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AFRICAN RAINBOW CAPITAL INVESTMENTS LIMITED - Condensed unaudited interim results for the six-month period ended 31 December 2018

Release Date: 14/03/2019 07:05
Code(s): AIL     PDF:  
 
Wrap Text
Condensed unaudited interim results for the six-month period ended 31 December 2018

African Rainbow Capital Investments Limited
(Incorporated in the Republic of Mauritius)
(Registration number C148430)
JSE share code: AIL    ISIN code: MU0553S00000
("ARC Investments" or "the Company")

CONDENSED UNAUDITED INTERIM RESULTS
for the six-month period ended 31 December 2018

KEY COMMENTS

AFRICAN RAINBOW CAPITAL
INVESTMENTS LIMITED
(ARC INVESTMENTS)

INVESTMENT IN RAND MUTUAL HOLDINGS
R289 million

INTRINSIC NET ASSET VALUE (INAV)
Up 1.0%
TO R9 626 MILLION
(30 June 2018: R9 529 million)

DILUTED INAV PER SHARE
Up R9.21
(30 June 2018: R9.12)

INCREASED SHAREHOLDING IN TYMEBANK
Up 31.7% TO 36.7%
(30 June 2018: 5.0%)

PROFIT FOR THE SIX-MONTH PERIOD 31 DECEMBER 2018
Down R385 million
TO R77 MILLION (31 DECEMBER 2017: R462 MILLION)
(30 June 2018: R675 million)

INTRINSIC PORTFOLIO VALUE (IPV)
R8 567 million
(30 June 2018: R7 917 million)

CASH IN THE ARC FUND AT END OF PERIOD
R1 099 million

FAIR VALUE WRITE UP OF RAIN
Up R186 million

SUCCESSFUL LAUNCH OF
TymeBank

KROPZ PLC LISTED ON AIM IN NOVEMBER 2018

PROFIT ON DISPOSAL OF BKB
R189 million

COMMENTARY
for the six-month period ended 31 December 2018

NATURE OF BUSINESS

African Rainbow Capital Investments Limited (ARC Investments/ the Company/ ARCI) is a public company which is
incorporated in the Republic of Mauritius and holds a Category One Global Business License under the Mauritian Financial
Services Act, 2007. It is regulated by the Mauritian Financial Services Commission. 

The Company is listed on the Johannesburg Stock Exchange Limited (JSE) and is 50.1% (30 June 2018: 51.7%) owned by
African Rainbow Capital Proprietary Limited (ARC) which is in turn 100% owned by Ubuntu-Botho Investments Proprietary
Limited (UBI). 

The principal activities of the Company are that of an investment holding company which offers shareholders long-term
capital appreciation by indirectly investing in a diversified portfolio of unlisted and listed investments.

ARC Investments is the Limited Partner with a 99.95% interest in the ARC Fund Partnership (the ARC Fund), an en
commandite partnership which is South African based. Full details of the structure of the group were disclosed in the
Pre-Listing Statement issued on 28 August 2017 and published on the Company's website,  The underlying investments of
the ARC Fund are managed by UBI General Partner Proprietary Limited (the General Partner).

STRATEGY

The main purpose of the establishment of ARC Investments and the listing was to:

     - create a Broad-Based Black-controlled investment vehicle of significant scale with an exposure to a diversified
       portfolio of investments;
     - enable investors to invest in the Company and obtain indirect exposure to a diversified pool of unlisted and
       listed Broad-Based Black Economic Empowerment (B-BBEE) assets through a listed investment vehicle; and
     - enable ARC Investments to access capital markets, if required, to fund future expansion.

The most significant benefit in this regard is access to high quality companies, some of which would otherwise not be
available to normal investors on the JSE. In addition, investments are typically acquired at an appropriate B-BBEE
discount where the investment carries a B-BBEE lock-in for a contractually agreed period which results in attractive
prospective yields.

The UBI Group seeks to utilise its empowerment credentials, its financial strength, its strong and well experienced
leadership team as well as its strong brand to achieve superior capital appreciation for investors in ARC Investments.

INVESTMENT STRATEGY

As stated above, the Company effectively invests through its interest in the ARC Fund. By investing in a broad range of
sectors and through a variety of unlisted and listed entities, the ARC Fund generally seeks to gain exposure to growth
and early-maturity stage businesses in which management teams are appropriately incentivised. The ARC Fund primarily
acquires significant minority equity interests in established and start-up businesses that meet one or more of the
following criteria:

     - Experienced, qualified and capable management. 
     - A demonstrable track record.
     - Strong cash flow generation.
     - Solid growth prospects.
     - Established market position.
     - The opportunity to consolidate their respective markets and/or existing businesses within the ARC Fund portfolio.
     - Commercial prospects which can be enhanced by having strong B-BBEE credentials.

Where the ARC Fund holds majority or significant minority interests in portfolio companies, the General Partner, where
appropriate, seeks to provide broad strategic guidance through representation and participation on the board of
directors of such companies.

The ARC Fund has the flexibility to participate in opportunistic investments as and when they arise and seeks to focus
on transactions in South Africa and other select countries in Africa but may also invest in companies with interests
and/or operations elsewhere in the world. 

The ARC Fund does not have a target size and may be geared, as appropriate, to meet its investment strategy.

ARC Investments' medium- to long-term objective is to grow its Intrinsic Net Asset Value (INAV) by at least 16% per
annum. Each investment opportunity is expected to exceed a return on a standalone basis which is appropriate considering
the 16% hurdle as well as specific risk factors related to the investment.  

The ARC Fund seeks to derive synergies among portfolio companies for investments in the Diversified Financial Services
Portfolio. Its exposure to financial services entities is through a single investment in African Rainbow Capital
Financial Services Holdings Proprietary Limited (ARC FinHoldCo) in which the ARC Fund holds a 49.9% interest. 

For investments in non-financial services businesses within the Diversified Investments Portfolio, the approach is to
invest in sound stand-alone businesses and to back a strong and effective management team to deliver on the required
return on investment for the business. 

In the period under review the ARC Fund established ARCH Emerging Markets Partners Limited (ARCH EM) to geographically
expand its reach outside South Africa into the rest of the African continent. ARCH EM is a specialist firm focusing on
private market opportunities in renewable energy, cold chain solutions and financial services in developing countries.
The company is a joint venture between JCH & Partners LLP and African Rainbow Capital. The ARCH EM team has extensive
experience managing and investing in high-growth businesses in emerging markets, with strong in-country networks and a
focus on early-life cycle development aimed at unlocking growth and creating sustainable returns to investors.  

Operating environment

The period under review has been characterised by strained economic conditions which adversely impacted most of the
companies in our portfolio.  The poor performance of the economy resulted from several factors and is expected to remain
as such for the remainder of the financial year. Confidence levels are a key factor negatively impacting overall
economic growth. Our investee companies experienced low consumer, business and investor confidence, which was
exacerbated by political and policy uncertainty. 

Performance highlights

The INAV of the Company decreased from R9.23 per share at 30 June 2018 to R9.21 per share at 31 December 2018. The
diluted INAV per share increased from R9.12 per share at 30 June 2018 to R9.21 per share at 31 December 2018, which
amounts to an increase of 1.0% (2.0% on an annualised basis). This is significantly below the medium to long-term
expectation of 16% per annum. The net asset value (NAV) per share decreased from R9.31 per share at 30 June 2018 to
R9.28 per share at 31 December 2018 whilst the diluted NAV per share increased from R9.20 per share at 30 June 2018 to
R9.28 per share at 31 December 2018.

The ARC Fund's Intrinsic Portfolio Value (IPV) amounted to R8 688 million for the period under review. Additional
investments, predominantly in unlisted companies, amounted to R497 million, with R43 million in fair value adjustments.
Cash resources available for investments amounted to R1 099 million at 31 December 2018.

The main drivers of performance are largely explained by: 

Economy

The poor performance of the economy negatively impacted most of the investee companies in our portfolio. 

In the listed share portfolio, the share prices decreased substantially in the period under review and the ARC Fund
devalued its interest in these investments by R83 million (31 December 2017: R197 million).

Early lifecycle stage businesses

One of the unique offerings of the portfolio within the ARC Fund is rare inaccessible unlisted investments which we
access by leveraging our network. This often presents the opportunity to invest in early stage businesses in need of a
self-funding B-BBEE partner to further unlock their disruptive business edge and potential within their respective
sectors.  These businesses are typically start-up by their nature and still in the early stage of their growth cycle,
and thus characteristically the ARC Fund takes a long-term view on them and consistently commits to ensure they are
supported strategically to deliver on their value proposition.  Approximately 50% of the ARC Fund's Intrinsic Portfolio
Value of R8 688 million includes early stage businesses such as Rain, TymeBank, Kropz Plc and Kropz Elandsfontein.

Whilst developments and the progress made is promising, it will take some time for these initiatives to mature. 

Acquisitions and divestitures during the period

Growth in Intrinsic Portfolio Value

Deal flow remained healthy in the period under review, and the ARC Fund concluded additional net acquisitions which
increased the Intrinsic Portfolio Value by R497 million. These acquisitions were largely driven by further investment in
early stage businesses in the existing portfolio.

Detailed commentary on specific investments is provided in note 5. Significant developments during the period under
review and were as follows:

Rand Mutual Holdings

The ARC Fund acquired an effective 15% equity interest in Rand Mutual Holdings (RMH) during the period under review. The
acquisition is an excellent fit within the financial services portfolio and was concluded at a consideration of R289
million with R118 million thereof still subject to performance hurdles over the next two years.  The direct interest is
held by ARC FinHoldCo.

RMH is a subsidiary of Rand Mutual Assurance (RMA) which was founded in 1894 as a mutual assurance company with the
purpose of administering workers' compensation for mining industry employees injured in the course and scope of their
employment. The core of RMA's administration business is the receipt, adjudication and administration of workers'
compensation claims, including the payment of medical costs, once-off disability payments and the ongoing payment of
pensions in the case of severe disability and death. 

TymeBank

ARC FinHoldCo also acquired control of TymeBank on 1 November 2018. The founders and staff trust also form part of the
current shareholding structure. The cumulative amount invested by the ARC Fund for the acquisition of TymeBank amounted
to R278 million at 31 December 2018. The investment in TymeBank represents a critical component of the ARC Fund's
financial services strategy and this investment completes the banking pillar. 

Kropz Elandsfontein

At 30 June 2018, The ARC Fund owned an effective interest of 26% in Kropz Elandsfontein, a phosphate mine and processing
plant in the West Coast. The 74% interest was previously held by Kropz International. 

This interest as well as the largest remaining undeveloped phosphate ore reserve on the African continent was acquired
by Kropz Plc which was listed on the London Alternative Investment Market in November 2018. The ARC Fund subscribed for
an amount of US$32 million in the initial public offering and acquired a 47.2% economic interest in Kropz Plc. The ARC
Fund, however, has 50.5% of the voting rights in Kropz Plc.

The proceeds of the capital raise will predominantly be utilised to reconfigure and commission the processing plant and
mining operation at Kropz Elandsfontein.

BKB

Following the arbitration regarding the potential disposal of the ARC Fund's interest in BKB to Acorn Agri and Food
which was heard and concluded during September 2018, BKB re-acquired the 20% interest held by the ARC Fund for a
consideration of R410 million in December 2018. The 20% interest was originally acquired with the listing of ARCI on 7
September 2017 for R220 million.

Performance Review for the period

PORTFOLIO REVIEW

Below is a summarised review of the portfolio performance for the Diversified Investments and Diversified Financial
Services segments.

DIVERSIFIED INVESTMENTS PORTFOLIO MOVEMENTS

Telecommunications (28.4% of IPV)

The ARC Fund's investment in Rain (26.8% of IPV) increased from R2 144 million at 30 June 2018 to R2 330 million at 31
December 2018, mainly as a result of revaluations of R186 million. Overall, the growth prospects for Rain remain
optimistic. Revenue growth has been encouraging and significant progress has been made to further improve on network
performance and stability. Rain recently announced at the World Mobile Congress that they are in advanced talks with the
Chinese electronics manufacturer Huawei to launch 5G technology. The company is therefore well positioned to become a
significant player in the 5G data market in the foreseeable future.

Mining, Construction and Energy (20.8% of IPV)

The IPV of the investments in Mining, Construction and Energy increased from R1 284 million at 30 June 2018 to R1 803
million at 31 December 2018. The increase is mainly attributable to the investment in Kropz Plc of R510 million.

Business Process Outsourcing (12.8% of IPV)

The IPV of the investments in Business Process Outsourcing decreased from R1 245 million at 30 June 2018 to R1 114
million at 31 December 2018. This included a net loss of R157 million, mainly as a result of a fair value write down in
Bluespec of R209 million. 

The business of Bluespec is focused on the short-term insurance value chain and luxury/exotic vehicle sales. The motor
industry has experienced challenging trading conditions because of the economic downturn. 

Insurance companies have over the past year generally experienced favourable claims ratios on their motor insurance
business. This had a significant impact on the motor body repair shops and tow trucking businesses owned by Bluespec.

Whilst corrective measures have been implemented by the management of Bluespec to address the challenges, it was
concluded that it was appropriate to record a fair value write down of R209 million at 31 December 2018. The carrying
value has thus been reduced to R300 million. 

Agriculture (5.2% of IPV)

The IPV of the investments in Agriculture decreased to R449 million as a result of the disposal of the investment in BKB
for an amount of R410 million. 

Property (6.2% of IPV)

The IPV of the investments in Property increased from R523 million at 30 June 2018 to R535 million at 31 December 2018.
The increase is mainly attributable to the revaluation of Majik Holdings Limited of R15 million in the six-month period
ended 31 December 2018. 

Other (5.3% of IPV)

The Other investments consist mainly of a 51% equity interest in Fledge Capital which was valued at R342 million at 30
June 2018 and currently valued at R400 million as a result of further equity acquisition in Fledge of R21 million and a
revaluation of R37 million largely attributed to the value realised by Fledge in the conclusion of the "We Buy Cars"
deal with Naspers.

Diversified Financial Services (21.4% of IPV) 

The IPV of Diversified Financial Services increased from R1 567 million at 30 June 2018 and to R1 858 million at 31
December 2018. The increase is mainly attributable to the acquisitions of R289 million for Rand Mutual Holdings and R117
million for TymeBank discussed above. 

Governance & Leadership 

ARC Investments is managed and controlled in Mauritius by an experienced, multinational and majority independent Board
of Directors (the Board) that has final oversight and responsibility in respect of ARC Investments' business, strategy
and key policies. This includes the investment in the ARC Fund. There are no executive directors on the Board of ARC
Investments.

ARC Investments is the only Limited Partner in the ARC Fund, an en commandite partnership established in South Africa.
It thus plays no role in the management or investment decisions of the ARC Fund. 

All the investment decisions of the ARC Fund are taken by the General Partner through its Board or its Investment
Committee or, subject to the terms of any delegations in place, its Investment Advisory Committee. The ARC Fund's
relationship with the General Partner is governed through a partnership agreement. The Company's Investment Guidelines
have been adopted by the General Partner's Investment Committee in its charter. 

The General Partner has, in turn, entered into the Investment Services Agreement with African Rainbow Capital
Proprietary Limited (ARC). In terms of this agreement, ARC assists the General Partner to source investment
opportunities and also provides certain administrative and back office support to the General Partner. 

The Board of the General Partner is responsible for the general investment decisions and reviews of the ARC Fund and
management of the pipeline and liquidity of the ARC Fund. It will provide representation on the Boards of portfolio
companies (where appropriate), prepare valuation reports to ARC Investments and provide general feedback to ARC
Investments on relevant matters relating to the ARC Fund. Mr Anil Currimjee was appointed as an Independent
Non-executive Director to the Board of Directors of ARC Investments on 11 March 2019. Refer to detailed SENS
announcement issued on 11 March 2019.

Events post December 2018

The following investments were concluded in the ARC Fund post the reporting period:

TymeBank

ARC FinHoldCo has agreed to subscribe for an additional R346 million capital in TymeBank which will be injected over a
four-month period from February 2019. The ARC Fund will contribute its 49.9% share through share subscriptions of R172
million in ARC FinHoldCo. In addition, ARC FinHoldCo invested US$2 million in Tyme Global Limited, a Hong Kong based
company, to follow its rights to maintain its interest of 33% in the company. Tyme Global Limited owns the intellectual
property that is used by TymeBank.

The ARC Fund further made various investments aggregating less than R100 million. 

Other than the investment activities post the reporting period detailed above, the Company and the ARC Fund had no other
subsequent events that required adjustment or disclosure in the reported results.

BASIS OF PREPARATION

Statement of compliance

The condensed unaudited interim financial statements are prepared in accordance with the requirements of the JSE Limited
Listings Requirements for condensed unaudited interim financial statements and the requirements of the Mauritian
Companies Act, 2001 in so far as applicable to a Category One Global Business Licensed company under the Mauritian
Financial Services Act, 2007 which is regulated by the Mauritian Financial Services Commission. 

The Listings Requirements require condensed interim results to be prepared in accordance with the framework concepts,
the measurement and recognition requirements of International Financial Reporting Standards (IFRS), the SAICA Financial
Reporting Guides as issued by the Accounting Practices Committee and Financial Pronouncements as issued by the Financial
Reporting Standards Council and to also, as a minimum, contain the information required by IAS 34 "Interim Financial
Reporting".

The accounting policies applied in the preparation of the condensed unaudited interim results are consistent with those
applied in the Company's 30 June 2018 audited annual financial statements. 

STATEMENT OF RESPONSIBILITY

The Directors are responsible for the preparation of these condensed unaudited interim results.

These condensed unaudited interim results were compiled under the supervision of the Chief Financial Officer, Ms Karen
Bodenstein, BCompt.

APPROVAL

The condensed unaudited interim results for the period ended 31 December 2018 were approved by the Board of Directors of
the Company on 11 March 2019 in Mauritius. 

Mark Cyril Olivier          Clive Msipha                                   Karen Bodenstein
Chairman of the Board       Chairman of the Audit and Risk Committee       Chief Financial Officer

CONDENSED STATEMENT OF FINANCIAL POSITION
as at 31 December 2018

                                                                                                                  Unaudited   Unaudited Audited
                                                                                                                31 December 31 December 30 June
R million                                                                                                 Notes        2018        2017    2018
ASSETS
Non-current assets
Investment in the ARC Fund at FVTPL*                                                                         4        9 661       9 297   9 582
Current assets
Trade and other receivables                                                                                               2           2       1
Cash and cash equivalents                                                                                                27          44      28
Total assets                                                                                                          9 690       9 343   9 611
EQUITY
Stated capital                                                                                              6.1       8 903       8 832   8 832
Accumulated (loss)/profit                                                                                              (89)          16   (131)
Performance participation reserve                                                                             8           -          44     115
Fair value reserve                                                                                          5.3         874         435     795
LIABILITIES
Current liabilities
Trade and other payables                                                                                                  2          16       -
Total equity and liabilities                                                                                          9 690       9 343   9 611

Per share information
Number of ordinary shares in issue at the end of the period (million)                                     6.2.2       1 045       1 032   1 032
Net asset value per share (cents)                                                                           4.2         928         904     931
Number of diluted ordinary shares at the end of the period (million)                                      6.2.2       1 045         467   1 045
Diluted net asset value per share                                                                           4.2         928         893     920

* FVPL: Fair value through profit or loss.

CONDENSED STATEMENT OF COMPREHENSIVE INCOME
for the six-month period ended 31 December 2018

                                                                                                                  Unaudited   Unaudited Audited
                                                                                                                31 December 31 December 30 June
R million                                                                                                 Notes        2018        2017    2018
Fair value movements on the investment in the ARC Fund at FVTPL*                                            5.1          79         510     795
Other income                                                                                                              1           1       2
Other expenses                                                                                                          (3)         (5)     (7)
Performance Participation expense                                                                             8           -        (44)   (115)
Profit before taxation                                                                                                   77         462     675
Taxation                                                                                                      9           -           -       -
Profit for the period                                                                                                    77         462     675
Other comprehensive income for the period                                                                                 -           -       -
Total comprehensive income for the period                                                                                77         462     675
Earnings per share:
Basic earnings per ordinary share (cents)                                                                  6.2           7          96       81
Diluted earnings per ordinary share (cents)                                                                6.2           7          95       79

* FVTPL: Fair value through profit or loss.

CONDENSED STATEMENT OF CHANGES IN EQUITY
for the six-month period ended 31 December 2018

                                                                                                   Performance
                                                                          Stated    Accumulated  participation   Fair value
R million                                                       Notes    capital           loss        reserve      reserve        Total equity
Audited balance at incorporation 30 June 2017                               -              (11)              -            -                (11)
Issue of shares:                                                                                                                              -
- Acquisition of portfolio assets settled                         6.1      4 563              -              -            -               4 563
with equity    
- Issue of shares                                                 6.1      4 300              -              -            -               4 300
- Share issue costs                                               6.1       (31)              -              -            -                (31)
Total comprehensive income for the six-month                                   -            462              -            -                 462
period   
Transfer to fair value reserve                                    5.3          -          (435)              -          435                   -
Performance Participation                                           8          -              -             44            -                  44
Unaudited balance at 31 December 2017                                      8 832             16             44          435               9 327
   
Total comprehensive income for the six-month                                   -            213              -            -                 213
period   
Transfer to fair value reserve                                    5.3          -          (360)              -          360                   -
Performance Participation                                           8          -              -             71            -                  71
Audited balance at 30 June 2018                                            8 832          (131)            115          795               9 611
Total comprehensive income for the six-month period                            -             77              -            -                  77            
Conversion of C shares                                            6.1         71              -           (71)            -                   -
Transfer to retained earnings                                                  -             44           (44)            -                   -
Transfer to fair value reserve                                    5.3          -           (79)              -           79                   -
Performance Participation                                           8          -              -              -            -                   -
Unaudited balance at 31 December 2018                                      8 903           (89)              -          874               9 688
   
CONDENSED STATEMENT OF CASH FLOWS
for the six-month period ended 31 December 2018

                                                                                                                  Unaudited   Unaudited Audited
                                                                                                                31 December 31 December 30 June
R million                                                                                                 Notes        2018        2017    2018
CASH FLOWS FROM OPERATING ACTIVITIES
Cash utilised in operations before investment activities                                                    10         (1)          (2)    (17)
Cash capital contribution to the investment in FVTPL                                                         4           -      (4 224) (4 224)
Net cash outflows from operating activities                                                                            (1)      (4 226) (4 241)
CASH FLOWS FROM FINANCING ACTIVITIES
Issue of shares                                                                                            6.1           -        4 300   4 300
Share issue costs                                                                                          6.1           -         (31)    (31)
Net cash inflows from financing activities                                                                               -        4 269   4 269
Net increase in cash and cash equivalents                                                                              (1)           43      28
Cash and cash equivalents at the beginning of the period                                                                28            -       -
Total cash and cash equivalents                                                                                         27           43      28

ACCOUNTING POLICIES

for the six-month period ended 31 December 2018

1. DEFINITIONS

The following definitions are key to the understanding of the Company's condensed unaudited interim financial
statements:

1.1 IFRS Portfolio Value

Investments in the ARC Fund are reported in compliance with IFRS.

1.2 Intrinsic Portfolio Value (IPV)

The Intrinsic Portfolio Value is determined by the Directors at every reporting period. The Intrinsic Portfolio Value is
the IFRS Portfolio Value adjusted for non-IFRS measures as set out in note 4.2. The significant non-IFRS measurement
differences comprise:

   - valuing underlying listed investments on a 30-day volume weighted average price (VWAP) basis (compared to
     closing spot price), net after taxation; and
   - valuing underlying listed investments after recognising B-BBEE discounts on a 30-day VWAP basis (compared
     to closing spot price), net after taxation.

1.3 Intrinsic Net Asset Value (INAV)

Intrinsic Portfolio Value of ARC Investments plus cash and other net assets in the Company and the ARC Fund.

1.4 NAV

The net asset value of ARC Investments as reported on the statement of financial position.

2. BASIS OF PREPARATION

2.1 Statement of compliance

The condensed unaudited interim financial statements are prepared in accordance with the requirements of the JSE Limited
Listings Requirements for condensed unaudited interim financial statements and the requirements of the Mauritian
Companies Act, 2001 in so far as applicable to a Category One Global Business Licensed company under the Mauritian
Financial Services Act, 2007 which is regulated by the Mauritian Financial Services Commission.

The Listings Requirements require financial statements to be prepared in accordance with the framework concepts, the
measurement and recognition requirements of International Financial Reporting Standards (IFRS), the SAICA Financial
Reporting Guides as issued by the Accounting Practices Committee and Financial Pronouncements as issued by the Financial
Reporting Standards Council and to also, as a minimum, contain the information required by IAS 34 "Interim Financial
Reporting".

The accounting policies applied in the preparation of the condensed unaudited interim financial statements are
consistent with those applied in the Company's 30 June 2018 audited annual financial statements other than the adoption
of new standards as disclosed in note 15.

2.2 Functional currency and presentation currency

The Company's condensed unaudited interim financial statements are presented in South African Rand (Rand), which is the
Company's functional and presentation currency. All financial information presented in Rand has been rounded to the
nearest million (R million) except where otherwise indicated.

All other accounting policies are consistent with IFRS, inter alia, financial instruments; expected taxation cashflows;
taxation; Performance Participation and cash and cash equivalents where IFRS offers no accounting policy choice.

2.3 Basis of measurement

The condensed unaudited interim financial statements have been prepared on the historical-cost basis, except for the
measurement of financial instruments at fair value.

The going-concern basis has been used in preparing the condensed unaudited interim financial statements as the Directors
have a reasonable expectation that the Company will continue as a going concern for the foreseeable future.

3. KEY AREAS OF JUDGEMENT

3.1 Fair value measurement of the investment in the ARC Fund

The basis of valuation of the Investment in the ARC Fund is dependent on the basis of valuation of all investments in
the ARC Fund Portfolio. The basis of valuation of all investments in the ARC Fund Portfolio and consequently the
investment at fair value through profit or loss (FVTPL), is fair value. Fair value is determined at the end of each
quarter. All investments are valued in accordance with the valuation policy outlined below.

The sum of the individual instruments plus the cash and net assets in the ARC Fund make up the investment in the ARC
Fund. The valuation of the individual assets is in line with IFRS 13, therefore the sum of these approximates the IFRS
13 fair value of the investment in the ARC Fund.

The General Partner values the investment portfolio in accordance with its valuation policy. The valuation policy
considers the International Private Equity and Venture Capital Valuation Guidelines (IPEV Guidelines) and is consistent
with the below detailed valuation approach, which will be consistent year on year except where there have been changes
in circumstances in relation to an investment, and therefore the impact of such change would be disclosed.

3.1.1 Basis of valuation and approach

The fair value approach of the investments in the ARC Fund was determined as at the measurement date in accordance with
the principles of IFRS 13, Fair Value Measurement. Fair value is defined as the price that would be received for an
asset in an orderly transaction between market participants at the measurement date. A fair value measurement assumes
that a hypothetical transaction to sell an asset takes place in the principal market or in its absence, the most
advantageous market for the asset.

For listed investments which are suitably liquid investments, the available market prices (calculated at spot on
reporting date) will be the basis for the measurement of the IFRS Portfolio Value for identical instruments.

For unlisted investments, the primary valuation methodologies applied are the income approach (IA) and discounted cash
flow (DCF), compared against a market approach (MA), where appropriate.

The General Partner uses its judgement to select the valuation technique most appropriate for an investment. The use of
multiple valuation approaches on an investment is encouraged. On a specific investment, a single valuation technique or
approach may be appropriate (e.g. when valuing an asset using quoted prices in an active market for identical assets).

If multiple valuation techniques or approaches are used to measure fair value, the results of the various valuation
methods are evaluated considering the reasonableness of the range of values indicated by those results. A fair value
measurement is the point within that range that is most representative of fair value in the circumstances.

In determining the fair value of an investment, the General Partner uses its judgement. This includes consideration of
those specific terms of the investment which may impact its fair value. In this regard, the General Partner would
consider the economic substance of the investment, which may take precedence over the strict legal form. The General
Partner would take the results of each of the valuation methods applied into account in concluding the final value of an
investment.

Foreign investments are those considered to be in jurisdictions outside of South Africa. These are valued in the local
currency of the country of investment and translated to Rand at the spot rate at the valuation date.

Lack of control/minority interest: To the extent that an investment is a minority interest and is not able to be easily
realised, an appropriate minority discount would be considered. However, to the extent that the ARC Fund has certain
rights in respect of an investment (such as minority protections or Board representations) these rights would be
considered in the IFRS Portfolio Value of the investment in arriving at a control premium adjustment.

Restriction on trading: To the extent that the ARC Fund is restricted from disposing of the investment for a period of
time, this restriction would be considered in the IFRS Portfolio Value of the investment in arriving at a marketability
discount adjustment.

3.1.2 Income approach methodology

When applying the income approach, the General Partner will consider the appropriateness of any sensitivity and/or
scenario analyses.

3.1.3 Discounted cash flow methodology

The discounted cash flow method is used to derive the enterprise value of the investment using reasonable assumptions on
the estimations of expected future post-taxation cash flows and the terminal value (free cash flows to the firm), and
discounting to the present value by applying the appropriate risk adjusted rate that captures the risk inherent to the
projections weighted average cost of capital (WACC). To arrive at an appropriate equity value, an adjustment for net
indebtedness will be made. Where appropriate, an adjustment to the valuation would be made for surplus non-operating
assets and liabilities in the investment.

In some valuations (for example, insurance and banking valuations), the use of free cash flow to equity might be
preferred.

The length of period for which it would remain appropriate to use this valuation technique will depend on the specific
circumstances of the investment and is subject to the judgement of the General Partner.

3.1.4 Market approach methodology

If a multiple approach is used, where appropriate, the General Partner would apply an Enterprise Value (EV)/earnings
before interest, taxation, depreciation and amortisation (EBITDA) or price/earnings (P/E) multiple that is appropriate
and reasonable, based on comparable companies and taking account of the size, risk profile and earnings prospects of the
underlying company. In other cases, where appropriate, EV/EBITDA and price/book value may also be considered.

The General Partner as Fund Manager of the portfolio assets is contractually bound to perform fair valuation of the
Portfolio Companies on a quarterly basis and provide quarterly accounts and valuation reports with respect thereto to
the partners of the ARC Fund after approval by the Board of Directors of the General Partner on recommendation for such
approval by the Audit and Risk Committee of the General Partner with the support, guidance and direction of the
Investment Committee. Whilst the best judgement is used in determining the fair value of these investments, there are
inherent limitations in any valuation technique involving securities of the type in which the ARC Fund invests.
Therefore, the fair values presented herein may not be indicative of the amount which the ARC Fund could realise in a
current transaction.

3.2 Control over the ARC Fund

The General Partner directs all the relevant activities of the ARC Fund. The Company does not have a currently
exercisable right to remove the General Partner other than for a reasonable cause. Therefore, the Company does not
control the ARC Fund. ARC Investments does not have the power to participate in the financial and operating policy
decisions of the ARC Fund. Therefore, ARC Investments does not have significant influence over the ARC Fund.

CONDENSED SEGMENTAL INFORMATION
for the six-month period ended 31 December 2018

Accounting policies and choices

The Company's operations consist of the investment in the ARC Fund. The Company has only one operating segment in terms of IFRS 8, Operating Segments. The chief
operating decision-makers (CODMs), being the Board of Directors, evaluate the investment in the ARC Fund based on Intrinsic Portfolio Value and fair value movement
in this Intrinsic Portfolio Value. This is disclosed in note 4 and 5 herein.

Information of the ARC Fund is also reported to the CODMs for the purpose of assessing segment performance. This is specifically focused on the reporting to the
Board of the Company by the General Partner in the ARC Fund through its Investment Committee under the adopted ARC Investments Limited Investment Guidelines.

Company context in application of accounting policy choices

Diversified Investments - these are the non-financial services investments acquired by the ARC Fund for purposes of demonstrated growth potential and the potential
ability to deliver returns above the cost of capital of 16%. These are a combination of growth assets and businesses about to reach steady state. The key factor
around the Diversified Investments' strategy is that the ARC Fund partners with industry leaders in the sub-segments to ensure the right level of monitoring and
oversight is achieved with people with the requisite knowledge and experience of the relevant industry. As a consequence of this, the Diversified Investments'
segment is further sub-segmented as follows:

- Telecommunications - the most significant investment is in Rain, a company which is aiming to become a full-service mobile network operator.
- Mining, Construction and Energy - the largest investments are in the Kropz Plc Group which focuses on Sub-Saharan phosphate mining and concentration, as 
  well as Afrimat.
- Business Process Outsourcing - the Company is in partnership with and has invested in Gemcap.
- Property- the partnership with the Buffet Group through the ARC Real estate joint venture.
- Agriculture - the most significant investment is in Acorn Agri and Food, a holding company that specialises in agricultural investments.
- Other - mainly Fledge Capital which is well positioned to make smaller investments.
  
Diversified Financial Services

This is the core industry experience of the executive team within the ARC Fund. The investment strategy is to assemble a portfolio of assets that lends itself to
synergistical benefits within its ecosystem. To this end, the segment is organised into the following sub-segments:

- Insurance and Asset Management - a mix of small and large investments with diverse and significant client pools.
- Specialist Financial Services - Companies in financial services with access to significant client pools.
- Banking - TymeBank, a new age digital bank.
  
IFRS 8 has been applied on a look-through basis of the ARC Fund in identifying the reportable segments, reporting the relevant segment information and the
associated disclosure. There are no accounting policy choices afforded by IFRS 8 which have been elected by the Company that require further explanation.
A reconciliation between the IFRS Portfolio Values and the Intrinsic Portfolio Values is presented in notes 4.2 and 5.2.

Valuation of Investment Portfolio(1) HY1 FY 2019 

                                               IFRS Portfolio Value                        Intrinsic Portfolio Value
                                                        Unaudited                                      Unaudited
                                                             IFRS                                      Intrinsic
                                            Unaudited   Portfolio                           Unaudited  Portfolio
                                  Audited         net       Value    Unaudited   Audited          net      Value    Unaudited
                                    as at   additions  fair value        as at     as at    additions fair value        as at
                                  30 June  (including     adjust-  31 December   30 June   (including    adjust-  31 December
R million                            2018   interest)    ments(2)         2018      2018    interest)   ments(2)         2018
Diversified Investments
Telecommunications                  2 280           -         190        2 470     2 280            -        190        2 470
Mining, Construction and Energy     1 347         506          54        1 907     1 284          463         56        1 803
Business Process Outsourcing        1 250          27       (158)        1 119     1 245           26      (157)        1 114
Property                              523         (3)           2          522       523          (3)         15          535
Agriculture                           877       (421)        (12)          444       877        (410)       (18)          449
Other                                 373          55          29          457       372           56         31          459
                                    6 650         164         105        6 919     6 581          132        117        6 830
Diversified Financial
Services
Insurance and Asset Management      1 136         269        (96)        1 309     1 147          259        (82)       1 324
Specialist Financial Services         261        (10)           4          255       262         (11)           8         259
Banking                               158         108           -          266       158          117           -         275
                                    1 555         367        (92)        1 830     1 567          365        (74)       1 858
Total                               8 205         531          13        8 749     8 148          497          43       8 688

(1) A reconciliation of IFRS Portfolio value to Intrinsic Portfolio value is disclosed in notes 4, 4.2 and 5.2.
(2) The values are stated net of related expected taxation cash flow adjustments for the Portfolio assets held in ARC FinHoldCo.

Valuation of Investment Portfolio(1) HY2 FY 2018

                                                                                      IFRS Portfolio Value                        Intrinsic Portfolio Value
                                                                                                    Unaudited                                      Unaudited
                                                                                                         IFRS                                      Intrinsic
                                                                                       Unaudited    Portfolio                          Unaudited   Portfolio
                                                                            Unaudited        net        Value  Audited     Unaudited         net       Value  Audited
                                                                                as at  additions   fair value    as at         as at   additions  fair value    as at
                                                                          31 December (including      adjust-  30 June   31 December  (including     adjust-  30 June
R million                                                                        2017  interest)     ments(2)     2018          2017   interest)    ments(2)     2018
Diversified Investments
Telecommunications                                                              2 019         76          185    2 280         2 019          76         185    2 280
Mining, Construction and Energy                                                 1 358         73         (84)    1 347         1 201          70          13    1 284
Business Process Outsourcing                                                    1 247          3            -    1 250         1 237           3           5    1 245
Property                                                                          445         49           29      523           386          17         120      523
Agriculture                                                                       727         66           84      877           727          66          84      877
Other                                                                             199        145           29      373           200         145          27      372
                                                                                5 995        412          243    6 650         5 770         377         434    6 581
Diversified Financial
Services
Insurance and Asset                                                             1 111         71         (46)    1 136         1 086          68         (7)    1 147
Management
Specialist Financial                                                              231         26            4      261           232          27           3      262
Services
Banking                                                                             -        158            -      158             -         158           -      158
                                                                                1 342        255         (42)    1 555         1 318         253         (4)    1 567
Total                                                                           7 337        667          201    8 205         7 088         630         430    8 148

(1) A reconciliation of IFRS Portfolio value to Intrinsic Portfolio value is disclosed in notes 4, 4.2 and 5.2.
(2) The values are stated net of related expected taxation cash flow adjustments for the Portfolio assets held in ARC FinHoldCo.

Return on Investment Portfolio(1) HY1 FY 2019

                                                                                                           IFRS Portfolio                         Intrinsic Portfolio
                                                                                                         Value fair value                            Value fair value
                                                                                       IFRS Portfolio         adjustments   Intrinsic Portfolio           adjustments
                                                                       Income from   Value fair value    plus income from      Value fair value      plus income from
                                                                    investments(2)     adjustments(3)      investments(3)         adjustment(3)        investments(3)
                                                                     Unaudited for      Unaudited for       Unaudited for         Unaudited for         Unaudited for
                                                                     the six-month      the six-month       the six-month         the six-month         the six-month
                                                                      period ended       period ended        period ended          period ended          period ended
R million                                                         31 December 2018   31 December 2018    31 December 2018      31 December 2018      31 December 2018
Diversified Investments
Telecommunications                                                               -                190                 190                   190                   190
Mining, Construction and Energy                                                 42                 54                  96                    56                    98
Business Process Outsourcing                                                    25              (158)               (133)                 (157)                 (132)
Property                                                                         4                  2                   6                    15                    19
Agriculture                                                                     21               (12)                   9                  (18)                     3
Other                                                                            -                 29                  29                    31                    31
                                                                                92                105                 197                   117                   209
Diversified Financial Services
Insurance and Asset Management                                                   8               (96)                (88)                  (82)                  (74)
Specialist Financial Services                                                    5                  4                   9                     8                    13
Banking                                                                          -                  -                   -                     -                     -
                                                                                13               (92)                (79)                  (74)                  (61)
Interest income: Cash and cash equivalents                                      52                  -                  52                     -                    52
Other income and expenses directly attributable to the ARC Fund               (91)                  -                (91)                     -                  (91)

Total                                                                           66                 13                  79                    43                   109

(1) A reconciliation of IFRS Portfolio value to Intrinsic Portfolio value is disclosed in note 4.2 and 5.2.
(2) Income from investments includes dividend income, interest on loans and Directors' fees pertaining to portfolio entities in the ARC Fund and ARC FinHoldCo; and
    the interest income and cash and cash equivalents in the ARC Fund and ARC FinHoldCo.
(3) The values are stated net of related expected taxation cash flow adjustments for the Portfolio assets held in ARC FinHoldCo.

Return on Investment Portfolio(1) HY1 FY 2018

                                                                                                           IFRS Portfolio                         Intrinsic Portfolio
                                                                                                         Value fair value                            Value fair value
                                                                                        IFRS Portfolio        adjustments   Intrinsic Portfolio           adjustments
                                                                       Income from    Value fair value   plus income from      Value fair value      plus income from
                                                                    investments(2)      adjustments(3)     investments(3)         adjustment(3)        investments(3)
                                                                     Unaudited for       Unaudited for      Unaudited for         Unaudited for         Unaudited for
                                                                     the six-month       the six-month      the six-month         the six-month         the six-month
                                                                      period ended        period ended       period ended          period ended          period ended
R million                                                         31 December 2017    31 December 2017   31 December 2017      31 December 2017      31 December 2017
Diversified Investments
Telecommunications                                                               -                 192                192                   194                   194
Mining, Construction and Energy                                                  5                  49                 54                  (26)                  (21)
Business Process Outsourcing                                                    21                (94)               (73)                 (189)                 (168)
Property                                                                        16                  52                 68                    53                    69
Agriculture                                                                      7                 176                183                   177                   184
Other                                                                            -                   -                  -                     -                     -
                                                                                49                 375                424                   209                   258
Diversified Financial Services
Insurance and Asset Management                                                  12                  55                 67                    60                    72
Specialist Financial Services                                                    1                  10                 11                    11                    12
Banking                                                                          -                   -                  -                     -                     -
                                                                                13                  65                 78                    71                    84
Interest income: Cash and cash equivalents                                      47                   -                 47                     -                    47
Expenses directly attributable to the ARC Fund                                (39)                   -               (39)                     -                  (39)

Total                                                                           70                 440                510                   280                   350

(1) A reconciliation of IFRS Portfolio value to Intrinsic Portfolio value is disclosed in note 4.2 and 5.2.
(2) Income from investments includes dividend income, interest on loans and Directors' fees pertaining to portfolio entities in the ARC Fund and ARC FinHoldCo; and
    the interest income and cash and cash equivalents in the ARC Fund and ARC FinHoldCo.
(3) The values are stated net of related expected taxation cash flow adjustments for the Portfolio assets held in ARC FinHoldCo.

Return on Investment Portfolio(1) FY 2018

                                                                                                           IFRS Portfolio                         Intrinsic Portfolio
                                                                                                         Value fair value                            Value fair value
                                                                                       IFRS Portfolio         adjustments   Intrinsic Portfolio           adjustments
                                                                       Income from   Value fair value    plus income from      Value fair value      plus income from
                                                                    investments(2)     adjustments(3)      investments(3)         adjustment(3)        investments(3)
                                                                       Audited for        Audited for         Audited for           Audited for           Audited for
                                                                    the year ended     the year ended      the year ended        the year ended        the year ended
R million                                                             30 June 2018       30 June 2018        30 June 2018          30 June 2018          30 June 2018
Diversified Investments
Telecommunications                                                               -                377                 377                   379                   379
Mining, Construction and Energy                                                 17               (35)                (18)                  (14)                     3
Business Process Outsourcing                                                    40               (93)                (53)                 (181)                 (141)
Property                                                                        23                 81                 104                   169                   192
Agriculture                                                                     10                260                 270                   261                   271
Other                                                                            -                 29                  29                    27                    27
                                                                                90                619                 709                   641                   731
Diversified Financial Services
Insurance and Asset Management                                                  20                  9                  29                    53                    73
Specialist Financial Services                                                    5                 14                  19                    14                    19
Banking                                                                          -                  -                   -                     -                     -
                                                                                25                 23                  48                    67                    92
Interest income: Cash and cash equivalents                                     131                  -                 131                     -                   131
Expenses directly attributable to the ARC Fund                                (94)                  -                (94)                     -                  (94)

Total                                                                          152                642                 794                   708                   860

(1) A reconciliation of IFRS Portfolio value to Intrinsic Portfolio value is disclosed in note 4.2 and 5.2.
(2) Income from investments includes dividend income, interest on loans and Directors' fees pertaining to portfolio entities in the ARC Fund and ARC FinHoldCo; and
    the interest income and cash and cash equivalents in the ARC Fund and ARC FinHoldCo.
(3) The values are stated net of related expected taxation cash flow adjustments for the Portfolio assets held in ARC FinHoldCo.

Other Valuation of investment portfolio Segment Information(1) HY1 FY 2019

                                                                                  IFRS Portfolio Value                      Intrinsic Portfolio Value
                                                                                              Unaudited                                       Unaudited
                                                                                                   IFRS                                       Intrinsic
                                                                                Unaudited     Portfolio                          Unaudited    Portfolio
                                                                     Audited          net         Value    Unaudited   Audited         net        Value     Unaudited
                                                                       as at    additions    Fair value        as at     as at   additions   Fair value         as at
                                                                     30 June   (including       adjust-  31 December   30 June  (including      adjust-   31 December
R million                                                               2018    interest)      ments(2)         2018      2018   interest)     ments(2)          2018
Profile:
Listed:                                                                1 465          500           (3)        1 962     1 411         558         (83)         1 886
- Diversified Investments                                                921          500            32        1 453       855         558         (14)         1 399
- Diversified Financial Services                                         544            -          (35)          509       556           -         (69)           487
Unlisted:                                                              6 740           31            16        6 787     6 737        (61)          126         6 802
- Diversified Investments                                              5 729        (336)            73        5 466     5 726       (426)          131         5 431
- Diversified Financial Services                                       1 011          367          (57)        1 321     1 011         365          (5)         1 371
Total                                                                  8 205          531            13        8 749     8 148         497           43         8 688
Geographic:
South Africa                                                           7 826           46          (18)        7 854     7 769        (16)           27         7 780
International                                                            379          485            31          895       379         513           16           908

Total                                                                  8 205          531            13        8 749     8 148         497           43         8 688

(1) A reconciliation of IFRS Portfolio value to Intrinsic Portfolio value is disclosed in notes 4, 4.2 and 4.3.
(2) The values are stated net of related expected taxation cash flow adjustments for the Portfolio assets held in ARC FinHoldCo.

Other Valuation of investment portfolio Segment Information(1) HY2 FY 2018

                                                                                IFRS Portfolio Value                       Intrinsic Portfolio Value
                                                                                                 Unaudited                                        Unaudited  
                                                                                                      IFRS                                        Intrinsic  
                                                                                    Unaudited    Portfolio                           Unaudited    Portfolio  
                                                                      Unaudited           net        Value   Audited    Unaudited          net        Value   Audited
                                                                          as at     additions   Fair value     as at        as at    additions   Fair value     as at
                                                                    31 December    (including      adjust-   30 June  31 December   (including      adjust-   30 June
R million                                                                  2017     interest)     ments(2)      2018         2017    interest)     ments(2)      2018
Profile:
Listed:                                                                   1 596            87        (218)     1 465        1 403           86         (78)     1 411
- Diversified Investments                                                 1 035            43        (158)       920          866           43         (54)       855
- Diversified Financial Services                                            561            44         (60)       545          537           43         (24)       556
Unlisted:                                                                 5 741           580          419     6 740        5 684          547          506     6 737
- Diversified Investments                                                 4 959           368          402     5 729        4 904          337          485     5 726
- Diversified Financial Services                                            782           212           17     1 011          780          210           21     1 011
Total                                                                     7 337           667          201     8 205        7 087          633          428     8 148
Geographic:
South Africa                                                              7 006           638          182     7 826        6 757          623          389     7 769
International                                                               331            29           19       379          330           10           39       379

Total                                                                     7 337           667          201     8 205        7 087          633          428     8 148

(1) A reconciliation of IFRS Portfolio value to Intrinsic Portfolio value is disclosed in notes 4, 4.2 and 4.3.
(2) The values are stated net of related expected taxation cash flow adjustments for the Portfolio assets held in ARC FinHoldCo.

Other Return on Investment Portfolio Segment Information(1) H1 FY 2019

                                                                                                           IFRS Portfolio                         Intrinsic Portfolio
                                                                                                         Value fair value                            Value fair value
                                                                                        IFRS Portfolio   adjustments plus   Intrinsic Portfolio      adjustments plus
                                                                        Income from   Value fair value        income from      Value fair value           income from
                                                                     investments(2)     adjustments(3)     investments(3)         adjustment(3)        investments(3)
                                                                      Unaudited for      Unaudited for      Unaudited for         Unaudited for         Unaudited for
                                                                   the period ended   the period ended   the period ended      the period ended      the period ended
R million                                                          31 December 2018   31 December 2018   31 December 2018      31 December 2018      31 December 2018
Profile:
Listed:                                                                           7                (3)                  4                  (83)                  (76)
- Diversified Investments                                                         7                 32                 39                  (14)                   (7)
- Diversified Financial Services                                                  -               (35)               (35)                  (69)                  (69)
Unlisted:                                                                        98                 16                114                   126                   224
- Diversified Investments                                                        85                 73                158                   131                   216
- Diversified Financial Services                                                 13               (57)               (44)                   (5)                     8
Interest income: Cash and cash equivalents                                       52                  -                 52                     -                    52
Other income and expenses directly attributable to the ARC Fund                (91)                  -               (91)                     -                  (91)

Total                                                                            66                 13                 79                    43                   109

Geographic:                                                                     105                 13                118                    43                   148
South Africa                                                                    101               (18)                 83                    27                   128
International                                                                     4                 31                 35                    16                    20
Interest income: Cash and cash equivalents                                       52                  -                 52                     -                    52
Other income and expenses directly attributable to the ARC Fund                (91)                  -               (91)                     -                  (91)
Total                                                                            66                 13                 79                    43                   109

(1)   A reconciliation of IFRS Portfolio Value to Intrinsic Portfolio Value is disclosed in notes 4.2 and 5.2.
(2)   Income from investments includes dividend income, interest on loans and Directors' fees pertaining to portfolio entities in the ARC Fund and ARC FinHoldCo; and
      the interest income and cash and cash equivalents in the ARC Fund and ARC FinHoldCo.
(3)   The values are stated net of related expected taxation cash flow adjustments for the Portfolio assets held in ARC FinHoldCo.

Other Return on Investment Portfolio Segment Information(1) HY1 FY 2018

                                                                                                           IFRS Portfolio                         Intrinsic Portfolio
                                                                                                         Value fair value                            Value fair value
                                                                                        IFRS Portfolio   adjustments plus   Intrinsic Portfolio      adjustments plus
                                                                        Income from   Value fair value        income from      Value fair value           income from
                                                                     investments(2)     adjustments(3)     investments(3)         adjustment(3)        investments(3)
                                                                      Unaudited for      Unaudited for      Unaudited for         Unaudited for         Unaudited for
                                                                   the period ended   the period ended   the period ended      the period ended      the period ended
R million                                                          31 December 2017   31 December 2017   31 December 2017      31 December 2017      31 December 2017
Profile:
Listed:                                                                         12                (28)               (16)                 (197)                 (185)
- Diversified Investments                                                       12                (42)               (30)                 (212)                 (200)
- Diversified Financial Services                                                 -                  14                 14                    15                    15
Unlisted:                                                                       50                 468                518                   477                   527
- Diversified Investments                                                       38                 416                454                   422                   460
- Diversified Financial Services                                                12                  52                 64                    55                    67
Interest income: Cash and cash equivalents                                      47                   -                 47                     -                    47
Expenses directly attributable to the ARC Fund                                (39)                   -               (39)                     -                  (39)

Total                                                                           70                 440                510                   280                   350

Geographic:                                                                     62                 440                502                   280                   342
South Africa                                                                    57                 422                479                   261                   318
International                                                                    5                  18                 23                    19                    24
Interest income: Cash and cash equivalents                                      47                   -                 47                     -                    47
Expenses directly attributable to the ARC Fund                                (39)                   -               (39)                     -                  (39)
Total                                                                           70                 440                510                   280                   350

(1) A reconciliation of IFRS Portfolio Value to Intrinsic Portfolio Value is disclosed in notes 4.2 and 5.2.
(2) Income from investments includes dividend income, interest on loans and Directors' fees pertaining to portfolio entities in the ARC Fund and ARC FinHoldCo; and
    the interest income and cash and cash equivalents in the ARC Fund and ARC FinHoldCo.
(3) The values are stated net of related expected taxation cash flow adjustments for the Portfolio assets held in ARC FinHoldCo.

Other Return on Investment Portfolio Segment Information(1) FY 2018

                                                                                                            IFRS Portfolio                        Intrinsic Portfolio
                                                                                                          Value fair value                           Value fair value
                                                                                         IFRS Portfolio   adjustments plus   Intrinsic Portfolio     adjustments plus
                                                                         Income from   Value fair value        income from      Value fair value          income from
                                                                      investments(2)     adjustments(3)     investments(3)         adjustment(3)       investments(3)
                                                                         Audited for        Audited for        Audited for           Audited for          Audited for
                                                                    the period ended   the period ended   the period ended      the period ended     the period ended
R million                                                               30 June 2018       30 June 2018       30 June 2018          30 June 2018         30 June 2018
Profile:
Listed:                                                                           35              (243)              (208)                 (275)                (240)
- Diversified Investments                                                         24              (198)              (174)                 (266)                (242)
- Diversified Financial Services                                                  11               (45)               (34)                   (9)                    2
Unlisted:                                                                         80                885                965                   983                1 063
- Diversified Investments                                                         66                817                883                   907                  973
- Diversified Financial Services                                                  14                 68                 82                    76                   90
Interest income: Cash and cash equivalents                                       131                  -                131                     -                  131
Expenses directly attributable to the ARC Fund                                  (94)                  -               (94)                     -                 (94)

Total                                                                            152                642                794                   708                  860

Geographic:                                                                      115                642                757                   708                  823
South Africa                                                                     105                604                709                   650                  755
International                                                                     10                 38                 48                    58                   68
Interest income: Cash and cash equivalents                                       131                  -                131                     -                  131
Expenses directly attributable to the ARC Fund                                  (94)                  -               (94)                     -                 (94)
Total                                                                            152                642                794                   708                  860

(1) A reconciliation of IFRS Portfolio Value to Intrinsic Portfolio Value is disclosed in notes 4.2 and 5.2.
(2) Income from investments includes dividend income, interest on loans and Directors' fees pertaining to portfolio entities in the ARC Fund and ARC FinHoldCo; and
    the interest income and cash and cash equivalents in the ARC Fund and ARC FinHoldCo.
(3) The values are stated net of related expected taxation cash flow adjustments for the Portfolio assets held in ARC FinHoldCo.

DIVERSIFIED INVESTMENTS DETAILED INTRINSIC PORTFOLIO VALUE BY REPORTING SEGMENT
for the six-month period ended 31 December 2018

                                                                                                         Gross                                                                                                                       
                                                                                                    Investment                                                                                                           % of Fund   
                                     Opening Cost   Acquisition/                                         Value                                                                      Deferred         Fund Value              Value   
Investment (R million)               30 June 2018     (Disposal)   Revaluation   Fund Value   31 December 2018  Control  Premium   Minority   Discount   Marketability   Discount   Taxation   31 December 2018   31 December 2018   
Diversified Investments                                                                                                                                                                                                              
Telecommunications                          2 280              -           190        2 470              3 199        -        -                 (380)                      (349)          -              2 470              28.4%   
Rain                                        2 144              -           186        2 330              3 043        -        -    (12.5%)      (380)         (12.5%)      (333)          -              2 330              26.8%   
MetroFibre                                    136              -             4          140                156        -        -          -          -         (10.0%)       (16)          -                140               1.6%   
Mining, Construction and Energy             1 284            463            56        1 803              2 067        -        -                  (12)                      (252)          -              1 803              20.8%   
Afrimat(#)                                    641              -          (27)          614                702        -        -          -          -         (12.5%)       (88)          -                614               7.1%   
Kropz PLC(#)                                    -            510             -          510                510        -        -          -          -               -          -          -                510               5.9%   
Kropz Elandsfontein                           454           (60)            60          454                605        -        -          -          -         (25.0%)      (151)          -                454               5.2%   
Last Mile Fund                                132              -             4          136                136        -        -          -          -               -          -          -                136               1.6%   
Other Mining, Construction                                                                                                                                                                                                           
and Energy                                     57             13            19           89                114        -        -          -       (12)               -       (13)          -                 89               1.0%   
Business Process Outsourcing                1 245             26         (157)        1 114              1 238        -        7                  (46)                       (85)          -              1 114              12.8%   
Gemcap                                        429             19            42          490                490        -        -          -          -               -          -          -                490               5.6%   
Bluespec                                      509              -         (209)          300                417        -        -    (10.0%)       (42)         (20.0%)       (75)          -                300               3.5%   
Humanstate                                    139              2             -          141                141        -        -          -          -               -          -          -                141               1.6%   
Other Business Process Outsourcing            168              5            10          183                190        -        7          -        (4)               -       (10)          -                183               2.1%   
Property                                      523            (3)            15          535                633        -        -                  (42)                       (56)          -                535               6.2%   
Majik                                         239              -            15          254                268        -        -          -        (8)         (15.0%)        (7)          -                253               2.9%   
Val de Vie                                    187              -             -          187                251        -        -          -       (28)               -       (35)          -                188               2.2%   
ARC Real Estate                                97            (3)             -           94                114        -        -    (10.0%)        (6)         (15.0%)       (14)          -                 94               1.1%   
Agriculture                                   877          (410)          (18)          449                517        -        -                  (31)                       (37)          -                449               5.2%   
Acorn Agri & Food                             277              -          (37)          240                240        -        -          -          -               -          -          -                240               2.8%   
RSA                                           106              -             -          106                138        -        -          -       (14)               -       (19)          -                105               1.2%   
Subtropico                                     78              -            25          103                139        -        -          -       (17)               -       (18)          -                104               1.2%   
BKB                                           416          (410)           (6)            -                  -        -        -          -          -               -          -          -                  -               0.0%   
Other                                         372             56            31          459                554        -        -                  (25)                       (70)          -                459               5.3%   
Fledge Capital                                342             21            37          400                495        -        -     (5.0%)       (25)         (15.0%)       (70)          -                400               4.6%   
Other investments                              30             35           (6)           59                 59        -        -          -          -               -          -          -                 59               0.7%   
Total Diversified Investments               6 581            132           117        6 830              8 208        -        7          -      (536)               -      (849)          -              6 830              78.6% 

(#) Denotes a listed entity. 

Diversified Investments Portfolio Analysis

Listed companies

Listed companies report as per the regulated reporting cycles and information on these companies is readily available.
As such no additional information other than the information contained in the table on the previous page is disclosed.

Telecommunications

Rain

Rain is aiming to become a full-service Mobile Network Operator, focusing on data as a primary offering. The major
assets constitute spectrum licences, including an allocation in the 1 800 MHz band, along with the other major
operators, as well as an allocation in the sought after 2 600 MHz band. 

Rain intends to build a dedicated national LTE Advanced network and infrastructure that will eventually facilitate an
environment where open access to the internet becomes a reality in South Africa, with the best possible quality and
internet speed, at affordable rates. 

The Rain group consists of three operating business units, namely Networks, Business to Business and Mobile.

The Network business unit builds and manages the Rain LTE Advanced network. The business unit is responsible for the
capital expenditure to build a network of LTE sites and expand the network to enable nationwide connectivity for the
Business to Business and Direct business units. It has a target of reaching 3 000 LTE sites by 28 February 2019. By the
end of January 2019, approximately 2 800 sites were already enabled. In addition to the infrastructure, the network
business unit is responsible for roaming agreements with other major telecommunication companies.

The Business to Business unit provides fixed wireless connectivity to end users. Rain has suspended new sales of fixed
LTE in October 2018 due to capacity constraints. This comprises a relatively small component of the overall business. 

Rain Mobile represents Rain's mobile strategy which has been offered directly to the public since 6 June 2018.
Subscriber uptake is meeting targets, with the unlimited off-peak data package being the most popular. Positive media
coverage and social media posts are the major drivers in expanding the Mobile customer base.

Overall, the growth prospects for Rain remain positive. Revenue growth has been encouraging and significant progress has
been made to further improve on network performance and stability. Rain is well positioned to become a major player in
the 5G data market in the near future. 

MetroFibre

MetroFibre is an internet infrastructure company that provides managed fibre optic broadband connectivity in South
Africa. MetroFibre customers consist of service providers, resellers, residential and business properties. Consumers can
take advantage of an array of services that are tailored to meet their business needs. The Company recently launched a
new ISP, Gigago, and is performing in line with expectations. The main objective remains to expand its infrastructure
roll-out.

Mining, Construction and Energy

Afrimat

Afrimat is a leading Black-empowered supplier to the resources, industrial minerals, mining, road, rail and construction
sectors, with a national footprint across Southern Africa. The company specialises in open cast mining, industrial
minerals and beneficiates mined products. The group is well positioned to capitalise on its strategic initiatives, and
being listed on the JSE, the company's financial results are in the public domain.

Kropz Elandsfontein

Kropz Elandsfontein is a new phosphate mine and processing plant situated on the West Coast. The challenges in respect
of the commissioning of the plant were fully covered in the previous annual financial statements. During the period
under review, laboratory testing was conducted and pilot plant testing has almost been finalised. Additional capital has
been procured (see Kropz Plc below) to augment and reconfigure the plant. The revised designs are currently being done
and construction will commence during the second half of 2019. Commissioning is scheduled for the first quarter of 2020.

Recently the phosphate market price has increased further after a prolonged period of decline. This augurs well for the
project once it starts commercial production.

Kropz Plc

Kropz Plc listed on London's Alternative Investment Market in November 2018 and raised capital of US$35 million through
an Initial Public Offering ("IPO"). Kropz Plc is an emerging sub-Saharan phosphate rock explorer, developer, miner and
marketer, with three main assets, namely:

     - A 74% interest in Kropz Elandsfontein in South Africa;
     - A 99% interest in Cominco Limited, a company that owns a 90% interest in the Hinda phosphate deposit in the
       Republic of Congo (the largest undeveloped phosphate ore body in Africa), and 
     - An early-stage exploration project in Ghana. 

During the IPO the ARC Fund acquired 47.2% of Kropz Plc for an equivalent of R464 million:

In addition to its shareholding the ARC Fund has an option to acquire such number of shares to enable it to exercise
50.5% of shareholder votes, thereby giving the ARC Fund outright control.

The shares are restricted from trading for 24 months with the second 12 months being a restriction which can be waived
by the Nominated Advisor to the listed company. The investment in Kropz Plc is carried at cost. 

Last Mile Fund

The Last Mile Fund is a Black-owned fund incorporated to explore opportunities that exist in the broader resource space
created and accelerated by B-BBEE legislation. To date two investments have been made which include a coal mine and an
investment in a crane business, the latter being a supplier to the mining industry.

Business Process Outsourcing

GemCap

GemCap remains focused on investments in Knowledge Process Outsourcing (KPO) technologies with specific focus on
industry wide platform and portal solutions. Its investments comprise Payprop SA, CSG Holdings Limited, Consumer Friend
and Infoslips.

Payprop SA (Payprop) is a well-established, market leading residential letting outsourcing business that offers a unique
end-to-end rental property management and compliance software platform. It is an automated payment platform system that
offers settlement functionality within the real-time banking environment, enabling automation of the entire letting
transaction life cycle according to property-specific payment rules set up by clients. Payprop continues to gain market
share and its customers range from small independent letting agencies to large rental agencies.

CSG Holdings Limited is a listed company and is a leading strategic outsource partner of choice for staffing solutions,
facility management, security and related services in southern Africa.

Consumer Friend operates a leading debt review technology platform which is used by most major debt counsellors.

Infoslips is a document outsourcing service.

The underlying assets have performed well in terms of yield and cashflow under depressed market conditions and are
growing in line with expectations. The pipeline for acquisitions in the KPO space remains strong.

Bluespec

Bluespec is a holding company comprised of several specialist businesses which collectively aim to transform the motor
body repair and recovery industry to enable it deliver more effective and efficient propositions to their clients in the
most cost-effective manner. Business units include Incident Logistics (FirstGroup), Autobody Repair (Renew-it Group),
Salvage (Auction Nation), Motor Retail (Daytona Group), Technology (DreamTec) and StraightThrough. Bluespec is 51%
Black-owned with WIPHOLD Investment Trust and The ARC Fund as the B-BBEE partners.

The company has been negatively impacted by the economic downturn particularly on motor dealerships and motor body
repairers. 

Corrective measures have been implemented by the management of Bluespec to address the challenges. However, due to the
lack of anticipated growth, coupled with the view that the current conditions will prevail for the foreseeable future,
it was concluded that it was appropriate to recognise a fair value write down of R209 million and the carrying value has
been reduced to R300 million. 

Humanstate

Humanstate is a private technology services group based in the United Kingdom. It provides businesses and non-profit
organisations with state-of the-art web-based software applications, integrated with on-demand payment processing based
on their global transactional platform. 

Humanstate's primary holdings is Payprop SA. Cash generated from the South African operations is invested in developing
Payprop UK and Payprop Canada. Payprop UK is in early development stage while the Canadian initiative is still in a
start-up phase but has already gained traction and onboarded customers onto the platform. Payprop SA continues to
deliver strong results and dividend flow while the development in UK and Canada is satisfactory. Further initiatives
were launched in the North America. Please refer to Gemcap for more information on Payprop SA. 

Other

The other portfolio investments include:

Autoboys

ARC Fund has a 51% interest in Autoboys Holdings, a company that is a provider of certified aftermarket automotive parts
and has a large market share of glass replacements for the insurance industry. The business has shown excellent growth
since its formation in 2017. 

DETAILED INTRINSIC PORTFOLIO VALUE BY REPORTING SEGMENT
for the six-month period ended 31 December 2018

EOH

The business, including its subsidiaries, is the largest technology services company in Africa and has a wide range of
solutions in Industry Consulting, IT Services, Software, IT Infrastructure, Industrial Technologies and Business Process
Outsourcing. The business is listed on the JSE. The investment in EOH is held for sale and will be disposed of at an
appropriate time.

Capital Appreciation

The business initially started as a Special Purpose Acquisition Company (SPAC). It has since made various acquisitions
and is listed on the JSE Limited. 

Other

The other portfolio investments include:

Global Asset Management (GAM)

GAM is a JSE AltX listed holding company focused on asset-based financing and development of alternative energy
businesses. The directors of the Company believe that the Group has good prospects to expand its operations over the
next year based on its current pipeline of recycling energy projects and initiatives supported by the group's strong
complement of management skills and strategic partners. The company is in the process of delisting and the disposal of
its asset based finance business in order to focus on the renewable energy business.

Property

Majik

Majik is a private equity structure which invests in commercial real estate in the United Kingdom. The investment is
held through Majik Property Holdings Limited, which is a Limited Partner in the Squarestone Growth Limited Liability
Partnership (Squarestone).

The business of Squarestone involves the acquisition, active management, holding, marketing and sale of secondary
commercial real estate in the United Kingdom, with a predominant focus in Scotland and the North of England. The
underlying property portfolio is performing well.

Val de Vie

Val de Vie is an established luxury residential estate located in Paarl. After the integration of Pearl Valley Golf
Estate, Val de Vie has grown to become a mega estate. Paarl is fast becoming a new node separate from the Cape Town
northern suburbs. The development is progressing as planned.

Other

The other portfolio investments include:

ARC Real Estate

ARC Real Estate is a real estate investment platform established in partnership with KLT Holdings and Buffet Investment
Services. Its focus is on Black Economic Empowerment themed opportunities. The largest current holding is the Setso
Property Fund, a mixed use commercial and retail portfolio with assets throughout South Africa. Other holdings include
sale-and-leaseback assets and warehousing. The portfolio is developing in line with expectations and investment
opportunities remain strong. The balance sheet is well positioned for further growth. 

Agriculture

BKB

The ARC Fund disposed of its investment in BKB in December 2018 for a consideration of R410 million.

Acorn Agri and Food

Acorn Agri & Food is a long-term investor focusing on food and food processing, agricultural processing and the
agricultural value chain. Acorn Agri & Food currently has investments: Lesotho Milling, Montagu Dried Fruits and Nuts,
BKB, Grassroots and ACG Fruit, Overberg Agri Grain Division, Overberg Agri Retail, Overberg Mechanisation, Overberg
Financial Services, Overberg Insurance, Overberg Irrigation, Loxton Irrigation, Agpack (supplier of packaging), Boltfast
(large supplier of stainless steel fastners), Bontebok Limeworks and Bredasdorp Abbatoir.

Acorn Agri and Overberg Agri entered into an Amalgamation Agreement whereby the two entities amalgamated their
respective businesses into one combined entity. This has created a leading national agriculture and food investment
company, with a shared culture and values, a focused and complementary investment portfolio, proven management and track
record. It is aiming for a listing over the medium term. The ARC Fund's shareholding has diluted to 7.8% as a result of
the merger but at the amalgamated share price significant value has been created for the ARC Fund.

Other

The other portfolio investments include: 

The RSA Group 

RSA is a horizontally integrated sales organisation which offers a unique value proposition to the suppliers of fresh
produce in the agricultural sector across all channels. The company reported robust results under tough trading
conditions to 31 December 2018. 

Subtropico

Subtropico operates in the food and agricultural sector, focusing mainly on the services segment in these industries.
The Group consists of a fresh produce market agent, livestock agents, a packing facility, an equity interest in
Farmwise, shareholding in Natsure, and a shareholding in KLK Landbou (an agri-business operating in the Northern Cape).

Other

Fledge Capital

ARC partnered with Fledge Capital to execute smaller investments as there are significant investment opportunities which
the ARC Fund is not able to execute due their limited size. Fledge provides funding solutions to private companies
within a wide range of industries. Investments include Safari and Outdoor, WeBuyCars and Better Life. Fledge's
investment portfolio showed robust performance during the six months under review and net asset value increased by 16.9%
(after fees and expenses). A significant portion of the entity's good performance was driven by the earnings achieved by
WeBuyCars. Fledge also concluded a transaction to dispose of a portion of its investment in WeBuyCars with the OLX Group
in the latter part of 2018. This transaction is still subject to competition commission approval. The investment
portfolio totals 11 investee companies. The company is in a strong cash position and has a healthy deal pipeline.

Other Investments

Other investments comprise of the investment in ARC Investments Limited and Moloto Capital.

DIVERSIFIED FINANCIAL SERVICES DETAILED INTRINSIC PORTFOLIO VALUE BY REPORTING SEGMENT
for the six-month period ended 31 December 2018

                                                                                                             Gross                                                                                                                               
                                                                                                        Investment                                                                                                                   % of Fund   
                                         Opening Cost   Acquisition/                                         Value                                                                              Deferred         Fund Value              Value   
Investment (R million)                   30 June 2018     (Disposal)   Revaluation   Fund Value   31 December 2018       Control     Premium   Minority   Discount   Marketability   Discount   Taxation   31 December 2018   31 December 2018   
Diversified Financial Services                                                                                                                                                                                                                   
Insurance and Asset Management                  1 147            259          (82)        1 324              1 376                        77                  (71)                       (83)                         1 324              15.2%   
Alexander Forbes Group Holdings(#)                371              -          (62)          309                291             -           -          -          -               -          -         18                309               3.6%   
Rand Mutual Holdings                                -            289             -          289                289             -           -          -          -               -          -          -                289               3.3%   
Alexander Forbes Limited                          321              -          (36)          285                327         20.0%          65    (15.0%)       (59)         (17.5%)       (58)         10                285               3.3%   
Afrocentric(#)                                    131              -           (7)          124                122             -           -          -          -               -          -          2                124               1.4%   
ARC Health                                         96           (30)            11           77                 78             -           -          -          -               -          -        (1)                 77               0.9%   
Colourfield                                        80              -             -           80                106             -           -     (7.5%)        (8)         (20.0%)       (18)          -                 80               0.9%   
Other Insurance and                                                                                                                                                                                                                              
Asset Management                                  148              -            12          160                163             -          12          -        (4)               -        (7)        (4)                160               1.8%   
Specialist Financial Services                     262           (11)             8          259                296                         -                  (13)                       (22)                           259               3.0%   
Ooba                                              110              -             3          113                137             -           -     (7.5%)       (10)         (10.0%)       (13)        (1)                113               1.3%   
Other Specialist Financial Services               152           (11)             5          146                159             -           -          -        (3)               -        (9)        (1)                146               1.7%   
Banking                                           158            117             -          275                275                         -                     -                          -                           275               3.2%   
TymeDigital                                       158            117             -          275                275             -           -          -          -               -          -          -                275               3.2%   
Total Diversified Financial Services            1 567            365          (74)        1 858              1 947                        77                  (84)                      (105)                         1 858              21.4%   
Gross Intrinsic Portfolio value                 8 148            497            43        8 688             10 155                        84                 (620)                      (954)                         8 688             100.0%   
Less: Deferred consideration
liability                                       (231)            110             -        (121)              (121)             -           -          -          -               -          -          -              (121)                      
Net Intrinsic Portfolio value                   7 917            607            43        8 567             10 034             -          84          -      (620)               -      (954)          -              8 567                      

(#) Denotes a listed entity.

Diversified Financial Services Portfolio Analysis

Listed companies

Listed companies report as per the regulated reporting cycles and information on these companies is readily available.
As such no additional information other than the information contained in the table on the previous page is disclosed.

Insurance and Asset Management

Alexander Forbes

ARC FinHoldCo owns 10% of the operating company Alexander Forbes Limited and owns 8.9% in the listed company Alexander
Forbes Group Holdings Limited. ARC FinHoldCo has the right to convert its shareholding in Alexander Forbes Limited for
shares in Alexander Forbes Group Holdings Limited in two years' time. The conversion ratio per the agreement currently
translates into a shareholding of 9%. The effective combined shareholding in Alexander Forbes Group Limited on
conversion would be 17% (after considering the dilution impact of the flip up on current shareholding in the listed
entity). The ARC Fund (through its 49.9% in ARC FinHoldCo) thus has an effective shareholding of 8.5%.

Rand Mutual Holdings

Rand Mutual Assurance(RMA) was founded in 1894 by mining companies with the purpose of administering workmen
compensation benefits to employees injured in the scope of their employment and was incorporated as a public company
during 1899. RMA is licensed in terms of the Compensation for Occupational Injuries & Diseases Act (COIDA) to provide
and administer such benefits for two classes of workers, namely mining and metal workers. Rand Mutual Assurance Holdings
(RMA Holdco) is a subsidiary in the RMA Group and has subsidiaries owning the IT platform as well as conducting
administration services and long and short-term insurance businesses. ARC FinHoldco acquired a 30% interest in RMA
Holdco during September of 2018. The investment is carried at cost.

Afrocentric

Afrocentric is a Black-empowered investment holding company with an investment portfolio focused on providing services
to the healthcare sector. Through its operating subsidiaries, the businesses provide health administration and health
risk management solutions. 

ARC Health Group

ARC Health is a private investment company and wholly owned subsidiary of ARC FinHoldCo.

This business primarily consists of two key underlying businesses operating in various parts of the value chain
servicing mainly the entry-level market.

Colourfield

Colourfield Liability Solutions is an asset management firm which specialises in Liability Driven Investment (LDI),
goals-based investing, the management of inflation linked bonds and "smart beta" equity management solutions.

The core LDI business is stable and continues to perform well. 

Other

The other portfolio investments include:

Santam Limited


Indwe Broker Services

Indwe is an independent South African general insurance broker that provides personal insurance, business insurance and
specialist risk consulting services to private, commercial and corporate clients.

EBS International

EBS International provides hosted member administration and asset management solution platforms as well as providing
technology, consulting, disaster recovery and business continuity services.

LifeCheq

The business is an independent financial advisory company (IFA) that targets the middle market in SA.

Lima Mbeu

The business is a start-up investment management group focusing on asset management for institutional clients and it
targets retirement funds in both the private and public-sector market segments.

InFund Holdings and Portfolium

InFund Holdings comprise of InFund Solutions and Sash Consulting. It is positioned to take advantage of amendments to
the Pension Fund regulations effective from 1 March 2019. InFund primarily provides education and communication to
members of large pension funds on behalf of trustees as well as retirement benefits counsellors to the fund. Portfolium
structures off-balance sheet living annuity products for pension fund members on behalf of the fund.

Specialist financial services

Ooba

Ooba is primarily a mortgage originator with a healthy life and general insurance business emanating from the
origination. Ooba is one of the leading players in the South African origination landscape. The company is generally
performing well despite subdued economic conditions. 

Other

The other portfolio investments include:

A2X

A2X is an alternative stock exchange for the secondary listing of companies. The business started during calendar year
2018 with five listed companies with a combined market cap of around R50 billion and ended the year with 16 listed
companies with an aggregate market capitalisation of R2 trillion. It notably includes Naspers, Standard Bank, African
Rainbow Minerals, Sanlam and Santam. This has resulted in A2X gaining sufficient credibility and momentum as a viable
alternative stock exchange. 

Constellation Capital

A research and brokering business in the South African equity and currency derivative market. The business is performing
well, despite current market conditions.

Edge Growth

A leading enterprise and supplier development firm that focuses on strategic partnerships between business and Small to
Medium Enterprise (SME) development, commercial leadership and enterprise development strategy.

Alternative Prosperity

A majority Black-owned company that offers products and services in responsible investment, transformation and
sustainability.

Bravura

Bravura offers astute and sound financial solutions underpinned by an independent and flexible approach as well as
rigorous risk management practices.

Sinayo Securities

Sinayo Securities specialises in equity sales and trading of listed South African companies. It provides quality
services to institutional investors. Sinayo Securities is majority owned by Black women and is a Level 2 B-BBEE company.

Banking

TymeDigital

ARC FinHoldCo acquired control of TymeBank on 1 November 2018, post approval from the Prudential Authority of the South
African Reserve Bank and the Competition Commission. The Founders and Staff Trust also form part of the current
shareholding structure.

ARC FinHoldCo's investment in TymeBank to 31 December 2018 amounted to R556m. The investment in TymeBank represents a
critical component of ARC's financial services strategy and this investment completes the Banking pillar. TymeBank
embarked on a soft launch on 5 November and has since been gradually rolling out its footprint in South Africa, as well
as focusing on the operational resiliency of its digital model. It was publicly launched on 24 February 2019, at which
point, the number of active TymeBank kiosks in Pick n Pay and Boxer stores was approximately 720. This country-wide
distribution network, linked with the Pick n Pay Smart Shopper Rewards programme, represent a key value proposition of
TymeBank. It is anticipated that TymeBank's digital offering and low-cost model enable scalability and will drive
financial inclusion to both the unbanked and underbanked.

NOTES TO THE CONDENSED FINANCIAL RESULTS
for the six-month period ended 31 December 2018

4. INVESTMENT IN THE ARC FUND MANDATORILY AT FVTPL

Accounting policies and choices

The business model applied for the Board of Directors of the Company in its management of the investment in the ARC Fund is the Intrinsic fair value of the fund
portfolio as it is held primarily for capital appreciation. The investment in the ARC Fund is thus a financial instrument mandatorily at fair value through profit
or loss as recognised and measured in accordance with the principles in IFRS 9, Financial Instruments, with associated disclosures presented in accordance with IFRS
7, Financial Instruments Disclosure and IFRS 13, Fair Value Measurements. There were no accounting policy choices afforded by the aforementioned standards which
need to be explained further.

Key judgements relate to the fair value measurement as well as control over the ARC Fund. These are discussed in more detail under Accounting Policies in note 3
above.

The investment in the ARC Fund at FVTPL and the underlying portfolio (which is compiled on a look-through basis in the ARC Fund), need to be classified at the
appropriate level of hierarchy on which their fair values are based. Fair value classification within these Condensed Unaudited Interim Financial Statements is as
follows:

Level 1 fair value hierarchy - Investments that trade in active markets and derive their fair value from quoted market prices of identical assets are classified
within level 1. The quoted market prices provides the most reliable fair value classification and the Company does not need to adjust the quoted prices to measure
the fair value of the investments. The quoted market price used for investments held by the Company is the current bid price.

Level 2 fair value hierarchy - Investments that trade in markets not considered to be active and derive their fair value from observable inputs other than quoted
prices included within level 1 above. 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 data.

Level 3 fair value hierarchy - This classification applies to investments where observable inputs are not available for the asset to determine their fair value.
Unobservable inputs are used to measure fair value where relevant observable inputs are not available. The unlisted investments, shareholder loans and derivatives
in the ARC Fund are typically classified as level 3.
 
Prior year accounting policy

In the prior year, the investment in the ARC Fund was a financial instrument designated at fair value through profit or loss and recognised and
measured in accordance with the principles in IAS 39, Financial Instruments, with associated disclosures presented in accordance with IFRS 7,
Financial Instruments Disclosure and IFRS 13, Fair Value Measurements. There were no accounting policy choices afforded by the aforementioned
standards which need to be explained further.

Company context in application of accounting policy choices

The Company obtains exposure and has indirect interests in a diversified pool of listed and unlisted investments (Portfolio Companies) by investing as a Limited
Partner into an en-commandite partnership established in South Africa known as the ARC Fund. The Fund is managed by a Black-owned and controlled Fund Manager, UBI
General Partner Proprietary Limited (UBI GP Co.) as the General Partner.

Investment objective

The Company's medium- to long-term objective is to grow its NAV by at least 16% per annum, risk-adjusted, gross of dividend distributions and any management fees
paid to the General Partner of the ARC Fund and any performance participation. Each investment opportunity will be expected to exceed this minimum risk-adjusted
return hurdle on a standalone basis (i.e. without considering potential synergy benefits that can be derived from being part of a diversified portfolio).

The Company has a detailed Investment Policy, which has been formulated in compliance with section 15 of the JSE Limited Listings Requirements as well as certain
other ancillary matters, which sets out its investment strategy, investment objective, investment focus and investment parameters. The ARC Fund Investment Committee
has adopted these Investment Guidelines in its charter to ensure conformance therewith in its investment decision-making in the ARC Fund. The details of the
Investment Policy and guidelines of the Company are available on its website www.arci.mu.
Any material changes to the Investment Policy of the Company must be approved by Shareholders of the Company by way of ordinary resolution. Any future changes to
the Investment Guidelines reciprocally adopted in the ARC Fund must be approved by the Company, as an amendment or variation to the Partnership Agreement.
Categorisation of investments

The investment in the ARC Fund is a financial asset that is measured at fair value through profit or loss at initial recognition. The investment is managed and its
performance evaluated on a fair value basis, in accordance with the Company's documented risk management and investment strategy, consequently information about the
investment is provided internally on that basis. It is stated at fair value, with any gains or losses arising on remeasurement recognised in profit or loss.

Investments made by the fund are broadly categorised as:

Equity interests in Portfolio Companies which are a group of financial assets that are designated as fair value through profit or loss upon initial recognition and
is managed and its performance evaluated on a fair value basis, and the basis of accounting is the same as the investment in the ARC Fund described above.
Investments are initially recognised at fair value. Day one gains, which typically arise in B-BBEE transactions which result in an investment at a discount to the
fair value at acquisition date, are recognised in profit or loss.

Loans and other receivables that have fixed or determinable payments that are not quoted in an active market. These are measured at amortised cost using the
effective interest method less any impairment. Interest income is recognised by applying the effective interest rate, except for short-term receivables where the
recognition of interest would be immaterial. Loans and receivables at amortised cost within the ARC Fund approximates fair value per IFRS 13.

                                                                                                                   Unaudited           Unaudited              Audited
                                                                                                                       as at               as at                as at
R million                                                                                          Notes   31 December 2018     31 December 2017         30 June 2018
The movement of the investment in the ARC Fund at FVTPL are as follows:                            
Opening balance                                                                                                       9 582                    -                    -
Contribution of Portfolio Assets                                                                     6.1                  -                4 563                4 563
Cash capital contribution                                                                            6.1                  -                4 224                4 224
Fair value movements on the investment in the ARC Fund at FVTPL                                      5.1                 79                  510                  795

Total                                                                                                                 9 661                9 297                9 582
The segmental analysis of the investment is as follows:
Diversified Investments                                                                                               6 919                5 995                6 650
Diversified Financial Services                                                                                        1 830                1 342                1 555
IFRS Portfolio Value                                                                                                  8 749                7 337                8 205
Cash and cash equivalents in the ARC Fund                                                                             1 099                2 027                1 577
Other net assets/(liabilities) in the ARC Fund                                                                        (187)                 (67)                (200)
Total Investment in the ARC Fund at FVTPL                                                                             9 661                9 297                9 582
Valuation information:
IFRS 13 fair value hierarchy                                                                                        Level 3              Level 3              Level 3
Valuation methodology                                                                                      Sum of the parts     Sum of the parts     Sum of the parts

4.1 Significant Portfolio Assets in the ARC Fund Investment

The following Portfolio Assets in the ARC Fund are individually material based on Intrinsic Portfolio Value:


                                                                                         IFRS Portfolio Value                     Intrinsic Portfolio Value
                                                                                  Unaudited      Unaudited      Audited      Unaudited       Unaudited        Audited
                                                                                      as at          as at        as at          as at           as at          as at
                           Valuation                                Portfolio   31 December    31 December      30 June    31 December     31 December        30 June
R million                  information                                      %          2018           2017         2018           2018            2017           2018

Portfolio Asset                                                                                                                                                      
Rain                       Discounted
                           cash flow                                    26.8%         2 330          1 892        2 144          2 330           1 892          2 144
Elandsfontein              Various
group(1)                                                                11.1%           970            421          454            964             421            454
Afrimat Limited            Listed share 
                           price                                         7.1%           737            782          726            614             630            641
Gemcap                     Sum of the 
                           parts                                         5.6%           501            359          432            490             359            429
Alexander                  Listed share 
Forbes Group               price 
Holdings 
Limited(1)                                                               3.6%           324            407          345            309             383            371
Rand Mutual                Acquisition 
Holdings                   cost                                          3.3%           289              -            -            454               -              -
Alexander                  Proxy
Forbes Limited(2)          valuation to
                           listed share
                           price                                         3.3%           256            317          321            284             318            321
BKB                        Sale contract
                           price                                         0.0%             -            385          416              -             385            416

                                                                        60.8%         5 407          4 563        4 838          5 445           4 388          4 776
Balance of
portfolio                                                               39.2%         3 342          2 774        3 367          3 243           2 698          3 372

Total portfolio                                                          100%         8 749          7 337        8 205          8 688           7 086          8 148

(1) The Kropz Elandsfintein group is comprised of Kropz Plc which is valued at cost and Kropz Elandsfontein which is valued based on the discounted cashflow
     methodology.
(2) Exposure to Alexander Forbes is computed as the combined value of the Investment in Alexander Forbes Group Holdings Limited and Alexander Forbes Limited and
    amounts to 7%.

The valuations, which have been performed in accordance with the Company's valuation policy as disclosed under Key Areas
of Judgement in Accounting Policies note 3, have given rise to the above Intrinsic Portfolio Value. The key valuation
inputs are disclosed in note 4.3 below.

4.2 Intrinsic Net Asset Value (INAV(1))

The Directors monitor the performance of the investment in the ARC Fund based on the INAV. A reconciliation between IFRS
Portfolio Value and Intrinsic Portfolio Value is presented below:

                                                                                                               Unaudited   Unaudited  Audited           Change in the
                                                                                                                   as at       as at    as at     six-month period to
                                                                                                             31 December 31 December  30 June             31 December
R million                                                                                             Notes         2018        2017     2018                    2018
Reported IFRS Portfolio Value                                                                                      8 749       7 337    8 205                     544
Adjust for non-IFRS measures included in Intrinsic Portfolio Value(2):                                              (61)       (251)     (57)                     (4)
30-day VWAP difference to spot price on                                                                               76        (85)       67                       9
listed portfolio assets 
Expected taxation cash flow                                                                                         (24)           7      (5)                    (19)
B-BBEE lock-in discount on listed assets                                                                           (113)       (111)    (119)                       6
Fair value gain at acquisition of investments                                                                          -        (58)        -                       -
Other                                                                                                                  -         (4)        -                       -
Segment reported Intrinsic
Portfolio Value                                                                                                    8 688       7 086    8 148                     540
Liabilities in the ARC Fund(3)                                                                                     (122)           -    (262)                     262
Cash and other net assets in the ARC Fund                                                                          1 033       1 960    1 614                   (581)
Cash and other net assets in ARC Investments                                                                          27          29       29                     (2)
INAV                                                                                                               9 626       9 075    9 529                      97
NAV                                                                                                                9 688       9 327    9 610                      78
Number of shares at end of reporting period (million)                                                 6.2.2        1 045       1 032    1 032                      13
Diluted number of shares at end of reporting period (million)                                         6.2.2        1 045       1 037    1 045                       -
INAV per share (cents)                                                                                               921         879      923                     (2)
Diluted INAV per share (cents)                                                                                       921         875      912                       9
NAV per share (cents)                                                                                                928         904      931                     (3)
Diluted NAV per share (cents)                                                                                        928         893      920                       8
Gross Intrinsic Portfolio Value(4)                                                                                10 156       8 167    9 365                     791
The following adjustments have been effected to the Gross Intrinsic Portfolio                                                                                       -
Value in arriving at the reported Intrinsic Portfolio Value.
Total discounts recognised                                                                                       (1 468)     (1 081)  (1 217)                   (251)
Minority discounts(5)                                                                                              (620)       (498)    (554)                    (66)
Marketability discounts(6)                                                                                         (955)       (646)    (739)                   (216)
Control premium(7)                                                                                                    84          83       93                     (9)
Expected taxation cash flow on Diversified Financial                                                                   -           -        -                       -
Services Portfolio assets and other                                                                                   23        (20)     (17)                      40
adjustments
Segment reported Intrinsic Portfolio Value                                                                         8 688       7 086    8 148                     540

(1) Intrinsic Portfolio Value is defined under the definitions in Accounting Policies.
(2) The adjustments for Non-IFRS measures include:
    - listed investments valued on a 30-day VWAP basis (compared to closing spot price), net of expected taxation cash flow; and
    - listed investments valued after recognising B-BBEE discounts (compared to closing spot price), net of expected taxation cash flow.
(3) As at 31 December 2018, liabilities included R118 deferred consideration payable to Rand Mutual Holdings.
(4) Gross Intrinsic Portfolio Value is defined as the Intrinsic Portfolio Value before taking into account the control premium, marketability discount,
    minority discount and consequential expected taxation cash flow.
(5) These are adjustments for lack of control which are applied in the case of a minority interest valuation. In applying the minority discounts,
    the specific nature and characteristics of the interest being valued in relation to the facts and circumstances surrounding the valuation were
    considered. This analysis focused on the specific contractual rights arising from subscription and shareholders' agreements granted to the
    controlling shareholder(s) in the business including, inter alia:
    - election of Directors;
    - ability to select management;
    - control over dividend policy;
    - ability to set corporate strategies;
    - ability to acquire or liquidate assets;
    - ability to affect future earnings; and
    - ability to acquire or liquidate the assets.
(6) Marketability discounts, which include B-BBEE lock-in discounts, pertain to the lack of marketability associated with an interest in a privately
    held company where there is no established market for the active trade of the portfolio entity shares and listed portfolio interests where B-BBEE
    lock-ins are contractually agreed, and reflect the inability of the ARC Fund to sell its interest.
(7) Control premium for purposes of Intrinsic Portfolio Value valuation is the inverse of minority discount and is applied up to 40%.

4.3 Valuation input disclosures for the ARC Fund at FVTPL

The details of the valuation inputs and methodology applied for the Portfolio assets which are greater than 5% of the
ARC Fund Value by Intrinsic Portfolio Value are as follows:

Details of valuation inputs                                       Rain                                 TymeBank                       Rand Mutual Holdings                                      Fledge Capital             
                                               Unaudited     Unaudited   Audited     Unaudited        Unaudited      Audited     Unaudited        Unaudited          Audited         Unaudited        Unaudited   Audited   
                                             31 December   31 December   30 June   31 December      31 December      30 June   31 December      31 December          30 June        1 December      31 December   30 June   
R million                                           2018          2017      2018          2018             2017         2018          2018             2017             2018              2018             2017      2018   
Gross Intrinsic Portfolio Value                    3 043           656     2 800           275                -          158           289                -                -               495                -       423   
Adjustment for:                                    (713)             -     (656)             -                -            -             -                -                -              (95)                -      (81)   
Minority discounts                                 (380)             -     (350)             -                -            -             -                -                -              (25)                -      (21)   
% minority discounts                               12.5%             -     12.5%             -                -            -             -                -                -              5.0%                -     10.0%   
Marketability discounts                            (333)             -     (306)             -                -            -             -                -                -              (70)                -      (60)   
% marketability discounts                          12.5%             -     12.5%             -                -            -             -                -                -             15.0%                -     20.0%   
Control premium                                        -             -         -             -                -            -             -                -                -                 -                -         -   
% control premium                                      -             -         -             -                -            -             -                -                -                 -                -         -   
Expected taxation cash flow                            -             -         -             -                -            -             -                -                -                 -                -         -   
Segment reported Intrinsic Portfolio Value         2 330           656     2 144           275                -          158           289                -                -               400                -       342   
% of Intrinsic Portfolio                           27.0%         28.0%     26.3%          3.2%   Not Applicable         1.9%          3.3%   Not Applicable   Not Applicable              4.6%   Not Applicable      4.2%   
% of Business Segment                              94.0%         84.9%     94.0%        100.0%   Not Applicable       100.0%         21.8%   Not Applicable   Not Applicable             87.1%   Not Applicable     91.9% 

Valuation information:                                                                                                                                                                                                                  
IFRS 13 fair value hierarchy                         Level 3                                            Level 3                                          Level 3                                         Level 3
Valuation methodology                          Discounted cash flow                                  Acquisition cost                                 Acquisition cost                               Sum of the parts

Other details                      For Rain, there was an additional acquisition of      The investment in TymeBank was initially       The investment in Rand Mutual holdings was      The investment in Fledge Capital occurred in
                                                   R1 052 million in                      acquired at a cost of R29 million in June     concluded at a consideration of R171 million                       2017.
                                       October 2017 and a further amount of           2018 with a vendor financed R129 million. The     and is subject to a deferred consideration of
                                            R70 million during April 2018.             vendor funding has since been repaid and an                       R118 million.
                                                                                      additional capital injection of R200 million was
                                                                                               concluded in December 2018.

                                                       Rain                                                  TymeBank                                   Rand Mutual Holdings                                 Fledge Capital
Details of valuation inputs                                                        
                                                                                                                                                                                                                                           
                                     Unaudited        Unaudited          Audited           Unaudited         Unaudited           Audited        Unaudited        Unaudited          Audited        Unaudited        Unaudited          Audited
                                   31 December      31 December          30 June         31 December       31 December           30 June      31 December      31 December          30 June      31 December      31 December          30 June
R million                                 2018             2017             2018                2018              2017              2018             2018             2017             2018             2018             2017             2018

Key inputs                                                                                                                                                                                                           
                                                    At the time                                                                                                                                     Weighted                          Weighted
                                                 of listing the                                  Not               Not               Not              Not              Not                           average              Not          average
Input 1                                   WACC    agreement for             WACC          Applicable        Applicable        Applicable       Applicable       Applicable                            EBITDA       Applicable           EBITDA
Input variable                           18.7%     the purchase            18.7%                                                                                                                         6.5                               6.5
                                                    of Rain had                                                                                                                                                                               
                                                  recently been                 
                                      Terminal     concluded at         Terminal                 Not               Not               Not              Not              Not                               Not              Not              Not
Input 2                            growth rate     a 20% equity      growth rate          Applicable        Applicable        Applicable       Applicable       Applicable                        Applicable       Applicable       Applicable
Input 2 variable                         3.00%   interest for a             3.0%                                                                                                                                                            
                                                  consideration                 
Sensitivity of key inputs                             of R1 708                                                                                                                                                                                
                                                   million. Due                                  Not               Not               Not              Not              Not                          Weighted              Not         Weighted
Input 1                                   WACC    to it being a             WACC          Applicable        Applicable        Applicable       Applicable       Applicable                        average PE       Applicable       average PE
                                  R220 million      recent, the     R204 million                                                                                                                  R4 million                        R3 million
                                        per 1%     agreed price           per 1%                                                                                                                      per 1%                            per 1%
Input variable                          change   was indicative           change                                                                                                                      change                            change
                                                    of the fair                 
                                      Terminal     value of the         Terminal                 Not               Not               Not              Not              Not                               Not              Not              Not
Input 2                            growth rate       investment      growth rate          Applicable        Applicable        Applicable       Applicable       Applicable                        Applicable       Applicable       Applicable
                                  R118 million     and thus was     R103 million
                                        per 1%     not revalued           per 1%
Input 2 variable                        change    upon listing.           change                                                                                                                                             

Portfolio entity disclosures                                                                                                                                                                                     
                                       Transfer restrictions and pre-emptives apply to                                                           Three years from February 2017. Three months
B-BBEE lock-in                                     the ARC Fund's interest.                                    None                                      remaining at 31 December 2018.                               None
Listed/unlisted                                            Unlisted                                           Unlisted                                              Unlisted                                         Unlisted
Summarised financial information                                                                                                                                                                                                 
ARC Fund effective interest                                  20.6%                                   36.7% (30 June 2018: 5.0%)                                       30.0%                                           51.0%

Reported period                                                                                                          
                                The entity is in an early stage of its life cycle
                                 and thus the financial information will be
                                 disclosed after a year or two of trade for
Share of comprehensive income             meaningful comparison.                                   -                 -                 -                                 -                -                -                -                -
Dividends received                           -                                 -                   -                 -                 -                -                -                -                -                -                -


Details of valuation inputs                                Bluespec                            Gemcap                           Kropz Elandsfontein                             Kropz Plc             
                                               Unaudited     Unaudited   Audited     Unaudited     Unaudited   Audited     Unaudited         Unaudited   Audited     Unaudited     Unaudited   Audited   
                                             31 December   31 December   30 June   31 December   31 December   30 June   31 December       31 December   30 June   31 December   31 December   30 June   
R million                                           2018          2017      2018          2018          2017      2018          2018              2017      2018          2018          2017      2018   
Gross Intrinsic Portfolio Value                      417             -       509           491           324       429           605               489       512           510             -         -   
Adjustment for:                                    (117)             -         -             -             -         -         (151)              (68)      (58)             -             -         -   
Minority discounts                                  (42)             -         -             -             -         -             -              (22)      (19)             -             -         -   
% minority discounts                               (10%)             -         -             -             -         -             -             12.5%         -             -             -         -   
Marketability discounts                             (75)             -         -             -             -         -         (151)              (46)      (39)             -             -         -   
% marketability discounts                          (20%)             -         -             -             -         -       (25.0%)             30.0%         -             -             -         -   
Control premium                                        -             -         -             -             -         -             -                 -         -             -             -         -   
% control premium                                      -             -         -             -             -         -             -                 -         -             -             -         -   
Expected taxation cash flow                            -             -         -             -             -         -             -                 -         -             -             -         -   
Segment reported Intrinsic Portfolio Value           300             -       509           491           324       429           454               421       454           510             -         -   
% of Intrinsic Portfolio                            3.0%             -      6.2%          6.0%          7.2%      5.3%          5.0%              9.4%      5.6%          5.9%           N/A       N/A   
% of Business Segment                              27.0%             -     40.9%         44.0%         37.4%     34.5%         26.0%             37.6%     35.4%         28.3%           N/A       N/A   


Valuation information:                                                                                                                                                                         
IFRS 13 fair value hierarchy                               Level 3                          Level 3                                Level 3                                          Level 3
Valuation methodology                                                                   Sum of the parts.        14-year life of mine discounted cash flow.                        Cost price
                                                                                                                                                                 The investment in Kropz Plc was concluded
                                                                                                                                                                in November 2018. Owing to the shares being
                                                                                                                                                                 thinly traded, the provisions of IFRS 13 have
                                                                                                                The increase in the life of the mine is because   been applied in accounting for the investment
Other details                                 Bluespec was acquired in October 2017.                                     of increased proven ore body.                                at cost.


                                                     Bluespec                                                                               Gemcap                                        Kropz Elandsfontein                                               Kropz Plc
Details of valuation inputs
                                       Unaudited           Unaudited               Audited             Unaudited              Unaudited                       Audited           Unaudited                 Unaudited          Audited           Unaudited             Unaudited                Audited
                                     31 December         31 December               30 June           31 December            31 December                        30 June        31 December               31 December          30 June         31 December           31 December                30 June
R million                                   2018                2017                  2018                  2018                   2017                          2018                2018                      2017             2018                2018                  2017                   2018
Key inputs:                                                                                                                                                                                                                                                                        
                                                                                                 EBITDA multiple        EBITDA multiple                                         Commodity                 Commodity
Input 1                              PE Multiple                   -       Not applicable.             (average)              (average)                                             price                     price                      Not applicable.       Not applicable.        Not applicable.
Input variable                                 7                   -                                       6.9 x                 6.5 x                                        $/t FOB 107               $/t FOB 107                                                                                 

Input 2                          Not applicable.                   -       Not applicable.           Growth rate            Growth rate                                    USD : ZAR rate            USD : ZAR rate                      Not applicable.       Not applicable.        Not applicable.
                                                                                                                                                                              R/$ forward               R/$ forward
                                                                                                                                                                            rate based on             rate based on
                                                                                                                                                                           2.6% inflation            2.6% inflation
Input 2 variable                                                                                            6.0%                   6.0%                                      differential              differential                                                                               

Input 3                                                                                                                                                                              WACC                      WACC                      Not applicable.       Not applicable.        Not applicable.
Input 3 variable                                                                                                                                                                    17.3%                     17.3%                                                                                  

Sensitivity of key inputs:           PE Multiple                   -       Not applicable.                                                                                                                                                                                                          
                                  R3 million per                                                                                                                                Commodity                 Commodity
Input 1                                1% change                   -                             EBITDA multiple        EBITDA multiple                                             price                     price                                  N/A                   N/A                    N/A
                                                                                                  R4 million per       R3.2 million per                                    R8 million per         R8 million per 1%
Input variable                                                                                         1% change              1% change                                         1% change                    change                                                                                 
Input 2                                                                                              Growth rate            Growth rate                                    USD : ZAR rate            USD : ZAR rate                                                                                 
                                                                                                   R17.5 million      R13.2 million per                                    R8 million per         R8 million per 1%
Input 2 variable                                                                                   per 1% change              1% change                                         1% change                    change                                                                                 
Input 3                                                                                                                                                                              WACC                      WACC                      Not applicable.       Not applicable.        Not applicable.
                                                                                                                                                                          R21 million per           R21 million per
Input 3 variable                                                                                                                                                                 % change                  % change                                                                                 

Portfolio entity disclosures:                                                                                                                                                                                                                                                        
                                                                                                    Transfer
                                                                                               restrictions apply
                                                                                                 for Consumer
                                                                                                 Friend for five
                                                                                                years from April
                                  Five years from                           Five years from     2017. Five years          Transfer
                                 September 2017.                           September 2017.      from April 2017.     restrictions apply     Transfer restrictions apply for                        Ten years from      Ten years from
                                 Three years and                            Four years and      Three years and        for Consumer         Consumer Friend for five years                        April 2016. Seven   April 2016. Seven
                                   nine months                               three months         four months          Friend for five       from April 2017. Three years                           years and ten       years and ten  
                                   remaining at                               remaining at        remaining at        years from April       and ten months remaining at                           months remaining   months remaining    12 months from
B-BBEE lock-in                  31 December 2018.                  -          30 June 2018.    31 December 2018              2017.                   30 June 2018.                   -               at 30 June 2018.   at 30 June 2018.   31 December 2018.      Not applicable        Not applicable
Listed/unlisted                       Unlisted              Unlisted            Unlisted            Unlisted              Unlisted                     Unlisted                  Unlisted               Unlisted           Unlisted             Listed          Not Applicable        Not Applicable
Summarised financial
information                                                                                                                                                                                                                                                                                                    
ARC Fund effective interest            25.0%                                                           51.0%                51.0%                         51.0%                    26.3%                  25.0%               25.0%             47.20%          Not applicable        Not applicable

Reported period   31 August 2017 31 August 2016                                                                                                                                                                                                                      
                                                                                                                                                                                                                                                 The group has been
                                                                                                                                                                                                                                                 restructured and
                                                                                                                                                                                                                                                 Kropz Elandsfontein
                                                                                                                                                                                                                                                 has yet to become
                                                                                                                                                                                                                                                 operational and
                                                                                                                                                                                                                                                 commission its
                                                                                                                                                                                                                                                 plant, and thus
                                                                                                                                                                                                                                                 the financial
                                                                                            The entity has yet to become operational                    The entity has yet to become operational     The entity has yet to become operational    information will be
Share of                                                                                    and to commission its plant, and thus the                   and to commission its plant, and thus the    and to commission its plant, and thus the   disclosed after a
                                                                                            financial information will be disclosed                     financial information will be disclosed      financial information will be disclosed     year or two of trade
comprehensive                                                                               after a year or two of trade for meaningful                 after a year or two of trade for meaningful  after a year or two of trade for meaningful for meaningful
income                                        55                  24                        comparison.                                                 comparison.                                  comparison.                                 comparison.      Not Applicable       Not Applicable
Dividends
received                                      17                   -               -                      -                       -                                                            -                                            -           -                      -                    -

5. REALISATION AND DERECOGNITION

Accounting Policies and Choices

The Company applies the derecognition principle in IFRS 9, Financial Instruments. The Company performs an assessment of whether an asset has been transferred or
not, to determine whether the financial asset should be derecognised or not. A financial asset is derecognised only when the contractual rights to the cash flows
from the asset expire; or it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another entity. If the Company
neither transfers nor retains substantially all the risks and rewards of ownership and continues to control the transferred asset, it recognises its retained
interest in the asset and an associated liability for amounts it may have to pay. If the Company retains substantially all the risks and rewards of ownership of a
transferred financial asset, it continues to recognise the financial asset and also recognises a secured borrowing for the proceeds received.

Consistent with the Accounting Policy indicated in note 3, the Investment in the ARC Fund is a financial asset at fair value through profit or loss, all the fair
value movements are recognised and included in profit or loss.

Company Context in Application of Accounting Policy Choices

Per the Dividend and Dividend Policy in note 7, the strategic objective and policy of the Company as it relates to dividend, is not to declare any dividends in the
short- to medium-term as it is dependent on return of capital from the ARC Fund.

As such, the Company's partnership profit share in the reporting period is not as a result of a return of capital but rather the fair value movements of the
Portfolio Companies in the ARC Fund and are therefore unrealised. The Company has thus adopted a policy whereby unrealised profits of this nature are transferred to
the fair value reserve. In the event of a return of capital by the ARC Fund, these would be realised and accordingly transferred from the fair value reserve to
retained earnings.

Per the segment report accounting policy the below information of the ARC Fund is also reported to the CODMs for the purpose of assessing segment performance.

5.1 Fair value movements on the Investment in the ARC Fund at FVTPL

                                                                                                                                       Unaudited   Unaudited Audited
                                                                                                                                     31 December 31 December 30 June
R million                                                                                                                                   2018        2017    2018
Income:                                                                                                                                      170         549     918
Fair value movements on Diversified Investments                                                                                              105         375     620
Day-one gain at acquisition of investments                                                                                                     -           -       -
Fair value movements on Diversified Financial Services                                                                                      (92)          65      23
Income from Diversified Investments                                                                                                           92          50     119
Income from Diversified Financial Services                                                                                                    13          12      25
Interest income on cash and cash equivalents                                                                                                  52          47     131
Expenses:                                                                                                                                   (91)        (39)   (123)
Fees paid to the Fund Manager                                                                                                               (74)        (34)    (94)
Net foreign exchange gains/(losses) on mark-to-market of foreign denominated                                                                   -         (4)      13
loans and receivables in the portfolio
Audit fees                                                                                                                                    -           -      (1)
Loss on disposal of investments                                                                                                             (1)           -        -
Other net expenses                                                                                                                         (16)         (1)     (41)

Total                                                                                                                                        79         510      795

5.2 Reconciliation of reported IFRS Portfolio fair value adjustment to Intrinsic Portfolio fair value adjustment

                                                                                                                                       Unaudited   Unaudited Audited
                                                                                                                                     31 December 31 December 30 June
R million                                                                                                                    Notes          2018        2017    2018
Fair value adjustments in the reporting period amounted to R467 million compared to the intrinsic reported fair value
adjustments per the segment report of R43 million. A reconciliation to the reported intrinsic value is as follows:
Segment reported IFRS Portfolio fair value adjustment                                                                                        13         440      642
Adjust for non-IFRS measures included in Intrinsic Portfolio fair value adjustment                                                           30       (160)       66
30-day VWAP difference to spot price on listed portfolio assets                                                                               9        (84)     (21)
B-BBEE lock-in discount on listed portfolio assets                                                                                            6       (111)      (4)
Deferred taxation on B-BBEE lock-in discounts                                                                                              (19)           6     (12)
Equity day one gains(1)                                                                                                                       -           -      103
Other(2)                                                                                                                                     34          29        -

Segment reported Intrinsic Portfolio fair value adjustment                                                                                   43         280      708

(1) Gains on transfer of the portfolio assets from ARC where the transfer value was lower than the fair value at date of transfer have been recognised as a capital
    contribution in equity for IFRS Portfolio Value. These have not been adjusted for in the Intrinsic Portfolio Value.
    At 31 December 2018, day one capital gains were recognised on the acquisition of Kropz Plc.
(2) Other adjustment include interest income on loans and forex adjustments capitalised against the investment under IFRS.

5.3 Fair value reserve

                                                                                                                                   Unaudited     Unaudited   Audited
                                                                                                                                 31 December   31 December   30 June
R million                                                                                                                  Notes        2018          2017      2018
Opening balance                                                                                                                          795             -       435
Fair value movements on the Investment in the ARC Fund at FVTPL                                                                           79           435       360
Segment reported IFRS Portfolio fair value adjustment                                                                                    874           435       795

6. CAPITAL AND RETURN ON CAPITAL

6.1 Stated capital

                                                                                                                                      Unaudited   Unaudited  Audited
                                                                                                                                    31 December 31 December  30 June
R million                                                                                                                                  2018        2017     2018
ARC Investments has the following categories of share capital:
Category         Rights
Ordinary shares  Participating share with voting rights.
B shares         Non-participating non-voting share except if as at any ordinary shareholder record date an appointed B-BBEE
                 Rating Agent determines that ownership of ordinary shares by Black People as defined in the B-BBEE Codes, as
                 determined using the flow-through principle in accordance with the B-BBEE Codes is less than 51%; and that ARC as
                 the holder of the B share, holds at least 26.1% of the ordinary shares of the Company and since issue of these
                 shares, the holding percentage has never dropped below 26.1%.
C shares         Non-participating, non-voting shares with automatic conversion based on the terms of the performance
                 participation (refer below).
In terms of the Mauritius Companies Act 2001, as amended, the Company is not required to have an authorised share capital. All the
Company's classes of shares are of no par value and, accordingly, the Company does not have a share premium account.
Issued share capital
Ordinary shares
- 100 Ordinary shares of no par value issued at incorporation at USD1 per share (translated at R12.91)(1).                                    -           -        -
- 526 588 235 shares issued to ARC Proprietary Limited under an asset-for-share sale transaction.                                         4 563       4 563    4 563
- 505 882 353 shares issued at listing date at R8.50 per share.                                                                           4 300       4 300    4 300
- Share issue costs.                                                                                                                       (31)        (31)     (31)
- Conversion of 12 577 126 C shares for FY 2018 Performance Participation                                                                    71           -        -
Total issued share capital at the end of the period                                                                                       8 903       8 832    8 832
B share
1 share issued to ARC Proprietary Limited at a nominal value of R1.                                                                           -           -        -
C shares
5 billion shares were issued to UBI Proprietary Limited at listing at a nominal value of R1 for the Performance Participation. On             -           -        -
11 December 2018, 12 577 126 were converted into A ordinary shares, thus 4 987 422 874 C shares were outstanding at 31 December
2018.

(1)  The amount is less than R1 million and is rounded to Rnil.

6.2 Earnings per share

                                                                                                                                  Unaudited      Unaudited   Audited
                                                                                                                                31 December    31 December   30 June
 R million                                                                                                             Notes           2018           2017      2018
 Basic earnings per ordinary share (cents)                                                                                                7             96        81
 Diluted earnings per ordinary share (cents)                                                                                              7             95        79
 Headline earnings per ordinary share (cents)                                                                                             7             96        81
 Diluted headline earnings per ordinary share (cents)                                                                                     7             95        79

6.2.1 Reconciliation of reported earnings to headline earnings:

Earnings/Headline earnings of the Company                                                                                                77            462       675
There were no items that require adjustment from the reported earnings in terms of SAICA Circular 4/2018,
Headline Earnings.

6.2.2 Number of ordinary shares (million):

Number of shares in issue at end of reporting period                                                                                  1 045          1 032     1 032
Weighted average number of shares at end of reporting period (million)                                                                1 034            484       836
Diluted weighted average number of shares at end of reporting period (million)                                                        1 034              5       849
Diluted number of shares at end of reporting period (million)                                                                         1 045            467     1 045
On 7 September 2017, the Company issued 1 032 470 588 shares upon listing on the JSE initially through an
asset-for-share transfer transaction with ARC Proprietary Limited (as discussed above in note 6.1) and
thereafter a private placement including cornerstone investors Public Investment Corporation Limited (PIC), GIC
Private Limited and Sanlam Private Wealth Proprietary Limited. On 11 December 2018, 12 577 126 C shares were
converted into A ordinary shares. As the issued number of shares at the beginning of the period was 1 032, the
impact of the new issue has been weighted for the 20 days they were in issue at 31 December 2018 over the
184-day reporting period resulting in a weighted average number of shares of 1 103 million for the period.
AS at 31 December 2018, the Company did not achieved the participation hurdle of 10%. No dilutive shares have              8
been recognised.
Diluted weighted average number of shares at end of reporting period (million)                                             8         1 034            489        849
Diluted number of shares at end of reporting period (million)                                                              8         1 045          1 037      1 045

7. DIVIDENDS AND DIVIDEND POLICY

Company Context in Application of Accounting Policy Choices

Company strategic objective

The Company is a capital-raising and investment entity structured to offer its shareholders long-term capital appreciation through the growth in the NAV of its
underlying investment in the ARC Fund. As such, ARC Investments does not currently intend to pay dividends on the ordinary shares but may choose to pay dividends,
including special dividends, at some time in the future when it is appropriate to do so.

Dividends

The Company's ability to pay dividends is a function of the return of capital by the ARC Fund, which is not anticipated in the short term and over which the Company
has no direct control. Furthermore, the current intention of the General Partner is that cash raised by the ARC Fund through realisations and distributions received
from Portfolio Companies will generally be utilised for new investment opportunities.

If the Company receives the proceeds of realisations or distributions by underlying Portfolio Companies from the ARC Fund and chooses to pay dividends, the Board
anticipates declaring and paying a final dividend only. The Board may, however, resolve to declare and pay interim dividends on the ordinary shares. The payment of
a dividend will be subject to the Company's constitutional documents and applicable laws and regulations and the reasonably foreseeable obligations of the Company
and will require the approval of the Board. The dividends that are envisaged would primarily be paid from distributions received by the ARC Fund from the Portfolio
Companies and proceeds arising from the disposal of underlying investments by the ARC Fund, that are distributed to the Company as returns of capital by the ARC
Fund.

Unclaimed dividend

All unclaimed dividends may be invested or otherwise made use of by the Directors for the benefit of the Company until claimed, provided that dividends unclaimed
for a period of three years from the date they were declared may be forfeited for the benefit of the Company. There is no fixed date on which entitlement to
dividends arises and the date of payment will be determined by the Board at the time of declaration, subject to the JSE Listings Requirements. There are no current
arrangements under which future dividends are waived or agreed to be waived.

8. PERFORMANCE PARTICIPATION

Accounting Policies and Choices

The Performance Participation is an equity-settled share-based payment accounted for in accordance with the provisions of IFRS 2, Share-based Payments. The
share-based payment expense is recognised in profit or loss and the reserve in the statement of changes in equity as a separate reserve.

Company Context in Application of Accounting Policy Choices

As detailed in note 6.1, the Company has issued 5 billion C shares to UBI through a subscription agreement signed on 14 August 2017 for purposes of the Performance
Participation, which in accordance with their rights and terms, are convertible into ordinary shares at no consideration.

Grant date:                14 August 2017
Grant price:               R1 for the full 5 billion shares.
Performance hurdle:        10%
Participation percentage:  16%, provided the IPV NAV at the beginning of the measurement period not being less than the previous highest IPV NAV.                       
Performance period:        Each annual financial year of the Company commencing 1 July and ending 30 June.(1)
Conversion date:           No more than 10 business days (excluding weekends) from the date the Board approves the calculation of the Performance Participation
                           which will normally be the date of approval of the Audited Annual Financial Statements of the Company.
C shares conversion        The number of C shares that will automatically convert into ordinary shares is determined by dividing the Performance Participation for
formula:                   the relevant annual measurement period by the INAV per ordinary share at the end of that measurement period. The conversion is calculated
                           based on the growth in the IPV plus cash returns (of interest and dividends) on the IPV for the performance period percentage exceeding
                           the performance hurdle rate of 10% per annum compounded annually at each financial year-end during each performance period.

(1) The performance period in the year of listing commenced at listing date of 7 September 2017 and ended 30 June 2018.

                                                                                                                                       Unaudited   Unaudited Audited
                                                                                                                                     31 December 31 December 30 June
R million                                                                                                                                   2018        2017    2018
The annualised growth in Intrinsic Portfolio Value for the reporting period amounted to 1.3%,   no Performance Participation has
been recognised.

5 billion shares were issued to UBI Proprietary Limited at listing on at a nominal value of R1 for the Performance Participation.
On 11 December 2018, 12 577 126 were converted into A ordinary shares, thus 4 987 422 874 C shares were outstanding at 31 December
2018.
Performance Participation expense for the performance period                                                                                  -        (44)    (115)

9. TAXATION

Accounting Policies and Choices

Normal income taxation and deferred taxation are recognised using the taxation rates and taxation laws that have been enacted or substantively enacted by the end of
the reporting period in accordance with the recognition and measurement principles in IAS 12, Taxes.

Company Context in Application of Accounting Policy Choices

The Company holds a Category one Global Business License, for the purpose of the Mauritian Financial Services Act 2007. It was registered in Mauritius as a private
company limited by shares on 30 June 2017 and converted to a public Company on 2 August 2017. It is liable for income taxation at a rate of 15%. However, the
Company is entitled to a taxation credit equivalent to the higher of the actual foreign taxation incurred and 80% of the Mauritian taxation on its foreign source
income, thus having a standard taxation rate of 3%.

The foregoing is based on current interpretation and practice and is subject to any future changes in Mauritian taxation laws.

                                                                                                                                      Unaudited   Unaudited  Audited
                                                                                                                                    31 December 31 December  30 June
R million                                                                                                                                  2018        2017     2018
No provision has been made for taxation as the Company incurred an estimated taxation loss carried forward amounting to R21
million (at 30 June 2018: R17 million loss). Mauritian taxation Regulations permit the carryforward of unused taxation losses for
a maximum period of 5 year from the date they arose. The accumulated taxation losses are available for set-off against future
taxable income as follows:
Arising in FY 2019, carry forward up to 2024 financial year                                                                                   3
Arising in FY 2018, carry forward up to 2023 financial year                                                                                                        7
Arising in FY 2017, carry forward up to 2022 financial year                                                                                              11
Reconciliation of loss before income taxation:
Profit before taxation                                                                                                                       77         462      675
Taxation at a statutory effective rate of 3%
after foreign taxation credit
Taxation consequences in the year:
Non-deductible expenditure                                                                                                                    -           1        4
Performance Participation expense                                                                                                             -           1        4
Other (incorporation fees and realised foreign exchange losses)(1)                                                                            -           -        -
Non-taxable income                                                                                                                           16          15       24
Fair value movements on the investment in the ARC Fund at FVTPL                                                                              16          15       24
Interest earned on local bank account(1)                                                                                                      -           -        -
Deferred taxation asset not raised                                                                                                            -           -        -
Taxation expense for the year                                                                                                                 -           -        -

(1) The amount is less than R1 million and is rounded to Rnil.

                                                                                                                                       Unaudited   Unaudited Audited
                                                                                                                                     31 December 31 December 30 June
R million                                                                                                                                   2018        2017    2018
A deferred taxation asset amounting to R0,6 million (at 30 June 2018: R0,5 million) has not been raised as the Directors have
uncertainty about the Company's ability to generate sufficient taxable profits in the foreseeable future against which the
deferred taxation asset can be utilised.
Reconciliation of taxation rate:
Mauritian standard income taxation rate for a company with a Category one Global                                                               %           %       %
Business License                                                                                                                              15          15      15
Foreign taxation credit                                                                                                                     (12)        (12)    (12)
Non-deductible expenditure                                                                                                                     -           -       1
Non-taxable income                                                                                                                           (3)           -     (4)
Deferred taxation asset not raised                                                                                                             -         (3)       -
Effective taxation rate                                                                                                                        -           -       -

10. RECONCILIATION OF CASH UTILISED IN OPERATIONS BEFORE INVESTMENT ACTIVITIES

                                                                                                                                       Unaudited   Unaudited Audited
                                                                                                                                     31 December 31 December 30 June
R million                                                                                                                      Notes        2018        2017    2018
Profit/(loss) before taxation                                                                                                                 77         462     675
Adjustment for non-cash items                                                                                                               (79)       (466)   (680)
Fair value movements on the investment in the ARC Fund at FVTPL                                                                  5.1        (79)       (510)   (795)
Performance Participation expense                                                                                                  8           -          44     115
Unrealised foreign exchange gains/(losses)                                                                                                     -           -       -
Working capital movements                                                                                                                      1           2    (12)
(Increase)/decrease in trade and other receivables                                                                                           (1)         (2)     (1)
Increase/(decrease) in trade and other payables                                                                                                2           4    (11)
Cash utilised in operations before investment activities                                                                                     (1)         (2)    (17)

11. FINANCIAL INSTRUMENTS

11.1 Risk management

The Company's exposure to market risks is predominantly through its investment in the ARC Fund. To this end, the Board
of the General Partner, through its Investment Committee, agrees and reviews the ARC Fund policies for managing all
market risks that the financial instruments within the ARC Fund are exposed to. The Directors of the Company manage the
Company's exposure to market risks as indicated below.

11.1.1 Equity price risk

Most of the Company's interest in the ARC Fund is deployed in equity instruments (92% at 31 December 2018; 91% at 30
June 2018; 88% as at 7 September 2017), the Company is thus exposed to equity price risk through the valuation of the
underlying Portfolio Investments held by the ARC Fund. The fair value of these investments is derived through the
valuations disclosed in note 4.4. The underlying Portfolio Companies are valued quarterly and the Board has access to
the valuation information to monitor and review the fair value of the investments and, where impairment indicators have
been identified, consider any possible impairment adjustments.

                                                                                                                                      Unaudited   Unaudited  Audited
                                                                                                                                    31 December 31 December  30 June
R million                                                                                                                                  2018        2017     2018
Change in portfolio equity prices
+5%                                                                                                                                       8 393       6 880    7 840
Equity component being 92% (30 June 2018: 91%) of Reported IFRS Portfolio Value                                                           7 993       6 552    7 467
- 5%                                                                                                                                      7 594       6 225    7 094
11.1.2 Interest rate risk

The Company is mainly exposed to interest rate risk through its investment in the ARC Fund which has interest bearing loan
assets and cash of R1 670 million (as at 30 June 2018: R 2 200 million) in its portfolio.
Change in portfolio loan receivable interest rates - annualised
+ 100 basis points                                                                                                                           17          27       22

11.1.3 Credit risk

The cash and cash equivalents of the Company and the ARC Fund balance are held with the four largest banks in South
Africa.

The Company is exposed to credit risk through the ARC Fund Portfolio and the counter parties of the financial
instruments in the portfolio. The diversity of the portfolio mitigates concentration of credit risk. Rigorous
assessments, adherence by the Fund Manager to the Investment Guidelines and reviews and due diligence with each
investment decision made by the General Partner Investment Committee, which consists of strong and well experienced
members, ensure that the Company effectively manages exposure to credit risk. On a quarterly basis, the Board receives
detailed reports and updates from the Fund Manager to enable it to monitor the performance of the underlying
investments.

11.1.4 Currency risk

The Company's exposure to currency risk is primarily through its Investment in the ARC Fund. The portfolio interests of
the ARC Fund are predominantly denominated in ZAR with 9.7% denominated in foreign currency. The exposure to currency
risk is thus low; however, the Board continuously monitors the exposure to currency risk through the Investment
Committee of the Fund Manager.

11.1.5 Liquidity risk

The Company is exposed to the risk relating to the payment of trade and other payables which at the reporting date were
not significant. At listing the Company retained sufficient funds from the listing proceeds for working capital
requirements. The adequacy of the working capital of the Company is Audited by the Board bi-annually.

12. COMMITMENTS

As at six-month period ended 31 December 2018, the Company did not have any commitments.  The commitments in the ARC
Fund were as follows:

                                                                                                                                       Unaudited   Unaudited Audited
                                                                                                                                     31 December 31 December 30 June
Contracted (R million)                                                                                                                      2018        2017    2018
Contingent consideration on existing portfolio investments                                                                                     -           -     140
Other contractual commitments arising from signed investment agreements(1)                                                                   977           -     400
Total contracted                                                                                                                             977           -     540

(1) The Investment Committee of the ARC Fund has approved, and management have concluded contractual commitments to
    investment of R976 million over the next five years. The most significant relate to investments in the ARCH Renewal
    Energy capital fund, the Barloworld project and ARC Real Estate and Sanlam Asset Management.


                                                                                                                                       Unaudited   Unaudited Audited
                                                                                                                                     31 December 31 December 30 June
Approved not yet contracted (R million)                                                                                                     2018        2017    2018
Other contractual commitments arising from signed memoranda of understanding (MOU)(3)                                                          -           -   1 594
Total approved not yet contracted                                                                                                            543           -   1 594
Total commitments                                                                                                                          1 520           -   2 109

(3) A number of prospective investments approved by the Investment Committee of the ARC Fund are currently under
    negotiation and still subject to signed contracts.

The aging profile of commitments in accordance with the financial year-ends of the Company and the ARC Fund are as
follows:

Unaudited 31 December 2018                                                                                  
Year (R million)                                                                                                                          Total    Total       Total
(R million)                                                                                                    2019 2020 2021 - 2023 contracted approved commitments
Contracted                                                                                                      591  136         250        977        -         977
Approved                                                                                                        258   71         214          -      543         543
Total                                                                                                           849  207         464        977      543       1 520

The cash and cash equivalents of the ARC Fund at 31 December 2018 amounted to R1.1 billion and would be utilised to fund
the contracted commitments in the 2019 financial year of R977 million.

Unaudited 30 June 2018
Year                                                                                                                                      Total    Total       Total
(R million)                                                                                                           2019 2020 2021 contracted approved commitments
Contracted                                                                                                             260  140  115        515        -         515
Approved                                                                                                             1 026  568    -          -    1 594       1 594
Total                                                                                                                1 286  708  115        515    1 594       2 109

The cash and cash equivalents of the ARC Fund at 30 June 2018 amounted to R1.6 billion and would be utilised to fund the
commitments in the 2019 financial year.

13. RELATED PARTY DISCLOSURES

Accounting Policies and Choices

Related party transactions are transfers of resources, services or obligations between the Company and a related party (as identified below), regardless of whether
a price is charged or not. They include commitments to do something if a particular event occurs (or does not occur) in the future and executory contracts
(recognised or unrecognised). The Company has complied with the provisions of IAS 24, Related Party Transactions, in identifying, quantifying and disclosing the
information below.

Company Context in Application of Accounting Policy Choices

The Company has identified the following related party relationships and related transactional terms which are relevant to the current period's condensed interim
financial statements:

Name                Relationship                        Nature of transaction/terms
Companies:
- UBI               - Ultimate parent                   - None.
                    - Holder of the C shares for the    - Issue of the C shares (note 6.1).
                      Performance Participation         - The Performance Participation (note 8).
- ARC               - Controlling shareholder           - Asset-for-share transaction prior to listing (note 6.1).
                    - Holder of the B share             - Issue of the B share (note 6.1).
                    - Incorporation loan                - Loan advanced per the loan agreement signed on 14 August 2017 for the payment of incorporation and listing
                                                          related expenses incurred prior to the listing date and effective 18 August 2017 for an amount of up to R60
                                                          million. The loan is unsecured, bore no interest and repayments were to be financed from the listing
                                                          proceeds.
- The ARC Fund      - South African en-commandite       - Contribution of Portfolio Assets (note 4).
                      Partnership at a partnership
                      interest of 99.95%.
                                                        - Cash capital contribution (note 4).
- General Partner   - General Partner in the ARC Fund   - 0.05% in the ARC Fund Capital and partnership   profit share.
                                                        - Fund management fees (note 5.1).

Name                        Relationship                            Nature of transaction/terms
Key management personnel:
- MC Olivier                -   Non-executive Director and Chairman - Directors fees.
- T Lo Seen Chong           -   Non-executive Director              - Directors fees.
- C Msipha                  -   Non-executive Director              - Directors fees.
- R Mokate                  -   Non-executive Director              - Directors fees.
- NB Radebe                 -   Non-executive Director              - Rnil.
- K Bodenstein              -   Chief Financial Officer             - Executive salary.

Transactions with related parties in the year under review are as follows:

                                                                                          Unaudited                        Unaudited                         Audited
                                                                         Unaudited      balance due        Unaudited     balance due         Audited     balance due
                                                                      transactions  from/(to) as at     transactions from/(to) as at    transactions    from/(to) as
                                                                        during the     '31 December       during the    '31 December      during the      at 30 June
R million                                                                   period             2018           period            2017            year            2018
UBI                                                                             71               71                -              44             115               -
Issue of C shares (note 6.1)(1)                                                 71               71                -               -               -               -
Issue of A shares (note 6.1)(1)                                                  -                -                -               -               -               -
Performance Participation
(note 8)                                                                         -                -                -              44             115               -
ARC                                                                              -                -                -               -           4 574               -
Issue of B-share (note 6.1)(1)                                                   -                -                -               -               -               -
Accrual of listing expenses                                                      -                -                -               -               -               -
Recovery of expenses payable
by ARC                                                                           -                -                -               -               3               -
Settlement of incorporation
loan                                                                             -                -                -               -               8               -
Asset-for-share transaction
prior to listing (note 6.1)                                                      -                -                -               -           4 563               -
The ARC Fund                                                                   533                -                -           9 297           9 582           9 582
Contribution of Portfolio
Assets (note 4)                                                                  -                -                -           4 563           4 563           4 563
Cash capital contribution
(note 4)                                                                         -                -                -           4 224           4 224           4 224
Partnership profit share for
the year (note 4)                                                              533                -                -             510             795             795
General Partner                                                                 74               74                -              34            (31)            (31)
Fund management fees
accrued for the year (note 5.1)                                                 74               74                -              34            (94)            (94)
Fund management fees paid
for the year                                                                     -                -                -               -              63              63
Directors' interest                                                                                                                                                  
MC Olivier - 305 882 shares
in the Company at a 0.005%
interest                                                                       n/a              n/a              n/a             n/a             n/a             n/a
Key management personnel(2)                                                  (0.3)            (0.3)                -             0.1           (0.3)           (0.3)
MC Olivier fees accrued                                                      (0.2)            (0.2)                -           (0.2)           (0.3)           (0.3)
- fees paid to MC Olivier                                                      0.1              0.1                -             0.2             0.2             0.2
T Lo Seen Chong fees accrued                                                     -                -                -               -           (0.1)           (0.1)
- fees paid to T Lo Seen Chong                                                   -                -                -             0.1             0.1             0.1
C Msipha fees accrued                                                        (0.2)            (0.2)                -           (0.1)           (0.3)           (0.3)
- fees paid to C Msipha                                                        0.1              0.1                -             0.1             0.2             0.2
R Mokate fees accrued                                                        (0.2)            (0.2)                -           (0.1)           (0.3)           (0.3)
- fees paid to R Mokate                                                        0.1              0.1                -             0.1             0.2             0.2
NB Radebe                                                                        -                -                -               -               -               -
K Bodenstein executive salary
accrued¹                                                                         -                -                -               -           (0.1)           (0.1)
- salary paid to K Bodenstein(1)                                                 -                -                -               -             0.1             0.1

(1) Amount is less than R1 million and is rounded to Rnil.
(2) Amount is less than R 1 million and is rounded to a million and 1 decimal place. The amounts are disclosed as they are
    material in nature.

14. SUBSEQUENT EVENTS

Other than the investment activities post the reporting period detailed below, the Company had no other subsequent
events that required adjustment to or disclosure in the reported results.

The following investments were concluded in the ARC Fund post the reporting period:

TymeBank

ARC FinHoldCo has agreed to subscribe for an additional R346 million capital in TymeBank which will be injected over a
four-month period from February 2019. The ARC Fund will contribute its 49.9% share through share subscriptions of R172
million in ARC FinHoldCo. In addition, ARC FinHoldCo invested US$2 million in Tyme Global Limited, a Hong Kong based
company, to follow its rights to maintain its interest of 33% in the company. Tyme Global Limited owns the intellectual
property that is used by TymeBank.

The ARC Fund further made various investments aggregating less than R100 million. 

15. APPLICATION OF NEW AND REVISED INTERNATIONAL FINANCIAL REPORTING STANDARDS (IFRS)

New standards adopted in the current reporting period:

The following new standards became effective for the Company in the current reporting period and have been adopted:

                                                                                                                                                        Effective for
Standard,                                                                                                                                           financial periods
amendment                                                                                                                                                beginning on
or interpretation    Summary of expected impact                                                                                                                    or 
                                                                                                                                                                after
IFRS 9 - Financial   Summary of amendment                                                                                                              1 January 2018
instruments
                     This standard replaced the guidance in IAS 39. It includes requirements on the classification and measurement of financial
                     assets and liabilities; it also includes an expected credit losses model that replaces the current incurred loss impairment
                     model.
                     
                     Summary impact on the Company
                     
                     The amendments have been applied in the financial results for the six month period ended 31 December 2018. The business
                     model of the Company as clarified under the provisions and guiding principles of IFRS 9, specifically, to its main financial
                     instrument - the investment in the ARC Fund has remained unchanged from the prior financial year. Since under IFRS 9, the
                     investment in the fund is mandatorily a fair value through profit and loss investment as it is managed on its intrinsic fair
                     value performance, the adoption of the new standard has not changed the basis of recognition and measurement of the
                     financial instruments of the Company. Under IAS 39, the investment was designated as fair value through profit and loss, and
                     thus is indicates minimal impact of the adoption of the new standard.

New standards in issue but not yet effective or early adopted:

The following standard has been published and is deemed relevant to the Company but is not yet effective and has also
not been early adopted:

                                                                                                                                                        Effective for
Standard,                                                                                                                                           financial periods
amendment                                                                                                                                                beginning on
or interpretation                                    Summary of expected impact                                                                                    or 
                                                                                                                                                                after
Amendment to IAS 1, 'Presentation of financial                                                                                                        01 January 2020
statements' and IAS 8, 'Accounting policies,
changes in accounting estimates and errors' on the
definition of material.                              Summary of amendment 
                                                     These amendments to IAS 1 and IAS 8 and consequential amendments to other IFRSs:
                                                     -     use a consistent definition of materiality through IFRSs and the Conceptual Framework
                                                           for Financial Reporting;
                                                     -     clarify the explanation of the definition of material; and
                                                     -     incorporate some of the guidance in IAS 1 about immaterial information.

                                                     Summary impact on the Company

                                                     The Directors anticipate that these amendments will be applied in the financial statements
                                                     for the annual period beginning 1 July 2020. The company has applied the principle of
                                                     materiality in the preparation and disclosure of financial information. The amendments will
                                                     have a minimal impact.
Amendments to IFRS 9 - 'Financial instruments' on                                                                                                     01 January 2019
prepayment features with negative compensation and
modification of financial liabilities.               Summary of amendment
                                                     The narrow-scope amendment covers two issues:
                                                     -     The amendments allow companies to measure particular prepayable financial assets with
                                                     so-called negative compensation at amortised cost or at fair value through other
                                                     comprehensive income if a specified condition is met—instead of at fair value through profit
                                                     or loss. It is likely to have the biggest impact on banks and other financial services
                                                     entities.
                                                     -     How to account for the modification of a financial liability. The amendment confirms
                                                     that most such modifications will result in immediate recognition of a gain or loss. This is
                                                     a change from common practice under IAS 39 today and will affect all kinds of entities that
                                                     have renegotiated borrowings.
                                                     
                                                     Summary impact on the Company

                                                     The Directors anticipate that these amendments will be applied in the financial statements
                                                     for the annual period beginning 1 July 2019. The company does not make prepayments on
                                                     investments and financial liabilities consist mainly of deferred consideration, which is 1.3%
                                                     of the total investment portfolio. The amendments are thus expected to have a minimal impact.

I - SHAREHOLDERS' DIARY

The key dates to be noted by shareholders are as follows: 

Details                                              Date
Interim Results Announcement                14 March 2019
Financial year end                           30 June 2019
Year end results announcement           12 September 2019
Integrated Annual Report                   September 2019
Annual General Meeting                      November 2019

II - CORPORATE INFORMATION

Contact Information    African Rainbow Capital Investments Limited
                       (A Company registered and domiciled in the Republic of Mauritius)
                       www.arci.mu
Registration number    C148430
JSE share code         AIL
ISIN code              MU0553S00000
Directors              Mark Cyril Olivier (Chairman)
                       Deans Tommy Lo Seen Chong
                       Clive Msipha
                       Renosi Mokate
                       Anil Currimjee (Appointed: 11 March 2019)
                       Bridget Ntombenhle Radebe
Executive Management   Karen Bodenstein
                       (Chief Financial Officer)
Registered Address     Level 3, Alexander House, 35 Cybercity
                       Ebène, 72201
                       (Level 3, Alexander House, 35 Cybercity, Ebène, 72201, Mauritius)
                       Registered and incorporated as a private Company in Mauritius on 30 June 2017 and
                       converted to a public Company on 2 August 2017.
Company Secretary      Intercontinental Trust Limited Level 3,
                       Alexander House, 35 Cybercity, Ebène, 72201
                       (Level 3, Alexander House, 35 Cybercity, Ebène, 72201, Mauritius)
                       (Company number: C23546)
Sponsor                Rand Merchant Bank, a division of
                       FirstRand Bank Limited 1 Merchant Place
                       Cnr Fredman Drive and Rivonia Road
                       Sandton, Johannesburg, 2196
                       (PO Box 786273, Sandton, 2146, South Africa)
                       (Registration number 1929/001225/06)
Transfer Secretaries   Computershare Investor Services Proprietary Limited
                       Registration number 2004/003647/07)
                       Rosebank Towers, 15 Biermann Avenue
                       Rosebank, 2196
                       (PO Box 61051, Marshalltown, 2107, South Africa)
                       (Registration number 2004/003647/07)                       
Independent Auditors   PricewaterhouseCoopers and PricewaterhouseCoopers Inc.
                       3rd Floor, 18 Cybercity, Ebène, 72201, Mauritius
                       5 Silo Square, V&A Waterfront, Cape Town, 8002, South Africa
Investor Relations     Ainsley Moos
                       investors@arci.mu
                       +230 (403) 0800
                       +21 (21) 180 0107
                       +27 (83) 296 4697

SENS release date: 14 March 2019

www.arci.mu             


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