REG - EPE Special Opps Ltd EPE Special Opp-EO.P EPE Special Opp-EL.P - Half-year Report
15/09/2023 07:00
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RNS Number : 5178M EPE Special Opportunities Limited 15 September 2023
EPE Special Opportunities Limited
("ESO" or the "Company")
Interim Report and Unaudited Condensed Financial Statements for the six months
ended 31 July 2023
The Board of EPE Special Opportunities is pleased to announce the Company's
Interim Report and Unaudited Condensed Financial Statements for the six months
ended 31 July 2023.
Summary
· The Company's portfolio has continued to experience headwinds from
an adverse macro-economic environment in the six months ended 31 July 2023.
The Board and Investment Advisor note that there are indications that the
trading environment is stabilising and are hopeful of improvements in the
coming period. In the near term however, ongoing market uncertainty presents a
difficult environment for acquisitions or disposals within the portfolio given
the lack of alignment in pricing expectations between buyers and sellers. The
Board and Investment Advisor remain focused on managing the portfolio through
the continuing turbulence and ensuring it is well placed to take advantage of
improvements in market conditions as they develop over the next year, with
value creation plans extending beyond the likely period of market dislocation.
· The net asset value ("NAV") per share of the Company as at 31 July
2023 was 308 pence, representing a decrease of 6 per cent. on the NAV per
share of 328 pence as at 31 January 2023.
· The share price of the Company as at 31 July 2023 was 148 pence,
representing a decrease of 13 per cent. on the share price of 170 pence as at
31 January 2023.
· In September 2023, Luceco plc ("Luceco") released its results for
the six months ended 30 June 2023. The group announced sales of £101 million
and adjusted operating profit of £11 million, ahead of expectations. The
business reported net debt of 1.3x LTM EBITDA as at 30 June 2023, providing
facility headroom to support organic investment and M&A.
· The Rayware Group ("Rayware") has faced a difficult trading
environment with sales impacted by customer destocking and weakened consumer
demand, and profitability impacted by freight costs and supply chain
disruption. The business appointed a new Head of US Sales and Marketing in
June 2023, Naddia Prandelli, to support the business' growth strategy in the
market. In July 2023, ESO Investments 1 Limited invested £2.6 million to
reduce the business' indebtedness and has undertaken to provide £2.5m of
funding by way of a contingent guarantee to Rayware's third party lenders,
should such an injection be required in due course.
· Whittard of Chelsea ("Whittard") has performed pleasingly, with
strong growth in the business' retail estate supported by improved domestic
and tourist volumes. Whittard has continued to develop its international
presence, with the business' South Korean franchise partner opening a new
store in Samsung Town in April 2023 and new wholesale accounts secured in
North America.
· David Phillips is focused on achieving further sales growth, led by
the business' built-to-rent ("BTR") and other project-based divisions. The
business is targeting improved profitability as actions taken in the last two
years in response to the inflationary environment begin to deliver returns.
· Pharmacy2U has successfully maintained its growth trajectory,
supported by strong growth in its NHS online prescription channel. In November
2022, the business appointed a new chairperson, Deidre Burns, and a new CEO,
Kevin Heath.
· Since the investment in October 2023, Denzel's has successfully
completed the appointment of a number of key roles, including Head of
Marketing and Head of E-commerce. The business has continued to grow its
distribution with the introduction of new product ranges and has launched a
new website.
· In April 2023, EPIC Acquisition Corp ("EAC") announced the
extension of its business combination period, with an initial three-month
extension to 25 July 2023 and the option to further extend by one month at a
time up until a final business combination date of 25 January 2024. EAC
announced a further extension to 25 September 2023 in August 2023. EAC
continues to actively source and review a pipeline of targets.
· In July 2023, the Company completed the realisation of its
holdings in Atlantic Credit Opportunities Fund and in August 2023 completed
the realisation of its holdings in Prelude Structured Alternatives Master Fund
LP.
· The Company had cash balances of £16.3 million(1) as at 31 July
2023. The Board continue to focus in particular on maintaining satisfactory
liquidity during the current period of market uncertainty. In July 2023, the
Company agreed the extension of the maturity of £4.0 million of unsecured
loan notes to July 2024. In July 2023, the Company completed the buyback of
7.5 million zero dividend preference ("ZDP") shares. Following this buyback,
the Company has 12.5 million ZDP shares remaining in issue, maturing in
December 2026. The Company has no other third-party debt outstanding.
· As at 31 July 2023, the Company's unquoted portfolio was valued at
a weighted average EBITDA to enterprise value multiple of 7.0x (excluding
assets investing for growth) and the portfolio has a low level of third party
leverage with net debt at 1.2x EBITDA in aggregate.
Mr Clive Spears, Chairman, commented: "We have experienced a difficult
macro-economic environment in the period, and as such have adopted a prudent
approach to positioning the portfolio for long term growth and ensuring the
Company is well equipped to navigate these challenges. The Board would like to
extend its thanks to the Investment Advisor and the management teams of the
Company's portfolio for their hard work during a challenging period. The Board
looks forward to updating shareholders with further progress at the year end."
The Company's Interim Report and Unaudited Condensed Financial Statements can
be viewed at the Company's website at the following address:
https://www.epespecialopportunities.com/reports-and-accounts.php.
The person responsible for releasing this information on behalf of the Company
is Amanda Robinson of Langham Hall Fund Management (Jersey) Limited.
Note 1: Company liquidity is stated inclusive of cash held by subsidiaries in
which the Company is the sole investor.
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
The Chairman's Statement
The Company's portfolio has continued to experience headwinds from an adverse
macro-economic environment in the six months ended 31 July 2023. The Board and
Investment Advisor note that there are indications that the trading
environment is stabilising and are hopeful of improvements in the coming
period. In the near term however, ongoing market uncertainty presents a
difficult environment for further acquisitions or disposals within the
portfolio given the lack of alignment in pricing expectations between buyers
and sellers. The Board and Investment Advisor remain focused on managing the
portfolio through the continuing turbulence and ensuring it is well placed to
take advantage of improvements in market conditions as they develop over the
next year, with value creation plans extending beyond the likely period of
market dislocation.
The net asset value ("NAV") per share of the Company as at 31 July 2023 was
308 pence, representing a decrease of 6 per cent. on the NAV per share of 328
pence as at 31 January 2023. The share price of the Company as at 31 July 2023
was 148 pence, representing a decrease of 13 per cent. on the share price of
170 pence as at 31 January 2023. The share price of the Company represents a
discount of 52% to the NAV per share of the Company as at 31 July 2023. The
Company seeks to manage the discount to NAV via capital management, including
ordinary share buyback programs, as well as achieving further diversification
of the investment portfolio and scale in the Company.
The Company has focused on positioning the portfolio to navigate market
conditions, while progressing value creation plans;
· Luceco plc ("Luceco") released its results for the six months ended
30 June 2023 announcing sales of £101 million and adjusted operating profit
of £11 million, ahead of expectations.
· The Rayware Group ("Rayware") has faced a difficult trading
environment with sales impacted by customer destocking and weakened consumer
demand, and profitability impacted by freight costs and supply chain
disruption.
· Whittard of Chelsea ("Whittard") has performed pleasingly, with
strong growth in the business' retail estate supported by improved domestic
and tourist volumes.
· David Phillips has focused on achieving further sales growth, led by
the business' built-to-rent ("BTR") and other project-based divisions.
· Pharmacy2U has successfully maintained its growth trajectory,
supported by strong growth in its NHS online prescription channel.
· Denzel's has continued to grow its distribution with the introduction
of new product ranges and has launched a new website.
· EPIC Acquisition Corp ("EAC") announced the extension of its business
combination period in April 2023, with an initial three-month extension to 25
July 2023 and the option to further extend by one month at a time up until to
a final business combination date of 25 January 2024. EAC announced a further
extension to 25 September 2023 in August 2023.
The Company successfully completed the following investments and realisations
in the period;
· In July 2023, the Company, through its subsidiary ESO Investments 1
Limited, invested £2.6 million in Rayware, reducing the business' senior debt
and committed to provide up to £2.5m of funding via a contingent guarantee to
Rayware's third party lenders.
· In July 2023, the Company completed the realisation of its holdings
in Atlantic Credit Opportunities Fund and in August 2023 completed the
realisation of its holdings in Prelude Structured Alternatives Master Fund LP.
The Company had cash balances of £16.3 million(1) as at 31 July 2023. The
Board continue to focus in particular on maintaining satisfactory liquidity
during the current period of market uncertainty. In July 2023, the Company
agreed the extension of the maturity of £4.0 million of unsecured loan notes
to July 2024. In July 2023, the Company completed the buyback of 7.5 million
zero dividend preference ("ZDP") shares. Following this buyback, the Company
has 12.5 million ZDP shares remaining in issue, maturing in December 2026 and
implying a final redemption value of £16.1 million. The Company has no other
third-party debt outstanding.
The Board would like to extend its thanks to the Investment Advisor and the
management teams of the Company's portfolio companies for their hard work
during a challenging period. The Board looks forward to updating shareholders
with further progress at the year end.
Clive Spears
Chairman
14 September 2023
(1) Company liquidity is stated inclusive of cash held by subsidiaries in
which the Company is the sole investor.
Investment Advisor's Report
The Company's portfolio has faced a difficult backdrop of inflationary and
recessionary pressures, with the Investment Advisor working alongside
management teams to position the portfolio to navigate this environment.
Furthermore, the Company has taken prudent actions to de-risk its capital
structure in the period. The Company improved its liquidity by electing to
extend the maturity of its £4.0 million unsecured loan notes to July 2024.
This supported the retirement of 7.5 million of its ZDP shares, decreasing the
redemption amount payable at maturity in December 2026.
The Net Asset Value ("NAV") per share of the Company as at 31 July 2023 was
308 pence, representing a decrease of 6 per cent. on the NAV per share of 328
pence as at 31 January 2023. The share price of the Company as at 31 July 2023
was 148 pence, representing a decrease of 13 per cent. on the share price of
170 pence as at 31 January 2023.
The Company maintains strong liquidity and prudent levels of third party
leverage. The Company had cash balances of £16.3 million(1) as at 31 July
2023, which are available to support the portfolio, meet committed obligations
and deploy into attractive investment opportunities. Net debt in the
underlying portfolio stands at 1.2x EBITDA in aggregate.
The Company's unquoted private equity portfolio is valued at a weighted
average enterprise value to EBITDA multiple of 7.0x 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.
In July 2023, the Company completed the repurchase of 7.5 million of its ZDP
shares in the market (or 38 per cent. of the Company's issued ZDP share
capital) at a weighted average share price of 105 pence.
Luceco released its results for the six months ended 30 June 2023 in September
2023. The business announced trading ahead of expectations, with sales of
£101 million in the period. The business reported adjusted operating profit
of £11 million for the interim period and provided guidance for the full year
at the upper end of market expectations. Performance benefitted from the end
of customer destocking and improving gross margin. Net debt was 1.3x LTM
EBITDA as at 30 June 2023, at the lower end of the business' target range. The
business noted that its latest acquisitions, SyncEV and D W Windsor, were both
performing well following their integration.
Rayware's trading has been impacted by customer destocking, decreased consumer
confidence and inflationary pressures. The business appointed a new Head of US
Sales and Marketing in June 2023, Naddia Prandelli, who has over 20 years
experience in branded homewares sales. In July 2023, the Company, through its
subsidiary ESO Investments 1 Limited, invested £2.6 million, reducing the
business' senior debt and committed to provide up to £2.5m of funding via a
contingent guarantee to Rayware's third party lenders.
Whittard of Chelsea has delivered strong sales growth, with the business'
retail channel trading ahead of budget and the prior year, despite market
headwinds. Consumers' return to offline channels has, however, implied a
partial normalisation in the business' online performance. Whittard's South
Korean franchise partner progressed its store rollout in the period, opening a
new store in Samsung Town. The business also continued to expand its marketing
channels, launching their first UK TV advertising campaign in February 2023.
David Phillips has developed a strong pipeline of projects across its
build-to-rent and fitted furniture divisions, providing top line momentum in
the coming period. The business has maintained prudent cost control and
improved produce pricing and sourcing strategies, which are expected to
improve profitability in the near term.
Pharmacy2U has delivered strong sales growth within its NHS online
prescription channel, trading ahead of budget and the prior year. In November
2022, the business appointed Deirdre Burns as chairperson and Kevin Heath as
CEO. Deirdre has broad-ranging experience as a chairperson of private equity
backed companies across the health and care sectors. Kevin has more than 20
years' experience in pharmacy, having previously held senior positions at
Walgreens Boots Alliance, including as an executive board director.
Denzel's has utilised the investment raised in October 2022 to help accelerate
the development of its team and operational platform, whilst continuing to
grow sales year-on-year. Notable new hires include the Head of Marketing and
Head of E-commerce. The business recently re‑launched its website to improve
functionality and offer an enhanced subscription offering to customers. Future
growth plans are focused on the launch of new products and expansion of
offline and online sales channels.
EAC announced the extension of its business combination period in April 2023,
with an initial three-month extension to 25 July 2023 and the option to
further extend by one month at a time up until to a final business combination
date of 25 January 2024. EAC announced a further extension to 25 September
2023 in August 2023. EAC continues to actively source and review a pipeline of
potential business combination targets.
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. In July 2023, the Company
completed the realisation of its holdings in Atlantic Credit Opportunities
Fund and in August 2023 completed the realisation of its holdings in Prelude
Structured Alternatives Master Fund LP.
The Investment Advisor would like to express its appreciation to the
management and employees of the portfolio for their dedication during a
challenging period. The Investment Advisor thanks the Board and the Company's
shareholders for their continued support.
EPIC Investment Partners LLP
Investment Advisor to the Company
14 September 2023
(1) Company liquidity is stated inclusive of cash held by subsidiaries in
which the Company is the sole investor
Report of the Directors
Principal activity
EPE Special Opportunities Limited (the "Company") was incorporated in the Isle
of Man as a company limited by shares
under the Laws with registered number 108834C on 25 July 2003. On 23 July
2012, the Company 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'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 Company's Unsecured Loan Notes ("ULN") are quoted on
the Aquis Stock Exchange.
The Company's Zero Dividend Preference Shares ("ZDP") are admitted to trade on
the main market of the London Stock Exchange (standard listed). It was
identified that the 31 January 2023 accounts did not include certain
disclosures and requirements necessitated by the main market listing of the
ZDP shares. Detailed review is being performed by management to consider
obligations and reporting requirements in accordance with the Listing Rules
and DTR for the standard listed segment (shares) on the London Stock Exchange.
The format of the Interim Review has been updated to include the required
disclosures, and the annual report will also be updated on this basis going
forward.
The principal activity of the Company and its Subsidiaries is to arrange
income yielding financing for growth, buyout and
special situations and holding the investments with a view to exiting in due
course at a profit.
Incorporation
The Company was incorporated on 25 July 2003 and on 11 September 2018,
registered under the Bermuda Companies Act 1981. The Company's registered
office is:
Clarendon House, 2 Church Street, Hamilton HM11, Bermuda.
Place of business
Prior to 15 May 2023, the Company operated out of and was controlled from:
Liberation House, Castle Street, St Helier, Jersey JE1 2LH
On 15 May 2023, the Company's place of business was amended to:
Gaspe House, 66-72 Esplanade, St Helier, Jersey, Channel Islands, JE1 2LH
Results of the financial year
Results for the year are set out in the Condensed Statement of Comprehensive
Income and in the Condensed Statement of Changes in Equity below.
Dividends
The Board does not recommend a dividend in relation to the current year (2022:
nil) (see note 10 for further details).
Corporate governance principles
The Directors, place a high degree of importance on ensuring that the Company
maintains high standards of Corporate
Governance and have therefore adopted the Quoted Companies Alliance 2018
Corporate Governance Code (the "QCA Code").
The Board holds at least four meetings annually and has established Audit and
Risk and Investment committees. The Board does not intend to establish
remuneration and nomination committees given the current composition of the
Board and the nature of the Company's operations. The Board reviews annually
the remuneration of the Directors and agrees on the level of Directors' fees.
Composition of the Board
The Board currently comprises five non-executive directors, all of whom are
independent. Clive Spears is Chairman of the Board, David Pirouet is Chairman
of the Audit and Risk Committee and Heather Bestwick is Chair of the
Investment Committee.
Audit and Risk Committee
The Audit and Risk Committee comprises David Pirouet (Chairman of the
Committee) and all other Directors. The Audit and Risk Committee provides a
forum through which the Company's external auditors report to the Board.
The Audit and Risk Committee meets at least twice a year and is responsible
for considering the appointment and fee of the external auditors and for
agreeing the scope of the audit and reviewing its findings. It is responsible
for monitoring compliance with accounting and legal requirements, ensuring
that an effective system of internal controls is maintained and for reviewing
the annual and interim financial statements of the Company before their
submission for approval by the Board. The Audit and Risk Committee has adopted
and complied with the extended terms of reference implemented on the Company's
readmission to AIM in August 2010, as reviewed by the Board from time to time.
The Board is satisfied that the Audit and Risk Committee contains members with
sufficient recent and relevant financial
experience.
Principal risks and uncertainties
The Company has a robust approach to risk management that involves ongoing
risk assessments, communication with our Board of Directors and Investment
Advisor, and the development and implementation of a risk management framework
along with reports, policies and procedures. We continue to monitor relevant
emerging risks and consider the market and macro impacts on our key risks.
Risk Description Mitigation
Performance risk In the event the Company's investment portfolio underperforms the market, the The Board independently reviews any investment recommendation made by the
Company may underperform vs. the market and peer benchmarks. Investment Advisor in light of the investment objectives of the Company
and the expectations of shareholders.
The Investment Advisor maintains board representation on all majority owned
portfolio investments and maintains ongoing discussions with management and
other key stakeholders in investments to ensure that there are controls in
place to ensure the success of the investment.
Portfolio Concentration Risk The Company's investment policy is to hold a concentrated portfolio of 2-10 The Directors and Investment Advisor keep the portfolio under review and focus
assets. In a concentrated portfolio, if the valuation of any asset decreases closely on those holdings which represent the largest proportion of total
it may have a material impact on the Company's NAV. value.
Liquidity Management Liquidity risk is the risk that the Company will encounter difficulty in The Board and Investment Advisor closely monitors cash flow forecasts in
meeting the obligations associated with its financial liabilities that are conjunction with liability maturity. Liquidity forecasts are carefully
settled by delivering cash or another financial asset. considered before capital deployment decisions are made.
Credit Risk Credit risk is the risk that an issuer or counterparty will be unable or Loan investments are entered into as part of the investment strategy of the
unwilling to meet a commitment that it has entered into with the Company. The Company and its Subsidiaries, and credit risk is managed by taking security
Company, through its interests in Subsidiaries, has advanced loans to a number where available (typically a floating charge) and the Investment Advisor
of private companies which exposes the Company to credit risk. The loans are taking an
advanced to unquoted private companies, which have no credit risk rating.
active role in the management of the borrowing companies. In addition to the
repayment of loans advanced, the Company and Subsidiaries will often
arrange additional preference share structures and take significant equity
stakes so as to create shareholder value. It is the performance of the
combination of all securities including third party
debt that determines the Company's view of each investment.
Operational Risk The Company outsources investment advisory and administrative functions to The primary responsibility for the development and implementation of controls
over operational risk rests with the Board of Directors. This responsibility
service providers. Inadequate or failed internal processes could lead to is supported by the development of overall standards for the management of
operational performance risk and regulatory risk. operational risk, which encompasses the controls and processes
at the service providers and the establishment of service levels with the
service providers. The Directors' assessment of the adequacy of the
controls and processes in place at the service providers with respect to
operational risk is carried out via regular discussions with the service
providers as well as site visits to their offices. The
Company also undertakes periodic third-party reviews of service providers'
activities.
Investment Committee
The Board established an Investment Committee, which comprises Heather
Bestwick (Chair of the Committee) and all the other Directors. The purpose of
this committee is to review the portfolio of the Company, new investment
opportunities and evaluate the performance of the Investment Advisor.
The Board is satisfied that the Investment Committee contains members with
sufficient recent and relevant experience.
Directors
The Directors of the Company holding office during the financial year and to
date are:
Mr. C.L. Spears (Chairman)
Mr. N.V. Wilson
Ms. H. Bestwick
Mr. D.R. Pirouet
Mr. M.M Gray
Related Party Transactions
Details in respect of the Company's related party transactions during the
period are included in note 15 to the financial statements.
Staff and Secretary
At 31 January 2023 the Company employed no staff (2022: none).
Independent Review
The current year is the second year in which PricewaterhouseCoopers CI LLP are
undertaking the interim review for the Company's condensed interim financial
statements.. PricewaterhouseCoopers CI LLP have indicated willingness to
continue in office.
On behalf of the Board
Heather Bestwick
Director
14 September 2023
Statement of Directors' Responsibilities
in respect of the Interim Report and the Financial Statements
The Directors are responsible for preparing the Interim Report & Unaudited
Condensed Financial Statements, in accordance with International Accounting
Standard 34, "Interim Financial Reporting", as issued by the IASB and
Disclosure Guidance and Transparency Rules sourcebook of the United Kingdom's
Financial Conduct Authority. The Directors confirm that, to the best of their
knowledge;
· The condensed set of financial statements contained in these interim
results have been prepared in accordance with International Accounting
Standard 34, "Interim Financial Reporting", as issued by the IASB; and
· The Chairman's Statement, Investment Advisor's Report, Report of the
Directors and Statement of Directors' Responsibilities (collectively referred
herein as "interim management report") includes a fair review of the
information required by DTR 4.2.7 R of the FCA's Disclosure Guidance and
Transparency Rules, being an indication of important events that have occurred
during the first six months of the financial year and a description of the
principal risks and uncertainties for the remaining six months of the
financial year; and
· The interim financial statements include a fair review of the
information required by DTR 4.2.8 of the Disclosure Guidance and Transparency
Rules, being material relating party transactions that have taken place in the
first six months of the year and any material changes in the related-party
transactions described in the annual report.
The maintenance and integrity of the Company's website is the responsibility
of the Directors; the work carried out by the authors does not involve
consideration of these matters and, accordingly, the auditors accept no
responsibility for any changes that might have occurred to the interim
financial statements since they were initially presented on the website.
This interim report was approved by the Board and the above Director's
Responsibility Statement was signed on behalf of the Board.
Heather Bestwick
Director
14 September 2023
Independent Review Report to EPE Special Opportunities Limited
Report on the condensed interim financial statements
Our conclusion
We have reviewed EPE Special Opportunities Limited's condensed interim
financial statements (the "interim financial statements") in the Interim
Report & Unaudited Condensed Financial Statements of EPE Special
Opportunities Limited for the 6 month period ended 31 July 2023 (the
"period").
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', as issued by the IASB and the Disclosure
Guidance and Transparency Rules sourcebook of the United Kingdom's Financial
Conduct Authority.
The interim financial statements comprise:
· the Condensed Statement of Assets and Liabilities as at 31 July 2023;
· the Condensed Statement of Comprehensive Income for the period then
ended;
· the Condensed Statement of Cash Flows for the period then ended;
· the Condensed 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 &
Unaudited Condensed Financial Statements of EPE Special Opportunities Limited
have been prepared in accordance with International Accounting Standard 34,
'Interim Financial Reporting', as issued by the IASB and the Disclosure
Guidance and Transparency Rules sourcebook of the United
Kingdom's Financial Conduct Authority.
Basis for conclusion
We conducted our review in accordance with International Standard on Review
Engagements (UK) 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 ("ISRE (UK) 2410"). 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 (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.
We have read the other information contained in the Interim Report &
Unaudited Condensed Financial Statements and considered whether it contains
any apparent misstatements or material inconsistencies with the information in
the interim financial statements.
Conclusions relating to going concern
Based on our review procedures, which are less extensive than those performed
in an audit as described in the Basis for conclusion section of this report,
nothing has come to our attention to suggest that the directors have
inappropriately adopted the going concern basis of accounting or that the
directors have identified material uncertainties relating to going concern
that are not appropriately disclosed. This conclusion is based on the review
procedures performed in accordance with ISRE (UK) 2410. However, future events
or conditions may cause the company to cease to continue as a going concern.
Our responsibilities and those of the directors
The Interim Report & Unaudited Condensed Financial Statements, 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 & Unaudited Condensed Financial Statements in accordance
with the Disclosure Guidance and Transparency Rules sourcebook of the United
Kingdom's Financial Conduct Authority. In preparing the Interim Report &
Unaudited Condensed Financial Statements, including the interim financial
statements, the directors are responsible for assessing the company's ability
to continue as a going concern, disclosing, as applicable, matters related to
going concern and using the going concern basis of accounting unless the
directors either intend to liquidate the company or to cease operations, or
have no realistic alternative but to do so.
Our responsibility is to express a conclusion on the interim financial
statements in the Interim Report & Unaudited Condensed Financial
Statements based on our review. Our conclusion, including our Conclusions
relating to going concern, is based on procedures that are less extensive than
audit procedures, as described in the Basis for conclusion paragraph of this
report. This report, including the conclusion, has been prepared for and only
for the company for the purpose of complying with the Disclosure Guidance and
Transparency Rules sourcebook of the United Kingdom's Financial Conduct
Authority 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.
PricewaterhouseCoopers CI LLP
Chartered Accountants
Jersey, Channel Islands
14 September 2023
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
Condensed Statement of Comprehensive Income
For the six months ended 31 July 2023
1 Feb 2023 to 31 Jul 2023 1 Feb 2022 to 31 Jul 2022 1 Feb 2022 to 31 Jan 2023
Total (unaudited) Total (unaudited) Total (audited)
Note £ £ £
Income
Interest income 16,106 79,899
106,478
Net fair value movement on investments* (3,539,864) (59,814,999) (39,438,551)
Total loss (3,433,386) (59,798,893) (39,358,652)
Expenses
4 Investment advisor's fees (909,805) (911,590) (1,755,442)
15 Directors' fees (86,000) (86,000) (172,000)
5 Share based payment expense (136,481) (354,193) (555,225)
6 Other expenses (302,814) (277,527) (557,416)
Total expense (1,435,100) (1,629,310) (3,040,083)
Loss before finance costs and tax (4,868,486) (61,428,203) (42,398,735)
Finance charges
13 Interest on unsecured loan note instruments (149,540) (159,842) (309,382)
13
Zero dividend preference shares finance charge (483,389) (546,507) (1,128,093)
Loss for the period/year before taxation (5,501,415) (62,134,552) (43,836,210)
Taxation - - -
Loss for the period/year (5,501,415) (62,134,552) (43,836,210)
Other comprehensive income - - -
Total comprehensive loss (5,501,415) (62,134,552) (43,836,210)
11 Basic loss per ordinary share (pence) (18.47) (197.13) (141.77)
11 Diluted loss per ordinary share (pence) (18.47) (197.13) (141.77)
*The net fair value movements on investments is allocated to the capital
reserve and all other income and expenses are allocated to the revenue reserve
in the Condensed Statement of Changes in Equity. All items derive from
continuing activities.
Condensed Statement of Assets and Liabilities
As at 31 July 2023
31 July 2023 (unaudited) 31 January 2023 (audited) 31 July 2022 (unaudited)
Note £ £ £
Non-current assets
7 Investments at fair value through profit or loss 79,938,043
93,730,728 100,412,977
93,730,728 100,412,977 79,938,043
Current assets
9 Cash and cash equivalents 16,241,165 22,226,008 26,532,104
Trade and other receivables and prepayments 64,814 87,899 83,710
16,305,979 22,313,907 26,615,814
Current liabilities
Trade and other payables (629,655) (596,790) (555,256)
13 Unsecured loan note instruments (3,987,729) (3,987,729) (3,987,729)
(4,617,384) (4,584,519) (4,542,985)
Net current assets 11,688,595 17,729,388 22,072,829
Non-current liabilities
13 Zero dividend preference shares (13,329,390) (20,721,001) (20,139,415)
(13,329,390) (20,721,001) (20,139,415)
Net assets 92,089,933 97,421,364 81,871,457
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 93,599,525 97,139,389 76,762,941
16 Revenue reserve and other equity (16,860,047) (15,068,480) (10,241,939)
Total equity 92,089,933 97,421,364 81,871,457
12 Net asset value per share (pence) 308.23 328.41 259.74
The financial statements were approved by the Board of Directors on 14
September 2023 and signed on its behalf by:
Clive
Spears
David Pirouet
Director
Director
Condensed Statement of Changes in Equity
For the six months ended 31 July 2023
Six months ended 31 July 2023 (unaudited)
Share capital Share premium Capital reserve Revenue reserve Total
Note £ £ £ £ £
Balance at 1 February 2023 1,730,828 13,619,627 97,139,389 (15,068,480) 97,421,364
Total comprehensive loss for the period - - (3,539,864) (1,961,551) (5,501,415)
Contributions by and distributions to owners
5 Share-based payment charge - - - 136,481 136,481
Share ownership scheme participation - - - 33,503 33,503
Total transactions with owners - - - 169,984 169,984
Balance at 31 July 2023 1,730,828 13,619,627 93,599,525 (16,860,047) 92,089,933
Year ended 31 January 2023 (audited)
Share capital Share premium Capital reserve Revenue reserve Total
£ £ £ £ £
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 year - - (39,438,551) (4,397,659) (43,836,210)
Contributions by and distributions to owners
5 Share-based payment charge - - - 555,225 555,225
Share ownership scheme participation - - - 149,568 149,568
Purchase of shares - - - (2,587,375) (2,587,375)
Share acquisition for JOSP scheme - - - (484,821) (484,821)
Total transactions with owners - - - (2,367,403) (2,367,403)
Balance at 31 January 2023 1,730,828 13,619,627 97,139,389 (15,068,480) 97,421,364
Six months ended 31 July 2022 (unaudited)
Share capital Share premium Capital reserve Revenue reserve Total
£ £ £ £ £
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
Condensed Statement of Cash Flows
For the six months ended 31 July 2023
1 Feb 2023 to 31 July 2023 (unaudited) 1 Feb 2022 to 31 Jul 2022 (unaudited)
1 Feb 2022 to 31 Jan 2023 (audited)
Note £ £ £
Operating activities
Interest income received 106,478 79,899 16,106
Expenses paid (1,241,554) (2,853,467) (1,678,661)
7 Purchase of investments (2,600,000) (3,174,948) (1,100,000)
7 Proceeds from investments 5,742,385 3,848,880 1,872,018
Net cash generated from / (used in) operating activities 2,007,309 (2,099,636) (890,537)
Financing activities
Unsecured loan note interest paid (149,540) (299,080) (149,540)
Purchase of shares - (3,072,196) (122,729)
Buyback of zero dividend preference shares (7,875,000) - -
Share ownership scheme participation 33,503 149,568 149,568
Net cash used in financing activities (7,991,037) (3,221,708) (122,701)
Decrease in cash and cash equivalents (5,983,728)
(5,321,344) (1,013,238)
Effect of exchange rate fluctuations on cash and cash equivalents (1,115) 2,310 300
Cash and cash equivalents at start of period/year 22,226,008
27,545,042 27,545,042
Cash and cash equivalents at end of period/year 16,241,165 22,226,008 26,532,104
Comparative cash flow of Expenses paid for the period ended 31 July 2022 has
been updated for consistency of presentation with the subsequent periods.
Effect of exchange rate fluctuations on cash and cash equivalents has been
broken out from Expenses paid.
Reconciliation of net debt
Cash and cash equivalents On 31 January 2023 Cash flows Other non-cash charge On 31 July 2023
£ £ £ £
Cash at bank 22,226,008 (5,983,728) (1,115) 16,241,165
Unsecured loan note (3,987,729)
instruments (3,987,729) 149,540 (149,540)
Zero dividend preference shares (20,721,001) 7,875,000 (483,389) (13,329,390)
Net debt (2,482,722) 2,040,812 (634,044) (1,075,954)
Notes to the Interim Financial Statements
For the six months ended 31 July 2023
1 The General Information
On 25 July 2003, the Company was incorporated with limited liability in the
Isle of Man. On 23 July 2012, 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 with
immediate effect 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 Company's zero dividend preference shares are
admitted to trade on the main market of the London Stock Exchange (standard
listed). The Company's unsecured loan notes are quoted on the Aquis Stock
Exchange.
The interim financial statements are as at and for the six months ended 31
July 2023, comprising the Company and investments in its subsidiaries. The
interim financial statements are unaudited.
The financial statements of the Company as at and for the year ended 31
January 2023 are available upon request from the Company's business office at
3(rd) Floor, Gaspe House, 66-72 Esplanade, St Helier, Jersey, Channel Islands,
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 two majority owned
subsidiaries entities, ESO Investments 1 Limited and ESO Investments 2 Limited
and one wholly owned subsidiary entity, ESO Alternative Investments LP
(together the "Subsidiaries").
Direct interests in the individual portfolio investments are held by the
following Subsidiaries;
· ESO Investment 1 Limited: Rayware, Whittard, David Phillips and
Denzel's
· ESO Investments 2 Limited: Luceco and Pharmacy2U
· ESO Alternative Investments LP: European Capital Private Debt
Fund LP, EPE Junior Aggregator LP, EPIC Acquisition Corp. and EAC Sponsor
Limited
The principal activity of the Company is to arrange income yielding financing
for growth, buyout and special situations investments with a view to exiting
in due course at a profit.
The Company has no employees.
The following significant changes occurred during the six months ended 31 July
2023:
· In July 2023, the Company completed the realisation of its
holdings in Atlantic Credit Opportunities Fund.
· The valuation methodology for EPIC Acquisition Corp. and EAC
Sponsor Limited was amended to a liquidation valuation, implying a reduction
in the aggregate value of the holdings. As a result, the designation of the
level of fair value hierarchy of EPIC Acquisition Corp was amended to Level 3
from Level 2 as at 31 January 2023 (see note 8).
· In July 2023, the Company completed the buyback of 7.5 million
zero dividend preference shares ("ZDP"). Following this buyback, the Company
has 12.5 million ZDP shares remaining in issue, maturing in December 2026 (see
note 15).
· The movement in the value of investments and fair value movement
are deemed as significant changes during the period (see note 8).
2 Basis of preparation
a. Statement of compliance
These interim financial statements for the six months ended 31 July 2023 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 2023. 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 accounting policies and methods of computation applied by the Company in
these interim financial statements are the same as those applied in its annual
financial statements as at and for the year ended 31 January 2023.
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.
These interim financial statements were authorised for issue by the Company's
Board of Directors on 14 September 2023.
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 adequate resources to
continue in business for at least twelve months from the date of approval of
interim financial statements. 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 a going concern basis.
c. Segmental reporting
The Directors are of the opinion that the Company is engaged in a single
segment of business and geographic area, being arranging financing for growth,
buyout and special situations investments in the United Kingdom. Information
presented to the Board of Directors for the purpose of decision making is
based on this single segment. All significant operating decisions are based
upon the analysis of the Company's investments as a single operating segment.
The financial information from this segement are equivalent to the financial
information of the Company as a whole, which are evaluated on a regular basis
by the Board of Directors.
d. Critical accounting estimates and assumption
Critical accounting estimates and assumptions made by Directors and the
Investment Advisor in the application of IFRS that have a significant effect
on the financial statements and estimates with a significant risk of material
adjustments in the year relate to the determination of fair value of financial
instruments with significant unobservable inputs (see note 8).
e. Critical judgements
The critical judgements made by the Directors and the Investment Advisor in
preparing these financial statements are:
· Classification of the zero dividend preference share as a non-current
liability in the Condensed Statement of Assets and Liabilities. Please refer
to note 13 for further details.
· Categorisation of ESO Alternative Investments LP, ESO Investments 1
Limited and ESO Investments 2 Limited as Subsidiaries. The Company is deemed
to have control over these subsidiaries.
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 2023.
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 2 and Level 3 portfolio assets, 1 per cent. of the Company's
NAV comprising Level 1 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 £909,805 (for the period ended 31 July
2022: £911,590 ; year ended 31 January 2023: £1,755,442). The amount
outstanding as at 31 July 2023 was £462,939 (for the period ended 31 July
2022: £411,590; year ended 31 January 2023: £487,107).
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 advisory 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 £70,000 (for the period ended 31 July
2022: £75,510; for the year ended 31 January 2023: £147,043).
Other administration fees during the period were £39,775 (for the period
ended 31 July 2022: £37,170; for the year ended 31 January 2023: £76,302).
Performance fees paid by Subsidiaries
The Subsidiaries are stated at fair value. Performance fees are paid to the
Investment Advisor based on the performance of the Subsidiaries and deducted
in calculating the fair value of the Subsidiaries.
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 2023, £1,679,522 has been accrued in the
profit share account of the Investment Advisor in the records of ESO
Investments 1 Limited (31 July 2022: £nil accrued; 31 January 2023: £nil
accrued).
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 2023, £8,237,011 has been accrued in the
profit share account of the Investment Advisor in the records of ESO
Investments 2 Limited (31 July 2022: £6,687,647 accrued; 31 January 2023:
£9,112,002 accrued).
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).
The assets (other than investments in the Company's shares), liabilities,
income and expenses of the trust established to operate the JOSP scheme (the
"Trust") are recognised by the Company. The Trust's investment in the
Company's shares is deducted from shareholders' funds in the Condensed
Statement of Asset and Liabilities as if they were treasury shares.
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 1,245,009 (for the period ended 31 July 2022: 1,049,702; for
the year ended 31 January 2023: 1,290,202) matching shares at the period end
which have historically not voted.
257,061 shares vested to Participants in the period ended 31 July 2023 (for
the period ended 31 July 2022: 862,290 ; for the year ended 31 January 2023:
862,290). 243,947 shares were awarded to Participants in the period ended 31
July 2023 (for the period ended 31 July 2022: 156,173 ; for the year ended 31
January 2023: 156,173).
The share-based payment expense in the Condensed 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 in the period ended 31 July 2023 was
£136,481 (for the period ended 31 July 2022: £354,193 ; for the year ended
31 January 2023: £555,225). Of the total share-based payment expense during
the period ended 31 July 2023, £12,431 related to the Directors (for the
period ended 31 July 2022: £23,103; for the year ended 31 January 2023:
£36,217) and the balance related to members, employees and consultants of the
Investment Advisor.
6 Other expenses
The breakdown of other expenses presented in the Condensed Statement of
Comprehensive Income is as follows:
1 Feb 2023 to 31 Jul 2023 (unaudited) 1 Feb 2022 to 31 Jul 2022 (unaudited) 1 Feb 2022 to 31 Jan 2023 (audited)
Total Total Total
£ £ £
Administration fees (109,775) (112,680) (223,345)
Directors' and officers' insurance (13,997) (13,543) (27,464)
Professional fees (57,079) (46,736) (94,442)
Board meeting and travel expenses (768) (847) (1,085)
Auditors' remuneration (39,525) (19,518) (61,350)
Interim review remuneration (17,000) (17,000) (17,000)
Bank charges (694) (922) (1,705)
Foreign exchange movement (1,110) (89) 2,687
Nominated advisor and broker fees (27,500) (27,745) (62,322)
Listing fees (24,963) (29,115) (52,769)
Sundry expenses (10,403) (9,332) (18,621)
Other expenses (302,814) (277,527) (557,416)
7 Investments at fair value through profit or loss
31 July 2023 31 January 2023 31 July 2022
(unaudited)
(audited)
(unaudited)
£ £ £
Investments at fair value through profit and loss* 93,730,728
100,412,977 79,938,043
93,730,728
100,412,977 79,938,043
Investment roll forward schedule
31 July 2023 (unaudited) 31 January 2023 (audited) 31 July 2022
(unaudited)
Investments at fair value as at 1 February 100,412,977 140,525,060 140,525,060
Purchase of investments 2,600,000 3,174,948 1,100,000
Proceeds from investments (5,742,385) (3,848,880) (1,872,018)
Net fair value movements (3,539,864) (39,438,551) (59,814,999)
Reclassification of debtor balance to investee - 400 -
Investments at fair value 93,730,728 100,412,977 79,938,043
*Comprises Subsidiaries stated at fair value (ESO Investments 1 Limited, ESO
Investments 2 Limited and ESO Alternative Investments LP.
Discussion of the performance of individual investments is presented in the
Chairman's Statement and the Investments Advisor's Report.
8 Fair value of financial instruments
The Company determines the fair value of financial instruments with reference
to IPEV guidelines and the valuation principles of IFRS 13 (Fair Value
Measurement). The Company measures 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. 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.
The Company recognises transfers between levels of the fair value hierarchy at
the end of the reporting period during which the change has occurred.
Valuation framework
The Company employs the valuation framework detailed below with respect to the
measurement of fair values. A valuation of the Company's investments held via
its Subsidiaries 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 Risk and Audit committee of the Company's Board 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 the financial instruments are
recorded in the Condensed 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 was considered to be a Level 2 asset in the year ended
31 January 2023. For the period ended 31 July 2023, the investment in EPIC
Acquisition Corp is considered to be a Level 3 asset, and therefore no assets
are considered to be Level 2.
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, Denzel's, Pharmacy2U, European Capital Private Debt Fund LP, EPE
Junior Aggregator LP, EPIC Acquisition Corp 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 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.
For the period ended 31 July 2023, a public comparable sales multiple
valuation is employed for the investment in Denzel's. The valuation
methodology has been amended given the elapsed time since investment, with
changes in market conditions and trading outlook in the intervening period.
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 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.
EPIC Acquisition Corp and EAC Sponsor Limited
For the period ended 31 July 2023, a recovery valuation is employed for the
holdings in EPIC Acquisition Corp and EAC Sponsor Limited, calculated on the
basis of the value of ESO Alternative Investments LP's holding in a
liquidation scenario. The investments are considered as Level 3 assets. For
the year ended 31 January 2023, EPIC Acquisition Corp was valued on a marked
to market basis and considered a Level 2 asset and EAC Sponsor Limited was
valued on the basis of a probability weighted range of implied values under
potential realisation scenarios and considered a Level 3 asset. The valuation
methodology has been amended to a liquidation value to reflect the limited
business combination period time horizon, with extensions agreed on a rolling
monthly basis and with a final business combination deadline of 25 January
2024. The liquidation valuation approach implies both assets are considered
Level 3 assets.
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 EPIC Acquisition
Corp and EAC Sponsor Limited's assets, changing one or more of the assumptions
used to reasonably possible alternative assumptions would have the following
effects on the investment valuations. The key inputs into the preparation of
the valuations of EPIC Acquisition Corp and EAC Sponsor Limited were the
distributions available in a liquidation scenario to EAC Sponsor Limited. If
these inputs had been taken to be 25 per cent. higher, the value of these
assets and profit for the year would have been £38,423 higher. If these
inputs had been taken to be 25 per cent. lower, the value of these assets and
profit for the year would have been £38,423 lower. This sensitivity excludes
amounts held by EPIC Acquisition Corp. in escrow, which will deliver a fixed
distribution in the event of a liquidation scenario.
Fair value hierarchy - Financial instruments measured at fair value
The Company's investments in the Subsidiaries at 31 July 2023 are classified
as Level 3 (in line with 31 January 2023), given the variation in
classification of the underlying assets. The Company values these investments
on the basis of the net asset value of these holdings.
The table below analyses the underlying investments held by the Subsidiaries
measured at fair value at the reporting date by the level in the fair value
hierarchy into which the fair value measurement is categorised. The Board
assesses the fair value of the total investment, which includes debt and
equity.
The tables below show the gross amount and the net amount of all investments
held via the subsidiaries per the fair value hierarchy. The net amount is a
result of the application of profit share adjustments relating to the
performance fees discussed in Note 4.
Level 1 Level 3 Total
31 July 2023 £ £ £
Financial assets at fair value through profit or loss
Unquoted private equity investments (including debt) - 52,105,782 52,105,782
Fund investments - 6,021,917 6,021,917
Quoted investments 45,308,867 - 45,308,867
Investments at fair value through profit or loss 45,308,867 58,127,699 103,436,566
Other asset and liabilities (held at cost) - - 210,695
Performance fee adjustment (7,913,917) (2,002,616) (9,916,533)
Total 37,394,950 93,730,728
56,125,083
Level 1 Level 2 Level 3 Total
31 January 2023 £ £ £ £
Financial assets at fair value through profit or loss
Unquoted private equity investments (including debt) - - 47,752,184 47,752,184
Unquoted fund investments - - 3,184,749 3,184,749
Quoted investments 50,501,249 5,495,557 - 55,996,806
Investments at fair value through profit or loss 50,501,249 5,495,557 50,936,933 106,933,739
Other asset and liabilities (held at cost) - - - 2,591,240
Performance fee adjustment (8,743,708) - (368,294) (9,112,002)
Total 41,757,541 5,495,557 50,568,639 100,412,977
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) - - 36,189,920 36,189,920
Unquoted fund investments - - 5,968,453 5,968,453
Quoted investments 38,907,301 5,263,920 - 44,171,221
Investments at fair value through profit or loss 38,907,301 5,263,920 42,158,373 86,329,594
Other asset and liabilities (held at cost) - - - 296,096
Performance fee adjustment (6,315,608) - (372,039) (6,687,647)
Total 32,591,693 5,263,920 41,786,334 79,938,043
There has been a change in the designation of the level of fair value
hierarchy of EPIC Acquisition Corp from Level 2 to Level 3 in the reporting
period under review, with the valuation methodology has been amended to a
liquidation value approach.
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 Subsidiaries.
31 July 2023 (unaudited) 31 January 2023
(audited) 31 July 2022 (unaudited)
Unquoted investments (including debt) £ £
Balance as at 1 February 50,568,639 47,886,854 47,886,854
Additional investments 2,600,000 2,086,948 1,100,000
Capital distributions from investments (2,406,232) (2,235,136) -
Transfer to Level 3 investments 5,495,557 - -
Change in fair value through profit and loss (132,881) 2,829,973 (7,200,519)
56,125,083 50,568,639 41,786,335
Significant unobservable inputs used in measuring fair value
The table below sets out information about significant unobservable inputs
used at 31 July 2023 in measuring financial instruments categorised as Level 3
in the fair value hierarchy.
Description Fair value at 31 July 2023 Significant unobservable inputs
£
Unquoted private equity investments (including debt) 52,105,782 Sales/EBITDA multiple
Fund investments 6,021,917 Reported net asset value or liquidation value
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.
· Investment cost: for recently acquired assets (typically
completed in the last twelve months), the Investment Advisor considers the
investment cost an appropriate fair value for the asset. No asset was valued
using investment cost as at 31 July 2023.
· Recovery value: for underperforming assets, the Investment
Advisor considers the value recovered in the event of a liquidation of the
asset an appropriate fair value for the asset.
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 the company's investments in mature Level 3 assets, the
valuations used in the preparation of the financial statements imply an
average EV to EBITDA multiple of 7.0x (weighted by each asset's total
valuation) (31 January 2023: 6.7x). The key unobservable inputs into the
preparation of the valuation of mature Level 3 assets was the EBITDA multiple
applied to the asset's financial forecasts. A sensitivity of 25 per cent. has
been applied to these multiples, in line with the maximum liquidity discount
employed in the valuations. 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 £12,854,708 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 £14,183,672 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 the company's investments in growth Level 3 assets, the
valuations used in the preparation of the financial statements imply an
average EV to sales multiple of 1.3x (weighted by each asset's total
valuation) (31 January 2023: 1.4x). The key unobservable inputs into the
preparation of the valuation of growth Level 3 assets were the sales multiple
applied to the asset's financial forecasts. A sensitivity of 25 per cent. has
been applied to these multiples, in line with the maximum liquidity discount
employed in the valuations. 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 £589,134 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 £985,753 lower. A corresponding increase or decrease in the asset's
financial forecasts would have a similar impact on the Company's assets and
profit.
Classification of financial assets and liabilities
The table below sets out the classifications of the carrying amounts of the
Company's financial assets and liabilities into categories of financial
instruments.
31 July 2023
Financial assets At fair At amortised Total
value cost £
£ £
Investments at fair value through profit or loss 93,730,728 - 93,730,728
Cash and cash equivalents - 16,241,165 16,241,165
Trade and other receivables - 64,814 64,814
93,730,728 16,305,979 110,036,707
Financial liabilities
Trade and other payables - 629,655 629,655
Unsecured loan note instruments* - 3,987,729 3,987,729
Zero dividend preference shares** - 13,329,390 13,329,390
- 17,946,774 17,946,774
31 January 2023
Financial assets At fair At amortised Total
value cost £
£ £
Investments at fair value through profit or loss 100,412,977 - 100,412,977
Cash and cash equivalents - 22,226,008 22,226,008
Trade and other receivables - 87,899 87,899
100,412,977 22,313,907 122,726,884
Financial liabilities
Trade and other payables - 596,790 596,790
Unsecured loan note instruments* - 3,987,729 3,987,729
Zero dividend preference shares** - 20,721,001 20,721,001
- 25,305,520 25,305,520
31 July 2022
Financial assets At fair At amortised Total
value cost £
£ £
Investments at fair value through profit or loss 79,938,043 - 79,938,043
Cash and cash equivalents - 26,532,104 26,532,104
Trade and other receivables - 83,710 83,710
79,938,043 26,615,814 106,553,857
Financial liabilities
Trade and other payables - 555,256 555,256
Unsecured loan note instruments* - 3,987,729 3,987,729
Zero dividend preference shares** - 20,139,415 20,139,415
- 24,682,400 24,682,400
*The Directors consider that the fair value of the unsecured loan note
instruments is the same as its carrying value.
**The Directors consider that the fair value of the zero dividend preference
shares is £12,937,500 (2023: £19,100,000) calculated on the basis of the
quoted price of the instrument on the London Stock Exchange of 103.50 pence as
at 31 July 2023 (2023: 95.50 pence).
9 Cash and cash equivalents
31 July 2023 31 January 2023 31 July 2022
£ £ £
Current and call accounts 16,241,165 22,226,008 26,532,104
16,241,165 22,226,008 26,532,104
The current and call accounts have been classified as cash and cash
equivalents in the Condensed Statement of Cash Flows.
10 Share capital
31 July 2023 31 January 2023 31 July 2022
(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 (4,739,707) - (4,951,575) - (3,096,575) -
29,876,847 1,730,828 29,664,979 1,730,828 31,519,979 1,730,828
No shares were issued during the period ended 31 July 2023.
During the period ended 31 July 2023, the Company transferred 211,868 shares
out of treasury to the Trust (2023: repurchase of 1,855,000 shares into
treasury) with a total value of £350,006 (2023: £2,587,375). During the
period ended 31 July 2023, the Trust purchased 211,868 shares (2023: 280,739
shares) with a total value of £350,006 (2023: £484,821). 257,061 shares
vested to Participants in the period ended 31 July 2023 (2023: 862,290). At 31
July 2023 1,245,009 shares were held by the Trust (2023:1,290,202) (see note
5).
11 Basic and diluted loss per share (pence)
Basic loss per share for the period ended 31 July 2023 is 18.47 pence (for the
period ended 31 July 2022: basic loss per share of 197.13 pence; for the year
ended 31 January 2023: basic loss per share of 141.77 pence). This is
calculated by dividing the loss of the Company for the period attributable to
the ordinary shareholders of £5,501,415 (for the period ended 31 July 2022:
loss of £62,134,552; for the year ended 31 January 2023: loss of
£43,836,210) divided by the weighted average number of shares outstanding
during the period of 29,786,715 after excluding treasury shares (for the
period ended 31 July 2022: 31,519,979 shares; for the year ended 31 January
2023: 30,921,130 shares).
Diluted loss per share for the period ended 31 July 2023 is 18.47 pence (for
the period ended 31 July 2022: basic loss per share of 197.13 pence; for the
year ended 31 January 2023: basic loss per share of 141.77 pence). This is
calculated by dividing the loss of the Company for the period attributable to
ordinary shareholders of £5,501,415 (for the period ended 31 July 2022: loss
of £62,134,552 ; for the year ended 31 January 2023: loss of £43,836,210)
divided by the weighted average number of ordinary shares outstanding during
the period of 29,786,715 after excluding treasury shares (for the period ended
31 July 2022: 31,519,979 shares ; for the year ended 31 January 2023:
30,921,130 shares).
12 NAV per share (pence)
The Company's NAV per share of 308.23 pence (for the period ended 31 July
2022: 259.74 pence ; for the year ended 31 January 2023: 328.41 pence) is
based on the net assets of the Company at the period end of £92,089,933 (for
the period ended 31 July 2022: £81,871,457; for the year ended 31 January
2023: £97,421,364) divided by the shares in issue at the end of the period of
29,876,847 after excluding treasury shares (for the period ended 31 July 2022:
31,519,979; for the year ended 31 January 2023: 29,664,979).
The Company's diluted NAV per share of 308.23 pence (for the period ended 31
July 2022: 259.74 pence ; for the year ended 31 January 2023: 328.41 pence) is
based on the net assets of the Company at the period end of £92,089,933 (for
the period ended 31 July 2022: £81,871,457 ; for the year ended 31 January
2023: £97,421,364) divided by the shares in issue at the end of the period of
29,876,847 after excluding treasury shares. (for the period ended 31 July
2022: 31,519,979; for the year ended 31 January 2023: 29,664,979).
13 Liabilities
Unsecured Loan Notes ("ULN")
The Company has issued ULN's that are redeemable on 24 July 2024, following
the extension of their maturity in July 2023. The Company's ULN's are quoted
on the Aquis Stock Exchange. The interest rate for the period up to 23 July
2023 was 7.5 per cent per annum. The interest rate was increased to 8.0 per
cent per annum for the period subsequent to 23 July 2023. Following their
extension, the interest rate has increased to 8.0 per cent per annum. At 31
July 2023, £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 were amortised over the period to 24 July 2022. The total issue
costs expensed in the period ended 31 July 2023 was £nil (for the period
ended 31 July 2022: £10,303; for the year ended 31 January 2023: £10,303).
The carrying value of the ULNs in issue at the period end was £3,987,729 (for
the period ended 31 July 2022: £3,987,729; for the year ended 31 January
2023: £3,987,729). The total interest expense on the ULNs for the period is
£149,540 (for the period ended 31 July 2022: £159,842; for the year ended 31
January 2023: £309,382). The comparatives for interest expense includes the
amortisation of the issue costs. The carrying value of the ULN is presented
under current liabilities in the current period as they are redeemable within
12-month period from the Statement of Assets and Liabilities 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 Company's ZDP shares are admitted to
trade on the main market of the London Stock Exchange (standard listed). 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. Under IAS 32 - Financial
Instruments: Presentation, the ZDP Shares are classified as financial
liabilities and are held at amortised cost. 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. In July 2023, the Company completed the
repurchase of 7,500,000 ZDP shares, which are held in treasury. Following this
buyback, the Company has 12,500,000 ZDP shares remaining in issue. The total
issue costs expensed for the period ended 31 July 2023 was £57,205 (for the
period ended 31 July 2022: £71,744; for the year ended 31 January 2023:
£115,359). The carrying value of the ZDP Shares in issue at the period-end
was £13,329,390 (for the period ended 31 July 2022: £20,139,415; for the
year ended 31 January 2023: £20,721,001). The total finance charge for the
ZDP Shares for the period is £483,389 (for the period ended 31 July 2022:
£546,507; for the year ended 31 January 2023: £1,128,093). This includes the
ZDP Share final capital entitlement accrual and the amortisation of the Issue
costs.
31 July 2023 31 January 2023 31 July 2022
£ £ £
Balance as at 1 February 20,721,001 19,580,190 19,580,190
ZDP shares non cash charge 483,389 1,140,811 559,225
Buyback of ZDP shares (7,875,000) - -
Total 13,329,390 20,721,001 20,139,415
14 Director's interests
Five of the Directors have interests in the shares of the Company as at 31
July 2023 (for the period ended 31 July 2022: five; for the year ended 31
January 2023: five). Nicholas Wilson holds 154,721 ordinary shares (for the
period ended 31 July 2022: 144,690 ; for the year ended 31 January 2023:
144,690), Clive Spears holds 61,872 ordinary shares (for the period ended 31
July 2022: 51,841 ; for the year ended 31 January 2023: 51,841), Heather
Bestwick holds 49,462 ordinary shares (for the period ended 31 July 2022:
39,431 ; for the year ended 31 January 2023: 39,431), David Pirouet holds
32,497 shares (for the period ended 31 July 2022: 17,309 ; for the year ended
31 January 2023: 17,309) and Michael Gray holds 10,489 ordinary shares (for
the period ended 31 July 2022: 5,614 ; for the year ended 31 January 2023:
5,614).
15 Related parties
The Company has no ultimate controlling party.
Directors' fees expense during the period amounted to £86,000 (for the period
ended 31 July 2022: £86,000 ; for the year ended 31 January 2023: £172,000)
of which £14,333 is accrued as at 31 July 2023 (for the period ended 31 July
2022: £14,333 ; for the year ended 31 January 2023: £14,333).
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.
Performance fees are paid to the Investment Advisor based on the performance
of the Subsidiaries and deducted in calculating the fair value of Subsidiaries
(see note 4).
In August 2020, the Investment Advisor acquired a controlling interest in EPIC
Investment Partners (Ireland) (previously known as "ACML"). ACML is the
manager of Atlantic Credit Opportunities Fund and the sub-advisor to the
segregated account of Prelude Structured Alternatives Master Fund LP. On 1
September 2020, the Company completed a £1.9 million investment into Atlantic
Credit Opportunities Fund. On 12 November 2020, the Company completed a
further $2.5 million investment in a segregated account of Prelude Structured
Alternatives Master Fund LP. In July 2023, the Company completed the
realisation of its holdings in Atlantic Credit Opportunities Fund. In August
2023, the Company completed the realisation of its holdings in Prelude
Structured Alternatives Master Fund LP. The Company did not pay any management
or performance fees to ACML in relation to these two investments.
In December 2021, ESO Alternative Investments LP invested €10 million into
EPIC Acquisition Corp ("EAC"), a newly incorporated special purpose
acquisition company ("SPAC") and EAC's sponsor, EAC Sponsor Limited (the
"Sponsor"). The Sponsor is jointly led by the Investment Advisor and TT Bond
Partners (an independent party).
In July 2023, the Company agreed the extension of the maturity of £4.0
million unsecured loan notes to 24 July 2024. 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.
Giles Brand, Managing Partner of the Investment Advisor, is a director of
certain portfolio investments of the Subsidiaries, including Luceco plc and
Hamsard 3145 Limited.
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 2023 is £76,739,478 (for the period ended 31 July 2022:
£66,521,002; for the year ended 31 January 2023: £82,070,909).
17 Subsequent events
In August 2023, the Company completed the realisation of its remaining holding
of $0.3m in Prelude Structured Alternatives Master Fund LP.
Alternative Performance Measures
Measures Definition
Premium / Discount to NAV The amount by which the share price of the Company is either higher (premium)
or lower (discount) than the NAV per share, expressed as a percentage of the
NAV per share.
Please find a reconciliation to the NAV per share of the Company below.
31 July 2023 31 January 2023 31 July 2022
Share price (pence) 148 170 173
NAV per share (pence) 308 328 260
Discount to NAV (%) 52% 48% 33%
EBITDA Earnings before interest, taxation, depreciation and amortisation.
This measure is calculated at the level of the underlying portfolio and
therefore is not directly reconcilable to GAAP metrics in the financial
statements.
EV/EBITDA multiple The EV/EBITDA multiple is calculated by dividing a company's Enterprise Value
('EV') by its annual EBITDA. The mature unquoted asset valuation EV/EBITDA
multiple quoted in the report is weighted by the Fair Value of the underlying
investments, and excludes assets at a pre-profitability growth stage.
This measure is calculated at the level of the underlying portfolio and
therefore is not directly reconcilable to GAAP metrics in the financial
statements.
EV/Sales multiple The EV/Sales multiple is calculated by dividing a company's EV by its annual
Sales.
This measure is calculated at the level of the underlying portfolio and
therefore is not directly reconcilable to GAAP metrics in the financial
statements.
IRR The gross Internal Rate of Return ("IRR") of an investment or set of
investments, calculated as the annual compound rate of return on the
investment cashflows. Gross IRR does not reflect expenses to be borne by the
relevant fund or its investors, including performance fees, management fees,
taxes and organisational or transaction expenses.
This measure is calculated at the level of the underlying portfolio and
therefore is not directly reconcilable to GAAP metrics in the financial
statements.
Liquidity Company liquidity is calculated as cash balances held by the Company,
inclusive of cash held by subsidiaries in which the Company is the sole
investor.
Please find a reconciliation to the cash balances held by the Company below.
31 July 2023 31 January 2023 31 July 2022
£ £ £
Cash held by the Company 16,241,165 22,226,008 26,532,104
Cash held by the Subsidiaries 53,616 2,284,081 35,113
Total liquidity 16,294,781 24,510,089 26,567,217
Portfolio Sales CAGR The portfolio sales compound annual growth rate ("CAGR") is calculated on the
basis of the CAGR implied by the sum of the annual sales for the portfolio
companies' latest completed financial year vs. the prior three year period.
This measure is calculated at the level of the underlying portfolio and
therefore is not directly reconcilable to GAAP metrics in the financial
statements.
MM The Money Multiple ("MM") is calculated as the total gross realisations from
an investment or set of investments, divided by the total cost of the
investment. Gross money multiple does not reflect expenses to be borne by the
relevant fund or its investors, including performance fees, management fees,
taxes and organisational or transaction expenses.
This measure is calculated at the level of the underlying portfolio and
therefore is not directly reconcilable to GAAP metrics in the financial
statements.
Net Debt Net Debt is calculated as the total third party debt of a portfolio company,
less cash balances.
This measure is calculated at the level of the underlying portfolio and
therefore is not directly reconcilable to GAAP metrics in the financial
statements.
Portfolio Leverage Portfolio Leverage is calculated as the aggregate Net Debt of the portfolio,
divided by the aggregate annual EBITDA of the portfolio.
This measure is calculated at the level of the underlying portfolio and
therefore is not directly reconcilable to GAAP metrics in the financial
statements.
Annualised share price return The annualised share price return is calculated as the CAGR implied by the
Company's share price vs. the share price 10 years prior.
Please find a reconciliation to the share price of the Company below:
31 July 2023 31 January 2023 31 July 2022
Company's share price 10 years prior to the period / year end (pence) 71.00 56.00 56.50
Company's share price at the period / year end (pence) 147.50 170.00 172.50
Annualised Share Price Return (%) 8% 12% 12%
EBITDA
Earnings before interest, taxation, depreciation and amortisation.
This measure is calculated at the level of the underlying portfolio and
therefore is not directly reconcilable to GAAP metrics in the financial
statements.
EV/EBITDA multiple
The EV/EBITDA multiple is calculated by dividing a company's Enterprise Value
('EV') by its annual EBITDA. The mature unquoted asset valuation EV/EBITDA
multiple quoted in the report is weighted by the Fair Value of the underlying
investments, and excludes assets at a pre-profitability growth stage.
This measure is calculated at the level of the underlying portfolio and
therefore is not directly reconcilable to GAAP metrics in the financial
statements.
EV/Sales multiple
The EV/Sales multiple is calculated by dividing a company's EV by its annual
Sales.
This measure is calculated at the level of the underlying portfolio and
therefore is not directly reconcilable to GAAP metrics in the financial
statements.
IRR
The gross Internal Rate of Return ("IRR") of an investment or set of
investments, calculated as the annual compound rate of return on the
investment cashflows. Gross IRR does not reflect expenses to be borne by the
relevant fund or its investors, including performance fees, management fees,
taxes and organisational or transaction expenses.
This measure is calculated at the level of the underlying portfolio and
therefore is not directly reconcilable to GAAP metrics in the financial
statements.
Liquidity
Company liquidity is calculated as cash balances held by the Company,
inclusive of cash held by subsidiaries in which the Company is the sole
investor.
Please find a reconciliation to the cash balances held by the Company below.
31 July 2023 31 January 2023 31 July 2022
£ £ £
Cash held by the Company 16,241,165 22,226,008 26,532,104
Cash held by the Subsidiaries 53,616 2,284,081 35,113
Total liquidity 16,294,781 24,510,089 26,567,217
Portfolio Sales CAGR
The portfolio sales compound annual growth rate ("CAGR") is calculated on the
basis of the CAGR implied by the sum of the annual sales for the portfolio
companies' latest completed financial year vs. the prior three year period.
This measure is calculated at the level of the underlying portfolio and
therefore is not directly reconcilable to GAAP metrics in the financial
statements.
MM
The Money Multiple ("MM") is calculated as the total gross realisations from
an investment or set of investments, divided by the total cost of the
investment. Gross money multiple does not reflect expenses to be borne by the
relevant fund or its investors, including performance fees, management fees,
taxes and organisational or transaction expenses.
This measure is calculated at the level of the underlying portfolio and
therefore is not directly reconcilable to GAAP metrics in the financial
statements.
Net Debt
Net Debt is calculated as the total third party debt of a portfolio company,
less cash balances.
This measure is calculated at the level of the underlying portfolio and
therefore is not directly reconcilable to GAAP metrics in the financial
statements.
Portfolio Leverage
Portfolio Leverage is calculated as the aggregate Net Debt of the portfolio,
divided by the aggregate annual EBITDA of the portfolio.
This measure is calculated at the level of the underlying portfolio and
therefore is not directly reconcilable to GAAP metrics in the financial
statements.
Annualised share price return
The annualised share price return is calculated as the CAGR implied by the
Company's share price vs. the share price 10 years prior.
Please find a reconciliation to the share price of the Company below:
31 July 2023 31 January 2023 31 July 2022
Company's share price 10 years prior to the period / year end (pence) 71.00 56.00 56.50
Company's share price at the period / year end (pence) 147.50 170.00 172.50
Annualised Share Price Return (%) 8% 12% 12%
Company Information
Directors Administrator and Company Address
C.L. Spears (Chairman) Langham Hall Fund Management (Jersey) Limited
H. Bestwick Gaspe House
D.R. Pirouet 66-72 Esplanade, 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 45 Gresham Street
St Helier, Jersey London EC2V 7BF
Channel Islands JE1 4XA
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 Registrar and CREST Providers
1st Floor Computershare Investor Services (Jersey) Limited
60 Queen Victoria Street Queensway House
London EC4N 4TR Hilgrove Street
St. Helier JE1 1ES
Santander International Investor Relations
PO Box 545 Richard Spiegelberg
19-21 Commercial Street Cardew Company
St Helier, Jersey, JE4 8XG 29 Lincoln's Inn Fields
London WC2A 3EG
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. END IR BLGDCIXBDGXSRecent news on EPE Special Opportunities
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AnnouncementREG - EPE Special Opps Ltd EPE Special Opp-EO.P EPE Special Opp-EL.P - Transaction in Own Shares
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