Electra Private Equity : Annual Report & Accounts 2018

Electra Private Equity PLC

Annual Report and Financial Statements

30th September 2018

About Electra Private Equity PLC

Electra Private Equity PLC ("Electra" or the "Company") is a private equity investment trust which has been listed on the London Stock Exchange since 1976. As at 30th September 2018 its net assets were £342 million or 892p per share.

During the year, Electra's objective was to achieve a return on equity of between 10% and 15% per year over the long term by investing in a portfolio of private equity assets.

Since 30th October 2018, Electra's investment objective has been to follow a realisation strategy which aims to crystallise value for shareholders, through balancing the timing of returning cash to shareholders with maximisation of value.

The Company will not make any new investments but will continue to support its existing investments to the extent required in order to optimise returns.

By 31st December 2018 the Company will have distributed over £2.0 billion (approximately 5,186p per share) since 1st October 2016 to shareholders.

Electra Private Equity PLC | Annual Report and Financial Statements 2018 1

Strategic and Business Review

Financial Statements

Corporate Governance

Further Information

Chairman's Statement

"From a market capitalisation of £1.2 billion at the start of October 2015 we have now made and announced distributions to shareholders of over £2.0 billion with remaining net assets of £0.2 billion after announced distributions. The direction is now clear, and we will seek to optimise value in the remaining portfolio over an acceptable timeframe whilst managing our cost base accordingly."

The past year has been one focused on setting the strategic direction of the Company and of its portfolio of investments, as well as of continued corporate simplification and tidying up the past.

Having concluded in the second phase of our strategic review in October 2017 that a listed closed-ended fund structure is not optimal for private equity investment, and having had significant interest in our portfolio assets, in May 2018 we commenced the third and final stage of our strategic review. This considered all options for the future.

The review concluded that it would be optimal to accept offers received for our larger non-controlled assets and thereafter consult with shareholders over the future. The Board considered that having now paid and announced distributions to shareholders of over £2.0 billion since 2016, and given the size of the remaining portfolio, it is unsustainable to continue in our current form and, on 30th October 2018, recommended a managed wind-down of the portfolio to shareholders.

In making this recommendation, the Board had concluded that, given the well documented challenges in both the UK retail and casual dining sectors, it was not appropriate to sell the two remaining larger assets TGI Fridays and Hotter Shoes at this time. These assets represent nearly 90% of the remaining portfolio, after disposals already announced, and are fully controlled. Despite the impact of short-term trading conditions on current valuation, the Board is confident that both assets offer good opportunity for growth and can provide strong exits in an acceptable timeframe. This concentration of value in two assets, both with exposure to UK consumer and retail markets, introduces a concentration of risk and possible volatility that would have been inappropriate in the context of the previous Investment Objective and Policy.

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