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Share Name Share Symbol Market Type Share ISIN Share Description
Jz Capital Partners Limited LSE:JZCP London Ordinary Share GG00B403HK58 ORD NPV
  Price Change % Change Share Price Bid Price Offer Price High Price Low Price Open Price Shares Traded Last Trade
  0.00 0.0% 78.00 68.00 88.00 85.00 78.00 78.00 6,110 08:00:27
Industry Sector Turnover (m) Profit (m) EPS - Basic PE Ratio Market Cap (m)
Equity Investment Instruments 25.9 -238.2 -300.5 - 60

JZ Capital Ptnrs Ltd Half-year Report

05/11/2020 7:00am

UK Regulatory (RNS & others)


 
TIDMJZCP TIDMJZCC TIDMJZCN 
 
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 PERIODED 
 
                                31 AUGUST 2020 
 
LEI: 549300TZCK08Q16HHU44 
 
(Classified Regulated Information, under DTR 6 Annex 1 section 1.2) 
 
05 November 2020 
 
JZ Capital Partners, the London listed fund that invests in US and European 
microcap companies and US real estate, announces its interim results for the 
six-month period ended 31 August 2020. 
 
Key Highlights 
 
·     NAV per share of $4.60 (FYE 29/2/2020: $6.14) 
 
·     NAV of $356.3 million (FYE 29/2/2020: $475.7 million) 
 
·     US and European Microcap portfolios continued to perform solidly through 
COVID-19 delivering a net increase of 6 cents per share and 2 cents per share 
respectively 
 
·     The pandemic's devastating impact on commercial retail real estate 
negatively impacted the real estate portfolio during the period, leading to a 
write down of c.$110 million 
 
·     Significant progress made towards the stated goal of stabilising the 
Company by realizing investments at maximum value to generate cash to pay debt 
and return capital to shareholders 
 
o  Total liquidity of $175.7 million realized, including the recently 
announced, post period end secondary sale (the "Secondary Sale") of certain US 
microcap assets 
 
o  Total liquidity comprised $141.8 million in cash and the relief of $33.9 
million in unfunded and potential commitments 
 
o  Liquidity is being used to pay down a material portion of the Company's 
senior debt with approximately $20 million having been repaid recently and a 
further approximately $62.7 million to be repaid upon closing of the Secondary 
Sale 
 
o  Agreement reached with its senior lenders post period end to amend the terms 
of JZCP's existing senior facility agreement. The Company has now secured more 
advantageous covenant terms for itself, including the asset coverage covenant 
being reset at a lower threshold and is now in full compliance with covenant 
terms 
 
Portfolio 
 
·     The Board commissioned updated appraisals of the Real Estate portfolio as 
of 31 August 2020, which have taken into account the effect of COVID-19. This 
led to a further c.$110 million write down given the leveraged position of the 
assets and retail tenants being unable to pay rent during the crisis. 
 
o  The remaining properties with equity value are carried on the Company's 
balance sheet at approximately $47.4 million as of 31 August 2020 
 
o  Given the significant decline in valuation, JZCP agreed an amendment to its 
senior loan with Guggenheim following a breach of the asset coverage covenant, 
which has been reset at a lower threshold. 
 
·     Resilience and underlying quality of the US and European microcap 
portfolios underpinned by solid performance with several assets delivering 
record monthly sales and EBITDA 
 
o  Decisive measures taken quickly early in the pandemic to stabilize the 
businesses' liquidity positions and set them on a course to weather the 
pandemic 
 
Secondary Sale (post-period end) 
 
·     The Secondary Sale of six US microcap assets (Flex Pack, Flow Controls, 
Testing Services, Felix Storch, Peaceable and TierPoint) to a Secondary Fund 
which includes investors of certain funds and accounts managed by Hamilton Lane 
Advisors, L.L.C. 
 
·     JZCP will receive aggregate consideration of $90 million in cash, less 
fees and expenses, and a special limited partner interest in the Secondary Fund 
entitling JZCP to certain distributions from the Secondary Fund 
 
·     The full potential commitment to the Secondary Fund by its investors is 
up to $110 million in aggregate, with its investors committing up to $20 
million to develop the underlying investments. 
 
·     JZCP will continue to benefit from its interest in the new Secondary 
Fund, which entitles the Company to participate in the future growth of the 
assets 
 
·     Following the Secondary Sale and repayment of approximately $82.7 million 
of senior debt, the Company's approximate senior obligations include: (i) 
senior debt of $65.8 million (due 12 June 2021), (ii) Convertible Unsecured 
Loan Stock ("CULS") of GBP38.9m (due 30 July 2021), and (iii) Zero Dividend 
Preference Shares ("ZDPs") of GBP57.6m (due 1 October 2022). 
 
Outlook 
 
·     The outlook for JZCP is improved - JZCP remains committed to further 
progressing the Stabilisation Plan and generating sufficient liquidity to repay 
its obligations and return capital to shareholders 
 
·     Having obtained updated real estate appraisals and having continued to 
watch the Company's US and European portfolios navigate well through the 
current market, the Board feels confident in the stated values of the Company's 
investments. Accordingly, monthly NAV announcements, which had been previously 
suspended, will resume this month 
 
·     The conservatively leveraged microcap portfolios are well positioned to 
navigate an economic downturn with limited exposure to cyclical businesses and 
below market entry multiples offering significant room for capital gains 
 
David Macfarlane, Chairman of JZCP, said: "The Company has come a long way and 
stands today with a significantly reduced debt position with improved terms, a 
resilient microcap portfolio and a plan to further reduce our debt obligations 
and return capital to shareholders. 
 
The period has been characterised by further significant and disappointing 
losses in the value of the Company's real estate portfolio, with the full 
effects of the pandemic and leverage taking a heavy toll on the portfolio and 
the Company's NAV. In contrast, the Board has been pleased with the solidly 
performing microcap portfolios which continue to demonstrate the underlying 
quality and resilience of the core part of the business. 
 
While COVID-19 market conditions mean that realisations may be delayed or 
become more difficult, the successful sale of certain US microcap assets to the 
Secondary Fund marks a turning point for the Company. Clearly, the achievement 
of the objective of the stabilisation plan and the new investment policy 
depends on realisations, both as to their amount and timing. However, the Board 
and the Investment Adviser are optimistic that all the Company's obligations 
will be repaid in full and that capital will be returned to shareholders." 
 
__________________________________________________________________________________ 
 
The information contained within this announcement is considered by the Company 
to constitute inside information as stipulated under the Market Abuse 
Regulations (EU) No. 596/2014. Upon the publication of this announcement, this 
inside information is now considered to be in the public domain. The person 
responsible for arranging the release of this announcement on behalf of the 
Company is David Macfarlane, Chairman. 
 
Important Notice 
 
This announcement includes statements that are, or may be deemed to be, 
"forward-looking statements". These forward-looking statements can be 
identified by the use of forward-looking terminology, including the terms 
"believes", "estimates", "anticipates", "expects", "intends", "may", "will" or 
"should" or, in each case, their negative or other variations or comparable 
terminology. These forward-looking statements relate to matters that are not 
historical facts. By their nature, forward-looking statements involve risks and 
uncertainties because they relate to events and depend on circumstances that 
may or may not occur in the future. Forward-looking statements are not 
guarantees of future performance. The Company's actual investment performance, 
results of operations, financial condition, liquidity, policies and the 
development of its strategies may differ materially from the impression created 
by the forward-looking statements contained in this announcement. In addition, 
even if the investment performance, result of operations, financial condition, 
liquidity and policies of the Company and development of its strategies, are 
consistent with the forward-looking statements contained in this announcement, 
those results or developments may not be indicative of results or developments 
in subsequent periods. These forward-looking statements speak only as at the 
date of this announcement. Subject to their legal and regulatory obligations, 
each of the Company, the Investment Adviser and their respective affiliates 
expressly disclaims any obligations to update, review or revise any 
forward-looking statement contained herein whether to reflect any change in 
expectations with regard thereto or any change in events, conditions or 
circumstances on which any statement is based or as a result of new 
information, future developments or otherwise. 
 
For further information: 
 
Ed Berry / Colette La Pointe 
      +44 (0)7703 330 199 / +44 (0)7976 713 690 
FTI Consulting 
 
David Zalaznick 
                                                                        +1 212 
485 9410 
Jordan/Zalaznick Advisers, Inc. 
 
Sam Walden 
                                                                      +44 (0) 
1481 745385 
Northern Trust International Fund 
Administration Services (Guernsey) Limited 
 
 About JZ Capital Partners 
 
JZ Capital Partners ("JZCP") is one of the oldest closed-end investment 
companies listed on the London Stock Exchange. It seeks to provide shareholders 
with a return by investing selectively in US and European microcap companies 
and US real estate. JZCP receives investment advice from Jordan/Zalaznick 
Advisers, Inc. ("JZAI") which is led by David Zalaznick and Jay Jordan. They 
have worked together for more than 35 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. For 
more information please visit www.jzcp.com 
 
Chairman's Statement 
 
We present the results of the Company for the six-month period ended 31 August 
2020. As expected, the last six months have been very challenging for our real 
estate portfolio and as foreshadowed in my statement accompanying the results 
for the year ended 29 February 2020, the effect of leverage and the COVID-19 
crisis have further reduced the value of that portfolio. As announced in 
September 2020 and revised in October 2020, this write down has been quantified 
at approximately $110 million. As a consequence, I regret to report that the 
Company's NAV fell to $4.60 per share at 31 August 2020 from $6.14 per share at 
29 February 2020. The continued difficulties with the real estate portfolio 
have offset a robust performance in our traditional private equity portfolios 
in the US and Europe. The two portfolios have navigated the COVID-19 
environment well and have, broadly speaking, held their values with several 
individual investments outperforming in each portfolio 
 
The recently announced Secondary Sale of certain assets within the US Microcap 
portfolio marks steady progress towards the Company's goal of realising the 
maximum value of its current investments and, in accordance with the Company's 
stabilisation plan, generating sufficient liquidity to repay its obligations 
and return capital to shareholders. However, we do note that the enduring 
effect of COVID-19 market conditions means that realisations may be delayed or 
become more difficult 
 
Liquidity 
 
The further write down of the real estate portfolio caused the Company to 
breach the asset coverage covenant of its senior loan with Guggenheim Partners. 
However, the Investment Manager and the Board have moved quickly and 
proactively to agree an amendment to its senior loan, whereby this breach has 
been waived by Guggenheim and the Company's asset coverage covenant has been 
reset at a lower threshold. In return, the Company has repaid Guggenheim $20 
million (post period-end) and will be obliged to repay a further $62.7 million 
on completion of the Secondary Sale, which is anticipated to close following 
shareholder approval in December 2020. 
 
Nevertheless, the Board notes that, at this time, the remaining balance of 
Guggenheim's loan will still mature on 12 June 2021 and the Convertible 
Unsecured Loan Stock (CULS), which is a subordinate security, will mature 
shortly thereafter on 30 July 2021. 
 
Real Estate Portfolio 
 
As previously disclosed, the write down in the Company's real estate portfolio 
as of 29 February 2020 reflected valuations undertaken by a new independent 
third-party appraiser, albeit prior to the impact of the COVID-19 crisis. As 
indicated in the Chairman's Statement accompanying the year end results, the 
Board commissioned updated appraisals as of 31 August 2020, which have taken 
into account the effect of COVID-19; this analysis underpins the further write 
down of approximately $110 million in the period. Unfortunately, this comes as 
no surprise, given the leveraged position of the assets and how few retail 
tenants have paid rent during the continuing crisis. In aggregate, the 
remaining properties with equity value are carried on the Company's balance 
sheet at $47.4 million as of 31 August 2020. Included in this amount are the 
approximate cash proceeds received from the recently announced sale of the 
Company's Greenpoint investment, which had been written down to its approximate 
sale value as of 31 August 2020 
 
US and European Microcap Portfolios 
 
At the 2019 full year results, I reported that the Company's US and European 
microcap investments had performed solidly, though the Board expressed concern 
regarding the unknown consequences of the lingering COVID-19 crisis. While no 
company has escaped fully unscathed, our Investment Adviser and the management 
teams of our portfolio companies have worked unremittingly to stabilise our 
private equity assets. We believe that the majority of our businesses have 
sustained no lasting or fundamental damage, other than that progress towards 
maximising and realising value has naturally been delayed. In fact, several of 
our assets in both portfolios have outperformed during the six-month period, in 
spite of COVID-19, and, in certain instances, are net beneficiaries of the 
current environment. 
 
It almost goes without saying how difficult the current market environment can 
be to execute transactions. In one form or another, the Secondary Sale with 
Hamilton Lane Advisors, L.L.C. ("Hamilton Lane") was under negotiation for more 
than a year. Having now agreed this transaction, the Company has unlocked 
significant liquidity to repay a material portion of its senior loan and reset 
the terms of the loan through maturity. In the coming years, JZCP will continue 
to benefit from its special limited partnership interest in the new Secondary 
Fund, which entitles the Company to participate in the future growth of the 
assets comprising the Secondary portfolio. This growth will be generated by $20 
million in fresh capital contributed by the Secondary Fund to execute the 
respective acquisition strategies of the Secondary portfolio assets. 
 
New Investment Policy and Stabilisation Plan 
 
The Company's continued intention is to realise the maximum value of its 
current investments and, in accordance with the Company's stabilisation plan, 
to generate sufficient liquidity to repay its obligations and return capital to 
shareholders. Following the Secondary Sale and ensuing pay down of senior debt, 
the Company's approximate senior obligations will be as follows: (i) senior 
debt of $68.5 million (due 12 June 2021), (ii) Convertible Unsecured Loan Stock 
("CULS") of GBP38.9m (due 30 July 2021), and (iii) Zero Dividend Preference 
Shares ("ZDPs") of GBP57.6m (due 1 October 2022). 
 
The achievement of the stabilisation plan depends upon the Company's ability to 
realise assets. As noted above, an enduring effect of COVID-19 market 
conditions is that realisations may be delayed or become more difficult. In 
addition, a number of the Company's investments are "co-investments", where the 
Company does not control exit timing. Given this situation, the Directors' 
report accompanying the interim results disclose material uncertainties as to 
the Company's ability to continue as a going concern, as a result of a 
potential lack of liquidity to repay the senior debt facility and redeem its 
CULS. 
 
Prospects 
 
Having obtained updated real estate appraisals and having continued to watch 
the Company's US and European portfolios navigate well through the current 
market, the Board feels confident in the stated values of the Company's 
investments. Accordingly, monthly NAV announcements, which had been previously 
suspended, will resume this month. Clearly, the achievement of the objectives 
of the stabilisation plan and the new investment policy depends on 
realisations, both as to their amount and timing. However, the Board and the 
Investment Adviser are optimistic that all the Company's obligations will be 
repaid in full and that a significant amount of capital will be returned to 
shareholders. 
 
David Macfarlane 
Chairman 
 
4 November 2020 
 
Investment Adviser's Report 
 
Dear Fellow Shareholders, 
 
During the period, we have made substantial progress towards our stated goal of 
realizing investments to generate cash to pay debt, relieve JZCP of unfunded 
commitments, selectively support our existing portfolio and return capital to 
shareholders; this is all in line with the Company's new investment policy 
approved by shareholders last year. 
 
Our team has executed several significant realizations, as detailed in the 
table below, including the recently announced Secondary Sale agreed with 
Hamilton Lane. In aggregate, these transactions will generate approximately 
$175.7 million in liquidity for JZCP in 2020, comprised of approximately $141.8 
million in cash proceeds to JZCP and the relief of a further approximately 
$33.9 million in unfunded and potential commitments. JZCP is using this 
liquidity to pay down a material portion of its senior debt (approximately 
$82.7 million) and selectively support the Company's existing assets to 
maximize their realizable value in the near term. 
 
As we approach the maturity of the remaining balance of our senior debt and the 
CULS in June 2021 and July 2021, respectively, our efforts will continue to be 
totally dedicated towards raising cash in order to execute the aforementioned 
plan to pay debt in the first instance and ultimately return capital to 
shareholders. 
 
Realizations and Further Commitments Relieved Since 1 March 2020 
 
Asset                          Portfolio                  Proceeds   Further Commitment 
                                                      ($ millions)         ($ millions) 
 
Secondary Sale1                US                             90.0                 20.0 
 
K2 II & ABTB (Taco Bell)1      US                             18.6                    - 
 
Greenpoint - Sale1             Real Estate                    13.6                    - 
 
Eliantus - Refinancing         Europe                          2.9                    - 
 
Eliantus - Sale1               Europe                          6.5                    - 
 
Salter - Refinance1            US                              4.4                    - 
 
Orangewood Fund - Sale1        US                              3.7                  6.6 
 
CERPI - Sale1                  US                              1.3                  7.3 
 
Other & Receipt of Escrows     US                              0.8                    - 
 
Total                                                        141.8                 33.9 
 
1 Proceeds received or to be received post period-end 
 
Since our last report, our US and European micro-cap portfolios have continued 
to perform solidly through COVID-19. Our portfolio companies' respective senior 
management teams moved quickly to take decisive measures early in the pandemic 
to stabilize the businesses' liquidity positions and set them on a course to 
weather the pandemic. We are particularly pleased that several of our assets in 
the US and Europe have outperformed in the current climate, hitting record 
monthly sales and EBITDA figures, demonstrating the quality of the underlying 
companies and the resilience of the portfolio. 
 
In addition, while we are hopeful that the economic downturn will be relatively 
short-term in nature, we believe that our assets are prepared to sustain a 
longer duration impact for the following reasons: (i) they are not heavily 
invested in cyclical businesses; (ii) they are conservatively leveraged; and, 
(iii) our entry multiples are below market and offer significant room for 
capital gains. Furthermore, having generated significant liquidity through 
realizations in 2020, we will be able to selectively support our existing 
portfolio, should the unanticipated need arise over the coming months. 
 
With regards to our real estate portfolio, COVID-19 has been devastating to 
commercial retail real estate and has resulted in further write downs in the 
value of our real estate assets. Many of our retail tenants have not paid rent 
throughout the pandemic. We believe what material equity value remains in the 
real estate portfolio is largely concentrated in our properties at 247 Bedford 
Avenue in Williamsburg, Brooklyn (where Apple is a tenant), and Esperante, our 
office tower in West Palm Beach, Florida. 
 
As of 31 August 2020, our US micro-cap portfolio consisted of 22 businesses, 
which includes four 'verticals' and 14 co-investments, across seven industries; 
this portfolio was valued at 8.5x EBITDA, after applying an average 18% 
marketability discount to public comparables. The average underlying leverage 
senior to JZCP's position in our US micro-cap portfolio is 4.2x EBITDA. 
Consistent with our value-oriented investment strategy, we have acquired our 
current US micro-cap portfolio at an average 5.9x EBITDA. 
 
Our European micro-cap portfolio consisted of 16 companies across six 
industries and seven countries. The European micro-cap portfolio has low 
leverage senior to JZCP's position, of under 2.0x EBITDA. 
 
Net Asset Value ("NAV") 
 
JZCP's NAV per share decreased $1.54 or 25.1%, during the six-month period. 
 
NAV per Ordinary share as of 29 February 2020                                     $6.14 
 
Change in NAV due to capital gains and accrued income 
 
+ US Micro-cap                                                                     0.06 
 
+ European Micro-cap                                                               0.02 
 
- Real estate                                                                    (1.46) 
 
Other increases/(decreases) in NAV 
 
+ Change in fair value of CULS                                                     0.03 
 
+ Net foreign exchange effect                                                      0.03 
 
- Finance costs                                                                  (0.12) 
 
- Expenses and taxation                                                          (0.10) 
 
NAV per Ordinary share as of 31 August 2020                                       $4.60 
 
The US micro-cap portfolio navigated the COVID-19 environment well during the 
six-month period, delivering a net increase of 6 cents per share. This was 
primarily due to net accrued income of 5 cents, increased earnings at Felix 
Storch (10 cents) and co-investments New Vitality (2 cents) and Salter (3 
cents) and the write-up at sale of K2 Towers II / ABTB (2 cents). We also 
received 1 cent of escrow payments during the period. Offsetting these 
increases were decreases at co-investments Igloo  (2 cents) and Suzo Happ (15 
cents). 
 
Our JZI Fund III, L.P. ("Fund III") portfolio also performed well through 
COVID-19 during the period, posting a net increase of 2 cents, primarily due to 
net accrued income of 1 cent and net write-ups at Fund III portfolio companies 
of 1 cent. 
 
The real estate portfolio experienced a net decrease of $1.46, largely due to 
the write-off of large portions of our Brooklyn portfolio and a significant 
portion of our Wynwood portfolio. 
 
Returns 
 
The chart below summarises cumulative total shareholder returns and total NAV 
returns for the most recent six-month, one-year, three-year and five-year 
periods. 
 
                                                                  31.8.2020 29.2.2020 31.8.2019 31.8.2017 31.8.2015 
 
Share price (in GBP)                                                  GBP0.89     GBP2.58     GBP4.82     GBP5.16     GBP4.34 
 
 
NAV per share (in USD)                                                $4.60     $6.14     $9.66     $9.88    $10.67 
 
 
NAV to market price                                                   74.1%     46.3%     39.2%     32.8%     37.4% 
discount 
 
                                                                             6 month    1 year    3 year    5 year 
                                                                               return    return    return    return 
 
Dividends paid (in USD)                                                             -         -         -    $0.465 
 
Total Shareholders' return (GBP)1                                              -65.5%    -81.5%    -82.7%    -77.8% 
 
Total NAV return per share (USD)1                                              -25.1%    -52.4%    -53.4%    -54.9% 
 
Total Adjusted NAV return per share (USD)1,2                                   -25.1%    -52.4%    -54.3%    -51.2% 
 
1 Total returns are cumulative and assume that dividends were reinvested. 
 
2 Adjusted NAV returns reflect the return per share before (i) the dilution 
resulting from the issue of 18,888,909 ordinary shares at a discount to NAV on 
30 September 2015 and (ii) subsequent appreciation from the buyback of ordinary 
shares at a discount. 
 
Portfolio Summary 
 
Our portfolio is well-diversified by asset type and geography, with 39 US and 
European micro-cap investments across eleven industries. The European portfolio 
itself is well-diversified geographically across Spain, Italy, Portugal, 
Luxembourg, Scandinavia and the UK. 
 
Below is a summary of JZCP's assets and liabilities at 31 August 2020 as 
compared to 29 February 2020. An explanation of the changes in the portfolio 
follows: 
 
US microcap portfolio                                            31.8.2020    29.2.2020 
                                                                   US$'000      US$'000 
                                                                   409,502      404,880 
 
European microcap portfolio                                        111,800      102,591 
 
Real estate portfolio                                               47,362      158,712 
 
Other investments                                                   23,443       22,603 
 
Total investments                                                  592,107      688,786 
 
Treasury bills                                                       3,395        3,386 
 
Cash                                                                35,656       52,912 
 
Total cash equivalents                                              39,051       56,298 
 
Other assets                                                           125          119 
 
Total assets                                                       631,283      745,203 
 
Zero Dividend Preference shares                                     69,354       64,510 
 
Convertible Unsecured Loan Stock                                    49,432       49,886 
 
Loans payable                                                      150,355      150,362 
 
Other liabilities                                                    5,866        4,711 
 
Total liabilities                                                  275,007      269,469 
 
Net Asset Value                                                    356,276      475,734 
 
US microcap portfolio 
 
As you know from previous reports, our US portfolio is grouped into industry 
'verticals' and co-investments. Our 'verticals' strategy focuses on 
consolidating businesses under industry executives who can add value via 
organic growth and cross company synergies. Our co-investments' strategy allows 
for greater diversification of our portfolio by investing in larger companies 
alongside well-known private equity groups. 
 
The US micro-cap portfolio navigated the COVID-19 environment well during the 
six-month period, delivering a net increase of 6 cents per share. This was 
primarily due to net accrued income of 5 cents, increased earnings at Felix 
Storch (10 cents) and co-investments New Vitality (2 cents) and Salter (3 
cents) and the write-up at sale of K2 Towers II / ABTB (2 cents). We also 
received 1 cent of escrow payments during the period. Offsetting these 
increases were decreases at co-investments Igloo (2 cents) and Suzo Happ (15 
cents). 
 
European microcap portfolio 
 
Our JZI Fund III, L.P. ("Fund III") portfolio also performed well through 
COVID-19 during the period, posting a net increase of  2 cents, primarily due 
to net accrued income of 1 cent and net write-ups at Fund III portfolio 
companies of 1 cent. 
 
JZCP invests in the European micro-cap sector through its approximately 18.8% 
ownership of Fund III. As of 31 August 2020, Fund III held 12 investments: four 
in Spain, two in Scandinavia, two in Italy, two in the UK and one each in 
Portugal and Luxembourg. JZCP held direct loans to a further three companies in 
Spain: Docout, Xacom and Toro Finance. 
 
JZAI has offices in London and Madrid and an outstanding team with over fifteen 
years of experience investing together in European micro-cap deals. 
 
During the period and post-period, JZCP received distributions totalling 
approximately EUR8.0 million (approximately $9.4 million) from the refinancing 
and sale of Fund III portfolio company Eliantus (see below). 
 
In April 2020, JZCP received EUR2.7 million in proceeds from the refinancing of 
Fund III portfolio company, Eliantus, which issued its second project bond 
backed by solar power plants in Spain. In September 2020 (post period), JZCP 
received a further EUR5.3 million in proceeds from the sale of Eliantus to 
Sonnedix, an independent solar power producer which develops, builds, owns and 
operates solar power plants globally, including in Italy, France, Spain, USA/ 
Puerto Rico, Chile, South Africa and Japan. Including previously distributed 
proceeds and future escrows/earn- outs, Fund III has realized a gross multiple 
of invested capital ("MOIC") of approximately 2.0x. 
 
Real estate portfolio 
 
As discussed in the Chairman's Statement and several recent announcements, our 
real estate portfolio has suffered a further large reduction in value during 
the period. COVID-19 has irreparably damaged large portions of the portfolio, 
many of which were in a precarious position pre-COVID-19, resulting in 
significant write-downs and write- offs of assets in Brooklyn and South 
Florida. We expect any material remaining value in the real estate portfolio to 
come from our properties at 247 Bedford Avenue, Williamsburg, Brooklyn (where 
Apple is a tenant) and Esperante our office tower in West Palm Beach, Florida. 
 
In October 2020 (post period), JZCP sold its investment in the Greenpoint 
property, receiving approximately $13.6 million in sale proceeds. 
 
Other investments 
 
Our asset management business in the US, Spruceview Capital Partners, has 
continued to make encouraging progress since our last report to you. Spruceview 
addresses the growing demand from corporate pensions, endowments, family 
offices and foundations for fiduciary management services through an Outsourced 
Chief Investment Officer ("OCIO") model as well as customized products/ 
solutions per asset class. 
 
During the period, Spruceview received a commitment of $124 million, the first 
tranche of an anticipated total additional commitment of $800 million, for a 
portfolio of alternative private equity investments for a Mexican trust (or 
"CERPI"). In addition, the firm launched a third private markets fund, focused 
on co-investment opportunities in the US, with initial commitments of $24 
million. 
 
During the period, Spruceview also maintained a pipeline of potential client 
opportunities and continued to provide investment management oversight to the 
pension funds of the Mexican and Canadian subsidiaries of an international 
packaged foods company, as well as portfolios for family office clients, a 
European private credit fund-of-funds, and a US middle market private equity 
fund-of-funds. 
 
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 17 investment, business and product 
development, legal and operations professional. 
 
Realisations 
 
Secondary Sale 
 
As announced on October 19, 2020, JZCP signed an agreement to sell its 
interests in certain US microcap portfolio companies (the "Secondary Sale") to 
a secondary fund which includes investors of certain funds and accounts managed 
by Hamilton Lane Advisors, L.L.C, one of the world's largest asset management 
firms. 
 
The Secondary Sale marks a significant milestone towards the delivery of the 
Company's previously announced strategy of realizing value from its investment 
portfolio and paying down debt. Upon completion, the Secondary Sale will 
provide the Company with the needed liquidity to repay a substantial portion of 
its senior debt. 
 
The US microcap assets to be sold as part of the Secondary Sale include JZCP's 
interests in each of ACW Flex Pack, Flow Control, Testing Services, Felix 
Storch, Peaceable Street Capital and TierPoint (together, the "US Microcap 
Portfolio Companies"). In return, JZCP will receive aggregate consideration of: 
(i) $90 million in cash (less any fees and expenses) and (ii) a special limited 
partner interest in the Secondary Fund entitling JZCP to certain distributions 
from the Secondary Fund (the "Special LP Interest"). 
 
The full potential commitment by the Secondary Investors to the Secondary Fund 
is up to US$110 million in aggregate, with a total initial investment of $90 
million to be funded at the time of closing of the Secondary Sale to facilitate 
the Secondary Fund's acquisition of the US Microcap Portfolio Companies from 
JZCP. In addition to this initial investment amount, up to $20 million of 
unfunded capital commitments is expected to be contributed to the Secondary 
Fund by the Secondary Investors to complete the acquisition strategies of the 
US Microcap Portfolio Companies. 
 
JZCP expects that the value of the its Special LP Interest should increase in 
the near to medium term as the Secondary Investors fund this additional new 
capital required to grow the US Microcap Companies and complete their 
respective acquisition strategies. 
 
K2 II and ABTB (Taco Bell) 
 
In June 2020, JZCP sold its interests in K2 II and ABTB at approximately NAV, 
receiving approximately $18.6 in net proceeds. 
 
Orangewood Fund 
 
During the period and post-period, JZCP received approximately $3.6 million in 
proceeds from selling down $10 million of its $24 million total commitment to 
the Orangewood Fund. In addition to having received back its funded cost plus 
8.0% interest (i.e., $3.6 million), JZCP was relieved of up to approximately 
$6.6 million in unfunded commitments to the Orangewood Fund. JZCP intends to 
sell down its remaining commitment to the Orangewood Fund over the coming 
months. 
 
CERPI 
 
In August 2020, JZCP received approximately $1.3 million in proceeds from 
selling its interest in the CERPI, a fund managed by Spruceview. In addition to 
having received back its approximate cost in the CERPI, JZCP was relieved of up 
to approximately $7.3 million in unfunded commitments and potential future 
commitments to the CERPI. 
 
Eliantus 
 
In April 2020, JZCP received EUR2.7 million in proceeds from the refinancing of 
Fund III portfolio company, Eliantus, which issued its second project bond 
backed by solar power plants in Spain. In September 2020 (post period), JZCP 
received a further EUR5.3 million in proceeds from the sale of Eliantus to 
Sonnedix, an independent solar power producer which develops, builds, owns and 
operates solar power plants globally, including in Italy, France, Spain, USA/ 
Puerto Rico, Chile, South Africa and Japan. Including previously distributed 
proceeds and future escrows/earn- outs, Fund III has realized a gross multiple 
of invested capital ("MOIC") of approximately 2.0x. 
 
Greenpoint 
 
In October 2020 (post period), JZCP sold its investment in the Greenpoint 
property, receiving approximately $13.6 million in sale proceeds. 
 
Outlook 
 
While it has clearly been a challenging period for the real estate portfolio in 
particular, the outlook for JZCP has significantly improved since we reported 
to you at 29 February 2020. In terms of cash generation, as well as cash 
conservation, we are well down the road to stabilizing our portfolio. 
 
We see more value to be realized from our US and European microcap portfolio 
and will continue to selectively invest in these portfolios to maximize their 
values. We believe this is the most effective way for us to be able to return 
capital to our common shareholders. Until then, we will continue to pursue 
realizations and repay debt. 
 
While the uncertain COVID-19 world in which we are living continues, our focus 
remains on the health and wellbeing of our people and partners. We will do 
everything we can to manage this portfolio defensively and we remain committed 
to maximizing value along the way. 
 
Thank you again for your support of the Company's revised investment strategy. 
 
Yours faithfully, 
Jordan/Zalaznick Advisers, Inc. 
 
4 November 2020 
 
Board of Directors 
David Macfarlane (Chairman)1 
 
Mr Macfarlane was appointed to the Board of JZCP in 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. 
 
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 an Overseer of 
the Gennadius Library of the American School of Classical Studies in Athens, 
and as Director of Pro Natura de Yucatan. 
 
Sharon Parr2 
 
Mrs Parr was appointed to the Board of JZCP in June 2018. In 2003 she completed 
a private equity backed MBO of the trust and fund administration division of 
Deloitte and Touche, called Walbrook, selling it to Barclays Wealth in 2007. As 
a Managing Director of Barclays, she ultimately became global head of their 
trust and fund administration businesses, comprising over 450 staff in 10 
countries. She stepped down from her executive roles in 2011 to focus on other 
areas and interests but has maintained directorships in several companies. She 
is a Fellow of the Institute of Chartered Accountants in England and Wales and 
a member of the Society of Trust and Estate Practitioners, and is a resident of 
Guernsey. 
 
Ashley Paxton 
 
Mr Paxton was appointed to the board in August 2020. Ashley has more than 25 
years of funds and financial services industry experience, with a demonstrable 
track record in advising closed-ended London listed boards and their audit 
committees on IPOs, capital market transactions, audit and other corporate 
governance matters. Ashley was previously C.I. Head of Advisory for KPMG in the 
Channel Islands, a position he held from 2008 through to his retirement from 
the firm in 2019. Ashley is a Fellow of the Institute of Chartered Accountants 
in England and Wales and a resident of Guernsey. Amongst other appointments he 
is Chairman of the Youth Commission for Guernsey & Alderney, a locally based 
charity whose vision is that all children and young people in the Guernsey 
Bailiwick are ambitious to reach their full potential. 
 
Tanja Tibaldi 
 
Ms Tibaldi resigned from the Board on 12 August 2020. 
 
1Chairman of the nominations committee of which all Directors are members. 
 
2Chairman of the audit committee of which all Directors are members. 
 
Report of the Directors 
 
Statement of Directors' Responsibilities 
 
The Directors are responsible for preparing the Interim Report and Financial 
Statements comprising the Half-yearly Interim Report (the "Interim Report") and 
the Unaudited Condensed Interim Financial Statements (the "Interim Financial 
Statements") in accordance with applicable law and regulations. 
 
·     the Interim Financial Statements have been prepared in accordance with 
IAS 34, "Interim Financial Reporting" and give a true and fair view of the 
assets, liabilities, financial position and profit or loss of the Company; and 
 
·     the Chairman's Statement and Investment Adviser's Report include a fair 
review of the information required by: 
 
i.     DTR 4.2.7R of the Disclosure Guidance and Transparency Rules, being an 
indication of important events that have occurred during the first six months 
of the financial year and their impact on the Interim 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 Guidance and Transparency Rules, being 
related party transactions that have taken place in the first six months of the 
financial year and that have materially affected the financial position or the 
performance of the entity during that period; and any changes in the related 
party transactions described in the 2020 Annual Report and Financial Statements 
that could do so. 
 
Principal Risks and Uncertainties 
 
The Company's Board believes the principal risks and uncertainties that relate 
to an investment in JZCP are as follows: 
 
Portfolio Liquidity 
 
The Company invests predominantly in unquoted companies and real estate. 
Therefore, this potential illiquidity means there can be no assurance 
investments will be realised at their latest valuation. The Board considers 
this illiquidity when planning to meet its future obligations, whether 
committed investments or the repayment of the debt facility or the future 
repayment of CULS and ZDP shares. On a quarterly basis, the Board reviews a 
working capital model produced by the Investment Adviser which highlights the 
Company's projected liquidity and financial commitments. 
 
COVID-19 
 
Whilst reporting its annual results for the year ended 29 February 2020 the 
Board disclosed in its Going Concern Assessment on Note 3 of the Annual Report, 
that the market conditions generated by COVID-19 had resulted in uncertainties 
that, at that juncture cast significant doubt on the Company's ability to 
continue as a going concern and that they were unable to estimate the full 
extent and duration of the impact on the Company. 
 
The Board are now in a better position to assess how COVID-19 has impacted the 
Company's investment portfolio and to assess the risks and uncertainties that 
the pandemic still pose. The Board are pleased that the Company's micro-cap 
portfolios have generally continued to perform well throughout the interim 
period and to date. This encouraging performance in the face of unprecedented 
circumstances gives the Board confidence in the valuation of the portfolios and 
the potential for growth and future valuation uplifts. The Real Estate 
portfolio has seen further significant write downs in value in the interim 
period which can be contributed in the main to the challenges retail real 
estate has faced resulting from the pandemic. 
 
The Board has confidence that the micro-cap portfolios will continue to perform 
robustly but are mindful that market conditions means that realisations may be 
delayed or become more difficult. 
 
NAV Factors 
 
(i) Macroeconomic Risks 
 
The Company's performance, and underlying NAV, is influenced by economic 
factors that affect the demand for products or services supplied by investee 
companies and the valuation of Real Estate interests held. Economic factors 
will also influence the Company's ability to invest and realise investments and 
the level of realised returns. Approximately 19% of the Company's investments 
are denominated in non-US dollar currencies, primarily the Euro. Also the 
Company has issued debt denominated in non-US dollar currencies, primarily 
Sterling. Fluctuations to these exchange rates will affect the NAV of the 
Company. 
 
(ii) Underlying Investment Performance 
 
The Company is reliant on the Investment Adviser to support the Company's 
investment portfolio by executing suitable investment opportunities. The 
Investment Adviser provides to the Board an explanation of all investment 
decisions and also quarterly investment reports and valuation proposals of 
investee companies. The Board reviews investment performance quarterly and 
investment decisions are checked to ensure they are consistent with the agreed 
investment strategy. 
 
Share Price Trading at Discount to NAV 
 
JZCP's share price is subject to market sentiment and will also reflect any 
periods of illiquidity when it may be difficult for shareholders to realise 
shares without having a negative impact on share price. The Directors review 
the share price in relation to Net Asset Value on a regular basis and determine 
whether to take any action to manage the discount. The Directors with the 
support of the Investment Adviser work with brokers to maintain interest in the 
Company's shares through market contact and research reports. 
 
Gearing and Financing Costs in the Real Estate Portfolio 
 
The cost of servicing debt in the underlying real estate structures may impact 
the net valuation of the real estate portfolio and subsequently the Company's 
NAV. Gearing in the underlying real estate structures will increase any losses 
arising from a downturn in property valuations. 
 
Operational and Personnel 
 
Although the Company has no direct employees, the Company considers what 
dependence there is on key individuals within the Investment Adviser and 
service providers that are key to the Company meeting its operational and 
control requirements. 
 
The Board considers the principal risks and uncertainties above are broadly 
consistent with those reported at the prior year end, but wish to note the 
following: 
 
·     The Board recognises the Company will have an increased exposure to 
liquidity risk as future debt obligations near maturity. 
 
·     Gearing and the finance costs within the real estate portfolio have 
become less of a future risk to the Company as the current valuation of $47.4 
million (29 February 2020: $158.7 million) now reflects the majority of write 
downs that could be attributed by the gearing structure and costs incurred. 
 
·     The effect of COVID-19 on market conditions means that there are 
challenges to completing corporate transactions and planned realisations may be 
delayed. This uncertainty is considered when the Board assess the Company's 
ability to generate sufficient realisation proceeds to meet its financial 
obligations. 
 
Going Concern 
 
A fundamental principle of the preparation of financial statements in 
accordance with IFRS is the judgement that an entity will continue in existence 
as a going concern for a period of at least 12 months from signing of the 
Interim Financial Statements, which contemplates continuity of operations and 
the realisation of assets and settlement of liabilities occurring in the 
ordinary course of business. 
 
Due to the uncertainties that the Company will not have sufficient liquidity to 
repay its senior debt facility (due 12 June 2021) and redeem its CULS (due 30 
July 2021) there are material uncertainties which cast significant doubt on the 
ability of the Company to continue as a going concern. However the Interim 
Financial Statements for the period ended 31 August 2020 have been prepared on 
a going concern basis given the Board's assessment of future realisations set 
out below and as the Board, with recommendation from the Audit Committee, have 
a reasonable expectation that the Company has adequate resources to continue in 
operational existence for the foreseeable future. 
 
In reaching its conclusion, the Board have considered the risks that could 
impact the Company's liquidity over the period to 4 November 2021. 
 
As part of their assessment the Audit Committee highlighted the following key 
considerations: 
 
1.    Whether the Company can generate sufficient cash through realisations of 
its underlying investments to discharge its liabilities over the period to 4 
November 2021, including the sale of interests in certain US microcap portfolio 
companies (the "Secondary Sale") which is contingent upon  Shareholder 
Approval; and 
 
2.    Whether, in the event that sufficient realisation proceeds referenced 
above are not generated by the Company before the expiration of the current 
loan facilities, whilst remaining within the agreed covenant terms, together 
with the scheduled maturity date of the CULS, the Company is able to implement 
an alternative plan within the required timeframe to refinance and/or 
restructure the loan facility and/or the CULS. 
 
1.    Whether the Company can generate sufficient cash through realisations of 
its underlying investments to discharge its liabilities over the period to 4 
November 2021, including the Secondary Sale which is contingent upon 
Shareholder Approval. 
 
As at 31 October 2020, the Company had cash, cash equivalents and liquid 
investments of approximately $55 million. Post period end, the agreed Secondary 
Sale will result in proceeds of approximately $90 million, less fees and 
expenses. For the avoidance of doubt, the completion of the Secondary Sale is 
subject to pending shareholder approval. The Company has repaid Guggenheim $20 
million (post period-end) and will be obliged to repay a further $62.7 million 
on completion of the Secondary Sale. 
 
Once the Secondary Sale of U.S. micro-cap investments has completed the Company 
will have two major debt obligations to settle within the going concern period 
being; 
 
i.     Senior Loan facility totalling approximately $68.5 million due for 
settlement on or before 12 June 2021; and 
 
ii.     CULS for settlement value of GBP38.9 million (approximately $51 million) 
due for settlement on their scheduled maturity date of 30 July 2021. 
 
Considering the Company's projected cash position, ongoing operating costs and 
the anticipated further investment required to support the Company's portfolio 
the Board anticipate further proceeds of $70 million to $80 million are 
required from the realisation of investments to enable the Company to settle 
its debts as they fall due. 
 
The investment adviser is working on the realisation of various investments 
including a Secondary Sale of its interest in its European micro-cap 
investments. Forecast realisations for the period to redemption of the senior 
debt are in the range of $85 million to $115 million, in addition to the 
proceeds from the completion of the Secondary Sale of U.S. micro-cap 
investments mentioned above. 
 
The Board continue to consider the levels of realisation proceeds historically 
generated by the Company's micro- cap portfolios as well as the accuracy of 
previous forecasts whilst concluding on the predicted accuracy of forecasts 
presented. 
 
The Board have considered the effect of COVID-19 on market conditions which 
means that realisations may be delayed or become more difficult. 
 
2.    Whether, in the event that sufficient realisation proceeds referenced 
above are not generated by the Company before the expiration of the current 
loan facilities, whilst remaining within the agreed covenant terms, together 
with the scheduled maturity date of the CULS, the Company is able to implement 
an alternative plan within the required timeframe to refinance and/or 
restructure the loan facility and/or the CULS. 
 
JZAI personnel manage the relationship with the Company's lenders, monitor 
compliance with loan terms and covenants and report to the Board on matters 
arising. 
 
Post period end, the Company reached agreement with Guggenheim to pay down a 
significant portion of the debt owed from proceeds from the agreed Secondary 
Sale and also for a third party, Cohanzick, to assume $40 million of the 
outstanding debt. The terms of the new agreement require the Company to 
allocate 90% of future realisation proceeds to the repayment of the balance of 
the Guggenheim loan. 
 
Prior to the new agreement, due to the fall in the valuation of the Company's 
real estate portfolio, the Company had breached the asset cover covenant terms 
of the Guggenheim loan. The Company is now in full compliance with loan 
covenant terms having secured more advantageous terms for itself. The current 
asset coverage has been reset at 3.25x rising to 3.5x on the earliest of 7 
December 2020 or the date of closure of the Secondary Sale of U.S. micro-cap 
investments. On completion of the Secondary Sale and further repayment of the 
senior loan facility, the Company's asset coverage is expected to increase from 
approximately 3.8x to approximately 5.7x. Stress testing performed by the 
Company, show investment losses resulting in the reduction of 10% of total 
collateral would reduce the current asset coverage ratio from 3.8x to 3.5x 
(above the 3.25x threshold) and following the anticipated closure of the 
Secondary Sale and further repayment of debt in December 2020, a similar fall 
in the Company's investment value would see the asset coverage ratio fall from 
5.7x to 5.3x (above the 3.5x threshold). 
 
Any changes to the terms of the CULS will require the sanction of CULS holders 
by the approval of an extraordinary resolution of CULS holders.  Any such 
extraordinary resolution would require the approval of not less than 75% of the 
votes cast by CULS holders at a duly convened meeting. 
 
Going Concern Conclusion 
 
After careful consideration and based on our assessment of future realisations, 
the Board are satisfied, as of today's date, that it is appropriate to adopt 
the going concern basis in preparing the financial statements and they have a 
reasonable expectation that the Company will continue in existence as a going 
concern for the period to 4 November 2021. 
 
The Board have determined that there are material uncertainties surrounding the 
Company's ability to generate sufficient liquidity to repay its senior debt 
facility (due 12 June 2021) and repay its CULS (due 30 July 2021) which casts 
significant doubt over the ability of the Company to continue as a Going 
Concern, based on the following key considerations: 
 
1.    Whether the Company can generate sufficient cash through realisations of 
its underlying investments to discharge its liabilities over the period to 4 
November 2021, including the Secondary Sale which is contingent upon 
Shareholder Approval; and 
 
2.    Whether, in the event that sufficient realisation proceeds referenced 
above are not generated by the Company before the expiration of the current 
loan facilities, whilst remaining within the agreed covenant terms, together 
with the scheduled maturity date of the CULS, the Company is able to implement 
an alternative plan within the required timeframe to refinance and/or 
restructure the loan facility and/or the CULS. 
 
The financial statements do not include any adjustments that might result from 
the outcome of these uncertainties. 
 
Approved by the Board of Directors and agreed on behalf of the Board on 4 
November 2020. 
 
David Macfarlane 
Chairman 
 
Sharon Parr 
Director 
 
Investment Portfolio 
 
                                                         31 August 2020      Percentage 
                                                                                     of 
                                                        Cost1         Value   Portfolio 
 
                                                      US$'000       US$'000           % 
 
US Micro-cap portfolio 
 
US Micro-cap (Verticals) 
 
Industrial Services Solutions2 
 
INDUSTRIAL SERVICES SOLUTIONS ("ISS") 
Provider of aftermarket maintenance, repair, 
and field services for critical process 
equipment throughout the US 
 
Total Industrial Services Solutions valuation          48,250        95,889        16.1 
 
Testing Services Holdings2,3 
 
TECHNICAL SOLUTIONS AND SERVICES 
Provider of safety focused solutions for the 
industrial, environmental and life science 
related markets 
 
CONTAMINATION CONTROL & CERTIFICATION 
Provider of testing, certification and 
validation services for cleanroom, critical 
environments and containment systems 
 
Total Technical Solutions and Services                 23,771        24,619         4.1 
Vertical valuation 
 
Flexible Packaging Vertical3 
 
ACW FLEX PACK, LLC 
Provider of a variety of custom flexible 
packaging solutions to converters and 
end-users 
 
Total Flexible Packaging Vertical valuation            10,032        11,955         2.0 
 
Flow Controls3 
 
FLOW CONTROL, LLC 
Manufacturer and distributor of 
high-performance, mission-critical flow 
handling products and components utilized to 
connect processing line equipment 
 
Total Flow Control Vertical valuation                  14,040        16,126         2.7 
 
Total US Micro-cap (Verticals)                         96,093       148,589        24.9 
 
DEFLECTO                                               40,112        39,079         6.6 
Deflecto designs, manufactures and sells 
innovative plastic products to multiple 
industry segments 
 
GEORGE INDUSTRIES                                      12,179        12,177         2.0 
Manufacturer of highly engineered, complex 
and high tolerance products for the 
aerospace, transportation, military and other 
industrial markets 
 
IGLOO2                                                  6,040           329         0.1 
Designer, manufacturer and marketer of 
coolers and outdoor products 
 
NEW VITALITY2                                           3,354        11,306         1.9 
Direct-to-consumer provider of nutritional 
supplements and personal care products 
 
ORANGEWOOD PARTNERS PLATFORM                           16,722        20,500         3.4 
Holds JZCP's proceeds from the sale of ABTB 
and K2 Towers II 
 
ORANGEWOOD PARTNERS II-A LP                             8,028         8,028         1.3 
Private fund managed by Orangewood Partners 
currently invested in K2 Towers II and Exer 
Urgent Care an urgent care operator. 
 
ORIZON                                                  4,127         7,293         1.2 
Manufacturer of high precision machine parts 
and tools for aerospace and defence 
industries 
 
PEACEABLE STREET CAPITAL3                              28,041        36,541         6.1 
Specialty finance platform focused on 
commercial real estate 
 
SALTER LABS2                                           16,762        23,845         4.0 
Developer and manufacturer of respiratory 
medical products and equipment for the 
homecare, hospital, and sleep disorder 
markets 
 
SLOAN LED2                                              6,030             -           - 
Designer and manufacturer of LED lights and 
lighting systems 
 
VITALYST2                                               9,020         8,192         1.4 
Provider of outsourced IT support and 
training services 
 
Total US Micro-cap (Co-investments)                   150,415       167,290        28.0 
 
US Micro-cap (Other) 
 
AVANTE HEALTH SOLUTIONS                                 7,185         9,810         1.6 
Provider of new and professionally 
refurbished healthcare equipment 
 
FELIX STORCH3                                              50        32,000         5.4 
Supplier of specialty, professional, 
commercial, and medical refrigerators and 
freezers, and cooking appliances 
 
HEALTHCARE PRODUCTS HOLDINGS4                          17,636             -           - 
Designer and manufacturer of motorised 
vehicles 
 
NATIONWIDE STUDIOS                                     26,324         5,000         0.8 
Processor of digital photos for pre-schoolers 
 
TIERPOINT2,3                                           44,313        46,813         7.9 
Provider of cloud computing and colocation 
data centre services 
 
Total US Micro-cap (Other)                             95,508        93,623        15.7 
 
Total US Micro-cap portfolio                          342,016       409,502        68.6 
 
European Micro-cap portfolio 
 
EUROMICROCAP FUND 2010, L.P.                              169         2,901         0.5 
Invested in European Micro-cap entities 
 
JZI FUND III, L.P.                                     47,120        74,409        12.5 
At 31 August 2020, was invested in twelve 
companies in the European micro-cap sector: 
Fincontinuo, S.A.C, Collingwood, My Lender, 
Alianzas en Aceros, ERSI, Treee, Factor 
Energia, BlueSites, Luxida, Karium and UFASA 
 
Total European Micro-cap (measured at Fair             47,289        77,310        13.0 
Value) 
 
Direct Investments 
 
DOCOUT6                                                 2,777         4,166         0.7 
Provider of digitalisation, document 
processing and storage services 
 
OMBUDS6                                                17,198             -           - 
Provider of personal security, asset 
protection and facilities management services 
 
TORO FINANCE6                                          21,619        25,896         4.4 
Provides short term receivables finance to 
the suppliers of major Spanish companies 
 
XACOM6                                                  2,055         4,428         0.8 
Supplier of telecom products and technologies 
 
Total European Micro-cap (Direct Investments)          43,649        34,490         5.9 
 
Total European Micro-cap portfolio                     90,938       111,800        18.9 
 
Real Estate portfolio 
 
JZCP REALTY5                                          443,763        47,362         8.0 
Facilitates JZCP's investment in US real 
estate 
 
Total Real Estate portfolio                           443,763        47,362         8.0 
 
Other investments 
 
BSM ENGENHARIA                                          6,115           459         0.1 
Brazilian-based provider of supply chain 
logistics, infrastructure services and 
equipment rental 
 
JZ CERPI Blocker Ltd                                    1,296         1,296         0.2 
Proceeds from the sale of CERPI the 
Spruceview managed investment product 
 
JZ INTERNATIONAL4                                           -           750         0.1 
Fund of European LBO investments 
 
SPRUCEVIEW CAPITAL                                     31,855        20,938         3.5 
Asset management company focusing primarily 
on managing endowments and pension funds 
 
Total Other investments                                39,266        23,443         3.9 
 
Listed investments 
 
U.S. Treasury Bill - Maturity 15 October 2020           3,394         3,395         0.6 
 
Total Listed investments                                3,394         3,395         0.6 
 
Total - portfolio                                     919,377       595,502       100.0 
 
 
 
 
1 Original book cost incurred by JZCP adjusted for subsequent 
transactions. The book cost represents cash outflows and excludes PIK 
investments. 
 
2 Co-investment with Fund A, a Related Party (Note 18). 
 
3 Included within the Secondary Sale due to complete in December 2020 
(note 21) 
 
4 Legacy Investments. Legacy investments are excluded from the calculation 
of capital and income incentive fees. 
 
5 JZCP invests in real estate indirectly through its investments in JZCP 
Realty Ltd. JZCP owns 100% of the shares and voting rights of JZCP Realty, 
Ltd. 
 
6 Classified as Loans at Amortised Cost. 
 
Independent Review Report to JZ Capital Partners Limited 
 
Introduction 
 
We have been engaged by the Company to review the Unaudited Interim Condensed 
Financial Statements ("Interim Financial Statements") for the six months ended 
31 August 2020 which comprise the Unaudited Statement of Comprehensive Income, 
the Unaudited Statement of Financial Position, the Unaudited Statement of 
Changes in Equity, the Unaudited Statement of Cash Flows and the related notes 
1 to 21. We have read the other information contained in the Interim 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 International Standard on Review Engagements 2410 (UK and Ireland) "Review 
of Interim Financial Information Performed by the Independent Auditor of the 
Entity" issued by the Auditing Practices Board ("ISRE 2410"). 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 Interim Report and Interim Financial Statements are the responsibility of, 
and have been approved by, the Directors. The Directors are responsible for 
preparing the Interim Report and Interim Financial Statements in accordance 
with the Disclosure Guidance 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 IFRSs as adopted by the European Union. The Interim 
Financial Statements have been prepared in accordance with International 
Accounting Standard 34, "Interim Financial Reporting", as adopted by the 
European Union ("IAS 34"). 
 
Our Responsibility 
 
Our responsibility is to express to the Company a conclusion on the Interim 
Financial Statements based on our review. 
 
Scope of Review 
 
We conducted our review in accordance with ISRE 2410. 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 
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 Interim Financial Statements for the six months ended 31 
August 2020 are not prepared, in all material respects, in accordance with IAS 
34 and the Disclosure Guidance and Transparency Rules of the United Kingdom's 
Financial Conduct Authority. 
 
Emphasis of Matter 
 
We draw your attention to note 3 in the Interim Financial Statements, which 
states that there is material uncertainty surrounding the Company's ability to 
generate sufficient liquidity to repay its senior debt facility (due 12 June 
2021) and repay its CULS (due 30 July 2021) based on the following key 
considerations i.) Whether, the Company can generate sufficient cash through 
realisations of its underlying investments to discharge its liabilities over 
the period to 4 November 2021; and ii.) Whether, in the event that sufficient 
realisation proceeds referenced above are not generated by the Company  before 
the expiration of the current loan facilities and the scheduled maturity date 
of the CULS, the Company is  able to implement an alternative plan within the 
required timeframe to refinance and/or restructure the loan  facility and/or 
the CULS. 
 
Our conclusion on the Unaudited Interim Condensed Financial Statements based on 
our review is not modified in respect of this matter. 
 
Ernst & Young LLP 
Guernsey 
Channel Islands 
 
4 November 2020 
 
Notes 
 
1.    The 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 Condensed Interim 
Financial Statements since they were initially presented on the website. 
 
3.    Legislation in Guernsey governing the preparation and dissemination of 
Condensed Interim Financial Statements may differ from legislation in other 
jurisdictions. 
 
Statement of Comprehensive Income (Unaudited) 
 
For the Period from 1 March 2020 to 31 August 2020 
 
                                                                Six Month       Six Month 
 
                                                             Period Ended    Period Ended 
 
                                                                31 August       31 August 
                                                                     2020            2019 
 
                                                 Note             US$'000 
 
Income and investment and other gains 
 
Realisations from investments held in escrow      20                  801           3,923 
accounts 
 
Investment Income                                  8               12,697          19,984 
 
Bank and deposit interest                                             124             225 
 
Net foreign currency exchange gains                                     -           3,765 
 
Gain on financial liabilities at fair value       13                    -           4,107 
through profit or loss 
 
                                                                   13,622          32,004 
 
Expenses and losses 
 
Net loss on investments at fair value through      6            (114,089)        (31,575) 
profit or loss 
 
Expected credit losses                             7                (560)        (14,727) 
 
Loss on financial liabilities at fair value       13              (2,836)               - 
through profit or loss 
 
Net foreign currency exchange losses                              (2,035)               - 
 
Investment Adviser's base fee                     10              (5,359)         (8,301) 
 
Administrative expenses                                           (2,151)         (1,660) 
 
Directors' remuneration                                             (150)           (230) 
 
Investment Adviser's incentive fee                10                    -           2,895 
 
                                                                (127,180)        (53,598) 
 
Operating loss                                                  (113,558)        (21,594) 
 
Finance costs                                      9              (9,190)        (10,463) 
 
Loss for the period                                             (122,748)        (32,057) 
 
Other comprehensive income 
 
Gain on financial liabilities due to change       13                3,290               - 
in credit risk 
 
Total comprehensive loss for the period                         (119,458)        (32,057) 
 
Weighted average number of Ordinary shares in                  77,474,175      80,614,784 
issue during the period 
 
Basic loss per Ordinary share                                   (158.44)c        (39.77)c 
 
Diluted loss per Ordinary share                                 (158.44)c        (39.84)c 
 
 
In accordance with IFRS, the Company has calculated the movement in fair value 
due to the change in the credit risk of the CULS which is allocated as Other 
Comprehensive Income. The loss/gain on financial liabilities at fair value 
through profit or loss comprises the movement in the fair value attributable to 
the change in the benchmark interest rate and the movement attributable to 
foreign exchange gain/loss on translation. The gain/loss on financial 
liabilities due to change in credit risk for the comparative period was deemed 
to be immaterial. 
 
The accompanying notes form an integral part of the Interim Financial 
Statements. 
 
Statement of Financial Position (Unaudited) 
 
As at 31 August 2020 
 
                                                              31 August      29 February 
                                                                   2020             2020 
 
                                              Note              US$'000          US$'000 
 
Assets 
 
Investments at fair value through profit       11               561,012          661,200 
or loss 
 
Loans at amortised cost                        11                34,490           30,972 
 
Other receivables                                                   125              119 
 
Cash at bank                                                     35,656           52,912 
 
Total assets                                                    631,283          745,203 
 
Liabilities 
 
Zero Dividend Preference shares                12                69,354           64,510 
 
Convertible Unsecured Loan Stock               13                49,432           49,886 
 
Loan payable                                   14               150,355          150,362 
 
Investment Adviser's base fee                  10                 4,538            1,179 
 
Other payables                                 15                 1,328            1,225 
 
Investment Adviser's incentive fee             10                     -            2,307 
 
Total liabilities                                               275,007          269,469 
 
Equity 
 
Share capital                                                   216,625          216,625 
 
Other reserve                                                   353,528          353,528 
 
Retained deficit                                              (213,877)         (94,419) 
 
Total equity                                                    356,276          475,734 
 
Total liabilities and equity                                    631,283          745,203 
 
Number of Ordinary shares in issue at          16            77,474,175       77,474,175 
period/year end 
 
Net asset value per Ordinary share                                $4.60            $6.14 
 
These Interim Financial Statements were approved by the Board of Directors and 
authorised for issuance on 4 November 2020. They were signed on its behalf by: 
 
David Macfarlane 
Chairman 
 
Sharon Parr 
Director 
 
The accompanying notes form an integral part of the Interim Financial 
Statements. 
 
Statement of Changes in Equity (Unaudited) 
 
For the Period from 1 March 2020 to 31 August 2020 
 
                                                     Share      Other    Retained 
 
                                                   Capital    Reserve     Deficit       Total 
 
                                         Note      US$'000    US$'000     US$'000     US$'000 
 
Balance as at 1 March 2020                         216,625    353,528    (94,419)     475,734 
 
Loss for the period                                      -          -   (122,798)   (122,798) 
 
Gain on financial liabilities due to      13             -          -       3,290       3,290 
change in credit risk 
 
Balance at 31 August 2020                          216,625    353,528   (213,877)     356,276 
 
Comparative for the Period from 1 March 2019 to 31 August 2019 
 
                                                     Share      Other    Retained 
 
                                                   Capital    Reserve    Earnings       Total 
 
                                                   US$'000    US$'000     US$'000     US$'000 
 
Balance at 1 March 2019                            246,604    353,528     210,130     810,262 
 
Loss for the period                                      -          -    (32,057)    (32,057) 
 
Buy back of Ordinary shares               16      (29,979)          -           -    (29,979) 
 
Balance at 31 August 2019                          216,625    353,528     178,073     748,226 
 
 
The accompanying notes form an integral part of the Interim Financial 
Statements. 
 
Statement of Cash Flows (Unaudited) 
 
For the Period from 1 March 2020 to 31 August 2020 
 
                                                              Six Month       Six Month 
 
                                                           Period Ended    Period Ended 
 
                                                         31 August 2020       31 August 
                                                                                   2019 
 
                                                Note            US$'000         US$'000 
 
Cash flows from operating activities 
 
Cash inflows 
 
Realisation of investments1                      11               3,016         117,341 
 
Maturity of treasury bills2                      11               3,395           3,350 
 
Escrow receipts received                         20                 801           3,923 
 
Interest received from unlisted investments                         249             677 
 
Income distributions received from                                    -           1,192 
investments 
 
Bank interest received                                              124             225 
 
Cash outflows 
 
Direct investments and capital calls             11             (5,714)        (51,228) 
 
Purchase of treasury bills                       11             (3,394)         (3,321) 
 
Investment Adviser's base fee paid               10             (2,000)         (8,324) 
 
Investment Adviser's incentive fee paid          10             (2,307)         (3,000) 
 
Other operating expenses paid                                   (2,204)         (1,865) 
 
Foreign exchange gain/(loss) realised                                19           (306) 
 
Net cash (outflow)/inflow before financing                      (8,015)          58,664 
activities 
 
Financing activities 
 
Finance costs paid: 
 
* Convertible Unsecured Loan Stock                              (1,445)         (1,515) 
 
* Loan payable                                                  (7,863)         (6,453) 
 
Payments to buy back Company's Ordinary                               -        (29,979) 
shares 
 
Net cash outflow from financing activities                      (9,308)        (37,947) 
 
(Decrease)/increase in cash at bank                            (17,323)          20,717 
 
Reconciliation of net cash flow to movements in cash at bank 
 
                                                                US$'000         US$'000 
 
Cash and cash equivalents at 1 March                             52,912          50,994 
 
(Decrease)/increase in cash at bank                            (17,323)          20,717 
 
Unrealised foreign exchange movements on                             67            (25) 
cash at bank 
 
Cash and cash equivalents at period end                          35,656          71,686 
 
1Total realisations quoted in the Interim Report of $141.8 million, include 
realisations agreed post period end of $138.0 million, and escrow receipts of 
$0.8 million. 
 
2Includes $10,000 of treasury bill interest received on maturity 
 
The accompanying notes form an integral part of the Interim Financial 
Statements. 
 
Notes to the Financial Statements (Unaudited) 
 
1. General Information 
 
JZ Capital Partners Limited ("JZCP" or 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 classified 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 Fund Segment ("SFS"). 
 
The Company's new investment policy, adopted this year, is for the Company to 
make no further investments outside of its existing obligations or to the 
extent that investment may be made to support selected existing portfolio 
investments. The intention is to realise the maximum value of the Company's 
investments and, after repayment of all debt, to return capital to 
shareholders. The Company's previous Investment Policy was to target 
predominantly private investments and back management teams to deliver on 
attractive investment propositions. In executing this strategy, the Company 
took a long term view. The Company looked to invest directly in its target 
investments and was able to invest globally but with a particular focus on 
opportunities in the United States and Europe. 
 
The Company is currently mainly focused on supporting its investments in the 
following areas: 
 
a)    small or micro-cap buyouts in the form of debt and equity and preferred 
stock in both the US and Europe; and 
 
b)    real estate interests. 
 
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 otherwise indicated. 
 
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 2020 to 
31 August 2020 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 
Disclosure Guidance and Transparency Rules. The Interim Financial Statements do 
not include all the information and disclosure required in the Annual Audited 
Financial Statements and should be read in conjunction with the Annual Report 
and Financial Statements for the year ended 29 February 2020. 
 
Basis of Preparation 
 
The Interim Financial Statements have been prepared under the historical cost 
basis, modified by the revaluation of financial instruments designated at fair 
value through profit or loss ("FVTPL") upon initial recognition. The principal 
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 2020. The 
preparation of these Interim Financial Statements are in conformity with IAS 
34, "Interim Financial Reporting" as adopted in the European Union, and 
requires the Company to make estimates and assumptions that affect the reported 
amounts of assets and liabilities at the date of the Interim Financial 
Statements and the reported amounts of revenues and expenses during the 
reporting period. Actual results could materially differ from those estimates. 
 
New standards, interpretations and amendments adopted by the Company 
 
The accounting policies adopted in the preparation of the Interim Financial 
Statements are consistent with those followed in the preparation of the 
Company's annual financial statements for the year ended 29 February 2020. 
There has been no early adoption, by the Company, of any other standard, 
interpretation or amendment that has been issued but is not yet effective. 
 
3. Estimates and Judgements 
 
The estimates and judgements made by the Board of Directors are consistent with 
those made in the Audited Financial Statements for the year ended 29 February 
2020. 
 
Directors' Assessment of Going Concern 
 
A fundamental principle of the preparation of financial statements in 
accordance with IFRS is the judgement that an entity will continue in existence 
as a going concern for a period of at least 12 months from signing of the 
Interim Financial Statements, which contemplates continuity of operations and 
the realisation of assets and settlement of liabilities occurring in the 
ordinary course of business. 
 
Due to the uncertainties that the Company will not have sufficient liquidity to 
repay its senior debt facility (due 12 June 2021) and redeem its CULS (due 30 
July 2021) there are material uncertainties which cast significant doubt on the 
ability of the Company to continue as a going concern. However the Interim 
Financial Statements for the period ended 31 August 2020 have been prepared on 
a going concern basis given the Board's assessment of future realisations set 
out below and as the Board, with recommendation from the Audit Committee, have 
a reasonable expectation that the Company has adequate resources to continue in 
operational existence for the foreseeable future. 
 
In reaching its conclusion, the Board have considered the risks that could 
impact the Company's liquidity over the period to 4 November 2021. 
 
As part of their assessment the Audit Committee highlighted the following key 
considerations: 
 
1.    Whether, the Company can generate sufficient cash through realisations of 
its underlying investments to discharge its liabilities over the period to 4 
November 2021, including the sale of interests in certain US microcap portfolio 
companies (the "Secondary Sale") which is contingent upon  Shareholder 
Approval; and 
 
2.    Whether, in the event that sufficient realisation proceeds referenced 
above are not generated by the Company before the expiration of the current 
loan facilities, whilst remaining within the agreed covenant terms, together 
with the scheduled maturity date of the CULS, the Company is able to implement 
an alternative plan within the required timeframe to refinance and/or 
restructure the loan facility and/or the CULS. 
 
1.    Whether, the Company can generate sufficient cash through realisations of 
its underlying investments to discharge its liabilities over the period to 4 
November 2021, including the Secondary Sale which is contingent upon 
Shareholder Approval. 
 
As at 31 October 2020, the Company had cash, cash equivalents and liquid 
investments of approximately $55 million. Post period end, the agreed Secondary 
Sale will result in proceeds of approximately $90 million, less fees and 
expenses. For the avoidance of doubt, the completion of the Secondary Sale is 
subject to pending shareholder approval. The Company has repaid Guggenheim $20 
million (post period-end) and will be obliged to repay a further $62.7 million 
on completion of the Secondary Sale. 
 
Once the Secondary Sale of U.S. micro-cap investments has completed the Company 
will have two major debt obligations to settle within the going concern period 
being; 
 
i.     Senior Loan facility totalling approximately $68.5 million due for 
settlement on or before 12 June 2021; and 
 
ii.     CULS for settlement value of GBP38.9 million (approximately $51 million) 
due for settlement on their scheduled maturity date of 30 July 2021. 
 
Considering the Company's projected cash position, ongoing operating costs and 
the anticipated further investment required to support the Company's portfolio 
the Board anticipate further proceeds of $70 million to $80 million are 
required from the realisation of investments to enable the Company to settle 
its debts as they fall due. 
 
The investment adviser is working on the realisation of various investments 
including a Secondary Sale of its interest in its European micro-cap 
investments. Forecast realisations for the period to redemption of the senior 
debt are in the range of $85 million to $115 million, in addition to the 
proceeds from the completion of the Secondary Sale of U.S. micro-cap 
investments mentioned above. 
 
The Board continue to consider the levels of realisation proceeds historically 
generated by the Company's micro- cap portfolios as well as the accuracy of 
previous forecasts whilst concluding on the predicted accuracy of forecasts 
presented. 
 
The Board have considered the effect of COVID-19 on market conditions which 
means that realisations may be delayed or become more difficult. 
 
2.    Whether, in the event that sufficient realisation proceeds referenced 
above are not generated by the Company before the expiration of the current 
loan facilities, whilst remaining within the agreed covenant terms, together 
with the scheduled maturity date of the CULS, the Company is able to implement 
an alternative plan within the required timeframe to refinance and/or 
restructure the loan facility and/or the CULS. 
 
JZAI personnel manage the relationship with the Company's lenders, monitor 
compliance with loan terms and covenants and report to the Board on matters 
arising. 
 
Post period end, the Company reached agreement with Guggenheim to pay down a 
significant portion of the debt owed from proceeds from the agreed Secondary 
Sale and also for a third party, Cohanzick, to assume $40 million of the 
outstanding debt. The terms of the new agreement require the Company to 
allocate 90% of future realisation proceeds to the repayment of the balance of 
the Guggenheim loan. 
 
Prior to the new agreement, due to the fall in the valuation of the Company's 
real estate portfolio, the Company had breached the asset cover covenant terms 
of the Guggenheim loan. The Company is now in full compliance with loan 
covenant terms having secured more advantageous terms for itself. The current 
asset coverage has been reset at 3.25x rising to 3.5x on the earliest of 7 
December 2020 or the date of closure of the Secondary Sale of U.S. micro-cap 
investments. On completion of the Secondary Sale and further repayment of the 
senior loan facility, the Company's asset coverage is expected to increase from 
approximately 3.8x to approximately 5.7x. Stress testing performed by the 
Company, show investment losses resulting in the reduction of 10% of total 
collateral would reduce the current asset coverage ratio from 3.8x to 3.5x 
(above the 3.25x threshold) and following the anticipated closure of the 
Secondary Sale and further repayment of debt in December 2020, a similar fall 
in the Company's investment value would see the asset coverage ratio fall from 
5.7x to 5.3x (above the 3.5x threshold). 
 
Any changes to the terms of the CULS will require the sanction of CULS holders 
by the approval of an extraordinary resolution of CULS holders.  Any such 
extraordinary resolution would require the approval of not less than 75% of the 
votes cast by CULS holders at a duly convened meeting. 
 
Going Concern Conclusion 
 
After careful consideration and based on our assessment of future realisations, 
the Board are satisfied, as of today's date, that it is appropriate to adopt 
the going concern basis in preparing the financial statements and they have a 
reasonable expectation that the Company will continue in existence as a going 
concern for the period to 4 November 2021. 
 
The Board have determined that there are material uncertainties surrounding the 
Company's ability to generate sufficient liquidity to repay its senior debt 
facility (due 12 June 2021) and repay its CULS (due 30 July 2021) which casts 
significant doubt over the ability of the Company to continue as a Going 
Concern, based on the following key considerations: 
 
1.    Whether the Company can generate sufficient cash through realisations of 
its underlying investments to discharge its liabilities over the period to 4 
November 2021, including the Secondary Sale which is contingent upon 
Shareholder Approval; and 
 
2.    Whether, in the event that sufficient realisation proceeds referenced 
above are not generated by the Company before the expiration of the current 
loan facilities, whilst remaining within the agreed covenant terms, together 
with the scheduled maturity date of the CULS, the Company is able to implement 
an alternative plan within the required timeframe to refinance and/or 
restructure the loan facility and/or the CULS. 
 
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 - (not falling into above categories) 
 
Investments in treasury bills are not considered as part of the investment 
strategy and are therefore excluded from this segmental analysis. 
 
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. 
 
Segmental operating profit/(loss) 
 
For the period from 1 March 2020 to 31 August 2020 
 
                                         US    European        Real         Other 
 
                                  Micro-Cap   Micro-Cap      Estate   Investments       Total 
 
                                   US$ '000    US$ '000    US$ '000      US$ '000    US$ '000 
 
Interest revenue                     11,443       1,245           -             -      12,688 
 
Total segmental revenue              11,443       1,245           -             -      12,688 
 
Net (loss)/gain on investments at   (8,074)       7,034   (113,049)             - 
FVTPL                                                                               (114,089) 
 
Expected credit losses                    -       (560)           -             -       (560) 
 
Realisations from investments           801           -           -             -         801 
held in Escrow 
 
Investment Adviser's base           (3,087)       (785)       (968)         (175)     (5,015) 
fee 
 
Total segmental operating             1,083       6,934   (114,017)         (175) 
profit/(loss)                                                                       (106,175) 
 
For the period from 1 March 2019 to 31 August 2019 
 
                                         US    European       Real         Other 
 
                                  Micro-Cap   Micro-Cap     Estate   Investments      Total 
 
                                   US$ '000    US$ '000   US$ '000      US$ '000   US$ '000 
 
Interest                             15,980       2,742         32             -     18,754 
revenue 
 
Dividend revenue                          -       1,192          -             -      1,192 
 
Total segmental revenue              15,980       3,934         32             -     19,946 
 
Net gain/(loss) on investments at    29,331       3,097                        - 
FVTPL                                                     (64,003)                 (31,575) 
 
Expected credit losses                    -    (14,727)          -             - 
                                                                                   (14,727) 
 
Realisations from investments         3,923           -          -             -      3,923 
held in Escrow 
 
Investment Adviser's base           (3,420)       (827)    (3,379)         (147)    (7,773) 
fee 
 
Investment Adviser's capital       (10,074)         240     12,729             -      2,895 
incentive fee1 
 
Total segmental operating            35,740     (8,283)                    (147) 
profit/(loss)                                             (54,621)                 (27,311) 
 
1The 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. No capital incentive fee was payable for the period ended 31 
August 2020. 
 
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 
loss and operating loss: 
 
                                                                        Period      Period 
                                                                         ended       ended 
 
                                                                     31.8.2020   31.8.2019 
 
                                                                      US$ '000    US$ '000 
 
Total segmental operating loss                                       (106,175)    (27,311) 
 
Gain on financial liabilities at fair value through profit or              454       4,107 
loss 
 
Net foreign exchange (loss)/gain                                       (2,035)       3,765 
 
Bank and deposit interest                                                  124         225 
 
Expenses not attributable to segments                                  (2,301)     (1,890) 
 
Fees payable to investment adviser based on non-segmental assets         (344)       (528) 
 
Interest on US treasury bills                                                9          38 
 
Operating loss                                                       (110,268)    (21,594) 
 
The following table provides a reconciliation between total segmental revenue 
and Company revenue: 
 
                                                                                      Period ended     Period 
                                                                                                        ended 
 
                                                                                         31.8.2020  31.8.2019 
 
                                                                                          US$ '000   US$ '000 
 
Total segmental revenue                                                                     12,688     19,946 
 
Non-segmental revenue 
 
Bank and deposit interest                                                                      124        225 
 
Interest on US treasury bills                                                                    9         38 
 
Total revenue                                                                               12,821     20,209 
 
Segmental Net Assets 
 
At 31 August 2020                           US         European              Real            Other 
 
                                     Micro-Cap        Micro-Cap            Estate      Investments      Total 
 
                                      US$ '000         US$ '000               US$         US$ '000   US$ '000 
                                                                             '000 
 
Segmental assets 
 
Investments at FVTPL                  409,502       77,310              47,362              23,443    557,617 
 
Loans at amortised cost                     -       34,490                   -                   -     34,490 
 
Other receivables                           -            -                  80                   -         80 
 
Total segmental assets                409,502      111,800              47,442              23,443    592,187 
 
Segmental liabilities 
 
Payables and accrued expenses         (3,467)        (804)               (340)               (169)    (4,780) 
 
Total segmental liabilities           (3,467)        (804)               (340)               (169)    (4,780) 
 
Total segmental net                   406,035      110,996              47,102              23,274    587,407 
assets 
 
At 29 February 2020                        US     European                Real               Other 
 
                                    Micro-Cap    Micro-Cap              Estate         Investments      Total 
 
                                     US$ '000     US$ '000            US$ '000            US$ '000   US$ '000 
 
Segmental assets 
 
Investments at FVTPL                  404,880       71,619             158,712              22,603    657,814 
 
Loans at amortised cost                     -       30,972                   -                   -     30,972 
 
Other receivables                           -            -                  80                   -         80 
 
Total segmental assets                404,880      102,591             158,792              22,603    688,866 
 
Segmental liabilities 
 
Payables and accrued expenses         (3,290)        (113)               (501)                (23)    (3,927) 
 
Total segmental                       (3,290)        (113)               (501)                (23)    (3,927) 
liabilities 
 
Total segmental net                   401,590      102,478             158,291              22,580    684,939 
assets 
 
 
The following table provides a reconciliation between total segmental assets 
and total assets and total segmental liabilities and total liabilities: 
 
                                                                   31.8.2020    29.2.2020 
 
                                                                    US$ '000     US$ '000 
 
Total segmental assets                                               592,187      688,866 
 
Non segmental assets 
 
Treasury Bills                                                         3,395        3,386 
 
Cash at bank                                                          35,656       52,912 
 
Other receivables                                                         45           39 
 
Total assets                                                         631,283      745,203 
 
Total segmental liabilities                                          (4,780)      (3,927) 
 
Non segmental liabilities 
 
Zero Dividend Preference shares                                     (69,354)     (64,510) 
 
Convertible Unsecured Loan Stock                                    (49,432)     (49,886) 
 
Loans payable                                                      (150,355)    (150,362) 
 
Other payables                                                             -        (784) 
 
Total liabilities                                                  (273,921)    (269,469) 
 
Total net assets                                                     357,362      475,734 
 
 
5. Fair Value of Financial Instruments 
 
The Company classifies fair value measurements of its financial instruments at 
FVTPL using a fair value hierarchy that reflects the significance of the inputs 
used in making the measurements. The financial instruments 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 when assets/liabilities with quoted prices, that would 
normally meet the criteria of Level 1, do not meet the definition of being 
traded on an active market. At the period end, the Company had assessed that 
the liabilities valued at FVTPL being the CULS and valued using the quoted ask 
price, would be classified as level 2 within the valuation method as they are 
not regularly traded. 
 
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 2020 
 
                                            Level 1     Level 2     Level 3       Total 
 
                                           US$ '000    US$ '000    US$ '000    US$ '000 
 
US micro-cap                                      -           -     409,502     409,502 
 
European micro-cap                                -           -      77,310      77,310 
 
Real estate                                       -           -      47,362      47,362 
 
Other investments                                 -           -      23,443      23,443 
 
Listed investments                            3,395           -           -       3,395 
 
                                              3,395           -     557,617     561,012 
 
Financial assets at 29 February 
2020 
 
                                            Level 1     Level 2     Level 3       Total 
 
                                           US$ '000    US$ '000    US$ '000    US$ '000 
 
US micro-cap                                      -           -     404,880     404,880 
 
European micro-cap                                -           -      71,619      71,619 
 
Real estate                                       -           -     158,712     158,712 
 
Other investments                                 -           -      22,603      22,603 
 
Listed investments                            3,386           -           -       3,386 
 
                                              3,386           -     657,814     661,200 
 
Valuation techniques 
 
The same valuation methodology and process was deployed as for the year ended 
29 February 2020. 
 
Financial liabilities designated at fair value through profit or loss at 
inception 
 
Financial liabilities at 31 August 2020        Level 1    Level 2    Level 3        Total 
 
                                              US$ '000   US$ '000   US$ '000     US$ '000 
 
CULS                                                 -     49,432          -       49,432 
 
                                                     -     49,432          -       49,432 
 
Financial liabilities at 29 February           Level 1    Level 2    Level 3        Total 
2020 
 
                                              US$ '000   US$ '000   US$ '000     US$ '000 
 
CULS                                                       49,886          -       49,886 
 
                                                     -     49,886          -       49,886 
 
Market transactions for the CULS do not take place with sufficient frequency 
and volume to provide adequate pricing information on an ongoing basis and 
therefore it is considered the CULS are not traded in an active market and are 
therefore categorised at Level 2 as defined by IFRS. 
 
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 2020 and 29 February 2020 are shown below: 
 
                    Value      Valuation      Unobservable          Range    Sensitivity      Approx. Impact on 
                31.8.2020                                       (weighted                            Fair Value 
                                                                 average) 
                  US$'000      Technique             input                          used                US$'000 
 
US micro-cap      409,502         EBITDA    Average EBITDA         6.5x -        -0.5x /    (34,447)     34,295 
investments                     Multiple Multiple of Peers          16.3x          +0.5x 
                                                                   (9.0x) 
 
                                               Discount to      10% - 30%      +5% / -5%    (45,609)     44,964 
                                          Average Multiple          (18%) 
 
European           77,310         EBITDA    Average EBITDA     6.6x-13.8x        -0.5x /     (4,457)      4,430 
micro-cap                       Multiple Multiple of Peers         (9.3x)          +0.5x 
investments 
                                               Discount to       7% - 56%      +5% / -5%     (3,842)      3,811 
                                          Average Multiple          (25%) 
 
Real estate        24,271     Comparable  Market Value Per    $200 - $826    -10% / +10%    (10,057)     10,134 
1,2                                Sales       Square Foot      per sq ft 
                                                                   ($340) 
 
                      610    DCF Model /    Capitalisation           5.5%        +50bps/       (610)        842 
                                  Income              Rate                        -50bps 
                                Approach     Discount Rate           6.5% 
 
                   22,481      Cap Rate/    Capitalisation   5.25% - 6.5%        +50bps/     (7,925)     14,146 
                                  Income              Rate         (5.9%)         -50bps 
                                Approach 
 
Other              20,938            AUM               AUM      $3.0 Bn -      -10%/+10%     (4,744)      4,744 
investments                     Approach                          $4.0 Bn 
 
                                              % Applied to           2.4%      -10%/+10%     (2,090)      2,090 
                                                       AUM 
 
                    Value      Valuation      Unobservable          Range    Sensitivity      Approx. Impact on 
                29.2.2020                                       (weighted                            Fair Value 
                                                                 average) 
                  US$'000      Technique             input                          used                US$'000 
 
US micro-cap      404,880         EBITDA    Average EBITDA         6.5% -    -0.5x/+0.5x    (32,240)     33,918 
investments                     Multiple Multiple of Peers          16.3% 
                                                                   (8.7%) 
 
                                               Discount to      10% - 30%        +5%/-5%    (39,497)     40,898 
                                          Average Multiple          (17%) 
 
European           71,619         EBITDA    Average EBITDA         6.7x -        -0.5x /     (4,210)      4,210 
micro-cap                       Multiple Multiple of Peers          14.0x          +0.5x 
investments                                                       (10.0x) 
 
                                               Discount to       3% - 58%       +5% /-5%     (4,380)      4,380 
                                          Average Multiple          (16%) 
 
Real estate2       73,126     Comparable  Market Value Per  $286 - $1,964      -10%/+10%    (21,188)     22,717 
                                   Sales       Square Foot  ($795) per sq 
                                                                       ft 
 
                   45,283    DCF Model /    Capitalisation    5.25%-5.75%       +50bps/     (19,797)     27,497 
                                  Income              Rate         (5.5%)        -50bps 
                                Approach     Discount Rate    6.25%-7.50% 
                                                                   (6.5%) 
 
                   32,518      Cap Rate/    Capitalisation     4.75%-6.0%        +50bps/    (13,671)     16,084 
                                  Income              Rate        (5.75%)         -50bps 
                                Approach 
 
Other              20,338            AUM               AUM        $3.2 Bn      -10%/+10%     (4,065)      4,065 
investments                     Approach 
 
                                              % Applied to           2.6%      -10%/+10%     (2,034)      2,034 
                                                       AUM 
 
 
1The real estate portfolio recorded losses during the period of $113.0 million. 
Fair value losses are also attributable to the cost of servicing debt and the 
foreclosure or likely foreclosure of properties as well as the changes in 
appraisal metrics (shown above). 
 
2Sensitivity is applied to the property value and then the debt associated to 
the property is deducted before the impact to JZCP's equity value is 
calculated. Due to gearing levels in the property structures an increase in the 
sensitivity of measurement metrics at property level will result in a 
significantly greater impact at JZCP's equity level. 
 
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 2020 
 
                                        US    European        Real         Other 
 
                                 Micro-Cap   Micro-Cap      Estate   Investments       Total 
 
                                  US$ '000    US$ '000    US$ '000      US$ '000    US$ '000 
 
At 1 March 2020                    404,880      71,619     158,712        22,603     657,814 
 
Investments in year including        1,574       1,601       1,699           840       5,714 
capital calls 
 
Payment in kind ("PIK")              1,755           -           -             -       1,755 
 
Proceeds from investments             (72)     (2,944)           -             -     (3,016) 
realised 
 
Net (loss)/gain on investments     (8,074)       7,034                         - 
                                                         (113,049)                 (114,089) 
 
Movement in accrued interest         9,439           -           -             -       9,439 
 
At 31 August 2020                  409,502      77,310      47,362        23,443     557,617 
 
Year ended 29 February 2020 
 
                                       US    European        Real         Other 
 
                                Micro-Cap   Micro-Cap      Estate   Investments       Total 
 
                                 US$ '000    US$ '000    US$ '000      US$ '000    US$ '000 
 
At 1 March 2019                   478,970      70,686     443,044        18,302   1,011,002 
 
Investments in year including       9,678      12,635      51,196         4,301      77,810 
capital calls 
 
Payment in kind ("PIK")            26,205           -           -             -      26,205 
 
Proceeds from investments                    (13,643)     (4,622)             - 
realised                        (122,031)                                         (140,296) 
 
Net gain/(loss) on                 12,459       1,941                         - 
investments                                             (330,906)                 (316,506) 
 
Movement in accrued interest        (401)           -           -             -       (401) 
 
At 29 February 2020               404,880      71,619     158,712        22,603     657,814 
 
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 2020 the ask price for the ZDP (2022) shares was GBP3.00 (29 
February 2020: GBP4.34 per share) the total fair value of the ZDP shares was 
$47,832,000 
 
(29 February 2020: $66,010,000) which is $21,522,000 lower (29 February 2020: 
$1,500,000 higher) lower than the liability recorded in the Statement of 
Financial Position 
 
ZDP shares are recorded at amortised cost and would fall in to the Level 2 
hierarchy if valued at FVTPL. 
 
6. Net Loss on Investments at Fair Value Through Profit or Loss 
 
                                                                          Period      Period 
                                                                           ended       ended 
 
                                                                       31.8.2020   31.8.2019 
 
                                                                        US$ '000    US$ '000 
 
Loss on investments held in investment portfolio at period 
end 
 
Net movement in period end unrealised gain                             (111,517)    (55,727) 
position 
 
Unrealised gains in prior periods now realised                             9,128      13,259 
 
Net unrealised losses in the period                                    (102,389)    (42,468) 
 
Net gains/(losses)on investments realised in the 
period 
 
Proceeds from investments realised                                         6,411     120,691 
 
Cost of investments realised                                             (8,983)    (96,539) 
 
Unrealised gains in prior periods now realised                           (9,128)    (13,259) 
 
Total net (loss)/gain in the period on investments realised             (11,700)      10,893 
in the period 
 
Net loss on investments in the period                                  (114,089)    (31,575) 
 
7. Expected Credit Losses 
 
                                                                   Period          Period 
                                                                    ended           ended 
 
                                                                31.8.2020       31.8.2019 
 
                                                                 US$ '000        US$ '000 
 
Impairment on loans during period                                     560          14,727 
 
 
Expected Credit Losses ("ECLs") are recognised in three stages. Stage one being 
for credit exposures for which there has not been a significant increase in 
credit risk since initial recognition, ECLs are provided for credit losses that 
result from default events that are possible within the next 12-months (a 
12-month ECL). Stage two being for those credit exposures for which there has 
been a significant increase in credit risk since initial recognition, a loss 
allowance is required for credit losses expected over the remaining life of the 
exposure, irrespective of the timing of the default (a lifetime ECL). Stage 
three being credit exposures which are considered credit-impaired, interest 
revenue is calculated based on the amortised cost (i.e. the gross carrying 
amount less the loss allowance). Financial assets in this stage will generally 
be assessed individually. Lifetime expected credit losses are recognised on 
these financial assets. 
 
As from 1 December 2019, the Company provided for ECLs to write down the value 
of the Ombuds loans to nil as no recovery is expected. Following the default 
event, the loan is now classified as Level 3 stage, consequently no further 
interest is being recognised on the loan. ECLs recognised on other direct loan 
investments are done per the stage one methodology being the recognition of 
expected losses over a 12 month period (or to maturity date if earlier). 
 
8. Investment Income 
 
                                                                   31.8.2020      31.8.2019 
 
                                                                    US$ '000       US$ '000 
 
Interest calculated using the effective interest rate                  1,245          2,742 
method 
 
Other interest and similar income                                     11,452         17,242 
 
                                                                      12,697         19,984 
 
Income for the period ended 31 August 2020 
 
                    Preferred       Loan note Interest                 Other 
 
                     Interest         PIK         Cash   Dividend   Interest      Total 
 
                     US$ '000    US$ '000     US$ '000   US$ '000   US$ '000   US$ '000 
 
US micro-cap           11,035         154          254          -          -     11,443 
 
European                    -       1,245            -          -          -      1,245 
micro-cap 
 
Listed                      -           -            -          -          9          9 
investments 
 
                       11,035       1,399          254          -          9     12,697 
 
Income for the period ended 31 August 2019 
 
                    Preferred    Loan note Interest                    Other 
 
Portfolio            Interest         PIK        Cash    Dividend   Interest      Total 
 
                     US$ '000    US$ '000    US$ '000    US$ '000   US$ '000   US$ '000 
 
                                                                - 
 
US micro-cap           15,231         104       645             -          -     15,980 
 
European                    -       2,742         -         1,192          -      3,934 
micro-cap 
 
Real estate                 -           -         -             -         32         32 
 
Listed                      -           -         -             -         38         38 
investments 
 
                       15,231       2,846       645         1,192         70     19,984 
 
 
9. Finance Costs 
 
                                                             Period ended   Period ended 
 
                                                                31.8.2020      31.8.2019 
 
                                                                 US$ '000       US$ '000 
 
Interest expense calculated using the effective 
interest method 
 
ZDP shares (Note 12)                                                1,636          1,563 
 
Loan payable - (Note 14)                                            6,109          7,385 
 
                                                                    7,745          8,948 
 
Other interest and similar expense 
 
CULS interest paid (Note 13)                                        1,445          1,515 
 
                                                                    9,190         10,463 
 
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 2020, total investment advisory and 
management expenses, based on the average total assets of the Company, were 
included in the Statement of Comprehensive Income of $5,359,000 (period ended 
31 August 2019: $8,301,000). Of this amount $4,538,000 (29 February 2020: 
$1,179,000) 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 2020 and 31 August 2019 there was no income 
incentive fee payable. 
 
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 are excluded from the calculation of the fee. 
Assets of JZI Fund III and EuroMicrocap Fund 2010, L.P. are also excluded from 
the Capital Gains Incentive fee ("CGIF"). Carried interest, of an amount 
equivalent to the CGIF payable under the Advisory Agreement, is payable by the 
funds to an affiliate of JZAI. 
 
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 
 
During the year ended 29 February 2020, the Investment Adviser agreed to waive 
fees payable by the Company relating to realised gains in the years ended 
February 2019 and 2020. No further incentive fees will be paid to the 
Investment Adviser until the Company and Investment Adviser have mutually 
agreed to reinstate such payments. 
 
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. As the Company's 
investments are in a net loss position, no provision is included for the period 
ended 31 August 2020 and no provision was included at the prior year end of 29 
February 2020. 
 
                                      Provision     Provision         Paid    Expense for 
                                             At            At       during     the period 
                                                                    period          ended 
 
                                      31.8.2020     29.2.2020    31.8.2020      31.8.2020 
 
                                       US$ '000      US$ '000     US$ '000       US$ '000 
 
CGIF on realised                              -         2,307      (2,307)              - 
investments 
 
Provision for CGIF on unrealised              -             -          n/a              - 
investments 
 
                                              -         2,307      (2,307)              - 
 
                                      Provision     Provision         Paid    Expense for 
                                             At            At       during     the period 
                                                                    period          ended 
 
                                      31.8.2019     28.2.2019    31.8.2019      31.8.2019 
 
                                       US$ '000      US$ '000     US$ '000       US$ '000 
 
CGIF on realised                         27,444        21,429      (3,000)          9,015 
investments 
 
Provision for CGIF on unrealised          9,432        21,342          n/a       (11,910) 
investments 
 
                                         36,876        42,771      (3,000)        (2,895) 
 
11. Investments 
 
                                           Listed    Unlisted    Unlisted       Carrying 
                                                                                   Value 
 
                                            FVTPL       FVTPL       Loans          Total 
 
                                        31.8.2020   31.8.2020   31.8.2020      31.8.2020 
 
                                         US$ '000    US$ '000    US$ '000       US$ '000 
 
Book cost at 1 March 2020                   3,385     970,184      71,939      1,045,508 
 
Investments in period including             3,394       5,714           -          9,108 
capital calls 
 
Payment in kind ("PIK")                         -       1,755         531          2,286 
 
Proceeds from investments matured/        (3,395)     (3,016)           -        (6,411) 
realised 
 
Income received on maturity                    10           -           -             10 
 
Net realised loss                               -     (2,572)           -        (2,572) 
 
Book cost at 31 August 2020                 3,394     972,065      72,470      1,047,929 
 
Unrealised investment and foreign               -                 (8,348)      (436,014) 
exchange loss                                       (427,666) 
 
Impairment on loans at                          -           -    (30,821)       (30,821) 
amortised cost 
 
Accrued interest                                1      13,218       1,189         14,408 
 
Carrying value at 31 August                 3,395     557,617      34,490        595,502 
2020 
 
 
 
                                           Listed    Unlisted    Unlisted       Carrying 
                                                                                   Value 
 
                                            FVTPL       FVTPL       Loans          Total 
 
                                        29.2.2020   29.2.2020   29.2.2020      29.2.2020 
 
                                         US$ '000    US$ '000    US$ '000       US$ '000 
 
Book cost at 1 March 2019                   3,312     980,120      66,849      1,050,281 
 
Investments in year including               6,706      77,810           -         84,516 
capital calls 
 
Payment in kind ("PIK")                         -      26,205       5,090         31,295 
 
Proceeds from investments matured/        (6,700)   (140,296)           -      (146,996) 
realised 
 
Interest received on maturity                  67           -           -             67 
 
Net realised investment and foreign             -      26,345           -         26,345 
exchange gain 
 
Book cost at 29 February 2020               3,385     970,184      71,939      1,045,508 
 
Unrealised investment and foreign               -                (11,077)      (327,226) 
exchange loss                                       (316,149) 
 
Impairment on loans at                          -           -    (30,261)       (30,261) 
amortised cost 
 
Accrued interest                                1       3,779         371          4,151 
 
Carrying value at 29 February               3,386     657,814      30,972        692,172 
2020 
 
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. 
 
Loans at amortised cost 
 
Interest on the loans accrues at the following rates: 
 
As At 31 August 2020                                As At 29 February 
                                                    2020 
 
                     8%       10%      14%    Total        8%         10%     14%    Total 
 
Loans at         25,896     2,038    6,556   34,490     5,289       1,616   4,067   30,972 
amortised cost 
 
Maturity dates are as follows: 
 
As At 31 August 2020                                   As At 29 February 
                                                       2020 
 
                      0-6       7-12      1-2    Total       0-6       7-12    1-2  Total 
                   months     months    years             months     months  years 
 
                    $'000      $'000    $'000    $'000     $'000      $'000  $'000  $'000 
 
Loans at           30,324      4,166        -   34,490     3,827     27,145      - 30,972 
amortised cost 
 
12. Zero Dividend Preference ("ZDP") shares 
 
On 1 October 2015, the Company rolled over 11,907,720 existing ZDP (2016) 
shares into new ZDP shares with a 2022 maturity date. The new ZDP shares (ZDP 
2022) have a gross redemption yield of 4.75% and a total redemption value of GBP 
57,598,000 (approximately $77,121,000 using the period end exchange rate). 
 
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 and Articles of 
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 
 
                                                                   31.8.2020   29.2.2020 
 
                                                                    US$ '000    US$ '000 
 
Amortised cost at 1 March                                             64,510      63,838 
 
Finance costs allocated to Statement of Comprehensive Income           1,636       3,211 
 
Unrealised currency loss/(gain) on translation                         3,208     (2,539) 
 
Amortised cost at period/year end                                     69,354      64,510 
 
Total number of ZDP shares in issue                               11,907,720  11,907,720 
 
13. Convertible Subordinated Unsecured Loan Stock ("CULS") 
 
On 30 July 2014, JZCP issued GBP38,861,140 6% CULS. Holders of CULS may convert 
the whole or part (being an integral multiple of GBP10 in nominal amount) of 
their CULS into Ordinary Shares. The initial conversion price was GBP6.0373 per 
Ordinary Share, which shall be subject to adjustment to deal with certain 
events which would otherwise dilute the conversion of the CULS. 
 
CULS bear interest on their nominal amount at the rate of 6.00 per cent. per 
annum, payable semi-annually in arrears. During the six-month period ended 31 
August 2020: $1,445,000 (31 August 2019: $1,515,000) of interest was paid to 
holders of CULS and is shown as a finance cost in the Statement of 
Comprehensive Income. 
 
In accordance with IFRS, the Company has calculated the movement in fair value 
due to the change in the credit risk of the CULS which is allocated as Other 
Comprehensive Income in the Statement of Comprehensive Income. 
 
                                                                 31.8.2020     29.2.2020 
 
                                                                  US$ '000      US$ '000 
 
Fair Value of CULS at 1 March                                       49,886        54,274 
 
Unrealised movement in value of CULS due to change in Company's    (3,290)             - 
Credit Risk 
 
Unrealised movement in the fair value of CULS allocated to             560       (2,326) 
change in observed (benchmark) interest rate 
 
Unrealised currency loss/(gain) on translation during the            2,276       (2,062) 
period/year 
 
Loss/(gain) to the Company on movement in the fair value of          2,836       (4,388) 
CULS 
 
Fair Value of CULS based on offer price                             49,432        49,886 
 
14. Loan Payable 
 
Guggenheim Partners Limited 
 
On 12 June 2015, JZCP entered into a loan agreement with Guggenheim Partners 
Limited ("Guggenheim"). The agreement was structured so that part of the 
proceeds EUR18 million were received and will be repaid in Euros and the 
remainder of the facility $80 million was received in US dollars. During April 
2017, JZCP increased its credit facility with Guggenheim by a further $50 
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%. In this agreement, the presence of the floor does not 
significantly alter the amortised cost of the instrument, therefore separation 
is not required and the loan is valued at amortised cost using the effective 
interest rate method. 
 
Post period end, the Company announced that it has reached agreement to amend 
the terms of its existing loan agreement with Guggenheim. Under the terms of 
the Amended Senior Loan Facility, approximately $40 million of the outstanding 
principal amount has been assigned to clients and funds advised by Cohanzick 
Management, LLC and CrossingBridge Advisors, LLC ("Cohanzick"). The Company has 
subsequently repaid $20.0 million to Guggenheim and has agreed to repay a 
further $62.7 million on the completion of the Secondary Sale of certain U.S 
micro-cap investments. Cohanzick have agreed, pursuant to an agreement among 
lenders, to be subordinated to Guggenheim and it has been agreed under the 
Amended Senior Facility that the interest rate payable by the Company for the 
loans funded by the new lender willl accrue interest at a rate of LIBOR + 
11.00%. Prior to the new agreement, due to the fall in the valuation of the 
Company's real estate portfolio, the Company had breached the asset cover 
covenant terms of the Guggenheim loan. The Company has now secured more 
advantageous covenant terms for itself including the asset coverage covenant 
being reset at a lower threshold and is now in full compliance with covenant 
terms. The terms of the new agreement require the Company allocate 90% of 
future realisation proceeds to the repayment of the Guggenheim balance. 
 
                                                                 31.8.2020      29.2.2020 
 
                                                                  US$ '000       US$ '000 
 
Amortised cost (US$ drawdown) - 1 March                            130,523        128,838 
 
Amortised cost (Euro drawdown) - 1 March                            19,839         20,389 
 
Finance costs charged to Statement of Comprehensive Income           6,109         14,293 
 
Interest and finance costs                                         (7,863)       (12,436) 
paid 
 
Unrealised currency (loss)/gain on translation of Euro               1,747          (722) 
drawdown 
 
Amortised cost at period/year end                                  150,355        150,362 
 
Amortised cost (US$ drawdown)                                      128,999        130,523 
 
Amortised cost (Euro drawdown)                                      21,356         19,839 
 
                                                                   150,355        150,362 
 
The carrying value of the loans approximates to fair value. 
 
(1) LIBOR rates applied are the US dollar 3 month rate ($130 million) and the 
Euro 3-month rate (EUR18 million). 
 
15. Other Payables 
 
                                                                31.8.2020      29.2.2020 
 
                                                                 US$ '000       US$ '000 
 
Provision for tax on dividends received not                           523            523 
withheld at source 
 
Audit fees                                                            268            190 
 
Legal fees provision                                                  250            250 
 
Directors' remuneration                                                50             58 
 
Other expenses                                                        237            204 
 
                                                                    1,328          1,225 
 
16. Ordinary shares - Issued Capital 
 
                                                             31.8.2020        29.2.2020 
 
                                                             Number of        Number of 
                                                                shares           shares 
 
Total Ordinary shares in issue                              77,474,175       77,474,175 
 
The Company's shares trade on the London Stock Exchange's Specialist Fund 
Segment. 
 
During the comparative period ended 31 August 2019, the Company bought back 
3,192,663 of its own Ordinary shares as part of a tender offer. The total cost 
of the repurchase of the shares was $29.979 million. 
 
17. Commitments 
 
At 31 August 2020 and 29 February 2020, JZCP had the following financial 
commitments outstanding in relation to fund investments: 
 
                                                     Expected date  31.8.2020 29.2.2020 
 
                                                           of Call   US$ '000  US$ '000 
 
JZI Fund III GP, L.P. EUR26,580,957 (29.2.2020: EUR          < 2 years     31,789    25,943 
23,617,789) 
 
Orangewood Partners II-A LP1                          Over 3 years     15,404    17,247 
 
Spruceview Capital Partners, LLC2                         < 1 year      1,900       220 
 
Igloo Products Corp                                   Over 3 years        240       240 
 
CERPI                                                                       -     3,080 
 
Suzo Happ Group                                                             -     2,039 
 
                                                                       49,333    48,769 
 
1Post period end, the Company was relieved of $9.25 million of its total 
commitment to the Orangewood Fund. Of the commitments relieved $6.128 million 
were outstanding at the period end. As at the date of this report, JZCP's 
outstanding commitment to the Orangewood Fund was $9.275 million. 
 
2As approved by a shareholder vote on 12 August 2020, JZCP has the ability to 
make up to approximately $4.1 million in further commitments to Spruceview, 
above the $1.9 million unfunded commitments as at 31 August 2020. 
 
18. Related Party Transactions 
 
JZAI is a US based company founded by David Zalaznick and John ("Jay") Jordan 
II, that provides advisory services to the Company in exchange for management 
fees, paid quarterly. Fees paid by the Company to the Investment Adviser are 
detailed in Note 10. JZAI and various affiliates provide services to certain 
JZCP portfolio companies and may receive fees for providing these services 
pursuant to the Advisory Agreement. 
 
JZCP invests in European micro-cap companies through JZI Fund III, L.P. ("Fund 
III"). Previously investments were made via the EuroMicrocap Fund 2010, L.P. 
("EMC 2010"). Fund III and EMC 2010 are managed by an affiliate of JZAI. At 31 
August 2020, JZCP's investment in Fund III was valued at $74.4 million (29 
February 2020: $68.9 million). JZCP's investment in EMC 2010 was valued at $2.9 
million (29 February 2020: $2.7 million). 
 
JZCP has invested 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 2020, was $33.5 million with 
$1.9 million of this amount remaining unfunded and outstanding. As approved by 
a shareholder vote on 12 August 2020, JZCP has the ability to make up to 
approximately $4.1 million in further commitments to Spruceview, above the 
$33.5 million committed as of 31 August 2020. Should this approved capital be 
committed to Spruceview, it would be committed on the same 50:50 basis with Jay 
Jordan and David Zalaznick (or their respective affiliates). 
 
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 an affiliate of JZAI. JZCP invested in a ratio of 82%/18% with 
the Fund A entities. At 31 August 2020, the total value of JZCP's investment in 
these co-investments was $211.0 million (29 February 2020: $218.7 million). 
Fund A, Fund A Parallel I, II and III Limited Partnerships are no longer making 
platform investments alongside JZCP and, in the case of Testing Services 
Holdings, LLC, these entities have failed to make certain preferred ownership 
investments alongside JZCP. As a consequence, the common ownership interest of 
the Fund A Partnerships in Testing Services has been diluted. 
 
Total Directors' remuneration for the six-month period ended 31 August 2020 was 
$150,000 (31 August 2019: $230,000). 
 
Post period end, following shareholder approval, JZAI Founders Jay Jordan and 
David Zalaznick relieved the Company of $4.25 million of its commitments to the 
Orangewood Fund and also a further $8.64 million being the Company's maximum 
potential commitment to CERPI (the investment fund managed by Spruceview 
Capital Partners). 
 
Post period end, the Company announced that it has agreed pending shareholder 
approval to sell its interests in certain US microcap portfolio companies (the 
"Secondary Sale") to a secondary fund led by Hamilton Lane Advisors, L.L.C. The 
Secondary Sale will be structured as a sale and contribution to a newly formed 
fund, JZHL Secondary Fund LP, managed by an affiliate of JZAI. 
 
19. Basic and Diluted Earnings Loss per Share 
 
Basic loss per share are calculated by dividing the loss for the period by the 
weighted average number of Ordinary shares outstanding during the period. 
 
For the period ended 31 August 2020 the weighted average number of Ordinary 
shares outstanding during the period was 77,474,175 (31 August 2019: 
80,614,784). 
 
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 2020 and 31 August 
2019 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 loss recorded of $2,836,000 (31 August 
2019: gain of $4,107,000) and finance cost attributable to CULS $1,445,000 (31 
August 2019: $1,515,000). 
 
For the period ended 31 August 2020, the potential conversion of the CULS would 
have been anti-dilutive to the total loss per share, therefore the diluted loss 
per share is presented as per the basic loss per share calculation. 
 
20. Contingent Assets 
 
Amounts held in escrow accounts 
 
When investments have been disposed of by the Company, proceeds may reflect 
contractual terms requiring that a percentage is held in an escrow account 
pending resolution of any indemnifiable claims that may arise. 
 
At 31 August 2020 and 29 February 2020, the Company has assessed that the 
likelihood of the recovery of these escrow accounts cannot be determined and 
has therefore disclosed the escrow accounts as a contingent asset. 
 
As at 31 August 2020 and 29 February 2020, the Company had the following 
contingent assets held in escrow accounts which had not been recognised as 
assets of the Company: 
 
                                                                         Amount in Escrow 
 
                                                                    31.8.2020   29.2.2020 
 
                                                                      US$'000     US$'000 
 
Bolder Healthcare Solutions                                                50         343 
 
Triwater Holdings                                                         309         644 
 
Xpress Logistics (AKA Priority                                             19         153 
Express) 
 
                                                                          378       1,140 
 
During the period ended 31 August 2020, proceeds of $801,000 (31 August 2019: 
$3,923,000) were realised and recorded in the Statement of Comprehensive 
Income. The prior year end position has been adjusted for additional potential 
escrow proceeds of $39,000 that are now recognised. 
 
21. Subsequent Events 
 
These interim financial statements were approved by the Board on 4 November 
2020. Events subsequent to the period end 31 August 2020 have been evaluated 
until this date. 
 
Post period end, the Company announced that it has agreed pending shareholder 
approval to sell its interests in certain US micro-cap portfolio companies (the 
"Secondary Sale") to a secondary fund led by Hamilton Lane Advisors, L.L.C. The 
Secondary Sale will be structured as a sale and contribution to a newly formed 
fund, JZHL Secondary Fund LP, managed by an affiliate of JZAI. 
 
The Company will receive consideration for the Secondary Sale comprised of: (i) 
Cash Consideration, being $90 million (less any fees and expenses), subject to 
certain adjustments; and (ii) a special limited partner interest in JZHL 
Secondary Fund LP. 
 
The value of the Special LP Interest to the Company, following the execution of 
the Sale Agreement, should be approximately $40.0 million. Adding this figure 
to the cash consideration of $90 million (less any fees and expenses) would 
indicate a write down to the Company's net asset value of approximately $38.0 
million, when compared against the aggregate net asset value of the US 
micro-cap companies at 31 August 2020 of $168.0 million. 
 
Post period end, the Company announced that it has reached agreement to amend 
the terms of its existing loan agreement with Guggenheim. Under the terms of 
the Amended Senior Loan Facility, approximately $40 million of the outstanding 
principal amount has been assigned to clients and funds advised by Cohanzick 
Management, LLC and CrossingBridge Advisors, LLC. The Company has subsequently 
repaid $20.1 million to Guggenheim and agreed to repay a further $67.2 million 
on the completion of the Secondary Sale of certain U.S micro-cap investments. 
 
The new lenders have agreed, pursuant to an agreement among lenders, to be 
subordinated to Guggenheim and it has been agreed under the Amended Senior 
Facility that the interest rate payable by the Company for the loans funded by 
the new lender will accrue interest at a rate of Libor + 11.00%.The Company has 
secured more advantageous covenant terms for itself including the asset 
coverage covenant being reset at a lower threshold of 3.5x and is now fully 
compliant with all covenants. The terms of the new agreement require the 
Company allocate 90% of future realisation proceeds to the repayment of the 
Guggenheim balance. 
 
Post period end, the Company completed on the sale of its Greenpoint property 
located in Brooklyn, New York. The Company received approximately $13.6 million 
for its interest in the site which approximately corresponds to the carrying 
value at 
 
31 August 2020. 
 
Company Advisers 
 
Investment Adviser 
 
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 offers investment advice to the 
Board of JZCP. JZAI has offices in New York and Chicago. 
 
Jordan/Zalaznick Advisers, Inc. 
9 West, 57th Street 
New York NY 10019 
 
Registered Office 
PO Box 255 
Trafalgar Court 
Les Banques 
St Peter Port 
Guernsey GY1 3QL 
 
JZ Capital Partners Limited is registered in Guernsey Number 48761 
Administrator, Registrar and Secretary 
Northern Trust International Fund Administration 
Services (Guernsey) Limited 
PO Box 255 
Trafalgar Court 
Les Banques 
St Peter Port 
Guernsey GY1 3QL 
 
UK Transfer and Paying Agent 
Equiniti Limited 
Aspect House 
Spencer Road 
Lancing 
West Sussex BN99 6DA 
 
US Bankers 
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 
PO Box 71 
Trafalgar Court 
Les Banques 
St Peter Port 
Guernsey GY1 3DA 
 
Independent Auditor 
Ernst & Young LLP 
PO Box 9 
Royal Chambers 
St Julian's Avenue 
St Peter Port 
Guernsey GY1 4AF 
 
UK Solicitors 
Ashurst LLP 
London Fruit & Wool Exchange 
1 Duval Square 
London E1 6PW 
 
US Lawyers 
Monge Law Firm, PLLC 
333 West Trade Street 
Charlotte, NC 28202 
Mayer Brown LLP 
214 North Tryon Street 
Suite 3800 
Charlotte NC 28202 
Winston & Strawn LLP 
35 West Wacker Drive 
Chicago IL 60601-9703 
 
Guernsey Lawyers 
Mourant 
Royal Chambers 
St Julian's Avenue 
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 
Unsecured 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 price of the Ordinary shares are shown in the Financial Times under 
"Conventional Private Equity" and can also be found at https://markets.ft.com 
along with the prices of the ZDP shares and CULS. 
 
ISIN/SEDOL numbers 
 
                                          Ticker Symbol         ISIN Code   Sedol Number 
 
Ordinary shares                                    JZCP      GG00B403HK58        B403HK5 
 
ZDP (2022) shares                                  JZCZ      GG00BZ0RY036        BZ0RY03 
 
CULS                                               JZCC      GG00BP46PR08        BP46PR0 
 
Key Information Documents 
 
JZCP produces Key Information Documents to assist investors' understanding of 
the Company's securities and to enable comparison with other investment produc 
ts. These documents are found on the Company's website - www.jzcp.com/ 
investor-relations/key-information- documents. 
 
Alternative Performance Measures 
 
In accordance with ESMA Guidelines on Alternative Performance Measures ("APMs") 
the Board has considered what APMs are included in the Interim Report and 
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 
Report and Financial Statements, which are unaudited and outside the scope of 
IFRS, are deemed to be as follows: 
 
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 (one year) and also three-month, 
three-year, five-year and seven 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 the appreciation/dilution per 
share caused by the buy back/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. The Total NAV Return for the period ended 
31 August 2020 was-25.1%, which only reflects the change in NAV as no dividends 
were paid during the year. The Total NAV Return for the year ended 29 February 
2020 was -38.8%. 
 
Total Shareholder Return (Ordinary shares) 
 
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 (one year) and also three-month, three-year, five-year and 
seven-year periods. It assumes that dividends paid to shareholders are 
reinvested in the shares at the time the shares are quoted ex dividend. The 
Shareholder Return for the period ended 31 August 2020 was -65.5%, which only 
reflects the change in share price as no dividends were paid during the year. 
The Shareholder Return for the year ended 29 February 2020 was -40.7%. 
 
NAV to market price discount 
 
The NAV per share is the value of all the 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 Segment, 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. 
 
At 31 August 2020, JZCP's Ordinary shares traded at GBP0.89 (29 February 2020: GBP 
2.58) or $1.19 (29 February 2020: $3.30) being the dollar equivalent using the 
year end exchange rate of GBP1: $1.34 (29 February 2020 GBP1: $1.28). The shares 
traded at a 74% (29 February 2020: 46%) discount to the NAV per share of $4.60 
(29 February 2020: $6.14). 
 
Criminal Facilitation of Tax Evasion 
 
The Board has approved a policy of zero tolerance towards the criminal 
facilitation of tax evasion, in compliance with the Criminal Finances Act 2017 
 
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. Therefore Ordinary shares 
issued by JZ Capital Partners can continue to be recommended by financial 
advisers as an 
 
investment for UK retail investors 
 
Internet Address 
 
The Company: www.jzcp.com 
 
Financial Diary 
 
Results for the year ended 28 February               May 2021 (date to be confirmed) 
2021 
 
Annual General Meeting                               June/July 2021 (date to be 
                                                     confirmed) 
 
Interim report for the six months ended 31 August    November 2021 (date to be 
2021                                                 confirmed) 
 
Payment of Dividends 
 
In the event of a cash dividend being paid, the dividend 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. 
 
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, and the related rules thereunder); 
 
(b) is a "Benefit Plan Investor" (as described under "Prohibition on Benefit 
Plan Investors and Restrictions on Non-ERISA Plans" 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 entitled 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 29 C.F.R. Section 2510.3-101, as modified by 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 laws 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 
advisers, 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 adviser will have certain 
general fiduciary duties to the Company, the board and the investment adviser 
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 laws 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 adviser 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 adviser. 
 
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 adviser 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 adviser 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) The Non-ERISA Plan's investment in the Company will not result in a 
non-exempt violation of any applicable federal, state or local law; 
 
(d) None of the Company, the Board, the Investment adviser 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 
adviser 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 
 
(e) 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 adviser 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 
adviser. 
 
US Tax Matters 
 
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 Board may 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 because of, among other reasons, certain US ownership 
and transfer restrictions that relate to "controlled foreign corporations" 
contained in the Articles of the Company. A Shareholder of the Company may be 
subject to forced sale provisions contained in the Articles in which case such 
shareholder could be forced to dispose of its securities if the Company's 
directors believe that such shareholder 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 shareholder would materially 
increase the risk that the Company could be or become a "controlled foreign 
corporation" within the meaning of the Code (a "CFC"). Shareholders of the 
Company may also be restricted by such provisions with respect to the persons 
to whom they are permitted to transfer their securities. 
 
In general, a foreign corporation is treated as a CFC if, on any date of its 
taxable year, its "10% US Shareholders" collectively own (directly, indirectly 
or constructively within the meaning of Section 958 of the Code) more than 50% 
of the total combined voting power or total value of the corporation's stock. 
For this purpose, a "10% US Shareholder" means any US person who owns 
(directly, indirectly or constructively within the meaning of Section 958 of 
the Code) 10% or more of the total combined voting power of all classes of 
stock of a foreign corporation or 10% or more of the total value of shares of 
all classes of stock of a foreign corporation. The Tax Cuts and Jobs Act (the 
"Tax Act") eliminated the prohibition on "downward attribution" from non-US 
persons to US persons under Section 958(b)(4) of the Code for purposes of 
determining constructive stock ownership under the CFC rules. As a result, the 
Company's US subsidiary will be deemed to own all of the stock of the Company's 
non-US subsidiaries held by the Company for purposes of determining such 
foreign subsidiaries' CFC status. The legislative history under the Tax Act 
indicates that this change was not intended to cause the Company's non-US 
subsidiaries to be treated as CFCs with respect to a 10% US Shareholder that is 
not related to the Company's US subsidiary. However, the IRS has not yet issued 
any guidance confirming this intent and it is not clear whether the IRS or a 
court would interpret the change made by the Tax Act in a manner consistent 
with such indicated intent. The Company's treatment as a CFC as well as its 
foreign subsidiaries' treatment as CFCs could have 
 
adverse tax consequences for 10% US Shareholders. 
 
The Company has been advised that it is NOT a passive foreign investment 
company ("PFIC") for the fiscal years ended February 2019 and 2018. An analysis 
for the financial year ended 29 February 2020 will be undertaken this year. A 
classification as a PFIC would likely 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. 
 
Investment Adviser's ADV Form 
 
Shareholders and state securities authorities wishing to view the Investment 
Adviser's ADV form can do so by following the link below: 
 
https://adviserinfo.sec.gov/firm/summary/160932 
 
 
 
END 
 

(END) Dow Jones Newswires

November 05, 2020 02:00 ET (07:00 GMT)

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