Electra Private Equity PLC Realisation strategy; Hotter Shoes trading update (8137I)

TIDMELTA

RNS Number : 8137I

Electra Private Equity PLC

17 August 2021

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, DIRECTLY OR INDIRECTLY, IN OR INTO OR FROM ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OR REGULATIONS OF SUCH JURISDICTION.

Electra Private Equity PLC

Update on realisation strategy and Hotter Shoes trading

17(th) August 2021

Electra Private Equity PLC ("Electra") reaffirms that, having explored other possibilities, the Board is confident that the value creation opportunity arising from both the demerger of Electra's hospitality brands through a new parent company Hostmore plc ("Hostmore") and the subsequent transition of Electra to AIM as the parent company of Hotter Shoes ('Hotter') is the most attractive route to create both short and longer term shareholder value. The Board believes that its strategy of two separate listings significantly outweigh the opportunity to realise cash now, or to maintain the status quo.

The proposed demerger of Hostmore marks the penultimate stage of the implementation of the Electra strategy that has delivered the return of over GBP2bn to shareholders since 2016. On completion of the demerger of Hostmore, Electra's sole remaining corporate investment will be Hotter.

In completing the delivery of our strategy, Electra shareholders will receive shares in Hostmore and will retain their shares in Electra (renamed as outlined below) on AIM.

Preparations for the demerger of Hostmore are proceeding well and further announcements will follow shortly.

Proposed rename of Electra to Unbound Group PLC when it transitions to AIM as parent company for Hotter Shoes late this calendar year

Having been transformed from a retail to a multi-channel business with a strong and growing digital focus over the last 2 years, Hotter is now a fast growing, profitable and cash generative e-commerce focused footwear brand. Hotter provides footwear with uncompromising focus on comfort and fit through the use of differentiating technology, to a targeted demographic that values its brand and products.

Hotter's direct to consumer channels now reach 29% of the female population in the UK over the age of 55 - providing them with footwear that allows them to do more of what they love.

Cultural and demographic shifts now provide an opportunity to further monetise the existing Hotter customer database and to grow it through the addition of similarly themed products beyond footwear.

The over 55 demographic is a materially underserved online audience with the characteristics of:

-- Rapidly increasing digital literacy - now generating over 30% of overall internet participation

   --    Long term structural growth, significantly in excess of growth in younger demographics 

-- Focus on health, wellbeing, leisure and recreation with a more acute need for comfort over performance

-- High concentration of UK wealth in the demographic results in focus for product selection being on value rather than price

Based on the foundations of Hotter as a trusted brand with market-leading digital infrastructure and strong customer personalisation through data insight, Unbound will provide a marketplace delivering a range of products and services that support the wellbeing and active lifestyles of our chosen customer community. Unbound's expanded offering beyond footwear will feature apparel and wellness brands alongside third party complementary brands.

Subject to the Hostmore demerger completing, Electra intends to seek shareholder approval to rename Electra as Unbound Group PLC ("Unbound") and to move its listing to AIM. Unbound will be the parent company of Hotter and the foundation of a fast growing e-commerce business serving and enhancing the lifestyles, health and wellbeing of our targeted customer community. We anticipate that Unbound will offer its first products beyond footwear from H1 2022.

A Capital Markets Day focused on Unbound will be held on 15(th) September, further details of which will be confirmed in due course.

As part of the transition to Unbound, Hotter has appointed Dan Lampard as the new Chief Financial Officer, effective from 30(th) August 2021. Dan has performed a number of different financial and commercial roles, most recently as CFO Glanbia Performance Nutritions. Dan's broad and relevant commercial experience will further enhance a management team with strong capabilities and expertise in e-commerce, product development, brand strategy and customer experience.

Hotter Shoes trading update

In the first 6 months of its financial year to January 2022 Hotter's UK Direct to Consumer sales have grown 39% on the comparable period in 2020.

In the same period overall sales growth has been 25%. Reflecting real progress in realising the benefits of Hotter's strategy, overall Gross Margin over the 6 month period was 63%, up from 53% in the same period in 2020 and over the same period fixed costs have reduced by 34% YOY.

Ian Watson, Chief Executive Officer of Hotter, commented:

"We are delighted with the progress we are making and welcome Dan to our team at this important time for the business. His track record of success in on-line, direct-to-consumer retail businesses will help drive our transformation as we work towards our listing on AIM and focus on delivering growth across our platform."

Neil Johnson, Chair of Electra, commented:

"It is an absolute priority for the Electra Board that, having already successfully delivered significant value for shareholders in our realisation strategy, the value realised for our final two investments should also exceed expectations.

Whilst we can't determine the value that the market will ascribe to Hostmore and Unbound, what we can say is that we are delighted to be planning for both companies to embark on their separate journeys as independent listed companies with the management, strategy and financial position to deliver real value growth in both the short and longer terms.

Both businesses have the opportunity to become leaders in their chosen markets and we have every confidence that the management teams that are in place can deliver their plans - and with them significant shareholder value."

Enquiries

   Gavin Manson, Chief Financial and Operating Officer, Electra Private Equity PLC      020 3874 8300 

John Sunnucks, Sofia Newitt, Vico Partners Limited 020 3957 5045

Notes to Editors

Electra Private Equity PLC

Electra is a private equity investment trust which has been listed on the London Stock Exchange since 1976. Electra's investment objective is to follow a realisation strategy, which aims to crystallise value for shareholders, through balancing the timing of returning cash to shareholders with maximisation of value. The Board has decided that the optimal outcome for shareholders, and for further significant longer term value creation, is likely to be to list Electra's two largest remaining portfolio assets, Fridays and Hotter Shoes on the LSE's Main Market and AIM, respectively (by way of a demerger of Hostmore and, in the case of Hotter, through reclassification of Electra's listing subsequent to the demerger of Hostmore). Since 1st October 2016, Electra has distributed over GBP2.1 billion to shareholders through ordinary dividends, special dividends and share buybacks.

Further Information

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The contents of this announcement have been prepared by and are the sole responsibility of Electra .

This announcement is being made for information purposes only in connection with the proposed demerger by Electra of Hostmore and the admission of the entire issued and to be issued share capital of Hostmore to the Official List of the Financial Conduct Authority and to trading on the main market for listed securities of the London Stock Exchange plc ("Admission") and the reclassification of Electra's listing subsequent to the demerger of Hostmore and does not purport to be full or complete.

This announcement does not constitute an offer or invitation to sell or issue, or a solicitation of an offer or invitation to purchase or subscribe for any securities in any jurisdiction nor shall it (or any part of it) or the fact of its distribution, form the basis of, or be relied on in connection with any contract therefor.

This announcement may not be relied upon for the purpose of entering into any transaction and should not be construed as, nor be relied on in connection with, any offer, invitation or inducement to purchase or subscribe for, or otherwise acquire, hold or dispose of any securities of Electra and/or Hostmore and shall not be regarded as a recommendation in relation to any such transaction whatsoever.

HSBC Bank plc ("HSBC"), which is authorised by the Prudential Regulation Authority (the "PRA") and regulated in the UK by the Financial Conduct Authority (the "FCA") and the PRA, and Numis Securities Limited ("Numis"), which is authorised and regulated in the UK by the FCA, are acting as financial advisers exclusively for Electra and Numis is acting exclusively as sponsor for Hostmore and in each case for no one else in connection with the demerger, Admission or any other matters described in this announcement and will not regard any other person as a client in connection with the demerger, Admission or any other matters described in this announcement or be responsible to anyone other than Electra and Hostmore for providing the protections afforded to clients of HSBC or Numis (as applicable) nor for providing advice in connection with the demerger, Admission, or any other matters referred to in this announcement. Apart from the responsibilities and liabilities, if any, which may be imposed on HSBC or Numis by the Financial Services and Markets Act 2000 or the regulatory regime established thereunder, neither HSBC or Numis nor any of their respective affiliates, directors, officers or employees owes or accepts any duty, liability or responsibility whatsoever (whether direct or indirect, consequential, whether in contract, in tort, in delict, under statute or otherwise) to any person who is not a client of HSBC or Numis (as applicable) for the contents of this announcement or its accuracy, completeness or verification or for any other statement made or purported to be made by it, or on its behalf, or by any other person(s) in connection with the demerger, Admission, this announcement, any statement contained herein, or otherwise.

Stifel Nicolaus Europe Limited ("Stifel") which is authorised and regulated in the UK by the FCA, is acting as financial adviser and nominated adviser exclusively for Electra in connection with the proposed move of its listing to AIM following the demerger of Hostmore (the "Listing Move") and for no one else in connection with the Listing Move or any other matters described in this announcement and will not regard any other person as a client in connection with the Listing Move or any other matters described in this announcement or be responsible to anyone other than Electra for providing the protections afforded to clients of Stifel nor for providing advice in connection with the Listing Move or any other matters referred to in this announcement. Apart from the responsibilities and liabilities, if any, which may be imposed on Stifel by the Financial Services and Markets Act 2000 or the regulatory regime established thereunder, neither Stifel nor any of its affiliates, directors, officers or employees owes or accepts any duty, liability or responsibility whatsoever (whether direct or indirect, consequential, whether in contract, in tort, in delict, under statute or otherwise) to any person who is not a client of Stifle for the contents of this announcement or its accuracy, completeness or verification or for any other statement made or purported to be made by it, or on its behalf, or by any other person(s) in connection with the Listing Move, this announcement, any statement contained herein, or otherwise.

Certain statements made in this announcement are forward-looking statements and by their nature, all such forward-looking statements involve risk and uncertainty. Forward-looking statements include all matters that are not historical facts and often use words such as "expects", "may", "will", "could", "should", "intends", "plans", "predicts", "envisages" or "anticipates" or other words of similar meaning. These forward-looking statements are based on current beliefs and expectations based on information that is known to Electra at the date of this announcement. Actual results of the Electra Group (being Electra and its subsidiary undertakings from time to time), and/or their respective industries may differ from those expressed or implied in the forward-looking statements as a result of any number of known and unknown risks, uncertainties and other factors, including, but not limited to, the effects of the COVID-19 pandemic and uncertainties about its impact and duration, many of which are difficult to predict and are generally beyond the control of Electra. Persons receiving this announcement should not place undue reliance on any forward-looking statements. Unless otherwise required by applicable law or regulation Electra and its advisers (including HSBC, Numis and Stifel) disclaims any obligation or undertaking to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

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August 17, 2021 02:00 ET (06:00 GMT)