EPE Special Opportunities confident despite tough environment

EPE Special Opportunities reported challenges in its interim report on Friday amid an unfavourable macroeconomic environment.

The AIM-traded firm did, however, report optimism within the board and investment advisor about potential stability in the trading environment.

Immediate market volatility was still making acquisitions or disposals within the portfolio challenging, however, due to the misalignment in pricing expectations between buyers and sellers.

The company’s net asset value per share came in at 308p at the period end on 31 July, marking a 6% drop from 328p at the end of January.

Its share price, meanwhile, came in at 148p, making for a 13% decrease from its January value of 170p.

Luceco reported sales of £101m and an adjusted operating profit of £11m for the first half, exceeding expectations.

Its net debt as of 30 June was 1.3x last 12 months EBITDA.

Rayware Group meanwhile faced sales setbacks due to customer destocking and reduced consumer demand.

Supply chain disruptions and freight costs also dented profitability.

However, a new head of US sales and marketing, Naddia Prandelli, was appointed in June, indicating a possible strategy shift for the US market.

Whittard of Chelsea saw robust growth in its retail branch thanks to increased domestic and tourist volumes.

It had expanded internationally, marking its presence with a new store in Samsung Town, South Korea, and securing wholesale accounts in North America.

Meanwhile, David Phillips was aiming for sales growth via its built-to-rent division and was looking forward to returns after adjusting to counter inflation in the last two years.

Pharmacy2U meanwhile sustained its growth, mainly through the NHS online prescription channel, while it also changed leadership roles in 2022.

EPIC Acquisition Corp (EAC) extended its business combination period to 25 September and was currently seeking potential targets for partnership.

Looking at EPE’s liquidity, it reported cash balances of £16.3m as of 31 July, as it prioritised maintaining liquidity during an uncertain environment.

It also extended the maturity of £4m of unsecured loan notes to July next year and bought back 7.5 million zero-dividend preference shares.

On 31 July, the portfolio's value was gauged at a weighted average EBITDA to enterprise value multiple of 7.0x.

The portfolio also boasted a low level of third-party leverage, with a net debt of 1.2x EBITDA overall.

“We have experienced a difficult macro-economic environment in the period, and as such have adopted a prudent approach to positioning the portfolio for long-term growth and ensuring the company is well equipped to navigate these challenges,” said chairman Clive Spears.

“The board would like to extend its thanks to the investment advisor and the management teams of the company's portfolio for their hard work during a challenging period.

“The board looks forward to updating shareholders with further progress at the year's end.”

At 1128 BST, shares in EPE Special Opportunities were up 4.7% at 164.9p.

Reporting by Josh White for Sharecast.com.