REG - EPE Special Opps Ltd EPE Special Opp-EO.P EPE Special Opp-EL.P - Half-year Report
10/09/2024 07:00
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RNS Number : 4979D EPE Special Opportunities Limited 10 September 2024
EPE Special Opportunities Limited
("ESO" or the "Company")
Interim Report and Unaudited Condensed Consolidated Financial Statements for
the six months ended 31 July 2024
The Board of EPE Special Opportunities is pleased to announce the Company's
Interim Report and Unaudited Condensed Consolidated Financial Statements for
the six months ended 31 July 2024.
Summary
· Despite continuing macroeconomic challenges, the Company has
maintained a steady performance in the six months to 31 July 2024. This is the
result of the focus of the Board, Investment Advisor and portfolio company
management teams on protecting the financial position of the Company and its
investments by prioritising operating improvements and liquidity. Although
economic indicators provide reasons for cautious optimism, the market for new
investments and disposals remains difficult.
· The Net Asset Value ("NAV") per share* of the Company as at 31 July
2024 was 319 pence, representing a decrease of 2 per cent. on the NAV per
share* of 324 pence as at 31 July 2024.
· The share price of the Company as at 31 July 2024 was 169 pence,
representing an increase of 2 per cent. on the share price of 165 pence as at
31 January 2024.
· Luceco plc ("Luceco") released its trading update for the six months
ended 30 June 2024 in July 2024. The business announced year-on-year growth of
8 per cent. with sales of £109 million and adjusted operating profit of
£12.5 million in the period. Full year guidance was in line with market
expectations. Net debt* was 1.2x LTM EBITDA* as at 30 June 2024, at the lower
end of the target range, despite the recent acquisition of D-Line, which
completed in February 2024.
· Whittard of Chelsea ("Whittard") has continued to maintain a robust
sales and profitability growth trajectory. The UK retail channel benefitted
from strong domestic and international footfall. Whittard continues to invest
in its retail estate, with the opening in July 2024 of its Oxford Circus
store. The business has made good progress in developing its US presence,
securing material orders from select key retailers in the territory, including
Sam's Club.
· The Rayware Group's ("Rayware") trading has been impacted by weak
consumer demand, with the homewares category experiencing a particularly
adverse trading environment. Jamie O'Brien joined Rayware as CEO in May 2024,
bringing over 20 years' experience in leadership roles in the branded consumer
sector. In May 2024, the Company, through its subsidiary ESO Investments 1
Limited, invested £1.5 million to reduce the business' senior debt and
subsequently has a remaining £0.3 million contingent guarantee outstanding to
Rayware's third-party lenders as at 31 July 2024.
· Pharmacy2U ("P2U") continues to build its market share, with the
integration of LloydsDirect progressing well following approval of the
acquisition by the CMA in March 2024. The business acquired The PharmaPet Co
in April 2024 to expand its offerings into animal care.
· David Phillips ("DP") is focused on building profitability through
maintaining its current top-line growth trajectory and operational efficiency.
The business benefits from an improving UK construction sector, a compelling
service offering and a healthy pipeline of won projects. Ben Munn joined David
Phillips as CEO in July 2024 with over 25 years of experience in the sector,
most recently as a Managing Director at JLL.
· Denzel's continues to drive growth within key accounts and enhance
brand visibility through high-profile partnerships, including its co-branded
collaboration with Battersea Dogs & Cats Home which launched in June 2024.
This has supported sustained year-on-year growth in top-line sales across its
channels.
· The Company had cash balances of £18.4 million*(1) as at 31 July
2024. The Board and Investment Advisor continue to closely monitor liquidity
to ensure a suitable level is maintained during the ongoing period of market
disruption. In July 2024, the Company agreed the extension of the maturity of
£4.0 million of unsecured loan notes to July 2025. 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 2024, the Company's unquoted portfolio was valued at a
weighted average EBITDA to enterprise value multiple of 7.2x (excluding assets
investing for growth) and the portfolio has a low level of third-party
leverage with net debt at 1.4x EBITDA in aggregate.
Mr Clive Spears, Chairman, commented: "The Company's performance during the
recent period has been encouraging despite ongoing macroeconomic disruptions.
The Board, Investment Advisor, and portfolio management teams have remained
focused on safeguarding the Company's financial position and the value of its
investments. I would like to express my gratitude to the Investment Advisor
and the portfolio management teams for their hard work and unwavering support
over this period, which leave the Company well positioned for the balance of
the year."
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.
Note *: See Alternative Performance Measures of this Interim Report and
Unaudited Condensed Consolidated Financial Statements.
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
Despite continuing macroeconomic challenges, the Company has maintained a
steady performance in the six months to 31 July 2024. This is the result of
the focus of the Board, Investment Advisor and portfolio company management
teams on protecting the financial position of the Company and its investments
by prioritising operating improvements and liquidity. Although economic
indicators provide reasons for cautious optimism, the market for new
investments and disposals remains difficult.
The Net Asset Value ("NAV") per share* of the Company as at 31 July 2024 was
319 pence, representing a decrease of 2 per cent. on the NAV per share* of 324
pence as at 31 January 2024. The share price of the Company as at 31 July 2024
was 169 pence, representing an increase of 2 per cent. on the share price of
165 pence as at 31 January 2024. The share price of the Company represents a
discount of 47% to the NAV per share* of the Company as at 31 July 2024. The
Company seeks to manage the discount to NAV via capital management, including
ordinary share buyback programs, marketing to wealth managers and smaller
institutions and by 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 trading update for the six
months ended 30 June 2024 announcing sales of £109 million and an operating
profit of £12.5 million, in line with expectations.
· Whittard of Chelsea ("Whittard") has sustained its positive
growth trend, primarily driven by its UK retail channel, including the recent
opening of a new store in Oxford Circus in July 2024.
· The Rayware Group ("Rayware") continued to be impacted by a soft
trading environment, however prudent action has been taken across the cost
base to mitigate. A new CEO was appointed in May 2024.
· Pharmacy2U ("P2U") delivered both organic and inorganic growth,
including the integration of LloydsDirect in March 2024, following CMA
approval, and the acquisition of The PharmaPet Co in April 2024.
· David Phillips is focused on growth initiatives across its
build-to-rent and project-based divisions, and delivering improved
profitability. A new CEO was appointed in July 2024.
· Denzel's continues to deliver year-on-year sales growth and
enhance brand visibility, including its co-branded partnership with Battersea
Dogs & Cats Home which launched in June 2024.
The performance of the investment portfolio is a key driver of the Net Asset
Value performance of the Company.
The Company had cash balances of £18.4 million*1 as at 31 July 2024. The
Board continues to prioritise liquidity amid the current period of market
uncertainty. In July 2024, the Company agreed the extension of the maturity of
£4.0 million of unsecured loan notes to July 2025. The Company has 12.5
million ZDP shares remaining in issue, maturing in December 2026. The Company
has no other third-party debt outstanding.
I would like to express my gratitude to my fellow directors and the Investment
Advisor for their careful guidance during the period. I look forward to
updating shareholders on the Company's progress at the year-end.
Clive Spears
Chairman
9 September 2024
Note 1: Company liquidity is stated inclusive of cash held in subsidiaries in
which the Company is the sole investor.
Note *: See Alternative Performance Measures on page 58 to 60 of this Report
and Accounts.
Investment Advisor's Report
Macroeconomic conditions have remained uncertain in the period, resulting in a
demanding operating environment for the portfolio. There have been limited
attractive opportunities for new investments or disposals. The Investment
Advisor has been focused on supporting the portfolio and its management teams,
helping them enhance operational efficiency and provide the basis for
long-term value creation.
The Net Asset Value ("NAV") per share* of the Company as at 31 July 2024 was
319 pence, representing a decrease of 2 per cent. on the NAV per share* of 324
pence as at 31 January 2024. The share price of the Company as at 31 July 2024
was 169 pence, representing an increase of 2 per cent. on the share price of
165 pence as at 31 January 2024.
The Company maintains good liquidity and prudent levels of third-party
leverage. The Company had cash balances of £18.4 million*(1) as at 31 July
2024, which are available to support the portfolio, meet committed obligations
and deploy into attractive investment opportunities. Net third-party debt* in
the underlying portfolio stands at 1.4x EBITDA* in aggregate. The Company has
decided to extend the maturity of its £4.0 million unsecured loan notes to
July 2025, which will help strengthen liquidity at Company level.
The Company's unquoted private equity portfolio is valued at a weighted
average enterprise value to EBITDA multiple* of 7.2x for mature assets
(excluding assets investing for growth). The valuation has been derived by
reference to quoted comparables, after the application of a liquidity discount
to adjust for the portfolio's scale and unquoted nature. The Investment
Advisor notes that the fair market value of the portfolio is exposed to a
volatile macro environment and equity market valuations.
Luceco plc released its trading update for the six months ended 30 June 2024
in July 2024. The business announced year-on-year growth of 8 per cent. with
sales of £109 million and adjusted operating profit of £12.5 million in the
period. Full year guidance was in line with market expectations. Net debt* was
1.2x LTM EBITDA* as at 30 June 2024, at the lower end of the target range,
despite the recent acquisition of D-Line, which completed in February 2024.
Whittard of Chelsea has continued to maintain a robust sales and profitability
growth trajectory. The UK retail channel benefitted from strong domestic and
international footfall. Whittard continues to invest in its retail estate,
with the opening in July 2024 of an Oxford Circus store. The business has made
good progress in developing its US presence, securing material orders from
select key retailers in the territory, including Sam's Club.
Rayware's trading has been impacted by weak consumer demand, with the
homewares category experiencing a particularly adverse trading environment.
Jamie O'Brien joined Rayware as CEO in May 2024, bringing over 20 years'
experience in leadership roles in the branded consumer sector. In May 2024,
the Company, through its subsidiary ESO Investments 1 Limited, invested £1.5
million to reduce the business' senior debt and subsequently has a remaining
£0.3 million contingent guarantee outstanding to Rayware's third-party
lenders as at 31 July 2024.
Pharmacy2U continues to build its market share, with the integration of
LloydsDirect progressing well following approval of the acquisition by the CMA
in March 2024. The business acquired The PharmaPet Co in April 2024 to expand
its offerings into animal care.
David Phillips is focused on building profitability through maintaining its
current top-line growth trajectory and operational efficiency. The business
benefits from an improving UK construction sector, a compelling service
offering and a healthy pipeline of won projects. Ben Munn joined David
Phillips as CEO in July 2024 with over 25 years of experience in the sector,
most recently as a Managing Director at JLL.
Denzel's continues to drive growth within key accounts and enhance brand
visibility through high-profile partnerships, including its co-branded
collaboration with Battersea Dogs & Cats Home which launched in June 2024.
This has supported sustained year-on-year growth in top-line sales across its
channels.
The Investment Advisor continues to monitor the Company's investment in
European Capital Private Debt Fund, which has completed its investment period
and is distributing capital to the Company.
The Investment Advisor wishes to express its gratitude to the management teams
and employees of the portfolio companies for their concerted efforts during a
difficult period. The Investment Advisor is also grateful to the Board and
shareholders for their continued support of the Company.
EPIC Investment Partners LLP
Investment Advisor to the Company
9 September 2024
Note 1: Company liquidity is stated inclusive of cash held in subsidiaries in
which the Company is the sole investor.
Note *: See Alternative Performance Measures on page 58 to 60 of this Report
and Accounts.
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 Zero
Dividend Preference Shares are admitted to trade on the London Stock Exchange
(non-equity shares and non-voting equity shares, formerly standard listing
(shares)). The Company's Unsecured Loan Notes ("ULN") are quoted on the Growth
Market of the Aquis Stock Exchange.
The principal activity of the Company and its subsidiaries holding vehicles
(together the "Subsidiaries") is to provide long- term return on equity for
its shareholders by investing between £2 million and £30 million in small
and medium sized companies. The Company targets growth capital and buy-out
opportunities, special situations and distressed transactions, deploying
capital where it believes the potential for shareholder value creation to be
compelling. The Company has the flexibility to invest in public as well as
private companies and is also able to invest in Special Purpose Acquisition
Companies ("SPACs") and third-party funds. The Company will consider most
industry sectors including business services, consumer and retail, financial
services and the industrials sector. The portfolio is likely to be
concentrated, numbering between two and ten assets at any one time, which
allows the Company to allocate the necessary resource to form genuinely
engaged and supportive partnerships with management teams. This active
approach facilitates the delivery of truly transformational initiatives in
underlying investments during the Company's period of ownership.
The Subsidiary investment holding vehicles are not consolidated in the group's
financial statements in accordance with IFRS 10. The Company also controls an
employee benefit trust ("EBT") established to operate the jointly owned share
plan and share based payment scheme for the Company's Directors and certain
employees of the Investment Advisor. The interim financial statements
presented in this Interim Report and Accounts are the condensed consolidated
financial statements of the Company and the EBT subsidiary. The Company and
the EBT subsidiary are collectively referred to as the "Group" hereinafter.
Registered office
The Company's registered office is:
Clarendon House, 2 Church Street, Hamilton HM11, Bermuda.
Place of business
The Company's place of business is:
Gaspe House, 66-72 Esplanade, St Helier, Jersey, Channel Islands, JE1 2LH.
Results of the financial period
Results for the period are set out in the Condensed Consolidated Statement of
Comprehensive Income and in the Condensed Consolidated Statement of Changes in
Equity.
Dividends
The Board does not recommend a dividend in relation to the current period (for the period ended 31 July 2023: nil; for the year ended 31 January 2024: nil).
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 an Audit and Risk Committee. 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 four 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.
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 twice a year, at a minimum, 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 Group 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 Investment Advisor in light of the investment objectives of the Company and the expectations of
Company may underperform vs. the market and peer benchmarks. 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 unwilling to meet a commitment that it has entered into with the Company. The Company, through its interests in subsidiaries, has advanced loans to a number of private companies which exposes the Company to credit risk. The loans are advanced to unquoted private companies, which have no credit risk rating. Loan investments are entered into as part of the investment strategy of the Company and its subsidiaries, and credit risk is managed by taking security where available
(typically a floating charge) and the Investment Advisor taking an 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 service providers. Inadequate or failed internal processes could lead to operational performance risk and regulatory risk. The primary responsibility for the development and implementation of controls over operational risk rests with the Board of Directors. This responsibility is supported by
the development of overall standards for the management of 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.
Directors
The Directors of the Company holding office during the financial period and to date are:
Mr. C.L. Spears (Chairman)
Ms. H. Bestwick
Mr. D.R. Pirouet
Mr. M.M Gray
Related Party Transactions
Details in respect of the Group's related party transactions during the period are included in note 15 to the interim financial statements.
Staff and Secretary
At 31 July 2024 the Group employed no staff (for the period ended 31 July 2023: none; for the year ended 31 January 2024: none).
Independent Review
The current year is the third year in which PricewaterhouseCoopers CI LLP are undertaking the interim review for the Group. PricewaterhouseCoopers CI LLP have indicated willingness to continue in office.
On behalf of the Board
Heather Bestwick
Director
9 September 2024
Statement of Directors' Responsibilities
in respect of the Interim Report & Unaudited Condensed Consolidated
Financial Statements
The Directors are responsible for preparing the Interim Report & Unaudited
Condensed Consolidated Financial Statements, in accordance with International
Accounting Standard 34, "Interim Financial Reporting", as issued by the
International Accounting Standards Board ("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 consolidated 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 Group's 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 might have occurred to the interim
financial statements since they were initially presented on the website.
Legislation in Bermuda governing the preparation and dissemination of
financial statements may differ from legislation in other jurisdictions.
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
9 September 2024
Condensed Consolidated Statement of Comprehensive Income
For the six months ended 31 July 2024
1 Feb 2024 to 31 Jul 2024 1 Feb 2023 to 31 Jul 2023 1 Feb 2023 to 31 Jan 2024
Total (unaudited) Total (unaudited) Total (audited)
Note £ £ £
Income
Interest income 374,341 106,478 366,660
Net fair value movement on investments* 256,129 (3,539,864) 3,384,604
Total income / (loss) 630,470 (3,433,386) 3,751,264
Expenses
4 Investment advisor's fees (978,425) (909,805) (1,832,745)
15 Directors' fees (70,000) (86,000) (162,474)
5 Share based payment expense (165,210) (136,481) (339,593)
6 Other expenses (297,405) (302,814) (635,675)
Total expense (1,511,040) (1,435,100) (2,970,487)
(Loss) / profit before finance costs and tax (880,570) (4,868,486) 780,777
Finance charges
13 Interest on unsecured loan note instruments (159,509) (149,540) (309,049)
13 Zero dividend preference shares finance charge (394,570) (483,389) (868,190)
Loss for the period / year before taxation (1,434,649) (5,501,415) (396,462)
Taxation - - -
Loss for the period / year (1,434,649) (5,501,415) (396,462)
Other comprehensive income - -
Total comprehensive loss (1,434,649) (5,501,415) (396,462)
11 Basic loss per ordinary share (pence) (5.08) (19.31) (1.39)
11 Diluted loss per ordinary share (pence) (4.80) (18.47) (1.33)
The Condensed Consolidated Statement of Comprehensive Income should be read in
conjunction with the accompanying notes.
*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 Consolidated Statement of Assets and Liabilities
As at 31 July 2024
31 July 2024 (unaudited) 31 January 2024 (audited) 31 July 2023 (unaudited)
Note £ £ £
Non-current assets
7 Investments at fair value through profit or loss 95,512,154 95,459,612 93,730,728
95,512,154 95,459,612 93,730,728
Current assets
7 Investments at fair value through profit or loss - 5,262,427 -
9 Cash and cash equivalents 18,356,255 14,462,495 16,241,165
Trade and other receivables and prepayments 53,125 73,646 64,814
18,409,380 19,798,568 16,305,979
Current liabilities
Trade and other payables (654,226) (676,284) (629,655)
13 Unsecured loan note instruments (3,987,729) (3,987,729) (3,987,729)
(4,641,955) (4,664,013) (4,617,384)
Net current assets 13,767,425 15,134,555 11,688,595
Non-current liabilities
13 Zero dividend preference shares (14,108,761) (13,714,191) (13,329,390)
(14,108,761) (13,714,191) (13,329,390)
Net assets 95,170,818 96,879,976 92,089,933
Equity
10 Share capital 1,730,828 1,730,828 1,730,828
10 Share premium 13,619,627 13,619,627 13,619,627
16 Capital reserve 100,780,122 100,523,993 93,599,525
16 Revenue reserve and other equity (20,959,759) (18,994,472) (16,860,047)
Total equity 95,170,818 96,879,976 92,089,933
12 Net asset value per share (pence) 318.54 324.26 308.23
The Condensed Consolidated Statement of Assets and Liabilities should be read
in conjunction with the accompanying notes.
The financial statements were approved by the Board of Directors on 9
September 2024 and signed on its behalf by:
Clive
Spears
David Pirouet
Director
Director
Condensed Consolidated Statement of Changes in Equity
For the six months ended 31 July 2024
Six months ended 31 July 2024 (unaudited)
Share capital Share premium Capital reserve Revenue reserve Total
Note £ £ £ £ £
Balance at 1 February 2024 1,730,828 13,619,627 100,523,993 (18,994,472) 96,879,976
Total comprehensive loss for the period - - 256,129 (1,690,778) (1,434,649)
Contributions by and distributions to owners
5 Share-based payment charge - - - 165,210 165,210
Share ownership scheme participation - - - 34,357 34,357
Share acquisition for JOSP scheme - - - (474,076) (474,076)
Total transactions with owners - - - (274,509) (274,509)
Balance at 31 July 2024 1,730,828 13,619,627 100,780,122 (20,959,759) 95,170,818
Year ended 31 January 2024 (audited)
Share capital Share premium Capital reserve Revenue reserve Total
£ £ £ £ £
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 year - - 3,384,604 (3,781,066) (396,462)
Contributions by and distributions to owners
5 Share-based payment charge - - - 339,593 339,593
Share ownership scheme participation - - - 41,401 41,401
Share acquisition for JOSP scheme - - - (525,920) (525,920)
Total transactions with owners - - - (144,926) (144,926)
Balance at 31 January 2024 1,730,828 13,619,627 100,523,993 (18,994,472) 96,879,976
Six months ended 31 July 2023 (unaudited)
Share capital Share premium Capital reserve Revenue reserve Total
£ £ £ £ £
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
The Condensed Consolidated Statement of Changes in Equity should be read in
conjunction with the accompanying notes.
Condensed Consolidated Statement of Cash Flows
For the six months ended 31 July 2024
1 Feb 2024 to 31 July 2024 (unaudited) 1 Feb 2023 to 31 July 2023 (unaudited)
1 Feb 2023 to 31 Jan 2024 (audited)
Note £ £ £
Operating activities
Interest income received 374,341 366,660 106,478
Expenses paid (1,346,844) (2,535,853) (1,241,554)
7 Purchase of investments (1,885,969) (3,350,000) (2,600,000)
7 Proceeds from investments 7,351,983 6,425,542 5,742,385
Net cash generated from operating activities 4,493,511 906,349 2,007,309
Financing activities
Unsecured loan note interest paid (159,509) (309,049) (149,540)
Purchase of shares (474,076) (525,920) -
Buyback of zero dividend preference shares - (7,875,000) (7,875,000)
Share ownership scheme participation 34,357 41,401 33,503
Net cash used in financing activities (599,228) (8,668,568) (7,991,037)
Increase / (decrease) in cash and cash equivalents 3,894,283 (5,983,728)
(7,762,219)
Effect of exchange rate fluctuations on cash and cash equivalents (523) (1,294) (1,115)
Cash and cash equivalents at start of period / year 14,462,495
22,226,008 22,226,008
Cash and cash equivalents at end of period / year 18,356,255 14,462,495 16,241,165
Reconciliation of net debt
Cash and cash equivalents On 31 January 2024 Cash flows Other non-cash charge On 31 July 2024
£ £ £ £
Cash at bank 14,462,495 3,894,283 (523) 18,356,255
Unsecured loan note (3,987,729) 159,509 (159,509) (3,987,729)
instruments
Zero dividend preference shares (13,714,191) - (394,570) (14,108,761)
Net debt (3,239,425) 4,053,792 (554,602) 259,765
The Condensed Consolidated Statement of Cash Flows should be read in
conjunction with the accompanying notes.
Notes to the Condensed Consolidated Interim Financial Statements
For the six months ended 31 July 2024
1 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 in order to bring the Company within 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 (non-equity
shares and non-voting equity shares, formerly standard listing (shares)). The
Company's unsecured loan notes are quoted on the Growth Market of the Aquis
Stock Exchange.
The interim financial statements are as at and for the six months ended 31
July 2024, 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 2024 are available upon request from the Company's business office at
3rd 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"). ESO Investments 1 Limited and ESO Investments 2
Limited operate out of Jersey and ESO Alternative Investments LP operates out
of the United Kingdom.
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, Atlantic Credit Opportunities DAC, and EAC Sponsor Limited
The Company also controls the EPIC Private Equity Employee Benefit Trust
(referred herein as the "EBT subsidiary"), an employee benefit trust, which
financial position and results are consolidated in these financial statements
(refer to Note 5 for details). These financial statements are condensed
consolidated financial statements of the Company and the EBT subsidiary. The
Company and the EBT subsidiary are collectively referred to as the "Group"
hereinafter.
The Group's primary objective is to provide long-term return on equity for its
shareholders by investing between £2 million and £30 million in small and
medium sized companies.
The Group targets growth capital and buy-out opportunities, special situations
and distressed transactions, deploying capital where it believes the potential
for shareholder value creation to be compelling. ESO has the flexibility to
invest in public as well as private companies and is also able to invest in
Special Purpose Acquisition Companies ("SPACs") and third-party funds.
The Company will consider most industry sectors including business services,
consumer and retail, financial services and the industrials sector.
The portfolio is likely to be concentrated, numbering between two and ten
assets at any one time, which allows the Group to allocate the necessary
resource to form genuinely engaged and supportive partnerships with management
teams. This active approach facilitates the delivery of truly transformational
initiatives in underlying investments during the Group's period of ownership.
The Group has no employees.
The following significant changes occurred during the six months ended 31 July
2024:
· In February 2024, the realisation of the investment in EPIC
Acquisition Corp was completed, returning €6.2 million. The realisation from
EAC Sponsor Limited remains subject to the completion of the liquidation.
· In May 2024, the Company, through its subsidiary ESO Investments
1 Limited, invested £1.5 million to reduce Rayware's senior debt and
subsequently has a remaining £0.3 million contingent guarantee outstanding to
Rayware's third-party lenders as at 31 July 2024.
· In June 2024, the Company, through its subsidiary ESO Investments
1 Limited, invested £0.4 million in Whittard.
· In July 2024, the Company agreed the extension of the maturity of
£4.0 million unsecured loan notes to 24 July 2025.
· The movement in the value of investments and fair value movement
are deemed as significant changes during the period (see note 8).
The financial information is derived from the Group's condensed consolidated
interim financial statements for the six-month ended 31 July 2024. The
financial information set out above does not constitute the Group's statutory
accounts for the year ended 31 January 2024 and six-months ended 31 July 2023
and 31 July 2024 but is derived from those accounts. The Auditors have
reported on the accounts and their report was unqualified and did not draw
attention to any matters by way of emphasis. The full text of the review
report can be found in the Company's Interim Report and Condensed Consolidated
Financial Statements on pages 35 to 36.
The 2024 Interim Report and Unaudited Condensed Consolidated Financial
Statements was published on the Company's website at
https://www.epespecialopportunities.com/. They were submitted to the National
Storage Mechanism where they are available for inspection at
https://data.fca.org.uk/#/nsm/nationalstoragemechanism
(https://data.fca.org.uk/#/nsm/nationalstoragemechanism) .
2 Basis of preparation
a. Statement of compliance
These interim financial statements for the six months ended 31 July 2024 have
been prepared in accordance with IAS 34 Interim Financial Reporting and should
be read in conjunction with the Group's last annual financial statements as at
and for the year ended 31 January 2024. They do not include all of the
information required for a complete set of financial statements prepared in
accordance with IFRS Accounting Standards. However, selected explanatory notes
are included to explain events and transactions that are significant to an
understanding of the changes in the Group's financial position and performance
since the last annual financial statements.
· Standards and amendments to existing standards effective 1
January 2024
There are no standards, amendments to standards or interpretations that are
effective for annual periods beginning on 1 January 2024 that have a material
effect on the Interim financial statements of the Group.
· New standards, amendments and interpretations effective after 1
January 2024 and have not been early adopted
A number of new standards, amendments to standards and interpretations are
effective for annual periods beginning after 1 January 2024, and have not been
early adopted in preparing these financial statements. None of these are
expected to have a material effect on the Interim financial statements of the
Group.
The accounting policies and methods of computation applied by the Group 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 2024.
The annual financial statements of the Group are prepared in accordance with
IFRS Accounting Standards as issued by the International Accounting Standards
Board ("IFRS Accounting Standards") and applicable legal and regulatory
requirements of Bermuda Companies Act 1981.
These interim financial statements were authorised for issue by the Group's
Board of Directors on 9 September 2024.
b. Going concern
The Group's management has assessed the Group's ability to continue as a going
concern and is satisfied that the Group 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 Group'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 segment 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. Use of estimates and judgements
The preparation of financial statements in conformity with IFRS Accounting
Standard requires the Directors and the Investment Advisor to make judgements,
estimates and assumptions that affect the application of policies and the
reported amounts of assets and liabilities, income and expense. The estimates
and associated assumptions are based on historical experience and various
other factors that are believed to be reasonable under the circumstances, the
results of which form the basis of making the judgements about carrying values
of assets and liabilities that are not readily apparent from other sources.
The Directors have, to the best of their ability, provided as true and fair a
view as is possible. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis.
Revisions to accounting estimates are recognised in the period in which the
estimate is revised if the revision affects only that period or in the period
of the revision and future periods if the revision affects both current and
future periods.
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).
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 Consolidated 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 2024.
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 Group's NAV where the Group'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 Group's NAV
comprising Level 2 and Level 3 portfolio assets, 1 per cent. of the Group'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 Group's net cash (if greater
than nil), and 2 per cent. of the Group's net cash (if less than nil) (i.e.
reducing fees for net debt positions).
The charge for the current period was £978,425 (for the period ended 31 July
2023: £909,805; year ended 31 January 2024: £1,832,745). The amount
outstanding as at 31 July 2024 was £478,425 (for the period ended 31 July
2023: £462,939; year ended 31 January 2024: £484,400).
Administration fees
EPIC Administration Limited provides accounting and financial administration
services to the Group. 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 Group's NAV where the Group'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 Group's NAV above £100 million.
The charge for the current period was £74,884 (for the period ended 31 July
2023: £70,000; for the year ended 31 January 2024: £141,330).
Other administration fees during the period were £36,350 (for the period
ended 31 July 2023: £39,775; for the year ended 31 January 2024: £82,406).
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 2024, £4,099,879 has been accrued in the
profit share account of the Investment Advisor in the records of ESO
Investments 1 Limited (31 July 2023: £1,679,522 accrued; 31 January 2024:
£4,983,792 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 2024, £11,273,382 has been accrued in the
profit share account of the Investment Advisor in the records of ESO
Investments 2 Limited (31 July 2023: £8,237,011 accrued; 31 January 2024:
£9,104,320 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).
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. The
Trust is consolidated in these financial statements. 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 1,682,609 (for the period ended 31 July 2023 1,245,009; for the
year ended 31 January 2024: 1,546,693) matching shares at the period end,
which have historically not voted.
150,865 shares vested to Participants in the period ended 31 July 2024 (for
the period ended 31 July 2023: 257,061; for the year ended 31 January 2024:
257,061). 186,594 shares were awarded to Participants in the period ended 31
July 2024 (for the period ended 31 July 2023: 243,947; for the year ended 31
January 2024: 305,082). The weighted average fair value of the shares awarded
during the period is 146.33 pence per share.
The fair value of awards granted under the JOSP is recognised as an employee
benefits expense, with a corresponding increase in equity. This has been
calculated on the basis of the fair value of the equity instruments, which is
the share price of the equity instrument on the AIM market of the London Stock
Exchange 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 from the Participants. As the
Company does not pay dividends, no expected dividends were incorporated into
the measurement value. No other features other than the share price of the
equity instrument is incorporated into the measurement of the fair value of
the awards.
The impact of revision to original estimates, if any, is recognised in profit
or loss, with a corresponding adjustment to equity.
The total share-based payment expense in the period ended 31 July 2024 was
£165,210 (for the period ended 31 July 2023: £136,481; for the year ended 31
January 2024: £339,593). Of the total share-based payment expense during the
period ended 31 July 2024, £13,183 related to the Directors (for the period
ended 31 July 2023: £12,431; for the year ended 31 January 2024: £31,352)
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 Consolidated
Statement of Comprehensive Income is as follows:
1 February 1 February 1 February
2024 to 2023 to 2023 to
31 July 31 July 31 January
2024 2023 2024
(unaudited) (unaudited) (audited)
Total Total Total
£ £ £
Administration fees (111,234) (109,775) (223,806)
Directors' and officers' insurance (13,997) (13,997) (27,993)
Professional fees (50,811) (57,079) (145,363)
Board meeting and travel expenses (1,633) (768) (1,639)
Auditors' remuneration (32,097) (39,525) (81,200)
Interim review remuneration(*) (17,000) (17,000) (26,350)
Bank charges (755) (694) (1,404)
Foreign exchange movement (551) (1,110) (1,137)
Nominated advisor and broker fees (28,566) (27,500) (55,001)
Listing fees (30,990) (24,963) (53,472)
Sundry expenses (9,771) (10,403) (18,310)
Other expenses (297,405) (302,814) (635,675)
7 Investments at fair value through profit or loss
31 July 31 January 31 July
2024 2024 2023
(unaudited)
(audited)
(unaudited)
Non-current assets £ £ £
Investments at fair value through profit and loss* 95,512,154 95,459,612 93,730,728
Current assets
Investments at fair value through profit and loss* - 5,262,427 -
95,512,154 100,722,039 93,730,728
Investments roll forward schedule
31 July 2024 (unaudited) 31 January 2024 (audited) 31 July 2023
(unaudited)
Investments at fair value as at 1 February 100,722,039 100,412,977 100,412,977
Purchase of investments 1,885,969 3,350,000 2,600,000
Proceeds from investments (7,351,983) (6,425,542) (5,742,385)
Net fair value movements 256,129 3,384,604 (3,539,864)
Investments at fair value 95,512,154 100,722,039 93,730,728
*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 Audit and Risk 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 Audit and Risk 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 Consolidated 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 closing price on the
relevant exchange at the measurement date.
Quoted investments traded in markets that are considered less than active are
classified as Level 2 in the IFRS 13 fair value hierarchy. The Company does
not hold any investment that are considered as Level 2 assets.
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, Atlantic
Credit Opportunities DAC, 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 liquidation 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. The financial metric to which the multiple is applied will
depend on the stage of the company and the sector in which it operates.
Typically, mature companies will be valued on the basis of the basis of an
EBITDA multiple, while growth companies will be valued on the basis of a sales
multiple;
· For assets managed and valued by third-party managers, the
valuation methodology of the third-party manager is reviewed. If deemed
appropriate and consistent with reporting standards, the valuation prepared by
the third-party manager will be used.
The Investment Advisor believe that it is appropriate to apply an illiquidity
discount to the multiples of comparable companies when using them to calculate
valuations for small, private companies. This discount adjusts for the
difference in size between generally larger comparable companies and the
smaller assets being valued. The illiquidity discount also considers 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.
Fair value hierarchy - Financial instruments measured at fair value
The Company's investments in the Subsidiaries at 31 July 2024 are classified
as Level 3 (in line with 31 January 2024), 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 2024 £ £ £
Financial assets at fair value through profit or loss
Unquoted private equity investments (including debt) - 54,416,660 54,416,660
Fund investments - 248,003 248,003
Quoted investments 55,907,017 - 55,907,017
Investments at fair value through profit or loss 55,907,017 54,664,663 110,571,680
Other asset and liabilities (held at cost) - - 313,735
Performance fee adjustment (10,363,593) (5,009,668) (15,373,261)
Total 45,543,424 49,654,995 95,512,154
Level 1 Level 3 Total
31 January 2024 £ £ £
Financial assets at fair value through profit or loss
Unquoted private equity investments (including debt) - 59,103,536 59,103,536
Unquoted fund investments - 451,348 451,348
Quoted investments 48,865,293 5,262,427 54,127,720
Investments at fair value through profit or loss 48,865,293 64,817,311 113,682,604
Other asset and liabilities (held at cost) - - 1,127,547
Performance fee adjustment (8,732,750) (5,355,362) (14,088,112)
Total 40,132,543 59,461,949 100,722,039
Level 1 Total
Level 3
31 July 2023 £ £ £
Financial assets at fair value through profit or loss
Unquoted private equity investments (including debt) - 52,105,782 52,105,782
Unquoted 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 56,125,083 93,730,728
Level 1 Total
Level 3
31 July 2023 £ £ £
Financial assets at fair value through profit or loss
Unquoted private equity investments (including debt) - 52,105,782 52,105,782
Unquoted 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 56,125,083 93,730,728
The comparative Performance fee adjustment for the period ended 31 July 2023
has been updated for consistency of presentation with the subsequent periods.
The Performance fee adjustment has been broken out from the Financial assets
at fair value through profit or loss.
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 2024 (unaudited) 31 January 2024
(audited) 31 July 2023 (unaudited)
Unquoted investments (including debt) £ £
Balance as at 1 February 59,461,949 50,568,639 50,568,639
Additional investments 1,885,969 3,350,000 2,600,000
Capital distributions from investments (5,477,287) (2,694,081) (2,406,232)
Transfer to Level 3 investments - 5,495,557 5,495,557
Change in fair value through profit and loss (6,215,636) 2,741,834 (132,881)
49,654,995 59,461,949 56,125,083
Significant unobservable inputs used in measuring fair value
The table below sets out information about significant unobservable inputs
used at 31 July 2024 in measuring financial instruments categorised as Level 3
in the fair value hierarchy.
Description Fair value at 31 July 2024 Significant unobservable inputs
£
Unquoted private equity investments (including debt) 49,406,992 Sales/EBITDA multiple
Fund investments 248,003 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.
· Liquidation 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 7.2x (weighted by each asset's total
valuation) (31 January 2024: 7.2x). 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 £6,623,877 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 £6,883,845 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 1.2x (weighted by each asset's total
valuation) (31 January 2024: 1.5x). 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 £1,282,735 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 £1,282,735 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 2024
Financial assets At fair At amortised Total
value cost £
£ £
Investments at fair value through profit or loss 95,512,154 - 95,512,154
Cash and cash equivalents - 18,356,255 18,356,255
95,512,154 18,356,255 113,686,409
Financial liabilities
Trade and other payables - 654,226 654,226
Unsecured loan note instruments* - 3,987,729 3,987,729
Zero dividend preference shares** - 14,108,761 14,108,761
- 18,750,716 18,750,716
31 January 2024
Financial assets At fair At amortised Total
value cost £
£ £
Investments at fair value through profit or loss 100,722,039 - 100,722,039
Cash and cash equivalents - 14,462,495 14,462,495
100,722,039 14,462,495 115,184,534
Financial liabilities
Trade and other payables - 676,284 676,284
Unsecured loan note instruments* - 3,987,729 3,987,729
Zero dividend preference shares** - 13,714,191 13,714,191
- 18,378,204 18,378,204
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
93,730,728 16,241,165 109,971,893
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
*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 £13,250,000 (for the period ended 31 July 2023: £12,937,500; for
the year ended 31 January 2024: £12,812,500) calculated on the basis of the
quoted price of the instrument on the London Stock Exchange of 106.00 pence as
at 31 July 2024 (for the period ended 31 July 2023: 103.50 pence; for the year
ended 31 January 2024: 102.50 pence).
9 Cash and cash equivalents
31 July 2024 31 January 2024 31 July 2023
£ £ £
Current and call accounts 18,356,255 14,462,495 16,241,165
18,356,255 14,462,495 16,241,165
The current and call accounts have been classified as cash and cash
equivalents in the Condensed Consolidated Statement of Cash Flows.
10 Share capital
31 July 2024 31 January 2024 31 July 2023
(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) - (4,739,707) - (4,739,707) -
29,876,847 1,730,828 29,876,847 1,730,828 29,876,847 1,730,828
Share Premium 13,619,627 13,619,627 13,619,627
No shares were issued during the period ended 31 July 2024.
During the period ended 31 July 2024, the Company transferred nil shares out
of treasury to the Trust (2024: transfer of 211,868 shares into treasury) with
a total value of £nil (2024: £350,006).
During the period ended 31 July 2024, the Trust purchased 286,781 shares
(2024: 301,684 shares) with a total value of £474,076 (2024: £525,920).
150,865 shares vested to Participants in the period ended 31 July 2024 (2024:
257,061). At 31 July 2024 1,682,609 shares were held by the Trust
(2024:1,546,693) (see note 5).
11 Basic and diluted loss per share (pence)
Basic loss per share for the period ended 31 July 2024 is 5.08 pence (for the
period ended 31 July 2023: basic loss per share of 19.31 pence; for the year
ended 31 January 2024: basic loss per share of 1.39 pence). This is calculated
by dividing the loss of the Group for the period attributable to the ordinary
shareholders of £1,434,649 (for the period ended 31 July 2023: loss of
£5,501,415; for the year ended 31 January 2024: loss of £396,462) divided by
the weighted average number of shares outstanding, excluding the shares of the
EBT subsidiary, during the period of 28,224,557 (for the period ended 31 July
2023: 28,491,236 shares; for the year ended 31 January 2024: 28,469,486
shares).
Diluted loss per share for the period ended 31 July 2024 is 4.80 pence (for
the period ended 31 July 2023: diluted loss per share of 18.47 pence; for the
year ended 31 January 2024: diluted loss per share of 1.33 pence). This is
calculated by dividing the loss of the Group for the period attributable to
ordinary shareholders of £1,434,649 (for the period ended 31 July 2023: loss
of £5,501,415; for the year ended 31 January 2024: loss of £396,462) divided
by the weighted average number of shares outstanding, including the shares of
the EBT subsidiary, during the period of 29,876,847 (for the period ended 31
July 2023: 29,787,886 shares ; for the year ended 31 January 2024: 29,832,732
shares).
The comparative basic loss per share and diluted loss per share for the period
ended 31 July 2023 has been updated for consistency of presentation with the
subsequent periods.
12 NAV per share (pence)
The Group's NAV per share of 318.54 pence (for the period ended 31 July 2023:
308.23 pence ; for the year ended 31 January 2024: 324.26 pence) is based on
the net assets of the Group at the period end of £95,170,818 (for the period
ended 31 July 2023: £92,089,933; for the year ended 31 January 2024:
£96,879,976) 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 2024:
29,876,847; for the year ended 31 January 2024: 29,876,847).
The shares of the EBT subsidiary are included in the outstanding shares when
calculating the Company's NAV per share to ensure that the NAV per share is
stable in the event of share purchases made by the EBT subsidiary or the
vesting of shares of the EBT subsidiary.
13 Liabilities
Unsecured Loan Notes ("ULN")
The Company has issued ULN's that are redeemable on 24 July 2025, following
the extension of their maturity in July 2024. The Company's ULN's are quoted
on the Growth Market of 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 periods subsequent to 23 July
2023. At 31 July 2024, £3,987,729 (for the period ended 31 July 2023:
£3,987,729; for the year ended 31 January 2024: £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 have been amortised
over the period to 24 July 2022. The carrying value of the ULNs in issue at
the period end was £3,987,729 (for the period ended 31 July 2023:
£3,987,729; for the year ended 31 January 2024: £3,987,729). The total
interest expense on the ULNs for the period is £159,509 (for the period ended
31 July 2023: £149,540; for the year ended 31 January 2024: £309,049). 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. The ULN has in place Financial
Covenants including an Interest Coverage Test (that the ratio of cash and cash
equivalents to interest payable is greater than or equal to 6:1) and a Gross
Asset Test (that the ratio of gross asset value to financial indebtedness of
the Company is greater than or equal to 2:1). The Covenants have been met for
the year ended 31 January 2024 and periods ended 31 July 2024 and 31 July
2023.
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 (non-equity shares and
non-voting equity shares, formerly standard listing (shares)). 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 2024 was £35,538 (for the period ended
31 July 2023: £57,205; for the year ended 31 January 2024: £115,359). The
carrying value of the ZDP Shares in issue at the period-end was £14,108,761
(for the period ended 31 July 2023: £13,329,390; for the year ended 31
January 2024: £13,714,191). The total finance charge for the ZDP Shares for
the period is £394,570 (for the period ended 31 July 2023: £483,389; for the
year ended 31 January 2024: £868,190). This includes the ZDP Share final
capital entitlement accrual and the amortisation of the Issue costs.
31 July 2024 31 January 2024 31 July 2023
£ £ £
Balance as at 1 February 13,714,191 20,721,001 20,721,001
ZDP shares non cash charge 394,570 945,348 483,389
Buyback of ZDP shares - (7,952,158) (7,875,000)
Total 14,108,761 13,714,191 13,329,390
14 Director's interests
Four of the Directors have interests in the shares of the Company as at 31
July 2024 (for the period ended 31 July 2023: five; for the year ended 31
January 2024: four). Clive Spears holds 70,520 ordinary shares (for the period
ended 31 July 2023: 61,872 ; for the year ended 31 January 2024: 63,010),
Heather Bestwick holds 58,110 ordinary shares (for the period ended 31 July
2023: 49,462 ; for the year ended 31 January 2024: 50,600), David Pirouet
holds 41,145 shares (for the period ended 31 July 2023: 32,497 ; for the year
ended 31 January 2024: 33,635) and Michael Gray holds 16,242 ordinary shares
(for the period ended 31 July 2023: 10,489 ; for the year ended 31 January
2024: 11,627).
15 Related parties
The Company has no ultimate controlling party.
Directors' fees expense during the period amounted to £70,000 (for the period
ended 31 July 2023: £86,000; for the year ended 31 January 2024: £162,474)
of which £11,667 is accrued as at 31 July 2024 (for the period ended 31 July
2023: £14,333; for the year ended 31 January 2024: £11,667).
There were no shares re-acquired from related parties during the period ended
31 July 2024 (2024: nil). 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 December 2021, ESO Alternative Investments LP invested €10 million into
EPIC Acquisition Corp ("EAC"), a special purpose acquisition company ("SPAC")
and EAC's sponsor, EAC Sponsor Limited (the "Sponsor"). The Sponsor was
jointly led by the Investment Advisor and TT Bond Partners (an independent
party). In February 2024, the realisation of the investment in EPIC
Acquisition Corp was completed, returning €6.2 million. The realisation from
EAC Sponsor Limited remains subject to the completion of the liquidation.
In July 2024, the Company agreed the extension of the maturity of £4.0
million unsecured loan notes to 24 July 2025. 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 holding vehicles, including Luceco plc and Hamsard 3145
Limited (trading as Whittard of Chelsea).
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 and other equity. The total
reserves of the Company for the period ended 31 July 2024 is £79,820,363 (for
the period ended 31 July 2023: £76,739,478; for the year ended 31 January
2024: £81,529,521).
17 Subsequent events
There were no subsequent events after the end of reporting period
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 31 January 31 July
2024 2024 2023
Share price (pence) 169 165 148
NAV per share (pence) 319 324 308
Discount to NAV (%) 47% 49% 52%
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.
31 July 31 January 31 July
2024 2024 2023
Mature unquoted asset valuation 7.2x 7.2x 7.0x
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.
31 July 31 January 31 July
2024 2024 2023
Portfolio IRR 22% 22% 22%
EPIC IRR 15% 15% 15%
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 31 January 31 July
2024 2024 2023
£ £ £
Cash held by the Company 18,356,255 14,462,495 16,241,165
Cash held by the Subsidiaries 43,666 868,510 53,616
Total liquidity 18,399,921 15,331,005 16,294,781
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.
31 July 31 January 31 July
2024 2024 2023
Portfolio Sales CAGR 8% 8% 11%
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.
31 July 31 January 31 July
2024 2024 2023
Portfolio MM 3.5x 3.1x 3.0x
EPIC MM 2.3x 2.3x 2.2x
NAV per share The Group's NAV per share is calculated as the net assets of the Group at the
year-end divided by the outstanding shares.
The shares of the EBT subsidiary are included in the outstanding shares when
calculating the Company's NAV per share to ensure that the NAV per share is
stable in the event of share purchases made by the EBT subsidiary or the
vesting of shares of the EBT subsidiary.
31 July 31 January 31 July
2024 2024 2023
Net asset value 95,170,818 96,879,976 92,089,933
Outstanding shares 29,876,847 29,876,847 29,876,847
NAV per share (pence) 318.54 324.26 308.23
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.
31 July 31 January 31 July
2024 2024 2023
Portfolio Leverage 1.4x 1.4x 1.2x
Annualised Net Asset Value Per Share Return The annualised net asset value per share return is calculated as the CAGR
implied by the Company's net asset value per share vs. the net asset value per
share 10 years prior.
Please find a reconciliation to the net asset value per share of the Company
below:
31 July 31 January 31 July
2024 2024 2023
Company's net asset value per share 10 years prior to the period / year end 135 135 109
(pence)
Company's net asset value per share at the period / year end (pence) 319 324 308
Annualised Net Asset Value Per Share Return (%) 9% 9% 11%
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.
31 July 31 January 31 July
2024 2024 2023
Mature unquoted asset valuation 7.2x 7.2x 7.0x
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.
31 July 31 January 31 July
2024 2024 2023
Portfolio IRR 22% 22% 22%
EPIC IRR 15% 15% 15%
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 31 January 31 July
2024 2024 2023
£ £ £
Cash held by the Company 18,356,255 14,462,495 16,241,165
Cash held by the Subsidiaries 43,666 868,510 53,616
Total liquidity 18,399,921 15,331,005 16,294,781
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.
31 July 31 January 31 July
2024 2024 2023
Portfolio Sales CAGR 8% 8% 11%
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.
31 July 31 January 31 July
2024 2024 2023
Portfolio MM 3.5x 3.1x 3.0x
EPIC MM 2.3x 2.3x 2.2x
NAV per share
The Group's NAV per share is calculated as the net assets of the Group at the
year-end divided by the outstanding shares.
The shares of the EBT subsidiary are included in the outstanding shares when
calculating the Company's NAV per share to ensure that the NAV per share is
stable in the event of share purchases made by the EBT subsidiary or the
vesting of shares of the EBT subsidiary.
31 July 31 January 31 July
2024 2024 2023
Net asset value 95,170,818 96,879,976 92,089,933
Outstanding shares 29,876,847 29,876,847 29,876,847
NAV per share (pence) 318.54 324.26 308.23
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.
31 July 31 January 31 July
2024 2024 2023
Portfolio Leverage 1.4x 1.4x 1.2x
Annualised Net Asset Value Per Share Return
The annualised net asset value per share return is calculated as the CAGR
implied by the Company's net asset value per share vs. the net asset value per
share 10 years prior.
Please find a reconciliation to the net asset value per share of the Company
below:
31 July 31 January 31 July
2024 2024 2023
Company's net asset value per share 10 years prior to the period / year end 135 135 109
(pence)
Company's net asset value per share at the period / year end (pence) 319 324 308
Annualised Net Asset Value Per Share Return (%) 9% 9% 11%
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
M.M. Gray Jersey JE1 2LH
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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