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EPE Special Opps Ltd - Trading Update

Announcement provided by

EPE Special Opportunities Ltd · EO.P

06/02/2023 07:00

EPE Special Opps Ltd - Trading Update
RNS Number : 9975O
EPE Special Opportunities Limited
06 February 2023

EPE Special Opportunities Limited

("ESO" or the "Company")


Trading Statement


The Board of EPE Special Opportunities is pleased to provide an update on the Company's performance for the year ended 31 January 2023.




·    The Company's performance in the year ended 31 January 2023 has been affected by adverse macro-economic conditions and a recessionary environment. The Board and Investment Advisor expect these headwinds to continue through the immediate period but look forward to the normalisation of trading conditions over the medium term. Notwithstanding these headwinds, the Company was pleased to announce the completion of a new investment in Denzel's Limited ("Denzel's") in October 2022. Looking ahead, the Board and Investment Advisor will continue to adopt a careful approach, monitoring economic conditions, maintaining a prudent level of liquidity at the Company and positioning the portfolio to navigate the complicated operating environment. As a result of the uncertainty on market outlook, the Board expects a challenging environment to complete further acquisitions or disposals within the portfolio in the near term.


·    The unaudited estimate of the Net Asset Value ("NAV") per share of the Company as at 31 January 2023 was 334 pence, representing a decrease of 27 per cent. on the NAV per share of 456 pence as at 31 January 2022. The unaudited estimate has been prepared using the Company's historic valuation methodology and accounting principles.


·    The share price of the Company as at 31 January 2023 was 170 pence, representing a decrease of 45 per cent. on the share price of 309 pence as at 31 January 2022.


·    In January 2023, Luceco released a trading update for the year ended 31 December 2022, announcing trading in line with market expectations. The group announced sales of £206 million, with trading impacted by continuing customer destocking. The business expects to generate operating profit of £20 - 22 million, at the upper end of prior guidance. The business achieved record cash generation supporting further deleveraging, with net debt of 0.8x LTM EBITDA as at 31 December 2022.


·    The Rayware Group's ("Rayware") trading has been impacted by a confluence of challenges, including customer destocking, decreased consumer confidence and supply chain disruption. The business expects performance to strengthen over the coming period, benefitting from abating input cost, supply chain and customer destocking pressures. The business has continued to develop its presence in international markets, and has appointed Alec Taylor, former director of Bradshaw International, as a non-executive director and made a number of additions to the US sales team to support the strategic focus on the US market.


·    Whittard of Chelsea ("Whittard") has performed robustly, with the business' retail channel trading strongly, benefitting from strengthening footfall and returning tourist volumes. Whittard has made encouraging progress in its international channels, with the business' new South Korean franchise partner progressing its store rollout, and with new wholesale customers secured in the US and Europe. The business completed the relocation of its head office to Milton Park in Oxfordshire in April 2022.


·    David Phillips made good progress, despite the wider inflationary environment, generating strong cash generation in the period. The business is focussed on achieving further growth in its existing channels and accessing greater profitability through efficiencies and scale.


·    Pharmacy2U has continued to experience growth in its core NHS online prescription channel and has been focussed on building scale in its primary Bardon facility to increase operational efficiency.


·    EPIC Acquisition Corp ("EAC") has progressed to advanced discussions with a number of European consumer brands regarding a potential business combination. EAC continues to actively source and review a pipeline of attractive targets.


·    In October 2022, the Company announced a £2.0 million investment in Denzel's. Denzel's is a fast-growing, healthy and sustainable premium dog snacks brand. Denzel's operates an omni-channel distribution strategy, underpinned by listings in some of the UK's leading retailers and hospitality locations as well as e-commerce channels. The Investment Advisor intends to work closely with Denzel's to help deliver its growth strategy, which is focused on the launch of new products, notably high value and functional dog treats, as well as growth of both offline and online distribution channels.


·    The Company's investments in Atlantic Credit Opportunities Fund and Prelude Structured Alternatives Master Fund are in the process of realisation, with the distribution of proceeds to the Company to be completed in the coming period.


·    The Company had cash balances of £24.5 million as at 31 January 2023. In July 2022, the Company agreed the extension of the maturity of £4.0 million of unsecured loan notes to July 2023, with an option for the Company to further extend the maturity to July 2024. The Company has £20.7 million zero dividend preference shares ("ZDP") maturing in December 2026 and no other third-party debt outstanding.


·    In September and October 2022, the Company completed buybacks in the market totalling 1.9 million ordinary shares (or 5.4 per cent. of the Company's issued ordinary share capital) at a weighted average share price of 139 pence.


·    As at 31 January 2023, the Company's unquoted portfolio was valued at a weighted average EBITDA to enterprise value multiple of 6.7x (excluding assets investing for growth) and the portfolio had a low level of third party leverage with net debt at 1.3x EBITDA in aggregate.


Mr Clive Spears, Chairman, commented: "The Company has faced significant macro-economic headwinds in the period, but the Board and Investment Advisor have maintained a careful approach, positioning the portfolio and the Company accordingly. The Company was pleased to announce the completion of the new investment in Denzel's and continues to review a pipeline of attractive investments. The Board would like to note its appreciation of the Investment Advisor and the portfolio management teams for their efforts through a complicated period. The Board will monitor the progress of the portfolio over the coming months and looks forward to updating shareholders at the half year."


The person responsible for releasing this information on behalf of the Company is Amanda Robinson of Langham Hall Fund Management (Jersey) Limited.




EPIC Investment Partners LLP

+44 (0) 207 269 8865

Alex Leslie

Langham Hall Fund Management (Jersey) Limited

+44 (0) 15 3488 5200

Amanda Robinson

Cardew Group Limited

+44 (0) 207 930 0777

Richard Spiegelberg

Numis Securities Limited

+44 (0) 207 260 1000

Nominated Advisor:

Stuart Skinner

Corporate Broker:

Charles Farquhar


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