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Annual financial results for the year ended 30 June 2024 and availability of B-BBEE compliance report
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")
ANNUAL FINANCIAL RESULTS FOR THE YEAR ENDED 30 JUNE 2024 AND AVAILABILITY OF B-BBEE COMPLIANCE REPORT
INTRODUCTION
EPE Capital Partners Ltd is an investment holding company, registered, and incorporated in Mauritius and listed on the Johannesburg Stock Exchange ("JSE").
It invests directly into Funds or Co-Investments that are actively managed by Rohatyn Management South Africa (Pty) Limited ("TRG SA"), providing the
Company with largely indirect exposure to a diversified portfolio of unlisted private equity-type investments ("Portfolio Companies"). In addition, TRG SA
acts as the Company's Investment Advisor.
Due to the nature of the business conducted by the Group, the Group's performance is largely measured by growth in the net asset value ("NAV") and NAV per
share ("NAVPS") and NAVPS has been adopted as the relevant measure for trading statement and results announcement purposes. This approach has been approved
by the JSE.
The NAV of each Fund is derived from the fair values of the underlying Portfolio Companies which are prepared in accordance with International Private
Equity and Venture Capital Valuation Guidelines, and largely consists of investments being valued on an earnings or revenue multiple method. In terms of
this method, an appropriate valuation multiple, as derived from public market companies' multiples and adjusted by the investment manager for certain
factors, is applied to an investment's maintainable earnings (e.g., earnings before interest, taxes, depreciation and amortisation ("EBITDA")) or revenue to
determine the enterprise value of the investment that is then adjusted for surplus assets or net debt to derive the equity value of the investment
attributable to its shareholders.
RESULTS ANNOUNCEMENT
Key highlights over the year
- The 17.9% decline in Group NAVPS from R8.56 to R7.03 was largely driven by the significant decline in the Brait ordinary share price
- The performance of the unlisted portfolio remained robust with reported LTM Revenue and EBITDA increasing by 12% and 18% respectively
- Optasia's strong operational performance continued (US$ EBITDA growth of 10%) with a significant step-up in its run-rate EBITDA since May 2024 due to new
deployments and products however, the valuation was negatively impacted by the material Naira devaluation
- Strong operational turnaround at Twinsaver and increases in valuation of Synerlytic and Crossfin due to concluded sale processes resulted in an increase in
the unlisted portfolio NAV
- TymeBank concluded another capital raising round post year-end at a significant premium to the June 2024 carrying value
- Significant realisations during the past year and post year-end to date resulted in total proceeds received of R457m
- This brought the total proceeds received by Ethos Capital since listing to over R1bn (constituting 47% of invested capital), with realised assets delivering
a MOIC of 1.7x with a realised IRR of 17%
- Proceeds received have resulted in a reduction in debt to c.R200m which will facilitate return of capital to shareholders
- Material unlock of shareholder value through the Brait unbundling (with a consequential reduction in NAVPS volatility) resulting in the discount to NAVPS
falling from over 50% pre-30 June 2024 to c.30% as at 26 September 2024. The Brait ordinary share price has also increased significantly post 30 June 2024
- Ethos Capital has returned R215m of capital to shareholders since listing through share buybacks and the Brait unbundling and the Board will continue to
explore alternatives for expediting the return of capital to shareholders.
Overview
Over the past year, the global economy has continued to face headwinds, with persistent inflation, high interest rates and geopolitical uncertainties
(particularly Ukraine and Gaza/Israel) continuing. The South African economic landscape faced ongoing challenges with constrained GDP growth, continued
loadshedding and significant political uncertainty in the run up to the South African elections. However, the last few months of the financial year
generated some optimism, driven by the suspension of loadshedding in March 2024, the introduction of a Government of National Unity ("GNU") and the largely
peaceful transition from an ANC controlled government to the GNU generated some hope of economic reforms and governance.
Ethos Capital's NAVPS decreased by 17.9% to R7.03 (30 June 2023: R8.56) over the year. The decrease was largely attributable to the listed portfolio that
fell by 52%, with the Brait ordinary share price down 73% year-on-year.
The unlisted portfolio had a mixed performance and delivered a 12.3% return, that was reduced to 4.2% after taking into account the foreign exchange
devaluation of Optasia as is noted further below in the report. There were notable increases in the values of Synerlytic and Crossfin, following successful
sale processes that were either concluded or signed, and strong performances from Gammatek and Twinsaver.
The unlisted Portfolio Companies grew reported last-twelve-months ("LTM") revenues and EBITDA by 12% and 18% respectively. The portfolio benefitted from a
significant turnaround on a number of underperforming assets. The top five unlisted investments grew their LTM revenue and LTM EBITDA by 10% and 9%
respectively.
The largest unlisted investment exposure in Ethos Capital is to Optasia. While Optasia's operational performance was strong, its earnings were significantly
impacted by currency devaluations across some of its key territories, leading to a normalisation adjustment to its maintainable EBITDA. The earnings
adjustment, alongside the strengthening of the ZAR against the US$, resulted in a 7% reduction to its 30 June 2024 valuation (adjusted for dividend proceeds
received).
Including realisations post 30 June 2024 to date, Ethos Capital received proceeds of R457 million during the period, that included the sale of Neopak, The
Beverage Company and Synerlytic (The Particle Group and WearCheck). The sale of Adumo (Crossfin) is expected to conclude in October 2024. Pleasingly, all
these realisations were achieved at premiums to their carrying values.
In August 2024, the Brait ordinary shares, valued at an Ethos Capital NAVPS of R0.45 at 30 June 2024, were unbundled to Ethos Capital shareholders.
As the Company announced in November 2023, post an engagement with its shareholders, the Board of Ethos Capital has revised the Company's strategy to focus
on the monetisation of the asset base and a return of capital to shareholders. The Board will continue to evaluate alternatives to optimise shareholder
returns in line with this strategy.
FINANCIAL POSITION AND INVESTMENT PORTFOLIO
SUMMARISED STATEMENT OF FINANCIAL POSITION
Group
30 June 2024 30 June 2023
R'million R'million
ASSETS
Non-current assets
Unlisted investments at fair value 2,309.2 2,688.1
Current assets 19.1 20.0
TOTAL ASSETS 2,328.3 2,708.1
EQUITY AND LIABILITIES
Total Ordinary shareholders' equity 1,784.4 2,172.1
Total Liabilities 543.9 536.0
TOTAL EQUITY AND LIABILITIES 2,328.3 2,708.1
NET ASSET VALUE 1,784.4 2,172.1
Net Asset Value per share (Rand) 7.03 8.56
Attributable shares in issue ('000) 253,885 253,885
INVESTMENT PORTFOLIO - AT 30 JUNE 2024
Valuation % of total
Name R'million assets
Primary/Secondary Investments
Ethos Mid Market Fund I 765.8 32.9
TRG AF VII 734.0 31.5
Ethos Ai Fund I 247.6 10.6
Ethos Healthcare Platform 126.2 5.4
Ethos Fund VI 33.5 1.5
Ethos Mezzanine Partners 3 18.6 0.8
Co-Investments
Brait EB 136.5 5.9
Optasia 84.5 3.6
Brait 66.1 2.9
Primedia 86.9 3.7
Kevro 9.5 0.4
2,309.2 99.2
TOP 10 UNDERLYING PORTFOLIO COMPANIES - AT 30 JUNE 2024
% of Total
Name Business description Year* assets
Optasia FinTech service provider 2018 32.3
Synerlytic Specialised analytical and testing services 2019 11.6
Vertice MedTech 2018 7.4
Crossfin FinTech group 2021 7.3
Gammatek TMT accessory distribution 2018 6.7
TymeBank Banking 2019 4.8
Echo Corporate ISP 2018 4.7
Primedia Media 2017 4.0
Virgin Active (Brait) Health club operator 2020 3.6
e4 Software as a Service 2023 2.8
85.2
Brait EB Exchangeable bonds 2021 6.5
Other (10 Portfolio Companies) 7.5
Total underlying investments 99.2
* Initial acquisition date by TRG SA Fund
AVAILABILITY OF AUDITED ANNUAL FINANCIAL STATEMENTS
The audited Annual Financial Statements, alongside the Integrated Annual Report, are available from today at the below JSE cloudlink,
https://senspdf.jse.co.za/documents/2024/JSE/ISSE/EPEE/EPECAP0624.pdf
and both are published on the Company's website at,
https://ethoscapital.mu/investors/reports-results/
Deloitte & Touche, the Group's independent auditor, has audited the Consolidated and Company Annual Financial Statements and has expressed an unmodified
audit opinion thereon.
The results announcement does not provide full or all of the details and therefore any investment decision should be based on a consideration of the Annual
Financial Statements as a whole, which is available for viewing from today at the links as set out above.
PRESENTATION
Ethos Capital will host a webcast presentation at 13h00 on Monday 30 September 2024 covering the results relating to the year ended 30 June 2024, and
outlook. A copy of the presentation will be available for download on the Company's website at https://ethoscapital.mu/investors/reports-results/
Participants can obtain access via the following link:
https://www.diamondpass.net/6069233
AVAILABILITY OF B-BBEE COMPLIANCE REPORT
Shareholders are advised that the annual compliance report in terms of Section 13G(2) of the Broad-Based Black Economic Empowerment Amendment Act No.46 of
2013, is available on the Company's website at https://ethoscapital.mu/investors/governance/
CORPORATE INFORMATION
Directors
Yvonne Stillhart (Chairperson)
Derek Prout-Jones
Kevin Allagapen
Michael Pfaff
Yuvraj Juwaheer
Senior Advisors (Officers)
Anthonie de Beer (CEO; appointed 1 July 2024)
Peter Hayward-Butt (CEO; resigned 30 June 2024)
Jean-Pierre van Onselen (CFO)
Investment Advisor
TRG Management South Africa (Pty) Ltd
Rosebank Towers
15 Biermann Avenue
Office Level 3
Rosebank, 2196
Company Secretary and Registered Office
Ocorian
6th Floor, Tower A
1 Exchange Square
Wall Street
Ebene
Mauritius
Auditors
Deloitte & Touche
Level 7, Standard Chartered Tower
19 Cybercity
Ebene
Mauritius
Deloitte & Touche
5 Magwa Crescent
Waterfall City
Johannesburg, 2090
Listing
JSE Limited
Abbreviated name: ETHOSCAP
JSE code: EPE
Sector: Financials - Closed End Investments
Transfer Secretaries
Computershare Investor Services Proprietary Limited
15 Biermann Avenue
Rosebank, 2196
Sponsor
Rand Merchant Bank (A division of FirstRand Bank Limited)
1 Merchant Place
Cnr Fredman Drive & Rivonia Road
Sandton, 2196
Disclaimer
This announcement is extracted from the audited financial statements but is itself not audited
Ebene, Mauritius (with simultaneous circulation in Johannesburg)
30 September 2024
Sponsor
RAND MERCHANT BANK (A division of FirstRand Bank Limited)
Date: 30-09-2024 07:30:00
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