EPE Special Opportunities (ESO) has provided a trading update for the year ended 31 January 2020. In what was a recovery year for the private equity firm, ESO has smashed it out of the park with a return on NAV of 54.6% driven primarily by led by a significant recovery in value at Luceco Plc and encouraging sales and profit growth at Whittard (Whittard and Luceco being its two largest holdings). The update provides the following key highlights:
- The unaudited estimate of the Company’s Net Asset Value (“NAV”) as at 31 January 2020 is 317.18 pence per share, an increase of 54.6 per cent on the NAV per share of 205.19 pence as at 31 January 2019. This unaudited estimate has been prepared using the Company’s historic valuation methodology and accounting principles.
- The strong performance of the Company’s NAV per share has been driven primarily by the growth in value of the Companies two largest assets, Luceco and Whittard of Chelsea (“Whittard”).
- The share price at 31 January 2020 was 199.00 pence, representing an increase of 33.9 per cent on the share price of 148.57 pence as at 31 January 2019.
- Whittard displayed encouraging sales growth and improved profitability over the period. The business’s UK retail estate continued to perform strongly, achieving 9.1 per cent LFL sales growth, whilst further afield three new stores were opened in Taiwan. Growth in Whittard’s e-commerce channel was maintained both domestically and in China.
- On 28 January 2020, Luceco released its full year trading statement for the year ending 31 December 2019. The business reported stronger trading performance as well as sustained gross margin gains and increased profitability following the successful implementation of operational improvements.
- Trading at David Phillips improved steadily over the course of 2019, with the business successfully identifying new opportunities to improve sales and profitability.
- Pharmacy2U maintained its strong growth trajectory throughout the period, underpinned by significant improvements in key customer acquisition, retention and profitability metrics.
- The Company’s portfolio is valued at a weighted average EBITDA to enterprise value multiple of 8.1x (excluding Pharmacy2U, which is valued on a sales multiple). The Company’s portfolio has in aggregate 0.7x third party net debt to EBITDA.
- The Board continues to examine new investment opportunities identified by the Investment Advisor.
- Between June and October 2019, the Company completed buybacks in the market totaling 752,001 ordinary shares (or 2.3 per cent of the Company’s issued ordinary share capital).
- Liquidity at the Company is circa £26 million. The Company has outstanding unsecured loans of £3.9 million, of which £2.0 million will be redeemed in July 2020.