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Electra Private Equity PLC Second Interim Report & Accounts to 30 Sept 2021

02/12/2021 7:00am

UK Regulatory (RNS & others)


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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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