TIDMESO TIDMEO.P TIDMEC.P TIDMEL.P
RNS Number : 9070K
EPE Special Opportunities Limited
07 September 2021
EPE Special Opportunities Limited
("ESO" or the "Company")
Interim Review and Unaudited Financial Statements for the six
months ended 31 July 2021
The Board of EPE Special Opportunities is pleased to announce
the Company's Interim Review and Unaudited Financial Statements for
the six months ended 31 July 2021.
Summary
-- The Company achieved a strong performance in the six months
ended 31 July 2021. Overall progress has been made across the
portfolio against the backdrop of headwinds caused by the ongoing
COVID-19 pandemic. The Board was pleased to announce the Company's
investment in Hamsard 3634 Limited, trading as The Rayware Group
("Rayware") in July 2021. The Board and Investment Advisor continue
to monitor the improving outlook for the UK economy as social
restrictions are relaxed and the vaccination programme nears
completion.
-- The Net Asset Value ("NAV") per share of the Company as at 31
July 2021 was 542.30 pence per share, representing an increase of
23.9 per cent. on the NAV per share of 437.63 pence as at 31
January 2021.
-- The share price of the Company as at 31 July 2021 was 393.00
pence, representing an increase of 45.0 per cent. on the share
price of 271.00 pence as at 31 January 2021.
-- Luceco plc's share price performed strongly, achieving a 49.2
per cent. increase in the six months ended 31 July 2021, with the
share price as at 31 July 2021 being 388.00 pence. The business
announced strong trading for the six months ended 30 June 2021,
achieving profit growth underpinned by market share gains through
the COVID period and the defence of margins against inflationary
pressures. The business announced full year guidance ahead of
market expectations, forecasting sales of at least GBP220.0 million
and operating profit of at least GBP39.0 million. In June 2021, ESO
sold 4.5 million shares in Luceco plc, returning GBP15.0 million in
cash, whilst retaining a 22.1 per cent. holding in the
business.
-- Whittard of Chelsea ("Whittard") continued to face disruption
to trading as a result of COVID-19. In line with government
restrictions, Whittard's retail stores remained closed until April
2021. Subsequent to the reopening of stores, trading was impacted
by reduced tourist volumes and social distancing measures. The
business' profitability in the period benefitted from further
government support and the agreement of bilateral deals with
landlords. Whittard made pleasing progress internationally,
securing a new franchise partner in South Korea and new marketplace
partners in the US and EU.
-- David Phillips achieved sales growth and sustained
profitability in the period, in the context of a difficult macro
trading environment. The business has secured a healthy pipeline of
large-scale projects in the build-to-rent and institutional
developer markets. Looking to the medium term, the business is
monitoring the impact of inflationary cost pressures and working
capital requirements.
-- Pharmacy2U continued to execute its growth plan, benefiting
from the shift to online pharmacy in the COVID-19 period. The
business has achieved EBITDA profitability, aided by the
operational leverage of increased scale.
-- In July 2021, the Company acquired a majority interest in
Rayware, a wholesaler of six heritage British homeware brands,
including the iconic Kilner and Mason Cash marques, as well as
Viners, Typhoon, Ravenhead and Price & Kensington. The business
develops and distributes a wide product range including jars,
mixing bowls, cutlery, glassware and tableware. Rayware has
achieved significant growth in the last twelve months, driven by
strong relationships with its long-standing customer base, and more
recently benefitting from structural trends including home cooking,
sustainability and premiumisation. The Company intends to support
Rayware to achieve its future growth ambitions by supporting
international expansion and the development of a digitally-led
channel strategy.
-- The Company has liquidity of GBP19.7 million(1) as at 31 July
2021. The Company has GBP3.9 million of outstanding unsecured loan
notes repayable in July 2022 and has no other third-party debt
outstanding. The Company is considering raising debt financing of
up to GBP25.0 million to provide additional capital for its strong
pipeline of potential investments. Such debt financing options
include an interest-bearing loan (listed or unlisted), zero
dividend preference shares or a term debt facility and would bear
market rate financing costs. Other forms of debt finance may also
be contemplated.
-- As at 31 July 2021, the Company's unquoted portfolio was
valued at a weighted average EBITDA to enterprise value multiple of
6.4x (excluding Pharmacy2U, which is valued on a sales multiple)
and had a low level of third party leverage with net debt at 0.6x
EBITDA in aggregate.
-- The Board would like to welcome Michael Gray, who joined the
Board on 2 September 2021 as a non-executive Director. Mr Gray was
at The Royal Bank of Scotland for over 30 years, latterly as
Managing Director (Corporate) of RBS International, before retiring
in 2015. The Board are confident his experience in private equity
and the wider financial services sector will be a valuable addition
to the Board.
Mr Clive Spears, Chairman, commented: "The performance of the
Company in the six months ended 31 July 2021 was strong despite the
ongoing disruption caused by the COVID-19 pandemic. The Company has
continued to make progress in the existing portfolio and has
successfully completed a new investment in the period. The Board
would like to express its gratitude to the Investment Advisor for
navigating this turbulent period. The Board looks forward to
updating shareholders on further progress made by the Company 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.
(1) Company liquidity is stated inclusive of cash held by
associates in which the Company is the sole investor.
Enquiries:
EPIC Investment Partners LLP +44 (0) 207 269 8865
Alex Leslie
Langham Hall Fund Management (Jersey) Limited +44 (0) 153 488 5200
Amanda Robinson
Cardew Group Limited +44 (0) 207 930 0777
Richard Spiegelberg
Numis Securities Limited +44 (0) 207 260 1000
Nominated Advisor: Stuart Skinner / Henry
Slater
Corporate Broker: Charles Farquhar
Chairman's Statement
The Company achieved a strong performance in the six months
ended 31 July 2021. Overall progress has been made across the
portfolio against the backdrop of headwinds caused by the ongoing
COVID-19 pandemic. The Board was pleased to announce the Company's
investment in Hamsard 3634 Limited, trading as The Rayware Group
("Rayware") in July 2021. The Board and Investment Advisor continue
to monitor the improving outlook for the UK economy as social
restrictions are relaxed and the vaccination programme nears
completion.
The Net Asset Value ("NAV") per share of the Company as at 31
July 2021 was 542.30 pence per share, representing an increase of
23.9 per cent. on the NAV per share of 437.63 pence as at 31
January 2021. The share price of the Company as at 31 July 2021 was
393.00 pence, representing an increase of 45.0 per cent. on the
share price of 271.00 pence as at 31 January 2021.
Luceco plc's share price performed strongly, achieving a 49.2
per cent. increase in the six months ended 31 July 2021, with the
share price as at 31 July 2021 being 388.00 pence. The business
announced strong trading for the six months ended 30 June 2021,
achieving profit growth underpinned by market share gains through
the COVID period and the defence of margins against inflationary
pressures. The business announced full year guidance ahead of
market expectations, forecasting sales of at least GBP220.0 million
and operating profit of at least GBP39.0 million. In June 2021, ESO
sold 4.5 million shares in Luceco plc, returning GBP15.0 million in
cash, whilst retaining a 22.1 per cent. holding in the
business.
Whittard of Chelsea ("Whittard") continued to face disruption to
trading as a result of COVID-19. In line with government
restrictions, Whittard's retail stores remained closed until April
2021. Subsequent to the reopening of stores, trading was impacted
by reduced tourist volumes and social distancing measures . The
business' profitability in the period benefitted from further
government support and the agreement of bilateral deals with
landlords. Whittard made pleasing progress internationally,
securing a new franchise partner in South Korea and new marketplace
partners in the US and EU.
David Phillips achieved sales growth and sustained profitability
in the period, in the context of a difficult macro trading
environment. The business secured a healthy pipeline of large-scale
projects in the build-to-rent and institutional developer markets.
Looking to the medium term, the business is monitoring the impact
of inflationary cost pressures and working capital
requirements.
Pharmacy2U continued to execute its growth plan, benefiting from
the shift to online pharmacy in the COVID-19 period. The business
has achieved EBITDA profitability, aided by the operational
leverage of increased scale.
In July 2021, the Company acquired a majority interest in
Rayware, a wholesaler of six heritage British homeware brands,
including the iconic Kilner and Mason Cash marques, as well as
Viners, Typhoon, Ravenhead and Price & Kensington. The business
develops and distributes a wide product range including jars,
mixing bowls, cutlery, glassware and tableware. Rayware has
achieved significant growth, driven by strong relationships with
its long-standing customer base, and more recently benefitting from
structural trends including home cooking, sustainability and
premiumisation. The Company intends to support Rayware to achieve
its future growth ambitions by supporting international expansion
and the development of a digitally-led channel strategy.
The Company has liquidity of GBP19.7 million(1) as at 31 July
2021. The Company has GBP3.9 million of outstanding unsecured loan
notes repayable in July 2022 and has no other third-party debt
outstanding. The Company is considering raising debt financing of
up to GBP25.0 million to provide additional capital for its strong
pipeline of potential investments. Such debt financing options
include an interest-bearing loan (listed or unlisted), zero
dividend preference shares or a term debt facility and would bear
market rate financing costs. Other forms of debt finance may also
be contemplated.
The Board would like to welcome Michael Gray, who joined the
Board on 2 September 2021 as a non-executive Director. Mr Gray was
at The Royal Bank of Scotland for over 30 years, latterly as
Managing Director (Corporate) of RBS International, before retiring
in 2015. The Board are confident his experience in private equity
and the wider financial services sector will be a valuable addition
to the Board.
I would like to express my gratitude to my fellow directors and
the Investment Advisor for navigating this turbulent period. I look
forward to updating shareholders on further progress made by the
Company at the year end.
Clive Spears
Chairman
6 September 2021
(1) Company liquidity is stated inclusive of cash held by
associates in which the Company is the sole investor.
Investment Advisor's Report
The Company achieved pleasing momentum in the six months ended
31 July 2021, with the portfolio navigating the ongoing challenges
of the COVID-19 pandemic. The Investment Advisor was pleased to
announce the completion of the Company's investment in Rayware and
looks forward to developing the attractive growth avenues available
to the business. The Investment Advisor continues to review a
healthy pipeline of investment opportunities in which to deploy
further capital. The Investment Advisor and the Board will
endeavour to build on the encouraging performance of the last six
months and look forward to updating shareholders at the year
end.
The Company
The Net Asset Value ("NAV") per share of the Company as at 31
July 2021 was 542.30 pence per share, representing an increase of
23.9 per cent. on the NAV per share of 437.63 pence as at 31
January 2021. The share price of the Company as at 31 July 2021 was
393.00 pence, representing an increase of 45.0 per cent. on the
share price of 271.00 pence as at 31 January 2021.
The Company maintains strong liquidity and prudent levels of
third-party leverage. The Company has cash balances of GBP19.7
million [1] as at 31 July 2021, which are available to support the
existing portfolio, meet committed obligations and to deploy into
attractive investment opportunities. Net debt in the underlying
portfolio stands at 0.6x EBITDA in aggregate. In June 2021, the
Company partially sold down its stake in Luceco plc, returning
GBP15.0 million cash to ESO to maintain liquidity and finance new
acquisitions.
The Portfolio
The Company's unquoted portfolio is valued at a weighted average
enterprise value to EBITDA multiple of 6.4x for mature assets
(excluding assets investing for growth). The valuation has been
derived by reference to relevant quoted comparables, after the
application of an appropriate discount to adjust for the
portfolio's scale and unquoted nature (i.e. an illiquidity
discount). Given the use of quoted comparables/actuals generally,
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 consequent equity valuations.
The share price of Luceco plc as at 31 July 2021 was 388.00
pence, representing an increase of 49.2 per cent. vs. 31 January
2021. On 16 July 2021, Luceco released a trading update for the six
months ended 30 June 2021, announcing trading ahead of
expectations, with sales of GBP108.0 million, a 51.0 per cent.
increase vs. 2020 and 31.0 per cent. vs. 2019. In addition, the
business achieved gross margin of 38.5 per cent. (a 0.1 per cent.
increase vs. 2020) and operating profit of GBP19.0 million (a 115.9
per cent. increase vs. 2020), with profitability successfully
defended against inflationary cost pressures. The business
announced a full year forecast of at least GBP220.0 million sales
and at least GBP39.0 million operating profit, ahead of market
expectations. In June 2021, ESO sold down 11.2 per cent. of its
investment in Luceco plc in the market, providing GBP15.0 million
in funds for new investments.
Whittard of Chelsea ("Whittard") continued to experience
challenging trading conditions as a result of the COVID-19
pandemic. Trading was impacted by the closure of the UK retail
estate for much of the period, as well as social distancing
restrictions subsequent to the reopening of stores. Whittard's
online channel continued to perform well, maintaining the increased
scale attained in the prior year. In the medium term, reduced
tourist volumes are expected to continue to provide a headwind to
trading performance. The business continued to make pleasing
progress in developing its international presence, securing a new
franchise partner in South Korea, and new marketplace partners in
the US and EU.
David Phillips continued its positive trajectory in the period
despite difficult trading conditions, with sales growth supported
by resilience in the Company's high growth business lines,
residential projects and fitted. Looking forward, the Investment
Advisor and the management team are focused on ensuring successful
execution through this high growth period, against a complex
background of high input costs, tightness in operational capacity
and structural working capital cycle shifts. The Investment Advisor
is encouraged by the fact that the business realised considerable
structural improvements through both the initial turnaround phase
and through the COVID-19 crisis which should allow the Company to
operate efficiently at this higher trading level.
Pharmacy2U continued to grow both sales and registered patients
in the period, building on the significant gains made in the prior
year. Pharmacy2U has achieved EBITDA profitability, benefitting
from the business' significantly increased scale.
In July 2021, the Company acquired a majority interest in
Rayware, a wholesaler of six heritage British homeware brands,
including the iconic Kilner and Mason Cash marques, as well as
Viners, Typhoon, Ravenhead and Price & Kensington. The business
develops and distributes a wide product range including jars,
mixing bowls, cutlery, glassware and tableware. The business has
performed strongly over the recent period, growing sales and
gaining market share by maintaining uninterrupted supply to
customers through the period of COVID-19 disruption and benefitting
from long term market drivers. Looking to the future, the business
has a number of attractive growth avenues available, with the
Investment Advisor seeking to support the development of an
omni-channel strategy across domestic and international
markets.
The Investment Advisor continues to monitor the Company's credit
fund investments. European Capital Private Debt Fund has completed
the deployment of the Company's committed capital in the fund and
continues to distribute capital to the Company. Both Atlantic
Credit Opportunities Fund and Prelude have achieved strong
performance in the period, ahead of the high yield market and hedge
fund peers, delivering an 18.4 per cent. return and 17.5 per cent.
return respectively in the six months ended 30 June 2021.
The Investment Advisor would like to extend its gratitude to the
management and employees of the portfolio for their continuing hard
work and welcome the team at Rayware . The Investment Advisor would
like to thank the Board and the Company's shareholders for their
continued support.
EPIC Investment Partners LLP
Investment Advisor to the Company
6 September 2021
(1) Company liquidity is stated inclusive of cash held by
associates in which the Company is the sole investor.
Biographies of the Directors
Clive Spears - Chairman David Pirouet - Chair of Audit
& Risk Committee
Clive Spears retired from the Royal David Pirouet joined PricewaterhouseCoopers
Bank of Scotland International Limited Channel Islands LLP in 1980, retiring
in December 2003 as Deputy Director in 2009 after being an Audit and
of Jersey after 32 years of service. Assurance Partner for over 20 years.
His main activities prior to retirement During his 29 years at the firm
included Product Development, Corporate Mr Pirouet specialised in the financial
Finance, Trust and Offshore Company services sector, in particular
Services and he was Head of Joint in the alternative investment management
Venture Fund Administration with area and also led the business's
Rawlinson & Hunter. Mr Spears is Hedge Fund and business recovery
an Associate of the Chartered Institute practices for over four years.
of Bankers and a Member of the Chartered Mr Pirouet currently holds a number
Institute for Securities & Investment. of non-executive positions across
He has accumulated a well spread private equity, infrastructure
portfolio of directorships centring and corporate debt. Mr Pirouet's
on private equity, infrastructure was previously non-executive Director
and corporate debt. His current appointments and Chair of the Audit and Risk
include Chairman of Nordic Capital committee for GCP Infrastructure
Limited and directorships of a series Investments (FTSE 250 listed company)
of ICG plc sponsored funds and funds until he retired in February 2021.
managed by Kreos Fund Management.
--------------------------------------------
Heather Bestwick Michael Gray
--------------------------------------------
Heather Bestwick has been a financial Michael Gray joined The Royal Bank
services professional for over 25 of Scotland in 1983, retiring in
years, onshore in the City of London 2015 after being Managing Director
and offshore in the Cayman Islands (Corporate) of RBS International
and Jersey. She qualified as an English for 10 years. During his 32 years
solicitor, specialising in ship finance, at the firm Michael covered a broad
with City firm Norton Rose, and worked spectrum of financial services
in their London and Greek offices including corporate and commercial
for 8 years. Ms Bestwick subsequently banking, funds, trusts and real
practised and became a partner with estate. Mr Gray currently holds
global offshore law firm Walkers a number of non-executive positions
in the Cayman Islands, and Managing across private equity, infrastructure
Partner of the Jersey office. Ms and fund management. Michael's
Bestwick sits on the boards of Deutsche appointments currently include
International Corporate Services non-executive directorships of
Limited and Rathbone Investment Management Triton Investment Management (a
International Limited. 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 finance not-for-profit),
JTC plc (a FTSE 250 listed trust
and corporate services company)
and TEAM plc (a listed wealth management
company).
--------------------------------------------
Nicholas Wilson
Nicholas Wilson has over 40 years
of experience in hedge funds, derivatives
and global asset management. He has
run offshore branch operations for
Mees Pierson Derivatives Limited,
ADM Investor Services International
Limited and several other London
based financial services companies.
He is Chairman of Gulf Investment
Fund plc, a premium listed company,
and, until recently, was chairman
of Alternative Investment Strategies
Limited.
Biographies of the Investment Advisor
Giles Brand Hiren Patel
Giles Brand is a Managing Partner Hiren Patel is a Managing Partner
and the founder of EPIC. He is of EPIC. Hiren is responsible for
currently Non-executive Chairman EPIC's Markets and Administration
of Whittard of Chelsea and Luceco business lines, as well as the group's
plc. Before joining EPIC, Giles financial, operational and compliance
was a founding Director of EPIC functions. Hiren has worked in the
Investment Partners, a fund management investment management industry for
business which at sale had US $5bn the past twenty years. Before joining
under management. Prior to this, EPIC, Hiren was Group Financial Controller
Giles worked in Mergers and Acquisitions at Groupama Asset Management.
at Baring Brothers in Paris and
London. Giles read History at Bristol
University.
------------------------------------------------
Robert Fulford James Henderson
------------------------------------------------
Robert Fulford is a Managing Director James Henderson is a Managing Director
at EPIC. He previously worked at at EPIC. He previously worked in
Barclaycard Consumer Europe before the Investment Banking division of
joining EPIC. Whilst at Barclaycard, Deutsche Bank before joining EPIC.
Robert was the Senior Manager for Whilst at Deutsche Bank he worked
Strategic Insight and was responsible on a number of M&A transactions and
for identifying, analysing and IPOs in the energy, property, retail
responding to competitive forces. and gaming sectors, as well as providing
Prior to Barclaycard, Robert spent corporate broking advice to mandated
four years as a strategy consultant clients. At EPIC, James manages the
at Oliver Wyman Financial Services, investment in Pharmacy2U. James read
where he worked with a range of Modern History at Oxford University
major retail banking and institutional and Medicine at Nottingham University.
clients in the UK, mainland Europe,
Middle East and Africa. At EPIC,
Robert manages the investments
in Whittard of Chelsea, David Phillips
and Rayware. Robert read Engineering
at Cambridge University.
------------------------------------------------
Alex Leslie Ian Williams
------------------------------------------------
Alex Leslie is a Managing Director Ian Williams is a Managing Director
at EPIC. He previously worked in at EPIC. He was previously a Partner
Healthcare Investment Banking at at Lyceum Capital Partners LLP, responsible
Piper Jaffray before joining EPIC. for deal origination and engagement,
Whilst at Piper Jaffray he worked with a primary focus on the business
on a number of M&A transactions services and software sectors, as well
and equity fundraisings within as financial services, education and
the Biotechnology, Specialty Pharmaceutical health sectors. Prior to Lyceum, Ian
and Medical Technology sectors. was a Director at Arbuthnot Securities,
At EPIC, Alex manages the investment involved in transactions including
in Luceco plc and Rayware. Alex IPOs, secondary fund raisings and M&A,
read Human Biological and Social focusing on the support services, healthcare,
Sciences at the University of Oxford transport & IT sectors. Ian read Politics
and obtained an MPhil in Management and Economics at the University of
from the Judge Business School Bristol.
at the University of Cambridge.
------------------------------------------------
Independent Review Report to EPE Special Opportunities
Limited
Conclusion
We have been engaged by the Company to review the condensed set
of financial statements in the half-yearly report for the six
months ended 31 July 2021 which comprises the Statement of
Comprehensive Income, Statement of Financial Position, Statement of
Changes in Equity, Statement of Cash Flows and the related
explanatory notes.
Based on our review, nothing has come to our attention that
causes us to believe that the condensed set of financial statements
in the half-yearly report for the six months ended 31 July 2021 is
not prepared, in all material respects, in accordance with IAS 34
Interim Financial Reporting and the AIM Rules.
Scope of review
We conducted our review in accordance with International
Standard on Review Engagements (UK and Ireland) 2410 Review of
Interim Financial Information Performed by the Independent Auditor
of the Entity issued by the Auditing Practices Board for use in the
UK. 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. We read the other information contained in the
half-yearly report and consider whether it contains any apparent
misstatements or material inconsistencies with the information in
the condensed set of financial statements.
A review is substantially less in scope than an audit conducted
in accordance with International Standards on Auditing (UK) and
consequently does not enable us to obtain assurance that we would
become aware of all significant matters that might be identified in
an audit. Accordingly, we do not express an audit opinion.
Directors' responsibilities
The half-yearly report is the responsibility of, and has been
approved by, the Directors. The Directors are responsible for
preparing the half-yearly report in accordance with the AIM
Rules.
As disclosed in note 2, the annual financial statements of the
Company are prepared in accordance with International Financial
Reporting Standards. The Directors are responsible for preparing
the condensed set of financial statements included in the
half-yearly financial report in accordance with IAS 34.
Our responsibility
Our responsibility is to express to the Company a conclusion on
the condensed set of financial statements in the half-yearly report
based on our review.
The purpose of our review work and to whom we owe our
responsibilities
This report is made solely to the Company in accordance with the
terms of our engagement. Our review has been undertaken so that we
might state to the Company those matters we are required to state
to it in this report and for no other purpose. To the fullest
extent permitted by law, we do not accept or assume responsibility
to anyone other than the Company for our review work, for this
report, or for the conclusions we have reached.
KPMG Audit LLC
Chartered Accountants
Heritage Court
41 Athol Street
Douglas
Isle of Man IM1 1LA
6 September 2021
Statement of Comprehensive Income
For the six months ended 31 July 2021
1 Feb 1 Feb
2020 to 2020 to
31 Jul 31 Jan
1 Feb 2021 to 31 Jul 2021 2020 (unaudited) 2021 (audited)
Revenue Capital Total
(unaudited) (unaudited) (unaudited) Total Total
Note GBP GBP GBP GBP GBP
---------------- ------------------- ------------------- ----------------------- --------------------- --------------------
Income
Interest income 514 - 514 1,398 4,089
Gains/(losses)
on
investments - 36,734,638 36,734,638 (2,439,705) 42,012,143
---------------- ------------------- ------------------- ----------------------- --------------------
Total
income/(loss) 514 36,734,638 36,735,152 (2,438,307) 42,016,232
---------------- ------------------- ------------------- ----------------------- --------------------- --------------------
Expenses
Investment
advisor's
5 fees (1,028,984) - (1,028,984) (937,976) (1,937,207)
14 Directors' fees (74,498) - (74,498) (77,000) (154,000)
Share based
payment
6 expense (396,520) - (396,520) (217,715) (682,525)
7 Other expenses (765,619) - (765,619) (342,047) (669,769)
Total expense (2,265,621) - (2,265,621) (1,574,738) (3,443,501)
---------------- ------------------- ------------------- ----------------------- --------------------- --------------------
Profit/(loss)
before
finance costs
and
tax (2,265,107) 36,734,638 34,469,531 (4,013,045) 38,572,731
---------------- ------------------- ------------------- ----------------------- --------------------- --------------------
Finance charges
Interest on
unsecured
loan note
13 instruments (159,843) - (159,843) (159,842) (319,685)
Profit/(loss)
for
the year before
taxation (2,424,950) 36,734,638 34,309,688 (4,172,887) 38,253,046
Taxation - - - -
---------------- ------------------- ------------------- ----------------------- --------------------- --------------------
Profit/(loss)
for
the year (2,424,950) 36,734,638 34,309,688 (4,172,887) 38,253,046
---------------- ------------------- ------------------- ----------------------- --------------------- --------------------
Other
comprehensive
income - - - -
---------------- ------------------- ------------------- ----------------------- --------------------- --------------------
Total
comprehensive
income/(loss) (2,424,950) 36,734,638 34,309,688 (4,172,887) 38,253,046
---------------- ------------------- ------------------- ----------------------- --------------------- --------------------
Basic
earnings/(loss)
per ordinary
share
11 (pence) (7.54) 114.26 106.72 (12.69) 116.69
---------------- ------------------- ------------------- ----------------------- --------------------- --------------------
Diluted
earnings/(loss)
per ordinary
share
11 (pence) (7.54) 114.26 106.72 (12.69) 116.69
---------------- ------------------- ------------------- ----------------------- --------------------- --------------------
The total column of this statement represents the Statement of
Comprehensive Income, prepared in accordance with IFRS. The
supplementary revenue return 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 2021
31 July 2021
(unaudited) 31 January 2021 (audited) 31 July 2020 (unaudited)
Note GBP GBP GBP
------------------------ ------------------------ -------------------------- -------------------------
Non-current assets
Investments at fair
value through profit or
8 loss 159,573,313 117,256,810 82,107,768
159,573,313 117,256,810 82,107,768
------------------------ ------------------------ -------------------------- -------------------------
Current assets
Cash and cash
equivalents 19,669,303 27,854,701 22,150,379
Trade and other
receivables 92,454 197,564 175,798
------------------------ ------------------------ -------------------------- -------------------------
19,761,757 28,052,265 22,326,177
------------------------ ------------------------ -------------------------- -------------------------
Current liabilities
Trade and other
payables (1,026,055) (659,645) (641,238)
Unsecured loan note
13 instruments (3,967,124) - -
------------------------ ------------------------ -------------------------- -------------------------
(4,993,179) (659,645) (641,238)
------------------------ --------------------------
Net current assets 14,768,578 27,392,620 21,684,939
------------------------ ------------------------ -------------------------- -------------------------
Non-current liabilities
Unsecured loan note
13 instruments - (3,956,822) (3,946,520)
--------------------------
- (3,956,822) (3,946,520)
------------------------ ------------------------ -------------------------- -------------------------
Net assets 174,341,891 140,692,608 99,846,187
------------------------ ------------------------ -------------------------- -------------------------
Equity
10 Share capital 1,730,828 1,730,828 1,730,828
Share premium 13,619,627 13,619,627 13,619,627
Capital reserve 163,032,215 126,297,577 81,845,729
Revenue reserve (4,040,779) (955,424) 2,650,003
--------------------------
Total equity 174,341,891 140,692,608 99,846,187
Net asset value per
12 share (pence) 542.30 437.63 303.04
------------------------ ------------------------ -------------------------- -------------------------
Statement of Changes in Equity
For the six months ended 31 July 2021
Six months ended 31 July 2021 (unaudited)
Share capital Share Capital Revenue Total
premium reserve reserve
Note 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
6 charge - - - 396,520 396,620
Share acquisition for
JSOP 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
------------------------- -------------- ------------ ------------- ------------ -------------
Year ended 31 January 2021 (audited)
Share capital Share Capital Revenue Total
premium reserve reserve
GBP GBP GBP GBP GBP
------------------------- -------------- ------------ ------------- ------------ -------------
Balance at 1 February
2020 1,726,953 13,489,826 84,285,434 4,755,783 104,257,996
Total comprehensive
income/(loss) for the
year - - 42,012,143 (3,759,097) 38,253,046
------------------------- -------------- ------------ ------------- ------------ -------------
Contributions by and
distributions to owners
Share-based payment
6 charge - - - 682,525 682,525
Share ownership scheme
participation - - - 3,943 3,943
Share acquisition for
JSOP scheme - - - (786,140) (786,140)
Provision for future
settlement - - - 216,323 216,323
Purchase of shares - - - (2,068,761) (2,068,761)
Issue of new shares 3,875 129,801 - - 133,676
Total transactions with
owners 3.875 129,801 - (1,952,110) (1,818,344)
------------------------- -------------- ------------ ------------- ------------ -------------
Balance at 31 January
2021 1,730,828 13,619,627 126,297,577 (955,424) 140,692,608
------------------------- -------------- ------------ ------------- ------------ -------------
Six months ended 31 July 2020 (unaudited)
Share capital Share Capital Revenue Total
premium reserve reserve
GBP GBP GBP GBP GBP
------------------------- -------------- ------------ ------------- ------------ -------------
Balance at 1 February
2020 1,726,953 13,489,826 84,285,343 4,755,783 104,257,996
Total comprehensive
loss for the period - - (2,439,705) (1,733,182) (4,172,887)
------------------------- -------------- ------------ ------------- ------------ -------------
Contributions by and
distributions to owners
Share-based payment
6 charge - - - 217,715 217,715
Share ownership scheme
participation - - - (20,497) (20,497)
Share acquisition for
JSOP scheme - - - (786,140) (786,140)
Provision for future
settlement - - - 216,324 216,324
Issue of new shares 3,875 129,801 - - 133,676
------------------------- -------------- ------------ ------------- ------------ -------------
Total transactions with
owners 3,875 129,801 - (372,598) (238,922)
------------------------- -------------- ------------ ------------- ------------ -------------
Balance at 31 July 2020 1,730,828 13,619,627 81,845,729 2,650,003 99,846,187
------------------------- -------------- ------------ ------------- ------------ -------------
Statement of Cash Flows
For the six months ended 31 July 2021
1 Feb 2021 1 Feb 2020 1 Feb 2020
to 31 Jul to 31 Jan to 31 Jul
2021 (unaudited) 2021 (audited) 2020 (unaudited)
Note GBP GBP GBP
------------------------------------- -------------------------- ------------------ ------------------
Operating activities
Interest income received 514 4,089 1,398
Expenses paid (1,495,782) (2,896,656) (1,335,075)
Net cash used in operating
activities (1,495,268) (2,892,567) (1,333,677)
------------------------------------- -------------------------- ------------------ ------------------
Investing activities
8 Purchase of investments (22,520,000) (5,320,330) (1,000,000)
8 Proceeds from investments 17,314,775 13,612,853 -
Loan from associates (278,440) - (164,550)
Net cash (used in)/generated
from investing activities (5,483,665) 8,292,523 (1,164,550)
------------------------------------- -------------------------- ------------------ ------------------
Financing activities
Unsecured loan note interest
paid (149,540) (299,080) (149,540)
Purchase of shares - (2,854,901) -
Share acquisition for JSOP
scheme (1,056,925) - (786,140)
Share ownership scheme participation - 3,943 (20,497)
Net cash used in financing
activities (1,206,465) (3,150,038) (956,177)
------------------------------------- -------------------------- ------------------ ------------------
(Decrease)/increase in cash
and cash equivalents (8,185,398) 2,249,918 (3,454,404)
Cash and cash equivalents
at start of period/year 27,854,701 25,604,783 25,604,783
------------------------------------- -------------------------- ------------------ ------------------
Cash and cash equivalents
at end of period/year 19,669,303 27,854,701 22,150,379
------------------------------------- -------------------------- ------------------ ------------------
Notes to the Financial Statements
For the six months ended 31 July 2021
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 with immediate effect on 17 May 2017
and has subsequently operated from Jersey only.
The Company's ordinary shares are quoted on AIM, a market
operated by the London Stock Exchange, and the Growth Market of the
Aquis Stock Exchange (formerly the NEX Exchange).
The interim financial statements are as at and for the six
months ended 31 July 2021, comprising the Company and its
associates. The interim financial statements are unaudited.
The financial statements of the Company as at and for the year
ended 31 January 2021 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
(ESO Investments 1 Limited, ESO Investments 2 Limited and ESO
Alternative Investments LP). The remainder of the Company's
subsidiary companies and associates are to be dissolved or are in
the process of liquidation.
The principal activity of the Company and 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 Statement of compliance
These interim financial statements for the six months ended 31
July 2021 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 2021. 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. They
were previously prepared in accordance with IFRS as adopted by the
EU. This change has no impact on the financial statements.
These interim financial statements were authorised for issue by
the Company's Board of Directors on 6 September 2021.
3 Significant accounting policies
COVID 19 Impact:
The COVID-19 pandemic has had a significant impact on the
valuation multiples, derived from quoted comparables, used in the
preparation of the fair market valuation of the Company's unquoted
investments. These quoted comparables are subject to both market
volatility and uncertainty due to the impact of the pandemic and
their trading outlook. The performance and financial position
forecasted for the Company's portfolio is subject to the wider
market uncertainty caused by the COVID-19 pandemic. These inputs
have been used in the preparation of the fair market valuation of
the Company's unquoted investments.
4 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 2021.
5 Investment advisory, administration fees and profit share
Investment advisory fees
Company
The investment advisory fee payable to EPIC Investment Partners
LLP, previously known as EPIC Private Equity LLP, 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 GBP1,028,984 (for the
period ended 31 July 2020: GBP937,976; year ended 31 January 2021:
GBP1,937,207). The amount outstanding as at 31 July 2021 was
GBP528,984 (for the period ended 31 July 2020: GBP500,000; year
ended 31 January 2021: GBP500,000).
Administration fees
EPIC Administration Limited, trading as EPIC Investments
Partners and previously known as EPE 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 GBP108,424 (for the period
ended 31 July 2020: GBP70,242; for the year ended 31 January 2021:
GBP163,212).
Other administration fees during the period were GBP38,272 (for
the period ended 31 July 2020: GBP27,441; for the year ended 31
January 2021: GBP66,234).
Profit share 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 in the base value of investment. For the period
ended 31 July 2021, GBP400,872 (for the period ended 31 July 2020:
GBP1,633,929; for the year ended 31 January 2021: GBP767,311) has
been credited to the profit share account of the Investment Advisor
in the records of ESO Investments 1 Limited.
Profit share 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 in the base value of investment. For the period
ended 31 July 2021, GBP26,191,448 (for the period ended 31 July
2020: GBP4,736,542; for the year ended 31 January 2021:
GBP16,125,708) has been credited to the profit share account of the
Investment Advisor in the records of ESO Investments 2 Limited.
6 Share-based payment expense
Certain employees (including Directors) of the Company and the
Investment Advisors receive remuneration in the form of equity
settled share-based payment transactions, through a Joint Share
Ownership Plan ("JSOP").
The cost of equity settled transactions with certain Directors
of the Company and other participants (including employees, members
and consultants of the Investment Advisor) ("Participants") is
measured by reference to the fair value at the date on which they
are granted. 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 JSOP. 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 1,748,193 (for the period ended 31 July 2020:
1,419,004; for the year ended 31 Jan 2021: 1,419,004) matching
shares at the period end which have traditionally not voted.
During the period, 329,189 shares were acquired by the Trust for
the JSOP scheme (2021: 462,435). No shares were vested during the
period to the JSOP participants (2021: nil). 154,110 shares were
awarded to the JSOP participants in the period (2021: 271,995).
The amount expensed in the income statement has been calculated
by reference to the grant date at a fair value of the equity
instrument 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 expense
recognised on the share-based payments during the period amounts to
GBP396,520 (for the period ended 31 July 2020: GBP217,715; for the
year ended 31 Jan 2021: GBP682,525), of which GBP320,869 related to
expenses incurred during the period ended 31 July 2021 and
GBP75,651 related to expenses incurred in the year ended 31 January
2020. Of the total share-based payment expense during the period
ended 31 July 2021, GBP23,386 related to the Directors (31 Jan
2021: GBP48,588) and the balance related to members, employees and
consultants of the Investment Advisor.
7 Other expenses
The breakdown of other expenses presented in the statement of
comprehensive income is as follows:
1 Feb 2021 1 Feb 2020 1 Feb 2020
to 31 Jul to 31 Jul to 31 Jan 2021
2021 (unaudited) 2020 (unaudited) (audited)
Total Total Total
GBP GBP GBP
------------------------------------ ---------------------- ---------------------- ----------------------
Administration fees (146,696) (97,683) (229,446)
Directors' and officers' insurance (11,286) (11,103) (22,356)
Professional fees (478,027) (136,941) (221,697)
Board meeting and travel expenses (155) (1,981) (1,981)
Auditors' remuneration (24,546) (36,535) (55,000)
Bank charges (751) (303) (659)
Irrecoverable VAT (360) (450) (675)
Sundry expenses (47,241) (6,224) (33,111)
Nominated advisor and broker
fees (29,343) (29,072) (60,710)
Listing fees (27,214) (21,755) (44,134)
------------------------------------- ---------------------- ---------------------- ----------------------
Other expenses (765,619) (342,047) (669,769)
------------------------------------- ---------------------- ---------------------- ----------------------
8 Investments at fair value through profit or loss
31 July 2021 31 January 31 July 2020
2021
(unaudited) (audited) (unaudited)
GBP GBP GBP
Investments at fair value through
profit and loss 159,573,313 117,256,810 82,107,768
159,573,313 117,256,810 82,107,768
----------------- ----------------------- ------------------
Investment roll forward schedule
31 July 2021 31 January 31 July
(unaudited) 2021 (audited) 2020
(unaudited)
Investments at fair value as at
1 February 117,256,810 83,382,923 83,382,923
Purchase of investments 22,520,000 5,320,330 1,000,000
Income from investments (17,314,775) (13,612,853) -
Distributions (non-cash distribution) - (66,664) -
Fair value movements 36,734,638 42,012,143 (2,439,705)
Loan to associates 278,440 220,931 164,550
Reclassification of debtor balance
to investee 98,200 - -
Investments at fair value as at
31 July/ 31 January 159,573,313 117,256,810 82,107,768
--------------------------------------- ------------------------- ----------------------------- ---------------
9 Fair value of financial instruments
The Company determines the fair value of financial instruments
with reference to IPEV guidelines and the valuation principles of
IFRS 13 (Fair Value Measurement). The Company measures fair value
using the IFRS 13 fair value hierarchy, which reflects the
significance and certainty of the inputs used in deriving the fair
value of an asset:
-- Level 1: Inputs that are quoted market prices (unadjusted) in
active markets for identical instruments;
-- Level 2: Inputs other than quoted prices included within
Level 1 that are observable either directly (i.e. as prices) or
indirectly (i.e. derived from prices). This category includes
instruments valued using quoted market prices in active markets for
similar instruments, quoted prices for identical or similar
instruments in markets that are considered less than active or
other valuation techniques in which all significant inputs are
directly or indirectly observable from market data;
-- Level 3: Inputs that are unobservable. This category includes
all instruments for which the valuation technique includes inputs
not based on observable data and the unobservable inputs have a
significant effect on the instrument's valuation. This category
includes instruments that are valued based on quoted prices for
similar instruments but for which significant unobservable
adjustments or assumptions are required to reflect differences
between the instruments.
Valuation framework
The Company employs the valuation framework detailed below with
respect to the measurement of fair values. A valuation of the
Company's investments is 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 financial statements.
Quoted equity investments
Quoted investments traded in an active market are classified as
Level 1 in the IFRS 13 fair value hierarchy. The Company's
investment in Luceco is a Level 1 asset. For Level 1 assets, the
Company calculates the holding value from the latest market price
(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 Company's
investments in Whittard, David Phillips, Rayware, Pharmacy2U,
Atlantic Credit Opportunities Fund Limited, Prelude and European
Capital Private Debt Fund LP 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, the Company considers the
investment cost, in conjunction with cross referencing of the
valuation to quoted comparables multiples, as an applicable fair
value for the asset;
-- For underperforming assets, the Company considers the net
asset or recovery valuation more applicable, in particular where
the business' performance be contingent on shareholder financial
support;
-- For performing assets, the Company considers the market
approach to be the most appropriate with a specific focus on
trading comparables, applied on a forward basis. The Company will
also consider transaction comparables, applied on a historic
basis;
-- For assets managed and valued by third party managers, the
Company reviews the valuation methodology of the third-party
manager. If deemed appropriate and consistent with the Company's
reporting standards, the Company will use the valuation prepared by
the third-party manager.
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/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 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 3 Total
31 July 2021 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 equity 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
------------------------------------------- ----------------- ------------------ --------------------
Level 1 Level 3 Total
31 January 2021 GBP GBP GBP
------------------------------------------ ----------------- ------------------ --------------------
Financial assets at fair value through
profit or loss
Unquoted private equity investments
(including debt) - 23,156,643 23,156,643
Unquoted fund investments - 5,265,686 5,265,686
Quoted equity investments 88,737,691 - 88,737,691
------------------------------------------- ----------------- ------------------ --------------------
Investments at fair value through profit
or loss 88,737,691 28,422,329 117,160,020
------------------------------------------- ----------------- ------------------ --------------------
Other asset and liabilities (held at
cost) - - 96,790
------------------------------------------- ----------------- ------------------ --------------------
Total 88,737,691 28,422,329 117,256,810
------------------------------------------- ----------------- ------------------ --------------------
Level 1 Level 3 Total
31 July 2020 GBP GBP GBP
------------------------------------------ ----------------- ------------------ -------------------
Financial assets at fair value through
profit or loss
Unquoted private equity investments
(including debt) - 22,179,014 22,179,014
Unquoted fund investments - 1,393,452 1,393,452
Quoted equity investments 57,306,094 - 57,306,094
------------------------------------------- ----------------- ------------------ -------------------
Investments at fair value through profit
or loss 57,306,094 23,572,466 80,878,560
------------------------------------------- ----------------- ------------------ -------------------
Other asset and liabilities (held at
cost) - 1,229,208 1,229,208
------------------------------------------- ----------------- ------------------ -------------------
Total 57,306,094 24,801,674 82,107,768
------------------------------------------- ----------------- ------------------ -------------------
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 2021 31 January
(unaudited) 2021
(audited)
Unquoted investments (including debt) GBP GBP
---------------------------------------- ---- ---------------------------- ---------------------
Balance as at 1 February 28,422,329 25,405,230
Additional investments 22,520,000 5,339,953
Capital distributions from investments (306,090) (223,018)
Change in fair value through profit
and loss (3,865,862) (2,099,836)
Balance as at 31 July / 31 January 46,770,377 28,422,329
---------------------------------------------- ---------------------------- ---------------------
Significant unobservable inputs used in measuring fair value
The table below sets out information about significant
unobservable inputs used at 31 July 2021 in measuring financial
instruments categorised as Level 3 in the fair value hierarchy.
Description Fair value at 31 Significant unobservable
July 2021 inputs
------------------------------------ -------------------------
GBP
------------------------------------ ----------------------- -------------------------
Unquoted private equity investments Sales/EBITDA multiple
(including debt) 41,117,869
Unquoted fund investments Reported net asset
5,652,508 value
------------------------------------ ----------------------- -------------------------
Significant unobservable inputs are developed as follows:
-- Trading comparable multiple: valuation multiples used by
other market participants when pricing comparable assets. Relevant
comparable assets are selected from public companies determined to
be proximate to the Company's investment based on similarity of
sector, size, geography or other relevant factors. The valuation
multiple for a comparable company is determined by calculating the
enterprise value of the company implied by its market price as at
the reporting date and dividing by the relevant financial metric
(sales or EBITDA).
-- Reported net asset value: for assets managed and valued by a
third party, the manager provides the Company with periodic
valuations of the Company's investment. The Company reviews the
valuation methodology of 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 the Company's investment in mature Level 3 assets, the
valuations used in the preparation of the financial statements
imply an average EV to EBITDA multiple of 6.4x (weighted by each
asset's total valuation) (2021: 5.8x). 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 GBP11,074,537 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 GBP15,776,787 lower. A
corresponding increase or decrease in the asset's financial
forecasts would have a similar impact on the Company's assets and
profit.
-- For the Company's investment in growth Level 3 assets, the
valuations used in the preparation of the financial statements
imply an average EV to sales multiple of 1.5x (weighted by each
asset's total valuation) (2021: 1.6x). 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 GBP878,792 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 GBP878,792 lower. A
corresponding increase or decrease in the asset's financial
forecasts would have a similar impact on the Company's assets and
profit.
10 Share capital
31 July 2021 31 January 2021 31 July 2020
(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 (2,467,731) - (2,467,731) - (1,668,251) -
32,148,823 1,730,828 32,148,823 1,730,828 32,948,303 1,730,828
--------------- ---------- --------------- ---------- -------------- --------------
11 Basic and diluted loss per share (pence)
Basic profit per share is calculated by dividing the profit of
the Company for the period attributable to the ordinary
shareholders of GBP34,309,688 (for the period ended 31 July 2020:
loss of (GBP4,172,887); for the year ended 31 January 2021: profit
of GBP38,253,046) divided by the weighted average number of shares
outstanding during the period of 32,148,823 after excluding
treasury shares (for the period ended 31 July 2020: 32,885,795; for
the year ended 31 January 2021: 32,782,089).
Diluted profit per share is calculated by dividing the profit of
the Company for the period attributable to ordinary shareholders of
GBP34,309,688 (for the period ended 31 July 2020: loss of
(GBP4,172,887); for the year ended 31 January 2021: profit of
GBP38,253,046) 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 32,148,823 after
excluding treasury shares (for the period ended 31 July 2020:
32,885,795 ; for the year ended 31 January 2021: 32,782,089).
12 NAV per share (pence)
The Company's NAV per share of 542.30 pence (for the period
ended 31 July 2020: 303.04 pence; for the year ended 31 January
2021: 437.63 pence) is based on the net assets of the Company at
the period end of GBP174,341,891 (for the period ended 31 July
2020: GBP99,846,187; for the year ended 31 January 2021:
GBP140,692,608) divided by the shares in issue at the end of the
period of 32,148,823 after excluding treasury shares (for the
period ended 31 July 2020: 32,948,303 ; for the year ended 31
January 2021: 32,148,823).
The Company's diluted NAV per share of 542.30 pence (for the
period ended 31 July 2020: 303.04 pence; for the year ended 31
January 2021: 437.63 pence) is based on the net assets of the
Company at the period end of GBP174,341,891 (for the period ended
31 July 2020: GBP99,846,187; for the year ended 31 January 2021:
GBP140,692,608) divided by the shares in issue at the end of the
period, as adjusted for the effects of dilutive potential ordinary
shares of 32,148,823 after excluding treasury shares (for the
period ended 31 July 2020: 32,948,303; for the year ended 31
January 2021: 32,148,823).
13 Unsecured loan note instruments
The Company has issued Unsecured Loan Notes ("ULN") which pay
interest at 7.5 per cent. per annum and are redeemable on 23 July
2022 (subject to voluntary early redemption by the Company). At 31
July 2021, 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 2021 was GBP10,303 (for the
period ended 31 July 2020: GBP10,303; for the year ended 31 Jan
2021: GBP20,605). The carrying value of the ULNs in issue at the
period end was GBP3,967,124 (for the period ended 31 July 2020:
GBP3,946,520; for the year ended 31 Jan 2021: GBP3,956,822). The
total interest expense on the ULNs for the period is GBP159,843
(for the period ended 31 July 2020: GBP159,842; for the year ended
31 Jan 2021: GBP319,685). This includes the amortisation of the
issue costs. The carrying value of ULN is presented under current
liabilities in the current period (previously presented under
non-current liabilities) as they are redeemable within 12-month
period from the Statement of Financial Position date.
14 Related parties
Directors' fees expense during the period amounted to GBP74,498
(for the period ended 31 July 2020: GBP77,000; for the year ended
31 January 2021: GBP154,000) of which GBP10,333 is accrued as at 31
July 2021 (for the period ended 31 July 2020: GBP12,833; for the
year ended 31 January 2021: GBP12,833).
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
6).
Four of the Directors have interests in the shares of the
Company as at 31 July 2021 (31 July 2020: five). Nicholas Wilson
holds 131,265 ordinary shares (31 July 2020: 131,265), Clive Spears
holds 136,314 ordinary shares (31 July 2020:133,270), Heather
Bestwick holds 22,307 ordinary shares (31 July 2020: 19,263) and
David Pirouet holds 14,073 shares (31 July 2020: 11,162). Robert
Quayle resigned during the period ended 31 July 2021. During the
period of his directorship with the Company, he held 112,577
ordinary shares (31 July 2020: 112,577).
15 Subsequent events
On 2 September 2021, Michael Gray was appointed as a Director of
the Company .
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
R.B.M. Quayle (resigned in June Jersey JE1 2LH
2021)
N.V. Wilson
M.M. Gray (appointed in September
2021)
Investment Advisor Nominated Advisor and Broker
EPIC Investment Partners LLP Numis Securities Limited
Audrey House 10 Paternoster Square
16-20 Ely Place London EC4M 7LT
London EC1N 6SN
Auditors and Reporting Accountants Registered Agent (Bermuda)
KPMG Audit LLC Conyers Dill & Pearman
Heritage Court Clarendon House, 2 Church Street
41 Athol Street Hamilton HM 11
Douglas Bermuda
Isle of Man IM1 1LA
Bankers Registrar and CREST Providers
Barclays Bank plc Computershare Investor Services
(Jersey) Limited
1 Churchill Place Queensway House
Canary Wharf Hilgrove Street
London E14 5HP St. Helier JE1 1ES
HSBC Bank plc Investor Relations
1st Floor Richard Spiegelberg
60 Queen Victoria Street Cardew Company
London EC4N 4TR 5 Chancery Lane
London EC4A 1BL
Santander International
PO Box 545
19-21 Commercial Street
St Helier, Jersey, JE4 8XG
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END
IR EANNKEAKFEFA
(END) Dow Jones Newswires
September 07, 2021 02:00 ET (06:00 GMT)
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