UNAUDITED INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 DECEMBER 2019

EPE CAPITAL PARTNERS LTD ("ETHOS CAPITAL" OR "THE COMPANY")

12 MAR 2020

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

Unaudited interim results for the six months ended 31 December 2019

INTRODUCTION

Ethos Capital is an investment company, registered and incorporated in Mauritius as a public company. It is listed on the Johannesburg Stock Exchange (“JSE”) and offers shareholders long-term capital appreciation by making commitments and investments into Funds or Co-Investments that are managed by Ethos Private Equity (Pty) Limited (“Ethos”), providing the Company with largely indirect exposure to a diversified portfolio of unlisted private equity type investments (“Portfolio Companies”). The Group refers to the consolidated results of the Company and its deemed controlled entity.

The Group’s performance is largely measured by the growth in the net asset value (“NAV”) and NAV per share (“NAVPS”).

THE ADVISOR: ETHOS

Ethos acts as Ethos Capital’s Investment Advisor. In addition, Ethos is the Manager of the Funds that Ethos Capital invests in. Ethos is an investment firm that manages investments in private equity and mezzanine transactions in South Africa and other sub-Saharan African countries. Ethos has a 35-year history and an unparalleled record of successful, sustainable investing across economic and political cycles that has delivered 96 realised investments at a 36% gross IRR and a 2.7x multiple of cost.

RESULTS ANNOUNCEMENT

Key highlights


Overview

The economic outlook in South Africa faces significant structural and growth impediments. Consumer sentiment and business confidence remain depressed and GDP growth rates continue to underperform market expectations. During the reporting period, industrial output was subdued with many corporates choosing to delay investment and expansion pending further clarity of key sectoral policies. Unexpected load shedding also negatively impacted both consumer and business confidence which was felt across almost all of Ethos’ South African based Portfolio Companies. Unfortunately, this is likely to continue over the medium term. However, strong economic growth across many other sub-Saharan African countries has continued which positively impacted those assets which had exposure to such countries.

The Group modestly increased its total assets and NAVPS at 31 December 2019 to R2.0 billion and R11.48 respectively (30 June 2019: R11.34). During the period, the Company invested R0.2 billion, largely into four acquisitions within the existing portfolio and thereby increasing its invested capital to R1.7 billion, 85.5% of total assets. The investments provide exposure to 19 Portfolio Companies operating in sub-Saharan Africa (+40% by value outside of South Africa) that are currently valued at an EBITDA multiple of 6.7x (30 June 2019: 6.9x)

Post the period-end, in February 2020, the Company successfully completed a R750 million fully underwritten Rights Offer at R7.50 per share to fund its participation in the Brait SE (“Brait”) Rights Offer. In March 2020, Ethos took over as the investment advisor to the Brait Board. The above increased both the Group’s total assets and invested capital to R2.7 billion, expanding the investments further to 24 Portfolio Companies with a wide geographical spread.

Given the uncertain economic outlook, the Board believes that remaining focused on Ethos’ strategy of theme/tailwind led investing and leveraging the sector, value add and domain expertise it has, while exercising price discipline, will result in strong investment returns in excess of the Company’s cost of equity.

FINANCIAL POSITION AND INVESTMENT PORTFOLIO

EXTRACT OF STATEMENT OF FINANCIAL POSITION


Group
31 Dec 2019
R’million
Company
30 June 2019
R’million

31 Dec 2019
R’million

30 June 2019

R’million
ASSETS
Non-current assets
Unlisted investments at fair value

1,680.0

1,427.3

1,680.0

1,427.3
Current assets284.5501.3284.0500.8
Trade and other receivables
Money market investments at fair value
Cash and cash equivalents
TOTAL ASSETS
0.4
278.3
5.8
1,964.5
16.7
481.0
3.6
1,928.6
0.4
278.3
5.3
1,964.0
16.7
481.0
3.1
1,928.1
EQUITY AND LIABILITIES
Total Ordinary shareholders’ equity

1,808.0

1,785.5

1,945.9

1,920.5
Non-current liabilities
Current liabilities
Total Liabilities
TOTAL EQUITY AND LIABILITIES
138.4
18.1
156.5
1,964.5
135.5
7.6
143.1
1,928.6

18.1
18.1
1,964.0

7.6
7.6
1,928.1
NET ASSET VALUE
Basic Net Asset Value per share (Rand)
Attributable shares in issue (‘000)
1,808.0
11.48
157,500
1,785.5
11.34
157,500
1,945.9
11.38
171,000
1,920.5
11.23
171,000
INVESTMENT PORTFOLIO – AT 31 DECEMBER 2019
Name

Commitment
R’million

Valuation
R’million

% of total assets
Primary/Secondary Investments
Ethos Mid Market Fund I
Ethos Fund VII
Ethos Ai Fund I
Ethos Healthcare Platform
Ethos Fund VI
Ethos Mezzanine Partners 3
Co-Investments
Primedia Group (Pty) Ltd
Channel Vas Investments Ltd BVI
Kevro Holdings (Pty) Ltd

950.0
1,250.0
150.0
87.0
140.0
250.0

171.0
100.0
100.0
3,198.0

520.9
418.0
119.2
108.4
91.3
40.4

175.3
105.6
100.9
1,680.0

26.5
21.3
6.1
5.5
4.6
2.1

8.9
5.4
5.1
85.5

TOP 10 UNDERLYING PORTFOLIO COMPANIES – AT 31 DECEMBER 2019

Name Business description Year*% of Total assets
Channel Vas
Kevro
Echotel
Primedia
Vertice
Synerlytic
Gammatek
Twinsaver
Autozone  
TymeBank
FinTech service provider
Corporate clothing and gifting
Corporate ISP
Media
MedTech
Specialised analytical and testing services
TMT accessory distribution
Manufacturing (FMCG)
Automotive parts retailer & wholesaler
Banking
2018
2017
2018
2017
2018
2019
2018
2015
2014
2019
23.4
9.7
8.7
8.0
7.5
6.2
4.8
3.4
2.4
2.3
76.4
Other (9 Portfolio Companies)
Total underlying investments
9.1
85.5
* Initial acquisition date by Ethos Fund

RESPONSIBILITY STATEMENT

This short-form announcement is the responsibility of the Directors of Ethos Capital and is only a summary of the information in the full announcement and does not contain full or complete details. The announcement is itself not audited and extracted from unaudited results. Any investment decision should be based on the full announcement which is available from today here:

Full Announcement

and is published on the Company’s website :

Company Website

Copies of the full announcement may also be requested from the Company Secretary (represented by Mr Ravi Cunnoosamy) at no charge at +230 (0) 403 6000, during office hours, or at ethoscapital@ocorian.com.

PRESENTATION

Ethos Capital will host a webcast presentation at 10h00 am on Thursday 12 March 2020 covering the results relating to the six months ended 31 December 2019, and outlook. A copy of the presentation is available for download on the Company’s website here

Participants should please register for the webcast in advance by navigating to this website:

Website Registration

CORPORATE INFORMATION

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

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

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

Company Secretary and Registered Office
Ocorian
6th Floor, Tower A,
1 Cybercity
Ebene
Mauritius

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

Deloitte & Touche
20 Woodlands Drive
Woodmead
Sandton
Johannesburg, 2196

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

Transfer Secretary
Computershare Investor Services Proprietary Limited
70 Marshall Street
Johannesburg, 2001

1 Merchant Place Cnr Fredman Drive & Rivonia Road Sandton Johannesburg, 2196

DATE:

12-03-2020

SPONSOR:

RAND MERCHANT BANK (A division of FirstRand Bank Limited)

Disclaimer
The financial information on which this announcement is based, has not been audited, reviewed and reported on by the Company's external auditors.