JZ CAPITAL PARTNERS LIMITED (the
"Company" or "JZCP")
(a closed-end investment company incorporated with limited
liability under the laws of Guernsey with registered number
48761)
INTERIM RESULTS FOR THE SIX-MONTH
PERIOD ENDED
31 AUGUST
2016
26 October 2016
JZ Capital Partners, the London
listed fund that invests in US and European micro-cap companies and
US real estate, announces its interim results for the six-month
period ended 31 August 2016.
Results Highlights
· NAV of $873 million (FYE 29/02/16: $851.7 million)
· NAV per share of $10.40, an increase of 2.5% (FYE 29/02/16:
$10.15)
· Total NAV return per share of
3.9%. Positive total NAV return per share delivered in 26 of the
past 30 quarters
· Distribution of 15 cents per share for FYE 29/02/16 paid on 10 June
2016
· Interim dividend of 15.5 cents per share declared for the period
ended 31/08/16
· Implied dividend yield of 5.1%
(as at 31/08/16).
· Repayment of remaining ZDPs due
June 2016, for £32.9 million
· Share price trading near its
all-time high as at 25 October 2016,
rising 28% since 29 February 2016
Portfolio Highlights
· Robust investment activity, with
$97.1 million invested across the
three core portfolios:
o Invested $8.7 million in
Oncology Services International and Pacific Medical, the third and
fourth investments through the Jordan Health Products platform
o Invested $18.6 million in
Esperante Corporate Centre, a landmark office building in
West Palm Beach, Florida,
alongside JZCP’s long-term real estate partner, RedSky Capital, LLC
(“RedSky”) and co-investor, The Clark Estates
· Realisations of $76.3 million, including:
o $20.7 million of proceeds
from the sale of JZCP’s stake in Winn to a major financial
institution
· As of 31 August
2016, the US micro-cap portfolio consisted of 22 business,
which includes four ‘verticals’ and 14 co-investments, across eight
industries; the European micro-cap portfolio held 13 companies
across five industries and six countries
· The US real estate portfolio was
primarily comprised of four major assemblages (56 properties in
total) located in New York and
South Florida
o Five properties acquired during the period
David Zalaznick, JZCP’s
Founder and Investment Adviser, said: “We are pleased with the
strong performance of the Company for the first half of the year.
Our differentiated portfolio of US and European micro-cap and US
real estate has generated consistent returns for our shareholders –
with positive NAV total return in 26 of the past 30 quarters.
We expect the positive performance to continue in the second half
of our fiscal year.”
David Macfarlane, Chairman of
JZCP, said: “The Board has declared an interim dividend of
15.5 cents per share to be paid to
shareholders in November 2016. The
first half performance underscores the resilience of the Company’s
investment portfolio and expertise of the Investment Adviser in
growing the Company’s NAV in the face of a challenging market
environment. We look ahead to the rest of the year with
confidence.”
Presentation details:
There will be an analyst and investor presentation to discuss
JZCP’s recent financial performance and portfolio developments at
09:30 on 26 October 2016 at FTI
Consulting, 200 Aldersgate, Aldersgate
Street, London EC1A 4HD. It
can be accessed by dialing +44 (0)20 3043 2026 (UK)
or +1 719 325 2202 (US) with the participant access
code 2129309.
A playback facility will be available two hours after the
conference call concludes. This facility may be accessed by using
the same dial in details and participant access code as above.
For further information:
Ed Berry / Kit Dunford
+44 (0)20 3727 1046 / 1143
FTI Consulting
Paul Le Ray
+44 (0) 1481 745815
JZ Capital Partners
David Zalaznick
+1 (212) 485-9410
Jordan/Zalaznick Advisers, Inc.
About JZCP
JZCP is a London listed fund
which invests in US and European micro-cap companies and US real
estate. Its objective is to achieve an overall return comprised of
a current yield and capital appreciation. JZCP receives investment
advice from Jordan/Zalaznick Advisers, Inc. (“JZAI”) which is led
by David Zalaznick and Jay Jordan. They have worked together for 30
years and are supported by teams of investment professionals in
New York, Chicago, London and Madrid. JZAI’s experts work with the existing
management of micro-cap companies to help build better businesses,
create value and deliver strong returns for investors. JZCP also
invests in mezzanine loans, first and second lien investments and
other publicly traded securities. For more information please visit
www.jzcp.com
Chairman's Statement
I am pleased to report the results of JZ Capital Partners
("JZCP" or the "Company") for the six-month period ended
31 August 2016.
Performance
The Company’s robust performance over the last six months has
been set against a backdrop of continued political and economic
uncertainty in the markets that we focus on and, in the case of the
UK, extreme market volatility following the UK’s decision to leave
the European Union.
Despite a balanced US economic outlook, the US Federal Reserve
refrained from hiking interest rates in September and will wait for
confirmation of a pick-up in inflation rates before taking further
action. Elsewhere, the modest recovery in the Eurozone
appears to continue and the global Purchasing Managers’ Index
(“PMI”) edged up in August, helped by improving prospects for
emerging markets.
The continued uncertainty surrounding the outcome of the US
presidential election in November and details of Brexit
negotiations is expected to continue to weigh on the minds of
investors as we enter the last quarter of 2016.
Within this market environment, the Board is delighted with
JZCP’s performance during the period. For the six-month period
ended 31 August 2016, JZCP’s net
asset value ("NAV") per share increased from $10.15 to $10.40,
or 2.5%, underpinned by positive investment performance across our
three core portfolios. Total NAV return per share was 3.9%, which
includes a 15 cent dividend per share
paid on 10 June 2016. This marks the
26th quarter of positive NAV total return per share out of the last
30 quarterly periods.
The Company’s share price is trading near its all-time high as
at 25 October 2016, rising 28% since
29 February 2016.
Strategy
The Investment Adviser’s value-driven investment approach
continues to lead to exciting opportunities in the US and European
micro-cap sectors and the US real estate market. We continue to
implement our strategy of working with the existing management of
micro-cap companies to enhance growth, and look to acquire
off-market properties with a large value-added component, providing
investors with access to a diversified and balanced portfolio of
alternative investment opportunities.
Portfolio update
It has been an active investment period for the Company, putting
$97.1 million to work across the US
micro-cap and real estate portfolios - whilst realising
$76.3 million, primarily through the
sale of JZCP’s stake in Winn; the refinancing of three properties
located in Brooklyn, New York, and
the partial realisation of JZCP’s investment in the Bright Spruce
Fund.
At the end of the period, the Company’s portfolio consisted of
22 US micro-cap businesses, including four ‘verticals’ and 14
co-investments, across eight industries, 13 European micro-cap
companies across five industries and six countries, and four major
real estate assemblages (56 properties in total) located across
Brooklyn, New York and
South Florida. It’s also important
to note that the portfolio is becoming more balanced by vintage:
46% of the portfolio’s value has been held for less than three
years; 30% three to five years; and 24% more than five years.
US and European Micro-cap
The Board is pleased with the performance of the US micro-cap
portfolio during the period, which has seen a net valuation
increase of 23 cents per share,
primarily due to increased earnings at our Healthcare Revenue Cycle
Management vertical and positive performance at several
co-investments.
JZCP continues to expand and diversify its investment portfolio
in Western Europe through its 75%
ownership of the EuroMicrocap Fund 2010, L.P. and its 18.8%
ownership of JZI Fund III, L.P. The European portfolio performed
well during the period due to increased earnings at Petrocorner,
our petrol station build-up in Spain and Collingwood, our niche UK insurance
business, as well as a write-up at our online German bank, Fidor
Bank (“Fidor”).
The Company agreed to sell its interest in Fidor during the
period to Groupe BPCE, the second largest banking group in
France. JZCP invested a total of
$13.8 million and is expected to
receive total gross proceeds of approximately $25.7 million from the sale, following
customary regulatory approvals.
Real Estate
The Company continues to explore attractive investment
opportunities in Brooklyn, New
York and South Florida in
conjunction with our partner, RedSky Capital. During the period,
JZCP invested $53.3 million to
acquire interests in five properties located in Brooklyn, New York and South Florida. Post-period, JZCP acquired a
further three properties. The portfolio has seen a valuation
increase of 27 cents per share, led
by a significant uplift at our Roebling Portfolio property located
in Williamsburg, Brooklyn.
As of August 2016, JZCP has
approximately $309 million invested
in four major real estate assemblages (56 properties in total) with
an approximate valuation of $435
million. All properties are currently in various stages of
development and re-development.
Realisations
The Company generated realisations totalling $76.3 million during the period, primarily
through the sale of JZCP’s stake in Winn; the refinancing of three
properties located in Brooklyn, New
York, and the partial realisation of its investment in the
Bright Spruce Fund. The Company closed the sale of its stake in
Winn, a Newcastle-based UK legal
services firm, to a major financial institution receiving net sale
proceeds of $20.7 million following
the receipt of regulatory approval.
Distributions
In accordance with our policy to distribute annually an amount
equal to three per cent of NAV, the Board has declared an interim
dividend of 15.5 cents per share for
the six-month period ended 31 August
2016, compared to 16 cents
(paid on a smaller number of shares due to the capital raise
completed in September 2015) for the
six-month period ended 31 August 2015. This implies an
annualised yield as at 31 August 2016
of 5.1%.
Outlook
We are pleased with the results of the hard work that’s been
completed during the period. The Company has built on the
heightened levels of investment activity during 2015 with further
investments and realisations across the portfolio, whilst at the
same time deleveraging the Company’s balance sheet through the
repayment of the remaining 2016 Zero Dividend Preference Shares in
June 2016.
The Board is confident in the Investment Adviser’s ability to
continue to grow the Company’s NAV, providing an attractive
long-term return for investors. We look forward to the second half
of the year with confidence.
David
Macfarlane
Chairman
25 October
2016
Investment Adviser's Report
Dear Fellow Shareholders,
We are pleased to report that all three of JZCP’s major asset
classes – US micro-cap, European micro-cap and US real estate –
continued their positive performance for the six-month period
ending 31 August 2016. JZCP’s NAV per
share increased from $10.15 to
$10.40, or 2.5% during the period,
whereas total NAV return per share was 3.9%, which includes a
15 cent per share dividend paid on
10 June 2016.
This quarter marks positive total NAV return per share in 26 of
the past 30 quarters, which is a testament to the consistent
performance of our portfolio companies across several different
asset classes.
For the past twelve-month period, including a previously paid
dividend of 16 cents in November 2015, the implied dividend yield, based
on our stock price at 31 August 2016
is 5.2%.
In the six-month period ended 31 August
2016, JZCP invested a total of $97.1
million, underpinned by a healthy pipeline of opportunities
across our growing real estate portfolio and core US micro-cap
portfolio, while realising $76.3
million, primarily through the sale of JZCP’s stake in Winn,
the refinancing of three properties located in Brooklyn, New York and the partial realisation
of JZCP’s investment in the Bright Spruce Fund. In addition, we
received $11.5 million from two
post-period realisations in our US micro-cap portfolio.
As of 31 August 2016, our US
micro-cap portfolio consisted of 22 businesses, which includes four
‘verticals’ and 14 co- investments, across eight industries; this
portfolio was valued at 8.2x EBITDA, after applying an
average 26% marketability discount to public comparables. The
average underlying leverage senior to JZCP’s position in our US
micro-cap portfolio is 3.5x EBITDA. Consistent with our
value-oriented investment strategy, we have acquired our current US
micro-cap portfolio at an average 6.3x EBITDA; we paid 5.5x EBITDA
on average for US micro-cap acquisitions made during the
period.
As of 31 August 2016, our European
micro-cap portfolio consisted of 13 companies across five
industries and six countries. The European micro-cap portfolio has
low leverage senior to JZCP’s position, of under 2.0x EBITDA.
Our US real estate portfolio can be grouped primarily into four
major “assemblages” (56 total properties), located in the
Williamsburg and Downtown/Fulton Mall neighbourhoods of
Brooklyn, New York and the Wynwood
and Design District neighbourhoods of Miami, Florida. Five properties were acquired
during the period and an additional three properties were purchased
post-period in September 2016. Our
assemblages are comprised of adjacent or concentrated groupings of
properties that can be developed, financed and/or sold together at
a higher valuation than on a stand- alone basis.
Net Asset Value ("NAV")
JZCP’s NAV per share increased from $10.15 to $10.40,
or 2.5%, for the six-month period ending 31
August 2016. Total NAV return per share was 3.9%, which
includes a 15 cent per share dividend
paid on 10 June 2016.
NAV per
Ordinary share as of 29 February 2016 |
|
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$10.15 |
Change
in NAV due to capital gains and accrued income |
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+ US
Micro-cap |
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0.23 |
+ European
Micro-cap |
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0.08 |
+ Real
estate |
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0.27 |
+ Other
investments |
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0.04 |
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Other
increases/(decreases) in NAV |
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+ Change
in CULS fair value (1) |
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0.03 |
- Finance
costs |
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(0.09) |
+ Foreign
exchange effect (2) |
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0.10 |
- Expenses
and taxation |
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(0.26) |
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NAV per
Ordinary share (before dividends paid) |
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$10.55 |
-
Dividends paid |
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(0.15) |
NAV per
Ordinary share as of 31 August 2016 |
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$10.40 |
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(1) Includes fx gains of four
cents
(2) Includes fx gains on investments of eight cents
The US micro-cap portfolio had a net increase of 23 cents, primarily due to increased earnings at
our Healthcare Revenue Cycle Management vertical (20 cents). Also contributing to the positive
portfolio performance were increases at several co-investment
companies: Salter (2 cents) and
Medplast (3 cents), both healthcare
products manufacturers; TierPoint, a data centre business
(3 cents); and Vitalyst, an IT
support business (1 cent).
Offsetting these increases was a decrease at Healthcare Products
Holdings, our power wheelchair company, which was written down to
zero (12 cents), as further
regulations have significantly damaged the company’s prospects.
Other assets to experience earnings declines included: our Water
and Industrial Services Solutions (“ISS”) verticals, (5 and
3 cents, respectively); Suzo-Happ,
our co-investment manufacturer of parts for the global gaming
industry (3 cents); and Sloan LED,
our co-investment LED lighting business (1
cent).
The European micro-cap portfolio had a net increase of
8 cents, primarily due to a write-up
at our online German bank, Fidor Bank (3
cents), which was contractually sold to a French banking
conglomerate during the period. Other assets written up due to
increased earnings include Petrocorner (2
cents), our petrol station build-up in Spain and Collingwood (1 cent), our niche UK insurance business.
The real estate portfolio had a net increase of 27 cents, led by a write-up at our Roebling
Portfolio property located in Williamsburg, Brooklyn (27
cents). Increases in value of our real estate properties are
based upon third-party appraisals.
Returns
The chart below summarises the cumulative total NAV returns and
total shareholder returns for the most recent three- month,
six-month, twelve-month, three-year and five-year period. The
number of shares at the beginning of each period (except for the
three-month and six-month periods) was 65,018,607, while the number
of shares at the end of each period was 83,907,516, thus negatively
affecting the total NAV return per share and total shareholder
return per share.
|
|
Since |
Since |
Since |
Since |
Since |
|
31.8.2016 |
31.5.2016 |
29.2.2016 |
31.8.2015 |
31.8.2013 |
31.8.2011 |
Share price (in
GBP) |
£4.53 |
£3.90 |
£3.97 |
£4.34 |
£4.75 |
£3.75 |
NAV per share (in
USD) |
$10.40 |
$10.32 |
$10.15 |
$10.67 |
$9.87 |
$9.09 |
Dividends paid (in
USD) |
- |
- |
$0.15 |
$0.31 |
$0.94 |
$1.48 |
Implied dividend
yield |
5.2% |
5.4% |
6.1% |
4.9% |
3.9% |
2.6% |
Total Shareholders'
return3 |
- |
16.2% |
17.3% |
10.0% |
8.5% |
51.3% |
Total NAV return3 |
- |
0.8% |
4.0% |
0.4% |
15.8% |
33.1% |
NAV to market price
discount |
43.0% |
45.0% |
45.5% |
37.4% |
25.6% |
32.9% |
3
Total returns are cumulative and assume that
dividends were reinvested. |
For 31 August dates in
2016, 2015 & 2013, implied dividend yield
calculated as the addition of dividends paid in the June and
November immediately preceding the 31 August date, divided by the
stock price at the 31 August date. For 31 May 2016, implied
dividend yield calculated as the addition of June 2016 and November
2015 dividends paid, divided by the stock price at 31 May 2016. For
29 February 2016, dividend yield calculated as the addition of the
June & November 2015 dividends paid divided by the stock price
at 29 February 2016. For August 2011, dividend yield calculated as
the addition of the July & November 2011 dividends paid divided
by the stock price at 31 August 2011. |
Portfolio Summary
Our portfolio is well diversified by asset type and geography,
with 35 US and European micro-cap investments across nine
industries and four primary real estate “assemblages” (56 total
properties) located in Brooklyn, New
York and South Florida. It
continues to become more diversified geographically across
Western Europe with investments in
Spain, Italy, Germany, Scandinavia and the UK. It’s also
important to note that 46% of our investment portfolio is less than
three years old.
Below is a summary of JZCP’s assets and liabilities at
31 August 2016 as compared to
29 February 2016. An explanation of
the changes in the portfolio follows:
|
31.8.2016
US$'000 |
|
29.2.2016
US$'000 |
US
micro-cap portfolio |
438,188 |
|
386,173 |
European
micro-cap portfolio |
158,159 |
|
168,797 |
Real
estate portfolio |
435,144 |
|
366,158 |
Other
investments |
28,500 |
|
64,320 |
Total
private investments |
1,059,991 |
|
985,448 |
Listed
corporate bonds |
13,373 |
|
13,036 |
UK
treasury gilts |
- |
|
45,608 |
Cash |
53,825 |
|
91,937 |
Total
listed investments and cash |
67,198 |
|
150,581 |
Other
assets |
5,970 |
|
3,551 |
Total
assets |
1,133,159 |
|
1,139,580 |
Zero
Dividend Preference shares |
(55,325) |
|
(101,617) |
Convertible Unsecured Loan Stock |
(57,004) |
|
(59,573) |
Loans
payable |
(107,254) |
|
(97,011) |
Other
payables |
(40,575) |
|
(29,640) |
Total
liabilities |
(260,158) |
|
(287,841) |
|
|
|
|
|
|
|
Net Asset
Value |
|
873,001 |
|
851,739 |
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|
US micro-cap portfolio
The US micro-cap portfolio has performed very well during the
period. As described earlier, the US micro-cap portfolio had a net
increase of 23 cents, due to a
combination of increased earnings and accretive acquisitions.
Our US portfolio is grouped into industry verticals where we are
continuing our strategy of consolidating businesses under industry
executives who can add value via organic growth and cross company
synergies. We made a number of acquisitions in our verticals during
the period.
New US
investments – verticals |
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Vertical |
|
Number of Acquisitions |
|
JZCP Investment ($ millions) |
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Industrial Services
Solutions |
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3 |
|
No cash required from JZCP |
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Healthcare
Revenue Cycle Management |
|
2 |
|
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|
1.4 |
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Testing Services |
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2 |
|
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0.5 |
|
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Other |
|
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- |
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3.9 |
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7 |
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5.8 |
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New US
investments – co-investments |
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Portfolio
Company |
|
New/Follow-on |
|
JZCP Investment ($ millions) |
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George Industries |
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New |
|
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12.6 |
|
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Southern
Petroleum Labs |
Follow-on |
|
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0.4 |
|
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|
Jordan Healthcare
Products |
|
New/Follow-on |
|
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8.7 |
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Tech Industries |
|
Follow-on |
|
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2.5 |
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Peaceable Street
Capital |
|
Follow-on |
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13.8 |
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38.0 |
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European micro-cap portfolio
Recent events
JZCP completes second phase of secondary sale
to major financial institution:
Following the receipt of regulatory approval in August 2016, JZCP closed the sale of its stake in
Newcastle-based UK legal services
firm Winn (held through the EuroMicrocap Fund 2010, L.P. (“EMC
2010”)) to a major financial institution, receiving net sale
proceeds of $20.7 million4 plus
an interest distribution of $1.2
million post-period in September 2016. These total proceeds of
$21.9 million compare against an
initial investment made by JZCP in Winn of $14.8 million in August
2013.
This marks the completion of the two-phase transaction to sell
JZCP’s stake in six European investments held through EMC 2010 to
the same financial institution, which was originally announced in
February 2016.
JZCP agrees to sell its interest in
Fidor to second largest French banking group:
JZCP agreed to sell its interest in Fidor Bank AG (“Fidor”) to
Groupe BPCE, the second largest banking group in France. The closing of the transaction will be
subject to customary regulatory change of control approval from the
European Central Bank and BaFin as well as clearance from the
German competition authority, expected in the fourth quarter of
2016.
JZCP first invested in Fidor in August
2013 through EMC 2010 and has since worked with the senior
management team to grow and develop the business. JZCP invested a
total of $13.8 million and is
expected to receive total gross proceeds of approximately
$25.7 million from the sale.
4 Original gross sale price fixed in euros at €21.1 million,
plus 8% interest from 1 February 2016
to 30 June 2016, minus a distribution
to JZCP in that period of €1.1 million.
Current European portfolio
JZCP invests in the European micro-cap sector through its 75%
ownership of EMC 2010 and EuroMicrocap Fund-C,L.P.(“EMC Fund-C”)
and its 18.8% ownership of JZI Fund III, L.P. (“Fund III”). As you
may recall, JZAI has offices in London and Madrid and an outstanding team with over
fifteen years of experience investing together in European
micro-cap deals.
As of 31 August 2016, EMC 2010
held one investment in Germany
(Fidor) and EMC Fund-C held two investments in Spain (Factor Energia and Oro Direct5).
Fund III held six investments: two in Spain, one each in the UK and Italy, and two in Scandinavia.
5EMC 2010 transferred its interests in Factor Energia and Oro
Direct to EuroMicrocap Fund-C, L.P. (“EMC Fund-C”) as of
1 February 2016 and 1 March
2016, respectively. EMC Fund-C is held by the same limited
partners and in the exact same ownership percentages as EMC
2010.
Real Estate Portfolio
As of 31 August 2016, JZCP had
more than $309 million invested in a
portfolio of retail, office and residential properties in
Brooklyn, New York and
South Florida that is valued at
$435 million as of the same date. We
have made these investments in partnership with RedSky Capital, a
team with significant experience in the sector.
Fiscal year overview:
During the period, JZCP, together with RedSky, acquired five
properties, reflecting RedSky Capital’s ability to originate a
healthy pipeline of attractive investment opportunities in both
New York and South Florida. Since we began investing with
RedSky in April 2012, we have
acquired a total of 59 properties (three post-period in
September 2016), all currently in
various stages of development and re-development.
The real estate portfolio had a net increase of 27 cents, led by a write-up at our Roebling
Portfolio property located in Williamsburg, Brooklyn (27
cents). Increases in value of our real estate properties are
based upon third-party appraisals.
New real
estate investments |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Geography |
|
Number of Acquisitions |
|
JZCP Investment ($ millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Brooklyn,
New York |
|
|
1 |
|
|
|
9.3 |
|
|
|
South
Florida |
|
|
4 |
|
|
|
42.8 |
|
|
|
Other |
|
|
- |
|
|
|
1.2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5 |
|
|
|
53.3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Investments
Our asset management business in the US, Spruceview Capital
Partners, addresses the growing demand from corporate pensions,
endowments, family offices and foundations for fiduciary management
services through an Outsourced Chief Investment Officer model.
Spruceview has a robust pipeline of opportunities and continues to
provide investment oversight to the pension fund of a Canadian
subsidiary of an international confectionary company, as well as a
European private credit fund-of-funds tailored to the clients of an
international multi-family office.
As previously reported, Richard
Sabo, former Chief Investment Officer of Global Pension and
Retirement Plans at JPMorgan and a member of that firm’s executive
committee, is leading a team of 12 senior investment, business
development, legal and operations professionals.
Listed Investments
We have continued our strategy of holding highly-rated listed
corporate bonds as a means of earning an enhanced return on our
cash. Currently, Goldman Sachs is the sole obligor of these bonds,
which mature in January 2017.
Realisations |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Asset |
|
Type |
|
Portfolio |
|
Proceeds ($ millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bright Spruce
Fund |
|
Partial
realisation |
|
Other |
|
|
|
39.7 |
|
|
|
|
Suzo Happ |
|
Distribution |
|
US |
|
|
|
1.3 |
|
|
|
|
K2 Towers |
|
Partial
buy down |
|
US |
|
|
|
1.1 |
|
|
|
|
Dental Services |
|
Escrow
receipt |
|
US |
|
|
|
3.1 |
|
|
|
|
Amptek |
|
Escrow
receipt |
|
US |
|
|
|
1.6 |
|
|
|
|
Galson |
|
Escrow
receipt |
|
US |
|
|
|
0.5 |
|
|
|
|
JZ International |
|
Various |
|
Other |
|
|
|
0.9 |
|
|
|
|
Winn |
|
Sale |
|
European |
|
|
|
20.7 |
|
|
|
|
Roebling |
Refinance |
|
Real
estate |
|
|
|
1.2 |
|
|
|
|
Redbridge Bedford |
|
Refinance |
|
Real
estate |
|
|
|
3.9 |
|
|
|
|
Flatbush |
|
Refinance |
|
Real
estate |
|
|
|
0.8 |
|
|
|
|
Other |
|
|
|
Other |
|
|
|
1.5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
76.3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
In addition, post-period we realised $11.5 million from the sale of Southern Petroleum
Laboratories ($8.4 million), a
provider of petroleum and environmental testing services, and
Metpar ($3.1 million), a manufacturer
of restroom partitions.
Outlook
We anticipate that the positive performance across our three
major asset classes – US micro-cap, European micro-cap and US real
estate – will continue in the second half of JZCP’s fiscal
year.
Our teams in the US and Europe
are working with our respective management partners to grow JZCP’s
portfolio investments in a low interest environment. Of course, we
will be pursuing several realisations, both sales and
refinancings.
Our stock has risen about 25% since the end of our fiscal year
at 29 February 2016. While that is
gratifying, we feel there is a still a long way to go from the
current discount of approximately 40%. In consideration of the
constant validation of our growing NAV, we hope investors will
realise the opportunity JZCP offers for long-term superior returns
with a healthy yield (currently 5%) while you wait.
As always, we thank you for your continued support in our
investment strategy. Please feel free to contact us with any ideas
that might be beneficial to JZCP.
Yours faithfully,
Jordan/Zalaznick Advisers, Inc.
25 October 2016
Investment Portfolio
|
|
Historical
Book |
|
Carrying Value
31 August |
|
Percentage of |
|
cost(1) |
|
2016 |
|
portfolio |
|
US$'000 |
|
US$'000 |
|
% |
|
US Micro-cap portfolio |
|
|
|
|
|
|
US Micro-cap
(Verticals) |
|
|
|
|
|
|
Industrial Services
Solutions(4) |
|
|
|
|
|
|
INDUSTRIAL SERVICES
SOLUTIONS (“ISS”) |
|
|
|
|
|
|
A combination of
twenty five acquired businesses in the industrial |
|
|
|
|
|
|
maintenance, repair
and service industry |
|
|
|
|
|
|
Total Industrial
Services Solutions valuation |
33,256 |
|
84,045 |
|
7.8 |
|
Healthcare Revenue
Cycle Management (4) |
|
|
|
|
|
|
BHS HOSPITAL
SERVICES |
|
|
|
|
|
|
Provider of outsourced
revenue cycle management solutions to hospitals. |
|
|
|
|
|
|
BHS Hospital Services,
Inc., which owns Bolder Outreach Services |
|
|
|
|
|
|
(formerly
known as Monti Eligibility & Denial Solutions),
Receivables |
|
|
|
|
|
|
Outsourcing,
Inc. and Avectus Healthcare Solutions, LLC is a |
|
|
|
|
|
|
subsidiary of Bolder
Healthcare Solutions, LLC |
|
|
|
|
|
|
BHS PHYSICIAN
SERVICES |
|
|
|
|
|
|
Provider of outsourced
revenue cycle management solutions to physician |
|
|
|
|
|
|
groups. BHS
Physician Services, Inc., which owns Bodhi Tree Group |
|
|
|
|
|
|
and PPM Information
Solutions, Inc. is a subsidiary of Bolder Healthcare |
|
|
|
|
|
|
Solutions, LLC |
|
|
|
|
|
|
Total Healthcare
Revenue Cycle Management valuation |
30,327 |
|
55,649 |
|
5.2 |
|
Sensors
Solutions(4) |
|
|
|
|
|
|
NIELSEN-KELLERMAN |
|
|
|
|
|
|
Designer and
manufacturer of weather, wind and timing measurement |
|
|
|
|
|
|
instruments and
devices. Nielsen-Kellerman is a subsidiary of Sensors |
|
|
|
|
|
|
Solutions
Holdings |
|
|
|
|
|
|
Total Sensors
Solutions Vertical valuation |
2,644 |
|
6,514 |
|
0.6 |
|
Testing
Services(4) |
|
|
|
|
|
|
ARGUS GROUP
HOLDINGS |
|
|
|
|
|
|
Sells, rents and
services safety and testing equipment to a variety of |
|
|
|
|
|
|
industries. Argus
Group Holdings is a subsidiary of Testing Services |
|
|
|
|
|
|
Holdings |
|
|
|
|
|
|
Total Testing
Services Vertical valuation |
11,174 |
|
10,273 |
|
1.0 |
|
Logistics
Solutions(4) |
|
|
|
|
|
|
PRIORITY EXPRESS,
LLC |
|
|
|
|
|
|
Provider of same day
express courier services to various companies |
|
|
|
|
|
|
located in
northeastern USA. Priority Express is a subsidary of US |
|
|
|
|
|
|
Logistics, LLC |
|
|
|
|
|
|
Total Logistics
Vertical valuation |
13,200 |
|
8,873 |
|
0.8 |
|
Water
Services(4) |
|
|
|
|
|
|
TWH INFRASTRUCTURE
INDUSTRIES, INC. |
|
|
|
|
|
|
Environmental
infrastructure company that provides technology to facilitate |
|
|
|
|
|
|
repair of underground
pipes and other infrastructure. TWH Infrastructure |
|
|
|
|
|
|
Industries, Inc.,
which owns LMK Enterprises, Perma-Liner Industries |
|
|
|
|
|
|
and APMCS is a
subsidiary of Triwater Holdings |
|
|
|
|
|
|
TWH WATER TREATMENT
INDUSTRIES, INC. |
|
|
|
|
|
|
Provider of water
treatment supplies and services. TWH Water Treatment |
|
|
|
|
|
|
Industries, Inc.,
which owns Nashville Chemical & Equipment and |
|
|
|
|
|
|
Klenzoid
Canada Company/Eldon Water, Inc., is a subsidiary of
Triwater |
|
|
|
|
|
|
Holdings |
|
|
|
|
|
|
TWH FILTRATION
INDUSTRIES, INC. |
|
|
|
|
|
|
Supplier of parts and
filters for point-of-use filtration systems, which owns |
|
|
|
|
|
|
Paragon Water
Systems, is a subsidiary of Triwater Holdings |
|
|
|
|
|
Total
Water Services Vertical valuation |
33,457 |
|
41,571 |
|
3.9 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total US Micro-cap (Verticals) |
124,058 |
|
206,925 |
|
19.3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
US
Micro-cap (Co-investments) |
|
|
|
|
|
GEORGE
INDUSTRIES |
|
|
|
|
|
Manufacturer of highly engineered, complex and high tolerance
products for the aerospace, transportation, military and other
industrial markets |
12,639 |
|
12,639 |
|
1.2 |
IGLOO
PRODUCTS CORP(4) |
|
|
|
|
|
Designer,
manufacturer and marketer of coolers and outdoor products |
6,039 |
|
6,039 |
|
0.6 |
ILLUMINATION INVESTMENTS, LLC(4) |
|
|
|
|
|
Designer
and manufacturer of LED lights and lighting systems |
4,920 |
|
1,930 |
|
0.2 |
JORDAN
HEALTH PRODUCTS, LLC |
|
|
|
|
|
Provider
of new and professionally refurbished healthcare equipment |
26,685 |
|
26,685 |
|
2.5 |
K2 TOWERS,
LLC |
|
|
|
|
|
Acquirer
of wireless communication towers |
20,900 |
|
20,900 |
|
1.9 |
MEDPLAST/UPG HOLDINGS(4) |
|
|
|
|
|
Manufacturer of plastic medical components |
17,983 |
|
28,035 |
|
2.6 |
NEW
VITALITY HOLDINGS, INC.(4) |
|
|
|
|
|
Direct-to-consumer provider of nutritional supplements and personal
care products. |
3,280 |
|
3,653 |
|
0.3 |
PEACEABLE
STREET CAPITAL, LLC |
|
|
|
|
|
Specialty
finance platform focused on commercial real estate |
17,500 |
|
17,500 |
|
1.6 |
VITALYST(4) |
|
|
|
|
|
Provider
of outsourced IT support and training services |
9,020 |
|
7,000 |
|
0.6 |
SALTER
LABS, INC.(4) |
|
|
|
|
|
Developer
and manufacturer of respiratory medical products and |
|
|
|
|
|
equipment
for the homecare, hospital, and sleep disorder markets |
16,762 |
|
18,118 |
|
1.7 |
SOUTHERN
PETROLEUM LABORATORIES(4) |
|
|
|
|
|
Provider of petroleum and environmental testing
services
SUZO HAPP GROUP(4) |
4,334 |
|
8,935 |
|
0.8 |
Designer,
manufacturer and distributor of components for the global |
|
|
|
|
|
gaming,
amusement and industrial markets |
2,572 |
|
11,700 |
|
1.1 |
TECH
INDUSTRIES(4) |
|
|
|
|
|
Manufacturer of high precision machine parts and tools for
aerospace and defense industries |
9,717 |
|
9,717 |
|
0.9 |
TIERPOINT,
LLC(4) |
|
|
|
|
|
Provider
of cloud computing and colocation data center services |
44,313 |
|
46,813 |
|
4.4 |
Total US Micro-cap (Co-investments) |
196,664 |
|
219,664 |
|
20.4 |
US
Micro-cap (Other) |
|
|
|
|
|
INDUSTRIAL
PERFORMANCE SOLUTIONS(4) |
|
|
|
|
|
Acquirer
of companies providing mission critical inspection services for
a |
|
|
|
|
|
variety of
industries |
331 |
|
409 |
|
- |
HEALTHCARE
PRODUCTS HOLDINGS, INC.(3) |
|
|
|
|
|
Designer
and manufacturer of motorised vehicles |
17,636 |
|
- |
|
- |
MODJ,
LLC(4) |
|
|
|
|
|
Acquirer
of speciality retail companies located in the centre of |
|
|
|
|
|
shopping
malls |
208 |
|
267 |
|
- |
NATIONWIDE
STUDIOS, INC. |
|
|
|
|
|
Processer
of digital photos for preschoolers |
20,092 |
|
10,295 |
|
1.0 |
US
SANITATION, LLC(4) |
|
|
|
|
|
|
Acquirer of janitorial
and sanitorial product distributors and related chemical
manufacturers and blenders |
425 |
|
628 |
|
0.1 |
|
Total US
Micro-cap (Other) |
38,692 |
|
11,599 |
|
1.1 |
|
Total US Micro-cap
portfolio |
359,414 |
|
438,188 |
|
40.8 |
|
|
|
|
|
|
|
European Micro-Cap
portfolio |
|
|
|
|
|
EUROMICROCAP FUND
2010,
L.P.
At 31 August 2016, was invested in one company in the European
micro-cap sector: Fidor Bank |
|
19,693 |
|
24,555 |
2.3 |
EUROMICROCAP FUND-C,
L.P.
At 31 August 2016, was invested in two companies in the European
micro-cap sector: Factor Energia and Oro Direct |
|
13,937 |
|
64,341 |
6.0 |
JZI Fund
III,
L.P.
At 31 August 2016, was invested in six companies in the European
micro-cap sector: Petrocorner, Fincontinuo, S.A.C,
Collingwood, My Lender and Alianzas en Acero |
|
21,417 |
|
24,532 |
2.3 |
|
|
|
|
|
|
Direct
investments |
|
|
|
|
|
DOCOUT,
SL
Provider of digitalisation, document processing and storage
services |
|
2,777 |
|
3,010 |
0.3 |
GRUPO
OMBUDS
Provider of personal security and asset protection |
|
17,155 |
|
20,279 |
1.9 |
TORO FINANCE
Provides short term receivables finance to the suppliers of major
Spanish companies |
|
21,619 |
|
18,414 |
1.7 |
XACOM COMUNICACIONES
SL
Supplier of telecom products and technologies |
|
2,055 |
|
3,028 |
0.3 |
|
|
|
|
|
|
|
|
|
|
|
|
Total European
Micro-cap portfolio |
|
98,653 |
|
158,159 |
14.8 |
|
|
|
|
|
|
Real
estate |
|
|
|
|
|
JZCP REALTY
FUND(2)
Facilitates JZCP's investment in US real estate |
|
308,660 |
|
435,144 |
40.5 |
|
|
|
|
|
|
|
|
|
|
|
|
Total Real estate
portfolio |
|
308,660 |
|
435,144 |
40.5 |
|
|
|
|
|
|
Other
investments |
|
|
|
|
|
BSM ENGENHARIA
S.A.
Brazilian-based provider of supply chain logistics, infrastructure
services and equipment rental |
|
6,115 |
|
459 |
- |
METPAR INDUSTRIES,
INC. (5)
Manufacturer of restroom partitions |
|
7,754 |
|
750 |
0.1 |
SPRUCEVIEW CAPITAL,
LLC
Asset management company focusing primarily on managing
endowments and pension funds |
|
18,010 |
|
18,010 |
1.7 |
BRIGHT SPRUCE FUND,
L.P.
Fund investing in marketable equity, fixed income and alternative
asset classes |
|
10,301 |
|
8,531 |
0.8 |
JZ INTERNATIONAL,
LLC(3)
Fund of European LBO investments |
|
- |
|
750 |
0.1 |
|
|
|
|
|
|
|
|
|
|
|
|
Total Other
investments |
|
42,180 |
|
28,500 |
2.7 |
|
|
|
|
|
|
Listed
investments |
|
|
|
|
|
Corporate
bonds |
|
|
|
|
|
Goldman Sachs,
30.1.2017 |
|
16,590 |
|
13,373 |
1.2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Listed
investments |
|
16,590 |
|
13,373 |
1.2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total -
portfolio |
|
825,497 |
|
1,073,364 |
100.0 |
|
|
|
|
|
|
|
|
|
|
|
|
(1) Original book cost incurred by
JZEP/JZCP adjusted for subsequent transactions. The book cost
represents cash outflows and excludes PIK investments.
(2) JZCP owns 100% of the shares and voting
rights of JZCP Realty Fund, Ltd.
(3) Legacy Investments. Legacy investments are
excluded from the calculation of capital and income incentive
fees.
(4) Co-investment with Fund A, a Related
Party (Note 20).
(5) Investment in mezzanine debt is
classified as a Loan and Receivable in the financial
statements.
Unaudited Statement of Comprehensive Income
For the Period from 1 March 2016
to 31 August 2016
|
|
Six month period from 1 March 2016 to 31 August 2016 |
|
Six month period from 1 March 2015 to 31 August 2015 |
|
|
Revenue |
|
Capital |
|
Total |
|
Revenue |
|
Capital |
|
Total |
|
|
return |
|
return |
|
|
|
return |
|
return |
|
|
|
Note |
US$'000 |
|
US$'000 |
|
US$'000 |
|
US$'000 |
|
US$'000 |
|
US$’000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net gains
on investments at fair value through profit or loss |
6 |
- |
|
38,903 |
|
38,903 |
|
- |
|
2,357 |
|
2,357 |
Gains on
financial liabilities at fair value through profit or loss |
|
- |
|
2,569 |
|
2,569 |
|
- |
|
324 |
|
324 |
Net write
back of impairments on loans and receivables |
7 |
- |
|
183 |
|
183 |
|
- |
|
2,651 |
|
2,651 |
Realisations from investments held in escrow accounts |
22 |
- |
|
5,315 |
|
5,315 |
|
- |
|
644 |
|
644 |
Net
foreign currency exchange gains |
|
- |
|
1,944 |
|
1,944 |
|
- |
|
455 |
|
455 |
Investment
income |
8 |
14,343 |
|
- |
|
14,343 |
|
14,510 |
|
- |
|
14,510 |
Bank and
deposit interest |
|
28 |
|
- |
|
28 |
|
114 |
|
- |
|
114 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
14,371 |
|
48,914 |
|
63,285 |
|
14,624 |
|
6,431 |
|
21,055 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Expenses |
|
|
|
|
|
|
|
|
|
|
|
|
Investment
Adviser's base fee |
10 |
(8,724) |
|
- |
|
(8,724) |
|
(7,413) |
|
- |
|
(7,413) |
Investment
Adviser's incentive fee |
10 |
- |
|
(11,197) |
|
(11,197) |
|
- |
|
(3,072) |
|
(3,072) |
Administrative expenses |
|
(1,292) |
|
- |
|
(1,292) |
|
(1,325) |
|
- |
|
(1,325) |
Directors'
remuneration |
|
(200) |
|
- |
|
(200) |
|
(200) |
|
- |
|
(200) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(10,216) |
|
(11,197) |
|
(21,413) |
|
(8,938) |
|
(3,072) |
|
(12,010) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating profit |
|
4,155 |
|
37,717 |
|
41,872 |
|
5,686 |
|
3,359 |
|
9,045 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Finance
costs |
9 |
- |
|
(8,024) |
|
(8,024) |
|
- |
|
(9,127) |
|
(9,127) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit/(loss) before taxation |
|
4,155 |
|
29,693 |
|
33,848 |
|
5,686 |
|
(5,768) |
|
(82) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Withholding taxes |
11 |
- |
|
- |
|
- |
|
(398) |
|
- |
|
(398) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit/(loss) for the period |
|
4,155 |
|
29,693 |
|
33,848 |
|
5,288 |
|
(5,768) |
|
(480) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted
average number of Ordinary shares in issue during period |
21 |
|
|
|
83,907,516 |
|
|
|
|
65,018,607 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
earnings per Ordinary share |
21 |
4.95c |
|
35.39c |
|
40.34c |
|
8.13c |
|
(8.87)c |
|
(0.74)c |
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted
earnings per Ordinary share |
21 |
4.60c |
|
31.88c |
|
36.48c |
|
8.13c |
|
(8.87)c |
|
(0.74)c |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All items in the above statement are derived from continuing
operations.
The profit for the period is attributable to the Ordinary
shareholders of the Company.
The format of the Income Statement follows the recommendations
of the 2014 AIC Statement of Recommended Practice.
The "Total" column of this statement represents the Company's
statement of comprehensive income, prepared in accordance with
IFRS.
There was no comprehensive income other than the profit for the
period.
The accompanying notes form an integral part of the unaudited
condensed interim financial statements.
Statement of Financial Position
As at 31 August 2016
|
|
|
31
August |
|
29
February |
|
|
|
2016 |
|
2016 |
|
Note |
|
US$'000 |
|
US$'000 |
|
|
|
|
|
|
|
|
|
Unaudited |
|
Audited |
|
|
|
|
|
|
Assets |
|
|
|
|
|
Investments at fair
value through profit or loss |
12 |
|
1,072,614 |
|
1,043,342 |
Investments classified
as loans and receivables |
12 |
|
750 |
|
750 |
Cash and cash
equivalents |
|
|
53,825 |
|
91,937 |
Other receivables |
13 |
|
5,970 |
|
3,551 |
|
|
|
|
|
|
|
|
|
|
|
|
Total
assets |
|
|
1,133,159 |
|
1,139,580 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities |
|
|
|
|
|
Convertible Unsecured
Loan Stock |
14 |
|
57,004 |
|
59,573 |
Zero Dividend
Preference (2022) shares |
15 |
|
55,325 |
|
57,400 |
Zero Dividend
Preference (2016) shares |
15 |
|
- |
|
44,217 |
Loans payable |
16 |
|
107,254 |
|
97,011 |
Investment Adviser's
incentive fee |
10 |
|
36,086 |
|
24,889 |
Investment Adviser's
base fee |
10 |
|
2,342 |
|
2,145 |
Other payables |
17 |
|
2,147 |
|
2,606 |
|
|
|
|
|
|
|
|
|
|
|
|
Total
liabilities |
|
|
260,158 |
|
287,841 |
|
|
|
|
|
|
|
|
|
|
|
|
Equity |
|
|
|
|
|
Stated capital |
|
|
265,685 |
|
265,685 |
Distributable
reserve |
|
|
353,528 |
|
353,528 |
Capital reserve |
|
|
186,479 |
|
156,786 |
Revenue reserve |
|
|
67,309 |
|
75,740 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
equity |
|
|
873,001 |
|
851,739 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities
and equity |
|
|
1,133,159 |
|
1,139,580 |
|
|
|
|
|
|
|
|
|
|
|
|
Number of Ordinary
shares in issue at period end |
18 |
|
83,907,516 |
|
83,907,516 |
|
|
|
|
|
|
Net asset value per
Ordinary share |
|
|
$10.40 |
|
$10.15 |
These unaudited condensed interim financial statements were
approved by the Board of Directors and authorised for issue on
25 October 2016. They were signed on
its behalf by:
David Macfarlane |
Chairman |
The accompanying notes form an integral part of the unaudited
condensed interim financial statements.
Unaudited Statement of Changes in Equity
For the Period from 1 March 2016
to 31 August 2016
|
|
|
|
Stated |
|
Distributable |
|
Capital Reserve |
|
Revenue |
|
|
|
|
|
|
Capital |
|
Reserve |
|
Realised |
|
Unrealised |
|
Reserve |
|
Total |
|
|
Note |
|
US$'000 |
|
US$'000 |
|
US$'000 |
|
US$'000 |
|
US$'000 |
|
US$'000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as at 1
March 2016 |
|
|
|
265,685 |
|
353,528 |
|
59,560 |
|
97,226 |
|
75,740 |
|
851,739 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit for the
period |
|
|
|
- |
|
- |
|
19,468 |
|
10,225 |
|
4,155 |
|
33,848 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Prior
period finance costs now realised |
- |
|
- |
|
(45,752) |
|
45,752 |
|
- |
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends paid |
|
24 |
|
- |
|
- |
|
- |
|
- |
|
(12,586) |
|
(12,586) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at 31
August 2016 |
|
|
|
265,685 |
|
353,528 |
|
33,276 |
|
153,203 |
|
67,309 |
|
873,001 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comparative for the period from 1 March 2015 to 31 August 2015 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stated |
|
Distributable |
|
Capital Reserve |
|
Revenue |
|
|
|
|
|
|
Capital |
|
Reserve |
|
Realised |
|
Unrealised |
|
Reserve |
|
Total |
|
|
Note |
|
US$'000 |
|
US$'000 |
|
US$'000 |
|
US$'000 |
|
US$'000 |
|
US$'000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at 1 March
2015 |
|
|
|
149,269 |
|
353,528 |
|
104,657 |
|
10,539 |
|
87,517 |
|
705,510 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss for the
period |
|
|
|
- |
|
- |
|
(388) |
|
(5,380) |
|
5,288 |
|
(480) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends Paid |
|
24 |
|
- |
|
- |
|
- |
|
- |
|
(11,378) |
|
(11,378) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at 31
August 2015 |
|
|
|
149,269 |
|
353,528 |
|
104,269 |
|
5,159 |
|
81,427 |
|
693,652 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The accompanying notes form an integral part of the unaudited
condensed interim financial statements.
Unaudited Statement of Cash Flows
For the Period from 1 March 2016
to 31 August 2016
|
|
|
Six
Month |
|
Six
Month |
|
|
|
Period
Ended |
|
Period
Ended |
|
|
|
31
August 2016 |
|
31
August 2015 |
|
|
|
|
|
|
|
|
Note |
US$'000 |
|
US$'000 |
|
|
|
|
|
|
Operating activities |
|
|
|
|
|
|
|
|
|
|
Net cash
outflow from operating activities |
23 |
(7,011) |
|
(13,420) |
|
|
|
|
|
|
Cash
outflow for purchase of investments |
|
(94,039) |
|
(108,518) |
|
|
|
|
|
|
Cash
outflow for Capital Call by the EuroMicrocap Fund 2010, L.P. |
|
- |
|
(7,275) |
|
|
|
|
|
|
Cash
inflow from repayment and disposal of investments |
|
118,444 |
|
19,511 |
|
|
|
|
|
|
Cash
inflow from the repayment of loans and receivables |
|
226 |
|
2,886 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash
inflow/(outflow) before financing activities |
|
17,620 |
|
(106,816) |
|
|
|
|
|
|
Financing activity |
|
|
|
|
|
|
|
|
|
|
Redemption
of Zero Dividend Preference (2016) shares |
15 |
(47,863) |
|
- |
|
|
|
|
|
|
Proceeds
from loan facilities |
16 |
9,512 |
|
100,283 |
|
|
|
|
|
|
Loan/share
issue costs paid |
16 |
- |
|
(4,033) |
|
|
|
|
|
|
Repayment
of loan facility |
16 |
- |
|
(50,201) |
|
|
|
|
|
|
Finance
costs paid |
|
(5,108) |
|
(3,498) |
|
|
|
|
|
|
Dividends
paid to Shareholders |
24 |
(12,586) |
|
(11,378) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash
(outflow)/inflow from financing activities |
|
(56,045) |
|
31,173 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Decrease
in cash and cash equivalents |
|
(38,425) |
|
(75,643) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of net cash flow to movements in cash and cash
equivalents |
|
|
|
Cash and
Cash Equivalents at 1 March |
|
91,937 |
|
101,323 |
Decrease
in cash and cash equivalents |
|
(38,425) |
|
(75,643) |
Unrealised
foreign exchange movements on cash at bank |
|
313 |
|
161 |
|
|
|
|
|
|
|
|
|
|
|
|
Cash and
cash equivalents at period end |
|
53,825 |
|
25,841 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of cash outflows/inflows from investments and
realisations (above), to numbers presented in the Chairman's
statement and Investment Adviser's report and note 12 (Investment
Reconciliation) to the financial statements. |
|
|
|
|
|
|
|
|
|
Six
Month |
|
|
|
|
|
Period
Ended |
|
|
|
|
|
31
August 2016 |
|
|
|
|
|
US$'000 |
|
|
|
|
|
|
|
|
Cash
outflow for purchase of investments |
|
94,039 |
|
|
Deposits
paid during prior period invested in current period |
|
3,018 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Purchases
in period (note 12) |
|
97,057 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
US$'000 |
|
|
Cash
inflow from repayment and disposal of investments |
|
118,444 |
|
|
Cash
inflow from the repayment of loans and receivables |
|
226 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds
from investments realised (note 12) |
|
118,670 |
|
|
|
|
|
|
|
|
Escrow
receipts |
|
5,315 |
|
|
Less
proceeds received from maturity of UK treasury gilt |
|
(47,694) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
realisations in period |
|
76,291 |
|
|
|
|
|
|
|
|
The accompanying notes form an integral part of the unaudited
condensed interim financial statements.
Notes to the Financial Statements
1. General Information
JZ Capital Partners Limited (the "Company") is a Guernsey
domiciled closed-ended investment company which was incorporated in
Guernsey on 14 April 2008 under the
Companies (Guernsey) Law, 1994. The Company is now subject to the
Companies (Guernsey) Law, 2008. The Company is classed as an
authorised fund under the Protection of Investors (Bailiwick of
Guernsey) Law 1987. The Company's Capital consists of Ordinary
shares, Zero Dividend Preference ("ZDP") shares and Convertible
Unsecured Loan Stock ("CULS"). The Company's shares trade on the
London Stock Exchange's Specialist Segment.
The Company's objective is to create a portfolio of investments
providing a superior overall return comprised of a current yield
and significant capital appreciation.
The Company’s Investment Policy is to target predominantly
private investments, seeking to back management teams to deliver on
attractive investment propositions. In executing its strategy, the
Company takes a long term view. The Company seeks to invest
directly in its target investments, although it may also invest
through other collective investment vehicles. The Company may also
invest in listed investments, whether arising on the listing of its
private investments or directly. The Investment Adviser is able to
invest globally but with a particular focus on opportunities in
the United States and Europe.
The Company is focused on investing in the following areas:
(a) small or micro-cap buyouts in
the form of debt and equity and preferred stock;
(b) real estate or real estate
linked investments
The Investment Adviser takes a dynamic approach to asset
allocation and, though it doesn’t expect to, in the event that the
Company were to invest 100% of gross assets in one area, the
Company will, nevertheless, always seek to maintain a broad spread
of investment risk. Exposures are monitored and managed by the
Investment Adviser under the supervision of the Board.
The Company has no direct employees. For its services the
Investment Adviser receives a management fee and is also entitled
to performance related fees (Note 10). The Company has no ownership
interest in the Investment Adviser. During the period under review
the Company was administered by Northern Trust International Fund
Administration Services (Guernsey) Limited.
The unaudited condensed interim financial statements (the
"interim financial statements") are presented in US$'000 except
where indicated otherwise.
2. Significant Accounting Policies
The accounting policies adopted in the preparation of these
interim financial statements have been consistently applied during
the period, unless otherwise stated.
Statement of Compliance
The interim financial statements of the Company for the period
1 March 2016 to 31 August 2016 have been prepared in accordance
with IAS 34, "Interim Financial Reporting" as adopted in the
European Union, together with applicable legal and regulatory
requirements of the Companies (Guernsey) Law, 2008 and the Listing
Rules of the London Stock Exchange's Specialist Fund Market. The
interim financial statements do not include all the information and
disclosure required in the annual financial statements and should
be read in conjunction with the annual report and audited financial
statements at 29 February 2016.
Basis of Preparation
The interim financial statements have been prepared under the
historical cost basis, modified by the revaluation of certain
financial instruments designated at Fair value through Profit or
Loss upon initial recognition. The accounting policies adopted in
the preparation of these interim financial statements are
consistent with the accounting policies stated in Note 2 of the
annual financial statements for the year ended 29 February 2016. The preparation of condensed
interim financial statements in conformity with IAS 34, "Interim
Financial Reporting" as adopted in the European Union, requires the
Company to make estimates and assumptions that affect the reported
amounts of assets and liabilities at the date of the condensed
interim financial statements and the reported amounts of revenues
and expenses during the reporting period. Actual results could
materially differ from those estimates.
Standards, amendments and
interpretations that are not effective and are not expected to have
a material impact on the financial position or performance of the
Company
IFRS 9 Financial Instruments: Classification and Measurement.
The adoption of the first phase of IFRS 9 (tentatively effective
for periods beginning on after 1 January
2018), awaiting EU endorsement, may have an effect on the
classification and measurement of the Company’s financial assets,
but will potentially have no impact on classification and
measurements of financial liabilities.
There are certain other current standards, amendments and
interpretations that are not relevant to the Company's
operations.
3. Estimates and Judgements
The following are the key judgements and other key sources of
estimation uncertainty at the end of the reporting period, that
have a significant risk of causing a material adjustment to the
carrying amounts of assets and liabilities within the financial
year:
Estimates
Fair Value of Investments at
Fair Value Through Profit or
Loss ("FVTPL")
Certain investments are classified as FVTPL, and valued
accordingly, as disclosed in Note 2 of the annual
financial statements for the year ended 29 February 2016. The key source of estimation
uncertainty is on the valuation of unquoted equities and
equity-related securities.
In reaching its valuation of the unquoted equities and
equity-related securities the key judgements the Board have to make
are those relating to the multiples, discount factors and real
estate valuation factors (Note 5) used in the valuation models.
Loans and Receivables
Certain investments are classified as Loans and Receivables, and
valued accordingly, as disclosed in Note 2 of the annual financial
statements for the year ended 29 February
2016 as stated in Note 2. The key estimation is the
impairment review and the key assumptions are as disclosed in Note
2 of the financial statements for the year ended 29 February 2016.
Judgements
Investment in Associates
The policies applied in accounting for the Company's associates
require significant judgement. Full details are disclosed in Note 3
of the annual financial statements for the year ended 29 February 2016.
Assessment as an Investment
Entity
The Board has concluded that the Company meets the definition of
an investment entity and as such, does not consolidate its
subsidiaries but rather values them at fair value through profit or
loss as described in Note 3 of the annual financial statements for
the year ended 29 February 2016.
Going Concern
A fundamental principle of the preparation of financial
statements in accordance with IFRS is the assumption that an entity
will normally continue in existence as a going concern. The Company
has assessed its future working capital requirements, and is
confident it can meet its future financial obligations for the
twelve months from the signing of the interim financial statements.
The Company has prepared the interim financial statements on the
going concern basis.
4. Segment Information
The Investment Manager is responsible for allocating resources
available to the Company in accordance with the overall business
strategies as set out in the Investment Guidelines of the Company.
The Company is organised into the following segments:
• Portfolio of US micro-cap investments
• Portfolio of European micro-cap investments
• Portfolio of Real estate investments
• Portfolio of Other investments
• Portfolio of Listed equities
The investment objective of each segment is to achieve
consistent medium-term returns from the investments in each segment
while safeguarding capital by investing in a diversified
portfolio.
Investments in corporate bonds and treasury gilts are not
considered part of any individual segment and have therefore been
excluded from this segmental analysis.
Segmental profit/(loss)
For the period from 1 March 2016
to 31 August 2016
|
US
Micro-Cap
US$ '000 |
European Micro-Cap US$ '000 |
Real
Estate US$ '000 |
Other Investments US$ '000 |
Listed
Equities US$ '000 |
Total US$ '000 |
Interest revenue |
11,450 |
2,643 |
199 |
43 |
- |
14,335 |
Total segmental
revenue |
11,450 |
2,643 |
199 |
43 |
- |
14,335 |
Realisations from
investments held in Escrow accounts |
5,315 |
- |
- |
- |
- |
5,315 |
Net gain on
investments at fair value through profit or loss |
2,482 |
8,042 |
22,628 |
3,143 |
- |
36,295 |
Write back of
Impairments on loans and receivables |
- |
- |
- |
183 |
- |
183 |
Investment Adviser's
base fee |
(3,065) |
(1,286) |
(3,081) |
(433) |
- |
(7,865) |
Investment Adviser's
capital incentive fee |
(5,499) |
(176) |
(4,526) |
(483) |
- |
(10,684) |
Total segmental
operating profit |
10,683 |
9,223 |
15,220 |
2,453 |
- |
37,579 |
For the period from 1 March 2015
to 31 August 2015
|
US
Micro-Cap
US$ '000 |
European Micro-Cap US$ '000 |
Real
Estate US$ '000 |
Other Investments US$ '000 |
Listed
Equities US$ '000 |
Total US$ '000 |
Interest revenue |
10,245 |
1,838 |
99 |
593 |
- |
12,775 |
Dividend revenue |
1,325 |
- |
- |
- |
- |
1,325 |
Total segmental
revenue |
11,570 |
1,838 |
99 |
593 |
- |
14,100 |
Realisations from
investments held in Escrow accounts |
644 |
- |
- |
- |
- |
644 |
Net gain/(loss) on
investments at fair value through profit or loss |
8,050 |
(502) |
(1,943) |
(55) |
(2,669) |
2,881 |
Write back of
Impairments on loans and receivables |
- |
- |
- |
2,651 |
- |
2,651 |
Investment Adviser's
base fee |
(2,372) |
(1,839) |
(1,757) |
(96) |
(459) |
(6,523) |
Investment Adviser's
capital incentive fee |
(2,962) |
(2) |
389 |
(1,136) |
534 |
(3,177) |
Total segmental
operating profit/(loss) |
14,930 |
(505) |
(3,212) |
1,957 |
(2,594) |
10,576 |
The capital incentive fee is allocated across segments where a
realised or unrealised gain or loss has occurred. Segments with
realised or unrealised losses are allocated a credit pro rata to
the size of the loss and segments with realised or unrealised gains
are allocated a charge pro rata to the size of the gain.
Certain income and expenditure is not considered part of the
performance of an individual segment. This includes net foreign
exchange gains, interest on cash, finance costs, management fees,
custodian and administration fees, directors’ fees and other
general expenses.
The following table provides a reconciliation between total
segmental operating profit and operating profit.
|
|
|
|
|
|
|
|
|
|
|
|
|
Period ending |
|
Period ending |
|
|
|
|
|
|
|
|
|
|
|
|
|
31.8.2016 |
|
31.8.2015 |
|
|
|
|
|
|
|
|
|
|
|
|
|
US$
'000 |
|
US$
'000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
segmental operating profit |
|
|
|
|
|
37,579 |
|
10,576 |
Net
gain/(loss) on treasury gilts and corporate bonds |
|
|
|
|
|
2,425 |
|
(524) |
Gain on
financial liabilities at fair value through profit or loss |
|
|
|
2,569 |
|
324 |
Net
foreign exchange gains |
|
|
|
|
|
1,944 |
|
455 |
Interest
on treasury notes and corporate bonds |
|
|
|
|
|
8 |
|
410 |
Interest on cash |
|
|
|
|
|
|
|
|
|
|
|
|
28 |
|
114 |
Fees
payable to investment adviser based on non segmental assets |
|
|
|
(1,372) |
|
(785) |
Expenses
not attributable to segments |
|
|
|
(1,492) |
|
(1,525) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating profit |
|
|
|
|
|
|
|
|
|
41,689 |
|
9,045 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The following table provides a reconciliation between total
segmental revenue and Company revenue.
|
|
|
|
|
|
|
|
|
|
|
|
|
31.8.2016 |
|
31.8.2015 |
|
|
|
|
|
|
|
|
|
|
|
|
|
US$
'000 |
|
US$
'000 |
Total
segmental revenue |
|
|
|
|
|
|
|
|
|
4,335 |
|
14,100 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-segmental revenue |
|
|
|
|
|
|
|
|
|
|
|
|
Interest
on treasury gilts and corporate bonds |
|
|
|
|
|
|
|
8 |
|
410 |
Bank and
deposit interest |
|
|
|
|
|
|
|
|
|
|
28 |
|
114 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenue |
|
|
|
|
|
|
|
|
|
|
|
|
14,371 |
|
14,624 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segmental Net Assets
At 31
August 2016 |
|
|
|
|
|
|
|
|
US |
|
European |
|
Real |
|
Other |
|
Listed |
|
|
|
|
|
|
|
|
|
|
Micro-Cap |
|
Micro-Cap |
|
Estate |
|
Investments |
|
Investments |
|
Total |
|
|
|
|
|
|
|
|
US$
'000 |
|
US$ '000 |
|
US$ '000 |
|
US$ '000 |
|
US$ '000 |
|
US$ '000 |
|
Segmental assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
Investments at fair value through profit or loss |
|
438,188 |
|
158,159 |
|
435,144 |
|
27,750 |
|
- |
|
1,059,241 |
|
Investments classified as loans and receivables |
|
- |
|
- |
|
- |
|
750 |
|
- |
|
750 |
|
Other
receivables |
|
- |
|
- |
|
5,920 |
|
- |
|
- |
|
5,920 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
segmental assets |
|
438,188 |
|
158,159 |
|
441,064 |
|
28,500 |
|
- |
|
1,065,911 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segmental liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
Payables
and accrued expenses |
|
(17,351) |
|
1,150 |
|
(26,158) |
|
3,002 |
|
(1,401) |
|
(40,758) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
segmental liabilities |
|
(17,351) |
|
1,150 |
|
(26,158) |
|
3,002 |
|
(1,401) |
|
(40,758) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
segmental net assets |
|
|
|
420,837 |
|
159,309 |
|
414,906 |
|
31,502 |
|
(1,401) |
|
1,025,153 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At 29
February 2016 |
|
|
|
|
|
|
|
|
US |
|
European |
|
Real |
|
Other |
|
Listed |
|
|
|
|
|
|
|
|
|
|
Micro-Cap |
|
Micro-Cap |
|
Estate |
|
Investments |
|
Investments |
|
Total |
|
|
|
|
|
|
|
|
US$
'000 |
|
US$ '000 |
|
US$ '000 |
|
US$ '000 |
|
US$ '000 |
|
US$ '000 |
|
Segmental assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
Investments at fair value through profit or loss |
|
386,173 |
|
168,797 |
|
366,158 |
|
63,570 |
|
- |
|
984,698 |
|
Investments classified as loans and receivables |
|
- |
|
- |
|
- |
|
750 |
|
- |
|
750 |
|
Other
receivables |
|
- |
|
- |
|
3,513 |
|
- |
|
- |
|
3,513 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
segmental assets |
|
386,173 |
|
168,797 |
|
369,671 |
|
64,320 |
|
- |
|
988,961 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segmental liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
Payables
and accrued expenses |
|
(11,714) |
|
1,263 |
|
(21,405) |
|
3,456 |
|
(1,401) |
|
(29,801) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
segmental liabilities |
|
(11,714) |
|
1,263 |
|
(21,405) |
|
3,456 |
|
(1,401) |
|
(29,801) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
segmental net assets |
|
|
|
374,459 |
|
170,060 |
|
348,266 |
|
67,776 |
|
(1,401) |
|
959,160 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other receivables and prepayments are not considered to be part
of individual segment assets. Certain liabilities are not
considered to be part of the net assets of an individual segment.
These include custodian and administration fees payable, directors’
fees payable and other payables and accrued expenses.
The following table provides a reconciliation between total
segmental net assets and total net assets.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
31.8.2016 |
|
29.2.2016 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
US$ '000 |
|
US$ '000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
segmental assets |
|
|
|
|
|
|
|
|
|
1,065,911 |
|
988,961 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non
segmental assets |
|
|
|
|
|
|
|
|
|
|
|
|
Treasury gilts |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- |
|
45,608 |
Corporate bonds |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
13,373 |
|
13,036 |
Cash and
cash equivalents |
|
|
|
|
|
53,825 |
|
91,937 |
Other
receivables and prepayments |
|
|
|
|
|
|
|
50 |
|
38 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
assets |
|
|
|
|
|
|
|
|
|
1,133,159 |
|
1,139,580 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
segmental liabilities |
|
|
|
|
|
|
|
|
|
|
|
(40,758) |
|
(29,801) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non
segmental liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
Zero
Dividend Preference (2022) shares |
|
|
|
|
|
(55,325) |
|
(57,400) |
Zero
Dividend Preference (2016) shares |
|
|
|
|
|
- |
|
(44,217) |
Convertible Unsecured Loan Stock |
|
|
|
|
|
(57,004) |
|
(59,573) |
Loans payable |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(107,254) |
|
(97,011) |
Other
payables and accrued expenses |
|
|
|
|
|
183 |
|
161 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
liabilities |
|
|
|
|
|
|
|
|
|
(260,158) |
|
(287,841) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
net assets |
|
|
|
|
|
|
|
|
|
873,001 |
|
851,739 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The Company classifies fair value measurements of its financial
instruments at Fair Value Through Profit or Loss ("FVTPL") using a
fair value hierarchy that reflects the significance of the inputs
used in making the measurements. The financial assets valued at
FVTPL are analysed in a fair value hierarchy based on the following
levels:
Level 1
Quoted prices (unadjusted) in active markets for identical
assets or liabilities.
Level 2
Those involving inputs other than quoted prices included within
level 1 that are observable for the asset or liability, either
directly (that is, as prices) or indirectly (that is, derived from
prices). For example, investments which are valued based on quotes
from brokers (intermediary market participants) are generally
indicative of Level 2 when the quotes are executable and do not
contain any waiver notices indicating that they are not necessarily
tradeable. Another example would be derivatives such as interest
rate swaps or forward currency contracts where inputs are mostly
observable and therefore may also fall into Level 2. At the period
end, the Company had assessed it held no assets or liabilities
valued at FVTPL that were using inputs that would be classified as
level 2 within the valuation method.
Level 3
Those involving inputs for the asset or liability that are not
based on observable market data (that is, unobservable inputs).
Investments in JZCP's portfolio valued using unobservable inputs
such as multiples, capitalisation rates, discount rates (see note
5) fall within Level 3.
Differentiating between Level 2 and Level 3 fair value
measurements i.e., assessing whether inputs are observable and
whether the unobservable inputs are significant, may require
judgement and a careful analysis of the inputs used to measure fair
value including consideration of factors specific to the asset or
liability.
The following table shows financial instruments recognised at
fair value, analysed between those whose fair value is based
on:
Financial assets at 31 August 2016
|
Level 1
US$ '000 |
Level 2
US$ '000 |
Level 3
US$ '000 |
Total
US$ '000 |
US micro-cap
portfolio |
- |
- |
438,188 |
438,188 |
European micro-cap
portfolio |
- |
- |
158,159 |
158,159 |
Real estate
portfolio |
- |
- |
435,144 |
435,144 |
Other investments |
- |
- |
27,750 |
27,750 |
Listed
investments |
13,373 |
- |
- |
13,373 |
|
13,373 |
- |
1,059,241 |
1,072,614 |
Financial assets at 29 February
2016 |
|
|
|
|
|
Level 1 |
Level 2 |
Level 3 |
Total |
|
US$
'000 |
US$
'000 |
US$
'000 |
US$
'000 |
US micro-cap
portfolio |
- |
- |
386,173 |
386,173 |
European micro-cap
portfolio |
- |
- |
168,797 |
168,797 |
Real estate
portfolio |
- |
- |
366,158 |
366,158 |
Other investments |
- |
- |
63,570 |
63,570 |
Listed
investments |
58,644 |
- |
- |
58,644 |
|
58,644 |
- |
984,698 |
1,043,342 |
Investments classified as loans and receivables and recorded at
amortised cost would fall into Level 3 hierarchy if valued at
FTVPL.
Financial liabilities designated at fair value through profit or
loss at inception |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial liabilities at 31 August 2016 |
|
|
|
Level
1 |
Level
2 |
Level
3 |
Total |
|
|
|
|
|
|
|
|
|
|
US$
'000 |
US$
'000 |
US$
'000 |
US$
'000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Convertible Subordinated
Unsecured Loan Stock |
|
|
|
57,004 |
- |
- |
57,004 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
57,004 |
- |
- |
57,004 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial liabilities at 29 February 2016 |
|
|
|
Level
1 |
Level
2 |
Level
3 |
Total |
|
|
|
|
|
|
|
|
|
|
US$
'000 |
US$
'000 |
US$
'000 |
US$
'000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Convertible Subordinated
Unsecured Loan Stock |
|
|
|
59,573 |
- |
- |
59,573 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
59,573 |
- |
- |
59,573 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Transfers between levels
There were no transfers between the levels of hierarchy of
financial assets and liabilities recognised at fair value through
profit or loss within the period ended 31
August 2016 and the year ended 29
February 2016.
Valuation techniques
In valuing investments in accordance with International
Financial Reporting Standards, the Directors follow a number of
general principles as detailed in the International Private Equity
and Venture Capital Association ("IPEVCA") guidelines.
When fair values of listed equity and debt securities at the
reporting date are based on quoted market prices or binding dealer
price quotations (bid prices for long positions), without any
deduction for transaction costs, the instruments are included
within Level 1 of the hierarchy.
Investments for which there are no active markets are valued
according to one of the following methods:
Real estate
JZCP makes its real estate investments through JZCP Realty Fund
Limited a wholly-owned subsidiary, which in turn owns interests in
various residential, commercial, and development real estate
properties. The net asset value of the subsidiary is used for the
measurement of fair value. The underlying fair value of JZCP’s Real
Estate holdings, however, is represented by the properties
themselves.
The Company's Investment Adviser and Board review the fair value
methods and measurement of the underlying properties on a quarterly
basis. The fair value techniques used in the underlying valuations
are:
- Use of third party appraisals on the subject property, where
available.
- Use of comparable market values per square foot of properties
in recent transactions in the vicinity in which the property is
located, and in similar condition, of the relevant property,
multiplied by the property’s square footage.
- Discounted Cash Flow ("DCF") analysis, using the relevant
rental stream, less expenses, for future periods, discounted at a
Market Capitalization ("MC") rate, or interest rate.
- Relevant rental stream less expenses divided by the market
capitalisation rate; this method approximates the enterprise value
construct used for non-real estate assets.
For each of the above techniques third party debt is deducted to
arrive at fair value.
Due to the inherent uncertainties of real estate valuation, the
values reflected in the financial statements may differ
significantly from the values that would be determined by
negotiation between parties in a sales transaction and those
differences could be material.
Mezzanine loans
Investments are generally valued at amortised cost except where
there is deemed to be impairment in value which indicates that a
provision should be made. Mezzanine loans are classified in the
Statement of Financial Position as loans and receivables and are
accounted for at amortised cost using the effective interest method
less accumulated impairment allowances in accordance with IFRS. If
there is objective evidence that an impairment loss has been
incurred, the amount of the loss is measured as the difference
between the asset’s carrying amount and the net present value of
expected cash flows discounted at the original effective interest
rate.
Unquoted preferred
shares, micro-cap loans,
unquoted equities and
equity related
securities
Unquoted preferred shares, micro-cap loans, unquoted equities
and equity related securities investments are classified in the
Statement of Financial Position as Investments at fair value
through profit or loss. These investments are typically valued by
reference to their enterprise value, which is generally calculated
by applying an appropriate multiple to the last twelve months'
earnings before interest, tax, depreciation and amortisation
("EBITDA"). In determining the multiple, the Directors consider
inter alia, where practical, the multiples used in recent
transactions in comparable unquoted companies, previous valuation
multiples used and where appropriate, multiples of comparable
publicly traded companies. In accordance with IPEVCA guidelines, a
marketability discount is applied which reflects the discount that
in the opinion of the Directors, market participants would apply in
a transaction in the investment in question.
In respect of unquoted preferred shares and micro-cap loans the
Company values these investments by reference to the attributable
enterprise value as the exit strategy in respect to these
investments would be a one tranche disposal together with the
equity component. The fair value of the investment is determined by
reference to the attributable enterprise value (this is generally
calculated by a multiple of EBITDA reduced by senior debt and a
marketability discount) covering the aggregate of the unquoted
equity, unquoted preferred shares and debt instruments invested in
the underlying company. The increase of the fair value of the
aggregate investment is reflected through the unquoted equity
component of the investment and a decrease in the fair value is
reflected across all financial instruments invested in an
underlying company.
Quantitative information of significant
unobservable inputs and sensitivity analysis to significant changes
in unobservable inputs within Level 3 hierarchy
The significant unobservable inputs used in fair value
measurement categorised within Level 3 of the fair value hierarchy
together with a quantitative sensitivity as at 31 August 2016 and 29
February 2016 are shown below:
|
|
|
Value |
|
|
|
|
|
Range (weighted average) |
|
|
|
|
|
|
|
|
|
31.8.2016 |
|
Valuation |
|
Unobservable |
|
|
Sensitivity |
|
Effect on Fair Value |
|
|
|
US$'000 |
|
Technique |
|
input |
|
|
used
1 |
|
US$'000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
US micro-cap
investments |
|
|
438,188 |
|
EBITDA
Multiple |
|
Average
EBITDA Multiple of Peers |
|
6.0x -
18.7x (8.2x) |
|
0.5x /
-0.5x |
|
(37,103) |
|
36,067 |
|
|
|
|
|
|
|
Discount
to Average Multiple |
|
15% - 40%
(26%) |
|
5% /
-5% |
|
(48,273) |
|
50,646 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
European micro-cap
investments |
|
|
158,159 |
|
EBITDA
Multiple |
|
Average
EBITDA Multiple of Peers |
|
6.5x -
9.7x (7.5x) |
|
0.5x /
-0.5x |
|
(5,640) |
|
5,708 |
|
|
|
|
|
|
|
Discount
to Average Multiple |
|
0% - 42%
(22%) |
|
5.0% /
-5.0% |
|
(4,530) |
|
4,598 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Real estate
2 |
|
|
435,144 |
|
Comparable Sales |
|
Market
Value Per Square Foot |
|
$286 -
$2,999 per sq ft |
|
-5%
/+5% |
|
(11,947) |
|
12,187 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
DCF
Model/Income Approach |
|
Discount
Rate |
|
6.2% to
7.5% |
+25bps /-25bps |
(2,016) |
|
2,294 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cap Rate/
Income Approach |
|
Capitalisation Rate |
|
3.5% -
5.5% |
+25bps /-25bps |
(6,230) |
|
8,298 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other investments |
|
|
27,750 |
|
EBITDA
Multiple |
|
Average
EBITDA Multiple of Peers |
|
5.0x |
|
0.5x /
-0.5x |
|
(444) |
|
444 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Discount
to Average Multiple |
|
25% |
|
5% /
-5% |
|
- |
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
NAV |
|
Discount
for Lack of Liquidity |
|
5% |
|
5% /
-5% |
|
(427) |
|
427 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Value |
|
|
|
|
|
Range (weighted average) |
|
|
|
|
|
|
|
|
|
29.2.2016 |
|
Valuation |
|
Unobservable |
|
|
Sensitivity |
|
Effect on Fair Value |
|
|
|
US$'000 |
|
Technique |
|
input |
|
|
used
1 |
|
US$'000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
US micro-cap
investments |
|
|
386,173 |
|
EBITDA
Multiple |
|
Average
EBITDA Multiple of Peers |
|
6.0x -
18.7x (8.1x) |
|
0.5x /
-0.5x |
|
(29,855) |
|
29,254 |
|
|
|
|
|
|
|
Discount
to Average Multiple |
|
15% - 35%
(24%) |
|
5% /
-5% |
|
(38,104) |
|
36,129 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
European micro-cap
investments |
|
|
168,797 |
|
EBITDA
Multiple |
|
Average
EBITDA Multiple of Peers |
|
6.5x -
10.0x (8.2x) |
|
0.5x /
-0.5x |
|
(4,181) |
|
4,181 |
|
|
|
|
|
|
|
Discount
to Average Multiple |
|
0% - 42%
(16%) |
|
5.0%
/
-5.0% |
|
(2,748) |
|
2,748 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Real estate
2 |
|
|
366,158 |
|
Comparable Sales |
|
Market
Value Per Square Foot |
|
$380 -
$575 per sq ft |
|
-5%
/+5% |
|
(5,607) |
|
5,809 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
DCF
Model/Income Approach |
|
Discount
Rate |
|
7% |
+25bps /-25bps |
(1,236) |
|
1,055 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cap Rate/
Income Approach |
|
Capitalisation Rate |
|
3.75% -
5.5% |
+25bps /-25bps |
(11,619) |
|
12,399 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other investments |
|
|
63,570 |
|
EBITDA
Multiple |
|
Average
EBITDA Multiple of Peers |
|
7.5x |
|
0.5x /
-0.5x |
|
(295) |
|
295 |
|
|
|
|
|
|
|
Discount
to Average Multiple |
|
25% |
|
5% /
-5% |
|
- |
|
- |
|
|
|
|
|
Adjusted
NAV |
|
Discount
for Lack of Liquidity |
|
5% |
|
5% /
-5% |
|
(2,418) |
|
2,666 |
1 The sensitivity analysis refers to a percentage amount added
or deducted from the average input and the effect this has on the
fair value.
2 The Fair Value of JZCP's investment in financial interests in
real estate, is measured as JZCP's percentage interest in the value
of the underlying properties. The Directors consider the discount
rate used, applied to the DCF, when valuing the properties as the
most significant unobservable input affecting the measurement of
fair value.
The following table shows a reconciliation of all movements in
the fair value of financial instruments categorised within Level 3
between the beginning and the end of the reporting period.
Period ended 31 August 2016
|
|
|
|
|
|
|
US |
|
European |
|
Real |
|
Other |
|
|
|
|
|
|
|
|
|
Micro-Cap |
|
Micro-Cap |
|
Estate |
|
Investments |
|
Total |
|
|
|
|
|
|
|
US$
'000 |
|
US$
'000 |
|
US$
'000 |
|
US$
'000 |
|
US$
'000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At 1 March 2016 |
|
|
|
|
|
|
386,173 |
|
168,797 |
|
366,158 |
|
63,570 |
|
984,698 |
Purchases |
|
|
|
|
|
|
42,277 |
|
- |
|
53,280 |
|
1,500 |
|
97,057 |
Payment in kind
("PIK") |
|
|
|
|
|
|
1,444 |
|
- |
|
- |
|
- |
|
1,444 |
Proceeds
from investments realised |
|
(2,443) |
|
(20,739) |
|
(6,922) |
|
(40,646) |
|
(70,750) |
Net gains
on investments |
|
2,482 |
|
8,042 |
|
22,628 |
|
3,326 |
|
36,478 |
Movement
in accrued interest |
|
8,255 |
|
2,059 |
|
- |
|
- |
|
10,314 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At 31 August 2016 |
|
|
|
|
|
|
438,188 |
|
158,159 |
|
435,144 |
|
27,750 |
|
1,059,241 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended
29 February 2016 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
US |
|
European |
|
Real |
|
Other |
|
|
|
|
|
|
|
|
|
Micro-Cap |
|
Micro-Cap |
|
Estate |
|
Investments |
|
Total |
|
|
|
|
|
|
|
US$
'000 |
|
US$
'000 |
|
US$
'000 |
|
US$
'000 |
|
US$
'000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At 1 March 2015 |
|
|
|
|
|
|
297,340 |
|
245,884 |
|
216,781 |
|
75,993 |
|
835,998 |
Purchases/calls |
|
|
|
|
|
|
103,125 |
|
59,319 |
|
104,677 |
|
5,593 |
|
272,714 |
Payment in kind
("PIK") |
|
|
|
|
|
|
16,996 |
|
- |
|
- |
|
78 |
|
17,074 |
Proceeds
from investments realised |
|
(41,441) |
|
(137,289) |
|
(8,012) |
|
(13,982) |
|
(200,724) |
Net
gains/(losses) on investments |
|
10,167 |
|
(188) |
|
52,712 |
|
(4,031) |
|
58,660 |
Movement
in accrued interest |
|
(14) |
|
1,071 |
|
- |
|
(81) |
|
976 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At 29 February
2016 |
|
|
|
|
|
|
386,173 |
|
168,797 |
|
366,158 |
|
63,570 |
|
984,698 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net gains/(losses) on Investments at FVTPL are analysed between
gains/(losses) on investments realised in the period and those
still held at the period end.
|
|
|
|
|
Level
1 |
|
Level
3 |
|
Total |
|
Level
1 |
|
Level
3 |
|
Total |
|
|
|
|
|
31.8.2016 |
|
31.8.2016 |
|
31.8.2016 |
|
29.2.2016 |
|
29.2.2016 |
|
29.2.2016 |
|
|
|
|
|
US$ '000 |
|
US$ '000 |
|
US$ '000 |
|
US$ '000 |
|
US$
'000 |
|
US$
'000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investments
realised during the period |
|
|
|
|
|
|
|
|
|
|
|
Net gain/(loss) on
investments realised |
|
2,313 |
|
10,251 |
|
12,564 |
|
(4,694) |
|
(32,002) |
|
(36,696) |
Net (gain)/loss
recognised in prior periods |
(227) |
|
(9,965) |
|
(10,192) |
|
1,331 |
|
30,305 |
|
31,636 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net realised
gain/(loss) in current period |
|
2,086 |
|
286 |
|
2,372 |
|
(3,363) |
|
(1,697) |
|
(5,060) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investments held
at period end |
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss)/gain on
investments |
|
339 |
|
36,192 |
|
36,531 |
|
(209) |
|
60,357 |
|
60,148 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,425 |
|
36,478 |
|
38,903 |
|
(3,572) |
|
58,660 |
|
55,088 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair value of Zero Dividend Preference
("ZDP") shares
The fair value of the ZDP shares is deemed to be their quoted
market price. As at 31 August 2016
the ask price for the ZDP (2022) shares was £4.16 (29 February 2016: £3.85 per share) the total fair
value of the ZDP shares was $64,877,000 (29 February
2016: $63,889,000) which is
$9,552,000 higher (29 February 2016: $6,489,000) higher than the liability recorded in
the Statement of Financial Position.
ZDP shares are recorded at amortised cost and would fall in to
the Level 3 hierarchy if valued at FVTPL.
6. Net Gains on
Investments at Fair Value Through Profit or Loss
|
|
|
|
|
|
|
|
|
|
|
|
|
Period
ended |
|
Period
ended |
|
|
|
|
|
|
|
|
|
|
|
|
|
31.8.2016 |
|
31.8.2015 |
|
|
|
|
|
|
|
|
|
|
|
|
|
US$
'000 |
|
US$
'000 |
Gains
on investments held in investment portfolio at period end |
|
|
|
|
|
|
|
|
Net
movement in unrealised gains in period |
|
|
|
|
|
|
|
26,339 |
|
2,113 |
Unrealised
gains in prior periods now realised |
|
|
|
|
|
|
|
10,192 |
|
72 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
movement in unrealised gains in the period |
|
|
|
|
|
|
|
36,531 |
|
2,185 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
gains on investments realised in period |
|
|
|
|
|
|
|
|
|
|
Proceeds
from investments realised |
|
|
|
|
|
|
|
|
|
118,444 |
|
19,511 |
Cost of
investments realised |
|
|
|
|
|
|
|
|
|
(105,880) |
|
(19,267) |
Unrealised
gains in prior periods now realised |
|
|
|
|
|
|
|
(10,192) |
|
(72) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total net
gains in the period on investments realised in period |
|
|
|
|
|
2,372 |
|
172 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net gains
on investments in the period |
|
|
|
|
|
|
|
|
|
38,903 |
|
2,357 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7. Net Write Back of Impairments on Loans
and
Receivables
|
Period
ended |
Period
ended |
|
|
|
|
|
|
|
|
|
|
|
|
|
31.8.2016 |
31.8.2015 |
|
|
|
|
|
|
|
|
|
|
|
|
|
US$
'000 |
US$
'000 |
Net
unrealised impairments on loans and receivables |
13 |
118 |
Proceeds
from loans repaid |
226 |
2,886 |
Cost of
loans repaid |
(56) |
(353) |
Realised
gains on repayment of investments classified on loans and
receivables |
170 |
2,533 |
Net write
back of impairments on loans and receivables |
183 |
2,651 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8. Investment Income
|
|
|
|
|
|
|
|
|
|
|
|
Period
ended |
|
Period
ended |
|
|
|
|
|
|
|
|
|
|
|
|
31.8.2016 |
|
31.8.2015 |
|
|
|
|
|
|
|
|
|
|
|
|
US$
'000 |
|
US$
'000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income
from investments classified as FVTPL |
|
|
|
|
|
|
14,300 |
|
14,497 |
Income
from investments classified as loans and receivables |
|
|
|
|
43 |
|
13 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
14,343 |
|
14,510 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income for
the period ended 31 August 2016 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred |
|
Loan note Interest |
|
Other |
|
|
|
|
|
|
Dividends |
|
Interest |
|
PIK |
|
Cash |
|
Interest |
|
Total |
|
|
|
|
US$
'000 |
|
US$
'000 |
|
US$
'000 |
|
US$
'000 |
|
US$
'000 |
|
US$
'000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
US micro-cap
portfolio |
|
|
|
- |
|
8,584 |
|
1,043 |
|
1,735 |
|
88 |
|
11,450 |
European micro-cap
portfolio |
|
|
|
- |
|
- |
|
1,889 |
|
754 |
|
- |
|
2,643 |
Real estate |
|
|
|
- |
|
- |
|
- |
|
- |
|
199 |
|
199 |
Other investments |
|
|
|
- |
|
- |
|
43 |
|
- |
|
- |
|
43 |
Treasury
gilts and corporate bonds |
|
- |
|
- |
|
- |
|
- |
|
8 |
|
8 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- |
|
8,584 |
|
2,975 |
|
2,489 |
|
295 |
|
14,343 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income for
the period ended 31 August 2015 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred |
|
Loan note Interest |
|
Other |
|
|
|
|
|
|
Dividends |
|
Interest |
|
PIK |
|
Cash |
|
Interest |
|
Total |
|
|
|
|
US$
'000 |
|
US$
'000 |
|
US$
'000 |
|
US$
'000 |
|
US$
'000 |
|
US$
'000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
US micro-cap
portfolio |
|
|
|
1,325 |
|
6,434 |
|
1,639 |
|
2,172 |
|
- |
|
11,570 |
European micro-cap
portfolio |
|
|
|
- |
|
- |
|
1,838 |
|
- |
|
- |
|
1,838 |
Real estate |
|
|
|
- |
|
- |
|
- |
|
- |
|
99 |
|
99 |
Other investments |
|
|
|
- |
|
- |
|
13 |
|
- |
|
580 |
|
593 |
Treasury
gilts and corporate bonds |
|
- |
|
- |
|
- |
|
- |
|
410 |
|
410 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,325 |
|
6,434 |
|
3,490 |
|
2,172 |
|
1,089 |
|
14,510 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9. Finance Costs
|
|
|
|
|
|
|
Period ended |
|
Period ended |
|
|
|
|
|
|
|
31.8.2016 |
|
31.8.2015 |
|
|
|
|
|
|
|
US$
'000 |
|
US$
'000 |
|
|
|
|
|
|
|
|
|
|
Zero
Dividend Preference shares (Note 15) |
2,625 |
|
4,171 |
CULS
interest paid (Note 14) |
1,676 |
|
1,726 |
Loan - Guggenheim
(Note 16) |
|
|
|
|
|
|
3,673 |
|
1,596 |
Loan -
Guggenheim administration cost |
|
38 |
|
16 |
Loan -
Deutsche Bank (Note 16) |
|
12 |
|
187 |
Loan -
Jefferies Finance, LLC (Note 16) |
|
- |
|
1,431 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,024 |
|
9,127 |
|
|
|
|
|
|
|
|
|
|
10. Fees Payable to the Investment
Adviser
Investment Advisory and Performance fees
The Company entered into the amended and restated investment
advisory and management agreement with Jordan/Zalaznick Advisers,
Inc. (the "Investment Adviser") on 23
December 2010 (the “Advisory Agreement”).
Pursuant to the Advisory Agreement, the Investment Adviser is
entitled to a base management fee and to an incentive fee. The base
management fee is an amount equal to 1.5 per cent per annum of the
average total assets under management of the Company less those
assets identified by the Company as being excluded from the base
management fee, under the terms of the agreement. The base
management fee is payable quarterly in arrears; the agreement
provides that payments in advance on account of the base management
fee will be made.
For the six-month period ended 31 August
2016, total investment advisory and management expenses,
based on the average total assets of the Company, were included in
the Statement of Comprehensive Income of US$8,724,000 (period ended 31 August 2015: US$7,413,000). Of this amount US$2,342,000 (29 February
2016: US$2,145,000) was due
and payable at the period end.
The incentive fee has two parts. The first part is calculated by
reference to the net investment income of the Company ("Income
Incentive fee") and is payable quarterly in arrears provided that
the net investment income for the quarter exceeds 2 per cent of the
average of the net asset value of the Company for that quarter (the
"hurdle") (8 per cent. annualised). The fee is an amount equal to
(a) 100 per cent of that proportion of the net investment income
for the quarter as exceeds the hurdle, up to an amount equal to a
hurdle of 2.5%, and (b) 20 per cent of the net investment income of
the Company above a hurdle of 2.5% in any quarter. Investments
categorised as legacy investments and other assets identified by
the Company as being excluded are excluded from the calculation of
the fee. A true-up calculation is also prepared at the end of each
financial year to determine if further fees are payable to the
Investment Adviser or if any amounts are recoverable from future
income incentive fees.
For the periods ended 31 August
2016 and 31 August 2015 there
was no income incentive fee.
The second part of the incentive fee is calculated by reference
to the net realised capital gains ("Capital Gains Incentive fee")
of the Company and is equal to: (a) 20 per cent. of the realised
capital gains of the Company for each financial year less all
realised capital losses of the Company for the year less (b) the
aggregate of all previous capital gains incentive fees paid by the
Company to the Investment Adviser. The capital gains incentive is
payable in arrears within 90 days of the fiscal year end.
Investments categorised as legacy investments and assets of the
Euro Microcap Fund 2010, L.P., EuroMicrocap Fund-C, L.P. and JZI
Fund III,L.P. are excluded from the calculation of the fee.
For the purpose of calculating incentive fees cumulative
preferred dividends received on the disposal of an investment are
treated as a capital return rather than a receipt of income.
At 31 August 2016 and 29 February 2016, due to accumulative realised
capital losses in the prior year ended 29
February 2016, there was no provision for an incentive fee
based on realised gains. At 31 August
2016, for the purpose of the capital gains incentive fee
("CGIF") calculation JZCP had cumulative net realised capital
losses of $15,046,000 (29
February 2016: $22,667,000), an amount which the Investment
Adviser must cover through realised gains before being able to earn
an incentive fee going forward.
The Company also provides for a CGIF based on unrealised gains,
calculated on the same basis as that of the fee on realised
gains/losses. For the period ended 31 August
2016 a provision of $36,086,000 (29 February
2016: $24,889,000) has been
included.
|
|
Provision At |
|
Provision At |
|
Paid
during |
|
Movement in provision for the period ended |
|
|
31.8.2016 |
|
29.2.2016 |
|
period |
|
31.8.2016 |
|
|
US$
'000 |
|
US$
'000 |
|
US$
'000 |
|
US$
'000 |
CGIF on unrealised
investments |
|
36,086 |
|
24,889 |
|
n/a |
|
11,197 |
CGIF on realised
investments |
|
- |
|
- |
|
- |
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11,197 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision At |
|
Provision At |
|
Paid
during |
|
Movement in provision for the period ended |
|
|
31.8.2015 |
|
28.2.2015 |
|
period |
|
31.8.2015 |
|
|
US$
'000 |
|
US$
'000 |
|
US$
'000 |
|
US$
'000 |
CGIF on unrealised
investments |
|
12,511 |
|
9,439 |
|
n/a |
|
3,072 |
CGIF on realised
investments |
|
13,156 |
|
13,156 |
|
- |
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,072 |
|
|
|
|
|
|
|
|
|
The Advisory Agreement may be terminated by the Company or the
Investment Adviser upon not less than two and one-half years’ (i.e.
913 days’) prior notice (or such lesser period as may be agreed by
the Company and Investment Adviser).
11. Taxation
The company has been granted Guernsey tax exempt status in
accordance with The Income Tax (Exempt Bodies) (Guernsey) Ordinance
1989 (as amended) in exchange for a £1,200 annual fee.
12. Investments
|
Categories of financial instruments |
|
|
|
|
|
|
Listed |
|
Unlisted |
|
Carrying Value |
|
|
|
|
|
|
|
31.8.2016 |
|
31.8.2016 |
|
31.8.2016 |
|
|
|
|
|
|
|
US$
'000 |
|
US$
'000 |
|
US$
'000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair value
through profit or loss (FVTPL) |
|
|
13,373 |
|
1,059,241 |
|
1,072,614 |
|
|
Loans and
receivables |
|
|
|
|
- |
|
750 |
|
750 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
13,373 |
|
1,059,991 |
|
1,073,364 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Listed |
|
Unlisted |
|
Total |
|
|
|
|
|
|
|
31.8.2016 |
|
31.8.2016 |
|
31.8.2016 |
|
|
|
|
|
|
|
US$
'000 |
|
US$
'000 |
|
US$
'000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Book cost at 1 March
2016 |
|
|
|
|
61,971 |
|
832,007 |
|
893,978 |
|
|
Purchases in
period |
|
|
|
|
- |
|
97,057 |
|
97,057 |
|
|
Payment in kind
("PIK") |
|
|
|
|
- |
|
1,444 |
|
1,444 |
|
|
Proceeds
from investments realised |
|
|
|
(47,694) |
|
(70,976) |
|
(118,670) |
|
|
Net realised
gains |
|
|
|
|
2,313 |
|
10,421 |
|
12,734 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Book cost at 31 August
2016 |
|
|
|
|
16,590 |
|
869,953 |
|
886,543 |
|
|
Unrealised
(losses)/gains at 31 August 2016 |
|
|
(3,217) |
|
168,732 |
|
165,515 |
|
|
Accrued
interest at 31 August 2016 |
|
|
- |
|
21,306 |
|
21,306 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Carrying
value at 31 August 2016 |
|
|
13,373 |
|
1,059,991 |
|
1,073,364 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Listed |
|
Unlisted |
|
Carrying Value |
|
|
|
|
|
|
|
29.2.2016 |
|
29.2.2016 |
|
29.2.2016 |
|
|
|
|
|
|
|
US$
'000 |
|
US$
'000 |
|
US$
'000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair value
through profit or loss (FVTPL) |
|
|
58,644 |
|
984,698 |
|
1,043,342 |
|
|
Loans and
receivables |
|
|
|
|
- |
|
750 |
|
750 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
58,644 |
|
985,448 |
|
1,044,092 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Listed |
|
Unlisted |
|
Total |
|
|
|
|
|
|
|
29.2.2016 |
|
29.2.2016 |
|
29.2.2016 |
|
|
|
|
|
|
|
US$
'000 |
|
US$
'000 |
|
US$
'000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Book cost at 1 March
2015 |
|
|
|
|
57,321 |
|
775,225 |
|
832,546 |
|
|
Purchases in year |
|
|
|
|
45,381 |
|
218,630 |
|
264,011 |
|
|
Capital calls during
year |
|
|
|
|
- |
|
54,085 |
|
54,085 |
|
|
Payment in kind
("PIK") |
|
|
|
|
- |
|
17,146 |
|
17,146 |
|
|
Proceeds
from investments realised |
|
|
|
(36,037) |
|
(203,610) |
|
(239,647) |
|
|
Net realised
gains |
|
|
|
|
(4,694) |
|
(29,469) |
|
(34,163) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Book cost at 29
February 2016 |
|
|
|
|
61,971 |
|
832,007 |
|
893,978 |
|
|
Unrealised
(losses)/gains at 29 February 2016 |
|
|
(3,329) |
|
142,492 |
|
139,163 |
|
|
Accrued
interest at 29 February 2016 |
|
|
|
2 |
|
10,949 |
|
10,951 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Carrying
value at 29 February 2016 |
|
|
58,644 |
|
985,448 |
|
1,044,092 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The
above book cost is the cost to JZCP equating to the transfer value
as at 1 July 2008 upon the liquidation of JZEP and adjusted for
subsequent transactions. |
|
|
The
cost of PIK investments is deemed to be interest not received in
cash but settled by the issue of further securities when that
interest has been recognised in the Statement of Comprehensive
Income. |
|
|
|
|
13. |
Other
Receivables |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
31.8.2016 |
|
29.2.2016 |
|
|
|
|
|
|
|
|
|
US$
'000 |
|
US$
'000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deposits
paid on behalf of JZCP Realty Fund |
|
|
|
|
5,425 |
|
3,018 |
|
|
Accrued
interest due from JZCP Realty Fund |
|
|
|
|
495 |
|
495 |
|
|
Other
receivables and prepayments |
|
|
|
|
50 |
|
38 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,970 |
|
3,551 |
|
|
|
|
|
|
|
|
|
|
|
|
|
14. Convertible Subordinated Unsecured Loan
Stock ("CULS")
On 30 July 2014, JZCP issued
£38,861,140 6% CULS raising the dollar equivalent of $65,687,000. Holders of CULS may convert the
whole or part (being an integral multiple of £10 in nominal amount)
of their CULS into Ordinary Shares. Conversion Rights may be
exercised at any time during the period from 30 September 2014 to 10 business days prior to
the Maturity date being the 30 July
2021. The initial conversion price is £6.0373 per Ordinary
Share, which shall be subject to adjustment to deal with certain
events which would otherwise dilute the conversion of the CULS.
These events include consolidation of Ordinary Shares, dividend
payments made by the Company, issues of shares, rights,
share-related securities and other securities by the Company and
other events as detailed in the Prospectus.
During the six-month period ended 31
August 2016: $1,676,000
(31 August 2015: $1,726,000) of interest was paid to holders of
CULS and is shown as a finance cost in the Statement of
Comprehensive Income.
|
|
|
|
|
|
|
31.8.2016 |
|
29.2.2016 |
|
|
|
|
US$
'000 |
|
US$
'000 |
|
|
|
|
|
|
|
|
|
|
Fair Value of CULS at
1 March |
|
|
|
|
|
|
59,573 |
|
67,563 |
Unrealised
movement in fair value of CULS |
|
|
|
|
1,083 |
|
(1,501) |
Unrealised
currency gain to the Company on translation during the
period/year |
|
(3,652) |
|
(6,489) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair Value
of CULS based on offer price |
|
|
|
|
57,004 |
|
59,573 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15. Zero Dividend Preference ("ZDP")
shares
ZDP (2016) shares were issued on 22 June
2009 at a price of 215.80
pence and provided a pre-determined final capital
entitlement of 369.84 pence on
22 June 2016. The shares had a gross
redemption yield of 8%.
On 1 October 2015, the Company
rolled over 11,907,720 existing ZDP (2016) shares in to new ZDP
shares with a 2022 maturity date. The new ZDP (2022) shares have a
gross redemption yield of 4.75% and a total redemption value of
£57,598,000 (approximately $75,400,000 using the period end exchange rate).
The remaining 8,799,421 ZDP (2016) shares were redeemed on
22 June 2016 the total redemption
value being £32,870,000 ($48,342,000)
or 373.54 pence per share. The
redemption value included a 1% premium ($479,000) agreed as part of the terms of the
rollover, the premium is treated as an issue cost of the 2022 ZDPs
and is accounted for accordingly.
ZDP shares are designed to provide a pre-determined final
capital entitlement which ranks behind the Company's creditors but
in priority to the capital entitlements of the Ordinary shares. The
ZDP shares carry no entitlement to income and the whole of their
return will therefore take the form of capital. In certain
circumstances, ZDP shares carry the right to vote at general
meetings of the Company as detailed in the Company's Memorandum of
Articles and Incorporation. Issue costs are deducted from the cost
of the liability and allocated to the Statement of Comprehensive
Income over the life of the ZDP shares.
ZDP (2022) Shares
|
31.8.2016
US$ '000 |
29.2.2016
US$ '000 |
ZDP
shares issued 1 October 2015
Rollover - from ZDP (2016) shares |
- |
63,085 |
Issue costs paid prior
year |
- |
(1,997) |
Amortised cost at 1
March 2016 / 1 October 2015 |
57,400 |
61,088 |
Issue costs
refunded |
26 |
- |
Finance costs
allocated to Statement of Comprehensive Income |
1,445 |
1,296 |
Unrealised currency
gain to the Company on translation |
(3,546) |
(4,984) |
Amortised cost at
period/year end |
55,325 |
57,400 |
Total number of ZDP
shares in issue |
11,907,720 |
11,907,720 |
ZDP (2016)
Shares |
|
|
|
31.8.2016 |
29.2.2016 |
|
US$ '000 |
US$ '000 |
ZDP
shares issued 22 June 2009
Amortised cost at 1 March |
44,217 |
106,813 |
Finance costs
allocated to Statement of Comprehensive Income |
1,180 |
6,459 |
Redeemed 22 June
2016 |
(47,863) |
- |
Realised currency loss
in period on redemption |
2,466 |
- |
Rollover - to ZDP
(2022) shares |
- |
(63,085) |
Unrealised currency
gain to the Company on translation |
- |
(5,970) |
Amortised cost at
period/year end |
- |
44,217 |
Total number of ZDP
shares in issue |
- |
8,799,421 |
16. Loans Payable
|
|
|
|
|
|
|
31.8.2016 |
|
29.2.2016 |
|
|
|
|
|
|
|
US$
'000 |
|
US$
'000 |
Guggenheim Partners
Limited |
|
|
|
|
|
|
97,742 |
|
97,011 |
Deutsche Bank |
|
|
|
|
|
|
9,512 |
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
107,254 |
|
97,011 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Guggenheim Partners Limited
On 12 June 2015, JZCP entered into
a loan agreement with Guggenheim Partners Limited. The agreement
was structured so that part of the proceeds (€18 million) were
received and will be repaid in Euros and the remainder of the
facility was received in US dollars ($80
million).
The loan matures on 12 June 2021
(6 year term) and interest is payable at 5.75% + LIBOR(1). There is
an interest rate floor that stipulates LIBOR will not be lower than
1%.
At 31 August 2016, investments
valued at $606,837,000 were held as
collateral on the loan. A covenant in the loan agreement states the
fair value of the collateral must be 4x the loan value and the cost
of collateral must be at least 57.5% of total assets. The Company
is also required to hold a minimum cash balance of $15 million plus 50% of interest on any new debt.
At 31 August 2016 and 29 February 2016, the Company was in full
compliance with covenant terms.
There is an early repayment charge of 2% of the total loan if
repaid in year 1 and 1% in year 2.
|
31.8.2016
US$ '000 |
29.2.2016
US$ '000 |
Amortised cost (US$
drawdown) - 1 March 2016 |
77,916 |
- |
Amortised cost (Euro
drawdown) - 1 March 2016 |
19,095 |
- |
Proceeds - 12 June
2015 (US$ drawdown) |
- |
80,000 |
Proceeds - 12 June
2015 ( Euro draw down €18 million) |
- |
20,283 |
Issue costs |
- |
(4,033) |
Finance costs charged
to Statement of Comprehensive Income |
3,673 |
5,298 |
Interest paid |
(3,408) |
(3,825) |
Unrealised currency
loss/(gain) on translation of Euro drawdown |
466 |
(712) |
Amortised cost at 31
August |
97,742 |
97,011 |
Amortised cost (US$
drawdown) |
78,121 |
77,916 |
Amortised cost (Euro
drawdown) |
19,621 |
19,095 |
|
97,742 |
97,011 |
(1) LIBOR rates applied are the US dollar
3 month rate ($80 million) and
the Euro 3 month rate (€18
million).
Deutsche Bank
At 31 August 2016, JZCP had a loan
facility with Deutsche Bank allowing the Company to draw down a
total of $13.4 million. As at
31 August 2016, the loan outstanding
was $9.5 million (29 February 2016: $nil) and approximately
$3.9 million was available to draw
down. The loan is secured by the Company's investment in corporate
bonds, the total value of assets held as collateral at 31 August 2016 was $13.4
million. The interest rate is charged at US 30 day LIBOR +
75 basis points. The repayment terms of the loan facility are
dependant on the investments held as security.
Jefferies Finance, LLC
On 16 June 2014, JZCP entered in
to a $50.0 million loan agreement
with Jefferies Finance, LLC. Proceeds of $49.0 million were received after deduction of a
2% original issue discount. Loan interest was payable at 7%, after
allowing for transaction costs and the initial discount the
effective interest rate applied was 9.8%. The loan was repaid on
12 June 2015.
|
|
|
|
|
|
|
31.8.2016 |
|
29.2.2016 |
|
|
|
|
|
|
|
US$
'000 |
|
US$
'000 |
|
|
|
|
|
|
|
|
|
|
Amortised
cost at 1 March |
|
- |
|
50,154 |
Issue costs |
|
|
|
|
|
|
- |
|
- |
Finance
costs charged to Statement of Comprehensive Income |
|
|
|
- |
|
1,431 |
Interest paid |
|
|
|
|
|
|
- |
|
(1,585) |
Repaid - 12 June
2015 |
|
|
|
|
|
|
- |
|
(50,000) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- |
|
- |
|
|
|
|
|
|
|
|
|
|
The carrying value of the loans approximates to fair value and
would be designated as Level 3 in the fair value hierarchy.
17. Other Payables
|
|
|
|
|
|
|
31.8.2016 |
|
29.2.2016 |
|
|
|
|
|
|
|
US$
'000 |
|
US$
'000 |
|
|
|
|
|
|
|
|
|
|
Provision
for tax on dividends received not withheld at source |
|
|
|
1,401 |
|
1,401 |
Other expenses |
|
|
|
|
|
|
426 |
|
389 |
Legal fees |
|
|
|
|
|
|
250 |
|
250 |
Directors'
remuneration |
|
|
|
|
|
|
70 |
|
80 |
ZDP issue costs |
|
|
|
|
|
|
- |
|
486 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,147 |
|
2,606 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
18. Ordinary shares – Issued
Capital
|
|
|
|
|
|
|
31.8.2016 |
|
29.2.2016 |
|
|
|
|
|
|
|
Number of shares |
|
Number of shares |
|
|
|
|
|
|
|
|
|
|
Total Ordinary
shares in issue |
|
|
|
|
|
|
83,907,516 |
|
83,907,516 |
|
|
|
|
|
|
|
|
|
|
The Company’s shares trade on the London Stock Exchange’s
Specialist Fund Segment.
19. Commitments
At 31 August 2016 and 29 February 2016 JZCP had the following financial
commitments outstanding in relation to fund investments:
|
31.8.2016 |
29.2.2016 |
|
US$
'000 |
US$
'000 |
JZI Fund III GP,
L.P. |
60,446 |
60,446 |
Peaceable Street
Capital, LLC |
7,500 |
21,250 |
Spruceview Capital
Partners, LLC |
11,836 |
13,336 |
Tech Industries |
10,283 |
12,745 |
Suzo Happ Group |
4,491 |
4,491 |
BSM Engenharia
S.A. |
2,085 |
2,085 |
Igloo Products
Corp |
771 |
772 |
|
97,412 |
115,125 |
20. Related Party Transactions
JZCP invests in European micro-cap companies via the
EuroMicrocap Fund 2010, L.P. ("EMC 2010"), EuroMicrocap Fund-C,
L.P. ("EMCC") and JZI Fund III, L.P. (“Fund III”). EMC 2010, EMC-C
and Fund III are managed by an affiliate of JZAI, JZCP's investment
manager. JZAI was founded by David
Zalaznick and John ("Jay") Jordan. At 31 August 2016, JZCP's investments in EMC 2010
were valued at $24,555,000
(29 February 2016: $46,918,000), EMCC at $64,341,000 (29 February
2016: $57,907,000) and Fund
III at $24,532,000 (29 February 2016: $22,159,000).
During March 2016 the investment
in Oro Direct was transferred from EMC 2010 to EMC-C; the
investment was transferred at fair value being $2,780,000 or €2,559,000.
JZCP invests in Spruceview Capital Partners, LLC on a 50:50
basis with Jay Jordan and
David Zalaznick (or their respective
affiliates). The total amount committed by JZCP to this investment
at 31 August 2016 was $30,000,000 with $11,836,000 of commitments outstanding.
JZCP has co-invested with Fund A, Fund A Parallel I, II and III
Limited Partnerships in a number of US micro-cap buyouts. These
Limited Partnerships are managed by JZAI. JZCP invested in a ratio
of 82%/18% with the Fund A entities. At 31
August 2016, the total value of JZCP's investment in these
co-investments was $350,169,000
(29 February 2016: $324,848,000). Fund A, Fund A Parallel I, II and
III Limited Partnerships are no longer making platform investments
alongside JZCP.
JZAI a US based company, provides advisory services to the Board
of Directors of the Company in exchange for management fees, paid
quarterly. Fees paid by the Company to the Investment Adviser are
detailed in Note 10.
JZCP is able to invest up to $75
million in "New JI Platform Companies". The platform
companies are being established to invest primarily in buyouts and
build-ups of companies and in growth company platforms in the US
micro-cap market, primarily healthcare equipment companies. At
31 August 2016, JZCP had invested
$26.7 million (29 February 2016: $18.0
million) in Jordan Health
Products, LLC. JZCP co-invests 50/50 in the platform companies with
other investors (“JI members”). David
Zalaznick and Jay Jordan own
approximately 50 per cent of the JI members ownership
interests.
During the period JZCP transferred part of its investment in K2
Towers, to Jay Jordan. The
investment was transferred at fair value being $1,000,000, which equates to the cost to JZCP.
Interest was paid to JZCP at a rate of 8% on cost over the period
the investment was held.
21. Basic and Diluted Earnings
per share
Basic earnings per share are calculated by dividing the earnings
for the period by the weighted average number of Ordinary shares
outstanding during the period.
For the period ended 31 August
2016 the weighted average number of Ordinary shares
outstanding during the period was 83,907,516 (31 August 2015: 65,018,607).
The weighted average of Ordinary shares is based on the average
number of Ordinary shares in issue during the period. On
30 September 2015 a placing and open
offer of Ordinary shares resulted in 18,888,909 Ordinary shares
being issued at the price of £4.1919.
The diluted earnings per share are calculated by considering
adjustments required to the earnings and weighted average number of
shares for the effects of potential dilutive Ordinary shares. The
weighted average of the number of Ordinary shares is adjusted
assuming the conversion of the CULS (“If-converted method”).
Conversion is assumed even though at 31 August 2016 and
31 August 2015 the exercise price of
the CULS is higher than the market price of the Company’s Ordinary
shares and are therefore deemed ‘out of the money’. Earnings are
adjusted to remove the fair value gain on CULS $2,569,000 (31 August 2015:
$324,000) and finance costs
attributable to CULS $1,676,000
(31 August 2015: $1,726,000). At 31 August 2015 the effect of
the issue of the potential conversion of the CULS to Ordinary
shares were anti-dilutive to the earnings per share and therefore
the comparative diluted earnings per share equates to the
comparative basic earnings per share.
22. Contingent Assets
a) Amounts held in escrow
accounts
Investments have been disposed by the Company, of which the
consideration received included contractual terms requiring that a
percentage was held in an escrow account pending resolution of any
indemnifiable claims that may arise. At 31
August 2016 and 29 February
2016 the Company has assessed that the likelihood of the
recovery of these escrow accounts cannot be determined and has
therefore recognised the escrow accounts as a contingent asset.
As at 31 August 2016 and
29 February 2016, the Company had the
following contingent assets held in escrow accounts which had not
been recognised as assets of the Company:
Amount in Escrow
|
31.8.2016
US$'000 |
29.2.2016
US$'000 |
Dental Holdings
Corporation |
- |
2,776 |
Amptek, Inc. |
- |
1,129 |
Galson
Laboratories |
- |
475 |
ETX Holdings,
Inc. |
- |
118 |
Petco Animal Supplies,
Inc. |
- |
39 |
H&S (BG
Holdings) |
- |
10 |
|
- |
4,547 |
During the period ended 31 August
2016 $5,315,000 (31 August 2015: $644,000) was realised relating to the escrow
accounts of the Company. Of the amount realised during the period,
$768,000 had not been recognised in
the Company's escrow accounts at 29 February
2016.
23. Notes to the Unaudited
Statement of Cash Flows
Reconciliation of the profit/(loss) for the period to net cash
from operating activities:
|
|
|
|
|
|
|
Period
ended |
|
Period
ended |
|
|
|
|
|
|
|
31.8.2016 |
|
31.8.2015 |
|
|
|
|
|
|
|
US$
'000 |
|
US$
'000 |
|
|
|
|
|
|
|
|
|
|
Profit/(loss) for the
period |
|
|
|
|
|
|
33,848 |
|
(480) |
Increase in other
receivables |
|
|
|
|
|
|
(12) |
|
(22) |
(Decrease)/increase in
other payables |
|
|
|
|
|
|
(459) |
|
552 |
Increase in amount
owed to Investment Adviser |
|
|
|
|
|
|
11,394 |
|
3,373 |
Payment for Real
Estate deposits |
|
|
|
|
|
|
(5,425) |
|
(11,130) |
Net
unrealized gains on investments |
|
|
|
|
|
(26,352) |
|
(2,231) |
Gains on
financial liabilities at fair value through profit or loss |
|
(2,569) |
|
(324) |
Unrealised
currency gain on ZDP shares |
|
(3,546) |
|
(511) |
Adjustment
for other net unrealised foreign currency exchange loss/(gain) |
|
153 |
|
(271) |
Increase
in accrued interest on investments and adjustment for interest
received as PIK |
|
(11,799) |
|
(8,726) |
Realised gain on
investments |
|
|
|
|
|
|
(12,734) |
|
(2,777) |
Realised
currency loss on redemption of ZDP shares (reclassified as
financing activity) |
|
2,466 |
|
- |
Finance
costs (reclassified as financing activity) |
|
8,024 |
|
9,127 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash outflow from
operating activities |
|
|
|
|
|
|
(7,011) |
|
(13,420) |
|
|
|
|
|
|
|
|
|
|
24. Dividends Paid and Proposed
In accordance with the dividend policy, the Company will
distribute approximately 3% of the Company's net assets in the form
of dividends paid in US dollars (Shareholders can elect to receive
dividends in Sterling), in semi-annual instalments.
An interim dividend of 15.5 cents
per Ordinary share (total $13,006,000) was declared by the board on
25 October 2016.
For the year ended 29 February
2016, an interim dividend of 16
cents per Ordinary share (total $10,403,000) was paid on 27 November 2015 and a second interim dividend
dividend of 15 cents per Ordinary
share (total $12,586,000) was paid on
10 June 2016.
For the year ended 28 February
2015, a second interim dividend of 17.5 cents per Ordinary share (total $11,378,000) was paid on 12 June 2015.
25. US GAAP reconciliation
The Company's financial statements are prepared in accordance
with IFRS, which in certain respects differ from the accounting
principles generally accepted in the
United States ("US GAAP"). It is the opinion of the
Directors that these differences are not material and therefore no
reconciliation between IFRS, as adopted by the EU, and US GAAP has
been presented.
26. Subsequent Events
During September JZCP realised $8.4
million from the sale of Southern Petroleum Laboratories a
US micro-cap co-investment and $3.1
million from the refinancing of its Mezzanine investment in
Metpar.
These financial statements were approved by the Board on
25 October 2016. Events subsequent to
the balance sheet have been evaluated until this date.
Board of Directors
David
Macfarlane (Chairman)1
Mr Macfarlane was appointed to the Board of JZCP in April 2008 as Chairman and a non-executive
Director. Until 2002 he was a Senior Corporate Partner at Ashurst.
He was a non-executive director of the Platinum Investment Trust
Plc from 2002 until January 2007. He
is also chairman of Rex Bionics plc.
Patrick Firth2
Mr Firth was appointed to the Board of JZCP in April 2008. He is also a director of a number of
offshore funds and management companies, including DW Catalyst Fund
(formerly "BH Credit Catalysts Limited"), ICG-Longbow Senior
Secured UK Property Debt Investments Limited, Riverstone Energy
Limited and Next Energy Solar Fund Limited. He is Chairman of GLI
Finance Limited. He is a member of the Institute of Chartered
Accountants in England and
Wales and The Chartered Institute
for Securities and Investment. He is a resident of Guernsey.
James
Jordan
Mr Jordan is a private investor who was appointed to the Board
of JZCP in 2008. He is a director of the First Eagle family of
mutual funds, and of Alpha Andromeda Investment Trust Company,
S.A.. Until 30 June 2005, he was the
managing director of Arnhold and S. Bleichroeder Advisers, LLC, a
privately owned investment bank and asset management firm; and
until 25 July 2013, he was a
non-executive director of Leucadia National Corporation. He is a
Trustee and Vice Chairman of the World Monuments Fund, and serves
on the Chairman's Council of Conservation International.
Tanja
Tibaldi
Ms Tibaldi was appointed to the Board of JZCP in April 2008. She was on the board of JZ Equity
Partners Plc from January 2005 until
the company's liquidation on 1 July
2008. She was managing director at Fairway Investment
Partners, a Swiss asset management company where she was
responsible for the Group's marketing and co-managed two fund
of funds. Previously she was an executive at the Swiss
Stock Exchange and currently serves on the board of several private
companies.
Christopher
Waldron
Mr Waldron was appointed to the Board of JZCP in October 2013. He is a director of a number of
Guernsey funds and investment companies including GBD Limited,
Multi Manager Investment Programmes PCC Limited, DW Catalyst Fund
(formerly "BH Credit Catalysts Limited") and Ranger Direct Lending
Fund plc. An experienced investment manager, he was Chief Executive
Officer of the Edmond de Rothschild companies in Guernsey until
January 2013 and he remains a
consultant to the Edmond de Rothschild Group. He is a Fellow of the
Chartered Institute for Securities and Investment and a Guernsey
resident.
1Chairman of the nominations committee of which all
Directors are members.
2Chairman of the audit committee of which all Directors
are members.
Directors' Responsibilities
Statement of Directors'
Responsibilities
The Directors are responsible for preparing Condensed Interim
Financial Statements which give a true and fair view of the state
of affairs of the Company for that period and which are in
accordance with applicable laws and interim financial reporting
standards. In preparing those Condensed Interim Financial
Statements the Directors are required to:
? select
suitable accounting policies and apply them consistently;
? present
information including accounting policies, in a manner that
provides relevant, reliable, comparable and understandable
information;
? make
judgements and estimates that are reasonable and prudent;
? prepare
the Financial Statements on the going concern basis, unless it is
inappropriate to presume that the Company will continue in
business; and
? provide
additional disclosures when compliance with the specific
requirements of IFRS is insufficient to enable users to understand
the impact of particular transactions, other events and conditions
on the Company's financial position and financial performance.
The Directors confirm that they have complied with these
requirements in preparing the Interim Financial Statements.
The Condensed Interim Consolidated Financial Statements have
been prepared in accordance with IAS 34,"Interim Financial
Reporting" as adopted by the European Union.
Each of the Directors confirms to the best of each person's
knowledge and belief that:
? this set
of Condensed Interim Financial Statements has been prepared in
accordance with IAS 34, "Interim Financial Reporting" as adopted by
the European Union;
? the
Condensed Interim Report and Financial Statements includes
information detailed in the Chairman's Statement and Investment
Adviser's Report and Notes to the Condensed Interim Financial
Statements which provides a fair review of the information required
by:
(i) DTR 4.2.7R of the Disclosure and Transparency Rules,
being an indication of important events that have occurred for the
period from 1 March 2016 to
31 August 2016 and their impact on
the condensed set of interim consolidated financial statements; and
a description of the principal risks and uncertainties for the
remaining six months of the year: and
(ii) DTR 4.2.8R of the Disclosure and Transparency Rules,
being related party transactions that have taken place in the
period from 1 March 2016 to
31 August 2016 and that have
materially affected the financial position or performance of the
Company during that period.
Going concern and principal risks and
uncertainties
As an investment fund, the Company's principal risks are those
that are associated with its investment portfolio. Given the nature
of the portfolio, the principal risks are associated with the
financial and operating performance of the underlying investments,
along with market risk associated with related publicly-listed
equities.
The Directors do not consider that the principal risks and
uncertainties have changed since the publication of the annual
report and accounts for the year ended 29
February 2016 (as explained on page 29 of the annual
report). The Directors continue to monitor the risks to the
Company. These risks include the Company's exposure to Euro and
Sterling currencies and the impact of austerity measures being
adopted in countries within which the Company invests.
The Directors consider the Company has adequate financial
resources, in view of its holding in cash and cash equivalents and
liquid investments, and the income streams deriving from its
investments and believe that the Company is well placed to manage
its business risks successfully to continue in operational
existence for the foreseeable future and that it is appropriate to
prepare the financial statements on the going concern basis.
Approved by the Board of Directors and agreed on behalf of the
Board on 25 October 2016.
David Macfarlane
Chairman
Patrick Firth
Director
Independent Review Report to JZ Capital Partners Limited
Introduction
We have been engaged by JZ Capital Partners Limited (the
“Company”) to review the Unaudited Condensed Interim Financial
Statements in the half-yearly Financial Report for the six months
ended 31 August 2016 which comprise
the Statement of Comprehensive Income, the Statement of Financial
Position, the Statement of Changes in Equity, the Statement of Cash
Flows and the related Notes 1 to 26. We have read the other
information contained in the half-yearly Financial Report and
considered whether it contains any apparent misstatements or
material inconsistencies with the information in the Interim
Financial Statements.
This report is made solely to the Company in accordance with
guidance contained in ISRE 2410 (UK and Ireland) "Review of Interim Financial
Information Performed by the Independent Auditor of the Entity"
issued by the Auditing Practices Board. To the fullest extent
permitted by law, we do not accept or assume responsibility to
anyone other than the Company, for our work, for this report, or
for the conclusions we have formed.
Directors' Responsibilities
The half-yearly Financial Report is the responsibility of, and
has been approved by, the Directors. The Directors are
responsible for preparing the half-yearly Financial Report in
accordance with the Disclosure and Transparency Rules of the
United Kingdom's Financial Conduct
Authority.
As disclosed in Note 2, the Annual Financial Statements of the
Company are prepared in accordance with International Financial
Reporting Standards as adopted by the European Union. The Unaudited
Condensed Financial Statements included in this half-yearly
Financial Report have been prepared in accordance with
International Accounting Standard 34, "Interim Financial
Reporting", as adopted by the European Union.
Our Responsibility
Our responsibility is to express to the Company a conclusion on
the Unaudited Condensed Interim Financial Statements in the
half-yearly Financial Report based on our review.
Scope of Review
We conducted our review in accordance with International
Standard on Review Engagements (UK and Ireland) 2410, "Review of Interim Financial
Information Performed by the Independent Auditor of
the Entity" issued by the Auditing Practices Board for use in
the United Kingdom. A review of
Interim Financial Information consists of making enquiries,
primarily of persons responsible for financial and accounting
matters, and applying analytical and other review procedures. A
review is substantially less in scope than an audit conducted in
accordance with International Standards on Auditing (UK and
Ireland) and consequently does not
enable us to obtain assurance that we would become aware of all
significant matters that might be identified in an audit.
Accordingly, we do not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that
causes us to believe that the Unaudited Condensed Interim
Financial Statements in the half-yearly Financial Report for the
six months ended 31 August 2016 are
not prepared, in all material respects, in accordance with
International Accounting Standard 34 as adopted by the European
Union and the Disclosure and Transparency Rules of the United
Kingdom's Financial Conduct Authority.
Ernst & Young LLP
Guernsey
Channel Islands
25 October 2016
Notes
1. The
Condensed Interim Report and Financial Statements are published on
websites maintained by the Investment Adviser
2 The
maintenance and integrity of these websites are the responsibility
of the Investment Adviser; the work carried out by the Auditors
does not involve consideration of these matters and, accordingly,
the Auditor accepts no responsibility for any changes that may have
occurred to the Financial Statements since they were initially
presented on the website.
3
Legislation in Guernsey governing the preparation and dissemination
of Financial Statements may differ from legislation in other
jurisdictions.
Company Advisers
Investment
Adviser |
|
US Bankers |
The
Investment Adviser to JZ Capital Partners Limited
(“JZCP”) is Jordan/Zalaznick Advisers, Inc., (“JZAI”)
a company beneficially owned by John (Jay) W Jordan II and David W
Zalaznick. The company was formed for the purpose of advising the
Board of JZCP on investments in leveraged securities, primarily
related to private equity transactions. JZAI has offices in New
York and Chicago. |
|
HSBC Bank USA NA |
|
452 Fifth Avenue |
|
New York NY 10018 |
|
|
|
(Also provides
custodian services to JZ Capital Partners |
|
Limited under the
terms of a Custody Agreement). |
|
|
|
|
|
|
|
Guernsey
Bankers |
|
|
Northern Trust
(Guernsey) Limited |
Jordan/Zalaznick
Advisers, Inc. |
|
PO Box 71 |
9 West, 57th
Street |
|
Trafalgar Court |
New York NY 10019 |
|
Les Banques |
|
|
St Peter Port |
Registered
Office |
|
Guernsey GY1 3DA |
PO Box 255 |
|
|
Trafalgar Court |
|
Independent
Auditor |
Les Banques |
|
Ernst & Young
LLP |
St Peter Port |
|
PO Box 9 |
Guernsey GY1 3QL |
|
Royal Chambers |
|
|
St Julian's
Avenue |
JZ Capital Partners
Limited is registered in Guernsey |
|
St Peter Port |
Number 48761 |
|
Guernsey GY1 4AF |
|
|
|
Administrator,
Registrar and Secretary |
|
UK
Solicitors |
Northern Trust
International Fund Administration Services |
|
Ashurst LLP |
(Guernsey)
Limited |
|
Broadwalk House |
PO Box 255 |
|
5 Appold Street |
Trafalgar Court |
|
London EC2A 2HA |
Les Banques |
|
|
St Peter Port |
|
US Lawyers |
Guernsey GY1 3QL |
|
Monge Law Firm,
PLLC |
|
|
333 West Trade
Street |
|
|
Charlotte, NC
28202 |
UK Transfer and
Paying Agent |
|
|
Equiniti Limited |
|
Mayer Brown LLP |
Aspect House |
|
214 North Tryon
Street |
Spencer Road |
|
Suite 3800 |
Lancing |
|
Charlotte NC
28202 |
West Sussex BN99
6DA |
|
|
|
|
Winston & Strawn
LLP |
|
|
35 West Wacker
Drive |
|
|
Chicago IL
60601-9703 |
|
|
|
|
|
Guernsey
Lawyers |
|
|
Mourant Ozannes |
|
|
P.O Box 186 |
|
|
1 Le Marchant
Street |
|
|
St Peter Port |
|
|
Guernsey GY1 4HP |
|
|
|
|
|
Financial Adviser
and Broker |
|
|
JP Morgan Cazenove
Limited |
|
|
20 Moorgate |
|
|
London EC2R 6DA |
Useful Information for Shareholders
Listing
JZCP Ordinary, Zero Dividend Preference ("ZDP") shares and
Convertible Loan Stock ("CULS") are listed on the Official List of
the Financial Services Authority of the UK, and are admitted to
trading on the London Stock Exchange Specialist Fund Segment for
listed securities. The ticker symbols are "JZCP", "JZCZ" and "JZCC"
respectively.
The prices of the Ordinary shares and ZDP shares are shown in
the Financial Times under "Investment Companies - Ordinary Income
Shares" and "Investment Companies - Zero Dividend Preference
shares" as "JZ Capital" respectively.
ISIN/SEDOL numbers
|
Ticker Symbol |
ISIN Code |
Sedol Number |
Ordinary shares |
JZCP |
GG00B403HK58 |
B403HK5 |
ZDP (2022) shares |
JZCZ |
GG00BZ0RY036 |
Z0RY03 |
ZDP (2016) shares (now
redeemed) |
JZCN |
GG00B40B7X85 |
B40D7X8 |
CULS |
JZCC |
GG00BP46PR08 |
BP46PR0 |
Alternative Performance Measures
In accordance with ESMA Guidelines on Alternative Performance
Measures ("APMs") the Board has considered what APMs are included
in the interim financial statements which require further
clarification. An APM is defined as a financial measure of
historical or future financial performance, financial position, or
cash flows, other than a financial measure defined or specified in
the applicable financial reporting framework. APMs included in the
interim financial statements, which are unaudited and outside the
scope of IFRS, are deemed to be the dividend yield, net asset value
("NAV") to market price discount, Total NAV Returns prepared on a
diluted and adjusted basis and Total Shareholder Returns.
Dividend Yield
The annual dividends expressed as a percentage of the current
share price. A dividend yield can give you an indication of the
level of income you might get from an investment company share.
However, depending on the performance of the company, future
dividends may be higher or lower than indicated by the current
dividend yield. The current yield for JZCP is quoted at 5.1% being
the sterling equivalent of the interim dividend declared plus the
2016 second interim dividend paid as a percentage of the period end
share price.
NAV to market price discount
The NAV per share is the value of all the investment company’s
assets, less any liabilities it has, divided by the number of
shares. However, because JZCP shares are traded on the London Stock
Exchange's Specialist Fund Market, the share price may be higher or
lower than the NAV. The difference is known as a discount or
premium. JZCP's discount is calculated by expressing the difference
between the period end dollar equivalent share price and the period
end NAV per share as a percentage of the NAV per share.
Total NAV Return
The Total NAV Return measures how the net asset value (NAV) per
share has performed over a period of time, taking into account both
capital returns and dividends paid to shareholders. JZCP quotes NAV
total return as a percentage change from the start of the period
(six months) and also three-month, one-year, three-year and
five-year periods. It assumes that dividends paid to shareholders
are reinvested back into the Company therefore future NAV gains are
not diminished by the paying of dividends. JZCP also produces an
adjusted Total NAV Return which excludes the effect of dilution per
share caused by the issue of shares at a discount to NAV, the
result of the adjusted Total NAV return is to provide a measurement
of how the Company's Investment portfolio contributed to NAV growth
adjusted for the Company's expenses and finance costs.
Total Shareholder Return
A measure showing how the share price has performed over a
period of time, taking into account both capital returns and
dividends paid to shareholders. JZCP quotes shareholder price total
return as a percentage change from the start of the period and also
three-month, one-year, three-year and five-year periods. It assumes
that dividends paid to shareholders are reinvested in the shares at
the time the shares are quoted ex dividend.
Non-Mainstream Pooled Investments
From 1 January 2014, the FCA rules
relating to the restrictions on the retail distribution of
unregulated collective investment schemes and close substitutes
came into effect. JZCP's Ordinary shares qualify as an ‘excluded
security’ under these rules and will therefore be excluded from the
FCA’s restrictions which apply to non-mainstream investment
products. The shares of JZ Capital Partners qualify as “excluded
securities” under these new rules. Therefore shares issued by JZ
Capital Partners can continue to be recommended by financial
advisors as an investment for UK retail investors.
Financial
Diary |
|
|
Results for the year
ended 28 February 2016 |
|
May 2016 |
Annual General
Meeting |
|
June/July 2016 (date
to be confirmed) |
Interim report for the
six months to 31 August 2016 |
|
October/November 2017
(date to be confirmed) |
JZCP will be issuing an Interim Management Statement for the
quarters ending 30 November 2016 and
31 May 2017. These Statements will be
sent to the market via RNS within six weeks from the end of the
appropriate quarter, and will be posted on JZCP's website at the
same time, or soon thereafter.
Payment of Dividends
Cash dividends will be sent by cheque to the first-named
shareholder on the register of members at their registered address,
together with a tax voucher. At shareholders' request, where they
have elected to receive dividend proceeds in Sterling, the dividend
may instead be paid direct into the shareholder's bank account
through the Bankers' Automated Clearing System. Payments will be
paid in US dollars unless the shareholder elects to receive the
dividend in Sterling. Existing elections can be changed by
contacting the Company's Transfer and Paying Agent, Equiniti
Limited on +44 (0) 121 415 7047.
Share Dealing
Investors wishing to buy or sell shares in the Company may do so
through a stockbroker. Most banks also offer this service.
Internet Address
The Company: www.jzcp.com
Foreign Account Tax Compliance Act
The Company is registered (with a Global Intermediary
Identification Number CAVBUD.999999.SL.831) under The Foreign
Account Tax Compliance Act ("FATCA").
Share Register Enquiries
The Company's UK Transfer and Paying Agent, Equiniti Limited,
maintains the share registers. In event of queries regarding your
holding, please contact the Registrar on 0871 384 2265, calls to
this number cost 8p per minute from a BT landline, other providers'
costs may vary. Lines are open 8.30 a.m. to
5.30 p.m., Monday to Friday, If calling from overseas +44
(0) 121 415 7047 or access their website at www.equiniti.com.
Changes of name or address must be notified in writing to the
Transfer and Paying Agent.
Nominee Share Code
Where notification has been provided in advance, the Company
will arrange for copies of shareholder communications to be
provided to the operators of nominee accounts. Nominee investors
may attend general meetings and speak at meetings when invited to
do so by the Chairman.
Documents Available for Inspection
The following documents will be available at the registered
office of the Company during usual business hours on any weekday
until the date of the Annual General Meeting and at the place of
the meeting for a period of fifteen minutes prior to and during the
meeting:
(a) the Register of Directors' Interests in the
stated capital of the Company;
(b) the Articles of Incorporation of the Company;
and
(c) the terms of appointment of the Directors.
Warning to Shareholders – Boiler Room
Scams
In recent years, many companies have become aware that their
shareholders have been targeted by unauthorised overseas-based
brokers selling what turn out to be non-existent or high risk
shares, or expressing a wish to buy their shares. If you are
offered, for example, unsolicited investment advice, discounted
JZCP shares or a premium price for the JZCP shares you own, you
should take these steps before handing over any money:
• Make sure you get the correct name of the person
or organisation
• Check that they are properly authorised by the FCA before
getting involved by visiting
http://www.fca.org.uk/firms/systems-reporting/register
• Report the matter to the FCA by calling 0800 111
6768
• If the calls persist, hang up
• More detailed information on this can be found on
the Money Advice Service website www.moneyadviceservice.org.uk
US Investors
General
The Company's Articles contain provisions allowing the Directors
to decline to register a person as a holder of any class of
ordinary shares or other securities of the Company or to require
the transfer of those securities (including by way of a disposal
effected by the Company itself) if they believe that the
person:
(A) is a "US person" (as defined in Regulation S
under the US Securities Act of 1933, as amended) and not a
"qualified purchaser" (as defined in the US Investment Company Act
of 1940, as amended);
(B) is a "Benefit Plan Investor" (as described under
"Prohibition on Benefit Plan Investors and Restrictions on
Non-ERISA Plan" below); or
(C) is, or is related to, a citizen or
resident of the United States, a
US partnership, a US corporation or a certain type of estate or
trust and that ownership of any class of ordinary shares or any
other equity securities of the Company by the person would
materially increase the risk that the Company could be or become a
"controlled foreign corporation" (as described under "US Tax
Matters" below").
In addition, the Directors may require any holder of any class
of ordinary shares or other securities of the Company to show to
their satisfaction whether or not the holder is a person described
in paragraphs (A), (B) or (C) above.
US Securities Laws
The Company (a) is not subject to the reporting requirements of
the US Securities Exchange Act of 1934, as amended (the "Exchange
Act") and does not intend to become subject to such reporting
requirements and (b) is not registered as an investment company
under the US Investment Company Act of 1940, as amended (the "1940
Act"), and investors in the Company are not subject to the
protections provided by the 1940 Act.
Prohibition on Benefit Plan Investors and Restrictions on
Non-ERISA Plans
Investment in the Company by "Benefit Plan Investors" is
prohibited so that the assets of the Company will not be deemed to
constitute "plan assets" of a "Benefit Plan Investor". The term
"Benefit Plan Investor" shall have the meaning contained in Section
3(42) of the US Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), and includes (a) an "employee benefit plan" as
defined in Section 3(3) of ERISA that is subject to Part 4 of Title
I of ERISA; (b) a "plan" described in Section 4975(e)(1) of the US
Internal Revenue Code of 1986, as amended (the "Code"), that is
subject to Section 4975 of the Code; and (c) an entity whose
underlying assets include "plan assets" by reason of an employee
benefit plan's or a plan's investment in such entity. For purposes
of the foregoing, a "Benefit Plan Investor" does not include a
governmental plan (as defined in Section 3(32) of ERISA), a non-US
plan (as defined in Section 4(b)(4) of ERISA) or a church plan (as
defined in Section 3(33) of ERISA) that has not elected to be
subject to ERISA.
Each purchaser and subsequent transferee of any class of
ordinary shares (or any other class of equity interest in the
Company) will be required to represent, warrant and covenant, or
will be deemed to have represented, warranted and covenanted that
it is not, and is not acting on behalf of or with the assets of a,
Benefit Plan Investor to acquire such ordinary shares (or any other
class of equity interest in the Company).
Under the Articles, the directors have the power to require the
sale or transfer of the Company's securities in order to avoid the
assets of the Company being treated as "plan assets" for the
purposes of ERISA.
The fiduciary provisions of pension codes applicable to
governmental plans, non-US plans or other employee benefit plans or
retirement arrangements that are not subject to ERISA
(collectively, "Non-ERISA Plans") may impose limitations on
investment in the Company. Fiduciaries of Non-ERISA Plans, in
consultation with their advisors, should consider, to the extent
applicable, the impact of such fiduciary rules and regulations on
an investment in the Company. Among other considerations, the
fiduciary of a Non-ERISA Plan should take into account the
composition of the Non-ERISA Plan's portfolio with respect to
diversification; the cash flow needs of the Non-ERISA Plan and the
effects thereon of the illiquidity of the investment; the economic
terms of the Non- ERISA Plan's investment in the Company; the
Non-ERISA Plan’s funding objectives; the tax effects of the
investment and the tax and other risks associated with the
investment; the fact that the investors in the Company are expected
to consist of a diverse group of investors (including taxable, tax-
exempt, domestic and foreign entities) and the fact that the
management of the Company will not take the particular objectives
of any investors or class of investors into account.
Non-ERISA Plan fiduciaries should also take into account the
fact that, while the Company's board of directors and its
investment advisor will have certain general fiduciary duties to
the Company, the board and the investment advisor will not have any
direct fiduciary relationship with or duty to any investor, either
with respect to its investment in Shares or with respect to the
management and investment of the assets of the Company. Similarly,
it is intended that the assets of the Company will not be
considered plan assets of any Non-ERISA Plan or be subject to any
fiduciary or investment restrictions that may exist under pension
codes specifically applicable to such Non-ERISA Plans. Each
Non-ERISA Plan will be required to acknowledge and agree in
connection with its investment in any securities to the foregoing
status of the Company, the board and the investment advisor that
there is no rule, regulation or requirement applicable to such
investor that is inconsistent with the foregoing description of the
Company, the board and the investment advisor.
Each purchaser or transferee that is a Non-ERISA Plan will be
deemed to have represented, warranted and covenanted as
follows:
(a) The Non-ERISA Plan is not a Benefit Plan
Investor;
(b) The decision to commit assets of the
Non-ERISA Plan for investment in the Company was made by
fiduciaries independent of the Company, the Board, the Investment
Advisor and any of their respective agents, representatives or
affiliates, which fiduciaries (i) are duly authorized to make such
investment decision and have not relied on any advice or
recommendations of the Company, the Board, the Investment Advisor
or any of their respective agents, representatives or affiliates
and (ii) in consultation with their advisers, have carefully
considered the impact of any applicable federal, state or local law
on an investment in the Company;
(c) None of the Company, the Board, the
Investment Advisor or any of their respective agents,
representatives or affiliates has exercised any discretionary
authority or control with respect to the Non-ERISA Plan’s
investment in the Company, nor has the Company, the Board, the
Investment Advisor or any of their respective agents,
representatives or affiliates rendered individualized investment
advice to the Non-ERISA Plan based upon the Non-ERISA Plan’s
investment policies or strategies, overall portfolio composition or
diversification with respect to its commitment to invest in the
Company and the investment program thereunder; and
(d) It acknowledges and agrees that it is intended
that the Company will not hold plan assets of the Non-ERISA Plan
and that none of the Company, the Board, the Investment Advisor or
any of their respective agents, representatives or affiliates will
be acting as a fiduciary to the Non-ERISA Plan under any applicable
federal, state or local law governing the Non-ERISA Plan, with
respect to either (i) the Non-ERISA Plan’s purchase or retention of
its investment in the Company or (ii) the management or operation
of the business or assets of the Company. It also confirms that
there is no rule, regulation, or requirement applicable to such
purchaser or transferee that is inconsistent with the foregoing
description of the Company, the Board and the Investment
Advisor.
This discussion does not constitute
tax advice and is not intended to be a substitute for tax advice
and planning. Prospective holders of the Company's securities must
consult their own tax advisers concerning the US federal, state and
local income tax and estate tax consequences in their particular
situations of the acquisition, ownership and disposition of any of
the Company's securities, as well as any consequences under the
laws of any other taxing jurisdiction.
The Company's directors are entitled to decline to register a
person as, or to require such person to cease to be, a holder of
any class of ordinary shares or other equity securities of the
Company if they believe that: such person is, or is related to, a
citizen or resident of the United
States, a US partnership, a US corporation or a certain type
of estate or trust and that ownership of any class of ordinary
shares or any other equity securities of the Company by such person
would materially increase the risk that the Company could be or
become a "controlled foreign corporation" (a "CFC").
In general, a foreign corporation is treated as a "CFC" only if
its "US shareholders" collectively own more than 50% of the total
combined voting power or total value of the corporation's stock. A
"US shareholder" means any US person who owns, directly or
indirectly through foreign entities, or is considered to own (by
application of certain constructive ownership rules), 10% or more
of the total combined voting power of all classes of stock of a
foreign corporation, such as the Company.
There is a risk that the Company will decline to register a
person as, or to require such person to cease to be, a holder of
the Company's the Company if the Company could be or become a CFC.
The Company's treatment as a CFC could have adverse tax
consequences for US taxpayers.
The Company is expected to be treated as a "passive foreign
investment company" ("PFIC"). The Company's treatment as a PFIC is
likely to have adverse tax consequences for US taxpayers.
The taxation of a US taxpayer's
investment in the Company's securities is highly complex.
Prospective holders of the Company's securities must consult their
own tax advisers concerning the US federal, state and local income
tax and estate tax consequences in their particular situations of
the acquisition, ownership and disposition of any of the Company's
securities, as well as any consequences under the laws of any other
taxing jurisdiction.