, which represents the
initial net proceeds of the issue after issue costs plus the
accrued entitlement to the date of these financial statements.
The accrued entitlement is calculated as the difference between
the proceeds on the issue of these shares and the final liability
and is charged as interest expense over the term of the life of
these shares using the effective interest method.
Share Capital
Ordinary shares issued by the Group are recognised at fair value
or proceeds received with the excess of the amount received over
nominal value being credited to the share premium account. Direct
issue costs net of tax are deducted from equity.
Taxation
The tax effect on income and expenses is calculated using the
Company's effective rate of tax for the accounting period.
Impairment
The Company assesses at the end of each reporting period whether
there is objective evidence that the financial asset is impaired. A
financial asset is impaired and impairment losses are incurred only
if there is objective evidence of impairment; when observable data
indicates there is a measurable decrease in the estimated further
cash flows.
The amount of loss is measured as the difference between the
asset's carrying amount and the present value of estimated future
cash flows discounted at the financial asset's original effective
interest rate.
Application of New Standards
At the balance sheet date, the Company has adopted all Standards
and IFRIC interpretations that were either issued, or which become
effective, during the year. None of the standards applicable during
the year were relevant and did not have a significant impact on the
financial statements or accounting policies.
New Standards to be Applied
At the date of authorisation of these financial statements, the
IASB and the IFRIC have issued the following standards, amendments
and interpretations to be applied to financial statements with
periods commencing on or after the following dates:
-- Amendments to IFRS 7, 'Disclosures - Offsetting financial
assets and financial liabilities' (effective for annual periods
beginning on or after 1 January 2013) require additional
disclosures to enable users of financial statements to evaluate the
effect or the potential effects of netting arrangements, including
rights of set-off associated with an entity's recognised financial
assets and recognised financial liabilities, on the entity's
financial position
-- Amendments to IAS 32, 'Offsetting financial assets and
financial liabilities' is effective for annual periods beginning on
or after 1 January 2014. These amendments clarify the offsetting
criteria in IAS 32 and address inconsistencies in their
application
-- IFRS 12, 'Disclosures of interests in other entities' is
effective for annual periods beginning on or after 1 January
2013.
None of the standards, amendments and interpretations are
expected to have a significant effect on the consolidated financial
statements of the Group.
2 Segmental Analysis
The chief operating decision-maker has been identified as the
Board of the Company. The Board of the Company considers there to
be only one business segment and there is therefore no further
segmental analysis.
3 Income
2013 2012
For the year ended 30 September GBP'000 GBP'000
--------------------------------- --------- ---------
Interest receivable
Other interest 2,317 2,250
--------------------------------- --------- ---------
4 Expenses
2013 2012
For the year ended 30 September GBP'000 GBP'000
--------------------------------- --------- ---------
Administrative expenses 38 7
Auditors' remuneration 15 16
--------------------------------- --------- ---------
53 23
--------------------------------- --------- ---------
During the year PricewaterhouseCoopers LLP earned the following
fees:
2013 2012
For the year ended 30 September GBP'000 GBP'000
--------------------------------- --------- ---------
Audit fees
Statutory audit of the Company 15 16
--------------------------------- --------- ---------
5 Directors and Employees
No remuneration was paid to any Directors during the year.
The Company has no employees.
6 Finance Costs
2013 2012
For the year ended 30 September GBP'000 GBP'000
-------------------------------------- --------- ---------
Zero Dividend Preference Share costs 3,940 3,710
-------------------------------------- --------- ---------
This represents the amortised cost of the issue expenses plus
the accrued entitlement of the final liability less the proceeds on
issue.
7 Taxation
2013 2012
Taxation on loss for the year ended 30 September GBP'000 GBP'000
-------------------------------------------------- --------- ---------
(a) UK Corporation Tax
Current Tax
UK Corporation Tax on loss for the year -- --
Prior year adjustment 83 --
Total Current Tax Credit 83 --
-------------------------------------------------- --------- ---------
Deferred Tax
Origination and reversal of timing differences -- --
Total Deferred Tax -- --
-------------------------------------------------- --------- ---------
Tax on loss on Ordinary Activities 83 --
-------------------------------------------------- --------- ---------
(b) Factors Affecting Tax Charge for the Year
Loss on Ordinary Activities before Tax (1,676) (1,483)
-------------------------------------------------- --------- ---------
Loss on Ordinary Activities multiplied by
the standard rate in the UK 23.5% (2012: 25%) (394) (368)
Group Relief claimed (532) (559)
Expenses not deductible for tax purposes 926 927
Prior year adjustment (83) --
Current Tax (Credit) for the year (83) --
-------------------------------------------------- --------- ---------
8 Dividends
No dividend was paid during the year ended 30 September 2013
(2012: nil).
9 Loss per Share
2013 2012
For the year ended 30 September GBP GBP
------------------------------------ -------- --------
Earnings per Ordinary Share (Basic
and Diluted) (31.86) (29.67)
------------------------------------ -------- --------
The calculation of earnings per share is based on the loss
attributable to the owners of the parent of GBP1,593,000 (2012:
GBP1,483,000) and on a weighted average number of 50,000 (2012:
50,000) ordinary shares of GBP1 each in issue.
10 Loans and Receivables
2013 2012
As at 30 September GBP'000 GBP'000
-------------------------------- --------- ---------
Amounts owed by Group entities 54,281 51,441
-------------------------------- --------- ---------
Under the intercompany Loan Agreement, the Company charges
interest at LIBOR rates plus a margin of 3%.
11 Zero Dividend Preference Shares
2013 2012
As at 30 September GBP'000 GBP'000
--------------------------------- --------- ---------
Zero Dividend Preference Shares 60,684 56,743
--------------------------------- --------- ---------
On 5 August 2009, the Company issued 43,000,000 Zero Dividend
Perference Shares at 100p each. On 2 December 2009, a further
4,295,000 Zero Dividend Preference Shares were issued at a price of
104p each. Each share has a par value of 0.01p and is redeemable on
5 August 2016 for 155.41p.
12 Financial Instruments
The Company was established for the issuance of Zero Dividend
Preference Shares and it has the single objective of providing
final capital entitlement to the Zero Dividend Preference
shareholders at 5 August 2016.
The Company's financial instruments comprise:
1. Cash at bank and in hand.
2. An issuance of Zero Dividend Preference shares.
3. Loan due from Electra.
The Company's obligation to pay the ZDP Shareholders the final
capital entitlement is dependent upon Electra's ability to comply
with its obligations to the Company. Hence the main risks arising
from the Company's financial instruments are linked to Electra's
market price, liquidity and capital risk.
Market price risk
Market price risk arises mainly from uncertainty about future
prices of financial instruments used in Electra's operations. It
represents the potential loss Electra might suffer through holding
market positions in the face of price movements, mitigated by stock
selections. Details of how this risk is managed are contained
within the accounts of Electra Private Equity PLC.
Liquidity risk
This is the risk that the Company will encounter difficulty in
meeting obligations associated with financial liabilities.
Liquidity risk is considered to be significant as Electra is
reliant upon the sale of assets which mainly comprise unlisted
investments. Details of how this risk is managed are contained
within the accounts of Electra Private Equity PLC.
Capital risk
The management of Electra's capital risk safeguards its ability
to continue as a going concern and thus its capacity to comply with
its obligations to the Company. Details of how this risk is managed
are contained within the accounts of Electra Private Equity
PLC.
i) Net interest exposure
The risk of adverse movements in interest rates is assessed on
the net of the ZDP finance charge and the intercompany loan to
Electra.
Pursuant to a loan agreement between the Company and Electra,
the Company lent Electra the whole of the net proceeds of the ZDP
shares, charging interest at LIBOR plus a margin of 3%. The net
exposure to interest risk is considered immaterial as a result of
the undertaking by Electra whereby at any time up to or immediately
prior to the ZDP repayment date, Electra will subscribe for such
number of ordinary shares in the Company as is necessary to provide
the Company on the ZDP repayment date (after taking in to account
the monies to be received by it on repayment of the loan) with
sufficient funds to meet the repayment obligations in respect of
the ZDP Shares.
ii) Maturity of Financial Liabilities
The maturity profile of the Company's financial liabilities as
at 30 September 2013 was:
2013 2012
As at 30 September GBP'000 GBP'000
-------------------- --------- ---------
Over two years 73,496 73,496
-------------------- --------- ---------
This relates to the Zero Dividend Preference shares. These are
redeemable on 5 August 2016.
The fair value of the Zero Dividend Preference shares as at 30
September 2013 was GBP66,154,000 (2012: GBP62,524,000).
13 Share Capital
2013 2012
As at 30 September GBP'000 GBP'000
-------------------------------------- --------- ---------
Allotted, called up and fully paid
50,000 ordinary shares of GBP1 each 50 50
-------------------------------------- --------- ---------
14. Related Party Transactions
Pursuant to a loan agreement between the Company and Electra, in
2009 the Company lent Electra the whole of the net proceeds of the
ZDP shares and these funds continue to be managed in accordance
with the investment policy of Electra. This loan is on terms
requiring its repayment by Electra to the Company at any time up to
or immediately prior to the ZDP repayment date. As at 30 September
2013, the outstanding balance of the loan was GBP54,281,000 (2012:
GBP51,441,000) including interest accrued of GBP9,022,000 (2012:
GBP6,709,000).
15. Immediate and Ultimate Parent
The Company's immediate and ultimate parent undertaking and
controlling party is Electra, a company incorporated in Great
Britain and registered in England and Wales. Copies of the
financial statements are available at the Company's registered
office at Paternoster House, 65 St. Paul's Churchyard, London, EC4M
8AB.
Board of Directors
Colette Bowe (Chairman)
An economist by profession, Dr Bowe has worked in Whitehall,
City regulation and the fund management industry. She is currently
Chairman of the Ofcom board, a board member of the UK Statistics
Authority, a board member of AXA Investment Managers, and a member
of the supervisory board of AXA Investment Managers Deutschland
GmbH.
Dr Bowe was appointed a Director and Chairman in 2010.
Geoffrey Cullinan
Mr Cullinan was a Director of Bain & Company from 1997 to
2005. He was the founder and leader of their private equity
business in Europe and continues to be an Adviser to Bain. He was
formerly Chief Executive of Hamleys plc (1996) and senior non
executive director of Datamonitor plc (1994 to 2002). Prior to that
he was the managing partner of OC&C Strategy Consultants, which
he co-founded in 1986.
Mr Cullinan was appointed a Director in 2012.
Roger Perkin
Mr Perkin is a former senior partner at Ernst & Young with
extensive global accounting experience and financial services
expertise. He spent 40 years at Ernst & Young and its
predecessor firms, including over 30 years as a Partner, working
with a wide range of clients before specialising in financial
services. He is a director of Nationwide Building Society,
Resolution Ltd and Tullett Prebon plc.
Mr Perkin was appointed a Director in 2010.
Roger Yates
Mr Yates has 30 years' experience as an investment professional
and a business manager in the fund management industry having begun
his career with GT Management Limited in 1981. He was Chief
Executive of Henderson Global Investors from 1999 to 2003 and then,
following the company's listing, of Henderson Group Plc until 2008.
Prior to that he was Chief Investment Officer of Invesco Global and
Morgan Grenfell Investment Management Limited. He is currently non
executive Chairman of Pioneer Global Asset Management, part of the
UniCredit Group, and a non executive director of JP Morgan Elect
plc and IG Group Holdings plc and was, from 2009 to 2010, non
executive director of F&C Asset Management plc. Mr Yates will
join the board of St. James' Place plc as a non executive director
with effect from 1 January 2014.
Mr Yates was appointed a Director in 2013.
Notes:
All the Directors are also Directors of the Company's parent
company Electra.
Contact Details
Board of Directors
Colette Bowe (Chairman)
Geoffrey Cullinan
Roger Perkin
Roger Yates
Telephone +44 (0)20 7214 4200
Company Secretary
Frostrow Capital LLP
25 Southampton Buildings
London WC2A 1AL
Telephone +44 (0)20 3008 4910
Registered Office
Paternoster House
65 St Paul's Churchyard
London EC4M 8AB
Company Number
06885579
Registered Independent Auditors
PricewaterhouseCoopers LLP
Chartered Accountants &
Statutory Auditors
7 More London Riverside
London SE1 2RT
Stockbroker
J.P. Morgan Cazenove
Registrar and Transfer Office
Equiniti Limited
Aspect House
Spencer Road
Lancing
West Sussex BN99 6DA
Telephone (UK) 0871 384 2351 *
Textel/Hard of hearing line (UK) 0871 384 2255 *
Telephone (Overseas) +44 121 415 7047
* Calls to these numbers cost 8p per minute plus network extras.
Lines open 8.30am to 5.30pm, Monday to Friday.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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