TIDMEQPI TIDMEQPC
RNS Number : 5853C
Equity Partnership Inv Co PLC
17 November 2009
The Equity Partnership Investment Company PLC (EPIC PLC)
Annual Report and Financial Statements 2009
Chairman's Statement
In the last Annual Report I suggested that share markets would begin to recover
before there were tangible signs of economic recovery and so it has proved. The
twelve month period under review from 1 August 2008 to 31 July 2009 has been
very much a game of two halves, with the first half showing a significant
decline in equity values followed by a steady and latterly stronger recovery
after the UK market reached its low on 3 March this year. At the time of writing
the FTSE 100 Index has recovered in excess of 40% of the value, although over
the twelve months as a whole the Index remains 15% below the peak. Against this
background EPIC's UK Equity Portfolio has fallen by 5.8% and the leveraged
Capital Share NAV has fallen by 41.6%. Over the period the Company paid four
quarterly dividends of 3.1217 pence per share to Income Shareholders amounting
to a total of 12.4868p for the year.
Throughout this difficult period the Board and its advisers have continued to
exercise the Company's conservative approach to the writing down of assets
whenever we believe there is any doubt about an investment's prospects. This
policy has affected our Specialist Funds portfolio in particular. As a result
of this and the declines in quoted equity valuations, the proportion of the fund
represented by unlisted equities has risen by default from 27% to 40% over the
year. The Managers believe that the process of writing down assets where we
consider the values have been impaired is now all but complete and that any
recovery in equity values or realisations from the private equity portfolio
should feed through into an improvement in the Capital Shares' NAV. The Company
is pursuing payment from Tiger Aspect in respect of the Mr Bean series animated
for ITV which was produced by Varga, one of our previously written-down private
equity holdings. We have made full provision for the potential costs of pursuing
this course of action and we have a high degree of confidence that we will
retrieve some of the value lost when the holding was written off in 2004.
My statement at the half year set out the future asset allocation policy
resulting from our Asset Allocation Review. More specifically the Board will be
closely monitoring the Manager's progress in moving the Company's asset
weightings into more liquid investments when opportunities arise. There may be
occasional exceptions to this rule, as indicated in my previous report, where
fill-in acquisitions within the Private Equity portfolio are likely to improve
both the timing and the value of future realisations. Hopefully, follow on
investments will in some cases not require further equity investment,
particularly in those companies in the portfolio where there are limited
borrowings and the Managers can access bank finance.
Through EPIC's half yearly reports and quarterly updates the Company will be
reporting on the Manager's progress in generating the liquidity required in
order to satisfy the Company's obligation to repay Zero Dividend Preference and
Income shareholders in July 2011. In parallel, and as I have mentioned in
previous reports, the Board is also determined to fulfil its obligation to
protect the rights of all classes of shareholder and wish to avoid any need to
realise the Company's less liquid assets at a time or in a manner where full
value is unlikely to be achieved. While feedback from some of our investors
indicates a potential appetite to extend the life of the Zero Dividend
Preference and or Income Shares, our prime objective is to ensure that the
portfolio holds sufficient liquid assets to enable full repayment in July 2011
whilst at the same time recognising that the Fund's hurdle rate requires
continued exposure to growth assets to prevent Capital Share NAV erosion. In
parallel with these core objectives we will continue to explore any corporate
opportunities which could improve the outlook for shareholders.
Given the robust performance of many companies within our Private Equity
portfolio we would be disappointed not to see opportunities to realise
investments at more attractive valuations over the next year. These are reported
in more detail within the Manager's commentary but it is encouraging to see
companies which are exposed to the UK economy such as Nexus performing well and
repaying bank debt.
It is hard to believe that a recession caused by the most serious financial
crisis for decades will soon abate and allow the UK economy to return to growth.
Alas, the legacy of the crisis and more particularly, measures designed to
mitigate its effect, are likely to be felt for many years to come. A continuing
low interest rate environment and a corporate sector that appears not to be
currently shouldering its share of the burden - at the expense of the labour
force where continuing pressure on employment and earnings will postpone any
consumer led recovery. However, against this background a combination of high
levels of investor liquidity, low interest rates and encouraging corporate
profitability may continue to apply upward pressure on equity and bond
valuations, even if the path to economic recovery remains bumpy and protracted.
+-----------------------------+--------+--+-----------------------------+--------+
| Asset Allocation as at 31 July 2009 | | Asset Allocation as at 31 July 2008 |
+--------------------------------------+--+--------------------------------------+
| | % | | | % |
+-----------------------------+--------+--+-----------------------------+--------+
| Unquoted | 39.75 | | Unquoted | 28.74 |
| Investments/Private | | | Investments/Private | |
| Equities | | | Equities | |
+-----------------------------+--------+--+-----------------------------+--------+
| Quoted UK Equities | 19.63 | | Quoted UK Equities | 28.32 |
+-----------------------------+--------+--+-----------------------------+--------+
| Specialist Funds | 16.58 | | Specialist Funds | 21.64 |
+-----------------------------+--------+--+-----------------------------+--------+
| Cash & Sterling CD's | 10.38 | | Cash & Sterling CD's | 6.05 |
+-----------------------------+--------+--+-----------------------------+--------+
| Bonds & Structured Income | 8.08 | | Bonds & Structured Income | 8.18 |
| Products | | | Products | |
+-----------------------------+--------+--+-----------------------------+--------+
| Strategic Investments* | 5.58 | | Strategic Investments* | 7.07 |
+-----------------------------+--------+--+-----------------------------+--------+
| *Syndicate Asset Management PLC, | | *Syndicate Asset Management PLC, |
| Strand Partners Limited, | | Strand Partners Limited, |
| Note: figures do not include the | | Note: figures do not include the |
| exposure to EPIC Securities PLC | | exposure to EPIC Securities PLC |
+-----------------------------+--------+--+-----------------------------+--------+
Cameron McPhail
16 November 2009
Consolidated Income Statement
For the year ended 31 July 2009
+-------+---------------------------------------------------+--+----------+----------+
| | | | 2009 | 2008 |
+-------+---------------------------------------------------+--+----------+----------+
| Note | | | GBP000s | GBP000s |
+-------+---------------------------------------------------+--+----------+----------+
| | Income | | | |
+-------+---------------------------------------------------+--+----------+----------+
| | Dividend income | | 923 | 1,107 |
+-------+---------------------------------------------------+--+----------+----------+
| | Bond interest income | | 2,544 | 2,229 |
+-------+---------------------------------------------------+--+----------+----------+
| | Bank interest income | | 133 | 614 |
+-------+---------------------------------------------------+--+----------+----------+
| | Other income | | 40 | 16 |
+-------+---------------------------------------------------+--+----------+----------+
| | Total income | | 3,640 | 3,966 |
+-------+---------------------------------------------------+--+----------+----------+
| | | | | |
+-------+---------------------------------------------------+--+----------+----------+
| | Expenses | | | |
+-------+---------------------------------------------------+--+----------+----------+
| 3 | Management and investment advisory fees | | 1,077 | 976 |
+-------+---------------------------------------------------+--+----------+----------+
| | Professional fees | | 363 | 378 |
+-------+---------------------------------------------------+--+----------+----------+
| | Other expenses | | 375 | 533 |
+-------+---------------------------------------------------+--+----------+----------+
| 3 | Performance fees | | - | 273 |
+-------+---------------------------------------------------+--+----------+----------+
| 3 | Administration fees | | 139 | 145 |
+-------+---------------------------------------------------+--+----------+----------+
| 4 | Directors' fees | | 75 | 67 |
+-------+---------------------------------------------------+--+----------+----------+
| | Custodian fees | | 22 | (6) |
+-------+---------------------------------------------------+--+----------+----------+
| | Audit fees | | 68 | 67 |
+-------+---------------------------------------------------+--+----------+----------+
| 11 | Provisions | | 650 | - |
+-------+---------------------------------------------------+--+----------+----------+
| | Total expenses | | 2,769 | 2,433 |
+-------+---------------------------------------------------+--+----------+----------+
| | Net investment income | | 871 | 1,533 |
+-------+---------------------------------------------------+--+----------+----------+
| | | | | |
+-------+---------------------------------------------------+--+----------+----------+
| | (Losses)/gains on investments | | | |
+-------+---------------------------------------------------+--+----------+----------+
| | Realised gains/(losses) on sale of investments at | | 2,757 | (8,261) |
| | fair value through profit or loss | | | |
+-------+---------------------------------------------------+--+----------+----------+
| | Net realised losses on settlement of forward | | (3,428) | (508) |
| | foreign exchange contracts | | | |
+-------+---------------------------------------------------+--+----------+----------+
| | Net unrealised gains/(losses) on forward foreign | | 827 | (617) |
| | currency contracts | | | |
+-------+---------------------------------------------------+--+----------+----------+
| | Foreign exchange differences | | 376 | 699 |
+-------+---------------------------------------------------+--+----------+----------+
| | Movement in unrealised losses on revaluation of | | (11,939) | (9,212) |
| | investments at fair value through profit or loss | | | |
+-------+---------------------------------------------------+--+----------+----------+
| | Loss for the year on investments at fair value | | (11,407) | (17,899) |
| | through profit or loss | | | |
+-------+---------------------------------------------------+--+----------+----------+
|5, 12 | Dividends on Income Shares | | (2,589) | (2,466) |
+-------+---------------------------------------------------+--+----------+----------+
| 12 | Debt finance costs | | (1,497) | (1,410) |
+-------+---------------------------------------------------+--+----------+----------+
| | Loss for the year | | (14,622) | (20,242) |
+-------+---------------------------------------------------+--+----------+----------+
| 6 | Basic and diluted loss per capital share (pence) | | (36.28)p | (50.02)p |
+-------+---------------------------------------------------+--+----------+----------+
| | | | | |
+-------+---------------------------------------------------+--+----------+----------+
| | | | | |
+-------+---------------------------------------------------+--+----------+----------+
The accompanying notes are an integral part of the financial statements
Consolidated Balance Sheet
As at 31 July 2009
+------+---------------------------------------------------+--+----------+---------+
| | | | 2009 | 2008 |
+------+---------------------------------------------------+--+----------+---------+
|Note | | | GBP000s | GBP000s |
+------+---------------------------------------------------+--+----------+---------+
| 7b | Financial assets at fair value through profit or | | 59,786 | 71,848 |
| | loss | | | |
+------+---------------------------------------------------+--+----------+---------+
| | | | | |
+------+---------------------------------------------------+--+----------+---------+
| | Current assets | | | |
+------+---------------------------------------------------+--+----------+---------+
| | Cash and cash equivalents | | 2,139 | 5,109 |
+------+---------------------------------------------------+--+----------+---------+
| 9 | Trade debtors and other receivables | | 5,257 | 3,113 |
+------+---------------------------------------------------+--+----------+---------+
| | Total assets | | 67,182 | 80,070 |
+------+---------------------------------------------------+--+----------+---------+
| | | | | |
+------+---------------------------------------------------+--+----------+---------+
| | Current liabilities | | | |
+------+---------------------------------------------------+--+----------+---------+
| 10 | Trade creditors and other payables | | 1,749 | 1,686 |
+------+---------------------------------------------------+--+----------+---------+
| 11 | Provisions | | 60 | - |
+------+---------------------------------------------------+--+----------+---------+
| | | | | |
+------+---------------------------------------------------+--+----------+---------+
| | Non-current liabilities | | | |
+------+---------------------------------------------------+--+----------+---------+
| 12b | Zero Dividend Preference Shares | | 24,213 | 22,562 |
+------+---------------------------------------------------+--+----------+---------+
| 12a | Income Shares | | 20,631 | 20,671 |
+------+---------------------------------------------------+--+----------+---------+
| | Total liabilities | | 46,653 | 44,919 |
+------+---------------------------------------------------+--+----------+---------+
| | Net assets | | 20,529 | 35,151 |
+------+---------------------------------------------------+--+----------+---------+
| | Shareholders' Equity | | | |
+------+---------------------------------------------------+--+----------+---------+
| 13 | Share capital | | 4,030 | 4,030 |
+------+---------------------------------------------------+--+----------+---------+
| 14 | Share premium | | 35,410 | 35,410 |
+------+---------------------------------------------------+--+----------+---------+
| 15 | Reserves | | (18,911) | (4,289) |
+------+---------------------------------------------------+--+----------+---------+
| | Shareholders' Equity | | 20,529 | 35,151 |
+------+---------------------------------------------------+--+----------+---------+
| 16 | Net asset value per Capital Share (basic and | | 50.93p | 87.21p |
| | diluted, pence) | | | |
+------+---------------------------------------------------+--+----------+---------+
The accompanying note are an integral part of the financial statements.
Company Balance Sheet
As at 31 July 2009
+------+---------------------------------------------------+--+----------+---------+
| | | | 2009 | 2008 |
+------+---------------------------------------------------+--+----------+---------+
|Note | | | GBP000s | GBP000s |
+------+---------------------------------------------------+--+----------+---------+
| 7a | Financial assets at fair value through profit or | | 36,019 | 51,464 |
| | loss | | | |
+------+---------------------------------------------------+--+----------+---------+
| 8 | Investment in subsidiaries | | - | - |
+------+---------------------------------------------------+--+----------+---------+
| | | | | |
+------+---------------------------------------------------+--+----------+---------+
| | Current assets | | | |
+------+---------------------------------------------------+--+----------+---------+
| | Cash and cash equivalents | | 1,504 | 5,029 |
+------+---------------------------------------------------+--+----------+---------+
| 9 | Trade debtors and other receivables | | 23,863 | 18,954 |
+------+---------------------------------------------------+--+----------+---------+
| | Total assets | | 61,386 | 75,447 |
+------+---------------------------------------------------+--+----------+---------+
| | | | | |
+------+---------------------------------------------------+--+----------+---------+
| | Current liabilities | | | |
+------+---------------------------------------------------+--+----------+---------+
| 10 | Trade creditors and other payables | | 1,716 | 1,661 |
+------+---------------------------------------------------+--+----------+---------+
| 11 | Provisions | | 60 | - |
+------+---------------------------------------------------+--+----------+---------+
| | | | | |
+------+---------------------------------------------------+--+----------+---------+
| | Non-current liabilities | | | |
+------+---------------------------------------------------+--+----------+---------+
| 12b | Zero Dividend Preference Shares | | 24,213 | 22,562 |
+------+---------------------------------------------------+--+----------+---------+
| 12a | Income Shares | | 20,631 | 20,671 |
+------+---------------------------------------------------+--+----------+---------+
| | Total liabilities | | 46,620 | 44,894 |
+------+---------------------------------------------------+--+----------+---------+
| | Net assets | | 14,766 | 30,553 |
+------+---------------------------------------------------+--+----------+---------+
| | Shareholders' Equity | | | |
+------+---------------------------------------------------+--+----------+---------+
| 13 | Share capital | | 4,030 | 4,030 |
+------+---------------------------------------------------+--+----------+---------+
| 14 | Share premium | | 35,410 | 35,410 |
+------+---------------------------------------------------+--+----------+---------+
| 15 | Reserves | | (24,674) | (8,887) |
+------+---------------------------------------------------+--+----------+---------+
| | Shareholders' Equity | | 14,766 | 30,553 |
+------+---------------------------------------------------+--+----------+---------+
The accompanying notes are an integral part of the financial statements.
Consolidated Statement of Changes in Shareholders' Equity
For the year ended 31 July 2009
+-----+----------------------------+--+---------+---------+----------+----------+----------+
| | | | Share | Share | Retained | 2009 | 2008 |
| | | | capital | premium | reserves | Total | Total |
+-----+----------------------------+--+---------+---------+----------+----------+----------+
| | | | GBP000s | GBP000s | GBP000s | GBP000s | GBP000s |
+-----+----------------------------+--+---------+---------+----------+----------+----------+
| | Balance at 1 August | | 4,030 | 35,410 | (4,289) | 35,151 | 55,393 |
+-----+----------------------------+--+---------+---------+----------+----------+----------+
| | | | | | | | |
+-----+----------------------------+--+---------+---------+----------+----------+----------+
| | Loss for the year | | - | - | (14,622) | (14,622) | (20,242) |
+-----+----------------------------+--+---------+---------+----------+----------+----------+
| | | | | | | | |
+-----+----------------------------+--+---------+---------+----------+----------+----------+
| | Balance at 31 July | | 4,030 | 35,410 | (18,911) | 20,529 | 35,151 |
+-----+----------------------------+--+---------+---------+----------+----------+----------+
The accompanying notes are an integral part of the financial statements.
Consolidated Statement of Cash Flows
For the year ended 31 July 2009
+------+----------------------------------------------------+--+----------+----------+
| | | | 2009 | 2008 |
+------+----------------------------------------------------+--+----------+----------+
|Note | | | GBP000s | GBP000s |
+------+----------------------------------------------------+--+----------+----------+
| | Operating activities | | | |
+------+----------------------------------------------------+--+----------+----------+
| | Dividends received | | 892 | 1,079 |
+------+----------------------------------------------------+--+----------+----------+
| | Bond interest received | | 1,506 | 2,066 |
+------+----------------------------------------------------+--+----------+----------+
| | Bank interest and commission received | | 394 | 621 |
+------+----------------------------------------------------+--+----------+----------+
| | Other income received | | 40 | 16 |
+------+----------------------------------------------------+--+----------+----------+
| | Expenses paid | | (1,920) | (2,805) |
+------+----------------------------------------------------+--+----------+----------+
| 17 | Net cash inflow from operating activities | | 912 | 977 |
+------+----------------------------------------------------+--+----------+----------+
| | Investing activities | | | |
+------+----------------------------------------------------+--+----------+----------+
| | Purchase of investments | | (40,671) | (75,378) |
+------+----------------------------------------------------+--+----------+----------+
| | Proceeds on sale of investments | | 42,401 | 76,422 |
+------+----------------------------------------------------+--+----------+----------+
| | Project cost paid | | - | (39) |
+------+----------------------------------------------------+--+----------+----------+
| | Realised exchange differences on non Sterling | | (99) | 620 |
| | deposits | | | |
+------+----------------------------------------------------+--+----------+----------+
| | Settlement of forward foreign exchange contracts | | (3,429) | (547) |
+------+----------------------------------------------------+--+----------+----------+
| | Net cash (outflow)/inflow from investing | | (1,798) | 1,078 |
| | activities | | | |
+------+----------------------------------------------------+--+----------+----------+
| | Financing activities | | | |
+------+----------------------------------------------------+--+----------+----------+
| | Dividends paid on income shares | | (2,558) | (2,444) |
+------+----------------------------------------------------+--+----------+----------+
| | Payment of ZDP formation costs | | - | (214) |
+------+----------------------------------------------------+--+----------+----------+
| | Net cash outflow from financing activities | | (2,558) | (2,658) |
+------+----------------------------------------------------+--+----------+----------+
| | Decrease in cash and cash equivalents | | (3,444) | (603) |
+------+----------------------------------------------------+--+----------+----------+
| | Unrealised effect of exchange rate fluctuations on | | 474 | 5 |
| | cash and cash equivalents held | | | |
+------+----------------------------------------------------+--+----------+----------+
| | Cash and cash equivalents at start of year | | 5,109 | 5,707 |
+------+----------------------------------------------------+--+----------+----------+
| | Cash and cash equivalents at 31 July 2009 | | 2,139 | 5,109 |
+------+----------------------------------------------------+--+----------+----------+
The accompanying notes are an integral part of the financial statements.
Notes to the Financial Statements
For the year ended 31 July 2009
1 The Company
The Equity Partnership Investment Company PLC ("EPIC PLC") was incorporated in
the Isle of Man on 6 July 2001. The Company is a closed ended investment company
and was formed primarily for investment in quoted equities, bonds and structured
income products, unquoted equities and specialist funds. The aim of the Group is
to provide long-term capital growth together with a high level of income. The
Group has no employees.
2Statement of accounting policies
a.Basis of preparation
The financial statements have been prepared in conformity with International
Financial Reporting Standards (IFRSs) and Interpretations adopted by the
International Accounting Standards Board (IASB) and applicable requirements of
Isle of Man law.
The financial statements have been prepared on a historical cost basis except
for the measurement at fair value of derivatives and financial assets measured
at fair value through the profit or loss. The carrying amount of recognised
assets and liabilities that are hedged is adjusted to record changes in the fair
value attributable to the risks that are being hedged.
b.Segmental reporting
The Directors are of the opinion that the Group is engaged in a single
geographic segment in the United Kingdom and single economic segment being
investment business. The segment is managed through analysis of various sub
segments.
c.Income
Dividends arising on equity investments are credited to income when the right to
receive the dividend is established. Bond interest and short-term deposit
interest income is accounted for on an effective interest basis.
d.Expenses
All expenses are accounted for on an accruals basis. Issue costs incurred in
respect of the Income Shares have been deferred and are amortised on a
straight-line basis over eight years. The issue costs in respect of the Zero
Dividend Preference Shares are charged as interest expense in the Income
Statement over the term of the life of these shares using the effective interest
method.
e.Taxation
The company is liable to Isle of Man taxation at a rate of 0% (2008: 0%).
f.Cash and cash equivalents
Cash in hand and at bank and short-term deposits which are held to maturity are
carried at cost.
Cash and cash equivalents are defined as cash in hand, demand deposits and
short-term, highly liquid investments readily convertible to known amounts of
cash and subject to insignificant risk of changes in value. For the purposes of
the Statement of Cashflows, cash and cash equivalents consist of cash in hand
and deposits in banks.
g.Investments
All investments are classified as "at fair value through profit or loss".
Investments are initially recognised at fair value.
After initial recognition, investments are measured at fair value, with
unrealised gains and losses on investments recognised in the Consolidated Income
Statement. Realised gains and losses on investments sold are calculated as the
difference between sales proceeds and cost. The Group applies the First-In
First-Out basis for the purposes of determining the historical cost in
calculating all realised gains and losses arising throughout the year.
For investments actively traded in organised financial markets, fair value is
generally determined by reference to Stock Exchange quoted market bid prices at
the close of business on the balance sheet date.
Unlisted investments are valued at the Directors' estimate of their fair value
in accordance with the requirements of IAS 39 'Financial Instruments:
Recognition and Measurement' and guidelines issued by the International Private
Equity and Venture Capital Association.
Where it proves impossible to obtain a market price the Directors will use their
discretion and awareness of market conditions to evaluate the fair value of such
investments.
h.Trade date accounting
All 'regular way' purchases and sales of financial assets are recognised on the
'trade date', i.e. the day that the entity commits to purchase or sell the
asset. Regular way purchases or sales are purchases or sales of financial assets
that require delivery of the asset within the time frame generally established
by regulation or convention in the market place.
i. Foreign currency translation
The functional and presentational currency is sterling.
Transactions denominated in foreign currencies are translated into sterling at
the rate of exchange ruling on the date of the transaction. Foreign currency
monetary assets and liabilities are translated into sterling at the rate ruling
on the balance sheet date. Gains and losses arising on revaluation of foreign
currency assets and liabilities are recorded in the Consolidated Income
Statement. All gains and losses arising to date on the revaluation of monetary
assets have been included within the unrealised gains arising on investments.
j.Non-current liabilities
Loans and borrowings
All loans and borrowings are initially recognised at cost, being the fair value
of the consideration received less issue costs where applicable. After initial
recognition, all interest-bearing loans and borrowings are subsequently measured
at amortised cost. Amortised cost is calculated by taking into account any
discount or premium on settlement.
Income Shares
Income Shares which exhibit characteristics of liabilities are recognised as
liabilities in the balance sheet. The corresponding dividends on these shares
and the difference between the net proceeds on the issue of these shares and the
final liability are charged to the Consolidated Income Statement, amortised on a
straight-line basis over eight years.
Zero Dividend Preference Shares
Zero Dividend Preference Shares, which exhibit the characteristics of
liabilities, are recognised as liabilities in the Balance Sheet in accordance
with International Accounting Standard 39 ("IAS 39"), Financial Instruments:
Recognition and Measurement. After initial recognition, these liabilities are
measured at amortised cost, which represents the initial proceeds of the
issuance plus the accrued entitlement to the date of the financial statements.
The accrued entitlement is calculated as the difference between the proceeds on
the issue of these shares and the final liability and is charged as interest
expense in the Consolidated Income Statement over the term of the life of these
shares using the effective interest method.
k.Derivative financial instruments
The Group uses derivative financial instruments to hedge its risks associated
primarily with interest rate and foreign currency fluctuations. It is the
Group's policy not to trade in derivative financial instruments. Details of the
Group's financial risk management objectives and policies are set out in Note
19.
Derivative financial instruments are stated at fair values, with gains and
losses included in the Income Statement.
l.Consolidation
Subsidiaries are those entities, including limited liability partnerships,
controlled by the Group. Control exists when the Company has the power, directly
or indirectly, to govern the financial and operating policies of an entity so as
to obtain economic benefits from its activities. The financial statements of
subsidiaries are included in the consolidated financial statements from the date
that control commences until the date control ceases.
m.Subsidiaries
Investments in subsidiaries are stated at cost less any permanent diminution in
value in the Company Balance Sheet.
n.Associates
Associates are those entities over which the Company has significant influence.
By virtue of the exemption provided by IAS 28 for investment funds and similar
entities, investments in such entities are designated upon initial recognition
to be accounted for at fair value through profit or loss.
o.Company Income Statement
In accordance with section 3(5) (b) (ii) of the Companies Act 1982, the Company
is exempt from the requirement to present its own Income Statement. Of the loss
on ordinary activities, a loss of GBP15,786,751 (2008: loss of GBP21,821,182)
has been made by EPIC PLC.
p.Future changes in accounting policies
IASB and IFRIC have issued the following standards and interpretations with an
effective date after the date of these financial statements:
+---------------------------------------------------+-------------------+
| New/Revised International Financial Reporting | Effective date |
| Standards (IAS/IFRS) | (accounting |
| | periods |
| | commencing after) |
+---------------------------------------------------+-------------------+
| IAS 1 Presentation of Financial Statements - | 1 January 2009 |
| Comprehensive revision including requiring a | |
| statement of comprehensive income (Revised 2007) | |
+---------------------------------------------------+-------------------+
| IAS 1 Presentation of Financial Statements | 1 January 2009 |
| (Revised May 2008)* | |
+---------------------------------------------------+-------------------+
| IAS 1 Presentation of Financial Statements - | 1 January 2009 |
| Amendments relating to disclosure of puttable | |
| instruments and obligations arising on | |
| liquidation (2008) | |
+---------------------------------------------------+-------------------+
| IAS 1 Presentation of Financial Statements | 1 January 2010 |
| (Revised April 2009)** | |
+---------------------------------------------------+-------------------+
| IAS 7 Statement of Cash Flows (Revised April | 1 January 2010 |
| 2009)** | |
+---------------------------------------------------+-------------------+
| IAS 23 Borrowing Costs - Comprehensive revision | 1 January 2009 |
| to prohibit intermediate expensing (Amended 2007) | |
+---------------------------------------------------+-------------------+
| IAS 23 Borrowing costs (Revised May 2008)* | 1 January 2009 |
+---------------------------------------------------+-------------------+
| IAS 27 Consolidated and Separate Financial | 1 July 2009 |
| Statements - Consequential amendments resulting | |
| from amendments to IFRS 3 (2008) | |
+---------------------------------------------------+-------------------+
| IAS 27 Consolidated and Separate Financial | 1 January 2009 |
| Statements - Amendment relating to cost of an | |
| investment on first-time adoption (Revised 2008) | |
+---------------------------------------------------+-------------------+
| IAS 27 Consolidated and Separate Financial | 1 January 2009 |
| Statements (Revised May 2008)* | |
+---------------------------------------------------+-------------------+
| IAS 28 Investments in Associates - Consequential | 1 July 2009 |
| amendments resulting from amendments to IFRS 3 | |
| (2008) | |
+---------------------------------------------------+-------------------+
| IAS 28 Investments in Associates* | 1 January 2009 |
+---------------------------------------------------+-------------------+
| IAS 31 Interests in Joint Ventures - | 1 July 2009 |
| Consequential amendments resulting from | |
| amendments to IFRS 3 (2008) | |
+---------------------------------------------------+-------------------+
| IAS 31 Interests in Joint Ventures (Revised May | 1 January 2009 |
| 2008)* | |
+---------------------------------------------------+-------------------+
| IAS 32 Financial instruments: Presentation - | 1 January 2009 |
| Amendments relating to puttable instruments and | |
| obligations arising on liquidation | |
+---------------------------------------------------+-------------------+
| IAS 36 Impairment of Assets (Revised May 2008)* | 1 January 2009 |
+---------------------------------------------------+-------------------+
| IAS 36 Impairment of Assets** | 1 January 2010 |
+---------------------------------------------------+-------------------+
| IAS 39 Financial Instruments: Recognition and | 1 January 2009 |
| Measurement (Revised May 2008)* | |
+---------------------------------------------------+-------------------+
| IAS 39 Financial Instruments: Recognition and | 30 June 2009 |
| Measurement - Amendments for embedded derivatives | |
| when reclassifying financial instruments | |
+---------------------------------------------------+-------------------+
| IAS 39 Financial Instruments: Recognition and | 1 July 2009 |
| Measurement - Amendments for eligible hedged | |
| items | |
+---------------------------------------------------+-------------------+
| IAS 39 Financial Instruments: Recognition and | 1 January 2010 |
| Measurement (Revised April 2009)** | |
+---------------------------------------------------+-------------------+
| IAS 40 Investment Property (Revised May 2008)* | 1 January 2009 |
+---------------------------------------------------+-------------------+
| IFRS 3 Business Combinations - Comprehensive | 1 July 2009 |
| revision on applying the acquisition method | |
+---------------------------------------------------+-------------------+
| IFRS 5 Non-current Assets Held for Sale and | 1 July 2009 |
| Discontinued Operations (Revised May 2008)* | |
+---------------------------------------------------+-------------------+
| IFRS 5 Non-current Assets Held for Sale and | 1 January 2010 |
| Discontinued Operations** | |
+---------------------------------------------------+-------------------+
| IFRS 7 Financial Instruments: Disclosures - | 1 January 2009 |
| Amendments enhancing disclosures about fair value | |
| and liquidity risk (Revised March 2009) | |
+---------------------------------------------------+-------------------+
| IFRS 8 Operating Segments (Original issuance | 1 January 2009 |
| 2006) | |
+---------------------------------------------------+-------------------+
| IFRS 8 Operating Segments (Revised April 2009)** | 1 January 2010 |
+---------------------------------------------------+-------------------+
| IFRIC Interpretation | |
+---------------------------------------------------+-------------------+
| IFRIC 15 Agreement for Construction of Real | 1 January 2009 |
| Estate | |
+---------------------------------------------------+-------------------+
| IFRIC 16 Hedges of a Net Investment in a Foreign | 1 October 2008 |
| Operation | |
+---------------------------------------------------+-------------------+
| IFRIC 17 Distributions of Non-Cash Assets to | 1 July 2009 |
| Owners | |
+---------------------------------------------------+-------------------+
| IFRIC 18 Transfers of Assets from Customers | 1 July 2009 |
+---------------------------------------------------+-------------------+
*Amendments resulting from May 2008 Annual Improvements to IFRSs
**Amendments resulting from April 2009 Annual Improvements to IFRSs
The Directors do not anticipate that the adoption of the other standards and
interpretations will have a material impact on the Group's financial statements
in the period of initial application
q.Significant estimates and judgements
The preparation of financial statements in conformity with IFRS requires
management 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. Actual results may differ from these
estimates.
Unlisted investments are valued at the Directors' estimate of their fair value
in accordance with the requirements of IAS 39 'Financial Instruments:
Recognition and Measurement' and guidelines issued by the International Private
Equity and Venture Capital Association. Fair values of such instruments are
determined by using valuation techniques and Directors make assumptions based on
market conditions. Where valuation techniques are used to determine fair values,
they are validated and periodically reviewed. However, changes in assumptions
could affect the reported fair value of financial instruments.
In 2007, interest in EPIC Investment Partners Limited ("EIP") was disposed, and
a provision of 50% was made for contingent consideration receivable. The
deferred consideration is GBP1.30 for every GBP1 pre tax per annum for 2007,
2008 and 2009 over GBP1.142m. The maximum payout requires pre tax profits of an
average GBP1.857m per annum. To be cautious, the Board of Directors has agreed
to assume that EIP generates GBP1.5m p.a and therefore EPIC PLC earns 50% of the
maximum payout. The Directors decided to make a provision of 50% of the deferred
consideration, of which GBP89,142 was received in the year ended 31 July 2009,
the balance has therefore been accrued as a debtor. The remaining 50% represents
a contingent asset (see note 23).
r.Provisions
Provisions are liabilities of uncertain timing or amount, recognised where the
Company has a probable future outflow of economic benefits (cash or assets)
arising from a past event, for which a reliable estimate can be made. During the
year ended 31 July 2009 the Company was engaged in a legal dispute in relation
to an investment made by the Company in Varga Limited as a result of which the
company may be required to pay legal costs of the other side.
3.Management, investment advisory, administration and performance fees
+---------------------+-----------------------+--------------+--+---------+---------+
| | | | | 2009 | 2008 |
+---------------------+-----------------------+--------------+--+---------+---------+
| | | | | GBP000s | GBP000s |
+---------------------+-----------------------+--------------+--+---------+---------+
| Management and investment advisory fee | | | 1,077 | 976 |
+---------------------------------------------+--------------+--+---------+---------+
| Administration fee | | | | 139 | 145 |
+---------------------+-----------------------+--------------+--+---------+---------+
| Performance fee | | | | - | 273 |
+---------------------+-----------------------+--------------+--+---------+---------+
| | | | | 1,216 | 1,394 |
+---------------------+-----------------------+--------------+--+---------+---------+
4 Directors' fees
Directors' fees amount to GBP75,000 (2007: GBP67,439) and are comprised as
follows:
+--------------------------+------------------+--------------+--+---------+---------+
| | | | | 2009 | 2008 |
+--------------------------+------------------+--------------+--+---------+---------+
| | | | | GBP000s | GBP000s |
+--------------------------+------------------+--------------+--+---------+---------+
| Dr Cameron McPhail | | | | 25 | 25 |
| (Chairman) | | | | | |
+--------------------------+------------------+--------------+--+---------+---------+
| Mr Donald McCrickard | | | | 20 | 20 |
+--------------------------+------------------+--------------+--+---------+---------+
| Mr Martin Richardson | | | | 20 | 20 |
+--------------------------+------------------+--------------+--+---------+---------+
| Mr Philip Scales | | | | 10 | 10 |
+--------------------------+------------------+--------------+--+---------+---------+
| Prior year under | | | | - | (8) |
| overprovision | | | | | |
+--------------------------+------------------+--------------+--+---------+---------+
| | | | | 75 | 67 |
+--------------------------+------------------+--------------+--+---------+---------+
5 Dividends on income shares
+---------------------+----------------------+---------------+--+---------+---------+
| | | | | 2009 | 2008 |
+---------------------+----------------------+---------------+--+---------+---------+
| | | Rate (pence) | | GBP000s | GBP000s |
+---------------------+----------------------+---------------+--+---------+---------+
| 1st interim dividend paid on 27 November | 3.1217 (2008: | | 647 | 617 |
| 2008 | 2.973) | | | |
+--------------------------------------------+---------------+--+---------+---------+
| 2nd interim dividend paid on 23 February | 3.1217 (2008: | | 647 | 616 |
| 2009 | 2.973) | | | |
+--------------------------------------------+---------------+--+---------+---------+
| 3rd interim dividend paid on 22 May 2009 | 3.1217 (2008: | | 647 | 617 |
| | 2.973) | | | |
+--------------------------------------------+---------------+--+---------+---------+
| Declared 4th interim dividend paid on 21 | 3.1217 (2008: | | 648 | 616 |
| August 2009 | 2.973) | | | |
+--------------------------------------------+---------------+--+---------+---------+
| | | | | 2,589 | 2,466 |
+---------------------+----------------------+---------------+--+---------+---------+
The 4th interim dividend of GBP647,326 was payable on 21 August 2009 to
shareholders on the register as at 1 August 2009. The ex-dividend date was 29
July 2009.
6Basic and diluted loss per capital share
Capital Shares
Basic loss per capital share is calculated by dividing the loss for the year
attributable to Capital Shares by the weighted average number of Capital Shares
outstanding during the year.
+---------------------+-----------------------+--------------+--+------------+------------+
| | | | | 2009 | 2008 |
+---------------------+-----------------------+--------------+--+------------+------------+
| Loss for the year | | | | (14,622) | (20,242) |
| (GBP thousands) | | | | | |
+---------------------+-----------------------+--------------+--+------------+------------+
| Weighted average number of Capital Shares | | | 40,304,312 | 40,304,312 |
| for basic earnings per share | | | | |
+---------------------------------------------+--------------+--+------------+------------+
| Basic and diluted loss per capital share | | | (36.28) | (50.22) |
| (pence) | | | | |
+---------------------------------------------+--------------+--+------------+------------+
| | | | | | |
+---------------------+-----------------------+--------------+--+------------+------------+
For the years ended 31 July 2009 and 2008 there is no difference between basic
and fully diluted loss per capital share.
7 ACompany: Financial assets at fair value through profit or loss
+--------------+--+---------+-------------+-------------+----------+------------+------------+---------+----------+
| | | Cash | *Strategic | *Unquoted | Quoted | Specialist | Structured | Others | Totals |
| | | Based | Investments | Investments | Equities | Funds | Products | | |
| | | Funds | | | | | | | |
+--------------+--+---------+-------------+-------------+----------+------------+------------+---------+----------+
| | | GBP000s | GBP000s | GBP000s | GBP000s | GBP000s | GBP000s | GBP000s | GBP000s |
+--------------+--+---------+-------------+-------------+----------+------------+------------+---------+----------+
| Closing book | | 6,205 | 5,324 | - | 26,070 | 19,545 | 3,961 | 500 | 61,605 |
| cost at 31 | | | | | | | | | |
| July 2009 | | | | | | | | | |
+--------------+--+---------+-------------+-------------+----------+------------+------------+---------+----------+
| Unrealised | | - | (1,990) | - | (14,335) | (9,631) | 870 | (500) | (25,586) |
| (loss)/gain | | | | | | | | | |
| on | | | | | | | | | |
| revaluation | | | | | | | | | |
+--------------+--+---------+-------------+-------------+----------+------------+------------+---------+----------+
| Fair Value | | 6,205 | 3,334 | - | 11,735 | 9,914 | 4,831 | - | 36,019 |
| at 31 July | | | | | | | | | |
| 2009 | | | | | | | | | |
+--------------+--+---------+-------------+-------------+----------+------------+------------+---------+----------+
| As at 31 | | 4,343 | 5,083 | - | 20,344 | 15,551 | 5,877 | 266 | 51,464 |
| July 2008 | | | | | | | | | |
+--------------+--+---------+-------------+-------------+----------+------------+------------+---------+----------+
*Unlisted investments at Directors' valuation.
Included in Specialist Funds and Structured Products are unquoted holdings at
Directors' valuation of GBP4,151,778 and GBP4,813,538 respectively (2008:
2,260,067 and GBP3,938,248 respectively).
7 B Consolidated: Financial assets at fair value through the profit or loss
+--------------+--+---------+-------------+-------------+----------+------------+------------+---------+----------+
| | | Cash | *Strategic | *Unquoted | Quoted | Specialist | Structured | Others | Totals |
| | | Based | Investments | Investments | Equities | Funds | Products | | |
| | | Funds | | | | | | | |
+--------------+--+---------+-------------+-------------+----------+------------+------------+---------+----------+
| | | GBP000s | GBP000s | GBP000s | GBP000s | GBP000s | GBP000s | GBP000s | GBP000s |
+--------------+--+---------+-------------+-------------+----------+------------+------------+---------+----------+
| Closing book | | 6,205 | 5,324 | 25,789 | 26,070 | 19,545 | 3,961 | 500 | 87,394 |
| cost at 31 | | | | | | | | | |
| July 2009 | | | | | | | | | |
+--------------+--+---------+-------------+-------------+----------+------------+------------+---------+----------+
| Unrealised | | - | (1,990) | (2,022) | (14,335) | (9,631) | 870 | (500) | (27,608) |
| (loss)/gain | | | | | | | | | |
| on | | | | | | | | | |
| revaluation | | | | | | | | | |
+--------------+--+---------+-------------+-------------+----------+------------+------------+---------+----------+
| Fair Value | | 6,205 | 3,334 | 23,767 | 11,735 | 9,914 | 4,831 | - | 59,786 |
| at 31 July | | | | | | | | | |
| 2009 | | | | | | | | | |
+--------------+--+---------+-------------+-------------+----------+------------+------------+---------+----------+
| As at 31 | | 4,343 | 5,083 | 20,384 | 20,344 | 15,551 | 5,877 | 266 | 71,848 |
| July 2008 | | | | | | | | | |
+--------------+--+---------+-------------+-------------+----------+------------+------------+---------+----------+
*Unlisted investments at Directors' valuation.
Included in Specialist Funds and Structured Products are unquoted holdings at
Directors' valuation of GBP4,151,778 and GBP4,813,538 respectively (2008:
2,260,067 and GBP3,938,248 respectively).
The valuation of unquoted investments by the Directors is carried out with the
advice of the investment advisor using BVCA guidelines which state that
portfolio companies should be valued on an EBIT/EBITDA multiple basis using
publicly quoted comparables and/or transaction comparables, then discounting the
equity value by an appropriate percentage to account for marketability
considerations. It is then possible to determine on a case by case basis whether
it makes more sense to value the investment at "cost" or "fair value".
8 Investment in subsidiaries
+------------------------+----------+----------------+-------------------------+----------------+
| Name | Holding | Type held | Country of | Activity |
| | | | incorporation/formation | |
+------------------------+----------+----------------+-------------------------+----------------+
| | | | | |
+------------------------+----------+----------------+-------------------------+----------------+
| EPIC Finance Company | 100.000% | Ordinary | Isle of Man | Financing |
| Limited | | shares | | |
+------------------------+----------+----------------+-------------------------+----------------+
| EPIC Securities Plc | 100.000% | Ordinary | Isle of Man | Financing |
| | | shares | | |
+------------------------+----------+----------------+-------------------------+----------------+
| EPIC Investments LLP | 99.999% | Partnership | United Kingdom | Investment |
| | | interest | | holding |
+------------------------+----------+----------------+-------------------------+----------------+
| EPIC Investments 2 LLP | 99.999% | Partnership | United Kingdom | Investment |
| | | interest | | holding |
+------------------------+----------+----------------+-------------------------+----------------+
The partnerships are controlled entities of EPIC PLC. The Partnerships'
principal purpose is to make private equity investments.
9Trade debtors and other receivables
+-----------------------+--------------+--+---------+---------+---------+---------+
| | | | Group | Company | Group | Company |
+-----------------------+--------------+--+---------+---------+---------+---------+
| | | | 2009 | 2009 | 2008 | 2008 |
+-----------------------+--------------+--+---------+---------+---------+---------+
| Amounts due within 1 year | | GBP000s | GBP000s | GBP000s | GBP000s |
+--------------------------------------+--+---------+---------+---------+---------+
| Amounts due from | | | 670 | 670 | - | - |
| brokers | | | | | | |
+-----------------------+--------------+--+---------+---------+---------+---------+
| Interest and | | | 1,406 | 526 | 1,294 | 861 |
| dividends receivable | | | | | | |
+-----------------------+--------------+--+---------+---------+---------+---------+
| Unrealised gain on outstanding | | 541 | 541 | - | - |
| forward exchange contracts | | | | | |
+--------------------------------------+--+---------+---------+---------+---------+
| Other debtors | | | 396 | 396 | 509 | 509 |
+-----------------------+--------------+--+---------+---------+---------+---------+
| | | | 3,013 | 2,133 | 1,803 | 1,370 |
+-----------------------+--------------+--+---------+---------+---------+---------+
| Amounts due after 1 | | | | | | |
| year | | | | | | |
+-----------------------+--------------+--+---------+---------+---------+---------+
| Interest receivable | | | 2,244 | - | 1,310 | - |
+-----------------------+--------------+--+---------+---------+---------+---------+
| Loan due from EPIC Investments LLP | | - | 18,980 | - | 15,027 |
+--------------------------------------+--+---------+---------+---------+---------+
| Loan due from EPIC Investments 2 LLP | | - | 2,750 | - | 2,557 |
+--------------------------------------+--+---------+---------+---------+---------+
| | | | 2,244 | 21,730 | 1,310 | 17,584 |
+-----------------------+--------------+--+---------+---------+---------+---------+
| | | | | | | |
+-----------------------+--------------+--+---------+---------+---------+---------+
| | | | 5,257 | 23,863 | 3,113 | 18,954 |
+-----------------------+--------------+--+---------+---------+---------+---------+
Loans due from subsidiaries are unsecured, interest free loans and will be
payable by EPIC Investments LLP and EPIC Investments 2 LLP to EPIC PLC out of
the proceeds of disposals.
Amounts due from brokers will be payable by brokers within normal market
settlement terms.
10Trade creditors and other payables
+-----------------------+--------------+--+---------+---------+---------+---------+
| | | | Group | Company | Group | Company |
+-----------------------+--------------+--+---------+---------+---------+---------+
| | | | 2009 | 2009 | 2008 | 2008 |
+-----------------------+--------------+--+---------+---------+---------+---------+
| | | | GBP000s | GBP000s | GBP000s | GBP000s |
+-----------------------+--------------+--+---------+---------+---------+---------+
| Amounts due to | | | 556 | 557 | 539 | 539 |
| brokers | | | | | | |
+-----------------------+--------------+--+---------+---------+---------+---------+
| Unrealised loss on outstanding | | - | - | 286 | 286 |
| forward exchange contracts | | | | | |
+--------------------------------------+--+---------+---------+---------+---------+
| Accrued expenses | | | 545 | 511 | 245 | 220 |
+-----------------------+--------------+--+---------+---------+---------+---------+
| Dividends payable on Income Shares | | 648 | 648 | 616 | 616 |
+--------------------------------------+--+---------+---------+---------+---------+
| | | | 1,749 | 1,716 | 1,686 | 1,661 |
+-----------------------+--------------+--+---------+---------+---------+---------+
Amounts due to brokers will be payable by EPIC PLC within normal market
settlement terms.
Accrued expenses will be payable by EPIC PLC within 30 days of approval of
invoice.
11Provisions
+---------------------+-----------------------+--------------+--+---------+---------+
| | | | | | 2009 |
+---------------------+-----------------------+--------------+--+---------+---------+
| Legal costs | | | | | GBP000s |
| provisions | | | | | |
+---------------------+-----------------------+--------------+--+---------+---------+
| Legal costs provisions at start of year | | | | - |
+---------------------------------------------+--------------+--+---------+---------+
| Funds deposited | | | | | (590) |
| with courts | | | | | |
+---------------------+-----------------------+--------------+--+---------+---------+
| Estimated costs | | | | | 650 |
+---------------------+-----------------------+--------------+--+---------+---------+
| Legal costs provisions at 31 July 2009 | | | | 60 |
+---------------------------------------------+--------------+--+---------+---------+
| | | | | | |
+---------------------+-----------------------+--------------+--+---------+---------+
In January 2008 one of the companies in which the group holds an investment
became involved in a legal dispute, as a result of which the Company was
required to deposit with the court certain funds and to provide for the costs of
the dispute.
In addition the Company may be liable for the legal costs incurred by the other
party.
12Non-current liabilities
+--------------+--+-----------+---------+----------+----------+----------+----------+
| | | | | Group | Company | Group | Company |
+--------------+--+-----------+---------+----------+----------+----------+----------+
| | | | | 2009 | 2009 | 2008 | 2008 |
+--------------+--+-----------+---------+----------+----------+----------+----------+
| | | Maturity | Rate % | GBP000s | GBP000s | GBP000s | GBP000s |
| | | Date | | | | | |
+--------------+--+-----------+---------+----------+----------+----------+----------+
| Zero Dividend | 31-Jul-11 | 6.50 | 24,213 | - | 22,562 | - |
| Preference | | | | | | |
| Shares | | | | | | |
+-----------------+-----------+---------+----------+----------+----------+----------+
| Loan note of | | - | - | 24,213 | - | 22,562 |
| Epic Securities | | | | | | |
| Plc | | | | | | |
+-----------------+-----------+---------+----------+----------+----------+----------+
| Income | | 31-Jul-11 | 10.00 | 20,631 | 20,631 | 20,671 | 20,671 |
| Shares | | | | | | | |
+--------------+--+-----------+---------+----------+----------+----------+----------+
| | | | | 44,844 | 44,844 | 43,233 | 43,233 |
+--------------+--+-----------+---------+----------+----------+----------+----------+
a) Income Shares
+-----------------------+--------------+--+------------+---------+------------+---------+
| | | | | 2009 | | 2008 |
+-----------------------+--------------+--+------------+---------+------------+---------+
| Income Shares | | | Shares | GBP000s | Shares | GBP000s |
+-----------------------+--------------+--+------------+---------+------------+---------+
| Authorised | | | | | | |
+-----------------------+--------------+--+------------+---------+------------+---------+
| Income Shares of 10p | | | 45,000,000 | 4,500 | 45,000,000 | 4,500 |
| each | | | | | | |
+-----------------------+--------------+--+------------+---------+------------+---------+
| | | | | | | |
+-----------------------+--------------+--+------------+---------+------------+---------+
| Issued and fully paid | | | 20,736,333 | 2,074 | 20,736,333 | 2,074 |
+-----------------------+--------------+--+------------+---------+------------+---------+
| Income Shares of 10p | | | | | | |
| each | | | | | | |
+-----------------------+--------------+--+------------+---------+------------+---------+
| | | | | | | |
+-----------------------+--------------+--+------------+---------+------------+---------+
| | | | | 2009 | | 2008 |
+-----------------------+--------------+--+------------+---------+------------+---------+
| | | | | GBP000s | | GBP000s |
+-----------------------+--------------+--+------------+---------+------------+---------+
| At start of year | | | | 20,671 | | 20,606 |
+-----------------------+--------------+--+------------+---------+------------+---------+
| Amortisation of Income Shares issue | | | 52 | | 65 |
| costs | | | | | |
+--------------------------------------+--+------------+---------+------------+---------+
| Over amortisation in | | | | (92) | | - |
| prior years | | | | | | |
+-----------------------+--------------+--+------------+---------+------------+---------+
| At close of year | | | | 20,631 | | 20,671 |
+-----------------------+--------------+--+------------+---------+------------+---------+
On 17 August 2001, the Group issued 20,736,333 Income Shares at 100p each. Each
share has a par value of 10p and is redeemable on 31 July 2011 for 100p provided
that the assets of the Group provide sufficient cover. The fair value of the
income shares at 31 July 2009 was GBP16,485,385 (2008: GBP21,306,582) based on
the quoted offer price of 79.50 p (2008: 102.75p) per income share.
Voting and other rights
Holders of Income Shares are not entitled to vote at general meetings unless
either at the date of the notice convening the meeting any dividend payable on
such shares is in arrears and/or the business of the meeting includes the
consideration of a resolution for winding up the Group, the reduction of the
Group's capital or any resolution directly abrogating or varying any of the
special rights or privileges attached to Income Shares. Under these
circumstances the Income Shareholders are entitled to one vote for each share
held.
Dividends
The Income Shares carried the right to a cumulative preferential dividend at an
initial rate of 10p per share for the year ending 31 July 2003 but shall have no
further right to participate in the profits of the Group. The Dividends payable
in respect of each financial year thereafter will be increased in proportion to
the increase (if any) in the RPI over the preceding year, capped at a 5%
increase in any year.
Winding up
On a winding up, the holders of the Income Shares shall be entitled pro rata to
their holdings, out of the assets available for distribution to shareholders, to
payment of any arrears of the preferential dividend entitlement and to repayment
of the original issue price of GBP1 per share.
b) Zero Dividend Preference Shares
EPIC Securities Plc issued 20,000,000 ZDP shares of 10p each at a price of 100p.
These shares had an initial capital entitlement of 100p per share, increasing at
a daily compound rate equivalent to an annual compound rate of 6.5% so as to
reach a final capital entitlement of 139.3p per share on 31 July 2011. Issue
costs totalled GBP751,214 which have been set off against the issued ZDP share
capital and will be amortised over the term of the ZDP issue. The fair value of
the ZDP shares at 31 July 2009 was GBP24,500,000 (2008: GBP22,550,000) based on
the quoted offer price of 122.50p (2008: 112.75p) per ZDP share.
After taking account of issue costs the annual compound rate to reach the final
capital entitlement of 139.3p per share on 31 July 2011 is 7.27% (2008: 7.29%).
In accordance with the articles of association of EPIC Securities Plc, the
holders of the 20,000,000 Zero Dividend Preference Shares ("ZDP"), are entitled
on a winding up to an amount equal to 100p per ZDP share as increased daily at
the compound rate as would give a final capital entitlement of 139.3p on the ZDP
repayment date. At 31 July 2009 the accrued value was GBP24,213,358 (2008:
GBP22,562,028). The entitlement accrued under the contribution of assets
agreement (Deed of Undertaking) is equivalent to the annual compound rate of
6.5%.
Rights attaching to ZDP Shares
ZDP shareholders are not entitled to receive, and cannot participate in, any
dividends or other distributions out of the profits of the Company available for
dividend and resolved to be distributed in respect of any accounting period or
any other income or right to participate therein.
The ZDP Shares do not carry any entitlement to receive income.
On a return of assets on liquidation, after payment of all debts and
satisfaction of all creditors there shall be paid to ZDP shareholders from the
surplus assets an amount equal to 100p per ZDP Share as increased daily at such
compound rate as will give entitlement to 139.3p on the ZDP redemption date, the
first increase occurring on the date the ZDP Shares are first admitted to the
Official List of the United Kingdom Listing Authority and the last on the actual
date of payment. The redemption entitlements due to holders of the ZDP Shares
will be satisfied by an allocation to the redemption reserve. The daily compound
rate applied to the ZDP Shares represents an annual compound rate of 7.27%
(2008: 7.29%).
Although the Zero Dividend Preference Shares are entitled to a pre-determined
capital repayment on the repayment date, this is not guaranteed and, based on
the Principal Bases and Assumptions, following the placing a fall at a rate
greater than 15% per annum (compound) in the value of the Total Assets of EPIC
PLC would result in a lower payment than the pre-determined entitlement of
139.3p per Zero Dividend Preference Share, which could potentially be zero.
ZDP shareholders will not have the right to receive notice of any general
meeting of the Company nor did to attend or vote at any such meeting except in
respect of any resolution altering, modifying or abrogating any of the special
rights and privileges attach to the ZDP Shares or to wind up the Company.
The carrying amount of ZDPs has been determined by deducting the issue cost from
the 20 million ZDP shares and adding the interest due and finance cost due from
EPIC PLC.
+---------------------+-----------------------+--------------+--+---------+---------+
| | | | | | |
+---------------------+-----------------------+--------------+--+---------+---------+
| | | | | 2009 | 2008 |
+---------------------+-----------------------+--------------+--+---------+---------+
| ZDP Shares | | | | GBP000s | GBP000s |
+---------------------+-----------------------+--------------+--+---------+---------+
| Liability at beginning of year | | | 22,562 | 2,120 |
+---------------------------------------------+--------------+--+---------+---------+
| Additional issue | | | | - | (214) |
| costs paid | | | | | |
+---------------------+-----------------------+--------------+--+---------+---------+
| Finance cost of ZDP | | | | 1,497 | 1,410 |
| Shares | | | | | |
+---------------------+-----------------------+--------------+--+---------+---------+
| Amortisation of | | | | 154 | 157 |
| issue costs | | | | | |
+---------------------+-----------------------+--------------+--+---------+---------+
| Liability at end of | | | | 24,213 | 22,562 |
| year | | | | | |
+---------------------+-----------------------+--------------+--+---------+---------+
13Share capital - Capital shares
+------------------------+--+------------+------------+------------+------------+------+
| | | Number of | 2009 | Number of | 2008 |
+------------------------+--+------------+------------+------------+-------------------+
| | | shares | GBP000s | shares | GBP000s |
+------------------------+--+------------+------------+------------+-------------------+
| Authorised | | | | | |
+------------------------+--+------------+------------+------------+-------------------+
| Capital shares | | 75,000,000 | 7,500 | 75,000,000 | 7,500 |
+------------------------+--+------------+------------+------------+-------------------+
| Warrants | | 15,000,000 | 1,500 | 15,000,000 | 1,500 |
+------------------------+--+------------+------------+------------+-------------------+
| | | | | | |
+------------------------+--+------------+------------+------------+-------------------+
| | | 90,000,000 | 9,000 | 90,000,000 | 9,000 |
+------------------------+--+------------+------------+------------+-------------------+
| | | | | | |
+------------------------+--+------------+------------+------------+-------------------+
| Issued and fully paid | | | | | |
+------------------------+--+------------+------------+------------+-------------------+
| Capital shares | | 40,304,312 | 4,030 | 40,304,312 | 4,030 |
+------------------------+--+------------+------------+------------+-------------------+
| | | | | | |
+------------------------+--+------------+------------+------------+-------------------+
| | | 40,304,312 | 4,030 | 40,304,312 | 4,030 |
+------------------------+--+------------+------------+------------+-------------------+
| | | | | | |
+------------------------+--+------------+------------+------------+------------+------+
Voting and other rights
Holders of Capital Shares are entitled to one vote for each share held.
Dividends
Dividends are payable only to Income shareholders.
Winding up
On a winding up, the holders of the Capital Shares shall be entitled, pro rata
to their holdings, to all the assets of the Group available for distribution to
shareholders after satisfaction of the entitlement of the holders of the Income
Shares and Zero Dividend Preference Shares.
Capital History
In accordance with International Financial Reporting Standards, the Income
Shares and ZDP Shares are treated as liabilities as described under accounting
policies in note 2(j) above.
Capital management
The Board's policy is to maintain a strong capital base so as to maintain
investor, creditor and market confidence and to sustain future development of
the business. The Board manages the Company's affairs to achieve shareholder
returns through capital growth rather than income, and monitors the achievement
of this through growth in net asset value per share.
Company capital comprises share capital, share premium and reserves. The Company
is not subject to externally imposed capital requirements.
14Share premium - Capital Shares
+-------------------------------------+--+----------------+-------------------+
| | | 2009 | 2008 |
+-------------------------------------+--+----------------+-------------------+
| | | GBP000s | GBP000s |
+-------------------------------------+--+----------------+-------------------+
| | | | |
+-------------------------------------+--+----------------+-------------------+
| Share premium at start of year | | 35,410 | 35,410 |
+-------------------------------------+--+----------------+-------------------+
| | | | |
+-------------------------------------+--+----------------+-------------------+
| Share premium at 31 July | | 35,410 | 35,410 |
+-------------------------------------+--+----------------+-------------------+
| | | | |
+-------------------------------------+--+----------------+-------------------+
15Group and company reserves - Capital Shares
+-----------------------+--------------+--+--+----------------+--+----------------+
| Group Reserves | | | Profit and loss | Profit and loss |
| | | | reserve | reserve |
+-----------------------+--------------+--+-------------------+-------------------+
| | | | | 2009 | | 2008 |
+-----------------------+--------------+--+--+----------------+--+----------------+
| | | | | GBP000s | | GBP000s |
+-----------------------+--------------+--+--+----------------+--+----------------+
| Reserves at start of | | | | (4,289) | | 15,953 |
| year | | | | | | |
+-----------------------+--------------+--+--+----------------+--+----------------+
| (Loss) for the year | | | | (14,622) | | (20,242) |
+-----------------------+--------------+--+--+----------------+--+----------------+
| Reserves at 31 July | | | | (18,911) | | (4,289) |
+-----------------------+--------------+--+--+----------------+--+----------------+
| | | | | | | |
+-----------------------+--------------+--+--+----------------+--+----------------+
| | | | | | | |
+-----------------------+--------------+--+--+----------------+--+----------------+
| Company Reserves | | | Profit and loss | Profit and loss |
| | | | reserve | reserve |
+-----------------------+--------------+--+-------------------+-------------------+
| | | | | 2009 | | 2008 |
+-----------------------+--------------+--+--+----------------+--+----------------+
| | | | | GBP000s | | GBP000s |
+-----------------------+--------------+--+--+----------------+--+----------------+
| Reserves at start of | | | | (8,887) | | 12,934 |
| year | | | | | | |
+-----------------------+--------------+--+--+----------------+--+----------------+
| (Loss) for the year | | | | (15,787) | | (21,821) |
+-----------------------+--------------+--+--+----------------+--+----------------+
| Reserves at 31 July | | | | (24,674) | | (8,887) |
+-----------------------+--------------+--+--+----------------+--+----------------+
Per the Group's Prospectus, dividends can be paid up to the cumulative total of
gross income. As at 31 July 2009 GBP8,073,000 (2008: GBP6,982,000) of
undistributed gross income was included in reserves.
An analysis of the profit and loss reserve detailing the split of the retained
profit and loss reserve between Revenue and Capital is detailed in note 20.
16Net asset value per share - Capital Share (Basic and Diluted)
The basic net asset value per Capital Share is based on the net assets
attributable to Capital shareholders of GBP20,528,637 (2008: GBP35,150,522) on
40,304,312 (2008: 40,304,312) capital shares in issue at the end of the year.
17Published Net Asset Value
+---------------------+-----------+---------------+--------------+--+---------+--------+
| As at 31 July 2009 | | | | GBP000s | Pence |
| | | | | | per |
| | | | | | share |
+---------------------+---------------------------+--------------+--+---------+--------+
| Published net asset value of capital shares | | | 20,571 | 51.04 |
+-------------------------------------------------+--------------+--+---------+--------+
| Adjustments for | | | | | |
+---------------------+---------------------------+--------------+--+---------+--------+
| Financial assets market value adjustments | | | (537) | (1.33) |
+-------------------------------------------------+--------------+--+---------+--------+
| Over amortisation of Income shares | | | 92 | 0.23 |
+-------------------------------------------------+--------------+--+---------+--------+
| Over amortisation of ZDP shares | | | | 69 | 0.17 |
+---------------------------------+---------------+--------------+--+---------+--------+
| Over estimation of expenses | | | | 334 | 0.82 |
+---------------------------------+---------------+--------------+--+---------+--------+
| Consolidated net asset value per financial | | | 20,529 | 50.93 |
| statements | | | | |
+---------------------+-----------+---------------+--------------+--+---------+--------+
18Note to the Statement of Cash Flows
Reconciliation of net investment income to net cash inflow) from operating
activities:
+---------------------+-----------------------+--------------+--+---------+---------+
| | | | | 2009 | 2008 |
+---------------------+-----------------------+--------------+--+---------+---------+
| | | | | GBP000s | GBP000s |
+---------------------+-----------------------+--------------+--+---------+---------+
| Net investment | | | | 871 | 1,533 |
| income | | | | | |
+---------------------+-----------------------+--------------+--+---------+---------+
| Adjustment for: | | | | | |
+---------------------+-----------------------+--------------+--+---------+---------+
| Amortisation of Zero Dividend Preference | | | 154 | 160 |
| Shares issue costs | | | | |
+---------------------------------------------+--------------+--+---------+---------+
| Amortisation of Income Shares issue costs | | | (40) | 65 |
+---------------------------------------------+--------------+--+---------+---------+
| Provisions | | | | 590 | - |
+---------------------+-----------------------+--------------+--+---------+---------+
| Increase in trade and other receivables | | | (1,024) | (184) |
+---------------------------------------------+--------------+--+---------+---------+
| Increase/(decrease) in trade and other | | | 361 | (597) |
| payables | | | | |
+---------------------------------------------+--------------+--+---------+---------+
| Net cash inflow from operating activities | | | 912 | 977 |
+---------------------+-----------------------+--------------+--+---------+---------+
19 Financial instruments
The Group's financial instruments comprise:
Equity shares, fixed interest securities, cash funds and unquoted securities
that are held in accordance with the Group's investment objectives.
Cash and cash equivalents that arise directly from the Group's operations;
Forward exchange contracts; and
Zero Dividend Preference Shares and Income Shares.
The analysis of investments is provided in note 7B.
Financial risk management objectives and policies
The main risks arising from the Group's financial instruments are market price
risk, credit risk, liquidity risk, foreign currency risk and interest rate risk.
The Board regularly reviews and agrees policies for managing each of these risks
and these are summarised below.
Estimation of fair values
For investments actively traded in organised financial markets, fair value is
generally determined by reference to Stock Exchange quoted market bid prices at
the close of business on the balance sheet date.
Unlisted investments are valued at the Directors' estimate of their fair value
in accordance with the requirements of IAS 39 'Financial Instruments:
Recognition and Measurement' and guidelines issued by the International Private
Equity and Venture Capital Association.
Forward exchange contracts are marked to market using listed market prices by
discounting the contractual forward price and deducting the current spot rate.
For receivables/payables with a remaining life of less than one year, the
notional amount is deemed to reflect the fair value. All other
receivables/payables are discounted to determine the fair value.
Market price risk
Market price risk arises mainly from uncertainty about future prices of
financial instruments held. It represents the potential loss the Group might
suffer through holding market positions in the face of price movements. All
financial assets and liabilities are carried at fair value except for ZDP shares
and Income shares (note 12).
To mitigate the risk the Board's investment strategy is to select investments
for their fundamental value. Stock selection is therefore based on disciplined
accounting, market and sector analysis, with the emphasis on long term
investments. An appropriate spread of investments is held in the portfolio in
order to reduce both the statistical risk and the risk arising from factors
specific to a country or sector. The Investment Manager actively monitors market
prices throughout the year and reports to the Board, which meets regularly in
order to consider investment strategy.
If the value of the Group's investment portfolio declined by 5% the net assets
would decrease by GBP3,053,542 (2008: GBP3,592,414). An increase in value of 5%
would have an equal but opposite effect.
Credit risk
Credit risk is the risk that an issuer or counterparty will be unable or
unwilling to meet a commitment that it has entered into with the Group.
The investment manager assesses the risk associated with fixed interest
investments by performing financial analysis on the issuing companies as part of
its normal scrutiny of prospective investments. The Group invests in a
combination of high yield and investment grade bonds.
At the reporting date, the Group's financial assets exposed to credit risk
amounted to the following:
+---------------------+-----------------------+--------------+--+---------+---------+
| | | | | 2009 | 2008 |
+---------------------+-----------------------+--------------+--+---------+---------+
| | | | | GBP000s | GBP000s |
+---------------------+-----------------------+--------------+--+---------+---------+
| Cash based funds | | | | 6,205 | 4,343 |
+---------------------+-----------------------+--------------+--+---------+---------+
| Debt securities | | | | 28,598 | 26,353 |
+---------------------+-----------------------+--------------+--+---------+---------+
| Cash and cash | | | | 2,139 | 5,109 |
| equivalents | | | | | |
+---------------------+-----------------------+--------------+--+---------+---------+
| Trade debtors and other receivables | | | 5,257 | 3,113 |
+---------------------------------------------+--------------+--+---------+---------+
| | | | | 42,199 | 38,918 |
+---------------------+-----------------------+--------------+--+---------+---------+
Liquidity risk
Liquidity risk is the risk that the Group will encounter in realising assets or
otherwise raising funds to meet financial commitments. The Group's investments
include marketable securities in which there is active trade and the investments
are readily realisable. In addition there are strategic and unquoted investments
in which there are no ready markets and as such, these investments may not be
readily realisable.
Residual contractual maturities of financial liabilities:
+--------------+--+---------+---------+---------+---------+---------+----------+
| 31 July 2009 | | Less | 1-3 | 3 | 1-5 | Over 5 | No |
| | | than 1 | months | months | years | years | stated |
| | | month | | to 1 | | | maturity |
| | | | | year | | | |
+--------------+--+---------+---------+---------+---------+---------+----------+
| | | GBP000s | GBP000s | GBP000s | GBP000s | GBP000s | GBP000s |
+--------------+--+---------+---------+---------+---------+---------+----------+
| Financial | | | | | | | |
| liabilities | | | | | | | |
+--------------+--+---------+---------+---------+---------+---------+----------+
| Trade creditors | 1,749 | - | - | - | - | - |
| and other | | | | | | |
| payables | | | | | | |
+-----------------+---------+---------+---------+---------+---------+----------+
| Provisions | | - | - | - | - | - | 60 |
+--------------+--+---------+---------+---------+---------+---------+----------+
| Zero Dividend | - | - | - | 24,213 | - | - |
| Preference | | | | | | |
| Shares | | | | | | |
+-----------------+---------+---------+---------+---------+---------+----------+
| Income | | | - | ` | 20,631 | - | - |
| Shares | | | | | | | |
+--------------+--+---------+---------+---------+---------+---------+----------+
| | | 1,749 | - | - | 44,844 | - | 60 |
+--------------+--+---------+---------+---------+---------+---------+----------+
| | | | | | | | |
+--------------+--+---------+---------+---------+---------+---------+----------+
| 31 July 2008 | | Less | 1-3 | 3 | 1-5 | Over 5 | No |
| | | than 1 | months | months | years | years | stated |
| | | month | | to 1 | | | maturity |
| | | | | year | | | |
+--------------+--+---------+---------+---------+---------+---------+----------+
| | | GBP000s | GBP000s | GBP000s | GBP000s | GBP000s | GBP000s |
+--------------+--+---------+---------+---------+---------+---------+----------+
| Financial | | | | | | | |
| liabilities | | | | | | | |
+--------------+--+---------+---------+---------+---------+---------+----------+
| Trade creditors | 1,686 | - | - | - | - | - |
| and other | | | | | | |
| payables | | | | | | |
+-----------------+---------+---------+---------+---------+---------+----------+
| Zero Dividend | - | - | - | 22,562 | - | - |
| Preference | | | | | | |
| Shares | | | | | | |
+-----------------+---------+---------+---------+---------+---------+----------+
| Income | | | - | - | 20,671 | - | - |
| Shares | | | | | | | |
+--------------+--+---------+---------+---------+---------+---------+----------+
| | | 1,686 | - | - | 43,233 | - | - |
+--------------+--+---------+---------+---------+---------+---------+----------+
The obligations of EPIC PLC to repay the Loan Note and discharge its
obligations pursuant to the undertakings, will be subordinated to the claims of
EPIC PLC's other creditors on a winding up. If at the repayment Date (or any
earlier redemption of the Zero Dividend Preference Shares) EPIC PLC has
insufficient assets, then its obligations to repay the Loan Notes and make
payment under the undertakings may be satisfied only in part or not at all.
Accordingly the Company may have insufficient assets to satisfy the then current
or final capital entitlement of the Zero Dividend Preference Shares.
Foreign currency risk
Foreign currency risk is the risk that the value of a financial instrument will
fluctuate because of changes in foreign exchange rates. The Group has exposure
to foreign exchange movements in Euro and US Dollar. The Group's foreign
exchange exposure arises from its investment in securities and cash balances
denominated in currencies other than sterling.
The Group has entered into forward exchange contracts to hedge certain
anticipated Euro foreign currency revenues and investment in foreign entities.
+----------------------+----+--------+----+--+----+-----+----+----+----+----------+----+----+-------+----+----+
| As at 31 July 2009 | |
| the Group held open | |
| forward exchange | |
| contracts in | |
| sterling against the | |
| currencies as | |
| follows: | |
+----------------------+-------------+
| Settlement Date of | Contractual | | Cost | | Market | | Unrealised |
| contract | Amount | | | | Value | | Gains |
+---------------------------+-------------+-------+----------+---------+----------+---------+------------+
| | | | GBP000s | | GBP000s | | GBP000s |
+---------------------------+-------------+-------+----------+---------+----------+---------+------------+
| 26 August 2009 | EUR | | (2,229) | | (2,138) | | 91 |
| | 2,500,000 | | | | | | |
+---------------------------+-------------+-------+----------+---------+----------+---------+------------+
| 23 September 2009 | EUR | | (2,229) | | (2,138) | | 91 |
| | 2,500,000 | | | | | | |
+---------------------------+-------------+-------+----------+---------+----------+---------+------------+
| 25 September 2009 | EUR | | (1,388) | | (1,283) | | 105 |
| | 1,500,000 | | | | | | |
+---------------------------+-------------+-------+----------+---------+----------+---------+------------+
| 21 October 2009 | EUR | | (2,229) | | (2,138) | | 91 |
| | 2,500,000 | | | | | | |
+---------------------------+-------------+-------+----------+---------+----------+---------+------------+
| 15 October 2009 | $ | | (1,833) | | (1,810) | | 23 |
| | 3,000,000 | | | | | | |
+---------------------------+-------------+-------+----------+---------+----------+---------+------------+
| 17 December 2009 | $ | | (1,836) | | (1,810) | | 26 |
| | 3,000,000 | | | | | | |
+---------------------------+-------------+-------+----------+---------+----------+---------+------------+
| 15 September 2009 | $ | | (1,321) | | (1,207) | | 114 |
| | 2,000,000 | | | | | | |
+---------------------------+-------------+-------+----------+---------+----------+---------+------------+
| | | | (13,065) | | (12,524) | | 541 |
+---------------------------+-------------+-------+----------+---------+----------+---------+------------+
| | | | | | | | |
+---------------------------+-------------+--+----------+---------+--------------------+------------+---------+
| As at 31 July 2008 | |
| the Group held open | |
| forward exchange | |
| contracts in | |
| sterling against the | |
| currencies as | |
| follows: | |
+----------------------+-------------+
| Settlement Date of | Contractual | | Cost | | Market | | Unrealised |
| contract | Amount | | | | Value | | Gains |
+---------------------------+-------------+-------+----------+---------+----------+---------+------------+
| | | | GBP000s | | GBP000s | | GBP000s |
+---------------------------+-------------+-------+----------+---------+----------+---------+------------+
| 29 August 2008 | EUR | | (3,809) | | (3,940) | | (131) |
| | 5,000,000 | | | | | | |
+---------------------------+-------------+-------+----------+---------+----------+---------+------------+
| 20 November 2008 | $ | | (2,021) | | (2,086) | | (65) |
| | 4,099,979 | | | | | | |
+---------------------------+-------------+-------+----------+---------+----------+---------+------------+
| 20 November 2008 | $ | | 2,602 | | 2,595 | | (7) |
| | 5,099,979 | | | | | | |
+---------------------------+-------------+-------+----------+---------+----------+---------+------------+
| 21 November 2008 | $ | | (508) | | (509) | | (1) |
| | 1,000,000 | | | | | | |
+---------------------------+-------------+-------+----------+---------+----------+---------+------------+
| 27 February 2009 | EUR | | (2,527) | | (2,609) | | (82) |
| | 3,300,000 | | | | | | |
+---------------------------+-------------+-------+----------+---------+----------+---------+------------+
| | | | (6,263) | | (6,549) | | (286) |
+----------------------+----+--------+----+--+----+-----+----+----+----+----------+----+----+-------+----+----+
A breakdown of the financial assets at fair value through profit or loss and
cash denominated in currency other than sterling is as follows:
+-----------------------+------+------+------+--+---------+---------+---------+---------+
| | | | | 2009 | | 2008 |
+-----------------------+--------------------+--+---------+---------+---------+---------+
| | | | Denominated in | Denominated in |
| | | | foreign currency | foreign currency |
+-----------------------+--------------------+--+-------------------+-------------------+
| | | | US $000s | US $000s |
+-----------------------+--------------------+--+-------------------+-------------------+
| Financial assets at fair value through | | | 9,029 | | 8,132 |
| profit or loss | | | | | |
+--------------------------------------------+--+---------+---------+---------+---------+
| Cash balances | | | | 36 | | 32 |
+------------------------------+-------------+--+---------+---------+---------+---------+
| Forward foreign exchange | | | | (8,000) | | - |
| contracts | | | | | | |
+------------------------------+-------------+--+---------+---------+---------+---------+
| Total: US Dollar | | | | 1,065 | | 8,164 |
+------------------------------+-------------+--+---------+---------+---------+---------+
| Total: Sterling | | | | 642 | | 4,121 |
+------------------------------+-------------+--+---------+---------+---------+---------+
| | | | | | | |
+------------------------------+-------------+--+---------+---------+---------+---------+
| | | | | EUR000s | | EUR000s |
+------------------------------+-------------+--+---------+---------+---------+---------+
| Financial assets at fair value through | | | 7,032 | | 9,003 |
| profit or loss | | | | | |
+--------------------------------------------+--+---------+---------+---------+---------+
| Cash balances | | | | 1 | | 5 |
+-------------------------------------+------+--+---------+---------+---------+---------+
| Forward foreign exchange contracts | | | | (9,000) | | (8,300) |
+-------------------------------------+------+--+---------+---------+---------+---------+
| Total: Euros | | | | (1,967) | | 708 |
+-------------------------------------+------+--+---------+---------+---------+---------+
| Total: Sterling | | | | (1,682) | | 541 |
+-------------------------------------+------+--+---------+---------+---------+---------+
| | | | | | | |
+-----------------------+------+------+------+--+---------+---------+---------+---------+
Interest rate risk
The Group's exposure to market risk for changes in interest rates relates
primarily to debt securities in the Group's investment portfolio and obligations
regarding ZDP shares and Income Shares. The portfolio includes only debt
securities with active secondary or resale markets to ensure portfolio
liquidity.
Bond and preference share yields, and as a consequence their prices, are
determined by market perception as to the appropriate level of yields given the
economic background. Key determinants include economic growth prospects,
inflation, the government's fiscal position, short-term interest rates and
international market comparisons. The Investment Manager takes all these factors
into account when making any investment decisions as well as considering the
financial standing of the potential investee Company.
Returns from bonds and preference shares are fixed at the time of purchase, as
the fixed coupon payments are known, as are the final redemption proceeds.
Consequently, if a bond is held until its redemption date, the total return
achieved is unaltered from its purchase date. However, over the life of a bond
the market price at any given time will depend on the market environment at that
time.
The Group's policy is to manage its interest cost using a mix of fixed and
variable rate debt. The interest rate profile of the Group at 31 July 2009 is as
follows:
+-----------------------+--------------+--+---------+----------+---------+----------+
| | | | | | | |
+-----------------------+--------------+--+---------+----------+---------+----------+
| | | | | | | |
+-----------------------+--------------+--+---------+----------+---------+----------+
| Financial assets | | | Total | Variable | Fixed | Assets |
| | | | as per | rate | Rate | on |
| | | | Balance | | | which |
| | | | Sheet | | | no |
| | | | | | | interest |
| | | | | | | is |
| | | | | | | received |
+-----------------------+--------------+--+---------+----------+---------+----------+
| | | | GBP000s | GBP000s | GBP000s | GBP000s |
+-----------------------+--------------+--+---------+----------+---------+----------+
| Type: | | | | | | |
+-----------------------+--------------+--+---------+----------+---------+----------+
| Cash Based Funds | | | 6,205 | 6,205 | - | - |
+-----------------------+--------------+--+---------+----------+---------+----------+
| Strategic Investments | | | 3,334 | - | 2,502 | 832 |
+-----------------------+--------------+--+---------+----------+---------+----------+
| Unquoted Investments | | | 23,767 | - | 17,250 | 6,517 |
+-----------------------+--------------+--+---------+----------+---------+----------+
| Quoted Equities | | | 11,735 | - | - | 11,735 |
+-----------------------+--------------+--+---------+----------+---------+----------+
| Specialist Funds | | | 9,914 | - | 1,135 | 8,779 |
+-----------------------+--------------+--+---------+----------+---------+----------+
| Structured Products | | | 4,831 | - | 4,831 | - |
+-----------------------+--------------+--+---------+----------+---------+----------+
| Financial assets measured at fair | | 59,786 | 6,205 | 25,718 | 27,863 |
| value through profit or loss | | | | | |
+--------------------------------------+--+---------+----------+---------+----------+
| | | | | | | |
+-----------------------+--------------+--+---------+----------+---------+----------+
| Cash and cash | | | 2,139 | 2,139 | - | - |
| equivalents | | | | | | |
+-----------------------+--------------+--+---------+----------+---------+----------+
| Trade debtors and | | | 5,257 | - | 3,124 | 2,133 |
| other receivables | | | | | | |
+-----------------------+--------------+--+---------+----------+---------+----------+
| | | | 67,182 | 8,344 | 28,842 | 29,996 |
+-----------------------+--------------+--+---------+----------+---------+----------+
| | | | | | | |
+-----------------------+--------------+--+---------+----------+---------+----------+
| | | | | | | |
+-----------------------+--------------+--+---------+----------+---------+----------+
| Financial liabilities | | | Total | Variable | Fixed | Assets |
| | | | as per | rate | Rate | on |
| | | | Balance | | | which |
| | | | Sheet | | | no |
| | | | | | | interest |
| | | | | | | is paid |
+-----------------------+--------------+--+---------+----------+---------+----------+
| | | | GBP000s | GBP000s | GBP000s | GBP000s |
+-----------------------+--------------+--+---------+----------+---------+----------+
| Type: | | | | | | |
+-----------------------+--------------+--+---------+----------+---------+----------+
| Creditors | | | 1,749 | - | - | 1,749 |
+-----------------------+--------------+--+---------+----------+---------+----------+
| Provisions | | | 60 | - | - | 60 |
+-----------------------+--------------+--+---------+----------+---------+----------+
| Income Shares | | | 20,631 | 20,631 | - | - |
+-----------------------+--------------+--+---------+----------+---------+----------+
| Zero Dividend | | | 24,213 | - | 24,213 | - |
| Preference Shares | | | | | | |
+-----------------------+--------------+--+---------+----------+---------+----------+
| | | | 46,653 | 20,631 | 24,213 | 1,809 |
+-----------------------+--------------+--+---------+----------+---------+----------+
| | | | | | | |
+-----------------------+--------------+--+---------+----------+---------+----------+
The interest rate profile of the Group at 31 July 2008 was as follows:
+----------------------+--------------+--+---------+----------+---------+----------+
| Financial assets | | | Total | Variable | Fixed | Assets |
| | | | as per | rate | Rate | on |
| | | | Balance | | | which |
| | | | Sheet | | | no |
| | | | | | | interest |
| | | | | | | is |
| | | | | | | received |
+----------------------+--------------+--+---------+----------+---------+----------+
| | | | GBP000s | GBP000s | GBP000s | GBP000s |
+----------------------+--------------+--+---------+----------+---------+----------+
| Type: | | | | | | |
+----------------------+--------------+--+---------+----------+---------+----------+
| Cash Based Funds | | | 4,343 | 4,343 | - | - |
+----------------------+--------------+--+---------+----------+---------+----------+
| Unquoted Investments | | | 20,384 | - | 16,600 | 3,784 |
+----------------------+--------------+--+---------+----------+---------+----------+
| Quoted Equities | | | 20,344 | - | - | 20,344 |
+----------------------+--------------+--+---------+----------+---------+----------+
| Specialist Funds | | | 15,551 | - | 516 | 15,035 |
+----------------------+--------------+--+---------+----------+---------+----------+
| Strategic | | | 5,083 | - | 2,502 | 2,581 |
| Investments | | | | | | |
+----------------------+--------------+--+---------+----------+---------+----------+
| Structured Products | | | 5,877 | - | 5,877 | - |
+----------------------+--------------+--+---------+----------+---------+----------+
| Others | | | 266 | - | - | 266 |
+----------------------+--------------+--+---------+----------+---------+----------+
| Financial assets measured at fair | | 71,848 | 4,343 | 25,495 | 42,010 |
| value through profit or loss | | | | | |
+-------------------------------------+--+---------+----------+---------+----------+
| | | | | | | |
+----------------------+--------------+--+---------+----------+---------+----------+
| Cash and cash | | | 5,109 | 5,109 | - | - |
| equivalents | | | | | | |
+----------------------+--------------+--+---------+----------+---------+----------+
| Trade debtors and other receivables | | 3,113 | - | - | 3,113 |
+-------------------------------------+--+---------+----------+---------+----------+
| | | | 80,070 | 9,452 | 25,495 | 45,123 |
+----------------------+--------------+--+---------+----------+---------+----------+
| | | | | | | |
+----------------------+--------------+--+---------+----------+---------+----------+
| | | | | | | |
+----------------------+--------------+--+---------+----------+---------+----------+
| Financial | | | Total | Variable | Fixed | Assets |
| liabilities | | | as per | rate | Rate | on |
| | | | Balance | | | which |
| | | | Sheet | | | no |
| | | | | | | interest |
| | | | | | | is paid |
+----------------------+--------------+--+---------+----------+---------+----------+
| | | | GBP000s | GBP000s | GBP000s | GBP000s |
+----------------------+--------------+--+---------+----------+---------+----------+
| Type: | | | | | | |
+----------------------+--------------+--+---------+----------+---------+----------+
| Income Shares | | | 20,671 | 20,671 | - | - |
+----------------------+--------------+--+---------+----------+---------+----------+
| Creditors | | | 1,686 | - | - | 1,686 |
+----------------------+--------------+--+---------+----------+---------+----------+
| Zero Dividend Preference Shares | | 22,562 | - | 22,562 | - |
+-------------------------------------+--+---------+----------+---------+----------+
| | | | 44,919 | 20,671 | 22,562 | 1,686 |
+----------------------+--------------+--+---------+----------+---------+----------+
20Split of profit and loss reserve between Revenue and Capital
+-----------------------+--------------+--+---------+----------+---------+----------+
| | | | 2009 | 2009 | 2008 | 2008 |
+-----------------------+--------------+--+---------+----------+---------+----------+
| | | | Revenue | Capital | Revenue | Capital |
+-----------------------+--------------+--+---------+----------+---------+----------+
| | | | GBP000s | GBP000s | GBP000s | GBP000s |
+-----------------------+--------------+--+---------+----------+---------+----------+
| Total income | | | 3,640 | | 3,966 | - |
+-----------------------+--------------+--+---------+----------+---------+----------+
| Total expenses (including debt | | 40 | (4,306) | (65) | (3,778) |
| finance costs) | | | | | |
+--------------------------------------+--+---------+----------+---------+----------+
| Net investment | | | 3,680 | (4,306) | 3,901 | (3,778) |
| income/(loss) | | | | | | |
+-----------------------+--------------+--+---------+----------+---------+----------+
| (Loss)/gains on | | | | | | |
| investments | | | | | | |
+-----------------------+--------------+--+---------+----------+---------+----------+
| Realised (losses) on sale of | | - | (671) | - | (8,261) |
| investments | | | | | |
+--------------------------------------+--+---------+----------+---------+----------+
| Net unrealised forward foreign | | - | 827 | - | (617) |
| currency contracts | | | | | |
+--------------------------------------+--+---------+----------+---------+----------+
| Foreign exchange | | | - | 376 | - | 191 |
| differences | | | | | | |
+-----------------------+--------------+--+---------+----------+---------+----------+
| Movement in unrealised losses on | | - | (11,939) | - | (9,212) |
| revaluation of investments | | | | | |
+--------------------------------------+--+---------+----------+---------+----------+
| Dividends in respect of income | | (2,589) | - | (2,466) | - |
| shares | | | | | |
+--------------------------------------+--+---------+----------+---------+----------+
| | | | (2,589) | (11,407) | (2,466) | (17,899) |
+-----------------------+--------------+--+---------+----------+---------+----------+
| Profit /(loss) for | | | 1,091 | (15,713) | 1,435 | (21,677) |
| the year | | | | | | |
+-----------------------+--------------+--+---------+----------+---------+----------+
| | | | | | | |
+-----------------------+--------------+--+---------+----------+---------+----------+
| Reserves brought | | | 6,982 | (11,271) | 5,547 | 10,406 |
| forward | | | | | | |
+-----------------------+--------------+--+---------+----------+---------+----------+
| Reserves carried | | | 8,073 | (26,984) | 6,982 | (11,271) |
| forward | | | | | | |
+-----------------------+--------------+--+---------+----------+---------+----------+
21Directors' interests
No Directors had interests in the shares of the Group as at 31 July 2009 or 31
July 2008.
22Related parties
(a) The Administrator, IOMA Fund and Investment Management Limited has delegated
the provision of accounting services to EHM International Limited (formerly EHM
Service Providers Limited). Administration fees amounting to GBP139,072 (2008:
GBP150,000) were paid to EHM International Limited, calculated in accordance
with the Administration Agreement, dated 30 November 2007, of which GBP31,321
(2008: GBP12,929) was outstanding as at 31 July 2008.
(b) On 14 August 2001 the Group entered into an agreement with EPIC Investment
Partners for the provision of investment management services, terms of which are
disclosed in note 3. EPE Limited (formerly EPIC Specialist Investment Limited)
provided investment management services between January 2007 and September 2007.
On 21 of September 2007 EPIC Asset Management Limited was appointed the
Investment Manager.
Investment management fees of GBP680,318 (2008: GBP876,486) were payable to EPIC
Asset Management Limited, of which GBP162,639 (2008: GBP161,497) was outstanding
as at 31 July 2009.
Performance fees of GBPnil (2008: GBP272,950) were paid to EPE Limited, of which
GBPnil was outstanding at 31 July 2009 (2008: GBPnil).
(c) Under the terms of the Limited Liability Partnership Member's agreement for
the investment in EPIC Investment Limited Liability Partnership (EPIC LLP) dated
27 April 2006 EPIC Private Equity LLP was appointed as investment advisor to the
Partnership, terms of which are disclosed in note 3.
(d) Under the terms of the Limited Liability Partnership Member's agreement for
the investment in EPIC Investment 2 Limited Liability Partnership (EPIC 2 LLP)
dated 30 January 2007, EPIC Private Equity LLP was appointed as investment
advisor to the Partnership, terms of which are disclosed in note 3.
Investment advisory fees of GBP362,689 (2008: GBP100,000) were payable to EPIC
Private Equity LLP of which GBP31,567(2008: GBP25,000) remains outstanding at
the year end.
The Limited Liability Partnership Members agreement also provides for the
provision of a performance-related fee to its members EPIC PLC and EPIC Carry
LLP, terms of which are disclosed in note 3.
There was no performance fees payable for the year ended 31 July 2009 (2008:
GBPNil).
(e) The Group invest in certain companies which are considered to be related
parties, as follows:
?Syndicate Asset Management plc;
?EPE Special Opportunities plc (formerly EPIC Reconstruction plc).
(f) The principals of EPIC Private Equity LLP co-invest in certain portfolio
companies invested by the Group companies.
23Contingent asset
As part of the sale of the investment of EPIC Investment Partners, deferred
consideration of GBP938,000 is receivable if certain performance conditions are
achieved during the period from 1 January 2007 and 31 March 2010. These
conditions are detailed in note 2(p). The directors consider that it is more
probable than not that 50% of the performance condition will be achieved and
have accrued GBP469,000 accordingly, of which GBP89,142 had been received at the
year end and GBP375,858 remained outstanding. The remaining 50% above expected
performance is considered to be less likely to be achieved and has not therefore
been accrued. There is therefore a contingent asset in the amount of GBP375,858
at the year-end (2008: GBP469,000).
24Commitments
As 31 July 2009, EPIC PLC had no formal obligations to fund the working capital
requirements of its portfolio companies. It has committed $1,300,000
(GBP784,148) of capital investments to UK Film Partners LLC, of which $585,000
(GBP352,857) was uncalled at the year end (2008: $845,000 (GBP426,725)).
25 Post balance sheet events
The Board of Directors declared a final dividend of 3.127 pence per income
share, payable to all eligible income shareholders at record date 1 August 2009.
The ex-dividend date is 30 July 2009. The dividend was paid on 21 August 2009.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR BLBDBCGBGGCL
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