TIDMESO TIDMEO.P TIDMEC.P TIDMEL.P
RNS Number : 3314Y
EPE Special Opportunities Limited
06 September 2022
EPE Special Opportunities Limited
("ESO" or the "Company")
Interim Report and Unaudited Financial Statements for the six
months ended 31 July 2022
The Board of EPE Special Opportunities is pleased to announce
the Company's Interim Report and Unaudited Financial Statements for
the six months ended 31 July 2022.
Summary
-- The Company has experienced a challenging period, with
performance in the six months ended 31 July 2022 impacted by
macro-economic headwinds felt across the portfolio. The confluence
of inflation, decreasing consumer demand and geopolitical risk has
created an adverse environment across sectors. The Board and
Investment Advisor have focused on positioning the portfolio to
weather these pressures. These challenges are expected to continue
over the medium term and the Board will accordingly maintain a
prudent approach.
-- The Net Asset Value ("NAV") per share of the Company as at 31
July 2022 was 259.74 pence, representing a decrease of 43.1 per
cent. on the NAV per share of 455.66 pence as at 31 January
2022.
-- The share price of the Company as at 31 July 2022 was 172.50
pence, representing a decrease of 44.2 per cent. on the share price
of 309.00 pence as at 31 January 2022.
-- Luceco plc ("Luceco") released its trading update for the six
months ended 30 June 2022 in July 2022, announcing a decrease in
like for like revenue compared to a strong prior year comparator.
Sales were impacted by customer destocking and a reduction in DIY
consumer demand. The business announced gross margin slightly
behind the prior year, but with input cost inflation controlled via
pricing increases. Net debt as at 30 June 2022 was 1.4x adjusted
last twelve month EBITDA, in line with the target leverage range.
In March 2022, Luceco announced the acquisition of Sync EV for
GBP10.0 million, providing a platform for entry into the high
growth EV charge point segment.
-- The Rayware Group ("Rayware") experienced a complex trading
environment in the period, with sales impacted by customer
destocking and margin impacted by input costs and supply chain
challenges. Looking beyond near term headwinds, Rayware is focused
on progressing international expansion. The business appointed Alec
Taylor, former director of Bradshaw International, as a
non-executive director, to provide strategic leadership for the
business's growing activities in the US.
-- Whittard of Chelsea ("Whittard") delivered pleasing
performance, with COVID-19 disruption receding. Whittard's retail
stores traded ahead of budget and the prior year, as domestic and
tourist footfall strengthened following the relaxation of
restrictions. Whittard continues to focus on the development of
international channels, with the business's South Korean franchise
partner opening a flagship location in Seoul. The business
completed the relocation of its head office to Milton Park in South
East Oxfordshire in April 2022, enhancing Whittard's ability to
recruit from wider talent pools.
-- David Phillips achieved material sales growth, supported by
strong performance in the Fitted and project based divisions.
Pressures from supply chain disruption and input costs have
continued to impact profitability, however the business has taken
actions to mitigate. Looking ahead, the business is focused on
delivering improved profitability in its existing channels as well
as acquisition opportunities to deliver further scale.
-- Pharmacy2U maintained the increased scale attained through
the COVID-19 period, while focusing on increasing profitability.
The business has continued to develop its operational platform and
expand its Services division .
-- EPIC Acquisition Corp ("EAC") has continued to progress its
search for a business combination, focusing on European consumer
brands with the potential to realise significant growth in Asian
markets. A number of attractive potential merger opportunities are
under active review.
-- The Company had cash balances of GBP26.6 million as at 31
July 2022. In July 2022, the Company agreed the extension of the
maturity of GBP4.0 million of unsecured loan notes to July 2023.
The Company has GBP20.1 million zero dividend preference shares
("ZDP") maturing in December 2026 and no other third-party debt
outstanding. The Board and the Investment Advisor continue to keep
a close watch on liquidity given the adverse market conditions.
-- As at 31 July 2022, the Company's unquoted portfolio was
valued at a weighted average EBITDA to enterprise value multiple of
6.2x (excluding Pharmacy2U, which is valued on a sales multiple)
and the portfolio had a low level of third party leverage with net
debt at 1.6x EBITDA in aggregate .
Mr Clive Spears, Chairman, commented: "The Company has
experienced a challenging period, but has taken actions across the
portfolio to mitigate macro-economic headwinds. The Company
maintains ample liquidity to support the existing portfolio as well
as to fund the investment pipeline. I would like to express my
gratitude to the Investment Advisor and the portfolio management
teams for their hard work during a complex start to the year. The
Board will closely monitor the performance of the portfolio through
the balance of the year and I look forward to providing an update
on further developments at the year end."
The person responsible for releasing this information on behalf
of the Company is Amanda Robinson of Langham Hall Fund Management
(Jersey) Limited.
Enquiries:
EPIC Investment Partners LLP +44 (0) 207 269 8865
Alex Leslie
Langham Hall Fund Management (Jersey) Limited +44 (0) 1534 885 200
Amanda Robinson
Cardew Group Limited +44 (0) 207 930 0777
Richard Spiegelberg
Numis Securities Limited +44 (0) 207 260 1000
Nominated Advisor: Stuart Skinner
Corporate Broker: Charles Farquhar
Chairman's Statement
The Company has experienced a challenging period, with
performance in the six months ended 31 July 2022 impacted by
macro-economic headwinds felt across the portfolio. The confluence
of inflation, decreasing consumer demand and geopolitical risk has
created an adverse environment across sectors. The Board and
Investment Advisor have focused on positioning the portfolio to
weather these pressures. These challenges are expected to continue
over the medium term and the Board will accordingly maintain a
prudent approach.
The Net Asset Value ("NAV") per share of the Company as at 31
July 2022 was 259.74 pence, representing a decrease of 43.1 per
cent. on the NAV per share of 455.66 pence as at 31 January 2022.
The share price of the Company as at 31 July 2022 was 172.50 pence,
representing a decrease of 44.2 per cent. on the share price of
309.00 pence as at 31 January 2022.
Luceco plc ("Luceco") released its trading update for the six
months ended 30 June 2022 in July 2022, announcing a decrease in
like for like revenue compared to a strong prior year comparator.
Sales were impacted by customer destocking and a reduction in DIY
consumer demand. The business announced gross margin slightly
behind the prior year, but with input cost inflation controlled via
pricing increases. Net debt as at 30 June 2022 was 1.4x adjusted
last twelve month EBITDA, in line with the target leverage range.
In March 2022, Luceco announced the acquisition of Sync EV for
GBP10.0 million, providing a platform for entry into the high
growth EV charge point segment.
The Rayware Group ("Rayware") experienced a complex trading
environment in the period, with sales impacted by customer
destocking and margin impacted by input costs and supply chain
challenges. Looking beyond near term headwinds, Rayware is focused
on progressing international expansion. The business appointed Alec
Taylor, former director of Bradshaw International, as a
non-executive director, to provide strategic leadership for the
business's growing activities in the US.
Whittard of Chelsea ("Whittard") delivered pleasing performance,
with COVID-19 disruption receding. Whittard's retail stores traded
ahead of budget and the prior year, as domestic and tourist
footfall strengthened following the relaxation of restrictions.
Whittard continues to focus on the development of international
channels, with the business's South Korean franchise partner
opening a flagship location in Seoul. The business completed the
relocation of its head office to Milton Park in South East
Oxfordshire in April 2022, enhancing Whittard's ability to recruit
from wider talent pools.
David Phillips achieved material sales growth, supported by
strong performance in the Fitted and project based divisions.
Pressures from supply chain disruption and input costs have
continued to impact profitability, however the business has taken
actions to mitigate. Looking ahead, the business is focused on
delivering improved profitability in its existing channels as well
as acquisition opportunities to deliver further scale.
Pharmacy2U maintained the increased scale attained through the
COVID-19 period, while focusing on increasing profitability. The
business has continued to develop its operational platform and
expand its Services division.
EPIC Acquisition Corp ("EAC") has continued to progress its
search for a business combination, focusing on European consumer
brands with the potential to realise significant growth in Asian
markets. A number of attractive potential merger opportunities are
under active review.
The Company had cash balances of GBP 26.6 million (1) as at 31
July 2022. In July 2022, the Company agreed the extension of the
maturity of GBP4.0 million unsecured loan notes to July 2023. The
Company has GBP20.1 million zero dividend preference shares ("ZDP")
maturing in December 2026 and no other third-party debt
outstanding. The Board and the Investment Advisor continue to keep
a close watch on liquidity given the adverse market conditions.
I would like to express my gratitude to the Investment Advisor
and the portfolio management teams for their hard work during a
complex start to the year. The Board will closely monitor the
performance of the portfolio through the balance of the year and I
look forward to providing an update on further developments at the
year end.
Clive Spears
Chairman
5 September 2022
(1) Company cash balances are stated inclusive of cash held by
associates in which the Company is the sole investor.
Investment Advisor's Report
The Company has faced a difficult macro-economic environment,
with pressures felt across the portfolio and wider financial
markets. The Investment Advisor has acted across the portfolio to
mitigate these factors and to ensure resilience against an
uncertain outlook . T he Company has acted to preserve liquidity,
extending the maturity of its GBP4.0 million unsecured loan notes
to July 2023, to increase cash balances available to support the
portfolio and take advantage of investment opportunities. The
Investment Advisor and the Board will remain vigilant in light of
evolving macro-economic dynamics, maintaining a conservative
positioning.
The Company
The NAV per share of the Company as at 31 July 2022 was 259.74
pence, representing a decrease of 43.1 per cent. on the NAV per
share of 455.66 pence as at 31 January 2022. The share price of the
Company as at 31 July 2022 was 172.50 pence, representing a
decrease of 44.2 per cent. on the share price of 309.00 pence as at
31 January 2022.
The Company maintains strong liquidity and prudent levels of
third party leverage. The Company has cash balances of GBP26.6
million(2) as at 31 July 2022, which are available to support the
portfolio, meet committed obligations and deploy into attractive
investment opportunities. Net debt in the underlying portfolio
stands at 1.6x EBITDA in aggregate.
The Portfolio
The Company's unquoted portfolio is valued at a weighted average
enterprise value to EBITDA multiple of 6.2x for mature assets
(excluding assets investing for growth). The valuation has been
derived by reference to quoted comparables, after the application
of a liquidity discount to adjust for the portfolio's scale and
unquoted nature. Given the use of quoted comparables and actual
financial results, the valuation reflects the fair value of assets
as at the balance sheet date. The Investment Advisor notes that the
fair market value of the portfolio remains exposed to a volatile
macro environment and equity market valuations.
Luceco plc ("Luceco") released its trading update for the six
months ended 30 June 2022 in July 2022, reporting sales of GBP106.0
million. Retail channels were negatively impacted by customer
destocking, however professional and project channels demonstrated
greater resilience. The business reported an operating profit of
GBP11.5 million, with margin impacted by product mix and input
costs, mitigated by selling price increases. The business reported
net debt of 1.4x adjusted last twelve months EBITDA. Net debt is
expected to reduce as inventory levels adjust to normalising supply
chain conditions and lower activity levels. The business announced
that Sync EV, acquired in March 2022, had been fully integrated and
was forecast to generate sales growth and margin accretion for the
group.
The Rayware Group has traded marginally below expectations,
having faced headwinds from customer destocking and inflationary
cost pressures. The Investment Advisor was pleased to welcome Alec
Taylor to the business' board of directors in March 2022. Alec has
significant experience with growing US homewares brands via his
former directorship of Bradshaw International and is well placed to
support the business' growth ambitions in the US and international
markets.
Whittard of Chelsea has delivered resilient performance, with
retail trading rebounding following the relaxation of social
distancing and international travel restrictions. Whittard's
e-commerce channels have experienced a partial normalisation of
volumes following exceptional trading through the COVID-19 period.
Whittard's new franchise partner in South Korea has continued to
progress its store rollout plan, opening a flagship location in
Seoul, the largest Whittard store globally. In April 2022, the
business moved into new offices in Milton Park in Oxfordshire,
enhancing talent pools via access to London and surrounding
catchment areas.
David Phillips has achieved a significant increase in scale,
with growth lead by its project-based business units. This growth
has been set against challenging operating conditions, including
input cost inflation, supply chain disruption and working capital
dynamics. The Investment Advisor and the business's management are
focused on developing the existing platform, alongside inorganic
opportunities to generate further scale.
Pharmacy2U is focused on delivering continued growth and
improving profitability. The business has continued to diversify
its activities. The Services division, which operates vaccination
and testing centres and associated services, reaching a material
scale.
EPIC Acquisition Corp remains focused on reviewing targets for
business combination. The Investment Advisor and their co-sponsor
TTB Partners, a Hong Kong-based investment and advisory business,
are seeking a business at the forefront of consumer innovation,
recognised in both its home markets and Asia.
The Investment Advisor continues to monitor the Company's credit
fund investments. European Capital Private Debt Fund has completed
its investment period and is distributing capital to the Company.
Atlantic Credit Opportunities Fund and Prelude have been impacted
by challenging conditions in high yield markets, but performance
has remained ahead of the high yield index and hedge fund
peers.
The Investment Advisor would like to express its sincere thanks
to the portfolio's management and employees for their perseverance
through a challenging period. The Investment Advisor remains
grateful to the Board and the Company's shareholders for their
continued support.
EPIC Investment Partners LLP
Investment Advisor to the Company
5 September 2022
(2) Company cash balances are stated inclusive of cash held by
associates in which the Company is the sole investor.
Biographies of the Directors
Clive Spears (Non- executive David Pirouet (Non - executive
Chairman) Director)
Clive Spears retired from the David Pirouet joined PricewaterhouseCoopers
Royal Bank of Scotland International Channel Islands LLP in 1980, retiring
Limited in December 2003 as Deputy in 2009 after being an Audit and
Director of Jersey after 32 years Assurance Partner for over 20
of service. His main activities years. During his 29 years at
prior to retirement included the firm Mr Pirouet specialised
Product Development, Corporate in the financial services sector,
Finance, Trust and Offshore Company in particular in the alternative
Services and he was Head of Joint investment management area and
Venture Fund Administration with also led the business's Hedge
Rawlinson & Hunter. Mr Spears Fund and business recovery practices
is an Associate of the Chartered for over four years. Mr Pirouet
Institute for Securities & Investment. currently holds a number of non-executive
He has accumulated a well spread positions across private equity,
portfolio of directorships centring infrastructure and corporate debt.
on private equity, infrastructure Mr Pirouet's was previously non-executive
and corporate debt. His current Director and Chair of the Audit
appointments include Chairman and Risk committee for GCP Infrastructure
of Nordic Capital Limited and Investments (FTSE 250 listed company)
directorships of a series of until he retired in February 2021.
ICG plc sponsored funds and funds He is a resident of Jersey.
managed by Kreos Fund Management.
He is a resident of Jersey.
--------------------------------------------
Heather Bestwick (Non - executive Nicholas Wilson (Non - executive
Director) Director)
--------------------------------------------
Heather Bestwick has been a financial Nicholas Wilson has over 40 years
services professional for over of experience in hedge funds,
25 years, onshore in the City derivatives and global asset management.
of London and offshore in the He has run offshore branch operations
Cayman Islands and Jersey. She for Mees Pierson Derivatives Limited,
qualified as an English solicitor, ADM Investor Services International
specialising in ship finance, Limited and several other London
with City firm Norton Rose, and based financial services companies.
worked in their London and Greek He is a resident of Isle of Man.
offices for 8 years. Ms Bestwick
subsequently practised and became
a partner with global offshore
law firm Walkers in the Cayman
Islands, and Managing Partner
of the Jersey office. Ms Bestwick
sits on the boards of the Deutsche
Bank company which managed the
dbX fund platform and Rathbone
Investment Management International
Limited. She is a resident of
Jersey.
--------------------------------------------
Michael Gray (Non - executive
Director)
Michael Gray was at The Royal
Bank of Scotland for over 30
years, latterly as Managing Director
(Corporate) of RBS International
before retiring in 2015. During
his 32 years at the firm Michael
covered a broad spectrum of financial
services including corporate
and commercial banking, funds,
trusts and real estate. Mr Gray
currently holds a number of non-executive
positions across private equity,
infrastructure and fund management.
Michael's appointments currently
include non-executive directorships
of Triton Investment Management
(a Swedish private equity group),
GCP Infrastructure Investments
(a FTSE 250 listed company),
J-Star Jersey Company Limited
(a Japanese private equity group),
Foresight 4 VCT plc (a listed
venture capital fund), Jersey
Finance Limited (a Jersey not-for-profit
promotional company), JTC plc
(a FTSE 250 listed trust and
corporate services company) and
TEAM plc (a listed wealth management
company). He is a resident of
Jersey.
Biographies of the Investment Advisor
Giles Brand Hiren Patel
Giles Brand is a Partner and Hiren Patel is a Partner of EPIC.
the founder of EPIC. He is currently He has worked in the investment
Non-executive Chairman of Whittard management industry for the past
of Chelsea and Luceco plc. Before twenty years. Before joining EPIC,
joining EPIC, Giles was a founding Hiren was Finance Director of
Director of EPIC Investment Partners, EPIC Investment Partners. Prior
a fund management business which to this, Hiren was employed at
at sale had US $5bn under management. Groupama Asset Management where
Prior to this, Giles worked in he was the Group Financial Controller.
Mergers and Acquisitions at Baring
Brothers in Paris and London.
Giles read History at Bristol
University.
------------------------------------------
Robert Fulford James Henderson
------------------------------------------
Robert Fulford is a Managing James Henderson is a Managing
Director of EPIC. He previously Director of EPIC. He previously
worked at Barclaycard Consumer worked in the Investment Banking
Europe before joining EPIC. Whilst division of Deutsche Bank before
at Barclaycard, Robert was the joining EPIC. Whilst at Deutsche
Senior Manager for Strategic Bank he worked on a number of
Insight and was responsible for M&A transactions and IPOs in the
identifying, analysing and responding energy, property, retail and gaming
to competitive forces. Prior sectors, as well as providing
to Barclaycard, Robert spent corporate broking advice to mandated
four years as a strategy consultant clients. At EPIC, James manages
at Oliver Wyman Financial Services, the investment in Pharmacy2U and
where he worked with a range EPIC Acquisition Corp. James read
of major retail banking and institutional Modern History at Oxford University
clients in the UK, mainland Europe, and Medicine at Nottingham University.
Middle East and Africa. At EPIC,
Robert manages the investments
in Whittard of Chelsea, Rayware
and David Phillips. Robert read
Engineering at Cambridge University.
------------------------------------------
Alex Leslie Ian Williams
------------------------------------------
Alex Leslie is a Managing Director Ian Williams is a Managing Director
of EPIC. He previously worked of EPIC. He was previously a Partner
in Healthcare Investment Banking at Lyceum Capital Partners LLP,
at Piper Jaffray before joining responsible for deal origination
EPIC. Whilst at Piper Jaffray and engagement, with a primary focus
he worked on a number of M&A on the business services and software
transactions and equity fundraisings sectors, as well as financial services,
within the Biotechnology, Specialty education and health sectors. Prior
Pharmaceutical and Medical Technology to Lyceum, Ian was a Director at
sectors. At EPIC, Alex manages Arbuthnot Securities, involved in
the investment in Luceco plc, IPO's, secondary fund raisings and
Rayware, Prelude, Atlantic Credit M&A, focused on the support services,
Opportunities Fund and European healthcare, transport & IT sectors.
Capital Private Debt Fund. He Ian started his career at Hambros
previously managed the Company's Bank in the M&A team. Ian read Politics
investments in Process Components, and Economics at the University
BigHead Industries, David Phillips of Bristol.
and Driver Require. Alex read
Human Biological and Social Sciences
at the University of Oxford and
obtained an MPhil in Management
from the Judge Business School
at the University of Cambridge.
------------------------------------------
Independent Review Report to EPE Special Opportunities
Limited
Report on the Interim Report and Unaudited Financial
Statements
Our conclusion
We have reviewed EPE Special Opportunities Limited's Interim
Report and Unaudited Financial Statements (the "interim financial
statements") in the Interim Report of EPE Special Opportunities
Limited for the six month period ended 31 July 2022. Based on our
review, nothing has come to our attention that causes us to believe
that the interim financial statements are not prepared, in all
material respects, in accordance with International Accounting
Standard 34, 'Interim Financial Reporting' and the AIM Rules for
Companies.
What we have reviewed
The interim financial statements comprise:
-- the statement of financial position as at 31 July 2022;
-- the statement of comprehensive income for the period then ended;
-- the statement of cash flows for the period then ended;
-- the statement of changes in equity for the period then ended; and
-- the explanatory notes to the interim financial statements.
The interim financial statements included in the Interim Report
have been prepared in accordance with International Accounting
Standard 34, 'Interim Financial Reporting' and the AIM Rules for
Companies.
Responsibilities for the interim financial statements and the
review
Our responsibilities and those of the directors
The Interim Report, including the interim financial statements,
is the responsibility of, and has been approved by, the directors.
The directors are responsible for preparing the Interim Report in
accordance with International Accounting Standard 34, 'Interim
Financial Reporting' and the AIM Rules for Companies.
Our responsibility is to express a conclusion on the interim
financial statements in the Interim Report based on our review.
This report, including the conclusion, has been prepared for and
only for the company for the purpose of complying with the AIM
Rules for Companies and for no other purpose. We do not, in giving
this conclusion, accept or assume responsibility for any other
purpose or to any other person to whom this report is shown or into
whose hands it may come save where expressly agreed by our prior
consent in writing.
What a review of interim financial statements involves
We conducted our review in accordance with International
Standard on Review Engagements 2410, 'Review of Interim Financial
Information Performed by the Independent Auditor of the Entity'
issued by the International Auditing and Assurance Standards Board.
A review of interim financial information consists of making
enquiries, primarily of persons responsible for financial and
accounting matters, and applying analytical and other review
procedures.
A review is substantially less in scope than an audit conducted
in accordance with International Standards on Auditing and,
consequently, does not enable us to obtain assurance that we would
become aware of all significant matters that might be identified in
an audit. Accordingly, we do not express an audit opinion.
We have read the other information contained in the Interim
Report and considered whether it contains any apparent
misstatements or material inconsistencies with the information in
the interim financial statements.
PricewaterhouseCoopers CI LLP
Chartered Accountants
Jersey, Channel Islands
5 September 2022
The maintenance and integrity of the EPE Special Opportunities
Limited website is the responsibility of the directors; the work
carried out by the auditors does not involve consideration of these
matters and, accordingly, the auditors accept no responsibility for
any changes that may have occurred to the financial statements
since they were initially presented on the website.
Legislation in Jersey governing the preparation and
dissemination of financial statements may differ from legislation
in other jurisdictions.
Statement of Comprehensive Income
For the six months ended 31 July 2022
1 Feb 1 Feb
2021 to 2021 to
31 Jul 31 Jan
1 Feb 2022 to 31 Jul 2022 2021 2022
Revenue Capital Total Total Total
(unaudited) (unaudited) (unaudited) (unaudited) (audited)
Note GBP GBP GBP GBP GBP
---------------- ------------------- ------------------- ----------------------- ----------------------- -----------------------
Income
Interest income 16,106 - 16,106 514 514
Net fair value
movement
on investments - (59,814,999) (59,814,999) 36,734,638 10,280,363
---------------- ------------------- ------------------- ----------------------- -----------------------
Total
(loss)/income 16,106 (59,814,999) (59,798,893) 36,735,152 10,280,877
---------------- ------------------- ------------------- ----------------------- ----------------------- -----------------------
Expenses
Investment
advisor's
4 fees (911,590) - (911,590) (1,028,984) (2,054,555)
15 Directors' fees (86,000) - (86,000) (74,498) (149,000)
Share based
payment
5 expense (354,193) - (354,193) (396,520) (822,166)
6 Other expenses (277,527) - (277,527) (765,619) (1,052,268)
Total expense (1,629,310) - (1,629,310) (2,265,621) (4,077,989)
---------------- ------------------- ------------------- ----------------------- ----------------------- -----------------------
(Loss)/profit
before
finance costs
and
tax (1,613,204) (59,814,999) (61,428,203) 34,469,531 6,202,888
---------------- ------------------- ------------------- ----------------------- ----------------------- -----------------------
Finance charges
Interest on
unsecured
loan note
13 instruments (159,842) - (159,842) (159,843) (319,685)
Zero dividend
preference
shares final
capital
entitlement
13 accrual (546,507) - (546,507) - (156,983)
(Loss)/profit
for
the period/year
before taxation (2,319,553) (59,814,999) (62,134,552) 34,309,688 5,726,220
Taxation - - - - -
---------------- ------------------- ------------------- ----------------------- ----------------------- -----------------------
(Loss)/profit
for
the period/year (2,319,553) (59,814,999) (62,134,552) 34,309,688 5,726,220
---------------- ------------------- ------------------- ----------------------- ----------------------- -----------------------
Other
comprehensive
income - - - - -
---------------- ------------------- ------------------- ----------------------- ----------------------- -----------------------
Total
comprehensive
(loss)/income (2,319,553) (59,814,999) (62,134,552) 34,309,688 5,726,220
---------------- ------------------- ------------------- ----------------------- ----------------------- -----------------------
Basic
(loss)/earnings
per ordinary
share
11 (pence) (7.36) (189.77) (197.13) 106.72 17.86
---------------- ------------------- ------------------- ----------------------- ----------------------- -----------------------
Diluted
(loss)/earnings
per ordinary
share
11 (pence) (7.36) (189.77) (197.13) 106.72 17.86
---------------- ------------------- ------------------- ----------------------- ----------------------- -----------------------
The total column of this statement represents the Company's
Statement of Comprehensive Income, prepared in accordance with
IFRS. The supplementary revenue and capital return columns are
prepared in accordance with the Board of Directors' agreed
principles, which are that the net gain/loss on investments is
allocated to the capital column and all other income and expenses
are allocated to the revenue column. All items derive from
continuing activities.
Statement of Financial Position
As at 31 July 2022
31 July 2022 31 July 2021
(unaudited) 31 January 2022 (audited) (unaudited)
Note GBP GBP GBP
----------------------- ----------------------- ------------------------------ -----------------------
Non-current assets
Investments at fair
value through profit
7 or loss 79,938,043 140,525,060 159,573,313
79,938,043 140,525,060 159,573,313
----------------------- ----------------------- ------------------------------ -----------------------
Current assets
Cash and cash
9 equivalents 26,532,104 27,545,042 19,669,303
Trade and other
receivables and
prepayments 83,710 95,147 92,454
----------------------- ----------------------- ------------------------------ -----------------------
26,615,814 27,640,189 19,761,757
----------------------- ----------------------- ------------------------------ -----------------------
Current liabilities
Trade and other
payables (555,256) (982,655) (1,026,055)
Unsecured loan note
13 instruments (3,987,729) (3,977,427) (3,967,124)
----------------------- ----------------------- ------------------------------ -----------------------
(4,542,985) (4,960,082) (4,993,179)
----------------------- ------------------------------
Net current assets 22,072,829 22,680,107 14,768,578
----------------------- ----------------------- ------------------------------ -----------------------
Non-current
liabilities
Zero dividend
13 preference shares (20,139,415) (19,580,190) -
------------------------------
(20,139,415) (19,580,190) -
----------------------- ----------------------- ------------------------------ -----------------------
Net assets 81,871,457 143,624,977 174,341,891
----------------------- ----------------------- ------------------------------ -----------------------
Equity
10 Share capital 1,730,828 1,730,828 1,730,828
Share premium 13,619,627 13,619,627 13,619,627
16 Capital reserve 76,762,941 136,577,940 163,032,215
16 Revenue reserve (10,241,939) ( 8,303,418) (4,040,779)
------------------------------
Total equity 81,871,457 143,624,977 174,341,891
Net asset value per
12 share (pence) 259.74 455.66 542.30
----------------------- ----------------------- ------------------------------ -----------------------
The financial statements were approved by the Board of Directors
on 5 September 2022 and signed on its behalf by:
Clive Spears David Pirouet
Director Director
Statement of Changes in Equity
For the six months ended 31 July 2022
Six months ended 31 July 2022 (unaudited)
Share Share Capital Revenue Total
capital premium reserve reserve
Note 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
-------------- ---------------- ------------------- ------------------------- ------------------- --------------------
Year ended 31 January 2022 (audited)
Share Share Capital Revenue Total
capital premium reserve reserve
GBP GBP GBP GBP GBP
-------------- ---------------- ------------------- ------------------------- ------------------- --------------------
Balance at 1
February
2021 1,730,828 13,619,627 126,297,577 (955,424) 140,692,608
Total
comprehensive
income/(loss)
for the
year - - 10,280,363 (4,554,143) 5,726,220
-------------- ---------------- ------------------- ------------------------- ------------------- --------------------
Contributions
by and
distributions
to owners
Share-based
payment
5 charge - - - 822,166 822,166
Share
ownership
scheme
participation - - - 625 625
Purchase of
shares - - - (2,117,866) (2,117,866)
Share
acquisition
for
JOSP scheme - - - (1,498,776) (1,498,776)
Total
transactions
with owners - - - (2,793,851) (2,793,851)
-------------- ---------------- ------------------- ------------------------- ------------------- --------------------
Balance at 31
January
2022 1,730,828 13,619,627 136,577,940 (8,303,418) 143,624,977
-------------- ---------------- ------------------- ------------------------- ------------------- --------------------
Six months ended 31 July 2021 (unaudited)
Share Share Capital Revenue Total
capital premium reserve reserve
GBP GBP GBP GBP GBP
-------------- ---------------- ------------------- ------------------------- ------------------- --------------------
Balance at 1
February
2021 1,730,828 13,619,627 126,297,577 (955,424) 140,692,608
Total
comprehensive
income/(loss)
for the
period - - 36,734,638 (2,424,950) 34,309,688
-------------- ---------------- ------------------- ------------------------- ------------------- --------------------
Contributions
by and
distributions
to owners
Share-based
payment
5 charge - - - 396,520 396,520
Share
acquisition
for
JOSP scheme - - - (1,056,925) (1,056,925)
-------------- ---------------- ------------------- ------------------------- ------------------- --------------------
Total
transactions
with owners - - - (660,405) (660,405)
-------------- ---------------- ------------------- ------------------------- ------------------- --------------------
Balance at 31
July
2021 1,730,828 13,619,627 163,032,215 (4,040,779) 174,341,891
-------------- ---------------- ------------------- ------------------------- ------------------- --------------------
Statement of Cash Flows
For the six months ended 31 July 2022
1 Feb 2022 1 Feb 2021 1 Feb 2021
to 31 July to 31 Jan to 31 Jul
2022 (unaudited) 2022 (audited) 2021 (unaudited)
Note GBP GBP GBP
------------------------------ -------------------- -------------------- -------------------
Operating activities
Interest income received 16,106 514 514
Expenses paid (1,678,361) (3,231,866) (1,495,782)
7 Purchase of investments (1,100,000) (31,253,480) (22,520,000)
7 Proceeds from investments 1,872,018 18,364,193 17,036,335
-------------------- -------------------- -------------------
Net cash used in operating
activities (890,237) (16,120,639) (6,978,933)
------------------------------ -------------------- -------------------- -------------------
Financing activities
Unsecured loan note interest
paid (149,540) (299,080) (149,540)
Purchase of shares (122,729) (3,616,642) (1,056,925)
Issue of zero dividend - 20,000,000 -
preference shares
Issue costs for zero dividend - (273,923) -
preference shares
Share ownership scheme
participation 149,568 625 -
Net cash (used in)/generated
from financing activities (122,701) 15,810,980 (1,206,465)
------------------------------ -------------------- -------------------- -------------------
Decrease in cash and
cash equivalents (1,012,938) (309,659) (8,185,398)
Cash and cash equivalents
at start of period/year 27,545,042 27,854,701 27,854,701
------------------------------ -------------------- -------------------- -------------------
Cash and cash equivalents
at end of period/year 26,532,104 27,545,042 19,669,303
------------------------------ -------------------- -------------------- -------------------
Notes to the Financial Statements
For the six months ended 31 July 2022
1 The Company
The Company was incorporated with limited liability in the Isle
of Man on 25 July 2003. The Company then re-registered under the
Isle of Man Companies Act 2006, with registration number 008597V.
On 11 September 2018, the Company re-registered under the Bermuda
Companies Act 1981, with registration number 53954. The Company
moved its operations to Jersey on 17 May 2017 and has subsequently
operated from Jersey only.
The Company's ordinary shares are quoted on AIM, a market
operated by the London Stock Exchange, and the Growth Market of the
Aquis Stock Exchange (formerly the NEX Exchange).
The interim financial statements are as at and for the six
months ended 31 July 2022, comprising the Company and investments
in its Associates. The interim financial statements are
unaudited.
The financial statements of the Company as at and for the year
ended 31 January 2022 are available upon request from the Company's
business office at Liberation House, Castle Street, St Helier,
Jersey, JE1 2LH and the registered office at Clarendon House, 2
Church Street, Hamilton HM11, Bermuda, or at
www.epespecialopportunities.com .
The Company's portfolio investments are held in three Associates
entities, ESO Investments 1 Limited, ESO Investments 2 Limited and
ESO Alternative Investments LP (together the "Associates").
Associates are those enterprises over which the reporting entity
has significant influence, and which are neither subsidiaries, nor
an interest in a joint venture.
Direct interests in the individual portfolio investments are
held by the following Associates;
-- ESO Investment 1 Limited: Rayware, Whittard and David Phillips
-- ESO Investments 2 Limited: Luceco and Pharmacy2U
-- ESO Alternative Investments LP: European Capital Private Debt
Fund LP, EPE Junior Aggregator LP, Atlantic Credit Opportunities
Fund Limited, EPIC Acquisition Corp. and EAC Sponsor Limited
As the Company is an investment entity per IFRS 10, interests in
Associates are measured at fair value.
The principal activity of the Company through its Associates is
to arrange income yielding financing for growth, buyout and special
situations and holding the investments and its Associates with a
view to exiting in due course at a profit.
The Company has no employees.
2 Basis of preparation
a. Statement of compliance
These interim financial statements for the six months ended 31
July 2022 have been prepared in accordance with IAS 34 Interim
Financial Reporting and should be read in conjunction with
Company's last annual financial statements as at and for the year
ended 31 January 2022. They do not include all of the information
required for a complete set of financial statements prepared in
accordance with IFRS Standards. However, selected explanatory notes
are included to explain events and transactions that are
significant to an understanding of the changes in the Company's
financial position and performance since the last annual financial
statements.
The annual financial statements of the Company are prepared in
accordance with International Financial Reporting Standards and
applicable legal and regulatory requirements of Bermuda law. They
were previously prepared in accordance with IFRS as adopted by the
EU until 31 January 2021. This change has had no impact on the
financial statements.
These interim financial statements were authorised for issue by
the Company's Board of Directors on 5 September 2022.
b. Going concern
The Company's management has assessed the Company's ability to
continue as a going concern and is satisfied that the Company has
the resources to continue in business for the foreseeable future.
Furthermore, the management is not aware of any material
uncertainties that may cast significant doubt upon the Company's
ability to continue as a going concern. Therefore, the financial
statements continue to be prepared on the going concern basis.
3 Financial risk management
The financial risk management objectives and policies are
consistent with those disclosed in the financial statements as at
and for the year ended 31 January 2022.
4 Investment advisory, administration and performance fees
Investment advisory fees
The investment advisory fee payable to EPIC Investment Partners
LLP ("EPIC") is assessed and payable at the end of each fiscal
quarter and is calculated as 2 per cent. of the Company's NAV where
the Company's NAV is less than 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 3 portfolio assets (i.e. unquoted assets), 1 per
cent. of the Company's NAV comprising Level 1 assets (i.e. quoted
assets), no fees on assets which are managed or advised by a third
party-manager, 0.5 per cent. of the Company's net cash (if greater
than nil), and 2 per cent. of the Company's net cash (if less than
nil) (i.e. reducing fees for net debt positions).
The charge for the current period was GBP911,590 (for the period
ended 31 July 2021: GBP1,028,984 ; year ended 31 January 2022:
GBP2,054,555). The amount outstanding as at 31 July 2022 was
GBP411,590 (for the period ended 31 July 2021: GBP528,984 ; year
ended 31 January 2022: GBP500,000).
Administration fees
EPIC Administration Limited provides accounting and financial
administration services to the Company. The fee payable to EPIC
Administration Limited is assessed and payable at the end of each
fiscal quarter and is calculated as 0.15 per cent. of the Company's
NAV where the Company's NAV is less than GBP100 million (subject to
a minimum fee of GBP35,000); otherwise the administration 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 GBP75,510 (for the period
ended 31 July 2021: GBP108,424 ; for the year ended 31 January
2022: GBP212,431).
Other administration fees during the period were GBP37,170 (for
the period ended 31 July 2021: GBP38,272 ; for the year ended 31
January 2022: GBP72,196).
Performance fees paid by Associates
The Associates are stated at fair value. Performance fees are
paid to the Investment Advisor based on the performance of the
Associates and deducted in calculating the fair value of the
Associates.
Performance fee in ESO Investments 1 Limited
The distribution policy of ESO Investments 1 Limited includes an
allocation of profits to the Investment Advisor such that, for each
investment where a returns hurdle of 8 per cent per annum has been
achieved, the Investment Advisor is entitled to receive 20 per cent
of the increase above the base value of investment. As at 31 July
2022, there was an accrual of GBPnil in the profit share account of
the Investment Advisor in the records of ESO Investments 1 Limited
(31 July 2021: GBP400,872 ; 31 January 2022: GBPnil).
Performance fee in ESO Investments 2 Limited
The distribution policy of ESO Investments 2 Limited includes an
allocation of profit to the Investment Advisor such that, for each
investment where a returns hurdle of 8 per cent per annum has been
achieved, the Investment Advisor is entitled to receive 20 per cent
of the increase above the base value of investment. As at 31 July
2022, there was an accrual of GBP6,687,647 in the profit share
account of the Investment Advisor in the records of ESO Investments
2 Limited (31 July 2021: GBP26,191,448 ; 31 January 2022:
GBP20,027,085).
Jointly Owned Share Plan ("JOSP") and share-based payments
Directors of the Company and certain employees of the Investment
Advisor (together "Participants") receive remuneration in the form
of equity-settled share-based payment transactions, through a JOSP
scheme (see note 5).
5 Share-based payment expense
The cost of equity settled transactions to Participants in the
JOSP scheme are measured at fair value at the grant date. The fair
value is determined based on the share price of the equity
instrument at the grant date.
The Trust was created to award shares to Participants as part of
the JOSP. Participants are awarded a certain number of shares
("Matching Shares") which are subject to a three-year service
vesting condition from the grant date. In order to receive their
Matching Share allocation Participants are required to purchase
shares in the Company on the open market ("Bought Shares"). The
Participant will then be entitled to acquire a joint ownership
interest in the Matching Shares for the payment of a nominal
amount, on the basis of one joint ownership interest in one
Matching Share for every Bought Share they acquire in the relevant
award period.
The Trust holds the Matching Shares jointly with the Participant
until the award vests. These shares carry the same rights as rest
of the ordinary shares.
The Trust held 1,049,702 (for the period ended 31 July 2021:
1,748,193 ; for the year ended 31 January 2022: 1,871,753) matching
shares at the period end which have traditionally not voted.
During the period, 40,239 shares were acquired by the Trust for
the JOSP scheme (for the period ended 31 July 2021: 329,189 ; for
the year ended 31 January 2022: 456,524). 862,290 shares were
vested during the period to the JOSP Participants (for the period
ended 31 July 2021: nil ; for the year ended 31 January 2022:
3,775). 156,173 shares were awarded to the JOSP Participants in the
period (for the period ended 31 July 2021: 154,110 ; for the year
ended 31 January 2022: 185,779).
The share-based payment expense in the Statement of
Comprehensive Income has been calculated on the basis of the fair
value of the equity instruments at the grant date and the estimated
number of equity instruments to be issued after the vesting period,
less the amount paid for the joint ownership interest in the
Matching Shares.
The total share-based payment expense recognised in the period
ended 31 July 2022 was GBP354,193 (for the period ended 31 July
2021: GBP396,520 ; for the year ended 31 January 2022: GBP822,166).
Of the total share-based payment expense during the period ended 31
July 2022, GBP23,103 related to the Directors (for the period ended
31 July 2021: 23,386 ; for the year ended 31 January 2022:
GBP52,621) and the balance related to members, employees and
consultants of the Investment Advisor.
6 Other expenses
The breakdown of other expenses presented in the statement of
comprehensive income is as follows:
1 Feb 2022 1 Feb 2021 1 Feb 2021
to 31 Jul 2022 to 31 Jul 2021 to 31 Jan 2022
(unaudited) (unaudited) (audited)
Total Total Total
GBP GBP GBP
------------------------------ ------------------- ---------------------- ------------------------
Administration fees (112,680) (146,696) (284,627)
Directors' and officers'
insurance (13,543) (11,286) (24,453)
Professional fees (46,736) (478,027) (480,554)
Board meeting and travel
expenses (847) (155) (588)
Auditors' remuneration (19,518) (16,221) (68,095)
Interim review remuneration (17,000) (8,325) (8,325)
Bank charges (922) (751) (3,261)
Irrecoverable VAT - (360) (360)
Foreign exchange movement (89) (40,941) (52,948)
Nominated advisor and broker
fees (27,745) (29,343) (61,962)
Listing fees (29,115) (27,214) (48,446)
Sundry expenses (9,332) (6,300) (18,649)
------------------------------- ------------------- ---------------------- ------------------------
Other expenses (277,527) (765,619) (1,052,268)
------------------------------- ------------------- ---------------------- ------------------------
The breakdown of other expenses presented in the statement of
comprehensive income for the period ended 31 July 2021 has been
updated for consistency of presentation with the subsequent
periods. Interim review remuneration has been broken out from
auditors' remuneration. Foreign exchange movement has been broken
out from sundry expenses.
7 Investments at fair value through profit or loss
31 July 31 January 31 July
2022 2022 2021
(unaudited) (audited) (unaudited)
GBP GBP GBP
Investments at fair value through
profit and loss 79,938,043 140,525,060 159,573,313
79,938,043 140,525,060 159,573,313
------------------ ------------ -----------------
Investment roll forward schedule
31 July 2022 31 January 31 July 2021
(unaudited) 2022 (audited)
(unaudited)
Investments at fair value as
at 1 February 140,525,060 117,256,810 117,256,810
Purchase of investments 1,100,000 31,253,480 22,520,000
Proceeds from investments (1,872,018) (18,364,193) (17,036,335)
Net fair value movements (59,814,999) 10,280,363 36,734,638
Reclassification of debtor
balance
to investee - 98,600 98,200
Investments at fair value 79,938,043 140,525,060 159,573,313
--------------------------------- ------------------------- ----------------------------- -------------------------
Discussion of the performance of individual investments is
presented in the Chairman's Statement and the Investment Advisor's
Report.
The line items "Purchase of investments" and "Proceeds from
investments" were classified under Investing activities in the
Statement of Cash flows for the year ended 31 January 2022. These
have now been reclassified to Operating activities to align with
the Company's principal activities.
8 Fair value of financial instruments
The Company and the Associates determine the fair value of
nancial instruments with reference to IPEV guidelines and the
valuation principles of IFRS 13 (Fair Value Measurement). The
Company and the Associates measure fair value using the IFRS 13
fair value hierarchy, which 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 and
Auditor. The Risk and Audit committee of the Company's Board meets
at least once every six months, in line with the Company's
semi-annual reporting periods, to review the recommended valuations
and approve final valuations for adoption in the Company's
financial statements.
Valuation framework
The Company and the Associates employ the valuation framework
detailed below with respect to the measurement of fair values. A
valuation of the Company's investments and the Associates'
investments are prepared by the Investment Advisor with reference
to IPEV guidelines and the valuation principles of IFRS 13 (Fair
Value Measurement). The Investment Advisor recommends these
valuations to the Board of Directors. The Board of Directors
considers the valuations recommended by the Investment Advisor,
determines any amendments required and thereafter adopts the fair
values presented in the Company's nancial statements. Changes in
the fair value of financial instruments are recorded in the
Statement of Comprehensive Income in the line item "Net fair value
movement on investments".
Quoted investments
Quoted investments traded in an active market are classified as
Level 1 in the IFRS 13 fair value hierarchy. The investment in
Luceco is a Level 1 asset. For Level 1 assets, the holding value is
calculated from the latest market price (without adjustment).
Quoted investments traded in markets that are considered less
than active are classified as Level 2 in the IFRS 13 fair value
hierarchy. The investment in EPIC Acquisition Corp is considered as
a Level 2 asset. For Level 2 assets, the holding value is
calculated from the latest available market prices (without
adjustment).
Unquoted private equity investments and unquoted fund
investments
Private equity investments and fund investments are classified
as Level 3 in the IFRS 13 fair value hierarchy. The investments in
Whittard, David Phillips, Rayware, Pharmacy2U, European Capital
Private Debt Fund LP, EPE Junior Aggregator LP, Atlantic Credit
Opportunities Fund Limited and EAC Sponsor Limited are considered
to be Level 3 assets. Various valuation techniques may be applied
in determining the fair value of investments held as Level 3 in the
fair value hierarchy;
-- For recently acquired assets, investment cost may be
considered as an applicable fair value for the asset if this is
deemed appropriate;
-- For underperforming assets, net asset or recovery valuation
is considered more applicable, in particular where the business'
performance be contingent on shareholder financial support;
-- For performing assets, market approach is considered to be
the most appropriate with a specific focus on trading comparables,
applied on a forward basis. Transaction comparables, applied on a
historic basis may also be considered;
-- For assets managed and valued by third party managers, the
valuation methodology of the third-party manager is reviewed. If
deemed appropriate and consistent with reporting standards, the
valuation prepared by the third-party manager will be used.
The Investment Advisor believe that it is appropriate to apply
an illiquidity discount to the multiples of comparable companies
when using them to calculate valuations for small, private
companies. This discount adjusts for the difference in size between
generally larger comparable companies and the smaller assets being
valued. The illiquidity discount also incorporates the premium the
market gives to comparable companies for being freely traded or
listed securities. The Investment Advisor has determined between 15
per cent. and 25 per cent. to be an appropriate illiquidity
discount with reference to market data and transaction multiples
seen in the market in which the Investment Advisor operates.
Where portfolio investments are held through subsidiary or
associate holding companies, the net assets of the holding company
are added to the value of the portfolio investment being assessed
to derive the fair value of the holding company held by the
Company.
Fair value hierarchy - Financial instruments measured at fair
value
The Company's investments in the Associates at 31 July 2022 is
classified as Level 3 (in line with 31 July 2021 and 31 January
2022) due to the mix of underlying assets which have different
levels of observable price sources. The Company takes the net asset
value of these holdings.
The table below analyses the underlying investments held by the
Associates measured at fair value at the reporting date by the
level in the fair value hierarchy into which the fair value
measurement is categorised. Debt securities are also included, as
these are also stated at fair value with the Board assessing the
fair value of the total investment, which includes debt and equity.
The amounts are based on the values recognised in the statement of
financial position of the Associates.
Level 1 Level 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) - - 35,817,882 35,817,882
Unquoted fund investments - - 5,968,453 5,968,453
Quoted investments 32,591,692 5,263,920 - 37,855,612
----------------------------- ----------------- ---------------------- ---------------------- ------------------
Investments at fair value
through
profit or loss 32,591,692 5,263,920 41,786,335 79,641,947
----------------------------- ----------------- ---------------------- ---------------------- ------------------
Other asset and liabilities
(held at cost) - - - 296,096
----------------------------- ----------------- ---------------------- ---------------------- ------------------
Total 32,591,692 5,263,920 41,786,335 79,938,043
----------------------------- ----------------- ---------------------- ---------------------- ------------------
Level 1 Level Level 3 Total
2
31 January 2022 GBP GBP GBP GBP
---------------------------- ----------------- ---------------------- ---------------------- ------------------
Financial assets at fair
value
through profit or loss
Unquoted private equity
investments
(including debt) - - 41,897,143 41,897,143
Unquoted fund investments - - 5,989,711 5,989,711
Quoted investments 87,206,277 5,166,896 - 92,373,173
----------------------------- ----------------- ---------------------- ---------------------- ------------------
Investments at fair value
through
profit or loss 87,206,277 5,166,896 47,886,854 140,260,027
----------------------------- ----------------- ---------------------- ---------------------- ------------------
Other asset and liabilities
(held at cost) - - - 265,033
----------------------------- ----------------- ---------------------- ---------------------- ------------------
Total 87,206,277 5,166,896 47,886,854 140,525,060
----------------------------- ----------------- ---------------------- ---------------------- ------------------
Level 1 Level Level 3 Total
2
31 July 2021 GBP GBP GBP GBP
------------------------------------- ------------------ ------ ----------------- ------------------
Financial assets at fair value
through profit or loss
Unquoted private equity investments
(including debt) - - 41,117,869 41,117,869
Unquoted fund investments - - 5,652,508 5,652,508
Quoted investments 112,423,187 - - 112,423,187
-------------------------------------- ------------------ ------ ----------------- ------------------
Investments at fair value through
profit or loss 112,423,187 - 46,770,377 159,193,564
-------------------------------------- ------------------ ------ ----------------- ------------------
Other asset and liabilities
(held at cost) - - - 379,749
-------------------------------------- ------------------ ------ ----------------- ------------------
Total 112,423,187 - 46,770,377 159,573,313
-------------------------------------- ------------------ ------ ----------------- ------------------
There have been no changes in the designation of level of fair
value hierarchy in the reporting periods under review.
The following table, detailing the value of portfolio
investments only, shows a reconciliation of the opening balances to
the closing balances for fair value measurements in level 3 of the
fair value hierarchy for the underlying investments held by the
Associates.
31 July 2022 31 January
(unaudited) 2022
(audited) 31 July 2021
(unaudited)
Unquoted investments (including GBP GBP
debt)
--------------------------------- --- -------------------- ---------------------- -----------------
Balance as at 1 February 47,886,854 28,422,329 28,422,329
Additional investments 1,100,000 25,786,074 22,520,000
Capital distributions from
investments - (330,247) (306,090)
Change in fair value through
profit and loss (7,200,519) (5,991,302) (3,865,862)
41,786,335 47,886,854 46,770,377
------------------------------------- -------------------- ---------------------- -----------------
Significant unobservable inputs used in measuring fair value
The table below sets out information about significant
unobservable inputs used at 31 July 2022 in measuring financial
instruments categorised as Level 3 in the fair value hierarchy.
Description Fair value at Significant unobservable
31 July 2022 inputs
------------------------------------ -------------------------
GBP
------------------------------------ ------------------------ -------------------------
Unquoted private equity investments 35,817,882 Sales/EBITDA multiple
(including debt)
Unquoted fund investments 5,968,453 Reported net asset
value
------------------------------------ ------------------------ -------------------------
The valuation methodology employed as at 31 July 2022 for the
investment in Rayware was changed from the acquisition cost
methodology used in the prior period to an EBITDA multiple
methodology, given that the acquisition occurred greater than 12
months prior to the valuation date.
Significant unobservable inputs are developed as follows:
-- Trading comparable multiple: valuation multiples used by
other market participants when pricing comparable assets. Relevant
comparable assets are selected from public companies determined to
be proximate to the investment based on similarity of sector, size,
geography or other relevant factors. The valuation multiple for a
comparable company is determined by calculating the enterprise
value of the company implied by its market price as at the
reporting date and dividing by the relevant 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.
Although management believes that its estimates of fair value
are appropriate, the use of different methodologies or assumptions
could lead to different measurements of fair value. For fair value
measurements of Level 3 assets, changing one or more of the
assumptions used to reasonably possible alternative assumptions
would have the following effects on the Level 3 investment
valuations:
-- For investments in mature Level 3 assets, the valuations used
in the preparation of the financial statements imply an average EV
to EBITDA multiple of 6.2x (weighted by each asset's total
valuation) (2022: 5.2x). The key unobservable inputs into the
preparation of the valuation of mature Level 3 assets was the EV to
EBITDA multiple applied to the asset's financial forecasts. If
these inputs had been taken to be 25 per cent. higher, the value of
the Level 3 assets and profit for the period would have been
GBP12,093,779 higher. If these inputs had been taken to be 25 per
cent. lower, the value of the Level 3 assets and profit for the
period would have been GBP13,420,744 lower. A corresponding
increase or decrease in the asset's financial forecasts would have
a similar impact on the Company's assets and profit.
-- For investments in growth Level 3 assets, the valuations used
in the preparation of the financial statements imply an average EV
to sales multiple of 1.0x (weighted by each asset's total
valuation) (2022: 1.2x). The key unobservable inputs into the
preparation of the valuation of growth Level 3 assets were the EV
to sales multiple applied to the asset's financial forecasts. If
these inputs had been taken to be 25 per cent. higher, the value of
the Level 3 assets and profit for the period would have been
GBP617,192 higher. If these inputs had been taken to be 25 per
cent. lower, the value of the Level 3 assets and profit for the
period would have been GBP631,343 lower. A corresponding increase
or decrease in the asset's financial forecasts would have a similar
impact on the Company's assets and profit.
9 Cash and cash equivalents
31 January 31 July 2021
31 July 2022 2022
GBP GBP GBP
--------------------------- ---------------------- ---------------------- ------------
Current and call accounts 26,532,104 27,545,042 19,669,303
--------------------------- ---------------------- ---------------------- ------------
26,532,104 27,545,042 19,669,303
--------------------------- ---------------------- ---------------------- ------------
The current and call accounts have been classified as cash and
cash equivalents in the Statement of Cash Flows.
10 Share capital
31 July 2022 31 January 2022 31 July 2021
(unaudited) (audited) (unaudited)
------------------------------------ ------------------------- ------------------------------
Number 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 (3,096,575) - (3,096,575) - (2,467,731) -
31,519,979 1,730,828 31,519,979 1,730,828 32,148,823 1,730,828
--------------- ------------------- ------------- ---------- -------------- --------------
11 Basic and diluted loss per share (pence)
Basic loss per share is calculated by dividing the loss of the
Company for the period attributable to the ordinary shareholders of
(GBP62,134,552) (for the period ended 31 July 2021: profit of
GBP34,309,688 ; for the year ended 31 January 2022: profit of
GBP5,726,220) divided by the weighted average number of shares
outstanding during the period of 31,519,979 after excluding
treasury shares (for the period ended 31 July 2021: 32,148,823 ;
for the year ended 31 January 2022: 32,065,616).
Diluted loss per share is calculated by dividing the loss of the
Company for the period attributable to ordinary shareholders of
(GBP62,134,552) (for the period ended 31 July 2021: profit of
GBP34,309,688 ; for the year ended 31 January 2022: profit of
GBP5,726,220) divided by the weighted average number of ordinary
shares outstanding during the period, as adjusted for the effects
of all dilutive potential ordinary shares, of 31,519,979 after
excluding treasury shares (for the period ended 31 July 2021:
32,148,823 ; for the year ended 31 January 2022: 32,065,616).
12 NAV per share (pence)
The Company's NAV per share of 259.74 pence (for the period
ended 31 July 2021: 542.30 pence ; for the year ended 31 January
2022: 455.66 pence) is based on the net assets of the Company at
the period end of GBP81,871,457 (for the period ended 31 July 2021:
GBP174,341,891 ; for the year ended 31 January 2022:
GBP143,624,977) divided by the shares in issue at the end of the
period of 31,519,979 after excluding treasury shares (for the
period ended 31 July 2021: 32,148,823 ; for the year ended 31
January 2022: 31,519,979).
The Company's diluted NAV per share of 259.74 pence (for the
period ended 31 July 2021: 542.30 pence ; for the year ended 31
January 2022: 455.66 pence) is based on the net assets of the
Company at the period end of GBP81,871,457 ( (for the period ended
31 July 2021: GBP174,341,891 ; for the year ended 31 January 2022:
GBP143,624,977) divided by the shares in issue at the end of the
period, as adjusted for the effects of dilutive potential ordinary
shares of 31,519,979 after excluding treasury shares (for the
period ended 31 July 2021: 32,148,823 ; for the year ended 31
January 2022: 31,519,979).
13 Liabilities
Unsecured Loan Notes ("ULN")
The Company has issued ULN's which pay interest at 7.5 per cent.
per annum and are redeemable on 24 July 2023, following an approval
of an extension of their maturity in July 2022. At 31 July 2022,
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 are being amortised over the life of
the instrument. The total issue costs expensed in the period ended
31 July 2022 was GBP10,303 (for the period ended 31 July 2021:
GBP10,303 ; for the year ended 31 January 2022: GBP20,605). The
carrying value of the ULNs in issue at the period end was
GBP3,987,729 (for the period ended 31 July 2021: GBP3,967,124 ; for
the year ended 31 January 2022: GBP3,977,427). The total interest
expense on the ULNs for the period is GBP159,842 (for the period
ended 31 July 2021: GBP159,843 ; for the year ended 31 January
2022: GBP319,685). This includes the amortisation of the issue
costs. The carrying value of ULN is presented under current
liabilities in the current period as they are redeemable within
12-month period from the Statement of Financial Position date.
Zero Dividend Preference Shares ("ZDP Shares")
On 17 December 2021 the Company issued 20,000,000 ZDP Shares at
a price of GBP1 per share, raising GBP20,000,000. The ZDP Shares
will not pay dividends but have a final capital entitlement at
maturity on 16 December 2026 of 129.14 pence per ZDP Share. It
should be noted that the predetermined capital entitlement of a ZDP
Share is not guaranteed and is dependent upon the Company's gross
assets being sufficient on 16 December 2026 to meet the final
capital entitlement.
Issue costs totalling GBP573,796 have been offset against the
value of the ZDP Shares and are being amortised over the life of
the instrument. The total issue costs expensed for the period ended
31 July 2022 was GBP71,744 (for the period ended 31 July 2021: nil
; for the year ended 31 January 2022: GBP14,538). The carrying
value of the ZDP Shares in issue at the period-end was
GBP20,139,415 (for the period ended 31 July 2021: nil ; for the
year ended 31 January 2022: GBP19,580,190). The total finance
charge for the ZDP Shares for the year is GBP546,507 (for the
period ended 31 July 2021: nil ; for the year ended 31 January
2022: GBP156,983). This includes the ZDP Share final capital
entitlement accrual and the amortisation of the issue costs.
14 Director's interests
Five of the Directors have interests in the shares of the
Company as at 31 July 2022 (for the period ended 31 July 2021: four
; for the year ended 31 January 2022: five ). Nicholas Wilson holds
144,690 ordinary shares (for the period ended 31 July 2021: 131,265
; for the year ended 31 January 2022: 131,265 ), Clive Spears holds
51,841 ordinary shares (for the period ended 31 July 2021: 136,314
; for the year ended 31 January 2022: 136,314 ), Heather Bestwick
holds 39,431 ordinary shares (for the period ended 31 July 2021:
22,307 ; for the year ended 31 January 2022: 22,307 ), David
Pirouet holds 17,309 shares (for the period ended 31 July 2021:
14,073 ; for the year ended 31 January 2022: 14,073 ) and Michael
Gray holds 5,614 ordinary shares (for the period ended 31 July
2021: nil ; for the year ended 31 January 2022: 2,378 ) .
15 Related parties
Directors' fees expense during the period amounted to GBP86,000
(for the period ended 31 July 2021: GBP74,498 ; for the year ended
31 January 2022: GBP149,000) of which GBP14,333 is accrued as at 31
July 2022 (for the period ended 31 July 2021: GBP10,333 ; for the
year ended 31 January 2022: GBP12,833). In November 2021, The
Company agreed an increased level of Directors' fees effective from
1 February 2022.
Certain Directors of the Company and other participants are
incentivised in the form of equity settled share-based payment
transactions, through a Joint Share Ownership Plan (see note
5).
Details of remuneration payable to key service providers are
included in note 4 of the interim financial statements.
In July 2022, the Company agreed the extension of the maturity
of GBP4.0 million unsecured loan notes to 24 July 2023. Delphine
Brand, a connected party of Giles Brand (a person discharging
managerial responsibilities ("PDMR") for the Company), is a
minority holder of the unsecured loan notes.
16 Other information
The revenue and capital reserves are presented in accordance
with the Board of Directors' agreed principles, which are that the
net gain/loss on investments is allocated to the capital reserve
and all other income and expenses are allocated to the revenue
reserve. The total reserve of the Company for the period ended 31
July 2022 is GBP66,521,002 (for the period ended 31 July 2021:
GBP158,991,436 ; for the year ended 31 January 2022:
GBP128,274,522)
17 Subsequent events
There were no significant subsequent events that would require
adjustments to or disclosure in these financial statements.
Company Information
Directors Administrator and Company
Address
C.L. Spears (Chairman) Langham Hall Fund Management
(Jersey) Limited
H. Bestwick Liberation House
D.R. Pirouet Castle Street, St Helier
N.V. Wilson Jersey JE1 2LH
M.M. Gray
Investment Advisor Financial Administrator
EPIC Investment Partners LLP EPIC Administration Limited
Audrey House Audrey House
16-20 Ely Place 16-20 Ely Place
London EC1N 6SN London EC1N 6SN
Auditors and Reporting Accountants Nominated Advisor and Broker
PricewaterhouseCoopers CI LLP Numis Securities Limited
37 Esplanade 10 Paternoster Square
St Helier, Jersey London EC4M 7LT
Channel Islands JE1 4XA
Appointed 22 April 2022
Bankers Registered Agent (Bermuda)
Barclays Bank plc Conyers Dill & Pearman
1 Churchill Place Clarendon House, 2 Church Street
Canary Wharf Hamilton HM 11
London E14 5HP Bermuda
HSBC Bank plc
1st Floor Registrar and CREST Providers
60 Queen Victoria Street Computershare Investor Services
(Jersey) Limited
London EC4N 4TR Queensway House
Hilgrove Street
Santander International St. Helier JE1 1ES
PO Box 545
19-21 Commercial Street Investor Relations
St Helier, Jersey, JE4 8XG Richard Spiegelberg
Cardew Company
5 Chancery Lane
London EC4A 1BL
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END
IR FLFLRAIIEIIF
(END) Dow Jones Newswires
September 06, 2022 02:00 ET (06:00 GMT)
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