Enhanced Investments - Financial Portal

Results for the six months ended 31 December 2020

Published: 2021-03-11 05:05:00 ET

EPE Capital Partners Limited (JSE:EPE) News - Results for the six months ended 31 December 2020

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

RESULTS FOR THE SIX MONTHS ENDED 31 DECEMBER 2020

INTRODUCTION

EPE Capital Partners Ltd is an investment company, registered and incorporated in Mauritius as a public company. It is listed on the Johannesburg Stock
Exchange ("JSE") and offers shareholders long-term capital appreciation by making commitments and investments into Funds or Co-Investments that are managed
by Ethos Private Equity (Pty) Limited ("Ethos"), providing the Company with largely indirect exposure to a diversified portfolio of unlisted private equity
type investments ("Portfolio Companies"). The Group's performance is largely measured by the growth in the net asset value ("NAV") and NAV per share
("NAVPS").

THE ADVISOR: ETHOS

Ethos acts as Ethos Capital's Investment Advisor. In addition, Ethos is the Manager of the Funds that Ethos Capital invests in. Ethos is an investment firm
that manages investments in private equity and mezzanine transactions in South Africa and other sub-Saharan African countries. Ethos has a 36-year history
and an unparalleled record of successful, sustainable investing across economic and political cycles that has delivered 97 realised investments at a 36%
gross internal rate of return ("IRR") and a 2.7x multiple on invested capital ("MOIC").

RESULTS ANNOUNCEMENT

Key highlights

- R1.8 billion carrying value of invested capital, with exposure to 22 Portfolio Companies.
- NAVPS at 31 December 2020 of R6.65, based on Brait's share price.
- NAVPS of R8.65 based on Brait's last reported NAVPS (as at 30 September 2020).
- Unlisted portfolio's EBITDA valuation multiple unchanged at 7.0x; "market implied" multiple of 4.3x, based on share price.
- Last 12 months attributable revenue and EBITDA growth of top 5 unlisted investments of 15.0% and 8.6% respectively.
- Ethos Capital achieved realisations during the past 12 months from its unlisted portfolio of R159 million, including the sale of two investments 
  at an average 1.6x MOIC and a 24% IRR.
- Brait realised R3 billion of disposals from its portfolio in the past 12 months.

Overview

COVID has had a significant impact on most of the Portfolio Companies. As a consequence of the initial lockdown, the Portfolio Companies implemented
significant cost-saving initiatives and improved operational efficiencies, and focused on finding opportunities to grow the businesses post the crisis. With
the improved consumer sentiment, slightly improved macroeconomic outlook, and easing of respective lockdown restrictions towards the second part of the
year, most of the Portfolio Companies benefitted from these earlier initiatives that resulted in stronger than expected recoveries across some of these
businesses. The largest five unlisted investments achieved growth in their last 12 months ("LTM") attributable revenue and EBITDA of 15.0% and 8.6% respectively,
resulting in significant valuation uplifts.

Some others though have been adversely impacted by the further enforced lockdowns and consumer restrictions and spending, with Virgin Active and Ster
Kinekor having to contend with significant reductions in revenue that necessitated significant restructuring of the businesses to ensure they are viable and
able to thrive in a post-COVID world.

Despite a significant re-rating of the market from its COVID lows with some sectors having fully recovered, Ethos has kept the valuation multiples
effectively at the March 2020 levels until the sustainability of the recovery and investment performance is entrenched. The unlisted portfolio is valued at
an unchanged implied EV/maintainable EBITDA multiple of 7.0x.

The NAV of R1.7 billion increased slightly over the period, while the NAVPS, including Brait at its share price that increased by 12% during the period,
ended the six-month period flat at R6.65. The NAVPS, including Brait at a valuation of its last reported NAVPS, decreased from R9.12 to R8.65. Ethos Capital
benefitted from R159 million of realisations during the past 12 months, including a partial sale of Channel VAS for R75.7 million, that achieved a MOIC
of 1.6x and an IRR of 25%. Following the R1 billion invested during the six-months to 30 June 2020, the investment rate was
subdued during the current period, other than a few bolt-on acquisitions by Portfolio Companies.

The impact of COVID is likely to be felt for some time and the macroeconomic outlook for South Africa remains uncertain. The Board believes that remaining
focused on theme/tailwind-led investing, leveraging the sector and domain expertise of Ethos while exercising price discipline, should enable the Company to
generate sustainable, market-leading returns for its investors.

FINANCIAL POSITION AND INVESTMENT PORTFOLIO

EXTRACT OF STATEMENT OF FINANCIAL POSITION
                                                       Group                        Company
                                            31 Dec 2020    30 June 2020    31 Dec 2020    30 June 2020
                                              R'million       R'million      R'million       R'million
ASSETS
Non-current assets
Unlisted investments at fair value              1,804.3         1,891.7        1,804.3         1,891.7
Current assets                                     67.2            13.4           66.7            12.9
TOTAL ASSETS                                    1,871.5         1,905.1        1,871.0         1,904.6

EQUITY AND LIABILITIES
Total ordinary shareholders' equity             1,713.6         1,711.8        1,863.4         1,856.2
   Non-current liabilities                        150.3           184.9              -            40.0
   Current liabilities                              7.6             8.4            7.6             8.4
Total liabilities                                 157.9           193.3            7.6            48.4
TOTAL EQUITY AND LIABILITIES                    1,871.5         1,905.1        1,871.0         1,904.6

NET ASSET VALUE                                 1,713.6         1,711.8        1,863.4         1,856.2
Basic Net Asset Value per share (Rand)             6.65            6.65           6.88            6.85
Attributable shares in issue ('000)             257,500         257,500        271,000         271,000

INVESTMENT PORTFOLIO - AT 31 DECEMBER 2020
                                            Valuation    % of total
Name                                        R'million        assets
Primary/Secondary Investments
Ethos Fund VII                                  688.8          36.8
Ethos Mid Market Fund I                         395.4          21.1
Ethos Healthcare Platform                       137.6           7.4
Ethos Ai Fund I                                  92.5           4.9
Ethos Fund VI                                    51.7           2.8
Ethos Mezzanine Partners 3                        8.5           0.4
Co-Investments
Brait                                           280.1          15.0
Primedia / Ster Kinekor                          67.2           3.6
Channel                                          52.0           2.8
Kevro                                            30.5           1.6
                                              1,804.3          96.4

TOP 10 UNDERLYING PORTFOLIO COMPANIES - AT 31 DECEMBER 2020

                                                                                                     % of Total 
Name                                      Business description                         Year*             assets
Channel Vas                               FinTech service provider                      2018               24.4
Virgin Active (Brait)                     Health club operator                          2020               12.9
Premier (Brait)                           FMCG manufacturer                             2020               11.5
Echo                                      Corporate ISP                                 2018                9.9
Vertice                                   MedTech                                       2018                9.4
Synerlytic                                Specialised analytical and testing services   2019                6.7
Gammatek                                  TMT accessory distribution                    2018                4.4
Primedia                                  Media                                         2017                3.8
Kevro                                     Corporate clothing and gifting                2017                3.1
Twinsaver                                 Manufacturing (FMCG)                          2015                1.8
                                                                                                           87.9
Other (12 Portfolio Companies)                                                                              8.5
Total underlying investments                                                                               96.4

* Initial acquisition date by Ethos Fund

RESPONSIBILITY STATEMENT

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

https://senspdf.jse.co.za/documents/2021/JSE/ISSE/EPEE/EPECAP1220.pdf

and is published on the Company's website at:

https://ethoscapital.mu/investors/reports-results/

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

PRESENTATION
Ethos Capital will host a webcast presentation at 11h00 am on Thursday 11 March 2021 covering the results relating to the six months ended 31 December 2020,
and outlook. A copy of the presentation is available for download on the Company's website at https://ethoscapital.mu/investors/reports-results/

Participants can join the webcast by navigating to this website:

https://themediaframe.net/ethos10038729

CORPORATE INFORMATION

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

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

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

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

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

Deloitte
5 Magwa Crescent
Waterfall City
Johannesburg, 2090

Listing
JSE Limited
Abbreviated name: ETHOSCAP
JSE code: EPE
Sector: Financials - Equity Investment Instruments

Transfer Secretary
Computershare Investor Services Proprietary Limited
Rosebank Towers
15 Biermann Avenue
Rosebank, 2196

Sponsor
Rand Merchant Bank (A division of FirstRand Bank Limited)
1 Merchant Place
Cnr Fredman Drive & Rivonia Road
Sandton
Johannesburg, 2196

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

Ebene, Mauritius (with simultaneous circulation in Johannesburg)
11 March 2021

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

Date: 11-03-2021 07:05:00
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Important disclosures

Performance results were prepared by Enhanced Investments, and have not been compiled, reviewed or audited by an independent accountant. Performance estimates are subject to future adjustment and revision. Investors should be aware that a loss of investment is possible. Account holdings are for illustrative purposes only and are not investment recommendations. Additional information, including (i) the calculation methodology; and (ii) a list showing the contribution of each holding to the portfolio’s performance during the time period will be provided upon request.
All statements made via social media sites sponsored or maintained by Enhanced Investments and its affiliates are for informational purposes only and do not constitute a comprehensive description of Enhanced Investments' investment advisory services.
Certain investments are not suitable for all investors. Before investing, consider your investment objectives and applicable fees. The rate of return on investments can vary widely over time, especially for long term investments. Investment losses are possible, including the potential loss of all amounts invested. Information provided by Enhanced Investments is for informational and general educational purposes only and is not investment or financial advice.

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Performance results were prepared by Enhanced Investments, and have not been compiled, reviewed or audited by an independent accountant. Performance estimates are subject to future adjustment and revision. Investors should be aware that a loss of investment is possible. Account holdings are for illustrative purposes only and are not investment recommendations. Additional information, including (i) the calculation methodology; and (ii) a list showing the contribution of each holding to the portfolio’s performance during the time period will be provided upon request.
All statements made via social media sites sponsored or maintained by Enhanced Investments and its affiliates are for informational purposes only and do not constitute a comprehensive description of Enhanced Investments' investment advisory services.
Certain investments are not suitable for all investors. Before investing, consider your investment objectives and applicable fees. The rate of return on investments can vary widely over time, especially for long term investments. Investment losses are possible, including the potential loss of all amounts invested. Information provided by Enhanced Investments is for informational and general educational purposes only and is not investment or financial advice.