TIDMESO
RNS Number : 6162F
EPE Special Opportunities PLC
28 April 2011
28 April 2010
EPE Special Opportunities plc
Audited Results for the year ended 31 January 2011
The Board of EPE Special Opportunities plc are pleased to
announce the Company's Audited Results for the year to 31 January
2011.
Highlights of the period are:
-- Total gross income of GBP1.1m and net income for the period
of GBP0.4m
-- Net asset value per share as at 31 January 2011: 79.21p, an
increase of 9.3% on the net asset value per share as at 31 July
2010
-- The acquisition for GBP22.0m of a majority interest in the
private equity portfolio from The Equity Partnership Investment
Company plc ("EPIC plc") in August 2010. As a result of the
acquisition, the Company has increased its ownership of trading
private equity assets from four to thirteen, enhancing its sector,
stage and vintage diversification
-- The portfolio has performed satisfactorily, with a number of
investments outperforming budget
-- In light of the need to service an annual interest payment on
GBP10.0 million of convertible loan notes and the desire to
consider share repurchases and possible acquisition opportunities,
the Board do not recommend a dividend in respect of the year ended
31 January 2011
Geoffrey Vero, Chairman, commented: "The acquisition completed
in August has transformed the complexion of the Company to the
significant benefit of shareholders. Prior to the acquisition, the
Company's portfolio consisted of four trading private equity assets
and was predominantly weighted towards the UK retail sector, while
the Company's strategy was solely focused on distressed and special
situation scenarios. After the acquisition, the Company now
consists of thirteen trading private equity assets and has expanded
its investment mandate to incorporate growth and buyout
transactions, as well as special situations."
Enquiries:
Numis Securities Ltd +44 (0) 20 7260 1000
Nominated Advisor: Stuart Skinner
Corporate Broker: Alex Ham
EPIC Private Equity LLP Giles Brand +44 (0) 20 7553 2341
IoMA Philip Scales +44 (0) 16 2468 1250
Cardew Group Richard Spiegelberg / Alexandra Stoneham +44 (0) 20
7930 0777
Chairman's Statement
The twelve months since January 2010 have once again presented a
challenging and continually uncertain economic environment for the
Company. Uncertainty surrounding May's general election and the
installation of a Coalition Government did little to quell rising
fears over the UK economy, whilst the subsequent announcement of
fiscal tightening adversely impacted the prospects for an
expeditious economic recovery. Meanwhile, rising unemployment,
falling house prices and consistently above-target inflation have
continued to impact consumers at a time when banks are still
reluctant to extend credit. These conditions remain highly
conducive to one leg of the Company's investment strategy, special
situations investing, but equally demanding for the Company's
portfolio assets.
Whilst the economic backdrop has presented the Company with
opportunities and challenges in equal measure, the acquisition of a
majority interest in the private equity portfolio from The Equity
Partnership Investment Company plc ("EPIC plc") in August 2010
transformed the complexion of the Company to the significant
benefit of shareholders. Prior to the acquisition, the Company's
portfolio consisted of four trading private equity assets,
predominantly weighted towards the UK retail sector, whilst the
Company's strategy was solely focused on distressed and special
situation scenarios. Following the acquisition, the Company has
increased its ownership of trading private equity assets from four
to thirteen, enhancing its sector, stage and vintage
diversification, whilst the Company's investment mandate has
expanded to incorporate the Investment Advisor's historic
investment strategy across special situations, distressed, growth
and buyout transactions.
The introduction of a GBP10.0 million equity investment by the
European Secondary Development Fund IV LP ("ESD") in order to part
finance the acquisition also advanced the ownership structure of
the Company, resulting in all of the Company's current private
equity assets (with the exception of Process Components) being held
in a new Limited Partnership, ESO Investments 1 LP (the "Fund"). As
part of the transaction, the Company agreed to commit an additional
GBP2.0 million to the Fund by way of follow-on investment into the
current portfolio, pro rata with its holding in the Fund, with ESD
therefore committing a total of GBP0.8 million for this purpose.
Going forward, Process Components, together with any new platform
investments, will be held in a separate Limited Liability
Partnership vehicle, ESO Investments 2 LLP, in which the Company is
a sole investor.
Since the date of the acquisition, the portfolio has performed
satisfactorily, with a number of investments outperforming budget.
Adverse, and at times extreme, weather conditions over the
Christmas period, however, tarnished the year end performance of
the portfolio as a whole, with both Past Times and Whittard
delivering below budget performance in what was an extraordinarily
challenging December for UK retail sales. The companies reacted
differently to the weather, however, with Whittard achieving year
end figures that continue what has been an impressive turnaround
under the Company's ownership, with 10% like-for-like sales growth
during 2010. Performance at both of these companies is now at or
around budget within the context of an extremely difficult climate
for the UK retail sector and the Investment Advisor is progressing
a number of initiatives, including the closure of a number of
underperforming stores and investment in the web channel, to enable
Past Times to improve its performance over the coming financial
year.
For the full financial year ended 31 January 2011, the Group
reported gross income of GBP1.1 million. This translated to net
income for the Group of GBP0.4 million. Total capital gains were
GBP3.0 million, which translated to a net asset value per share as
at 31 January 2011 for the Group of 79.21 pence, an increase of
9.3% on the net asset value of per share of 72.47 pence for the
half year ended 31 July 2010. Shares issued during the year to EPIC
plc and EPIC Private Equity LLP ("EPE"), together with the costs of
issuing and readmitting these shares, diluted the Group's net asset
value per share by 3.6 pence.
The Directors consider that addressing the imbalance between the
market price for Ordinary Shares and net asset value is important.
The Directors intend to utilise the mechanism of share repurchases
to enhance the net asset value per share, whilst the Investment
Advisor will continue to engage with both new and existing
shareholders in order to enhance liquidity and narrow the discount
between the share price and the net asset value per share.
The Directors do not recommend a dividend in respect of the year
ended 31 January 2011. The need to service an annual interest
payment on GBP10.0 million of Convertible Loan Notes and the desire
to consider both share repurchases in order to manage the discount
to Net Asset Value and attractive bolt-on and platform acquisition
opportunities, all combine to make the preservation of healthy cash
balances at the Company a primary objective of the Directors.
Once again, I would like to thank the Investment Advisor, EPE,
as well as my fellow Directors and professional advisors, for their
considerable efforts over the last twelve months. I look forward to
updating you on developments at the half year.
Geoffrey Vero
Chairman
26 April 2011
Investment Advisor's Report
In the twelve month period since 31 January 2010, considerable
time and effort was employed in successfully acquiring the private
equity portfolio of EPIC plc on 31 August 2010. Subsequent to the
acquisition, the Investment Advisor has focused on maintaining and
creating value from within the existing portfolio, whilst at the
same time seeking out new opportunities by way of platform or
bolt-on investment opportunities. All new investments will be made
via ESO Investments 2 LLP, in which the Company is the sole
investor. In addition, the Investment Advisor continues to explore
opportunities for adding value to the current portfolio through
revenue enhancing and cost saving initiatives as well as seeking to
identify appropriate management to optimise performance. Within the
context of the current economic climate, the importance of these
initiatives is clearly acutely felt.
Since the date of the acquisition, the portfolio has performed
satisfactorily, with a number of investments outperforming budget.
However, an extraordinarily cold December impacted the year end
performance of the portfolio as a whole, and Past Times in
particular, which delivered below budget figures given its reliance
on Christmas trading. Nevertheless, Q1 trading at Past Times has
stabilised and the Investment Advisor is instigating a number of
measures to prevent a repeat performance in 2011, including store
closures, overhead reduction and expansion of the web offering.
Whittard, which also delivered a below budget performance but
continued its successful turnaround at the EBITDA level, will focus
on diluting its reliance on UK trading through a planned expansion
of its international and wholesale operations.
The Company also completed the bolt-on acquisitions of two small
companies into Morada Home in a continued effort to reduce the
business' reliance on public sector-driven revenue streams. The two
companies, Gradus Fabrics and SJ Clarke (completed in July and
August 2010, respectively), should significantly boost Morada
Home's sales in the care homes, universities and hotel sectors.
Process Components is also being readied for sale, with indicative
offers received from both trade and financial sponsor buyers in
January. Elsewhere in the portfolio, Nexus finished the year to 31
December 2010 ahead of budget, with the Chinese factory operations
(Jiaxing) continuing to ramp up. Indicia also performed well over
the same period, beating its EBITDA budget despite a tough year for
its sector, where customer marketing budgets remain constrained and
mergers and acquisitions activity continues to cause uncertainty
within marketing departments. Indicia continues to target digital
acquisitions with strong cross-selling potential.
The net asset value per share as at 31 January 2011 for the
Company was 79.21 pence, calculated on the basis of 30.8 million
ordinary shares. Investment highlights from the inception of the
Company to date include:
-- deployed GBP62 million of capital and returned over GBP33
million to the Company in capital and income;
-- generated gross income of GBP15 million and paid dividends of
GBP5 million;
-- the Portfolio, since inception, is valued at a gross 1.2x
money multiple and the Company at 0.9x money multiple, net of all
costs.
Uncertainty persists in the wider UK economy, with the strong
pace of GDP growth through the second and third quarter of 2010
contrasted sharply by the fourth quarter's contraction and January
2011's sharp rises in inflation. Debt finance remains in scarce
supply, reserved largely for better-performing and asset-rich
companies, with banks primarily focused on rebuilding their balance
sheets as opposed to new primary lending. The period has therefore
continued to be one of consolidation for the Company with a
positive focus on creating value in the core investments.
Investment Strategy
The Investment Advisor believes that the current economic
environment continues to create a wide range of investment
opportunities. As a result, the Investment Advisor continues to
engage actively with the wider restructuring and advisory community
in communicating the Company's investment strategy. Following the
acquisition, 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:
-- Special situations where the Investment Advisor believes that
assets are undervalued due to specific, event-driven circumstances.
Target companies may or may not be distressed as a result of the
situation. The Investment Advisor will aim to use its restructuring
and refinancing expertise to resolve the situation and achieve a
controlling position in the target company.
-- Distressed companies where asset-backing may be available and
the opportunity exists for recovery and significant upside. These
transactions may involve target companies with a substantial asset
base providing the Company with considerable downside protection.
The Company seeks to acquire distressed debt, undervalued equity or
the assets of target businesses in solvent or insolvent
situations.
-- Public companies either backing management to acquire and
de-list the company or buying ordinary equity in a listed business.
The Company may consider making investments in a number of smaller
companies, primarily ones whose shares are admitted to AIM, being
companies with a market capitalisation in the region of GBP1
million to GBP5 million. It is anticipated that these transactions
would involve the acquisition of the entire issued share capital of
such companies. The Company may offer ordinary shares as all or
part of the consideration for such investments.
-- Growth, buyout and pre-IPO opportunities, leveraging the
Investment Advisor's investment experience, contacts and
ability.
The Company will consider most industry sectors, including
consumer, retail, manufacturing, financial services, healthcare,
support services and media. The Company partners with management
and entrepreneurs to maximise value by combining financial and
operational expertise in each investment.
The Company will seek to invest between GBP2 million and GBP10
million in a range of debt and equity instruments with a view to
generating returns through both yield and capital gain. Whilst in
general the Company aims to take controlling equity positions, it
may seek to develop companies as a minority investor. Occasionally
the Board may authorise investments of less than GBP2 million. For
investments larger than GBP5 million, the Company may seek
co-investment from third parties.
From a portfolio management perspective, the Company aims to
continue its strategic focus of seeking to exit the smaller
investments and grow the core portfolio (by value) by way of both
organic and acquisition-led growth. In addition to reinvestment
behind the core portfolio, the Company intends to allocate capital
either to new deals or share repurchases where the opportunity for
an enhancement in net asset value per share is compelling.
Current Portfolio: ESO Investments 2 LLP
Process Components
Process Components is an engineering parts and equipment
supplier. It was formed in June 2009 after a significant industry
cut-back in capital expenditure programmes forced a secondary
restructuring of Kemutec, formerly a manufacturer of mixing and
sifting equipment for the chemical, pharmaceutical and food
industries that was originally purchased by the Company in March
2005. Previously constrained by its parent, the new business now
supplies higher margin products from a significantly lower cost
base. The business is currently trading ahead of budget at both the
sales and EBITDA level, with credit terms improving with key
suppliers and the new operations successfully bedded down.
Current Portfolio: ESO Investments 1 LP
Nexus Industries
Nexus Industries ("Nexus") is a manufacturer and distributor of
electrical accessories in the UK, operating under the brand names
Masterplug, British General and Ross, and supplies to both the
retail and wholesale markets. The business is now deleveraging and
performing well despite the current market conditions, with both
year end December 2010 sales and EBITDA above budget. The
construction of a large freehold factory located in mainland China
has recently been completed and this is expected to drive both
margin improvement and sales growth over the next three to four
years. However, copper price rises, hitting an all time high in
January, remain a concern for the business, as does demand from UK
consumers.
Pinnacle Regeneration Group
Pinnacle Regeneration Group ("PRG") is a diversified social
housing services business. The core facilities management business
serves the public sector social housing market. PRG also owns an
employment and skills business, Pinnacle People, and a Private
Finance Initiative ("PFI") bidding vehicle, Regenter, a joint
venture with Laing. PRG finished the year marginally behind sales
budget but ahead of EBITDA budget. The Investment Advisor remains
cautiously optimistic that, given Treasury-related funding
constraints, outsourcing of project bidding to the private sector
will become more common, even if margins decrease. Sector concerns
remain, however, after the demise of some quoted comparables.
Palatinate Schools
Palatinate Schools ("Palatinate") operates a group of private
preparatory, pre-preparatory and nursery schools based in Central
London. The schools have good prestige value and pupil growth is
anticipated to remain robust, which will drive sales growth. The
Investment Advisor manages Palatinate alongside other private
equity investors. 2010 August year end performance was solid,
although growth was limited. Significant potential exists to drive
organic growth via improved branding and advertising.
Whittard of Chelsea
Whittard of Chelsea, a specialist retailer of tea and coffee,
was acquired in December 2008. The initial restructuring of the
business was completed in the first half of 2009, with the number
of stores and overhead base both significantly reduced and new
branding now commencing roll-out into the stores and product
packaging. 2010 saw a difficult end to trading with the extreme
weather conditions affecting key trading in the run-up to
Christmas. Nevertheless, after sales were up 10% like-for-like on
the previous year, 2011 growth will be driven by the launch of a
new website, whilst significant potential exists to develop both
the wholesale and international franchising sides of the
business.
Indicia
Indicia is a direct marketing business focussed on database and
multi-channel analytics. Indicia was formed through the acquisition
and consolidation of three separate businesses and is currently in
discussions with several parties with regard to the purchase of a
digital and market research business to complement its existing
database build, analysis and direct marketing portfolio of
services. Despite a tough year for the sector, the Company finished
the year to December 2010 marginally behind sales budget, although
EBITDA was comfortably ahead of budget and significantly ahead of
2009 levels.
Past Times
Past Times is a niche retailer of historically inspired
jewellery, gifts, books and house-wares. Past Times was acquired in
December 2005 from the administrators of Retail Variations plc.
During the initial phase of the turnaround, Past Times underwent a
major restructuring process, with the number of stores
significantly reduced, the head office cost base reduced, and the
product range improved. However, the good progress made in 2009 has
slipped back in 2010 and the business concluded the year with a
very challenging fourth quarter owing to extreme weather
conditions, with sales and EBITDA both behind budget. 2011 will
focus on an expansion of proven growth areas, such as the web and
temporary stores, coupled with a re-focus on core stores and
commensurate closure of under-performing stores.
Bighead Bonding Fasteners
Bighead Bonding Fasteners ("Bighead") is a specialist
engineering business, manufacturing specialist load-spreading
fasteners and fixings for composites, plastics and traditional
materials. December 2010 year end performance was impressive, with
EBITDA significantly ahead of budget. The Investment Advisor, over
the long-term, aims to replicate Bighead's local success in
high-end niche applications by establishing an international
network of distributors for the company's products.
Pharmacy2U
Pharmacy2U is an online pharmacy business, delivering National
Health Service and private prescriptions direct to the home using
an innovative, in-house developed technology, Electronic
Prescription Service ("EPSr2"). The business has experienced
significant sales growth since inception. Sales were in line with
budget for the nine months to January 2011, although EBITDA was
significantly ahead of budget. Long range performance remains
reliant on the expected roll-out of EPSr2.
Morada Home
In 2005, the Company backed a management buyout of the Morada
Home business from the administration of Morada International. The
business was originally focussed solely on contracts with the
Ministry of Defence ("MoD") to supply curtains and blinds for MoD
living accommodation. Morada has since begun to diversify,
supplying PFI contractors as well as a large number of customers in
the retail sector. To that end, the Company recently completed the
bolt-on acquisitions of Gradus Fabrics and SJ Clarke (completed in
July and August 2010, respectively) into Morada Home, significantly
diversifying the group's sales base and enhancing the business'
presence in the care homes, universities and hotel sectors.
Evolving Media
Evolving Media is a young and growing integrated digital
marketing agency, based in Bedford, UK and providing
digitally-focussed marketing solutions to a range of clients. Sales
for the full year to December 2010 were ahead of budget, although
EBITDA was behind budget. The Investment Advisor is currently
focussed on establishing a London office in order to drive business
and product development and recruitment. Evolving Media will focus
in 2011 on improving profitability from current clients, whilst
selectively targeting new business.
Ryness
Ryness is a London-based electrical retail and wholesaler,
focused on light bulbs, lighting and small electrical goods,
operating from 17 locations across London. The investment follows a
buy-and-build strategy, with two bolt-on investments of electricals
businesses completed in 2008. The Investment Advisor is currently
actively searching for further trade counter acquisitions, which it
believes should be available at attractive prices owing to the
market downturn. Full year results to December 2010 were below
budget at both sales and EBITDA level. Nevertheless, the wholesale
customer base continues to grow with strong recent wins including
the Hilton Group's UK business.
Driver Require
Driver Require is a recruitment company for commercial drivers
across all major vehicle categories, based in Stevenage, UK. The
recession had a significant impact on the transport sector and
Driver Require's target market was particularly affected. However,
trading stabilised in the year to December 2010 with the Company
once again reaching break-even. The Investment Advisor is currently
actively pursuing bolt-on investments and identifying new office
sites in its attempt to grow the business in anticipation of an
expected market recovery.
Valuation Methodology
The Company values its investments with reference to the BVCA
guidelines which state that portfolio companies should be valued on
an EBITDA multiple basis using publicly quoted comparables and/or
transaction comparables, then discounting the equity value by an
appropriate percentage to account for marketability considerations.
Cost may be considered as fair value in some cases but assets will
always be held at fair value, whether this is at, above or below
cost, and the value of such assets will be reviewed periodically to
ensure that such is the case.
The Investment Advisor intends to announce an estimated net
asset value per ordinary share on a monthly basis following a
review of the valuation of the Company's investments. The Company
has always endeavoured to comply with industry-standard guidelines
and, as the Fund will be applying the International Private Equity
and Venture Capital Valuation Guidelines, for consistency the Board
will consider adopting these guidelines going forward. The Company
believes that there is unlikely to be any material effect on the
valuation process as a result of such a change. The Investment
Advisor adopts a conservative approach to valuation with reference
to the aforementioned methodology but also having regard for
ongoing volatile market conditions, particularly in the UK retail
sector, and credit restraints.
Consolidated Statement of Comprehensive Income
For the year ended 31 January 2011
31
January
31 January 2011 2010
---------------------------------- ----------
Revenue Capital Total Total(
Note GBP GBP GBP GBP
----- ---------- ---------- ---------- ----------
Income
Rental income 63,800 - 63,800 58,484
Interest income 4 1,047,773 - 1,047,773 1,326,742
---------- ---------- ---------- ----------
Total income 1,111,573 - 1,111,573 1,385,226
---------- ---------- ---------- ----------
Expenses
Investment advisor's
fees 5 (230,933) - (230,933) (360,451)
Administration fees 5 (44,319) - (44,319) (30,000)
Directors' fees 6 (100,000) - (100,000) (90,629)
Directors' and
Officers' insurance (11,813) - (11,813) (10,350)
Professional fees (65,204) - (65,204) (182,860)
Board meeting and
travel expenses (4,997) - (4,997) (10,623)
Auditors' remuneration (28,636) - (28,636) (29,697)
Bank charges (536) - (536) (533)
Irrecoverable VAT (122,209) - (122,209) (105,146)
Sundry expenses (95,192) - (95,192) (61,935)
Nominated advisor and
broker fees (32,054) - (32,054) (20,649)
Total expenses (735,893) - (735,893) (902,873)
---------- ---------- ---------- ----------
Net income/(expense) 375,680 - 375,680 482,353
---------- ---------- ---------- ----------
Gains/(losses) on
investments
Share of profit of
equity accounted
investee - 1,989,446 1,989,446 -
Net realised losses on
secured loans - (50,000) (50,000) -
Movement in fair value
of investments at
fair value through
profit or loss 9 - 1,099,365 1,099,365 (750,000)
Revaluation of
investment property 9 - (14,690) (14,690) (14,592)
Gain/(loss) for the
year on investments - 3,024,121 3,024,121 (764,592)
---------- ---------- ---------- ----------
Finance charges
Interest on mortgage
loan 15 (26,823) - (26,823) (28,514)
Interest on
convertible loan note
instruments 15 (317,919) - (317,919) -
Profit/(loss) for the year
before taxation 30,938 3,024,121 3,055,059 (310,753)
Taxation 7 - - - -
---------- ---------- ---------- ----------
Profit/(loss) for the
year 30,938 3,024,121 3,055,059 (310,753)
========== ========== ========== ==========
Other comprehensive
income - - - -
---------- ---------- ---------- ----------
Total comprehensive
income/(loss) 30,938 3,024,121 3,055,059 (310,753)
========== ========== ========== ==========
Basic and diluted
earnings/(loss) per
ordinary share
(pence) 18 0.11 10.67 10.78 (1.59)
========== ========== ========== ==========
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.
The notes form an integral part of these financial
statements.
Company Statement of Comprehensive Income
For the year ended 31 January 2011
31 January
31 January 2011 2010
------------------------------------
Revenue Capital Total Total
Note GBP GBP GBP GBP
----- ------------ ---------- ---------- -----------
Income
Interest income 4 34,454 - 34,454 2,045
Dividend income
from subsidiaries - - - 1,048,055
------------ ---------- ---------- -----------
Total income 34,454 - 34,454 1,050,100
------------ ---------- ---------- -----------
Expenses
Investment
advisor's fees 5 (225,357) - (225,357) (358,184)
Administration fees 5 (44,319) - (44,319) (30,000)
Directors' fees 6 (95,000) - (95,000) (80,629)
Directors and
Officers'
insurance (11,813) - (11,813) (10,350)
Professional fees (65,204) - (65,204) (182,860)
Board meeting and
travel expenses (4,997) - (4,997) (10,623)
Auditors'
remuneration (37,759) - (37,759) (22,000)
Bank charges (344) - (344) (321)
Irrecoverable VAT (119,218) - (119,218) (103,650)
Sundry expenses (81,662) - (81,662) (49,340)
Nominated advisor
and broker fees (36,755) - (36,755) (20,649)
Total expenses (722,428) - (722,428) (868,606)
------------ ---------- ---------- -----------
Net
income/(expense) (687,974) - (687,974) 181,494
------------ ---------- ---------- -----------
Gains/(losses) on
investments
Share of profit of
equity accounted
investee - 1,989,446 1,989,446 -
Net realised
gains/(losses) on
investments - 1,179,762 1,179,762 -
Movement in fair
value of
investments at
fair value through
profit or loss 9 - - - (750,000)
Movement in fair
value of
investments in
subsidiaries at
fair value through
profit or loss 10 - 891,744 891,744 257,753
------------ ---------- ---------- -----------
Gain/(loss) for the
year on
investments - 4,060,952 4,060,952 (492,247)
------------ ---------- ---------- -----------
Finance charges
Interest on
convertible loan
note instruments 15 (317,919) - (317,919) -
------------ ---------- ---------- -----------
Profit/(loss) for
the year before
taxation (1,005,893) 4,060,952 3,055,059 (310,753)
Taxation 7 - - - -
------------ ---------- ---------- -----------
Profit/(loss) for
the year (1,005,893) 4,060,952 3,055,059 (310,753)
============ ========== ========== ===========
Other comprehensive
income - - - -
------------ ---------- ---------- -----------
Total comprehensive
income/(loss) (1,005,893) 4,060,952 3,055,059 (310,753)
============ ========== ========== ===========
Basic and diluted
earnings/(loss)
per ordinary share
(pence) (3.55) 14.33 10.78 (1.59)
============ ========== ========== ===========
The total column of this statement represents the Company
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.
The notes form an integral part of these financial
statements.
Consolidated Statement of Assets and Liabilities
As at 31 January 2011
31 January 31 January
2011 2010
Note GBP GBP
------ ------------- -------------
Non-current assets
Investment property 9 470,718 485,408
Financial assets 9,10 2,494,987 14,796,452
Investment in equity accounted
investee 9,10 27,659,601 -
Loans to equity accounted investee
and related companies 10,13 1,473,678 -
32,098,984 15,281,860
------------- -------------
Current assets
Cash and cash equivalents 10,12 3,502,811 3,542,388
Trade and other receivables 10 67,758 1,220,939
Committed cash balances 10,12 - 5,407
------------- -------------
3,570,569 4,768,734
------------- -------------
Current liabilities
Trade and other payables 10,14 (918,057) (219,994)
------------- -------------
(918,057) (219,994)
Net current assets 2,652,512 4,548,740
------------- -------------
Non-current liabilities
Convertible loan note instruments 10,15 (9,880,429) -
Bank loan 10,15 (470,718) (485,408)
------------- -------------
(10,351,147) (485,408)
------------- -------------
Net assets 24,400,349 19,345,192
============= =============
Equity
Share capital 16 1,544,583 1,327,075
Share premium 17 1,815,385 -
Capital reserve (12,436,945) (15,461,066)
Revenue reserve 33,477,326 33,479,183
------------- -------------
Total equity 24,400,349 19,345,192
============= =============
Net asset value per share (pence) 79.21 72.89
============= =============
The financial statements were approved by the Board of Directors
on 26 April 2011 and signed on its behalf by:
Geoffrey Vero Nicholas Wilson
Chairman Director
The notes form an integral part of these financial
statements.
Company Statement of Assets and Liabilities
As at 31 January 2011
31 January 31 January
2011 2010
Note GBP GBP
------ ------------- -------------
Non-current assets
Investment in equity accounted
investee 9,10 27,659,601 -
Investment in subsidiaries
at fair value through profit
or loss 10 1,127,234 246,951
Loans to subsidiaries 10,11 1,482,866 17,262,652
Loans to associate and related
companies 13 1,473,678 -
31,743,379 17,509,603
------------- -------------
Current assets
Cash and cash equivalents 10,12 3,445,270 2,051,903
Trade and other receivables 10 11,560 10,098
3,456,830 2,062,001
------------- -------------
Current liabilities
Trade and other payables 10,14 (912,300) (207,821)
(912,300) (207,821)
------------- -------------
Net current assets 2,544,530 1,854,180
------------- -------------
Non-current liabilities
Investment in subsidiaries
at fair value through profit
or loss 9 (7,131) (18,591)
Convertible loan note instruments 10,15 (9,880,429) -
------------- -------------
(9,887,560) (18,591)
-------------
Net assets 24,400,349 19,345,192
============= =============
Equity
Share capital 16 1,544,583 1,327,075
Share premium 17 1,815,385 -
Capital reserve (13,039,533) (17,100,485)
Revenue reserve 34,079,914 35,118,602
------------- -------------
Total equity 24,400,349 19,345,192
============= =============
Net asset value per share
(pence) 79.21 72.89
============= =============
The financial statements were approved by the Board of Directors
on 26 April 2011 and signed on its behalf by:
Geoffrey Vero Nicholas Wilson
Chairman Director
The notes form an integral part of these financial
statements.
Consolidated Statement of Changes in Equity
For the year ended 31 January 2011
Year ended 31 January 2011
---------------------------------------------------------------
Share Share Capital Revenue
capital premium reserve reserve Total
GBP GBP GBP GBP GBP
---------- ---------- ------------- ----------- -----------
Balance at 1
February
2010 1,327,075 - (15,461,066) 33,479,183 19,345,192
Total
comprehensive
income for
the year - - 3,024,121 30,938 3,055,059
---------- ---------- ------------- ----------- -----------
Contributions
by and
distributions
to owners
Shares issued 217,508 2,212,492 - - 2,430,000
Share issue
costs - (397,107) - - (397,107)
Purchase of
treasury
shares - - - (32,795) (32,795)
---------- ---------- ------------- ----------- -----------
Total
transactions
with owners 217,508 1,815,385 - (32,795) 2,000,098
---------- ---------- ------------- ----------- -----------
Balance at 31
January 2011 1,544,583 1,815,385 (12,436,945) 33,477,326 24,400,349
========== ========== ============= =========== ===========
Year ended 31 January 2010
------------------------------------------------------------------
Share Share Capital Revenue
capital premium reserve reserve Total
GBP GBP GBP GBP GBP
---------- ------------- ------------- ----------- -----------
Balance at 1
February 2009 327,075 28,795,404 (14,696,474) 511,536 14,937,541
Total
comprehensive
loss for the
year - - (764,592) 453,839 (310,753)
---------- ------------- ------------- ----------- -----------
Contributions
by and
distributions
to owners
Shares issued 1,000,000 4,000,000 - - 5,000,000
Share issue
costs - (281,596) - - (281,596)
Cancellation
of share
premium - (32,513,808) - 32,513,808 -
---------- ------------- ------------- ----------- -----------
Total
transactions
with owners 1,000,000 (28,795,404) - 32,513,808 4,718,404
---------- ------------- ------------- ----------- -----------
Balance at 31
January 2010 1,327,075 - (15,461,066) 33,479,183 19,345,192
========== ============= ============= =========== ===========
The notes form an integral part of these financial
statements.
Company Statement of Changes in Equity
For the year ended 31 January 2011
Year ended 31 January 2011
----------------------------------------------------------------
Share Share Capital Revenue
capital premium reserve reserve Total
GBP GBP GBP GBP GBP
---------- ---------- ------------- ------------ -----------
Balance at
1 February
2010 1,327,075 - (17,100,485) 35,118,602 19,345,192
Total
comprehensive
income for
the year - - 4,060,952 (1,005,893) 3,055,059
---------- ---------- ------------- ------------ -----------
Contributions
by and
distributions
to owners
Shares issued 217,508 2,212,492 - - 2,430,000
Share issue
costs - (397,107) - - (397,107)
Purchase of
treasury
shares - - - (32,795) (32,795)
---------- ---------- ------------- ------------ -----------
Total
transactions
with owners 217,508 1,815,385 - (32,795) 2,000,098
---------- ------------- ------------ -----------
Balance at
31 January
2011 1,544,583 1,815,385 (13,039,533) 34,079,914 24,400,349
========== ========== ============= ============ ===========
Year ended 31 January 2010
------------------------------------------------------------------
Share Share Capital Revenue
capital premium reserve reserve Total
GBP GBP GBP GBP GBP
---------- ------------- ------------- ----------- -----------
Balance at 1
February 2009
as previously
reported 327,075 28,795,404 (14,756,646) 601,102 14,966,935
Effect of
change in
accounting
policy - - (1,851,592) 1,822,198 (29,394)
---------- ------------- ------------- ----------- -----------
Balance at 1
February 2009
as restated 327,075 28,795,404 (16,608,238) 2,423,300 14,937,541
Total
comprehensive
loss for the
year - - (492,247) 181,494 (310,753)
---------- ------------- ------------- ----------- -----------
Contributions
by and
distributions
to owners
Shares issued 1,000,000 4,000,000 - - 5,000,000
Share issue
costs - (281,596) - - (281,596)
Cancellation
of share
premium - (32,513,808) - 32,513,808 -
---------- ------------- ------------- ----------- -----------
Total
transactions
with owners 1,000,000 (28,795,404) - 32,513,808 4,718,404
---------- ------------- ------------- ----------- -----------
Balance at 31
January 2010 1,327,075 - (17,100,485) 35,118,602 19,345,192
========== ============= ============= =========== ===========
The notes form an integral part of these financial
statements.
Consolidated Statement of Cash Flows
For the year ended 31 January 2011
31 January 31 January
2011 2010
Note GBP GBP
----- ------------ ------------
Operating activities
Rental income received 69,117 40,964
Interest income received 311,472 157,126
Expenses paid (766,414) (753,031)
Net cash used in operating
activities 20 (385,825) (554,941)
------------ ------------
Investing activities
Receipts on disposal of
investee company 400,000 -
Receipts on disposal of
equipment 17,500 17,500
Loan advances to investee
companies (3,734,000) (3,325,000)
Loan repayments from investee
companies 3,531,841 1,096,000
Portfolio acquisition costs
paid (2,020) -
Cash of subsidiary transferred
on acquisition of investment (414,854) -
Net receipts from associate
and related companies 801,967 -
Payments called under the
guarantee - (1,215,196)
Transfer from committed
cash 5,407 1,215,196
------------ ------------
Net cash generated from/(used
in) investing activities 605,841 (2,211,500)
------------ ------------
Financing activities
Loan interest paid (26,823) (28,514)
Part payment of mortgage
loan (14,690) (14,951)
Convertible loan note issue
costs (17,845) -
Purchase of treasury shares (32,795) -
Share issue proceeds - 5,000,000
Share issue expenses paid (167,440) (281,596)
Net cash generated from/(used
in) financing activities (259,593) 4,674,939
------------ ------------
Increase/(decrease) in
cash and cash equivalents (39,577) 1,908,498
Cash and cash equivalents
at start of year 3,542,388 1,633,890
------------ ------------
Cash and cash equivalents
at end of year 3,502,811 3,542,388
============ ============
Significant non-cash transactions:
During the year the Company issued ordinary shares with a value
of GBP2,000,000 and convertible loan note instruments with a value
of GBP10,000,000 and transferred investments with a value of
GBP13,160,000 as consideration for an interest in an associate: ESO
Investments 1 LP.
The Company also issued 796,781 shares with a value of
GBP430,000 as payment of EPIC Private Equity LLP's fees in relation
to acquisition of the private equity portfolio.
The notes form an integral part of these financial
statements.
Company Statement of Cash Flows
For the year ended 31 January 2011
31 January 31 January
2011 2010
Note GBP GBP
----- ----------- ------------
Operating activities
Interest income received 211 2,045
Expenses paid (747,174) (722,311)
Net cash used in operating
activities 20 (746,963) (720,266)
----------- ------------
Investing activities
Receipts on disposal of
investee company 320,800 -
Loans repaid by/(to) subsidiaries 1,237,664 (1,961,007)
Portfolio acquisition costs
paid (2,021)
Receipts from associate
and related companies 801,967 -
Net cash generated from/(used
in) investing activities 2,358,410 (1,961,007)
----------- ------------
Financing activities
Convertible loan note issue
costs (17,845) -
Purchase of treasury shares (32,795) -
Share issue proceeds - 5,000,000
Share issue costs (167,440) (281,596)
Net cash generated from/(used
in) financing activities (218,080) 4,718,404
----------- ------------
Increase in cash and cash
equivalents 1,393,367 2,037,131
Cash and cash equivalents
at start of year 2,051,903 14,772
----------- ------------
Cash and cash equivalents
at end of year 3,445,270 2,051,903
=========== ============
Significant non-cash transactions:
During the year the Company issued ordinary shares with a value
of GBP2,000,000 and convertible loan note instruments with a value
of GBP10,000,000 and transferred investments with a value of
GBP13,160,000 as consideration for an interest in an associate: ESO
Investments 1 LP.
The company also issued 796,781 shares with a value of
GBP430,000 as payment of EPIC Private Equity LLP's fees in relation
to acquisition of the private equity portfolio.
The notes form an integral part of these financial
statements.
Notes to the Financial Statements
For the year ended 31 January 2011
1 Operations
The Company was incorporated with limited liability in the Isle
of Man with the registered number 108834C on 25 July 2003. The
Company's ordinary shares are listed on the Alternative Investment
Market ("AIM"). The Company raised GBP30m by a placing of ordinary
shares at 100 pence per share. In 2009 the Company raised an
additional GBP5m by a placing of ordinary shares at 5 pence per
share. During the year ended 31 January 2011 the Company issued a
further GBP2.4m in share capital.
The Company has two wholly owned subsidiary companies and a 100%
interest in a limited liability partnership accounted as a
subsidiary. During the year the Company acquired an interest in a
limited partnership accounted as an associate and transferred
certain assets to the limited partnership as detailed in Note
9.
The principal activity of the Company and its subsidiaries
(together "the Group") and its associate 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 Company and its subsidiaries (the "Group") and its associate
(see Notes 3(a) and 24).
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 (IFRSs) and
interpretations adopted by the International Accounting Standards
Board (IASB) except for the non-consolidation of certain companies
as detailed in Note 3(a) and applicable legal and regulatory
requirements of Isle of Man law and reflect the following policies,
which have been adopted and applied consistently.
The consolidated financial statements were authorised for issue
by the Board of Directors on 26 April 2011.
b. Basis of measurement
The consolidated financial statements have been prepared on the
historical cost basis except for the following material items:
-- financial instruments at fair value through profit or loss
are measured at fair value; and
-- investment property is 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, given the
continuing uncertainty in the global economy, provided as true and
fair a view as is possible under the circumstances. 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. Due to the current market conditions,
the level of estimation required in the valuation of unquoted
equity investments and impairment provisions is increased due to a
lack of reliable quoted market comparables and recent transaction
comparables (Notes 9 and 21).
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.
As part of the Group's investment policy, the Group may receive
preference and ordinary shares. Such shares permit the Group to
participate in any increase in the value of portfolio companies. In
some cases such shares are received for nil consideration and the
equity interest of the Group is capped by way of management options
to purchase the Group's interest at a set amount. In addition,
Board representation is only assumed in default situations. For
such interests the Directors consider that they do not meet the
definition of subsidiaries under IAS 27.
For one investment (2010: three investments) in portfolio
companies, the equity interest of the Company is not capped. It is
considered that such companies meet the definition of subsidiaries
and would therefore fail to be consolidated as required under IAS
27. However, the Directors consider that consolidation would render
the consolidated financial statements misleading, as such interests
were acquired for nil consideration, as part of loan finance
arranged for such companies and such interests were acquired with a
view to income and capital gain.
The Company holds an interest in ESO Investments 1 LP, which is
managed and controlled by EPIC Private Equity LLP for the benefit
of the Company and the other members. The Company has the power to
appoint members to the investment committee of ESO Investments 1 LP
but does not have the ability to direct the activities of ESO
Investments 1 LP. The Directors consider that ESO Investments 1 LP
does not meet the definition of a subsidiary.
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.
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. Taxation
Income tax on the profit or loss for the period presented
comprises current and deferred tax. Income tax is recognised in
profit or loss except to the extent that it relates to items
recognised directly in equity, in which case it is recognised in
equity.
Current tax is the expected tax payable on the taxable income
for the year, using tax rates enacted or substantially enacted at
the balance sheet date and any adjustment to tax payable in respect
of the previous years.
Deferred tax is provided using the balance sheet liability
method, providing for temporary differences between the carrying
amount of assets and liabilities for financial reporting purposes
and the amounts used for taxation purposes. The amount of deferred
tax provided is based on the expected manner if realisation or
settlement of the carrying amount of assets and liabilities, using
tax rates enacted or substantively enacted at the balance sheet
date.
A deferred tax asset is recognised only to the extent that it is
probable that future taxable profits will be available against
which the asset can be utilised. Deferred tax assets are reduced to
the extent that it is no longer probable that the related tax
benefit will be realised.
f. 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.
g. Investments
i. Classification
Equity and preference share investments 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 are stated at fair
value. Loans and receivables are stated at amortised cost.
The Investment Advisor determines asset values using BVCA
guidelines and other valuation methods with reference to Level 3
valuation principles of IAS 39. BVCA 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 amount for which an asset could be exchanged,
or a liability settled, between knowledgeable, willing parties in
an arm's length transaction. IAS 39 provides a hierarchy to be used
in determining the fair value for a financial instrument
Quoted market prices in an active market are the best evidence
of fair value and should be used, where they exist, to measure the
financial instrument. If a market for a financial instrument is not
active, an entity establishes fair value by using a valuation
technique that makes maximum use of market inputs and includes
recent arm's length market transactions, reference to the current
fair value of another instrument that is substantially the same,
discounted cash flow analysis, and option pricing models. An
acceptable valuation technique incorporates all factors that market
participants would consider in setting a price and is consistent
with accepted economic methodologies for pricing financial
instruments. If there is no active market for an equity instrument
and the range of reasonable fair values is significant and these
estimates cannot be made reliably, then an entity must measure the
equity instrument at cost less impairment.
Amortised cost is calculated using the effective interest
method. The effective interest rate is the rate that exactly
discounts estimated future cash payments or receipts through the
expected life of the financial instrument to the net carrying
amount of the financial asset or liability. Financial assets that
are not carried at fair value though profit and loss are subject to
an impairment test. If expected life cannot be determined reliably,
then the contractual life is used.
In the Company Statement of Assets and Liabilities the
investments in subsidiaries and associates are stated at fair
value, based on the net assets of the subsidiaries and associates
respectively.
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.
h. Financial guarantees
Commitments under financial guarantees are provided for when an
event has occurred that will result in the commitment being called
(see Note 25).
i. Investment property
Investment property is stated at fair value determined annually
by the Directors. Any gain or loss arising from a change in fair
value is recognised in the profit or loss. Rental income from
investment property is accounted for on an accruals basis. Property
interests held under operating leases for investment purposes are
classified and accounted for as investment property.
j. 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.
k. 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 remeasured subsequent to initial
recognition.
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.
l. Future changes in accounting policies
IASB (International Accounting Standards Board) and IFRIC
(International Financial Reporting Interpretations Committee) have
issued the following standards and interpretations with an
effective date after the date of these financial statements:
New/Revised International Financial Effective
Reporting Standards (IAS/IFRS) date
(accounting
periods
commencing
on or after)
---------------------------------------------- --------------
IAS 1 Presentation of Financial Statements 1 January
(Revised May 2010)* 2011
IAS 12 Income Taxes - Limited scope 1 January
amendment (recovery of underlying 2012
assets) (December 2010)
IAS 24 Related Party Disclosures - 1 January
Revised definition of related parties 2011
IAS 27 Consolidated and Separate Financial 1 July 2010
Statements (Revised May 2010)*
IAS 34 Interim Financial Reporting 1 January
(Revised May 2010) 2011
IFRS 3 Business Combinations (Revised 1 July 2010
May 2010)*
IFRS 7 Financial Instruments: Disclosures 1 January
(Revised May 2010)* 2011
IFRS 7 Financial Instruments: Disclosures 1 July 2011
- Amendments enhancing disclosures
about transfers of financial assets
(October 2010)
IFRS 9 Financial Instruments - Classification 1 January
and Measurement 2013
---------------------------------------------- --------------
IFRIC Interpretation
IFRIC 19 Extinguishing Financial Liabilities 1 July 2010
with Equity Instruments
---------------------------------------------- --------------
* Amendments resulting from May 2010 Annual Improvements to
IFRSs
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. However, IFRS 9
Financial Instruments issued in November 2009 will change
classification of financial assets.
The standard is not expected to have an impact on the
measurement basis of the financial assets since the majority of the
Group's financial assets are measured at fair value through profit
or loss.
IFRS 9 deals with the classification and measurement of
financial assets and its requirements represent a significant
change from the existing IAS 39 in respect of financial assets. The
standard contains two primary measurement categories for financial
assets: at amortised cost and fair value. A financial asset would
be measured at amortised cost if it is held within a business model
whose objective is to hold assets in order to collect contractual
cash flows, and the asset's contractual terms give rise on
specified dates to cash flows that are solely payments of principal
and interest on the principal outstanding. All other financial
assets would be measured at fair value. The standard eliminates the
existing IAS 39 categories of held to maturity, available for sale
and loans and receivables.
For an investment in an equity instrument that is not held for
trading, the standard permits an irrevocable election, on initial
recognition, on an individual share-by-share basis, to present all
fair value changes from the investment in other comprehensive
income. No amount recognised in other comprehensive income would
ever be reclassified to profit or loss. However, dividends on such
investments are recognised in profit or loss, rather than other
comprehensive income, unless they clearly represent a partial
recovery of the cost of the investment. Investments in equity
instruments in respect of which the entity does not expect to
present fair value changes in other comprehensive income would be
measured at fair value with changes in fair value recognised in
profit or loss.
4 Interest income
2011 2011 2010 2010
Group Company Group Company
GBP GBP GBP GBP
--------------- ---------- -------- ---------- --------
Cash balances 298 211 5,556 2,045
Secured loans 1,047,475 34,243 1,321,186 -
--------------- ---------- -------- ---------- --------
Total 1,047,773 34,454 1,326,742 2,045
--------------- ---------- -------- ---------- --------
5 Investment advisory, administration and performance fees
Investment advisory fees
EPE Special Opportunities plc
The management fee payable to EPIC Private Equity LLP was, until
31August 2010, calculated at 2% of the Group's Net Asset Value
("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 in return for a priority profit share paid from ESO
Investments 1 LP, as detailed below.
ESO Investments 1 LP
On the completion of the creation of ESO Investments 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 Investments
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 Partnership, such amount as may be agreed
between the Partners. As from the next calendar day subsequent to
the 31 August 2012, the payment of fees will resume at a rate of 2%
per annum of the Company's NAV (including its share of the Fund)
plus VAT.
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 Investments 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, subject to a minimum fee of GBP30,000 per
annum.
Performance fees
EPE Special Opportunities plc
The Investment Advisory Agreement 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 2011 (2010: GBPnil).
Carried interest in ESO Investments 1 LP
The distribution policy of ESO Investments 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 2011 GBP1,915,940 has been credited to
the carry account of the Investment Advisor in the records of ESO
Investments 1 LP.
6 Directors' fees
2011 2010
Group Company Group Company
GBP GBP GBP GBP
---------------------- -------- -------- ------- --------
G.O. Vero (Chairman) 25,000 25,000 22,917 22,917
R.B.M. Quayle 25,000 22,500 22,917 17,917
C.L. Spears 25,000 25,000 21,878 21,878
N.V. Wilson 25,000 22,500 22,917 17,917
---------------------- -------- -------- ------- --------
100,000 95,000 90,629 80,629
---------------------- -------- -------- ------- --------
7 Taxation
The Company is Isle of Man tax resident. The Company is subject
to zero per cent. income tax (2010: zero per cent.).
EPIC Reconstruction Property Company Limited is resident in
England and Wales and subject to corporation tax at the standard UK
corporation tax rate of 20% (2010: 20%).
The Limited Liability Partnerships and Limited Partnerships are
transparent for tax purposes and tax is paid by the members.
8 Dividends paid and proposed
No dividends were paid or proposed for the year ended 31 January
2011 (2010: GBPnil).
9 Non-current assets
2011 2010
-------------------------- ------------------------ ------------------------
Group Company Group Company
GBP GBP GBP GBP
-------------------------- ----------- ----------- ----------- -----------
Investment property 470,718 - 485,408 -
Financial assets
Secured loans 1,395,622 - 14,584,334 -
Unquoted equity
investments 1,099,365 - 212,118 -
Investment in
subsidiaries - 1,127,234 - 246,951
Investments in equity
accounted
investee/associate 27,659,601 27,659,601 - -
Loans to associate
and related companies 1,473,678 1,473,678 - -
Loans to subsidiaries - 1,482,866 - 17,262,652
32,098,984 31,743,379 15,281,860 17,509,603
-------------------------- ----------- ----------- ----------- -----------
Investment property is stated at the Directors' considered
current valuation.
The secured loans are secured by way of floating charge. The
terms of secured loans, credit risk and impairment provisions are
disclosed in Note 21.
Unquoted equity investments comprise an unrealised fair value
gain of GBP1,099,365 on Process Components Limited (2010: GBPnil).
For the year ended 31 January 2010 the unquoted equity investments
comprised GBP212,118 deferred shares in Past Times Trading
Limited.
The Investment Advisor has applied appropriate valuation methods
with reference to BVCA guidelines and the valuation principles of
IAS 39 Financial Instruments: Recognition and Measurement.
Underlying investments in the equity accounted investee are valued
using the same principles.
In accordance with IFRS 7 Financial Instruments: Disclosures,
unquoted equity investments are classified as Level 3 investments
(see Note 3g (iii)). The following shows a reconciliation from the
beginning balances to the ending balances for fair value
measurements in Level 3 of the fair value hierarchy. Underlying
equity investments held by ESO Investments 1 LP are also classified
as Level 3 investments.
2011 2010
-----------------------
Group Company Group Company
GBP GBP GBP GBP
----------------------- ---------- -------- ---------- --------
Unquoted equity
investments
Opening balance 212,118 - 750,000 -
Additions during
the year - - 212,118 -
Transferred during
the year (212,118) - - -
Movement in fair
value through profit
or loss 1,099,365 - (750,000) -
----------------------- ---------- -------- ---------- --------
1,099,365 - 212,118 -
----------------------- ---------- -------- ---------- --------
Investment in equity accounted investee/associate
Investments in equity accounted investees comprise the
investment in ESO Investments 1 LP which is stated at cost plus the
share of profit and loss to date. The equity accounted investee has
accounted for its equity investments at fair value. During the
year, the Company did not receive any distributions from its equity
accounted associate.
Summary financial information for equity accounted investee as
at 31 January 2011 is as follows:
2011
GBP
----------------------- ------------
Total assets 46,886,333
Total liabilities (1,813,255)
----------------------- ------------
45,073,078
----------------------- ------------
Revenue 2,577,286
----------------------- ------------
Profit for the period 9,913,028
----------------------- ------------
Acquisition of interest in equity accounted investee
The Company, together with DES Holdings IV(A) LLC, acquired on
31 August 2010 the private equity portfolio of The Equity
Partnership Investment Company plc ("EPIC plc") for a consideration
of GBP22 million. The assets acquired were transferred to a new
limited partnership, ESO Investments 1 LP ("the LP"). The following
summarises the consideration for the acquisition:
GBP
----------------------------------- -----------
Cash 10,000,000
Convertible loan note instruments
to EPIC plc 10,000,000
Consideration shares to EPIC plc 2,000,000
Total 22,000,000
----------------------------------- -----------
The cash payment of GBP10 million was financed by DES Holdings
IV(A) LLC for participation in the LP and the balance by EPE
Special Opportunities plc.
The Company contributed a total of GBP25,160,000 to the LP
comprising the convertible loan note instruments and consideration
shares issued to EPIC plc noted above together with the transfer of
GBP13.2 million of investments.
Key terms of LP Agreement
Profits or losses are credited or debited to each Member's
account to reflect the distributions payable to each Member were
the LP to be liquidated at its statement of financial position
value.
Prior to the First Hurdle Point (being the point at which each
member has received repayment of the loans advanced and a Hurdle
amount being 8% per annum on the loan balances) distributions shall
be made as:
-- 37% to DES Holdings IV(A) LLC
-- 63% to EPE Special Opportunities plc
At the First Hurdle Point for an investor an amount equal to 25%
of the Hurdle shall be credited from that investor to EPE Carry LP.
After the First Hurdle Point distributions shall be as stated above
less 20% which shall be credited to EPE Carry LP until the Second
Hurdle Point.
At the Second Hurdle Point, (being the point at which DES
Holdings IV(A) LLC has received 1.5 times its loans advanced)
distributions shall be made as;
-- 25% to DES Holdings IV(A) LLC
-- 75% to EPE Special Opportunities plc
Subject to a 20% allocation to EPE Carry LP in the event that
the First Hurdle Point has been reached.
At the Third Hurdle Point, (being the point at which DES
Holdings IV(A) LLC has received 2 times its loans advanced)
distributions shall be made as;
-- 18% to DES Holdings IV(A) LLC
-- 82% to EPE Special Opportunities plc
Subject to a 20% allocation to EPE Carry LP in the event that
the Second Hurdle Point has been reached.
10 Financial assets and liabilities
2011 2010
---------------------- ---------------------------- ------------------------
Group Company Group Company
GBP GBP GBP GBP
---------------------- ------------- ------------- ----------- -----------
Assets
Financial assets at
fair value through
profit or loss -
designated on
initial recognition
Equity investments 1,099,365 - 212,118 -
Investments in
subsidiaries at fair
value - 1,127,234 - 246,951
Investments in
equity accounted
investee/associate 27,659,601 27,659,601 - -
Financial assets
at amortised cost
Loans and receivables
and cash balances 6,439,869 6,413,374 19,353,068 19,324,653
Total financial
assets 35,198,835 35,200,209 19,565,186 19,571,604
---------------------- ------------- ------------- ----------- -----------
Liabilities
Financial liabilities
measured at
amortised cost
Other financial
liabilities (1,388,775) (912,300) (705,402) (207,821)
Convertible loan
note instruments (9,880,429) (9,880,429) - -
Financial liabilities
at fair value
through profit or
loss - designated on
initial recognition
Investments in
subsidiaries at fair
value - (7,131) - (18,591)
Total financial
liabilities (11,269,204) (10,799,860) (705,402) (226,412)
---------------------- ------------- ------------- ----------- -----------
Loans and receivables presented above represent secured loans,
cash balances and accrued interest and other receivables as
detailed in the Statement of Assets and Liabilities.
Other financial liabilities measured at amortised cost presented
above represent accrued expenses, sundry creditors and bank loan,
as detailed in the Statement of Assets and Liabilities.
11 Loans to subsidiaries
2011 2010
Company Company
GBP GBP
-------------------------------------- ---------- -----------
ESO Investments 2 LLP 1,372,766 -
EPIC Reconstruction Property Company
II Limited 110,100 3,531
EPIC Structured Finance Limited - 14,672,854
ESO Investments LLP - 2,586,267
1,482,866 17,262,652
-------------------------------------- ---------- -----------
The loans to the subsidiaries are unsecured, interest free and
not subject to any fixed repayment term.
12 Cash and cash equivalents
2011 2010
------------------ ---------------------- ----------------------
Group Company Group Company
GBP GBP GBP GBP
------------------ ---------- ---------- ---------- ----------
Current and call
accounts 3,502,811 3,445,270 3,542,388 2,051,903
Term deposit - - 5,407 -
------------------ ---------- ---------- ---------- ----------
3,502,811 3,445,270 3,547,795 2,051,903
------------------ ---------- ---------- ---------- ----------
The current and call accounts and money market fund have been
classified as cash and cash equivalents in the Company and
Consolidated Statement of Cash Flows.
13 Loans to associate and related companies
2011 2010 2011 2010
Group Group Company Company
GBP GBP GBP GBP
------------------ ---------- ------ ---------- --------
ESO Investments
1 LP 915,137 - 915,137 -
EPIC Structured
Finance Limited 558,541 - 558,541 -
1,473,678 - 1,473,678 -
------------------ ---------- ------ ---------- --------
Loans to associate derive from investments passed to ESO
Investments 1 LP but whose economic benefit remains with the
Company until such time as ESO Investments 1 LP repays the loan.
The loans bear interest at a rate reflecting the underlying rate on
the assets between zero and 20%.
14 Current Liabilities
2011 2010
Group Company Group Company
GBP GBP GBP GBP
-------------------------------------- -------- -------- -------- --------
Accrued Crest fee 4,168 4,168 4,168 4,168
Accrued administration fee 18,617 18,617 8,688 8,688
Accrued audit fee 25,320 22,500 29,338 18,145
Accrued professional fee 133,017 130,080 130,804 130,804
Accrued Directors' fees 9,167 9,167 9,063 8,083
Accrued investment advisor fees - - 37,933 37,933
Acquisition fees payable* 419,974 419,974 - -
Convertible loan note instrument
interest 307,794 307,794 - -
Total 918,057 912,300 219,994 207,821
-------------------------------------- -------- -------- -------- --------
* Fees outstanding from the acquisition of the private equity
portfolio of EPIC plc in August 2010
15 Non-current liabilities
2011 2010
Group Company Group Company
GBP GBP GBP GBP
-------------------------- ----------- ---------- -------- --------
Investment in subsidiary - 7,131 - 18,591
Convertible loan
note instruments 9,880,429 9,880,429 - -
Mortgage loan 470,718 - 485,408 -
-------------------------- ----------- ---------- -------- --------
10,351,147 9,887,560 485,408 18,591
-------------------------- ----------- ---------- -------- --------
The mortgage bank loan bears interest at LIBOR plus 4.5% margin
per annum calculated on a daily basis subject to a maximum of 12.9%
per annum. The loan is secured on investment property valued in the
financial statements at GBP470,718 (2010: GBP485,408). The loan
expiry date is May 2029.
Convertible loan note instruments were issued on 31 August 2010
to The Equity Partnership Investment Company plc. The notes carry
interest at 7.5% per annum and are convertible at the option of the
holder at a price of 170 pence per ordinary share. The convertible
shares fall under the definition of compound financial instruments
within IAS 32 Financial Instruments: Presentation. The Directors
are required to assess the element of liability contained with the
compound instrument. The Directors consider that the instrument has
no equity element.
Issue costs of GBP129,696 have been offset against the value of
the convertible loan note instruments and is being amortised over
the life of the instrument at an effective interest rate of 0.24%
per annum. A total of GBP10,125 has been expensed in the year ended
31 January 2011.
The convertible loan notes are repayable on 31 December 2015
unless the shareholders of the Company pass a resolution on or
before 30 September 2015 for the continuation of the Company beyond
31 December 2016, in which case the final repayment date shall be
31 December 2016, but each Noteholder has the right to require the
redemption of some or all of his notes on 31 December 2015 by
providing the Company written notice up to the close of business on
30 November 2015.
16 Share capital
2011 2010
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 30,891,577 1,544,583 26,541,501 1,327,075
Ordinary shares
of 5p each held
in treasury (88,750) - - -
--------------------- ----------- ---------- ----------- ----------
30,802,827 1,544,583 26,541,501 1,327,075
--------------------- ----------- ---------- ----------- ----------
On 8 June 2009, a resolution was passed to increase the
authorised share capital of the company from GBP500,000 to
GBP1,650,000 by the creation of 115,000,000 new ordinary shares of
1 pence each ranking pari passu in all respects with the existing
ordinary shares.
During the year ended 31 January 2010, the Company issued
100,000,000 ordinary shares of 1 pence each giving a total number
of shares in issue of 132,707,509.
On 15 June 2009, each five existing, issued and unissued, shares
of 1 pence each in the capital of the Company were consolidated
into one ordinary share of 5 pence each with the same rights
attached to them in the Articles of Association of the Company. The
authorised share capital of the Company became GBP1,605,000
comprising 33,000,000 ordinary shares of 5 pence each.
During the year the Company issued a further 3,580,379 shares to
The Equity Partnership Investment Company plc as partial
consideration for the investments in EPIC Investments LLP and EPIC
Investments 2 LLP and 769,781 shares were issued to EPIC Private
Equity LLP in consideration of transaction fees. The shares were
all issued at a price of 55.86 pence per share.
During the year the Company purchased 88,750 treasury shares at
a weighted average price of 36.95 pence per share.
17 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 (55.86 pence) and the par value (5 pence).
18 Basic and diluted earnings/(loss) per share (pence)
Basic and diluted earnings per share is calculated by dividing
the profit for the Group and Company for year attributable to the
ordinary shareholders of GBP3,055,059 (2010: GBP310,753 loss)
divided by the weighted average number of shares outstanding during
the year of 28,348,894 after excluding treasury shares (2010:
19,582,597 shares).
19 Net asset value per share (pence)
The Group and Company net asset value per share is based on the
net assets of the Group and Company at the year end of
GBP24,400,349 (2010: GBP19,345,192) divided by the shares in issue
at the end of the year of 30,802,827 after excluding treasury
shares (2010: 26,541,501).
20 Net cash used in operating activities
Reconciliation of net investment income/expense to net cash used
in operating activities:
2011 2010
Group Company Group Company
GBP GBP GBP GBP
------------------------ ---------- ---------- ------------ ------------
Net investment
income/(expense) 375,680 (687,974) 482,353 181,494
Movement in trade
and other receivables (697,556) (1,457) (1,026,888) (1,039,904)
Movement in loans
to associate and
related companies (34,243) (34,243) - -
Movement in trade
and other payables (29,706) (23,289) (10,406) 138,144
------------------------ ---------- ---------- ------------ ------------
Net cash used in
operating activities (385,825) (746,963) (554,941) (720,266)
------------------------ ---------- ---------- ------------ ------------
21 Financial instruments
The Group's financial instruments comprise:
-- Investments in unlisted companies, comprising equity and
loans that are held in accordance with the Group's investment
objectives;
-- Cash and cash equivalents, bank loan and convertible loan
note instruments; and
-- Accrued interest and other receivables, accrued expenses,
sundry creditors and provisions for calls under guarantee.
Financial risk management objectives and policies
The main risks arising from the Group's financial instruments
are liquidity risk, credit risk and interest rate risk. None of
those risks are hedged. These risks arise through directly held
investments and activities of the Group and through the indirect
exposures created by the underlying investments in the associate.
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
which are readily realisable and a term deposit account.
Residual contractual maturities of financial liabilities:
Less 3 months No
than 1 1 - 3 to 1 1 - Over stated
31 January Month Months year 5 years 5 years maturity
2011 GBP GBP GBP GBP GBP GBP
------------- -------- -------- --------- ---------- --------- ---------
Financial
liabilities
Trade and
other
payables 918,057 - - - - -
Convertible
loan note
instruments - - - 9,880,429 - -
Bank loan - - - - 470,718 -
-------- -------- --------- ---------- --------- ---------
Total 918,057 - - 9,880,429 470,718 -
------------- -------- -------- --------- ---------- --------- ---------
Less 3 months No
than 1 1 - 3 to 1 1 - Over stated
31 January Month Months year 5 years 5 years maturity
2010 GBP GBP GBP GBP GBP GBP
------------- -------- -------- --------- ---------- --------- ---------
Financial
liabilities
Trade and
other
payables 219,994 - - - - -
Bank loan - - - - 485,408 -
-------- -------- --------- ---------- --------- ---------
Total 219,994 - - - 485,408 -
------------- -------- -------- --------- ---------- --------- ---------
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 had 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 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 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:
2011 2010
GBP GBP
------------------------------------ ---------- -----------
Secured loans 1,395,622 14,584,334
Cash and cash equivalents 3,502,811 3,542,388
Committed cash balances - 5,407
Trade and other receivables 67,758 1,220,939
Loans to equity accounted investee
and related companies 1,473,678 -
Total 6,439,869 19,353,068
------------------------------------ ---------- -----------
Cash balances are placed with Royal Bank of Scotland
International in Jersey 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, which are stated at fair value - with gains and losses
recognised in the Statement of Comprehensive Income.
Market price risk sensitivity
The Group's interest in unquoted equity investments comprises 4%
(2010: 1%) of net assets. A 5% increase in the value of these
investments as at 31 January 2011 would have increased net assets
by GBP54,968 (2010: GBP10,606); an equal change in the opposite
direction would have decreased net assets by an equal but opposite
amount.
Interest rate risk
The Group is exposed to significant interest rate risk, through
the secured loan portfolio and cash balances. The return on the
bank balances is linked to short-term deposit rates and is
therefore linked closely to bank base rate changes.
The secured loans bear interest at fixed rates of between 15%
and 20% and are repayable as follows:
Interest
31 January 2011 Principal Rate Maturity
GBP
------------------------------- ---------- --------- ------------
Process Components Limited 1,395,622 9% 31 May 2013
------------------------------- ---------- --------- ------------
Interest
31 January 2010 Principal Rate Maturity
GBP
------------------------------- ---------- --------- ------------
30 April
Past Times Trading Limited 7,750,000 15% 2011
31 December
Past Times Trading Limited 1,168,870 15% 2012
31 January
Morada Home Limited 1,058,000 15% 2011
Whittard of Chelsea (Hammsard 22 December
3146 Limited) 2,734,000 20% 2010
30 April
Autocue Group Limited 450,000 15% 2013
30 June
Process Components Limited 1,423,464 15% 2010
------------------------------- ---------- --------- ------------
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:
3
Less months Non-
31 January than 1 - 3 to 1 1 - Over interest
2011 1 month months year 5 years 5 years bearing Total
Assets GBP GBP GBP GBP GBP GBP GBP
------------- ---------- ------- ------- ------------ ---------- ---------- -------------
Designated
at fair
value
through
profit or
loss
Equities - - - - - 1,099,365 1,099,365
Loans and
receivables
Secured
loans - 1,395,622 - - 1,395,622
Loans to
equity
accounted
investee 1,473,678 1,473,678
Trade and
other
receivables 5,013 - - - - 62,745 67,758
Cash and
cash
equivalents 3,502,811 - - - - - 3,502,811
Total
financial
assets 3,507,824 - - 2,869,300 - 1,162,110 7,539,234
------------- ---------- ------- ------- ------------ ---------- ---------- -------------
Liabilities
Financial
liabilities
measured at
amortised
cost
Trade and
other
payables - - - - - (918,057) (918,057)
Convertible
loan note
instruments - - - (9,880,429) - - (9,880,429)
Bank loan - - - - (470,718) - (470,718)
------------- ---------- ------- ------- ------------ ---------- ---------- -------------
Total
financial
liabilities - - - (9,880,429) (470,718) (918,057) (11,269,204)
------------- ---------- ------- ------- ------------ ---------- ---------- -------------
Total
interest
rate
sensitivity
gap 3,507,824 - - (7,011,129) (470,718)
------------- ---------- ------- ------- ------------ ---------- ---------- -------------
Less 3 months Non-
31 January than 1 - 3 to 1 1 - Over interest
2010 1 month months year 5 years 5 years bearing Total
Assets GBP GBP GBP GBP GBP GBP GBP
------------- ---------- ------- ---------- ----------- ---------- ---------- -----------
Designated
at fair
value
through
profit or
loss
Equities - - - - - 212,118 212,118
Loans and
receivables
Secured
loans 4,157,464 10,426,870 - - 14,584,334
Trade and
other
receivables - - - - - 1,220,939 1,220,939
Cash and
cash
equivalents 3,542,388 - - - - - 3,542,388
Committed
cash 5,407 - - - - - 5,407
------------- ---------- ------- ---------- ----------- ---------- ---------- -----------
Total
financial
assets 3,547,795 - 4,157,464 10,426,870 - 1,433,057 19,565,186
------------- ---------- ------- ---------- ----------- ---------- ---------- -----------
Liabilities
Financial
liabilities
measured at
amortised
cost
Trade and
other
payables - - - - - (219,994) (219,994)
Bank loan - - - - (485,408) - (485,408)
------------- ---------- ------- ---------- ----------- ---------- ---------- -----------
Total
financial
liabilities - - - - (485,408) (219,994) (705,402)
------------- ---------- ------- ---------- ----------- ---------- ---------- -----------
Total
interest
rate
sensitivity
gap 3,547,795 - 4,157,464 10,426,870 (485,408)
------------- ---------- ------- ---------- ----------- ---------- ---------- -----------
Interest rate sensitivity
The Group is exposed to market interest rate risk via its bank
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.
Fair values
Financial instruments are considered to be stated at fair value
except for secured loans and the bank loan, which carry a fixed
interest rate and are stated at amortised cost.
22 Directors' interests
Two of the Directors had an interest in the shares of the
Company as at 31 January 2011 (2010: two). Geoffrey Vero held
40,000 ordinary shares (2010: 40,000) and Nicholas Wilson held
20,000 ordinary shares (2010: 20,000).
23 Related parties
Mr 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. Advisory fees of GBP400,275 in respect of the
acquisition of the private equity portfolio of EPIC plc and
subsequent readmission of the Company in August 2010 were payable
to Numis Securities Limited. Broker fees of GBP30,000 (2010:
GBP30,000) were payable to Numis Securities Limited paid in advance
half-yearly of which GBP3,647 (2010: GBP9,280) was paid as at 31
January 2011. Additional fees of nil (2010: GBP25,000) were paid to
Numis Securities Limited in respect of corporate finance work
relating to the Open Offer and Placing.
Giles Brand, a partner in the Investment Advisor owns 10.3%
(2010: 9.1%) of the ordinary share capital in the Company.
The Principals of the Investment Advisor co-invest in certain
portfolio companies invested by Group Companies.
24 Subsidiary companies
On 21 August 2003, the Company incorporated EPIC Structured
Finance Limited in the Isle of Man, with paid up share capital of
GBP2. During the year the Company transferred its holding to ESO
Investments 1 LP.
On 30 December 2004, the Company incorporated EPIC
Reconstruction Property Company II Limited in England and Wales,
with paid up share capital of GBP1.
On 7 November 2008, a limited liability partnership was formed,
namely ESO Investments LLP. During the year the Company transferred
its interest in the partnership to ESO Investments 1 LP.
25 Financial commitments and guarantees
Under the terms of the Limited Partnership agreement the Company
is committed to provide a maximum of GBP2.0 million additional
investment to ESO Investments 1 LP.
The Company provides certain guarantees to Lloyds Banking Group
Corporate Markets ("Lloyds") on the facilities that Lloyds provide
to Past Times Trading Limited. Such obligations are limited to a
maximum of GBP3,000,000.
26 Subsequent events
There have been no significant events since 31 January 2011.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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