EPE CAPITAL PARTNERS LIMITED - Unaudited summarised interim results for the six months ended 31 December 2017

Release Date: 19/03/2018 07:30
Code(s): EPE
 
Wrap Text
Unaudited summarised interim results for the six months ended 31 December 2017

EPE CAPITAL PARTNERS LTD ("ETHOS CAPITAL" OR "THE COMPANY")
INCORPORATED IN THE REPUBLIC OF MAURITIUS
REGISTRATION NUMBER: C138883 C1/GBL
ISIN: MU0522S00005
SHARE CODE: EPE

UNAUDITED SUMMARISED INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 DECEMBER 2017

INTRODUCTION

EPE Capital Partners Ltd ("Ethos Capital" or "the Company") is an investment holding company, registered and incorporated in Mauritius and listed on the JSE Limited
("JSE"). It invests directly into Funds or Direct Investments, managed by Ethos Private Equity (Pty) Limited ("Ethos"), which give the Company indirect exposure to a
diversified portfolio of unlisted private equity-type investments ("Portfolio Companies"). By nature, private equity is a long-term investment, requiring long-term
thinking and a patient strategy.

A. RESULTS ANNOUNCEMENT

   KEY HIGHLIGHTS FOR THE PERIOD ENDED 31 DECEMBER 2017
   - Net asset value ("NAV") increased to R1.9 billion and NAV per share ("NAVPS") to R10.76
   - +R400 million invested, increasing invested capital to 39% of NAV and providing exposure to 11x Portfolio Companies; which has increased to 41% and 12x since the 
     period-end
   - Committed capital to Ethos Funds of R1.3 billion with an additional R1.8 billion approved 
   - Value-weighted average EV/EBITDA and Debt/EBITDA valuation multiples of 6.9x and 2.0x respectively
   - Strong pipeline of new Funds and investment opportunities across all Funds

   OVERVIEW
   The 2017 year was economically and politically challenging for South Africa. GDP growth remained subdued, consumer confidence was soft, and policy and political
   uncertainty severely impacted companies' strategic deployment of capital and investor confidence.

   South Africa's longer-term outlook has, however, improved significantly of late. Political changes - both within the ANC and also at national government with 
   Mr Cyril Ramaphosa taking over as South Africa's new president in February 2018 - are likely to result in a significant uplift in both consumer and business 
   confidence. The subsequent changes to key government ministerial leadership will hopefully drive the implementation of clear policies in crucial sectors of the 
   economy. Enhanced governance at key state-owned enterprises will also provide for growth in many dependent sectors across the economy. While it will take time for 
   revised government mandates and structural changes to take full effect, we are confident that South Africa's long-term growth prospects are greatly improved.

   Private equity is a long-term investment strategy which requires patient capital and an activist mindset to outperform. Given the difficult economic conditions, 
   growth in the private sector has been constrained, and many of Ethos's Portfolio Companies have not been immune to the downturn. The underlying attributable EBITDA 
   growth across the various Funds' portfolios over the past 12 months has been relatively modest. Importantly, the Ethos Fund teams, together with the in-house Value 
   Add capability, have spent significant time and effort to ensure that each Portfolio Company is optimally positioned, both strategically and operationally, to 
   benefit from the turnaround in the economic cycle. With economic prospects likely to improve in the medium term, we believe that the value-accretive strategies 
   implemented at Portfolio Companies should start delivering accelerated growth.

   The Board's medium-term objective remains to fully invest Ethos Capital's NAV, while managing liquidity and commitment strategies in a disciplined way. In support
   thereof, Ethos is continuing to review opportunities to develop and grow its product offerings, with the launch of Ethos Healthcare Investments being the most 
   recent initiative. The strategies that Ethos Capital is invested in are detailed alongside:

   Ethos Mid Market Fund I
   The Ethos Mid Market Fund I ("EMMF I") had its first close in November 2016, and is expected to have its final close by the end of May 2018, with commitments of 
   over R2 billion.

   To date, the Fund has invested in six Portfolio Companies, representing 44% of the total commitments to the Fund. The Fund has a strong pipeline of potential
   investments in the mid-market space and its broad-based black economic empowerment ("B-BBEE") credentials are providing a competitive advantage in sourcing such
   opportunities.

   Ethos Fund VI
   Ethos Capital completed a secondary transaction of a stake in Ethos Fund VI ("EF VI") in November 2016. The stake is relatively small (a US$10 million commitment) 
   at 3% of the NAV, but currently provides exposure to nine Portfolio Companies. 

   Since June 2017, the Fund has successfully exited one investment at a Fund return of 2.7x cost invested. A further two exits are expected to be completed in Q2 2018.

   Ethos Fund VII
   Fund raising for Ethos Fund VII ("EF VII") was launched in August 2017, with a target size of R8 billion to R10 billion. Ethos Capital has made a first close 
   commitment to this Fund of R1.25 billion with an intended final commitment of up to R2.3 billion; this will provide investors with exposure to large buyout 
   Portfolio Companies based in South Africa and other select sub-Saharan countries. The first close for this Fund is likely to occur in Q2 2018.

   Ethos Mezzanine Partners Fund 3
   Ethos Mezzanine Partners Fund 3 ("EMP 3") is likely to have its first close in March/April 2018, with strong demand from international investors, especially
   development finance institutions.

   The pipeline of opportunities for this Fund is strong, with particular application of the mezzanine product to growth opportunities in sub-Saharan Africa. The Fund 
   has signed two term sheets for transactions which are likely to close in Q2 2018. Aligned with this strategy, Ethos recently opened a satellite office in Nairobi, 
   Kenya, and believes this footprint will further enhance deal origination and investment management into the future. The Fund operates in a relatively uncontested 
   niche, which has resulted in strong demand both from potential investors and also companies looking to access growth capital. Ethos Capital has made a first close 
   commitment of R250 million to this Fund with an intended final commitment of R320 million.

   Ethos Healthcare Investments
   Ethos Healthcare Investments ("EHI") is a platform that has been established to invest in hospitals and other healthcare-related industries in South Africa and in
   other sub-Saharan African countries. The  two key principals in this Fund are Michael Flemming and Jonathan Lowick, who were instrumental in establishing, operating 
   and growing Life Healthcare, one of South Africa's largest hospital groups. The pipeline of opportunities remains strong, and the first investment has been signed 
   and is subject to regulatory approval. Ethos Capital has made a commitment of R250 million to EHI.

   Direct Investments
   During the period, a Direct Investment of R100 million was made in Kevro Holdings (Pty) Ltd ("Kevro"), alongside EMMF I. In addition, a further Direct Investment of
   R171 million was made in Primedia Holdings (Pty) Ltd ("Primedia"), alongside EF VI. The Company continues to assess a number of interesting additional co-investment
   opportunities alongside the various Ethos Funds.

   OUTLOOK
   The pipeline of opportunities across all of the Funds remains very strong. While there is improvement in the macroeconomic environment, it is important that the 
   Funds continue to invest selectively in assets that have a robust and defensible business case.

   Across the various Funds, Ethos is in exclusive discussions on seven investments. Two have been signed and are subject only to regulatory approval. A further two
   investments are well progressed and have signed term sheets. While there can be no guarantee that all of these transactions will close, Ethos remains confident that
   it will be able to close on the majority of these investments.

   The amount of capital required by Ethos Capital into these transactions, should the Funds be successful in closing all of them, would be approximately R400 million.

   INVESTOR PRESENTATION
   The Company will host a webcast presentation at 12:00 pm on Monday 19 March 2018, covering the above results and outlook. Participants should please register for
   the webcast in advance by navigating to this website:

   http://services.choruscall.za.com/DiamondPassRegistration/register?confirmationNumber=5478956&linkSecurityString=1a49fad60

   To access the call, dial one of the numbers supplied and then enter the passcode and PIN provided in the confirmation (which will be sent to you upon registration).

   If you experience any issues with the registration, or do not have web access, please contact Arlene Byrne at 011 328 7414 for assistance.


B. REVIEW OF THE NAV AND INVESTMENTS

   NAV
   During the six months ended 31 December 2017, the NAV increased to R1.9 billion, equivalent to R10.76 per share.

   At 31 December 2017, Ethos Capital's unlisted invested capital (including guarantees) was 39% of the NAV, with the balance largely invested in Temporary Investments.

   An analysis of the movements in the NAV and NAVPS is detailed below:

                                                   NAV        NAVPS
                                                 R'000        Cents
   At 30 June 2017                           1 867 079        10.37
   Net return on Temporary Investments          52 427         0.29
   Return on investment portfolio               28 511         0.16
   Share buybacks                              (17 344)        0.03
   Expenses and tax                            (10 457)       (0.06)
   Fees paid to Ethos                           (6 207)       (0.03)
   At 31 December 2017                       1 914 009        10.76

   The net return on Temporary Investments during the period was R52.4 million, representing a net annualised return of 7.6%. The net return on the unlisted investment
   portfolio was R28.5 million, implying a cumulative IRR of the investment portfolio of 12.2%.

   Operating expenses and tax for the Company totalled R10.5 million, constituting 0.5% of NAV, of which R4.2 million relates to transaction-related fees in respect of
   completed and aborted transactions. The fees payable to Ethos include advisory fees on Primary and Direct Investments, charged at 1.5% per year on the average 
   invested capital over the period, and management fees on Temporary Investments, charged at 0.25% per year less any fees payable to Ashburton Fund Managers 
   Proprietary Limited ("Ashburton") for managing the portfolio of Temporary Investments. Further details on expenses are provided in note 9 of the Notes to the 
   Interim Financial Statements.

   SHARE PRICE ANALYSIS
   Ethos Capital's share price as at 31 December 2017 was R8.70, which represented a 19.1% discount to the NAVPS at 31 December 2017.

   As noted previously, the Ethos Capital Board is committed to a policy of enhancing long-term shareholder value. The Company has continued to repurchase shares to
   enhance shareholder value and the shares acquired by the Company are held in treasury. During the six months to 31 December 2017, the Company repurchased an 
   additional 2 034 038 shares representing 1.1% of the unencumbered issued A Ordinary Share capital.

   Since the period-end, the Company has continued to repurchase shares and the Board will continue to monitor the Company's share price performance and the discount 
   to NAV.

   COMMITMENTS
   Ethos Capital's Investment Strategy is to make investment commitments into Funds managed by Ethos, through a combination of Primary, Direct and Secondary 
   Investments, or making commitments to Direct Investments. As at 31 December 2017, Ethos Capital had liquid resources of R1.2 billion to meet any outstanding 
   commitments. In addition, the Company has agreed a four-year revolving credit facility with Rand Merchant Bank ("RMB") that, once activated, will provide access to 
   c. R0.6 billion of additional resources for the Company.

   As at 31 December 2017, the Company's closed and approved - subject to legal Fund closings - commitments to Ethos Funds were as follows:

                             Type                    Vintage           Original      Undrawn
                                                                          R'000        R'000
   Closed
   EMMF I                    Primary                    2016            900 000      532 085
   Primedia                  Direct                     2017            171 105        8 199
   EF VI                     Secondary                  2011            123 050       17 670
   EMMF ID*                  Direct                     2017            100 000            -
                                                                      1 294 155      557 954
   Approved
   EF VII                                                             1 250 000    1 250 000
   EMP 3                                                                320 000      320 000
   EHI                                                                  250 000      250 000
                                                                      3 114 155    2 377 954

   * Investment in Kevro via the Ethos Mid Market Fund I Direct Partnership ("EMMF ID").
  
   INVESTMENT PORTFOLIO
   At 31 December 2017, the investment portfolio and invested capital consisted of the following:

                                  Cost    Valuation          
                                 R'000        R'000           % of NAV
   Investments
   EMMF I                      362 265      403 957               21.1
   Primedia                    160 275      160 275                8.4
   EMMF ID*                    100 000      100 000                5.2
   EF VI                        65 402       65 458                3.4
   Total investments           687 942      729 690               38.1
   Unfunded guarantees
   EF VI**                           -       20 064                1.1
   Total invested capital      688 088      749 754               39.2
 
   *  Investment in Kevro via the Ethos Mid Market Fund I Direct Partnership ("EMMF ID").
   ** Guarantees provided by the Fund to raise financing that was used to invest in Portfolio Companies.

   During the period, the investments in two Portfolio Companies (Kevro and Primedia) were completed as well as the EMMF I investment into MTN Zakhele Futhi (the BEE
   shareholder of the MTN Group). This increased Ethos Capital's underlying exposure to 11 Portfolio Companies across a number of sectors which provide a 
   diversified portfolio exposure.

   Post-December, EMMF I completed the acquisition of Echotel Proprietary Limited ("Echo"), of which Ethos Capital's contribution was R34.0 million. Echo is a 
   South African corporate Internet Service Provider and primarily services domestic high-end SME and enterprise clients.

   The above increased Ethos Capital's invested capital to 41% of NAV and its underlying exposure to 12 Portfolio Companies.

   REALISATIONS
   During October 2017, Ethos Capital received R11.9 million as its share of the sale of Kevro by EF VI which generated a Fund return of 2.7x cost invested.
   A further two exits are expected to be completed in Q2 2018.

   UNDERLYING PORTFOLIO COMPANIES
   The Ethos Funds - making up Ethos Capital's investment portfolio - invest in a diversified pool of unquoted investments (Portfolio Companies) and provide the 
   Company with indirect exposure to the Funds' underlying investments. At 31 December 2017, the investments (excluding guarantees) constituting 38.1% of total NAV, 
   consisted of the following 11 companies and other surplus cash and current assets at the Fund level:

   Name                    Fund               Business description                            Year*    % of NAV
   Kevro                   EMMF I/EMMF ID     Corporate clothing and promotional               2017        11.3
   Primedia                EF VI/Direct       Media                                            2017         8.9
   Autozone                EF VI/EMMF I       Retailer and wholesaler  of automotive parts     2014         5.5
   MTN Zakhele Futhi       EMMF I             Telecommunications                               2017         3.7
   Twinsaver               EF VI/EMMF I       Industrials (FMCG)                               2015         3.5
   Eazi Access             EF VI/EMMF I       Industrial support services                      2016         3.2
   Eaton Towers            EF VI              Shared telecoms towers                           2015         0.6
   Waco International      EF VI              Industrial support services                      2012         0.6
   The Beverage Company    EF VI              Carbonated drinks                                2017         0.3
   RTT                     EF VI              Logistics                                        2014         0.2
   Neopak                  EF VI              Paper and packaging                              2015         0.2
   Other                   EF VI/EMMF I       Cash and current assets                                       0.1
                                                                                                           38.1
   
   * Initial acquisition date by Ethos Fund

   PORTFOLIO COMPANY PERFORMANCE
   Ethos Capital's investment portfolio at 31 December 2017 provides exposure to 11 Portfolio Companies that, in aggregate (excluding the results of the MTN Group),
   have sales of over R24 billion and EBITDA of more than R4 billion. The companies span a number of sectors providing diversified portfolio exposure.

   The economic environment in South Africa and sub-Saharan Africa has remained subdued in the past 12 months, with some prevalent macroeconomic headwinds. 
   However, the Portfolio Companies' performance held up relatively well and the Funds benefited from sectoral diversity in the portfolio and some of the initiatives 
   undertaken to optimise operations. The growth in the aggregate sales of the Portfolio Companies (excluding the results of the MTN Group) over the last 12 months 
   ("LTM") to 31 December 2017 was 6.1% while the portfolio grew its LTM aggregate EBITDA by 4.6%.

   PORTFOLIO COMPANY VALUATION ANALYSIS
   The NAV of each Fund is derived from the valuations of the underlying Portfolio Companies, which are prepared in accordance with International Private Equity and
   Venture Capital Guidelines ("IPEV Guidelines"). Valuations are performed quarterly, audited semi-annually and approved by each Fund's Advisory Board. The IPEV
   Guidelines set out best practice where private equity investments are reported on at fair value.

   As at 31 December 2017, the Ethos Capital portfolio of investments was valued at an average EV/EBITDA multiple of 6.9x. The IPEV Guidelines require the Manager to
   ascribe a series of adjustments to the Portfolio Company valuation multiples to reflect their unlisted nature and company-specific factors.  As at 31 December 2017,
   the average EV/EBITDA multiple represents an average discount of 41% compared to the equivalent multiple of the Portfolio Companies' peer groups.

   The value-weighted average Net Debt/EBITDA of the portfolio was 2.0x.


C. UNAUDITED SUMMARISED INTERIM FINANCIAL STATEMENTS

   UNAUDITED SUMMARISED STATEMENT OF FINANCIAL POSITION
   AT 31 DECEMBER 2017
                                                                            Unaudited
                                                           Notes    31 Dec 2017  31 Dec 2016  30 June 2017
                                                                          R'000        R'000         R'000
   ASSETS
   Non-current assets
   Unlisted investments at fair value                          4        729 690      340 175       307 939

   Total non-current assets                                             729 690      340 175       307 939

   Current assets
   Other assets and receivables                                          21 621       24 156        26 758
   Money market investments at fair value                      5      1 141 236    1 421 383     1 529 281
   Cash and cash equivalents                                             25 782       10 756        10 044

   Total current assets                                               1 188 639    1 456 295     1 566 083

   TOTAL ASSETS                                                       1 918 329    1 796 470     1 874 022

   EQUITY AND LIABILITIES
   Capital and reserves
   Issued capital                                              6      1 747 668    1 765 359     1 765 012
   Retained earnings                                                    166 341       28 871       102 067

   Total equity                                                       1 914 009    1 794 230     1 867 079

   Current liabilities
   Other liabilities and payables                                         3 657          889         3 775
   Current tax liabilities                                                  663        1 351         3 168

   Total current liabilities                                              4 320        2 240         6 943

   TOTAL EQUITY AND LIABILITIES                                       1 918 329    1 796 470     1 874 022
 
   NET ASSET VALUE                                                    1 914 009    1 794 230     1 867 079

   Net asset value per share (Rand)                         11.2          10.76         9.97         10.37
   Attributable shares in issue at end of 
   period/year ('000)                                       11.1        177 926      180 000       179 960


   UNAUDITED SUMMARISED STATEMENT OF COMPREHENSIVE INCOME
   FOR THE SIX MONTHS ENDED 31 DECEMBER 2017


                                                                           Unaudited
                                                                     Six months   Six months   
                                                                          ended        ended    Year ended  
                                                                    31 Dec 2017  31 Dec 2016   30 Jun 2017
                                                           Notes          R'000        R'000         R'000
   Income
   Investment income                                           7         60 121       50 627       123 901
   Net fair value gains/(losses)                               8         21 850       (8 971)        2 683
   Total income                                                          81 971       41 656       126 584

   Expenses
   Management and administration fees                        9.1         (7 240)      (1 693)       (4 820)
   Legal and consultancy fees                                9.2         (4 641)      (5 938)       (8 917)
   Other operating expenses                                  9.3         (4 361)      (3 803)       (7 612)
   Total expenses                                                       (16 242)     (11 434)      (21 349)

   Profit before tax                                                     65 729       30 222       105 235

   Income tax expense                                                    (1 455)      (1 351)       (3 168)
   Profit for the period/year                                            64 274       28 871       102 067

   Other comprehensive income for the period/year                             -            -             -
   TOTAL COMPREHENSIVE INCOME FOR THE PERIOD/YEAR                        64 274       28 871       102 067

   Earnings per share
   Basic and diluted earnings per share (Rand)              11.1           0.36         0.16          0.57

   The above relate to continuing operations as no operations were acquired or discontinued during the year.


   UNAUDITED SUMMARISED STATEMENT OF CHANGES IN EQUITY
   FOR THE SIX MONTHS ENDED 31 DECEMBER 2017

                                                                                   Unaudited
                                                                          Six months ended 31 Dec 2017
                                                                          Share     Retained         Total
                                                                        capital     earnings        equity
                                                           Notes          R'000        R'000         R'000
   Balance at 1 July 2017                                             1 765 012      102 067     1 867 079
   Buy-back of ordinary shares                                 6        (17 344)           -       (17 344)
   Income for the period                                    11.1              -       64 274        64 274
   Balance at 31 December 2017                                        1 747 668      166 341     1 914 009

                                                                                   Unaudited
                                                                          Six months ended 31 Dec 2016
                                                                          Share     Retained         Total
                                                                        capital     earnings        equity
                                                                          R'000        R'000         R'000
   Issue of ordinary shares                                    6      1 800 075            -     1 800 075
   Share issue costs                                           6        (34 716)           -       (34 716)
   Income for the period                                    11.1              -       28 871        28 871
   Balance at 31 December 2016                                        1 765 359       28 871     1 794 230

                                                                              Year ended 30 Jun 2017
                                                                          Share     Retained         Total
                                                                        capital     earnings        equity
                                                                          R'000        R'000         R'000
   Issue of ordinary shares                                    6      1 800 075            -     1 800 075
   Share issue costs                                           6        (34 716)           -       (34 716)
   Buy-back of ordinary shares                                 6           (347)           -          (347)
   Income for the year                                      11.1              -      102 067       102 067
   Balance at 30 June 2017                                            1 765 012      102 067     1 867 079

   No comparative financial information as at 1 July 2016 has been presented as no Statement of Changes in Equity was presented in the 30 June 2016 financial
   statements.


   UNAUDITED SUMMARISED STATEMENT OF CASH FLOWS
   FOR THE SIX MONTHS ENDED 31 DECEMBER 2017

                                                                            Unaudited
                                                                     Six months   Six months   
                                                                          ended        ended    Year ended
                                                                    31 Dec 2017  31 Dec 2016   30 Jun 2017
                                                                          R'000        R'000         R'000
   Net cash (used in)/generated by operating activities before 
   investment activities                                                (21 843)       6 067       (16 769)

   Net cash generated by/(used in) investing activities                  55 019   (1 755 168)   (1 732 697)

   Cash generated by/(used in) operating and investing activities        33 176   (1 749 101)   (1 749 466)

   Net cash (used in)/generated by financing activities                 (17 344)   1 765 359     1 765 012

   Net increase in cash and cash equivalents                             15 832       16 258        15 546

   Cash and cash equivalents at the beginning of the period/year         10 044            -             -
   Effects of exchange rate changes on the balance of cash held  
   in foreign currencies                                                    (94)      (5 502)       (5 502)
   Total cash and cash equivalents at the end of the period/year         25 782       10 756        10 044


   NOTES TO THE SUMMARISED INTERIM FINANCIAL STATEMENTS
   FOR THE SIX MONTHS ENDED 31 DECEMBER 2017


1  GENERAL INFORMATION
   EPE Capital Partners Ltd ("Ethos Capital", or "the Company") was registered and incorporated in Mauritius as a private company on 26 May 2016 under the Mauritius
   Companies Act, Act No. 15 of 2001, and was converted to a public company on 15 July 2016. The Company is licensed as a Category One Global Business Licence company 
   by the Financial Services Commission of Mauritius and is designed to offer shareholders long-term capital appreciation by investing into Funds or Direct Investments
   that provide the Company exposure to a diversified portfolio of unlisted private equity-type investments.

2  APPLICATION OF NEW AND REVISED INTERNATIONAL FINANCIAL REPORTING STANDARDS ("IFRS")
   The following new and revised standards and interpretations are relevant to the Company and have been adopted in these Summarised Interim Financial Statements. 
   Their adoption has not had any significant impact on the amounts reported in these Summarised Interim Financial Statements but may have affected the accounting and
   disclosure of transactions and arrangements. These standards are effective for companies with financial year-ends beginning on or after the effective date as noted 
   for each standard.

   Standard          Description/name of standard                               Effective date
   IAS 7             Statement of Cash Flows                                    1 January 2017
   IFRS 2            Share-Based Payments                                       1 January 2017
   IFRS 17           Insurance Contracts                                        1 January 2017
   IAS 12            Income Taxes                                               1 January 2017
   IFRS 12           Disclosure of Interest in Other Entities                   1 January 2017

   The standards issued but not yet effective for the financial year ending on 30 June 2018 that are relevant to the Company and not implemented early, are the
   following:

   Standard          Description/name of standard                               Effective date
   IFRS 15           Revenue from Contracts with Customers                      1 January 2018
   IFRS 9            Financial Instruments                                      1 January 2018
   IFRIC 22          Foreign Currency Transactions and Advance Consideration    1 January 2018
   IFRS 16           Leases                                                     1 January 2019

   The Directors anticipate that these amendments will be applied in the Summarised Interim and Annual Financial Statements for the annual periods beginning on or 
   after the respective dates as indicated above. The Directors have not yet assessed the potential impact of the adoption of these amendments.

3  SIGNIFICANT ACCOUNTING POLICIES
   3.1  Basis of preparation
        These Summarised Interim Financial Statements have been prepared in accordance with: IFRS as issued by the International Accounting Standards Board; the SAICA
        Financial Reporting Guides, as issued by the Accounting Practices Committee; the Financial Reporting Pronouncements, as issued by the Financial Reporting 
        Standards Council; as a minimum, the information required by IAS 34; the Listings Requirements of the JSE; and the requirements of the Mauritius Companies Act,
        Act No. 15 of 2001, in so far as applicable to Category One Global Business License companies.
   
        The accounting policies applied in the preparation of these Summarised Interim Financial Statements are, where applicable to the prior financial year, 
        consistent in all material respects with those used in the prior financial year and with IFRS.

        The Summarised Interim Financial Statements have been prepared on the historical cost basis except for financial instruments and investments which are 
        measured at fair value.

        The Directors believe the Company has adequate resources to settle its obligations as and when they become due, therefore these Summarised Interim Financial
        Statements have been prepared on the going concern basis.

        These Summarised Interim Financial Statements were compiled under the supervision of the Chief Financial Officer, Mr Jean-Pierre van Onselen, CA(SA), and were
        approved by the Board on 13 March 2018.

   3.2  Segmental reporting
        Since the Company has only one business segment, and all its investments are managed as one segment investing in private equity-type investments, segmental 
        reporting is not applicable.

4  UNLISTED INVESTMENTS AT FAIR VALUE
   The Company obtains exposure to and has indirect interests in a diversified pool of unquoted  investments ("Portfolio Companies") by investing into Fund Limited
   Partnerships ("Funds"), managed by Ethos Private Equity (Pty) Limited ("Ethos"), that typically have a 10-year life cycle. The Company becomes a Limited Partner of
   the Fund and the investments are made through commitments into the Funds. Alternatively, the Company can also make direct commitments to invest into Portfolio
   Companies alongside the Funds.

   In November 2016, the Company made a R550 million commitment to the Ethos Mid Market Fund I Partnership ("EMMF I"), which was increased to R900 million in July 2017.
   The Company also acquired a US$10 million (R123 million) commitment in Ethos Fund VI (Jersey) LP ("EF VI") in November 2016, through a secondary transaction. During
   the current period, a commitment of R100 million was made to the Ethos Mid Market Fund I Direct Partnership ("EMMF I Direct"), to facilitate the Company's first
   Direct Investment, which was followed by a R171 million commitment to invest directly in Primedia Holdings (Pty) Ltd.

                                                                    31 Dec 2017  31 Dec 2016   30 Jun 2017
                                                                          R'000        R'000         R'000
   Investments held at fair value through profit and loss:
   Unlisted investment in EMMF I                                        403 957      292 142       247 412
   Unlisted investment in EF VI                                          64 458       48 033        60 527
   Unlisted investment in EMMF I Direct                                 100 000            -             -
   Unlisted investment in Primedia Holdings (Pty) Ltd                   160 275            -             -
                                                                        729 690      340 175       307 939
   Consisting of:
   Cost                                                                 687 942      344 272       288 505
   Unrealised capital appreciation/(depreciation) at end  
   of period/year                                                        27 340       (4 294)        7 515
   Accrued income                                                        14 408          197        11 919
                                                                        729 690      340 175       307 939

   At 31 December 2017, the underlying investments of the above Funds (Portfolio Companies), constituting 38.1% of the Company's net asset value ("NAV"), consisted of 
   the following 11 unlisted companies and other surplus cash and current assets held at the Fund level:

   Name                       Fund/type                                   Business description/sector                        % of NAV
                                                                                                                          31 Dec 2017
   Kevro                      EMMF I/EMMF I Direct                        Corporate clothing and promotional                     11.3
   Primedia                   EF VI/Direct                                Media                                                   8.9
   Autozone                   EF VI/EMMF I                                Retailer and wholesaler  of automotive parts            5.5
   MTN Zakhele Futhi          EMMF I                                      Telecommunications                                      3.7
   Twinsaver                  EF VI/EMMF I                                Industrials (FMCG)                                      3.5
   Eazi Access                EF VI/EMMF I                                Industrial support services                             3.2
   Eaton Towers               EF VI                                       Shared telecoms towers                                  0.6
   Waco International         EF VI                                       Industrial support services                             0.6
   The Beverage Company       EF VI                                       Carbonated drinks                                       0.3
   RTT                        EF VI                                       Logistics                                               0.2
   Neopak                     EF VI                                       Paper and packaging                                     0.2
   Other                      EF VI/EMMF I                                Cash and current assets                                 0.1
                                                                                                                                 38.1
                                                                        Capital
                                                                  appreciation/      Accrued               
                                                            Cost (depreciation)       income         Total
                                                           R'000          R'000        R'000         R'000
   Reconciliation of movements:

   Balance at 1 July 2017                                288 505          7 515       11 919       307 939
   Acquisitions                                          408 396              -            -       408 396
   Realisations                                           (8 959)        (1 360)        (801)      (11 120)
   Revaluation increase at end of period                       -         21 185        3 290        24 475
   Balance at 31 December 2017                           687 942         27 340       14 408       729 690

   Balance at 1 July 2016                                      -              -            -             -
   Acquisitions                                          349 160              -            -       349 160
   Realisations                                           (4 888)             -            -        (4 888)
   Revaluation (decrease)/increase at end of period            -         (4 294)         197        (4 097)
   Balance at 31 December 2016                           344 272         (4 294)         197       340 175

   Balance at 1 July 2016                                      -              -            -             -
   Acquisitions                                          293 393              -            -       293 393
   Realisations                                           (4 888)             -            -        (4 888)
   Revaluation increase at end of year                         -          7 515       11 919        19 434
   Balance at 30 June 2017                               288 505          7 515       11 919       307 939

5  MONEY MARKET INVESTMENTS AT FAIR VALUE

                                                                    31 Dec 2017  31 Dec 2016   30 Jun 2017             
                                                                          R'000        R'000         R'000
   Investments held at fair value through profit and loss:
   Floating rate notes                                                  502 001      552 433       637 091
   Negotiable certificates of deposit                                   567 475      383 368       577 473
   Treasury bills                                                        69 241      426 858       179 185
   Cash and call accounts                                                 2 519       58 724       135 532
                                                                      1 141 236    1 421 383     1 529 281

   Consisting of:
   Cost                                                               1 140 684    1 420 851     1 528 622
   Unrealised appreciation at end of period/year                            552          532           659
                                                                      1 141 236    1 421 383     1 529 281

   The money market investments, or Temporary Investments, are managed by Ashburton Fund Managers Proprietary Limited ("Ashburton") under a discretionary investment
   management agreement dated  28 July 2016. These investments are currently invested in money market instruments that consist of a combination of floating rate notes,
   negotiable certificates of deposit ("NCD") and treasury bills.
   
   At 31 December 2017, the following range of interest rates was applicable to the respective categories of money market instruments, from which the accrued income at
   31 December 2017 was derived:

                                                                                         31 Dec 2017
                                                                                         Low          High
                                                                                           %             %
   Floating rate notes                                                                7.8500        8.0750
   NCD                                                                                7.1000        8.2750
   Treasury bills                                                                     7.6538        7.6538

6  ISSUED CAPITAL

                                                                    31 Dec 2017  31 Dec 2016   30 Jun 2017
                                                                         Number       Number        Number
   Issued:
   A Ordinary Shares issued at R10.00 per share                     180 000 000  180 000 000   180 000 000
   A Ordinary Shares issued at R0.01 per share                        7 500 000    7 500 000     7 500 000
   B Ordinary Shares issued at R0.01 per share                           10 000       10 000        10 000
   Total issued at time of listing                                  187 510 000  187 510 000    187 510 000

   A Ordinary Shares purchased                                       (2 074 140)           -       (40 102)
   Total issued share capital                                       185 435 860  187 510 000   187 469 898


                                                                    31 Dec 2017  31 Dec 2016   30 Jun 2017
                                                                          R'000        R'000         R'000
   Issued:
   A Ordinary Shares issued at R10.00 per share                       1 800 000    1 800 000     1 800 000
   A Ordinary Shares issued at R0.01 per share                               75           75            75
   B Ordinary Shares issued at R0.01 per share                                -            -             -
   Less: Share issue costs                                              (34 716)     (34 716)      (34 716)
   Total issued at time of listing                                    1 765 359    1 765 359     1 765 359

   A Ordinary Shares purchased                                          (17 691)           -          (347)
   Total issued share capital                                         1 747 668    1 765 359     1 765 012

   During the period, the Company purchased 2 034 038 of its A Ordinary Shares at an average price  of R8.53 per share. These shares are currently held in treasury.

7  INVESTMENT INCOME

                                                                     Six months   Six months    
                                                                          ended        ended    Year ended
                                                                    31 Dec 2017  31 Dec 2016   30 Jun 2017
                                                                          R'000        R'000         R'000
   Interest from unlisted investments                                     6 359           50        15 854
   Dividends from unlisted investments                                      101          761         1 314
   Interest from money market investments                                47 988       33 656        80 251
   Interest from bank and call deposits                                     382        1 330         1 486
                                                                         54 830       35 797        98 905

   Amortisation of net discount                                           5 291       14 830        24 996
                                                                          5 291       14 830        24 996

                                                                         60 121       50 627       123 901

8  NET FAIR VALUE GAINS/(LOSSES)

                                                                     Six months   Six months    
                                                                          ended        ended    Year ended
                                                                    31 Dec 2017  31 Dec 2016   30 Jun 2017
                                                                          R'000        R'000         R'000
   Unrealised:
   Net gains/(losses) arising on changes in the fair value of 
   unlisted investments                                                  19 825       (4 294)        7 515
   Net (losses)/gains arising on changes in the fair value of money 
   market instruments                                                      (107)         532           659
   Net foreign exchange losses on conversion of cash and cash 
   equivalents                                                              (94)           -          (282)
                                                                         19 624       (3 762)        7 892

   Realised:
   Gains on realisation of unlisted investments                           2 226            -             -
   Gains on realisation of money market instruments                           -           11            11
   Net foreign exchange losses on conversion of cash and cash 
   equivalents                                                                -       (5 220)        (5 220)
                                                                          2 226       (5 209)        (5 209)

   Net fair value gains/(losses)                                         21 850       (8 971)        2 683

9  PROFIT BEFORE TAX 
   Profit before tax has been arrived at after charging:

                                                                     Six months   Six months    
                                                                          ended        ended    Year ended
                                                                    31 Dec 2017  31 Dec 2016   30 Jun 2017
                                                                          R'000        R'000         R'000
   9.1  Management and administration fees
        Management fees - Ethos                                           2 513            -         1 286
        Advisory fees - Ethos*                                            2 821            -             -
        Administration fee - Ethos                                          873          736         1 482
        Administration fee - Ashburton                                    1 033          957         2 052
                                                                          7 240        1 693         4 820

        * Payable from 1 July 2017. 

   9.2  Legal and consultancy fees
        Legal and consultancy fees                                           73        4 409         5 154
        Fund formation fees                                                 255        1 431         1 809
        Expenses relating to the acquisition of investments               4 313           98         1 954
                                                                          4 641        5 938         8 917
   9.3  Other operating expenses
        Company secretarial, accounting and other administration fees       758          800         1 517
        Directors' emoluments                                             1 960        1 526         3 353
        Auditors' remuneration                                              419          473           852
        Insurance costs                                                     321          191           431
        Sponsor and listing-related fees                                    377          112           408
        Other expenses                                                      526          701         1 051
                                                                          4 361        3 803         7 612
10  CAPITAL COMMITMENTS AND CONTINGENT LIABILITIES

                                                      Original                  Outstanding
                                                     31 Dec 2017    31 Dec 2017  31 Dec 2016   30 Jun 2017
                                                           R'000          R'000        R'000         R'000
    Capital commitments:
    Unlisted investment in EMMF I                        900 000        532 085      255 442       319 205
    Unlisted investment in EF VI                         123 050         17 670       81 815        55 874
    Unlisted investment in EMMF I Direct                 100 000              -            -             -
    Unlisted investment in Primedia Holdings (Pty) Ltd   171 105          8 199            -             -
                                                       1 294 155        557 954      337 257       375 079
    Contingent liabilities:
    Rand Merchant Bank ("RMB")                           105 000        118 143      106 369       113 424
                                                         105 000        118 143      106 369       113 424

    Total commitments and contingent liabilities       1 399 155        676 097      443 626       488 503

    Refer to note 4 for further details on the capital commitments.

    The Company has provided a guarantee against a R105 million five-year non-recourse loan facility (plus any outstanding interest thereon) issued by RMB to 
    Black Hawk Private Equity Proprietary Limited ("Black Hawk"), expiring on 29 July 2021. The proceeds of the facility, signed on 28 July 2016, were used by 
    Black Hawk to subscribe to R105 million of A Ordinary Shares on behalf of the two non-executive Directors, who are members of the Company's Investment Committee. 
    The above amount represents the current outstanding balance on the facility, including any accrued interest charges to 31 December 2017. Interest currently accrues 
    at a rate that is based on JIBAR plus a 1% margin, and the interest is intended to be rolled-up and settled with the capital amount outstanding upon the maturity 
    of the loan or an earlier repayment event.

11  EARNINGS AND NET ASSET VALUE PER SHARE
    As detailed in note 6, the Company issued 187 500 000 A Ordinary Shares, 7 500 000 of which were issued to the EPE Allocation Trust and are currently notionally 
    encumbered. Until these shares are released from their encumbrance (through the notional performance participation), the Company has an irrevocable  right and 
    option to acquire the notionally encumbered A Ordinary Shares at a repurchase price of  R0.01 per share, being each share's fair value, and then to apply for the 
    delisting of such shares acquired. The holders of these shares are therefore restricted from selling the shares to any party other than the Company and obtaining 
    or sharing in any economic benefit derived from the shares, until they are released from their encumbrance.

    Given the restrictions the encumbered shares place on the holder and the probability of the shares being delisted unless certain contingent conditions are met, 
    they are excluded from the calculations to determine the earnings, headline earnings and net asset value per share ("NAVPS") respectively. The calculations below 
    therefore reflect the earnings, headline earnings and NAV attributable to the unrestricted A Ordinary shareholders.

    11.1  Earnings and headline earnings per share

                                                                     Six months   Six months    
                                                                          ended        ended    Year ended
                                                                    31 Dec 2017  31 Dec 2016   30 Jun 2017
                                                                          R'000        R'000         R'000

          Total comprehensive profit attributable to ordinary 
          shareholders                                                   64 274       28 871       102 067

          Reconciliation of basic earnings to headline earnings:
          Total comprehensive profit attributable to ordinary 
          shareholders                                                   64 274       28 871       102 067
          Items attributable to headline earnings                             -            -             -
          Headline earnings for the period/year                          64 274       28 871       102 067

                                                                           '000         '000          '000
          Attributable shares:
          Number of shares in issue during the period/year              187 500      187 500       187 500
          Less: Treasury shares                                          (2 074)           -           (40)
          Less: Notionally encumbered shares                             (7 500)      (7 500)       (7 500)
          Number of attributable shares in issue at the end  
          of the period/year                                            177 926      180 000       179 960

          Weighted average number of ordinary shares for  
          the purpose of earnings per share                             178 631      180 000       180 000

          Basic and diluted earnings per share (Rand)                      0.36         0.16          0.57
          Basic and diluted headline earnings per share (Rand)             0.36         0.16          0.57

    11.2  Net asset value per share
 
                                                                    31 Dec 2017  31 Dec 2016   30 Jun 2017
                                                                          R'000        R'000         R'000

          Net assets                                                  1 914 009    1 794 230     1 867 079

          Net asset value per share (Rand)                                10.76         9.97         10.37

12  FINANCIAL RISK FACTORS AND INSTRUMENTS
    12.1  Overview
          The Board of Directors has overall responsibility for the establishment and oversight of the Company's risk management framework. The Company's risk 
          management policies are established to identify and analyse the risks faced by the Company, to set appropriate risk limits and controls and to monitor risks 
          and adherence to limits. Risk management policies and systems are reviewed regularly to reflect changes in market conditions and the products offered.

          Through the Company's activities, it is exposed to a variety of risks that could result in changes to the NAV or its performance.
          
          The main risks the Company is exposed to which could result in changes to the NAV or its performance are: capital risk; valuation risk; market risk 
          (comprising currency risk, interest rate risk and equity price risk); credit risk; and liquidity risk.
 
          These risks are detailed in note 23 of the Notes to the Annual Financial Statements as at 30 June 2017.

    12.2  Fair value classification of investments
          Financial assets and liabilities carried at fair value need to be classified within the appropriate level of hierarchy on which their fair values are based. 
          The information below sets out the different levels, as well as the classification of the Company's assets and liabilities where appropriate.

          Investments trading in active markets and deriving their fair value from quoted market prices of identical assets are classified within level 1. 
          These prices provide the most reliable fair value classification and the Company does not need to adjust the quoted prices to measure the fair value of 
          investments. The quoted market price used for investments held by the Company is the current bid price.

          Investments trading in markets not considered to be active and deriving their fair value from observable inputs other than quoted prices included within 
          level 1 are classified within level 2. These inputs need to be directly or indirectly observable for the investment and can include: quoted market prices 
          for similar assets in active or non-active markets; observable inputs other than quoted prices; and inputs derived or corroborated by observable market date. 
          The Company's money market investments will typically be classified within level 2.

          Level 3 classification applies to investments where observable inputs are not available for the asset to determine its fair value. Unobservable inputs are 
          used to measure fair value where relevant observable inputs are not available. The unlisted investments in Fund Limited Partnerships are within this level.

          The financial assets and liabilities measured at fair value in the Statement of Financial Position can be summarised as follows within the fair value 
          hierarchy:
  
                                                         Level 1        Level 2      Level 3         Total
                                                           R'000          R'000        R'000         R'000
          Assets:
          Unlisted investments                                 -              -      729 690       729 690
          Money market investments                             -      1 141 236            -     1 141 236
          Accrued income on money market investments           -         19 035            -        19 035
                                                               -      1 160 271      729 690     1 889 961

          During the period, there were no transfers of assets from level 1 to level 2 or 3, level 2 to level 1 or 3 or level 3 to level 1 or 2.
    
          The following table presents the movement in level 3 assets during the period by class of financial instrument:

                                                                                                  Unlisted
                                                                                               investments
                                                                                               31 Dec 2017
                                                                                                     R'000

          Non-current assets:
          Opening balance                                                                          307 939
          Acquisitions                                                                             408 396
          Realisations and equalisations at carrying value of acquisitions                         (11 120)
          Net gains included in the Statement of Comprehensive Income                               24 475
                                                                                                   729 690

          The Board of Directors has approved the valuation method for level 3 investments as set out in  the accounting policies. The valuation techniques used and 
          the inputs available to determine the fair value of each investment, are detailed in note 4 of the Notes to the Annual Financial Statements as at 
          30 June 2017. The inputs available to the Investment Advisor to determine the valuation of the underlying Portfolio Companies, from which the NAV of the 
          Funds is derived, are mainly the maintainable earnings of the relevant companies and valuation multiples that are derived from the public markets.
    
          The main inputs available to the Investment Advisor to determine the valuation on a case-by-case basis for each of the underlying Portfolio Companies, from 
          which the NAV of the Funds is derived, are: maintainable earnings, trading multiples and capital structures. Earnings, for instance EBITDA, can be based on 
          budgeted EBITDA, most recent or historic reported EBITDA, last-12-months EBITDA or EBITDA adjusted to a normalised earnings level.

          Trading multiples are determined by identifying comparable public companies based on, for instance, their industry, size, growth stage, revenue generation, 
          and strategy. Once a public company's trading multiple is calculated, the Investment Advisor can then adjust the multiple for considerations such as 
          illiquidity, capital structure and other differences between the public company and the Portfolio Company, based on company-specific facts and differences. 
          The Investment Advisor can also, in addition to the original transaction multiples, consider recent private transactions in similar securities as the 
          Portfolio Company or third-party transactions, and adjust the trading multiples as deemed appropriate.

          The capital structure of each Portfolio Company determines the ranking or distribution waterfall of how the fair value is allocated, firstly, to each type of 
          security, and secondly, to each holder of such securities, for example, taking into consideration preferred rights or incentive schemes upon an exit scenario, 
          possible earn-out payments, etc. Other subjective inputs to use might be based on the Investment Advisor's assessment of the quality of earnings, third-party
          external debt, comparability differences and probability of default.
   
          All these numerical and subjective inputs are recorded and maintained, for each Portfolio Company, in a valuation model designed and updated by the 
          Investment Advisor. The Board of Directors has no direct access or input to these valuation models or the subjective assessments that were considered in 
          deriving the fair value and are not reasonably available to the Board. All these inputs and considerations are largely interdependent and subjective, and 
          the models are highly complex for an outside party to manage. Therefore, it is not reasonable, and potentially misleading, for the Board to determine and 
          present to the shareholders of the Company a sensitivity analysis of the potential impact of changes to one or more of the underlying inputs to fair value.

    12.3  Interest rate risk
          Interest rate risk is the risk that the value of a financial instrument will fluctuate based on changes in market interest rates. The Company has exposure 
          to interest rate risk through its Temporary Investments (money market investments) that are largely invested in fixed rate instruments and floating rate 
          notes with a relatively short re-pricing period. The fair value of the money market instruments is largely dependent on the market interest rates and could 
          fluctuate with changes in the latter.

          The performance, maturity profile and sensitivity analysis of Temporary Investments are reviewed regularly and Ashburton aims to match the liquidity profile 
          with the Company’s liquidity requirements to optimise the returns. The Temporary Investments are managed by Ashburton under an investment management 
          agreement that sets certain permitted securities and limits within which they have to manage the portfolio to provide a balance of risk and returns that the 
          Board is comfortable with.

          The table below demonstrates the sensitivity in the fair value of the Temporary Investments held at 31 December 2017 based on assumed changes to the market 
          interest rates (measured in basis points (“bps”)) at different intervals and taking into account the maturity dates of the securities.

                                                                     Fair value
                                                                     adjustment
                                                                    31 Dec 2017
                                                                          R’000
          Change in market interest rates assumed:
          -75 bps                                                         1 959
          -50 bps                                                         1 306
          -25 bps                                                           653
          +25 bps                                                          (653)
          +50 bps                                                        (1 306)
          +75 bps                                                        (1 959)

13  EVENTS AFTER THE REPORTING PERIOD
    There have been no material events after the reporting date that would require disclosure or adjustment to the Summarised Interim Financial Statements for the six
    months ended 31 December 2017.


D.  CORPORATE INFORMATION

    Directors
    Yvonne Stillhart (Chairperson)
    Derek Prout-Jones
    Kevin Allagapen
    Michael Pfaff
    Yuvraj Juwaheer

    Senior Advisors
    Jean-Pierre van Onselen (CFO)
    Peter Hayward-Butt (CEO)

    Investment Advisor
    Ethos Private Equity (Pty) Limited
    35 Fricker Road
    Illovo
    Johannesburg, 2196

    Company Secretary and Registered Office
    Ocorian (Mauritius) Limited
    4th floor,
    Standard Chartered Tower
    19 Bank Street
    Cybercity
    Ebene
    Mauritius

    Auditors
    Deloitte & Touche
    Level 7, Standard Chartered Tower
    19 Bank Street
    Cybercity
    Ebene
    Mauritius

    Deloitte & Touche
    20 Woodlands Drive
    Woodmead
    Sandton
    Johannesburg, 2196

    Listing
    JSE Limited
    Abbreviated name: ETHOSCAP
    JSE code: EPE
    Sector: Financials - Speciality Finance

    Transfer Secretary
    Computershare Investor Services (Pty) Ltd
    Rosebank Towers
    15 Biermann Avenue
    Rosebank, 2196

    Sponsor
    Rand Merchant Bank
    1 Merchant Place
    Cnr Fredman Drive and Rivonia Road
    Sandton
    Johannesburg, 2196


Johannesburg
19 March 2018

Sponsor
RAND MERCHANT BANK (A division of FirstRand Bank Limited)




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