TRADING STATEMENT IN RESPECT OF FINANCIAL YEAR ENDED 30 JUNE 2020

TRADING STATEMENT IN RESPECT OF FINANCIAL YEAR ENDED 30 JUNE 2020

Ethos Capital is an investment holding company, registered and incorporated in Mauritius. It is listed on the Johannesburg Stock Exchange and offers shareholders potential long-term capital appreciation by making commitments and investments into Funds or Co-investments that are actively managed by Ethos Private Equity (Pty) Limited (“Ethos”), providing the Company with exposure to a diversified portfolio of unlisted private equity type investments (“Portfolio Companies”).
Below is a trading update ahead of the Company’s announcement of its annual results for the year ended 30 June 2020, which is expected to be released on the Stock Exchange News Service on or about 28 September 2020.

Trading update

Shareholders are advised that Ethos Capital’s Net Asset Value per share (“NAVPS”) as at 30 June 2020 is estimated to be between R6.60 and R6.70. This range represents a decrease of between 41% and 42% compared to the reported NAVPS at the last corresponding reporting period at 30 June 2019 of R11.34; and is largely similar to the 31 March 2020 reported NAVPS of R6.65.
The Brait SE (“Brait”) investment is included in the above 30 June 2020 NAVPS range at its 30 June 2020 share price of R3.34. Based on Brait’s last reported NAVPS of R8.27 at 31 March 2020, the Ethos Capital 30 June 2020 NAVPS is estimated to be between R9.07 and R9.17.

As noted in a SENS announcement in June 2020, the Company successfully raised R750 million through a fully underwritten Rights Issue at R7.50 per share during February 2020, that resulted in an increase in the number of shares in issue (excluding treasury shares) from 157.5 million to 257.5 million shares. The dilutive impact of the Rights Issue was a decrease in the prevailing NAVPS at the time of c.R1.59 per share.

The reduction in the estimated NAVPS during the latter part of the year was driven by the unprecedented outbreak of the COVID-19 pandemic, followed by national lockdowns across the world. This had a significant impact on most of the Portfolio Companies’ short-term profitability and resulted in sharp declines in peer group multiples and resultant valuations that impacted Ethos Capital NAVPS, as was reported in the 31 March 2020 NAVPS of R6.65. Whilst the valuation of the unlisted portfolio companies increased since 31 March 2020, a further decline in the share price of the Brait investment resulted in a largely flat NAVPS over the last quarter of the financial year.