TIDMESO TIDMEO.P TIDMEL.P
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
GBP101 million and adjusted operating profit of GBP11 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 GBP2.6 million to reduce the
business' indebtedness and has undertaken to provide GBP2.5m 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 GBP16.3 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 GBP4.0 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 GBP101 million and adjusted
operating profit of GBP11 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 GBP2.6 million in Rayware, reducing
the business' senior debt and committed to provide up to GBP2.5m 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 GBP16.3 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 GBP4.0 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 GBP16.1
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 GBP4.0 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 GBP16.3
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 GBP101 million in the period. The
business reported adjusted operating profit of GBP11 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 GBP2.6 million, reducing the
business' senior debt and committed to provide up to GBP2.5m 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 The Board independently
investment portfolio underperforms reviews any investment
the market, the Company recommendation made by
may underperform vs. the the Investment Advisor
market and peer benchmarks. 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 The Company's investment The Directors and Investment
Risk policy is to hold a concentrated Advisor keep the portfolio
portfolio of 2-10 assets. under review and focus
In a concentrated portfolio, closely on those holdings
if the valuation of any which represent the largest
asset decreases it may proportion of total value.
have a material impact
on the Company's NAV.
------------------------------------ ---------------------------------
Liquidity Management Liquidity risk is the The Board and Investment
risk that the Company Advisor closely monitors
will encounter difficulty cash flow forecasts in
in meeting the obligations conjunction with liability
associated with its financial maturity. Liquidity forecasts
liabilities that are settled are carefully considered
by delivering cash or before capital deployment
another financial asset. decisions are made.
------------------------------------ ---------------------------------
Credit Risk Credit risk is the risk Loan investments are entered
that an issuer or counterparty into as part of the investment
will be unable or unwilling strategy of the Company
to meet a commitment that and its Subsidiaries,
it has entered into with and credit risk is managed
the Company. The Company, by taking security where
through its interests available (typically a
in Subsidiaries, has advanced floating charge) and the
loans to a number of private Investment Advisor taking
companies which exposes an
the Company to credit active role in the management
risk. The loans are advanced of the borrowing companies.
to unquoted private companies, In addition to the repayment
which have no credit risk of loans advanced, the
rating. 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 The primary responsibility
investment advisory and for the development and
administrative functions implementation of controls
to over operational risk
service providers. Inadequate rests with the Board of
or failed internal processes Directors. This responsibility
could lead to operational is supported by the development
performance risk and regulatory of overall standards for
risk. 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.
------------------------------------ ---------------------------------
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 2022
1 Feb 2023 1 Feb 2022 to 31 Jan
to 31 Jul 2023 to 31 Jul 2022 2023
Total (unaudited) Total (unaudited) Total (audited)
Note GBP GBP GBP
------------------------- ---------------------------- ----------------------- -----------------------
Income
Interest income 106,478 16,106 79,899
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
Investment advisor's
4 fees (909,805) (911,590) (1,755,442)
15 Directors' fees (86,000) (86,000) (172,000)
Share based payment
5 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
Interest on unsecured
13 loan note instruments (149,540) (159,842) (309,382)
Zero dividend
preference
13 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)
------------------------- ---------------------------- ----------------------- -----------------------
Basic loss per ordinary
11 share (pence) (18.47) (197.13) (141.77)
------------------------- ---------------------------- ----------------------- -----------------------
Diluted loss per
11 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 31 July 2022
(unaudited) 31 January 2023 (audited) (unaudited)
Note GBP GBP GBP
---------------------- ------------------------ ------------------------------ -----------------------
Non-current assets
Investments at fair
value through profit
7 or loss 93,730,728 100,412,977 79,938,043
93,730,728 100,412,977 79,938,043
---------------------- ------------------------ ------------------------------ -----------------------
Current assets
Cash and cash
9 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)
Unsecured loan note
13 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
Zero dividend
13 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
Revenue reserve and
16 other equity (16,860,047) ( 15,068,480) (10,241,939)
------------------------------
Total equity 92,089,933 97,421,364 81,871,457
Net asset value per
12 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 Share Capital Revenue Total
capital premium reserve reserve
Note GBP GBP GBP GBP GBP
----------------- ----------- -------------- -------------------- ------------------- ------------------
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
Share-based
payment
5 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 Share Capital Revenue Total
capital premium reserve reserve
GBP GBP GBP GBP GBP
----------------- ----------- -------------- -------------------- ------------------- ------------------
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
Share-based
payment
5 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 Share Capital Revenue Total
capital premium reserve reserve
GBP GBP GBP GBP GBP
----------------- ----------- -------------- -------------------- ------------------- ------------------
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
Share-based
payment
5 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 1 Feb 2022 1 Feb 2022
to 31 July to 31 Jan 2023 to 31 Jul
2023 (unaudited) (audited) 2022 (unaudited)
Note GBP GBP GBP
----------------------------- ---------------------------- --------------------- ------------------
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 (7,875,000) - -
preference shares
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 Cash flows Other non-cash On 31 July
2023 charge 2023
GBP GBP GBP GBP
--------------------------- -------------- ------------ --------------- -------------
Cash at bank 22,226,008 (5,983,728) (1,115) 16,241,165
Unsecured loan note
instruments (3,987,729) 149,540 (149,540) (3,987,729)
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 .
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 GBP100 million; otherwise the
investment advisory fee shall be calculated as the greater of
GBP2.0 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 GBP909,805 (for the period
ended 31 July 2022: GBP911,590 ; year ended 31 January 2023:
GBP1,755,442). The amount outstanding as at 31 July 2023 was
GBP462,939 (for the period ended 31 July 2022: GBP411,590; year
ended 31 January 2023: GBP487,107).
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 GBP100 million (subject to
a minimum fee of GBP35,000); otherwise the advisory fee shall be
calculated as 0.15 per cent. of GBP100 million plus a fee of 0.1
per cent. of the excess of the Company's NAV above GBP100
million.
The charge for the current period was GBP70,000 (for the period
ended 31 July 2022: GBP75,510; for the year ended 31 January 2023:
GBP147,043).
Other administration fees during the period were GBP39,775 (for
the period ended 31 July 2022: GBP37,170; for the year ended 31
January 2023: GBP76,302).
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, GBP1,679,522 has been accrued in the profit share
account of the Investment Advisor in the records of ESO Investments
1 Limited (31 July 2022: GBPnil accrued; 31 January 2023: GBPnil
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, GBP8,237,011 has been accrued in the profit share
account of the Investment Advisor in the records of ESO Investments
2 Limited (31 July 2022: GBP6,687,647 accrued; 31 January 2023:
GBP9,112,002 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 GBP136,481 (for the period ended 31 July 2022:
GBP354,193 ; for the year ended 31 January 2023: GBP555,225). Of
the total share-based payment expense during the period ended 31
July 2023, GBP12,431 related to the Directors (for the period ended
31 July 2022: GBP23,103; for the year ended 31 January 2023:
GBP36,217) 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 1 Feb 2022 1 Feb 2022
to 31 Jul 2023 to 31 Jul 2022 to 31 Jan 2023
(unaudited) (unaudited) (audited)
Total Total Total
GBP GBP GBP
------------------------------ ---------------- ------------------- ------------------------
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 31 January 31 July
2023 2023 2022
(unaudited) (audited) (unaudited)
GBP GBP GBP
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 31 January 31 July
(unaudited) 2023 (audited) 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 nancial 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 re ects the signi
cance 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 signi cant 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
signi cant effect on the instrument's valuation. This category
includes instruments that are valued based on quoted prices for
similar instruments but for which signi cant unobservable
adjustments or assumptions are required to re ect 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 nancial 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 GBP38,423 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 GBP38,423 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 GBP GBP GBP
------------------------------------- -------------- ---------------------------------- ------------------
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 56,125,083 93,730,728
-------------------------------------- -------------- ---------------------------------- ------------------
Level 1 Level Level Total
2 3
31 January 2023 GBP GBP GBP GBP
------------------------------------- -------------- ---------- ---------------------- ------------------
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 Level 3 Total
2
31 July 2022 GBP GBP GBP GBP
------------------------------------- ------------- ---------- ----------- ------------------
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 8 6,329,594
-------------------------------------- ------------- ---------- ----------- ------------------
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 31 January
(unaudited) 2023
(audited) 31 July 2022
(unaudited)
Unquoted investments (including GBP GBP
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 Significant unobservable
31 July 2023 inputs
------------------------------------ -------------------------
GBP
------------------------------------ ---------------- -------------------------
Unquoted private equity investments 52,105,782 Sales/EBITDA multiple
(including debt)
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 nancial 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 GBP12,854,708 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 GBP14,183,672
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 GBP589,134 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 GBP985,753 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
At fair At amortised
value cost Total
Financial assets GBP GBP GBP
---------------------------------- ------------ ------------- ------------
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
At fair At amortised
value cost Total
Financial assets GBP GBP GBP
---------------------------------- ------------ ------------- ------------
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
At fair At amortised
value cost Total
Financial assets GBP GBP GBP
---------------------------------- ------------ ------------- ------------
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 GBP12,937,500 (2023: GBP19,100,000)
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 January 31 July 2022
31 July 2023 2023
GBP GBP GBP
--------------------------- ---------------------- ---------------------- ---------------------
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 GBP Number GBP Number GBP
--------------- --------------- ------------------- ------------- ---------- -------------- -----------------
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 GBP350,006
(2023: GBP2,587,375). During the period ended 31 July 2023, the
Trust purchased 211,868 shares (2023: 280,739 shares) with a total
value of GBP350,006 (2023: GBP484,821). 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 GBP5,501,415 (for the period ended 31 July 2022:
loss of GBP62,134,552; for the year ended 31 January 2023: loss of
GBP43,836,210) 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 GBP5,501,415 (for the period ended 31 July 2022:
loss of GBP62,134,552 ; for the year ended 31 January 2023: loss of
GBP43,836,210) 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 GBP92,089,933 (for the period ended 31 July 2022:
GBP81,871,457; for the year ended 31 January 2023: GBP97,421,364)
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 GBP92,089,933 (for the period ended 31
July 2022: GBP81,871,457 ; for the year ended 31 January 2023:
GBP97,421,364) 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, GBP3,987,729 of ULNs in principal amount
were outstanding. Issue costs totalling GBP144,236 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 GBPnil (for the period ended 31
July 2022: GBP10,303; for the year ended 31 January 2023:
GBP10,303). The carrying value of the ULNs in issue at the period
end was GBP3,987,729 (for the period ended 31 July 2022:
GBP3,987,729; for the year ended 31 January 2023: GBP3,987,729).
The total interest expense on the ULNs for the period is GBP149,540
(for the period ended 31 July 2022: GBP159,842; for the year ended
31 January 2023: GBP309,382). 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 GBP1 per share, raising GBP20,000,000. 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 GBP573,796 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 GBP57,205 (for the period ended 31 July 2022: GBP71,744; for
the year ended 31 January 2023: GBP115,359). The carrying value of
the ZDP Shares in issue at the period-end was GBP13,329,390 (for
the period ended 31 July 2022: GBP20,139,415; for the year ended 31
January 2023: GBP20,721,001). The total finance charge for the ZDP
Shares for the period is GBP483,389 (for the period ended 31 July
2022: GBP546,507; for the year ended 31 January 2023:
GBP1,128,093). This includes the ZDP Share final capital
entitlement accrual and the amortisation of the Issue costs.
31 January 31 July 2022
31 July 2023 2023
GBP GBP GBP
---------------------------- ------------- ----------- ------------
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 GBP86,000
(for the period ended 31 July 2022: GBP86,000 ; for the year ended
31 January 2023: GBP172,000) of which GBP14,333 is accrued as at 31
July 2023 (for the period ended 31 July 2022: GBP14,333 ; for the
year ended 31 January 2023: GBP14,333).
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 GBP1.9 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 EUR10
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 GBP4.0 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 GBP76,739,478 (for the period ended 31 July 2022:
GBP66,521,002; for the year ended 31 January 2023:
GBP82,070,909).
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 / The amount by which the share price of the Company is
Discount either higher (premium) or lower (discount) than the NAV
to 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 31 July 2022
2023
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 The EV/EBITDA multiple is calculated by dividing a company's
multiple 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 The EV/Sales multiple is calculated by dividing a company's
multiple 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 31 July 2022
2023
GBP GBP GBP
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 The portfolio sales compound annual growth rate ("CAGR")
Sales 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 Portfolio Leverage is calculated as the aggregate Net
Leverage 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 The annualised share price return is calculated as the
share price CAGR implied by the Company's share price vs. the share
return price 10 years prior.
Please find a reconciliation to the share price of the
Company below:
31 July 31 January 31 July
2023 2023 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 BLGDCIXBDGXS
(END) Dow Jones Newswires
September 15, 2023 02:00 ET (06:00 GMT)
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