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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September 06, 2022 02:00 ET (06:00 GMT)

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