TIDMESO TIDMEC.P TIDMEO.P
RNS Number : 6845H
EPE Special Opportunities PLC
18 March 2015
EPE Special Opportunities plc
Audited Financial Statements for the 12 months ended 31 January
2015
The Board of EPE Special Opportunities plc are pleased to
announce the Company's Final Results for the 12 months ended 31
January 2015.
Highlights:
-- The Net Asset Value (NAV) at 31 January 2015 amounted to
142.13 pence per share, an increase of 5.0% on the NAV per share of
135.37 as at 31 January 2014;
-- The share price for the Company as at 31 January 2015 was
114.00 pence, representing an increase of 31.0% on the share price
of 87.00 pence as at 31 January 2014;
-- The Company is pleased to confirm that the Company's largest
shareholder is the executives of the Investment Advisor, owning
26.5% of the Company between them;
-- The portfolio remains conservatively valued with a weighted
average Enterprise Value equating to an EBITDA multiple of 5.3x
with 35.4% of the portfolio's GAV comprised of yielding loans;
-- The underlying portfolio is relatively unleveraged with 1.4x
third party net debt to EBITDA;
-- The Company retains strong net cash balances of GBP9.9
million, providing 35.3x per annum coverage on Convertible Loan
Note interest. Overall cash in the Company is GBP14.0 million,
providing sufficient capital to invest in new deal
opportunities;
-- Over the last five years the Company has continued to use its
capital resources prudently, retiring 12.4% of the capital
base;
-- The Company successfully exited Bighead Holdings Limited to
management on 19 February 2014 at a premium of 31.4% to its
prevailing holding value, generating a total return to ESO 1 LP
since September 2010 of 3.6x Money Multiple and a 51.7% IRR;
-- The Company successfully exited Indicia Group Limited to
Charterhouse Print Management Limited on 24 December 2014 at a
premium of 42.4% to its prevailing holding value, generating a
total return to ESO 1 LP of 2.2x Money Multiple and a 24.6%
IRR;
-- The Company successfully exited Driver Require Limited to
Chrysalis VCT PLC on 20 January 2015 at a premium of 168.6% to its
prevailing holding value, generating a total return to ESO 1 LP of
1.3x Money Multiple and a 7.0% IRR;
-- Nexus finished the financial year to 31 December 2014 ahead
of budget, driven by strong performance in the UK trade and retail
channels, bolstered by strong demand for the Luceco LED lighting
ranges;
-- Whittard of Chelsea finished the year to 31 December 2014
behind budget, due to a disappointing first half and a shortfall in
retail and international/wholesale sales, before reversing course
and finishing the year with strong like-for-like growth;
-- Process Components finished the year to 30 June 2014 behind
an aggressive budget, but significantly ahead of 2013. Growth
continues to be driven by investment in sales, marketing and
product development;
-- Pharmacy2U finished the year to 31 March 2014 ahead of
budget, with registration of new NHS practices for the NHS
electronic prescription system significantly ahead of budget;
-- New investment opportunities are being pursued in light of
positive economic conditions. All new investments will be made via
ESO 2 LP, in which the Company is the sole investor;
-- Mr. Geoffrey Vero, Chairman, commented: "The Board are
satisfied with the overall performance of the portfolio and the
progress of the Company in the last 12 months. Most notable
progress has been made at Nexus and the successful disposal of a
number of portfolio assets above their holding values, providing
continued validation of the Company's NAV and increasing cash
balances to invest in new deal opportunities. We are optimistic
that the Company's portfolio will continue to perform and that the
Company will continue to explore opportunities to acquire high
quality assets at attractive prices to further diversify the
current portfolio."
Enquiries:
EPIC Private Equity LLP
Alex Leslie +44 (0) 20 7269 8865
Numis Securities Ltd
Nominated Advisor Stuart Skinner / Hugh Jonathan +44 (0) 20 7260 1000
Corporate Broker Charles Farquhar
IOMA
Philip Scales +44 (0) 16 2468 1250
Cardew Group
Richard Spiegelberg / Georgina Hall +44 (0) 20 7930 0777
Biographies of the Directors
Geoffrey Vero FCA Clive Spears
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Geoffrey Vero qualified as a chartered Clive Spears retired from the
accountant Royal Bank of
with Ernst & Young and then worked Scotland International Limited
for Savills, chartered surveyors, in December 2003 as Deputy Director
and The Diners Club Limited. He of Jersey after 32 years of service.
has been active in venture capital His main activities prior to
since 1985, initially with Lazard retirement included Product Development,
Development Capital Limited and Corporate Finance, Trust and
then from 1987 to 2002 as a director Offshore Company Services and
of Causeway Capital Limited which he was Head of Joint Venture
became ABN Amro Capital Limited. Fund Administration with Rawlinson
In 2002, he set up The Vero Consultancy & Hunter. Mr Spears is an Associate
specialising in corporate advisory of the Chartered Institute of
services and recovery situations. Bankers and a Member of the Chartered
He has considerable experience Institute for Securities & Investment.
in evaluating investment opportunities He has accumulated a well spread
and dealing with corporate recovery. portfolio of directorships centring
While at Causeway Capital, Mr on private equity, infrastructure
Vero was a Founder Director of and corporate debt. His appointments
Causeway Invoice Discounting Company currently include being Chairman
Limited, which was subsequently of Nordic Capital Limited and
sold to NM Rothschild. He is also sitting on the board of Jersey
a non-executive director of Numis Finance Limited.
Corporation plc and Chairman of
Albion Development VCT plc.
----------------------------------------- ------------------------------------------
Robert Quayle Nicholas Wilson
----------------------------------------- --------------------------------------------
Robert Quayle qualified as an Nicholas Wilson has over 35 years
English solicitor at Linklaters of experience in
& Paines in 1974 after reading hedge funds, derivatives and
law at Selwyn College, Cambridge. global asset management. He has
He subsequently practiced in London run offshore branch operations
and the Isle of Man as a partner for Mees Pierson Derivatives
in Travers Smith Braithwaite. Limited, ADM Investor Services
He served as Clerk of Tynwald International Limited and several
(the Isle of Man's parliament) other London based financial
for periods totalling 12 years services companies. He is Chairman
and holds a number of public and of Qatar Investment Fund Plc,
private appointments, and is active a premium listed company, and,
in the voluntary sector. Mr. Quayle until recently, was chairman
is Chairman of the Isle of Man of Alternative Investment Strategies
Steam Packet Company Limited, Limited, the longest running
W.H. Ireland (IOM) Limited and quoted fund of hedge funds and
a number of other companies in a FTSE all share constituent.
the financial services, manufacturing In addition, he sits on the boards
and distribution sectors. of several other public companies.
He is a resident of the Isle
of Man.
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Profile of Investment Advisor
EPIC Private Equity LLP ("EPE" or the "Investment Advisor") was
founded in June 2001 and is independently owned by its Partners.
EPE focuses on niche investment opportunities throughout the UK
with a focus on special situations, distressed, growth and buyout
transactions.
Giles Brand is a Partner and the Robert Fulford is an Investment
founder of EPE. He Director of EPE. He
is currently a non-executive director previously worked at Barclaycard
of a number of portfolio companies: Consumer Europe before joining
Whittard, Nexus Industries and EPE. Whilst at Barclaycard, Robert
Pharmacy2U. Before joining EPE, was the Senior Manager for Strategic
Giles was a founding Director Insight and was responsible for
of EPIC Investment Partners, a identifying, analysing and responding
fund management business which to competitive forces. Prior to
at sale to Syndicate Asset Management Barclaycard, Robert spent four
plc had US$5 billion under management years as a strategy consultant
and spent five years working in at Oliver Wyman Financial Services,
Mergers and Acquisitions at Baring where he worked with a range of
Brothers in Paris and London. major retail banking and institutional
Giles read History at Bristol clients in the UK, mainland Europe,
University. Middle East and Africa, specialising
in strategy and risk modelling.
He manages the Company's investments
in Nexus Industries and Whittard
of Chelsea, where he is currently
a non-executive director. Robert
read Engineering at Cambridge
University.
--------------------------------------------- ----------------------------------------
James Henderson is an Investment Daniel Roddick is Head of Investor
Director of EPE. He previously Relations and
worked in the Investment Banking Placement at EPE. He has over
division at Deutsche Bank before ten years' experience in corporate
joining EPE. Whilst at Deutsche finance, private equity and strategy
Bank he worked on a number of consulting; most recently as a
M&A transactions and IPOs in the consultant and trusted advisor
energy, property, retail and gaming to a number of London-based private
sectors, as well as providing equity firms. Prior to EPE, Daniel
corporate broking advice to mandated was a Vice President at Campbell
clients. He manages the Company's Lutyens where he led the marketing
investment in Pharmacy2U. James of funds across the Nordic region
read Modern History at Oxford and assisted in raising private
University and Medicine at Nottingham equity funds and on the sale and
University. restructuring of private equity
assets. Before Campbell Lutyens,
he was at McKinsey & Co., working
across London, Munich and Amsterdam
in the Corporate Finance and Strategy
Practice. Daniel read Engineering,
Economics and Management at Oxford
University and is a CFA charter
holder.
--------------------------------------------- ----------------------------------------
Alex Leslie is an Investment Director
of EPE. He previously worked in
Healthcare Investment Banking
at Piper Jaffray before joining
EPE. Whilst at Piper Jaffray he
worked on a number of M&A transactions
and equity fundraisings within
the Biotechnology, Specialty Pharmaceutical
and Medical Technology sectors.
He manages the Company's investment
in Process Components, where he
is currently a non-executive director.
Alex read Human Biological and
Social Sciences at Oxford University
and obtained an MPhil in Management
from the Judge Business School
at Cambridge University.
---------------------------------------------
Chairman's Statement
In the twelve months to January 2015, growth in the UK economy
continued at an increasing pace. Real GDP in the UK increased by
2.6%, faster than most of the countries in the G7 (apart from the
US and Canada) and marking the best performance since 2007. Despite
the slowdown in the industrial and construction sectors in the last
quarter, growth has been driven by a variety of sectors, in
particular consumption of services, as well as the construction
sector. Further positive signs of a full-scale recovery are found
in the significant decrease in unemployment to 5.7% in the three
months to December 2014 (7.2% 2013), and low levels of inflation,
with CPI in January 2015 at 0.3%. Although low levels of inflation
are inevitably reigniting deflation fears, and fears over oil
prices remain, the Board are overall optimistic that economic
conditions will continue to improve and yield a sustainable
recovery. This is expected to provide favourable conditions for the
EPE Special Opportunities plc ("ESO" or the "Company") investment
portfolio in the coming year.
The 31 January 2015 Net Asset Value ("NAV") of 142.13 pence per
share represents an increase of 5.0% on the NAV per share of 135.37
pence as at 31 January 2014. The share price as at 31 January 2015
for the Company was 114.00 pence, representing an increase of 31.0%
on the share price of 87.00 pence as at 31 January 2014. The year
proved satisfactory for the portfolio, most notably the Company's
largest asset, Nexus Industries ("Nexus"). As in recent years,
Nexus traded significantly ahead of budget during 2014, buoyed by
accelerating sales of the new LED lighting range. It is expected to
continue this strong performance in 2015, with the potential to
supplement organic sales and EBITDA growth with acquisitions.
Whittard of Chelsea, by contrast, underperformed in the 12 months
to 31 December 2014, with its new premium positioning strategy
taking longer than expected to deliver returns. Nevertheless,
despite a disappointing first half, the business finished the year
with strong like-for-like growth.
On 19 February 2014, the Company exited its investment in
Bighead Holdings Limited ("Bighead") to management, generating a
total return to ESO Investments 1 LP ("ESO 1 LP") of 3.6x Money
Multiple and a 51.7% IRR - a 31.4% premium to Bighead's prevailing
holding value.
A second disposal was completed with the sale of Indicia Group
Limited ("Indicia") to Charterhouse Print Management Limited
("Charterhouse") on 24 December 2014, generating a total return to
ESO 1 LP of 2.2x Money Multiple and a 24.6% IRR - a 42.4% premium
to Indicia's prevailing holding value.
The Board and the Investment Advisor are currently investigating
the possibility of raising additional funds for the Company by way
of senior debt, mezzanine finance or bonds. Should the Company
decide to raise funds by way of debt or debt-like instruments, it
would anticipate that those instruments and any existing
Convertible Loan Notes in aggregate would be more than 7.5x covered
by the Gross Assets of the Company. Any new funds raised would be
used, inter alia, to retire existing Convertible Loan Notes
("CLNs") in light of the December 2015 end date (extendable to
December 2016 at the Company's option), buy-in minorities in the
existing investments, and support new investments.
The Company did not complete any new acquisitions in the period.
Improving economic conditions may however yield investment
opportunities and the Company continues to actively source deals. I
would like to extend my thanks to the Investment Advisor, EPE, as
well as my fellow Directors and professional advisors, for their
concerted efforts over the last twelve months. I look forward to
once again updating you on continued success at the half-year
point.
Geoffrey Vero
Chairman
17 March 2015
Investment Advisor's Report
In the twelve month period since 31 January 2014, the Investment
Advisor has focused on maintaining and creating value from within
the existing portfolios held by the Company. The Investment Advisor
continues to undertake cost saving and revenue improvement measures
in investee companies to increase the value of the current
portfolio. At the same time, the Investment Advisor has endeavoured
to find new opportunities by way of platform or bolt-on investment
opportunities. All new investments will be made via ESO Investments
2 LP ("ESO 2 LP"), in which the Company is the sole investor.
Over the course of 2014, the UK economy grew at an increased
rate compared to the prior year, benefitting the Company's
portfolio. Inflation stood at 0.3% in January 2015 versus 1.9% in
January 2014, and the unemployment rate fell to 5.7% in the three
months to December, its lowest level for six years. The Investment
Advisor will continue to monitor carefully the health of
international markets as fears of deflation, particularly contagion
from the Eurozone, and geopolitical turmoil remain key issues in
2015.
The underlying portfolio has performed satisfactorily since
January 2014. Nexus finished the financial year to 31 December 2014
ahead of budget, driven by very strong performance in the UK trade
and retail channels, bolstered by strong demand for the Luceco LED
lighting range.
By contrast, Whittard of Chelsea finished the year behind budget
in 2014, due to a disappointing first half and a shortfall in
retail and international/wholesale sales, before reversing course
and finishing the year with strong like-for-like growth. The
business continues to show encouraging growth in web activities,
both at the sales and gross margin level, compared to the previous
year. Together, Nexus and Whittard represent 51.5% of the Company's
Gross Asset Value ("GAV").
Process Components finished the year to 30 June 2014 behind an
aggressive budget, but significantly ahead of 2013. Growth
continues to be driven by investment in sales, marketing and
product development.
Pharmacy2U finished the year to 31 March 2014 ahead of budget,
with registration of new NHS practices for the NHS electronic
prescription system significantly ahead of budget.
On 19 February 2014, the Company disposed of its investment in
Bighead to management, generating a total return to ESO 1 LP of
3.6x Money Multiple and a 51.7% IRR. A second disposal was made on
24 December 2014, with the Company exiting its investment in
Indicia to Charterhouse, generating a total return to ESO 1 LP of
2.2x Money Multiple and a 24.6% IRR. The disposal of Driver Require
Limited to Chrysalis VCT PLC was completed on 20 January 2015,
generating a total return to ESO 1 LP of 1.3x Money Multiple and a
7.0% IRR.
All three disposals have had a positive impact on the Company,
with Bighead completed at a 31.4% premium to its prevailing holding
value, Indicia completed at a 42.4% premium and Driver Require
completed at a 168.6% premium. The recent exits above prevailing
holding values provides continued validation of the Company's NAV
approach. The exits follow the exit of Palatinate at a 31.4%
premium to NAV, Pinnacle Regeneration Group at a 5.7% premium to
NAV in June 2011, and the disposal of Ryness at a 40.3% premium to
NAV in May 2011.
Company highlights
The NAV per share as at 31 January 2015 for the Company was
142.13 pence, calculated on the basis of 27.5 million ordinary
shares (versus 30.0 million at issue), representing an increase of
5.0% on the NAV per share of 135.37 pence as at 31 January 2014.
The share price as at 31 January 2015 for the Company was 114.00
pence, representing an increase of 31.0% on the share price of
87.00 pence as at 31 January 2014.
Based on the latest NAV, as set out above, Gross Asset Cover for
the outstanding CLNs of GBP6.0 million is now 7.5x. Net cash now
stands at GBP9.9 million with CLN interest coverage of 35.3x per
annum. Overall cash in the Company is GBP14.0 million.
Third party net debt in the Company's portfolio stands at 1.4x
EBITDA, whilst arithmetic average Net Debt to EBITDA across the
portfolio is 0.7x. The portfolio remains conservatively valued with
a weighted average Enterprise Value equating to an EBITDA multiple
of 5.3x with 35.4% of the portfolio's GAV comprised of yielding
loans (excludes one asset which represents 0.5% or GBP0.1 million
of the GAV). By comparison, listed European Private Equity
competitors' weighted average Enterprise Value to EBITDA multiple
is 9.3x (sources: latest Report and Accounts for 3i, Better
Capital, Dunedin Enterprise, Electra Private Equity, HgCapital
Trust, Graphite and Oakley Capital Investments).
Investment highlights from the inception of the Company (16
September 2003) to date include:
-- Deployed GBP66 million of capital;
-- Returned over GBP67 million to the Company in capital and income;
-- Generated gross income of GBP12 million and paid dividends of GBP5 million;
-- The underlying private equity portfolio is valued at a gross
4.1x money multiple and 32.4% IRR.
Performance summary One Three Five
As at 31 January 2015 Year Years Years
ESO plc Share Price 31% 140% 268%
ESO plc NAV Per Share 5% 59% 95%
Listed European PE Index* 16% 102% 76%
FTSE All-Share Index 4% 23% 36%
AIM All-Share Index (20%) (9%) 3%
--------------------------- ------ ------- -------
* Selected Listed European PE Index constituents: 3i, Better
Capital, Dunedin Enterprise, Electra Private Equity, HgCapital
Trust, Graphite and Oakley Capital Investments. The Index has been
constructed by weighting the daily share price of each constituent
by its market capitalisation as at 31 January 2015.
Recent developments
-- June 2013: sale of Palatinate at 2.4x Money Multiple and 43% IRR.
-- July 2013: passed Continuation Vote to extend life of Company
to December 2020, five year votes thereafter.
-- January 2014: Mark Dunhill, former TM Lewin International
Director, appointed new Whittard CEO.
-- February 2014: sale of Bighead at 3.6x Money Multiple and 52% IRR.
-- December 2014: disposal of Indicia at 2.2x Money Multiple and 24.6% IRR.
-- January 2015: disposal of Driver Require at 1.3x Money Multiple and a 7.0% IRR.
Portfolio diversification
The current portfolio is diversified by sector and instrument as
follows:
Sector %
---------------------------- -----
Engineering, Manufacturing
and Distribution 77%
Retail / FMCG 20%
Business Services 1%
Healthcare 2%
----------------------------
Total 100%
---------------------------- -----
Instrument %
------------------- -----
Mezzanine Loans 9%
Shareholder Loans 12%
Equity 44%
Cash 35%
-------------------
Total 100%
------------------- -----
Current portfolio: ESO 1 LP
Nexus Industries
Nexus Industries ("Nexus") is a manufacturer and distributor of
electrical accessories in the UK, operating under the brand names
Masterplug and British General, supplying both the retail and
wholesale markets. The development of the Luceco LED lighting
ranges is a major focus for the business. The gathering momentum
behind the lighting technology switch to LED provides Nexus with an
opportunity to enter and build market share in the category at a
point of disruptive transition as traditional solutions are
superseded. Nexus is differentiated by its positioning as a Chinese
manufacturer, where the Company has built a 250,000 square foot
wholly-owned production facility in Jiaxing, with British product
quality, brand and service standards supplying into a global
market.
Whittard of Chelsea
Whittard of Chelsea ("Whittard") is a retailer of specialty tea,
coffee and hot chocolate. Established in 1886, Whittard commands
both strong brand recognition and customer loyalty in the UK and
abroad. The main channel for the Company is the portfolio of 50
stores across the UK. These stores are positioned in prime
locations on the high street, in tourist centres and outlets, with
sales generated from both gifting and regular self-purchases. Other
channels include the online, wholesale and franchise channels. The
Investment Advisor has focussed on developing the Whittard of
Chelsea brand towards a more premium stance, which should broaden
its appeal both in the UK home market and abroad.
Pharmacy2U
Pharmacy2U ("P2U") is an online pharmacy business, delivering
National Health Service and private prescriptions direct to the
home using an innovative technology developed in conjunction with
the NHS, the Electronic Prescription Service ("EPSr2"). In June
2012, Andy Hornby became Chairman of P2U, bringing with him a
strong background in healthcare and of operating FTSE 100 companies
via his experience at Alliance Boots. He is mandated to drive the
sales and marketing effort necessary to capitalise on the potential
growth offered by EPSr2 roll-out.
Current portfolio: ESO Investments (PC) LLP ("ESO (PC) LLP")
Process Components
Process Components ("PCL") is an engineering parts and equipment
supplier to the powder processing industries, primarily food,
agriculture and pharmaceuticals. Customers are blue chip global
manufacturers, and the business has been growing its international
supply operations.
Current portfolio: ESO 2 LP
No new investments were made in the period. The Company
continues to explore opportunities to acquire high quality assets
at attractive prices to further diversify the current
portfolio.
Outlook
The Investment Advisor is focussed on consolidation with a view
to preserving and creating value in its core investments, as well
as on making new investments to increase portfolio diversification
and generate attractive returns for shareholders. The Investment
Advisor expects to achieve continued cost savings and revenue
improvement measures in portfolio companies, especially those in
manufacturing and consumer focussed sectors. New investment
opportunities are being pursued as positive economic signs
continue. All new investments will be made via ESO 2 LP, in which
the Company is the sole investor.
Strategic Report
Objectives and opportunities
The Company is an investment company and has been quoted on the
Alternative Investment Market ("AIM"). Its objective is to provide
long-term return on equity for its shareholders by way of
investment in a portfolio of private equity assets. The portfolio
is likely to be concentrated, numbering between two and 10 assets
at any one time.
Investment policy
The Investment Advisor believes that the current economic
environment continues to create a wide range of investment
opportunities in UK small and medium sized enterprises ("SMEs"). As
a result, the Investment Advisor continues to use proprietary deal
sourcing approaches to source these opportunities, as well as
engaging actively with the wider restructuring and advisory
community to communicate 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.
The Company is particularly focussed on making investments in
sectors where the opportunity exists to create a unique asset via
the consolidation of a number of smaller companies, taking
advantage of the lack of liquidity in the SME market and the
attraction to secondary buyers of larger operations.
-- Special Situations: investment opportunities where the
Investment Advisor believes that assets are undervalued due to
specific, event-driven circumstances and where asset-backing may be
available and the opportunity exists for recovery and significant
upside. 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. The
Company seeks to acquire distressed debt, undervalued equity or the
assets of target businesses in solvent or insolvent situations.
-- Private Investment in Public Equities (PIPEs): the Company
may consider making investments in a number of smaller quoted
companies, primarily ones whose shares are admitted to AIM. The
Company will either seek to acquire and de-list the target company
or make an investment in the ordinary equity of a quoted target
company. The Company may offer ordinary shares in the Company as
all or part of the consideration for such investments.
-- Secondary portfolios / LP positions (Secondary or Primary) /
EPE Funds: the Company is able, through EPE's Placement business,
to invest as a limited partner in various Private Equity funds on
substantially improved terms. On occasion, the Company will seek to
take advantage of these commitments. The EPE skill-set and
experience is well suited to the requirements of co-investing in
funds.
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 (c.5% to 15% per annum) 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 GBP10 million, the
Company may seek co-investment from third parties or additional
public market fundraisings.
The Company looks to invest in businesses with strong
fundamentals, including defensible competitive advantage,
opportunity for strong future cashflow and dynamic management
teams.
The Company aims to maintain a concentrated portfolio of between
two and 10 assets.
The Investment Advisor
The Investment Advisor to the Company is EPE, which was founded
in June 2001 and is an independent investment manager wholly owned
by its Partners. Since 2001, EPE has made 45 investments. EPE
manages the Company's investments in accordance with guidelines
determined by the Directors and as specified in the Limited
Partnership Agreement. EPE was appointed as the Investment Advisor
in September 2003.
Current and future development
A detailed review of the year and outlook is contained in the
Chairman's Statement and the Investment Advisor's Report.
The Board regularly reviews the development and strategic
direction of the Company. The Board's main focus continues to be on
the Company's long term investment return. It is believed that the
Company has foundations in place to build a successful and durable
investment vehicle given its supportive shareholder base, with EPE
executives owning 26.5% of the Company (excluding awards made under
the Joint Share Ownership Plan), and the provision of equity
funding until at least December 2020, with five year extensions
thereafter, via the passing of the Continuation Vote in July
2013.
The Board and the Investment Advisor are investigating the
possibility of raising additional funds for the Company to be used,
inter alia, to retire existing Convertible Loan Notes in light of
the December 2015 end date (extendable to December 2016 at the
Company's behest), buy-in minorities in the existing investments,
investment behind key assets such as Nexus, Whittard, Process
Components and Pharmacy2U and support new investments.
Performance
A detailed review of performance is contained in the Chairman's
Statement and the Investment Advisor's Report. A number of key
indicators are considered by the Board and the Investment Advisor
in assessing the progress and performance of the Company. These are
well established industry measures and are as follows:
-- Return on equity over the long term
-- Movement in NAV per ordinary share
-- Movement in share price
-- Realisation of assets above cost and above holding value at NAV
Further details of these key performance indicators can be found
on the Investment Advisor's Report.
Risk management
All risks associated with the Company are the responsibility of
the Board, which reviews and manages these either directly or
through EPE. The main risks which the Company faces are as
follows:
Macroeconomic risks
The performance of the Company's underlying portfolio of assets
as well as the Company's ability to exit these assets is materially
influenced by the macroeconomic conditions, including the current
business environment and market conditions, the availability of
debt finance, the level of interest rates, as well as the number of
active buyers. Considerable effort continues to be taken by the
Investment Advisor to position the portfolio companies to cope with
the changing macroeconomic climate.
Share price volatility and liquidity
The market price of the shares could be subject to significant
fluctuations due to a change in investor sentiment regarding the
Company or the industry in which the Company operates or in
response to specific facts and events, including positive or
negative variations in the Company's interim or full year operating
results and business developments of the Company and/or
competitors. The market price of the shares may not reflect the
underlying value of the Group and it is possible that the market
price of the shares will trade at a discount to NAV.
The Board monitors share price to NAV per share discount, and
considers the most effective methodologies to keep this at a
minimum. These methodologies include a share buyback policy, with
Directors continuing to seek shareholder authority on an annual
basis to enable them to purchase shares for cancellation when they
believe it will be in the best interests of shareholders. To date,
this strategy has been used prudently and efficiently to improve
shareholder returns, with the Company having retired par value CLNs
and ordinary shares over the last five years equating to 12.4% of
the capital base.
Long term strategic risks
The Company is subject to the risk that share price performance
and long-term strategy fail to meet the expectations of its
shareholders. The Board regularly reviews the Objective and
Investment Policy in light of prevailing investor sentiment to
ensure the Company remains attractive to its shareholders.
Investment risks
The Company operates in a competitive market. Changes in the
number of market participants, the availability of investable
assets, the pricing of investable assets, or in the ability of EPE
to access and execute deals could have a significant effect on the
Company's competitive position and on the sustainability of
returns.
Adequate sourcing and execution of deals is primarily dependent
on the ability of EPE to attract and retain key investment
executives with the requisite skills and experience.
Adequate performance of portfolio assets once acquired is
primarily dependent on macroeconomic conditions, conditions within
each asset's market and the ability of the respective management
teams of each asset to execute their business strategy. Any one of
these factors could have an impact on the valuation of a portfolio
company and upon the Company's ability to make a profitable exit
from the investment within the desired timeframe.
The Company may at certain times hold a relatively concentrated
investment portfolio of between two and 10 assets. The Company
could be subject to significant losses if it, for example, holds a
large position in a particular investment that declines in value.
Such losses could have a material adverse effect on the performance
of and returns achieved by the Company.
A rigorous process is put in place by EPE for managing the
relationship with each portfolio company. This includes regular
asset reviews, an assessment of concentration of the investment
portfolio at any given period and board representation by one or
more EPE executives. The Board reviews both the performance of EPE
and its incentive arrangements on a regular basis to ensure that
both are appropriate to the objectives of the Company.
Gearing risks
Gearing can cause both gains and losses in the asset value of
the Company to be magnified. Gearing can also have serious
operational impacts on the Company if a breach of its banking
covenants occurs. Secondary risks relate to whether the cost of
gearing is too high and whether the length of the gearing is
appropriate. The Board regularly monitors the headroom available
under banking covenants and reviews the impact of the various forms
of gearing and their cost to the Company. The Company uses gearing
directly via its CLNs and an overdraft facility at ESO 1 LP, and
indirectly via gearing in individual portfolio assets.
Foreign exchange risk
The base currency of the Company is Sterling. Certain of the
Company's assets may be invested in investee companies which may
have operations in countries whose currency is not Sterling and
securities and other investments which are denominated in other
currencies. Accordingly, the Company will necessarily be subject to
foreign exchange risks and the value of its assets may be affected
unfavourably by fluctuations in currency rates.
Valuation risks and methodology
The Investment Advisor determines asset values using BVCA and
IPEV guidelines and other valuation methods with reference to the
valuation principles of IFRS 13: Fair Value Measurement. This
determination is subject to many assumptions and requires
considerable judgment. As all investments are unquoted, the
valuation principles adopted are classified as Level 3 in the IFRS
7 fair value hierarchy. BVCA and IPEV guidelines recommend the use
of comparable quoted company metrics and comparable transaction
metrics to determine an appropriate enterprise value, to which a
marketability discount is applied given the illiquid nature of
private equity investments. The Investment Advisor also seeks to
confirm value using discounted cash flow and other methods of
valuation, and by applying a range approach. The Investment Advisor
adopts a conservative approach to valuation with reference to the
aforementioned methodology having regard for on-going volatile
market conditions.
The Company announces an estimated net asset value per ordinary
share on a monthly basis following a review of the valuation of the
Company's investments.
Operational risks
The Company's investment management and administration are
provided or arranged for the Company by EPE. The Company is
therefore exposed to internal and external operational risks at
EPE, including regulatory, legal, information technology, human
resources and deficiencies in internal controls. The Company
monitors the provision of services by EPE to ensure they meet the
Company's business objectives.
Sources of funds
The Company considers a number of sources for funds. These
include its own cash resources as well as third party funds. Own
cash resources originate via income from ESO 1 LP and ESO (PC) LLP
and capital from asset realisations and refinancings. The focus on
utilising these cash resources allows the Company to minimise
dilution from public market fundraisings and provides sufficient
capital for small share buybacks and the execution of one to two
new investment opportunities per annum.
The Company's own cash resources may be supplemented by
additional third party funding. One route of third party funding
includes the provision of co-investment capital alongside the
Company in ESO 2 LP, either as private investment capital directly
into ESO 2 LP or on a deal by deal basis. The Company may also seek
opportunistic public market fundraisings, in particular when
considering transformational investment opportunities such as the
acquisition of the EPIC plc private equity portfolio in 2010.
Alternatively, third party debt funding may be sourced, comprising
zero dividend preference shares, preference shares, senior and
mezzanine debt, such as the GBP10 million of CLNs raised in 2010 to
part-fund the EPIC plc portfolio acquisition.
Board Composition and Succession Plan
Objectives of Plan
-- To ensure that the Board is composed of persons who
collectively are fit and proper to direct the Company's business
with prudence, integrity and professional skills.
-- To define the Board Composition and Succession Plan (the
"Plan"), which guides the size, shape and constitution of the Board
and the identification of suitable candidates for appointment to
the Board.
The Plan will be reviewed by the Board annually and at such
other times as circumstances may require (e.g. a major corporate
development or an unexpected resignation from the Board). The Plan
may be amended or varied in relation to individual circumstances at
the Board's discretion.
Methodology
The Board is conscious of the need to ensure that proper
processes are in place to deal with succession issues and the Board
uses a skills matrix to assist in the selection process.
The matrix includes the following elements: finance, accounting
and operations; familiarity with the broader concepts of private
equity investment, diversity (gender, residency, cultural
background); Shareholder perspectives; investment management;
multijurisdictional compliance and risk management. In adopting the
matrix, the Board acknowledges that it is an iterative document and
will be reviewed and revised periodically to meet the Company's
on-going needs.
Directors may be appointed by the Board, in which case they are
required to seek election at the first AGM following their
appointment. In making an appointment the Board shall have regard
to the Board skills matrix.
A Director's formal letter of appointment sets out, amongst
other things, the following requirements:
-- Bringing independent judgment to bear on issues of strategy,
performance, resources, key appointments and standards of conduct
and the importance of remaining free from any business or other
relationship that could materially interfere with independent
judgement;
-- Having an understanding of the Company's affairs and its
position in the industry in which it operates;
-- Keeping abreast of and complying with the legislative and
broader responsibilities of a Director of a company whose shares
are traded on the London Stock Exchange;
-- Allocating sufficient time to meet the requirements of the
role, including preparation for Board meetings; and
-- Disclosing to the Board as soon as possible any potential conflicts of interest.
Geoffrey Vero
Chairman
17 March 2015
Risk and Audit Committee Report
The Risk and Audit Committee is chaired by Clive Spears and
comprises all other Directors, all of whom are deemed
independent.
The Risk and Audit Committee's main duties are:
-- To review and monitor the integrity of the interim and annual
financial statements, interim statements, announcements and matters
relating to accounting policy, laws and regulations of the
Company;
-- To evaluate the risks to the quality and effectiveness of the financial reporting process;
-- To review the effectiveness of the internal control systems
and the risk management policies and procedures of the Company;
-- To review the valuation of portfolio investments;
-- To review corporate governance compliance;
-- To review the nature and scope of the work to be performed by
the Auditors, and their independence and objectivity; and
-- To make recommendations to the Board as to the appointment
and remuneration of the external auditors.
The Risk and Audit Committee has a calendar which sets out its
work programme for the year to ensure it covers all areas within
its remit appropriately. It met four times during the period under
review to carry out its responsibilities and senior representatives
of the Investment Advisor attended the meetings as required by the
Risk and Audit Committee. In between meetings, the Risk and Audit
Committee chairman maintains ongoing dialogue with the Investment
Advisor and the lead audit partner.
During the year the Risk and Audit Committee carried out a
review of its terms of reference and its own effectiveness. It
concluded that the changes were working well and that the Risk and
Audit Committee is satisfactorily fulfilling its terms of reference
and is operating effectively.
Significant accounting matters
The significant issue considered by the Risk and Audit Committee
during the year in relation to the financial statements of the
Company is the valuation of unquoted investments.
The Company's accounting policy for valuing unquoted investments
is set out in note 11. The Risk and Audit Committee examined and
challenged the valuations prepared by the Investment Advisor,
taking into account the latest available information on the
Company's investments and the Investment Advisor's knowledge of the
underlying portfolio companies through their ongoing monitoring.
The Risk and Audit Committee satisfied itself that the valuation of
investments had been carried out consistently with prior accounting
periods, or that any change in valuation basis was appropriate, and
was conducted in accordance with published industry guidelines.
The Auditors explained the results of their review of the
procedures undertaken by the Manager for the valuation. On the
basis of their audit work, no material adjustments were identified
by the auditor.
External audit
The Risk and Audit Committee reviewed the audit plan and fees
presented by the Auditors, KPMG Audit LLC ("KPMG"), and considered
their report on the financial statements. The fee for the audit of
the annual report and financial statements of the Company for the
period ended 31 January 2015 is GBP26,200 (2014: GBP25,200).
The Risk and Audit Committee reviews the scope and nature of all
proposed non-audit services before engagement, with a view to
ensuring that none of these services have the potential to impair
or appear to impair the independence of their audit role. The
committee receives an annual assurance from the Auditors that their
independence is not compromised by the provision of such services,
if applicable. During the period under review, the Auditors did not
provide any non-audit services to the Company.
The Auditors have provided details of other relationships they
have with the Investment Advisor and confirmed to the Board that in
its opinion it is independent of the Investment Advisor. The Risk
and Audit Committee has considered the independence and objectivity
of the Auditors, and is satisfied that the Auditors remain
independent and continue to fulfil their obligations to the Company
and its shareholders.
KPMG were appointed as Auditors to the Company for the year
ending 31 January 2005 audit. The Risk and Audit Committee will
regularly consider the need to put the audit out to tender, the
Auditors' fees and independence, alongside matters raised during
each audit. The appointment of KPMG has not been put out to tender
as the committee, from ongoing direct observation and indirect
enquiry of the Investment Advisor, remain satisfied that KPMG
continue to provide a high quality audit and effective independent
challenge in carrying out their responsibilities. The Company
adheres to a five year roll over in relation to the Auditor
partner.
Having considered these matters and the effectiveness of the
external auditor, the Risk and Audit Committee has recommended to
the Board that KPMG be appointed as Auditors for the forthcoming
year.
Risk management and internal control
The Company does not have an internal audit function. The Risk
and Audit Committee believes this is appropriate as all of the
Company's management functions are delegated to the Investment
Advisor which has its own internal control and risk monitoring
arrangements. A report on these arrangements is prepared by the
Investment Advisor and submitted to the Risk and Audit Committee
which it reviews on behalf of the Board to support the Directors'
responsibility for overall internal control. The Company does not
have a whistleblowing policy and procedure in place. The Company
delegates this function to the Investment Advisor who is regulated
by the FCA and has such policies in place. The Risk and Audit
Committee has been informed by the Investment Advisor that these
policies meet the industry standards and no whistleblowing took
place during the year.
Clive Spears
Chairman of the Risk and Audit Committee
17 March 2015
Report of the Directors
Principal activity
The Company was incorporated in the Isle of Man as an AIM listed
public company limited by shares under the Laws with registered
number 108834C on 25 July 2003. On 23 July 2012, the Company
re-registered under the Isle of Man Companies Act 2006, with
registration number 008597V.
The principal activity of the Company and its subsidiaries
(together "the Group") and its associates is to arrange income
yielding financing for growth, buyout and special situations and
holding the investments with a view to exiting in due course at a
profit.
Incorporation
The Company was incorporated on 25 July 2003. The Company's
registered office is:
IOMA House, Hope Street, Douglas, Isle of Man, IM1 1AP, British
Isles.
Details of subsidiaries are provided in note 23.
Results of the financial year
Results for the year are set out in the Consolidated Statements
of Comprehensive Income and in the Consolidated Statement of
Changes in Equity.
Dividends
The Board does not recommend a dividend in relation to the
current year (see note 9 for further details).
Corporate governance principles
As an Isle of Man registered company and under the AIM rules for
companies, the Company is not required to comply with the UK
Corporate Governance Code published by the Financial Reporting
Council ("Code"). The Directors, however, place a high degree of
importance on ensuring that the Company maintains high standards of
Corporate Governance and have therefore adopted the spirit of the
Code to the extent that they consider appropriate, taking into
account the size of the Company and nature of its operations. This
includes a periodic internal evaluation of board performance.
The Board holds at least four meetings annually and has
established audit and investment committees. The Board does not
intend to establish remuneration and nomination committees given
the current composition of the Board and the nature of the
Company's operations. The Board reviews annually the remuneration
of the Directors and agrees on the level of Directors' fees.
Composition of the Board
The Board currently comprises four non-executive members, all of
whom are independent non-executive Directors. Geoffrey Vero is
Chairman of the Company, Clive Spears is Chairman of the Risk and
Audit Committee and Nicholas Wilson is Chairman of the Investment
Committee.
Risk and Audit Committee
The activities of the Risk and Audit Committee continued,
members of which are Clive Spears (Chairman of the Committee) and
all the other Directors. The Risk and Audit Committee provides a
forum through which the Company's external auditors report to the
Board.
The Risk and Audit Committee meets twice a year, at a minimum,
and is responsible for considering the appointment and fee of the
external auditors and for agreeing the scope of the audit and
reviewing its findings. It is responsible for monitoring compliance
with accounting and legal requirements, ensuring that an effective
system of internal controls in maintained and for reviewing annual
and interim financial statements of the Company before their
submission for approval by the Board. The Risk and Audit Committee
has adopted and complied with the extended terms of reference
implemented on the Company's readmission in August 2010.
The Board is satisfied that the Risk and Audit Committee
contains members with sufficient recent and relevant financial
experience.
Investment Committee
The Board established an Investment Committee, which comprises
Nicholas Wilson (Chairman of the Committee) and all the other
Directors. The purpose of this committee is to review the portfolio
of the Company and evaluate the performance of the Investment
Advisor.
The Board is satisfied that the Investment Committee contains
members with sufficient recent and relevant financial
experience.
Significant holdings
Significant shareholdings are analysed on the section titled
schedule of shareholders holding over 3% of issued shares. The
Directors are not aware of any other holdings greater than 3% of
issued shares.
Directors
The Directors of the Company holding office during the financial
year and to date are:
Mr. G.O. Vero (Chairman)
Mr. R.B.M. Quayle
Mr. C.L. Spears
Mr. N.V. Wilson
Secretary
The secretary of the Company holding office for the financial
year ended 31 January 2015 was Mr. P.P. Scales.
Staff
At 31 January 2015 the Group employed no staff (2014: none).
Auditors
Our Auditors, KPMG Audit LLC, being eligible, have expressed
their willingness to continue in office.
On behalf of the Board
Nicholas Wilson
Director
17 March 2015
Statement of Directors' Responsibilities in respect of the
Directors' Report and the Financial Statements
The Directors are responsible for preparing the Directors'
Report and the financial statements in accordance with applicable
law and regulations. In addition, the Directors have elected to
prepare the financial statements in accordance with International
Financial Reporting Standards ("IFRSs"), as adopted by the European
Union ("EU").
The financial statements are required to give a true and fair
view of the state of affairs of the Group and of the profit or loss
of the Company for that year.
In preparing these financial statements, the Directors are
required to:
-- select suitable accounting policies and then apply them consistently;
-- make judgements and estimates that are reasonable and prudent;
-- state whether they have been prepared in accordance with
International Financial Reporting Standards, as adopted by the EU;
and
-- prepare the financial statements on the going concern basis
unless it is inappropriate to presume that the Group will continue
in business.
The Directors are responsible for keeping proper accounting
records that are sufficient to show and explain the Parent
Company's transactions and disclose with reasonable accuracy at any
time its financial position. They have general responsibility for
taking such steps as are reasonably open to them to safeguard the
assets of the Group and to prevent and detect fraud and other
irregularities.
The Directors are responsible for the maintenance and integrity
of the corporate and financial information included on the
Company's website. Legislation governing the preparation and
dissemination of financial statements may differ from one
jurisdiction to another.
Report of the Independent Auditors, KPMG Audit LLC, to members
of EPE Special Opportunities plc
We have audited the financial statements of EPE Special
Opportunities plc for the year ended 31 January 2015 which comprise
the Consolidated Statement of Comprehensive Income, the
Consolidated Statements of Assets and Liabilities, the Consolidated
Statements of Changes in Equity, the Consolidated Statement of Cash
Flows and the related notes. The financial reporting framework that
has been applied in their preparation is applicable law and
International Financial Reporting Standards (IFRSs), as adopted by
the EU.
This report is made solely to the Company's members, as a body.
Our audit work has been undertaken so that we might state to the
Company's members those matters we are required to state to them in
an auditor's 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 and the Company's members as a body,
for our audit work, for this report, or for the opinions we have
formed.
Respective responsibilities of Directors and Auditor
As explained more fully in the Directors' Responsibilities
Statement, the Directors are responsible for the preparation of
financial statements that give a true and fair view. Our
responsibility is to audit, and express an opinion on, the
financial statements in accordance with applicable law and
International Standards on Auditing (UK and Ireland). Those
standards require us to comply with the Auditing Practices Board's
(APB's) Ethical Standards for Auditors.
Scope of the audit of the financial statements
An audit involves obtaining evidence about the amounts and
disclosures in the financial statements sufficient to give
reasonable assurance that the financial statements are free from
material misstatement, whether caused by fraud or error. This
includes an assessment of: whether the accounting policies are
appropriate to the Group's circumstances and have been consistently
applied and adequately disclosed; the reasonableness of significant
accounting estimates made by the Directors; and the overall
presentation of the financial statements.
Opinion on the financial statements
In our opinion the financial statements:
-- give a true and fair view of the state of the Group's affairs
as at 31 January 2015 and of the Group's profit for the year then
ended; and
-- have been properly prepared in accordance with IFRSs, as adopted by the EU.
KPMG Audit LLC
Heritage Court,
41 Athol Street,
Douglas,
Isle of Man, IM99 1HN
17 March 2015
Consolidated Statement of Comprehensive Income
For the year ended 31 January 2015
31 January 31 January
2015 2014
Revenue Capital Total Total
Note GBP GBP GBP GBP
---------------------------------- ------------ ---------- ------------ ------------
Income
4 Interest income 16,516 - 16,516 11,033
---------------------------------- ------------ ---------- ------------ ------------
Total income 16,516 - 16,516 11,033
---------------------------------- ------------ ---------- ------------ ------------
Expenses
Investment advisor's
5 fees (693,244) - (693,244) (594,952)
5 Administration fees (75,168) - (75,168) (74,967)
6 Directors' fees (124,000) - (124,000) (124,000)
Directors' and Officers'
insurance (4,163) - (4,163) (5,728)
Professional fees (30,107) - (30,107) (107,468)
Board meeting and travel
expenses (6,959) - (6,959) (15,227)
Auditors' remuneration (32,246) - (32,246) (31,766)
Bank charges (807) - (807) (938)
Irrecoverable VAT (186,349) - (186,349) (205,162)
7 Share based payment expense (197,631) - (197,631) (145,520)
Sundry expenses (27,859) - (27,859) (40,287)
Nominated advisor and
broker fees (51,709) - (51,709) (60,449)
Listing fees (24,190) - (24,190) (22,258)
Total expenses (1,454,432) - (1,454,432) (1,428,722)
---------------------------------- ------------ ---------- ------------ ------------
Net expense (1,437,916) - (1,437,916) (1,417,689)
---------------------------------- ------------ ---------- ------------ ------------
Gains/(losses) on investments
Share of profit of equity
10 accounted investees - 3,570,967 3,570,967 10,454,358
Deconsolidation of subsidiary - - - (9,003)
Gains for the year on
investments - 3,570,967 3,570,967 10,445,355
---------------------------------- ------------ ---------- ------------ ------------
Finance charges
Interest on convertible
15 loan note instruments (484,163) - (484,163) (483,303)
Profit/(loss) for the
year before taxation (1,922,079) 3,570,967 1,648,888 8,544,363
8 Taxation - - - -
----------
Profit/(loss) for the
year (1,922,079) 3,570,967 1,648,888 8,544,363
---------------------------------- ------------ ---------- ------------ ------------
Other comprehensive income - - - -
---------------------------------- ------------ ---------- ------------ ------------
Total comprehensive income/(loss) (1,922,079) 3,570,967 1,648,888 8,544,363
---------------------------------- ------------ ---------- ------------ ------------
Basic earnings/(loss)
17 per ordinary share (pence) (6.99) 12.98 5.99 30.62
---------------------------------- ------------ ---------- ------------ ------------
Diluted earnings/(loss)
17 per ordinary share (pence) (6.99) 12.44 5.74 29.51
---------------------------------- ------------ ---------- ------------ ------------
The total column of this statement represents the Group
Statement of Comprehensive Income, prepared in accordance with
IFRSs. The Supplementary revenue and capital return columns are
prepared in accordance with the Board of Directors' agreed
principles. All items derive from continuing activities.
Consolidated Statement of Assets and Liabilities
At 31 January 2015
31 January 31 January
2015 2014
Note GBP GBP
------------------------------------ ------------ ------------
Non-current assets
Investments in equity accounted
10 investees 30,346,726 34,050,939
Loans to equity accounted investees
10,13 and related companies 725,200 1,298,017
31,071,926 35,348,956
------------------------------------ ------------ ------------
Current assets
12 Cash and cash equivalents 13,998,962 7,862,252
Trade and other receivables 146,303 77,822
14,145,265 7,940,074
------------------------------------ ------------ ------------
Current liabilities
14 Trade and other payables (81,487) (42,518)
------------------------------------ ------------ ------------
(81,487) (42,518)
------------------------------------
Net current assets 14,063,778 7,897,556
------------------------------------ ------------ ------------
Non-current liabilities
15 Convertible loan note instruments (6,035,470) (6,005,994)
(6,035,470) (6,005,994)
------------------------------------ ------------ ------------
Net assets 39,100,234 37,240,518
------------------------------------ ------------ ------------
Equity
16 Share capital 1,534,411 1,534,411
16 Share premium 1,815,385 1,815,385
Capital reserve 9,750,430 6,179,463
Revenue reserve 26,000,008 27,711,259
Total equity 39,100,234 37,240,518
18 Net asset value per share (pence) 142.13 135.37
------------------------------------ ------------ ------------
The financial statements were approved by the Board of Directors
on 17 March 2015 and signed on its behalf by:
Clive Spears Nicholas Wilson
Director Director
Consolidated Statement of Changes in Equity
For the year ended 31 January 2015
Year ended 31 January 2015
Share Share Capital Revenue Total
capital premium reserve reserve
Note GBP GBP GBP GBP GBP
----------------------------------- ---------- ---------- ---------- ------------ -----------
Balance at 1 February 2014 1,534,411 1,815,385 6,179,463 27,711,259 37,240,518
Total comprehensive income
for the year - - 3,570,967 (1,922,079) 1,648,888
----------------------------------- ---------- ---------- ---------- ------------ -----------
Contributions by and distributions
to owners
7 Share based payment charge - - - 197,631 197,631
Cash received from JSOP
participants - - - 13,197 13,197
Total transactions with
owners - - - 210,828 210,828
----------------------------------- ---------- ---------- ---------- ------------ -----------
Balance at 31 January 2015 1,534,411 1,815,385 9,750,430 26,000,008 39,100,234
----------------------------------- ---------- ---------- ---------- ------------ -----------
Year ended 31 January 2014
Share Share Capital Capital Revenue Total
capital premium redemption reserve reserve
reserve
Note GBP GBP GBP GBP GBP GBP
---------------------- ---------- ---------- ------------ ------------ ------------ -----------
Balance at 1 February
2013 1,540,146 1,815,385 4,437 (4,265,892) 29,950,543 29,044,619
Total comprehensive
income for the year - - - 10,445,355 (1,900,992) 8,544,363
---------------------- ---------- ---------- ------------ ------------ ------------ -----------
Contributions by
and distributions
to owners
Cancelled ordinary
16 shares (5,735) - - - 5,735 -
Removal of capital
redemption reserve - - (4,437) - 4,437 -
Share based payment
7 charge - - - - 145,520 145,520
Cash received from
JSOP participants - - - - 31,511 31,511
Purchase of treasury
16 shares - - - - (525,495) (525,495)
Total transactions
with owners (5,735) - (4,437) - (338,292) (348,464)
---------------------- ---------- ---------- ------------ ------------ ------------ -----------
Balance at 31 January
2014 1,534,411 1,815,385 - 6,179,463 27,711,259 37,240,518
---------------------- ---------- ---------- ------------ ------------ ------------ -----------
Consolidated Statement of Cash Flows
For the year ended 31 January 2015
31 January 31 January
2015 2014
Note GBP GBP
-------------------------------------- ------------ ------------
Operating activities
Interest income received 16,516 11,033
Expenses paid (1,291,534) (1,323,823)
19 Net cash used in operating activities (1,275,018) (1,312,790)
-------------------------------------- ------------ ------------
Investing activities
Loan repayments from investee
companies 578,038 572,644
Deconsolidation of subsidiary - (6,706)
10 Capital distribution from associate 7,275,180 5,140,000
Net cash generated from investing
activities 7,853,218 5,705,938
-------------------------------------- ------------ ------------
Financing activities
Convertible loan note interest
paid (454,687) (454,687)
16 Purchase of treasury shares - (525,495)
Share ownership scheme participation 13,197 31,511
Net cash used in financing activities (441,490) (948,671)
-------------------------------------- ------------ ------------
Increase in cash and cash equivalents 6,136,710 3,444,477
Cash and cash equivalents at start
of year 7,862,252 4,417,775
-------------------------------------- ------------ ------------
Cash and cash equivalents at end
12 of year 13,998,962 7,862,252
-------------------------------------- ------------ ------------
Notes to the Financial Statements
For the year ended 31 January 2015
1 Operations
The Company was incorporated in the Isle of Man as an AIM listed
public company limited by shares under the Laws with registered
number 108834C on 25 July 2003. On 23 July 2012, the Company
re-registered under the Isle of Man Companies Act 2006, with
registration number 008597V. The Company raised GBP30 million by a
placing of ordinary shares at 100 pence per share. In 2009 the
Company raised an additional GBP5 million by a placing of ordinary
shares at 5 pence per share. During the year ended 31 January 2011,
the Company issued a further GBP2.4 million in share capital.
The Company has four wholly owned subsidiary companies (note 23)
and has interests in two partnerships that are accounted for as
associates. The partnerships comprise one limited liability
partnership and one limited partnership. The Company also has an
interest in a third partnership, ESO 2 LP, through which new
investments will be made. As at 31 January 2015, ESO 2 LP had made
no investments.
The principal activity of the Group 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 consolidated financial statements comprise the results of
the Group and its associates (see notes 3(a) and 23).
The Company has no employees.
2 Basis of preparation
a. Statement of compliance
The financial statements have been prepared in accordance with
International Financial Reporting Standards and interpretations as
adopted by the EU and applicable legal and regulatory requirements
of Isle of Man law and reflect the following policies, which have
been adopted and applied consistently, with the exception of the
adoption of the following new standards and amendments to
standards, including any consequential amendments to other
standards, with a date of initial application of 1 February
2014:
a. Offsetting Financial Assets and Financial Liabilities - Amendments to IAS 32.
The adoption of the above new standard has had no significant
impact on the Groups measurement of its assets and liabilities, and
no impact on the disclosures included in the financial
statements.
In the prior year, the Group adopted IFRS13: Fair Value
Measurement, which resulted in additional disclosures being
included in the financial statements.
b. Basis of measurement
The consolidated financial statements have been prepared on the
historical cost basis except for financial instruments at fair
value through profit or loss which are measured at fair value.
c. Functional and presentation currency
These consolidated financial statements are presented in
Sterling, which is the Company's functional currency. All financial
information presented in Sterling has been rounded to the nearest
pound.
d. Use of estimates and judgements
The preparation of financial statements in conformity with IFRSs
requires Directors and the Investment Advisor to make judgements,
estimates and assumptions that affect the application of policies
and the reported amounts of assets and liabilities, income and
expense. The estimates and associated assumptions are based on
historical experience and various other factors that are believed
to be reasonable under the circumstances, the results of which form
the basis of making the judgements about carrying values of assets
and liabilities that are not readily apparent from other sources.
The Directors have, to the best of their ability, provided as true
and fair a view as is possible. Actual results may differ from
these estimates.
The estimates and underlying assumptions are reviewed on an
ongoing basis. Revisions to accounting estimates are recognised in
the period in which the estimate is revised if the revision affects
only that period or in the period of the revision and future
periods if the revision affects both current and future
periods.
Judgements made by Directors and the Investment Advisor in the
application of IFRSs that have a significant effect on the
financial statements and estimates with a significant risk of
material adjustments in the next year relate to impairment
provisioning in connection with secured loans and valuations of
unquoted equity investments held by equity accounted investees.
3 Significant accounting policies
a. Basis of consolidation
Subsidiaries
Subsidiaries are those enterprises controlled by the Company.
Control exists when the Company has the power, directly or
indirectly, to govern the financial and operating policies of an
enterprise so as to obtain benefits from its activities. The
financial statements of subsidiaries are included in the
consolidated financial statements from the date that control
commences until the date that control ceases.
The Company holds interests in ESO 1 LP and ESO (PC) LLP, which
are managed and controlled by EPE for the benefit of the Company
and the other members. The Company has the power to appoint members
to the investment committee of ESO 1 LP and ESO (PC) LLP but does
not have the ability to direct the activities of ESO 1 LP and ESO
(PC) LLP. The Directors consider that ESO 1 LP and ESO (PC) LLP do
not meet the definition of subsidiaries. These entities are instead
treated as associates and equity accounted.
Transactions eliminated on consolidation
Intra-group balances and transactions, and any unrealised income
and expenses arising from intra-group transactions, are eliminated
in preparing the consolidated financial statements. Unrealised
gains arising from transactions with equity accounted investees are
eliminated against the investment to the extent of the Group's
interest in the investee. Unrealised losses are eliminated in the
same way as unrealised gains, but only to the extent that there is
no evidence of impairment.
Associates
Associates are those enterprises over which the Company has
significant influence, and which are neither subsidiaries nor an
interest in a joint venture. Significant influence is exerted when
the Company has the power to participate in the financial and
operating policy decision of the investee, but is not in control or
joint control over those policies.
The Company applies the equity method in accounting for
associates. The investment is initially measured at cost and the
carrying amount is increased or decreased to recognise the
Company's share of the associate's profit or loss. Accounting
policies of associates are aligned with those of the Group.
b. Segmental reporting
The Directors are of the opinion that the Group is engaged in a
single segment of business and geographic area being arranging
financing for growth, buyout and special situations in the United
Kingdom. Information presented to the Board of Directors for the
purpose of decision making is based on this single segment.
c. Income
Interest income is recognised as it accrues in profit or loss,
using the effective interest method. Dividend income is accounted
for when the right to receive such income is established.
d. Expenses
All expenses are accounted for on an accruals basis.
e. Cash and cash equivalents
Cash comprises current deposits with banks. Cash equivalents are
short-term highly liquid investments that are readily convertible
to known amounts of cash, are subject to an insignificant risk of
changes in value and are held for the purposes of meeting
short-term cash commitments rather than for investments or other
purposes.
f. Financial assets and financial liabilities
i. Classification
Equity and preference share investments, including those held by
equity accounted investees, have been designated at fair value
through profit and loss.
Financial assets that are designated as loans and receivables
comprise loans and accrued interest and other receivables.
ii. Recognition
The Group recognises financial assets and financial liabilities
on the date it becomes a party to the contractual provisions of the
instrument.
iii. Measurement
Equity and preference share investments, including those held by
equity accounted investees, are stated at fair value. Loans and
receivables are stated at amortised cost less any impairment
losses.
The Investment Advisor determines asset values using BVCA and
IPEV guidelines and other valuation methods with reference to the
valuation principles of IFRS 13. As all investments are unquoted,
the valuation principles adopted are classified as Level 3 in the
IFRS 7 fair value hierarchy. BVCA and IPEV guidelines recommend the
use of comparable quoted company metrics and comparable transaction
metrics to determine an appropriate enterprise value, to which a
marketability discount is applied given the illiquid nature of
private equity investments. The Investment Advisor also seeks to
confirm value using discounted cash flow and other methods of
valuation, and by applying a range approach. The Investment Advisor
then seeks to determine whether holding the investment at cost is
appropriate given the implied value, or whether an adjustment
should be made to achieve fair value: whether this be in the form
of an impairment or a write-up.
'Fair value' is the price that would be received to sell an
asset or paid to transfer a liability in an orderly transaction
between market participants at the measurement date in the
principal or, in its absence, the most advantages market to which
the Group has access at that date. The fair value of a liability
reflects its non-performance risk.
When available, the Group measures the fair value of an
instrument using the quoted price in an active market for that
instrument. A market is regarded as 'active' if transactions for
the asset or liability take place with sufficient frequency and
volume to provide pricing information on an ongoing basis. The
Group measures instruments quoted in an active market at
mid-price.
If there is no quoted price in an active market, then the Group
uses valuation techniques that maximise the use of relevant
observable inputs and minimise the use of unobservable inputs. The
chosen valuation technique incorporates all of the factors that
market participants would take into account in pricing a
transaction.
The Group recognises transfers between levels of the fair value
hierarchy as at the end of the reporting period during which the
change has occurred.
The amortised cost of a financial asset or financial liability
is the amount at which the financial asset or financial liability
is measured at initial recognition, minus principal repayments,
plus or minus the cumulative amortisation using the effective
interest method of any difference between the initial amount
recognised and the maturity amount, minus any reduction for
impairment. Financial assets that are not carried at fair value
though profit and loss are subject to an impairment test. For loans
to portfolio companies the impairment test is undertaken as part of
the assessment of the fair value of the enterprise value of the
related business, as described above. If expected life cannot be
determined reliably, then the contractual life is used.
iv. Impairment
Financial assets that are stated at cost or amortised cost are
reviewed at each reporting date to determine whether there is
objective evidence of impairment. If any such indication exists, an
impairment loss is recognised in the profit or loss as the
difference between the asset's carrying amount and the present
value of estimated future cash flows discounted at the financial
asset's original effective interest rate.
If in a subsequent period the amount of an impairment loss
recognised on a financial asset carried at amortised cost
decreases, and the decrease can be linked objectively to an event
occurring after the write-down, the write-down is reversed through
the profit or loss.
v. Derecognition
The Company derecognises a financial asset when the contractual
rights to the cash flows from the financial asset expire or it
transfers the financial asset and the transfer qualifies for
derecognition in accordance with IAS 39.
The Company uses the weighted average method to determine
realised gains and losses on derecognition.
A financial liability is derecognised when the obligation
specified in the contract is discharged, cancelled or expired.
g. Share capital
Ordinary share capital
Ordinary shares are classified as equity. Incremental costs
directly attributable to the issue of ordinary shares and share
options are recognised as a deduction from equity, net of any tax
effects.
Repurchase of share capital (treasury shares)
When share capital recognised as equity is repurchased, the
amount of the consideration paid, which includes directly
attributable costs, net of any tax effects, is recognised as a
deduction from equity. Repurchased shares are classified as
treasury shares and are presented as a deduction from total equity.
When treasury shares are sold or reissued subsequently, the amount
received is recognised as an increase in equity, and the resulting
surplus or deficit on the transaction is transferred to/from
retained earnings.
h. Compound financial instruments
Compound financial instruments issued by the Group comprise
convertible loan note instruments that can be converted to share
capital at the option of the holder, and the number of shares to be
issued does not vary with changes in their fair value.
The liability component of a compound financial instrument is
recognised initially at the fair value of a similar liability that
does not have an equity conversion option. The equity component is
recognised initially at the difference between fair value of the
compound financial instrument as a whole and the fair value of the
liability component. Any directly attributable transaction costs
are allocated to the liability and equity components in proportion
to their initial carrying amounts.
Subsequent to initial recognition, the liability component of a
compound financial instrument is measured at amortised cost using
the effective interest method. The equity component of a compound
financial instrument is not re-measured subsequent to initial
recognition.
When convertible loan notes are repurchased, the nominal value
of the convertible loan notes repurchased is first deducted from
the consideration paid with any gain or loss from the repurchase
being recognised in the profit or loss.
Interest, dividends, losses and gains in relation to the
financial liability are recognised in profit or loss. Distributions
to the equity holders are recognised in equity net of any tax
benefits.
i. EPIC Private Equity Employee Benefit Trust ("EBT")
As the Company is deemed to have control of its EBT, the EBT is
treated as a subsidiary and consolidated for the purposes of the
Group accounts. The EBT's assets (other than investments in the
Company's shares), liabilities, income and expenses are included on
a line-by-line basis in the Group financial statements. The EBT's
investment in the Company's shares is deducted from shareholders'
funds in the Group balance sheet as if they were treasury shares
(see note 7).
Share based payments
Certain employees (including Directors) of the Group receive
remuneration in the form of equity settled share-based payment
transactions, through a Joint Share Ownership Plan ("JSOP").
Equity-settled share-based payments are measured at fair value
at the date of grant. The fair value is determined based on the
share price of the equity instrument at the grant date. The fair
value determined at the grant date of the equity-settled
share-based payment is expensed on a straight-line basis over the
vesting period, based on the Group's estimate of the number of
shares that will eventually vest. The instruments are subject to a
three year service vesting condition from the grant date, and their
fair value is recognised as an employee benefit expense with a
corresponding increase in retained earnings within equity over the
vesting period.
Contributions received from employees as part of the JSOP
arrangement are recognised directly in equity.
j. Future changes in accounting policies
The International Accounting Standards Board ("IASB") and the
International Financial Reporting Interpretations Committee
("IFRIC") have issued the following standards and interpretations
with an effective date after the date of these financial
statements:
New/Revised International Financial Reporting Standards EU Effective Date (accounting periods commencing on or
(IAS/IFRS) after)
---------------------------------------------------------- ----------------------------------------------------------
IFRS 9 Financial Instruments Not yet endorsed
IASB effective date to be confirmed.
IFRS 14 Regulatory Deferral Accounts Not yet endorsed
IASB effective date 1 January 2016.
Standards not yet effective, but available for early EU Effective Date (accounting periods commencing on or
adoption after)
---------------------------------------------------------- ----------------------------------------------------------
IFRS 14 Regulatory Deferral Accounts 1 January 2016
Accounting for Acquisitions of Interests in Joint 1 January 2016
Operations (Amendments to IFRS 11)
Clarification of Acceptable Methods of Depreciation and 1 January 2016
Amortisation (Amendments to IAS 16
and IAS 38)
IFRS 15 Revenue from Contracts with Customers 1 January 2017
IFRS 9 Financial Instruments To be confirmed
The Directors do not expect the adoption of the standards and
interpretations to have a material impact on the Group's financial
statements in the period of initial application.
4 Interest income
2015 2014
GBP GBP
--------------- ------- -------
Cash balances 16,516 11,033
----------------
Total 16,516 11,033
---------------- ------- -------
5 Investment advisory, administration and performance fees
Investment advisory fees
ESO
The investment advisory fee payable to EPE was, until 31 August
2010, calculated at 2% of the Group's NAV, with a minimum of
GBP325,000 payable per annum. On 31 August 2010, the Investment
Advisor agreed to waive the fee from the Company for a period of
two years in return for a priority profit share paid from ESO 1 LP,
as detailed below. Consequently, the payment of fees has resumed at
a rate of 2% per annum of the Company's NAV (including its share of
the Fund) plus VAT. The charge for the current year was GBP693,244
(2014: GBP594,952).
ESO 1 LP
On the completion of the creation of ESO 1 LP on 31 August 2010,
the Investment Advisor agreed to waive entitlement to management
fees from the Company and ESO Investments LLP in exchange for a
fixed priority profit share paid by ESO 1 LP of GBP800,000 per
annum for the first two years (a year being calculated as ending on
31 August), GBP500,000 for the third year and GBP350,000 for the
fourth and fifth years, thereafter in any subsequent period of the
ESO 1 LP Partnership, such amount as may be agreed between the
Partners.
ESO Investments LLP
On 31 August 2010 the Investment Advisor agreed to waive the fee
from ESO Investments LLP in return for a priority profit share paid
from ESO 1 LP as detailed above.
Administration fees
On 30 November 2007 the Group entered into an agreement with
IOMA Fund and Investment Management Limited ("IOMA"), for the
provision of administration, registration and secretarial services.
IOMA delegated the provision of accounting services to EHM
International Limited. The fee is payable at a rate of 0.15% per
annum of the Group's NAV.
Performance fees
ESO
The Investment Advisory Agreement with EPE as described above
also provides for the provision of a performance fee. The fee is
payable if the Total Return (taken as NAV plus dividends
distributed) is equal to at least 8% per annum from the date of
admission of the Company's shares to AIM, based on the funds raised
through the placing of shares and compounded annually. No
performance fee has accrued for the year ended 31 January 2015
(2014: GBPnil).
Carried interest in ESO 1 LP
The distribution policy of ESO 1 LP includes a carried interest
portion retained for the Investment Advisor such that, for each
investor where a hurdle of 8% per annum has been achieved, the
carry vehicle of the Investment Advisor is entitled to receive 20%
of the increase in that investor's investment. For the period ended
31 January 2015, GBP793,966 (2014: GBP3,219,522) has been credited
to the carry account of the Investment Advisor in the records of
ESO 1 LP.
Carried interest in ESO (PC) LLP
The Investment Advisor is entitled to receive 20% of the profits
ESO (PC) LLP where a hurdle of 8% has been achieved over the
initial value of the investment. For the period ended 31 January
2015, GBP251,254 (2014: GBP163,084) has been credited to the
Investment Advisor.
6 Directors' fees
2015 2014
GBP GBP
---------------------- -------- --------
G.O. Vero (Chairman) 32,000 32,000
R.B.M. Quayle 30,000 30,000
C.L. Spears 32,000 32,000
N.V. Wilson 30,000 30,000
----------------------- -------- --------
Total 124,000 124,000
----------------------- -------- --------
7 Share based payment expense
The cost of equity settled transactions with employees 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 EBT was created to award shares to eligible employees as
part of the JSOP. Participants are awarded a certain number of
shares ("Matching Shares") which vest after three years. 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 EBT holds the Matching Shares jointly with the participant
until the award vests.
During the year, 250,001 Bought Shares were acquired by eligible
participants under the JSOP. The EBT held 1,191,280 matching shares
at the year end.
The amount expensed in the income statement has been calculated
by reference to the grant date fair value of the equity instrument
and the estimated number of equity instruments to be issued after
the vesting period, less the nominal amount paid for the joint
ownership interest in the Matching Shares. The total expense
recognised on the share based payments during the year amounts to
GBP197,631 (2014: GBP145,520).
8 Taxation
The Company is a tax resident of the Isle of Man. The Company is
subject to 0% income tax (2014: 0%).
The Limited Liability Partnerships and Limited Partnerships are
transparent for tax purposes.
9 Dividends paid and proposed
No dividends were paid or proposed for the year ended 31 January
2015 (2014: GBPnil).
10 Non-current assets
2015 2014
------------------------------------------- ----------- -----------
GBP GBP
------------------------------------------- ----------- -----------
Financial assets
Investments in equity accounted investees 30,346,726 34,050,939
Loans to equity accounted investees
and related companies (note 13) 725,200 1,298,017
31,071,926 35,348,956
------------------------------------------- ----------- -----------
Investment in equity accounted investees
The Investment Advisor has applied appropriate valuation methods
with reference to BVCA and IPEV guidelines and the valuation
principles of IAS 39 Financial Instruments: Recognition and
Measurement, with regard to the underlying investments held by the
equity accounted investees. See note 11 regarding the assessment of
the fair values of the underlying investments.
Investments in equity accounted investees comprise the
investment in ESO 1 LP and ESO (PC) LLP (formerly ESO Investments 2
LLP) which are stated at cost plus the share of remaining profit
and loss to date. The equity accounted investees have accounted for
their equity investments at fair value.
During the year, the Company received GBP7,275,180 (2014:
GBP5,140,000) from ESO 1 LP. The movements in the equity accounted
investees during the year are as follows:
ESO (PC)
ESO 1 LP LLP Total
GBP GBP GBP
-------------------------------- ------------ ---------- ------------
Investment in equity accounted
investees
Opening balance 30,151,811 3,899,128 34,050,939
Share of profit from equity
accounted investees 2,546,469 1,024,498 3,570,967
Distribution from equity
accounted investee (7,275,180) - (7,275,180)
25,423,100 4,923,626 30,346,726
------------ ---------- ------------
Summary financial information for equity accounted investees as
at 31 January 2015 is as follows:
Vehicle Total Minority ESO plc Percentage
interest share share
ESO 1 LP GBP GBP GBP %
------------------------------ ----------- ------------------------- ----------- -----------
Portfolio GAV 39,908,353 (15,833,937) 24,074,416 60.3%
Other assets and liabilities
ESO 1 LP 2,235,719 (887,035) 1,348,684 60.3%
Net assets 42,144,072 (16,720,972) 25,423,100 60.3%
------------------------------ ----------- ------------------------- ----------- -----------
Income 1,495,168 (610,599) 884,569 59.2%
Gains on investments 3,016,558 (1,231,907) 1,784,651 59.2%
Expenses (207,483) 84,732 (122,751) 59.2%
Profit 4,304,243 (1,757,774) 2,546,469 59.2%
------------------------------ ----------- ------------------------- ----------- -----------
ESO (PC) LLP
------------------------------ ----------- ------------------------- ----------- -----------
Portfolio GAV 5,802,936 (1,111,232) 4,691,704 80.9%
Other assets and liabilities
ESO (PC) LLP 286,854 (54,932) 231,922 80.9%
Net assets 6,089,790 (1,166,164) 4,923,626 80.9%
------------------------------ ----------- ------------------------- ----------- -----------
Income 55,974 (11,024) 44,950 80.3%
Gains on investments 1,225,000 (241,259) 983,741 80.3%
Expenses (5,221) 1,028 (4,193) 80.3%
Profit 1,275,753 (251,254) 1,024,498 80.3%
------------------------------ ----------- ------------------------- ----------- -----------
ESO plc
------------------------------ ----------- ------------------------- ----------- -----------
Loans to equity accounted
investees and related
companies 725,200 - 725,200 100.0%
Other assets and liabilities
ESO plc 14,063,778 - 14,063,778 100.0%
Total 14,788,978 - 14,788,978 100.0%
------------------------------ ----------- ------------------------- ----------- -----------
Total Net Assets 63,022,841 (17,887,139) 45,135,703 71.6%
------------------------------ ----------- ------------------------- ----------- -----------
Summary of ESO plc fund Total Minority ESO plc Percentage
structure interest share share
GBP GBP GBP GBP
------------------------------ ----------- ------------------------- ----------- -----------
ESO 1 LP 42,144,073 (16,720,976) 25,423,097 60.3%
ESO (PC) LLP 6,089,790 (1,166,163) 4,923,627 80.9%
ESO plc current assets,
current liabilities and
loans to related companies 14,788,978 - 14,788,978 100.0%
Total 63,022,841 (17,887,139) 45,135,703 71.6%
------------------------------ ----------- ------------------------- ----------- -----------
Summary financial information for equity accounted investees as
at 31 January 2014 is as follows:
Vehicle Total Minority ESO plc Percentage
interest share share
ESO 1 LP GBP GBP GBP %
------------------------------ ----------- ------------------------- ----------- -----------
Portfolio GAV 47,428,504 (18,676,587) 28,751,918 60.6%
Other assets and liabilities
ESO 1 LP 2,309,232 (909,339) 1,399,893 60.6%
Net assets 49,737,736 (19,585,925) 30,151,811 60.6%
------------------------------ ----------- ------------------------- ----------- -----------
Income 1,753,679 (719,390) 1,034,289 59.0%
Gains on investments 15,004,508 (6,155,117) 8,849,391 59.0%
Expenses (222,538) 91,289 (131,249) 59.0%
Profit 16,535,649 (6,783,218) 9,752,431 59.0%
------------------------------ ----------- ------------------------- ----------- -----------
ESO (PC) LLP
------------------------------ ----------- ------------------------- ----------- -----------
Portfolio GAV 5,100,000 (969,343) 4,130,657 81.0%
Other assets and liabilities
ESO (PC) LLP (285,862) 54,333 (231,529) 81.0%
Net assets 4,814,138 (915,010) 3,899,128 81.0%
------------------------------ ----------- ------------------------- ----------- -----------
Income 80,000 (15,083) 64,917 81.1%
Gains on investments 799,644 (150,760) 648,884 81.1%
Expenses (14,633) 2,759 (11,874) 81.1%
Profit 865,011 (163,084) 701,927 81.1%
------------------------------ ----------- ------------------------- ----------- -----------
ESO plc
------------------------------ ----------- ------------------------- ----------- -----------
Loans to equity accounted
investees and related
companies 1,298,017 - 1,298,017 100.0%
Other assets and liabilities
ESO plc 7,897,556 - 7,897,556 100.0%
Total 9,195,573 - 9,195,573 100.0%
------------------------------ ----------- ------------------------- ----------- -----------
Total Net Assets 63,747,447 (20,500,935) 43,246,512 67.8%
------------------------------ ----------- ------------------------- ----------- -----------
Summary of ESO plc fund Total Minority ESO plc Percentage
structure interest share share
GBP GBP GBP GBP
------------------------------ ----------- ------------------------- ----------- -----------
ESO 1 LP 49,737,736 (19,585,925) 30,151,811 60.6%
ESO (PC) LLP 4,814,138 (915,010) 3,899,128 81.0%
ESO plc current assets,
current liabilities and
loans to related companies 9,195,573 - 9,195,573 100.0%
Total 63,747,447 (20,500,935) 43,246,512 67.8%
------------------------------ ----------- ------------------------- ----------- -----------
In total, ESO 1 LP has now distributed GBP31.6 million: GBP19.9
million to ESO plc and GBP11.7 million to ESD. At the current
portfolio valuation the ESD minority interest equates to GBP9.0
million via the waterfall, which, together with GBP11.7 million of
distributions received to date by ESD, equates to a GBP20.7 million
total, or 2.1x money multiple.
To date ESD have received distributions representing a 1.2x
realised money multiple. Further distributions will therefore
continue to be apportioned between the limited partners in the
ratio 63% ESO : 37% ESD. This will continue until ESO 1 LP has
reached GBP43.9 million (GBP31.6 million currently) of
distributions (representing GBP20.0 million of new distributions)
and GBP15.0 million to ESD (1.5x money multiple), at which point
the value will be apportioned 75% ESO : 25% ESD.
At the current portfolio valuation ESD has achieved the 2.0x
investment hurdle. Further increases in the value of the portfolio
will therefore continue to be apportioned between the limited
partners in the ratio 82% ESO : 18% ESD.
Controlled investee companies
The Company has control over the following underlying investee
companies but these companies have not been consolidated on the
basis of the early adoption of the amendments to IFRS 10:
Country Equity percentage
of incorporation held at year
end
--------------------- ------------------- ------------------
Whittard of Chelsea UK 85.3%
Process Components UK 85.0%
Make it Rain UK 60.0%
------------------ ------------------
11 Financial assets and liabilities
2015 2014
GBP GBP
--------------------------------------------- ------------ ------------
Assets
Financial assets at fair value through
profit or loss - designated on initial
recognition
Investments in equity accounted investees 30,346,726 34,050,939
Financial assets at amortised cost
Loans and receivables and cash balances 14,870,465 9,238,091
Total financial assets 45,217,191 43,289,030
--------------------------------------------- ------------ ------------
Liabilities
Financial liabilities measured at amortised
cost
Other financial liabilities (81,487) (42,518)
Convertible loan note instruments (6,035,470) (6,005,994)
Total financial liabilities (6,116,957) (6,048,512)
--------------------------------------------- ------------ ------------
Fair values of financial instruments
The fair values of financial assets and financial liabilities
that are traded in an active market are based on quoted market
prices. For all other financial instruments, the Group determines
fair values using other valuation techniques, based on the BVCA and
IPEV rules.
For financial instruments that trade infrequently and have
little price transparency, fair value is less objective, and
requires varying degrees of judgement depending on liquidity,
uncertainty of market factors, pricing assumptions and other risks
affecting the specific instrument.
The Group measures fair values using the following fair value
hierarchy that reflects the significance of the inputs used in
making the measurements:
-- 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. All of the Group's underlying investments
held by equity accounted investees are deemed as level 3 in the
fair value hierarchy.
Various valuation techniques may be applied in determining the
fair value of investments held as level 3 in the fair value
hierarchy. The objective of valuation techniques is to arrive at a
fair value measurement that reflects the price that would be
received to sell the asset or paid to transfer the liability in an
orderly transaction between market participants at the measurement
date.
Valuation models that employ significant unobservable inputs
require a higher degree of management judgement and estimation in
the determination of fair value. Management judgement and
estimation are usually required for the selection of the
appropriate valuation model to be used. As discussed below, the
Investment Advisor has selected to use the EBITDA multiple
valuation model in arriving at the fair value of investments held
as level 3 in the fair value hierarchy.
Valuation framework
The Group has developed a valuation framework with respect to
the measurement of fair values. The valuation of investments is
performed by the Investment Advisor. As detailed in note 3(f), the
Investment Advisor determines fair values using the BVCA and IPEV
guidelines. The following approach is used:
-- 'Fair value' is the price that would be received to sell an
asset or paid to transfer a liability in an orderly transaction
between market participants at the measurement date in the
principal or, in its absence, the most advantageous market to which
the Group has access at that date. The fair value of a liability
reflects its non-performance risk;
-- The EBITDA multiple valuation model is used, based on
budgeted EBITDA for the next financial year;
-- Loans made are stated at amortised cost but impairment tested
based on the enterprise value derived from the valuation.
Fair value hierarchy - Financial instruments measured at fair
value
The table below analyses the underlying investments held by the
equity accounted investees 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 although stated at amortised cost, the Investment
Advisor assesses 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. All fair value
measurements below are recurring. There are no other financial
assets or liabilities carried at fair value.
Level Total
3
31 January 2015 GBP GBP
----------------------------------------------- ----------- -----------
Financial assets at fair value through profit
or loss
Unlisted private equity investments 29,515,300 29,515,300
Debt securities, unlisted 16,195,989 16,195,989
Total investments 45,711,289 45,711,289
------------------------------------------------ ----------- -----------
The following table shows a reconciliation of the opening
balances to the closing balances for fair value measurements in
Leve1 3 of the fair value hierarchy.
2015 2014
Unlisted private equity investments GBP GBP
--------------------------------------------- ------------ ------------
Balance at 1 February 29,995,285 17,829,979
Sale of investments (2,035,710) (1,832,715)
Change in fair value through profit or loss 1,555,725 13,998,021
Balance at 31 January 29,515,300 29,995,285
---------------------------------------------- ------------ ------------
Significant unobservable inputs used in measuring fair value
The table below sets out information about significant
unobservable inputs used at 31 January 2015 in measuring financial
instruments categorised as Level 3 in the fair value hierarchy.
Description Fair value at 31 January 2015 Valuation technique
GBP
------------------------------------ ------------------------------ --------------------
Unlisted private equity investments 29,515,300 EBITDA multiple
------------------------------------ ------------------------------ --------------------
Significant unobservable inputs are developed as follow:
-- EBITDA multiple: Represents amounts that market participants
would use when pricing the investments. EBITDA multiples are
selected from comparable public companies based on geographic
location, industry, size, target markets and other factors that
management considers to be reasonable. The traded multiples for the
comparable companies are determined by dividing the enterprise
value of the company by its EBITDA and further discounted for
considerations such as the lack of marketability and other
differences between the comparable peer group and specific
company.
-- The EBITDA multiple is applied to the budgeted EBITDA for the next financial year.
IFRS 13 requires disclosure, by class of financial instrument,
if the effect of changing one or more inputs to reasonably possible
alternative assumptions would result in a significant change to the
fair value measurement. The information used in determination of
the fair value of Level 3 investments is chosen with reference to
the specific underlying circumstances and position of the investee
company. On that basis, the Board believe that the impact of
changing one or more of the inputs to reasonably possible
alternative assumptions would not change the fair value
significantly.
Financial instruments not measured at fair value
The carrying value of short-term financial assets and financial
liabilities (cash, debtors and creditors) approximate their fair
value. The carrying value of the convertible loan note instrument
is also considered to approximate fair value.
Investments in equity accounted investees are considered to be
stated at fair value, as the underlying investments are at fair
value.
12 Cash and cash equivalents
2015 2014
GBP GBP
--------------------------- ----------- ----------
Current and call accounts 13,998,962 7,862,252
--------------------------- ----------- ----------
13,998,962 7,862,252
--------------------------- ----------- ----------
The current and call accounts have been classified as cash and
cash equivalents in the Consolidated Statement of Cash Flows.
13 Loans to/(from) equity accounted investees and related parties
2015 2014
GBP GBP
--------------------------------- ---------- ----------
ESO (PC) LLP (286,855) 285,962
EPIC Structured Finance Limited 500,000 500,000
ESO 1 LP 512,055 512,055
725,200 1,298,017
---------- ----------
The loans to equity accounted investees and related companies
are unsecured, interest free and not subject to any fixed repayment
terms.
14 Trade and other payables
2015 2014
GBP GBP
--------------------------------- ------- -------
Accrued administration fee 6,000 9,000
Accrued audit fee 10,256 11,661
Accrued professional fee 11,045 10,941
Accrued investment advisor fees 43,270 -
Accrued Directors' fees 10,916 10,916
Total 81,487 42,518
---------------------------------- ------- -------
15 Non-current liabilities
Convertible loan note instruments were issued on 31 August 2010
to The Equity Partnership Investment Company plc. The amount
issued, net of issue costs was GBP9,870,304. 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. On issue of the
loan notes, the Directors were required to assess the elements of
equity and liability contained with the compound instrument. At the
date of issue, the Directors considered that the instrument had no
equity element and therefore the whole instrument was treated as a
liability.
Issue costs of GBP129,696 were offset against the value of the
convertible loan note instruments and are being amortised over the
life of the instrument at an effective interest rate of 0.24% per
annum. A total of GBP27,020 was expensed in the year ended 31
January 2015 (2014: GBP28,617).
The convertible loan notes are repayable on 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. The
carrying value of the convertible loan notes in issue at the year
end was GBP6,035,470. The total interest expensed on the
convertible loan notes for the year is GBP484,163 (2014:
GBP483,303). This includes the amortisation of the issue costs.
16 Share capital
2015 2014
------------------------ ------------------------
Number GBP Number GBP
---------------------------- ------------ ---------- ------------ ----------
Authorised share capital
Ordinary shares of 5p each 33,000,000 1,650,000 33,000,000 1,650,000
----------------------------- ------------ ---------- ------------ ----------
Called up, allotted and
fully paid
Ordinary shares of 5p each 30,688,222 1,534,411 30,688,222 1,534,411
Ordinary shares of 5p each
held in treasury (3,178,030) - (3,178,030) -
----------------------------- ------------ ---------- ------------ ----------
27,510,192 1,534,411 27,510,192 1,534,411
------------ ---------- ------------ ----------
During the year ended 31 January 2015, the Company cancelled nil
shares which were previously held in treasury (2014: 114,689).
At the year end 1,191,280 treasury shares were held by the EBT
(note 7) (2014: 1,022,720).
Share premium
The share premium arose on the issue of the ordinary shares and
represented the difference between the price at which the shares
were issued and the par value (5 pence).
17 Basic and diluted earnings/(loss) per share (pence)
Basic earnings per share are calculated by dividing the profit
of the Group for the year attributable to the ordinary shareholders
of GBP1,648,888 (2014: GBP8,544,363) divided by the weighted
average number of shares outstanding during the year of 27,510,192
after excluding treasury shares (2014: 27,900,351 shares).
Diluted earnings per share are calculated by dividing the profit
of the Group for the year attributable to ordinary shareholders of
GBP1,648,888 (2014: GBP8,544,363) divided by the weighted average
number of ordinary shares outstanding during the year, as adjusted
for the effects of all dilutive potential ordinary shares of
28,701,472 after excluding treasury shares (2014: 28,953,683
shares).
18 NAV per share (pence)
The Group's NAV per share of 142.13 pence is based on the net
assets of the Group at the year end of GBP39,100,234 (2014:
GBP37,240,518) divided by the shares in issue at the end of the
year of 27,510,192 after excluding treasury shares (2014:
27,510,192).
The Group's diluted NAV per share of 136.23 pence is based on
the net assets of the Group and the Company at the year end of
GBP39,100,234 (2014: GBP37,240,518) divided by the shares in issue
at the end of the year, as adjusted for the effects of dilutive
potential ordinary shares of 28,701,472, after excluding treasury
shares (2014: 28,953,683).
19 Net cash used in operating activities
Reconciliation of net investment income/expense to net cash used
in operating activities:
2015 2014
GBP GBP
----------------------------------------- ------------ ------------
Net investment expense (1,437,916) (1,417,689)
Non-cash items 192,410 126,791
Movement in trade and other receivables (68,481) (11,336)
Movement in trade and other payables 38,969 (10,556)
Net cash used in operating activities (1,275,018) (1,312,790)
------------------------------------------ ------------ ------------
20 Financial instruments
The Group's financial instruments comprise:
-- Investments in unlisted companies held by equity accounted
investees, comprising equity and loans.
-- Cash and cash equivalents, bank loan and convertible loan note instruments; and
-- Accrued interest and trade and other receivables, accrued expenses and sundry creditors.
Financial risk management objectives and policies
The main risks arising from the Group's financial instruments
are liquidity risk, credit risk, market price risk and interest
rate risk. None of those risks are hedged. These risks arise
through directly held financial instruments and through the
indirect exposures created by the underlying financial instruments
in the equity accounted investees. These risks are managed by the
Directors in conjunction with the Investment Advisor. The
Investment Advisor is responsible for day to day management.
Liquidity risk
Liquidity risk is the risk that the Group will encounter
difficulty in meeting the obligations associated with its financial
liabilities that are settled by delivering cash or another
financial asset. The Group's liquid assets comprise cash and cash
equivalents and trade and other receivables, which are readily
realisable.
Residual contractual maturities of financial liabilities
31 January 2015 Less than 1 - 3 3 months 1 - 5 Over 5 No stated
1 Month Months to 1 year years years maturity
GBP GBP GBP GBP GBP GBP
----------------------- ---------- -------- ----------- ---------- ------- ----------
Financial liabilities
Trade and other
payables 81,487 - - - - -
Convertible loan
note instruments - - - 6,035,470 - -
Total 81,487 - - 6,035,470 - -
------------------------ ---------- -------- ----------- ---------- ------- ----------
31 January 2014 Less than 1 - 3 3 months 1 - 5 Over 5 No stated
1 Month Months to 1 year years years maturity
GBP GBP GBP GBP GBP GBP
----------------------- ---------- -------- ----------- ---------- ------- ----------
Financial liabilities
Trade and other
payables 42,518 - - - - -
Convertible loan
note instruments - - - 6,005,994 - -
Total 42,518 - - 6,005,994 - -
------------------------ ---------- -------- ----------- ---------- ------- ----------
Credit risk
Credit risk is the risk that an issuer or counterparty will be
unable or unwilling to meet a commitment that it has entered into
with the Group.
The Group, through its interests in equity accounted investees,
has advanced loans to a number of private companies which exposes
the Group to significant credit risk. The loans are advanced to
unquoted private companies, which have no credit risk rating. They
are entered into as part of the investment strategy of the Group
and its associates, and credit risk is managed by taking security
where available (typically a floating charge) and the Investment
Advisor taking an active role in the management of the borrowing
companies.
Although the Investment Advisor looks to set realistic repayment
schedules, it does not necessarily view a portfolio company not
repaying on time and in full as 'underperforming' and seeks to
monitor each portfolio company on a case-by-case basis. However, in
all cases the Investment Advisor reserves the right to exercise
step in rights. In addition to the repayment of loans advanced, the
Group and associates will often arrange additional preference share
structures and take significant equity stakes so as to create
shareholder value. It is the performance on the combination of all
securities including third party debt that determines the Group's
view of each investment.
At the reporting date, the Group's financial assets exposed to
credit risk amounted to the following:
2015 2014
GBP GBP
------------------------------------------------- ----------- ----------
Cash and cash equivalents 13,998,962 7,862,252
Trade and other receivables 70,267 77,822
Loans to equity accounted investees and related
companies 725,200 1,298,017
Total 14,794,429 9,238,091
-------------------------------------------------- ----------- ----------
Cash balances are placed with HSBC Bank plc and Barclays Bank
plc.
Market price risk
Market price risk is the risk that the value of a financial
instrument will fluctuate as a result of changes in market prices
(other than those arising from interest rate risk or currency
risk). The Group is exposed to a market price risk via its equity
investments held through its interests in equity accounted
investees, which are stated at fair value.
Market price risk sensitivity
The Group is exposed to market price risk with regard to its
investment in the partnerships, which own equity interests in a
number of unquoted companies which are stated at fair value.
Interest rate risk
The Group is exposed to interest rate risk through its
investment in the equity accounted investees and on its cash
balances. The equity accounted investees provide loans to portfolio
companies. Most of the loans are at fixed rates. Cash balances earn
interest at variable rates. The convertible loan note instruments
carry fixed interest rates.
The table below summarises the Group's exposure to interest rate
risks. It includes the Group's financial assets and liabilities at
the earlier of contractual re-pricing or maturity date, measured by
the carrying values of assets and liabilities:
31 January 2015 Less than 1 - 3 3 months 1 - 5 Over 5 Non- interest
1 month months - 1 year years years bearing Total
Assets GBP GBP GBP GBP GBP GBP GBP
------------------------ ----------- -------- ---------- ------------ ------- -------------- ------------
Loans and receivables
Loans to equity
accounted investees
and related companies - - - - - 725,200 725,200
Trade and other
receivables - - - - - 146,303 146,303
Cash and cash
equivalents 13,998,962 - - - - - 13,998,962
Total financial
assets 13,998,962 - - - - 871,503 14,870,465
------------------------- ----------- -------- ---------- ------------ ------- -------------- ------------
Liabilities
Financial liabilities
measured at amortised
cost
Trade and other
payables - - - - - (81,487) (81,487)
Convertible loan
note instruments - - - (6,035,470) - - (6,035,470)
Bank loan - - - - - - -
------------------------ ----------- -------- ---------- ------------ ------- -------------- ------------
Total financial
liabilities - - - (6,035,470) - (81,487) (6,116,957)
------------------------- ----------- -------- ---------- ------------ ------- -------------- ------------
Total interest
rate sensitivity
gap 13,998,962 - - (6,035,470) - - -
------------------------- ----------- -------- ---------- ------------ ------- -------------- ------------
Interest rate sensitivity
The Group is exposed to market interest rate risk only via its
cash balances. A sensitivity analysis has not been provided as it
is not considered significant to Group performance.
Currency risk
The Group has no exposure to currency risk as it has no
non-sterling assets or liabilities.
31 January 2014 Less than 1 - 3 3 months 1 - 5 Over 5 Non- interest
1 month months - 1 year years years bearing Total
Assets GBP GBP GBP GBP GBP GBP GBP
------------------------ ---------- -------- ---------- ------------ ------- -------------- ------------
Loans and receivables
Secured loans - - - - - - -
Loans to equity
accounted investees
and related companies - - - - - 1,298,017 1,298,017
Trade and other
receivables 13,979 - - - - 63,843 77,822
Cash and cash
equivalents 7,862,252 - - - - - 7,862,252
Total financial
assets 7,876,231 - - - - 1,361,860 9,238,091
------------------------- ---------- -------- ---------- ------------ ------- -------------- ------------
Liabilities
Financial liabilities
measured at amortised
cost
Trade and other
payables - - - - - (42,518) (42,518)
Convertible loan
note instruments - - - (6,005,994) - - (6,005,994)
Bank loan - - - - - - -
------------------------ ---------- -------- ---------- ------------ ------- -------------- ------------
Total financial
liabilities - - - (6,005,994) - (42,518) (6,048,512)
------------------------- ---------- -------- ---------- ------------ ------- -------------- ------------
Total interest
rate sensitivity
gap 7,876,231 - - (6,005,994) - - -
------------------------- ---------- -------- ---------- ------------ ------- -------------- ------------
21 Directors' interests
Four of the Directors have interests in the shares of the
Company as at 31 January 2015 (2014: four). Geoffrey Vero holds
60,620 ordinary shares (2014: 60,620). Nicholas Wilson holds 58,074
ordinary shares (2014: 50,931). Robert Quayle holds 37,755 ordinary
shares (2014: 30,612). Clive Spears holds 37,755 ordinary shares
(2014: 30,612).
22 Related parties
Geoffrey Vero is a non-executive Director of Numis Corporation
plc and a former non-executive Director of Numis Securities
Limited, the Nominated Advisors, Brokers and Placing Agent to the
Company. Broker fees of GBP51,709 (2014: GBP60,449) were payable to
Numis Securities Limited.
23 Subsidiary companies
On 29 October 2005, the Company incorporated EPIC Reconstruction
Property Company (IOM) Limited, in the Isle of Man.
On 16 November 2012, the Company incorporated Corvina Limited,
in the Isle of Man, whose principal activity is that of acquiring
shares in the Company, which are held as treasury shares (note
16).
The Company holds 100% of the issued share capital of EPIC
Reconstruction Property Company II Limited. The subsidiary is
likely to enter into liquidation and has been deconsolidated.
The Company is deemed to have control of its EBT, which is
therefore treated as a subsidiary and consolidated for the purpose
of the Group accounts (note 16).
24 Financial commitments and guarantees
Under the terms of the limited partnership agreement the Company
is committed to provide a maximum of GBP2 million additional
investment to ESO 1 LP.
25 Subsequent events
There were no significant subsequent events.
Schedule of shareholders holding over 3% of issued shares
Percentage
holding
---------------------------- -----------
Giles Brand 22.94%
The Corporation of Lloyds 10.02%
Henderson Global Investors 6.45%
Hoares Bank 5.23%
Nortrust Nominees Limited 5.20%
Miton Asset Management 4.36%
Total over 3% holding 54.20%
-------------------------------- -----------
Group Information
Directors Bankers
G.O. Vero (Chairman) Barclays Bank plc
R.B.M. Quayle 1 Churchill Place
C.L. Spears Canary Wharf
N.V. Wilson London E14 5HP
Secretary HSBC Bank plc
P.P. Scales 1st Floor
60 Queen Victoria Street
Registrar and Registered Office London
IOMA Fund and Investment Management
Limited EC4N 4TR
IOMA House
Hope Street
Douglas Investment Advisor
Isle of Man IM1 1AP EPIC Private Equity LLP
Audrey House
Nominated Advisor and Broker 16-20 Ely Place
Numis Securities Limited London EC1N 6SN
10 Paternoster Square
London EC4M 7LT Auditors and Reporting Accountants
KPMG Audit LLC
Crest Providers Heritage Court
Computershare Investor Services 41 Athol Street
(Jersey) Limited
Queensway House Douglas
Hilgrove Street Isle of Man IM99 1HN
St. Helier
Jersey, JE1 1ES
This information is provided by RNS
The company news service from the London Stock Exchange
END
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