EPE Special Opps Ltd EPE Special Opp-EO.P EPE Special Opp-EC.P EPE Special Opp-EL.P - Trading Update

EPE Special Opportunities

06/02/2023 07:00

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RNS Number : 9469O  EPE Special Opportunities Limited  06 February 2023

EPE Special Opportunities Limited
("ESO" or the "Company")

 

Trading Statement

 

The Board of EPE Special Opportunities is pleased to provide an update on the
Company's performance for the year ended 31 January 2023.

 

Summary

 

·    The Company's performance in the year ended 31 January 2023 has been
affected by adverse macro-economic conditions and a recessionary environment.
The Board and Investment Advisor expect these headwinds to continue through
the immediate period but look forward to the normalisation of trading
conditions over the medium term. Notwithstanding these headwinds, the Company
was pleased to announce the completion of a new investment in Denzel's Limited
("Denzel's") in October 2022. Looking ahead, the Board and Investment Advisor
will continue to adopt a careful approach, monitoring economic conditions,
maintaining a prudent level of liquidity at the Company and positioning the
portfolio to navigate the complicated operating environment. As a result of
the uncertainty on market outlook, the Board expects a challenging environment
to complete further acquisitions or disposals within the portfolio in the near
term.

 

·    The unaudited estimate of the Net Asset Value ("NAV") per share of
the Company as at 31 January 2023 was 334 pence, representing a decrease of 27
per cent. on the NAV per share of 456 pence as at 31 January 2022. The
unaudited estimate has been prepared using the Company's historic valuation
methodology and accounting principles.

 

·    The share price of the Company as at 31 January 2023 was 170 pence,
representing a decrease of 45 per cent. on the share price of 309 pence as at
31 January 2022.

 

·    In January 2023, Luceco released a trading update for the year ended
31 December 2022, announcing trading in line with market expectations. The
group announced sales of £206 million, with trading impacted by continuing
customer destocking. The business expects to generate operating profit of £20
- 22 million, at the upper end of prior guidance. The business achieved record
cash generation supporting further deleveraging, with net debt of 0.8x LTM
EBITDA as at 31 December 2022.

 

·    The Rayware Group's ("Rayware") trading has been impacted by a
confluence of challenges, including customer destocking, decreased consumer
confidence and supply chain disruption. The business expects performance to
strengthen over the coming period, benefitting from abating input cost, supply
chain and customer destocking pressures. The business has continued to develop
its presence in international markets, and has appointed Alec Taylor, former
director of Bradshaw International, as a non-executive director and made a
number of additions to the US sales team to support the strategic focus on the
US market.

 

·    Whittard of Chelsea ("Whittard") has performed robustly, with the
business' retail channel trading strongly, benefitting from strengthening
footfall and returning tourist volumes. Whittard has made encouraging progress
in its international channels, with the business' new South Korean franchise
partner progressing its store rollout, and with new wholesale customers
secured in the US and Europe. The business completed the relocation of its
head office to Milton Park in Oxfordshire in April 2022.

 

·    David Phillips made good progress, despite the wider inflationary
environment, generating strong cash generation in the period. The business is
focussed on achieving further growth in its existing channels and accessing
greater profitability through efficiencies and scale.

 

·    Pharmacy2U has continued to experience growth in its core NHS online
prescription channel and has been focussed on building scale in its primary
Bardon facility to increase operational efficiency.

 

·    EPIC Acquisition Corp ("EAC") has progressed to advanced discussions
with a number of European consumer brands regarding a potential business
combination. EAC continues to actively source and review a pipeline of
attractive targets.

 

·    In October 2022, the Company announced a £2.0 million investment in
Denzel's. Denzel's is a fast-growing, healthy and sustainable premium dog
snacks brand. Denzel's operates an omni-channel distribution strategy,
underpinned by listings in some of the UK's leading retailers and hospitality
locations as well as e-commerce channels. The Investment Advisor intends to
work closely with Denzel's to help deliver its growth strategy, which is
focused on the launch of new products, notably high value and functional dog
treats, as well as growth of both offline and online distribution channels.

 

·    The Company's investments in Atlantic Credit Opportunities Fund and
Prelude Structured Alternatives Master Fund are in the process of realisation,
with the distribution of proceeds to the Company to be completed in the coming
period.

 

·    The Company had cash balances of £24.5 million as at 31 January
2023. In July 2022, the Company agreed the extension of the maturity of £4.0
million of unsecured loan notes to July 2023, with an option for the Company
to further extend the maturity to July 2024. The Company has £20.7 million
zero dividend preference shares ("ZDP") maturing in December 2026 and no other
third-party debt outstanding.

 

·    In September and October 2022, the Company completed buybacks in the
market totalling 1.9 million ordinary shares (or 5.4 per cent. of the
Company's issued ordinary share capital) at a weighted average share price of
139 pence.

 

·    As at 31 January 2023, the Company's unquoted portfolio was valued at
a weighted average EBITDA to enterprise value multiple of 6.7x (excluding
assets investing for growth) and the portfolio had a low level of third party
leverage with net debt at 1.3x EBITDA in aggregate.

 

Mr Clive Spears, Chairman, commented: "The Company has faced significant
macro-economic headwinds in the period, but the Board and Investment Advisor
have maintained a careful approach, positioning the portfolio and the Company
accordingly. The Company was pleased to announce the completion of the new
investment in Denzel's and continues to review a pipeline of attractive
investments. The Board would like to note its appreciation of the Investment
Advisor and the portfolio management teams for their efforts through a
complicated period. The Board will monitor the progress of the portfolio over
the coming months and looks forward to updating shareholders at the half
year."

 

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) 15 3488 5200

                                                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

 

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