TIDMESO TIDMEC.P TIDMEO.P
RNS Number : 9861Q
EPE Special Opportunities PLC
28 October 2011
EPE Special Opportunities plc
Interim Results for the six months ended 31 July 2011
The Board of EPE Special Opportunities plc are pleased to
announce the Company's Interim Results for the six months ended 31
July 2011.
Highlights of the period are:
-- Net asset value per share as at 31 July 2011: 83.11p, an
increase of 4.9% on the net asset value per share as at 31 January
2011
-- Total gross income of GBP0.1m and net income of (GBP0.6m loss)
-- The sale of the investment in Pinnacle Regeneration Group
("Pinnacle"), realised GBP7.0 million, plus an additional GBP0.4
million dividend, representing a premium of 5.7% to the book cost
of the investment and a return of 1.7x money multiple and 112%
IRR
-- The sale of the investment in Ryness realised GBP1.3 million,
representing a premium of 40.3% to the book cost of the investment
and a return of 1.8x money multiple and 89% IRR
-- The portfolio has performed satisfactorily despite the
economic backdrop, with the majority of portfolio companies trading
in line with budget
-- The Board do not believe it appropriate to pay a dividend and
intend to conserve liquidity in order to protect against
uncertainty in the broader economic environment
Geoffrey Vero, Chairman, commented:"The six months up to 31 July
once again presented a challenging and continually uncertain
economic environment for the Company. The Board continues to view
this environment with caution."
Enquiries:
Numis Securities Ltd +44 (0) 20 7260 1000
Nominated Advisor Stuart Skinner
Corporate Broker Charles Farquhar
EPIC Private Equity LLP James Henderson +44 (0) 20 7553 2341
IoMA Philip Scales +44 (0) 16 2468 1250
Cardew Group Richard Spiegelberg / Alexandra Stoneham +44 (0) 20
7930 0777
Chairman's Statement
The six months up to July 2011 have once again presented a
challenging and continually uncertain economic environment for the
Company. Pessimism surrounding the euro-zone periphery's debt
obligations has adversely impacted the prospects for an expeditious
economic recovery. Indeed continuing market volatility in the light
of stuttering global political leadership continues to be a great
concern. Meanwhile, ongoing unemployment concerns, falling house
prices and consistently above-target inflation have continued to
impact consumers at a time when banks are still reluctant to extend
credit. These conditions however do remain attractive for one area
of the Company's investment strategy, namely special situations,
but equally demanding for the Company's core investments. The
underlying portfolio has performed satisfactorily to the half year
despite the economic backdrop, with the majority of companies
trading in line with budget. Although well set at this point, the
worsening economic backdrop will undoubtedly be challenging in the
months to come. Overall, notwithstanding the undoubted value in
distressed situations, your Board remain cautious at this time of
unprecedented global uncertainty.
In June 2011, the underlying investments in both Pinnacle
Regeneration Group ("Pinnacle") and Ryness were sold by ESO
Investments 1 LP ("the Fund"). The sale of the investment in
Pinnacle realised GBP7.4 million versus a September 2010
acquisition cost of GBP4.2 million. The dividend for Pinnacle was
declared at the 31 March 2011 year end and was paid by the new
investors in Pinnacle to the Fund simultaneously with the sale
proceeds. The sale of the investment in Ryness to Marlowes realised
GBP1.3 million versus a September 2010 acquisition cost of GBP0.8
million. The profits on the sale of these underlying investments
are realised by the Company through its distributions from the
Fund. Together, these sales demonstrate the Investment Advisor's
commitment to realising assets and returning cash to the Company,
to be utilised for new deals and ESO plc share buybacks.
Furthermore the sales help to validate the Investment Advisor's
NAV, with both assets being realised above NAV.
The end-date of The Equity Partnership Investment Company plc
("EPIC plc") in August 2011 resulted in a large number of new
shareholders being admitted to the Company's shareholder register.
Prior to its end-date, EPIC plc had held 20.1% of the Company's
shares, and a GBP10 million convertible loan note issued to part
fund the acquisition of EPIC plc's private equity portfolio in
September 2010. The convertible loan notes were listed on the PLUS
Stock Exchange in July. In line with EPIC plc's stated strategy at
the time of the acquisition, these instruments in the Company were
distributed pro-rata to its shareholder base on 16 August 2011. The
Company welcomes the broadening of the shareholder base.
For the interim period ended 31 July 2011, the Group reported
gross income of GBP0.1 million at Company level, with the majority
of income from the underlying portfolio companies being received at
the Fund level. The total capital increase in net assets was GBP1.2
million, which translated to a net asset value per share as at 31
July 2011 for the Group of 83.11 pence, an increase of 4.9 per
cent. on the net asset value of per share of 79.21 pence as at 31
January 2011. The Board do not believe it appropriate to pay a
dividend at this point in time and instead intend to conserve
liquidity in order to protect against uncertainty in the broader
economic environment and to take advantage of well-priced
investment opportunities as they arise.
Once again, I would like to thank the Investment Advisor, EPIC
Private Equity LLP ("EPE"), as well as my fellow Directors and
professional advisors, for their considerable efforts over the last
six months in consolidating a more diversified underlying portfolio
for the Company in the face of current market volatility. I look
forward to updating you on developments at the year end.
Geoffrey Vero
Chairman
27 October 2011
Investment Advisor's Report
In the six month period since 31 January 2011, the Investment
Advisor has focused on maintaining and creating value from within
the existing portfolios held by the Company and the Fund, whilst at
the same time seeking out new opportunities by way of platform or
bolt-on investment opportunities. All new investments will be made
via ESO Investments 2 LP, in which the Company is the sole
investor. In addition, the Investment Advisor continues to explore
opportunities for adding value to the current portfolio through
revenue enhancing and cost saving initiatives as well as seeking to
identify appropriate management to optimise performance. Within the
context of the current economic climate, the importance of these
initiatives is clearly acutely felt.
The underlying portfolio has performed in line with expectations
since January 2011, with a number of companies exceeding their
budgets to date. Nexus has completed the construction of a new
250,000 sq.ft. factory in China and hopes to achieve accelerated
organic growth and margin gains by switching to own production.
Meanwhile, Indicia performed well over the same period, with
trading in line with budget but expected to be ahead by the
year-end, driven by significant new business wins in the automotive
and FMCG sectors. Indicia continues to target digital acquisitions
with strong cross-selling potential. Process Components and Bighead
have both delivered considerably above budget trading figures for
the same period.
First half trading at Past Times has stabilised and the
Investment Advisor has instigated a number of measures to mitigate
a repeat performance of 2011's weather-related December trading
difficulties, including store closures, overhead reduction and
expansion of the web offering.
Whittard of Chelsea delivered positive like-for-like retail
sales growth in the first half of the year. Moving forward, the
Company will continue to focus on diluting its reliance on UK
trading through a planned expansion of its international and
wholesale operations. Sara Halton, previously CEO of Molton Brown,
was recently appointed as the new managing director.
In June, the underlying investments in both Pinnacle and Ryness
were sold by the Fund. The sale of Pinnacle realised GBP7.4
million. The sale of the investment in Ryness to Marlowes realised
GBP1.3 million. The profits on the sale of these underlying
investments are realised by the Company through its distributions
from the Fund. The Investment Advisor is also considering the sale
of other smaller investments in the portfolio.
The net asset value per share as at 31 July 2011 for the Company
was 83.11 pence, calculated on the basis of 30.8 million ordinary
shares. Investment highlights from the inception of the Company (16
September 2003) to date include:
-- deployed GBP62 million of capital and returned over GBP33
million to the Company in capital and income;
-- generated gross income of GBP15 million;
-- paid dividends of GBP5 million;
-- the underlying portfolio, as at 31 July 2011, is valued at a gross 1.5x money multiple.
Uncertainty has intensified further in the wider UK economy,
with the strong pace of GDP growth through the second and third
quarter of 2010 contrasting with subdued growth and rising
inflation in 2011. Rising unemployment, falling house prices and
sub-inflation wage growth continue to depress consumer spending and
squeeze retail operators in particular. The increasing likelihood
of a sovereign debt default continues to plague the markets,
placing downward pressure on consumer confidence which remains weak
against the backdrop of a further UK recession. In the meantime
debt finance is likely to remain in scarce supply, with banks
primarily focused on rebuilding their balance sheets as opposed to
new primary lending. This period therefore continues to be one of
consolidation for the Company with a positive focus on creating
value in the core investments.
Whilst current economic conditions remain demanding for the
Company's underlying portfolio, they are expected to provide
opportunities to acquire high quality assets at relatively low
price points.
Investment Strategy
The Investment Advisor believes that the current economic
environment continues to create a wide range of investment
opportunities. As a result, the Investment Advisor continues to
engage actively with the wider restructuring and advisory community
in communicating the Company's investment strategy. The Company
seeks to target growth and buyout opportunities, as well as special
situations and distressed transactions, making investments where it
believes pricing to be attractive and the potential for value
creation strong. The Company will continue to target the following
types of investments:
-- Growth, buyout and pre-IPO opportunities, leveraging the
Investment Advisor's investment experience, contacts and
ability.
-- Special situations where the Investment Advisor believes that
assets are undervalued due to specific, event-driven circumstances.
Target companies may or may not be distressed as a result of the
situation. The Investment Advisor will aim to use its restructuring
and refinancing expertise to resolve the situation and achieve a
controlling position in the target company.
-- Distressed companies where asset-backing may be available and
the opportunity exists for recovery and significant upside. These
transactions may involve target companies with a substantial asset
base, providing the Company with considerable downside protection.
The Company seeks to acquire distressed debt, undervalued equity or
the assets of target businesses in solvent or insolvent
situations.
-- Public companies, either backing management to acquire and
de-list the company or buying ordinary equity in a listed business.
The Company may consider making investments in a number of smaller
companies, primarily ones whose shares are admitted to AIM, being
companies with a market capitalisation in the region of GBP1
million to GBP5 million. It is anticipated that these transactions
would involve the acquisition of the entire issued share capital of
such companies. The Company may offer ordinary shares as all or
part of the consideration for such investments.
The Company will consider most industry sectors, including
consumer, retail, manufacturing, financial services, healthcare,
support services and media industries. The Company partners with
management and entrepreneurs to maximise value by combining
financial and operational expertise in each investment.
The Company will seek to invest between GBP2 million and GBP10
million in a range of debt and equity instruments with a view to
generating returns through both yield and capital gain. Whilst in
general the Company aims to take controlling equity positions, it
may seek to develop companies as a minority investor. Occasionally
the Board may authorise investments of less than GBP2 million. For
investments larger than GBP5 million, the Company may seek
co-investment from third parties.
Portfolio Diversification
The current underlying portfolio of eleven assets in which the
Company has an interest is diversified by sector and instrument as
at 31 July 2011 as follows:
SECTOR DIVERSIFICATION INSTRUMENT DIVERSIFICATION
Retail 27% Mezzanine Loans 21%
Textiles 1% Shareholder Loans 62%
Engineering 12% Equity 17%
Distribution 25%
Education 15%
Business Services 17%
Healthcare 3%
Current Portfolio: ESO Investments 2 LLP
Process Components
Process Components is an engineering parts, equipment and
services supplier to the food and pharmaceutical industries for
bulk solids and liquids processing and handling. Both sales and
EBITDA significantly increased in the year to 30 June 2011. The US
subsidiary has demonstrated particularly strong trading growth. New
product lines from European suppliers have been identified for the
US subsidiary to distribute in 2012 and 2013 as the company seeks
to capitalise on its strong US presence. Meanwhile, significant
investment in the UK team is expected over the next year, with
increasing exports and new product lines driving growth.
Current Portfolio: ESO Investments 1 LP
Nexus Industries
Nexus Industries ("Nexus") is a manufacturer and distributor of
electrical accessories in the UK, operating under the brand names
Masterplug, British General and Ross, and supplies to both the
retail and wholesale markets. The business is now deleveraging and
performing well despite the tough retail market conditions. The
construction of a large freehold factory located in mainland China
has recently been completed and this is expected to drive both
margin improvement and sales growth over the coming years.
Meanwhile, international demand is growing well. However, copper
price rises, hitting an all time high in the first quarter of 2011,
remain a concern for the business, as does demand from UK consumers
and wholesale clients.
Palatinate Schools
Palatinate Schools ("Palatinate") operates a group of private
preparatory, pre-preparatory and nursery schools based in Central
London. The schools have good prestige value and pupil numbers are
remaining robust. The Investment Advisor manages Palatinate
alongside other private equity investors. The business has recently
appointed a new CEO and is seeking to drive further organic growth
via fuller utilisation of its existing premises and improved
branding and advertising.
Whittard of Chelsea
Whittard of Chelsea ("Whittard"), a specialist retailer of tea
and coffee, was acquired in December 2008. The initial
restructuring of the business was completed in the first half of
2009, with the number of stores and overhead base both
significantly reduced and new branding now being introduced across
all lines. The business delivered a strong performance in the first
half of 2011, with positive like-for-like sales. The international
business continues to grow with the franchise partner in China
having recently opened an eleventh store after eight months of
trading in the region. Whittard continues to invest in the web
channel following sales growth of 70% last year. The business is
well-positioned for growth in the remainder of the year. Sara
Halton, previously CEO of Molton Brown, was recently appointed as
the new managing director.
Indicia
Indicia is a customer intelligence agency focused on planning,
data, direct marketing and multi channel analytics. Indicia was
formed through the acquisition and consolidation of three separate
businesses and is currently in discussions with several parties
with regard to the purchase of digital and market research
businesses to complement its existing portfolio of services. The
business is currently trading well and ahead of 2011 budget, with
new client wins in the automotive and FMCG sectors underpinning
growth.
Past Times
Past Times is a niche retailer of historically inspired
jewellery, gifts, books and house-wares. Past Times was acquired in
December 2005 from the administrators of Retail Variations plc. The
focus in 2011 is on an expansion of proven growth areas, such as
the web and temporary stores, coupled with a re-focus on core
stores and commensurate closure of under-performing locations. The
web is a strategic priority for the business and whilst the online
gifting market continues to be highly competitive in the UK, the
current retail footprint of Past Times presents a significant
opportunity to recruit new customers and build a leading
multi-channel offering. The second half of the year, particularly
November and December, remain critical to full year performance but
the business enters the period on the back of a solid first half
performance and with significant changes to the offering
underway.
Bighead Bonding Fasteners
Bighead Bonding Fasteners ("Bighead") is a specialist
engineering business, manufacturing specialist load-spreading
fasteners for composites, plastics and traditional materials. 2010
year-end demonstrated an impressive EBITDA performance
significantly ahead of budget following a deep recession in its
core markets of automotive, marine and construction in 2009. The
business has continuned to grow ahead of target in 2011, having
almost recovered sales to pre-recession levels. EBITDA continues to
grow and now exceeds pre-recession levels. The business is well
postioned to increase its sales in the UK and overseas through
partnerships with international distributors and complementary
technologies.
Pharmacy2U
Pharmacy2U is an online pharmacy business, delivering National
Health Service and private prescriptions direct to the home using
an innovative, proprietory technology, the Electronic Prescription
Service. The business has experienced significant sales growth
since inception. Trading peformed in line with expectations in the
year ending 31 March 2011. The business continues to investigate
and operate schemes for acquiring practices and patients to their
prescription system.
Evolving Media
Evolving Media ("Evolving") is a young and growing integrated
digital marketing agency, based in Bedford, UK and providing
digitally-focussed marketing solutions to a range of clients. Sales
for the full year 2010 were marginally behind budget, although
EBITDA was on budget. The company is currently focussed on
establishing a London office in order to drive business and product
development and recruitment. Evolving will focus throughout the
remainder of 2011 on improving profitability from current clients,
whilst selectively targeting new business.
Morada Home
In 2005, the Company backed a management buyout of the Morada
Home business from the administration of Morada International. The
business was originally focussed solely on contracts with the
Ministry of Defence ("MoD") to supply curtains and blinds for MoD
living accommodation. Morada diversified by supplying PFI
contractors and wholesalers in the retail sector. Through the
completion of bolt-on acquisitions Gradus Fabrics and SJ Clarke in
July and August 2010 the business has further diversified into the
care home, university and hotel sectors. The business is continuing
to re-structure. However, market conditions remain tough and
trading has suffered from budget cuts, uncertainty at the MoD and
ongoing weakness in the wholesale sector.
Driver Require
Driver Require is a recruitment company for commercial drivers
across all major vehicle categories based in Stevenage, UK. The
recession had a significant impact on the transport sector and
Driver Require's target market continues to be particularly
affected. Trading stabilised in 2010 and the first half of 2011
with the Company reaching break-even. The company has four branches
and plans to add further branches in the next two years.
Valuation Methodology
The Company values its investments with reference to the BVCA
guidelines and the valuation principles of IAS 39. This results in
unquoted portfolio companies being valued on an EBITDA multiple
basis using publicly quoted comparables and/or transaction
comparables, then discounting the equity value by an appropriate
percentage to account for marketability considerations. Cost may be
considered as fair value in some cases but assets will always be
held at fair value, whether this is at, above or below cost.
The Company has always endeavoured to comply with
industry-standard guidelines and, as the Fund (the vehicle through
which most of the Company's interest in private equity investments
are held) will be applying the International Private Equity and
Venture Capital Valuation guidelines, for consistency the Board
will consider adopting these guidelines going forward. The Company
believes that there is unlikely to be any material effect on the
valuation process as a result of such a change.
The Investment Advisor announces an estimated net asset value
per ordinary share on a monthly basis.
The Investment Advisor adopts a conservative approach to
valuation with reference to the aforementioned methodology but also
having regard for ongoing volatile market conditions, particularly
in the UK retail sector, and credit restraints.
Review reportby KPMGAudit LLC to EPE Special Opportunities
plc
Introduction
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 2011, which comprises the consolidated and
company statements of comprehensive income, the consolidated and
company statements of assets and liabilities, the consolidated and
company statements of changes in equity, the consolidated and
company statements of cash flows and the related explanatory notes.
We have read the other information contained in the half-yearly
report and considered whether it contains any apparent
misstatements or material inconsistencies with the information in
the condensed set of financial statements.
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.
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.
The annual financial statements of the Group and Company are
prepared in accordance with IFRSs. The condensed set of financial
statements included in this half-yearly report has been prepared in
accordance with IAS 34 Interim Financial Reporting.
Our responsibility
Our responsibility is to express to the Company a conclusion on
the condensed set of consolidated and company financial statements
in the half-yearly report based on our review.
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. A review is substantially less in scope than an audit
conducted in accordance with International Standards on Auditing
(UK and Ireland) 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.
Basis of adverse opinion on consolidated financial
statements
The condensed set of financial statements included in the
half-yearly financial report has been prepared in accordance with
IAS 34 Interim Financial Reporting. As detailed in Note 2, the
Group accounting policy for interests in investee companies that
are controlled by the Group is to state them at fair value through
profit or loss - not to consolidate their results as required by
IAS 27 Consolidated and Separate Financial Statements. This is a
departure from IFRSs and has resulted in an adverse opinion on the
consolidated financial statements.
Conclusion in respect of consolidated financial statements
As stated above, the results of investee companies which are
controlled by the Group are not consolidated in the financial
statements. Such investee companies are instead stated at fair
value. This is a non-compliance with IAS 27 Consolidated and
Separate Financial Statements, which requires all entities over
which the Group has the power to exercise control to be
consolidated.
Because of this non-compliance with IAS 27, our review indicates
that the condensed set of consolidated financial statements do not
give a true and fair view of the financial position of the Group as
at 31 July 2011 and of its financial performance and its cash flows
for the six months then ended in accordance with IFRSs.
Review report by KPMG Audit LLC to EPE Special Opportunities plc
(continued)
Conclusion in respect of parent company financial statements
Based on our review, nothing has come to our attention that
causes us to believe that the condensed set of parent company
financial statements in the half-yearly report for the six months
ended 31 July 2011 is not prepared, in all material respects, in
accordance with IAS 34 and the AIM Rules.
KPMG Audit LLC
Chartered Accountants
Heritage Court
41 Athol Street
Douglas
Isle of Man IM99 1HN
27 October 2011
Consolidated Statement of Comprehensive Income
For the six months ended 31 July 2011
1 Feb 1 Feb
2010 to 2010
1 Feb 2011 to 31 Jul 31 Jul to 31
2011 2010 Jan 2011
Revenue Capital Total Total Total
(unaudited) (unaudited) (unaudited) (unaudited) (audited)
------------- ------------- ------------- ------------- -----------
Note GBP GBP GBP GBP GBP
------------------------------- ------------- ------------- ------------- ------------- -----------
Income
Rental income 31,900 - 31,900 31,900 63,800
Interest income 95,220 - 95,220 845,118 1,047,773
------------------------------- ------------- ------------- ------------- ------------- -----------
Total income 127,120 - 127,120 877,018 1,111,573
------------------------------- ------------- ------------- ------------- ------------- -----------
Expenses
Investment advisor's fees - - - (194,730) (230,933)
Priority profit share (397,417) - (397,417) - -
Administration fees (22,224) - (22,224) (15,000) (44,319)
Directors' fees (50,000) - (50,000) (50,000) (100,000)
Directors' and Officers'
insurance (5,118) - (5,118) (6,667) (11,813)
Professional fees (37,314) - (37,314) (53,597) (65,204)
Board meeting and travel
expenses (5,432) - (5,432) - (4,997)
Auditors' remuneration (17,218) - (17,218) (15,958) (28,636)
Bank charges (67) - (67) - (536)
Irrecoverable VAT (101,034) - (101,034) (59,133) (122,209)
Sundry expenses (34,156) - (34,156) (19,937) (95,192)
Nominated advisor and broker
fees (4,759) - (4,759) (22,964) (32,054)
Total expenses (674,739) - (674,739) (437,986) (735,893)
------------------------------- ------------- ------------- ------------- ------------- -----------
Net income/(expense) (547,619) - (547,619) 439,032 375,680
------------------------------- ------------- ------------- ------------- ------------- -----------
Gains on investments
Share of profit of equity
12 accounted investee - 1,259,523 1,259,523 - 1,989,446
Net realised losses on secured
loans - - - (50,000) (50,000)
Movement in fair value of
investments at fair value
through profit or loss - 899,528 899,528 - 1,099,365
Revaluation of investment
property - (7,678) (7,678) (7,222) (14,690)
Gain for the period/year
on investments - 2,151,373 2,151,373 (57,222) 3,024,121
------------------------------- ------------- ------------- ------------- ------------- -----------
Finance charges
Interest on mortgage loan (13,206) - (13,206) (13,495) (26,823)
Interest on convertible
11 loan note instruments (389,872) - (389,872) - (317,919)
Profit for the period/year
before taxation (950,697) 2,151,373 1,200,676 368,315 3,055,059
Taxation - - - - -
------------- -------------
Profit for the period/year (950,697) 2,151,373 1,200,676 368,315 3,055,059
------------------------------- ------------- ------------- ------------- ------------- -----------
Other comprehensive income - - - - -
------------------------------- ------------- ------------- ------------- ------------- -----------
Total comprehensive income
for the period/year (950,697) 2,151,373 1,200,676 368,315 3,055,059
------------------------------- ------------- ------------- ------------- ------------- -----------
Basic and diluted earnings
per ordinary share (pence) (3.09) 6.99 3.90 1.39 10.78
------------------------------- ------------- ------------- ------------- ------------- -----------
The total column of this statement represents the Group's
Consolidated Statement of Comprehensive Income, prepared in
accordance with IFRS. The supplementary revenue return and capital
return columns are both prepared under Board approved guidelines in
relation to the allocation between revenue and capital. All items
in the above statement derive from continuing activities.
Company Statement of Comprehensive Income
For the six months ended 31 July 2011
1 Feb 1 Feb
2010 to 2010 to
1 Feb 2011 to 31 July 31 July 31 Jan
2011 2010 2011
Revenue Capital Total Total Total
(unaudited) (unaudited) (unaudited) (unaudited) (audited)
------------- ------------- ------------- ------------- -----------
Note GBP GBP GBP GBP GBP
-------------------------------- ------------- ------------- ------------- ------------- -----------
Income
Interest income 38,339 - 38,339 212 34,454
Dividend income from
subsidiaries - - - 183,790 -
-------------------------------- ------------- ------------- ------------- ------------- -----------
Total income 38,339 - 38,339 184,002 34,454
-------------------------------- ------------- ------------- ------------- ------------- -----------
Expenses
Investment advisor's
fees - - - (187,781) (225,357)
Administration fees (22,224) - (22,224) (15,000) (44,319)
Directors' fees (50,000) - (50,000) (45,000) (95,000)
Directors and Officers'
insurance (5,118) - (5,118) (6,667) (11,813)
Professional fees (37,314) - (37,314) (50,660) (65,204)
Board meeting and travel
expenses (5,432) - (5,432) - (4,997)
Auditors' remuneration (16,818) - (16,818) (25,257) (37,759)
Bank charges (67) - (67) (335) (344)
Irrecoverable VAT (101,034) - (101,034) (59,435) (119,218)
Sundry expenses (30,715) - (30,715) (18,720) (81,662)
Nominated advisor and
broker fees (4,759) - (4,759) (22,964) (36,755)
Total expenses (273,481) - (273,481) (431,819) (722,428)
-------------------------------- ------------- ------------- ------------- ------------- -----------
Net expense (235,142) - (235,142) (247,817) (687,974)
-------------------------------- ------------- ------------- ------------- ------------- -----------
Gains on investments
Share of profit of equity
12 accounted investee - 1,259,523 1,259,523 - 1,989,446
Net realised gains
on investments - - - 320,800 1,179,762
Movement in fair value
of investments in subsidiaries
at fair value through
profit or loss - 566,167 566,167 295,332 891,744
-------------------------------- ------------- ------------- ------------- ------------- -----------
Gain for the period/year
on investments - 1,825,690 1,825,690 616,132 4,060,952
-------------------------------- ------------- ------------- ------------- ------------- -----------
Finance charges
Interest on convertible
11 loan note instruments (389,872) - (389,872) - (317,919)
-------------------------------- ------------- ------------- ------------- ------------- -----------
Profit for the period/year
before taxation (625,014) 1,825,690 1,200,676 368,315 3,055,059
Taxation - - - - -
Profit for the period/year (625,014) 1,825,690 1,200,676 368,315 3,055,059
-------------------------------- ------------- ------------- ------------- ------------- -----------
Other comprehensive
income - - - - -
-------------------------------- ------------- ------------- ------------- ------------- -----------
Total comprehensive
income for the period/year (625,014) 1,825,690 1,200,676 368,315 3,055,059
-------------------------------- ------------- ------------- ------------- ------------- -----------
Basic and diluted earnings
per ordinary share
(pence) (2.03) 5.93 3.90 1.39 10.78
-------------------------------- ------------- ------------- ------------- ------------- -----------
The total column of this statement represents the Company's
Statement of Comprehensive Income, prepared in accordance with
IFRS. The supplementary revenue return and capital return columns
are both prepared under Board approved guidelines in relation to
the allocation between revenue and capital. All items in the above
statement derive from continuing activities.
Consolidated Statement of Assets and Liabilities
As at 31 July 2011
31 July 31 July 31 January
2011 2010 2011
(unaudited) (unaudited) (audited)
Note GBP GBP GBP
---------------------------------- --------------- -------------- -------------
5 Non-current assets
Investment property 463,040 478,186 470,718
Financial assets 3,000,000 14,103,452 2,494,987
Investment in equity accounted
12 investee 28,919,123 - 27,659,601
Loans to equity accounted investee
7 and related companies 1,541,594 - 1,473,678
33,923,757 14,581,638 32,098,984
---------------------------------- --------------- -------------- -------------
Current assets
Cash and cash equivalents 3,033,236 3,973,103 3,502,811
Trade and other receivables 36,991 1,857,545 67,758
Committed cash balances - 5,407 -
---------------------------------- --------------- -------------- -------------
3,070,227 5,836,055 3,570,569
---------------------------------- --------------- -------------- -------------
Current liabilities
Trade and other payables (1,037,498) (226,000) (918,057)
---------------------------------- --------------- -------------- -------------
(1,037,498) (226,000) (918,057)
----------------------------------
Net current assets 2,032,729 5,610,055 2,652,512
---------------------------------- --------------- -------------- -------------
11 Non-current liabilities
Convertible loan note instruments (9,892,421) - (9,880,429)
Bank loan (463,040) (478,186) (470,718)
---------------------------------- --------------- -------------- -------------
(10,355,461) (10,351,147)
---------------------------------- --------------- -------------- -------------
Net assets 25,601,025 19,713,507 24,400,349
---------------------------------- --------------- -------------- -------------
Equity
8 Share capital 1,540,146 1,327,075 1,544,583
Share premium 1,815,385 - 1,815,385
Capital reserve (10,285,572) (15,518,288) (12,436,945)
Revenue reserve 32,526,629 33,904,720 33,477,326
Capital redemption reserve 4,437 - -
Total equity 25,601,025 19,713,507 24,400,349
---------------------------------- --------------- -------------- -------------
10 Net asset value per share (pence) 83.11 74.27 79.21
---------------------------------- --------------- -------------- -------------
Company Statement of Assets and Liabilities
As at 31 July 2011
31 July 31 July 31 January
2011 2010 2011
(unaudited) (unaudited) (audited)
Note GBP GBP GBP
------------------------------- --------------- -------------- -------------
5 Non-current assets
Investment in equity accounted
12 investee 28,919,123 - 27,659,601
Investment in subsidiaries
at fair value through
profit or loss 1,686,270 536,917 1,127,234
6 Loans to subsidiaries 1,026,458 15,862,819 1,482,866
Loans to associate and
7 related companies 1,541,594 - 1,473,678
33,173,445 16,399,736 31,743,379
------------------------------- --------------- -------------- -------------
Current assets
Cash and cash equivalents 2,944,723 3,536,878 3,445,270
Trade and other receivables 5,807 9,181 11,560
2,950,530 3,546,059 3,456,830
------------------------------- --------------- -------------- -------------
Current liabilities
Trade and other payables (630,529) (219,063) (912,300)
(630,529) (219,063) (912,300)
------------------------------- --------------- -------------- -------------
Net current assets 2,320,001 3,326,996 2,544,530
------------------------------- --------------- -------------- -------------
11 Non-current liabilities
Investment in subsidiaries
at fair value through
profit or loss - (13,225) (7,131)
Convertible loan note
instruments (9,892,421) - (9,880,429)
------------------------------- --------------- -------------- -------------
(9,892,421) (13,225) (9,887,560)
-------------------------------
Net assets 25,601,025 19,713,507 24,400,349
------------------------------- --------------- -------------- -------------
Equity
8 Share capital 1,540,146 1,327,075 1,544,583
Share premium 1,815,385 - 1,815,385
Capital reserve (11,213,843) (16,484,353) (13,039,533)
Revenue reserve 33,454,900 34,870,785 34,079,914
Capital redemption reserve 4,437 - -
Total equity 25,601,025 19,713,507 24,400,349
------------------------------- --------------- -------------- -------------
Net asset value per share
10 (pence) 83.11 74.27 79.21
------------------------------- --------------- -------------- -------------
Consolidated Statement of Changes in Equity
For the six months ended 31 July 2011
Six months ended 31 July 2011 (Unaudited)
Share Share Capital Capital Revenue Total
capital premium redemption reserve reserve
reserve
GBP GBP GBP GBP GBP GBP
------------------------ ---------- ---------- ------------ ------------- ----------- -----------
Balance at 1 February
2011 1,544,583 1,815,385 - (12,436,945) 33,477,326 24,400,349
Total comprehensive
income for the period - - - 2,151,373 (950,697) 1,200,676
------------------------ ---------- ---------- ------------ ------------- ----------- -----------
Contributions by
and distributions
to owners
Cancellation of
treasury shares (4,437) - 4,437 - - -
Total transactions
with owners (4,437) - 4,437 - - -
------------------------ ---------- ---------- ------------ ------------- ----------- -----------
Balance at 31 July
2011 1,540,146 1,815,385 4,437 (10,285,572) 32,526,629 25,601,025
------------------------ ---------- ---------- ------------ ------------- ----------- -----------
Six months ended 31 July 2010 (Unaudited)
Capital Share Capital Revenue Total
premium reserve Reserve
GBP GBP GBP GBP GBP
---------------------------- ---------- --------- ------------- ----------- -----------
Balance at 1 February 2010 1,327,075 - (15,461,066) 33,479,183 19,345,192
Total comprehensive income
for the period - - (57,222) 425,537 368,315
---------------------------- ---------- --------- ------------- ----------- -----------
Balance at 31 July 2010 1,327,075 - (15,518,288) 33,904,720 19,713,507
---------------------------- ---------- --------- ------------- ----------- -----------
Consolidated Statement of Changes in Equity
For the six months ended 31 July 2011 (Continued)
Year ended 31 January 2011 (Audited)
Share Share Capital Revenue Total
capital premium reserve reserve
GBP GBP GBP GBP GBP
------------------------------------ ---------- ---------- ------------- ----------- -----------
Balance at 1 February 2010 1,327,075 - (15,461,066) 33,479,183 19,345,192
Total comprehensive income
for the year - - 3,024,121 30,938 3,055,059
------------------------------------ ---------- ---------- ------------- ----------- -----------
Contributions by and distributions
to owners
Shares issued 217,508 2,212,492 - - 2,430,000
Share issue costs - (397,107) - - (397,107)
Purchase of treasury shares - - - (32,795) (32,795)
Total transactions with
owners 217,508 1,815,385 - (32,795) 2,000,098
------------------------------------ ---------- ---------- ------------- ----------- -----------
Balance at 31 January 2011 1,544,583 1,815,385 (12,436,945) 33,477,326 24,400,349
------------------------------------ ---------- ---------- ------------- ----------- -----------
Company Statement of Changes in Equity
For the six months ended 31 July 2011
Six months ended 31 July 2011 (Unaudited)
Share Share Capital Capital Revenue Total
capital premium redemption reserve reserve
reserve
GBP GBP GBP GBP GBP GBP
----------------------- ---------- ---------- ------------ ------------- ----------- -----------
Balance at 1 February
2011 1,544,583 1,815,385 - (13,039,533) 34,079,914 24,400,349
Total comprehensive
income for the
period - - - 1,825,690 (625,014) 1,200,676
----------------------- ---------- ---------- ------------ ------------- ----------- -----------
Contributions
by and distributions
to owners
Cancellation of
treasury shares (4,437) - 4,437 - - -
Total transactions
with owners (4,437) - 4,437 - - -
----------------------- ---------- ---------- ------------ ------------- ----------- -----------
Balance at 31
July 2011 1,540,146 1,815,385 4,437 (11,213,843) 33,454,900 25,601,025
----------------------- ---------- ---------- ------------ ------------- ----------- -----------
Six months ended 31 July 2010 (Unaudited)
Capital Share Capital Revenue Total
premium reserve Reserve
GBP GBP GBP GBP GBP
------------------------ ---------- --------- ------------- ----------- -----------
Balance at 1 February
2010 1,327,075 - (17,100,485) 35,118,602 19,345,192
Total comprehensive
income for the period - - 616,132 (247,817) 368,315
------------------------ ---------- --------- ------------- ----------- -----------
Balance at 31 July
2010 1,327,075 - (16,484,353) 34,870,785 19,713,507
------------------------ ---------- --------- ------------- ----------- -----------
Year ended 31 January 2011 (Audited)
Share Share Capital Revenue Total
capital premium reserve reserve
GBP GBP GBP GBP GBP
-------------------------- ---------- ---------- ------------- ------------ -----------
Balance at 1 February
2010 1,327,075 - (17,100,485) 35,118,602 19,345,192
Total comprehensive
income for the year - - 4,060,952 (1,005,893) 3,055,059
-------------------------- ---------- ---------- ------------- ------------ -----------
Contributions by and
distributions to owners
Shares issued 217,508 2,212,492 - - 2,430,000
Share issue costs - (397,107) - - (397,107)
Purchase of treasury
shares - - - (32,795) (32,795)
Total transactions
with owners 217,508 1,815,385 - (32,795) 2,000,098
-------------------------- ---------- ---------- ------------- ------------ -----------
Balance at 31 January
2011 1,544,583 1,815,385 (13,039,533) 34,079,914 24,400,349
-------------------------- ---------- ---------- ------------- ------------ -----------
Consolidated Statement of Cash Flows
For the six months ended 31 July 2011
1 Feb 2011 1 Feb 2010 1 Feb 2010
to 31 July to 31 July to 31 Jan
2011 2010 2011
(unaudited) (unaudited) (audited)
GBP GBP GBP
--------------------------------------- -------------- -------------- ------------
Operating activities
Rental income received 31,900 31,900 69,117
Interest income received 56,879 158,070 311,472
Expenses paid (448,753) (431,038) (766,414)
Net cash used in operating activities (359,974) (241,068) (385,825)
-------------------------------------------- -------------- -------------- ------------
Investing activities
Receipts on disposal of investee
company - 320,800 400,000
Receipts on disposal of equipment 20,000 22,500 17,500
Loan advances to investee companies - (3,234,000) (3,734,000)
Loan repayments from investee
companies 399,528 3,583,200 3,531,841
Portfolio acquisition costs paid (197,570) - (2,020)
Cash of subsidiary transferred
on acquisition of investment - - (414,854)
Net receipts from associate and
related companies - - 801,967
Transfer from committed cash - - 5,407
-------------------------------------------- -------------- -------------- ------------
Net cash generated from investing
activities 221,958 692,500 605,841
-------------------------------------------- -------------- -------------- ------------
Financing activities
Loan interest paid (13,206) (13,495) (26,823)
Part payment of mortgage loan (7,678) (7,222) (14,690)
Convertible loan note interest
paid (310,675) - -
Convertible loan note issue costs - - (17,845)
Purchase of treasury shares - - (32,795)
Share issue expenses paid - - (167,440)
Net cash used in financing activities (331,559) (20,717) (259,593)
-------------------------------------------- -------------- -------------- ------------
(Decrease)/increase in cash and
cash equivalents (469,575) 430,715 (39,577)
Cash and cash equivalents at
start of period/year 3,502,811 3,542,388 3,542,388
-------------------------------------------- -------------- -------------- ------------
Cash and cash equivalents at
end of period/year 3,033,236 3,973,103 3,502,811
-------------------------------------------- -------------- -------------- ------------
Company Statement of Cash Flows
For the six months ended 31 July 2011
1 Feb 2011 1 Feb 2010 1 Feb 2010
to 31 July to 31 July to 31 Jan
2011 2010 2011
(unaudited) (unaudited) (audited)
GBP GBP GBP
--------------------------------------- -------------- -------------- ------------
Operating activities
Interest income received - 212 211
Expenses paid (448,710) (419,660) (747,174)
Net cash used in operating activities (448,710) (419,448) (746,963)
-------------------------------------------- -------------- -------------- ------------
Investing activities
Receipts on disposal of investee
company - 320,800 320,800
Loans repaid by/(to) subsidiaries 456,408 1,583,623 1,237,664
Portfolio acquisition costs
paid (197,570) - (2,021)
Receipts from associate and
related companies - - 801,967
Net cash generated from/(used
in) investing activities 258,838 1,904,423 2,358,410
-------------------------------------------- -------------- -------------- ------------
Financing activities
Convertible loan note interest
paid (310,675) - -
Convertible loan note issue
costs - - (17,845)
Purchase of treasury shares - - (32,795)
Share issue costs - - (167,440)
Net cash generated from/(used
in) financing activities (310,675) - (218,080)
-------------------------------------------- -------------- -------------- ------------
Increase in cash and cash equivalents (500,547) 1,484,975 1,393,367
Cash and cash equivalents at
start of period/year 3,445,270 2,051,903 2,051,903
-------------------------------------------- -------------- -------------- ------------
Cash and cash equivalents at
end of period/year 2,944,723 3,536,878 3,445,270
-------------------------------------------- -------------- -------------- ------------
Notes to the Unaudited Interim Financial Statements
For the six months ended 31 July 2011
1 The Company
The Company was incorporated with limited liability in the Isle
of Man with the registered number 108834C on 25 July 2003. The
Company's ordinary shares are listed on the Alternative Investment
Market ("AIM"), a market of the London Stock Exchange plc.
The interim consolidated and company financial statements as at
and for the six months ended 31 July 2011 comprise the Company and
its subsidiaries (together "the Group"). The interim consolidated
and company financial statements are unaudited.
The consolidated and company financial statements of the Group
as at and for the year ended 31 January 2011 are available upon
request from the Company's registered office at IOMA House, Hope
Street, Douglas, Isle of Man, IM1 1AP, or at www.epicpe.com.
The Company has the following subsidiaries - ESO Investments 2
LLP, a partnership formed on 29 July 2010, EPIC Reconstruction
Property Company II Limited, a company incorporated on 30 December
2004 in England and Wales and EPIC Reconstruction Property Company
(IOM) Limited, a company incorporated on 29 October 2005 in the
Isle of Man.
The Company also holds an interest in a Limited Partnership
accounted for as an associate - ESO Investments 1 LP, a partnership
formed on 28 July 2010.
2 Statement of compliance
These interim consolidated and company financial statements have
been prepared in accordance with IAS 34 Interim Financial Reporting
except, in the case of the consolidated interim financial
statements, for the non-consolidation of certain companies. As part
of the Group's investment policy, the Group may receive preference
and ordinary shares. Such shares permit the Group to participate in
any increase in the value of portfolio companies. In some cases
such shares are received for nil consideration and the equity
interest of the Group is capped by way of management options to
purchase the Group's interest at a set amount. In addition, Board
representation is only assumed in default situations. For such
interests the Directors consider that they do not meet the
definition of subsidiaries under IAS 27.
For one investment (2010: three investments) in portfolio
companies, the equity interest of the Company is not capped. It is
considered that such companies meet the definition of subsidiaries
and would therefore fall to be consolidated as required under IAS
27. However, the Directors consider that consolidation would render
the consolidated financial statements misleading, as such interests
were acquired for nil consideration, as part of loan finance
arranged for such companies and such interests were acquired with a
view to income and capital gain.
The Company holds an interest in ESO Investments 1 LP, which is
managed and controlled by EPIC Private Equity LLP for the benefit
of the Company and the other members. The Company has the power to
appoint members to the investment committee of ESO Investments 1 LP
but does not have the ability to direct the activities of ESO
Investments 1 LP. The Directors consider that ESO Investments 1 LP
does not meet the definition of a subsidiary.
The interim consolidated and company financial statements do not
include all of the information required for full annual financial
statements, and should be read in conjunction with the consolidated
financial statements of the Group and Company as at and for the
year ended 31 January 2011.
The interim Group and Company financial statements were approved
by the Board of Directors on 27 October 2011.
3 Significant accounting policies
The accounting policies applied by the Group and Company in
these interim consolidated and company financial statements are the
same as those applied by the Group and Company as at and for the
year ended 31 January 2011.
4 Financial risk management
The Group and Company financial risk management objectives and
policies are consistent with those disclosed in the consolidated
and company financial statements as at and for the year ended 31
January 2011.
5 Non-current assets
31 July 2011 31 July 2010 31 January 2011
---------------------------- ------------------------ ------------------------ ------------------------
Group Company Group Company Group Company
GBP GBP GBP GBP GBP GBP
---------------------------- ----------- ----------- ----------- ----------- ----------- -----------
Investment property 463,040 - 478,186 - 470,718 -
Financial assets
Secured loans 1,001,107 - 13,891,334 - 1,395,622 -
Unquoted equity
investments 1,998,893 - 212,118 - 1,099,365 -
Investment in subsidiaries - 1,686,270 - 536,917 - 1,127,234
Investments in
equity accounted
investee/associate 28,919,123 28,919,123 - - 27,659,601 27,659,601
Loans to associate
and related companies 1,541,594 1,541,594 - - 1,473,678 1,473,678
Loans to subsidiaries - 1,026,458 - 15,862,819 - 1,482,866
33,923,757 33,173,445 14,581,638 16,399,736 32,098,984 31,743,379
---------------------------- ----------- ----------- ----------- ----------- ----------- -----------
Unquoted equity investments are stated at Directors' valuations,
including the valuation of unquoted investments in the equity
accounted investee. The secured loans are secured by way of a
floating charge and bear interest at fixed rates between 15 and
20%. The loans are repayable as follows:
31 July 2011 Principal Interest Maturity
Rate
GBP
---------------------------- ---------- --------- ------------
Process Components Limited 1,001,107 9% 31 May 2013
---------------------------- ---------- --------- ------------
31 January 2011 Principal Interest Maturity
Rate
GBP
---------------------------- ---------- --------- ------------
Process Components Limited 1,395,622 9% 31 May 2013
---------------------------- ---------- --------- ------------
6 Loans to subsidiaries
31 July 31 July 31 January
2011 2010 2011
Company Company Company
GBP GBP GBP
ESO Investments 2 LLP 916,358 - 1,372,766
EPIC Reconstruction Property Company
II Limited 110,100 110,100 110,100
EPIC Structured Finance Limited - 13,404,674 -
ESO Investments LLP - 2,348,045 -
1,026,458 15,862,819 1,482,866
The loans to subsidiaries are unsecured, interest free and not
subject to any fixed repayment terms.
7 Loans to associate and related companies
31 July 2011 31 July 2010 31 January 2010
Group Company Group Company Group Company
GBP GBP GBP GBP GBP GBP
------------------ ---------- ---------- ------ -------- ---------- ----------
ESO Investments
1 LP 944,713 944,713 - - 915,137 915,137
EPIC Structured
Finance Limited 596,881 596,881 - - 558,541 558,541
1,541,594 1,541,594 - - 1,473,678 1,473,678
------------------ ---------- ---------- ------ -------- ---------- ----------
Loans to associate derive from investments passed to ESO
Investments 1 LP but whose economic benefit remains with the
Company until such time as ESO Investments 1 LP repays the loan.
The loans bear interest at a rate reflecting the underlying rate on
the assets between zero and 20%.
8 Share capital
31 July 2011 31 July 2010 31 January 2011
Number GBP Number GBP Number GBP
--------------------- ----------- ---------- ----------- ---------- ----------- ----------
Authorised share
capital
Ordinary shares
of 5p each 33,000,000 1,650,000 33,000,000 1,650,000 33,000,000 1,650,000
--------------------- ----------- ---------- ----------- ---------- ----------- ----------
Called up, allotted
and fully paid
Ordinary shares
of 5p each 30,802,911 1,540,146 26,541,501 1,327,075 30,891,661 1,544,583
Ordinary shares - - - - (88,750) -
of 5p each held
in treasury
--------------------- ----------- ---------- ----------- ---------- ----------- ----------
30,802,911 1,540,146 26,541,501 1,327,075 30,802,911 1,544,583
--------------------- ----------- ---------- ----------- ---------- ----------- ----------
The Company cancelled 88,750 Ordinary shares of 5p each which
was held in treasury on 31 May 2011. The Company now holds no
Ordinary shares in treasury.
9 Basic and diluted earnings per ordinary share
The basic earnings per share is calculated by dividing the
profit for the period attributable to ordinary shareholders by the
weighted average number of shares outstanding during the period of
30,802,911 (six month period ended 31 July 2010: 26,541,501 after
share consolidation, year ended 31 January 2011: 28,348,894)
Fully diluted earnings per share is the same as the basic
earnings per share.
10 Net asset value per share (pence)
The net asset value per share is based on the net assets at the
period end of GBP25,601,025 divided by 30,802,911 ordinary shares
in issue at the end of the period (31 July 2010: GBP19,713,507 and
26,541,501 ordinary shares, 31 January 2011: GBP24,400,349 and
30,802,911 ordinary shares).
11 Non-current liabilities
31 July 2011 31 July 2010 31 January 2011
Group Company Group Company Group Company
GBP GBP GBP GBP GBP GBP
-------------------------- ----------- ---------- -------- -------- ----------- ----------
Investment in subsidiary - - - 13,225 - 7,131
Convertible loan
note instruments 9,892,421 9,892,421 - - 9,880,429 9,880,429
Mortgage loan 463,040 - 478,186 - 470,718 -
-------------------------- ----------- ---------- -------- -------- ----------- ----------
10,355,461 9,892,421 478,186 13,225 10,351,147 9,887,560
-------------------------- ----------- ---------- -------- -------- ----------- ----------
The mortgage bank loan bears interest at LIBOR plus 4.5% margin
per annum, calculated on a daily basis subject to a maximum 12.9%.
The loan is secured on investment property valued in the financial
statements at GBP463,040 (31 July 2010: GBP478,186 and 31 January
2011 GBP470,718). The loan expiration date is May 2029.
Convertible loan note instruments were issued on 31 August 2010
to The Equity Partnership Investment Company plc. The notes carry
interest at 7.5% per annum and are convertible at the option of the
holder at a price of 170 pence per ordinary share. The convertible
shares fall under the definition of compound financial instruments
within IAS 32 Financial Instruments: Presentation. The Directors
are required to assess the element of liability contained with the
compound instrument. The Directors consider that the instrument has
no equity element.
Issue costs of GBP129,696 have been offset against the value of
the convertible loan note instruments and is being amortised over
the life of the instrument at an effective interest rate of 0.24%
per annum. A total of GBP11,992 has been expensed in the year ended
31 January 2011.
The convertible loan notes are repayable on 31 December 2015
unless the shareholders of the Company pass a resolution on or
before 30 September 2015 for the continuation of the Company beyond
31 December 2016, in which case the final repayment date shall be
31 December 2016, but each Noteholder has the right to require the
redemption of some or all of his notes on 31 December 2015 by
providing the Company written notice up to the close of business on
30 November 2015.
12 Investment in equity accounted investee/associate
Key terms of LP Agreement
Profits or losses are credited or debited to each Member's
account to reflect the distributions payable to each Member were
the LP to be liquidated at its statement of financial position
value.
Prior to the First Hurdle Point (being the point at which each
member has received repayment of the loans advanced and a Hurdle
amount being 8% per annum on the loan balances) distributions shall
be made as:
-- 37% to DES Holdings IV(A) LLC
-- 63% to EPE Special Opportunities plc
At the First Hurdle Point for an investor an amount equal to 25%
of the Hurdle shall be credited from that investor to EPE Carry LP.
After the First Hurdle Point distributions shall be as stated above
less 20% which shall be credited to EPE Carry LP until the Second
Hurdle Point.
At the Second Hurdle Point, (being the point at which DES
Holdings IV(A) LLC has received 1.5 times its loans advanced)
distributions shall be made as;
-- 25% to DES Holdings IV(A) LLC
-- 75% to EPE Special Opportunities plc
Subject to a 20% allocation to EPE Carry LP in the event that
the First Hurdle Point has been reached.
At the Third Hurdle Point, (being the point at which DES
Holdings IV(A) LLC has received 2 times its loans advanced)
distributions shall be made as;
-- 18% to DES Holdings IV(A) LLC
-- 82% to EPE Special Opportunities plc
Subject to a 20% allocation to EPE Carry LP in the event that
the Second Hurdle Point has been reached.
13 Related party transactions
Giles Brand, a partner in the Investment Advisor owns 16.8%
(2010: 9.1%) of the ordinary share capital in the Company.
The Principals of the Investment Advisor co-invest in certain
portfolio companies invested by Group Companies.
14 Financial commitments and guarantees
The Company provides certain guarantees to Lloyds TSB Bank plc
("Lloyds") on the facilities that Lloyds provides to Past Times
Trading Limited in the sum of GBP3,000,000, such guarantees being
given for Letter of Credit , Customs & Excise Bonds, corporate
credit cards and BACS liabilities.
15 Directors' interests
Two of the Directors had an interest in the shares of the
Company as at 31 July 2011 (31 January 2011: two). Geoffrey Vero
held 40,000 ordinary shares (31 January 2011: 40,000) and Nicholas
Wilson held 20,000 ordinary shares (31 January 2011: 20,000).
16 Subsequent events
On 15 August 2011 the Company successfully admitted 10,000,000
convertible loan notes of GBP1 each to be traded on the PLUS Stock
Exchange ("PLUS") which is operated by PLUS Markets Group plc.
These loan notes are solely traded on PLUS.
In September 2011, Giles Brand and other investors, including
employees of the Investment Advisor, acquired 7.8% of the Ordinary
Shares of the Company previously held by Lehman Brothers'
International. The acquisition increases Giles Brand's ownership to
16.8% of the Ordinary Shares of the Company, whilst employees of
the Investment Advisor, including Giles Brand, now hold 20.1% of
the Ordinary Shares of the Company.
Company Information
Directors Bankers
GO Vero (Chairman) Barclays Bank plc
RBM Quayle 1 Churchill Place
CL Spears Canary Wharf
NV Wilson London E14 5HP
Secretary Investment Advisor
P.P. Scales EPIC Private Equity LLP
Audrey House
Registrar and Registered 16-20 Ely Place
Office London EC1N 6SN
IOMA Fund and Investment Management Limited Auditors and Reporting Accountants
IOMA House KPMG Audit LLC
Hope Street Heritage Court
Douglas 41 Athol Street
Isle of Man IM1 1AP Douglas
Isle of Man IM99 1HN
Nominated Advisor and Broker
Numis Securities Limited
10 Paternoster Square
London EC4M 7LT
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR PGGWPUUPGGCM
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