22 March 2022, 07:00

Source - LSE Regulatory

RNS Number : 5251F

EPE Special Opportunities Limited

22 March 2022

EPE Special Opportunities Limited

("ESO" or the "Company")

Annual Reports and Accounts for the year ended 31 January 2022

The Board of EPE Special Opportunities is pleased to announce the Company's Annual Report and Accounts for the year ended 31 January 2022.

Summary

· The Company's performance in the year ended 31 January 2022 was led by robust trading within the portfolio, despite the continuing impact of the COVID-19 pandemic. The Company completed two new investments in the period, EPIC Acquisition Corp in December 2021 and The Rayware Group in July 2021. The Board and Investment Advisor continue to carefully monitor the UK economic outlook. The Board and Investment Advisor note the regrettable development of the Ukrainian conflict and would like to extend their thoughts to all those affected. The Board can confirm that the Company and its portfolio do not have any material exposures to Russia. As a result of the conflict, a heightened period of geopolitical risk and economic disruption is expected. The Board and Investment Advisor will therefore seek to adopt a conservative approach through the coming period.

· The Net Asset Value ("NAV") per share of the Company as at 31 January 2022 was 455.66 pence per share, representing an increase of 4.1 per cent. on the NAV per share of 437.63 pence as at 31 January 2021.

· The share price of the Company as at 31 January 2022 was 309.00 pence, representing an increase of 14.0 per cent. on the share price of 271.00 pence as at 31 January 2021.

· Luceco plc ("Luceco") released its trading update for the year ended 31 December 2021 in January 2022, announcing strong revenue growth 36.0 per cent. ahead of the 2019 pre-COVID-19 comparator, operating profit of £39.0 million and net debt to EBITDA of 0.7x. The business outperformed the market due to new business wins, superior channel access and superior product availability, despite global supply chain disruption. In October 2021, Luceco announced the acquisition of DW Windsor Group for £16.9 million. Luceco delivered share price growth of 15.4 per cent. for the year ended 31 January 2022. In June 2021, ESO sold 4.5 million shares in Luceco, returning £15.0 million in cash, whilst retaining a 22.1 per cent. holding in the business.

· The Rayware Group ("Rayware") performed well in the period since acquisition in July 2021, achieving sales ahead of forecast and the prior year, and maintaining strong profitability despite headwinds from increased input and freight costs. The business made a number of additions to the management team, appointing a new CFO, as well as a US Sales VP to support the strategic focus on the US market. Looking ahead, Rayware is well positioned for growth via international expansion and the development of its digital offering.

· Whittard of Chelsea ("Whittard") continued to face a difficult trading environment as a result of ongoing COVID-19 disruption throughout 2021. Whittard's retail stores remained closed until April 2021 in line with government restrictions, while fourth quarter trading was impacted by the resurgent Omicron variant. The business benefitted from further government support extended in the period as well as the agreement of bilateral deals with the majority of the business' landlords. Whittard's e-commerce platform continued to trade at an elevated level in the period, partially mitigating the disruption to the retail channel. Whittard has made encouraging progress in its international channels, securing a new franchise partner in South Korea, as well as new marketplace partners in the US and the EU.

· David Phillips achieved sales growth in the period, supported by the delivery of strong project pipelines. However, profitability was adversely affected by exceptional global supply chain pressures and raw material price increases. Whilst the narrowing profitability represents a set-back, the sales growth achieved in the year is validation of the market opportunity for the business and provides the scale to achieve meaningful profitability once margin pressure subsides.

· Pharmacy2U continued to build on the increased scale achieved as a result of the expansion of online pharmacy in the COVID-19 period, delivering further sales growth and improving profitability. In addition, the business has supplemented its core divisions with a new Services division, operating vaccination centres and associated services.

· In December 2021, the Company announced a €10 million investment in EPIC Acquisition Corp ("EAC"), a special purpose acquisition company co-sponsored by the Investment Advisor and TTB Partners, a Hong Kong based investment and advisory firm. EAC was admitted to Euronext Amsterdam on 6 December 2021, raising €150 million. EAC intends to leverage the experience of the Investment Advisor and TTB Partners to identify, acquire and develop a consumer company operating in the EEA or UK which has the potential for significant growth in Asian markets. EAC has appointed a highly experienced group of non-executive directors, who are leaders in global consumer and investment businesses and will be able to provide further access to and guidance on potential targets. EAC is targeting companies with an enterprise value of between €500 million and €1 billion.

· The Company had liquidity of £27.6 million as at 31 January 2022. In December 2021, the Company raised £20.0 million gross proceeds from a placement of zero dividend preference shares ("ZDP") to provide additional capital for the Company's medium term pipeline of potential investments. The ZDP is repayable in December 2026. The Company has £4.0 million of unsecured loan notes repayable in July 2022 and no other third-party debt outstanding.

· In December 2021, the Company completed buybacks in the market totalling 628,884 ordinary shares (or 1.8 per cent. of the Company's issued ordinary share capital).

· As at 31 January 2022, the Company's unquoted portfolio was valued at a weighted average EBITDA to enterprise value multiple of 5.2x (excluding Pharmacy2U, which is valued on a sales multiple) and the portfolio had a low level of third party leverage with net debt at 0.8x EBITDA in aggregate.

Mr Clive Spears, Chairman, commented: "The performance of the Company in the year ended 31 January 2022 was robust, despite the challenging macroeconomic environment. The Company has made pleasing progress in the development of the existing portfolio, the successful completion of two new investments, and the raising of additional capital to fund the future investment pipeline. The Board would like to extend its thanks to the Investment Advisor for its efforts in another challenging year. The Board will monitor the development of the portfolio over the coming period and looks forward to updating shareholders at the half year point."

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

Enquiries

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

Chairman's Statement

The Company's performance in the year ended 31 January 2022 was led by robust trading within the portfolio, despite the continuing impact of the COVID-19 pandemic. The Company completed two new investments in the period, EPIC Acquisition Corp in December 2021 and The Rayware Group in July 2021. The Board and Investment Advisor continue to carefully monitor the UK economic outlook. The Board and Investment Advisor note the regrettable development of the Ukrainian conflict and would like to extend their thoughts to all those affected. The Board can confirm that the Company and its portfolio do not have any material exposures to Russia. As a result of the conflict, a heightened period of geopolitical risk and economic disruption is expected. The Board and Investment Advisor will therefore seek to adopt a conservative approach through the coming period.

The Net Asset Value per share of the Company as at 31 January 2022 was 455.66 pence per share, representing an increase of 4.1 per cent. on the NAV per share of 437.63 pence as at 31 January 2021. The share price of the Company as at 31 January 2022 was 309.00 pence, representing an increase of 14.0 per cent. on the share price of 271.00 pence as at 31 January 2021.

Luceco plc released its trading update for the year ended 31 December 2021 in January 2022, announcing strong revenue growth 36.0 per cent. ahead of the 2019 pre-COVID-19 comparator, operating profit of £39.0 million and net debt to EBITDA of 0.7x. The business outperformed the market due to new business wins, superior channel access and superior product availability, despite global supply chain disruption. In October 2021, Luceco announced the acquisition of DW Windsor Group for £16.9 million. Luceco delivered share price growth of 15.4 per cent. for the year ended 31 January 2022. In June 2021, ESO sold 4.5 million shares in Luceco, returning £15.0 million in cash, whilst retaining a 22.1 per cent. holding in the business.

The Rayware Group performed well in the period since acquisition in July 2021, achieving sales ahead of forecast and the prior year, and maintaining strong profitability despite headwinds from increased input and freight costs. The business made a number of additions to the management team, appointing a new CFO, as well as a US Sales VP to support the strategic focus on the US market. Looking ahead, Rayware is well positioned for growth via international expansion and the development of its digital offering.

Whittard of Chelsea continued to face a difficult trading environment as a result of ongoing COVID-19 disruption throughout 2021. Whittard's retail stores remained closed until April 2021 in line with government restrictions, while fourth quarter trading was impacted by the resurgent Omicron variant. The business benefitted from further government support extended in the period as well as the agreement of bilateral deals with the majority of the business' landlords. Whittard's e-commerce platform continued to trade at an elevated level in the period, partially mitigating the disruption to the retail channel. Whittard has made encouraging progress in its international channels, securing a new franchise partner in South Korea, as well as new marketplace partners in the US and the EU.

David Phillips achieved sales growth in the period, supported by the delivery of strong project pipelines. However, profitability was adversely affected by exceptional global supply chain pressures and raw material price increases. Whilst the narrowing profitability represents a set-back, the sales growth achieved in the year is validation of the market opportunity for the business and provides the scale to achieve meaningful profitability once margin pressure subsides.

Pharmacy2U continued to build on the increased scale achieved as a result of the expansion of online pharmacy in the COVID-19 period, delivering further sales growth and improving profitability. In addition, the business has supplemented its core divisions with a new Services division, operating vaccination centres and associated services.

In December 2021, the Company announced a €10 million investment in EPIC Acquisition Corp, a special purpose acquisition company co-sponsored by the Investment Advisor and TTB Partners, a Hong Kong based investment and advisory firm. EAC was admitted to Euronext Amsterdam on 6 December 2021, raising €150 million. EAC intends to leverage the experience of the Investment Advisor and TTB Partners to identify, acquire and develop a consumer company operating in the EEA or UK which has the potential for significant growth in Asian markets. EAC has appointed a highly experienced group of non-executive directors, who are leaders in global consumer and investment businesses and will be able to provide further access to and guidance on potential targets. EAC is targeting companies with an enterprise value of between €500 million and €1 billion.

The Company had liquidity of £27.6 million as at 31 January 2022. In December 2021, the Company raised £20.0 million gross proceeds from a placement of zero dividend preference shares to provide additional capital for the Company's medium term pipeline of potential investments. The ZDP is repayable in December 2026. The Company has £4.0 million of unsecured loan notes repayable in July 2022 and no other third-party debt outstanding.

In December 2021, the Company completed buybacks in the market totalling 628,884 ordinary shares (or 1.8 per cent. of the Company's issued ordinary share capital).

I would like to extend thanks to the Investment Advisor for its efforts in another challenging year. The Board will monitor the development of the portfolio over the coming period and looks forward to updating shareholders at the half year point.

Clive Spears

Chairman

21 March 2022

Investment Advisor's Report

The Company reported a number of positive developments in the year ended 31 January 2022. The Investment Advisor was pleased to announce two new investments in the period, including the recent investment in EPIC Acquisition Corp, completed in December 2021. The Company raised £20.0 million additional capital via a ZDP placing in December 2021, allowing the Company to maintain significant cash balances whilst taking advantage of the medium term pipeline of opportunities. The Investment Advisor and the Board note the uncertain macro environment, and the expectation of headwinds in the coming period from the impact of the Ukrainian conflict, inflation and global supply chain disruption. The Investment Advisor and the Board will carefully monitor further developments and will seek to maintain a measured approach through the period.

The Company

The Company maintains strong liquidity and prudent levels of third-party leverage. The Company has cash balances of £27.6 million¹ as at 31 January 2022, which are available to support the existing portfolio, meet committed obligations and deploy into attractive investment opportunities. Net debt in the underlying portfolio stands at 0.8x EBITDA in aggregate. In June 2021, the Company partially sold down its stake in Luceco plc, returning £15.0 million cash to ESO. In December 2021, the Company raised £20.0 million from a ZDP placing, allowing the Company to maintain significant cash balances whilst continuing to invest in accordance with the Company's investing policy.

The Portfolio

The Company's unquoted portfolio is valued at a weighted average enterprise value to EBITDA multiple of 5.2x for mature assets (excluding assets investing for growth). The valuation has been derived by reference to relevant quoted comparables, after the application of an appropriate discount to adjust for the portfolio's scale and unquoted nature (i.e. an illiquidity discount). Given the use of quoted comparables and actual financial results generally, the valuation reflects the fair value of assets as at the balance sheet date. The Investment Advisor notes that the fair market value of the portfolio remains exposed to a volatile macro environment and consequent equity market valuations.

Luceco delivered share price growth of 15.4 per cent. in the year ended 31 January 2022. Luceco released its trading update for the year ended 31 December 2021 in January 2022, reporting sales of £228 million, with market share gains and strong growth across all sales channels generating an increase of 36.0 per cent vs. a 2019 pre-COVID-19 comparator. The business reported an operating profit of £39.0 million and margin of 17.0%, with input cost inflation successfully mitigated by selling price increases. The business reported a reduction in net debt to 0.7x adjusted last twelve months EBITDA, providing capacity for future growth investment. In October 2021, Luceco announced the acquisition of DW Windsor Group for £16.9 million. In June 2021, ESO sold 4.5 million shares in Luceco, returning £15.0 million in cash, whilst retaining a 22.1 per cent. holding in the business.

The Rayware Group has performed well since its acquisition by the Company in July 2021, maintaining trading momentum and profitability throughout the period. The Investment Advisor would like to welcome the new appointments to the business' management team, including the new CFO and US Sales VP. The business is focused on developing international opportunities, with a strategic focus on the US, as well as developing its digital channel strategy.

Whittard of Chelsea continued to face material disruption as a result of COVID-19. The retail estate was impacted by periods of closure and depressed footfall as a result of reduced tourist volumes and social distancing measures. Whittard's e-commerce channels maintained the increased scale attained in the prior period, partially mitigating this impact. Whittard continued to make progress in developing its international footprint, securing a new franchise partner in South Korea, with the first store in the territory opened in December 2021, and securing new marketplace partners in the US and the EU.

David Phillips has delivered substantial sales growth in the period, primarily driven by the residential projects and fitted business lines. The business has, however, had to contend with a complex operating environment, including high input costs, limited operational capacity and structural working capital cycle shifts. Management have taken a number of actions to mitigate these headwinds including pricing adjustments, supplier term negotiations and stock-sell through management. Looking ahead, the Investment Advisor remains focused on developing the Company's marketing function and the realisation of operational efficiencies to create a scalable logistics platform.

Pharmacy2U continued to deliver sales growth and improving profitability in the period. In addition, the business has developed a new Services division, operating vaccination centres and associated services.

In December 2021, the Company completed a €10 million investment in EPIC Acquisition Corp ("EAC"), a special purpose acquisition company, and EAC's sponsor, EAC Sponsor Limited (the "Sponsor"). EAC successfully raised a total of €150m at IPO and is listed on Euronext Amsterdam. The Sponsor is jointly led by the Investment Advisor and TTB Partners, a Hong Kong-based investment and advisory business which has a strong track record of helping global brands access and develop in Asian markets. EAC is seeking to acquire a European consumer company with significant potential for growth in Asian markets. The long term objective of EAC is to build a business at the forefront of consumer innovation, recognised in both its home markets and in Asia.

The Investment Advisor continues to monitor the Company's credit fund investments. European Capital Private Debt Fund has completed the deployment of the Company's committed capital in the fund and is distributing capital to the Company. Both Atlantic Credit Opportunities Fund and Prelude achieved strong performance in the period, ahead of the high yield market and hedge fund peers, delivering a 30.2 per cent. return and 18.0 per cent. return respectively in the year ended 31 December 2021.

The Investment Advisor would like to extend its gratitude to the management and employees of the portfolio for their continuing hard work and welcomes its new partnership with TTB Partners. The Investment Advisor would like to thank the Board and the Company's shareholders for their continued support.

EPIC Investment Partners LLP

Investment Advisor to the Company

21 March 2022

[1] Company liquidity is stated inclusive of cash held by associates in which the Company is the sole investor.

Biographies of the Directors

Clive Spears (Non- executive Chairman)	David Pirouet (Non - executive Director)
Clive Spears retired from the Royal Bank of Scotland International Limited in December 2003 as Deputy Director of Jersey after 32 years of service. His main activities prior to retirement included Product Development, Corporate Finance, Trust and Offshore Company Services and he was Head of Joint Venture Fund Administration with Rawlinson & Hunter. Mr Spears is an Associate of the Chartered Institute for Securities & Investment. He has accumulated a well spread portfolio of directorships centring on private equity, infrastructure and corporate debt. His current appointments include Chairman of Nordic Capital Limited and directorships of a series of ICG plc sponsored funds and funds managed by Kreos Fund Management. He is a resident of Jersey.	David Pirouet joined PricewaterhouseCoopers Channel Islands LLP in 1980, retiring in 2009 after being an Audit and Assurance Partner for over 20 years. During his 29 years at the firm Mr Pirouet specialised in the financial services sector, in particular in the alternative investment management area and also led the business's Hedge Fund and business recovery practices for over four years. Mr Pirouet currently holds a number of non-executive positions across private equity, infrastructure and corporate debt. Mr Pirouet's was previously non-executive Director and Chair of the Audit and Risk committee for GCP Infrastructure Investments (FTSE 250 listed company) until he retired in February 2021. He is a resident of Jersey.
Heather Bestwick (Non - executive Director)	Nicholas Wilson (Non - executive Director)
Heather Bestwick has been a financial services professional for over 25 years, onshore in the City of London and offshore in the Cayman Islands and Jersey. She qualified as an English solicitor, specialising in ship finance, with City firm Norton Rose, and worked in their London and Greek offices for 8 years. Ms Bestwick subsequently practised and became a partner with global offshore law firm Walkers in the Cayman Islands, and Managing Partner of the Jersey office. Ms Bestwick sits on the boards of the Deutsche Bank company which managed the dbX fund platform and Rathbone Investment Management International Limited. She is a resident of Jersey.	Nicholas Wilson has over 40 years of experience in hedge funds, derivatives and global asset management. He has run offshore branch operations for Mees Pierson Derivatives Limited, ADM Investor Services International Limited and several other London based financial services companies. He is a resident of Isle of Man.
Michael Gray (Non - executive Director)
Michael Gray was at The Royal Bank of Scotland for over 30 years, latterly as Managing Director (Corporate) of RBS International before retiring in 2015. During his 32 years at the firm Michael covered a broad spectrum of financial services including corporate and commercial banking, funds, trusts and real estate. Mr Gray currently holds a number of non-executive positions across private equity, infrastructure and fund management. Michael's appointments currently include non-executive directorships of Triton Investment Management (a Swedish private equity group), GCP Infrastructure Investments (a FTSE 250 listed company), J-Star Jersey Company Limited (a Japanese private equity group), Foresight 4 VCT plc (a listed venture capital fund), Jersey Finance Limited (a Jersey finance not-for-profit promotional company), JTC plc (a FTSE 250 listed trust and corporate services company) and TEAM plc (a listed wealth management company). He is a resident of Jersey.

Biographies of the Investment Advisor

Giles Brand	Hiren Patel
Giles Brand is a Managing Partner and the founder of EPIC. He is currently Non-executive Chairman of Whittard of Chelsea and Luceco plc. Before joining EPIC, Giles was a founding Director of EPIC Investment Partners, a fund management business which at sale had US$5bn under management. Prior to this, Giles worked in Mergers and Acquisitions at Baring Brothers in Paris and London. Giles read History at Bristol University.	Hiren Patel is a Managing Partner of EPIC. He has worked in the investment management industry for the past twenty years. Before joining EPIC, Hiren was Finance Director of EPIC Investment Partners. Hiren was employed at Groupama Asset Management where he was the Group Financial Controller.
Robert Fulford	James Henderson
Robert Fulford is a Managing Director at EPIC. He previously worked at Barclaycard Consumer Europe before joining EPIC. Whilst at Barclaycard, Robert was the Senior Manager for Strategic Insight and was responsible for identifying, analysing and responding to competitive forces. Prior to Barclaycard, Robert spent four years as a strategy consultant at Oliver Wyman Financial Services, where he worked with a range of major retail banking and institutional clients in the UK, mainland Europe, Middle East and Africa. At EPIC, Robert manages the investments in Whittard of Chelsea, Rayware and David Phillips. Robert read Engineering at Cambridge University.	James Henderson is a Managing Director at EPIC. He previously worked in the Investment Banking division of Deutsche Bank before joining EPIC. Whilst at Deutsche Bank he worked on a number of M&A transactions and IPOs in the energy, property, retail and gaming sectors, as well as providing corporate broking advice to mandated clients. At EPIC, James manages the investment in Pharmacy2U and EPIC Acquisition Corp. James read Modern History at Oxford University and Medicine at Nottingham University.
Alex Leslie	Ian Williams
Alex Leslie is a Managing Director at EPIC. He previously worked in Healthcare Investment Banking at Piper Jaffray before joining EPIC. Whilst at Piper Jaffray he worked on a number of M&A transactions and equity fundraisings within the Biotechnology, Specialty Pharmaceutical and Medical Technology sectors. At EPIC, Alex manages the investment in Luceco plc, Rayware, Prelude, Atlantic Credit Opportunities Fund and European Capital Private Debt Fund. He previously managed the Company's investments in Process Components. Alex read Human Biological and Social Sciences at the University of Oxford and obtained an MPhil in Management from the Judge Business School at the University of Cambridge.	Ian Williams is a Managing Director at EPIC. He was previously a Partner at Lyceum Capital Partners LLP, responsible for deal origination and engagement, with a primary focus on the business services and software sectors, as well as financial services, education and health sectors. Prior to Lyceum, Ian was a Director at Arbuthnot Securities, involved in IPO's, secondary fund raisings and M&A, focusing on the support services, healthcare, transport & IT sectors. Ian started his career at Hambros Bank in the M&A team. Ian read Politics and Economics at the University of Bristol.

Risk and Audit Committee Report

The Risk and Audit Committee is chaired by David Pirouet and comprises all other Directors. Mr Pirouet was appointed as Chairman of the Committee on 28 June 2019.

The Risk and Audit Committee's main duties are:

• To review and monitor the integrity of the interim and annual financial statements, interim statements, announcements and matters relating to accounting policy, laws and regulations of the Company;

• To evaluate the risks to the quality and effectiveness of the financial reporting process;

• To review the effectiveness and robustness of the internal control systems and the risk management policies and procedures of the Company;

• To review the valuation of portfolio investments;

• To review corporate governance compliance, including the Company's compliance with the QCA Corporate Governance Code;

• To review the nature and scope of the work to be performed by the Auditors, and their independence and objectivity; and

• To make recommendations to the Board as to the appointment and remuneration of the external auditors.

The Risk and Audit Committee has a calendar which sets out its work programme for the year to ensure it covers all areas within its remit appropriately. It met four times during the period under review to carry out its responsibilities and senior representatives of the Investment Advisor attended the meetings as required by the Risk and Audit Committee. In between meetings, the Risk and Audit Committee chairman maintains ongoing dialogue with the Investment Advisor and the lead audit partner via regular calls (which will be replaced by physical meeting once travel restrictions permit).

During the past year the Risk and Audit Committee carried out an ongoing review of its own effectiveness. These concluded that the Risk and Audit Committee is satisfactorily fulfilling its terms of reference and is operating effectively. In addition, the Committee undertook a review of the Company's corporate governance and compliance with the QCA Corporate Governance Code.

Significant accounting matters

The primary risk considered by the Risk and Audit Committee during the period under review in relation to the financial statements of the Company is the valuation of unquoted investments.

The Company's accounting policy for valuing investments is set out in notes 3i and 12.The Risk and Audit Committee examined and challenged the valuations prepared by the Investment Advisor, taking into account the latest available information on the Company's investments and the Investment Advisor's knowledge of the underlying portfolio companies through their ongoing monitoring. The Risk and Audit Committee satisfied itself that the valuation of investments had been carried out consistently with prior accounting periods, or that any change in valuation basis was appropriate, and was conducted in accordance with published industry guidelines.

The Auditors explained the results of their review of the procedures undertaken by the Investment Advisor in preparation of valuation recommendations for the Risk and Audit Committee. On the basis of their audit work, no material adjustments were identified by the Auditor.

External audit

The Risk and Audit Committee reviewed the audit plan and fees presented by the auditors, KPMG Audit LLC ("KPMG"), and considered their report on the financial statements. The fee for the audit of the annual report and financial statements of the Company (and associates) for the year ended 31 January 2022 is £68,095 (2021: £55,840).

The Risk and Audit Committee reviews the scope and nature of all proposed non-audit services before engagement, with a view to ensuring that none of these services have the potential to impair or appear to impair the independence of their audit role. The Risk and Audit Committee receives an annual assurance from the auditors that their independence is not compromised by the provision of such services, if applicable. During the period under review, the auditors provided non-audit services to the Company in relation to taxation, the Interim Review and Reporting Accountant work representing total fees of £75,825 (2021: £7,800).

KPMG were appointed as auditors to the Company for the audit of the year ended 31 January 2005. The Risk and Audit Committee regularly considers the need to put the audit out to tender, the auditors' fees and independence, alongside matters raised during each audit.

The audit was put out to tender by the Committee in September 2021, and at the conclusion of the process it was resolved that PricewaterhouseCoopers CI LLP be appointed as the Company's auditor for the next financial year.

The Board will review the performance and services offered by Langham Hall, as fund administrator and EPIC Administration as fund sub-administrator on an ongoing basis. EPIC Administration completed its triennial agreed upon procedures review during the previous financial year.

Risk management and internal control

The Company does not have an internal audit function. The Risk and Audit Committee believes this is appropriate as all of the Company's operational functions are delegated to third party service providers who have their own internal control and risk monitoring arrangements. A report on these arrangements is prepared by each third party service provider and submitted to the Risk and Audit Committee which it reviews on behalf of the Board to support the Directors' responsibility for overall internal control. The Company does not have a whistleblowing policy and procedure in place. The Company delegates this function to the Investment Advisor who is regulated by the FCA and has such policies in place. The Risk and Audit Committee has been informed by the Investment Advisor that these policies meet the industry standards and no whistleblowing took place during the year.

David Pirouet

Chairman of the Risk and Audit Committee

21 March 2022

Corporate Governance

The Board of EPE Special Opportunities is pleased to update shareholders of the Company's compliance with the 2018 Quoted Companies Alliance Corporate Governance Code (the "QCA Code").

The Company is committed to the highest standards of corporate governance, ethical practices and regulatory compliance. The Board believe that these standards are vital to generate long-term, sustainable value for the Company's shareholders. In particular the Board is concerned that the Company is governed in a manner to allow efﬁcient and effective decision making, with robust risk management procedures.

As an investment vehicle, the Company is reliant upon its service providers for many of its operations. The Board maintains ongoing and rigorous review of these providers. Speciﬁcally the Board reviews the governance and compliance of these entities to ensure they meet the high standards of the Company.

The Board is dedicated to upholding these high standards and will look to strengthen the Company's governance on an ongoing basis.

The Company's compliance with the QCA Code is available on the Company's website (www.epespecialopportunities.com). The Company will provide annual updates on changes to compliance with the QCA Code.

Clive Spears

Chairman

21 March 2022

Report of the Directors

Principal activity

The Company was incorporated in the Isle of Man as a company limited by shares under the Laws with registered number 108834C on 25 July 2003. On 23 July 2012, the Company re-registered under the Isle of Man Companies Act 2006, with registration number 008597V. On 11 September 2018, the Company re-registered under the Bermuda Companies Act 1981, with registration number 53954. The Company's ordinary shares are quoted on AIM, a market operated by the London Stock Exchange, and the Growth Market of the Aquis Stock Exchange (formerly the NEX Exchange).

The principal activity of the Company and its associates is to arrange income yielding financing for growth, buyout and special situations and holding the investments with a view to exiting in due course at a profit.

Incorporation

The Company was incorporated on 25 July 2003 and on 11 September 2018, registered under the Bermuda Companies Act 1981. The Company's registered office is:

Clarendon House, 2 Church Street, Hamilton HM11, Bermuda.

Place of business

During the year, the Company solely operated out of and was controlled from:

Liberation House, Castle Street, St Helier, Jersey JE1 2LH

Results of the financial year

Results for the year are set out in the Statements of Comprehensive Income and in the Statement of Changes in Equity.

Dividends

The Board does not recommend a dividend in relation to the current year (2021: nil) (see note 10 for further details).

Corporate governance principles

The Directors, place a high degree of importance on ensuring that the Company maintains high standards of Corporate Governance and have therefore adopted the Quoted Companies Alliance 2018 Corporate Governance Code (the "QCA Code").

The Board holds at least four meetings annually and has established Audit and Risk and Investment committees. The Board does not intend to establish remuneration and nomination committees given the current composition of the Board and the nature of the Company's operations. The Board reviews annually the remuneration of the Directors and agrees on the level of Directors' fees.

Composition of the Board

The Board currently comprises five non-executive directors, all of whom are independent. Clive Spears is Chairman of the Board, David Pirouet is Chairman of the Audit and Risk Committee and Heather Bestwick is Chair of the Investment Committee.

Robert Quayle stepped down from the Board at the 2021 Annual General Meeting.

Michael Gray was appointed to the Board in September 2021.

Audit and Risk Committee

The Audit and Risk Committee comprises David Pirouet (Chairman of the Committee) and all the other Directors. The Audit and Risk Committee provides a forum through which the Company's external auditors report to the Board.

The Audit and Risk Committee meets twice a year, at a minimum, and is responsible for considering the appointment and fee of the external auditors and for agreeing the scope of the audit and reviewing its findings. It is responsible for monitoring compliance with accounting and legal requirements, ensuring that an effective system of internal controls is maintained and for reviewing the annual and interim financial statements of the Company before their submission for approval by the Board. The Audit and Risk Committee has adopted and complied with the extended terms of reference implemented on the Company's readmission to AIM in August 2010, as reviewed by the Board from time to time.

The Board is satisfied that the Audit and Risk Committee contains members with sufficient recent and relevant financial experience.

Investment Committee

The Board established an Investment Committee, which comprises Heather Bestwick (Chair of the Committee) and all the other Directors. The purpose of this committee is to review the portfolio of the Company, new investment opportunities and evaluate the performance of the Investment Advisor.

The Board is satisfied that the Investment Committee contains members with sufficient recent and relevant experience.

Significant holdings

Significant shareholdings are analysed in schedule of shareholders holding over 3% of issued shared. The Directors are not aware of any other holdings greater than 3 per cent. of issued shares.

Directors

The Directors of the Company holding office during the financial year and to date are:

Mr. C.L. Spears (Chairman)

Mr. R.B.M. Quayle (resigned in June 2021)

Mr. N.V. Wilson

Ms. H. Bestwick

Mr. D.R. Pirouet

Mr. M.M Gray (appointed in September 2021)

Staff

At 31 January 2022 the Company employed no staff (2021: none).

Auditors

The current year is the seventh year in which the audit has been undertaken by the current engagement partner at KPMG Audit LLC. The extension of the engagement beyond the typical five-year limit was agreed by the KPMG Ethics and Independence partner following the deferral of the audit tender process as a result of COVID-19. The tender process has now been completed, and it was concluded that PricewaterhouseCoopers CI LLP will succeed KPMG Audit LLC as the Company's Auditors in the current financial year.

On behalf of the Board

Heather Bestwick

Director

21 March 2022

Statement of Directors' Responsibilities in respect of the Annual Report and the Financial Statements

The Directors are responsible for preparing the Annual Report and the financial statements in accordance with applicable law and regulations.

The Directors are required to prepare financial statements for each financial year. As required by the AIM Rules of the London Stock Exchange they are required to prepare the financial statement in accordance with International Financial Reporting Standards ("IFRS") and applicable legal and regulatory requirements of Bermuda law.

The Directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Company and of its profit or loss for that period. In preparing the Company's financial statements, the Directors are required to:

· make judgements and estimates that are reasonable, relevant and reliable;

· state whether they have been prepared in accordance with IFRS;

· assess the Company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern; and

· use the going concern basis of accounting unless they either intend to liquidate the Company or to cease operations, or have no realistic alternative but to do so.

The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company's transactions and disclose with reasonable accuracy at any time the financial position of the Company and enable them to ensure that its financial statements comply with the Bermuda Companies Act. They are responsible for such internal control as they determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error, and have general responsibility for taking such steps as are reasonably open to them to safeguard the assets of the Company and to prevent and detect fraud and other irregularities.

The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the Company's website. Legislation in Bermuda governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

Independent Auditor's Report to the Members of EPE Special Opportunities Limited

1 Our opinion is unmodified

We have audited the financial statements of EPE Special Opportunities Limited (the "Company"), which comprise the statement of assets and liabilities as at 31 January 2022, the statements of comprehensive income, changes in equity and cash flows for the year then ended, and notes, comprising significant accounting policies and other explanatory information.

In our opinion the financial statements:

· give a true and fair view of the state of the Company's affairs as at 31 January 2022 and of the Company's profit for the year then ended; and

· have been properly prepared in accordance with International Financial Reporting Standards.

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (UK) ("ISAs (UK)") and applicable law. Our responsibilities are described below. We have fulfilled our ethical responsibilities under, and are independent of the Company in accordance with, UK ethical requirements including the FRC Ethical Standard as applied to listed entities. We believe that the audit evidence we have obtained is a sufficient and appropriate basis for our opinion.

2 Key audit matters: our assessment of risks of material misstatement

Key audit matters are those matters that, in our professional judgement, were of most significance in the audit of the financial statements and include the most significant assessed risks of material misstatement (whether or not due to fraud) identified by us, including those which had the greatest effect on: the overall audit strategy; the allocation of resources in the audit; and directing the efforts of the engagement team. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. In arriving at our audit opinion above, the key audit matter was as follows (unchanged from 2021):

The risk

Our response

Valuation of unquoted investments:

£47.9m (2021: £28.4m).

Refer to Significant accounting matters identified by the Audit and Risk Committee, note 2d (estimates and judgements, including impact of Covid 19), note 3 (accounting policies), note 11 (investments at fair value through profit or loss) and note 12 (fair value of financial instruments).

Subjective valuation:

34.1% of the Company's underlying investment portfolio (by value) is held in investments and loans where no quoted market price is available.

Unquoted investments are measured at fair value, which is established in accordance with the valuation principles of International Financial Reporting Standard 13 ("IFRS 13") by using measurements of value such as prices of recent orderly transactions, trading comparable multiples and net assets.

The effect of these matters is that, as part of our risk assessment, we determined that the valuation of unquoted investments has a high degree of estimation uncertainty, with a potential range of reasonable outcomes greater than our materiality for the financial statements as a whole, and possibly many times that amount. The impact of COVID-19 on the economy has increased this uncertainty.

Our procedures included:

Control design:

Documenting and assessing the design and implementation of the investment valuation processes and controls;

Methodology choice:

In the context of valuation principles of IFRS 13 we challenged the appropriateness of the valuation basis selected;

Our valuations experience:

Challenging the investment advisor on key assumptions affecting investee company valuations, such as discount factors and earnings and sales multiples. We compared key underlying financial data inputs to external sources and investee company management information as applicable. We challenged the assumptions around sustainability of earnings based on the plans of the investee companies and whether these are achievable. Our work included consideration of events which occurred subsequent to the year end up until the date of this audit report;

Use of KPMG specialists

We involved KPMG specialists to examine the methodology adopted for the valuations and challenge the assumptions and key judgements in the valuations;

Assessing transparency:

Consideration of the appropriateness, in accordance with relevant accounting standards, of the disclosures in respect of unquoted investments and the effect of changing one or more inputs to reasonably possible alternative valuation assumptions.

3 Our application of materiality and an overview of the scope of our audit

Materiality for the financial statements as a whole was set at £1.45m (2021: £1.2m), determined with reference to a benchmark of total assets of £168.2m (2021: £145.3m), of which it represents approximately 0.86% (2021: 0.83%).

In line with our audit methodology, our procedures on individual account balances and disclosures were performed to a lower threshold, performance materiality, so as to reduce to an acceptable level the risk that individually immaterial misstatements in individual account balances add up to a material amount across the financial statements as a whole. Performance materiality for the Company was set at 75% (2021: 75%) of materiality for the financial statements as a whole, which equates to £1.09m (2021: £0.9m). We applied this percentage in our determination of performance materiality because we did not identify any factors indicating an elevated level of risk.

We reported to the Audit Committee any corrected or uncorrected identified misstatements exceeding £0.07m (2021: £0.06m), in addition to other identified misstatements that warranted reporting on qualitative grounds.

Our audit of the Company was undertaken to the materiality level specified above, which has informed our identification of significant risks of material misstatement and the associated audit procedures performed in those areas as detailed above.

4 Going concern

The directors have prepared the financial statements on the going concern basis as they do not intend to liquidate the Company or to cease its operations, and as they have concluded that the Company's financial position means that this is realistic. They have also concluded that there are no material uncertainties that could have cast significant doubt over its ability to continue as a going concern for at least a year from the date of approval of the financial statements (the "going concern period").

In our evaluation of the directors' conclusions, we considered the inherent risks to the Company's business model and analysed how those risks might affect the Company's financial resources or ability to continue operations over the going concern period. The risk that we considered most likely to affect the Company's financial resources or ability to continue operations over this period was the availability of capital to meet operating costs and other financial commitments.

We considered whether this risk could plausibly affect the liquidity in the going concern period by comparing severe, but plausible downside scenarios that could arise from this risk against the level of available financial resources indicated by the Company's financial forecasts.

We considered whether the going concern disclosure in note 2(f) to the financial statements gives a full and accurate description of the directors' assessment of going concern.

Our conclusions based on this work:

· we consider that the directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate;

· we have not identified, and concur with the directors' assessment that there is not, a material uncertainty related to events or conditions that, individually or collectively, may cast significant doubt on the Company's ability to continue as a going concern for the going concern period; and

· we found the going concern disclosure in the notes to the financial statements to be acceptable.

However, as we cannot predict all future events or conditions and as subsequent events may result in outcomes that are inconsistent with judgements that were reasonable at the time they were made, the above conclusions are not a guarantee that the Company will continue in operation.

5 Fraud and breaches of laws and regulations - ability to detect

Identifying and responding to risks of material misstatement due to fraud

To identify risks of material misstatement due to fraud ("fraud risks") we assessed events or conditions that could indicate an incentive or pressure to commit fraud or provide an opportunity to commit fraud. Our risk assessment procedures included:

· enquiring of management as to the Company's policies and procedures to prevent and detect fraud as well as enquiring whether management have knowledge of any actual, suspected or alleged fraud;

· reading minutes of meetings of those charged with governance; and

· using analytical procedures to identify any unusual or unexpected relationships.

As required by auditing standards, we perform procedures to address the risk of management override of controls, in particular the risk that management may be in a position to make inappropriate accounting entries. On this audit we do not believe there is a fraud risk related to revenue recognition because the Company's revenue streams are simple in nature with respect to accounting policy choice, and are easily verifiable to external data sources or agreements with little or no requirement for estimation from management. We did not identify any additional fraud risks.

We performed procedures including

· Identifying journal entries and other adjustments to test based on risk criteria and comparing the identified entries to supporting documentation; and

· incorporating an element of unpredictability in our audit procedures.

Identifying and responding to risks of material misstatement due to non-compliance with laws and regulations

We identified areas of laws and regulations that could reasonably be expected to have a material effect on the financial statements from our sector experience and through discussion with management (as required by auditing standards), and from inspection of the Company's regulatory and legal correspondence, if any, and discussed with management the policies and procedures regarding compliance with laws and regulations. As the Company is regulated, our assessment of risks involved gaining an understanding of the control environment including the entity's procedures for complying with regulatory requirements.

The Company is subject to laws and regulations that directly affect the financial statements including financial reporting legislation and taxation legislation and we assessed the extent of compliance with these laws and regulations as part of our procedures on the related financial statement items.

The Company is subject to other laws and regulations where the consequences of non-compliance could have a material effect on amounts or disclosures in the financial statements, for instance through the imposition of fines or litigation or impacts on the Company's ability to operate. We identified financial services regulation as being the area most likely to have such an effect, recognising the regulated nature of the Company's activities and its legal form. Auditing standards limit the required audit procedures to identify non-compliance with these laws and regulations to enquiry of management and inspection of regulatory and legal correspondence, if any. Therefore if a breach of operational regulations is not disclosed to us or evident from relevant correspondence, an audit will not detect that breach.

Context of the ability of the audit to detect fraud or breaches of law or regulation

Owing to the inherent limitations of an audit, there is an unavoidable risk that we may not have detected some material misstatements in the financial statements, even though we have properly planned and performed our audit in accordance with auditing standards. For example, the further removed non-compliance with laws and regulations is from the events and transactions reflected in the financial statements, the less likely the inherently limited procedures required by auditing standards would identify it.

In addition, as with any audit, there remains a higher risk of non-detection of fraud, as this may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal controls. Our audit procedures are designed to detect material misstatement. We are not responsible for preventing non-compliance or fraud and cannot be expected to detect non-compliance with all laws and regulations.

6 Other information

The directors are responsible for the other information. The other information comprises the information included in the annual report but does not include the financial statements and our auditor's report thereon. Our opinion on the financial statements does not cover the other information and we do not express an audit opinion or any form of assurance conclusion thereon.

In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

7 Respective responsibilities

Directors' responsibilities

As explained more fully in Directors' statement, the directors are responsible for: the preparation of the financial statements including being satisfied that they give a true and fair view; such internal control as they determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error; assessing the Company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern; and using the going concern basis of accounting unless they either intend to liquidate the Company or to cease operations, or have no realistic alternative but to do so.

Auditor's responsibilities

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue our opinion in an auditor's report. Reasonable assurance is a high level of assurance, but does not guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of the financial statements.

A fuller description of our responsibilities is provided on the FRC's website at www.frc.org.uk/auditorsresponsibilities.

8 The purpose of this report and restrictions on its use by persons other than the Company's members, as a body

This report is made solely to the Company's members, as a body, in accordance with the terms of engagement as detailed in our letter dated 6 July 2021. Our audit work has been undertaken so that we might state to the Company's members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company and the Company's members, as a body, for our audit work, for this report, or for the opinions we have formed.

KPMG Audit LLC

Chartered Accountants

Heritage Court

41 Athol Street

Douglas

Isle of Man IM1 1LA

21 March 2022

Statement of Comprehensive Income

For the year ended 31 January 2022

				31 January 2022	31 January 2021
		Revenue	Capital	Total	Total
Note		£	£	£	£
	Income
4	Interest income	514	-	514	4,089
11	Net fair value movement on investments	-	10,280,363	10,280,363	42,012,143
	Total income	514	10,280,363	10,280,877	42,016,232
	Expenses
5	Investment advisor's fees	(2,054,555)	-	(2,054,555)	(1,937,207)
6	Directors' fees	(149,000)	-	(149,000)	(154,000)
7	Share based payment expense	(822,166)	-	(822,166)	(682,525)
8	Other expenses	(1,052,268)	-	(1,052,268)	(669,769)
	Total expense	(4,077,989)	-	(4,077,989)	(3,443,501)
	Profit before finance costs and tax	(4,077,475)	10,280,363	6,202,888	38,572,731

	Finance charges
15	Interest on unsecured loan note instruments	(319,685)	-	(319,685)	(319,685)
15	Zero dividend preference shares final
	capital entitlement accrual	(156,983)	-	(156,983)	-
	Profit for the year before taxation	(4,554,143)	10,280,363	5,726,220	38,253,046
9	Taxation	-	-	-	-
	Profit for the year	(4,554,143)	10,280,363	5,726,220	38,253,046
	Other comprehensive income	-	-	-	-
	Total comprehensive income	(4,554,143)	10,280,363	5,726,220	38,253,046
17	Basic earnings per ordinary share (pence)	(14.20)	32.06	17.86	116.69
17	Diluted earnings per ordinary share (pence)	(14.20)	32.06	17.86	116.69

The total column of this statement represents the Company's Statement of Comprehensive Income, prepared in accordance with IFRS. The supplementary revenue and capital return columns are prepared in accordance with the Board of Directors' agreed principles, which are that the net gain/loss on investments is allocated to the capital column and all other income and expenses are allocated to the revenue column. All items derive from continuing activities.

Statement of Assets and Liabilities

At 31 January 2022

		31 January 2022	31 January 2021
Note		£	£
	Non-current assets
11	Investments at fair value through profit or loss	140,525,060	117,256,810
		140,525,060	117,256,810
	Current assets
13	Cash and cash equivalents	27,545,042	27,854,701
	Trade and other receivables and prepayments	95,147	197,564

		27,640,189	28,052,265
	Current liabilities
14	Trade and other payables	(982,655)	(659,645)
15	Unsecured loan note instruments	(3,977,427)	-
		(4,960,082)	(659,645)
	Net current assets	22,680,107	27,392,620

	Non-current liabilities
15	Unsecured loan note instruments	-	(3,956,822)
15	Zero dividend preference shares	(19,580,190)	-
		(19,580,190)	(3,956,822)
	Net assets	143,624,977	140,692,608
	Equity
16	Share capital	1,730,828	1,730,828
	Share premium	13,619,627	13,619,627
	Capital reserve	136,577,940	126,297,577
	Revenue reserve	(8,303,418)	(955,424)
	Total equity	143,624,977	140,692,608
18	Net asset value per share (pence)	455.66	437.63

The financial statements were approved by the Board of Directors on 21 March 2022 and signed on its behalf by:

Clive Spears David Pirouet

Director Director

Statement of Changes in Equity

For the year ended 31 January 2022

		Year ended 31 January 2022
		Share capital	Share premium	Capital reserve	Revenue reserve	Total
Note		£	£	£	£	£
	Balance at 1 February 2021	1,730,828	13,619,627	126,297,577	(955,424)	140,692,608

	Total comprehensive income/(loss) for the year	-	-	10,280,363	(4,554,143)	5,726,220

	Contributions by and distributions to owners
7	Share-based payment charge	-	-	-	822,166	822,166
	Share ownership scheme participation	-	-	-	625	625
16	Purchase of shares	-	-	-	(2,117,866)	(2,117,866)
16	Share acquisition for JSOP scheme	-	-	-	(1,498,776)	(1,498,776)
	Total transactions with owners	-	-	-	(2,793,851)	(2,793,851)
	Balance at 31 January 2022	1,730,828	13,619,627	136,577,940	(8,303,418)	143,624,977

		Year ended 31 January 2021
		Share capital	Share premium	Capital reserve	Revenue reserve	Total
Note		£	£	£	£	£
	Balance at 1 February 2020	1,726,953	13,489,826	84,285,434	4,755,783	104,257,996

	Total comprehensive income/(loss) for the year	-	-	42,012,143	(3,759,097)	38,253,046
	Contributions by and distributions to owners
7	Share-based payment charge	-	-	-	682,525	682,525
	Share ownership scheme participation	-	-	-	3,943	3,943
	Provision for future settlement	-	-	-	216,323	216,323
16	Purchase of shares	-	-	-	(2,068,761)	(2,068,761)
16	Share acquisition for JSOP scheme	-	-	-	(786,140)	(786,140)
16	Issue of new shares	3,875	129,801	-	-	133,676
	Total transactions with owners	3,875	129,801	-	(1,952,110)	(1,818,434)
	Balance at 31 January 2021	1,730,828	13,619,627	126,297,577	(955,424)	140,692,608

Statement of Cash Flows

For the year ended 31 January 2022

		31 January 2022	31 January 2021
Note		£	£
	Operating activities
	Interest income received	514	4,089
	Expenses paid	(3,231,866)	(2,896,656)
19	Net cash used in operating activities	(3,231,352)	(2,892,567)

	Investing activities
11	Purchase of investments	(31,253,480)	(5,320,330)
11	Proceeds from investments	18,364,193	13,612,853
	Net cash (used in)/generated from investing activities	(12,889,287)	8,292,523
	Financing activities
	Unsecured loan note interest paid	(299,080)	(299,080)
	Purchase of shares	(3,616,642)	(2,854,901)
	Share ownership scheme participation	625	3,943
	Issue of zero dividend preference shares	20,000,000	-
	Issue costs for zero dividend preference shares	(273,923)	-
	Net cash generated from/(used in) financing activities	15,810,980	(3,150,038)
	(Decrease)/ increase in cash and cash equivalents	(309,659)	2,249,918
	Cash and cash equivalents at start of year	27,854,701	25,604,783
13	Cash and cash equivalents at end of year	27,545,042	27,854,701

Notes to the Financial Statements

For the year ended 31 January 2022

1 Operations

The Company was incorporated with limited liability in the Isle of Man on 25 July 2003. The Company then re-registered under the Isle of Man Companies Act 2006, with registration number 008597V. On 11 September 2018, the Company re-registered under the Bermuda Companies Act 1981, with registration number 53954. The Company moved its operations to Jersey with immediate effect on 17 May 2017 and has subsequently operated from Jersey only.

The Company's ordinary shares are quoted on AIM, a market operated by the London Stock Exchange, and the Growth Market of the Aquis Stock Exchange (formerly the NEX Exchange).

The Company's portfolio investments are held in three associates (ESO Investments 1 Limited, ESO Investments 2 Limited and ESO Alternative Investments LP).

As the Company is an investment entity per IFRS 10, interests in associates are measured at fair value.

The principal activity of the Company and its associates is to arrange income yielding financing for growth, buyout and special situations and holding the investments and its associates with a view to exiting in due course at a profit.

The financial statements comprise the results of the Company and its associates (see notes 3(a)).

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 ("IFRS") and applicable legal and regulatory requirements of Bermuda law. They were previously prepared in accordance with IFRS as adopted by the EU. This change has had no impact on the financial statements. The following accounting policies have been adopted and applied consistently.

b. Basis of measurement

The financial statements have been prepared on the historical cost convention except for financial instruments at fair value through profit or loss which are measured at fair value.

c. Functional and presentation currency

These 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.

'Functional currency' is the currency of the primary economic environment in which the Company operates. The expenses (including investment advisory and administration fees) are denominated and paid in sterling. Accordingly, management has determined that the functional currency of the Company is sterling.

d. Use of estimates and judgements

The preparation of financial statements in conformity with IFRS requires the Directors and the Investment Advisor to make judgements, estimates and assumptions that affect the application of policies and the reported amounts of assets and liabilities, income and expense. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making the judgements about carrying values of assets and liabilities that are not readily apparent from other sources. The Directors have, to the best of their ability, provided as true and fair a view as is possible. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period or in the period of the revision and future periods if the revision affects both current and future periods.

Judgements made by Directors and the Investment Advisor in the application of IFRS that have a significant effect on the financial statements and estimates with a significant risk of material adjustments in the next year relate to the determination of fair value of financial instruments with significant unobservable inputs (see note 12).

COVID-19 Impact:

The COVID-19 pandemic has had a significant impact on the valuation multiples, derived from quoted comparables, used in the preparation of the fair market valuation of the Company's unquoted investments. These quoted comparables are subject to both market volatility and uncertainty due to the impact of the pandemic and their trading outlook. The performance and financial position forecasted for the Company's portfolio is subject to the wider market uncertainty caused by the COVID-19 pandemic. These inputs have been used in the preparation of the fair market valuation of the Company's unquoted investments.

e. Unconsolidated structured entities

The Company invests in portfolio investments via three entities, which the Directors consider to be associates. See note 3(a) for an explanation of why these entities are not controlled by the Company but the Company has significant influence. The purpose of these entities is to hold investments. These entities meet the definition of unconsolidated structured entities under IFRS 12. There are letters of support in place between the Company and ESO Investments 1 Limited and ESO Investments 2 Limited for the payment of expenses.

The total net assets of these three entities, inclusive of loans advanced by the Company, is £87,590,772 and the amount recognised in the Company's financial statements (as investments at fair value) is £140,525,060.

In respect of ESO Alternative Investments LP, the Company has 100% beneficial ownership of the entity and holds no voting rights.

In respect of ESO Investments 1 Limited, the Company has 80% beneficial ownership of the entity and holds no voting rights.

In respect of ESO Investments 2 Limited, the Company has 80% beneficial ownership of the entity and holds no voting rights.

There are no restrictions on the ability of the associates to transfer funds to the Company in the form of cash dividends or loan repayments.

f. Going concern

The Company's management has assessed the Company's ability to continue as a going concern and is satisfied that the Company has the resources to continue in business for the foreseeable future. Furthermore, the management is not aware of any material uncertainties that may cast significant doubt upon the Company's ability to continue as a going concern. Therefore, the financial statements continue to be prepared on the going concern basis.

3 Significant accounting policies

a. Basis of treatment of associates

Associates

Associates are those enterprises over which the reporting entity has significant influence, and which are neither subsidiaries nor an interest in a joint venture. Significant influence is exerted when the reporting entity has the power to participate in the financial and operating policy decision of the investee, but it is not in control or joint control of those policies.

The Company's portfolio investments are held via three entities in which the Company is the sole investor: ESO Investments 1 Limited, ESO Investments 2 Limited and ESO Alternative Investments LP (together the "Associates"). The primary activity of the Associates is to make, hold and realise investments with a view to profit. Any new investment made by the Company via the Associates is at the sole discretion of the Company. The Associates do not have any source of capital other than the Company and rely upon the Company for any investment funding. Investment funding advanced to the associates from the Company is contingent on it being used for the same investment. The Associates are required to distribute any proceeds from each investment to the Company upon receipt. This indicates that the Company has significant influence over the primary activity of the Associates.

The Associates, via their general partner or their Board, have discretion over the management of their existing portfolio and on the realisation of those investments. The respective Boards, general partner and appointed investment managers of the Associates are independent of the Company and accordingly the Company does not control the investment activities of the Associates. This indicates that the Company does not have overall control over the primary activity of the Associates.

As the Company is the sole investor in the Associates, they do not meet the definition of a joint venture. The Company does not have control over the activities of the Associates and therefore the Directors consider that they do not meet the definition of subsidiaries. The Company has significant influence over the activities of the Associates and therefore the Directors consider that, for the reasons detailed above, they meet the definition of associates. The Company has taken advantage of the exemption from applying IAS 28 for investment entities and therefore the interests in these associates are accounted for at fair value through profit and loss rather than being equity accounted.

b. Segmental reporting

The Directors are of the opinion that the Company 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 accrual basis.

e. Cash and cash equivalents

Cash and cash equivalents comprise of current cash deposits with banks only.

f. Finance charges

Other finance charges are recognised as an expense.

g. Trade and other payables

Trade and other payables are stated at amortised cost in accordance with IFRS 9.

h. Unsecured loan note instruments

Unsecured loan note instruments are stated at amortised cost in accordance with IFRS 9.

i. Financial assets and financial liabilities

i. Classification

Financial assets

When the Company first recognises a financial asset, it classifies it based on the business model for managing the asset and the asset's contractual cash flow characteristics, as follows:

· Amortised cost: a financial asset is measured at amortised cost if both of the following conditions are met:

- the asset is held within a business model whose objective is to hold assets in order to collect contractual cash flows; and

- the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

· Fair value through other comprehensive income: financial assets are classified and measured at fair value through other comprehensive income if they are held in a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets.

· Fair value through profit or loss: any financial assets that are not held in one of the two business models mentioned are measured at fair value through profit or loss.

When, and only when, the Company changes its business model for managing financial assets it must reclassify all affected financial assets.

Financial liabilities

All financial liabilities are measured at amortised cost, except for financial liabilities at fair value through profit or loss. Such liabilities include derivatives (other than derivatives that are financial guarantee contracts or are designated and effective hedging instruments), other liabilities held for trading, and liabilities that an entity designates to be measured at fair value through profit or loss.

ii. Recognition

The Company recognises financial assets and financial liabilities on the date it becomes a party to the contractual provisions of the instrument.

iii. Measurement

Equity and debt investments, including those held by associates, are stated at fair value. Loans and Receivables are stated at amortised cost less any impairment losses.

The Investment Advisor determines asset values using the valuation principles of IFRS 13.

'Fair value' is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date in the principal or, in its absence, the most advantages market to which the Company has access at that date. The fair value of a liability reflects its non-performance risk.

When available, the Company measures the fair value of an instrument using the quoted price in an active market for that instrument. A market is regarded as 'active' if transactions for the asset or liability take place with sufficient frequency and volume to provide pricing information on an ongoing basis. The Company measures instruments quoted in an active market at mid-price.

If there is no quoted price in an active market, then the Company uses valuation techniques that maximise the use of relevant observable inputs and minimise the use of unobservable inputs. The chosen valuation technique incorporates all of the factors that market participants would take into account in pricing a transaction.

The Company recognises transfers between levels of the fair value hierarchy as at the end of the reporting period during which the change has occurred.

The amortised cost of a financial asset or financial liability is the amount at which the financial asset or financial liability is measured at initial recognition, minus principal repayments, plus or minus the cumulative amortisation using the effective interest method of any difference between the initial amount recognised and the maturity amount, minus any reduction for impairment. Financial assets that are not carried at fair value though profit and loss are subject to an impairment test. For loans to portfolio companies the impairment test is undertaken as part of the assessment of the fair value of the enterprise value of the related business, as described above. If expected life cannot be determined reliably, then the contractual life is used.

iv. Impairment

12-month expected credit losses

12-month expected credit losses are calculated by multiplying the probability of a default occurring in the next 12 months with the total (lifetime) expected credit losses that would result from that default, regardless of when those losses occur. Therefore, 12-month expected credit losses represent a financial asset's lifetime expected credit losses that are expected to arise from default events that are possible within the 12 month period following origination of an asset, or from each reporting date for those assets in initial recognition stage.

Lifetime expected credit losses

Lifetime expected credit losses are the present value of expected credit losses that arise if a borrower defaults on its obligation at any point throughout the term of a lender's financial asset (that is, all possible default events during the term of the financial asset are included in the analysis). Lifetime expected credit losses are calculated based on a weighted average of expected credit losses, with the weightings being based on the respective probabilities of default.

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 IFRS 9.

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.

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 revenue reserves.

Capital Reserve and Revenue Reserve

The capital reserve comprises net gains and losses on investments. The revenue reserve comprises other income and expenses plus other items recorded directly in equity (excluding items recorded as share capital/share premium).

k. Joint share ownership plan ("JSOP") and share-based payments

Directors of the Company and certain employees of the Investment Advisor (together "Participants") receive remuneration in the form of equity-settled share-based payment transactions, through a JSOP Scheme.

Equity-settled share-based payments are measured at fair value at the date of grant. The fair value is determined based on the share price of the equity instrument at the grant date. The fair value determined at the grant date of the equity-settled share-based payment is expensed on a straight-line basis over the vesting period, based on the Company's estimate of the number of shares that will eventually vest. The instruments are subject to a three-year service vesting condition from the grant date, and their fair value is recognised as a share-based expense with a corresponding increase in revenue reserves within equity over the vesting period. Contributions received from employees as part of the JSOP arrangement are recognised directly in equity in the line share ownership scheme participation.

The assets (other than investments in the Company's shares), liabilities, income and expenses of the trust established to operate the JSOP scheme (the "Trust") are recognised by the Company as the Trust is considered to be an agent of the Company. The Trust's investment in the Company's shares is deducted from shareholders' funds in the Statement of Asset and Liabilities as if they were treasury shares (see note 7).

l. Zero dividend preference shares

Under IAS 32 - Financial Instruments: Presentation, the ZDP Shares are classified as financial liabilities and are held at amortised cost. Appropriation for the period in respect of ZDP Shares is included in the Statement of Comprehensive Income as a finance cost and is calculated using the effective interest rate method ("EIR"). The costs of issue of the ZDP Shares are being amortised over the period until the ZDP Shares are due for redemption.

m. Future changes in accounting policies

Several new standards are effective for annual periods beginning after 1 January 2021 and earlier application is permitted; however, the Company has not adopted early the new or amended standards in preparing these financial statements.

The Directors do not expect the adoption of the standards and interpretations to have a material impact on the Company's financial statements in the period of initial application.

4 Interest income

	2022	2021
	Company	Company
	£	£
Cash balances	514	4,089
Total	514	4,089

5 Investment advisory, administration and performance fees

Investment advisory fees

The investment advisory fee payable to EPIC Investment Partners LLP ("EPIC") is assessed and payable at the end of each fiscal quarter and is calculated as 2 per cent. of the Company's NAV where the Company's NAV is less than £100 million; otherwise the investment advisory fee is calculated as the greater of £2.0 million or the sum of 2 per cent. of the Company's NAV comprising Level 3 portfolio assets (i.e. unquoted assets), 1 per cent. of the Company's NAV comprising Level 1 assets (i.e. quoted assets), no fees on assets which are managed or advised by a third-party manager, 0.5 per cent. of the Company's net cash (if greater than nil), and 2 per cent. of the Company's net cash (if less than nil) (i.e. reducing fees for net debt positions).

The charge for the current year was £2,054,555 (2021: £1,937,207). The amount outstanding as at 31 January 2022 was £500,000 (2021: £500,000) (see note 14).

Administration fees

EPIC Administration Limited provides accounting and financial administration services to the Company. The fee payable to EPIC Administration Limited is assessed and payable at the end of each fiscal quarter and is calculated as 0.15 per cent. of the Company's NAV where the Company's NAV is less than £100 million (subject to a minimum fee of £35,000); otherwise the advisory fee shall be calculated as 0.15 per cent. of £100 million plus a fee of 0.1 per cent. of the excess of the Company's NAV above £100 million.

The charge for the current year was £212,431 (year ended 31 January 2021: £163,212).

Other administration fees during the year were £72,196 (2021: £66,234).

Performance fees paid by associates

The associates are stated at fair value. Performance fees are paid to the Investment Advisor based on the performance of the associates and deducted in calculating the fair value of associates.

Performance fee in ESO Investments 1 Limited

The distribution policy of ESO Investments 1 Limited includes an allocation of profits to the Investment Advisor such that, for each investment where a returns hurdle of 8 per cent. per annum has been achieved, the Investment Advisor is entitled to receive 20 per cent. of the increase above the base value of investment. As at 31 January 2022, £nil has been accrued in the profit share account of the Investment Advisor in the records of ESO Investments 1 Limited (2021: £767,311 accrued).

Performance fee in ESO Investments 2 Limited

The distribution policy of ESO Investments 2 Limited includes an allocation of profit to the Investment Advisor such that, for each investment where a returns hurdle of 8 per cent. per annum has been achieved, the Investment Advisor is entitled to receive 20 per cent. of the increase above the base value of investment. As at 31 January 2022, £20,027,085 has been accrued in the profit share account of the Investment Advisor in the records of ESO Investments 2 Limited (2021: £16,125,708 accrued).

Joint share ownership plan ("JSOP") and share-based payments

6 Directors' fees

	2022	2022	2021	2021
	Company	Share-based payment	Company	Share-based payment
	£	£	£	£
C.L. Spears (Chairman)	32,000	13,445	32,000	11,222
R.B.M. Quayle	15,000	4,754	30,000	10,440
N.V. Wilson	30,000	13,132	30,000	10,928
H. Bestwick	30,000	13,445	30,000	11,222
D.R. Pirouet	32,000	6,648	32,000	4,776
M.M. Gray	10,000	1,197	-	-
Total	149,000	52,621	154,000	48,588

In addition to above, during the year, C.L. Spears and H. Bestwick received £3,750 each and M.M. Gray received £1,250 as Directors' fees for their respective directorships in ESO Investments 1 Limited and ESO Investments 2 Limited. The share-based payment expense is calculated as set out in note 7.

7 Share-based payment expense

The cost of equity-settled transactions to Participants in the JSOP Scheme are measured at fair value at the grant date. The fair value is determined based on the share price of the equity instrument at the grant date.

The Trust was created to award shares to Participants as part of the JSOP. Participants are awarded a certain number of shares ("Matching Shares") which are subject to a three-year service vesting condition from the grant date. In order to receive their Matching Share allocation Participants are required to purchase shares in the Company on the open market ("Bought Shares"). The Participant will then be entitled to acquire a joint ownership interest in the Matching Shares for the payment of a nominal amount, on the basis of one joint ownership interest in one Matching Share for every Bought Share they acquire in the relevant award period.

The Trust holds the Matching Shares jointly with the Participant until the award vests. These shares carry the same rights

as the rest of the ordinary shares.

The Trust held 1,871,753 (2021: 1,419,004) matching shares at the year-end which have traditionally not voted (see note 16).

3,755 shares vested to Participants in the year ended 31 January 2022 (2021: Nil). 185,779 shares were awarded to Participants in the year ended 31 January 2022 (2021: 271,995).

The share-based payment expense in the Statement of Comprehensive Income has been calculated on the basis of the fair value of the equity instruments at the grant date and the estimated number of equity instruments to be issued after the vesting period, less the amount paid for the joint ownership interest in the Matching Shares.

The total share-based payment expense in the year ended 31 January 2022 was £822,166 (2021: £682,525) of which £670,865 related to expenses incurred in the year ended 31 January 2022 and £151,301 related to expenses incurred in the year ended 31 January 2020. Of the total share-based payment expense in the year ended 31 January 2022, £52,621 related to the Directors (2021: £48,588) and the balance related to members, employees and consultants of the Investment Advisor.

8 Other expenses

The breakdown of other expenses presented in the statement of comprehensive income is as follows:

	31 January 2022	31 January 2021
	Total	Total
	£	£
Administration fees	(284,627)	(229,446)
Directors' and officers' insurance	(24,453)	(22,356)
Professional fees	(480,554)	(212,697)
Board meeting and travel expenses	(588)	(1,981)
Auditors' remuneration	(68,095)	(55,840)
Interim review remuneration	(8,325)	(8,160)
Bank charges	(3,261)	(659)
Irrecoverable VAT	(360)	(675)
Foreign exchange movement	(52,948)	(20,033)
Nominated advisor and broker fees	(61,962)	(60,710)
Listing fees	(48,446)	(44,134)
Sundry expenses	(18,649)	(13,078)
Other expenses	(1,052,268)	(669,769)

9 Taxation

The Company is a tax resident of Jersey and is subject to 0 per cent. corporation tax (2021: 0 per cent.).

ESO Alternative Investments LP is transparent for tax purposes.

ESO Investments 1 Limited and ESO Investments 2 Limited are tax resident in Jersey and are subject to 0 per cent. corporation tax.

10 Dividends paid and proposed

No dividends were paid or proposed for the year ended 31 January 2022 (2021: £nil).

11 Investments at fair value through profit or loss

	31 January 2022	31 January 2021
	£	£
Investments at fair value through profit and loss*	140,525,060	117,256,810
	140,525,060	117,256,810

Investments
	31 January 2022	31 January 2021
	£	£
Investments at 1 February	117,256,810	83,382,923
Purchase of investments	31,253,480	5,320,330
Proceeds from investments	(18,364,193)	(13,612,853)
Distributions (non-cash distribution in prior year)	-	(66,664)
Net fair value movements	10,280,363	42,012,143
Loan to associates	-	220,931
Reclassification of debtor balance to investee	98,600	-
Investments at 31 January	140,525,060	117,256,810

*Comprises associates stated at fair value in accordance with accounting policy set out in note 3(a) (ESO Investments 1 Limited, ESO Investments 2 Limited and ESO Alternative Investments LP).

12 Fair value of financial instruments

The Company determines the fair value of financial instruments with reference to IPEV guidelines and the valuation principles of IFRS 13 (Fair Value Measurement). The Company measures fair value using the IFRS 13 fair value hierarchy, which reflects the significance and certainty of the inputs used in deriving the fair value of an asset:

· Level 1: Inputs that are quoted market prices (unadjusted) in active markets for identical instruments;

· Level 2: Inputs other than quoted prices included within Level 1 that are observable either directly (i.e. as prices) or indirectly (i.e. derived from prices). This category includes instruments valued using quoted market prices in active markets for similar instruments, quoted prices for identical or similar instruments in markets that are considered less than active or other valuation techniques in which all significant inputs are directly or indirectly observable from market data;

· Level 3: Inputs that are unobservable. This category includes all instruments for which the valuation technique includes inputs not based on observable data and the unobservable inputs have a significant effect on the instrument's valuation. This category includes instruments that are valued based on quoted prices for similar instruments but for which significant unobservable adjustments or assumptions are required to reflect differences between the instruments.

Valuation framework

The Company employs the valuation framework detailed below with respect to the measurement of fair values. A valuation of the Company's investments is prepared by the Investment Advisor with reference to IPEV guidelines and the valuation principles of IFRS 13 (Fair Value Measurement). The Investment Advisor recommends these valuations to the Board of Directors. The Board of Directors considers the valuations recommended by the Investment Advisor, determines any amendments required and thereafter adopts the fair values presented in the Company's financial statements.

Quoted investments

Quoted investments traded in an active market are classified as Level 1 in the IFRS 13 fair value hierarchy. The Company's investment in Luceco plc is considered as a Level 1 asset. For Level 1 assets, the Company calculates the holding value from the latest market price (without adjustment).

Quoted investments traded in markets that are considered less than active are classified as Level 2 in the IFRS 13 fair value hierarchy. The Company's investment in EPIC Acquisition Corp is considered as a Level 2 asset. For Level 2 assets, the Company calculates the holding value from the latest available market prices (without adjustment).

Unquoted private equity investments and third-party fund investments

Private equity investments and fund investments are classified as Level 3 in the IFRS 13 fair value hierarchy. The Company's investments in Whittard, David Phillips, Rayware, Pharmacy2U, European Capital Private Debt Fund LP, EPE Junior Aggregator LP, Atlantic Credit Opportunities Fund Limited and EAC Sponsor Limited are considered to be Level 3 assets. Various valuation techniques may be applied in determining the fair value of investments held as Level 3 in the fair value hierarchy;

· For recently acquired assets, the Company considers the investment cost an applicable fair value for the asset;

· For underperforming assets, the Company considers the net asset or recovery valuation more applicable, in particular where the business' performance be contingent on shareholder financial support;

· For performing assets, the Company considers the market approach to be the most appropriate with a specific focus on trading comparables, applied on a forward basis. The Company will also consider transaction comparables, applied on a historic basis;

· For assets managed and valued by third party managers, the Company reviews the valuation methodology of the third party manager. If deemed appropriate and consistent with the Company's reporting standards, the Company will use the valuation prepared by the third-party manager.

The Investment Advisor believe that it is appropriate to apply an illiquidity discount to the multiples of comparable companies when using them to calculate valuations for small, private companies. This discount adjusts for the difference in size between generally larger comparable companies and the smaller assets being valued. The illiquidity discount also incorporates the premium the market gives to comparable companies for being freely traded or listed securities. The Investment Advisor has determined between 15 per cent. and 25 per cent. to be an appropriate illiquidity discount with reference to market data and transaction multiples seen in the market in which the Investment Advisor operates.

Where portfolio investments are held through subsidiary/associate holding companies, the net assets of the holding company are added to the value of the portfolio investment being assessed to derive the fair value of the holding company held by the Company.

Fair value hierarchy - Financial instruments measured at fair value

The table below analyses the underlying investments held by the associates measured at fair value at the reporting date by the level in the fair value hierarchy into which the fair value measurement is categorised. Debt securities are also included, as these are also stated at fair value with the Board assessing the fair value of the total investment, which includes debt and equity. The amounts are based on the values recognised in the statement of financial position of the associates.

	Level 1	Level 2	Level 3	Total
31 January 2022	£	£	£	£
Financial assets at fair value through profit or loss
Unquoted private equity investments (including debt)	-	-	41,897,143	41,897,143
Unquoted fund investments	-	-	5,989,711	5,989,711
Quoted investments	87,206,277	5,166,896	-	92,373,173
Investments at fair value through profit or loss	87,206,277	5,166,896	47,886,854	140,260,027
Other assets and liabilities (held at cost)	-	-	-	265,033
Total	87,206,277	5,166,896	47,886,854	140,525,060


	Level 1	Level 2	Level 3	Total
31 January 2021	£	£	£	£
Financial assets at fair value through profit or loss
Unquoted private equity investments (including debt)	-	-	23,156,643	23,156,643
Unquoted fund investments	-	-	5,265,686	5,265,686
Quoted investments	88,737,691	-	-	88,737,691
Investments at fair value through profit or loss	88,737,691	-	28,422,329	117,160,020
Other assets and liabilities (held at cost)	-	-	-	96,790
Total	88,737,691	-	28,422,329	117,256,810

The following table, detailing the value of portfolio investments only, shows a reconciliation of the opening balances to the closing balances for fair value measurements in level 3 of the fair value hierarchy for the underlying investments held by the associates.

	31 January 2022	31 January 2021
Unquoted investments (including debt)	£	£
Balance as at 1 February	28,422,329	25,405,230
Additional investments	25,786,074	5,339,953
Capital distributions from investments	(330,247)	(223,018)
Change in fair value through profit & loss	(5,991,302)	(2,099,836)
Balance as at 31 January	47,886,854	28,422,329

Significant unobservable inputs used in measuring fair value

The table below sets out information about significant unobservable inputs used at 31 January 2022 in measuring financial instruments categorised as Level 3 in the fair value hierarchy.

Description	Fair value at 31 January 2022	Significant unobservable inputs
Description	£	Significant unobservable inputs
Unquoted private equity investments (including debt)	41,897,143	Sales/EBITDA multiple or cost of recent investment
Unquoted fund investments	5,989,711	Reported net asset value

Significant unobservable inputs are developed as follows:

· Trading comparable multiple: valuation multiples used by other market participants when pricing comparable assets. Relevant comparable assets are selected from public companies determined to be proximate to the Company's investment based on similarity of sector, size, geography or other relevant factors. The valuation multiple for a comparable company is determined by calculating the enterprise value of the company implied by its market price as at the reporting date and dividing by the relevant financial metric (sales or EBITDA).

· Reported net asset value: for assets managed and valued by a third party, the manager provides the Company with periodic valuations of the Company's investment. The Company reviews the valuation methodology of the third-party manager. If deemed appropriate and consistent with the Company's reporting standards, the Board will adopt the valuation prepared by the third-party manager. Adjustments are made to third party valuations where considered necessary to arrive at the Director's estimate of fair value.

· Investment cost: for recently acquired assets (typically completed in the last twelve months), the Investment Advisor considers the investment cost an applicable fair value for the asset.

Although management believes that its estimates of fair value are appropriate, the use of different methodologies or assumptions could lead to different measurements of fair value. For fair value measurements of Level 3 assets, changing one or more of the assumptions used to reasonably possible alternative assumptions would have the following effects on the Level 3 investment valuations:

· For the Company's investment in mature Level 3 assets, the valuations used in the preparation of the financial statements imply an average EV to EBITDA multiple of 5.2x (weighted by each asset's total valuation) (2021: 5.8x). The key unobservable inputs into the preparation of the valuation of mature Level 3 assets was the EV to EBITDA multiple applied to the asset's financial forecasts. If these inputs had been taken to be 25 per cent. higher, the value of the Level 3 assets and profit for the year would have been £10,654,945 higher. If these inputs had been taken to be 25 per cent. lower, the value of the Level 3 assets and profit for the year would have been £14,691,060 lower. A corresponding increase or decrease in the asset's financial forecasts would have a similar impact on the Company's assets and profit.

· For the Company's investment in growth Level 3 assets, the valuations used in the preparation of the financial statements imply an average EV to sales multiple of 1.2x (weighted by each asset's total valuation) (2021: 1.6x). The key unobservable inputs into the preparation of the valuation of growth Level 3 assets were the EV to sales multiple applied to the asset's financial forecasts. If these inputs had been taken to be 25 per cent. higher, the value of the Level 3 assets and profit for the year would have been £762,779 higher. If these inputs had been taken to be 25 per cent. lower, the value of the Level 3 assets and profit for the year would have been £762,779 lower. A corresponding increase or decrease in the asset's financial forecasts would have a similar impact on the Company's assets and profit.

Classification of financial assets and liabilities

The table below sets out the classifications of the carrying amounts of the Company's financial assets and liabilities into categories of financial instruments.

31 January 2022
Financial assets	At fair value £	At amortised cost £	Total £
Investments at fair value through profit or loss	140,525,060	-	140,525,060
Cash and cash equivalents	-	27,545,042	27,545,042
Trade and other receivables	-	-	-
	140,525,060	27,545,042	168,070,102
Financial liabilities
Trade and other payables	-	982,655	982,655
Unsecured loan note instruments*	-	3,977,427	3,977,427
Zero dividend preference shares	-	19,580,190	19,580,190
	-	24,540,272	24,540,272


31 January 2021
Financial assets	At fair value £	At amortised cost £	Total £
Investments at fair value through profit or loss	117,256,810	-	117,256,810
Cash and cash equivalents	-	27,854,701	27,854,701
Trade and other receivables	-	98,200	98,200
	117,256,810	27,952,901	145,209,711
Financial liabilities
Trade and other payables	-	659,645	659,645
Unsecured loan note instruments*	-	3,956,822	3,956,822
	-	4,616,467	4,616,467

*The directors consider that the fair value of the unsecured loan note instruments and zero dividend preference shares is equal to carrying value.

13 Cash and cash equivalents

	2022	2021
	£	£
Current and call accounts	27,545,042	27,854,701
	27,545,042	27,854,701

The current and call accounts have been classified as cash and cash equivalents in the Statement of Cash Flows.

14 Trade and other payables

	2022	2021
	£	£
Trade payables	13,657	688
Accrued administration fee	48,406	47,677
Accrued audit fee	54,078	43,466
Accrued professional fee	65,811	53,131
Accrued investment advisor fees	500,000	500,000
Accrued Directors' fees	12,833	12,833
Provision for ZDP issue costs	285,870	-
Other payables	2,000	1,850
Total	982,655	659,645

15 Non-current liabilities

Unsecured Loan Notes ("ULN")

The Company has issued ULN's which pay interest at 7.5 per cent. per annum and are redeemable on 23 July 2022 (subject to voluntary early redemption by the Company). At 31 January 2022, £3,987,729 (2021: £3,987,729) of ULNs in principal amount were outstanding. Issue costs totalling £144,236 have been offset against the value of the loan note instrument and are being amortised over the life of the instrument. The total issue costs expensed in the year ended 31 January 2022 was £20,605 (2021: £20,605). The carrying value of the ULNs in issue at the year-end was £3,977,427 (2021: £3,956,822). The total interest expense for the ULNs for the year is £319,685 (2021: £319,685). This includes the amortisation of the issue costs.

Zero Dividend Preference Shares ("ZDP Shares")

On 17 December 2021 the Company issued 20,000,000 ZDP Shares at a price of £1 per share, raising £20,000,000. The ZDP Shares will not pay dividends but have a final capital entitlement at maturity on 16 December 2026 of 129.14 pence. It should be noted that the predetermined capital entitlement of a ZDP Share is not guaranteed and is dependent upon the Company's gross assets being sufficient on 16 December 2026 to meet the final capital entitlement.

Issue costs totalling £573,796 have been offset against the value of the ZDP Shares and are being amortised over the life of the instrument. The total issue costs expensed in the year ended 31 January 2022 was £14,538 (2021: £nil). The carrying value of the ZDP Shares in issue at the year-end was £19,580,190 (2021: £nil). The total finance charge for the ZDP Shares for the year is £156,983 (2021: £nil). This includes the ZDP Share final capital entitlement accrual and the amortisation of the issue costs.

16 Share capital

	2022	2022	2021	2021
	Number	£	Number	£
Authorised share capital
Ordinary shares of 5p each	45,000,000	2,250,000	45,000,000	2,250,000
Called up, allotted and fully paid
Ordinary shares of 5p each	34,616,554	1,730,828	34,616,554	1,730,828
Ordinary shares of 5p each held in treasury	(3,096,575)	-	(2,467,731)	-
	31,519,979	1,730,828	32,148,823	1,730,828

No shares were issued during the year ended 31 January 2022. During the year ended 31 January 2021, 77,493 ordinary shares of 5 pence each were issued at a price of 172.50 pence each. Therefore, in the prior year the share capital of the Company increased by £3,875 and the share premium increased by £129,801.

During the year ended 31 January 2022, the Company repurchased 628,844 shares (2021: 799,480 shares) with a total value of £2,117,866 (2021: £2,068,761). These shares are held as treasury shares.

During the year ended 31 January 2022, the Trust purchased 456,524 shares (2021: 462,435 shares) with a total value of £1,498,776 (2021: £786,140). 3,755 shares vested to Participants in the year ended 31 January 2022 (2021: nil). At the year-end 1,871,753 shares were held by the Trust (2021: 1,419,004) (see note 7).

17 Basic and diluted profit per share (pence)

Basic profit per share is calculated by dividing the profit of the Company for the year attributable to the ordinary shareholders of £5,726,220 (2021: £38,253,046) divided by the weighted average number of shares outstanding during the year of 32,065,616 after excluding treasury shares (2021: 32,782,089 shares).

Diluted profit per share is calculated by dividing the profit of the Company for the year attributable to ordinary shareholders of £5,726,220 (2021: £38,253,046) divided by the weighted average number of ordinary shares outstanding during the year, as adjusted for the effects of all dilutive potential ordinary shares, of 32,065,616 after excluding treasury shares (2021: 32,782,089 shares).

18 NAV per share (pence)

The Company's NAV per share of 455.66 pence (2021: 437.63 pence) is based on the net assets of the Company at the year-end of £143,624,977 (2021: £140,692,608) divided by the shares in issue at the end of the year of 31,519,979 after excluding treasury shares (2021: 32,148,823).

The Company's diluted NAV per share of 455.66 pence is based on the net assets of the Company at the year-end of £143,624,977 (2021: £140,692,608) divided by the shares in issue at the end of the year, as adjusted for the effects of dilutive potential ordinary shares of 31,519,979 after excluding treasury shares (2021: 32,148,823).

19 Net cash used in operating activities

Reconciliation of profit before finance cost and tax to net cash used in operating activities:

	2022	2021
	Company	Company
	£	£
Loss before finance cost and tax (Revenue)	(4,077,475)	(3,439,412)
Adjustments:
Share-based payment expense	822,166	682,525
Movement in loans from associates	-	(154,268)
	(3,255,309)	(2,911,155)
Non-cash items
Movement in trade and other receivables	3,817	37,647
Movement in trade and other payables	20,140	(19,059)
Net cash used in operating activities	(3,231,352)	(2,892,567)

20 Financial instruments

The Company's financial instruments comprise:

· Investments in listed and unlisted companies held by associates, comprising equity and loans

· Cash and cash equivalents, loans and convertible loan note instruments; and

· Accrued interest and trade and other receivables, accrued expenses and sundry creditors.

Financial risk management objectives and policies

The main risks arising from the Company's financial instruments are liquidity risk, credit risk, market price risk and interest rate risk. None of those risks are hedged. These risks arise through directly held financial instruments and through the indirect exposures created by the underlying financial instruments in the associates. These risks are managed by the Directors in conjunction with the Investment Advisor. The Investment Advisor is responsible for day to day management of financial instruments in the associates.

Capital management

The Company's capital comprises share capital, share premium and reserves and is not subject to externally imposed capital requirements.

Liquidity risk

Liquidity risk is the risk that the Company will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or another financial asset. The Company's liquid assets comprise cash and cash equivalents and trade and other receivables, which are readily realisable.

Residual contractual maturities of financial liabilities

31 January 2022	Less than 1 Month £	1 - 3 Months £	3 months to 1 year £	1 - 5 years £	Over 5 years £	No stated maturity £
Financial liabilities
Trade and other payables	982,655	-	-	-	-	-
Loan note instruments	-	-	3,977,427	-	-	-
Zero dividend preference shares	-	-	-	19,580,190	-	-
Total	982,655	-	3,977,427	19,580,190	-	-

31 January 2021	Less than 1 Month £	1 - 3 Months £	3 months to 1 year £	1 - 5 years £	Over 5 years £	No stated maturity £
Financial liabilities
Trade and other payables	659,645	-	-	-	-	-
Loan note instruments	-	-	-	4,436,341	-	-
Total	659,645	-	-	4,436,341	-	-

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 Company.

The Company, through its interests in associates, has advanced loans to a number of private companies which exposes the Company 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 Company and its associates, and credit risk is managed by taking security where available (typically a floating charge) and the Investment Advisor taking an active role in the management of the borrowing companies.

Although the Investment Advisor looks to set realistic repayment schedules, it does not necessarily view a portfolio company not repaying on time and in full as 'underperforming' and seeks to monitor each portfolio company on a case-by-case basis. However, in all cases the Investment Advisor reserves the right to exercise step in rights. In addition to the repayment of loans advanced, the Company and associates will often arrange additional preference share structures and take significant equity stakes so as to create shareholder value. It is the performance of the combination of all securities including third party debt that determines the Company's view of each investment.

At the reporting date, the Company's financial assets exposed to credit risk amounted to the following (excluding exposure in the underlying associates):

	2022	2021
	£	£
Cash and cash equivalents	27,545,042	27,854,701
Trade and other receivables	-	98,200
Total	27,545,042	27,952,901

Cash balances are placed with HSBC Bank plc, Barclays Bank plc, both of which have the credit rating of A1 Negative (Moody's) and Santander International which has the credit rating of A2 (Moody's).

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 Company is exposed to a market price risk via its equity investments held through its interests in associates, which are stated at fair value.

Market price risk sensitivity

The Company is exposed to market price risk with regard to its investment in the associates, which own equity interests in a number of quoted and unquoted companies which are stated at fair value. Luceco plc was quoted on the Main Market of the London Stock Exchange at 31 January 2022. EPIC Acquisition Corp's shares was quoted on the Euronext Amsterdam Stock Exchange at 31 January 2022.

If Luceco plc's share price had been 5.0 per cent. higher than actual close of market on 31 January 2022, EPE Special Opportunities Limited's NAV / share would have been 2.97 per cent. higher than reported. If Luceco's share price had been 5.0 per cent. lower than actual close of market on 31 January 2022, EPE Special Opportunities Limited's NAV / share would have been 2.97 per cent. lower than reported. These movements would have had a corresponding effect on the profit for the year

If EPIC Acquisition Corp's share price had been 5.0 per cent. higher than actual close of market on 31 January 2022, EPE Special Opportunities Limited's NAV / share would have been 0.18 per cent. higher than reported. If EPIC Acquisition Corp's share price had been 5.0 per cent. lower than actual close of market on 31 January 2022, EPE Special Opportunities Limited's NAV / share would have been 0.18 per cent. lower than reported. These movements would have had a corresponding effect on the profit for the year.

Interest rate risk

The Company is exposed to interest rate risk through its investment in the associates and on its cash balances. The associates provide loans to portfolio companies. Most of the loans are at fixed rates. Cash balances earn interest at variable rates. The unsecured loan note instruments carry fixed interest rates.

The table below summarises the Company's exposure to interest rate risks. It includes the Company's financial assets and liabilities at the earlier of contractual re-pricing or maturity date, measured by the carrying values of assets and liabilities:

31 January 2022	Less than 1 month	1 month - 1 year	1 - 5 years	Over 5 years	Non- interest bearing	Total
Assets	£	£	£	£	£	£
Receivables and cash
Trade and other receivables	-	-	-	-	-	-
Cash and cash equivalents	27,545,042	-	-	-	-	27,545,042
Total financial assets	27,545,042	-	-	-	-	27,545,042

Liabilities
Financial liabilities measured at amortised cost
Trade and other payables	-	-	-	-	(982,655)	(982,655)
Unsecured loan note instruments	-	(3,977,427)	-	-	-	(3,977,427)
Total financial liabilities		(3,977,427)	-	-	(982,655)	(4,960,082)

31 January 2021	Less than 1 month	1 month - 1 year	1 - 5 years	Over 5 years	Non- interest bearing	Total
Assets	£	£	£	£	£	£
Receivables and cash
Trade and other receivables	-	-	-	-	98,200	98,200
Cash and cash equivalents	27,854,701	-	-	-	-	27,854,701
Total financial assets	27,854,701	-	-	-	98,200	27,952,901

Liabilities
Financial liabilities measured at amortised cost
Trade and other payables	-	-	-	-	(659,645)	(659,645)
Unsecured loan note instruments	-	-	(3,956,822)	-	-	(3,956,822)
Total financial liabilities	-	-	(3,956,822)	-	(659,645)	(4,616,467)

Interest rate sensitivity

The Company is exposed to market interest rate risk only via its cash balances. A sensitivity analysis has not been provided as it is not considered significant to Company performance.

Currency risk

The Company's has no significant exposure to foreign currency risk.

Exposure to other market price risk

The investment advisor monitors the concentration of risk for equity and debt securities based on counterparties and industries (and geographical location). The Company's equity and debt investments are concentrated in the following industries.

	2022	2021
	%	%
Consumer and Retail	26.1	13.3
Engineering, Manufacturing and Distribution	52.0	61.2
Healthcare	1.9	2.7
Credit Funds	3.6	3.6
Bank Deposits	16.4	19.2
	100.0	100.0

The Company notes that there was a concentration on the Engineering, Manufacturing and Distribution sector, representing 52.0 per cent. of investments for the year ended 31 January 2022 (31 January 2021: 61.2 per cent.). The Company monitors carefully the sector concentration risk across the portfolio.

Operational risk

'Operational risk' is the risk of direct or indirect loss arising from a wide variety of causes associated with the processes, technology and infrastructure supporting the Company's activities (both at the Company and at its service providers) and from external factors (other than credit, market and liquidity risks) such as those arising from legal and regulatory requirements and generally accepted standards of investment management behaviour.

The Company's objective is to manage operational risk so as to balance the limitation of financial losses and damage to its reputation with achieving its investment objective of generating returns to investors.

The primary responsibility for the development and implementation of controls over operational risk rests with the Board of Directors. This responsibility is supported by the development of overall standards for the management of operational risk, which encompasses the controls and processes at the service providers and the establishment of service levels with the service providers, in the following areas:

· documentation of controls and procedures;

· requirements for:

- appropriate segregation of duties between various functions, roles and responsibilities;

- reconciliation and monitoring of transactions; and

- periodic assessment of operational risk faced;

· the adequacy of controls and procedures to address the risks identified;

· compliance with regulatory and other legal requirements;

· development of contingency plans;

· training and professional development;

· ethical and business standards; and

· risk mitigation, including insurance if this is effective.

The Company's key service providers include the following:

· Administrator: Langham Hall Fund Management (Jersey) Limited

· Investment Advisor: EPIC Investment Partners LLP

· Financial Administrator: EPIC Administration Limited

· Nominated Advisor and Broker: Numis Securities Limited

The Directors' assessment of the adequacy of the controls and processes in place at the service providers with respect to operational risk is carried out via regular discussions with the service providers as well as site visits to their offices. The Company also undertakes periodic third-party reviews of service providers' activities.

21 Directors' interests

Five of the Directors have interests in the shares of the Company as at 31 January 2022 (2021: five). Nicholas Wilson holds 131,265 ordinary shares (2021: 131,265). Clive Spears holds 136,314 ordinary shares (2021: 133,270). Heather Bestwick holds 22,307 ordinary shares (2021: 19,263). David Pirouet holds 14,073 ordinary shares (2021: 11,162). Michael Gray holds 2,378 ordinary shares (2021: nil)

22 Related parties

Directors' fees expense during the year amounted to £149,000 (year ended 31 January 2021: £154,000) of which £12,833 is accrued as at 31 January 2022 (2021: £12,833)

Certain Directors of the Company and other participants are incentivised in the form of equity settled share-based payment transactions, through a Joint Share Ownership Plan (see note 7).

Details of remuneration payable to key service providers are included in note 5 to the financial statements.

In August 2020, the Investment Advisor acquired a controlling interest in Atlantic Capital Management Limited ("ACML"). ACML is the manager of Atlantic Credit Opportunities Fund and the sub-advisor to the segregated account of Prelude Structured Alternatives Master Fund LP. On 1 September 2020, the Company completed a £1.9 million investment into Atlantic Credit Opportunities Fund. On 12 November 2020, the Company completed a further $2.5 million investment in a segregated account of Prelude Structured Alternatives Master Fund LP. The Company will not pay any management or performance fees to ACML in relation to these two investments.

In December 2021, ESO Alternative Investments LP invested €10 million into EPIC Acquisition Corp ("EAC"), a newly incorporated special purpose acquisition company ("SPAC") and EAC's sponsor, EAC Sponsor Limited (the "Sponsor"). The Sponsor is jointly led by the Investment Advisor and TT Bond Partners (an independent party).

23 Subsequent events

Following the year end, the Directors in aggregate sold 88,653 ordinary shares in the Company at a price of 305.00 pence per ordinary share on 9 February 2022.

Following the year end, the Trust acquired 40,239 ordinary shares in the Company at a price of 305.00 pence per ordinary share on 9 February 2022.

Schedule of shareholders holding over 3% of issued shares

As at 31 January 2022

		Percentage holding
Giles Brand		32.8%
HSBC Global Custody Nominee UK Limited		7.5%
Corporation of Lloyds		7.4%
Boston Trust Company Limited (Trustee to the ESO JSOP Scheme)		5.9%
Premier Miton Investors		5.2%
Lombard Odier Darier Hentsch		3.3%
Total over 3% holding		62.1%

Directors	Administrator and Company Address
C.L. Spears (Chairman)	Langham Hall Fund Management (Jersey) Limited
H. Bestwick	Liberation House
D. Pirouet	Castle Street, St Helier
R.B.M. Quayle (resigned in June 2021)	Jersey JE1 2LH
N.V. Wilson M.M. Gray (appointed in September 2021)


Investment Advisor	Financial Administrator
EPIC Investment Partners LLP	EPIC Administration Limited
Audrey House	Audrey House
16-20 Ely Place	16-20 Ely Place
London EC1N 6SN	London EC1N 6SN


Auditors and Reporting Accountants	Nominated Advisor and Broker
KPMG Audit LLC	Numis Securities Limited
Heritage Court	10 Paternoster Square
41 Athol Street	London EC4M 7LT
Douglas
Isle of Man IM1 1LA


Bankers	Registered Agent (Bermuda)
Barclays Bank plc	Conyers Dill & Pearman
1 Churchill Place	Clarendon House, 2 Church Street
Canary Wharf	Hamilton HM 11
London E14 5HP	Bermuda

HSBC Bank plc	Registrar and CREST Providers
1st Floor	Computershare Investor Services (Jersey) Limited
60 Queen Victoria Street	Queensway House
London EC4N 4TR	Hilgrove Street
	St. Helier JE1 1ES
Santander International	Investor Relations
PO Box 545	Richard Spiegelberg
19-21 Commercial Street	Cardew Company
St Helier, Jersey, JE4 8XG	5 Chancery Lane
	London EC4A 1BL

EPE Special Opportunities Limited

("ESO" or the "Company")

Summary

Enquiries

Chairman's Statement

Investment Advisor's Report

Biographies of the Directors

Risk and Audit Committee Report

Corporate Governance

Report of the Directors

Statement of Directors' Responsibilities in respect of the Annual Report and the Financial Statements

3 Our application of materiality and an overview of the scope of our audit

4 Going concern

Statement of Assets and Liabilities

Statement of Changes in Equity

Statement of Cash Flows

Notes to the Financial Statements

Joint share ownership plan ("JSOP") and share-based payments

Company Information

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