EPE Special Opps Ltd EPE Special Opp-EO.P EPE Special Opp-EC.P EPE Special Opp-EL.P - Interim Report
06/09/2022 07:00
For best results when printing this announcement, please click on link below:
http://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20220906:nRSF3314Ya&default-theme=true
RNS Number : 3314Y EPE Special Opportunities Limited 06 September 2022
EPE Special Opportunities Limited
("ESO" or the "Company")
Interim Report and Unaudited Financial Statements for the six months ended 31
July 2022
The Board of EPE Special Opportunities is pleased to announce the Company's
Interim Report and Unaudited Financial Statements for the six months ended 31
July 2022.
Summary
· The Company has experienced a challenging period, with performance in
the six months ended 31 July 2022 impacted by macro-economic headwinds felt
across the portfolio. The confluence of inflation, decreasing consumer demand
and geopolitical risk has created an adverse environment across sectors. The
Board and Investment Advisor have focused on positioning the portfolio to
weather these pressures. These challenges are expected to continue over the
medium term and the Board will accordingly maintain a prudent approach.
· The Net Asset Value ("NAV") per share of the Company as at 31 July
2022 was 259.74 pence, representing a decrease of 43.1 per cent. on the NAV
per share of 455.66 pence as at 31 January 2022.
· The share price of the Company as at 31 July 2022 was 172.50 pence,
representing a decrease of 44.2 per cent. on the share price of 309.00 pence
as at 31 January 2022.
· Luceco plc ("Luceco") released its trading update for the six months
ended 30 June 2022 in July 2022, announcing a decrease in like for like
revenue compared to a strong prior year comparator. Sales were impacted by
customer destocking and a reduction in DIY consumer demand. The business
announced gross margin slightly behind the prior year, but with input cost
inflation controlled via pricing increases. Net debt as at 30 June 2022 was
1.4x adjusted last twelve month EBITDA, in line with the target leverage
range. In March 2022, Luceco announced the acquisition of Sync EV for £10.0
million, providing a platform for entry into the high growth EV charge point
segment.
· The Rayware Group ("Rayware") experienced a complex trading
environment in the period, with sales impacted by customer destocking and
margin impacted by input costs and supply chain challenges. Looking beyond
near term headwinds, Rayware is focused on progressing international
expansion. The business appointed Alec Taylor, former director of Bradshaw
International, as a non-executive director, to provide strategic leadership
for the business's growing activities in the US.
· Whittard of Chelsea ("Whittard") delivered pleasing performance, with
COVID-19 disruption receding. Whittard's retail stores traded ahead of budget
and the prior year, as domestic and tourist footfall strengthened following
the relaxation of restrictions. Whittard continues to focus on the development
of international channels, with the business's South Korean franchise partner
opening a flagship location in Seoul. The business completed the relocation of
its head office to Milton Park in South East Oxfordshire in April 2022,
enhancing Whittard's ability to recruit from wider talent pools.
· David Phillips achieved material sales growth, supported by strong
performance in the Fitted and project based divisions. Pressures from supply
chain disruption and input costs have continued to impact profitability,
however the business has taken actions to mitigate. Looking ahead, the
business is focused on delivering improved profitability in its existing
channels as well as acquisition opportunities to deliver further scale.
· Pharmacy2U maintained the increased scale attained through the
COVID-19 period, while focusing on increasing profitability. The business has
continued to develop its operational platform and expand its Services
division.
· EPIC Acquisition Corp ("EAC") has continued to progress its search
for a business combination, focusing on European consumer brands with the
potential to realise significant growth in Asian markets. A number of
attractive potential merger opportunities are under active review.
· The Company had cash balances of £26.6 million as at 31 July 2022.
In July 2022, the Company agreed the extension of the maturity of £4.0
million of unsecured loan notes to July 2023. The Company has £20.1 million
zero dividend preference shares ("ZDP") maturing in December 2026 and no other
third-party debt outstanding. The Board and the Investment Advisor continue to
keep a close watch on liquidity given the adverse market conditions.
· As at 31 July 2022, the Company's unquoted portfolio was valued at a
weighted average EBITDA to enterprise value multiple of 6.2x (excluding
Pharmacy2U, which is valued on a sales multiple) and the portfolio had a low
level of third party leverage with net debt at 1.6x EBITDA in aggregate.
Mr Clive Spears, Chairman, commented: "The Company has experienced a
challenging period, but has taken actions across the portfolio to mitigate
macro-economic headwinds. The Company maintains ample liquidity to support the
existing portfolio as well as to fund the investment pipeline. I would like to
express my gratitude to the Investment Advisor and the portfolio management
teams for their hard work during a complex start to the year. The Board will
closely monitor the performance of the portfolio through the balance of the
year and I look forward to providing an update on further developments at the
year end."
The person responsible for releasing this information on behalf of the Company
is Amanda Robinson of Langham Hall Fund Management (Jersey) Limited.
Enquiries:
EPIC Investment Partners LLP +44 (0) 207 269 8865
Alex Leslie
Langham Hall Fund Management (Jersey) Limited +44 (0) 1534 885 200
Amanda Robinson
Cardew Group Limited +44 (0) 207 930 0777
Richard Spiegelberg
Numis Securities Limited +44 (0) 207 260 1000
Nominated Advisor: Stuart Skinner
Corporate Broker: Charles Farquhar
Chairman's Statement
The Company has experienced a challenging period, with performance in the six
months ended 31 July 2022 impacted by macro-economic headwinds felt across the
portfolio. The confluence of inflation, decreasing consumer demand and
geopolitical risk has created an adverse environment across sectors. The Board
and Investment Advisor have focused on positioning the portfolio to weather
these pressures. These challenges are expected to continue over the medium
term and the Board will accordingly maintain a prudent approach.
The Net Asset Value ("NAV") per share of the Company as at 31 July 2022 was
259.74 pence, representing a decrease of 43.1 per cent. on the NAV per share
of 455.66 pence as at 31 January 2022. The share price of the Company as at 31
July 2022 was 172.50 pence, representing a decrease of 44.2 per cent. on the
share price of 309.00 pence as at 31 January 2022.
Luceco plc ("Luceco") released its trading update for the six months ended 30
June 2022 in July 2022, announcing a decrease in like for like revenue
compared to a strong prior year comparator. Sales were impacted by customer
destocking and a reduction in DIY consumer demand. The business announced
gross margin slightly behind the prior year, but with input cost inflation
controlled via pricing increases. Net debt as at 30 June 2022 was 1.4x
adjusted last twelve month EBITDA, in line with the target leverage range.
In March 2022, Luceco announced the acquisition of Sync EV for £10.0 million,
providing a platform for entry into the high growth EV charge point segment.
The Rayware Group ("Rayware") experienced a complex trading environment in the
period, with sales impacted by customer destocking and margin impacted by
input costs and supply chain challenges. Looking beyond near term headwinds,
Rayware is focused on progressing international expansion. The business
appointed Alec Taylor, former director of Bradshaw International, as a
non-executive director, to provide strategic leadership for the business's
growing activities in the US.
Whittard of Chelsea ("Whittard") delivered pleasing performance, with COVID-19
disruption receding. Whittard's retail stores traded ahead of budget and the
prior year, as domestic and tourist footfall strengthened following the
relaxation of restrictions. Whittard continues to focus on the development of
international channels, with the business's South Korean franchise partner
opening a flagship location in Seoul. The business completed the relocation of
its head office to Milton Park in South East Oxfordshire in April 2022,
enhancing Whittard's ability to recruit from wider talent pools.
David Phillips achieved material sales growth, supported by strong performance
in the Fitted and project based divisions. Pressures from supply chain
disruption and input costs have continued to impact profitability, however the
business has taken actions to mitigate. Looking ahead, the business is focused
on delivering improved profitability in its existing channels as well as
acquisition opportunities to deliver further scale.
Pharmacy2U maintained the increased scale attained through the COVID-19
period, while focusing on increasing profitability. The business has continued
to develop its operational platform and expand its Services division.
EPIC Acquisition Corp ("EAC") has continued to progress its search for a
business combination, focusing on European consumer brands with the potential
to realise significant growth in Asian markets. A number of attractive
potential merger opportunities are under active review.
The Company had cash balances of £26.6 million(1) as at 31 July 2022. In July
2022, the Company agreed the extension of the maturity of £4.0 million
unsecured loan notes to July 2023. The Company has £20.1 million zero
dividend preference shares ("ZDP") maturing in December 2026 and no other
third-party debt outstanding. The Board and the Investment Advisor continue to
keep a close watch on liquidity given the adverse market conditions.
I would like to express my gratitude to the Investment Advisor and the
portfolio management teams for their hard work during a complex start to the
year. The Board will closely monitor the performance of the portfolio through
the balance of the year and I look forward to providing an update on further
developments at the year end.
Clive Spears
Chairman
5 September 2022
(1) Company cash balances are stated inclusive of cash held by associates in
which the Company is the sole investor.
Investment Advisor's Report
The Company has faced a difficult macro-economic environment, with pressures
felt across the portfolio and wider financial markets. The Investment Advisor
has acted across the portfolio to mitigate these factors and to ensure
resilience against an uncertain outlook. The Company has acted to preserve
liquidity, extending the maturity of its £4.0 million unsecured loan notes to
July 2023, to increase cash balances available to support the portfolio and
take advantage of investment opportunities. The Investment Advisor and the
Board will remain vigilant in light of evolving macro-economic dynamics,
maintaining a conservative positioning.
The Company
The NAV per share of the Company as at 31 July 2022 was 259.74 pence,
representing a decrease of 43.1 per cent. on the NAV per share of 455.66 pence
as at 31 January 2022. The share price of the Company as at 31 July 2022 was
172.50 pence, representing a decrease of 44.2 per cent. on the share price of
309.00 pence as at 31 January 2022.
The Company maintains strong liquidity and prudent levels of third party
leverage. The Company has cash balances of £26.6 million(2) as at 31 July
2022, which are available to support the portfolio, meet committed obligations
and deploy into attractive investment opportunities. Net debt in the
underlying portfolio stands at 1.6x EBITDA in aggregate.
The Portfolio
The Company's unquoted portfolio is valued at a weighted average enterprise
value to EBITDA multiple of 6.2x for mature assets (excluding assets investing
for growth). The valuation has been derived by reference to quoted
comparables, after the application of a liquidity discount to adjust for the
portfolio's scale and unquoted nature. Given the use of quoted comparables and
actual financial results, the valuation reflects the fair value of assets as
at the balance sheet date. The Investment Advisor notes that the fair market
value of the portfolio remains exposed to a volatile macro environment and
equity market valuations.
Luceco plc ("Luceco") released its trading update for the six months ended 30
June 2022 in July 2022, reporting sales of £106.0 million. Retail channels
were negatively impacted by customer destocking, however professional and
project channels demonstrated greater resilience. The business reported an
operating profit of £11.5 million, with margin impacted by product mix and
input costs, mitigated by selling price increases. The business reported net
debt of 1.4x adjusted last twelve months EBITDA. Net debt is expected to
reduce as inventory levels adjust to normalising supply chain conditions and
lower activity levels. The business announced that Sync EV, acquired in March
2022, had been fully integrated and was forecast to generate sales growth and
margin accretion for the group.
The Rayware Group has traded marginally below expectations, having faced
headwinds from customer destocking and inflationary cost pressures. The
Investment Advisor was pleased to welcome Alec Taylor to the business' board
of directors in March 2022. Alec has significant experience with growing US
homewares brands via his former directorship of Bradshaw International and is
well placed to support the business' growth ambitions in the US and
international markets.
Whittard of Chelsea has delivered resilient performance, with retail trading
rebounding following the relaxation of social distancing and international
travel restrictions. Whittard's e-commerce channels have experienced a partial
normalisation of volumes following exceptional trading through the COVID-19
period. Whittard's new franchise partner in South Korea has continued to
progress its store rollout plan, opening a flagship location in Seoul, the
largest Whittard store globally. In April 2022, the business moved into new
offices in Milton Park in Oxfordshire, enhancing talent pools via access to
London and surrounding catchment areas.
David Phillips has achieved a significant increase in scale, with growth lead
by its project-based business units. This growth has been set against
challenging operating conditions, including input cost inflation, supply chain
disruption and working capital dynamics. The Investment Advisor and the
business's management are focused on developing the existing platform,
alongside inorganic opportunities to generate further scale.
Pharmacy2U is focused on delivering continued growth and improving
profitability. The business has continued to diversify its activities. The
Services division, which operates vaccination and testing centres and
associated services, reaching a material scale.
EPIC Acquisition Corp remains focused on reviewing targets for business
combination. The Investment Advisor and their co-sponsor TTB Partners, a Hong
Kong-based investment and advisory business, are seeking a business at the
forefront of consumer innovation, recognised in both its home markets and
Asia.
The Investment Advisor continues to monitor the Company's credit fund
investments. European Capital Private Debt Fund has completed its investment
period and is distributing capital to the Company. Atlantic Credit
Opportunities Fund and Prelude have been impacted by challenging conditions in
high yield markets, but performance has remained ahead of the high yield index
and hedge fund peers.
The Investment Advisor would like to express its sincere thanks to the
portfolio's management and employees for their perseverance through a
challenging period. The Investment Advisor remains grateful to the Board and
the Company's shareholders for their continued support.
EPIC Investment Partners LLP
Investment Advisor to the Company
5 September 2022
(2) Company cash balances are stated inclusive of cash held by associates in
which the Company is the sole investor.
Biographies of the Directors
Clive Spears (Non- executive Chairman) David Pirouet (Non - executive Director)
Clive Spears retired from the Royal Bank of Scotland International Limited in David Pirouet joined PricewaterhouseCoopers Channel Islands LLP in 1980,
December 2003 as Deputy Director of Jersey after 32 years of service. His main retiring in 2009 after being an Audit and Assurance Partner for over 20 years.
activities prior to retirement included Product Development, Corporate During his 29 years at the firm Mr Pirouet specialised in the financial
Finance, Trust and Offshore Company Services and he was Head of Joint Venture services sector, in particular in the alternative investment management area
Fund Administration with Rawlinson & Hunter. Mr Spears is an Associate of and also led the business's Hedge Fund and business recovery practices for
the Chartered Institute for Securities & Investment. He has accumulated a over four years. Mr Pirouet currently holds a number of non-executive
well spread portfolio of directorships centring on private equity, positions across private equity, infrastructure and corporate debt. Mr
infrastructure and corporate debt. His current appointments include Chairman Pirouet's was previously non-executive Director and Chair of the Audit and
of Nordic Capital Limited and directorships of a series of ICG plc sponsored Risk committee for GCP Infrastructure Investments (FTSE 250 listed company)
funds and funds managed by Kreos Fund Management. He is a resident of until he retired in February 2021. He is a resident of Jersey.
Jersey.
Heather Bestwick (Non - executive Director) Nicholas Wilson (Non - executive Director)
Heather Bestwick has been a financial services professional for over 25 years, Nicholas Wilson has over 40 years of experience in hedge funds, derivatives
onshore in the City of London and offshore in the Cayman Islands and Jersey. and global asset management. He has run offshore branch operations for Mees
She qualified as an English solicitor, specialising in ship finance, with City Pierson Derivatives Limited, ADM Investor Services International Limited and
firm Norton Rose, and worked in their London and Greek offices for 8 years. Ms several other London based financial services companies. He is a resident of
Bestwick subsequently practised and became a partner with global offshore law Isle of Man.
firm Walkers in the Cayman Islands, and Managing Partner of the Jersey office.
Ms Bestwick sits on the boards of the Deutsche Bank company which managed the
dbX fund platform and Rathbone Investment Management International Limited.
She is a resident of Jersey.
Michael Gray (Non - executive Director)
Michael Gray was at The Royal Bank of Scotland for over 30 years, latterly as
Managing Director (Corporate) of RBS International before retiring in 2015.
During his 32 years at the firm Michael covered a broad spectrum of financial
services including corporate and commercial banking, funds, trusts and real
estate. Mr Gray currently holds a number of non-executive positions across
private equity, infrastructure and fund management. Michael's appointments
currently include non-executive directorships of Triton Investment Management
(a Swedish private equity group), GCP Infrastructure Investments (a FTSE 250
listed company), J-Star Jersey Company Limited (a Japanese private equity
group), Foresight 4 VCT plc (a listed venture capital fund), Jersey Finance
Limited (a Jersey not-for-profit promotional company), JTC plc (a FTSE 250
listed trust and corporate services company) and TEAM plc (a listed wealth
management company). He is a resident of Jersey.
Biographies of the Investment Advisor
Giles Brand Hiren Patel
Giles Brand is a Partner and the founder of EPIC. He is currently Hiren Patel is a Partner of EPIC. He has worked in the investment management
Non-executive Chairman of Whittard of Chelsea and Luceco plc. Before joining industry for the past twenty years. Before joining EPIC, Hiren was Finance
EPIC, Giles was a founding Director of EPIC Investment Partners, a fund Director of EPIC Investment Partners. Prior to this, Hiren was employed at
management business which at sale had US$5bn under management. Prior to this, Groupama Asset Management where he was the Group Financial Controller.
Giles worked in Mergers and Acquisitions at Baring Brothers in Paris and
London. Giles read History at Bristol University.
Robert Fulford James Henderson
Robert Fulford is a Managing Director of EPIC. He previously worked at James Henderson is a Managing Director of EPIC. He previously worked in the
Barclaycard Consumer Europe before joining EPIC. Whilst at Barclaycard, Robert Investment Banking division of Deutsche Bank before joining EPIC. Whilst at
was the Senior Manager for Strategic Insight and was responsible for Deutsche Bank he worked on a number of M&A transactions and IPOs in the
identifying, analysing and responding to competitive forces. Prior to energy, property, retail and gaming sectors, as well as providing corporate
Barclaycard, Robert spent four years as a strategy consultant at Oliver Wyman broking advice to mandated clients. At EPIC, James manages the investment in
Financial Services, where he worked with a range of major retail banking and Pharmacy2U and EPIC Acquisition Corp. James read Modern History at Oxford
institutional clients in the UK, mainland Europe, Middle East and Africa. At University and Medicine at Nottingham University.
EPIC, Robert manages the investments in Whittard of Chelsea, Rayware and David
Phillips. Robert read Engineering at Cambridge University.
Alex Leslie Ian Williams
Alex Leslie is a Managing Director of EPIC. He previously worked in Healthcare Ian Williams is a Managing Director of EPIC. He was previously a Partner at
Investment Banking at Piper Jaffray before joining EPIC. Whilst at Piper Lyceum Capital Partners LLP, responsible for deal origination and engagement,
Jaffray he worked on a number of M&A transactions and equity fundraisings with a primary focus on the business services and software sectors, as well as
within the Biotechnology, Specialty Pharmaceutical and Medical Technology financial services, education and health sectors. Prior to Lyceum, Ian was a
sectors. At EPIC, Alex manages the investment in Luceco plc, Rayware, Prelude, Director at Arbuthnot Securities, involved in IPO's, secondary fund raisings
Atlantic Credit Opportunities Fund and European Capital Private Debt Fund. He and M&A, focused on the support services, healthcare, transport & IT
previously managed the Company's investments in Process Components, BigHead sectors. Ian started his career at Hambros Bank in the M&A team. Ian read
Industries, David Phillips and Driver Require. Alex read Human Biological and Politics and Economics at the University of Bristol.
Social Sciences at the University of Oxford and obtained an MPhil in
Management from the Judge Business School at the University of Cambridge.
Independent Review Report to EPE Special Opportunities Limited
Report on the Interim Report and Unaudited Financial Statements
Our conclusion
We have reviewed EPE Special Opportunities Limited's Interim Report and
Unaudited Financial Statements (the "interim financial statements") in the
Interim Report of EPE Special Opportunities Limited for the six month period
ended 31 July 2022. Based on our review, nothing has come to our attention
that causes us to believe that the interim financial statements are not
prepared, in all material respects, in accordance with International
Accounting Standard 34, 'Interim Financial Reporting' and the AIM Rules for
Companies.
What we have reviewed
The interim financial statements comprise:
● the statement of financial position as at 31 July 2022;
● the statement of comprehensive income for the period then ended;
● the statement of cash flows for the period then ended;
● the statement of changes in equity for the period then ended; and
● the explanatory notes to the interim financial statements.
The interim financial statements included in the Interim Report have been
prepared in accordance with International Accounting Standard 34, 'Interim
Financial Reporting' and the AIM Rules for Companies.
Responsibilities for the interim financial statements and the review
Our responsibilities and those of the directors
The Interim Report, including the interim financial statements, is the
responsibility of, and has been approved by, the directors. The directors are
responsible for preparing the Interim Report in accordance with International
Accounting Standard 34, 'Interim Financial Reporting' and the AIM Rules for
Companies.
Our responsibility is to express a conclusion on the interim financial
statements in the Interim Report based on our review. This report, including
the conclusion, has been prepared for and only for the company for the purpose
of complying with the AIM Rules for Companies and for no other purpose. We
do not, in giving this conclusion, accept or assume responsibility for any
other purpose or to any other person to whom this report is shown or into
whose hands it may come save where expressly agreed by our prior consent in
writing.
What a review of interim financial statements involves
We conducted our review in accordance with International Standard on Review
Engagements 2410, 'Review of Interim Financial Information Performed by the
Independent Auditor of the Entity' issued by the International Auditing and
Assurance Standards Board. A review of interim financial information consists
of making enquiries, 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 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.
We have read the other information contained in the Interim Report and
considered whether it contains any apparent misstatements or material
inconsistencies with the information in the interim financial statements.
PricewaterhouseCoopers CI LLP
Chartered Accountants
Jersey, Channel Islands
5 September 2022
The maintenance and integrity of the EPE Special Opportunities Limited website
is the responsibility of the directors; the work carried out by the auditors
does not involve consideration of these matters and, accordingly, the auditors
accept no responsibility for any changes that may have occurred to the
financial statements since they were initially presented on the website.
Legislation in Jersey governing the preparation and dissemination of financial
statements may differ from legislation in other jurisdictions.
Statement of Comprehensive Income
For the six months ended 31 July 2022
1 Feb 2022 to 31 Jul 2022 1 Feb 2021 to 31 Jul 2021 1 Feb 2021 to 31 Jan 2022
Revenue (unaudited) Capital (unaudited) Total (unaudited) Total (unaudited) Total
(audited)
Note £ £ £ £ £
Income
Interest income 16,106 - 16,106 514 514
Net fair value movement on investments - (59,814,999) (59,814,999) 36,734,638 10,280,363
Total (loss)/income 16,106 (59,814,999) (59,798,893) 36,735,152 10,280,877
Expenses
4 Investment advisor's fees (911,590) - (911,590) (1,028,984) (2,054,555)
15 Directors' fees (86,000) - (86,000) (74,498) (149,000)
5 Share based payment expense (354,193) - (354,193) (396,520) (822,166)
6 Other expenses (277,527) - (277,527) (765,619) (1,052,268)
Total expense (1,629,310) - (1,629,310) (2,265,621) (4,077,989)
(Loss)/profit before finance costs and tax (1,613,204) (59,814,999) (61,428,203) 34,469,531 6,202,888
Finance charges
13 Interest on unsecured loan note instruments (159,842) - (159,842) (159,843) (319,685)
13 Zero dividend preference shares final capital entitlement accrual (546,507) - (546,507) - (156,983)
(Loss)/profit for the period/year before taxation (2,319,553) (59,814,999) (62,134,552) 34,309,688 5,726,220
Taxation - - - - -
(Loss)/profit for the period/year (2,319,553) (59,814,999) (62,134,552) 34,309,688 5,726,220
Other comprehensive income - - - - -
Total comprehensive (loss)/income (2,319,553) (59,814,999) (62,134,552) 34,309,688 5,726,220
11 Basic (loss)/earnings per ordinary share (pence) (7.36) (189.77) (197.13) 106.72 17.86
11 Diluted (loss)/earnings per ordinary share (pence) (7.36) (189.77) (197.13) 106.72 17.86
The total column of this statement represents the Company's Statement of
Comprehensive Income, prepared in accordance with IFRS. The supplementary
revenue and capital return columns are prepared in accordance with the Board
of Directors' agreed principles, which are that the net gain/loss on
investments is allocated to the capital column and all other income and
expenses are allocated to the revenue column. All items derive from continuing
activities.
Statement of Financial Position
As at 31 July 2022
31 July 2022 (unaudited) 31 January 2022 (audited) 31 July 2021 (unaudited)
Note £ £ £
Non-current assets
7 Investments at fair value through profit or loss 79,938,043 140,525,060 159,573,313
79,938,043 140,525,060 159,573,313
Current assets
9 Cash and cash equivalents 26,532,104 27,545,042 19,669,303
Trade and other receivables and prepayments 83,710 95,147 92,454
26,615,814 27,640,189 19,761,757
Current liabilities
Trade and other payables (555,256) (982,655) (1,026,055)
13 Unsecured loan note instruments (3,987,729) (3,977,427) (3,967,124)
(4,542,985) (4,960,082) (4,993,179)
Net current assets 22,072,829 22,680,107 14,768,578
Non-current liabilities
13 Zero dividend preference shares (20,139,415) (19,580,190) -
(20,139,415) (19,580,190) -
Net assets 81,871,457 143,624,977 174,341,891
Equity
10 Share capital 1,730,828 1,730,828 1,730,828
Share premium 13,619,627 13,619,627 13,619,627
16 Capital reserve 76,762,941 136,577,940 163,032,215
16 Revenue reserve (10,241,939) (8,303,418) (4,040,779)
Total equity 81,871,457 143,624,977 174,341,891
12 Net asset value per share (pence) 259.74 455.66 542.30
The financial statements were approved by the Board of Directors on 5
September 2022 and signed on its behalf by:
Clive
Spears
David Pirouet
Director
Director
Statement of Changes in Equity
For the six months ended 31 July 2022
Six months ended 31 July 2022 (unaudited)
Share capital Share premium Capital reserve Revenue reserve Total
Note £ £ £ £ £
Balance at 1 February 2022 1,730,828 13,619,627 136,577,940 (8,303,418) 143,624,977
Total comprehensive loss for the period - - (59,814,999) (2,319,553) (62,134,552)
Contributions by and distributions to owners
5 Share-based payment charge - - - 354,193 354,193
Share ownership scheme participation - - - 149,568 149,568
Share acquisition for JOSP scheme - - - (122,729) (122,729)
Total transactions with owners - - - 381,032 381,032
Balance at 31 July 2022 1,730,828 13,619,627 76,762,941 (10,241,939) 81,871,457
Year ended 31 January 2022 (audited)
Share capital Share premium Capital reserve Revenue reserve Total
£ £ £ £ £
Balance at 1 February 2021 1,730,828 13,619,627 126,297,577 (955,424) 140,692,608
Total comprehensive income/(loss) for the year - - 10,280,363 (4,554,143) 5,726,220
Contributions by and distributions to owners
5 Share-based payment charge - - - 822,166 822,166
Share ownership scheme participation - - - 625 625
Purchase of shares - - - (2,117,866) (2,117,866)
Share acquisition for JOSP scheme - - - (1,498,776) (1,498,776)
Total transactions with owners - - - (2,793,851) (2,793,851)
Balance at 31 January 2022 1,730,828 13,619,627 136,577,940 (8,303,418) 143,624,977
Six months ended 31 July 2021 (unaudited)
Share capital Share premium Capital reserve Revenue reserve Total
£ £ £ £ £
Balance at 1 February 2021 1,730,828 13,619,627 126,297,577 (955,424) 140,692,608
Total comprehensive income/(loss) for the period - - 36,734,638 (2,424,950) 34,309,688
Contributions by and distributions to owners
5 Share-based payment charge - - - 396,520 396,520
Share acquisition for JOSP scheme - - - (1,056,925) (1,056,925)
Total transactions with owners - - - (660,405) (660,405)
Balance at 31 July 2021 1,730,828 13,619,627 163,032,215 (4,040,779) 174,341,891
Statement of Cash Flows
For the six months ended 31 July 2022
1 Feb 2022 to 31 July 2022 (unaudited) 1 Feb 2021 to 31 Jan 2022 (audited) 1 Feb 2021 to 31 Jul 2021 (unaudited)
Note £ £ £
Operating activities
Interest income received 16,106 514 514
Expenses paid (1,678,361) (3,231,866) (1,495,782)
7 Purchase of investments (1,100,000) (31,253,480) (22,520,000)
7 Proceeds from investments 1,872,018 18,364,193 17,036,335
Net cash used in operating activities (890,237) (16,120,639) (6,978,933)
Financing activities
Unsecured loan note interest paid (149,540) (299,080) (149,540)
Purchase of shares (122,729) (3,616,642) (1,056,925)
Issue of zero dividend preference shares - 20,000,000 -
Issue costs for zero dividend preference shares - (273,923) -
Share ownership scheme participation 149,568 625 -
Net cash (used in)/generated from financing activities (122,701) 15,810,980 (1,206,465)
Decrease in cash and cash equivalents (1,012,938)
(309,659) (8,185,398)
Cash and cash equivalents at start of period/year 27,545,042
27,854,701 27,854,701
Cash and cash equivalents at end of period/year 26,532,104 27,545,042 19,669,303
Notes to the Financial Statements
For the six months ended 31 July 2022
1 The Company
The Company was incorporated with limited liability in the Isle of Man on 25
July 2003. The Company then re-registered under the Isle of Man Companies Act
2006, with registration number 008597V. On 11 September 2018, the Company
re-registered under the Bermuda Companies Act 1981, with registration number
53954. The Company moved its operations to Jersey on 17 May 2017 and has
subsequently operated from Jersey only.
The Company's ordinary shares are quoted on AIM, a market operated by the
London Stock Exchange, and the Growth Market of the Aquis Stock Exchange
(formerly the NEX Exchange).
The interim financial statements are as at and for the six months ended 31
July 2022, comprising the Company and investments in its Associates. The
interim financial statements are unaudited.
The financial statements of the Company as at and for the year ended 31
January 2022 are available upon request from the Company's business office at
Liberation House, Castle Street, St Helier, Jersey, JE1 2LH and the
registered office at Clarendon House, 2 Church Street, Hamilton HM11, Bermuda,
or at www.epespecialopportunities.com (http://www.epespecialopportunities.com)
.
The Company's portfolio investments are held in three Associates entities, ESO
Investments 1 Limited, ESO Investments 2 Limited and ESO Alternative
Investments LP (together the "Associates"). Associates are those enterprises
over which the reporting entity has significant influence, and which are
neither subsidiaries, nor an interest in a joint venture.
Direct interests in the individual portfolio investments are held by the
following Associates;
· ESO Investment 1 Limited: Rayware, Whittard and David Phillips
· ESO Investments 2 Limited: Luceco and Pharmacy2U
· ESO Alternative Investments LP: European Capital Private Debt
Fund LP, EPE Junior Aggregator LP, Atlantic Credit Opportunities Fund Limited,
EPIC Acquisition Corp. and EAC Sponsor Limited
As the Company is an investment entity per IFRS 10, interests in Associates
are measured at fair value.
The principal activity of the Company through its Associates is to arrange
income yielding financing for growth, buyout and special situations and
holding the investments and its Associates with a view to exiting in due
course at a profit.
The Company has no employees.
2 Basis of preparation
a. Statement of compliance
These interim financial statements for the six months ended 31 July 2022 have
been prepared in accordance with IAS 34 Interim Financial Reporting and should
be read in conjunction with Company's last annual financial statements as at
and for the year ended 31 January 2022. They do not include all of the
information required for a complete set of financial statements prepared in
accordance with IFRS Standards. However, selected explanatory notes are
included to explain events and transactions that are significant to an
understanding of the changes in the Company's financial position and
performance since the last annual financial statements.
The annual financial statements of the Company are prepared in accordance with
International Financial Reporting Standards and applicable legal and
regulatory requirements of Bermuda law. They were previously prepared in
accordance with IFRS as adopted by the EU until 31 January 2021. This change
has had no impact on the financial statements.
These interim financial statements were authorised for issue by the Company's
Board of Directors on 5 September 2022.
b. Going concern
The Company's management has assessed the Company's ability to continue as a
going concern and is satisfied that the Company has the resources to continue
in business for the foreseeable future. Furthermore, the management is not
aware of any material uncertainties that may cast significant doubt upon the
Company's ability to continue as a going concern. Therefore, the financial
statements continue to be prepared on the going concern basis.
3 Financial risk management
The financial risk management objectives and policies are consistent with
those disclosed in the financial statements as at and for the year ended 31
January 2022.
4 Investment advisory, administration and performance fees
Investment advisory fees
The investment advisory fee payable to EPIC Investment Partners LLP ("EPIC")
is assessed and payable at the end of each fiscal quarter and is calculated as
2 per cent. of the Company's NAV where the Company's NAV is less than £100
million; otherwise the investment advisory fee shall be calculated as the
greater of £2.0 million or the sum of 2 per cent. of the Company's NAV
comprising Level 3 portfolio assets (i.e. unquoted assets), 1 per cent. of the
Company's NAV comprising Level 1 assets (i.e. quoted assets), no fees on
assets which are managed or advised by a third party-manager, 0.5 per cent. of
the Company's net cash (if greater than nil), and 2 per cent. of the Company's
net cash (if less than nil) (i.e. reducing fees for net debt positions).
The charge for the current period was £911,590 (for the period ended 31 July
2021: £1,028,984 ; year ended 31 January 2022: £2,054,555). The amount
outstanding as at 31 July 2022 was £411,590 (for the period ended 31 July
2021: £528,984 ; year ended 31 January 2022: £500,000).
Administration fees
EPIC Administration Limited provides accounting and financial administration
services to the Company. The fee payable to EPIC Administration Limited is
assessed and payable at the end of each fiscal quarter and is calculated as
0.15 per cent. of the Company's NAV where the Company's NAV is less than £100
million (subject to a minimum fee of £35,000); otherwise the administration
fee shall be calculated as 0.15 per cent. of £100 million plus a fee of 0.1
per cent. of the excess of the Company's NAV above £100 million.
The charge for the current period was £75,510 (for the period ended 31 July
2021: £108,424 ; for the year ended 31 January 2022: £212,431).
Other administration fees during the period were £37,170 (for the period
ended 31 July 2021: £38,272 ; for the year ended 31 January 2022: £72,196).
Performance fees paid by Associates
The Associates are stated at fair value. Performance fees are paid to the
Investment Advisor based on the performance of the Associates and deducted in
calculating the fair value of the Associates.
Performance fee in ESO Investments 1 Limited
The distribution policy of ESO Investments 1 Limited includes an allocation of
profits to the Investment Advisor such that, for each investment where a
returns hurdle of 8 per cent per annum has been achieved, the Investment
Advisor is entitled to receive 20 per cent of the increase above the base
value of investment. As at 31 July 2022, there was an accrual of £nil in the
profit share account of the Investment Advisor in the records of ESO
Investments 1 Limited (31 July 2021: £400,872 ; 31 January 2022: £nil).
Performance fee in ESO Investments 2 Limited
The distribution policy of ESO Investments 2 Limited includes an allocation of
profit to the Investment Advisor such that, for each investment where a
returns hurdle of 8 per cent per annum has been achieved, the Investment
Advisor is entitled to receive 20 per cent of the increase above the base
value of investment. As at 31 July 2022, there was an accrual of £6,687,647
in the profit share account of the Investment Advisor in the records of ESO
Investments 2 Limited (31 July 2021: £26,191,448 ; 31 January 2022:
£20,027,085).
Jointly Owned Share Plan ("JOSP") and share-based payments
Directors of the Company and certain employees of the Investment Advisor
(together "Participants") receive remuneration in the form of equity-settled
share-based payment transactions, through a JOSP scheme (see note 5).
5 Share-based payment expense
The cost of equity settled transactions to Participants in the JOSP scheme are
measured at fair value at the grant date. The fair value is determined based
on the share price of the equity instrument at the grant date.
The Trust was created to award shares to Participants as part of the JOSP.
Participants are awarded a certain number of shares ("Matching Shares") which
are subject to a three-year service vesting condition from the grant date. In
order to receive their Matching Share allocation Participants are required to
purchase shares in the Company on the open market ("Bought Shares"). The
Participant will then be entitled to acquire a joint ownership interest in the
Matching Shares for the payment of a nominal amount, on the basis of one joint
ownership interest in one Matching Share for every Bought Share they acquire
in the relevant award period.
The Trust holds the Matching Shares jointly with the Participant until the
award vests. These shares carry the same rights as rest of the ordinary
shares.
The Trust held 1,049,702 (for the period ended 31 July 2021: 1,748,193 ; for
the year ended 31 January 2022: 1,871,753) matching shares at the period end
which have traditionally not voted.
During the period, 40,239 shares were acquired by the Trust for the JOSP
scheme (for the period ended 31 July 2021: 329,189 ; for the year ended 31
January 2022: 456,524). 862,290 shares were vested during the period to the
JOSP Participants (for the period ended 31 July 2021: nil ; for the year ended
31 January 2022: 3,775). 156,173 shares were awarded to the JOSP Participants
in the period (for the period ended 31 July 2021: 154,110 ; for the year ended
31 January 2022: 185,779).
The share-based payment expense in the Statement of Comprehensive Income has
been calculated on the basis of the fair value of the equity instruments at
the grant date and the estimated number of equity instruments to be issued
after the vesting period, less the amount paid for the joint ownership
interest in the Matching Shares.
The total share-based payment expense recognised in the period ended 31 July
2022 was £354,193 (for the period ended 31 July 2021: £396,520 ; for the
year ended 31 January 2022: £822,166). Of the total share-based payment
expense during the period ended 31 July 2022, £23,103 related to the
Directors (for the period ended 31 July 2021: 23,386 ; for the year ended 31
January 2022: £52,621) and the balance related to members, employees and
consultants of the Investment Advisor.
6 Other expenses
The breakdown of other expenses presented in the statement of comprehensive
income is as follows:
1 Feb 2022 to 31 Jul 2022 (unaudited) 1 Feb 2021 to 31 Jul 2021 (unaudited) 1 Feb 2021 to 31 Jan 2022 (audited)
Total Total Total
£ £ £
Administration fees (112,680) (146,696) (284,627)
Directors' and officers' insurance (13,543) (11,286) (24,453)
Professional fees (46,736) (478,027) (480,554)
Board meeting and travel expenses (847) (155) (588)
Auditors' remuneration (19,518) (16,221) (68,095)
Interim review remuneration (17,000) (8,325) (8,325)
Bank charges (922) (751) (3,261)
Irrecoverable VAT - (360) (360)
Foreign exchange movement (89) (40,941) (52,948)
Nominated advisor and broker fees (27,745) (29,343) (61,962)
Listing fees (29,115) (27,214) (48,446)
Sundry expenses (9,332) (6,300) (18,649)
Other expenses (277,527) (765,619) (1,052,268)
The breakdown of other expenses presented in the statement of comprehensive
income for the period ended 31 July 2021 has been updated for consistency of
presentation with the subsequent periods. Interim review remuneration has been
broken out from auditors' remuneration. Foreign exchange movement has been
broken out from sundry expenses.
7 Investments at fair value through profit or loss
31 July 2022 31 January 2022 31 July 2021
(unaudited)
(audited)
(unaudited)
£ £ £
Investments at fair value through profit and loss 79,938,043 140,525,060 159,573,313
79,938,043 140,525,060 159,573,313
Investment roll forward schedule
31 July 2022 (unaudited) 31 January 2022 (audited) 31 July 2021
(unaudited)
Investments at fair value as at 1 February 140,525,060 117,256,810 117,256,810
Purchase of investments 1,100,000 31,253,480 22,520,000
Proceeds from investments (1,872,018) (18,364,193) (17,036,335)
Net fair value movements (59,814,999) 10,280,363 36,734,638
Reclassification of debtor balance to investee - 98,600 98,200
Investments at fair value 79,938,043 140,525,060 159,573,313
Discussion of the performance of individual investments is presented in the
Chairman's Statement and the Investment Advisor's Report.
The line items "Purchase of investments" and "Proceeds from investments" were
classified under Investing activities in the Statement of Cash flows for the
year ended 31 January 2022. These have now been reclassified to Operating
activities to align with the Company's principal activities.
8 Fair value of financial instruments
The Company and the Associates determine the fair value of financial
instruments with reference to IPEV guidelines and the valuation principles of
IFRS 13 (Fair Value Measurement). The Company and the Associates measure fair
value using the IFRS 13 fair value hierarchy, which reflects the
significance and certainty of the inputs used in deriving the fair value of
an asset:
· Level 1: Inputs that are quoted market prices (unadjusted) in
active markets for identical instruments;
· Level 2: Inputs other than quoted prices included within Level 1
that are observable either directly (i.e. as prices) or indirectly (i.e.
derived from prices). This category includes instruments valued using quoted
market prices in active markets for similar instruments, quoted prices for
identical or similar instruments in markets that are considered less than
active or other valuation techniques in which all significant inputs are
directly or indirectly observable from market data;
· Level 3: Inputs that are unobservable. This category includes all
instruments for which the valuation technique includes inputs not based on
observable data and the unobservable inputs have a significant effect on the
instrument's valuation. This category includes instruments that are valued
based on quoted prices for similar instruments but for which significant
unobservable adjustments or assumptions are required to reflect differences
between the instruments.
The Investment Advisor undertakes the valuation of financial instruments
required for financial reporting purposes. Recommended valuations are reviewed
and approved by the Investment's Advisor's Valuation Committee for circulation
to the Company's Board and Auditor. The Risk and Audit committee of the
Company's Board meets at least once every six months, in line with the
Company's semi-annual reporting periods, to review the recommended valuations
and approve final valuations for adoption in the Company's financial
statements.
Valuation framework
The Company and the Associates employ the valuation framework detailed below
with respect to the measurement of fair values. A valuation of the Company's
investments and the Associates' investments are prepared by the Investment
Advisor with reference to IPEV guidelines and the valuation principles of IFRS
13 (Fair Value Measurement). The Investment Advisor recommends these
valuations to the Board of Directors. The Board of Directors considers the
valuations recommended by the Investment Advisor, determines any amendments
required and thereafter adopts the fair values presented in the Company's
financial statements. Changes in the fair value of financial instruments are
recorded in the Statement of Comprehensive Income in the line item "Net fair
value movement on investments".
Quoted investments
Quoted investments traded in an active market are classified as Level 1 in the
IFRS 13 fair value hierarchy. The investment in Luceco is a Level 1 asset. For
Level 1 assets, the holding value is calculated from the latest market price
(without adjustment).
Quoted investments traded in markets that are considered less than active are
classified as Level 2 in the IFRS 13 fair value hierarchy. The investment in
EPIC Acquisition Corp is considered as a Level 2 asset. For Level 2 assets,
the holding value is calculated from the latest available market prices
(without adjustment).
Unquoted private equity investments and unquoted fund investments
Private equity investments and fund investments are classified as Level 3 in
the IFRS 13 fair value hierarchy. The investments in Whittard, David Phillips,
Rayware, Pharmacy2U, European Capital Private Debt Fund LP, EPE Junior
Aggregator LP, Atlantic Credit Opportunities Fund Limited and EAC Sponsor
Limited are considered to be Level 3 assets. Various valuation techniques may
be applied in determining the fair value of investments held as Level 3 in the
fair value hierarchy;
· For recently acquired assets, investment cost may be considered
as an applicable fair value for the asset if this is deemed appropriate;
· For underperforming assets, net asset or recovery valuation is
considered more applicable, in particular where the business' performance be
contingent on shareholder financial support;
· For performing assets, market approach is considered to be the
most appropriate with a specific focus on trading comparables, applied on a
forward basis. Transaction comparables, applied on a historic basis may also
be considered;
· For assets managed and valued by third party managers, the
valuation methodology of the third-party manager is reviewed. If deemed
appropriate and consistent with reporting standards, the valuation prepared by
the third-party manager will be used.
The Investment Advisor believe that it is appropriate to apply an illiquidity
discount to the multiples of comparable companies when using them to calculate
valuations for small, private companies. This discount adjusts for the
difference in size between generally larger comparable companies and the
smaller assets being valued. The illiquidity discount also incorporates the
premium the market gives to comparable companies for being freely traded or
listed securities. The Investment Advisor has determined between 15 per cent.
and 25 per cent. to be an appropriate illiquidity discount with reference to
market data and transaction multiples seen in the market in which the
Investment Advisor operates.
Where portfolio investments are held through subsidiary or associate holding
companies, the net assets of the holding company are added to the value of the
portfolio investment being assessed to derive the fair value of the holding
company held by the Company.
Fair value hierarchy - Financial instruments measured at fair value
The Company's investments in the Associates at 31 July 2022 is classified as
Level 3 (in line with 31 July 2021 and 31 January 2022) due to the mix of
underlying assets which have different levels of observable price sources. The
Company takes the net asset value of these holdings.
The table below analyses the underlying investments held by the Associates
measured at fair value at the reporting date by the level in the fair value
hierarchy into which the fair value measurement is categorised. Debt
securities are also included, as these are also stated at fair value with the
Board assessing the fair value of the total investment, which includes debt
and equity. The amounts are based on the values recognised in the statement of
financial position of the Associates.
Level 1 Level 2 Level 3 Total
31 July 2022 £ £ £ £
Financial assets at fair value through profit or loss
Unquoted private equity investments (including debt) - - 35,817,882 35,817,882
Unquoted fund investments - - 5,968,453 5,968,453
Quoted investments 32,591,692 5,263,920 - 37,855,612
Investments at fair value through profit or loss 32,591,692 5,263,920 41,786,335 79,641,947
Other asset and liabilities (held at cost) - - - 296,096
Total 32,591,692 5,263,920 41,786,335 79,938,043
Level 1 Level 2 Level 3 Total
31 January 2022 £ £ £ £
Financial assets at fair value through profit or loss
Unquoted private equity investments (including debt) - - 41,897,143 41,897,143
Unquoted fund investments - - 5,989,711 5,989,711
Quoted investments 87,206,277 5,166,896 - 92,373,173
Investments at fair value through profit or loss 87,206,277 5,166,896 47,886,854 140,260,027
Other asset and liabilities (held at cost) - - - 265,033
Total 87,206,277 5,166,896 47,886,854 140,525,060
Level 1 Level 2 Level 3 Total
31 July 2021 £ £ £ £
Financial assets at fair value through profit or loss
Unquoted private equity investments (including debt) - - 41,117,869 41,117,869
Unquoted fund investments - - 5,652,508 5,652,508
Quoted investments 112,423,187 - - 112,423,187
Investments at fair value through profit or loss 112,423,187 - 46,770,377 159,193,564
Other asset and liabilities (held at cost) - - - 379,749
Total 112,423,187 - 46,770,377 159,573,313
There have been no changes in the designation of level of fair value hierarchy
in the reporting periods under review.
The following table, detailing the value of portfolio investments only, shows
a reconciliation of the opening balances to the closing balances for fair
value measurements in level 3 of the fair value hierarchy for the underlying
investments held by the Associates.
31 July 2022 (unaudited) 31 January 2022
(audited) 31 July 2021 (unaudited)
Unquoted investments (including debt) £ £
Balance as at 1 February 47,886,854 28,422,329 28,422,329
Additional investments 1,100,000 25,786,074 22,520,000
Capital distributions from investments - (330,247) (306,090)
Change in fair value through profit and loss (7,200,519) (5,991,302) (3,865,862)
41,786,335 47,886,854 46,770,377
Significant unobservable inputs used in measuring fair value
The table below sets out information about significant unobservable inputs
used at 31 July 2022 in measuring financial instruments categorised as Level 3
in the fair value hierarchy.
Description Fair value at 31 July 2022 Significant unobservable inputs
£
Unquoted private equity investments (including debt) 35,817,882 Sales/EBITDA multiple
Unquoted fund investments 5,968,453 Reported net asset value
The valuation methodology employed as at 31 July 2022 for the investment in
Rayware was changed from the acquisition cost methodology used in the prior
period to an EBITDA multiple methodology, given that the acquisition occurred
greater than 12 months prior to the valuation date.
Significant unobservable inputs are developed as follows:
· Trading comparable multiple: valuation multiples used by other
market participants when pricing comparable assets. Relevant comparable assets
are selected from public companies determined to be proximate to the
investment based on similarity of sector, size, geography or other relevant
factors. The valuation multiple for a comparable company is determined by
calculating the enterprise value of the company implied by its market price as
at the reporting date and dividing by the relevant financial metric (sales or
EBITDA).
· Reported net asset value: for assets managed and valued by a
third party, the manager provides periodic valuations of the investment. The
valuation methodology of the third-party manager is reviewed. If deemed
appropriate and consistent with reporting standards, The Board will adopt the
valuation prepared by the third-party manager. Adjustments are made to third
party valuations where considered necessary to arrive at the Director's
estimate of fair value.
Although management believes that its estimates of fair value are appropriate,
the use of different methodologies or assumptions could lead to different
measurements of fair value. For fair value measurements of Level 3 assets,
changing one or more of the assumptions used to reasonably possible
alternative assumptions would have the following effects on the Level 3
investment valuations:
· For investments in mature Level 3 assets, the valuations used in
the preparation of the financial statements imply an average EV to EBITDA
multiple of 6.2x (weighted by each asset's total valuation) (2022: 5.2x). The
key unobservable inputs into the preparation of the valuation of mature Level
3 assets was the EV to EBITDA multiple applied to the asset's financial
forecasts. If these inputs had been taken to be 25 per cent. higher, the value
of the Level 3 assets and profit for the period would have been £12,093,779
higher. If these inputs had been taken to be 25 per cent. lower, the value of
the Level 3 assets and profit for the period would have been £13,420,744
lower. A corresponding increase or decrease in the asset's financial forecasts
would have a similar impact on the Company's assets and profit.
· For investments in growth Level 3 assets, the valuations used in
the preparation of the financial statements imply an average EV to sales
multiple of 1.0x (weighted by each asset's total valuation) (2022: 1.2x). The
key unobservable inputs into the preparation of the valuation of growth Level
3 assets were the EV to sales multiple applied to the asset's financial
forecasts. If these inputs had been taken to be 25 per cent. higher, the value
of the Level 3 assets and profit for the period would have been £617,192
higher. If these inputs had been taken to be 25 per cent. lower, the value of
the Level 3 assets and profit for the period would have been £631,343 lower.
A corresponding increase or decrease in the asset's financial forecasts would
have a similar impact on the Company's assets and profit.
9 Cash and cash equivalents
31 July 2022 31 January 2022 31 July 2021
£ £ £
Current and call accounts 26,532,104 27,545,042 19,669,303
26,532,104 27,545,042 19,669,303
The current and call accounts have been classified as cash and cash
equivalents in the Statement of Cash Flows.
10 Share capital
31 July 2022 31 January 2022 31 July 2021
(unaudited) (audited) (unaudited)
Number £ Number £ Number £
Authorised share capital
Ordinary shares of 5p each 45,000,000 2,250,000 45,000,000 2,250,000 45,000,000 2,250,000
Called up, allotted and fully paid
Ordinary shares of 5p each 34,616,554 1,730,828 34,616,554 1,730,828 34,616,554 1,730,828
Ordinary shares of 5p each held in treasury (3,096,575) - (3,096,575) - (2,467,731) -
31,519,979 1,730,828 31,519,979 1,730,828 32,148,823 1,730,828
11 Basic and diluted loss per share (pence)
Basic loss per share is calculated by dividing the loss of the Company for the
period attributable to the ordinary shareholders of (£62,134,552) (for the
period ended 31 July 2021: profit of £34,309,688 ; for the year ended 31
January 2022: profit of £5,726,220) divided by the weighted average number of
shares outstanding during the period of 31,519,979 after excluding treasury
shares (for the period ended 31 July 2021: 32,148,823 ; for the year ended 31
January 2022: 32,065,616).
Diluted loss per share is calculated by dividing the loss of the Company for
the period attributable to ordinary shareholders of (£62,134,552) (for the
period ended 31 July 2021: profit of £34,309,688 ; for the year ended 31
January 2022: profit of £5,726,220) divided by the weighted average number of
ordinary shares outstanding during the period, as adjusted for the effects of
all dilutive potential ordinary shares, of 31,519,979 after excluding
treasury shares (for the period ended 31 July 2021: 32,148,823 ; for the year
ended 31 January 2022: 32,065,616).
12 NAV per share (pence)
The Company's NAV per share of 259.74 pence (for the period ended 31 July
2021: 542.30 pence ; for the year ended 31 January 2022: 455.66 pence) is
based on the net assets of the Company at the period end of £81,871,457 (for
the period ended 31 July 2021: £174,341,891 ; for the year ended 31 January
2022: £143,624,977) divided by the shares in issue at the end of the period
of 31,519,979 after excluding treasury shares (for the period ended 31 July
2021: 32,148,823 ; for the year ended 31 January 2022: 31,519,979).
The Company's diluted NAV per share of 259.74 pence (for the period ended 31
July 2021: 542.30 pence ; for the year ended 31 January 2022: 455.66 pence) is
based on the net assets of the Company at the period end of £81,871,457 (
(for the period ended 31 July 2021: £174,341,891 ; for the year ended 31
January 2022: £143,624,977) divided by the shares in issue at the end of the
period, as adjusted for the effects of dilutive potential ordinary shares of
31,519,979 after excluding treasury shares (for the period ended 31 July 2021:
32,148,823 ; for the year ended 31 January 2022: 31,519,979).
13 Liabilities
Unsecured Loan Notes ("ULN")
The Company has issued ULN's which pay interest at 7.5 per cent. per annum and
are redeemable on 24 July 2023, following an approval of an extension of their
maturity in July 2022. At 31 July 2022, £3,987,729 of ULNs in principal
amount were outstanding. Issue costs totalling £144,236 have been offset
against the value of the loan note instrument and are being amortised over the
life of the instrument. The total issue costs expensed in the period ended 31
July 2022 was £10,303 (for the period ended 31 July 2021: £10,303 ; for the
year ended 31 January 2022: £20,605). The carrying value of the ULNs in issue
at the period end was £3,987,729 (for the period ended 31 July 2021:
£3,967,124 ; for the year ended 31 January 2022: £3,977,427). The total
interest expense on the ULNs for the period is £159,842 (for the period ended
31 July 2021: £159,843 ; for the year ended 31 January 2022: £319,685). This
includes the amortisation of the issue costs. The carrying value of ULN is
presented under current liabilities in the current period as they are
redeemable within 12-month period from the Statement of Financial Position
date.
Zero Dividend Preference Shares ("ZDP Shares")
On 17 December 2021 the Company issued 20,000,000 ZDP Shares at a price of £1
per share, raising £20,000,000. The ZDP Shares will not pay dividends but
have a final capital entitlement at maturity on 16 December 2026 of 129.14
pence per ZDP Share. It should be noted that the predetermined capital
entitlement of a ZDP Share is not guaranteed and is dependent upon the
Company's gross assets being sufficient on 16 December 2026 to meet the final
capital entitlement.
Issue costs totalling £573,796 have been offset against the value of the ZDP
Shares and are being amortised over the life of the instrument. The total
issue costs expensed for the period ended 31 July 2022 was £71,744 (for the
period ended 31 July 2021: nil ; for the year ended 31 January 2022:
£14,538). The carrying value of the ZDP Shares in issue at the period-end was
£20,139,415 (for the period ended 31 July 2021: nil ; for the year ended 31
January 2022: £19,580,190). The total finance charge for the ZDP Shares for
the year is £546,507 (for the period ended 31 July 2021: nil ; for the year
ended 31 January 2022: £156,983). This includes the ZDP Share final capital
entitlement accrual and the amortisation of the issue costs.
14 Director's interests
Five of the Directors have interests in the shares of the Company as at 31
July 2022 (for the period ended 31 July 2021: four ; for the year ended 31
January 2022: five). Nicholas Wilson holds 144,690 ordinary shares (for the
period ended 31 July 2021: 131,265 ; for the year ended 31 January 2022:
131,265), Clive Spears holds 51,841 ordinary shares (for the period ended 31
July 2021: 136,314 ; for the year ended 31 January 2022: 136,314), Heather
Bestwick holds 39,431 ordinary shares (for the period ended 31 July 2021:
22,307 ; for the year ended 31 January 2022: 22,307), David Pirouet holds
17,309 shares (for the period ended 31 July 2021: 14,073 ; for the year ended
31 January 2022: 14,073) and Michael Gray holds 5,614 ordinary shares (for the
period ended 31 July 2021: nil ; for the year ended 31 January 2022: 2,378).
15 Related parties
Directors' fees expense during the period amounted to £86,000 (for the period
ended 31 July 2021: £74,498 ; for the year ended 31 January 2022: £149,000)
of which £14,333 is accrued as at 31 July 2022 (for the period ended 31 July
2021: £10,333 ; for the year ended 31 January 2022: £12,833). In November
2021, The Company agreed an increased level of Directors' fees effective from
1 February 2022.
Certain Directors of the Company and other participants are incentivised in
the form of equity settled share-based payment transactions, through a Joint
Share Ownership Plan (see note 5).
Details of remuneration payable to key service providers are included in note
4 of the interim financial statements.
In July 2022, the Company agreed the extension of the maturity of £4.0
million unsecured loan notes to 24 July 2023. Delphine Brand, a connected
party of Giles Brand (a person discharging managerial responsibilities
("PDMR") for the Company), is a minority holder of the unsecured loan notes.
16 Other information
The revenue and capital reserves are presented in accordance with the Board of
Directors' agreed principles, which are that the net gain/loss on investments
is allocated to the capital reserve and all other income and expenses are
allocated to the revenue reserve. The total reserve of the Company for the
period ended 31 July 2022 is £66,521,002 (for the period ended 31 July 2021:
£158,991,436 ; for the year ended 31 January 2022: £128,274,522)
17 Subsequent events
There were no significant subsequent events that would require adjustments to
or disclosure in these financial statements.
Company Information
Directors Administrator and Company Address
C.L. Spears (Chairman) Langham Hall Fund Management (Jersey) Limited
H. Bestwick Liberation House
D.R. Pirouet Castle Street, St Helier
N.V. Wilson Jersey JE1 2LH
M.M. Gray
Investment Advisor Financial Administrator
EPIC Investment Partners LLP EPIC Administration Limited
Audrey House Audrey House
16-20 Ely Place 16-20 Ely Place
London EC1N 6SN London EC1N 6SN
Auditors and Reporting Accountants Nominated Advisor and Broker
PricewaterhouseCoopers CI LLP Numis Securities Limited
37 Esplanade 10 Paternoster Square
St Helier, Jersey London EC4M 7LT
Channel Islands JE1 4XA
Appointed 22 April 2022
Bankers Registered Agent (Bermuda)
Barclays Bank plc Conyers Dill & Pearman
1 Churchill Place Clarendon House, 2 Church Street
Canary Wharf Hamilton HM 11
London E14 5HP Bermuda
HSBC Bank plc
1st Floor Registrar and CREST Providers
60 Queen Victoria Street Computershare Investor Services (Jersey) Limited
London EC4N 4TR Queensway House
Hilgrove Street
Santander International St. Helier JE1 1ES
PO Box 545
19-21 Commercial Street Investor Relations
St Helier, Jersey, JE4 8XG Richard Spiegelberg
Cardew Company
5 Chancery Lane
London EC4A 1BL
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
or visit
www.rns.com (http://www.rns.com/)
.
RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
. END IR FLFLRAIIEIIF
Recent news on EPE Special Opportunities
See all newsEPE Special Opps Ltd EPE Special Opp-EO.P EPE Special Opp-EL.P - Director/PDMR Shareholding
EPE Special Opps Ltd EPE Special Opp-EO.P EPE Special Opp-EL.P - Half-year Report
EPE Special Opps Ltd EPE Special Opp-EO.P EPE Special Opp-EL.P - Holding(s) in Company
EPE Special Opps Ltd EPE Special Opp-EO.P EPE Special Opp-EL.P - Holding(s) in Company
EPE Special Opps Ltd EPE Special Opp-EO.P EPE Special Opp-EL.P - Holding(s) in Company